2014 Funds Budget
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Auburn University Current Funds Budget1 For the Year Ended September 30, 2014 Unrestricted and Restricted (Unaudited) 2014 REVENUES State Appropriations2 242,982,031 Student Fees and Charges 416,078,372 Auxiliary Enterprises 137,119,532 Other Income (Includes Federal Grants, Appropriations and Contracts) 257,767,392 BUDGETED REVENUES 1.053 947.327 EXPENDITURES AND TRANSFERS Instruction 264,351,724 Research 225,049,120 Public Service 53,237,341 Academic Support 36,090,990 Student Services 35,350,357 Institutional Support 68,080,470 Library 15,728,071 Operation and Maintenance of Plant 73,608,794 Scholarships and Fellowships 104, 160,978 Auxiliary Enterprises 137,119,532 Mandatory and Non-Mandatory Transfers 41,169,950 BUDGETED EXPENDITURES AND TRANSFERS 1,053 947.327 1 The University's annual operating budget, as approved by the Board ofTrustees, reflects unrestricted and recurring restricted fund revenues and expenditures on a cash basis and is organized according to revenue source and expenditure function. The annual operating budget is not intended to reflect revenues and expenditures and other changes in net asset~ in the same format presented in the audited financial statements as required by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysisfor Public Colleges and Universities. The prospective financial information included in this Official Statement has been prepared by, and is the responsibility of, the University's management. The University and its management believe that the Current Funds Budget for the year ended September 30, 2013, has been prepared on a reasonable basis, reflecting the best estimates and judgments, and represents, to the best of management's knowledge and opinion, the University's expected course ofaction. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results. PricewaterhouseCoopers LLP has neither examined, compiled nor performed any procc_dures with respect to the prospective financial information contained herein and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance on such information or its achievability. PricewaterhouseCoopers LLP assumes no responsibility for and denies any association with the prospective financial information and any other information derived there from included elsewhere in this offering document. The PricewaterhouseCoopers LLP report attached as an appendix to this Official Statement refers exclusively to the University's historical financial information. PricewaterhouseCoopers LLP reports do not cover any other information in this Official Statement and should not be read to do so. This prospective financial information was not prepared with a view toward compliance with published guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. 2 For more information concerning the University's anticipated course of action to address the reduction in State appropriations, see "SPECIAL CONSIDERATIONS - State Proration" herein . 29 Auburn University Statements of Revenues, Expenses and Changes in Net Position for the Years Ended September 30, 2009-2013• 2009 2010 2011 2012 2013 OPERATING REVENUES Student Tuition & Fees, Net of Scholarship Allowances $257,628,293 $276,230,557 $294,726,600 $323,136,139 $345,231,012 Federal appropriations 10,946,114 9,026,000 14,324,010 11,840,435 13,003,383 Federal grants & contracts 69,512,621 77,953,387 82,288,355 82,499,718 69,712,138 State & local grants & contracts 18,187,145 19,873,107 18,675,902 19,069,123 17,457,909 Nongovernmental grants & contracts 11,516,685 11,297,084 10,854,763 ll,317,521 12,965,576 Sales & services of educational departments 27,998,226 30,308,344 32,165,275 37,061,728 41,965,810 Auxiliary enterprises, net 80,754,997 87,468,987 106,170,330 101,537,350 104,542,266 Other operating revenues 13,106,214 13,405,886 15,424,646 15,980,083 16,263,956 Total operating revenues 489,650,295 525,563,352 574,629,88 I 602,442,097 621,142,050 OPERATING EXPENSES Compensation & benefits 507,894,296 510,919,404 536,562,158 539,232,639 557,979,424 Scholarships & fellowships 17,903,346 17,810,837 17,327,167 18,354,074 17,351,012 Utilities 23,708,155 22,899,217 23,353,732 23,147,154 22,842,876 Other supplies & services I90,348,713 185,283,804 220,750,931 216,222,211 221,437,423 Depreciation 44,187,852 49,328,811 53,826,645 61,104,001 66,064,924 Total operating expenses 784,042,362 786,242,073 85 I,820,633 858,060,079 885,675,659 Operating Income (Loss) (294,392.067) (260,678,721) (277,190,752) (255,617,982) (264,533,609) NONOPERATING REVENUES (EXPENSES) State appropriations 261,691,096 236,212,711 235,724,142 247,816,148 238,601,180 ARRA state fiscal stabilization funds 21,236,839 