Boston College
Financial Statements
May 31, 2009 and 2008
Boston College
Index
May 31, 2009 and 2008
Page(s)
Report of Independent Auditors ................................................................................................................ 1
Financial Statements
Statement of Financial Position..................................................................................................................... 2
Statement of Activities................................................................................................................................... 3
Statement of Cash Flows .............................................................................................................................. 4
Notes to Financial Statements ................................................................................................................. 5-15
PricewaterhouseCoopers LLP
125 High Street
Boston, MA 02110-1707
Telephone (617) 530 5000
Facsimile (617) 530 5001
www.pwc.com
Report of Independent Auditors
To the Trustees of
Boston College
In our opinion, the accompanying statement of financial position and the related statements of activities
and cash flows present fairly, in all material respects, the financial position of Boston College at
May 31, 2009, and the changes in its net assets and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of Boston College's management. Our responsibility is to
express an opinion on these financial statements based on our audit. The prior year summarized
comparative information has been derived from Boston College's 2008 financial statements, and in our
report dated September 8, 2008, we expressed an unqualified opinion on those financial statements.
We conducted our audit of these statements in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
September 14, 2009
1
Boston College
Statement of Financial Position
As of May 31, 2009
(with summarized financial information as of May 31, 2008)
(in thousands)
2009
Assets
Short-term investments
Accounts receivable, net (Note B)
Contributions receivable, net (Note C)
Notes receivable, net (Note B)
Investments (Note D)
Funds held by trustees (Note D)
Other assets
Property, plant and equipment, net (Note F)
$
Total assets
Liabilities
Accounts payable
Accrued liabilities
Deposits payable and deferred revenues
Bonds and mortgages payable (Note G)
U.S. Government loan advances
Total liabilities
Net Assets
Unrestricted (Note H)
Temporarily restricted (Note H)
Permanently restricted (Note H)
Total net assets
Total liabilities and net assets
10,203
24,199
221,411
43,803
1,518,508
31,894
10,994
1,037,488
$
9,039
26,008
150,261
43,902
1,916,938
44,402
11,170
951,333
$ 2,898,500
$ 3,153,053
$
$
5,390
126,780
42,202
679,436
34,461
5,281
123,800
46,805
614,302
34,216
888,269
824,404
1,086,134
289,613
634,484
1,330,763
442,442
555,444
2,010,231
2,328,649
$ 2,898,500
$ 3,153,053
The accompanying notes are an integral part of these financial statements.
2
2008
Boston College
Statement of Activities
Year Ended May 31, 2009
(with summarized financial information for the year ended May 31, 2008)
(in thousands)
Unrestricted
Operating
Revenues and other support
Tuition and fees before student aid
Auxiliary enterprises before student aid
Sponsored research and training programs
Government financial aid programs
Sales and services
Other revenues
Nonoperating assets utilized or released from
restrictions for operations
$
Temporarily
Restricted
Permanently
Restricted
455,096
145,232
50,297
5,046
4,835
9,669
2009
Total
$
2008
Total
455,096
145,232
50,297
5,046
4,835
9,669
$
425,480
146,096
46,703
5,239
4,867
8,756
67,331
67,331
73,586
737,506
737,506
710,727
Student aid applicable to tuition and fees
Student aid applicable to auxiliary enterprises
(112,615)
(3,873)
(112,615)
(3,873)
(106,055)
(3,988)
Net revenues
621,018
621,018
600,684
226,601
54,294
33,986
43,745
2,241
111,657
148,392
226,601
54,294
33,986
43,745
2,241
111,657
148,392
217,434
48,362
31,443
41,309
2,704
103,912
155,423
620,916
620,916
600,587
102
102
97
Total revenues and other support
before student aid
Expenses
Instruction
Academic support
Research
Student services
Public service
General administration
Auxiliary enterprises
Total expenses
Increase in net assets from operating activities
Nonoperating
Contributions
Realized and unrealized investment (losses)/gains, net
Investment income, net
Other gains or losses
Debt extinguishment charges (Note G)
Nonoperating assets utilized or released from restrictions
for operations
Net assets reclassified or released from restrictions
6,265
(218,814)
4,132
13,077
(104)
$
65,339
(176,017)
653
(6,616)
-
$
79,213
(13,535)
86
(4,868)
-
150,817
(408,366)
4,871
1,593
(104)
103,231
58,198
10,177
(2,734)
(2,087)
(25,847)
(23,440)
(41,484)
5,296
18,144
(67,331)
-
(73,586)
-
Increase/(decrease) in net assets from
nonoperating activities
(244,731)
(152,829)
79,040
(318,520)
93,199
Total increase/(decrease) in net assets
(244,629)
(152,829)
79,040
(318,418)
442,442
555,444
Net assets, beginning of year
Net assets, end of year
1,330,763
$
1,086,134
$
289,613
$
634,484
$
2,010,231
The accompanying notes are an integral part of these financial statements.
