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An Introduction to CU’s Financials

A Companion to the 2019 Annual Financial Report

The University of Colorado Annual Financial Report is full of numbers, developed and reviewed by many accountants.

For those of you who do not have an accounting background, the Office of University Controller developed this companion website to help make financial report information easier to understand.

Fiscal Year 2019: CU at a Glance



3rd largest employer in Colorado: 37,000 faculty/staff/student workers

Economic Impact

$12.5 billion

Annual estimated economic impact for Colorado (including hospitals/health services)

Administrative Efficiency


6.9 %

Increase in operating revenues

Research Funding

$1.2 billion

Record level of federal/state/local awards


$2.86 billion

An increase of $80 million


7.3 %

Decrease in operating expenses

Where does CU hold its resources? What are the claims against those resources? In the Annual Financial Report, we find the answers to these questions in the Statements of Net Position, otherwise known as the Balance Sheet.

Balance Sheet

Balance Sheet: Assets

Assets are what we own


CU holds a variety of investments to diversify risk and maintain returns.

Capital Assets

Add capital assets (significant pieces of property) to investments and you now account for over 90% of CU’s assets.

Accounts Receivable

The bulk of CU’s remaining assets are accounts receivable, primarily due from students; federal, state, and private sponsors; and patients.

Balance Sheet: Liabilities

Liabilities are what we owe

Revenue Bonds

Revenue bonds account for about one-third of the University’s liabilities and are payable only from revenue sources specified in the debt agreements. They are normally issued to fund capital improvements.

Accrued Expenses

The vast majority of the University’s accrued expenses (expenses reported in the period in which they occur but for which payment is made in a subsequent period) are salaries and benefits owed in the current year that will be paid in the next year.

Compensated Absences

Compensated absences represent the dollar value of paid time off (primarily vacation) that was earned but not yet used by CU employees.


Other postemployment benefits (OPEB) are benefits (mostly health insurance) provided to individuals after their employment has ended. This liability is reported in the financial statements as the benefits are earned by currently active employees.

Unearned Revenue

This revenue depends on services yet to be provided (mostly research grants and tuition and fees). CU has an obligation to fulfill and that’s why it’s listed as a liability.

Balance Sheet: Deferred Resources

The Billion-Dollar Decrease

The University’s pension liability decreased from $2.2 billion in Fiscal Year 2018 to $1.2 billion in Fiscal Year 2019. Normally, a decrease such as this would mean that cash was disbursed to pay off the liability. However, this is not the case.

So what happened?

Understanding deferred outflows and inflows

Like assets and liabilities, deferred outflows and inflows of resources impact the balance sheet. However, deferred outflows should not be confused with assets and deferred inflows should not be confused with liabilities.

Assets provide some degree of real benefit to the University, for example, cash or investments used to pay expenses or generate income, or buildings and equipment used in day-to-day operations.

Liabilities represent a real claim on the University’s resources, for example, debt used to finance construction, or accounts payable related to goods purchased but not yet paid for.

Deferred outflows of resources impact the Balance Sheet in the same manner as assets – they increase the University’s net position. As a deferred outflow decreases over a number of years, it results in a decrease in net position. Deferred inflows of resources impact the Balance Sheet in the same manner as liabilities – they decrease the University’s net position. As a deferred inflow decreases over a number of years, it results in an increase in net position.

Deferred outflows, however, provide no real benefit … and deferred inflows create no real claim. Rather, they are an accounting tool used in the Income Statement to spread the impact of certain Balance Sheet changes over a number of fiscal years as opposed to reporting that impact in a single fiscal year.

What actually happened was that the funding of the state’s retirement plan changed significantly due to a new law. Accounting rules dictate that the impact of a change in pension liability be spread across multiple years using the deferred outflow/inflow tool. Under these circumstances, the billion-dollar decrease in the Fiscal Year 2019 financial statements shows up on the Balance Sheet as a decrease in the pension liability and an increase in deferred inflows … and shows up on the Income Statement as a decrease in expense.

Balance Sheet: Net Position

Net Position is the difference between the total of assets and deferred outflows and the total of liabilities and deferred inflows.

Net Investment in Capital Assets

CU’s capital asset balance less debt issued to fund those capital assets – this doesn’t reflect spendable reserves.

Net Position Restricted for Nonexpendable Purposes

Endowments received as gifts: only the investment earnings on the gift can be spent and then only on scholarships, endowed chairs, and the like.

Net Position Restricted for Expendable Purposes

Entire gift can be spent, not just the investment earnings. Funds can be spent only in accordance with restrictions established by external third parties.

Unrestricted Net Position

This balance is negative for the University primarily due to the reporting of the Net Pension Liability and OPEB. Negative Unrestricted Net Position among public universities is not uncommon.

Where does CU get its money (revenues)? How does CU use those revenues to operate on a daily basis (expenses)? In the Annual Financial Report, we find the answers to these questions in the Statements of Revenues, Expenses, and Changes in Net Position, otherwise known as the Income Statement.

Income Statement

Operating Revenues and Expenses

Operating revenues are received from what CU does as its primary missions: teach, conduct research, auxiliary enterprises, and health services. Operating expenses are costs incurred in fulfilling its primary missions.

CU’s operations are classified by function – instruction, research, and health services – so you can see where CU is focusing its efforts. These three functional expense areas reflect a direct correlation to the top three revenue sources (tuition; federal, state, and private grants/contracts; and health services).

Nonoperating Revenues and Expenses

Nonoperating revenues and expenses are those amounts that are not directly related to the University’s missions, but are important drivers of its financial results. Major nonoperating revenues are the federal Pell Grant, gifts, and investment income. State appropriations account for only about 5% of CU’s funding.

Major nonoperating expenses are investment losses and interest expense on the University’s outstanding debt. Over the past several years, CU has refinanced much of its outstanding debt. So, while you were refinancing your home loan to save money, CU was doing essentially the same thing!

Other Revenues

The main component of other revenues is capital gifts and grants. These are gifts made by donors to be used only for the construction of buildings or other capital assets. The gifts may also be donations of actual capital property.

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