Finance and Administration - Board of Trustees - The University of ...

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Finance and Administration Committee - V. Annual Report of the Treasurer, 2011 - InformationTable 8.2Year ending June 30: Principal Interest2012 $ 27,703,501.00 $ 23,244,534.602013 27,537,355.73 22,296,418.922014 28,251,840.23 21,163,773.072015 24,317,636.89 20,014,141.862016 24,942,964.77 18,980,565.862017-2021 126,548,790.43 78,114,096.252022-2026 113,173,671.94 50,878,128.922027-2031 85,290,591.39 27,545,848.582032-2036 48,050,361.33 10,394,822.752037-2040 17,854,084.52 1,725,237.26$ 523,670,798.23 $ 274,357,568.07TSSBA DEBT - COMMERCIAL PAPERThe Tennessee State School Bond Authority issues commercialpaper to finance the costs of various capital projects during theirconstruction phase. When projects are placed in service, longterm,fixed-rate debt is issued by TSSBA to finance the projectover its useful payback period and the commercial paper isredeemed. The amount issued for projects at the university was$36,688,502.05 at June 30, 2011.For the commercial paper program, the Tennessee State SchoolBond Authority maintains an interest rate reserve fund. Theuniversity contributes amounts to the reserve fund based on theamounts drawn. The principal of the reserve will be contributedto pay off notes or credited back to the university when thenotes are converted to bonds. The interest earned on the reserveis used to pay interest due during the month.More detailed information regarding the bonds and commercialpaper can be found in the notes to the financial statements in thefinancial report for the Tennessee State School Bond Authority.That report is available on the state’s website athttp://www.comptroller1.state.tn.us/tssba/cafr.asp.CAPITAL LEASE OBLIGATIONSThe university leases certain items of equipment accounted foras capital leases. The capitalized cost of the assets under lease atJune 30, 2011, was $3,126,282.87. Accumulated amortization ofthe leased assets at June 30, 2011, was $2,344,712.15.Future minimum lease payments under capital leases at June 30,2011, are as follows:Table 8.3. Year ending June 30:2012 $ 679,628.71Total $ 679,628.71Less: amount representing interest (29,167.96)Present value of minimum lease payments $ 650,460.75Note 9: Unrestricted Net AssetsUnrestricted net assets include funds that have been designatedfor specific purposes. These purposes include the following:Table 9.1. As of June 30, 2011Working capital $ 28,005,121.33Encumbrances 7,872,103.02Auxiliaries 9,414,441.78Quasi-endowments 13,529,273.54Plant construction 28,718,730.20Renewal and replacement of capital assets 338,897,897.43Debt retirement 30,786,597.20Undesignated 534,176.43Total $ 457,758,340.93Note 10: Pledged RevenuesThe University of Tennessee has pledged certain revenues andfees, including state appropriations, to repay $495,746,845.95 inrevenue bonds issued from September 1998 to September 2010.Proceeds from the bonds provided financing for constructionand renovation projects. The bonds are payable through 2040.(See Note 8 for further details.) Annual principal and interestpayments on the bonds are expected to require 3.83% ofavailable revenues. The total principal and interest remaining tobe paid on the bonds is $798,028,366.30. Principal and interestpaid for the current year and total available revenues were$48,125,873.82 and $1,257,890,028.77, respectively.Note 11: Pension PlansA. DEFINED BENEFIT PLANS1. TENNESSEE CONSOLIDATED RETIREMENTSYSTEMPlan DescriptionThe University of Tennessee contributes to the State Employees,Teachers, and Higher Education Employees Pension Plan(SETHEEPP), a cost-sharing multiple-employer defined benefitpension plan administered by the Tennessee ConsolidatedRetirement System (TCRS). TCRS provides retirement,death, and disability benefits as well as annual cost-of-livingadjustments to plan members and their beneficiaries. Title 8,Chapters 34-37, Tennessee Code Annotated, establishes benefitprovisions. State statutes are amended by the Tennessee GeneralAssembly. The TCRS issues a publicly available financial reportthat includes financial statements and required supplementaryinformation for SETHEEPP. That report is available on thestate’s website at http://www.state.tn.us/treasury/tcrs/index.html.Funding PolicyPlan members are noncontributory. The university is required tocontribute at an actuarially determined rate. The current rate is19351
