NOTE 8: COMPONENT UNITS

Summary financial statements and additional disclosures for the University’s discretely presented component units are presented below.

STATEMENT OF FINANCIAL POSITION (in thousands) as of June 30, 2015
UNIVERSITY OF VIRGINIA LAW SCHOOL FOUNDATION THE COLLEGE FOUNDATION OF THE UNIVERSITY OF VIRGINIA UNIVERSITY OF VIRGINIA DARDEN SCHOOL FOUNDATION ALUMNI ASSOCIATION OF THE UNIVERSITY OF VIRGINIA JEFFERSON SCHOLARS FOUNDATION VIRGINIA ATHLETICS FOUNDATION* UNIVERSITY OF VIRGINIA FOUNDATION UNIVERSITY OF VIRGINIA PHYSICIANS GROUP UNIVERSITY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY   ELIMINATIONS       COMPONENT    
UNITS TOTAL
                       
ASSETS                      
Current assets                      
Total current assets $4,383 $22,659 $24,840 $48,356 $16,212 $19,896 $7,131 $122,050 $521,817 $- $787,344
                       
Noncurrent assets                      
Long-term investments 455,974 91,846 314,135 264,922 308,715 68,690 96,862 219,263 7,116,166 (1,426,324) 7,510,249
Capital assets, net and other assets 21,028 23,199 70,186 10,092 33,171 15,263 234,474 62,101 735 - 470,249
Total noncurrent assets 477,002 115,045 384,321 275,014 341,886 83,953 331,336 281,364 7,116,901 (1,426,324) 7,980,498
                       
TOTAL ASSETS $481,385 $137,704 $409,161 $323,370 $358,098 $103,849 $338,467 $403,414 $7,638,718 $(1,426,324) $8,767,842
                       
LIABILITIES AND NET ASSETS                      
Current liabilities                      
Total current liabilities $690 $788 $6,695 $97,508 $8,577 $1,185 $19,737 $146,266 $4,653 $- $286,099
                       
Noncurrent liabilities                      
Long-term debt, net of current portion of $30,889 - - 13,812 - 22,500 - 175,894 28,235 - - 240,441
Other noncurrent liabilities 480 - - 2,794 23,543 136 30,109 131,975 7,620,657 (1,426,324) 6,383,370
Total noncurrent liabilities 480 - 13,812 2,794 46,043 136 206,003 160,210 7,620,657 (1,426,324) 6,623,811
                       
TOTAL LIABILITIES $1,170 $788 $20,507 $100,302 $54,620 $1,321 $225,740 $306,476 $7,625,310 $(1,426,324) $6,909,910
                       
NET ASSETS                      
Unrestricted $65,933 $2,585 $96,774 $69,869 $(16,547) $32,520 $25,142 $96,938 $13,408 $- $386,622
Temporarily restricted 268,508 61,468 144,935 94,693 134,977 32,286 72,809 - - - 809,676
Permanently restricted 145,774 72,863 146,945 58,506 185,048 37,722 14,776 - - - 661,634
TOTAL NET ASSETS $480,215 $136,916 $388,654 $223,068 $303,478 $102,528 $112,727 $96,938 $13,408 $- $1,857,932
TOTAL LIABILITIES AND NET ASSETS $481,385 $137,704 $409,161 $323,370 $358,098 $103,849 $338,467 $403,414 $7,638,718 $(1,426,324) $8,767,842
* December 31, 2014, year-end                


STATEMENT OF ACTIVITIES (in thousands) for the year ended June 30, 2015
UNIVERSITY OF VIRGINIA LAW SCHOOL FOUNDATION THE COLLEGE FOUNDATION OF THE UNIVERSITY OF VIRGINIA UNIVERSITY OF VIRGINIA DARDEN SCHOOL FOUNDATION ALUMNI ASSOCIATION OF THE UNIVERSITY OF VIRGINIA JEFFERSON SCHOLARS FOUNDATION VIRGINIA ATHLETICS FOUNDATION* UNIVERSITY OF VIRGINIA FOUNDATION UNIVERSITY OF VIRGINIA PHYSICIANS GROUP UNIVERISTY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY COMPONENT UNITS TOTAL
                     
UNRESTRICTED REVENUES AND SUPPORT                    
Contributions $3,989 $4,822 $5,427 $971 $160 $14,244 $- $- $- $29,613
Fees for services, rentals, and sales - - 23,335 2,601 - 880 47,318 300,907 13,145 388,186
Other revenues 15,728 11,079 14,380 47,948 13,213 16,162 4,650 121,088 520 244,768
TOTAL UNRESTRICTED REVENUES AND SUPPORT 19,717 15,901 43,142 51,520 13,373 31,286 51,968 421,995 13,665 662,567
                     