3
93,296
2,328,649
2,235,353
$
2,328,649
Boston College
Statement of Cash Flows
Year Ended May 31, 2009
(with summarized financial information for the year ended May 31, 2008)
(in thousands)
2009
Cash flows from operating activities
Total (decrease) increase in net assets
Adjustments to reconcile change in net assets to short-term
investments provided by (used in) operating activities
Depreciation, amortization and accretion
Net (gain) on retirement or disposal of fixed assets
Contributions of property and equipment
Loan cancellations
Contributed securities
Realized and unrealized investment losses (gains), net
Debt extinguishment charges
U.S. Government loan advances
Change in assets and liabilities
Accounts receivable, net
Contributions receivable, net
Accounts payable and accrued liabilities
Deposits payable and deferred revenue
Other assets
Contributions to be used for long-term investment
$ (318,418)
Net short-term investments provided by (used in) operating activities
Cash flows from investing activities
Proceeds from sales of investments
Purchases of investments
Student loans granted
Student loans collected
Purchases of property, plant and equipment
Change in funds held by trustees
2008
$
93,296
46,413
(13,045)
(1,014)
1,057
(5,102)
408,366
104
-
43,723
(124)
(155)
947
(11,751)
(58,198)
2,087
(1,430)
1,809
(71,150)
4,081
(4,603)
72
(42,030)
(6,159)
(19,806)
8,586
(13,473)
(4,723)
(54,437)
6,540
(21,617)
623,839
(628,673)
(5,299)
4,341
(119,822)
12,508
709,644
(681,998)
(6,313)
4,636
(120,688)
(25,305)
(113,106)
(120,024)
132,053
(54,470)
(8,179)
(3,949)
245
42,030
326,384
(145,000)
(79,365)
(8,849)
(4,000)
105
54,437
107,730
143,712
Net change in short-term investments
1,164
2,071
Short-term investments, beginning of year
9,039
6,968
Net short-term investments (used in) investing activities
Cash flows from financing activities
Net proceeds from issuance of debt and line of credit
Payment to refinance bonds payable
Repayment of debt and line of credit
Payment of bonds and mortgages payable
Prepayment of debt
Change in U.S. Government loan advances
Contributions to be used for long-term investment
Net short-term investments provided by financing activities
Short-term investments, end of year
Supplemental data
Interest paid
Asset retirement obligations recognized
Net fixed asset recognized related to asset retirement obligation
Contributed securities
$
10,203
$
9,039
$
27,967
409
155
5,102
$
25,813
777
920
11,751
The accompanying notes are an integral part of these financial statements.
4
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
A.
Accounting Policies
The significant accounting policies followed by Boston College (the "University") are set forth below
and in other sections of these notes.
Basis of Presentation
The accompanying financial statements have been prepared on the accrual basis with net assets,
revenues, expenses, gains, and losses classified into three categories based on the existence or
absence of externally imposed restrictions. The net assets of the University are classified and
defined as follows:
Unrestricted
Net assets that are not subject to donor-imposed stipulations. Unrestricted net assets may be
designated for specific purposes by action of the Board of Trustees.
