University of Central Oklahoma

              UNIVERSITY OF
CENTRAL OKLAHOMA
June 30, 2010
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
AUDITED FINANCIAL STATEMENTS
Independent Auditors’ Report ................................................................................................................. 1
Management’s Discussion and Analysis ................................................................................................ 3
Statements of Net Assets ........................................................................................................................... 8
Statements of Revenues, Expenses and Changes in Net Assets .......................................................... 9
Statements of Cash Flows ....................................................................................................................... 10
Notes to Financial Statements ................................................................................................................ 12
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress for Supplemental Retirement Annuity Plan
and Other Post Employment Insurance Benefits-Unaudited ......................................................... 45
OTHER SUPPLEMENTARY INFORMATION
Supplemental Schedule--2010 Combining Statement of Net Assets ................................................ 46
Supplemental Schedule--2010 Combining Statement of Revenues, Expenses and Changes in
Net Assets .......................................................................................................................................... 47
Supplemental Schedule--2009 Combining Statement of Net Assets ................................................ 48
Supplemental Schedule--2009 Combining Statement of Revenues, Expenses and Changes in
Net Assets .......................................................................................................................................... 49
REPORTS REQUIRED BY GOVERNMENT AUDITING STANDARDS AND OMB CIRCULAR
A-133
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 ..................................................... 50
Independent Auditors’ Report on Compliance with Requirements Applicable to
Each Major Program and Internal Control over Compliance in Accordance with
OMB Circular A-133 and the Schedule of Expenditures of Federal Awards ............................... 52
Schedule of Expenditures of Federal Awards ...................................................................................... 55
Notes to Schedule of Expenditures of Federal Awards ...................................................................... 58
Schedule of Findings and Questioned Costs ........................................................................................ 59
Summary Schedule of Prior Audit Findings ........................................................................................ 66
Independent Auditors’ Report
Board of Regents
Regional University System of Oklahoma
University of Central Oklahoma
Oklahoma City, Oklahoma
We have audited the statements of net assets of the University of Central Oklahoma (the
“University”), a component unit of the State of Oklahoma, as of June 30, 2010 and 2009, and the
related statements of revenues, expenses and changes in net assets and cash flows for the years
then ended. These financial statements are the responsibility of the University’s management.
Our responsibility is to express an opinion on these financial statements based on our audits.
We did not audit the financial statements of the University of Central Oklahoma Alumni
Association (the “Alumni Association”) or the KCSC Classical Radio Foundation (the “KCSC
Foundation”), discretely presented component units of the University, whose financial
statements collectively reflect total assets of $916,760 and $851,760 as of June 30, 2010 and 2009,
respectively, and total revenues of $186,274 and $270,917, respectively, for the years then ended
of the aggregate discretely presented component units. Those financial statements were
audited by other auditors, whose reports thereon have been furnished to us, and in our opinion,
insofar as it relates to the amounts included for the Alumni Association and the KCSC
Foundation, is based on the reports of the other auditors.
We conducted our audits 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 audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The financial statements of
the Alumni Association and the KCSC Foundation were audited by other auditors and were not
audited in accordance with Government Auditing Standards. The financial statements of the UCO
Student Housing Foundation (the “Housing Foundation”) and the University of Central
Oklahoma Foundation, Inc. (the “University Foundation”) were also 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, assessing the accounting
principles used and the significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
1
2
In our opinion, based on our audit and the report of the other auditors, the financial statements
referred to above present fairly, in all material respects, the financial position of the University
of Central Oklahoma and its discretely presented component units, the University Foundation,
the Alumni Association and the KCSC Foundation., as of June 30, 2010 and 2009, and the
respective changes in financial position and, where applicable, cash flows for the years then
ended in conformity with accounting principles generally accepted in the United States of
America.
In accordance with Government Auditing Standards, we have also issued our report dated
October 31, 2010 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, 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.
Management’s Discussion and Analysis and the Schedules of Funding Progress for the
Supplemental Retirement Annuity Plan and Other Post-Employment Insurance Benefits Plan
are not a required part of the basic financial statements but are 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.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the University’s basic financial statements. The Supplemental Combining
Schedules are presented for purposes of additional analysis and are not a required part of the
basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all
material respects, in relation to the basic financial statements taken as a whole.
Oklahoma City, Oklahoma
October 31, 2010
3
MANAGEMENT’S DISCUSSION & ANALYSIS
As the 4 time National Champion, UCO Cheer squad knows to
Live Central is to embrace the qualities of Community,
Character and Civility. To Live Central is to involve your life
with the lives of those you encounter, to give to life to others.
OVERVIEW
The following Management’s Discussion and Analysis (MD&A)
provides an overview of University of Central Oklahoma’s (UCO)
financial performance based on currently known facts, decisions
and conditions and is designed to assist readers in understanding
the accompanying financial statements. These financial
statements are prepared in accordance with Government
Accounting Standards Board (GASB) principles and focus on UCO
as a whole.
The financial statements encompass UCO and the discretely
presented component units; however, the MD&A focuses only on
UCO’s blended unit. Information relating to the component units
can be found in their separately issued financial statements.
UCO’s 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. All
dollar amounts in this MD&A are presented in thousands of
dollars.
STATEMENT OF NET ASSETS
The Statement of Net Assets presents the financial position of
UCO at the end of the fiscal year. From the data presented,
readers of the statement are able to determine the assets
available to continue the operations of UCO. They also are able to
determine how much UCO owes vendors, investors and lending
institutions. Finally, the Statement of Net Assets provides a
picture of the net assets (assets minus liabilities) and their
availability to pay expenses of UCO. The change in net assets is
one indicator of whether the overall financial condition has
improved or worsened during the year when considered with non-financial
facts such as enrollment levels and the condition of the
facilities.
The following table shows a condensed statement of net assets
at:
Assets are what UCO owns and are measured in current value,
except for property and equipment, which are recorded at
historical cost less accumulated depreciation. Assets are
categorized as either current, to be exhausted during the next
twelve months or noncurrent, more than twelve months.
Assets:
 Current assets decreased in the current year by less
than $1 million after an increase in 2009 by $6.5
million these changes are due to the three major
building projects’ restricted cash being categorized as
current in 2009 and the expense of some of those funds
in 2010.
 Capital assets continue to increase, in 2010 by $7.9
million and by $9.7 million in 2009 due to expenditures
primarily for the Forensic Science Institute and
Transformational Learning Center building projects in
progress. In working toward the completion of the
Forensic Science Institute, $3.9 million was expended in
2010 and $7.3 in 2009. Leading toward the completion
of the Transformational Learning Center $5.7 million
was expended during 2010 with $2.2 million expended
during 2009.
 Other assets increased by $1.4 million in 2010 due to
moving the remaining restricted cash to current as the
projects draw to a close in the next year. In 2009,
noncurrent assets decreased by $13.5 million largely
due to moving restricted cash for the completion of the
three building projects into the current category.
Liabilities:
 Current liabilities increased by $1.4 million in 2010 and
decreased by approximately $1 million in 2009. These
changes are made up of normal operating fluctuations
for such items as accounts payable, accrued payroll and
benefits, deferred revenue and current portion of
noncurrent liabilities (bonds, capital leases, and notes).
This fluctuation is not considered to be unusual or
represent a trend.
4
MANAGEMENT’S DISCUSSION & ANALYSIS
 Noncurrent liabilities decreased by approximately $3.3
million in 2010 and $3.9 million in 2009. This is
attributable to each year’s payment of principle on long
term obligations.
 In 2010, one capital lease was incurred for an additional
$1 million for a energy conservation project. In 2009, no
additional debt, short term or long term, was incurred.
Net Assets:
 Net assets represent the total assets of UCO less total
liabilities. The change in net assets is a net component
of the changes to assets and liabilities as described
above, and in the footnotes to the financial statements.
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET ASSETS
The Statement of Revenues, Expenses and Changes in Net
Assets presents the revenues earned and expenses incurred
during the year. Activities are reported as either operating or non-operating.
A public university’s dependency on state aid
(appropriations) and gifts will result in operating deficits (losses).
The Governmental Accounting Standards Board (GASB) requires
state appropriations and gifts to be classified as nonoperating
revenues.
The purpose of the statement is to present the revenues
received by UCO, both operating and nonoperating, and the
expenses paid by the institution, operating and nonoperating, and
any other revenues, expenses, gains and losses received or spent.
Operating revenues are generally received for providing goods
and services to the various customers of UCO. Operating
expenses are those expenses paid to acquire or produce the
goods and services provided in return for the operating revenues,
and to carry out the mission of UCO. Nonoperating revenues are
revenues received for which goods and services are not provided.
State capital appropriations are considered neither operating nor
nonoperating revenues and are reported under “Other Revenues,
Expenses, Gains and Losses”.
The following summarizes UCO’s revenues, expenses and
changes in net assets, for the year ended June 30:
Operating Revenues
Tuition &
Fees
65.70%
Housing Fees
13.20%
Auxilliary &
Other
9.56%
Grants &
Partners
11.53%
Operating Revenue Fiscal Year 2010
In July 2010, UCO hosted the World Sitting Volleyball
championships. 26 countries spanning five continents competed
and put the “C” of Community to the test. Community is not just
about your campus, your country or you. Thousands of hours and
an army of student and staff volunteers later; UCO passed the
test.
5
MANAGEMENT’S DISCUSSION & ANALYSIS
The following summarizes the operating revenues by source,
which were used to fund UCO’s operating activities for the fiscal
years ended June 30:
Operating revenues:
 2010 had a Tuition and Fee revenue increase of 4.34%
due to the increase in the credit hours for Fall, Spring
and Summer semesters. In 2009, improvement in
operating revenues was due to an increase in Tuition
and Fees associated with a boost in credit hours and an
increase in tuition over the prior fiscal year. Small class
size and personal attention given every student
attending UCO whether an incoming freshman or
graduating senior are still maintained even with the
growth in FTE and credit hours.
 UCO has a goal to grow the grant program to $20
million dollars by 2015. Grants have increase by
29.97% in 2010 over 2009 and a 23.66% increase
from 2008 to 2009. Increasing grant awards for
undergraduate research leads to an addition of $2.1
million dollars in 2010 to be used to enhance the
student experience.
 As more commuter students continued to sign up for a
meal plan, revenues in auxiliary grew by 10.8% for
2010. A complete remodeling of the food service areas
led to an 18% increase in meal plan sales in 2009 and
better all around quality for the student.
Operating Expenses
The following summarizes the operating expenses by the natural
classification, for the fiscal years ended:
Operating expenses increased $8.8 million in 2010 and $5.9
million 2009. Operating expenses reflect the normal expenses of
operating UCO, and carrying out the educational mission. The
increase in expenses reflects the use of increases in operating
revenues and declining state appropriations, as follows:
 Personnel service costs increased 2.1% equating to
$1.9 million in 2010 compared to a $4 million increase
in 2009. The major use of these funds resulted in the
employment of additional faculty and staff to meet the
demands due to record increases in student FTE and
credit hours. Growth in the area of instruction continues
to reflect UCO’s commitment to the quality of the
learning experience; reinforcing that the student and
their education is our first priority. Striving to hold back
costs, passed on to students through tuition, UCO is
continuing to hold salaries flat without raises.
 UCO’s green commitment is evident through the use of
100% wind power, biodiesel, sustainability efforts, a new
lead certified building, and the energy management
improvements throughout the campus that continue to
hold rising energy costs in check. Though utility costs
and consumption rose in fiscal years 2010, 2009 and
2008 for all areas of higher education, UCO’s
resourcefulness has held the line in controlling our utility
costs.
 As the average student continues to struggle to afford
the university experience, UCO continues to strive to
provide more financial aid per student to lighten that
burden. Scholarships and fellowships for 2010 reflect
an increase of $4.3 million dollars which is a 40.67%
increase over 2009. Scholarships in 2009 reflected a
$1.8 million dollar increase over 2008. In providing
increased scholarship and fellowship resources, UCO’s
is seeing an increase in first generation students and
returning veterans seeking to enhance their quality of
life and to give back to their community.
Nonoperating Revenues and Expenses
Certain revenue sources that UCO relies on to maintain more
affordable tuition rates and provide funding for operations,
including State Appropriations, which are defined under GASB as
nonoperating revenue. Nonoperating expenses include costs
related to capital assets. The following summarizes the
nonoperating revenues and expenses for the fiscal years ended:
The ��C” of Character is displayed when we keep our
commitments to others no matter the personal cost. Character
demonstrates honesty; keeps commitments; behaves in a
respectful manner; displays trustworthiness.
6
MANAGEMENT’S DISCUSSION & ANALYSIS
Net nonoperating revenues and expenses reflect a $5.8 million
increase in 2010 and an increase of $1.4 million in 2009. The
largest change is due to a $5.6 million receipt of financial aid for
2010 to meet the growing number of qualified student’s needs
due to a change in Federal regulations. In 2009, financial aid
increased by $1.3 million. State Appropriations continue to stay
fairly flat with a 1.27% increase in 2010 and a 2.7% increase in
2009. As State appropriations continue to reflect the State’s
financial position UCO continues to seek ways to offset dwindling
resources and reduce the size of requested tuition increase. The
2010 annual report from the Commissioners of Land Office
continues to show that UCO receives the fewest dollars per
student of any university in Oklahoma for capital expenditures.
