FY11-SIU-Hsng-Aux-Med-Fin-Full

              Crowe Horwath LLP
Independent Member Crowe Horwath International
STATE OF ILLINOIS
SOUTHERN ILLINOIS UNIVERSITY
FINANCIAL AUDITS FOR
SOUTHERN ILLINOIS UNIVERSITY
HOUSING AND AUXILIARY FACILITIES SYSTEM
&
MEDICAL FACILITIES SYSTEM
For the Year Ended June 30, 2011
Performed as Special Assistant Auditors
for the Auditor General, State of Illinois
STATE OF ILLINOIS
SOUTHERN ILLINOIS UNIVERSITY
FINANCIAL AUDIT
For the Year Ended June 30, 2011
Performed as Special Assistant Auditors
for the Auditor General, State of Illinois
Southern Illinois University
Board of Trustees and
Officers of Administration
Fiscal Year 2011
BOARD OF TRUSTEES OF SOUTHERN ILLINOIS UNIVERSITY
Roger Herrin, Chair Harrisburg
Ed Hightower, Vice Chair Edwardsville
Marquita Wiley, Secretary Belleville
Jeff Harrison Edwardsville
Mark Hinrichs Fairview Heights
Don Lowery Golconda
Donna Manering Makanda
John Simmons East Alton
Alex Vansaghi Carbondale
OFFICERS OF SOUTHERN ILLINOIS UNIVERSITY
Glenn Poshard, President
Jeffrey McLellan, Interim General Counsel
Paul Sarvela, Vice President, Academic Affairs
Duane Stucky, Senior Vice President, Financial and Administrative Affairs, and Board Treasurer
Misty Whittington, Executive Secretary of the Board
OFFICERS OF ADMINISTRATION, SOUTHERN ILLINOIS UNIVERSITY
CARBONDALE
Rita Cheng, Chancellor
John Nicklow, Provost and Vice Chancellor for Academic Affairs
J. Kevin Dorsey, Dean and Provost, School of Medicine
Kevin D. Bame, Vice Chancellor for Administration and Finance
John A. Koropchak, Vice Chancellor for Research and Graduate Dean
OFFICERS OF ADMINISTRATION, SOUTHERN ILLINOIS UNIVERSITY
EDWARDSVILLE
Vaughn Vandegrift, Chancellor
Paul W. Ferguson, Provost and Vice Chancellor for Academic Affairs
Narbeth Emmanuel, Vice Chancellor for Student Affairs
Patrick Hundley, Vice Chancellor for University Relations
Kenneth Neher, Vice Chancellor for Administration
Southern Illinois University
Annual Financial Report
Fiscal Year 2011
Table of Contents
Treasurer’s Letter 1
Financial Statement Report Summary 2
Independent Auditors’ Report 3
Management’s Discussion and Analysis 5
Basic Financial Statements
Statement of Net Assets 11
Statement of Revenues, Expenses and Changes in Net Assets 12
Statement of Cash Flows 13
Notes to Financial Statements 15
Independent Auditors’ Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on
an Audit of Financial Statements Performed in Accordance
with Government Auditing Standards 48
2
FINANCIAL STATEMENT REPORT
SUMMARY
The audit of the accompanying basic financial statements of Southern Illinois University was conducted
by Crowe Horwath LLP.
Based on their audit, and the reports of other auditors, the auditors expressed an unqualified opinion on
the University’s basic financial statements.
3
Crowe Horwath LLP
Independent Member Crowe Horwath International
Independent Auditors’ Report
Honorable William G. Holland
Auditor General, State of Illinois
and Board of Trustees
Southern Illinois University
As Special Assistant Auditors for the Auditor General, we have audited the accompanying financial
statements of the business-type activities of Southern Illinois University (“the University”) and its
aggregate discretely presented component units, 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 opinions on these financial statements based
on our audit. The prior year comparative information has been derived from the University’s 2010
financial statements and, in our report dated February 25, 2011 based on our audit and the reports of
other auditors, we expressed an unqualified opinion on the respective financial statements of the
business-type activities and the aggregate discretely presented component units. We did not audit the
financial statements of the University’s discretely presented component units (the “University Related
Organizations”), as described in Note 1 of the financial statements as of and for the year ended June 30,
2011. Those statements were audited by other auditors whose reports thereon has been provided to us,
and our opinion on the financial statements, insofar as it relates to the amounts included for the University
Related Organizations, is based solely on the reports of other auditors.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. The financial statements of two University Related Organizations, Southern
Illinois University Carbondale Foundation and the Southern Illinois University Carbondale Alumni
Association, were not audited in accordance with Government Auditing Standards. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our
audit and the reports of other auditors provide a reasonable basis for our opinions.
In our opinion, based on our audit and the reports of other auditors, the financial statements referred to
above present fairly, in all material aspects, the respective financial position of the business-type activities
of the University and the aggregate discretely presented component units as of June 30, 2011, and the
respective changes in financial position and, where applicable, cash flows thereof for the year then ended
in conformity with accounting principles generally accepted in the United States of America.
4
In accordance with Government Auditing Standards, we have also issued our report dated April 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.
The management’s discussion and analysis on pages 5 through 10 is not a required part of the basic
financial statements but is supplementary information required by accounting principles generally
accepted in the United States of America. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation of the
required supplementary information. However, we did not audit the information and express no opinion
on it.
Crowe Horwath LLP
Springfield, Illinois
April 2, 2012
Southern Illinois University
Management’s Discussion and Analysis
For the Year Ended June 30, 2011
5
Introduction
The following discussion and analysis of the financial statements of Southern Illinois University (the
“University”) provides an overview of the University’s financial activities for the year ended June 30, 2011.
This discussion has been prepared by management and should be read in conjunction with the financial
statements and related footnotes.
This discussion focuses on the financial activities of the University (the primary unit), a component unit of
the State of Illinois which conducts instruction, research, public services and related activities principally
at its campuses in Carbondale, which includes the School of Medicine in Springfield, and Edwardsville,
which includes the School of Dental Medicine in Alton and the East St. Louis Center.
The seven component units of the University consist of the following entities: the Southern Illinois
University Foundation at Carbondale; the Southern Illinois University at Edwardsville Foundation; the
Association of Alumni, Former Students and Friends of Southern Illinois University, Inc.; the Alumni
Association of Southern Illinois University at Edwardsville; University Park at Edwardsville; Southern
Illinois Research Park, Inc. at Carbondale; and SIU Physicians and Surgeons, Inc. Complete financial
statements for the component units may be obtained from each entity, and addresses are provided in
Note 1 in the Notes to Financial Statements.
Using the financial statements
The University’s 2011 financial report includes three basic financial statements: the Statement of Net
Assets; the Statement of Revenues, Expenses and Changes in Net Assets; and the Statement of Cash
Flows. The notes to financial statements are an integral part of the basic financial statements and provide
additional details which should be included as part of any review or analysis. These financial statements
are prepared in accordance with accounting principles generally accepted in the United States of America
and provide information on the University as a whole.
FINANCIAL HIGHLIGHTS
Statement of Net Assets
The Statement of Net Assets includes all assets and liabilities, both current and noncurrent, using the
accrual basis of accounting. The statement presents the financial position of the University at the end of
the fiscal year. The difference between total assets and total liabilities is net assets, which is one indicator
of the current financial health of the University. The changes in the net assets that occur over time
indicate improvements or deterioration in the University’s financial condition.
Net assets are divided into three major categories: invested in capital assets, net of related debt;
restricted net assets; and unrestricted net assets. Invested in capital assets, net, consists of capital assets
reduced by the outstanding balances of borrowings for construction and improvements of those assets.
Restricted net assets have external constraints, including grants and contracts, self insurance and capital
projects. Unrestricted Net Assets are those that do not meet the definition of the first two categories.
6
The University’s assets, liabilities and net assets at June 30, 2011 and 2010 are summarized as follows:
June 30, 2011 June 30, 2010
Assets:
Current assets $ 289,668,133 $ 254,145,530
Capital assets, net 716,438,214 688,676,997
Other assets 122,044,829 119,343,174
Total Assets $ 1,128,151,176 $ 1,062,165,701
Liabilities:
Current liabilities 143,773,319 143,538,405
Noncurrent liabilities 355,984,432 372,775,974
Total Liabilities $ 499,757,751 $ 516,314,379
Net Assets:
Invested in capital assets, net 410,754,130 387,680,620
Restricted - nonexpendable 2,976,342 3,089,109
Restricted - expendable 115,669,997 7 0,076,968
Unrestricted 9 8,992,956 8 5,004,625
Total Net Assets $ 628,393,425 $ 545,851,322
The University’s financial position remained strong at June 30, 2011, with assets of $1,128,151,176 and
liabilities of $499,757,751. Net assets, the difference between total assets and total liabilities, increased
$82,542,103, or over 15%, compared to the previous year.
Statement of Revenues, Expenses and Changes in Net Assets
The Statement of Revenues, Expenses and Changes in Net Assets presents the results of the University’s
revenue and expense activity categorized as operating or nonoperating. All of the current year’s revenues
and expenses are recognized when earned or incurred, regardless of when cash is received or paid.
Operating revenues and expenses involve exchange transactions. In general, operating revenues include
student tuition and fees which are net of scholarship allowances, most grants and contracts, auxiliary
enterprises, and sales and services of educational departments. Operating expenses are those expenses
incurred to carry out the mission of the University, and include educational and general program
expenses, as well as auxiliary enterprises and depreciation.
Nonoperating revenues and expenses involve non-exchange transactions and include state
appropriations, investment income, payments on-behalf of the University, and gifts. State appropriations
are mandated as nonoperating because they are provided by the legislature to the University without the
legislature directly receiving commensurate goods and services for those revenues. Therefore, an
operating loss will always result.
7
The following summarizes the University’s financial activity for fiscal years 2011 and 2010:
Year Ended Year Ended
June 30, 2011 June 30, 2010
Operating revenues:
Tuition and fees, net $ 242,813,334 $ 239,531,944
Auxiliary enterprises 1 07,373,101 1 06,461,946
Grants and contracts 1 09,135,111 1 09,919,427
Other 1 33,445,510 1 12,239,592
Operating expenses (1,003,604,416) (977,813,136)
Operating loss (410,837,360) (409,660,227)
State appropriations 2 22,013,500 2 20,753,700
State appropriations - ARRA funds - 15,913,300
On-behalf payments 1 91,169,767 1 78,405,918
Other nonoperating revenues & expenses, net 49,928,314 49,056,317
Income (loss) before other revenues 52,274,221 54,469,008
Other revenues 30,267,882 5,329,861
Increase in net assets 82,542,103 59,798,869
Net assets at beginning of year 5 45,851,322 4 86,052,453
Net assets at end of year $ 628,393,425 $ 545,851,322
The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with an increase
in net assets for the year of $82.5 million. A significant portion of this increase is in the Restricted -
expendable assets of the University, which increased over $45 million.
The following is a graphic illustration of revenues by source (both operating and nonoperating), which
were used to fund the University’s operating activities for the year ended June 30, 2011. The revenue
from charges for tuition and fees is shown net of the scholarship allowance of $41,849,276. Student
tuition and state appropriations are the primary source of funding for the University’s academic
programs. Other operating revenues consist primarily of income from sales and services of educational
activities, investment income, and income from the Physicians & Surgeons practice plan.
Tuition and
fees, net
22%
Auxiliary
ent.
10%
Grants
and
contracts
10%
Other
20%
State
appropriated
funds & on-behalf
payments
38%
FY11 Operating and Nonoperating Revenues
8
Operating Expenses
A summary of the University’s operating expenses by functional classification for the years ended June 30,
2011 and 2010 is as follows:
Year Ended Year Ended
June 30, 2011 June 30, 2010
Instruction $ 317,152,057 $ 314,929,274
Research 63,660,347 64,467,684
Public service 62,657,302 63,662,792
Academic support 1 61,909,517 1 49,910,775
Student services 69,031,681 68,648,632
Institutional support 70,058,717 69,255,532
Operation and maintenance of plant 84,188,302 78,274,816
Scholarships and fellowships 31,645,865 31,618,117
Depreciation 44,134,264 40,542,476
Auxiliary enterprises 98,759,484 96,071,371
Other expenditures 4 06,880 4 31,667
$ 1,003,604,416 $ 977,813,136
Operating expenses include $191,169,767 for health care and retirement costs paid on-behalf of
University employees by the State of Illinois. These expenses have been allocated by function.
The following is a graphic illustration of operating expenses by function for the year ended June 30, 2011:
Instruction
32%
Research
6%
Public service
6%
Academic
support
16%
Student
services
7%
Institutional
support
7%
O&M
9%
Scholarships
3%
Depreciation
4%
Auxiliary ent.
10%
FY11 Operating Expenses by Function
9
Statement of Cash Flows
The Statement of Cash Flows provides additional information about the University’s sources and uses of
cash during the fiscal year. This statement helps users assess the University’s ability to generate net cash
flows, its ability to meet obligations as they come due, and its need for external financing.
Year Ended Year Ended
June 30, 2011 June 30, 2010
Cash provided by (used in):
Operating activities $ (203,953,507) $ (236,229,643)
Noncapital financing activities 2 83,738,929 2 92,800,986
Capital and related financing activities ( 70,826,713) (100,613,717)
Investing activities 7,627,551 50,543,843
Net increase (decrease) in cash 16,586,260 6,501,469
Cash and cash equivalents, beginning of year 81,665,668 75,164,199
Cash and cash equivalents, end of year $ 9 8,251,928 $ 8 1,665,668
For additional information regarding the detail behind the four categories summarized above, please refer
to the Statement of Cash Flows.
Capital Asset and Debt Administration
At the end of fiscal year 2011, the University had $410,754,130 invested in capital assets, net of
accumulated depreciation and related debt. Depreciation expense for the current year was $44,134,264,
with accumulated depreciation of $773,962,451.
For additional information concerning the University’s Capital Assets and Debt Administration, see Notes
6, 8, 9 and 10 in the Notes to Financial Statements.
Economic Outlook
The State of Illinois continues to have a sizable budget deficit which has resulted in mounting unpaid
obligations, including extensive state appropriation payment delays to all Illinois Public Universities. As of
August 31, 2011, the State of Illinois owed Southern Illinois University over $114 million in total
appropriations compared to $63 million as of August 31, 2010. State appropriations represent 40% of
total revenues and are the largest single source of revenue for the University. State operating
appropriations for fiscal year 2011 were approved at $222.0 million. The fiscal year 2012 operating
appropriation has been approved at $219.5 million, which represents a 1.1% decrease over the fiscal year
2011 appropriation level.