Temporarily Restricted
Net assets whose use is limited by law or donor-imposed stipulations that will either expire with the
passage of time or be fulfilled or removed by actions of the University.
Permanently Restricted
Reflects the historical value of contributions (and in certain circumstances investment returns from
those contributions), subject to donor-imposed stipulations, which require the corpus to be invested
in perpetuity to produce income for general or specific purposes.
Revenues are reported as increases in unrestricted net assets unless use of the related assets is
limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net
assets. Realized and unrealized gains and losses on investments are reported as increases or
decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by
law.
Nonoperating Activity
Nonoperating activity includes all contributions, investment income, gains and losses on
investments, gains and losses on postretirement healthcare benefits, unfulfilled promises to give,
gains on sale of property and debt extinguishment charges. All other activity is classified as
operating revenue or expense.
To the extent contributions, investment income, and gains are used for operations, they are
reclassified as "nonoperating assets utilized or released from restrictions for operations."
Expirations of temporary restrictions on net assets or other clarifications from donors are presented
as "net assets reclassified or released from restrictions."
Contributions
Contributions, including unconditional promises to give, are recognized as unrestricted, temporarily
restricted, or permanently restricted revenues in the year received. Contributions receivable are
recorded at the present value of expected future cash flows, net of an allowance for estimated
unfulfilled promises to give. Conditional promises to give are not recognized until the conditions on
which they depend are substantially met. Contributions of noncash assets are recorded at fair
market value.
5
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
Contributions and investment return with donor-imposed restrictions, which are reported as
temporarily restricted revenues, are released to unrestricted net assets when an expense is
incurred that satisfies the restriction.
Contributions restricted for the purchase of property, plant and equipment are reported as
nonoperating temporarily restricted revenues and are released to unrestricted net assets upon
acquisition of the assets or when the asset is placed into service.
Contributions received for which the designation is pending by the donor are classified as
temporarily restricted net assets. Once a designation is made by the donor, the contributions are
reclassified to the appropriate net asset category as part of "net assets reclassified or released
from restrictions."
Sponsored Activities
Revenues associated with research and other contracts and grants are recognized when related
costs are incurred. Facilities and administrative cost recovery on U.S. Government contracts and
grants is based upon a predetermined negotiated rate and is recorded as unrestricted revenue.
Fundraising Activities
Expenses incurred in carrying out the fundraising activities of the University, which amounted to
$18,901,000 and $17,214,000 for the years ended May 31, 2009 and 2008, respectively, are
included primarily in the general administration expense category on the statement of activities.
Short-Term Investments
Short-term investments consist of cash and cash equivalents, operating funds deposited in cash
management accounts, and other investments with maturities at the time of purchase of 90 days or
less, and are carried at market value. Cash and cash equivalents held in the investment portfolio
are excluded from short-term investments.
Split-Interest Agreements
The University has split-interest agreements consisting primarily of charitable gift annuities, pooled
income funds, and charitable remainder trusts. Split-interest agreements which are included in
investments amount to $17,336,000 and $19,472,000 as of May 31, 2009 and 2008, respectively.
Contributions are recognized at the date the trusts are established net of a liability for the present
value of the estimated future cash outflows to beneficiaries. The present value of payments is
discounted with rates that range from 2.42% to 9.61%. The liability of $8,044,000 and $8,334,000
as of May 31, 2009 and 2008, respectively, is adjusted during the term of the agreement for
changes in actuarial assumptions.
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting
principles (GAAP) in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
Income Taxes
The University is a qualified tax-exempt organization under section 501(c)(3) of the Internal
Revenue Code.