STATEMENT OF CASH FLOWS
The Statement of Cash Flows provides additional information
about UCO’s financial results by reporting the major sources and
uses of cash. This statement will assist in evaluating UCO’s ability
to generate net cash flows, its ability to meet its obligations as
they come due, and its need for external financing. The statement
is divided into five parts. The first part deals with operating cash
flows and shows the net cash used by the operating activities of
UCO. The second section reflects cash flows from noncapital
financing activities. This section reflects the cash received and
spent for nonoperating, noninvesting, and noncapital financing
purposes. The third section deals with cash flows from capital
and related financing activities. This section deals with the cash
used for the acquisition and construction of capital and related
assets. The fourth section reflects the cash flows from investing
activities and shows the purchases, proceeds, and interest
received from investing activities. The fifth section reconciles the
net cash used to the operating income or loss reflected on the
Statement of Revenues, Expenses and Changes in Net Assets.
The following summarizes UCO’s cash flow for the years ending:
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2010, UCO has $117.6 million in capital assets,
net of accumulated depreciation compared to 2009 where UCO
had $109.7 million in capital assets, net of accumulated
depreciation. The following table summarizes UCO’s capital
assets, net of accumulated depreciation:
Debt Administration
As of June 30, 2010, UCO had $79.5 million compared to 2009
where UCO had $82.6 million in outstanding bonds, capital
leases, and notes payable, representing a decrease of
approximately $3.1 million in 2010 and $3.9 million in 2009. This
decrease represents the payments on existing obligations. The
following summarizes the outstanding long-term debt as of:
The “C” of Civility is open to others' ideas and opinions;
courteous when speaking to others; considerate of the feelings
and thoughts of others; tolerant. Civility is grasping the idea
that we are interdependent no matter who we are.
7
MANAGEMENT’S DISCUSSION & ANALYSIS
ECONOMIC OUTLOOK
The State of Oklahoma provided approximately 39.13% for
FY10 and 43.5% for FY09 of the University of Central Oklahoma’s
revenue resources for the operation of the university. Looking
forward to FY11, State revenues, which support higher education,
are in a state of uncertainty. Though first quarter reports show the
State’s results are better than the same time last year. UCO
continues to be cautious regarding State funding support. UCO’s
FY11 State Appropriations are slated to decrease at least one
million dollars and the Federal stimulus funds passed to UCO will
decrease approximately five hundred thousand dollars. Federal
stimulus dollars will not be available beyond FY11.
Enrollment continues to increase even with current economic
uncertainty. Fall of FY11 enrollment is up 6.27% over the Fall
semester of FY10 which itself was an increase of 2.34% over the
prior year’s Fall semester. However, the continued slow economic
recovery, of the State and Nation, creates a shadowy picture at
best, therefore fluctuations of both number of students and credit
hour production is uncertain.
As shown in the attached financial statements, the University
had an approximate $5.7 million dollar increase in operating
revenues for the year FY10. In the FY09 operating revenue
increased $5.9 million dollars from FY08. Undergraduate research
grants funding increased $2.1 million dollars over the FY09. Also
Federal financial aid increased $5.5 million dollars in FY10 where
previously the FY09 increase was only $1.3 million dollars. These
indicators of strong financial position will allow the university to
manage the upcoming year without significant reductions in
programming or services. We will continue to monitor the State
and National economic conditions as part of our financial decision
making process.
The University continues to develop scenarios to reduce costs
and increase operating revenues to protect critical academic
programming, while being sensitive to the individual economic
condition of our students. We are not aware of any additional
facts or conditions expected to have a significant impact on the
financial position or results of operations during the upcoming
fiscal year.
The outlook is positive for the new degree programs that have
grown from the first class of 150 in August 2009 to 400 that
began classes in August 2010. ACM is reaching both traditional
and non-traditional music students and has brought nation-wide
acclaim to UCO in just its first year.
Roger Daltrey, lead singer of the Who, was on campus at ACM
to teach one of the Master’s classes during the year. Here he is
answering questions with Scott Booker, CEO of ACM after the
session.
STATEMENTS OF NET ASSETS
UNIVERSITY OF CENTRAL OKLAHOMA
2010 2009 2010 2009
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 40,731,032 $ 34,602,547 $ 494,888 $ 2,554,224
Restricted cash and cash equivalents 8,455,083 7,860,921 - -
Restricted Investments 5,846,704 15,856,817 3,608,813 3,881,649
Investments held by others - - 158,464 145,983
Accounts receivable, net 14,280,553 11,643,289 - -
Interest receivable 39,980 35,951 40,200 67,305
Loan receivable - - - 4,939
Prepaid expenses 6,099 5,410 4,144 6,143
Inventories 32,840 38,205 - -
Contributions receivable - - 477,782 673,058
Current portion of student loans receivable, net 105,000 175,000 - -
TOTAL CURRENT ASSETS 69,497,291 70,218,140 $ 4,784,291 $ 7,333,301
NONCURRENT ASSETS
Restricted investments 3,309,660 1,994,472 $ 14,152,732 $ 10,861,453
Investments held by others - - 236,645 220,620
Student loans receivable, net 1,996,508 1,798,188 - -
Other assets 563,772 587,897 22,517 22,518
Prepaid pension asset 2,145,426 2,247,048 - -
Capitalized collections 4,544,290 4,544,290 - -
Capital assets, net 113,066,896 105,128,864 1,656,950 1,703,139
TOTAL NONCURRENT ASSETS 125,626,552 116,300,759 16,068,844 12,807,730
TOTAL ASSETS $ 195,123,843 $ 186,518,899 $ 20,853,135 $ 20,141,031
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 4,490,858 $ 3,916,091 $ 226,399 $ 27,260
Accrued payroll and benefits 2,635,045 2,463,639 - -
Accrued interest payable 370,357 383,478 - -
Deferred revenue 2,983,033 2,506,838 - -
Deposits held in custody for others 494,964 406,670 158,302 147,023
Current portion of noncurrent liabilities 4,800,557 4,673,213 37,494 35,892
TOTAL CURRENT LIABILITIES 15,774,814 14,349,929 422,195 210,175
NONCURRENT LIABILITIES, net of current portion
Accrued compensated absences 1,224,225 1,286,104 $ - $ -
Federal loan program contributions refundable 1,840,864 1,868,798 - -
Bonds payable 45,600,000 47,635,000 - -
Notes payable 6,070,000 6,475,000 849,148 886,642
ODFA master lease obligation 5,973,572 5,617,192 - -
Lease obligation payable to state agency 18,624,880 19,769,059 - -
TOTAL NONCURRENT LIABILITIES 79,333,541 82,651,153 849,148 886,642
TOTAL LIABILITIES $ 95,108,355 $ 97,001,082 $ 1,271,343 $ 1,096,817
NET ASSETS
Invested in capital assets, net of related debt $ 29,655,233 $ 27,552,410 $ - $ -
Restricted for:
Nonexpendable 659,161 622,567 13,223,599 12,694,809
Expendable: 3,239,830 3,338,571
Scholarships, research, instruction and other 4,185,720 4,105,921 - -
Loans 348,410 344,020 - -
Capital projects 1,039,784 2,253,963 - -
Debt service 17,670,365 15,541,835 - -
Unrestricted 46,456,815 39,097,101 3,118,363 3,010,834
TOTAL NET ASSETS $ 100,015,488 $ 89,517,817 $ 19,581,792 $ 19,044,214
See notes to financial statements
University
June 30,
Component Units
June 30,
Aggregate Discretely Presented
8
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
UNIVERSITY OF CENTRAL OKLAHOMA
2010 2009 2010 2009
OPERATING REVENUES
Student tuition and fees (included in fees are $3,724,953
of revenues dedicated for bond repayments) $ 70,040,850 $ 64,918,509 $ - $ -
Less scholarship, discounts and allowances (18,442,726) (15,464,475) - -
Net student revenues 51,598,124 49,454,034 - -
Federal grants and contracts 3,246,632 1,966,059 - -
State and local grants and contracts 5,810,036 5,001,837 - -
Bookstore operations 1,031,191 979,103 - -
Housing and food service revenues ($1,391,720 and
pledged as security on 2001 UCO Student
Housing Foundation Bonds) 10,365,234 9,148,526 - -
Parking and University Center revenues
(total revenues are dedicated as
security for bond repayments.) 2,264,008 2,198,882 - -
Interest earned on loans to students 18,749 18,883 - -
Other operating revenues 4,434,245 4,234,070 - -
TOTAL OPERATING REVENUES 78,768,219 73,001,394 - -
OPERATING EXPENSES
Compensation and employee benefits 98,348,469 96,355,796 - -
Contractual services 3,883,232 3,627,098 56,012 17,099
Supplies and materials 16,426,408 14,992,191 63,050 3,033
Depreciation 6,616,650 6,459,207 47,665 287
Utilities 2,683,617 2,678,376 - -
Scholarships and fellowships 15,087,260 10,724,494 - -
Other operating expenses 14,521,361 13,937,773 2,284,154 1,698,468
TOTAL OPERATING EXPENSES 157,566,997 148,774,935 2,450,881 1,718,887
Operating income (loss) (78,798,778) (75,773,541) (2,450,881) (1,718,887)
NONOPERATING REVENUES (EXPENSES)
State appropriations 60,909,102 64,376,151 - -
State appropriations - ARRA funds 4,286,658 - - -
Federal funded student aid 18,894,687 13,333,243 - -
OTRS on-behalf contributions 3,905,924 4,138,019 - -
Gifts - 1,966 1,824,882 2,425,235
Net/investment income (losses) 828,052 1,200,703 1,163,577 (2,106,057)
Interest expense (3,570,237) (3,680,812) - -
NET NONOPERATING REVENUES (EXPENSES) 85,254,186 79,369,270 2,988,459 319,178
Income (loss) before other revenues, expenses,
gains and losses 6,455,408 3,595,729 537,578 (1,399,709)
State appropriations restricted for capital purposes 1,721,978 1,777,330 - -
OCIA on-behalf state appropriations 2,154,747 2,141,105 - -
Gift of capital assets 165,538 192,640 - -
CHANGE IN NET ASSETS 10,497,671 7,706,804 537,578 (1,399,709)
NET ASSETS, BEGINNING OF YEAR 89,517,817 81,811,013 19,044,214 20,443,923
NET ASSETS, END OF YEAR $ 100,015,488 $ 89,517,817 $ 19,581,792 $ 19,044,214
See notes to financial statements.
Aggregate Discretely Presented
Year Ended June 30,
Component Units
$1,388,862 for 2010 and 2009, respectively,
and $3,539,890 for 2010 and 2009, respectively,
Year Ended June 30,
University
9
STATEMENTS OF CASH FLOWS
UNIVERSITY OF CENTRAL OKLAHOMA
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Tuition and fees $ 46,765,236 $ 49,316,590
Grants and contracts 9,920,466 6,223,642
Auxiliary enterprises and other receipts 19,874,476 16,378,228
Interest collected on loans to students 18,749 18,883
Payments to employees for salaries and benefits (94,232,515) (91,675,563)
Payments to suppliers and others (51,863,877) (47,460,315)
Loans issued to students (280,067) (497,648)
Collections of loans issued to students 151,747 203,779
Net cash used in operating activites (69,645,785) (67,492,404)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
State and federal aid 84,090,447 77,711,360
Other student financial assistance received (54,385,500) (48,695,790)
Other student financial assistance disbursed 54,385,500 48,695,790
Net cash provided by noncapital financing activities 84,090,447 77,711,360
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investments 10,043,023 10,022,432
Purchases of investments (1,348,096) (1,348,098)
Interest income received 824,023 1,200,068
Net cash provided by investing activities 9,518,950 9,874,402
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Cash paid for capital assets (14,593,533) (16,122,782)
Capital appropriations received 1,721,978 1,777,328
Proceeds of capital debt and leases 1,216,538 192,640
Payments on capital debt and leases (2,995,393) (2,873,414)
Interest paid on capital debt and leases (2,590,555) (2,651,115)
Net cash used in capital and related financing activities (17,240,965) (19,677,343)
Net increase in cash and cash equivalents 6,722,647 416,015
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 42,463,468 42,047,453
CASH AND CASH EQUIVALENTS, END OF YEAR $ 49,186,115 $ 42,463,468
Year Ended June 30,
10
STATEMENTS OF CASH FLOWS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
2010 2009
RECONCILIATION OF OPERATING LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
Operating Loss $ (78,798,778) $ (75,773,541)
Adjustments to reconcile operating loss to net cash
used in operating activities
Depreciation and amortization expense 6,616,650 6,459,207
Loss on disposal of fixed assets 3 8,851 2 9,192
Amortization 3 1,124 -
On-behalf contributions to teachers' retirement system 3,905,924 4,138,019
Changes in assets and liabilities
Accounts receivable (2,637,264) (1,109,810)
Prepaid pension asset 101,622 7,698
Prepaid expense (689) 838
Inventories 5,365 2,583
Student loans receivable (128,320) (293,869)
Accounts payable 574,767 (1,516,443)
Accrued payroll and benefits 171,406 272,642
Student and other deposits 8 8,294 (15,715)
Deferred revenues 476,195 7 8,997
Federal loan program contributions refundable (27,934) (34,076)
Accrued compensated absences (62,998) 261,874
Net cash used in operating activities $ (69,645,785) $ (67,492,404)
NONCASH INVESTING, NONCAPITAL FINANCING AND
CAPITAL AND RELATED FINANCING ACTIVITIES
Interest on capital debt paid by State Agency $ 992,803 $ 1,045,957
on behalf of the University
Principal on capital debt paid by State Agency
on behalf of the University 1,161,944 1,095,148
Total noncash investing, noncapital financing
and capital and related financing activities $ 2,154,747 $ 2,141,105
RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO THE STATEMENTS OF NET ASSETS
Current assets
Cash and cash equivalents $ 40,731,032 $ 34,602,547
Restricted cash and cash equivalents 8,455,083 7,860,921
Total cash and cash equivalents $ 49,186,115 $ 42,463,468
See notes to financial statements.