The State continues to appropriate on-behalf payments for University employees’ benefits, but in fiscal
year 2003 began requiring the University to supplement the funding. In fiscal year 2011, the State’s
portion of the on-behalf payments equaled $191.2 million, a 7.2% increase over fiscal year 2010 funding,
and the University contributed $7 million. The University will contribute $7 million toward employee
health coverage in fiscal year 2012.
10
Economic Outlook (continued)
As funding from the State has been reduced, gaps in the operating budget have primarily been filled by
increases in tuition and fees. Fiscal year 2012 tuition increased by 6.9% for first time students and
student fees increased 2.1% for full-time students at the Carbondale campus and 1.6% for full-time
students at the Edwardsville campus.
Southern Illinois University continues to develop and expand its resource base by seeking more revenue
opportunities from grants and contracts, sales and services of educational activities that include clinics,
conferences and seminars, other self-supporting activities, and fund raising efforts. This is demonstrated
in the fiscal year 2012 operating budget where projected increases in grants and contracts and sales and
services revenues are estimated at 8.7%.
Enrollment has remained relatively flat over the past four years, with slight declines at the Carbondale
campus offset by enrollment increases at the Edwardsville campus. The Fall 2011 enrollment at the
Edwardsville campus was 14,235, an increase of 102 students; the highest enrollment in the school’s
history. Total enrollment at the Carbondale campus was 19,817, down 220 students.
The University is committed to strong fiscal stewardship of its resources and maintaining a sound financial
position. To that end, University management establishes institutional priorities that are linked to
additional funding, sets funding guidelines for asset maintenance of facilities and equipment, and holds
2% of State appropriated funds and tuition income as a contingency reserve for fiscal emergencies.
Furthermore, SIU implemented several cost saving measures in fiscal year 2011 that are continuing into
fiscal year 2012 such as a hiring freeze on non-essential positions and cost restrictions on travel and
purchases to help offset anticipated budget shortfalls and to address cash flow issues created by state
appropriation payment delays.
The University is not aware of any additional facts, decisions, or conditions that might be expected to
have a significant effect on the financial position or results of operations during the next fiscal years
beyond those unknown factors having a global effect on virtually all types of business operations.
Southern Illinois University
Statement of Net Assets
June 30, 2011 with Comparative Totals for 2010
2011 2010 2011 2010
ASSETS
Current Assets:
Cash and cash equivalents $ 98,251,928 $ 81,665,668 $ 10,178,769 $ 5,570,591
Short-term investments 14,281,384 21,863,348 29,908,944 28,792,057
Deposits with University - - 11,502,129 8,612,523
Appropriations receivable from State of Illinois General Revenue 38,961 2 75,549 - -
Reimbursement due from State Treasurer 97,416,482 84,270,336 - -
Accounts receivable, net 60,869,098 51,249,402 28,758,263 15,054,643
Notes receivable, net 3,257,745 3,472,210 - -
Accrued interest receivable 68,008 1 81,078 1 85,072 174,559
Due from related organizations 5,244,633 3,110,694 34,855 43,997
Inventories 9,600,488 7,335,455 - -
Prepaid expenses and other assets 6 39,406 7 21,790 2,813,809 2,009,887
Total Current Assets 289,668,133 254,145,530 83,381,841 60,258,257
Noncurrent Assets:
Cash and cash equivalents - - 5 40,109 1,118,000
Long-term investments 101,178,502 97,847,393 137,762,953 111,385,848
Notes receivable, net 14,722,625 15,377,693 66,538 80,266
Prepaid expenses and other assets 6,143,702 6,118,088 16,410,309 15,669,662
Capital assets, not depreciated 87,909,529 119,498,057 3 15,672 315,672
Capital assets, net of depreciation 628,528,685 569,178,940 5,287,728 5,582,451
Total Noncurrent Assets 838,483,043 808,020,171 160,383,309 134,151,899
TOTAL ASSETS 1,128,151,176 1,062,165,701 243,765,150 194,410,156
LIABILITIES
Current Liabilities:
Accounts payable 34,515,211 38,572,249 1,213,285 2,085,656
Accrued interest payable 2,914,298 3,047,515 - -
Accrued payroll 11,987,032 9,317,627 4,046,126 3,764,405
Accrued compensated absences 3,735,380 3,709,319 - -
Revenue bonds payable 16,370,048 15,972,630 - -
Certificates of participation 2,100,784 2,871,092 - -
Liabilities under capitalized leases 1 22,595 1 70,312 - -
Annuities payable - - 5 41,789 591,777
Accrued liability for self-insurance 12,846,252 12,272,432 - -
Deposits held for University related organizations 11,502,129 8,612,524 - -
Deposits held in custody for others 1,331,924 7 53,379 93,879 61,746
Deferred revenue 46,199,648 48,073,981 8 50,142 860,238
Housing deposits 1 40,670 1 29,397 - -
Due to related organizations 7,348 35,948 5,272,140 3,118,743
Total Current Liabilities 143,773,319 143,538,405 12,017,361 10,482,565
Noncurrent Liabilities:
Accrued compensated absences 45,866,519 47,322,138 - -
Revenue bonds payable 269,117,679 281,300,394 - -
Certificates of participation 17,885,949 19,986,733 - -
Liabilities under capitalized leases 87,030 63,410 - -
Annuities payable - - 3,746,173 3,877,130
Accrued liability for self-insurance 5,583,732 6,556,958 - -
Federal loan program contributions refundable 17,271,593 17,266,223 - -
Housing deposits 1 71,930 1 58,153 - -
Other accrued liabilities - 1 21,965 2,447,443 2,419,760
Deposits held in custody for others - - 2,295,626 1,911,631
Total Noncurrent Liabilities 355,984,432 372,775,974 8,489,242 8,208,521
TOTAL LIABILITIES 499,757,751 516,314,379 20,506,603 18,691,086
NET ASSETS
Invested in capital assets, net of related debt 410,754,130 387,680,620 5,603,399 5,898,122
Restricted for:
Nonexpendable 2,976,342 3,089,109 94,347,079 92,036,179
Expendable 115,669,997 70,076,968 74,610,363 50,622,775
Unrestricted 98,992,956 85,004,625 48,697,706 27,161,994
TOTAL NET ASSETS $ 6 28,393,425 $ 5 45,851,322 $ 2 23,258,547 $ 175,719,070
The accompanying notes are an integral part of this statement.
11
UNIVERSITY
UNIVERSITY RELATED ORGANIZATIONS
Southern Illinois University
Statement of Revenues, Expenses and Changes in Net Assets
Year Ended June 30, 2011 with Comparative Totals for 2010
2011 2010 2011 2010
REVENUES
Operating Revenues:
Student tuition and fees (net of scholarship allowances
of $41,849,276 for 2011; $36,331,292 for 2010) $ 242,813,334 $ 239,531,944 $ - $ -
Federal grants and contracts 47,278,070 45,223,278 - 868,557
State of Illinois grants and contracts 34,150,739 32,826,476 - 123,000
Other government grants and contracts 7,680,891 7,220,367 - -
Private grants and contracts 20,025,411 24,649,306 - -
Sales and services of educational departments 78,558,753 71,146,322 - -
Physicians and Surgeons practice plan 54,622,838 40,790,153 - -
Patient service revenue (net) - - 103,376,149 82,977,271
Auxiliary enterprises:
Funded debt enterprises (net of scholarship allowances
of $7,029,568 for 2011; $6,257,656 for 2010) 97,587,220 97,528,468 - -
Other auxiliary enterprises (net of scholarship
allowances of $988,815 for 2011; $895,622 for 2010) 9,785,881 8,933,478 - -
Loan interest income 251,714 223,773 - -
Other operating revenues 12,205 79,344 16,241,885 15,815,997
Total Operating Revenues 592,767,056 568,152,909 119,618,034 99,784,825
EXPENSES
Operating Expenses:
Instruction 317,152,057 314,929,274 - -
Research 63,660,347 64,467,684 - -
Public service 62,657,302 63,662,792 - -
Academic support 161,909,517 149,910,775 - -
Student services 69,031,681 68,648,632 - -
Institutional support 70,058,717 69,255,532 112,021,067 107,942,503
Operation and maintenance of plant 84,188,302 78,274,816 - -
Scholarships and fellowships 31,645,865 31,618,117 - -
Depreciation 44,134,264 40,542,476 5 86,011 685,577
Auxiliary enterprises:
Funded debt enterprises 89,188,761 86,214,616 - -
Other auxiliary enterprises 9,570,723 9,856,755 - -
Other operating expenses 406,880 431,667 - -
Total Operating Expenses 1,003,604,416 977,813,136 112,607,078 108,628,080
Operating Income (Loss) ( 410,837,360) (409,660,227) 7,010,956 (8,843,255)
NONOPERATING REVENUES (EXPENSES)
State appropriations - General Revenue fund 222,013,500 220,753,700 - -
American Recovery & Reinvestment Act of 2009 funds - 1 5,913,300 - -
Gifts and contributions 9,748,643 10,435,456 9,107,293 10,471,568
Investment income (loss) 3,414,546 6,183,396 28,358,557 17,854,787
Grants and contracts 49,275,873 43,218,693 1 20,455 -
Interest on capital asset-related debt (11,030,411) (9,615,262) - (26,870)
Accretion on bonds payable (4,475,452) (4,457,420) - -
University related organizations (596,460) (533,616) - -
Payments on behalf of the university 191,169,767 178,405,918 - -
Other nonoperating revenues (expenses) 3,591,575 3,825,070 1,468,246 (3,275,540)
Net Nonoperating Revenues (Expenses) 463,111,581 464,129,235 39,054,551 25,023,945
Income (Loss) Before Other Revenues 52,274,221 5 4,469,008 46,065,507 16,180,690
Other Revenues:
Capital state appropriations 26,153,991 2,588,997 - -
Additions to permanent endowments - - 1,354,195 3,123,782
Capital grants and gifts 4,113,891 2,740,864 - -
Total Other Revenues 30,267,882 5,329,861 1,354,195 3,123,782
Increase (Decrease) in Net Assets 82,542,103 5 9,798,869 47,419,702 19,304,472
NET ASSETS
Net assets at beginning of year 545,851,322 486,052,453 175,719,070 156,414,598
Removal of Partnership for Connected Illinois URO (see note 16) - - 1 19,775 -
Net assets at end of year $ 628,393,425 $ 545,851,322 $ 223,258,547 $ 175,719,070
The accompanying notes are an integral part of this statement.
12
UNIVERSITY
UNIVERSITY RELATED ORGANIZATIONS
Southern Illinois University
Statement of Cash Flows
Year Ended June 30, 2011 with Comparative Totals for 2010
2011 2010 2011 2010
Cash Flows from Operating Activities
Tuition and fees $ 251,711,272 $ 245,140,790 $ - $ -
Grants and contracts 108,833,825 98,795,248 - -
Sales and services of educational activities 78,977,454 69,732,554 - -
Physicians and Surgeons 40,945,064 42,173,887 - -
Auxiliary enterprise revenues:
Funded debt 101,740,709 100,918,569 - -
Other auxiliary 10,742,235 9,677,238 - -
Payments for employee salaries and benefits ( 527,059,232) (525,890,390) (31,530,120) (31,577,380)
Payments to suppliers (279,800,941) (275,016,056) (69,779,032) (68,759,114)
Payments for scholarships and fellowships (80,239,460) (71,101,300) - -
Loans issued to students (1,754,709) (2,154,379) - -
Interest earned on loans to students 229,012 194,622 - -
Collection of loans from students 2,396,075 2,234,920 - -
Patient service revenue - - 86,406,456 80,472,292
Other operating receipts 89,325,189 69,064,654 8,617,991 14,393,218
Net cash used in operating activities (203,953,507) (236,229,643) (6,284,705) (5,470,984)
Cash Flows from Noncapital Financing Activities
State appropriations - General Revenue Fund 222,250,088 220,737,141 - -
ARRA State Fiscal Stablization Fund - 15,913,300 - -
Direct lending receipts 231,339,629 221,770,116 - -
Direct lending payments ( 231,377,621) (221,703,750) - -
Grants and contracts 49,275,873 43,218,693 - -
Government advances for federal loan funds (109,186) (153,123) - -
Payments to annuitants - - (545,733) (586,948)
Other 602,885 (226,482) (1,261,983) (1,973,188)
Gifts for other than capital purposes 11,757,261 13,245,091 9,304,822 13,476,759
Net cash provided by noncapital financing activities 283,738,929 292,800,986 7,497,106 10,916,623
Cash Flows from Capital and Related Financing Activities
Capital appropriations 18,364,538 953,780 - -
Capital gifts received - - - -
Capital grants - 2,880,000 120,455 -
Payments received on capital financing leases - - - -
Sale of capital assets - 1 8,000 - -
Purchases of capital assets (60,508,046) (80,545,283) (226,329) (225,805)
Proceeds from capital debt - - - -
Other 1,992,479 3,866,066 - -
Principal paid on capital debt (18,995,000) (15,960,000) - (1,100,000)
Interest paid on capital debt (11,680,684) (11,826,280) - (26,870)
Net cash provided by (used in) capital and related financing activities (70,826,713) ( 100,613,717) (105,874) (1,352,675)
Cash Flows from Investing Activities
Purchases of investments (46,276,296) (47,330,116) (7,320,016) (13,602,077)
Proceeds from sales of investments and maturities 50,169,639 91,271,510 5,856,247 8,159,075
Investment income 3,734,208 6,602,449 4,399,365 4,564,603
Net cash provided by (used in) investing activities 7,627,551 50,543,843 2,935,596 (878,399)
Net increase (decrease) in cash 16,586,260 6,501,469 4,042,123 3,214,565
Cash and cash equivalents, beginning of the year 81,665,668 75,164,199 6,688,591 3,474,026
Removal of Partnership for Connected Illinois URO beginning cash (see note 16) - - (11,836) -
Cash and cash equivalents, end of the year $ 98,251,928 $ 81,665,668 $ 10,718,878 $ 6,688,591
13
UNIVERSITY
UNIVERSITY RELATED ORGANIZATIONS
Southern Illinois University
Statement of Cash Flows
Year Ended June 30, 2011 with Comparative Totals for 2010
2011 2010 2011 2010
Reconciliation of Operating Income (Loss)
to Net Cash Used in Operating Activities
Operating income (loss) $ ( 410,837,360) $ ( 409,660,227) $ 7,010,956 $ (8,843,255)
Adjustments to reconcile operating income (loss) to net cash
used in operating activities:
Depreciation expense 44,134,264 40,542,476 586,011 685,577
Amortization expense - - 357,126 357,126
Noncash grants to University - - 539,777 332,768
Noncash expenditures for the benefit of the University - - 647,766 240,202
Noncash contributions - - (382,777) 767,123
Budget expended at University (318,694) (296,068) - -
Payments on behalf of the university 191,169,767 178,405,918 - -
Change in assets and liabilities:
Accounts receivable (net) (11,722,570) (7,492,649) (14,108,107) 5,635,262
Deposits with University - - - (3,910,008)
Reimbursement due from State Treasurer (13,146,146) (40,214,571) - -
Inventories (2,300,034) (662,678) - -
Prepaid expenses 7 7,425 2 6,893 107 ( 914)
Other assets 1,417,045 (792,818) (74,992) 1 1,760
Accounts payable 1,022,355 5,645,387 1,983,230 206,927
Accrued payroll 2,669,405 491,066 - -
Deferred revenue 572,824 (1,605,435) (2,461) 116,550
Compensated absences (1,429,558) 767,495 - -
Deposits held for others (32,998) (14,990) 3 2,133 (23,181)
Other liabilities (374,356) 1,095,787 2 2,199 2 6,668
Due to/from related organizations (4,854,876) (2,465,229) (2,895,673) (1,073,589)
Net cash used in operating activities $ ( 203,953,507) $ ( 236,229,643) $ (6,284,705) $ (5,470,984)
Noncash investing, capital and financing activities:
Payments on behalf of the university for fringe benefits $ 191,169,767 $ 178,405,918 $ - $ -
Accretion on bonds payable 4,475,452 4,457,420 - -
Gifts in kind 1,532,837 1,189,189 1,187,543 1,382,256
Capital assets in accounts payable 5,009,156 12,097,802 - -
Capital asset acquisition by CDB 26,153,991 2,588,997 - -
Loss on disposals of capital assets 674,527 136,363 - 7 3,592
Other capital asset adjustments 1,359,811 7 2,450 - -
Net interest capitalized 688,895 2,490,645 - -
The accompanying notes are an integral part of this statement.