Finance and Administration Committee - V. Annual Report of the Treasurer, 2011 - Information14.91% of annual covered payroll. Contribution requirementsfor the university are established and may be amended bythe TCRS’ Board of Trustees. The university’s contributionsto TCRS for the years ended June 30, 2011, 2010, and 2009,were $43,343,861.11, $37,266,850.27, and $37,963,757.88,respectively. Contributions met the requirements for each year.2. FEDERAL RETIREMENT PROGRAMPlan DescriptionThe University of Tennessee contributes to the FederalRetirement Program, a cost-sharing multiple-employerdefined benefit pension plan administered by the Civil ServiceRetirement System (CSRS) for participants employed prior toJanuary 1, 1984, and the Federal Employees Retirement System(FERS) for participants employed after December 31, 1983.Both systems provide retirement, death, and disability benefits,as well as annual cost-of-living adjustments, to plan membersand their beneficiaries. All regular full-time employees ofthe University of Tennessee Agricultural Extension Servicewho hold federal appointments for 51% or more of their timeare required to participate in either one of the two FederalRetirement Programs. For both systems, benefit provisions areestablished in federal statutes. Federal statutes are amended bythe U.S. Congress.CSRS and FERS issue publicly available financial reportsthat include financial statements and required supplementaryinformation. These reports may be obtained by writing to theOffice of Personnel Management, Retirement InformationOffice, P.O. Box 45, Boyers, PA 16017-0045, or by calling(202) 606-0500.Funding PolicyParticipating employees, with some exceptions, are requiredby federal statute to contribute 7.0% of covered salaries to theCSRS plan. The university is currently required to contribute7.0%. Contributions to CSRS for the year ended June 30, 2011,were $655,375.40, which consisted of $339,588.48 from theuniversity and $315,786.92 from the employees; contributionsfor the year ended June 30, 2010, were $795,846.34, whichconsisted of $411,178.79 from the university and $384,667.55from the employees; and contributions for the year ended June30, 2009, were $1,050,294.31, which consisted of $540,493.79from the university and $509,800.52 from the employees.Federal statute requires employees participating in FERS tocontribute 0.8% of their salaries to the Basic Benefit Plan. Theuniversity is required to contribute 11.7%. In addition, theuniversity is required to contribute 1% of each participant’ssalary to the Thrift Savings Plan plus up to an additional 4%depending upon employees’ contributions, which can rangefrom 0 to 10% of their salaries. Contributions for the BasicBenefit Plan were $1,050,369.80 for the year ended June30, 2011, which consisted of $67,950.44 from employeesand $982,419.36 from the university; $1,027,500.74 for theyear ended June 30, 2010, which consisted of $68,500.09from employees and $959,000.65 from the university; and$1,050,561.11 for the year ended June 30, 2009, whichconsisted of $70,037.34 from employees and $980,523.77 fromthe university. Contributions for the Thrift Savings Plan were$984,569.00 for the year ended June 30, 2011, which consistedof $586,628.00 from employees and $397,941.00 from theuniversity; $994,264.00 for the year ended June 30, 2010, whichconsisted of $592,984.00 from employees and $401,280.00from the university; and $1,065,023.00 for the year ended June30, 2009, which consisted of $653,541.00 from employeesand $411,482.00 from the university. Contributions met therequirements for each year.B. DEFINED CONTRIBUTION PLANS1. OPTIONAL RETIREMENT PLANS (ORP)Plan DescriptionThe university contributes to three defined contribution plans:Teachers Insurance and Annuity Association-College RetirementEquities Fund (TIAA-CREF), ING Life Insurance and AnnuityCompany, and Variable Annuity Life Insurance Company(VALIC). These plans are administered by the TennesseeDepartment of the Treasury. Each plan provides retirementbenefits to faculty and staff who are exempt from the overtimeprovisions of the Fair Labor Standards Act and who waivemembership in the TCRS. Benefits depend solely on amountscontributed to the plan plus investment earnings.The Plan provisions are established by state statute in Title 8,Chapter 35, Part 4, Tennessee Code Annotated. State statutes areamended by the Tennessee General Assembly.Funding PolicyPlan members are noncontributory. The university contributesan amount equal to 10% of the employee’s base salary below thesocial security wage base and 11% above the social security wagebase. Contribution requirements are established and amendedby state statute. The contributions made by the university to theplans for the year ended June 30, 2011, were $41,479,557.03and for the year ended June 30, 2010, were $40,627,517.44.Contributions met the requirements for each year.2. JOINT CONTRIBUTORY RETIREMENT SYSTEMPLAN A (JCRS-A)Plan DescriptionThe Joint Contributory Retirement System Plan A (JCRS-A)is a defined contribution plan with minimum benefits and isadministered by the Tennessee Consolidated Retirement Systemand TIAA-CREF. Employees who were enrolled in the TeachersInsurance and Annuity Association-College Retirement EquitiesFund (TIAA-CREF) before July 1977 are members of JCRS-A.Enrollment in this plan for new employees has been closedsince July 1977.Although JCRS-A members participate in ING, TIAA-CREF, orVALIC, they may also, under certain circumstances, receive asupplementary benefit from the State of Tennessee. Plan provisionsare established by Tennessee Code Annotated, Chapter 35, Part 4.State statutes are amended by the Tennessee General Assembly.32052
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