6
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
Prior Year Summarized Information
The financial statements include certain prior year summarized comparative information, but do not
include sufficient detail to constitute a presentation in conformity with GAAP. Accordingly, such
information should be read in conjunction with the University's audited financial statements for the
year ended May 31, 2008, from which the summarized information was derived. Certain amounts
in the financial statements for 2008 have been adjusted to reflect the Weston Jesuit School of
Theology affiliation (Note L).
B.
Accounts and Notes Receivable
Accounts receivable and notes receivable are stated net of allowances for doubtful accounts. As of
May 31, 2009 and 2008 the allowance related to accounts receivable is $901,000 and $1,293,000,
respectively.
As of May 31, 2009 and 2008, the allowance related to notes receivable is $650,000. Notes
receivable are principally amounts due from students under U.S. Government sponsored loan
programs, which are subject to significant restrictions. Accordingly, it is not practicable to
determine the fair value of such amounts.
C.
Contributions Receivable
Contributions receivable are summarized as follows as of May 31:
(in thousands)
2009
Unconditional promises scheduled to be collected in:
Less than one year
Between one year and five years
More than five years
Less discount and allowance for unfulfilled promises to give
Contributions receivable, net
2008
$
63,291
147,931
55,230
(45,041)
$
53,664
92,072
38,544
(34,019)
$
221,411
$
150,261
A present value discount of $28,224,000 and $16,543,000 as of May 31, 2009 and 2008,
respectively, has been calculated using discount factors that approximate the risk and expected
timing of future contribution payments.
Effective June 1, 2008 the University adopted Statement of Financial Accounting Standards
(SFAS) No. 157, Fair Value Measurements. The University has reflected contributions received
during fiscal 2009 at fair value as determined in accordance with SFAS No.157.
Conditional promises of $9,474,000 and $9,652,000 as of May 31, 2009 and 2008, respectively,
are not recorded in the financial statements.
D.
Investments
Investments are stated at fair value and include accrued income. The value of publicly traded
securities is based upon quoted market prices and net asset values. Other securities, for which no
such quotations or valuations are readily available, are carried at fair value as estimated by
management using values provided by external investment managers or appraisers. The
University believes that these valuations are a reasonable estimate of fair value as of May 31, 2009
and 2008, but are subject to uncertainty and, therefore, may differ from the value that would have
been used had a ready market for the investments existed.
7
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
Included in the investment balances and investment return amounts, which follow, are funds held
by trustees consisting principally of investments in United States Government obligations. These
funds are maintained by the University to meet the requirements of certain licensing, secured note,
and bond agreements, and as of May 31, 2009, include $10,765,000 of construction funds held by
trustees associated with the Boston College Series P and Series Q bond issues that will be drawn
down to fund various construction projects.
Investments, including funds held by trustees, consist of the following as of May 31:
(in thousands)
2009
Cost
Money market funds
Fixed income
Equities
Real estate
Total
$
2008
Market
82,838
234,062
1,061,093
134,323
$ 1,512,316
$
82,320
257,028
1,091,131
119,923
$ 1,550,402
Cost
$
102,297
197,203
1,115,993
126,652
$ 1,542,145
Market
$
102,297
213,855
1,500,090
145,098
$ 1,961,340
SFAS No. 157 establishes a three level hierarchy of valuation inputs based on the extent to which
the inputs are observable in the marketplace. Levels I and II are considered observable and Level
III is considered unobservable. The University's investments included in Level III primarily consist
of alternative investments (principally limited partnership interests). The fair values of limited
partnerships are represented by the net asset value of the partnership.
The following table presents the financial instruments carried at fair value as of May 31, 2009
grouped by the SFAS No. 157 valuation hierarchy.
(in thousands)
Level I
Money market funds
Fixed income
Equities
Real estate
Total investments, fair value
Level III
Total
$
78,393
173,788
494,664
6,200
$
3,927
83,240
596,467
113,723
$
82,320
257,028
1,091,131
119,923
$
753,045
$
797,357
$ 1,550,402
The following table is a rollforward of investments classified by the University within Level III as
defined previously:
(in thousands)
Fair value, June 1, 2008
Investment income, net
Realized and unrealized gains (losses), net
Purchases and sales, net
Fair value, May 31, 2009
8
$
907,980
(5,961)
(160,844)
56,182
$
797,357
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
The University recognized net realized and unrealized losses of $408,366,000 and investment
income of $4,871,000, net of investment advisory fees of $11,337,000, for the year ended May 31,
2009.
