SUNY 2009 Financial Report

A N N U A L F I N A N C I A L R E P O R T2009

T H E S T A T E U N I V E R S I T Y O F N E W Y O R K

The State University of New York 2009 Annual Financial Report The StateUniversity of New York 2009 Annual Financial Report The State University of New York2009 Annual Financial Report The State University of New York 2009 AnnualFinancial Report The State University of New York 2009 Annual Financial ReportThe State University of New York 2009 Annual Financial Report The StateUniversity of New York 2009 Annual Financial Report The State University ofNew York 2009 Annual Financial Report The State University of New York 2009Annual Financial Report The State University of New York 2009 Annual FinancialReport The State University of New York 2009 Annual Financial Report The StateUniversity of New York 2009 Annual Financial Report The State University of New York2009 Annual Financial Report The State University of New York 2009 AnnualFinancial Report The State University of New York 2009 Annual Financial ReportThe State University of New York 2009 Annual Financial Report The StateUniversity of New York 2009 Annual Financial Report The State University of New York2009 Annual Financial Report The State University of New York 2009 AnnualFinancial Report The State University of New York 2009 Annual Financial Report

2009

Board of TrusteesCarl T. Hayden, Chairman

Aminy I. Audi

Robert J. Bellafiore

Stephen J. Hunt

H. Carl McCall

John L. Murad, Jr.

Pedro Noguera

Michael E. Russell

Linda S. Sanford

Carl Spielvogel

Cary Staller

Harvey F. Wachsman

Gerri Warren-Merrick

Melody Mercedes (Student Trustee)

Kenneth P. O’Brien (Faculty Senate)

ChancellorNancy L. Zimpher

Senior ManagementMichael A. AbbottUniversity Auditor

Johanna Duncan-PoitierChancellor’s Deputy for theEducation Pipeline

Dr. Dennis GolladayVice Chancellor forCommunity Colleges

Dr. David K. LavalleeInterim Provost and Vice Chancellorfor Academic Affairs

Mitch LeventhalVice Chancellor for Global Affairs

Jeffrey J. McGrathOfficer-In-Charge,University Controller’s Office

John J. O’ConnorVice Chancellor andSecretary of the Universityand President of the ResearchFoundation

Monica RimaiSenior Vice Chancellor andChief Operating Officer

Nicholas RostowUniversity Counsel andVice Chancellor for Legal Affairs

Michael C. TrunzoVice Chancellor forGovernment Relations

Philip W. WoodVice Chancellor for Capital Facilitiesand Interim Vice Chancellor andChief Financial Officer

2 0 0 9 A N N U A L F I N A N C I A L R E P O R T

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Message from the ChancellorI am pleased to present this year’s Annual Financial Report of the State University of New York. The report

provides an overview of the State University’s finances and operating results for the year ended June 30, 2009.

Even in the midst of severe economic pressures, the State University continues to push forward with itsmission to enhance educational excellence, affordability, and accessibility for New Yorkers. Enrollment,student retention and sponsored research all remain strong or at record levels.

New York’s public higher education system is integral to the economic, cultural and civic well-being ofthe state. New York’s cities, towns and villages are more robust economically and culturally because of thepresence of State University campuses. The State University has the unique ability to educate individualsacross a spectrum of interests and career paths – from fashion to forestry, and from medicine to law – andin large numbers. Now serving nearly 465,000 students, the State University is the primary developer ofthe state's human capital, and a key driver of innovation, economic recovery and quality of life in ourcommunities.

The State University continues to attract and educate talented and promising students in record numbers.Total student enrollment has grown every year since 1997 and has been on a record-setting pace since the fallof 2000. Enrollment has increased almost 27 percent from the fall of 1997 to the fall of 2009. In addition,system-wide retention rates, which result in higher graduation rates, are steadily increasing. Retention offirst-time, full-time students is 83 percent, which is the highest level in the history of the State University.The retention rates continue to outpace the rates at most public colleges nationally, and are as high as, orapproaching, the rates at many of the best private colleges and universities in the United States. Reflectingthe State University’s commitment to improved student performances across all cultural backgrounds, recentdata show that the State University’s minority student graduation rates exceed the national rates for minoritystudents attending public institutions.

The volume of research and other sponsored programs revenue continues to be strong, with morethan $1.026 billion reported in fiscal year 2009. Research continues to be an important facet of the StateUniversity’s mission, with faculty constantly breaking new ground in diverse fields such as medicine, educa-tion, high performance computing and alternative energy. In the 2009 fiscal year, The Research Foundationof State University of New York received 320 invention disclosures, filed 205 patent applications, was awarded55 U.S. patents, executed 49 licenses and received more than $13 million in royalties. These achievementswere the products of more than 7,200 projects that supported more than 17,000 employees statewide.

More than ever before, the State University is an excellent investment for students and a critical resourcefor New York. If the State is to move forward in these tough economic times, then we must look to build astronger future for the State University, which has provided generations of New Yorkers access to educationaland economic opportunities. We take very seriously our responsibility to be good stewards of public dollarsand will continue to strive to be as efficient and creative as possible in managing our resources.

Nancy L. ZimpherChancellor


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To The Board of TrusteesState University of New York

In our opinion, based on our audits and the reports of other auditors, the financial statements of thebusiness-type activities and the aggregate discretely presented component units of The State Universityof New York (the “University”) which collectively comprise the Universityʼs basic financial statements,present fairly, in all material respects, the respective financial position of the business-type activities andthe aggregate discretely presented component units of the University at June 30, 2009 and 2008, and therespective changes in financial position and cash flows, where applicable, thereof for the years then endedin conformity with accounting principles generally accepted in the United States of America. These financialstatements are the responsibility of the University's management. Our responsibility is to express opinionson these financial statements based on our audits. For the year ended June 30, 2009, we did not auditthe financial statements of the State University Construction Fund, the Research Foundation, nor certainauxiliary service corporations, which statements reflect total assets of 7 percent and total net assets of10 percent of the related totals as of June 30, 2009 and total revenues of 18 percent of the related totalrevenues for the year ended of the business type activities. For the year ended June 30, 2008, we didnot audit the financial statements of the State University Construction Fund, nor certain auxiliary servicecorporations, which statements reflect total assets of 3 percent and total net assets of 8 percent of therelated totals as of June 30, 2008 and total revenues of 8 percent of the related total revenues for theyear then ended of business type activities. Additionally, we did not audit the financial statements of thediscretely presented component units, which comprise 100% of the total assets, total net assets and totalrevenue of the discretely presented component units. Those statements were audited by other auditorswhose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amountsincluded for the State University Construction Fund, the Research Foundation, certain auxiliary servicecorporations, and the discretely presented component units is based on the reports of the other auditors.We conducted our audits of these statements in accordance with auditing standards generally acceptedin the United States of America. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements, assessing the accounting principles used and significant estimates made by management,and evaluating the overall financial statement presentation. We believe that our audits and the reports ofother auditors provide a reasonable basis for our opinions.

As discussed in Note 1, the University is included in the primary government reporting entity of the State ofNew York as an enterprise fund. The accompanying financial statements represent only the financial state-ments of the University and do not purport to, and do not, present fairly the financial statements of the Stateof New York in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 14 to the financial statements, the discretely presented component units are reportedin accordance with generally accepted accounting principles promulgated by the Financial AccountingStandards Board ("FASB") and the audits were not performed in accordance with Government AuditingStandards.

The Management's Discussion and Analysis on pages 3 through 11 is not a required part of the basicfinancial statements but is supplementary information required by accounting principles generally acceptedin the United States of America. We have applied certain limited procedures, which consisted principallyof inquiries of management regarding the methods of measurement and presentation of the requiredsupplementary information. However, we did not audit the information and express no opinion on it.

October 29, 2009

PricewaterhouseCoopers LLP677 BroadwayAlbany NY 12207Telephone (518) 462 2030Facsimile (518) 427 4499

Report of Independent Auditors


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Management’s discussion and analysis (MD&A)provides a broad overview of the State University ofNew York’s (State University) financial condition asof June 30, 2009 and 2008, the results of itsoperations for the years then ended, and significantchanges from the previous years. Management hasprepared the financial statements and relatedfootnote disclosures along with this MD&A. TheMD&A should be read in conjunction with theaudited financial statements and related footnotesof the State University which directly followsthe MD&A.

For financial reporting purposes, the StateUniversity’s reporting entity consists of all sectors ofthe State University including the university centers,health science centers (including hospitals), collegesof arts and sciences, colleges of technology andagriculture, specialized colleges, statutory colleges(located at the campuses of Cornell and AlfredUniversities), and central services, but excludingcommunity colleges. The financial statements alsoinclude the financial activity of The ResearchFoundation of the State University of New York(Research Foundation), which administers thesponsored program activity of the State University,the State University Construction Fund, (ConstructionFund), which administers the capital program of theState University, the auxiliary services corporationsand foundations located on its campuses.

The foundations meet the criteria under theGovernmental Accounting Standards Board (GASB)accounting and financial reporting requirements forinclusion in the State University reporting entity.For financial statement presentation purposes, thecombined totals of the foundations are not includedin the reported amounts of the State University, butare discretely presented on separate pages in the StateUniversity’s financial statements, in accordance withdisplay requirements prescribed by the FinancialAccounting Standards Board (FASB) for not-for-profit organizations.

The focus of the MD&A is on the State Universityfinancial information contained in the balancesheets, the statements of revenues, expenses, andchanges in net assets, and the statements of cashflows, which exclude the foundations. Foundationfinancial statement information is presentedseparately on pages 16 and 17 of the StateUniversity’s financial statements.

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At June 30, 2009 and 2008, total assets reportedby the State University were $10.92 billion and$11.15 billion and total liabilities were $10.03 billion and $9.22 billion, respectively. Net assets,which total $897 million and $1.93 billion at June30, 2009 and 2008, experienced a decrease of $1.03billion in 2009 and a decrease of $336 million in2008. The net assets at June 30, 2009, 2008, and2007 are summarized in the following categories (in thousands):

The decrease in net assets during 2009 and 2008was driven by net realized and unrealized investmentlosses of $389 million and $35 million, respectively.In 2009, a $288 million transfer of substantially allof the assets held in the State University EndowmentFund to the State University campus foundationscontributed to the decline. Revenues, expenses, andthe change in net assets for the 2009, 2008, and 2007 fiscal years are summarized as follows (in thousands):

Total revenues reported in 2009, 2008, and 2007were $8.46 billion, $8.08 billion, and $8.16 billion,respectively. Total revenue in 2009 increased $374million while revenue in 2008 decreased $80 million,compared to the previous year. The revenue increase

Management’s Discussion and Analysis

2009 2008 2007Net Assets:Invested in capital assets, net of related debt $ 606,165 641,283 596,527

Restricted - nonexpendable 249,321 264,380 246,393Restricted - expendable 328,863 830,009 829,633Unrestricted (287,146) 195,872 595,076

Total net assets $ 897,203 1,931,544 2,267,629

2009 2008 2007

Operating revenues $ 4,805,384 4,402,658 4,408,393Nonoperating revenues 3,580,847 3,590,134 3,680,575Other revenues 69,285 89,119 73,010Total revenues 8,455,516 8,081,911 8,161,978Operating expenses 8,505,101 8,066,377 7,696,130Nonoperating expenses 984,756 351,619 280,357Total expenses 9,489,857 8,417,996 7,976,487Change in net assets $ (1,034,341) (336,085) 185,491


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in 2009 was driven by increases of $127 million inhospital and clinic revenue, $111 million in stateand local grants and contracts, $92 million in stateappropriations, net tuition revenues of $78 million,auxiliary enterprises of $49 million, and federal andstate student financial aid grants of $36 million.These increases were offset by decreases of $71 million in investment income and $50 million in private and capital gifts.

Total expenses for 2009, 2008, and 2007 were$9.49 billion, $8.42 billion, and $7.98 billion,respectively. State University expense growth in2009 and 2008 was $1.07 billion and $442 million,respectively. Expense growth in 2009 compared to2008 was primarily the result of increases in invest-ment losses of $354 million, the transfer of assets tothe State University campus foundations of $288million, hospital and clinic activity of $260 million,research activity of $120 million, and instructionactivity of $71 million.

