Information from the Chancellor’s Office Chapter 5 Presented by CSU and KPMG, LLP

1. Information from the Chancellor’s OfficeChapter 5Presented by CSU and KPMG, LLP

2. Revenue Bond Passdown Schedule • Rollforward of debt

3. Revenue Bond Passdown Schedule (cont’d) • GAAP passdown entries • Current year activities • Sectioned by net asset categories • Invested in capital assets, net of related debt • Restricted expendable debt service • Restricted expendable capital projects • Unrestricted

4. Revenue Bond Passdown Schedule (cont’d) • GAAP passdown entries (cont’d) • Types of entries in invested in capital assets, net of related debt • Current year principal payment from debt service transfers from campus • Reclassify next year’s principal debt obligation from noncurrent to current

5. Revenue Bond Passdown Schedule (cont’d) • GAAP passdown entries (cont’d) • Types of entries in restricted expendable debt service • Current year interest expense (may be capitalizable) • Current year interest receivable - 4th quarter SMIF (reverse in following year) • Debt service transfers-in from campus • Transfer-in of bond proceeds set aside to pay future debt services • Investment income • Investment income from bond proceeds above (may be capitalizable) • Accrued interest payable (reverse in following year) • Increase/decrease to investments based on above transactions

6. Revenue Bond Passdown Schedule (cont’d) • GAAP passdown entries (cont’d) • Types of entries in restricted expendable debt service (cont’d) • Reclassify debt service reserves internally imposed to unrestricted net assets (reverse in following year)

7. Revenue Bond Passdown Schedule (cont’d) • GAAP passdown entries (cont’d) • Types of entries in restricted expendable capital projects • BAN (Bond Anticipation Note) proceed • Interest expense from BAN (may be capitalizable) • LT-debt obligation from BAN issuance • Accrued interest payable (reverse in following year)

8. Revenue Bond Passdown Schedule (cont’d) • GAAP passdown entries (cont’d) • Types of entries in restricted expendable capital projects (cont’d) • Current year interest receivable - 4th quarter SMIF (reverse in following year) • Record BAN payoff • Transfer-out of bond proceeds set aside to pay future debt services • LT-debt obligation from bond issuance • Investment income • Investment income from unexpended bond proceeds by project (may be capitalizable) • Unamortized bond premium/discount • Current year amortization • Increase/decrease to investments based on above transactions

9. Revenue Bond Passdown Schedule (cont’d) • GAAP passdown entries (cont’d) • Types of entries in unrestricted • Reclassify debt service reserves internally imposed from restricted expendable debt service net assets (reverse in following year) • Centralized campus union maintenance and repair fund 0575 activities

10. Revenue Bond Passdown Schedule (cont’d) • Footnote disclosure - YES, note 7 • Interest rate • Maturity date • Original issue amount • Outstanding balance at 6/30 • Future principal and interest payments

11. Additional Schedules Provided by CO • SRB Sources and Uses Summary - This schedule supports the revenue bond passdown entries and is used to tie-out the amount transferred to escrow agent on the SCF.

12. Additional Schedules Provided by CO • Interagency Transfer Schedule - This schedule is used to reconcile to the state appropriations revenue, noncapital on the SRECNA (refer to Chapter 4, Section 4-13).

13. Additional Schedules Provided by CO • SWIFT (SystemWide Investment Fund Trust) Rollforward - This schedule is used to prepare the investment section on the SCF and the reconciliation of investment income on the SRECNA from the CSU pooled investments. • Investments Held by CO Rollforward Schedule – This schedule is used to tie-out the ending investments held by CO for SCO funds 0576, 0578, and 0575 (for applicable campuses). Please note the ending balance on this schedule is prior to any reclassification entries on the passdown schedules (e.g. entries 2.4, 2.5, 3.5 and 4.4).

14. Capitalize Interest • Campus needs to determine if the capitalization of interest is required for projects that are contained in its CWIP accounts. CWIP accounts can be broken out into 4 key categories: • Projects acquired using gifts, grants or State of California capital appropriations • No interest capitalization required • Project that are self-funded by the Campus • No interest capitalization required if not applicable or immaterial • Documentation if applicable • Projects funded with taxable debt • No interest capitalization required if not applicable or immaterial • Documentation if applicable

15. Capitalize Interest (cont’d) • Campus needs to determine if the capitalization of interest is required for projects that are contained in its CWIP accounts. CWIP accounts can be broken out into 4 key categories: (cont’d) • Projects funded with tax-exempt debt • Most likely result in interest capitalization • Capitalize interest cost less interest earned until assets are ready for intended use • For the portion of interest costs and interest earnings that are related to assets which have been placed in service, entries are recorded as presented in the pass down schedule. • For the portion of interest cost and interest earnings that are related to CWIP, campus needs to capitalize such amounts, i.e. to record the net amount as an addition to CWIP.

16. Calculation of Future Funding Commitment Receivable (Payable) • Represents amounts due to (from) CSURMA from the campuses to fund the estimated liability as of year end. • Calculated as follows: • Campus’ simple average contribution to total liabilities multiplied by receivable (payable) adjusted for campus prepayments received as of June 30. • Actuarial reports are received detailing each campus’ respective liability for workers’ compensation (WC), general liability (GL), AIME, AO WC, AO AGPIP-SIR. The campus’ percentage relative to the totals for WC and GL are calculated. Then a simple average is calculated based on both WC and GL.

17. Calculation of Campus Liability • Workers’ Compensation • [{Percentage of total campus WC liability to total liability} * by total liability] * by campus relative percentage of WC (percentage of campus specific WC to total WC). • General Liability • [{Percentage of total campus GL liability to total liability} * by total liability] * by campus relative percentage of GL (percentage of campus specific GL to total GL). • Sum of WC and GL to obtain total campus liability. Percentage calculated to CSURMA total liability.

18. Reference • Passdown schedules will be available on the Chancellor’s Office website at: http://www.calstate.edu/sfsr/gaap/ • Revenue Bonds available by August 20 • Risk Pool available by September 30