The University is committed to invest up to an additional $194,000,000 in private equity
investments as of May 31, 2009.
E.
Endowment
The net assets associated with endowment funds are classified, in accordance with relevant state
law as interpreted by the Board of Trustees, as unrestricted, temporarily restricted, and
permanently restricted based on the existence or absence of donor-imposed restrictions.
Unrestricted net assets include Board-designated funds, and any accumulated income and
appreciation thereon. Temporarily restricted net assets include contributions not yet designated by
donors and accumulated appreciation on temporarily and permanently restricted funds.
Permanently restricted net assets include contributions designated by donors to be invested in
perpetuity to produce income for general or specific purposes.
In August 2008, the Financial Accounting Standards Board issued Staff Position 117-1,
Endowments of Not-for-Profit Organizations, which requires the University to disclose certain
information about its endowment including net asset classification, composition, spending policies,
and related investment policies. The University has an endowment spending policy, as approved
by the University's Board of Trustees, which aims to preserve the purchasing power of the
endowment. Under this policy, 5% of a three-year quarterly moving average of market values can
be expended for operations. The long-term performance objective of the Endowment portfolio is to
attain an average annual total return that exceeds the University's spending rate plus inflation
within acceptable levels of risk over a full market cycle. To achieve its long-term rate of return
objectives, the University relies on a total return strategy in which investment returns are achieved
through both capital appreciation and current yield.
As of May 31, 2009 the market value attributable to certain endowment funds was less than the
historical value of the related permanently restricted contribution by an aggregate of $11,287,000.
This has been reflected as a reduction of unrestricted net assets and will be restored to
unrestricted net assets when the market value exceeds historical value. These deficits resulted
from unfavorable market fluctuations.
9
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
F.
Property, Plant and Equipment
The physical plant assets of the University are stated at cost on the date of acquisition or at fair
market or appraised value on the date of donation in the case of contributions. Physical plant
assets consist of the following as of May 31:
(in thousands)
2009
Land and improvements
Buildings
Equipment
Library books
Rare book and art collections
Purchase options
Plant under construction
$
Property, plant and equipment, gross
Accumulated depreciation/amortization
229,967
962,539
179,000
138,162
17,652
2,855
38,242
2008
$
1,568,417
1,450,331
(530,929)
Property, plant and equipment, net
$ 1,037,488
212,194
873,603
178,015
131,040
16,772
2,855
35,852
(498,998)
$
951,333
Annual provisions for depreciation of physical plant assets are computed on a straight-line basis
over the expected useful lives of the individual assets, averaging 20 years for land improvements,
25-60 years for buildings, and 2-15 years for equipment. Depreciation for the years ended May 31,
2009 and 2008 amounted to $43,598,000 and $40,780,000, respectively, and are allocated to
functional expense categories on the statement of activities based on square foot usage
calculations.
Library books are amortized over 50 years. Amortization amounted to $2,763,000 and $2,583,000
for the years ended May 31, 2009 and 2008, respectively. Rare book and art collections are
reflected at historical cost and are not amortized.
Maintenance and repairs are expensed as incurred, and improvements are capitalized. When
assets are retired or disposed of, the cost and accumulated depreciation thereon are removed from
the accounts, and gains or losses are included in the statement of activities. The University retired
or disposed of $18,245,000 and $933,000 in gross plant assets for the years ended May 31, 2009
and 2008, respectively.
Property, plant and equipment additions of $4,670,000 and $5,625,000 included in accounts
payable are reflected as a noncash item in the statement of cash flows for the years ended May 31,
2009 and 2008, respectively.