14
UNIVERSITY RELATED ORGANIZATIONS
UNIVERSITY
Southern Illinois University
Notes to Financial Statements
June 30, 2011
15
NOTE 1 - The financial reporting entity and component unit disclosures
Southern Illinois University (the University), a component unit of the State of Illinois, conducts education,
research, public service, and related activities principally at its two campuses. One is in Carbondale and
includes the School of Medicine in Springfield. The other is in Edwardsville and includes the School of
Dental Medicine in Alton and the East St. Louis Center. The governing body of the University is the Board
of Trustees of Southern Illinois University (the Board). As required by accounting principles generally
accepted in the United States of America, these financial statements present the financial position and
financial activities of the University (the primary unit) and its component units as well as certain activities
and expenditures funded by other State agencies on behalf of the University or its employees. The
component units discussed below are included in the University's financial reporting entity because of the
significance of their financial relationship with the University.
The University Related Organizations’ column in the financial statements includes the financial data of the
University’s component units which consist of the following seven entities: the Southern Illinois
University Foundation (at Carbondale) and the Southern Illinois University at Edwardsville Foundation
(Foundations); The Association of Alumni, Former Students and Friends of Southern Illinois University,
Incorporated, and The Alumni Association of Southern Illinois University at Edwardsville (Alumni
Associations); University Park, Southern Illinois University at Edwardsville, Inc.; Southern Illinois Research
Park, Inc., Carbondale; and SIU Physicians & Surgeons, Inc. The University’s related organizations are
reported in a separate column to emphasize that they are Illinois non-profit organizations legally separate
from the University. These entities are University Related Organizations as defined under University
Guidelines adopted by the State of Illinois Legislative Audit Commission in 1982 and amended in 1997.
The Foundations were formed for the purpose of providing fundraising and other assistance to the
University in order to attract private gifts to support the University's education, research, and public
service goals. In this capacity, the Foundations solicit, receive, hold, and administer gifts for the benefit of
the University. Complete financial statements for the Foundations may be obtained by writing: Southern
Illinois University Foundation (at Carbondale), MC 6805, 1235 Douglas, Carbondale, IL 62901-6805 and
Southern Illinois University at Edwardsville Foundation, Edwardsville, IL 62026-1082.
The Alumni Associations were formed to promote the general welfare of the University and to encourage
and stimulate interest among students, former students, and others in the University's programs. In this
capacity, the Alumni Associations offer memberships to former students, conduct various activities for
students and alumni, and publish periodicals for the benefit of the alumni. Complete financial statements
for the Alumni Associations may be obtained by writing: The Association of Alumni, Former Students and
Friends of Southern Illinois University, Incorporated, MC 6809, Colyer Hall, Carbondale, IL 62901-6809
and The Alumni Association of Southern Illinois University at Edwardsville, Southern Illinois University,
Edwardsville, IL 62026-1031.
University Park, Southern Illinois University at Edwardsville, Inc. was formed for the purpose of providing
such management, administrative, and other services as deemed essential to the operation and
development of the University Park facility. Complete financial statements for the University Park may be
obtained by writing: University Park, Southern Illinois University at Edwardsville, Inc., Southern Illinois
University, Edwardsville, IL 62026-1333.
Southern Illinois Research Park, Inc. was formed to promote high technology and knowledge-based
enterprise development within Carbondale and southern Illinois. Complete financial statements for the
16
NOTE 1 - The financial reporting entity and component unit disclosures (continued)
Research Park may be obtained by writing: Southern Illinois Research Park, 150 East Pleasant Hill Road,
Carbondale, IL 62901-6891.
SIU Physicians & Surgeons, Inc., d/b/a SIU HealthCare, was formed to aid in the education and training of
medical students, residents, fellows, and physicians for the delivery of cost-effective, high-quality patient
care and the conduct of medical and other scientific investigations. Complete financial statements for SIU
Physicians & Surgeons, Inc. may be obtained by writing: SIU Physicians & Surgeons, Inc., SIU School of
Medicine, P.O. Box 19606, Springfield, IL 62794-9606.
The 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, therefore, also included in the State's
comprehensive annual financial report.
NOTE 2 - Significant accounting policies
University basis of presentation
The financial statements of the University have been prepared in accordance with accounting principles
generally accepted in the United States of America as prescribed by the Governmental Accounting
Standards Board (GASB). The University has the option to apply all Financial Accounting Standards Board
(FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University
has elected to not apply FASB pronouncements issued after the applicable date.
For financial reporting purposes, the University is considered a special-purpose government engaged only
in business-type activities. Accordingly, the University’s financial statements have been presented using
the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis,
revenues are recognized when earned, and expenses are recorded when an obligation to pay has been
incurred. All significant intra-agency transactions have been eliminated.
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities; the disclosure of contingent assets and liabilities at the date of
the financial statements; and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The financial statements include prior year comparative information, which has been derived from the
University’s 2010 financial statements. Such information does not include all of the information required
to constitute a presentation in conformity with accounting principles generally accepted in the United
States of America as the Management’s Discussion and Analysis is not comparative. Accordingly, such
information should be read in conjunction with the University’s financial statements for the year ended
June 30, 2010.
University Related Organizations basis of presentation
The financial statements of the Southern Illinois University at Edwardsville Foundation; the Alumni
Association of Southern Illinois University at Edwardsville; University Park, Southern Illinois University at
Edwardsville, Inc.; Southern Illinois Research Park, Inc., Carbondale; and SIU Physicians & Surgeons, Inc.,
comply with the Governmental Accounting Standards Board (GASB) presentation format as described
above.
17
NOTE 2 - Significant accounting policies (continued)
Beginning in fiscal year 2009, the Southern Illinois University Foundation (at Carbondale) and The
Association of Alumni, Former Students and Friends of Southern Illinois University, Inc., follow Financial
Accounting Standards Board (FASB) standards for financial statement presentation. Consequently,
reclassifications have been made to convert their statements to the GASB format for inclusion in the
University Related Organizations’ column in the financial statements.
Cash and cash equivalents
Cash, deposits and cash equivalents of the University include bank accounts and investments with original
maturities of ninety days or less at the time of purchase, primarily U.S. Treasury Bills and money market
funds. The University classifies its investment in The Illinois Funds as a deposit for financial statement
purposes.
Allowance for uncollectibles
The University provides allowances for uncollectible accounts and notes receivable based upon
management's best estimate of uncollectible accounts and notes at the statement of net assets date,
considering type, age, collection history of receivables, and any other factors as considered appropriate.
The University’s accounts receivable and notes receivable are reported net of allowances of $14,122,939
and $2,749,831, respectively, at June 30, 2011, compared to allowances of $12,655,420 and $2,575,247,
respectively, at June 30, 2010.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or market with the exception of the
Textbook Rental Service at the Edwardsville campus. The rental books are recorded net of depreciation
with the related expense reported as operating expense.
Capital assets
Capital assets are recorded at cost at the date of acquisition or fair market value at the date of donation in
the case of gifts. The University’s capitalization policy for capital assets is as follows: infrastructure
$1,000,000 or greater; buildings $100,000 or greater; intangible assets $100,000 or greater; site or
building improvements $25,000 or greater; and equipment and library books $5,000 or greater.
Renovations to buildings that significantly increase the value or extend the useful life of the asset are
capitalized. Routine repairs and maintenance are charged to operating expense in the year incurred.
Depreciation is computed using the straight-line method over the estimated useful lives of the assets,
generally 40 years for buildings, 20 years for infrastructure, 15 years for site or building improvements,
and seven to 20 years for intangible assets. Vehicles and electronic data processing equipment are
depreciated over five years. Other equipment and books are depreciated over seven years. Land, works
of art, and historical treasures are not depreciated. The “following-month” prorate convention is used, in
which no depreciation is recorded in the month of acquisition and an entire month of depreciation is
recorded in the month of disposition.
Revenue and expense recognition
In accordance with GASB Statement No. 24, Accounting and Financial Reporting for Certain Grants and
Other Financial Assistance, the University reported on-behalf payments of $191,169,767 for fiscal year
2011 for health care and retirement costs, compared to $178,405,918 for fiscal year 2010. These costs
are reflected in the Statement of Revenues, Expenses and Changes in Net Assets as nonoperating
revenues entitled “Payments on behalf of the University” and as operating expenses under the
appropriate functional classifications.
18
NOTE 2 - Significant accounting policies (continued)
Substantially all employees participate in group health insurance plans administered by the State of
Illinois. The employer contributions to these plans for University employees paid from State
appropriations and auxiliary enterprises are paid by the State on behalf of the University. On-behalf
payments for health care costs totaled $112,954,554 for the year ended June 30, 2011, and $107,143,151
for the year ended June 30, 2010. The employer contributions to these plans for employees paid from
other University held funds are paid by the University. On behalf-payments of $78,215,213 for the year
ended June 30, 2011, were made for retirement costs, compared to $71,262,767 for the year ended June
30, 2010.
Classification of revenues and expenses
The University has classified its revenues and expenses as either operating or nonoperating as follows:
Operating: Operating revenues and expenses include activities that have the characteristics of exchange
transactions, such as student tuition and fees, sales and services of educational departments, sales and
services of auxiliary enterprises, and most grants and contracts. The majority of the University’s expenses
are operating expenses.
Nonoperating: Nonoperating revenues and expenses include activities that have the characteristics of
nonexchange transactions, such as gifts and contributions, and other sources and uses that are defined as
nonoperating by GASB Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust
Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB Statement No. 34,
Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local
Governments, such as state appropriations, investment income, and federal student aid programs.
Appropriations made to the University from the State of Illinois General Revenue Fund are recognized as
nonoperating revenues in the year appropriated to the extent expended. Other nonoperating revenues and
expenses include transactions relating to capital and financing activities, noncapital financing activities, and
investing activities.
Tuition and fees are generally recognized as revenues as they are assessed. The portion of summer
session tuition and fees applicable to the following fiscal year is deferred.
The University first applies restricted net assets when an expense is incurred for purposes for which both
restricted and unrestricted net assets are available.
Restricted grant revenues from external sources are recognized to the extent of related expenditures on
the accrual basis.
Compensated absences
Accrued compensated absences for University personnel are charged to current funds based on earned
but unused vacation and sick leave days including the University's share of Social Security and Medicare
taxes. At June 30, 2011, the University estimates $35,585,279 will be paid from state appropriated
accounts funded by the State of Illinois General Revenue Fund and the Income Fund, and $14,016,620
from local funds in subsequent years for a combined total of $49,601,899. This compares to $37,133,051
from state accounts and $13,898,406 from local funds, totaling $51,031,457, at June 30, 2010.
19
NOTE 2 - Significant accounting policies (continued)
New Governmental Accounting Standards
The Governmental Accounting Standards Board (GASB) has issued the following statements which are
effective for periods beginning July 1, 2010, or later which may impact the University:
Statement No. 54 – Fund Balance Reporting and Governmental Fund Type Definitions, enhances the
usefulness of fund balance information by providing clearer fund balance classifications and clarifies the
existing governmental fund type definitions. The statement is effective for the period beginning July 1,
2010. It did not impact the University.
Statement No. 57 – OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, amends
Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other
Than Pensions, to permit an agent employer that has an individual-employer OPEB plan with fewer than
100 total plan members to use the alternative measurement method. The Statement also amends a
Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans,
requirement that a defined benefit OPEB plan obtain an actuarial valuation. The statement is effective for
periods beginning after June 15, 2011. It will not impact the University.
Statement No. 59 – Financial Instruments Omnibus, updates and improves existing standards regarding
financial reporting and disclosure requirement of certain financial instruments and external investment
pools. The statement is effective for periods beginning after June 15, 2010. It did not impact the
University.
Statement No. 60 – Accounting and Financial Reporting for Service Concession Arrangements, applies to
public-private partnerships in which the public institution retains specific control criteria. The standard
generally applies to arrangements to provide services through the use of infrastructure or another public
asset, such as a facility. The statement is effective for periods beginning after December 15, 2011. The
impact on the University will be reviewed.
Statement No. 61 – The Financial Reporting Entity: Omnibus, which amends the requirements of
Statements No. 14, The Financial Reporting Entity, and No. 34, Basic Financial Statements-and
Management’s Discussion and Analysis-for State and Local Governments. The primary significance to
public Universities is that Statement 61 amends the criteria for blending, or reporting component units as
if they were part of the primary governments. The statement is effective for periods beginning after June
15, 2012. It is not expected to impact the University.
