NOTES TO THE FINANCIAL STATEMENT

Basis of Presentation
The financial statements included in this annual report present the combined activities of the Los Angeles campus of the University of California.

The accounts of the Los Angeles campus are subject to limited scope procedures as a part of the annual audit of the financial statements of the entire University of California system by the certified public accounting firm of PricewaterhouseCoopers. The financial statements for the Los Angeles campus have not been individually audited.

Basis of Accounting
To ensure observance of limitations and restrictions placed on the use of available resources, the accounts are maintained in accordance with the principles of fund accounting, under standards prescribed by the American Institute of Certified Public Accountants and the National Association of College and University Business Officers. These standards require that financial transactions be recorded within separate funds and that similar funds be grouped into fund groups for purposes of accounting and reporting. These fund groups are Current Funds, Loan Funds, Plant Funds, and Endowment and Similar Funds.

The financial statements are prepared on the accrual basis, except that depreciation is not provided for educational plant and equipment. In addition, certain accruals and deferrals, such as interest receivable on notes receivable in loan funds and accrued interest payable on plant-fund borrowing, are omitted. The inclusion of such amounts would not have a significant effect on the financial statements. Accrued compensated absences are reflected in the accompanying financial statements.

Revenues and other additions, expenditures and other deductions, and transfers among funds reported on the statement of changes in fund balances present financial activities related to the current reporting period. The statement does not present the results of operations or the net income or loss for the year, as would a statement of revenues and expenses.

Plant Facilities
Investments in plant and equipment assets are carried at cost, if purchased, or at fair-market value at date of acquisition, if donated. No decline in value has been recorded in the accompanying financial statements for those buildings that sustained damage resulting from the January 17, 1994 Northridge earthquake, as the fair-market value of such plant after damage exceeds the historical cost of the assets.

Gifts and Endowments
Gift pledges of $30.6 million are not included in the financial statements since it is impractical to estimate the net realizable value of pledges or the years in which the payments will be received.

Endowment funds are administered centrally by the Office of the President. Monies are invested by the Treasurer of The Regents and the income transferred to individual campuses annually. A substantial portion of the net assets of the Endowment and Similar Funds participates in a general endowment pool. Each individual fund subscribes to or disposes of units on the basis of the market value per unit at the end of the calendar month within which the transaction takes place. Investments include equities, high-yield equities, bonds and real estate.

Short-Term Investment Pool
All fund groups participate in a temporary investment pool that is administered by the Office of the President. Income earned on investments is distributed based on average investments in the pool. This pool invests primarily in U.S. Treasury securities, commercial paper, and short-term corporate notes with cost approximating market value.

note 1 Reclassification
The financial information shown for 1999 in the accompanying financial statements is included as a basis for comparison with 2000 and represents summarized totals only. Certain 1999 comparative totals have been reclassified in order to conform to classifications used for the year ended June 30, 2000. There was no impact on the net increase or decrease to funds balances.

note 2 Accounts Receivable
Current funds accounts receivable by resources, in thousands of dollars, as of June 30, 2000, are as follows:

note 3 Notes Receivable
Loan funds notes receivable by resources, in thousands of dollars, as of June 30, 2000, are as follows:

Of a total of $65,132,000 of student loan notes outstanding at June 30, 2000, $64,225,000 are in billing status with a private billing service under contract with the University. The remaining $1,907,000 represents loans to students still in school and loans in process of being transferred for billing. The faculty and staff loans are subject to campus collection.

note 4 Investment in Plant
Major plant projects capitalized during the 1999-'00 fiscal year, in thousands of dollars, are as follows:

note 5 Construction in Progress
Plant construction projects, in thousands of dollars, as of June 30, 2000, are summarized below:

note 6 Long-Term Indebtedness
(Plant Fund Group)
(dollars on thousands)

note 7 Separate Incorporated Entities
ASUCLA’s separately audited financial data for the fiscal year ending July 31, 1999 have been included in the financial statements in order to reflect total financial activity of the UCLA campus. ASUCLA conducts activities on the UCLA campus pursuant to the Statement of Understanding of ASUCLA’s Relationships with the University, dated June 28, 1974.

The Theatre Group, Inc., a separately reviewed entity, has been consolidated into the accompanying financial statements.

Contractual Commitments
Amounts authorized but unexpended for construction projects as of June 30, 2000 totaLled $654,239,000.

Obligations under capital leases/installment purchases are included in long-term indebtedness with other borrowings on the accompanying financial statements and are shown here with a projected-interest component. The five-year schedule of future minimum lease payments, in thousands of dollars, is as follows:

Contingencies
Substantial amounts are received and expended by the University under Federal and State grants and are subject to audit by cognizant government agencies. The University is also contingently liable in connection with claims and contracts, including those currently in litigation, arising in the normal course of its activities. The University maintains self-insurance reserves for certain of these claims, including medical-malpractice claims, workers'-compensation claims and various risks. Such risks are subject to various per-claim and aggregate limits, with excess liability coverage provided by an independent insurer.

University management and General Counsel are of the opinion that liabilities arising from such audits or claims will not have a material effect on the University's financial statements.

note 9 The Retirement Plan
The University of California Retirement System included a defined benefit plan (the Retirement Plan), in which eligible employees are required to participate, and a defined contribution plan (which includes the Defined Contribution Plan-Pretax Account and the Defined Contribution Plan-After Tax Account); and the Tax-Deferred 403(b) plan. The Board of Regents is the trustee for all UCRS funds and PERS-Voluntary Early Retirement Incentive Program (PERS-VERIP) plan funds. Accordingly, these funds are separately identified in the University's Annual Financial Report. 

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