The University recognized $372,000 and $319,000 of operating expenses relating to the accretion
of liabilities recorded under Financial Accounting Standards Interpretation No. 47, Accounting for
Conditional Asset Retirement Obligations, for the years ended May 31, 2009 and 2008,
respectively. Conditional asset retirement obligations of $7,101,000 and $7,138,000 as of May 31,
2009 and 2008, respectively, are included in accrued liabilities.
The University has commitments of $42,687,000 to complete various construction projects as of
May 31, 2009.
10
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
G.
Bonds and Mortgages Payable
Bonds and mortgages payable consist of the following as of May 31:
(in thousands)
2009
Massachusetts Health and Educational Facilities Authority (MHEFA)
Boston College Issues (fixed rate)
Series K, 5.25 - 5.38%, due 2010 - 2015
Series L, 4.75 - 5.25%, due 2010 - 2032
Series M, 5.00 - 5.50%, due 2023 - 2036
Series N, 4.13 - 5.25%, due 2010 - 2038
Boston College Issue (variable rate)
Series O
Capital Asset Program, Variable Rate Demand Revenue Bonds
Series C
Series D
$
Massachusetts Development Finance Agency (MDFA)
Boston College Issue (fixed rate)
Series P, 4.75 - 5.00%, due 2020-2043
Series Q, 3.00 - 5.00%, due 2011-2030
Department of Education
Library building bonds, 3.41%, due 2010 - 2023
Secured note, 3.00%, due 2010 - 2018
Unsecured notes payable
Bonds and mortgages payable, par
Net unamortized original bond issue premium
Bonds and mortgages payable, net
$
2008
27,510
108,955
134,285
103,340
$
31,330
110,190
134,285
104,895
-
2,500
-
1,293
27,837
176,980
95,695
176,980
-
8,180
1,455
8,610
1,594
-
555
656,400
600,069
23,036
14,233
679,436
$
614,302
The Department of Education building bonds are collateralized by a mortgage on the O'Neill Library
and the secured note is collateralized by funds held by trustees.
As of May 31, 2009, principal payments due on all long-term bonds and mortgages payable are as
follows: 2010 - $6,978,000; 2011 - $11,472,000; 2012 - $12,012,000; 2013 - $12,627,000; 2014 $13,286,000 and thereafter - $600,025,000.
As of May 31, 2009 and 2008, the estimated fair values of bonds and mortgages payable are
$697,938,000 and $621,688,000, respectively. The fair value of bonds and mortgages payable is
based on rates currently available for instruments with similar maturities.
Interest expense for the years ended May 31, 2009 and 2008 amounted to $27,876,000 and
$27,628,000, respectively. Interest expense has been allocated to the functional expense
categories on the statement of activities based on each functional area's corresponding use of the
related space or equipment that was constructed or acquired through debt financing. The
University capitalized interest of $1,760,000 and $1,823,000 for the years ended May 31, 2009 and
2008, respectively.
In December 2008, the University entered into an agreement for a $75,000,000 unsecured line of
credit. There was no balance outstanding on the line of credit as of May 31, 2009.
11
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
In May 2009, the University issued Massachusetts Development Finance Agency (MDFA) Series Q
Revenue Bonds in the amount of $95,695,000. The proceeds from this issue were used to retire
outstanding debt, finance the acquisition of property located in Brighton, MA and fund project costs.
The University recognized a debt extinguishment charge of $104,000 and incurred costs of
$788,000 associated with this issue which have been capitalized and are being amortized over the
life of the bonds. The MDFA Series Q Revenue Bonds were issued with an original issue premium
of $9,123,000, which is being amortized over the life of the bonds.
In fiscal 2008, the University issued $176,980,000 of MDFA Series P Revenue Bonds and
converted $145,000,000 of variable rate MHEFA Series M Revenue Bonds to $134,285,000 of
fixed rate revenue bonds. The proceeds from the MDFA Series P issue were used to retire certain
outstanding debt, partially refinance an acquisition of property, and fund project costs. The
University recognized total debt extinguishment charges of $2,087,000 which have been reflected
in the statement of activities.
