KENTUCKY STATE UNIVERSITY Management’s Discussion and Analysis, Continued

June 30, 2011

Financial Highlights, Continued

• The University classifies amounts earned on endowments as spendable or non-spendable in accordance with the endowment's donor stipulations. Nonexpendable restricted net assets represent amounts, which must be maintained in perpetuity. Expendable restricted net assets include endowment earnings that are spendable, consistent with the University's spending policy.
• Operating revenues were $45 million and operating expenditures were $69.1 million, resulting in a loss from operations of $24.1 million. Net non-operating revenues were $34.7 million, including $25.4 million in state appropriations, which, when combined with the loss from operations and capital appropriations, resulted in an overall increase in net assets of $10.6 million.

Using the Financial Statements

The University's Financial Statements consist of three financial statements: a Statement of Net Assets (Balance Sheet); a Statement of Revenues, Expenses and Changes in Net Assets (Income Statement); and a Statement of Cash Flows, along with the accompanying Notes to the Financial Statements. These financial statements are prepared in accordance with Governmental Accounting Standards Board (GASB) Statement No. 35, Basic Financial Statements – and Management's Discussion and Analysis – for Public Colleges and Universities.

Kentucky State University is a component unit of the Commonwealth of Kentucky.

Statements of Net Assets

The Statements of Net Assets present the financial position of the University at the end of the fiscal year and include all assets and liabilities. Net assets, the difference between total assets and total liabilities, are an important indicator of the current financial condition, while the change in net assets is an indicator of whether the overall financial position has improved or worsened during the year.