Revenue Bonds & BANs - GAAP Passdown Entries from CO

1. Revenue Bonds & BANs - GAAP Passdown Entries from CO December 2008 Version 1.0

2. Revenue Bond Passdown Schedule • The passdown schedules and entries are grouped by program (e.g. Union, Housing, Parking) • Each program has its own schedule and set of entries • Each Schedule is broken down into sections: • Debt rollforward • Invested in Capital Assets Net Asset category entries • Restricted Debt Service Net Asset category entries • Restricted Capital Projects Net Asset category entries • Unrestricted Net Asset category entries • Footnote disclosure

3. Debt Rollforward • Outstanding bonds and BANs at the beginning of the year by series • Current year activities (e.g. new issuance, BAN rollover, principal payments or BAN payoff, and bond defeasance) • Outstanding bonds and BANs at the end of the year • Interest expense for the year by series (may be used for capitalization of interest cost) • Accrued interest expense liability at 6/30/CY • Unamortized net premium/discount or loss at the beginning of the year by series • New premium/discount or loss • Current year amortization expense • Unamortized net premium/discount or loss at the end of the year

4. Passdown Entries • By net asset categories • Current year activities (not limited to debt rollforward) • Reversal of prior year accruals • Reclassification entries

5. Invested in Capital Assets, net of Related Debt Entries SCO Fund 0997 - General Fixed Asset Group • Current year principal payment from debt service transfers from campus [see note (a)] • Reclassify next year’s principal debt obligation from noncurrent to current

6. Invested in Capital Assets, net of Related Debt Entries (cont’d) • Record current year amortization expense

7. Restricted Expendable Debt Service EntriesSCO Fund 0578 - Interest & Redemption Fund • Current year interest expense (may be capitalizable) • Current year investment receivable - 4th quarter SMIF (reverse in following year) • Debt service transfers-in from campus [see note (a)] • Investment income • Investment income from bond proceeds (may be capitalizable) • Transfer-in of bond proceeds set aside to pay future debt services (also called in capitalized interest in financing terms) • Accrued interest expense payable (reverse in following year) • Increase/decrease to investments based on above transactions • Reversal of prior year interest expense accrual

8. Restricted Expendable Debt Service Entries (cont’d) • Reversal of prior year investment income accrual • Reclassify debt service reserve that is internally imposed to unrestricted net asset category (reverse in following year). Note: This is only a book entry. The actual reserve is still in 0578-Interest and Redemption Fund on the rollforward schedule. • Reversal of prior year’s debt service reserve entry • Reclassify capitalized interest in excess of next year’s debt service to restricted expendable capital projects net asset category (reverse in following year). Note: This is only a book entry. The excess fund is still in 0578-Interest and Redemption Fund on the rollforward schedule.

9. Restricted Expendable Capital Projects EntriesSCO Fund 0576 - Dormitory Construction Fund • Record new BAN proceeds • Record BAN rollover (consists of accrued interest expense and additional principal) • Record long-term debt, current from BAN issuance

10. Restricted Expendable Capital Projects EntriesSCO Fund 0576 - Dormitory Construction Fund (cont’d) • Record BAN payoff • Transfer-out bond proceeds set aside to pay future debt services (also called in capitalized interest in financing terms). See other side on slide 7. • Record new debt • Current year investment receivable - 4th quarter SMIF (reverse in following year) • Operation & maintenance of plant from bond related expenses incurred by the SCO • Investment income from unexpended bond proceeds by project (may be capitalizable) • Record net premium (consists of bond premium, underwriter’s discount, bond insurance premium, and cost of issuance) • Increase/decrease to investments based on above transactions

11. Restricted Expendable Capital Projects EntriesSCO Fund 0576 - Dormitory Construction Fund (cont’d) • Sources and Uses Summary - Bond Issuance

12. Restricted Expendable Capital Projects EntriesSCO Fund 0576 - Dormitory Construction Fund (cont’d) • Reversal of prior year investment income accrual • Reclassification entry from restricted expendable debt service net asset category for capitalized interest in excess of next year’s debt service (reverse in following year). Note: This is only a book entry. The excess fund is still in 0578-Interest and Redemption Fund on the rollforward schedule. See other side on slide 8.

13. Unrestricted EntriesSCO Fund 0948 - Trust Fund • Reclassification entry from restricted expendable debt service net asset category for debt service reserve that is internally imposed (reverse in following year). Note: This is only a book entry. The actual reserve is still in 0578-Interest and Redemption Fund on the rollforward schedule. See other side on slide 8. • Reversal of prior year’s debt service reserve entry. See other side on slide 8.

14. Footnote (FN) Disclosure #7 in YES • FN #7.1 - LT Debt Obligation Detail Passed Down from CO • Agrees to LT Debt outstanding and unamortized prem/disc at 6/30/20CY

15. Footnote (FN) Disclosure #7 in YES (cont’d) • FN #7.3 - LT Debt Obligation Schedule passed down from CO • Agrees to LT Debt at 6/30/20CY

16. 0576 Investments Held by CO Rollforward • This schedule should be used as a check figure to ensure all entries for all programs have been booked and the ending campus investment balance agrees to the 0576 rollforward schedule. • The beginning balance on the rollforward is prior year’s ending investment balance. • The current year activities are either provided in the passdown entries or need to be initiated and recorded by the campus as GAAP adjustment or reclassification entries. • Once the current year activities are booked, campus should arrive at the ending investment balance on the rollforward schedule. • Like the Note on page 12, the reclassification entry is only a book entry and need to be manually backed out of the 0576 investment balance in order to tieout to the rollforward schedule. • The investment rollforward schedule may be expanded by selecting the + sign to the left to view the activity detail.

17. 0578 Investments Held by CO Rollforward • This schedule should be used as a check figure to ensure all entries for all programs have been booked and the ending campus investment balance agrees to the 0578 rollforward schedule. • The beginning balance on the rollforward is prior year’s ending investment balance. • The current year activities are all provided in the passdown entries. • Once the current year activities are booked, campus should arrive at the ending investment balance on the rollforward schedule. • Per Note on page 8, reclassification entries are only book entries and need to be manually added back to the 0578 investment balance in order to tieout to the rollforward schedule.

18. Reporting Investments Held by CO on Note 3.2 • The current portion of the investment should be the ending 0578 investment rollforward balance less the amount reclassified to 0576. • The noncurrent restricted portion of the investment should be the ending 0576 investment rollforward balance plus the amount reclassified from 0578. • Total investments should agree to the sum of 0578 and 0576 ending investment rollforward balances. • A summary schedule is provided by the CO systemwide reporting as a check figure that the balances entered into note 3.2 are as expected.

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