Year Ended June 30,
11
NOTES TO FINANCIAL STATEMENTS
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
12
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity: University of Central Oklahoma (the University) is a metropolitan university
operating under the jurisdiction of the Regional University System of Oklahoma and the
Oklahoma State Regents for Higher Education. The University is a component unit of the State
of Oklahoma (the “State”) and is included in the general purpose financial statements of the
State as part of the higher education component unit.
Blended Component Unit: Based on Governmental Accounting Standards Board (GASB)
Statement No. 14, The Financial Reporting Entity, and Governmental Accounting Standards
Board (GASB) No. 39, Determining Whether Certain Organizations Are Component Units-an
amendment of GASB statement No. 14, for determining component units, UCO Student Housing
Foundation (the “Housing Foundation”) is included within the University reporting entity as a
blended component unit.
The Housing Foundation is responsible for administration and operation of the University
Suites, a student housing facility constructed with bond revenues issued through the Edmond
Economic Development Authority. The Housing Foundation is governed by a Board of
Directors comprised primarily of management of the University. In addition, University
employees and facilities are used for virtually all activities of the Housing Foundation. Separate
financial statements of the Housing Foundation have been prepared and can be obtained by
contacting the University’s Assistant Vice President for Administration.
Discretely Presented Component Units: Based on the criteria for determining component units
from GASB Statement No. 39, certain University direct support organizations are included
within the University’s reporting entity as discretely presented component units. The nature
and significance of the relationship between the University and the component units are such
that exclusion would cause the University’s financial statements to be misleading or incomplete.
These are separate, not-for-profit corporations organized and operated exclusively to assist the
University to achieve excellence by providing supplemental support and resources. An annual
audit of each organization’s financial statements is conducted by independent certified public
accountants. Separate financial statements of the University’s component units can be obtained
by contacting the University’s Assistant Vice President for Administration.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
13
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Discretely Presented Component Units--Continued:
The discretely presented component units included in the University’s financial reporting entity
are:
University of Central Oklahoma Foundation, Inc. (the “University Foundation”) is a
separate legal entity with its own Board of Trustees. The Foundation provides support for
the University by way of scholarships and other direct resources. The University contracts
with the Foundation to provide limited services and office space in exchange for the support
the University receives from the Foundation. A portion of the scholarships awarded by the
Foundation is remitted to the University after the University pays the award recipient.
University of Central Oklahoma Alumni Association (the “Association”) establishes and
maintains a close relationship and cooperation between the alumni of the University and
their alma mater. The University supports the Association by providing personnel, office
space, furniture and equipment at no charge to the Association.
KCSC Classical Radio Foundation (“KCSC Foundation”) is a 501(c) (3) organization created to
support the University’s KCSC Radio Station. Its purpose is to support and promote
classical music radio in Oklahoma.
The University’s component units are nonprofit organizations that report under Financial
Accounting Standards Board (FASB) standards. As such, certain revenue recognition criteria
and presentation features are different from GASB revenue recognition criteria and presentation
features. No modifications have been made to the component units’ financial information in the
University's financial reporting entity for these differences.
Although the University is the exclusive beneficiary of the component units, the component
units are independent of the University in all respects. The component units are not subsidiaries
or affiliates of the University and are not directly or indirectly controlled by the University.
Moreover, the assets of the component units are the exclusive property of the component units
and do not belong to the University. The University is not accountable for, and does not have
ownership of, any of the financial and capital resources of the component units. The University
does not have the power or authority to mortgage, pledge, or encumber the assets of the
component units. The Board of Directors / Trustees of the component units are entitled to make
all decisions regarding the business and affairs of the component units, including, without
limitation, distributions made to the University. Third parties dealing with the University
should not rely upon the financial statements of the component units for any purpose without
consideration of all of the foregoing conditions and limitations.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
14
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Financial Statement Presentation: The University’s financial statements are presented in
accordance with the requirements of GASB Statement No. 34, Basic Financial Statements and
Management’s Discussion and Analysis – for State and Local Governments, and GASB Statement No.
35, Basic Financial Statements and Management’s Discussion and Analysis for Public Colleges and
Universities. Under GASB Statements No. 34 and 35, the University is required to present a
statement of net assets classified between current and noncurrent assets and liabilities, a
statement of revenues, expenses and changes in net assets, with separate presentation for
operating and non-operating revenues and expenses, and a statement of cash flows using the
direct method.
Basis of Accounting: For financial reporting purposes, the University is considered a special
purpose government engaged only in business-type activities. Accordingly, the University’s
financial statements have been presented using the economic resources measurement focus and
the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned,
and expenses are recorded when an obligation has been incurred. All significant intra-agency
transactions have been eliminated. The University has the option to apply all Financial
Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless
FASB conflicts with GASB. The University has elected to not apply FASB pronouncements
issued after the applicable date.
Cash Equivalents: For purposes of the statements of cash flows, the University considers all
highly liquid investments with an original maturity of three months or less to be cash equivalents.
Funds invested through the State Treasurer’s Cash Management Program are considered cash
equivalents. The University Foundation excludes cash and cash equivalent funds held in the
Foundation’s investment portfolio as cash equivalents.
Investments: The University accounts for its investments at fair value in accordance with GASB
Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External
Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are
reported as a component of investment income in the statements of revenues, expenses and
changes in net assets.
The University Foundation investments consist of cash and cash equivalents, certificates of
deposits, government agency securities, corporate bonds, mutual funds, common and preferred
stocks, pooled funds, and limited partnership interests. Investments are carried at fair value and
realized gains and losses on sales of investments are computed on the first-in, first-out basis.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
15
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Accounts Receivable: Accounts receivable consists of tuition and fee charges to students and
auxiliary enterprise services provided to students, faculty and staff, the majority of each
residing in the State of Oklahoma. Accounts receivable also include amounts due from the
federal, state and local governments, or private sources, in connection with reimbursement of
allowable expenditures made pursuant to the University’s grants and contracts. Accounts
receivable are recorded net of estimated uncollectible amounts.
Inventories: Inventories are carried at the lower of cost or market on the first-in, first-out (“FIFO”)
basis.
Restricted Cash and Investments: Cash and investments that are externally restricted to make
debt service payments maintain sinking or reserve funds, or to purchase capital or other
noncurrent assets are classified as restricted assets in the statements of net assets.
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, net of accumulated depreciation. For equipment, the
University’s capitalization policy includes all items with a unit cost of $2,500 or more, and an
estimated useful life of greater than one year. Renovations to buildings, infrastructure, and
land improvements that significantly increase the value or extend the useful life of the structure
are capitalized. Routine repairs and maintenance are charged to operating expense in the year
in which the expense was incurred. Depreciation is computed using the straight-line method
over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 30 years
for infrastructure, land improvements, and building renovations, and 5 to 10 years for library
materials and equipment. Impairments are recorded to reduce the carrying value of the assets
to their net realizable value determined by management based on facts and circumstances at the
time of the determination. No property and equipment impairments were recorded in 2010 or
2009.
Capitalized Collections: Collections are capitalized at estimated fair values at the date of
contribution. The University’s capitalized collections consist primarily of works of art. These
collections were valued for reporting purposes at $4,544,290 and $4,544,290 at June 30, 2010 and
2009, respectively. Contributions in the value of $165,538 and $183,740 were received at June 30,
2010 and 2009, respectively. The University Foundation does not include either the cost or the
value of its collections in the statements net assets, nor does it recognize gifts of collection items as
revenues in the statements of revenues, expenses and changes in net assets.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
16
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Deferred Revenue: Deferred revenues include amounts received for tuition and fees and certain
auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting
period.
Compensated Absences: Employees’ vacation pay and compensatory time are accrued at year-end
for financial statement purposes. The liability and expense incurred are recorded at year-end
as accrued compensated absences in the statements of net assets, and as a component of
compensation and benefit expense in the statement of revenues, expenses and changes in net
assets.
Noncurrent Liabilities: Noncurrent liabilities include (1) principal amounts of revenue bonds
payable, notes payable, and capital lease obligations with contractual maturities greater than
one year, and (2) estimated amounts for accrued compensated absences and other liabilities that
will not be paid within the next fiscal year.
Net Assets: The University’s net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the University’s total investment in
capital assets, net of outstanding debt obligations related to those capital assets. To the
extent debt has been incurred but not yet expended for capital assets, such amounts are not
included as a component of invested in capital assets, net of related debt.
Restricted net assets – expendable: Restricted expendable net assets include resources in which
the University is legally or contractually obligated to spend resources in accordance with
restrictions imposed by external third parties.
Restricted net assets – nonexpendable: Nonexpendable restricted net assets consist of
endowment and similar type funds in which donors or other outside sources have
stipulated, as a condition of the gift instrument, that the principal is to be maintained
inviolate and in perpetuity, and invested for the purpose of producing present and future
income, which may either be expended or added to principal.
Unrestricted net assets: Unrestricted net assets represent resources derived from student
tuition and fees, state appropriations, and sales and services of educational departments and
auxiliary enterprises. These resources are used for transactions relating to the educational
and general operations of the University, and may be used at the discretion of the governing
board to meet current expenses for any purpose. These resources also include auxiliary
enterprises, which are substantially self-supporting activities that provide services for
students, faculty and staff.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
17
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Net Assets--Continued: When an expense is incurred that can be paid using either restricted or
unrestricted resources, the University’s policy is to first apply the expense towards restricted
resources, and then toward unrestricted resources.
Income Taxes: The University, as a political subdivision of the State, is exempt from all federal
income taxes under Section 115(1) of the Internal Revenue Code, as amended. The discretely
presented component units of the University are generally exempt from federal income taxes
under applicable provisions of Section 501 of the Internal Revenue Code. The component units
are exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. As a
result, no provision for income taxes is included in the financial statements.
Use of Estimates: The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make estimates and
assumptions that affect certain reported assets and liabilities and disclosures of contingencies at
the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
Classification of Revenues: The University has classified its revenues as either operating or
non-operating revenues according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of
exchange transactions, such as (1) student tuition and fees, net of scholarship discounts and
allowances, (2) sales and services of auxiliary enterprises, net of scholarship discounts and
allowances, (3) certain grants and contracts and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics
of non-exchange transactions, such as gifts and contributions, student aid revenues and
other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting
Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use
Proprietary Fund Accounting, and GASB No. 34, such as state appropriations, governmental
and other pass through grants and investment income.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
18
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Scholarship Discounts and Allowances: Student tuition and fee revenues, and certain other
revenues from students, are reported net of scholarship discounts and allowances in the
statements of revenues, expenses, and changes in net assets. Scholarship discounts and
allowances are the difference between the stated charge for goods and services provided by the
University and the amount that is paid by students and/or third parties making payments on
the students’ behalf. Certain governmental grants, such as Pell grants, and other Federal, State
or nongovernmental programs are recorded as either operating or non-operating revenues in
the University’s financial statements. To the extent that revenues from such programs are used
to satisfy tuition and fees and other student charges, the University has recorded a scholarship
discount and allowance.
NOTE B--DEPOSITS AND INVESTMENTS
Deposits: Custodial credit risk for deposits is the risk that in the event of a bank failure, the
University’s deposits may not be returned or the University will not be able to recover collateral
securities in the possession of an outside party. Generally, the University deposits its funds
with the Office of the State Treasurer (OST) and those funds are pooled with funds of other state
agencies and then, in accordance with statutory limitations, are placed in financial institutions
or invested as the OST may determine, in the State’s name. State statutes require the OST to ensure
that all state funds are either insured by Federal Deposit Insurance, collateralized by securities
held by the cognizant Federal Reserve Bank, or invested in U.S. government obligations.
The OST’s responsibilities include receiving and collateralizing the deposit of State funds,
investing State funds in compliance with statutory requirements, and maintaining adequate
liquidity to meet the cash flow needs of the State. If the University deposits funds directly with
financial institutions, those funds must be insured by Federal Deposit Insurance or
collateralized by securities held by the cognizant Federal Reserve Bank in the University’s
name. Some deposits with the OST are placed in the OST’s internal investment pool OK
INVEST. OK INVEST pools the resources of all state funds and agencies.
The State Treasurer has determined that current holdings in OK INVEST should be limited to
obligations of the US Government, its agencies and instrumentalities; including agency senior
debt and mortgage-backed pass-through securities, obligations of state and local governments,
tri-party repurchase agreements, money market mutual funds, collateralized Certificates of
Deposit, and State of Israel Bonds. Various other investments, as allowed by law, may be added
to the OK Invest portfolio as the State Treasurer determines.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
19
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Deposits--Continued: At June 30, 2010 and 2009, the carrying amount of all University and
blended component unit deposits with the OST and other financial institutions was $49,168,385
and $42,445,239, respectively. These amounts consisted of deposits with the OST ($48,799,485
and $41,983,535) and U.S. financial institutions ($388,900 and $461,704). The University also
maintains petty cash funds totaling $17,730 in 2010 and $18,230 in 2009. Of funds on deposit
with the OST, amounts invested in OK INVEST total $15,062,558 in 2010 and $13,010,648 in
2009.
