Note 10 – Other Liabilities
Table 10.1 details other liabilities as of June 30, 2018 and 2017.
Table 10.1. Other Liabilities (in thousands)
|Type||Total||Current Portion||Total||Current Portion|
|Construction contract retainage||9,609||9,607||12,880||12,880|
|Funds held for others||17,729||17,729||16,511||16,511|
|Federal Perkins loan||20,341||2,781||-||-|
|Total Other Liabilities||$||79,845||47,525||60,617||46,575|
RISK FINANCING-RELATED LIABILITIES
The University is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; medical malpractice; employee occupational injuries; graduate medical students’ health; and natural disasters. The University finances these risks through various self-insurance programs. The University finances the cost and risks associated with employee health benefit programs through the Trust, a related organization as discussed in Note 18 to the financial statements. Under the terms of the Trust, the University is self-insured for medical claims beginning July 1, 2010. However, the risk of loss has been transferred to the Trust. Therefore, no liability was reported as of June 30, 2018 or 2017 for unpaid claims.
The University utilizes a protected self-insurance program for its property, liability, and workers’ compensation risks. The University has established a separate self-insurance program for the purpose of providing professional liability coverage for the CU Denver | Anschutz Medical Campus and UCH. A separate self-insurance program has also been established to provide health insurance for graduate medical students and eligible dependents at CU Anschutz.
All self-insurance programs assume losses up to certain limits and purchase a defined amount of excess insurance for losses over those limits. These limits range from $325,000 to $1,500,000 per occurrence.
Reserves for unpaid claims under these programs are actuarially reviewed and evaluated for adequacy each year. The Property, General Liability, and Workers’ Compensation reserve of $16,769,000 and the Graduate Medical Student Health Benefits reserve of $2,689,000 are reported on an undiscounted basis, and the CU Denver | Anschutz Medical Campus Professional Liability reserve of $9,767,000 is reported at a discount basis using 4 percent. Settlements have not exceeded coverages for each of the past three fiscal years. There were no significant reductions or changes in insurance coverage from the prior year.
The amount recorded as risk financing-related liabilities represents reserves based upon the annual actuarial valuation and includes reserves for incurred but not reported claims. Such liabilities depend on many factors, including claims history, inflation, damage awards, investment return, and changes in legal doctrine. Accordingly, computation of the claims liabilities requires an annual estimation process. Claims liabilities are reevaluated on a periodic basis and take into consideration recently settled claims, frequency of claims, and other relevant factors.
Changes in the balances of risk financing-related liabilities for the years ended June 30, 2018 and 2017 are presented in Table 10.2.
Table 10.2. Risk Financing-related Liabilities (in thousands)
|Property, General Liability, and Workers’ Compensation||Professional Liability||Graduate Medical Student Health Benefits||Total|
|Balance as of June 30, 2016||$||16,727||11,469||1,666||29,862|
|Fiscal Year 2017:|
|Claims and changes in estimates||7,389||1,006||10,356||18,751|
|Balance as of June 30, 2017||$||16,120||9,429||2,308||27,857|
|Fiscal Year 2018:|
|Claims and changes in estimates||7,912||1,450||13,013||22,375|
|Balance as of June 30, 2018||$||16,769||9,767||2,689||29,225|
The University participates in two student lending programs operated by the federal government, Direct Student Loan and the State School as Lender. These programs enable eligible students or parents to obtain a loan to pay for the student’s cost of attendance directly through the University rather than through a private lender. The University is responsible for handling the complete loan process, including funds management as well as promissory note functions.
For the Direct Lending program, the University is not responsible for collection of these loans or for defaults by borrowers; therefore, these loans are not recognized as receivables in the accompanying financial statements. Direct lending activity during the years ended June 30, 2018 and 2017 was $397,016,000 and $386,128,000, respectively.
FEDERAL PERKINS LOANS
The Federal Perkins Loan program, which provided low-interest loans to college students with exceptional financial need, expired on September 30, 2017. The United States Department of Education (ED) will require an initial distribution of assets from the University’s Perkins Fund for the 2018-2019 Award Year. Beginning with the 2019-2020 Award Year and for all subsequent award years, ED will require a capital distribution from the University’s Perkins Fund on an annual basis for institutions that continue participating in the Perkins Loan Program. Institutions, such as the University, must return to ED the federal share of the institution’s Perkins Fund.
As permitted by GAAP, the University historically recorded the federal share of the Perkins Fund in restricted net position. With the expiration of the Perkins Loan Program, the University is required, beginning in Fiscal Year 2018, to reflect the federal share as a liability. Therefore, the University recorded a liability of $20,341,000 and a related expense of the same amount (included in Nonoperating Revenue, Net on the Statement of Revenues, Expenses and Changes in Net Position) in the Fiscal Year 2018 financial statements.
© Office of University Controller 2018