EXPENSES                    
Program services, lectures, and special events 12,124 15,543 36,440 46,334 16,518 27,566 29,132 346,945 13,814 544,416
Other expenses 4,193 999 5,785 2,261 1,240 3,348 20,927 84,687 3,619 127,059
TOTAL EXPENSES 16,317 16,542 42,225 48,595 17,758 30,914 50,059 431,632 17,433 671,475
                     
EXCESS (DEFICIENCY) OF UNRESTRICTED REVENUES AND SUPPORT OVER EXPENSES 3,400 (641) 917 2,925 (4,385) 372 1,909 (9,637) (3,768) (8,908)
                     
CHANGES IN TEMPORARILY RESTRICTED NET ASSETS                    
Contributions 2,772 18,931 831 30,123 3,559 11,418 - - - 67,634
Other 10,414 (4,624) 7,275 (25,768) 5,843 (8,922) 2,121 (115) - (13,776)
NET CHANGE IN TEMPORARILY RESTRICTED NET ASSETS 13,186 14,307 8,106 4,355 9,402 2,496 2,121 (115) - 53,858
                     
CHANGES IN PERMANENTLY RESTRICTED NET ASSETS                    
Contributions 3,332 2,088 4,558 9,265 4,737 3,489 - - - 27,469
Other 2,288 (313)   369 (787) 895 - - - 2,452
NET CHANGE IN PERMANENTLY RESTRICTED NET ASSETS 5,620 1,775 4,558 9,634 3,950 4,384 - - - 29,921
                     
CHANGE IN NET ASSETS 22,206 15,441 13,581 16,914 8,967 7,252 4,030 (9,752) (3,768) 74,871
Net assets — beginning of year 458,009 - 375,073 206,154 294,511 95,276 108,697 106,690 17,176 1,661,586
Net effect of change in reporting entity - 121,475 - - - - - - - 121,475
                     
NET ASSETS — END OF YEAR $480,215 $136,916 $388,654 $223,068 $303,478 $102,528 $112,727 $96,938 $13,408 $1,857,932
*December 31, 2014, year-end

In accordance with GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units, the University determined that the College Foundation should be included in the financial reporting entity as a component unit for the year ended June 30, 2015, due to the nature and significance of its relationship with the University, including its ongoing financial support of the University. The effect of including the College Foundation as a component unit was an increase of approximately $121.5 million to beginning net assets on the Component Units Combined Statement of Activities for the year ended June 30, 2015.

PLEDGES RECEIVABLE

Unconditional promises to give (pledges) are recorded as receivables and revenues and are assigned to net asset categories based on the presence or absence of donor-imposed restrictions. Pledges expected to be collected within one year are recorded at net realizable value. Pledges that are expected to be collected in future years are recorded at the net present value of their estimated future cash flows. The discounts on these amounts are computed using risk-free interest rates applicable to the years in which the promise was received and then remain consistent throughout the pledge’s life. The component units record an allowance against pledges receivable for estimated uncollectible amounts. UPG does not accept gifts. Unconditional promises to give at June 30, 2015, are as follows:

PLEDGES RECEIVABLE (in thousands) as of June 30, 2015
UNIVERSITY OF VIRGINIA LAW SCHOOL FOUNDATION THE COLLEGE FOUNDATION OF THE UNIVERSITY OF VIRGINIA UNIVERSITY OF VIRGINIA DARDEN SCHOOL FOUNDATION ALUMNI ASSOCIATION OF THE UNIVERSITY OF VIRGINIA JEFFERSON SCHOLARS FOUNDATION VIRGINIA ATHLETICS FOUNDATION* COMPONENT UNITS TOTAL
               
Total pledges receivable $8,247 $37,273 $15,275 $9,519 $14,810 $27,417 $112,541
Less:              
Allowance for uncollectible accounts (428) (4,070) (1,430) (1,015) (840) (2,388) (10,171)
Unamortized discount to present value (204) (4,385) (1,718) (296) (522) (214) (7,339)
Total pledges receivable, net 7,615 28,818 12,127 8,208 13,448 24,815 95,031
Less: Current portion, net of allowance (4,086) (10,688) (5,719) (1,833) (5,840) (10,933) (39,099)
TOTAL NONCURRENT PLEDGES RECEIVABLE $3,529 $18,130 $6,408 $6,375 $7,608 $13,882 $55,932
* December 31, 2014, year-end          

The Law School Foundation has received bequest intentions and certain other conditional promises to give of approximately $3.4 million as of June 30, 2015. These intentions and conditional promises to give are not recognized as assets, and if they are received, will generally be restricted for specific purposes stipulated by the donors, primarily endowments for scholarships and professorships.