For financial reporting purposes, deposits with the OST that are invested in OK INVEST are
classified as cash equivalents. The distribution of deposits in OK INVEST is as follows:
Cost Market
U.S. agency securities $ 5,771,361 $ 5,868,262
Money market mutual funds 1,318,437 1,318,437
Certificates of deposit 856,735 856,735
Tri-party repurchase agreements 965,981 965,981
Mortgage-backed agency securities 5,328,812 5,560,347
Municipal bonds 324,540 347,980
Foreign bonds 60,375 59,699
U.S. Treasury obligations 436,317 461,837
TOTAL $ 15,062,558 $ 15,439,278
June 30, 2010
OK INVEST Portfolio
Cost Market
U.S. agency securities $ 5,726,092 $ 5,897,680
Money market mutual funds 1,025,821 1,025,821
Certificates of deposit 829,217 829,217
Tri-party repurchase agreements 1,016,267 1,016,267
Mortgage-backed agency securities 2,950,203 2,985,961
Municipal bonds 209,225 210,940
Foreign bonds 24,787 24,787
U.S. Treasury obligations 1,229,036 1,271,982
TOTAL $ 13,010,648 $ 13,262,655
June 30, 2009
OK INVEST Portfolio
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
20
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Deposits--Continued: Agencies and funds that are considered to be part of the State’s reporting
entity in the State’s Comprehensive Annual Financial Report and who have funds deposited with
the State Treasurer are allowed to participate in OK INVEST. Oklahoma statutes and the OST
establish the primary objectives and guidelines governing the investment of funds in OK INVEST.
Safety, liquidity, and return on investment are the objectives which establish the framework for
the day to day OK INVEST management with an emphasis on safety of the capital and the
probable income to be derived and meeting the State’s daily cash flow requirements.
Guidelines in the investment policy address credit quality requirements, diversification
percentages and specify the types and maturities of allowable investments, and the specifics
regarding these policies can be found on the OST website at www.ok.gov/treasurer/.
The State Treasurer, at his discretion, may further limit or restrict such investments on a day to day
basis. OK INVEST includes a substantial investment in securities with an overnight maturity as
well as in U.S. government securities with a maturity of up to ten years. OK INVEST maintains
an overall weighted average maturity of less than 2 years. Participants in OK INVEST maintain
an interest in its underlying investments and, accordingly, may be exposed to certain risks. As
stated in the OST information statement, the main risks are interest rate risk, credit/default risk,
liquidity risk, and U.S. government securities risk. Interest rate risk is the risk that during periods
of rising interest rates, the yield and market value of the securities will tend to be lower than
prevailing market rates; in periods of falling interest rates, the yield will tend to be higher.
Credit/default risk is the risk that an issuer or guarantor of a security, or a bank or other
financial institution that has entered into a repurchase agreement, may default on its payment
obligations. Liquidity risk is the risk that OK INVEST will be unable to pay redemption
proceeds within the stated time period because of unusual market conditions, an unusually high
volume of redemption requests, or other reasons. U.S. Government securities risk is the risk that
the U.S. government will not provide financial support to U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by law. Various investment
restrictions and limitations are enumerated in the State Treasurer’s Investment Policy to mitigate
those risks; however, any interest in OK INVEST is not insured or guaranteed by the State, the
Federal Deposit Insurance Corporation or any other government agency.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
21
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Deposits--Continued: The University Foundation maintains cash in bank deposit accounts that, at
times, may exceed federally insured limits. The University has not experienced any losses in such
accounts and believes that it is not exposed to any significant credit risk on cash or cash
equivalents.
Investments: Investment credit risk is the risk that an issuer or other counterparty to an
investment will not fulfill its obligations. Generally, the University’s investments are managed
by the State Treasurer. In accordance with state statutes, the State Treasurer may only purchase
and invest in (a) United States treasury bills, notes and bonds and obligations fully insured or
unconditionally guaranteed; (b) United States government agency securities; (c) collateralized or
insured certificates of deposits; (d) negotiable certificates of deposits; (e) bankers’ acceptances;
(f) commercial paper; (g) obligations of state and local governments, including obligations of
Oklahoma State public trusts; (h) and repurchase agreements and tri-party repurchase
agreements. Interest rate risk is the risk that changes in interest rates will adversely affect the
fair value of an investment. Investments that are held for longer periods of time are subject to
increased risk of adverse interest changes. Neither the University nor State statutes limit
investment maturities as a means of managing exposure to fair value losses arising from
increasing interest rates; however, the OST Investment Policy limits the average maturity on its
portfolio to four (4) years, with certain individual securities having more restrictive limits as
defined in the policy. Concentration of credit risk is the risk of loss attributed to the magnitude
of the University’s investment in a single issuer. Neither the University’s investment policy nor
State statutes place limits on amounts that can be invested in any one issuer; however, the OST
Investment Policy states that, with the exception of U.S. Treasury securities, no more than 50%
of the State’s total funds may be invested in a single security type or with a single financial
institution, with diversification percentages being more restrictive on individual securities.
Custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty, the University will not be able to recover the value of its investments or collateral
securities in the possession of an outside party. As of June 30, 2010 and 2009, none of the
University’s investments were subject to custody credit risk.
The University component units have funds invested with Merrill Lynch and other local
banking institutions. The majority of marketable securities are combined in common
investment pools and invested on the basis of a total return policy to provide income and
improve opportunities to realize appreciation in investment values. At June 30, 2010 and 2009,
respectively, $3,034,813 and $3,556,649 are classified as current and $14,152,732 and $10,861,453
are classified as noncurrent on the statements of net assets.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
22
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Bond Fund Cash and Investments: Certain non-pooled cash and investments are restricted in
purpose by policies incorporated in applicable bond indentures. Credit risk policy generally
restricts investing to cash, investments fully insured by the FDIC and U.S. government and
agency securities or mutual funds investing in these types of securities.
There may be some variance among the investments authorized by the specific bond indentures
of University bond issues. A trustee bank generally provides the management of restricted,
non-pooled investments. Custodial credit risk is not addressed by bond indentures. Interest
rate risk in bond indentures provide that investments mature in no more than six to sixty
months depending on the purpose of the funds and the requirements of the account in which
the funds are deposited (i.e. construction, reserve, operations and maintenance, etc.)
Concentration of credit risk is not addressed.
At June 30, 2010 and 2009, the University had investments in restricted bond funds totaling
$9,156,364 and $17,851,289, respectively. At June 30, 2010 and 2009, respectively, $5,846,704 and
$15,865,817 are classified as current and $3,309,660 and $1,994,472 are classified as noncurrent
on the statement of net assets. The fair market value of these funds approximated their carrying
value at June 30, 2010 and 2009. The invested bond funds are not subject to maturity dates and
are due on demand. According to Standard and Poor’s rating service, the funds had an average
credit rating of AAAm at June 30, 2010.
All investments for the University, including its blended component unit, and discrete
component units at June 30, 2010 and 2009, respectively, were as follows:
Component
University Unit
Investments Investments
Cash and cash equivalent funds $ 8,764,351 $ 941,552
Guaranteed investment contract 392,013 -
Certificate of deposit - 3,636,793
Government securities - 2,585,534
Corporate bonds - 1,169,418
Mutual funds - 4,336,237
Equity Securities - 5,187,383
Other - 63,092
$ 9,156,364 $ 17,920,009
2010
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
23
NOTE B--DEPOSITS AND INVESTMENTS--Continued
Bond Fund Cash and Investments--Continued:
Component
University Unit
Investments Investments
Cash and cash equivalent funds $ 17,459,276 $ 513,369
Guaranteed investment contract 392,013 -
Certificate of deposit - 3,556,649
Government securities - 3,629,373
Corporate bonds - 527,568
Mutual funds - 103,054
Equity Securities - 5,288,778
Other - 1,124,311
$ 17,851,289 $ 14,743,102
2009
NOTE C--ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following at June 30, 2010 and 2009:
2010 Component
University Units
Student tuition and fees $ 10,172,374 $ -
Auxiliary enterprises and other operating activities 11,067,524 -
Federal, state, and private grants and contracts 1,886,959 -
Contributions receivable - 485,601
23,126,857 485,601
Less allowance for doubtful accounts (8,846,305) (7,819)
Net accounts receivable $ 14,280,552 $ 477,782
2009 Component
University Units
Student tuition and fees $ 10,091,747 $ -
Auxiliary enterprises and other operating activities 7,355,191 -
Federal, state, and private grants and contracts 2,733,505 -
Contributions receivable - 694,556
20,180,443 694,556
Less allowance for doubtful accounts (8,537,154) ( 21,498)
Net accounts receivable $ 11,643,289 $ 673,058
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
24
NOTE D--NOTES RECEIVABLE
Student loans made through the Federal Perkins Loan Program (the “Program”) comprise
substantially all of the loans receivable at June 30, 2010 and 2009. Under this Program, the
federal government provides funds for approximately 90% of the total contribution for student
loans with the University providing the balance. Under certain conditions such loans can be
forgiven at annual rates of 10% to 30% of the original balance up to a maximum of 50% to 100%
of the original loan. The federal government reimburses the University to the extent of 10% of
the amounts forgiven for loans originated prior to July 1, 1993 under the Federal Perkins Loan
Program. No reimbursements are guaranteed for loans originated after this date.
Amounts refundable to the U.S. Government upon cessation of the Program of approximately
$1,841,000 and $1,869,000 at June 30, 2010 and 2009, respectively, are reflected in the
accompanying statements of net assets as noncurrent liabilities. As the University determines
loans are uncollectible and not eligible for reimbursement by the federal government, the loans
are written off and assigned to the U.S. Department of Education. The allowance for
uncollectible loans only applies to University funded loans and the University portion of federal
student loans, as the University is not obligated to fund the federal portion of uncollected
student loans. The University has provided an allowance for uncollectible loans that, in
management’s opinion, is sufficient to absorb loans that will ultimately be written off.