24,429,089 Gifts 29,786,518 31,537,641 32,334,055 36,603,692 35,354,346 Grants 16,424,734 23,204,820 24,829,086 21,620,329 20,926,014 Net investment income 41,436,581 25,088,863 19,687,771 28,359,822 13,129,982 Interest expense on capital asset-related debt (14,150,603) (9,174,150) (9,803,075) (9,305,463) (13,703,285) Net Nonoperating Revenues 335,188,326 328,106,724 327,201,068 325,094,528 294,308,237 Income before Other Changes in Net Position 40,796,259 67,428,003 50,010,316 69,476,546 29,774,628 OTHER CHANGES IN NET POSITION Capital appropriations 2,760,396 18,224,230 18,663,689 1,801,433 114,188 Capital gifts & grants 15,681,879 29,373,311 29,520,158 15,393,203 28,086,402 Additions to permanent endowments 255,433 165,528 1,355,832 569,867 1,719,287 Increase in net position 59,493,967 115,191,072 99,549,995 87,241,049 59,694,505 Net position - beginning ofyear 1,150,418,225 1,220,679,173" 1,335,870,245 1,430,330,619'" 1,517,571,668 Net position - end ofyear $1,209,912,192'" $1,335,870,245 $1,435,420,240 $1,517,571,668 $1,577,266,173 • See accompanying notes to financial statements. In addition, the terminology in this table has been revised to comply with the University's implementation of GASB 63 for the fiscal year ending December 31, 2013. See "ACCOUNTING AND FINANCIAL INFORMATION - Accounting" herein. " As discussed in Note 2 ofthe University's 2011 financial statements, the University revised its 2010 financial statements to correct for an error in the deferral of certain scholarship and fellowship expenses as well as the calculation for tuition discounting. In connection with that revision, the University adjusted its 20 IO net assets (referenced in current financial statements as "net position") - beginning of year upward by $10,766,981. Although 2010 beginning net assets were revised, the changes affecting the 2009 activity has not been reflected in the financial information presented. "' As discussed in Note 2 of the University's 2013 financial statements, the University revised its 2012 financial statements for the adoption of GASB Statements No. 63 and No. 65 . In connection with that revision, the University adjusted its 2012 m;:t position - beginning of year downward by $5,089,621. Although 2012 beginning net position was revised, the changes affecting the 2011 activity has not been reflected in the financial information presented. 30 RETIREMENT PLANS All eligible employees of the University are members of the Teachers Retirement System of Alabama (the "System"). The System was established in 1941 and at this time covers public school and public college teachers and certain other public educational employees in the State. The System provides retirement, disability and death benefits, and the benefits are available to members at varying times during their creditable service. In 2012, the Alabama legislature created a new defined benefit plan for employees hired on or after January 1, 2013, with no previous creditable service ("Tier 2 participants"). Employees hired or with creditable service prior to January 1, 2013 are "Tier 1 participants". Tier 1 participants are required to contribute 7 .5% of their salary to the System, and Tier 2 participants are required to contribute 6.0% of their salary. The University is required to contribute the remaining amounts necessary to fund the actuarially determined contributions to ensure sufficient assets will be available to the System to pay benefits when due. The University is current in its required annual contributions to the System. For more detailed discussion of the System and other benefits provided by the University, See "APPENDIX B - 2013 Financial Report of the University - Notes 12 and 13 - Required Supplemental Information." TAX MATTERS General In the opinion of Bond Counsel, under existing law, interest on the Series 2014-A Bonds will be excludable from gross income for federal income tax purposes if the University complies with all requirements of the Internal Revenue Code of 1986 (the "Internal Revenue Code") that must be satisfied subsequent to the issuance of the Series 2014-A Bonds in order that interest thereon be and remain excludable from gross income. Failure to comply with certain of such requirements could cause the interest on the Series 2014-A Bonds to be included in gross income, retroactive to the date of issuance of the Series 2014-A Bonds. The University has covenanted to comply with all such requirements. Bond Counsel is also of the opinion that, under existing law, interest on the Series 2014-A Bonds will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that for the purpose of computing the alternative minimum use tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings.