KENTUCKY STATE UNIVERSITY
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
On July 15, 2010, The Commonwealth of Kentucky adopted the Uniform Prudent Management of Institutional Funds Act (UPMIFA). The Foundation follows UPMIFA and its own governing documents. The Foundation has interpreted UPMIFA as requiring the preservation of the corpus of the donor-restricted endowment funds absent explicit donor stipulations to the contrary, and other amounts as deemed necessary by the board. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (1) the original value of gifts donated to the permanent endowment, (2) the original value of subsequent gifts to the permanent endowment, and (3) accumulations to permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The Foundation has determined that the balance of its endowments includes funds that require that the income and net appreciation be restricted to certain uses for the benefit of participants.
Upon review, the Foundation has determined that appropriate expenditures have been made to meet all donor restrictions regarding balances recorded in the endowment fund.
Spending Policy: The Foundation spending policy is to distribute an amount at least equal to 3-5% of a moving sixteen quarter average of the fair value of the endowment funds. Accordingly, over the long term, the Foundation expects its spending policy to allow its endowment assets to grow at an average rate of 3% annually. This is consistent with the Foundation's objective to maintain the purchasing power of endowment assets as well as to provide additional real growth through investment return.
From time to time, the fair value of assets associated with individual donor restricted endowment funds may fall below the level the donor requires the Foundation to retain as a fund of perpetual duration. There were no such deficiencies as of June 30, 2017.
Endowment net asset composition by type of fund as of June 30, 2017 is as follows:
| Unrestricted | Temporarily Restricted | Permanently Restricted | Total Net Endowment Assets |
|---|
| Donor-restricted endowment funds | $ - | $ 3,981,609 | $ 3,711,724 | $ 7,693,333 |
| Unrestricted | Temporarily Restricted | Permanently Restricted | Total Net Endowment Assets |
|---|
| Endowment net assets, beginning of year | $ - | $ 4,030,448 | $ 3,608,613 | $ 7,639,061 |
|---|
| Contributions | - | - | 105,691 | 105,691 |
|---|
| Interest and dividends | - | 189,039 | - | 189,039 |
|---|
| Realized and unrealized losses | - | 534,754 | - | 534,754 |
|---|
| Amounts appropriated for expenditure | - | (772,632) | - | (772,632) |
|---|
| Reclassifications | - | - | (2,580) | (2,580) |
|---|
| Endowment net assets, end of year | $ - | $ 3,981,609 | $ 3,711,724 | $ 7,693,333 |
|---|
Changes in endowment net assets as of June 30, 2017 are as follows:
44.