H.
Net Assets
Net assets consist of the following as of May 31:
(in thousands)
Unrestricted
2009
2008
Endowment net assets,
beginning of year
Board designated
Donor restricted
Contributions
Investment return
Investment income
Net appreciation (depreciation)
Total investment return
Appropriation of endowed assets
for expenditure
Net assets reclassified or released
from restrictions
Other losses
908,737
-
$
916,222
-
$ 385,620
8,396
$
379,539
23,277
$
555,444
79,213
$
479,892
50,708
42
(211,704)
474
24,694
556
(176,153)
663
22,195
86
(13,535)
86
15,311
(211,662)
25,168
(175,597)
22,858
(13,449)
15,397
(41,801)
(38,051)
(36,955)
(31,164)
4,666
(6)
5,533
(135)
18,900
(3,624)
(8,643)
(247)
-
-
18,144
(4,868)
10,816
(1,369)
Endowment net assets, end of year
659,934
908,737
196,740
385,620
634,484
555,444
Designated for specific purposes
Net investment in plant
Program support
Contributions for plant assets
Student loans
58,518
367,682
-
61,350
360,676
-
30,913
61,002
958
27,666
28,239
917
-
-
$ 1,086,134
$ 1,330,763
$ 289,613
Total net assets
I.
$
Donor Restricted
Temporarily Restricted
Permanently Restricted
2009
2008
2009
2008
$
442,442
$
634,484
$
555,444
Retirement Programs
All eligible full-time personnel may elect to participate in a defined contribution retirement program.
Under the program, the University makes contributions, currently limited to 8-10% of the annual
wages of participants, up to defined limits. Voluntary contributions by participants are made
subject to IRS limitations. The limitation applicable to University contributions is on a combined
plan basis. For the years ended May 31, 2009 and 2008, the University's contributions to the
retirement program were $19,485,000 and $18,369,000 respectively.
12
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
The University provides certain health care benefits for retired employees who meet certain age
and service requirements. Employees will become eligible for this benefit if they reach retirement
while employed by the University. The plan does not hold assets and is funded as benefits are
paid. The estimated future cost of providing postretirement health care benefits is recognized on
an accrual basis over the period of service during which benefits are earned.
The University adopted SFAS No. 158, Employers' Accounting for Defined Benefit Pension and
Other Postretirement Plans in fiscal 2008. The impact of SFAS No. 158 is recorded on the
statement of activities in other gains or losses.
In May 2009, the University announced a plan amendment under which contributions for future
retirees will be based on a designated plan. The net impact of the change was a decrease in the
benefit obligation of $4,120,000.
The net periodic postretirement health care benefit cost and other changes in plan assets and
benefit obligation recognized in unrestricted net assets were determined as follows for the years
ended May 31:
(in thousands)
2009
Service cost
Interest cost
Amortization of prior service cost
Amortization of loss
$
Net periodic postretirement benefit cost
Adoption of SFAS No. 158
Prior service cost related to plan amendment
Net loss
Amortization of prior service cost
Amortization of loss
Other changes in plan assets and benefit obligation
Total recognized in net periodic benefit cost and
unrestricted net assets
$
2008
2,333
3,012
(499)
139
$
1,966
2,410
(499)
-
4,985
3,877
-
457
(4,120)
3,165
499
(139)
*
*
*
*
(595)
*
4,390
$
4,334
*With the adoption of SFAS No. 158 in fiscal 2008, certain information is not applicable.
In fiscal 2010, the prior service cost credit of $(1,050,000) and unrecognized net loss of $120,000
are expected to be amortized as a component of net periodic postretirement benefit cost.