Overview of the Financial Statements

The financial statements of the State Universityhave been prepared in accordance with U.S. generally accepted accounting principles as prescribed by the GASB. The financial statementpresentation consists of comparable balance sheets,statements of revenues, expenses, and changes in net assets, statements of cash flows, and accompany-ing notes for the June 30, 2009 and 2008 fiscalyears. These statements provide information on thefinancial position of the State University and thefinancial activity and results of its operations during the years presented. Certain amounts displayed for the 2008 and 2007 years have beenreclassified to conform to the 2009 presentation. A description of these statements follows:

The Balance Sheets present information on all ofthe State University’s assets and liabilities, with thedifference between the two reported as net assets.Over time, increases or decreases in net assets mayserve as a useful indicator of whether the financialposition of the State University is improving or deteriorating.

The Statements of Revenues, Expenses, and Changesin Net Assets present information showing the change in the State University’s net assets duringeach fiscal year. All changes in net assets are

reported as soon as the underlying event giving riseto the change occurs, regardless of the timing ofrelated cash flows. Thus, revenues and expensesreported in these statements include items that willresult in cash received or disbursed in future fiscalperiods (e.g., the receipt of amounts due from students and others for services rendered, or theamount accrued for postemployment benefit earned).

The Statements of Cash Flows provides informationon the major sources and uses of cash during theyear. The cash flow statements portray net cash provided or used from operating, investing, capital,and noncapital financing activities.

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The balance sheets present the financial positionof the State University at the end of its fiscal years.During the 2009 and 2008 fiscal years, the StateUniversity’s total assets decreased $225 million andincreased $745 million over the prior years, whiletotal liabilities increased $810 million and $1.08 billion, respectively. The following table reflects the financial position at June 30, 2009, 2008, and2007 (in thousands):

Current Assets

Current assets at June 30, 2009 increased $73 million while current liabilities decreased $45 million compared to the previous year. In general,current assets are those assets that are available to satisfy current liabilities (i.e., those that will be paidwithin one year).

Current assets at June 30, 2009 and 2008 consistprimarily of cash and cash equivalents of $1.23 billion and $1.2 billion, short-term investments of


2009 2008 2007

Current assets $ 2,828,996 2,756,467 2,470,162Capital assets, net 6,235,899 5,744,812 5,233,361Other noncurrent assets 1,859,604 2,647,822 2,700,652

Total assets 10,924,499 11,149,101 10,404,175

Current liabilities 1,674,262 1,719,058 1,504,132Noncurrent liabilities 8,353,034 7,498,499 6,632,414

Total liabilities 10,027,296 9,217,557 8,136,546

Net assets $ 897,203 1,931,544 2,267,629


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$296 million and $301 million, and receivables(accounts, interest, appropriations, and grants) of$1.24 billion and $1.2 billion, respectively. During2009, accounts, notes, and loan receivables grew $87 million and cash and cash equivalents increased$32 million. These increases were offset by decreasesin appropriations and grant receivable balances totaling $45 million.

Current Liabilities

Current liabilities at June 30, 2009 and 2008 consist principally of accounts payable and accruedexpenses of $602 million and $622 million, intereston debt of $162 million and $201 million, deferredrevenue of $254 million and $258 million, and thecurrent portion of long-term liabilities of $504 million and $477 million, respectively. The declinein current liabilities at June 30, 2009 was drivenprincipally by a decrease in interest payable of $39 million.

Capital Assets, net

Since 2003, the State University has received $5.8billion in cumulative new multi-year capital fundingauthorizations for State-operated campus education-al facilities and $869 million for the State Universityhospitals. Under the educational facilities program,a majority of the funding is designed to support critical maintenance projects to repair, renovate, orrehabilitate existing State University facilities.

During the 2009 and 2008 fiscal years, capitalassets (net of depreciation) increased $491 millionand $511 million, respectively. The majority of theincrease occurred at the State University campusesdue to new building construction, renovations, andrehabilitation totaling $386 million and $395 million for the 2009 and 2008 fiscal years, respectively. Equipment additions during 2009 and 2008 of $173 million and $214 million, respectively, also contributed to the increase.

Significant projects completed and capitalizedduring the 2009 fiscal year included construction of a new art center at Buffalo State College, a newadministrative building at Empire State College,modernization and expansion of a library at theCollege at Purchase, a new residence hall at theCollege at Geneseo, and the rehabilitation of a

science building at the College at Oneonta.

A summary of capital assets, by major classifica-tion, and related accumulated depreciation for the2009, 2008, and 2007 fiscal years is as follows (in thousands):

Other Noncurrent Assets

Other noncurrent assets exclusive of capital assetswere $1.86 billion and $2.65 billion at June 30,2009 and 2008, respectively. Noncurrent assets atJune 30, 2009 and 2008 include long-term invest-ments of $584 million and $1.37 billion, depositswith trustees of $803 million and $887 million,restricted cash of $98 million and $92 million, andthe noncurrent portion of receivables and deferredfinancing costs of $374 million and $301 million,respectively.

Long-term investments at June 30, 2009 and2008 of $584 million and $1.37 billion include theCornell statutory colleges of $482 million and $753million, Research Foundation of $60 million and$172 million, auxiliary services corporations of $24million and $28 million, and the statutory Collegeof Ceramics at Alfred University of $16 million and $24 million, respectively. In an effort to reduceduplicative expenses relating to the management and administration of endowment assets, the Board of Trustees authorized the transfer of title


2009 2008 2007

Land $ 313,175 301,862 274,846 Infrastructure and land improvements 664,602 593,877 518,808

Buildings 6,684,860 6,337,676 6,000,197 Equipment, library books and artwork 2,450,532 2,334,476 2,169,505

Construction in progress 1,125,153 901,084 752,776Total capital assets 11,238,322 10,468,975 9,716,132

Less accumulated depreciation: Infrastructure and land improvements 348,464 334,785 327,075

Buildings 2,923,117 2,787,220 2,679,161Equipment, library books 1,730,842 1,602,158 1,476,535and artworkTotal accumulated

depreciation 5,002,423 4,724,163 4,482,771

Capital assets, net $ 6,235,899 5,744,812 5,233,361


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to campus foundations of allocable portions of substantially all of the assets held in the StateUniversity Endowment Fund. Total long-terminvestments reported in 2009 were $2 million compared to $390 million in 2008. In June 2009,the Research Foundation established a separate legal trust for their post-retirement benefit plan and the investments held in the plan were transferred to the trust. The investments designatedfor the plan totaling $76 million were reported as long-term investments in 2008. As a result ofthese transfers, the downturn in the markets which generated substantial investment losses, andamounts used to meet spending needs, long-terminvestments decreased by a total of $784 million in 2009 compared to 2008.

During fiscal year 2009, deposits with trustees,which generally represent funds available from theissuance of bonds by the Dormitory Authority of theState of New York (DASNY) used to finance capitalprojects and maintain debt service reserves for theState University’s facilities, decreased $83 million.

Restricted cash and cash equivalents representunspent funds under various capital financingarrangements, cash held for others, and cash restricted for loan programs. At June 30, 2009restricted cash balances increased $6 million compared to 2008. The noncurrent portion ofreceivables reported at June 30, 2009 and 2008 consisted of accounts, notes, and loan receivables of $115 million and $114 million, appropriationreceivables of $165 million and $90 million, andcontribution receivables of $22 million and $30 million, respectively.

Noncurrent Liabilities

Noncurrent liabilities at June 30, 2009 and 2008of $8.4 billion and $7.5 billion, respectively, are largely comprised of debt on State University facilities, other long-term liabilities accrued for postemployment and post-retirement benefits, compensated absences, and litigation, as well as anoutstanding loan from the State’s short-term investment pool (STIP). The State University capital funding levels and bonding authority are subject to operating and capital appropriations ofthe State. Funding for capital construction and rehabilitation of educational and residence hall

facilities of the State University is provided principally through the issuance of bonds byDASNY. The debt service for the educational facilities is paid by, or provided through a directappropriation of, the State. The debt service on residence hall bonds is funded primarily from roomrents. A summary of non-current long-term liabilities at June 30, 2009, 2008, and 2007 is as follows (in thousands):

During fiscal year 2009, Personal Income TaxRevenue Bonds (PIT) were issued for the purpose of financing capital construction and major rehabilitation for educational facilities in the amountof $508.4 million. Also, during the year $34.4 million of PIT bonds were used in order to refinance$34.4 million of the State University’s existing educational facility obligations. The State Universityentered into agreements with DASNY during fiscalyear 2009 to issue residence hall facility obligations totaling $129.4 million for the purpose of financingcapital construction and major rehabilitation for residential hall facilities. The State University’s credit ratings for educational and residence hallbonds were unchanged in 2009 and 2008. The credit ratings at June 30, 2009 are as follows:

PIT Educational ResidenceBonds Facilities Halls

Moody’s Investors Service Aa3 A1 Aa3Standard & Poor’s AAA AA- AA-Fitch IBCA AA- A+ A+

Principal payments on educational and residencehall facilities obligations made during 2009 totaled$229 million and $28 million, in 2008 totaled$184.4 million and $24.3 million, and in 2007


2009 2008 2007

Educational facilities $ 4,907,472 4,591,499 4,374,709Residence hall facilities 943,590 845,385 727,950Postemployment and post-retirement obligationsand compensated absences 1,765,603 1,375,277 875,583

Loan - State STIP pool 68,754 92,934 113,196Other obligations 467,778 409,124 364,531

Long-term liabilities $ 8,153,197 7,314,219 6,455,969


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with interest from the short-term investment pool of the State. The amount outstanding under thisborrowing, including accrued interest, at June 30,2009 and 2008 was $86 million and $110.2 million,respectively. During fiscal years 2009 and 2008, thetotal amount paid on these loans was $25.6 millionin both years.

Refundable government loan funds at June 30,2009 and 2008 totaled $146.3 million and $144.3million, respectively. These revolving loan funds areprincipally those of the federal Perkins and NursingLoan Programs established with an initial and continued federal capital contribution. Repaymentsof principal and interest and new contributions aredeposited into a revolving loan fund for continualdisbursement to students.

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The statements of revenues, expenses, and changesin net assets present the State University’s results ofoperations. Total operating revenues of the StateUniversity were $4.81 billion in 2009, $4.40 billionin 2008, and $4.41 billion in 2007. Nonoperatingand other revenues, which includes State appropriations, totaled $3.65 billion, $3.68 billion,and $3.75 billion, for fiscal years 2009, 2008, and2007, respectively. Total expenses for 2009, 2008,and 2007 were $9.49 billion, $8.42 billion, and$7.98 billion, respectively.

Revenue Overview

Revenues (in thousands):2009 2008 2007

Tuition and fees, net $ 1,030,198 952,075 917,537 Hospitals and clinics 1,723,164 1,595,895 1,621,458 Federal grants and contracts 637,222 639,998 649,887State, local, private grants and contracts, and other sources 634,500 483,777 539,658

Auxiliary enterprises 780,300 730,913 679,853Operating revenues 4,805,384 4,402,658 4,408,393

State appropriations 3,062,915 2,970,720 2,910,145Other nonoperating 587,217 708,533 843,440

Nonoperating and otherrevenues 3,650,132 3,679,253 3,753,585Total revenues $ 8,455,516 8,081,911 8,161,978

totaled $389.2 million and $22.9 million, respectively.During fiscal years 2009 and 2008, the long-term

portion of postemployment and post-retirementbenefit obligations and compensated absences liabilities increased $390 million and $500 million,respectively. The State, on behalf of the StateUniversity, provides health insurance coverage foreligible retired State University employees and theirspouses as part of the New York State HealthInsurance Plan (NYSHIP). The State administersNYSHIP and has the authority to establish andamend benefit provisions offered. The StateUniversity, as a participant in the plan, recognizesthese other postemployment benefits (OPEB) on anaccrual basis. The State University’s OPEB plan isfinanced annually on a pay-as-you-go basis. Thereare no assets set aside to fund the plan. The actuarial accrued liability (AAL) and the unfundedAAL, utilizing the frozen entry age actuarial costmethod, as of April 1, 2008 and April 1, 2006 was$9.56 billion and $7.81 billion, respectively. TheState University’s total retirement related payrollduring fiscal years 2009 and 2007 was $2.8 billionand $2.4 billion, respectively. The total unfundedactuarial accrued liability as a percentage of coveredpayroll, based on the 2008 and 2006 actuarial valuation dates, were 341% and 325%, respectively.