At June 30, 2010 and 2009, loans receivable consisted of the following:
2010 Component
University Units
Total loans receivable $ 2,258,439 $ 2 2,517
Less: allowance for uncollectible loans 156,931 -
Loans receivable, net $ 2,101,508 $ 2 2,517
2009 Component
University Units
Total loans receivable $ 2,111,312 $ 2 7,457
Less: allowance for uncollectible loans 138,124 -
Loans receivable, net $ 1,973,188 $ 2 7,457
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
25
NOTE E--CAPITAL ASSETS
Following are the changes in University capital assets for the year ended June 30, 2010:
Balance Retirements/ Balance
June 30, 2009 Additions Transfers Adjustments June 30, 2010
Capital assets not being depreciated
Land $ 2,201,502 $ 9,726 $ - $ - $ 2,211,228
Art Collections 4,544,290 - - - 4,544,290
Construction in-progress 12,663,008 11,307,339 - - 23,970,347
Total capital assets not being depreciated 19,408,800 11,317,065 - - 30,725,865
Other capital assets
Non-major infrastructure networks 1,450,621 45,282 - - 1,495,903
Land improvements 8,637,301 71,509 - - 8,708,810
Buildings 124,111,638 313,019 - - 124,424,657
Furniture, fixtures and equipment 30,849,710 2,846,658 - ( 1,411,872) 32,284,496
Library materials 17,786,850 - - - 17,786,850
Total other capital assets 182,836,120 3,276,468 - ( 1,411,872) 184,700,716
Less accumulated depreciation for
Non-major infrastructure networks (1,102,178) (74,795) - - ( 1,176,973)
Land improvements (5,465,974) ( 292,381) - - ( 5,758,355)
Buildings (48,260,568) (3,982,155) - - ( 52,242,723)
Furniture, fixtures and equipment ( 21,526,272) ( 2,241,562) - 1,373,021 ( 22,394,813)
Library materials (16,216,774) ( 25,757) - - (16,242,531)
Total accumulated depreciation ( 92,571,766) (6,616,650) - 1,373,021 ( 97,815,395)
Other capital assets, net 90,264,354 ( 3,340,182) - ( 38,851) 86,885,321
Capital asset summary:
Capital assets not being depreciated 19,408,800 11,317,065 - - 30,725,865
Other capital assets, at cost 182,836,120 3,276,468 - (1,411,872) 184,700,716
Total cost of capital assets 202,244,920 14,593,533 - ( 1,411,872) 215,426,581
Less accumulated depreciation ( 92,571,766) (6,616,650) - 1,373,021 ( 97,815,395)
Capital assets, net $ 109,673,154 $ 7,976,883 $ -$ ( 38,851) $ 117,611,186
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
26
NOTE E--CAPITAL ASSETS--Continued
Following are the changes in University capital assets for the year ended June 30, 2009:
Balance Retirements/ Balance
June 30, 2008 Additions Transfers Adjustments June 30, 2009
Capital assets not being depreciated
Land $ 2,181,916 $ 19,586 $ - $ - $ 2,201,502
Art Collections 4,360,550 183,740 - - 4,544,290
Construction in-progress 6,045,164 10,375,024 (3,757,180) - 12,663,008
Total capital assets not being depreciated 12,587,630 10,578,350 (3,757,180) - 19,408,800
Other capital assets
Non-major infrastructure networks 1,450,621 - - - 1,450,621
Land improvements 7,987,189 650,112 - - 8,637,301
Buildings 121,221,443 2,890,195 - - 124,111,638
Furniture, fixtures and equipment 25,765,339 2,004,124 3,757,180 (676,933) 30,849,710
Library materials 17,786,850 - - - 17,786,850
Total other capital assets 174,211,442 5,544,431 3,757,180 (676,933) 182,836,120
Less accumulated depreciation for
Non-major infrastructure networks (1,029,647) (72,531) - - (1,102,178)
Land improvements (5,178,076) (287,898) - - (5,465,974)
Buildings (44,481,177) (3,779,391) - - (48,260,568)
Furniture, fixtures and equipment (19,911,959) (2,262,054) - 647,741 (21,526,272)
Library materials (16,191,017) (25,757) - - (16,216,774)
Total accumulated depreciation (86,791,876) (6,427,631) - 647,741 (92,571,766)
Other capital assets, net 87,419,566 (883,200) 3,757,180 (29,192) 90,264,354
Capital asset summary:
Capital assets not being depreciated 12,587,630 10,578,350 (3,757,180) - 19,408,800
Other capital assets, at cost 174,211,442 5,544,431 3,757,180 (676,933) 182,836,120
Total cost of capital assets 186,799,072 16,122,781 - (676,933) 202,244,920
Less accumulated depreciation (86,791,876) (6,427,631) - 647,741 (92,571,766)
Capital assets, net $ 100,007,196 $ 9,695,150 $ -$ (29,192) $ 109,673,154
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
27
NOTE F--LONG-TERM LIABILITIES
University long-term liability activity for the year ended June 30, 2010 was as follows:
Amounts
Balance Balance due within
June 30, 2009 Additions Reductions June 30, 2010 one year
Bonds payable and capital
lease obligations
Revenue bonds payable $ 49,545,000 $ - $ (1,910,000) $ 47,635,000 $ 2,035,000
Capital lease obligations 26,176,102 1,058,000 (1,857,338) 25,376,764 778,312
Notes payable 6,865,000 - (390,000) 6,475,000 405,000
Total bonds and capital leases 82,586,102 1,058,000 (4,157,338) 79,486,764 3,218,312
Other liabilities
Accrued compensated absences 2,869,467 1,392,919 (1,455,915) 2,806,471 1,582,245
Federal loan program contributions 1,868,797 - (27,934) 1,840,863 -
Total other liabilities 4,738,264 1,392,919 (1,483,849) 4,647,334 1,582,245
Total long-term liabilities $ 87,324,366 $ 2,450,919 $ (5,641,187) $ 84,134,098 $ 4,800,557
University long-term liability activity for the year ended June 30, 2009 was as follows:
Amounts
Balance Balance due within
June 30, 2008 Additions Reductions June 30, 2009 one year
Bonds payable and capital
lease obligations
Revenue bonds payable $ 51,375,000 $ - $ (1,830,000) $ 49,545,000 $ 1,910,000
Capital lease obligations 27,939,664 - (1,763,562) 26,176,102 789,850
Notes payable 7,240,000 - (375,000) 6,865,000 390,000
Total bonds and capital leases 86,554,664 - (3,968,562) 82,586,102 3,089,850
Other liabilities
Accrued compensated absences 2,607,596 1,628,971 (1,367,100) 2,869,467 1,583,363
Federal loan program contributions 1,902,874 - (34,077) 1,868,797 -
Total other liabilities 4,510,470 1,628,971 (1,401,177) 4,738,264 1,583,363
Total long-term liabilities $ 91,065,134 $ 1,628,971 $ (5,369,739) $ 87,324,366 $ 4,673,213
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
28
NOTE F--LONG-TERM LIABILITIES--Continued
Revenue Bonds Payable
Revenue bonds payable consisted of the following at June 30, 2010 and 2009:
2010 2009
University Center and Parking Revenue
Refunding Bonds, Series 2003 $ 12,335,000 $ 13,060,000
Library Revenue Refunding Bonds, Series 2003 5,255,000 5,565,000
ODFA Public Facilities Financing Program
Revenue Refunding Bonds, Series 2003 2,045,000 2,280,000
Wellness Center Student Facilities Revenue Bonds, Series 2000 7,720,000 7,935,000
Wantland Stadium Facility Revenue Bonds, Series 2004 12,310,000 12,550,000
UCO Student Housing Foundation Revenue Bonds, Series 2001 7,970,000 8,155,000
Total Revenue Bonds Payable $ 47,635,000 $ 49,545,000
University Center and Parking Revenue Refunding Bonds, Series 2003
The University Center and Parking Revenue Bonds, issued June 1, 2003, are secured by and
payable both as to principal and interest from the student facility fee, parking fee, gross receipts
from operations of auxiliary enterprises, and all monies in funds and accounts held by the
trustee bank and are available for such payment.
Original Amount Bond Type Installment Date Installment Amount Interest Rate Interest Due
$ 9,690,000 Serial Final 06/1/2016 $ 710,000 to 875,000 2.00% to 3.60% Semiannual
7,500,000 Term 6/1/2019 $ 2,820,000 4.00% Semiannual
6/1/2022 $ 3 ,195,000 5.00% Semiannual
6/1/2023 $ 1 ,485,000 4.13% Semiannual
$ 17,190,000
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
29
NOTE F--LONG-TERM LIABILITIES--Continued
Library Revenue Refunding Bonds, Series 2003
The Library Revenue Bonds, issued June 1, 2003, are secured by and payable both as to
principal and interest from gross receipts from a library fee and all monies in funds and
accounts held by the trustee bank available for such payment.
Original Amount Bond Type Installment Date Installment Amount Interest Rate Interest Due
$ 4,150,000 Serial Final 06/1/2016 $ 305,000 to 375,000 2.00% to 3.60% Semiannual
3,185,000 Term 6/1/2019 $ 1,200,000 4.00% Semiannual
6/1/2022 $ 1,355,000 5.00% Semiannual
6/1/2023 $ 630,000 4.125% Semiannual
$ 7,335,000
Oklahoma Development Finance Authority (ODFA) Public Facilities Financing Program
Revenue Refunding Bonds, Series 2003A
The ODFA Series 2003A Bonds, issued June 1, 2003, are secured by and payable both as to
principal and interest from the University’s Section 13 and New College Funds received from
the State of Oklahoma and all monies in funds and accounts held by the trustee bank and
available for such payment.
Original Amount Bond Type Installment Date Installment Amount Interest Rate Interest Due
$ 3,635,000 Serial Final 06/1/2018 $ 220,000 to 275,000 2.00% to 4.00% Semiannual
Wellness Center Student Facilities Revenue Bonds Series 2000
The Wellness Center Student Facilities Revenue Bonds, issued August 22, 2000, are secured by
and payable both as principal and interest from, gross receipts of a $2.30 per credit hour Student
Facility Fee equal to at least 1.25 times the annual debt service requirement and funds held by
the trustee bank.
Original Amount Bond Type Installment Date Installment Amount Interest Rate Interest Due
$ 1,515,000 Serial Final 08/1/2010 $ 80,000 to 235,000 4.50% to 5.15% Semiannual
7,485,000 Term 8/1/2015 $ 1,565,000 5.40% Semiannual
8/1/2020 $ 2,395,000 5.60% Semiannual
8/1/2025 $ 3,525,000 5.70% Semiannual
$ 9,000,000
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
30
NOTE F--LONG-TERM LIABILITIES--Continued
UCO Student Housing Foundation Revenue Bonds Series 2001A and 2001B
The Student Housing Foundation Revenue Bonds, issued April 19, 2001, are secured by and
payable both as to principal and interest from general revenues and the accounts, documents,
chattel paper, instruments, and general intangibles arising in any manner from the UCO
Student Housing Foundation’s operation of the project.
Original Amount Bond Type Installment Date Installment Amount Interest Rate Interest Due
$ 8,305,000 Serial 6/1/2031 $ 150,000 to 615,000 Variable Semiannual
Regional University System of Oklahoma Student Facilities Revenue Bonds (Wantland Stadium
Revenue Bonds)
The Wantland Stadium Facility Revenue Bonds, issued July 7, 2004, are secured by a facility fee
of $3 per credit hour which is pledged for debt service requirements on these bonds. The
University has also recorded an asset for its pro-rata share of the bond issuance costs, and is
amortizing that asset over the term of the lease agreement. At June 30, 2010 and 2009, the
unamortized bond issuance costs totaled $168,960 and $175,600, respectively.
Original Amount Bond Type Installment Date Installment Amount Interest Rate Interest Due Taxable
$ 685,000 Serial Final 06/1/2010 $ 220,000 to 240,000 4.20% to 5.00% Semiannual X
3,075,000 Term 6/1/2019 $ 290,000 to 400,000 3.65% to 4.60% Semiannual
9,235,000 Term 6/1/2024 $ 2,340,000 5.50% Semiannual
6/1/2034 $ 6,895,000 5.00% Semiannual
$ 12,995,000
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
31
NOTE F--LONG-TERM LIABILITIES--Continued
The scheduled maturities of University revenue bonds payable are as follows for the years
ending June 30:
Principal Interest Total
Years Ending June 30:
2011 $ 2,035,000 $ 2,128,315 $ 4,163,315
2012 2,115,000 2,058,573 4,173,573
2013 2,210,000 1,982,023 4,192,023
2014 2,305,000 1,900,780 4,205,780
2015 2,395,000 1,812,223 4,207,223
2016 - 2020 13,195,000 7,481,572 20,676,572
2021 - 2025 12,970,000 4,134,871 17,104,871
2026 - 2030 6,630,000 1,771,701 8,401,701
2031 - 2035 3,780,000 430,619 4,210,619
$ 47,635,000 $ 23,700,677 $ 71,335,677
Notes Payable
The University has one note payable for environmental control equipment.
Original Installment Effective Number of Balance Balance
Amount Date Frequency Amount Interest Rate Installments 2010 2009
$ 8 ,905,000 4/1/2002 Monthly $ 61,908 5.20% 240 $ 6,475,000 $ 6,865,000
Future minimum principal and interest payments under the notes payable obligations are as
follows:
Principal Interest Total
Years Ending June 30:
2011 $ 405,000 $ 335,244 $ 740,244
2012 425,000 317,019 742,019
2013 445,000 297,256 742,256
2014 470,000 274,450 744,450
2015 490,000 250,363 740,363
2015 - 2019 2,865,000 843,356 3,708,356
2020 - 2024 1,375,000 111,800 1,486,800
$ 6,475,000 $ 2,429,488 $ 8,904,488
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
32
NOTE F--LONG-TERM LIABILITIES--Continued
Capital Lease Obligations
Oklahoma Capitol Improvement Authority Leases
In September 2000, the Oklahoma Capitol Improvement Authority (OCIA) issued its OCIA
Bond Issues, Series 1999A. Of the total bond indebtedness, the State Regents for Higher
Education allocated $2,500,000 for the 1999 Series to the University. In April 2006, OCIA issued
its OCIA Bond Issues, Series 2006D. The University was allocated $19,805,623 of this total issue
by the State Regents. Concurrently with the allocations, the University entered into lease
agreements with OCIA, which included for the six projects being funded by the OCIA bonds.
The lease agreements provide for the University to make specified monthly payments over the
varying terms for the specific projects, ranging from 10 to 30 years. The proceeds of the bonds
and subsequent lease are to provide for capital improvements, furniture and equipment at the
University.
Through June 30, 2009, the University has drawn down 100% of the 1999 Series and 71% of
2006D Series of its total allotment for expenses incurred in connection with specific projects.
These expenses are being recorded as capital assets or operating expenses, in accordance with
University policy. The University has recorded a lease obligation payable to OCIA for the total
amount of the allotment, less repayment made during the fiscal years. The University has also
recorded an asset for its pro-rata share of the bond issuance costs, and is amortizing that asset
over the term of the lease agreement. At June 30, 2010 and 2009, the unamortized bond issuance
costs totaled $94,785 and $103,363 respectively.
During the years ended June 30, 2010 and 2009, OCIA made lease principal and interest
payments totaling $2,154,747 and $2,141,105, respectively, on behalf of the University. These
on-behalf payments have been recorded as restricted state appropriations in the University’s
statements of revenues, expenses and changes in net assets.
Oklahoma Development Finance Authority Master Lease Program
The Oklahoma Development Finance Authority (ODFA) issued the ODFA Master Lease
Revenue Bonds. ODFA issues bonds to fund capital improvements at state colleges and
universities in Oklahoma. ODFA allocates the bond proceeds to colleges and universities in the
form of financing leases. The University has recorded capital improvements funded by the
leases and the resulting capital lease obligations in its statement of net assets. At June 30, 2010
and 2009, the unamortized bond issuance costs totaled $60,250 and $57,200, respectively.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
33
NOTE F--LONG-TERM LIABILITIES--Continued
Capital Lease Obligations--Continued
Oklahoma Development Finance Authority Master Lease Program--Continued
The lease agreements calls for monthly payments to ODFA in an amount that equals debt
service requirements on the portion of the bonds used to finance the leases. After payment of
bond closing costs, the net bond proceeds were deposited into ODFA trust accounts as required
by the bond indentures. At June 30, 2010 and 2009, trust accounts balances total $485,338 and
$380,183, respectively, and are included with Restricted Investments on the University’s
statement of net assets.
Bond Series UCO's Allocated Amount Final Payment
2004A $ 1,825,000 6/1/2024
2005A 2,405,000 6/1/2025
2006B 1,508,000 5/15/2011
2007A 151,000 5/15/2012
2007C 2,020,000 12/1/2027
2009B 1,058,000 12/1/2029
Monies in the acquisition funds are restricted for the projects being funded by the Series 2009C.