For measurement purposes, the assumed annual rates of increase for the year ending May 31,
2010 were; 7.75% in the per capita cost of covered health care benefits for post-65 benefits, 8.25%
in the per capita cost of covered health care benefits for pre-65 benefits, and 7.25% in the
Medicare Part D subsidy integration threshold. All three rates were assumed to decrease gradually
to 5.00% in 2015 and remain at that level thereafter.
13
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
A one percentage point change in the assumed health care cost trend rates would have the
following effect:
(in thousands)
Increase
Effect on total of service and interest cost components
Effect on postretirement benefit obligation
$
921
6,067
Decrease
$
(752)
(5,104)
The discount rate used to determine the accumulated benefit obligation is 6.50% as of May 31,
2009 and 2008. The discount rate used to determine the net periodic postretirement benefit cost is
6.50% and 6.25% as of May 31, 2009 and 2008, respectively.
A reconciliation of the accumulated postretirement benefit obligation and plan assets are as follows
as of May 31:
(in thousands)
2009
Reconciliation of accumulated postretirement
benefit obligation
Benefit obligation, beginning of year
Service cost
Interest cost
Plan participant contributions
Actuarial (gain) loss
Benefits paid
Plan amendment
2008
$
43,919
2,333
3,012
286
3,165
(2,039)
(4,120)
$
43,848
1,966
2,410
218
(2,741)
(1,782)
-
Benefit obligation, end of year
$
46,556
$
43,919
Amounts recognized in statement of financial position
consist of
Accrued liabilities
$
46,556
$
43,919
$
(5,982)
5,844
$
(2,361)
2,818
$
(138)
$
Amounts recognized in unrestricted net assets consist of
Prior service cost
Net actuarial loss
457
Expected benefit payments, net of participant contributions and expected Medicare retiree drug
subsidy is as follows: 2010 - $2,043,000; 2011 - $2,389,000; 2012 - $2,585,000; 2013 $2,766,000; 2014 - $2,968,000; and the five fiscal years thereafter - $17,672,000. The expected
Medicare retiree drug subsidy is as follows: 2010 - $384,000; 2011 - $232,000; 2012 - $234,000;
2013 - $233,000; 2014 - $230,000; and the five fiscal years thereafter - $1,060,000.
14
Boston College
Notes to Financial Statements
May 31, 2009 and 2008
J.
Related Party
Boston College Ireland, Ltd. ("BCI") is a nonprofit entity established as an institute of education in
the Republic of Ireland. The University has an investment in the real estate used by BCI for
educational and rental purposes. The value of the investment as of May 31, 2009 and 2008
amounted to $4,077,000 and $10,203,000, respectively, and is included in the University's real
estate investments.
The University has mortgages, loans and notes due from various related parties of $23,320,000
and $20,815,000 as of May 31, 2009 and 2008, respectively.
K.
Commitments and Contingencies
The University has several legal cases pending that have arisen in the normal course of its
operations. The University believes that the outcome of these cases will have no material adverse
effect on the financial position of the University.
The University leases facilities and campus transportation under various operating lease
agreements, the last of which expires in 2020. The University incurred operating lease expenses
of $4,852,000 and $4,928,000 for the years ended May 31, 2009 and 2008, respectively. At
May 31, 2009, the minimum aggregate commitments for all current operating leases are as follows:
2010 - $4,807,000; 2011 - $4,876,000; 2012 - $4,952,000; 2013 - $1,021,000; 2014 - $400,000
and thereafter - $1,857,000.
L.
Affiliation
The University entered into an affiliation agreement with the Weston College Corporation. Under
this agreement, the Weston Jesuit School of Theology (WJST) became affiliated with the University
effective June 1, 2008. As a result of the affiliation the assets, liabilities and net assets of WJST
totaling $27,335,000, $977,000 and $26,358,000 as of June 1, 2008, respectively, were transferred
to the University. The fiscal 2008 summarized financial information was adjusted to reflect the
pooling of interest method of accounting. The affiliation agreement did not result in any changes in
fiscal year end or accounting practices which would have required an adjustment to net assets.
15