The Research Foundation sponsors a separatedefined benefit OPEB plan. Contributions are madeby the Research Foundation pursuant to a fundingpolicy established by its Board of Directors. In 2009,a Voluntary Employee Benefit Association (VEBA)trust was established and legal title to all the assets in the trust is vested in the trust for the benefit of the participants. The Research Foundation’s totalretirement related payroll during the 2009, 2008,and 2007 fiscal years was $233.7 million, $224.2million, and $209.1 million, respectively. The totalunfunded actuarial accrued liability as of the June30, 2009, 2008, and 2007 actuarial valuation was $188.8 million, $233.0 million, and $220.4million or 81%, 104%, and 105% of the total retirement related payroll expense of the ResearchFoundation for fiscal years 2009, 2008, and 2007,respectively.

In prior years, the State University experiencedoperating cash-flow deficits precipitated by cash-flow difficulties experienced by its three hospitals.As a result, the State University borrowed funds



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2009 Revenues (in thousands)

State Appropriations $3,062,915

Hospitals and Clinics $1,723,164

Tuition and Fees$1,030,198

Federal Grants and Contracts$637,222

State, Local, PrivateGrants, Contracts and Other Sources

$634,500

OtherNonoperating$587,217

Tuition and Fees, Net

Tuition and fee revenue for the 2009, 2008, and2007 fiscal years, net of scholarship allowances, was$1.03 billion, $952 million, and $918 million, anincrease of $78 million and $35 million in 2009 and 2008, respectively. The increases in 2009 and2008 were driven by increases in enrollment.During the 2009 fiscal year there was also a mid-yeartuition rate increase effective for the spring semester.Annual average full-time equivalent students,including undergraduate and graduate, were approximately 189,600, 185,700, and 180,200 forthe fiscal years ended June 30, 2009, 2008, and2007, respectively.

Hospitals and Clinics

The State University has three hospitals (each withacademic medical centers) under its jurisdiction - theState University hospitals at Brooklyn, Stony Brook,and Syracuse.

Hospital and clinic revenue for the 2009, 2008,and 2007 fiscal years were $1.72 billion, $1.60 billion, and $1.62 billion, respectively. During the2009 fiscal year, hospital and clinic revenuesincreased $127 million compared to the previousyear due to an increase in inpatient and outpatientrevenue and a $64 million increase in MedicaidDisproportionate Share (DSH) Program revenuefrom the prior year.

Sponsored Research, Grant and Contract Revenue

During fiscal year 2009, State University increasedits volume of sponsored program activity. Total revenue from federal, state, local, private and capitalgrants and contracts administered by the ResearchFoundation was $846 million, $794 million, and$791 million for the fiscal years ended June 30,2009, 2008, and 2007, respectively. Facilities andadministrative recoveries earned on grants and contracts administered by the Research Foundationwere $125 million, $127 million, and $124 millionfor the fiscal periods ending June 30, 2009, 2008, and 2007, respectively.

The volume of research and other sponsored programs reported for 2009 and 2008 by the statutory colleges at Cornell University was $176.1million and $147.9 million, and Alfred Universitywas $3.9 million and $4.3 million, respectively.

Revenue from projects sponsored by the federalgovernment and administered by the ResearchFoundation totaled $338 million and $340 millionfor the 2009 and 2008 fiscal years. Of these federally-sponsored projects, 55 percent and 54 percent of the funding was received from the Department ofHealth and Human Services during fiscal years 2009 and 2008, respectively. Other major federal sponsors include the National Science Foundation,the Department of Education, the Department ofDefense, the Agency for International Developmentand the Department of Energy.

Revenue from non-federal sponsors (includingfederal flow-through funds) administered by theResearch Foundation totaled $508 million and $454 million for the 2009 and 2008 fiscal years,respectively. In fiscal years 2009 and 2008, thelargest non-federal support of sponsored researchprograms was received from the Empire StateDevelopment Corporation.

Amounts received under the State’s TuitionAssistance Program increased $13 million from theprior year. Federal grants under the Pell and otherfederal student aid programs increased $23 millionfrom the previous year.


Auxiliary Enterprises $780,300


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Auxiliary Enterprises

The State University’s auxiliary enterprise activityis comprised of sales and services for residence halls, food services, campus store operations, intercollegiate athletics, student health services,parking, and other activities. The residence halls aregenerally owned, operated and managed by the StateUniversity and its campuses. Generally, food services, campus store operations and other servicesare operated and managed by separately incorp-orated not-for-profit organizations, commonlyreferred to as auxiliary services corporations.

The residence hall operations and capital pro-grams are financially self-sufficient. Each campus isresponsible for the operation of its residence hallsprogram including setting room rates and coveringoperating, maintenance, capital and debt servicecosts. Any excess funds generated by residence hallsoperating activities are separately maintained forimprovements and maintenance of the residencehalls. Revenue producing occupancy at the resi-dence halls has risen steadily to 72,741 for the fall of 2008, an increase of 12,159 students since the fall of 2001 and an increase of over 1,136 studentscompared to the previous year. The overall utilization rate for the fall of 2008 was reported at 96.7 percent.

Auxiliary enterprise sales and services revenuetotaled $780 million, $731 million, and $680 million in the 2009, 2008, and 2007 fiscal years,respectively. Of these amounts, residence halls operating revenue totaled $354 million, $325 million, and $301 million for 2009, 2008, and2007, respectively. Increases in revenue were largelydue to increases in occupancy levels and modestincreases in room rates.

Food service operations and other auxiliary services each generated $426 million, $406 million,and $379 million in revenue for fiscal years 2009,2008, and 2007, respectively.

State Appropriations

The State University’s single largest source of revenues are State appropriations, which for financial reporting purposes is classified as non-operating revenues. State appropriations totaled$3.06 billion, $2.97 billion, and $2.91 billion andrepresented approximately 36 percent, 37 percent,and 36 percent of total revenues for fiscal year 2009,2008, and 2007, respectively. State support (bothdirect support for operations and indirect supportfor debt service, litigation, and fringe benefits) forState University campus operations, statutory colleges, and hospitals and clinics increased $92 million in 2009 and $61 million in 2008. In 2009,State support for operating expenses decreased $49 million, while indirect State support for debtservice, fringe benefits, and litigation expensesincreased $141 million compared to 2008.

Nonoperating and Other Revenue

Nonoperating and other revenue excluding Stateappropriations were $587 million and $709 millionfor the 2009 and 2008 fiscal years, respectively. Thisdecrease was primarily due to decreases of $71 million in investment income, $50 million in privateand capital gifts, and $38 million in other non-operating revenues offset by an increase of $36 million in federal and state student financial aidgrant programs.

Expense Overview


Expenses (in thousands):2009 2008 2007

Instruction $ 2,044,597 1,974,050 1,911,300Research 687,724 567,944 597,301Public service 298,122 298,233 274,166Support services 2,090,135 2,150,881 2,017,118Scholarships and fellowships 125,965 119,123 110,738Hospitals and clinics 2,082,902 1,822,506 1,723,773Auxiliary enterprises 775,162 757,902 681,653Depreciation and amortization 400,494 375,738 380,081Other nonoperating 984,756 351,619 280,357Total expenses $ 9,489,857 8,417,996 7,976,487


10The increase in instruction expense of $71

million and $63 million during 2009 and 2008,respectively, is predominately from an increase inpersonal service and related fringe benefit expenses.Research expenses grew $120 million during 2009compared to 2008 and decreased $29 million in2008 compared to 2007. The increase in 2009 wasdue to increased sponsored research expenditureactivity at the Research Foundation and Cornellstatutory colleges.

Support services, which includes expenses for academic support, student services, institutionalsupport, and operation and maintenance of plant,decreased $61 million during 2009 compared to2008. Support services expenses increased $134 million in 2008 compared to 2007. Institutionalsupport decreased $27 million during 2009 andincreased $42 million in 2008 compared to 2007.Academic support costs grew $13 million and $33 million in the 2009 and 2008 fiscal years,respectively, which was primarily driven by anincrease in personal service costs. Operation andmaintenance of plant costs decreased $53 millionand increased $43 million during 2009 and 2008,respectively. The decrease in 2009 was attributableto lower utility costs and a decline in capital expenses.

In the State University’s financial statements,scholarships used to satisfy student tuition and fees(residence hall, food service, etc.) are reported as

an allowance (offset) to the respective revenue classification up to the amount of the studentcharges. The amount reported as expense representsamounts provided to the student in excess of StateUniversity charges.

Total scholarships and fellowships, including federal and state grant programs, were $617 millionand $554 million for the fiscal years ended June 30,2009 and 2008, respectively. Of this amount, $491 million and $435 million were classified asscholarship allowances and $126 million and $119 million was reported as scholarship expense for fiscal years 2009 and 2008, respectively. Majorscholarships and grants received include the StateTuition Assistance Program of $183 million and$170 million, and the federal Pell Program of $174million and $153 million during fiscal years 2009and 2008, respectively.

Expenses at the State University’s hospitals andclinics increased $260 million and $99 million during 2009 and 2008, respectively, largely due to an increase in core operating and personal servicecosts. Also contributing to the growth in 2009 wasan increase of $135 million in litigation expenses.

During fiscal years 2009 and 2008, auxiliaryenterprise expenses increased $17 million and $76million, respectively. For the 2009 fiscal year residence halls expenses declined $1 million, compared to an increase of $48 million from 2007to 2008. Food service expenses increased $9 millionand $16 million, respectively, primarily due to anincrease in enrolled students. Other auxiliary enterprise expenses for the years ended June 30,2009 and 2008 increased $9 million and $12 million, respectively.

Depreciation and amortization expense recog-nized in fiscal years 2009 and 2008 totaled $400million and $376 million, respectively. Other nonoperating expenses were $985 million and $352million for the years ended June 30, 2009 and 2008,respectively. The significant increase in nonoperat-ing expenses during fiscal year 2009 was due to market conditions resulting in larger investmentlosses of $354 million year-over-year, and the transfer of assets to the State University campusfoundations of $288 million.

Management’s Discussion and Analysis2009 Expenses (in thousands)

Public Service$298,122

Hospitals and Clinics $2,082,902

Auxiliary Enterprises$775,162

Depreciation$400,494

Other Nonoperating$984,756

Support Services$2,090,135

Research$687,724

Scholarships andFellowships $125,965

Instruction $2,044,597


11

Management’s Discussion and AnalysisEEccoonnoommiicc FFaaccttoorrss TThhaatt WWiillll AAffffeecctt tthhee FFuuttuurree

The State University is one of the largest publicuniversities in the nation, with headcount enrollment of nearly 222,000 in the fall 2009, on twenty-nine State-operated campuses and fivecontract/statutory colleges. The State University’sstudent population is directly influenced by Statedemographics as the majority of students attendingthe State University are New York residents. The enrollment outlook remains strong for the State University based on its continued ability toattract quality students for its academic programs.Full-time equivalent (FTE) enrollment, excluding community colleges, for the fiscal year ended June30, 2009, is approximately 189,600, an increase of 3,900 FTE compared to June 30, 2008.

New York State appropriations remain the largestsingle source of revenues. The State University’scontinued operational viability is substantiallydependent upon a consistent and proportionate levelof ongoing State support. For the most recent fiscalyear, State appropriations totaled $3.06 billionwhich represented 36 percent of the total revenues ofthe State University. State appropriations consistedof direct support ($1.46 billion), debt service on educational facility and PIT bonds ($427 million),fringe benefits for State employees ($1.04 billion),and litigation ($134 million). Debt service on educational facilities is paid by the State in anamount sufficient to cover annual debt servicerequirements; pursuant to annual statutory provisions, each of the University’s three teachinghospitals must reimburse the State for their share of debt service costs to finance their capital projects.To maintain budgetary equilibrium in an era of fiscal uncertainty, in anticipation of declining Staterevenue streams, the State University is taking appropriate measures, such as hiring freezes, travelrestrictions, and constraints on the use of energy

while seeking to enhance other revenue streams,including philanthropy and sponsored programs.