Statement No. 62 – Codification of Accounting and Financial Reporting Guidance Contained in Pre-
November 30, 1989, FASB and AICPA Pronouncements, incorporates guidance that previously could only
be found in certain FASB and American Institute of Certified Public Accountants (AICPA) pronouncements.
The standard supersedes GASB Statement No. 20, Accounting and Financial Reporting for Proprietary
Funds and Other Governmental Entities That Use Proprietary Fund Accounting. The statement is effective
for periods beginning after December 15, 2011. The impact on the University will be reviewed.
Statement No. 63 – Financial Reporting of Deferred Outflow of Resources, Deferred Inflows of Resources,
and Net Position, addresses how to report elements of financial statements that are deferrals. The
statement clarifies that amounts that are required to be reported as deferred outflows or inflows of
resources should be reported in a separate section in a statement of net assets. The statement is effective
for periods beginning after December 15, 2011. The impact on the University will be reviewed.
20
NOTE 2 - Significant accounting policies (continued)
Statement No. 64 – Derivative Instruments: Application of Hedge Accounting Termination Provisions,
provides guidance for circumstances in which hedge accounting continues to be applied when a swap
counterparty, or a swap counterparty’s credit support provider, is replaced. The statement is effective for
periods beginning after June 15, 2011. It is not expected to impact the University.
NOTE 3 - Cash, deposits and cash equivalents
At June 30, 2011, the actual bank balances related to the deposits of the University amounted to
$109,521,823; all such balances were covered by federal depository insurance or collateral held by an
agent in the University’s name. The actual bank balances at June 30, 2010, were $94,745,106.
Cash, deposits and cash equivalents at June 30, 2011 and 2010 are as follows:
2011 2010
UNIVERSITY:
Cash and cash equivalents $ 9,620,219 $ 2,687,556
The Il l inoi s Funds 88,631,709 78,978,112
Total cash and cash equivalents $ 98,251,928 $ 81,665,668
UNIVERSITY RELATED ORGANIZATIONS:
Total cash and cash equivalents $ 10,718,878 $ 6,688,591
NOTE 4 – Investments
University investment policy
It is University policy to invest funds in a manner which will provide investment returns and security
consistent with good business practices, while meeting the daily cash flow demands of the University and
conforming to all statutes governing the investments of funds. Funds are invested in accordance with the
provisions of the Illinois Compiled Statutes, Chapter 30, Sections 235/0.01 – 235/8, the Public Funds
Investment Act; the policies of the Board; and covenants provided from the University’s bond and
certificate of participation issuance activities. The University’s Investment Policy authorizes the University
to invest in securities of the United States of America, its agencies, and its instrumentalities; interest
bearing savings accounts, certificates of deposit, interest bearing time deposits, and other direct
obligations of any bank defined in the Illinois Banking Act; certain short term obligations of U.S.
corporations rated in the highest three rating classification by at least two standard rating services
provided such obligations do not mature in longer than 270 days from the time of purchase and the
issuing entity has at least $500 million in assets (limited to 33 percent of the portfolio); money market
mutual funds provided they are comprised of only U.S. Treasuries, agencies and instrumentalities; Public
Treasurer’s Investment Pool-State Treasurer’s Office; repurchase agreements of Government securities;
and other specifically defined repurchase agreements.
The three basic objectives of the University’s investment policy are safety of invested funds; maintenance
of sufficient liquidity to meet cash flow needs; and attainment of the maximum investment returns
possible consistent with the first two objectives. The University insures the safety of its invested funds by
limiting credit and interest rate risks. The University’s portfolio is structured to ensure that cash is
available to meet anticipated demands. Additionally, since all possible cash demands cannot be
anticipated, the portfolio consists largely of securities with active secondary or resale markets. The
investment returns on the University’s portfolio is a priority after the safety and liquidity objectives have
21
NOTE 4 – Investments (continued)
been met. Investments are limited to relatively low risk securities in anticipation of earning a fair return
relative to the risk being assumed.
University investments
Investments are reported at fair value. The fair value is determined to be the amount, usually quoted
market prices, at which financial instruments could be exchanged in a current transaction between willing
partners. The investment with the Public Treasurer’s Investment Pool-State Treasurer’s Office is at fair
value, which is the same value as the pool shares. State statutes require the Illinois Funds to comply with
the Illinois Public Funds Investment Act (30 ILCS 235). Also, certain money market investments having a
remaining maturity of one year or less at time of purchase and non-negotiable certificates of deposit with
redemption terms that do not consider market rates are carried at amortized cost.
The calculation of realized gains is independent of the calculation of the net increase in the fair value of
investments. Realized gains and losses on investments that had been held in more than one fiscal year
and sold in the current year may have been recognized as an increase or decrease in the fair value of
investments reported in the prior year. The University has pooled its operating cash for investment
purposes to provide for efficiencies and economies in their management. Proceeds related to revenue
bond and certificate of participation financing activities are pooled to the extent allowed under the
covenants. Investment income earned on the operating cash and investments, including realized gains
and losses resulting from the sale or other disposition of investments, is distributed on a quarterly basis to
the pooled participants based upon their respective average balances over the prior three-month period.
Western Asset Management manages the external portfolio, and JPMorgan Chase keeps custody of these
funds and assists in the accounting and reporting functions related to these investments. The funds are
allocated into an Intermediate Maturity Portfolio.
Investment income net of realized and unrealized gains and losses on investments for the years ended June
30, 2011 and 2010 are reflected below:
2011 2010
UNIVERSITY:
Interest earnings and realized
gain on inves tments $ 3,469,843 $ 6,250,984
Unreal i zed los s on inves tments (55,297) (67,588)
Net inves tment income $ 3,414,546 $ 6,183,396
UNIVERSITY RELATED ORGANIZATIONS:
Interest earnings and realized
gain on inves tments $ 13,931,006 $ 7,944,028
Unreal i zed gain on inves tments 14,427,551 9,910,759
Net inves tment income $ 28,358,557 $ 17,854,787
22
NOTE 4 – Investments (continued)
University risk disclosures
Credit risk: Credit risk is the risk of loss due to the failure of the security issuer or backer to meet promised
interest or principal payments on required dates. Credit risk is mitigated by limiting investments to those
specified in the Illinois Public Funds Investment Act, which prohibits investment in corporate bonds with
maturity dates longer than 270 days from the date of purchase; pre-qualifying the financial institutions
which are utilized; and diversifying the investment portfolio so that the failure of any one issue or backer
will not place an undue financial burden on the University. U.S. Treasuries are federal government
securities that do not require the disclosure of credit risk. The U.S. agencies investments typically include
the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the
Federal Home Loan Bank, all of which are rated AAA. The Public Treasurer’s Investment Pool is also rated
AAA.
Concentration of credit risk: The University’s investment policy states that the portfolio should consist of
a mix of various types of securities, issues and maturities. While the fund’s asset allocation strategy
provides diversification by fixed income sector, each portfolio within the sector is also broadly diversified
by security type, issue and maturity.
Custodial credit risk: Custodial credit risk is the risk that when, in the event a financial institution or
counterparty fails, the University would not be able to recover value of deposits, investments or collateral
securities that are in the possession of an outside party. All of the University’s investments are held in the
University’s name and are not subject to creditors of the custodial institution.
Interest rate risk: Interest rate risk is the risk that the market value of portfolio securities will fall or rise
due to changes in general interest rates. Interest rate risk is mitigated by maintaining significant balances
in cash equivalent and other short maturity investments and by establishing an asset allocation policy that
is consistent with the expected cash flows of the University. The internally managed portfolio is managed
in accordance with covenants provided from the University’s debt issuance activities. The externally
managed portfolio is typically allocated with a minimum of $40 million held in cash equivalents and $65 to
$115 million held in the intermediate term portfolio. However, circumstances may occur that cause the
allocations to temporarily fall outside the prescribed ranges.
Foreign currency risk: The University does not hold any foreign investments.
University Related Organizations investments
As the investments of the University’s two Foundations are considered material to the University’s
financial statements taken as a whole, the following disclosures are made:
Southern Illinois University Foundation (at Carbondale)
The Foundation financial statements follow Financial Accounting Standards Board (FASB) standards;
therefore, the required disclosures differ from GASB requirements. Investments are stated at fair value as
determined under FASB Accounting Standards Codification ASC 820: Fair Value Measurements and
Disclosures (previously SFAS No. 124, Accounting for Certain Investments Held by Not-for-Profit
Organizations), and are recorded on the trade date. The fair value of all debt and equity securities with a
readily determinable fair value are based on quotations obtained from national securities exchanges. The
alternative investments (hedge funds, limited partnerships and other private equity) for which quoted
market prices are not available, are carried at estimated fair market values as provided by the external
general partners or investment managers and/or audited financial statements of the fund or partnership.
Such values may be based on a variety of estimates and assumptions requiring various degrees of
judgment and may be subject to volatility in market conditions and the possibility that their value could
substantially change in the near term and/or be materially different than the values reported in the
23
NOTE 4 – Investments (continued)
statement of financial position. Management of the Foundation believes that the carrying amounts of
these financial instruments are a reasonable estimate of fair value. Realized gains and losses on sales of
investments are determined on the specific identification basis.
Investment securities are exposed to various risks including, but not limited to, interest rate and market
and credit risks. Due to the level of risks associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will occur in the near term.
Because the hedge funds and limited partnerships are not readily marketable, their estimated fair value is
subject to uncertainty and therefore may differ significantly from the values that would have been used
had a ready market existed.
Life insurance policies are carried at net cash surrender value. Changes in fair value (realized and
unrealized) are recorded in the statement of activities.
The Foundation measures fair value using a three-level hierarchy for fair value measurements based upon
the transparency of inputs to the valuation of an asset or liability. The objective of a fair value
measurement is to determine the price that would be received to sell an asset or paid to transfer a
liability in an order transaction between market participants at the measurement date (an exit price).
Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The Foundation may use valuation techniques consistent with the market, income and cost approaches to
measure fair value.
Custodial credit risk is the risk that, in the event of a bank failure, the Foundation’s deposits may not be
returned to the Foundation. The Foundation has a policy to require banks to collateralize balances over
the FDIC insured amount. As of June 30, 2011 and June 30, 2010, the entire amount of funds held at the
banks were either insured or collateralized by pledged bank assets in the Foundation’s name.
Southern Illinois University at Edwardsville Foundation
It is Foundation policy to invest funds in a manner which will provide investment returns and security
consistent with good business practices, while meeting the daily cash flow demands of the Foundation.
Funds are invested in accordance with the approved Board policy for investments. The Foundation’s
investment policy authorizes the Foundation to invest in securities of the U.S. government or its agencies,
banker’s acceptances, certificates of deposit, interest bearing savings accounts, interest bearing time
deposits, and other direct obligations of any bank defined in the Illinois Banking Act. The Foundation’s
policy also authorizes additional types of investments in corporate debt securities, open and closed end
mutual funds, and common and preferred stocks subject to United States’ securities regulation and
enforcement.
The Foundation has specific investment objectives based on the type of investment. For student
assistance endowments and quasi-endowments, the main objective of the investment policy is
maintenance of the purchasing power of the assets in perpetuity. For general endowments and quasi-endowments,
the main objective is maximizing total return on assets. For charitable gift annuity funds,
the main objective is to generate sufficient cash flow to meet the financial commitments to the
annuitants while obtaining a total investment return that provides for a residual balance of at least 50
percent of the original gift amount at the termination of the agreement. The investment policy has an
24
NOTE 4 – Investments (continued)
overall return objective to preserve the inflation adjusted value of the funds and to maximize total return
net of investment expense.
Credit risk: Credit risk is mitigated by limiting investments to those specified in the Board approved policy
and diversifying the investment portfolio so that the failure of any one issuer or backer will not place an
undue financial burden on the Foundation. Board policy requires investments in fixed income securities or
corporate securities to be purchased or retained only if the security is A2 or higher by Moody’s Investor
Service or is rated A or higher by Standard and Poor’s Corporation (S&P), Fitch Investors Service or Duffs &
Phelps Credit Rating Co. Commercial paper, money markets, and banker’s acceptances must be rated at
least Prime-1 by Moody’s or at least A1 by S&P. U.S. Treasuries are federal government securities that do
not require the disclosure of credit risk. The U.S. agencies investments include the Federal Home Loan
Mortgage Corporation and the Federal Home Loan Bank, all rated AAA and Aaa by S&P and Moody’s,
respectively.
Concentration of credit risk: Concentration of credit risk is the risk of loss attributable to the magnitude of
investment in a single issuer. The Foundation’s investment policy encourages diversification and prohibits
investments of five percent or more of total investments in any one issuer.
Custodial credit risk: Custodial credit risk is the risk that, in the event of the failure of the counterparty,
the Foundation will not be able to recover the value of its investments that are in the possession of an
outside party. The investment custodians hold these investments in their name for the benefit of the
Foundation. The Foundation’s investments are managed by three separate investment firms, each
offering SIPC protection up to $500,000.
Interest rate risk: The Foundation does not maintain a policy that limits investment maturities in regards
to interest rate risk; however, its overall risk management requires sound investment decisions and
diversification of overall risk.
Foreign currency risk: The Foundation had no investment in common stocks of foreign companies at June
30, 2011. The Foundation’s policy related to foreign currency risk is that no purchase of a foreign equity
may be made if such purchase would cause the total value of foreign equity assets to exceed the lesser of
ten percent of the total or 25 percent of the equity portion of the endowment portfolio.
Investment policies and relevant risk disclosures as described in GASB Statement No. 40 applicable to the
other University Related Organizations can be obtained by contacting those entities listed in Note 1 on
page 15.
