Substantially all full-time classified salaried employees of the University participate in the defined benefit retirement plan administered by the Virginia Retirement System (VRS). VRS is an agent multiple-employer public employee retirement system (PERS) that acts as a common investment and administrative agency for the Commonwealth of Virginia and its political subdivisions.
The University's payroll costs for employees covered by VRS were $172 million and $165.9 million for the years ended June 30, 1996 and 1995, respectively. The University's total payroll costs were $465.5 million and $446.8 million for the years ended June 30, 1996 and 1995, respectively.
Information regarding types of employees covered, benefit provisions, employee eligibility requirements including eligibility for vesting, and the authority under which benefit provisions as well as employer and employee obligations to contribute are established can be found in the Commonwealth's Comprehensive Annual Financial Report (CAFR).
The University's total VRS contributions were $15.9 million and $16.4 million for the years ended June 30, 1996 and 1995, respectively, which included the 5 percent employee contribution assumed by the employer. These contributions represent 9.2 percent and 9.9 percent of covered payroll for the respective years.
The VRS does not measure assets and pension benefit obligations separately for individual state institutions. The CAFR provides disclosure of the Commonwealth's unfunded pension benefit obligation at June 30, 1995. The same report contains historical trend information showing VRS's progress in accumulating sufficient assets to pay benefits when due.
Substantially all full-time faculty, certain administrative staff, and Health Care Professionals participate in Faculty Optional Retirement Plans. These are fixed-contribution plans where the retirement benefits received are based upon the employer and employee contributions (all of which are paid by the University), and the interest and dividends. Individual contracts issued under the plans for full-time faculty and certain administrative staff provide for full and immediate vesting of both the University's and the participant's contributions. Health Care Professional's employer contributions fully vest after one year of employment. Total pension costs under the plans were approximately $21.7 million and $20.4 million for the years ended June 30, 1996 and 1995, respectively. Contributions to the Optional Retirement Plans were calculated using base salaries of $208.4 million and $194 million for the years ended June 30, 1996 and 1995, respectively. The contribution percentage amounted to 10.4 percent in 1996 and 10.5 percent in 1995.
The Commonwealth of Virginia participates in the VRS administered statewide group life insurance program which provides postemployment life insurance benefits to eligible retired and terminated employees. The Commonwealth also provides health care credits against the monthly health insurance premiums of its retirees who have at least 15 years of state service and participate in the state health plan. Information related to these plans is available at the statewide level in the Commonwealth's Comprehensive Annual Financial Report.
Beginning July 1, 1995, all University employees had an option to participate in the University's self-funded, comprehensive medical care benefits program. The cost of medical care is paid out of employee and employer contributions and is held in a separate bank account. The University has contracted with QualChoice of Virginia of Blue Ridge Health Alliance, Inc., a third-party administrator, to provide administrative services for this health care benefits program. As of June 30, 1996, assets of $2,602,000 were in the account. The estimated liability at June 30, 1996 for outstanding claims was $2,813,000.
Assets of funds held by trustees for the benefit of the University are not reflected in the accompanying balance sheet. The University has irrevocable rights to all or a portion of the income of these funds, but the assets of the funds are not under the management of the University. The following reflects the market value of these funds as of June 30, 1996 and 1995, and the amount of income received from the trustees during the years then ended (in thousands):
|Market Value of Funds Held by Trustees for the Benefit of the University||$113,862||$98,546|
|Income Received from Funds Held by Trustees for the Benefit of the University||$ 4,234||$ 3,695|
Outstanding pledges to the University amounted to $63.2 million and $26.9 million as of June 30, 1996 and 1995, respectively. Included in these totals are $8.7 million and $6.1 million, respectively, of pledges relating to plant construction. It is not practicable to estimate the net realizable value of such pledges and, therefore, they are not reflected in the accompanying financial statements.
As of June 30, 1996, the University has construction contracts and commitments totaling approximately $127.5 million of which $96.8 million had been incurred. The University's commitments for equipment, leases, and services are as follows (in thousands):
The total rental expense for all property and equipment was approximately $7.7 million and $6.2 million for the years ended June 30, 1996 and 1995, respectively.
Prior bond defeasance
In prior years, certain outstanding bonds have been defeased by placing assets in irrevocable trusts with escrow agents. Accordingly, these assets and the liability for the defeased bonds are not reflected in the accompanying financial statements. As of June 30, 1996, $74.9 million of the defeased bonds remain outstanding.
The University is a defendant in a number of legal actions. While the final outcome cannot be determined at this time, management is of the opinion that the liability, if any, for these legal actions will not have a material effect on the University's financial position.
The University began participating in the Federal Direct Lending Program in July, 1995. For the year ended June 30, 1996, the Current Restricted Fund additions for federal grants and contracts of $148,355,000 includes $49,522,000 for direct lending. Additionally, for the year ended June 30, 1996, the Current Restricted Fund expenditures for scholarships and fellowships of $105,802,000 includes $49,522,000 for direct lending.
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