The State University depends on the State to provide appropriations in support of its capital programs. Consistent with the Executive Budget’srequest, in 2008 the State University submitted proposals for new five-year capital programs commencing in 2008-09 through 2012-13. As aresult, the final enacted 2008-09 State Budget provided a $1.7 billion multi-year appropriation for strategic initiatives and $550 million for the first of five anticipated annual appropriations dedicated to critical maintenance efforts targeted forpreservation or rehabilitation of existing facilities.The 2009-10 State Budget has authorized the second of the $550 million annual critical mainte-nance appropriations. With the additional annualcritical maintenance appropriations, the StateUniversity anticipates a total of $2.75 billion inmulti-year critical maintenance appropriations over the five year period.

Taken together, the cumulative multi-year funding authorizations appropriated since 2003 provide the State University with the basic resourcesneeded to address core critical maintenance needs ofits existing buildings and infrastructure, and themeans to make additional capital investments in arange of programmatic initiatives, including researchand technology development.

The State University hospitals, which are all partof larger State University Academic Health Centersat Brooklyn, Stony Brook and Syracuse, serve largenumbers of Medicaid and uninsured patients and, as a result, their dependency on the Medicaid DSH Program revenue stream and Medicaid reimbursement is critical to their continued viability.Their financial and operational capabilities will also continue to be challenged by unsupported inflationary and contractual cost increases.


12

Balance SheetsJune 30, 2009 and 2008

In thousands2009 2008

Assets

Current Assets:Cash and cash equivalents $ 1,227,501 1,195,109Short-term investments 295,947 301,093Accounts, notes, and loans receivable, net 668,571 582,048Interest receivable 1,407 5,934Appropriations receivable 388,107 414,329Grants receivable 179,800 198,599Inventories 48,827 40,648Other assets 18,836 18,707 Total current assets 2,828,996 2,756,467

Noncurrent Assets:Restricted cash and cash equivalents 98,254 91,976Deposits with trustees 803,298 886,726Accounts, notes, and loans receivable, net 114,686 113,633Contributions receivable 21,887 29,525Appropriations receivable 165,484 89,508Deferred financing costs 72,082 68,276Long-term investments 583,913 1,368,178Capital assets, net 6,235,899 5,744,812Total noncurrent assets 8,095,503 8,392,634Total assets $ 10,924,499 11,149,101

Liabilities and Net Assets

Current Liabilities:Accounts payable and accrued liabilities 602,076 621,814Interest payable 162,006 201,017Student deposits 11,345 11,791Deposits held in custody for others 88,537 75,038Deferred revenue 254,479 257,869Long-term liabilities - current portion 504,319 477,155Other liabilities 51,500 74,374Total current liabilities 1,674,262 1,719,058

Noncurrent Liabilities:Long-term liabilities 8,153,197 7,314,219Refundable government loan funds 146,301 144,250Other noncurrent liabilities 53,536 40,030Total noncurrent liabilities 8,353,034 7,498,499Total liabilities 10,027,296 9,217,557

Net Assets:Invested in capital assets, net of related debt 606,165 641,283Restricted - nonexpendable:Instruction and departmental research 94,101 102,577Scholarships and fellowships 75,139 77,730General operations and other 80,081 84,073

Restricted - expendable:Instruction and departmental research 117,710 434,341Scholarships and fellowships 37,567 109,854Capital projects 939 1,720Loans 17,674 22,979General operations and other 154,973 261,115

Unrestricted (287,146) 195,872Total net assets 897,203 1,931,544

Total liabilities and net assets $ 10,924,499 11,149,101

See accompanying notes to financial statements.


13

Statements of Revenues, Expenses, and Changes in Net AssetsFor the Years Ended June 30, 2009 and 2008


Operating revenues:Tuition and fees $ 1,407,900 1,284,276Less scholarship allowances (377,702) (332,201)Net tuition and fees 1,030,198 952,075

Federal grants and contracts 637,222 639,998State and local grants and contracts 218,850 107,808Private grants and contracts 312,078 275,416Hospitals and clinics 1,723,164 1,595,895Sales and services of auxiliary enterprises:Residence halls, net 353,890 324,895Food service, net 216,874 203,277Other, net 209,536 202,741

Other sources 103,572 100,553Total operating revenues 4,805,384 4,402,658

Operating expenses:Instruction 2,044,597 1,974,050Research 687,724 567,944Public service 298,122 298,233Academic support 433,336 420,120Student services 263,481 257,000Institutional support 808,493 835,074Operation and maintenance of plant 578,467 631,140Scholarships and fellowships 125,965 119,123Hospitals and clinics 2,082,902 1,822,506Auxiliary enterprises:Residence halls 308,703 309,746Food service 215,741 206,567Other 250,718 241,589

Depreciation and amortization expense 400,494 375,738Other operating expenses 6,358 7,547

Total operating expenses 8,505,101 8,066,377

Operating loss (3,699,717) (3,663,719)

Nonoperating revenues (expenses):State appropriations 3,062,915 2,970,720Federal and state student financial aid 386,176 349,944Investment income, net 61,227 132,418Net realized and unrealized losses (389,287) (35,418)Gifts 70,529 99,306Interest expense on capital related debt (293,196) (306,472)Loss on disposal of plant assets (4,481) (9,729)Transfer to state university campus foundations (287,563)Other nonoperating revenues (expenses), net (10,229) 37,746

Net nonoperating revenues 2,596,091 3,238,515

Loss before other revenues and gains (1,103,626) (425,204)

Capital appropriations 4,679 9,259Capital gifts and grants 48,096 68,912Additions to permanent endowments 16,510 10,948

Decrease in net assets (1,034,341) (336,085)

Net assets at the beginning of year 1,931,544 2,267,629Net assets at the end of year $ 897,203 1,931,544


-


14

Statements of Cash FlowsFor the Years Ended June 30, 2009 and 2008


Cash flows from operating activities:Tuition and fees $ 1,034,114 960,796Grants and contracts:Federal 664,867 620,030State and local 206,467 143,093Private 288,848 322,607

Hospital and clinics 1,644,447 1,573,056Personal service payments (3,674,846) (3,402,942)Other than personal service payments (2,187,141) (2,167,042)Payments for fringe benefits (413,545) (390,181)Payments for scholarships and fellowships (62,236) (61,488)Loans issued to students (16,701) (26,461)Collection of loans to students 16,699 18,855Auxiliary enterprise charges:Residence halls 349,519 325,213Food service 210,798 201,888Other (intercollegiate athletics, bookstore, fees, and vending) 197,971 189,470

Other receipts (payments) (16,204) 98,843Net cash used by operating activities (1,756,943) (1,594,263)

Cash flows from noncapital financing activities:State appropriations:Operations 1,464,331 1,468,865Debt service 463,856 437,669

Federal and State student financial aid grants 386,095 350,787Private gifts and grants 77,480 77,876Proceeds from short-term loans 34,502 54,839Repayment of short-term loans (86,450) (68,939)Direct loan receipts 324,126 275,953Direct loan disbursements (324,126) (275,953)Transfers to state university campus foundations (204,089)Other receipts 66,821 40,004

Net cash provided by noncapital financing activities 2,202,546 2,361,101

Cash flows from capital and related financing activities:Proceeds from capital debt 777,854 742,414Capital appropriations 4,679 9,259Capital grants and gifts received 47,783 63,085Proceeds from sale of capital assets 164 2,335Purchases of capital assets (309,477) (227,927)Payments to contractors (550,767) (612,237)Principal paid on capital debt and leases (343,392) (260,524)Interest paid on capital debt and leases (348,885) (305,385)Other receipts (payments) 21,211 (2,310)

Net cash used by capital and related financing activities (700,830) (591,290)

Cash flows from investing activities:Proceeds from sales and maturities of investments 3,826,542 4,040,036Interest, dividends, and realized gains (losses) on investments (95,488) 152,200Purchases of investments (3,437,157) (4,209,190)

Net cash provided (used) by investing activities 293,897 (16,954)Net change in cash 38,670 158,594

Cash - beginning of year 1,287,085 1,128,491Cash - end of year $ 1,325,755 1,287,085

End of year cash comprised of: Cash and cash equivalents $ 1,227,501 1,195,109Restricted cash and cash equivalents $ 98,254 91,976

-


15

Statements of Cash Flows (continued)For the Years Ended June 30, 2009 and 2008

In thousands

Reconciliation of net operating loss to net 2009 2008cash used by operating activities:Operating loss $ (3,699,717) (3,663,719)Adjustments to reconcile operating loss to net cashused by operating activities:

Depreciation and amortization expense 400,494 375,738Fringe benefits, litigation, and other noncash expenses 1,149,419 1,026,794Change in assets and liabilities:Receivables, net (61,139) (15,705)Inventories (8,179) (4,019)Other assets (129) (7,337)Accounts payable, accrued expenses, and other liabilities 462,793 575,822Deferred revenue (5,600) 74,523Student deposits (446) 1,750Deposits held for others 5,561 41,890

Net cash used by operating activities $ (1,756,943) (1,594,263)

Supplemental disclosures for noncash transactions:

New capital leases / debt agreements $ 157,064 182,612

Fringe benefits provided by the State $ 1,047,148 999,638

Litigation costs provided by the State $ 38,351 22,884

Noncash gifts $ 2,941 2,149



16

State University of New York FoundationsBalance Sheet

June 30, 2009 (with comparative totals for June 30, 2008)In thousands

Assets 2009 2008

Cash and cash equivalents $ 71,788 85,652Accounts and notes receivable, net 24,117 13,044Pledges receivable, net 139,337 89,631Investments 982,833 895,053Other assets 37,451 46,143Capital assets, net 361,168 334,025

Total assets $ 1,616,694 1,463,548

Liabilities and Net Assets

Liabilities:Accounts payable and accrued liabilities 22,902 23,290Current portion of long-term debt 8,248 9,232Deferred revenue 1,469 1,639Deposits held in custody for others 51,814 42,744Other liabilities 42,644 44,096Long-term debt 267,644 267,850

Total liabilities 394,721 388,851

Net Assets:Unrestricted:Board designated for:Fixed assets 112,323 105,593Campus programs 72,353 115,990Investments 62,957 61,069Other 3,948 17,098

Undesignated 4,639 16,588Temporarily restricted:Scholarships and fellowships 72,840 70,106Campus programs 205,752 155,637Research 93,893 16,773General operations and other 112,393 72,703

Permanently restricted:Scholarships and fellowships 222,347 201,331Campus programs 167,542 150,720Research 14,350 13,411General operations and other 76,636 77,678

Total net assets 1,221,973 1,074,697

Total liabilities and net assets $ 1,616,694 1,463,548



17

Temporarily Permanently 2009 2008Unrestricted Restricted Restricted Total Total

Revenues:Contributions, gifts, and grants $ 35,751 114,429 30,398 180,578 162,763Investment income, net 4,498 7,521 210 12,229 30,815Net realized and unrealized losses (85,824) (71,562) (6,615) (164,001) (42,151)Rental income 49,986 403 50,389 46,106Sales and services 17,287 2 17,289 20,506Program income and special events 35,755 5,096 171 41,022 42,931Change in value of split interest agreements 942 (1,703) (3,767) (4,528) (2,174)Other sources 2,854 703 44 3,601 1,776Transfers from state university endowment 33,654 183,232 17,987 234,873Endowment earnings transferred 696 (696) Net assets released from restrictions 69,155 (69,155)Total revenues 164,058 169,660 37,734 371,452 260,572

Expenses:Program expenses 94,873 94,873 94,868Payments to the State University:Scholarships and fellowships 23,233 23,233 22,450Other 19,822 19,822 20,296

Real estate expenses 19,653 19,653 18,639Depreciation and amortization expense 13,355 13,355 13,146Interest expense on capital-related debt 12,991 12,991 13,020Management and general 18,651 18,651 18,310Fundraising 15,354 15,354 14,424Other expenses 6,244 6,244 3,533Total expenses 224,176 224,176 218,686

Change in net assets (60,118) 169,660 37,734 147,276 41,886

Net assets, beginning of year 316,338 315,218 443,141 1,074,697 1,032,811

Net assets, end of year $ 256,220 484,878 480,875 1,221,973 1,074,697


-

State University of New York Foundations Statement of Activities

For the Year Ended June 30, 2009 (with comparative totals for June 30, 2008)In thousands

-

---------

-

---------

--

-- --

--


18

11.. SSuummmmaarryy ooff SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess aanndd BBaassiiss ooff PPrreesseennttaattiioonn

RReeppoorrttiinngg EEnnttiittyy

For financial reporting purposes, the StateUniversity of New York (State University) consists ofall sectors of the State University including theuniversity centers, health science centers (includinghospitals), colleges of arts and sciences, colleges oftechnology and agriculture, specialized colleges, andstatutory colleges (located at the campuses ofCornell and Alfred Universities), central services andother affiliated entities determined to be includablein the State University’s financial reporting entity.