25
NOTE 4 – Investments (continued)
Investment maturities
Interest rate risk is disclosed below using the segmented time distribution method. As of June 30, 2011
and 2010, the University had the following investment balances:
UNIVERSITY:
No
Investment Type: Fair Value Less Than 1 1-5 6-10 Maturity
U.S. Treasuries $ 45,230,472 $ 5,834,621 $ 30,155,248 $ 9,240,603 $ -
U.S. Agencies 70,185,114 8,446,763 50,162,527 11,575,824 -
The Il l inoi s Funds 88,631,709 88,631,709 - - -
Common Stock 44,300 - - - 44,300
Subtotal 204,091,595 $ 102,913,093 $ 80,317,775 $ 20,816,427 $ 44,300
Less: Investment in The
Il l inoi s Funds reported as cash (88,631,709)
Total Investments $ 115,459,886
UNIVERSITY:
No
Investment Type: Fair Value Less Than 1 1-5 6-10 Maturity
U.S. Treasuries $ 50,965,296 $ 18,710,871 $ 23,927,379 $ 8,327,046 $ -
U.S. Agencies 68,701,145 3,152,477 49,267,463 16,281,205 -
The Il l inoi s Funds 78,978,112 78,978,112 - - -
Common Stock 44,300 - - - 44,300
Subtotal 198,688,853 $ 100,841,460 $ 73,194,842 $ 24,608,251 $ 44,300
Less: Investment in The
Il l inoi s Funds reported as cash (78,978,112)
Total Investments $ 119,710,741
Investment Maturities (in Years)
Investment Maturities (in Years)
AS OF JUNE 30, 2011
AS OF JUNE 30, 2010
26
NOTE 4 – Investments (continued)
Investment maturities
Interest rate risk is disclosed below using the segmented time distribution method. As of June 30, 2011
and 2010, the University Related Organizations had the following investment balances:
UNIVERSITY RELATED
ORGANIZATIONS:
Investment Type: Fair Value Less Than 1 1-5 6-10 No Maturity
Municipal Bonds $ 288,911 $ - $ 206,575 $ 82,336 $ -
Common Stock 200,675 - - - 200,675
Certi ficates of Depos i t 8,392,224 1,790,984 6,576,327 24,913 -
Foreign Equi ty Securi ties 20,758,113 20,758,113 - - -
Corporate Equi ty Securi ties 330,135 - 265,988 64,147 -
Hedge Funds 5,434,086 3,570,379 1,863,707 - -
Private Equi ty 4,291,328 4,291,328 - - -
Money Market Funds wi th Brokers 2,754,297 2,754,297 - - -
Mutual Funds 125,222,128 125,222,128 - - -
Total Investments $ 167,671,897 $ 158,387,229 $ 8,912,597 $ 171,396 $ 200,675
UNIVERSITY RELATED
ORGANIZATIONS:
More
Investment Type: Fair Value Less Than 1 1-5 6-10 Than 10
U.S. Agencies $ 155,381 $ - $ 155,381 $ - $ -
Certi ficates of Depos i t 10,298,904 2,416,863 7,882,041 - -
Foreign Equi ty Securi ties 14,831,025 14,831,025 - - -
Corporate Equi ty Securi ties 125,494 - - - 125,494
Hedge Funds 5,164,777 5,164,777 - - -
Private Equi ty 2,915,359 1,263,592 1,651,767 - -
Money Market Funds wi th Brokers 1,789,426 1,789,426 - - -
Mutual Funds 104,897,539 104,897,539 - - -
Total Investments $ 140,177,905 $ 130,363,222 $ 9,689,189 $ - $ 125,494
Investment Maturities (in Years)
Investment Maturities (in Years)
AS OF JUNE 30, 2010
AS OF JUNE 30, 2011
27
NOTE 5 - Accounts and notes receivable
Accounts and notes receivable consisted of the following at June 30, 2011 and 2010:
UNIVERSITY:
Accounts Notes Accounts Notes
Receivable Receivable Receivable Receivable
Student tui tion and fees $ 16,499,626 $ - $ 14,090,112 $ -
Auxi l iary enterpri ses 10,703,293 - 9,349,550 -
Grants and contracts 19,832,477 - 22,899,212 -
General operating 27,323,351 - 16,397,267 -
Student loans 94,699 20,576,969 73,322 21,271,919
Plant funds 190,178 153,232 44,916 153,231
Other accounts receivable 348,413 - 1,050,443 -
74,992,037 20,730,201 63,904,822 21,425,150
Les s : Al lowance for doubtful accounts (14,122,939) (2,749,831) (12,655,420) (2,575,247)
Net receivable $ 60,869,098 $ 17,980,370 $ 51,249,402 $ 18,849,903
UNIVERSITY RELATED ORGANIZATIONS:
Accounts Notes Accounts Notes
Receivable Receivable Receivable Receivable
Accounts receivable $ 67,141,074 $ - $ 47,413,930 $ -
Student loans - 66,538 - 80,266
67,141,074 66,538 47,413,930 80,266
Less: Allowances for assignment
los ses & doubtful accounts (38,382,811) - (32,359,287) -
Net receivable $ 28,758,263 $ 66,538 $ 15,054,643 $ 80,266
2011 2010
2011 2010
During fiscal year 2003, Southern Illinois University entered into a contract for deed agreement with
Equipping the Saints Ministry, International, Inc. for the sale of the Auburn Clinic building in Auburn,
Illinois. The contract was in the amount of $240,000 at an interest rate of 4%, to be paid over a term of
ten years in eighteen semi-annual installments of $9,000, including interest, beginning June 19, 2003, with
a final installment of $124,790 due on December 19, 2011. A down payment of $24,000 was paid upon
signing of the contract. As of June 30, 2011, the outstanding balance of the note was $146,768, compared
to $153,231 at June 30, 2010. Subsequently, the balance was paid in full on September 8, 2011.
28
NOTE 6 - Capital assets
Capital asset activity for the University for the fiscal year ended June 30, 2011 was as follows:
UNIVERSITY:
Beginning Ending
Balance Additions Deletions Transfers Balance
Capital assets not being depreciated:
Land $ 21,544,339 $ - $ - $ - $ 21,544,339
Nondepreciable historical treasures
and works of art 10,273,961 568,929 - - 10,842,890
Construction in progress 87,679,757 5 3,636,719 1 05,093 ( 85,689,083) 55,522,300
Total capital assets not
being depreciated 119,498,057 5 4,205,648 1 05,093 ( 85,689,083) 87,909,529
Capital assets being depreciated:
Site improvements 59,671,889 631,558 1,074,348 2,539,242 61,768,341
Buildings 914,366,031 1 ,247,791 3,038,375 83,149,841 995,725,288
Equipment 320,320,107 1 6,100,597 7,371,711 - 329,048,993
Intangible assets 6,905,597 435,190 - - 7,340,787
Infrastructure 8,607,727 - - - 8,607,727
Total capital assets
being depreciated 1,309,871,351 1 8,415,136 11,484,434 85,689,083 1,402,491,136
Less accumulated depreciation for:
Site improvements 36,197,349 2 ,199,885 1,074,348 - 37,322,886
Buildings 428,797,057 2 4,969,056 3,038,376 - 450,727,737
Equipment 266,106,569 1 6,133,683 6,751,500 - 275,488,752
Intangible assets 9 83,709 831,640 - - 1,815,349
Infrastructure 8,607,727 - - - 8,607,727
Total accumulated depreciation 740,692,411 4 4,134,264 10,864,224 - 773,962,451
Total capital assets being
depreciated, net 569,178,940 (25,719,128) 6 20,210 85,689,083 628,528,685
Capital assets, net $ 688,676,997 $ 28,486,520 $ 7 25,303 $ - $ 716,438,214
29
NOTE 6 - Capital assets (continued)
Capital asset activity for the University for the fiscal year ended June 30, 2010 was as follows:
UNIVERSITY:
Beginning Ending
Balance Additions Deletions Transfers Balance
Capital assets not being depreciated:
Land $ 21,544,339 $ - $ - $ - $ 21,544,339
Nondepreciable historical treasures
and works of art 9,518,111 755,850 - - 10,273,961
Construction in progress 62,753,099 6 1,155,287 9 19,080 ( 35,309,549) 87,679,757
Total capital assets not
being depreciated 93,815,549 6 1,911,137 9 19,080 ( 35,309,549) 119,498,057
Capital assets being depreciated:
Site improvements 52,218,198 1 ,507,589 - 5,946,102 59,671,889
Buildings 875,807,438 1 0,451,687 5 03,126 28,610,032 914,366,031
Equipment 317,818,011 1 3,058,026 4,424,585 ( 6,131,345) 320,320,107
Intangible assets - 20,837 - 6,884,760 6,905,597
Infrastructure 8,607,727 - - - 8,607,727
Total capital assets
being depreciated 1,254,451,374 2 5,038,139 4,927,711 35,309,549 1,309,871,351
Less accumulated depreciation for:
Site improvements 34,401,643 1 ,795,803 97 - 36,197,349
Buildings 407,697,430 2 1,477,996 3 78,369 - 428,797,057
Equipment 253,981,613 1 6,535,853 4,160,012 (250,885) 266,106,569
Intangible assets - 732,824 - 2 50,885 9 83,709
Infrastructure 8,607,727 - - - 8,607,727
Total accumulated depreciation 704,688,413 4 0,542,476 4,538,478 - 740,692,411
Total capital assets being
depreciated, net 549,762,961 (15,504,337) 3 89,233 35,309,549 569,178,940
Capital assets, net $ 643,578,510 $ 46,406,800 $ 1,308,313 $ - $ 688,676,997
30
NOTE 6 - Capital assets (continued)
Capital asset activity for the University Related Organizations for the fiscal years ended June 30, 2011 and
2010 was as follows:
UNIVERSITY RELATED
ORGANIZATIONS:
Beginning Ending
Balance Additions Deletions Balance
Capital assets not being depreciated:
Land $ 3 15,672 $ - $ - $ 3 15,672
Total capital assets not being depreciated 3 15,672 - - 3 15,672
Capital assets being depreciated:
Site improvements 3 15,630 - - 3 15,630
Buildings 4,271,676 - - 4,271,676
Equipment 4,171,511 291,288 2 ,558 4,460,241
Total capital assets being depreciated 8,758,817 291,288 2 ,558 9,047,547
Less accumulated depreciation for:
Site improvements 1 39,559 31,402 - 1 70,961
Buildings 7 95,459 120,147 - 9 15,606
Equipment 2,241,348 434,462 2 ,558 2,673,252
Total accumulated depreciation 3,176,366 586,011 2 ,558 3,759,819
Total capital assets being depreciated, net 5,582,451 ( 294,723) - 5,287,728
Capital assets, net $ 5,898,123 $ ( 294,723) $ - $ 5,603,400
UNIVERSITY RELATED
ORGANIZATIONS:
Beginning Ending
Balance Additions Deletions Balance
Capital assets not being depreciated:
Land $ 3 15,672 $ - $ - $ 3 15,672
Total capital assets not being depreciated 3 15,672 - - 3 15,672
Capital assets being depreciated:
Site improvements 3 15,630 - - 3 15,630
Buildings 4,271,676 - - 4,271,676
Equipment 4,008,054 295,948 1 32,491 4,171,511
Total capital assets being depreciated 8,595,360 295,948 1 32,491 8,758,817
Less accumulated depreciation for:
Site improvements 1 08,158 31,401 - 1 39,559
Buildings 6 75,313 120,146 - 7 95,459
Equipment 1,766,216 534,030 5 8,898 2,241,348
Total accumulated depreciation 2,549,687 685,577 5 8,898 3,176,366
Total capital assets being depreciated, net 6,045,673 ( 389,629) 7 3,593 5,582,451
Capital assets, net $ 6,361,345 $ ( 389,629) $ 7 3,593 $ 5,898,123
2011
2010
31
NOTE 7 – Changes in liabilities
Liability activity for the years ended June 30, 2011 and 2010 is as follows:
UNIVERSITY:
Beginning Ending Current
Balance Additions Reductions Balance Portion
Compensated absences $ 51,031,457 $ 3,226,114 $ 4,655,672 $ 49,601,899 $ 3 ,735,380
Revenue bonds payable 2 97,273,024 4,475,452 16,260,749 2 85,487,727 1 6,370,048
Certificates of participation 2 2,857,825 - 2,871,092 1 9,986,733 2 ,100,784
Capitalized leases 233,722 2 26,761 2 50,858 209,625 122,595
Self insurance 1 8,829,390 11,347,694 11,747,100 1 8,429,984 1 2,846,252
Federal loan programs refundable 1 7,266,223 5 ,370 - 1 7,271,593 -
Due to related organizations 35,948 - 2 8,600 7,348 7,348
Other accrued liabilities 121,965 - 1 21,965 - -
Housing deposits 287,550 2 84,623 2 59,573 312,600 140,670
Total long-term liabilities $ 407,937,104 $ 19,566,014 $ 36,195,609 $ 391,307,509 $ 35,323,077
UNIVERSITY RELATED ORGANIZATIONS:
Beginning Ending Current
Balance Additions Reductions Balance Portion
Annuities payable $ 4 ,468,907 $ 3 43,464 $ 5 24,409 $ 4 ,287,962 $ 541,789
Other accrued liabilities 2 ,419,760 2 7,683 - 2 ,447,443 -
Deposits held in custody for others 1 ,973,377 4 99,521 8 3,393 2 ,389,505 93,879
Total long-term liabilities $ 8 ,862,044 $ 8 70,668 $ 6 07,802 $ 9 ,124,910 $ 635,668
UNIVERSITY:
Beginning Ending Current
Balance Additions Reductions Balance Portion
Compensated absences $ 50,103,042 $ 4,151,523 $ 3,223,108 $ 51,031,457 $ 3 ,709,319
Revenue bonds payable 3 06,079,620 4,457,420 13,264,016 2 97,273,024 1 5,972,630
Certificates of participation 2 5,624,191 - 2,766,366 2 2,857,825 2 ,871,092
Capitalized leases 417,516 1 00,700 2 84,494 233,722 170,312
Self insurance 1 7,727,828 18,111,678 17,010,116 1 8,829,390 1 2,272,432
Federal loan programs refundable 1 7,243,772 2 2,451 - 1 7,266,223 -
Due to related organizations 54,109 - 1 8,161 35,948 35,948
Other accrued liabilities 134,703 - 1 2,738 121,965 -
Housing deposits 293,325 1 60,894 1 66,669 287,550 129,397
Total long-term liabilities $ 417,678,106 $ 27,004,666 $ 36,745,668 $ 407,937,104 $ 35,161,130
UNIVERSITY RELATED ORGANIZATIONS:
Beginning Ending Current
Balance Additions Reductions Balance Portion
Notes payable $ 1 ,100,000 $ - $ 1,100,000 $ - $ -
Annuities payable 4 ,512,458 5 48,226 5 91,777 4 ,468,907 591,777
Other accrued liabilities 2 ,387,206 3 2,554 - 2 ,419,760 -
Deposits held in custody for others 2 ,984,316 1 97,833 1,208,772 1 ,973,377 61,746
Total long-term liabilities $ 10,983,980 $ 7 78,613 $ 2,900,549 $ 8 ,862,044 $ 653,523
2010
2011
32
NOTE 8 - Revenue bonds payable
Revenue bonds payable activity for the years ended June 30, 2011 and 2010 is as follows:
UNIVERSITY:
Annual Principal
Maturity Beginning Accretion/ Paid/Debt Ending Current
Series To Balance New Debt Refunded Balance Portion
1993A 2018 $ 24,144,934 $ 1,448,476 $ 3,435,000 $ 22,158,410 $ 3,430,000
1997A 2018 19,398,036 1,060,357 3 ,125,000 17,333,393 3 ,105,000
1999A 2029 35,240,356 1,966,619 390,000 36,816,975 395,000
2001A 2017 6,190,000 - 1 ,455,000 4,735,000 1 ,465,000
2003A 2029 7,230,000 - 255,000 6,975,000 265,000
2004A 2035 36,905,000 - 920,000 35,985,000 950,000
2005 2026 18,125,000 - 825,000 17,300,000 885,000
2006A 2036 62,865,000 - 2 ,850,000 60,015,000 2 ,995,000
2008A 2028 29,090,000 - 845,000 28,245,000 975,000
2009A 2030 53,735,000 - 2 ,020,000 51,715,000 2 ,055,000
$ 292,923,326 $ 4,475,452 $ 16,120,000 281,278,778 1 6,520,000
Unaccreted appreciation ( 288,660)
Unamortized debt premium 5,569,400 314,520
Unamortized loss on refunding ( 1,360,451) ( 175,812)
Total $ 285,487,727 $ 16,370,048
UNIVERSITY:
Annual Principal
Maturity Beginning Accretion/ Paid/Debt Ending Current
Series To Balance New Debt Refunded Balance Portion
1993A 2018 $ 22,732,311 $ 1,412,623 $ - $ 24,144,934 $ 3,435,000
1997A 2018 21,309,052 1,163,984 3 ,075,000 19,398,036 3 ,125,000
1999A 2029 33,729,543 1,880,813 370,000 35,240,356 390,000
2000A 2010 3 10,000 - 310,000 - -
2001A 2017 7,580,000 - 1 ,390,000 6,190,000 1 ,455,000
2003A 2029 10,675,000 - 3 ,445,000 7,230,000 255,000
2004A 2035 37,800,000 - 895,000 36,905,000 920,000
2005 2026 18,890,000 - 765,000 18,125,000 825,000
2006A 2036 65,295,000 - 2 ,430,000 62,865,000 2 ,850,000
2008A 2028 29,600,000 - 510,000 29,090,000 845,000
2009A 2030 53,735,000 - - 53,735,000 2 ,020,000
$ 301,655,906 $ 4,457,420 $ 13,190,000 292,923,326 1 6,120,000
Unaccreted appreciation ( 288,118)
Unamortized debt premium 5,885,961 316,560
Unamortized loss on refunding ( 1,536,263) ( 175,812)
Total $ 297,273,024 $ 15,972,630
2010
2011
33
NOTE 8 - Revenue bonds payable (continued)
University revenue bonds payable:
The Housing and Auxiliary Facilities System Bonds, Series 1993A were authorized by the University's Board
under the Third Supplemental Bond Resolution dated May 13, 1993. The bonds mature at varying
amounts from 2011 to 2018 and pay no current interest. Interest ranges from 6.05 to 6.20 percent,
approximate yield to maturity. The University records the annual increase in the principal amount of
these bonds as interest expense and accretion on bonds payable.
