7: Retirement Plans
of the University are employees of the Commonwealth. Substantially
all full-time classified salaried employees participate in a
defined benefit pension plan administered by the Virginia Retirement
System (VRS). Information relating to this plan is available at
the statewide level only in the Commonwealth of Virginia's
Comprehensive Annual Financial Report (CAFR). The Commonwealth,
not the University, has overall responsibility for contributions
to this plan.
all full-time faculty, certain administrative staff, and Health
Care Professionals participate in Faculty Optional Retirement
Plans. These are fixed-contribution plans where the retirement
benefits received are based upon the employer and employee contributions
(all of which are paid by the University), and the interest and
dividends. Individual contracts issued under the plans for full-time
faculty and certain administrative staff provide for full and
immediate vesting of both the University's and the participant's
contributions. Health Care Professionals' employer contributions
fully vest after one year of employment. Total pension costs under
the plans were approximately $27.3 million and $26.3 million for
the years ended June 30, 2000 and 1999, respectively. Contributions
to the Optional Retirement Plans were calculated using base salaries
of $260.7 million and $251.3 million for the years ended June
30, 2000 and 1999, respectively. The contribution percentage amounted
to 10.5 percent and 10.4 percent for the years ended June 30,
2000 and 1999, respectively.
8: Postemployment Benefits Other Than Pension Benefits
Commonwealth of Virginia participates in the VRS administered
statewide group life insurance program, which provides postemployment
life insurance benefits to eligible retired and terminated employees.
The Commonwealth also provides health care credits against the
monthly health insurance premiums of its retirees who have at
least 15 years of state service and participate in the state health
plan. Information related to these plans is available at the statewide
level in the Commonwealth's Comprehensive Annual Financial
University employees have an option to participate in the University's
self-funded, comprehensive medical care benefits program. The cost
of medical care is paid out of employee and employer contributions
and is held in a separate bank account. The University has contracted
with QualChoice of Virginia of Blue Ridge Health Alliance, Inc.,
a third-party administrator, to provide administrative services
for this health care benefits program. As of June 30, 2000 and
1999, cash and investments of $18,330,000 and $9,941,000 were
in the account, respectively. The estimated liability for outstanding
claims at June 30, 2000 and 1999, was $7,846,000 and $7,441,000,
risk management insurance plans are administered by the Department
of General Services, Division of Risk Management. Risk management
insurance includes property, boiler and machinery, crime, employee
faithful performance of duty bond, general (tort) liability,
professional liability (includes medical malpractice), aviation
and watercraft coverage, and automobile liability. The University
is self-insured for the first $100,000 of each property and boiler
and machinery loss, and for the first $20,000 of each vehicle physical
damage loss. The University also maintains excess crime and
vehicle physical damage insurance coverage.
10: Funds Held in Trust By Others
of funds held by trustees for the benefit of the University are
not reflected in the accompanying balance sheet. The University
has irrevocable rights to all or a portion of the income of these
funds, but the assets of the funds are not under the management
of the University. The following reflects the market value of these
funds as of June 30, 2000 and 1999, and the amount of income received
from the trustees during the years then ended (in thousands):
Value of Funds Held by Trustees for the Benefit of the University
Received from Funds Held by Trustees for the Benefit of the
pledges to the University amounted to $99.2 million and $76.8
million as of June 30, 2000 and 1999, respectively. Included in
both totals are $19.7 million of pledges relating to plant construction.
It is not practicable to estimate the net realizable value of
such pledges and, therefore, they are not reflected in the accompanying
12: Commitments and Contingencies
of June 30, 2000, the University was a party to construction contracts
and commitments totaling approximately $191.4 million of which
$130.2 million had been incurred. The University's commitments
for equipment, leases, and services are as follows:
total rental expense for all property and equipment was approximately
$12.2 million and $10.1 million for the years ended June 30, 2000
and 1999, respectively.
prior years, certain outstanding bonds have been defeased by placing
assets in irrevocable trusts with escrow agents. Accordingly,
these assets and the liability for the defeased bonds are not
reflected in the accompanying financial statements. As of June 30,
2000, $6.6 million of the defeased bonds remain outstanding.
University is a defendant in a number of legal actions. While
the final outcome cannot be determined at this time, management
is of the opinion that the liability, if any, for these legal
actions will not have a material effect on the University's
fiscal year 2000, the Department of Justice reviewed outpatient
billings submitted to Government Payers by the University of
Virginia Health Services Foundation (HSF) and the University of
Virginia Medical Center. This review revealed a small number
of billing errors. To avoid protracted legal and operational
costs, the Justice Department, Medical Center, and HSF negotiated
a tentative settlement of this issue. A final settlement has not
been reached, but the parties believe they are close to agreement.
The settlement will have several provisions, one of which will
be a payment to the Government of $3,000,000. Internal controls
have been implemented which will prevent a re-occurrence of the
problems identified during the investigation.
13: Direct Lending
University began participating in the Federal Direct Lending Program
in July 1995. For the year ended June 30, 2000, the Current Restricted
Fund additions for federal grants and contracts of $191.4 million
and the Current Restricted Fund expenditures for scholarships
and fellowships of $100.0 million include $52.1 million for direct
lending, respectively. For the year ended June 30, 1999, the
Current Restricted Fund additions for federal grants and contracts
of $179.6 million and the Current Restricted Fund expenditures
for scholarships and fellowships of $99.1 million include $53.1
million for direct lending, respectively.
14: Subsequent Events
April 7, 2000, the Health Care Financing Administration (HCFA)
published its final rules concerning a new prospective payment
system (PPS) for most hospital services. In addition to establishing
the outpatient PPS, the rules also established complex requirements
for obtaining provider-based status for clinic facilities that
are operated by a hospital. The new PPS rules clearly defined a
provider-based clinic and established specific criteria that must
be met to obtain this designation. The existing organization of
the clinics in the University of Virginia Health System did not
comply with the new regulations. In order to be in compliance,
the Health System was required to transfer ownership of most of
the clinics to the Medical Center. The revenues and expenses of
the clinics had historically been included in the HSF and Clinical
Department financial statements. The transfer of the operation
of the clinics was finalized August 1, 2000.
fiscal year 2000, the Medical Center entered into an agreement
to purchase a newly constructed child care center. The center,
in honor of the late Malcolm W. Cole, was dedicated on May 31,
2000. It contains 15,000 square feet of space and will accommodate
170 children from infants to pre-schoolers. The property was initially
leased from the builder and subsequently purchased by the Medical
Center for $2.4 million on July 18, 2000.
May 2000, the Medical Center entered into an agreement to purchase
the University Towers building from Genesis ElderCare National
Centers, Inc. dba Jefferson Park Center, a Florida for-profit corporation.
Genesis operated the property as a 173-bed nursing home. It contains
88,593 square feet of building space that rests on 58,238 square
feet of land. The closing date is tentatively scheduled for mid-November.
The purchase price is expected to be $7.3 million.
the Medical Center has agreed to purchase the building it
currently operates as the Zion's Crossroads Dialysis Center.
The building is currently owned by the Health Services Foundation
and is leased by the Medical Center. It contains 5,013 square
feet of space and is used to treat dialysis patients exclusively.
Closing is scheduled to take place pending the resolution of the
ground lease with Virginia Oil, Inc. The purchase price is
expected to be $1.1 million.