Debt service reserve funds are restricted for the payment of principal and interest pursuant to
the agreements. Future minimum lease payments under the University’s capital lease
obligations are as follows:
Principal Interest Total
Years Ending June 30:
2011 $ 778,312 $ 1,201,654 $ 1,979,966
2012 457,341 1,173,849 1,631,190
2013 424,613 1,153,686 1,578,299
2014 437,193 1,138,688 1,575,881
2015 446,896 1,121,185 1,568,081
2016-2020 2,210,381 5,322,899 7,533,280
2021-2025 2,020,000 4,869,283 6,889,283
2026-2030 762,000 4,526,902 5,288,902
2031-2033 17,840,028 2,150,322 19,990,350
$ 25,376,764 $ 22,658,468 $ 48,035,232
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
34
NOTE F--LONG-TERM LIABILITIES--Continued
Total interest costs incurred in 2010 was $3,588,688 of which $18,451 was capitalized. Total
interest costs incurred in 2009 was $3,802,242 of which $121,430 was capitalized.
Other Leases
The University has entered into a lease agreement with its component unit, the University
Foundation, to lease their music building for a period of 25 years in the amount of $6,689 per
month. The lease commenced in January 2002 and will terminate at the end of the 300th month.
In accordance with the agreement, the monthly rent adjusts every 5 years to mirror the change
in the interest rate paid by the Foundation. In addition, the University agreed to pay the
Foundation an additional sum of $1,200 per year plus the EEDA’s annual administrative fee
which is 1/8th of 1% of the declining principal balance of the loan on the property. This lease
may be cancelled at the end of any year should funding for the lease not be approved by the
Regional University System of Oklahoma and budgeted and approved by the University’s
administration.
The University has entered into a lease agreement with its component unit, the University
Foundation, to lease the building and grounds located at 400 N. Littler, 115 and 117 E. 4th and 29
S.E.4th, Edmond, Oklahoma for a period of one year. The lease calls for monthly rental
payments plus reimburse the Foundation for related property taxes and insurance. The lease
commenced in May 2005. This lease automatically renews for a term of one year through May
2013, unless notified in writing sixty days in advance of the anniversary date. Monthly rental
payments were $2,432 and $3,062 at June 30, 2010 and 2009, respectively.
NOTE G--RETIREMENT PLANS
The University’s academic and nonacademic personnel are covered by various retirement plans.
The plans available to University personnel include the Oklahoma Teachers’ Retirement System
(“OTRS”), which is a State of Oklahoma public employees retirement system, the Teachers’
Insurance Annuity Association, which is a defined contribution plan, and the Supplemental
Retirement Annuity (“SRA”), a single employer defined benefit plan available to employees
hired prior to July 1, 1995. The University does not maintain the accounting records, hold the
investments for, or administer these plans.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
35
NOTE G--RETIREMENT PLANS--Continued
Oklahoma Teachers’ Retirement System
Plan Description
The University contributes to the Oklahoma Teachers’ Retirement System, a cost-sharing
multiple employer defined benefit pension plan sponsored by the State. OTRS provides
defined retirement benefits based on members’ final compensation, age and term of service. In
addition, the retirement program provides for benefits upon disability and to survivors upon
the death of eligible members. The benefit provisions are established and may be amended by
the legislature of the State. Title 70 of the Oklahoma Statutes, Sections 17-101 through 17-116.9,
as amended, assigns the authority for management and operation of the Plan to the Board of
Trustees of OTRS. OTRS is not required to provide for a cost-of living adjustment. The OTRS
issues a publicly available financial report that includes financial statements and supplementary
information for OTRS. That report may be obtained by writing to Teachers’ Retirement System
of Oklahoma, P.O. Box 53524, Oklahoma City, Oklahoma 73152-3524, or by calling (405) 521-
2387.
Funding Policy
The University is required to contribute a fixed percentage of annual compensation on behalf of
active members. The employer contribution rate was 7.55% from January 1, 2008 through
December 31, 2008 and 8.05% from January 1, 2009 through December 31, 2009. From January
1, 2010 through December 31, 2010 the employer contribution rate is 8.55%. The contribution
rate is applied to annual compensation and is determined by State statute. Employees’
contributions are also determined by State statute. For all employees, the contribution rate was
7% of covered salaries and fringe benefits in 2010, 2009 and 2008, respectively. Percentages of
the compensation in excess of $15,000 for the employee’s contributions were paid directly by the
University to the OTRS for 2010, 2009 and 2008, respectively.
The University’s contributions to the OTRS for the years ended June 30, 2010, 2009, and 2008,
were approximately $9,230,000, $8,752,000, and $7,882,000, respectively. These contributions
included the University’s statutory contribution and the share of the employee’s contribution
paid directly by the University.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
36
NOTE G--RETIREMENT PLANS--Continued
Oklahoma Teachers’ Retirement System--Continued
Funding Policy--Continued
The State of Oklahoma is also required to contribute to the OTRS on behalf of the participating
employers. For 2010, the State of Oklahoma contributed 5% of state revenues from sales and
use taxes and individual income taxes, to the OTRS on behalf of participating employers. The
University has estimated the amounts contributed to the OTRS by the State on its behalf by
multiplying the ratio of its covered salaries to total covered salaries for the OTRS for the year by
the applicable percentage of taxes collected during the year. For the years ended June 30, 2010
and 2009, total amounts contributed to the OTRS by the State of Oklahoma on behalf of the
University were approximately $3,906,000 and $4,138,000, respectively. These on-behalf
payments have been recorded as both revenues and expenses of the current funds in the
financial statements in the statements of revenues, expenses and changes in net assets.
Supplemental Retirement Annuity (SRA)
Plan Description
The University’s SRA plan is a single employer, defined benefit pension plan administered by
the University’s Board of Regents. The SRA was established by the University’s Board of
Regents to provide supplemental retirement and death benefits to University employees who
were hired prior to July 1, 1995, or to those eligible employees’ beneficiaries. The authority to
amend the SRA’s benefit provisions rests with the University’s Board of Regents. The SRA does
not issue a standalone financial report, nor is it included in the financial report of another entity.
Funding Policy
The authority to establish and amend eligible employees’ and employer contribution
obligations to the SRA rests with the University’s Board of Regents. Eligible employees are not
required to make contributions to the SRA. The University is required to contribute to the SRA
an actuarially determined amount on an annual basis. Under a policy adopted in December
2002, the Plan must achieve 80% funding of the pension benefit obligation by December 1, 2022.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
37
NOTE G--RETIREMENT PLANS--Continued
Annual Pension Cost & Net Pension Obligation (Asset)
Annual pension cost and net pension obligation (asset) of the SRA as of June 30, 2010 and 2009
are as follows:
2010 2009
Annual required contribution $ 1,057,660 $ 963,568
Interest on net pension obligation (asset) (179,764) (180,380)
Adjustment to annual required contribution 228,867 229,651
Annual pension cost 1,106,763 1,012,839
Contributions made (1,005,141) (1,005,141)
Increase in net pension obligation 101,622 7,698
Net pension obligation (asset) at beginning of year (2,247,048) (2,254,746)
Net pension obligation (asset) at end of year $ (2,145,426) $ (2,247,048)
The annual required contributions for 2010 and 2009 were determined as part of an actuarial
valuation on June 30, 2010 and 2009, using the projected unit credit actuarial cost method. The
actuarial assumptions included (a) a discount rate of 8% per year to determine the present value
of future benefit payments; (b) retirement at age 65; (c) an 8% rate of return on investments; (d)
projected salary increases of 3.5% per year; and (e) an 8% interest rate for post-retirement
individual annuity settlement benefits. The value of the SRA assets is based on the TIAA-CREF
group annuity account asset value. The unfunded actuarial accrued liability is being amortized
over twenty years as a level dollar amount on a closed basis.
Year Ended Annual Pension Percentage of Net Pension
June 30, Cost (APC) APC Contributed Obligation (Asset)
2010 $ 1,106,763 90.8% $ (2,145,426)
2009 1,012,839 99.2% (2,247,048)
2008 1,141,982 88.0% (2,254,746)
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
38
NOTE H--OTHER POST-EMPLOYMENT INSURANCE BENEFITS (OPEB)
Postemployment Healthcare Plan
Plan Description
The University’s postemployment healthcare plan is an agent multiple-employer defined
benefit plan administered by the Regional University System of Oklahoma Board of Regents
(“RUSO”). The plan provides medical and life insurance benefits to eligible retired employees
until age 65. A retiring employee must have been employed full-time in the Regional
University System of Oklahoma for not less than ten years immediately preceding the date of
retirement; been a member of the Oklahoma Teachers’ Retirement System during that time; and
elected to receive a vested benefit under the provision of the Oklahoma Teachers’ Retirement
System. As of June 30, 2010, there were a total of 1,268 participants in the plan. The retirement
insurance program was adopted by the Board of Regents in 1985. In March 2008, the Retiree
Medical Trust for Regional University system of Oklahoma was established to hold assets and
pay benefits on behalf of the University’s postemployment healthcare plan, and is administered
by The Bank of Oklahoma, N.A. Prior to the establishment of the trust, the insurance benefits
were accounted for on a pay-as-you-go basis so that premiums were made from current
operating funds. In 2009, the board voted to eliminate this benefit for anyone hired after July 1,
2009, which will affect future years.
Funding Policy
The contribution requirements of the University are established and may be amended by the
RUSO. The University is required to contribute the annual required contribution (ARC) of the
employer, in an amount actuarially determined in accordance with the parameters of GASB
Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or
funding excess) over a period not to exceed thirty years.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
39
NOTE H--OTHER POST-EMPLOYMENT INSURANCE BENEFITS (OPEB)--Continued
Postemployment Healthcare Plan--Continued
Annual OPEB Cost
The University’s annual required contributions were $613,300 and $557,439, in 2010 and 2009,
respectively. In 2008, the University’s annual OPEB cost (expense) of $970,074 was equal to the
ARC plus the actual insurance benefits paid during the year, which have been reimbursed from
the trust account. The annual OPEB cost, the percentage of annual OPEB cost contributed to
the plan, and the net OPEB obligation at June 30, 2010 and 2009 were as follows:
Percentage of Net
Fiscal Annual Annual OPEB OPEB
Year Ended OPEB Cost Cost Contributed Obligation
6/30/2010 $ 613,300 100% $ -
6/30/2009 557,439 100% -
6/30/2008 970,074 145% -
Funded Status and Funding Progress
The funded status of the plan as of June 30, 2010, was as follows:
Actuarial accrued liability (AAL) $ 5,371,791
Actuarial value of plan assets 1,241,612
Unfunded actuarial accrued liability (UAAL) $ 4,130,179
Funded ratio (actuarial value of plan assets/AAL) 23.1%
Covered payroll (active plan members) $ 67,966,227
UAAL as a percentage of covered payroll 6.1%
Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts
determined regarding the funded status of the plan and the annual required contributions of
the employer are subject to continual revision as actual results are compared with past
expectations and new estimates are made about the future. The schedule of funding progress,
presented as required supplementary information following the notes to the financial statements,
presents multiyear trend information that shows whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
40
NOTE H--OTHER POST-EMPLOYMENT INSURANCE BENEFITS (OPEB)--Continued
Postemployment Healthcare Plan--Continued
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan and
include the types of benefits provided at the time of each valuation. The actuarial methods and
assumptions used include techniques that are designed to reduce short-term volatility in
actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term
perspective of the calculations. For the June 30, 2010 actuarial valuation, the Projected Unit
Credit Cost Method was used. The actuarial assumptions included a 7.0% investment rate of
return and an annual healthcare cost inflationary increase of 9.0%.
NOTE I--FUNDS HELD IN TRUST BY OTHERS
Beneficial Interest in State School Land Funds
The University has a beneficial interest in the Section Thirteen Fund State Educational
Institutions and the New College Fund administered by the Commissioners of the Land Office
as trustees for the various educational institutions entitled thereto. The University has the right
to receive annually 3.7% of the distributions of income produced by Section Thirteen Fund State
Educational Institutions assets and 100% of the distributions of income produced by the
University of Central Oklahoma’s New College Fund. The University received $963,950 and
$739,340 during the years ended June 30, 2010 and 2009, respectively, which is restricted to the
construction or acquisition of buildings, equipment, or other capital items. These amounts are
recorded as restricted capital gifts in the statements of revenues, expenses and changes in net
assets. State law prohibits the distribution of any corpus of these funds to the beneficiaries. The
total trust reserve for University of Central Oklahoma, held in trust by the commissioners of
Land Office, was approximately $13,493,000 and $12,374,000 at June 30, 2010 and 2009,
respectively.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
41
NOTE I--FUNDS HELD IN TRUST BY OTHERS--Continued
Oklahoma State Regents Endowment Trust Fund
The University participates in the Oklahoma State Regents’ Endowment Program (the
“Endowment Program”). Under the Endowment Program, the State matches contributions
received. Such contributions generally come from private donations through the Foundation,
for endowed chairs, lectureships, fellowships, and similar activities. The State matched
amounts, plus any retained accumulated earnings, totaled approximately $1,091,000 and
$953,000 at June 30, 2010 and 2009, respectively, and is invested by the Oklahoma State Regents
on behalf of the University. The University is entitled to receive an annual distribution of 4.5%
of the three-year average of the June 30th market values on these funds. As legal title of the State
Regents matching endowment funds is retained by the Oklahoma State Regents, the funds
available for distribution are approximately $73,000 and $55,000 at June 30, 2010 and 2009,
respectively.
NOTE J--COMMITMENTS AND CONTINGENCIES
The University conducts certain programs pursuant to various grants and contracts, which are
subject to audit by federal and state agencies. Costs questioned as a result of these audits, if
any, may result in refunds to these governmental agencies from various sources of the University.