The Housing and Auxiliary System Bonds, Series 1997A were authorized by the Board under the Fifth
Supplemental Bond Resolution dated July 10, 1997. The bonds were issued as current interest and capital
appreciation bonds. The current interest bonds mature at varying amounts from 1998 to 2009 with
interest ranging from 5.52 to 5.74 percent. Interest payments are due semi-annually. The capital
appreciation bonds mature at varying amounts from 1998 to 2018 with approximate yield to maturity
ranges from 4.10 to 5.74 percent. They pay no current interest. The University records the annual increase
in principal amount of these bonds as interest expense and accretion on bonds payable.
The Housing and Auxiliary Facilities System Bonds, Series 1999A were authorized by the University's Board
under the Sixth Supplemental Bond Resolution dated May 13, 1999. The bonds mature at varying
amounts from 2001 to 2029 with interest ranging from 4.10 to 5.55 percent. They pay no current interest.
The University records the annual increase in the principal amount of these bonds as interest expense and
accretion on bonds payable.
The Housing and Auxiliary Facilities System Bonds, Series 2001A were authorized by the University’s Board
under the Eighth Supplemental Bond Resolution dated July 12, 2001, as amended on December 11, 2003.
The bonds mature at varying amounts from 2002 to 2017 with interest ranging from 4.00 to 5.50 percent.
Interest payments are due semi-annually.
The Housing and Auxiliary Facilities System Bonds, Series 2003A were authorized by the University’s Board
under the Ninth Supplemental Bond Resolution dated December 12, 2002. The bonds mature at varying
amounts from 2004 to 2029 with interest ranging from 1.15 to 4.85 percent. Interest payments are due
semi-annually.
The Housing and Auxiliary Facilities System Bonds, Series 2004A were authorized by the University’s Board
under the Tenth Supplemental Bond Resolution dated October 14, 2004. The bonds mature at varying
amounts from 2006 to 2035 with interest ranging from 3.00 to 5.00 percent. Interest payments are due
semi-annually.
The Medical Facilities System Bonds, Series 2005 were authorized by the University’s Board on October
13, 2005. The bonds mature at varying amounts from 2006 to 2026 with interest ranging from 4.00 to
5.00 percent. Interest payments are due semi-annually.
The Housing and Auxiliary Facilities System Bonds, Series 2006A were authorized by the University’s Board
under the Eleventh Supplemental Bond Resolution dated March 9, 2006, as amended and restated on
May 2, 2006, and as further amended on November 9, 2006. The bonds mature at varying amounts from
2007 to 2036 with interest ranging from 4.00 to 5.25 percent. Interest payments are due semi-annually.
The Housing and Auxiliary Facilities System Bonds, Series 2008A were authorized by the University’s Board
under the Twelfth Supplemental Bond Resolution dated April 10, 2008. The bonds mature at varying
34
NOTE 8 - Revenue bonds payable (continued)
amounts from 2009 to 2028 with interest ranging from 3.00 to 5.50 percent. Interest payments are due
semi-annually.
The Housing and Auxiliary Facilities System Bonds, Series 2009A were authorized by the University’s Board
under the Thirteenth Supplemental Bond Resolution approved April 2, 2009. The bonds mature at varying
amounts from 2011 to 2030 with interest ranging from 2.50 to 6.20 percent. Interest payments are due
semi-annually. The bonds are Build America Bonds that carry a direct payment subsidy from the U.S.
Treasury in an amount equal to 35% of the interest due on each payment date:
Year Treasury
Ending Principal Interest Rebate Total
2012 $ 2,055,000 $ 2 ,768,520 $ ( 968,982) $ 3 ,854,538
2013 2,090,000 2 ,708,925 ( 948,124) 3 ,850,801
2014 2,135,000 2 ,641,000 ( 924,350) 3 ,851,650
2015 2,185,000 2 ,563,606 ( 897,262) 3 ,851,344
2016 2,245,000 2 ,473,475 ( 865,716) 3 ,852,759
2017-21 12,335,000 1 0,660,995 (3,731,349) 1 9,264,646
2022-26 14,690,000 7 ,041,835 (2,464,642) 1 9,267,193
2027-30 13,980,000 2 ,209,680 ( 773,388) 1 5,416,292
Total $ 51,715,000 $ 3 3,068,036 $ (11,573,813) $ 73,209,223
Housing and Auxiliary Facilities System: These bonds, which are payable through 2036, do not constitute
a debt of the State of Illinois or the individual members, officers or agents of the Board of Trustees of the
University but, together with interest thereon, are payable from and secured by a pledge of and lien on (i)
the net revenues of the System, (ii) pledged tuition in an amount not to exceed maximum annual debt
service (subject to prior payment of operating and maintenance expenses of the System), (iii) the Bond
and Interest Sinking Fund account, and (iv) the Repair and Replacement Reserve account. Unrefunded
bonds issued in 2001 and prior are additionally secured by the Debt Service Reserve. Total principal and
interest remaining on the debt is $417,298,768 with annual requirements ranging from $2,604,000 to
$25,267,244. For the current year, principal and interest paid was $25,090,869, and the total revenues
pledged were $58,000,566. In the prior year, principal and interest paid was $22,214,184, and the total
revenues pledged were $59,019,652. For fiscal year 2011, the total revenue pledged represents 100
percent of the net revenues of the System and 16 percent of net tuition revenue received, compared to
100 percent of the net revenues and 16 percent of net tuition revenue received during fiscal year 2010.
Although net tuition is pledged it is not expected to be needed to meet debt service requirements.
The bond resolution requires that debt service coverage on a cash basis be at least 120 percent of the
maximum annual debt service. For the year ended June 30, 2011, the maximum annual debt requirement
was $25,267,244, and the coverage was 230 percent. For the year ended June 30, 2010, the maximum
annual debt requirement was $25,267,244, and the coverage was 234 percent. The bond resolution also
requires the Treasurer to transfer annually to Renewals and Replacements from the funds remaining in
unrestricted net assets the sum of 10 percent of the maximum annual net debt service requirement or
such portion thereof as is available for transfer. The net assets of Renewals and Replacements were
$20,770,921 at June 30, 2011 and $18,597,589 at June 30, 2010.
35
NOTE 8 - Revenue bonds payable (continued)
All of the refunded bonds are considered to be defeased and, accordingly, have been accounted for as if
they were retired. As of both June 30, 2011 and 2010, $7,850,000 of the bonds refunded in 2006 were
outstanding. The market value of the related escrow fund was $7,905,680 and $7,958,924, respectively.
Medical Facilities System: These bonds, which are payable through 2026, do not constitute a debt of the
State of Illinois or the individual members, officers or agents of the Board of Trustees of the University
but, together with interest thereon, are payable from and secured by a pledge of and lien on (i) the net
revenues of the System, (ii) pledged tuition (subject to the prior payment of necessary operating and
maintenance expenses of the Housing and Auxiliary Facilities System, debt service of the Housing and
Auxiliary Facilities System not to exceed the maximum annual debt service, and then necessary operating
and maintenance expenses of the System), and (iii) the Bond and Interest Sinking Fund account. Total
principal and interest remaining on the debt is $23,940,062 with annual requirements ranging from
$543,400 to $1,985,750. For the current year, principal and interest paid was $1,690,238, and the total
revenues pledged were $138,480,771. In the prior year, principal and interest paid was $1,668,487, and
the total revenues pledged were $134,688,351. For fiscal year 2011, the total revenue pledged represents
100 percent of the net revenues of the System and 84 percent of net tuition revenue received, compared
to 100 percent of the net revenues and 84 percent of net tuition revenue received during fiscal year 2010.
Although net tuition is pledged it is not expected to be needed to meet debt service requirements.
The bond resolution requires that debt service coverage on the cash basis (net revenues plus pledged
tuition) be at least 200 percent of annual debt service and that net revenues shall be at least 100 percent
of the annual debt service requirement in each fiscal year. For the year ended June 30, 2011, the
maximum annual debt service was $1,985,750, and the coverage was 6,974 percent. For the year ended
June 30, 2010, the maximum annual debt requirement was $1,985,750, and the coverage was 6,783
percent. The bond resolution also requires the Treasurer to credit funds remaining in the revenue fund
into a separate and special account designated the Medical Facilities System Repair and Replacement
Reserve account on or before the close of each fiscal year, the sum of not less than 10 percent of the
maximum annual debt service, or such portion thereof as is available for transfer and deposit annually, for
a repair and replacement reserve. The net assets of Renewals and Replacements were $932,711 at June
30, 2011, and $726,566 at June 30, 2010.
36
NOTE 8 - Revenue bonds payable (continued)
As of June 30, 2011, future debt service requirements for all bonds outstanding are:
UNIVERSITY:
Principal Interest
2012 $ 16,520,000 $ 10,301,144
2013 17,105,000 9,904,744
2014 17,065,000 9,478,281
2015 17,370,000 9,057,224
2016 17,770,000 8,605,136
2017-21 87,610,000 35,288,040
2022-26 76,805,000 21,825,766
2027-31 55,585,000 9,884,495
2032-36 18,405,000 2,659,000
Total payments 324,235,000 $ 117,003,830
Unaccreted appreciation (42,956,222)
Subtotal 281,278,778
Unamorti zed premiums on bonds 5,569,400
Unamorti zed deferred los s on refunding (1,360,451)
Total bonds payable $ 285,487,727
June 30, 2011
As of June 30, 2010, future debt service requirements for all bonds outstanding were:
UNIVERSITY:
Principal Interest
2011 $ 16,120,000 $ 10,661,107
2012 16,520,000 10,301,144
2013 17,105,000 9,904,744
2014 17,065,000 9,478,281
2015 17,370,000 9,057,224
2016-20 87,845,000 37,944,484
2021-25 79,030,000 24,364,378
2026-30 67,375,000 12,198,325
2031-35 19,445,000 3,631,250
2036 2,480,000 124,000
Total payments 340,355,000 $ 127,664,937
Unaccreted appreciation (47,431,674)
Subtotal 292,923,326
Unamorti zed premiums on bonds 5,885,961
Unamorti zed deferred los s on refunding (1,536,263)
Total bonds payable $ 297,273,024
June 30, 2010
37
NOTE 9 - Capitalized leases
The University has entered into lease purchase contracts for certain items of equipment. Minimum lease
payments under capital leases together with the present value of the net minimum lease payments are:
UNIVERSITY: June 30, 2011
Year Ending
2012 $ 129,853
2013 90,088
Total minimum lease payments 219,941
Les s amount representing interes t (10,316)
Present value of net minimum lease payments $ 209,625
Year Ending June 30, 2010
2011 $ 178,206
2012 46,518
2013 6,753
2014 6,753
2015 6,752
Total minimum lease payments 244,982
Les s amount representing interes t (11,260)
Present value of net minimum lease payments $ 233,722
Assets held under capital lease are:
UNIVERSITY: June 30, 2011 June 30, 2010
Equipment $ 387,019 $ 506,971
Les s accumulated depreciation (79,964) (215,407)
Total net as sets $ 307,055 $ 291,564
The University leases office and instructional space and equipment (principally office machines,
automobiles, and farm equipment) under contracts which are renewable annually and many of which are
subject to escalation upon proper notice by the lessor. Rental payments on these operating leases totaled
$15,936,493 in 2011 and $15,319,183 in 2010.