Inclusion in the reporting entity is based primarilyon the notion of financial accountability, defined interms of a primary government (State University)that is financially accountable for the organizationsthat make up its legal entity. The reporting entityincludes legally-separate organizations meetingcertain financial accountability and fiscaldependency criteria of the State University. Separatelegal entities meeting the criteria for inclusion in theblended totals of the State University reportingentity are described below. The State University isincluded in the financial statements of the State ofNew York (State) as an enterprise fund as the State isthe primary government of the State University.

Legally-separate, tax-exempt, affiliated organiza-tions that receive or hold economic resources that aresignificant to, that are entirely or almost entirely forthe direct benefit of, and that can be accessed by, theprimary government, its component units, or itsconstituents are required to be included in thereporting entity using discrete presentationrequirements. As a result, the combined totals of thecampus-related foundations and student housingcorporations (all referred to as foundations) areseparately presented as an aggregate component uniton financial statement pages 16 and 17 in the StateUniversity’s financial statements in accordance withdisplay requirements prescribed by the FinancialAccounting Standards Board (FASB).

The Research Foundation of State University ofNew York (Research Foundation) is a separate,private, nonprofit educational corporation that

administers the majority of the State University’ssponsored programs. The programs include research,training, and public service activities of the State-operated campuses supported by sponsored fundsother than State appropriations. The activity of theResearch Foundation has been included in thesefinancial statements using GASB measurements andrecognition standards. The financial activity wasderived from audited financial statements of theResearch Foundation for the years ended June 30,2009 and 2008.

Almost all of the State University’s campusesmaintain auxiliary services corporations. Thesecorporations are campus-based, nonprofitorganizations which, as independent contractors,operate, manage, and promote educationally relatedservices for the benefit of the campus community.Although separate and independent legal entities,these corporations carry out operations which areintegrally related to the State University and,therefore, are included in the financial statements ofthe State University. All of the financial data forthese corporations was derived from each entity’sindividual audited financial statements, the majorityof which have a May 31 or June 30 fiscal year end.

The State University Construction Fund(Construction Fund) is a public benefit corporationthat designs, constructs, reconstructs andrehabilitates facilities of the State Universitypursuant to an approved master plan. Although theConstruction Fund is a separate legal entity, it carriesout operations which are integrally related to theState University and, therefore, the financial activityrelated to the Construction Fund is included in theState University’s financial statements as of theConstruction Fund’s fiscal years end of March 31,2009 and 2008.

The State statutory colleges at Cornell Universityand Alfred University are an integral part of, and areadministered by, those universities. The statutorycolleges are fiscally dependent on Stateappropriations through the State University. Thefinancial statement information of the statutorycolleges of Cornell University and Alfred University,have been included in the accompanying financialstatements.

Notes to Financial StatementsJune 30, 2009 and 2008


19

11.. SSuummmmaarryy ooff SSiiggnniiffiiccaanntt AAccccoouunnttiinngg PPoolliicciieess aanndd BBaassiiss ooff PPrreesseennttaattiioonn ((ccoonnttiinnuueedd))

The operations of certain related but independentorganizations, i.e., clinical practice managementplans, alumni associations and student associations,do not meet the criteria for inclusion, and are notincluded in the accompanying financial statements.

The State University administers State financialassistance to the community colleges in connectionwith its general oversight responsibilities pursuant to State Education Law. However, since thesecommunity colleges are sponsored by localgovernmental entities and are included in theirfinancial statements, the community colleges are notconsidered part of the State University’s financialreporting entity and, therefore, are not included inthe accompanying financial statements.

The accompanying financial statements of theState University have been prepared using theeconomic resources measurement focus and theaccrual basis of accounting in accordance with U.S.generally accepted accounting principles asprescribed by the Governmental AccountingStandards Board (GASB).

The State University applies all applicablepronouncements of the FASB issued on or beforeNovember 30, 1989 that do not conflict orcontradict GASB pronouncements. The StateUniversity has elected not to apply FASBpronouncements issued after November 30, 1989.

The State University reports its financialstatements as a special purpose government engagedin business-type activities, as defined by GASB.Business-type activities are those that are financed inwhole or in part by fees charged to external partiesfor goods or services. The financial statements of theState University consist of classified balance sheets;statements of revenues, expenses, and changes in netassets, that distinguish between operating andnonoperating revenues and expenses; and statementsof cash flows, using the direct method of presentingcash flows from operations and other sources.

The State University’s policy for definingoperating activities in the statement of revenues,expenses, and changes in net assets are those that

generally result from exchange transactions, i.e., thepayments received for services and payments madefor the purchase of goods and services. Certain othertransactions are reported as nonoperating activitiesand include the State University’s operating andcapital appropriations from the State, federalappropriations, nonexchange receipts, netinvestment income, gifts, and interest expense.

Resources are classified for accounting andfinancial reporting purposes into the following fournet asset categories:

Invested in capital assets, net of related debt

Capital assets, net of accumulated depreciationand amortization and outstanding principal balancesof debt attributable to the acquisition, construction,repair or improvement of those assets.

Restricted – nonexpendable

Net assets subject to externally imposedconditions that require the State University retain in perpetuity.

Restricted – expendable

Net assets whose use is subject to externallyimposed conditions that can be fulfilled by theactions of the State University or by the passage of time.

Unrestricted, all other categories of net assets

Included in unrestricted net assets are amountsprovided for specific use by the State University’s colleges and universities, hospitals and clinics, andseparate legal entities included in the StateUniversity’s reporting entity that are designated for those entities and, therefore, not available forother purposes.

The State University has adopted a policy of generally utilizing restricted - expendable funds,when available, prior to unrestricted funds.

RReevveennuueess

Revenues are recognized in the accounting periodwhen earned. State appropriations are recognizedwhen they are made legally available for expend-iture. Revenues and expenditures arising from



20


nonexchange transactions are recognized when all eligibility requirements, including timerequirements, are met. Promises of privatedonations are recognized at fair value. Net patientservice revenue for the hospitals is reported at theestimated net realizable amounts from patients, thirdparty payors and others for services rendered,including estimated retroactive adjustments underreimbursement agreements with third party payors.Tuition and fees and auxiliary sales and service

revenues are reported net of scholarship discountsand allowances. Auxiliary sales and service revenueclassifications for 2009 and 2008 were reported netof the following scholarship discount and allowanceamounts (in thousands):

2009 2008Residence halls $ 60,839 54,088Food service 26,433 24,476Other auxiliary 26,006 24,410

CCaasshh aanndd CCaasshh EEqquuiivvaalleennttss

Cash and cash equivalents are defined as currentoperating assets that include investments withoriginal maturities of less than 90 days, except forcash and cash equivalents held in investment poolswhich are included in short-term and long-terminvestments in the accompanying balance sheets.

IInnvveessttmmeennttss

Investments in marketable securities are stated atfair value based upon quoted market prices.Investment income is recorded on the accrual basis,and purchases and sales of investment securities arereflected on a trade date basis. Any net earnings notexpended are included as increases in restricted -nonexpendable net assets if the terms of the giftrequire that such earnings be added to the principalof a permanent endowment fund, or as increases inrestricted - expendable net assets as provided for

under the terms of the gift, or as unrestricted. AtJune 30, 2009 and 2008, the State University had$111 million and $715 million available forauthorization for expenditure, $56 million and $429million from restricted funds, and $55 million and$286 million from unrestricted funds, respectively.

The State University's Board of Trustees has theresponsibility of oversight for the State University’sEndowment and similar funds. In an effort to reduce duplicative expenses relating to themanagement and administration of endowmentassets, the Board of Trustees authorized the transferof title to campus foundations of allocable portionsof substantially all the assets of the State UniversityEndowment Fund and has authorized a separatefoundation to manage the investment of theremaining assets of the State University campusestotaling $1.9 million at June 30, 2009, title to whichis not transferred to campus foundations. The assetswere transferred during the 2009 fiscal year. In 2008, the expenditure of available endowmentincome was subject to New York State appropriationand the State University’s spending policy.

The Investment Committee of the Cornell Boardof Trustees establishes the investment policy of theCornell statutory colleges. Distributions from thepool are approved by the Cornell Board of Trusteesand are provided for program support independentof the cash yield and appreciation of investments inthat year. Investments in the pool are stated at fairvalue and include limited use of derivativeinstruments, including leverage futures, options andother similar vehicles to manage market exposureand to enhance the total return.

Alternative investments are valued using currentestimates of fair value obtained from the investmentmanager in the absence of readily determinablepublic market values. The estimated fair value ofthese investments is based on the most recentvaluations provided by the external investmentmanagers. Because of the inherent uncertainty ofvaluation for these investments, the investmentmanager’s estimate may differ from the values thatwould have been used had a ready market existed.



21


CCaappiittaall AAsssseettss

Capital assets are stated at cost, or in the case ofgifts, fair value at the date of receipt. Building reno-vations and additions costing over $100,000 andequipment items with a unit cost of $5,000 or moreare capitalized. Equipment under capital leases arestated at the present value of minimum leasepayments at the inception of the lease. Generally,the net interest cost on debt during the constructionperiod related to capital projects is capitalized andtotaled $12.4 million and $7.9 million in the 2009and 2008 fiscal years, respectively. Library materialsare capitalized and amortized over a ten-year period.Works of art or historical treasures that are held forpublic exhibition, education, or research infurtherance of public service are capitalized. Capitalassets, with the exception of land, construction inprogress, and inexhaustible works of art, aredepreciated on a straight-line basis over theirestimated useful lives, using historical and industryexperience, ranging from 3 to 50 years.

DDeeffeerrrreedd FFiinnaanncciinngg CCoossttss

Deferred financing costs represent costs incurredfor the issuance of bonds that are capitalized andamortized over the life of the related debt.

IInnvveennttoorriieess

Inventories held by the State University are primarily stated at the lower of cost or market valueon a first-in, first-out basis.

CCoommppeennssaatteedd AAbbsseenncceess

Employees accrue annual leave based primarily onthe number of years employed up to a maximumrate of 21 days per year up to a maximum of 40 days.

FFrriinnggee BBeenneeffiittss

Employee fringe benefit costs (e.g., health insurance, worker’s compensation, and pension andpost-retirement benefits) are paid by the State on

behalf of the State University (except for the StateUniversity hospitals, which pay their own fringebenefit costs) at a fringe benefit rate determined bythe State. The State University records an expenseand corresponding State appropriation revenue forfringe benefit costs based on the fringe benefit rateapplied to total eligible personal service costsincurred.

PPoosstteemmppllooyymmeenntt BBeenneeffiittss

Postemployment benefits other than pensions arerecognized on an actuarially determined basis asemployees earn benefits that are expected to be usedin the future. The amounts earned include employee sick leave credits expected to be used topay for a share of post-retirement health insurance.

TTaaxx SSttaattuuss

The State University and the Construction Fundare political subdivisions of the State and are, therefore, generally exempt from federal and stateincome taxes under applicable federal and statestatutes and regulations.

The Research Foundation and campus auxiliaryservices corporations are nonprofit organizations asdescribed in Section 501(c)(3) of the InternalRevenue Service Code and are tax-exempt on relatedincome, pursuant to Section 501(a) of the code.

UUssee ooff EEssttiimmaatteess

The preparation of financial statements in conformity with U.S. generally accepted accountingprinciples requires management to make estimatesand assumptions that affect the reported amounts ofassets and liabilities, the disclosure of contingentassets and liabilities at the date of the financial state-ments, and the reported amount of revenues andexpenses during the reporting period. Actual resultscould differ from those estimates.