The University participates in the Federal Family Education Loan Program (the “FFEL
Program”). The FFEL Program does not require the University to draw down cash; however,
the University is required to perform certain administrative functions under the FFEL Program.
Failure to perform such functions may require the University to reimburse the loan guarantee
agencies. For the years ended June 30, 2010 and 2009, approximately $54,386,000 and
$48,696,000 respectively, of FFEL Program loans were provided to University students.
NOTE K--RISK MANAGEMENT
During the ordinary course of business, the University may be subjected to various lawsuits and
civil action claims. Management believes that resolution of any such matters pending at June
30, 2010 will not have material adverse impact to the University.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
42
NOTE K--RISK MANAGEMENT--Continued
The University is exposed to various risks of loss from torts; theft of, damage to, and
destruction of assets; errors and omissions; employee injuries and illnesses; natural disasters;
and employee health, life, and accident benefits. Commercial insurance coverage is purchased
on a limited basis for special events and large dollar items that are under the State Risk
deductibles. The University, along with other state agencies and political subdivisions,
participates in the State of Oklahoma Risk Management Program and the State Insurance Fund,
public entity risk pools currently operating as a common risk management and insurance
program for its members. The University pays annual premiums to the pools for tort, property,
and liability insurance coverage.
The Oklahoma Risk Management Pool’s governing agreement specifies that the pool will be
self-sustaining though member premiums and will reinsure through commercial carriers for
claims in excess of specified stop-loss amounts. The University also participates in the College
Association of Liability Management (“CALM”) Workers’ Compensation Plan for its workers’
compensation coverage. CALM is an Interlocal Cooperative Act Agency that was organized to
provide workers’ compensation insurance coverage for participating colleges and universities
through the State Insurance Fund. CALM is a political subdivision of the State and is governed
by a Board of Trustees elected from members of the participating colleges and universities.
NOTE L--ACCOUNTING STANDARDS ISSUED NOT YET ADOPTED
In 2010, GASB issued Statement No. 59, Financial Instruments Omnibus. GASB No. 59 provides
updates and improvements to existing standards regarding financial reporting and disclosure
requirements of certain financial instruments and external investment pools for which
significant issues have been identified in practice. The requirements of this Statement are
effective for financial statements for periods beginning after June 15, 2010. Earlier application is
encouraged. Management has determined that this Statement will have no effect on the
University’s financial condition or results of operations.
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
43
NOTE M--SEGMENT INFORMATION
The following financial information represents an identifiable activity for which revenue bonds
are outstanding and for which segment information is to be reported, as required by GASB
Statement No. 34, as amended. The bonds were issued to construct a student housing facility
for the University.
UCO Student Housing Foundation- Series 2001
The UCO Student Housing Foundation operated the student housing facility known as the
University Suites II. Revenues pledged include all room rentals and other revenues generated
from the housing facility.
Condensed Statement of Net Assets
Student Housing Student Housing
2010 2009
ASSETS
Current assets $ 7 37,868 $ 7 77,663
Capital assets 5 ,474,766 5 ,651,372
Other assets 2 ,610,828 1 ,865,145
TOTAL ASSETS 8 ,823,462 8 ,294,180
LIABILITIES
Current liabilities 1 ,353,055 7 42,186
Long-term liabilities 7 ,760,000 7 ,970,000
TOTAL LIABILITIES 9 ,113,055 8 ,712,186
NET ASSETS
Unrestricted 2 ,205,641 2 ,085,622
Invested in capital assets, net of debt (2,495,234) (2,503,628)
TOTAL NET ASSETS (DEFICIENCY) $ (289,593) $ (418,006)
NOTES TO FINANCIAL STATEMENTS--Continued
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
44
NOTE M--SEGMENT INFORMATION--Continued
Condensed Statement of Revenues Expenses and Changes in Net Assets
Student Housing Student Housing
2010 2009
OPERATING REVENUES $ 1,629,845 $ 1,482,225
Depreciation expense (176,605) (216,624)
Other operating expenses (1,197,702) (987,340)
NET OPERATING INCOME 255,538 2 78,261
NONOPERATING REVENUES (EXPENSES)
Investment income 57 8 ,585
Interest expense (127,182) (216,512)
NET NONOPERATING EXPENSES (127,125) (207,927)
Transfers - -
Change in net assets 128,413 70,334
NET ASSETS, BEGINNING OF YEAR (418,006) (488,340)
NET ASSETS, END OF YEAR $ (289,593) $ (418,006)
Condensed Statement of Cash Flows
Student Housing Student Housing
2010 2009
Net cash provided by operating activities $ 7 46,046 $ 4 07,614
Net cash provided by bond activities - -
Net cash flows used by noncapital
financing activities - -
Net cash flows used by capital and
related financing activities (185,000) (160,000)
Net cash provided by investing activities (633,850) (149,193)
Net increase in cash (72,804) 98,421
CASH, BEGINNING OF YEAR 461,704 363,283
CASH, END OF YEAR $ 3 88,900 $ 461,704
REQUIRED SUPPLEMENTARY
INFORMATION
REQUIRED SUPPLEMENTARY INFORMATION--UNAUDITED
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
Actuarial Actuarial Value Actuarial Accrued Unfunded AAL Funded Covered UAAL as a percentage
Valuation of Assets Liability (AAL) (UAAL) Ratio Payroll of Covered Payroll
Date (a) (b) (b-a) (a/b) (c) (b-a)/(c)
6/30/2006 $ 4,790,261 $ 13,357,666 $ 8 ,567,405 35.9% $ 16,113,514 53.2%
6/30/2007 5,387,069 14,791,448 9 ,404,379 36.4% 15,958,108 58.9%
6/30/2008 5,279,537 13,981,155 8 ,701,618 37.8% 15,644,334 55.6%
6/30/2009 4,719,473 14,470,846 9 ,751,373 32.6% 15,140,727 64.4%
6/30/2010 5,009,966 15,086,417 10,076,451 33.2% 13,621,881 74.0%
Actuarial Actuarial Value Actuarial Accrued Unfunded AAL Funded Covered UAAL as a percentage
Valuation of Assets Liability (AAL) (UAAL) Ratio Payroll of Covered Payroll
Date (a) (b) (b-a) (a/b) (c) (b-a)/(c)
6/30/2008 $ 666,000 $ 5,112,000 $ 4,446,000 13.0% $ 51,210,330 8.7%
6/30/2009 944,691 5,371,791 4,427,100 17.6% 57,660,935 7.7%
6/30/2010 1,241,612 5,371,791 4,130,179 23.1% 67,966,227 6.1%
The actuarial liability is based on the projected unit credit method.
SCHEDULE OF FUNDING PROGRESS FOR SUPPLEMENTAL RETIREMENT ANNUITY PLAN
SCHEDULE OF FUNDING PROGRESS FOR OTHER POST EMPLOYMENT INSURANCE BENEFITS
45
OTHER SUPPLEMENTARY
INFORMATION
SUPPLEMENTAL SCHEDULE - COMBINING STATEMENT OF NET ASSETS
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2010
Student
Housing Total University Alumni KCSC-FM
UCO Foundation University Foundation Association Foundation Total
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4 0,342,132 $ 388,900 $ 4 0,731,032 $ 311,692 $ 103,928 $ 79,268 $ 494,888
Restricted cash and cash equivalents 8,455,083 - 8,455,083 - - - -
Restricted Investments 5,705,866 140,838 5,846,704 3,034,813 - 574,000 3,608,813
Investments held by others - - - - 158,464 - 158,464
Accounts receivable, net 14,077,799 202,754 14,280,553 - - - -
Interest receivable 39,980 - 39,980 39,948 - 252 40,200
Loan receivable - - - - - - -
Prepaid expenses 723 5,376 6,099 4,144 - - 4,144
Inventories 32,840 - 32,840 - - - -
Contributions receivable - - - 477,782 - - 477,782
Current portion of student
loans recievable, net 105,000 - 105,000 - - - -
TOTAL CURRENT ASSETS 68,759,423 737,868 69,497,291 3,868,379 262,392 653,520 4,784,291
NONCURRENT ASSET
Restricted investments 938,610 2,371,050 3,309,660 14,152,732 - - 14,152,732
Investments held by others - - - 236,645 - - 236,645
Investments - - - - - - -
Receivable from state agency - - - - - - -
Student loans receivable, net 1,996,508 - 1,996,508 - - - -
Other assets 323,994 239,778 563,772 22,517 - - 22,517
Prepaid pension asset 2,145,426 - 2,145,426 - - - -
Capitalized collections 4,544,290 - 4,544,290 - - - -
Capital assets, net 1 07,592,130 5,474,766 1 13,066,896 1,656,102 848 - 1,656,950
TOTAL NONCURRENT ASSETS 1 17,540,958 8,085,594 1 25,626,552 16,067,996 848 - 16,068,844
TOTAL ASSETS $ 186,300,381 $ 8,823,462 $ 195,123,843 $ 19,936,375 $ 263,240 $ 653,520 $ 20,853,135
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 3,347,803 $ 1,143,055 $ 4,490,858 $ 197,182 $ - $ 29,217 $ 226,399
Accrued payroll and benefits 2,635,045 - 2,635,045 - - - -
Accrued interest payable 370,357 - 370,357 - - - -
Deferred revenue 2,983,033 - 2,983,033 - - - -
Deposits held in custody for others 494,964 - 494,964 158,302 - - 158,302
Current portion of noncurrent liabilities 4,590,557 210,000 4,800,557 37,494 - - 37,494
TOTAL CURRENT LIABILITIES 14,421,759 1,353,055 15,774,814 392,978 - 29,217 422,195
NONCURRENT LIABILITIES,
net of current portion:
Accrued compensated absences 1,224,225 - 1,224,225 - - - -
Federal loan program contributions refundab 1,840,864 - 1,840,864 - - - -
Bonds payable 37,840,000 7,760,000 45,600,000 - - - -
Notes payable 6,070,000 - 6,070,000 849,148 - - 849,148
ODFA master lease obligation 5,973,572 - 5,973,572 - - - -
Lease obligation payable to state agency 18,624,880 - 18,624,880 - - - -
TOTAL NONCURRENT LIABILITIES 71,573,541 7,760,000 79,333,541 849,148 - - 849,148
TOTAL LIABILITIES $ 8 5,995,300 $ 9,113,055 $ 9 5,108,355 $ 1,242,126 $ - $ 29,217 $ 1,271,343
NET ASSETS
Invested in capital assets, net of related debt $ 3 2,150,467 $ (2,495,234) $ 2 9,655,233 $ - $ - $ - $ -
Restricted for:
Nonexpendable 659,161 - 659,161 13,223,599 - - 13,223,599
Expendable: 3,235,065 - 4,765 3,239,830
Scholarships, research, 4,185,720 - 4,185,720 - - - -
instruction and other
Loans 348,410 - 348,410 - - - -
Capital projects 1,039,784 - 1,039,784 - - - -
Debt service 17,670,365 - 17,670,365 - - - -
Unrestricted 44,251,174 2,205,641 46,456,815 2,235,585 263,240 619,538 3,118,363
TOTAL NET ASSETS $ 100,305,081 $ (289,593) $ 100,015,488 $ 18,694,249 $ 263,240 $ 624,303 $ 19,581,792
See notes to financial statements. TRUE TRUE TRUE TRUE
Primary Government Discrete Component Units
46
SUPPLEMENTAL SCHEDULE - COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
UNIVERSITY OF CENTRAL OKLAHOMA
Year Ended June 30, 2010
Student
Housing Total University Alumni KCSC-FM
UCO Foundation University Foundation Association Foundation Total
OPERATING REVENUES
Student tuition and fees (included in fees are $3,724,953
$ 70,040,850 $ - $ 70,040,850 $ - $ - $ - $ -
Less scholarship, discounts and allowances (18,442,726) - (18,442,726) - - - -
Net student revenues 51,598,124 - 51,598,124 - - - -
Federal grants and contracts 3,246,632 - 3,246,632 - - - -
State and local grants and contracts 5,810,036 - 5,810,036 - - - -
Bookstore operations 1,031,191 - 1,031,191 - - - -
Housing and food service revenues ($1,391,720 pledged
as security on 2001 UCO Student Housing
8,973,514 1,391,720 10,365,234 - - - -
Parking and University Center revenues (total revenues
are dedicated as security for bond repayments.) 2,264,008 - 2,264,008 - - - -
Interest earned on loans to students 1 8,749 - 18,749 - - - -
Other operating revenues 4,196,120 238,125 4,434,245 - - - -
TOTAL OPERATING REVENUES 77,138,374 1,629,845 78,768,219 - - - -
OPERATING EXPENSES
Compensation and employee benefits 98,348,469 - 98,348,469 - - - -
Contractual services 3,860,750 22,482 3,883,232 38,864 6,448 10,700 56,012
Supplies and materials 16,109,204 317,204 16,426,408 59,231 3,819 - 63,050
Depreciation 6,440,045 176,605 6,616,650 47,399 2 66 - 47,665
Utilities 2,586,088 97,529 2,683,617 - - - -
Scholarships and fellowships 15,087,260 15,087,260 - - - -
Other operating expenses 13,760,874 760,487 14,521,361 2,163,750 98,985 21,419 2,284,154
TOTAL OPERATING EXPENSES 156,192,690 1,374,307 157,566,997 2,309,244 109,518 32,119 2,450,881
Net operating income (loss) (79,054,316) 255,538 (78,798,778) (2,309,244) (109,518) ( 32,119) (2,450,881)
NONOPERATING REVENUES (EXPENSES)
State appropriations 60,909,102 - 60,909,102 - - - -
State appropriations - ARRA funds 4,286,658 - 4,286,658
Federal funded student aid 18,894,687 - 18,894,687 - - - -
OTRS on-behalf contributions 3,905,924 - 3,905,924 - - - -
Gifts - - - 1,656,118 114,376 54,388 1,824,882
Investment income 827,995 57 828,052 1,146,067 12,690 4,820 1,163,577
Interest expense (3,443,055) (127,182) (3,570,237) - - - -
NET NONOPERATING REVENUES (EXPENSES) 85,381,311 (127,125) 85,254,186 2,802,185 127,066 59,208 2,988,459
Income (loss) before other revenues, 6,326,995 128,413 6,455,408 492,941 17,548 27,089 537,578
expenses, gains and losses
State appropriations restricted for capital purposes 1,721,978 - 1,721,978 - - - -
OCIA on-behalf state appropriations 2,154,747 - 2,154,747 - - - -
Gifts 165,538 - 165,538 - - - -
Change in net assets 10,369,258 128,413 10,497,671 492,941 17,548 27,089 537,578
NET ASSETS, BEGINNING OF YEAR 89,935,823 (418,006) 89,517,817 18,201,308 245,692 597,214 19,044,214
NET ASSETS, END OF YEAR $ 100,305,081 $ ( 289,593) $ 100,015,488 $ 18,694,249 $ 263,240 $ 624,303 $ 1 9,581,792
See notes to financial statements.