NOTE 10 - Certificates of participation payable
Series 2004A: On June 17, 2004, the University issued Certificates of Participation (COPS) in the par
amount of $32,740,000. The COPS were issued at a discount of $91,480. The certificates were issued to
finance, in combination with University funds, the renovation of Morris Library, the construction of a
library storage facility, the construction of a Research Park, the replacement of campus signage, the
purchase of computer and research equipment, and energy conservation measures, all at Carbondale;
the construction of a Pharmacy building and the renovation of the Dental School building, both at
Edwardsville; and energy performance measures at the School of Medicine in Springfield. The certificates
bear interest at rates ranging from 2% to 5% payable semi-annually, and principal installments ranging
from $1,070,000 to $2,720,000 are payable annually on February 15 beginning 2005 through the year
2024. As of June 30, 2011 and 2010, these certificates were outstanding in the amount of $19,016,248
and $21,431,596, respectively.
38
NOTE 10 - Certificates of participation payable (continued)
Series 2002: On June 5, 2002, the University issued Certificates of Participation (COPS) in the par amount
of $4,180,000. The COPS were issued at a premium of $10,540. The certificates were issued to finance, in
combination with University funds, the construction of a new support services building to house business
services offices and warehouse space for the University’s Springfield medical campus. The certificates
bear interest at rates ranging from 3.25% to 4.40% payable semi-annually, and principal installments
ranging from $355,000 to $495,000 are payable annually on August 15 beginning 2003 through the year
2012. As of June 30, 2011 and 2010, these certificates were outstanding in the amount of $970,485 and
$1,426,229, respectively.
Annual aggregate principal and interest payments required for subsequent years are:
UNIVERSITY:
June 30, 2011
Principal Interest
2012 $ 2,105,000 $ 898,843
2013 2,190,000 812,540
2014 1,760,000 733,850
2015 1,195,000 661,250
2016 1,070,000 610,463
2017-21 6,135,000 2,284,150
2022-24 5,590,000 625,000
Total payments 20,045,000 $ 6,626,096
Unamortized premiums
(di s counts ) on COPS (58,267)
Total payable $ 19,986,733
June 30, 2010 Principal Interest
2011 $ 2,875,000 $ 1,015,410
2012 2,105,000 898,843
2013 2,190,000 812,540
2014 1,760,000 733,850
2015 1,195,000 661,250
2016-20 5,865,000 2,551,463
2021-24 6,930,000 968,150
Total payments 22,920,000 $ 7,641,506
Unamortized premiums
(di s counts ) on COPS (62,175)
Total payable $ 22,857,825
Certificates of Participation
39
NOTE 11 - Accrued self-insurance
The University is exposed to various risks of loss relative to general liability, professional liability, and
certain group coverage of student health and life benefits. The University minimizes its exposure through
a combination of risk reduction and self-insurance programs, as well as primary and excess insurance
coverage with commercial carriers.
The general and professional liability self-insurance fund provides for comprehensive general and
professional liability coverage. The University also purchases excess insurance coverage with commercial
carriers for claims that may result in catastrophic losses. The University makes contributions to the
general and professional liability self-insurance fund based on yearly actuarial analysis.
The Student Medical Insurance Plan (the “Plan”) was established on August 15, 1995, as a secondary
coverage plan to supplement the On-Campus Student Health Services in Carbondale and Springfield. The
Plan is supported by student fees and covers all students enrolled at the Carbondale campus with the
exception of those students who have demonstrated comparable coverage and have applied for a refund.
The Plan provides a maximum benefit per student while covered under the Plan of $250,000, subject to
other limits of the Plan. To protect against excessive losses, the University established a gap-reserve fund
and purchased a stop-loss insurance policy with a commercial carrier in the amount of $5,000,000.
Contributions to the Student Medical Insurance Plan are based on historic and estimated future year
claims.
As of June 30, 2011 and 2010, the accrual for self-insurance was $16,981,334 and $17,500,528,
respectively, for the general and professional liability fund and $1,448,650 and $1,328,862, respectively,
for the Student Medical Insurance Plan, for a total accrued liability for self-insurance of $18,429,984 and
$18,829,390. Because the amounts accrued and funded are estimates, the aggregate actual claims
covered by the self-insurance funds could differ from the amount that has been accrued. Changes in
these estimates will be reflected in the Statement of Revenues, Expenses, and Changes in Net Assets in
the period in which additional information becomes available.
Changes in the self-insurance accrual for the years ended June 30, 2011, and June 30, 2010, are reflected
below:
General and Student
Total Professional Plan
Accrued l iabi l i ty, June 30, 2010 $ 18,829,390 $ 17,500,528 $ 1,328,862
Current year claims and other changes 11,347,694 3,166,866 8,180,828
Payment of Claims (11,747,100) (3,686,060) (8,061,040)
Accrued l iabi l i ty, June 30, 2011 $ 18,429,984 $ 16,981,334 $ 1,448,650
General and Student
Total Professional Plan
Accrued l iabi l i ty, June 30, 2009 $ 17,727,828 $ 16,198,924 $ 1,528,904
Current year claims and other changes 18,111,678 11,937,413 6,174,265
Payment of Claims (17,010,116) (10,635,809) (6,374,307)
Accrued l iabi l i ty, June 30, 2010 $ 18,829,390 $ 17,500,528 $ 1,328,862
June 30, 2010
June 30, 2011
40
NOTE 12 - Net Assets
Net asset balances by major categories at June 30, 2011 and 2010:
UNIVERSITY: June 30, 2011 June 30, 2010
Invested in capital assets, net of related debt $ 410,754,130 $ 387,680,620
Res tri cted for:
Nonexpendable 2,976,342 3,089,109
Expendable
Quas i -endowment 243,320 205,047
Scholarships , research, ins truction and other 13,104,549 10,232,909
Loans 5,060,503 4,903,183
Sel f insurance 8,138,679 1,719,495
Capi tal projects 69,276,593 33,073,353
Debt service 19,846,353 19,942,981
Unres tricted 98,992,956 85,004,625
Total $ 628,393,425 $ 545,851,322
UNIVERSITY RELATED ORGANIZATIONS:
Inves ted in capi tal as sets , net of related debt $ 5,603,399 $ 5,898,122
Res tri cted for:
Nonexpendable 94,347,079 92,036,179
Expendable
Scholarships , research, ins truction and other 62,795,595 37,931,087
Loans 554,931 114,525
Capi tal projects 11,259,837 12,577,163
Unres tricted 48,697,706 27,161,994
Total $ 223,258,547 $ 175,719,070
NOTE 13 - Donor-restricted endowments
The University entered into an agreement with the Southern Illinois University Foundation at Carbondale
on July 1, 2003, in which the University transferred Endowment funds to the Foundation. The Foundation
has agreed to hold and administer these funds as agency funds based upon and consistent with the
desires of the donor and/or the University. During fiscal year 2011, realized gains on investments totaled
$106,244 and unrealized gains on investments totaled $216,491, resulting in a balance of $2,050,261 held
by the Foundation at June 30, 2011. During fiscal year 2010, realized gains on investments were $41,529
and unrealized gains on investments were $156,304, resulting in a balance of $1,727,526 at June 30, 2010.
The Foundation distributes earnings to the University on a quarterly basis. Payments during fiscal years
2011 and 2010 totaled $74,947 and $54,542, respectively.
The State of Illinois adopted the Uniform Prudent Management of Institutional Funds Act (UPMIFA),
effective June 30, 2009. UPMIFA added certain prudent spending measures to the Uniform Management
of Institutional Funds Act. In accordance with UPMIFA, the Board of Directors of Southern Illinois
University Foundation considers the following factors in making a determination to appropriate or
accumulate donor-restricted endowment funds: the duration and preservation of the fund; the purposes
of the donor-restricted endowment fund; general economic conditions; the possible effect of inflation
and deflation; the expected total return from income and the appreciation of investments; other
resources of the institution; and the investment policies of the Foundation.
41
NOTE 14 - State Universities Retirement System
The University contributes to the State Universities Retirement System of Illinois (SURS), a cost-sharing
multiple-employer defined benefit pension plan with a special funding situation whereby the State of
Illinois makes substantially all actuarially determined required contributions on behalf of the participating
employers. SURS was established July 21, 1941, to provide retirement annuities and other benefits for
staff members and employees of 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 calling 1-800-275-7877.
Plan members are required to contribute 8% 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 for fiscal year 2012 is 24.21% 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 contribution to SURS for the years ended June 30, 2011, 2010,
and 2009 were $81,241,705, $74,103,976, and $47,526,941, respectively, equal to the required
contributions for the year. The fiscal year 2011 contribution consisted of $78,215,213 from State
appropriations and $3,026,492 from other current funds, and the fiscal year 2010 contribution consisted
of $71,262,767 from State appropriations and $2,841,209 from other current funds.
All full-time employees of the Foundations, the Alumni Associations, University Park, and the Research
Park are paid as University employees. Accordingly, the benefits related to these employees are covered
by the University's plan.
NOTE 15 - Post-employment benefits
In addition to providing the above pension 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 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 Universities Retirement
System do not contribute towards health, dental, and vision benefits. For annuitants who retired on or
after January 1, 1998, the annuitant’s contribution amount is reduced five percent for each year of
credited service with the State allowing those annuitants with twenty or more years of credited service to
not have to contribute towards health, dental, and vision benefits. Annuitants also receive life insurance
coverage equal to the annual salary of the last day of employment until age 60, at which time the benefit
becomes $5,000.
The State pays the University’s portion of employer costs for the benefits provided. The total costs 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
42
NOTE 15 - Post-employment benefits (continued)
State in the Illinois Comprehensive Annual Financial Report. The State finances the costs on a pay-as-you-go
basis. The total costs incurred for health, dental, vision, and life insurance benefits are not separated
by department or component unit for annuitants and their dependents nor active employees and their
dependents.
A summary of post-employment benefit provisions, changes in benefit provisions, employee eligibility
requirements including eligibility for vesting, and the authority under which benefit provisions are
established are included as an integral part of the financial statements of the Department of Healthcare
and Family Services. A copy of the financial statements of the Department of Healthcare and Family
Services may be obtained by writing to the Department of Healthcare and Family Services, 201 South
Grand Ave., Springfield, Illinois, 62763-3838.
NOTE 16 - University Related Organizations - transactions with related parties
The University has entered into master contracts with the University Related Organizations which specify
the relationship between the University and its related organizations in accordance with the Legislative
Audit Commission’s University Guidelines of 1982 as amended in 1997. Significant transactions for the
University during fiscal years 2011 and 2010 included the receipt of $38,300,063 and $32,805,245,
respectively, from SIU Physicians & Surgeons, Inc. (SIU P&S) for services provided by the University. Also,
SIU P&S contributions to the University for Academic Development for the School of Medicine during
fiscal years 2011 and 2010 totaled $8,010,670 and $6,999,382, respectively.
Effective October 1, 2010, the agreement between the Partnership for a Connected Illinois (PCI) and the
University was terminated; therefore, PCI is no longer a University Related Organization. The prior year
net assets balance of ($119,775) has been removed from the Statement of Revenues, Expenses and
Changes in Net Assets, and the prior year cash balance of $11,836 has been removed from the Statement
of Cash Flows.
Additional information concerning transactions with related parties may be obtained by contacting the
entities listed in Note 1 on pages 15 and 16.
NOTE 17 - Commitments and contingencies
Grants and contracts
The University receives monies from federal and state government agencies under grants and contracts
for research and other activities, including medical service reimbursements and the administration of
student financial aid. The costs, both direct and indirect, charged to these grants and contracts are subject
to audit and disallowance by the granting agency. During fiscal year 2011, the U.S. Department of
Education performed a program review at SIUE that will likely result in the return of Title IV funds by the
University and the recognition of student receivables to recover the majority of that payment, but the
amount of this potential liability and receivable cannot be estimated. The University administration
believes that any disallowances or adjustment resulting from this review and any other reviews would not
have a material effect on the University’s financial position.
Legal action
The University is a defendant in several lawsuits. However, University officials are of the opinion, based
on the advice of legal counsel, that any ultimate liability which could result from such litigation would not
have a material effect on the University's financial position or its future operations.
43
NOTE 17 - Commitments and contingencies (continued)
Forward contract
The University has forward fixed-price purchase contracts with MidAmerican Energy Company for the
procurement of electricity that is used in the normal course of operations. The University does not
employ futures contracts or other derivative products. At June 30, 2011 and 2010, the University’s annual
commitment related to these contracts is approximately $11,500,000.
Construction projects
The University has active construction projects as of June 30, 2011. These projects include Stadium and
Arena construction at the Carbondale campus and other various projects. A total of $55,522,300 has
been spent on these projects through June 30, 2011. The University has $108,619,218 committed to the
completion of these projects.
NOTE 18 - Subsequent event
On December 8, 2011, the Board of Trustees of Southern Illinois University authorized the issuance of the
Housing and Auxiliary Facilities System Revenue Bonds, Series 2012 in an amount not exceeding
$31,300,000 for the purpose of construction of the Student Services Building at the Carbondale campus,
and refunding of the outstanding Housing and Auxiliary Facilities System Revenue Bonds, Series 2001.
The bonds were delivered in January 2012.
NOTE 19 - Segment information
A segment is an identifiable activity for which one or more revenue bonds or other revenue-backed debt
instruments are outstanding. A segment has a specific identifiable revenue stream pledged in support of
the revenue bonds or other revenue-backed debt and has related expenses, gains and losses, assets, and
liabilities that can be identified.
The University has issued revenue bonds with the net revenues from the two segments pledged to pay
the bond interest and principal. The Housing and Auxiliary Facilities System segment is comprised of
University owned housing units, student centers, recreation and athletic facilities, and similar auxiliary
enterprise units. The Medical Facilities System is comprised of clinical facilities used to provide patient
care at the School of Medicine in Springfield. Additional information relating to these segments is
included in Note 8, Revenue bonds payable.
Condensed financial statements for the University’s two segments for fiscal year 2011, with comparative
information for fiscal year 2010, are presented on the following pages.
