GASB 67/68 Disclosure

In June 2012, the GASB issued Statement No. 67, Financial Reporting for Pension Plans, effective for the University’s fiscal year beginning July 1, 2013. This Statement revises existing standards for financial reporting for pension plans by changing the approach to measuring the net pension liability. The net pension liability is measured as the total pension liability, less the amount of the pension plan’s fiduciary net position. The total pension liability is determined based upon discounting projected benefit payments based on the benefit terms and legal agreements existing at the pension plan’s fiscal year end. Projected benefit payments are required to be discounted using a single rate that reflects the expected rate of return on investments, to the extent that plan assets are available to pay benefits, and a tax-exempt, high-quality municipal bond rate when plan assets are not available.

In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions, effective for the University’s fiscal year beginning July 1, 2014. This Statement revises existing standards for measuring and reporting pension liabilities for pension plans provided by the University to its employees. This Statement requires recognition of a liability equal to the net pension liability, which is measured as the total pension liability, less the amount of the pension plan’s fiduciary net position. The total pension liability is determined based upon discounting projected benefit payments based on the benefit terms and legal agreements existing at the pension plan’s fiscal year-end. Projected benefit payments are required to be discounted using a single rate that reflects the expected rate of return on investments, to the extent that plan assets are available to pay benefits, and a tax-exempt, high-quality municipal bond rate when plan assets are not available. This Statement requires that most changes in the net pension liability be included in pension expense in the period of the change. To the extent practical, the financial statements presented for the periods affected should be restated.

The University will be implementing both GASB Statement Nos. 67 and 68 for the fiscal year ending June 30, 2014 and the financial statements for the University and the Medical Centers the year ended June 30, 2013 will be restated. As of June 30, 2013, the University reported an obligation to UCRP of $3.4 billion, representing unfunded contributions to UCRP based upon the University’s funding policy. Under GASB No. 68, the University’s obligation to UCRP is expected to increase. Currently, the Medical Centers do not report an obligation to UCRP, however, under GASB No. 68, the Medical Centers will be reporting their proportionate share of the UCRP obligation.