RReeccllaassssiiffiiccaattiioonnss

Certain amounts displayed in the 2008 financialstatements have been reclassified to conform to the2009 presentation.



22

33.. DDeeppoossiittss wwiitthh TTrruusstteeeess

Deposits with trustees primarily representDormitory Authority of the State of New York(DASNY) bond proceeds needed to finance capitalprojects and to establish required building andequipment replacement and debt service reserves.Pursuant to financing agreements with DASNY,bond proceeds, including interest income, arerestricted for capital projects or debt service. Alsoincluded are non-bond proceeds which have beendesignated for capital projects and equipment.The State University’s cash and investments which

comprise deposits with trustees are registered in theState University’s name held by an agent or in trustaccounts in the State University’s name. Cash andshort-term investments held in the State treasuryand money market accounts were approximately$258 million and $53.9 million at June 30, 2009and 2008, respectively. The market value ofinvestments held and maturity are displayed in thetable below (in thousands).

44.. IInnvveessttmmeennttss

Investments of the State University are recorded atfair value. Investment income is reported net ofinvestment fees of $3 million and $4.4 million for 2009 and 2008, respectively. Investments arecomprised of the statutory colleges at CornellUniversity and Alfred University (Alfred Ceramics),the Research Foundation, the Construction Fund,


22.. CCaasshh aanndd CCaasshh EEqquuiivvaalleennttss

Cash and cash equivalents represent StateUniversity funds held in the State treasury, in theshort-term investment pool (STIP), or local deposi-tories, and cash held by affiliated organizations.Cash held in the State treasury beyond immediateneed is pooled with other State funds for short-terminvestment purposes. The pooled balances are limit-ed to legally-stipulated investments which includeobligations of, or are guaranteed by, the UnitedStates, obligations of the State and its political sub-divisions, and repurchase agreements. These invest-ments are reported at cost (which approximates fairvalue) and are held by the State’s agent in its nameon behalf of the State University.

The New York State Comprehensive AnnualFinancial Report contains the GASB No. 40 risk disclosures for deposits held in the State treasury.Deposits not held in the State treasury that are not covered by depository insurance and are (a)uncollateralized; (b) collateralized with securitiesheld by a pledging financial institution; or (c) collateralized with securities held by a pledgingfinancial institution’s trust department or agency,but not in the State University or affiliates name atJune 30, 2009 and 2008, is as follows (in thousands):

Category a Category b Category c

2009 $ 69,489 20,083 8,7242008 59,238 24,868 4,639

Less than Less thanType of Investments Fair Value 1 year 1-5 years Rating Fair Value 1 year 1-5 years Rating

US Treasury notes/bonds $ 75,404 68,989 6,415 206,887 185,647 21,240

US Treasury bills 233,330 233,330 360,903 360,903

US Treasury strips 4,060 4,060 246,328 243,777 2,551

FNMA* 86,631 86,631 AAA 4,062 4,062 AAA

Federal Home Loan Bank 145,897 145,897 AAA 14,635 14,635 AAA

Total $ 545,322 538,907 6,415 832,815 809,024 23,791

*Federal National Mortgage Association

Fiscal Year 2009 Fiscal Year 2008

-

-

-

-

-

-

-

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-

--


23

44.. IInnvveessttmmeennttss ((ccoonnttiinnuueedd))

the auxiliary services corporations, and certain StateUniversity campuses.

Investments of the endowment and similar funds of the Cornell statutory colleges, except forseparately invested funds with a fair value of $23million and $42.7 million at June 30, 2009 and2008, respectively, are pooled on a fair value basis inCornell’s long-term investment pool and living trust fund. Individual funds enter or withdraw fromthe pool based on each fund’s share of the fair value of the pool’s investments.The investments of the State University campuses

are well diversified to achieve return objectives.During 2009, the Board of Trustees authorized thetransfer of title to campus foundations of allocableportions of substantially all of the assets held in theState University Endowment Fund. Totalinvestments reported in 2009 were $2 millioncompared to $401 million in 2008.

The Research Foundation maintains a diverseinvestment portfolio and with respect to debtinstruments, has a policy of investing in primarily


high quality securities. Investments are held withthe investment custodian in the ResearchFoundation’s name. During 2009, the ResearchFoundation transferred investment assets to aseparate legal trust designated for their post-retirement benefit plan. These assets were valued at$66.3 million at June 30, 2009.

Investments of the Construction Fund have beenmade in accordance with the applicable provisions ofthe laws of the State and the Construction Fund’sinvestment policy and consisted primarily ofobligations of the United States government and itsagencies. These investments are held by the State’sagent in the State University Construction Fund’sname.

Investments of the auxiliary services corporationsand Alfred Ceramics were derived from each entity’sindividual financial statements.

The State University’s financial position may beimpacted through its market risk positions and bychanges in economic conditions.

The composition of investments is as follows (in thousands):

2009 2008

Cash and money market funds $ 153,695 43,304Non-equities 218,034 415,458Domestic and international equities 58,684 639,232Equity partnerships 294,906 483,221Hedge funds 125,616 54,618Other investments 28,925 33,438Total investments 879,860 1,669,271

Classified as short-term 295,947 301,093

2009 2008

State University Campuses 1,960 400,966Cornell Statutory Colleges 542,076 764,151Alfred Ceramics 16,252 23,987Research Foundation 239,041 388,219Auxiliary Services Corporations 50,015 62,803State University Construction Fund 30,516 29,145Total investments $ 879,860 1,669,271


24


At June 30, 2009 and 2008, the State Universityhad the following non-equity investments andmaturities as summarized in Table A.

Generally, individual investment securities mustbe of investment grade. Credit quality ratings of theState University’s investments in debt securities, asdescribed by Moody’s, S&P, and Fitch IBCA as ofJune 30, 2009 and 2008 are summarized in Table B.


CCrreeddiitt RRaattiinngg AAAAAA AAAA AA BBBBBB BBBB BB CCCCCC NNoott RRaatteedd

Investment Type - 2009Asset-backed securities $ 3,070 583 177 426 223 755 489 761Municipal bonds 653 178 636 15 508Repurchase agreements 2,276Corporate bonds 7,141 8,927 29,939 11,659 163 101 252 380Mutual funds - non-equities* 14,702 4,881 7,472International - non-equities 1,870 562 652 995 179 75 1,008US government agencies 25,877 12,500

Total $ 53,313 10,250 31,404 13,095 5,446 931 741 24,905

Investment Type - 2008Asset-backed securities 46,050 999 233 743 372 567Municipal bonds 1,480 1,413 758 146 445Corporate bonds 2,831 7,329 10,077 14,143 204 161 1,572Commercial paper 4,973 846Mutual funds - non-equities* 103,911 69,880 37,731International - non-equities 3,228 1,825 600 832 460 102 6,495US government agencies 24,694 132 18,150

Total $187,167 81,578 11,668 15,864 1,036 263 65,806

*based on average credit quality of holdings

Fiscal Year 2009 Fiscal Year 2008Market Less than More than Market Less than More than

Investment Type Value 1 yr 1-5 yrs 6-10 yrs 10 yrs Value 1 yr 1-5 yrs 6-10 yrs 10 yrs

US treasury bills $ 10,687 10,687 2,115 2,115

US treasury notes/bonds 49,816 15,250 31,899 2,631 36 13,010 2,193 (515) 2,941 8,391

US treasury strips 13,952 3,452 10,500 6,018 6,018

Asset-backed securities 6,484 39 33 270 6,142 48,964 704 35,777 8,018 4,465

Municipals 1,990 60 107 870 953 4,242 15 1,209 1,654 1,364

Repurchase agreements 2,276 2,276 25,227 25,227

Corporate bonds 58,562 1,909 40,605 11,956 4,092 36,317 1,575 13,699 11,966 9,077

Commercial paper 5,819 5,819

Mutual funds – non-equities 27,055 16,983 5,733 4,236 103 211,522 132,367 38,234 38,597 2,324

International – non-equities 5,341 514 1,550 1,763 1,514 13,542 724 2,169 2,928 7,721

US government TIPS 3,494 1,122 303 2,069 5,706 (1,411) 4,080 3,037

US government agencies 38,377 3,293 5,387 24,686 5,011 42,976 1,116 14,166 10,684 17,010

Total investments $ 218,034 54,463 96,936 46,715 19,920 415,458 177,873 103,328 80,868 53,389

Table B (in thousands)

Table A (in thousands)

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-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

- -

-- -

-- - -- - --

- -- - --

- - -- - -

- -- - -

-

- - -- -- - -- -

-

- - -- -

-

-

- - -


25


The State University’s exposure to foreign currency risk for investments, held at June 30, 2009 and 2008, was as follows (fair value in thousands):

55.. AAccccoouunnttss,, NNootteess,, aanndd LLooaannss RReecceeiivvaabbllee

At June 30, accounts, notes, and loans receivablewere summarized as follows (in thousands):

2009 2008Tuition and fees $ 31,864 30,116Allowance for uncollectible (7,604) (7,419)Net tuition and fees 24,260 22,697

Room rent 7,780 7,528Allowance for uncollectible (1,805) (1,748)Net room rent 5,975 5,780

Patient fees, net ofcontractual allowances 631,746 566,565

Allowance for uncollectible (194,787) (172,466)Net patient fees 436,959 394,099

Other, net 176,233 131,914Total accounts andnotes receivable 643,427 554,490

Student loans 162,257 163,190Allowance for uncollectible (22,427) (21,999)Total student loans receivable 139,830 141,191Total, net $ 783,257 695,681

66.. CCaappiittaall AAsssseettss

Capital assets, net of accumulated depreciation,totaled $6.24 billion and $5.74 billion at fiscal yearend 2009 and 2008, respectively. Capital asset activity for fiscal years 2009 and 2008 is reflected inTable C. In the table, closed projects and retirementsrepresent capital assets retired and assets transferredfrom construction in progress for projects completedand the related capital assets placed in service.


Table C (in thousands)

Land $ 274,846 27,118 102 301,862 11,313 313,175 Infrastructure and land improvements 518,808 86,284 11,215 593,877 79,643 8,918 664,602 Buildings 6,000,197 395,101 57,623 6,337,675 385,610 38,425 6,684,860 Equipment, library books, and artwork 2,169,505 240,544 75,572 2,334,477 196,808 80,753 2,450,532 Construction in progress 752,776 634,714 486,406 901,084 723,737 499,668 1,125,153 Total capital assets 9,716,132 1,383,761 630,918 10,468,975 1,397,111 627,764 11,238,322

Less accumulated depreciation:

Infrastructure and land improvements 327,075 18,372 10,662 334,785 22,135 8,456 348,464 Buildings 2,679,161 156,475 48,416 2,787,220 171,910 36,013 2,923,117 Equipment and library books 1,476,535 196,382 70,759 1,602,158 202,600 73,916 1,730,842 Total accumulated depreciation 4,482,771 371,229 129,837 4,724,163 396,645 118,385 5,002,423

Capital assets, net $ 5,233,361 1,012,532 501,081 5,744,812 1,000,466 509,379 6,235,899

June 30, 2007 Additions

Closed Projects & Retirements

Closed Projects & Retirements

June 30, 2008 Additions

June 30, 2009

Currency Denomination 2009 2008

Japanese yen $ 4,377 29,717Euro 4,154 37,805British pound 2,306 21,083Hong Kong dollar 1,924 8,876Taiwan dollar 826 8,090South Korean won 795 10,398Brazil real cruzeiro 538 9,278Malaysian ringgit 522 1,900Singapore dollar 513 3,514Turkish lira 353 1,695So. African rand 344 2,880Canadian dollar 307 3,495Thailand baht 291 2,106Australian dollar 276 8,458Norwegian krone 257 2,285Swedish krona 224 3,719Swiss franc 191 8,827Mexican Nuevo Peso 191 2,993Polish zloty 185 1,301Danish krone 18 1,214Other 637 12,143Total $ 19,229 181,777

-


26

7. Long-term Liabilities

The State University has entered into capital leases and other financing agreements with DASNYto finance most of its capital facilities. The StateUniversity has also entered into financing arrange-ments with the New York Power Authority under thestatewide energy services program. Equipment pur-chases are also made through DASNY’s Tax-exemptEquipment Leasing Program (TELP), various statesponsored equipment leasing programs, or privatefinancing arrangements. At June 30, 2009 and 2008, other than facilities

obligations, which are included as of March 31,2009 and 2008, total obligations are summarized inTable D.