Foundation Bonds)
of revenues dedicated for bond repayments)
Primary Government Discrete Component Units
47
SUPPLEMENTAL SCHEDULE - COMBINING STATEMENT OF NET ASSETS
UNIVERSITY OF CENTRAL OKLAHOMA
June 30, 2009
Student
Housing Total University Alumni KCSC-FM
UCO Foundation University Foundation Association Foundation Total
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 34,140,843 $ 461,704 $ 3 4,602,547 $ 2,179,907 $ 98,595 $ 275,722 $ 2,554,224
Restricted cash and cash equivalents 7,860,921 - 7,860,921 - - - -
Restricted Investments 1 5,592,589 264,228 15,856,817 3,556,649 - 325,000 3,881,649
Investments held by others - - - - 145,983 - 145,983
Accounts receivable, net 1 1,596,968 46,321 11,643,289 - - - -
Interest receivable 35,951 - 35,951 63,609 - 3,696 67,305
Loan receivable - - - 4,939 - - 4,939
Prepaid expenses - 5,410 5,410 4,493 - 1,650 6,143
Inventories 38,205 - 38,205 - - - -
Contributions receivable - - - 673,058 - - 673,058
Current portion of student
loans receivable, net 175,000 - 175,000 - - - -
TOTAL CURRENT ASSETS 6 9,440,477 777,663 70,218,140 6,482,655 244,578 606,068 7,333,301
NONCURRENT ASSETS
Restricted investments 380,661 1,613,811 1,994,472 10,861,453 - - 10,861,453
Investments held by others - - - 220,620 - - 220,620
Investments - - - - - - -
Receivable from state agency - - - - - - -
Student loans receivable, net 1,798,188 - 1,798,188 - - - -
Other assets 336,563 251,334 587,897 22,518 - - 22,518
Prepaid pension asset 2,247,048 - 2,247,048 - - - -
Capitalized collections 4,544,290 - 4,544,290 - - - -
Capital assets, net 9 9,477,492 5,651,372 1 05,128,864 1,702,025 1,114 - 1,703,139
TOTAL NONCURRENT ASSETS 108,784,242 7,516,517 1 16,300,759 12,806,616 1,114 - 12,807,730
TOTAL ASSETS $ 178,224,719 $ 8,294,180 $ 186,518,899 $ 19,289,271 $ 245,692 $ 606,068 $ 20,141,031
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 3 ,359,418 $ 556,673 $ 3,916,091 $ 18,406 $ - $ 8,854 $ 27,260
Accrued payroll and benefits 2,463,639 - 2,463,639 - - - -
Accrued interest payable 383,478 - 383,478 - - - -
Deferred revenue 2,506,325 513 2,506,838 - - - -
Deposits held in custody for others 406,670 - 406,670 147,023 - - 147,023
Current portion of noncurrent liabilities 4,488,213 185,000 4,673,213 35,892 - - 35,892
TOTAL CURRENT LIABILITIES 1 3,607,743 742,186 14,349,929 201,321 - 8,854 210,175
NONCURRRENT LIABILITIES,
net of current portion
Accrued compensated absences 1,286,104 - 1,286,104 - - - -
Federal loan program contributions
refundable 1,868,798 - 1,868,798 - - - -
Bonds payable 3 9,665,000 7,970,000 47,635,000 - - - -
Notes payable 6,475,000 - 6,475,000 886,642 - - 886,642
ODFA master lease obligation 5,617,192 - 5,617,192 - - - -
Lease obligation payable to state agency 1 9,769,059 - 19,769,059 - - - -
TOTAL NONCURRENT LIABILITIES 7 4,681,153 7,970,000 82,651,153 886,642 - - 886,642
TOTAL LIABILITIES $ 88,288,896 $ 8,712,186 $ 9 7,001,082 $ 1,087,963 $ - $ 8,854 $ 1,096,817
NET ASSETS
Invested in capital assets, net of related deb $ 30,056,038 $ (2,503,628) $ 2 7,552,410 $ - $ - $ - $ -
Restricted for: - - - -
Nonexpendable 622,567 - 622,567 12,694,809 - - 12,694,809
Expendable: 3,313,571 - 25,000 3,338,571
Scholarships, research,
instruction and other 4,105,921 - 4,105,921 - - - -
Loans 344,020 - 344,020 - - - -
Capital projects 2,253,963 - 2,253,963 - - - -
Debt service 1 5,541,835 - 15,541,835 - - - -
Unrestricted 3 7,011,479 2,085,622 39,097,101 2,192,928 245,692 572,214 3,010,834
TOTAL NET ASSETS $ 89,935,823 $ (418,006) $ 8 9,517,817 $ 18,201,308 $ 245,692 $ 597,214 $ 19,044,214
See notes to financial statements.
Primary Government Discrete Component Units
48
SUPPLEMENTAL SCHEDULE - COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
UNIVERSITY OF CENTRAL OKLAHOMA
Year Ended June 30, 2009
Student
Housing Total University Alumni KCSC-FM
UCO Foundation University Foundation Association Foundation Total
OPERATING REVENUES
Student tuition and fees (included in fees are $3,539,890
$ 64,918,509 $ - $ 64,918,509 $ - $ - $ - $ -
Less scholarship, discounts and allowances (15,464,475) - (15,464,475) - - - -
Net student revenues 49,454,034 - 49,454,034 - - - -
Federal grants and contracts 1,966,059 - 1,966,059 - - - -
State and local grants and contracts 5,001,837 - 5,001,837 - -
Bookstore operations 979,103 - 979,103 - - - -
Housing and food service revenues ($1,388,862 pledged
as security on 2001 UCO Student Housing
7,759,664 1,388,862 9,148,526 - - - -
Parking and University Center revenues (total revenues
are dedicated as security for bond repayments.) 2,198,882 - 2,198,882 - - - -
Interest earned on loans to students 18,883 - 18,883 - - - -
Other operating revenues 4,140,707 93,363 4,234,070 - - - -
TOTAL OPERATING REVENUES 71,519,169 1,482,225 73,001,394 - - - -
OPERATING EXPENSES
Compensation and employee benefits 96,355,796 - 96,355,796 - - - -
Contractual services 3,606,208 20,890 3,627,098 - 6,399 10,700 17,099
Supplies and materials 14,818,805 173,386 14,992,191 - 3,033 - 3,033
Depreciation 6,242,583 216,624 6,459,207 - 287 - 287
Utilities 2,559,131 119,245 2,678,376 - - - -
Scholarships and fellowships 10,724,494 10,724,494 - - - -
Other operating expenses 13,263,954 673,819 13,937,773 1,593,650 89,812 15,006 1,698,468
TOTAL OPERATING EXPENSES 147,570,971 1,203,964 148,774,935 1,593,650 99,531 25,706 1,718,887
Net operating income (loss) (76,051,802) 278,261 (75,773,541) (1,593,650) ( 99,531) ( 25,706) (1,718,887)
NONOPERATING REVENUES (EXPENSES)
State appropriations 64,376,151 - 64,376,151 - - - -
Federal funded student aid 13,333,243 - 13,333,243
OTRS on-behalf contributions 4,138,019 - 4,138,019 - - - -
Gifts 1,966 - 1,966 2,148,905 133,566 142,764 2,425,235
Investment income 1,192,118 8,585 1,200,703 (2,100,644) ( 19,322) 13,909 (2,106,057)
Interest expense (3,464,300) (216,512) (3,680,812) - - - -
NET NONOPERATING REVENUES (EXPENSES) 79,577,197 (207,927) 79,369,270 48,261 114,244 156,673 319,178
Income (loss) before other revenues, expenses,
gains and losses 3,525,395 70,334 3,595,729 (1,545,389) 14,713 130,967 (1,399,709)
State appropriations restricted for capital purposes 1,777,330 - 1,777,330 - - - -
OCIA on-behalf state appropriations 2,141,105 - 2,141,105 - - - -
Gift of capital assets 192,640 - 192,640 - - - -
Change in net assets 7,636,470 70,334 7,706,804 (1,545,389) 14,713 130,967 (1,399,709)
NET ASSETS, BEGINNING OF YEAR 82,299,353 (488,340) 81,811,013 19,746,697 230,979 466,247 20,443,923
NET ASSETS, END OF YEAR $ 89,935,823 $ (418,006) $ 89,517,817 $ 18,201,308 $ 245,692 $ 597,214 $ 19,044,214
See notes to financial statements.
Foundation Bonds)
of revenues dedicated for bond repayments)
Primary Government Discrete Component Units
49
REPORTS REQUIRED BY
GOVERNMENT AUDITING STANDARDS
AND OMB CIRCULAR A-133
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
Board of Regents
Regional University System of Oklahoma
University of Central Oklahoma
Oklahoma City, Oklahoma
We have audited the financial statements of the University of Central Oklahoma (the
“University”), a component unit of the State of Oklahoma, as of and for the year ended June 30,
2010, and have issued our report thereon dated October 31, 2010. 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 of Central Oklahoma Alumni Association and the KCSC Classical Radio
Foundation, discretely presented component units of the University, as described in our report
on the University’s financial statements. The financial statements of the UCO Student Housing
Foundation, the University of Central Oklahoma Foundation, Inc., the University of Central
Oklahoma Alumni Association and the KCSC Classical Radio Foundation were not audited in
accordance with Government Auditing Standards.
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’ internal
control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entity’s financial statements will not be
prevented, or detected and corrected on a timely basis.
50
51
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies
in internal control over financial reporting that might be deficiencies, significant deficiencies or
material weaknesses. We identified a deficiency in internal control over financial reporting,
described in the accompanying Schedule of Findings and Questioned Costs, that we consider to
be a material weaknesses, as defined above. See Finding 2010-01. We also identified a certain
deficiency in internal control over financial reporting, described in the accompanying Schedule
of Findings and Questioned Costs, that we consider to be a significant deficiency in internal
control over financial reporting. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important
enough to merit attention by those charged with governance. See Finding 2010-02.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the University’s financial statements
are free of material misstatement, we performed tests of compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit
and, accordingly, we do not express such an opinion. The results of our tests disclosed an
instance of noncompliance or other matters that are required to be reported under Government
Auditing Standards and which are described in the accompanying Schedule of Findings
Questioned Costs. See Finding 2010-02.
The University’s responses to the findings identified in our audit are described in the
accompanying Schedule of Findings and Questioned Costs. We did not audit the University’s
responses and, accordingly, we express no opinion on them.
This report is intended solely for the information and use of the Board of Regents, management,
and federal awarding agencies and is not intended to be, and should not be, used by anyone
other than these specified parties.
Oklahoma City, Oklahoma
October 31, 2010
Independent Auditors’ Report on Compliance with Requirements That Could Have
a Direct and Material Effect on Each Major Program and Internal Control
Over Compliance in Accordance with OMB Circular A-133 and on the
Schedule of Expenditures of Federal Awards
Board of Regents
Regional University System of Oklahoma
University of Central Oklahoma
Oklahoma City, Oklahoma
Compliance
We have audited the compliance of the University of Central Oklahoma (the “University”), a
component unit of the State of Oklahoma, with the types of compliance requirements described
in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement
that could have a direct and material effect on each of its major federal programs for the year
ended June 30, 2010. The University’s major federal programs are identified in the Summary of
Auditors’ Results Section of the accompanying Schedule of Findings and Questioned Costs.
Compliance with the requirements of laws, regulations, contracts, and grants applicable to each
of its major federal programs is the responsibility of the University’s management. Our
responsibility is to express an opinion on the University’s compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally
accepted in the United States of America, the standards applicable to financial audits contained
in Government Auditing Standards issued by the Comptroller General of the United States and
OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those
standards and OMB Circular A-133 require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements
referred to above that could have a direct and material effect on a major federal program
occurred. An audit includes examining, on a test basis, evidence about the University’s
compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion. Our audit does not provide a legal determination of the University’s compliance with
those requirements.
In our opinion, the University of Central Oklahoma complied, in all material respects, with the
compliance requirements referred to above that could have a direct and material effect on each
of its major federal programs for the year ended June 30, 2010. However, the results of our
auditing procedures disclosed instances of noncompliance with those requirem