Notes to Financial Statements

As of June 30, 1998

NOTE 7: Retirement Plans

Employees 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.

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 $24.3 million and $22.5 million for the years ended June 30, 1998 and 1997, respectively. Contributions to the Optional Retirement Plans were calculated using base salaries of $233.9 million and $215.9 million for the years ended June 30, 1998 and 1997, respectively. The contribution percentage amounted to 10.4 percent in each year.

NOTE 8: Postemployment Benefits Other Than Pension Benefits

The Commonealth 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: Self-Insurance

Beginning July 1, 1995, all University employees had 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, 1998 and 1997, cash and investments of $2,799,000 and $602,000 were in the account, respectively. The estimated liability for outstanding claims at June 30, 1998 and 1997, was $7,514,000 and $2,821,000, respectively.

NOTE 10: Funds Held in Trust By Others

Assets of funds held by trustees for the benefit of the University are not refiected 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 refiects the market value of these funds as of June 30, 1998 and 1997, and the amount of income received from the trustees during the years then ended (in thousands):


Market Value of Funds Held by Trustees for the Benefit of the University

$ 141,287

$ 136,936

Income Received from Funds Held by Trustees for the Benefit of the University

$ 4,346

$ 3,995

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Financial Report