EEdduuccaattiioonnaall FFaacciilliittiieess

The State University, through DASNY, hasentered into financing agreements to finance variouseducational facilities which have a maximum 30-yearlife. Athletic facility debt is aggregated with educational facility debt. Debt service is paid by, or from specific appropriations of, the State.

During the year, Personal Income Tax RevenueBonds (PIT) were issued for the purpose of financing capital construction and major rehabilitation for educational facilities in the amount of $508.4 million. Also, during the year$34.4 million of PIT bonds were used in order to

refinance $34.4 million of the State University’sexisting educational facilities obligations.

RReessiiddeennccee HHaallll FFaacciilliittiieess

The State University has entered into capital leaseagreements for residence hall facilities. DASNYbonds for residence hall facilities, which have a maximum 30-year life, are repaid from room rentalsand other residence hall revenues. Upon repaymentof the bonds, including interest thereon, and the satisfaction of all other obligations under the leaseagreements, DASNY shall convey to the StateUniversity all rights, title, and interest in the assetsfinanced by the capital lease agreements. Residencehall facilities revenue realized during the year fromfacilities from which there are bonds outstanding is pledged as a security for debt service and isassigned to DASNY to the extent required for debtservice purposes. Any excess funds pledged toDASNY are available for residence hall capital andoperating purposes.

During the year, the State University entered intoagreements with DASNY to issue residential hallfacility obligations totaling $129.4 million for thepurpose of financing capital construction and majorrehabilitation for residential hall facilities.

In prior years, the State University defeased various obligations, whereby proceeds of new obligations were placed in an irrevocable trust to


Table D (in thousands)

July 1, June 30, Current2008 Additions Reductions 2009 Portion

Long-term debt:

Educational facilities $ 4,782,950 542,812 229,032 5,096,730 189,258 Residence hall facilities 873,355 129,375 27,970 974,760 31,170 Capital lease arrangements 217,532 41,284 62,751 196,065 49,584 Other long-term debt 61,835 13,186 17,898 57,123 12,898

Total long-term debt 5,935,672 726,657 337,651 6,324,678 282,910

Other long-term liabilities:

Postemployment and postretirement obligations and compensated absences 1,527,385 826,731 427,747 1,926,369 160,766

Loan from State 110,178 1,383 25,563 85,998 17,244Litigation 109,157 139,900 44,482 204,575 39,091 Other long-term liabilities 108,982 11,220 4,306 115,896 4,308

Total other long-term liabilities 1,855,702 979,234 502,098 2,332,838 221,409

Total long-term liabilities $ 7,791,374 1,705,891 839,749 8,657,516 504,319

For the 2009 Fiscal Year


2777.. LLoonngg--tteerrmm LLiiaabbiilliittiieess ((ccoonnttiinnuueedd))

provide for all future debt service payments on thedefeased obligations. Accordingly, the trust account assets and liabilities for the defeased obligations are not included in the State University’s financial statements. As of March 31, 2009, $1.01 billionand $327.4 million of outstanding educational andresidence hall facility obligations, respectively, wereconsidered defeased.

CCaappiittaall LLeeaassee AArrrraannggeemmeennttss

The State University leases equipment under

DASNY TELP, New York State Personal Income Tax Revenue Bonds, certificates of participation(COPs), vendor financing, or through statewidelease purchase agreements. The State University isresponsible for lease debt service payments sufficientto cover the interest and principal amounts dueunder these arrangements.

LLooaann FFrroomm SSttaattee

In prior years, the State University experiencedoperating cash-flow deficits precipitated by cash-flow difficulties experienced by its hospitals. In connection with these cash-flow deficits, as


Table D, continued (in thousands)

July 1, June 30, Current2007 Additions Reductions 2008 Portion

Long-term debt:

Educational facilities $ 4,549,253 418,105 184,408 4,782,950 191,451 Residence hall facilities 752,200 145,405 24,250 873,355 27,970 Capital lease arrangements 213,734 56,419 52,621 217,532 55,362 Other long-term debt 5,845 56,140 150 61,835 9,405

Total long-term debt 5,521,032 676,069 261,429 5,935,672 284,188

Other long-term liabilities:

Postemployment and postretirement obligations and compensated absences 1,020,796 879,494 372,905 1,527,385 152,108

Loan from State 130,440 5,300 25,562 110,178 17,244Litigation 131,742 22,515 45,100 109,157 19,650 Other long-term liabilities 95,598 18,279 4,895 108,982 3,965

Total other long-term liabilities 1,378,576 925,588 448,462 1,855,702 192,967

Total long-term liabilities $ 6,899,608 1,601,657 709,891 7,791,374 477,155

2010 $ 189,258 300,177 31,170 46,831 62,482 8,679 282,910 355,6872011 215,622 289,308 31,980 45,390 51,034 6,579 298,636 341,2772012 272,905 239,576 34,465 43,891 44,939 4,798 352,309 288,265 2013 297,049 226,363 36,315 42,315 34,730 2,885 368,094 271,563 2014 305,667 210,278 37,935 40,600 13,276 2,010 356,878 252,888

2015-19 1,254,436 841,009 193,885 175,266 31,771 5,548 1,480,092 1,021,823 2020-24 904,309 573,974 192,595 127,032 11,520 747 1,108,424 701,753 2025-29 810,509 338,688 185,350 80,889 2,151 62 998,010 419,639 2030-34 573,450 154,651 159,465 35,599 1,285 11 734,200 190,261 2035-39 273,525 29,004 71,600 7,221 345,125 36,225

Total $ 5,096,730 3,203,028 974,760 645,034 253,188 31,319 6,324,678 3,879,381

Principal Interest Principal Interest Principal Interest Principal Interest

Fiscal year(s) Educational Facilities Residential Facilities Other Total

Debt service requirements of the long-term debt obligations as of June 30, 2009 are as follows (in thousands):

Interest rates rangefrom 2.0% to 7.5%

Interest rates range from 3.0% to 6.0%

Interest rates rangefrom .54% to 9.78%

- -

For the 2008 Fiscal Year


28


77.. LLoonngg--tteerrmm LLiiaabbiilliittiieess ((ccoonnttiinnuueedd))

authorized by State Finance Law, the StateUniversity borrowed funds with interest from theshort-term investment pool of the State. Theamount outstanding under this borrowing from theState at June 30, 2009 was $86 million. During theyear, $25.6 million was paid on these loans. TheState University incurred an interest cost of $1.4million at an average interest rate of 1.3 percent.

88.. RReettiirreemmeenntt PPllaannss

RReettiirreemmeenntt BBeenneeffiittss

There are three major retirement plans for StateUniversity employees: the New York State and Local Employees’ Retirement System (ERS), theNew York State Teachers’ Retirement System (TRS),and the Teachers Insurance and Annuity Association- College Retirement Equities Fund (TIAA/CREF).ERS is a cost-sharing, multiple-employer, definedbenefit public plan administered by the StateComptroller. TRS is a cost-sharing, multiple-employer, defined benefit public plan separatelyadministered by a nine-member board. TIAA/CREFis a multiple-employer, defined contribution planadministered by separate boards of trustees.Substantially all full-time employees participate inthe plans.

Obligations of employers and employees to con-tribute, and related benefits, are governed by theNew York State Retirement and Social Security Law(NYSRSSL) and Education Law. These plans offer awide range of programs and benefits. ERS and TRSbenefits are related to years of credited service andfinal average salary, vesting of retirement benefits,death and disability benefits, and optional methodsof benefit payments. TIAA/CREF is a StateUniversity Optional Retirement Program (ORP)and offers benefits through annuity contracts.

ERS and TRS provide retirement benefits as wellas death and disability benefits. Benefits generallyvest after five years of credited service. TheNYSRSSL provides that all participants in ERS andTRS are jointly and severally liable for any actuarialunfunded amounts. Such amounts are collectedthrough annual billings to all participating employers. Employees who joined ERS and TRS

after July 27, 1976, and have less than ten years ofservice or membership are required to contribute 3 percent of their salary. Employee contributions are deducted from their salaries and remitted on acurrent basis to ERS and TRS. Employer contribu-tions are actuarially determined for ERS and TRS.

TIAA/CREF provides benefits through annuitycontracts and provides retirement and death benefitsto those employees who elected to participate in theORP. Benefits are determined by the amount ofindividual accumulations and the retirement incomeoption selected. All benefits generally vest after thecompletion of one year of service if the employee is retained thereafter. Employees who joinedTIAA/CREF after July 27, 1976, and have less than ten years of service or membership are required to contribute 3 percent of their salary.Employer contributions range from 8 percent to 15 percent depending upon when the employee was hired. Employee contributions are deductedfrom their salaries and remitted on a current basis to TIAA/CREF.

The State University’s total retirement-related payroll was $2.8 billion and $2.5 billion for the June30, 2009 and 2008 fiscal years, respectively. Thepayroll for 2009 and 2008 for State Universityemployees covered by TIAA/CREF was $1.73 billion and $1.57 billion, ERS was $993 million and $874 million, and TRS was $109 million and$84 million, respectively. Employer and employeecontributions under each of the plans were as follows(in millions):

2009 2008 2007Employer contributions:TIAA-CREF $194.6 167.8 161.0ERS 47.1 48.6 50.7TRS 8.3 8.3 6.7

Employee contributions:TIAA-CREF $ 40.6 43.6 43.9ERS 13.7 11.5 10.7TRS 1.1 1.0 0.9

The employer contributions are equal to 100 percent of the required contributions under each ofthe respective plans.

The Research Foundation maintains a separatenon-contributory plan through TIAA/CREF for substantially all of its employees. Employees becomefully vested in contributions made by the Research


29


88.. RReettiirreemmeenntt PPllaannss ((ccoonnttiinnuueedd))

Foundation after three years of service.Contributions are allocated to individual employeeaccounts. Employer contributions are based on apercentage of regular salary and range from 8 percent to 15 percent. The payroll for ResearchFoundation employees covered by TIAA/CREF for its fiscal year ended June 30, 2009 and 2008 was $350 million and $337.7 million, respectively.The Research Foundation pension contributions for fiscal years 2009 and 2008 were $28.2 million and$27.5 million, respectively. These contributions areequal to 100 percent of the required contributionsfor each year.

Each retirement system issues a publicly availablefinancial report that includes financial statementsand supplementary information. The reports maybe obtained by writing to:

New York State and Local Employees’ Retirement System110 State StreetAlbany, New York 12244

New York State Teachers’ Retirement System10 Corporate Woods DriveAlbany, New York 12211

Teachers Insurance and Annuity Association/College Retirement Equities Fund730 Third Avenue New York, New York 10017

PPoosstteemmppllooyymmeenntt aanndd PPoosstt--rreettiirreemmeenntt BBeenneeffiittss

The State, on behalf of the State University, provides health insurance coverage for eligible retiredState University employees and their spouses as partof the New York State Health Insurance Plan(NYSHIP). NYSHIP offers comprehensive benefitsthrough various providers consisting of hospital,medical, mental health, substance abuse and prescription drug programs. The State administersNYSHIP and has the authority to establish andamend the benefit provisions offered. NYSHIP isconsidered an agent multiple-employer defined benefit plan, is not a separate entity or trust, anddoes not issue stand-alone financial statements. The State University, as a participant in the plan,recognizes these other postemployment benefit(OPEB) expenses on an accrual basis.

Employee contribution rates for NYSHIP areestablished by the State and are generally 10 percentfor enrollee coverage and 25 percent for dependentcoverage. NYSHIP premiums are being financed ona pay-as-you-go basis. There are no assets set aside tofund the plan. During the fiscal year, the State, onbehalf of the State University, paid health insurancepremiums of $201.9 million. The State University’sannual OPEB cost and increase in the OPEB obligation for the years ended June 30 2009, 2008,and 2007 were as follows (in thousands):

The components of the State University’s OPEBobligation include the total annual required contribution (ARC) of $621.4 million (comprised of service costs of $239.0 million, amortization ofunfunded actuarial liability of $357.1 million, andinterest costs of $25.3 million), ARC reduction of$41.8 million, and interest costs of $46.1 million.The unfunded actuarial accrued liability totaled$9.56 billion as of the April 1, 2008 actuarial valua-tion date and is being amortized over an open period of thirty years using the level percentage ofprojected payroll amortization method. The StateUniversity total retirement related payroll for theJune 30, 2009 fiscal year was $2.8 billion.