Pledges receivable for the Virginia Athletics Foundation are for several programs. The majority of these are for facility improvements.

INVESTMENTS

Investments are recorded at market value, which is determined by readily available quotes on the stock exchange or as quoted by UVIMCO. Realized gains (losses) from the sale of securities and unrealized gains (losses) from the appreciation (depreciation) of the value of securities held are recognized in the year incurred. The fair values of investments by investment class on June 30, 2015, for the component units are as follows:

SUMMARY SCHEDULE OF INVESTMENTS (in thousands) as of June 30, 2015
UNIVERSITY OF VIRGINIA LAW SCHOOL FOUNDATION THE COLLEGE FOUNDATION OF THE UNIVERSITY OF VIRGINIA UNIVERSITY OF VIRGINIA DARDEN SCHOOL FOUNDATION ALUMNI ASSOCIATION OF THE UNIVERSITY OF VIRGINIA JEFFERSON SCHOLARS FOUNDATION VIRGINIA ATHLETICS FOUNDATION* UNIVERSITY OF VIRGINIA FOUNDATION UNIVERSITY OF VIRGINIA PHYSICIANS GROUP UNIVERISTY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY ELIMINATIONS COMPONENT
UNITS TOTAL
Common stocks, corporate notes, bonds, limited partnerships, and agency securities $7,580 $- $10,295 $24,473 $6,102 $66 $- $90,110 $4,604,145 $- $4,742,771
University of Virginia Investment Management Company 307,285 91,846 287,185 250,564 283,188 68,180 69,190 68,886 - (1,426,324) -
Mutual & money market funds 30,839 2,734 27,059 795 - - 883 53,612 360,146 - 476,068
Other 110,270 - - 18,531 23,734 444 28,378 12,567 2,669,598 - 2,863,522
Total investments 455,974 94,580 324,539 294,363 313,024 68,690 98,451 225,175 7,633,889 (1,426,324) 8,082,361
Less: Amounts shown in current assets - (2,734) (10,404) (29,441) (4,309) - (1,589) (5,912) (517,723) - (572,112)
LONG-TERM INVESTMENTS $455,974 $91,846 $314,135 $264,922 $308,715 $68,690 $96,862 $219,263 $7,116,166 $(1,426,324) $7,510,249
                       
* December 31, 2014, year-end                  

UVIMCO has investments in limited-partnership hedge funds, private equity, venture capital investments, and similar private investment vehicles. These investments do not actively trade through established exchange mechanisms and are valued at estimated fair market value, based on UVIMCO’s interest in the investee as determined and reported by the external manager of the investment. Such investments represent $5.7 billion (76 percent of investments held for others) on June 30, 2015. Because of the inherent uncertainty of such valuations, these estimated values may differ from the values that would have been used had a ready market for the investments existed, and such differences could be material.

CAPITAL ASSETS

Capital assets are recorded at cost, except donated property, which is recorded at fair market value at the date of the gift. Depreciation is taken over the estimated useful lives of the assets using the straight-line method. As of June 30, 2015, capital assets consisted of the following:

CAPITAL ASSETS (in thousands) as of June 30, 2015
UNIVERSITY OF VIRGINIA LAW SCHOOL FOUNDATION UNIVERSITY OF VIRGINIA DARDEN SCHOOL FOUNDATION ALUMNI ASSOCIATION OF THE UNIVERSITY OF VIRGINIA JEFFERSON SCHOLARS FOUNDATION VIRGINIA ATHLETICS FOUNDATION* UNIVERSITY OF VIRGINIA FOUNDATION UNIVERSITY OF VIRGINIA PHYSICIANS GROUP UNIVERISTY OF VIRGINIA INVESTMENT MANAGEMENT COMPANY COMPONENT UNITS TOTAL
Land $152 $- $633 $2,879 $- $77,353 $2,121 $- $83,138
Buildings and improvements 914 105,033 6,630 19,800 - 241,225 47,629 1,567 422,798
Furnishings and equipment 365 1,622 1,699 1,290 68 22,746 22,487 1,155 51,432
Collections - 75 - 41 - - - - 116
Construction in progress - - - 138 - - 4,279 - 4,417
Total 1,431 106,730 8,962 24,148 68 341,324 76,516 2,722 561,901
Less: Accumulated depreciation (241) (43,725) (5,324) (4,232) (51) (109,432) (35,073) (1,987) (200,065)
NET CAPITAL ASSETS $1,190 $63,005 $3,638 $19,916 $17 $231,892 $41,443 $735 $361,836
* December 31, 2014, year-end              