44
NOTE 19 - Segment information (continued)
Housing and Auxiliary Facilities System
CONDENSED STATEMENTS OF NET ASSETS
June 30, 2011 June 30, 2010
Assets:
Current assets $ 62,356,861 $ 9 3,398,907
Capital assets, net 2 63,682,720 2 51,195,959
Other assets 1 2,741,551 6 ,275,691
Total Assets 3 38,781,132 3 50,870,557
Liabilities:
Current liabilities 2 8,080,023 3 5,124,673
Noncurrent liabilities 2 55,519,773 2 66,762,325
Total Liabilities 2 83,599,796 3 01,886,998
Net Assets (Deficit)
Invested in capital assets, net of related debt (4,889,449) (8,970,683)
Restricted - expendable 4 2,326,550 3 9,569,460
Unrestricted 1 7,744,235 1 8,384,782
Total Net Assets $ 55,181,336 $ 4 8,983,559
CONDENSED STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS
Year ended Year ended
June 30, 2011 June 30, 2010
Operating revenues $ 104,553,077 $ 103,697,258
Operating expenses (94,690,883) (91,937,079)
Depreciation expense (13,049,509) (10,804,659)
Operating gain (loss) (3,187,315) 955,520
Nonoperating revenues and expenses - net 9 ,022,819 2 6,117,209
Income (loss) before other revenues, expenses,
gains or losses 5 ,835,504 2 7,072,729
Other revenues, expenses, gains or losses - net 362,273 1 ,410,188
Increase in net assets 6 ,197,777 2 8,482,917
N et assets at beginning of year 4 8,983,559 2 0,500,642
Net assets at end of year $ 55,181,336 $ 4 8,983,559
CONDENSED STATEMENTS OF CASH FLOWS
Year ended Year ended
June 30, 2011 June 30, 2010
Cash provided by (used in):
Operating activities $ 23,990,228 $ 2 4,976,321
Noncapital financing activities 1 1,892,620 1 4,002,718
Capital financing activities (54,664,606) (69,403,192)
Investing activities 6 ,865,024 4 3,167,580
Net increase (decrease) in cash (11,916,734) 1 2,743,427
Cash, beginning of year 6 2,444,245 4 9,700,818
Cash, end of year $ 50,527,511 $ 6 2,444,245
45
NOTE 19 - Segment information (continued)
CONDENSED STATEMENTS OF NET ASSETS
June 30, 2011 June 30, 2010
Assets:
Current assets $ 8 ,900,240 $ 7 ,449,360
Capital assets, net 3 5,886,654 3 4,804,271
Other assets 222,926 361,482
Total Assets 4 5,009,820 4 2,615,113
Liabilities:
Current liabilities 2 ,171,340 1 ,820,432
Noncurrent liabilities 1 7,895,083 1 9,195,097
Total Liabilities 2 0,066,423 2 1,015,529
Net Assets (Deficit)
Invested in capital assets, net of related debt 1 8,971,097 1 7,066,084
Restricted - expendable 1 ,393,159 1 ,248,569
Unrestricted 4 ,579,141 3 ,284,931
Total Net Assets $ 24,943,397 $ 2 1,599,584
CONDENSED STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS
Year ended Year ended
June 30, 2011 June 30, 2010
Operating revenues $ 39,196,236 $ 3 2,567,431
Operating expenses (48,686,453) (44,597,158)
Depreciation expense (1,238,713) (1,199,955)
Operating gain (loss) (10,728,930) (13,229,682)
Nonoperating revenues and expenses - net 1 3,595,822 1 2,259,424
Income (loss) before other revenues, expenses,
gains or losses 2 ,866,892 ( 970,258)
Other revenues, expenses, gains or losses - net 476,921 411,817
Increase in net assets 3 ,343,813 ( 558,441)
N et assets at beginning of year 2 1,599,584 2 2,158,025
Net assets at end of year $ 24,943,397 $ 2 1,599,584
CONDENSED STATEMENTS OF CASH FLOWS
Year ended Year ended
June 30, 2011 June 30, 2010
Cash provided by (used in):
Operating activities $ 2 ,582,867 $ 1 ,879,819
Noncapital financing activities 115,842 -
Capital financing activities (3,534,413) (1,901,052)
Investing activities 156,137 67,120
Net increase (decrease) in cash ( 679,567) 45,887
Cash, beginning of year 4 ,219,978 4 ,174,091
Cash, end of year $ 3 ,540,411 $ 4 ,219,978
Medical Facilities System
NOTE 20 - University Related Organizations
Condensed financial statements for the component units of the University are as follows:
SIUC SIUC
SIUC SIUE PHYSICIANS SIUC SIUE RESEARCH SIUE
FOUNDATION FOUNDATION & SURGEONS ALUMNI ALUMNI PARK UNIV. PARK TOTAL
CONDENSED STATEMENTS OF NET ASSETS
JUNE 30, 2011
Assets:
Current assets $ 31,445,742 $ 6,502,882 $ 43,339,889 $ 3 72,799 $ 22,426 $ 239,847 $ 1,458,256 $ 8 3,381,841
Noncurrent assets 119,263,053 29,820,354 2,256,331 7,256,545 141,628 2 62,630 1,382,768 1 60,383,309
Total Assets 150,708,795 36,323,236 45,596,220 7,629,344 164,054 5 02,477 2,841,024 2 43,765,150
Liabilities:
Current liabilities 6 53,568 3 51,598 9,760,834 783,353 227,188 80,540 160,280 12,017,361
Noncurrent liabilities 5,483,512 5 58,287 - 1,642,839 - - 804,604 8,489,242
Total Liabilities 6,137,080 9 09,885 9,760,834 2,426,192 227,188 80,540 964,884 20,506,603
Net Assets:
Invested in capital assets, net of related debt 4 38,806 2,238,858 1,027,790 252,547 - 2 62,630 1,382,768 5,603,399
Restricted - nonexpendable 78,080,232 16,266,847 - - - - - 94,347,079
Restricted - expendable 58,425,476 16,184,887 - - - - - 74,610,363
Unrestricted 7,627,201 7 22,759 34,807,596 4,950,605 (63,134) 1 59,307 493,372 48,697,706
Total Net Assets $ 144,571,715 $ 3 5,413,351 $ 35,835,386 $ 5,203,152 $ (63,134) $ 421,937 $ 1,876,140 $ 223,258,547
CONDENSED STATEMENTS OF REVENUES,
EXPENSES AND CHANGES IN NET ASSETS
Year ended June 30, 2011
Operating revenues $ 5,473,484 $ 4,861,126 $ 1 05,989,374 $ 2,077,218 $ 390,064 $ 337,396 $ 4 89,372 $ 119,618,034
Operating expenses 15,091,400 4,277,959 89,841,164 2,010,122 488,766 3 65,145 532,522 1 12,607,078
Operating income (loss) (9,617,916) 5 83,167 16,148,210 67,096 (98,702) ( 27,749) ( 43,150) 7,010,956
Nonoperating revenues and expenses - net 34,421,123 3,251,817 148,121 1,058,215 3 9,193 1 21,506 14,576 39,054,551
Income (loss) before other revenues 24,803,207 3,834,984 16,296,331 1,125,311 (59,509) 93,757 (28,574) 46,065,507
Other revenues 1,071,836 2 82,359 - - - - - 1,354,195
Increase (decrease) in net assets 25,875,043 4,117,343 16,296,331 1,125,311 (59,509) 93,757 (28,574) 47,419,702
Net assets at beginning of year 1 18,696,672 31,296,008 19,539,055 4,077,841 ( 3,625) 3 28,180 1,904,714 1 75,838,845
Net assets at end of year $ 144,571,715 $ 3 5,413,351 $ 35,835,386 $ 5,203,152 $ (63,134) $ 421,937 $ 1,876,140 $ 223,258,547
CONDENSED STATEMENTS OF CASH FLOWS
Year ended June 30, 2011
Cash provided by (used in):
Operating activities $ ( 8,830,583) $ 997,479 $ 1,709,503 $ 71,756 $ (95,056) $ (15,363) $ (122,441) $ (6,284,705)
Noncapital financing activities 7,176,041 2 81,827 (106,715) 9,041 6 6 - 136,846 7,497,106
Capital financing activities (4,498) ( 68,647) (97,688) - - 64,959 - (105,874)
Investing activities 2,481,708 1,203,192 (318,845) (496,842) 5 1,954 1,051 13,378 2,935,596
Net increase (decrease) in cash 8 22,668 2,413,851 1,186,255 (416,045) (43,036) 50,647 27,783 4,042,123
Cash, beginning of year 2 38,804 1,521,854 2,921,260 477,456 5 2,429 63,698 1,401,254 6,676,755
Cash, end of year $ 1,061,472 $ 3,935,705 $ 4,107,515 $ 61,411 $ 9 ,393 $ 114,345 $ 1,429,037 $ 1 0,718,878
46
NOTE 20 - University Related Organizations (continued)
Condensed financial statements for the component units of the University are as follows:
SIUC SIUC
SIUC SIUE PHYSICIANS SIUC SIUE RESEARCH SIUE SIUC
FOUNDATION FOUNDATION & SURGEONS ALUMNI ALUMNI PARK UNIV. PARK PCI TOTAL
CONDENSED STATEMENTS OF NET ASSETS
JUNE 30, 2010
Assets:
Current assets $ 28,118,282 $ 4,554,748 $ 24,565,419 $ 888,869 $ 6 2,930 $ 165,422 $ 1,436,623 $ 465,964 $ 60,258,257
Noncurrent assets 96,730,206 27,531,643 2,514,956 5,611,013 1 54,236 173,252 1,436,593 - 134,151,899
Total Assets 124,848,488 32,086,391 27,080,375 6,499,882 2 17,166 338,674 2,873,216 465,964 194,410,156
Liabilities:
Current liabilities 943,570 209,868 7,541,320 8 16,146 2 20,791 10,494 1 54,637 585,739 1 0,482,565
Noncurrent liabilities 5 ,208,246 580,515 - 1,605,895 - - 8 13,865 - 8,208,521
Total Liabilities 6 ,151,816 790,383 7 ,541,320 2,422,041 2 20,791 10,494 9 68,502 585,739 1 8,691,086
Net Assets:
Invested in capital assets, net of related debt 452,651 2,310,366 1,241,575 2 83,684 - 173,252 1,436,594 - 5,898,122
Restricted - nonexpendable 78,130,396 13,905,783 - - - - - - 9 2,036,179
Restricted - expendable 35,974,161 14,648,614 - - - - - - 5 0,622,775
Unrestricted 4 ,139,464 431,245 18,297,480 3,794,157 (3,625) 154,928 4 68,120 (119,775) 2 7,161,994
Total Net Assets $ 118,696,672 $ 31,296,008 $ 19,539,055 $ 4,077,841 $ (3,625) $ 328,180 $ 1,904,714 $ ( 119,775) $ 175,719,070
CONDENSED STATEMENTS OF REVENUES,
EXPENSES AND CHANGES IN NET ASSETS
Year ended June 30, 2010
Operating revenues $ 5,524,684 $ 4,602,979 $ 85,308,702 $ 2,075,405 $ 355,823 $ 341,932 $ 466,241 $1 ,109,059 $ 99,784,825
Operating expenses 19,114,271 3,641,817 81,561,055 1,839,548 4 26,567 350,929 4 65,059 1,228,834 108,628,080
Operating income (loss) (13,589,587) 961,162 3 ,747,647 2 35,857 (70,744) (8,997) 1,182 (119,775) (8,843,255)
Nonoperating revenues and expenses - net 22,821,953 1,483,918 148,530 5 14,280 33,924 1,897 19,443 - 2 5,023,945
Income (loss) before other revenues 9 ,232,366 2,445,080 3,896,177 7 50,137 (36,820) (7,100) 20,625 (119,775) 1 6,180,690
Other revenues 2 ,932,874 190,908 - - - - - - 3,123,782
Increase (decrease) in net assets 12,165,240 2,635,988 3,896,177 7 50,137 (36,820) (7,100) 20,625 (119,775) 1 9,304,472
Net assets at beginning of year 106,531,432 28,660,020 15,642,878 3,327,704 33,195 335,280 1,884,089 - 156,414,598
Net assets at end of year $ 118,696,672 $ 31,296,008 $ 19,539,055 $ 4,077,841 $ (3,625) $ 328,180 $ 1,904,714 $ ( 119,775) $ 175,719,070
CONDENSED STATEMENTS OF CASH FLOWS
Year ended June 30, 2010
Cash provided by (used in):
Operating activities $ (12,687,824) $ 6,475,114 $ 602,989 $ 231,787 $ (36,070) $ 3,468 $ (72,284) $ 11,836 $ (5,470,984)
Noncapital financing activities 10,496,361 190,908 94,259 2,483 342 - 1 32,270 - 1 0,916,623
Capital financing activities - ( 1,221,186) (128,899) (2,590) - - - - (1,352,675)
Investing activities 2 ,143,306 ( 4,502,740) 1,241,658 1 50,437 68,809 1,897 18,234 - (878,399)
Net increase (decrease) in cash (48,157) 942,096 1,810,007 3 82,117 33,081 5,365 78,220 11,836 3,214,565
Cash, beginning of year 286,961 579,758 1,111,253 95,339 19,348 58,333 1,323,034 - 3,474,026
Cash, end of year $ 2 38,804 $ 1,521,854 $ 2,921,260 $ 477,456 $ 5 2,429 $ 63,698 $ 1,401,254 $ 11,836 $ 6 ,688,591
47
48
Crowe Horwath LLP
Independent Member Crowe Horwath International
Independent Auditors’ Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards
Honorable William G. Holland
Auditor General, State of Illinois
and Board of Trustees
Southern Illinois University
As Special Assistant Auditors for the Auditor General, we have audited the financial statements of the
business-type activities of Southern Illinois University (the "University") and its aggregate discretely
presented component units (the “University Related Organizations”), 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 and have issued our report thereon dated April 2, 2012. Our report was
modified to include a reference to other auditors. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to financial
audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States. Other auditors audited the financial statements of the University Related Organizations, as described
in our report on the University’s financial statements. This report does not include the results of the other
auditors’ testing of internal control over financial reporting or compliance and other matters that are reported
on separately by those auditors. The financial statements of two University Related Organizations, the
Southern Illinois University Carbondale Foundation and the Southern Illinois University Carbondale
Alumni Association, were not audited in accordance with Government Auditing Standards.
Internal Control Over Financial Reporting
Management of the University is responsible for establishing and maintaining effective internal control
over financial reporting. In planning and performing our audit, we considered the University's internal
control over financial reporting as a basis for designing our auditing procedures for the purpose of
expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on
the effectiveness of the University’s internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the University’s internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control doe