The actuarial valuation utilizes a frozen entry ageactuarial cost method. The actuarial assumptionsinclude a 4.2 percent discount rate, payroll growthrate of 3.5 percent, and an annual healthcare costtrend rate for medical coverage of 10 percent initially, reduced by decrements to a rate of 5 percent after 6 years.

Projections of benefits are based on the plan andinclude the types of benefits provided at the time of each valuation. Actuarial valuations involve estimates of the value of reported amounts andassumptions about the probability of future events

2009 2008 2007

Annual OPEB cost $ 625,691 749,962 712,551

Benefits paid (201,894) (234,293) (142,399)

Increase in OPEB Obligation 423,797 515,669 570,152

Net obligation at beginning of year 1,085,821 570,152

Net obligation at end of year $ 1,509,618 1,085,821 570,152

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30


88.. RReettiirreemmeenntt PPllaannss ((ccoonnttiinnuueedd))

and actual results are considered for future valuations. The actuarial methods and assumptionsused are designed to reduce short-term volatility inreported amounts and reflect a long-term perspective.

The Research Foundation sponsors a separate single employer defined benefit post-retirement planthat provides health insurance and medical benefitsthat covers substantially all non-student ResearchFoundation employees. The Research FoundationBoard of Directors administers the plan and has theauthority to establish and amend the benefitprovisions offered. Contribution rates for employeeshired after 1985 are 10 percent for employeecoverage and 25 percent for dependent coverage.

Contributions by the Research Foundation aremade pursuant to a funding policy established by itsBoard of Directors and were $13.3 million and$12.3 million during the 2009 and 2008 fiscal years,respectively. In 2009, a separate legal trust wasestablished and the assets held in the trust of $66.3 million at June 30, 2009 are considered planassets in determining the funded status of the plan.In 2008, assets were held in a designated investmentaccount and were not considered plan assets indetermining the funded status of the plan. Theactuarial accrued liability at June 30, 2009 and 2008was $188.8 million and $233.0 million, respectively.The payroll for employees covered by the plan forthe 2009 fiscal year was $233.7 million. The plandid not issue stand-alone financial statements. Theplan will issue stand-alone financial statements forthe 2009 calendar year.

The Research Foundation’s annual cost andincrease in the OPEB obligation for the years ended June 30, 2009, 2008, and 2007 were as follows (in thousands):

The components of the Research FoundationOPEB obligation at June 30, 2009 include the totalannual required contribution (ARC) of $260.6 million (comprised of service cost of $11.3 millionand amortization of unfunded actuarial accrued liability of $ 249.3 million), ARC reduction of $ 249.3 million, and interest costs of $16.3 million.The unfunded actuarial accrued liability is amortizedover one year. The cost of the benefits providedunder this plan is recognized on an actuarial-determined basis using the projected unit costmethod. Under this method, actuarial assumptionsare made based on employee demographics andmedical trend rates to calculate the accrued benefitcost. The actuarial assumptions include a 7 percent discount rate, and an initial healthcare cost trend rate range of 7 to 9 percent grading downto 5 percent. A blended discount rate was utilizedusing the expected investment return on investmentsof the plan and investments held in the operationalpool expected to be used to fund future OPEB obligations.

99.. CCoommmmiittmmeennttss

The State University has entered into contracts forthe construction and improvement of various projects. At March 31, 2009, these outstanding contract commitments totaled approximately $894million.

The State University is also committed undernumerous operating leases covering real propertyand equipment. Rental expenditures reported for the years ended June 30, 2009 and 2008 under such operating leases were $32.3 million for both fiscal years. The following is a summary of the future minimum rental commitments under non-cancelable real property and equipment leaseswith terms exceeding one year (in thousands):

Year ending June 30,

2010 $ 31,0142011 27,0422012 23,4782013 18,7692014 13,6712015-19 25,6152020-24 1,9892025-39 1,219Total $ 142,797

2009 2008 2007

Annual OPEB cost $ 27,598 17,227 34,995

Benefits paid (5,542) (4,580) (3,994)

Contribution to plan (66,296)

Change in OPEB Obligation (44,240) 12,647 31,001

Net obligation at beginning of year 233,017 220,370 189,369

Net obligation at end of year $ 188,777 233,017 220,370

- -


31


1100.. CCoonnttiinnggeenncciieess

The State is contingently liable in connection withclaims and other legal actions involving the StateUniversity, including those currently in litigationarising in the normal course of State Universityactivities. The State University does not carry malpractice insurance and, instead, administers thesetypes of cases in the same manner as all other claimsagainst the State involving State University activitiesin that any settlements of judgments and claims are paid by the State from an account established for this purpose. With respect to pending andthreatened litigation, the State University has recorded a liability and a corresponding approp-riation receivable of approximately $204.6 million atJune 30, 2009 ($197.2 million related to hospitalsand clinics) for unfavorable judgments, both anticipated and awarded but not yet paid.

The State University is exposed to various risks ofloss related to damage and destruction of assets,injuries to employees, damage to the environment ornoncompliance with environmental requirements,and natural and other unforeseen disasters. TheState University has insurance coverage for its residence hall facilities. However, in general, the StateUniversity does not insure its educational buildings,contents or related risks and does not insure its vehicles and equipment for claims and assessmentsarising from bodily injury, property damages, andother perils. Unfavorable judgments, claims, or losses incurred by the State University are covered by the State on a self-insured basis. The State doeshave fidelity insurance on State employees.

1111.. RReellaatteedd PPaarrttiieess

The State University's single largest source of revenue is State appropriations. State appropriationstake the form of direct assistance, debt service oneducational facility and PIT bonds, fringe benefitsfor State employees, and litigation expenses forwhich the State is responsible. State appropriationstotaled $3.06 billion and $2.97 billion and represented approximately 36 and 37 percent of totalrevenues for the 2009 and 2008 fiscal years, respectively. The State University’s continued operational viability is substantially dependent upon a consistent and proportionate level of ongoing State support.

1122.. FFeeddeerraall GGrraannttss aanndd CCoonnttrraaccttss aanndd TThhiirrdd--PPaarrttyy RReeiimmbbuurrsseemmeenntt

Substantially all federal grants and contracts aresubject to financial and compliance audits by thegrantor agencies of the federal government.

Disallowances, if any, as a result of these auditsmay become liabilities of the State University. StateUniversity management believes that no materialdisallowances will result from audits by the grantoragencies.

The State University hospitals have agreementswith third-party payors, which provide for reimbursement to the hospitals at amounts differentfrom their established charges. Contractual serviceallowances and discounts (reflected through StateUniversity hospitals and clinics sales and services)represent the difference between the hospitals established rates and amounts reimbursed by third-party payors. The State University has madeprovision in the accompanying financial statementsfor estimated retroactive adjustments relating tothird-party payors cost reimbursement items.

1133.. SSuubbsseeqquueenntt EEvveennttss

The State University entered into agreements withDASNY to issue obligations totaling $570 millionfor the construction and major rehabilitation of educational facilities in August 2009.

In September 2009, the State University enteredinto agreements with DASNY to issue obligationstotaling $368.1 million to refinance the StateUniversity’s existing educational and athleticfacilities obligations.

In October 2009, the State of New York reducedthe 2009-10 State appropriated support to the State-operated campuses by $90 million. The StateUniversity’s financial position may be affected bythis reduction.

1144.. FFoouunnddaattiioonnss

Discretely presented component unit informationis comprised principally of the campus-related foundations. These foundations are nonprofit organizations responsible for the fiscal administra-tion of revenues and support received for the


32

1144.. FFoouunnddaattiioonnss ((ccoonnttiinnuueedd))

promotion, development and advancement of thewelfare of its campus, the State University and its students, faculty, staff and alumni. The foundationsreceive the majority of their support and revenuesthrough contributions, gifts and grants and providebenefits to their campus, students, faculty, staff andalumni. In addition, the reported amounts includefoundation student housing corporations, nonprofitorganizations that operate and administer certainhousing and related services for students. All thefoundations are exempt from federal income taxeson related income pursuant to Section 501(a) of the Internal Revenue Code. All of the financial data for these organizations was derived from eachentity’s individual financial statements, reported inaccordance with generally accepted accounting principles promulgated by FASB, the majority ofwhich have a June 30 fiscal year end.

During the years ended June 30, 2009 and 2008,the foundations distributed $43.1 million and $42.8 million, respectively, to the State Universityprincipally for scholarships and support of campusprogram activities.

Separately issued financial statements of the foundations and other related entities may beobtained by writing to:

The State University of New York System Administration Office of the University ControllerState University Plaza, S-421Albany, New York 12246

TTrraannssffeerr ttoo tthhee FFoouunnddaattiioonnss

During 2009, the State University Board ofTrustees authorized the transfer of title of substantially all of the assets held in the StateUniversity Endowment Fund to the campus foundations. As a result, the foundations recognized$234.9 million in revenue in the statement of activities for the year ended June 30, 2009. Threefoundations which received their allocable share of the endowment fund have a year-end other than June 30, 2009 and the transfer occurred after their year-end. As a result, the transfer for these foundations is not recognized in the 2009 statementof activities.

NNeett AAsssseett CCllaassssiiffiiccaattiioonnss

Unrestricted net assets represent resources whoseuses are not restricted by donor-imposed stipulationsand are generally available for the support of theState University campus and foundation programsand activities. Temporarily restricted net assets represent resources whose use is limited by donor-imposed stipulations that either expire by the passage of time or are removed by specific actions.Permanently restricted net assets represent resourcesthat donors have stipulated must be maintained permanently. The income derived from the permanently restricted net assets is permitted to bespent in part or in whole, restricted only by thedonors’ wishes. The beginning net asset amountshave been revised from those previously reported to reclassify amounts to conform with donor intentions. As a result, temporarily restricted netassets were increased $12.1 million and permanentlyrestricted and unrestricted net assets were decreasedby $2.5 million and $9.6 million, respectively.

IInnvveessttmmeennttss

All investments with readily determinable fair values have been reported in the financial statementsat fair value. Realized and unrealized gains and losses are recognized in the statement of activities.Gains or losses on investments are recognized asincreases or decreases in unrestricted net assets unlesstheir use is temporarily or permanently restricted byexplicit donor stipulations or by law. Investments of the State University foundations were $982.8 million and $895 million as of June 30, 2009 and2008, respectively. The composition of investmentsis as follows (in thousands):

2009 2008Equities - domestic $ 266,670 317,949Equities - international 213,668 156,472Non-equities 352,420 304,110Other investments 150,075 116,522Total investments $ 982,833 895,053

CCaappiittaall AAsssseettss

Capital assets are stated at cost, if purchased, or fair value at date of receipt, if acquired by gift.Land improvements, buildings, and equipment aredepreciated over their estimated useful lives usingthe straight-line method. Capital assets, net of


2009 2008Land and land improvements $ 32,627 24,525Buildings 358,377 342,331Equipment 21,167 30,501Artwork and library books 21,761 18,831Construction in progress 22,240 9,503Total capital assets 456,172 425,691

Less accumulated depreciation 95,004 91,666Capital assets, net $ 361,168 334,025

accumulated depreciation, totaled $361.2 million and $334 million at fiscal year end 2009 and 2008, respectively. Capital asset classifications are summarized as follows (in thousands):

LLoonngg--tteerrmm DDeebbtt

The Foundations have entered into variousfinancing arrangements, principally through theissuance of Industrial Development Agency bondsand Housing Authority bonds for the constructionof student residence hall facilities. The following isa summary of the future minimum annual debt service requirements for the next five years andthereafter (in thousands):

Year ending June 30:

2010 $ 8,2482011 10,9492012 10,9462013 8,9642014 15,570Thereafter 221,215

$ 275,892



33

ANNUAL FINANCIAL REPORT 2009The StateUniversity of New York

State University PlazaAlbany, NY 12246www.suny.edu

The State University of NewYork

SUNY 2009 Financial Report

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