Notes 7 - 10 to Financial Statements

Note 7: Retirement Plans

Substantially all full-time classified salaried employees of the University participate in the defined benefit retirement plan administered by the Virginia Retirement System (VRS). VRS is an agent multiple-employer public employee retirement system (PERS) that acts as a common investment and administrative agency for the Commonwealth of Virginia and its political subdivisions.

The University's payroll costs for employees covered by VRS were $167.7 million and $164.3 million for the years ended June 30, 1995 and 1994, respectively. The University's total payroll costs were $451.3 million and $436.9 million for the years ended June 30, 1995 and 1994, respectively. Information regarding types of employees covered, benefit provisions, employee eligibility requirements including eligibility for vesting, and the authority under which benefit provisions as well as employer and employee obligations to contribute are established can be found in the Commonwealth's Comprehensive Annual Financial Report (CAFR).

The University's total VRS contributions were $15.4 million and $14.7 million for the years ended June 30, 1995 and 1994, respectively, which included the 5 percent employee contribution assumed by the employer. These contributions represent 9.2 percent and 8.9 percent of covered payroll for the respective years.

The VRS does not measure assets and pension benefit obligations separately for individual State institutions. The CAFR provides disclosure of the Commonwealth's unfunded pension benefit obligation at June 30, 1994. The same report contains historical trend information showing VRS's progress in accumulating sufficient assets to pay benefits when due.

Substantially 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 Professional's employer contributions fully vest after one year of employment. Total pension costs under the plans were approximately $20.7 million and $19.5 million for the years ended June 30, 1995 and 1994, respectively. Contributions to the Optional Retirement Plans were calculated using base salaries of $197 million and $189.6 million for the years ended June 30, 1995 and 1994, respectively. The contribution percentage amounted to 11.2 percent in 1995 and 10.3 percent in 1994.

Note 8: Postemployment Benefits Other Than Pension Benefits

The 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 Report.

Note 9: Funds Held in Trust By Others

Assets 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, 1995 and 1994, and the amount of income received from the trustees during the years then ended (in thousands):

1995 1994
Market value of funds held by trustees for the benefit of the University $98,546 $86,721
Income received from funds held by trustees for the benefit of the University $ 3,695 $ 3,461

Note 10: Pledges

Outstanding pledges to the University amounted to $26.9 million and $11.9 million as of June 30, 1995 and 1994, respectively. Included in these totals are $6.1 million and $3.2 million, respectively, 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 financial statements.

Note 11: Commitments and Contingencies

Contractual commitments

As of June 30, 1995, the University has construction contracts and commitments totaling approximately $98.7 million of which $81 million had been incurred.The University's commitments for equipment, leases, and services are as follows (in thousands):

1995-1996 $7,996
1996-1997 1,881
1997-1998 1,078
1998-1999 858
1999-2000 647

The total rental expense for all property and equipment was approximately $6.2 million and $5.3 million for the years ended June 30, 1995 and 1994, respectively.

The Board of Visitors authorized the Medical Center to participate with the University of Virginia Health Services Foundation in establishing Healthcare Partners, Inc., a non-profit joint venture designed to provide clinical and related services, as well as to support and promote medical, educational, scientific, and research purposes. The Board authorized the Medical Center to invest $4 million to capitalize the corporation.

The Board of Visitors also authorized the Medical Center to establish an acute rehabilitation facility through a joint venture with HEALTHSOUTH Corporation. The Board authorized a capital contribution of $2 million upon approval of the Certificate of Public Need. .

Prior bond defeasance

In prior years, certain outstanding bonds have been defeas-ed 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, 1994, $150 million of the defeased bonds remain outstanding.


The 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 financial position.

Finance Staff

Leonard W. SandridgeExecutive Vice President and Chief Financial Officer
Colette Capone Vice President for Management and Budget
Charles T. GilletAssistant Vice President for Finance and University Comptroller
Alice W. HandyUniversity Treasurer
Peter L. Munger Chief Financial Officer, University of Virginia Medical Center

Internal Audit

Barbara J. Deily, Director of Audits

Non-Discrimination Policy

In accordance with federal law, the law of the Commonwealth of Virginia, and the policies of the Rector and Visitors of the University of Virginia, the University does not discriminate in any of its programs, procedures, or practices against any person on the basis of age, citizenship, color, handicap, national origin, political affiliation, race, religion, sex, sexual orientation, or status as a disabled veteran or veteran of the Vietnam era. The University operates equal opportunity and affirmative action programs for faculty, staff, and students. The University of Virginia is an Equal Opportunity/Affirmative Action Employer. The Section 504 Coordinator is Patricia M. Lampkin, Associate Dean of Students, Dabney House, Station 1, University of Virginia, Charlottesville, VA 22903, (804) 924-3736. The Title IX Coordinator is John Garland, Acting EO/AA Officer, Equal Opportunity/Affirmative Action Office, Poe Alley, West Lawn, Charlottesville, VA22903, (804) 924-3200.

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