LONG-TERM DEBT

UVAF had the following lines of credit outstanding on June 30, 2015:

LINES OF CREDIT (in thousands) as of June 30, 2015
AVAILABLE OUTSTANDING
BALANCE
Wells Fargo Bank, N.A. $21,000 $3,450
Wells Fargo Bank, N.A. 13,000 13,000
Bank of America, N.A. 40,000 21,010
U.S. Bank, N.A. 25,000 5,000
TOTAL $99,000 $42,460

The University has allocated up to $37.8 million of its quasi-endowment funds for use by UVAF to acquire and develop real estate. As of June 30, 2015, UVAF had borrowed $33.1 million of these funds to acquire properties on behalf of the University. These notes payable are noninterest bearing and due on demand.

The composition of the long-term debt of the component units on June 30, 2015, is summarized as follows:

LONG-TERM DEBT (in thousands) as of June 30, 2014
UNIVERSITY
OF VIRGINIA DARDEN
SCHOOL FOUNDATION
JEFFERSON
SCHOLARS
FOUNDATION
UNIVERSITY
OF VIRGINIA
FOUNDATION
UNIVERSITY
OF VIRGINIA
PHYSICIANS
GROUP
COMPONENT
UNITS TOTAL
University of Virginia Phase I and II Darden School Facilities $16,245 $- $- $- $16,245
Notes payable SunTrust Bank - 4,500 - - 4,500
Notes payable Bank of America - - 25,000 - 25,000
Recovery Zone Facility Bond - - 9,495 - 9,495
Note payable Augusta Professional Park - - - 1,291 1,291
1997 Industrial Development Authority revenue bonds—Louisa - - 2,958 - 2,958
1998 Refunding bonds - - - 5,050 5,050
2000 Industrial Development Authority revenue bonds—Louisa - - - 3,930 3,930
2001 Refinancing demand bonds - - 30,965 - 30,965
2004 Refinancing note payable - - 7,800 - 7,800
2009 Economic Development Authority revenue bonds—Albemarle - - - 20,835 20,835
2011 Refinancing demand bonds - 18,000 33,885 - 51,885
Notes payable University of Virginia - - 33,145 - 33,145
Lines of credit - - 42,460 - 42,460
Total 16,245 22,500 185,708 31,106 255,559
Less: Current portion (2,433) - (9,814) (2,871) (15,118)
NET LONG-TERM DEBT $13,812 $22,500 $175,894 $28,235 $240,441

Principal maturities of long-term debt obligations are on June 30, 2015, as follows:

MATURITIES (in thousands) as of June 30, 2015
UNIVERSITY
OF VIRGINIA DARDEN
SCHOOL FOUNDATION
JEFFERSON
SCHOLARS
FOUNDATION
UNIVERSITY
OF VIRGINIA
FOUNDATION
UNIVERSITY
OF VIRGINIA
PHYSICIANS
GROUP
COMPONENT
UNITS TOTAL
           
2016 $2,433 $- $9,814 $2,871 $15,118
2017 2,407 - 26,017 1,205 29,629
2018 2,727 - 27,904 1,265 31,896
2019 2,840 - 4,911 1,340 9,091
2020 2,958 - 5,136 1,400 9,494
Thereafter 2,880 22,500 111,926 23,025 160,331
TOTAL $16,245 $22,500 $185,708 $31,106 $255,559

SIGNIFICANT TRANSACTIONS WITH THE UNIVERSITY

The University provides certain services for the Darden School Foundation that are reimbursed by the Darden School Foundation monthly.

The University has entered into agreements with the Darden School Foundation in which the University has committed to reimburse the Darden School Foundation for any defaults the Darden School Foundation is required to pay under its student loan guarantee programs with three banks. As of June 30, 2015, there were outstanding student loan balances under the program of approximately $25.7 million. At the inception of the agreements with the banks, origination fees were used to fund reserve accounts which are to be used to cover subsequent student loan defaults. As of June 30, 2015, the reserve account balances totaled $679,398. No payments have been made to the Darden School Foundation related to student loan guarantee program defaults.

Direct payments to the University from the Alumni Association for the year ended June 30, 2015, totaled $1.2 million. This amount includes gift transfers, payment for facilities and services, and other support for University activities.

UPG has contracted with the University to provide certain professional and technical services. Payments received for these services were approximately $82.6 million for the year ended June 30, 2015. Approximately $21.2 million of the fiscal year payments received relate to disproportionate share funds paid for indigent patients served by UPG, which contributed $23.8 million to the University in support of various academic programs, equipment, teaching and research for the year ended June 30, 2015.