KENTUCKY STATE UNIVERSITY MANAGEMENT'S DISCUSSION AND ANALYSIS June 30, 2017
Liabilities and Deferred Inflows: As of June 30, 2017, total liabilities and deferred inflows amounted to $127.3 million. Net pension liabilities amounted to $98.1 million. The University's proportion of the net pension liability of the Kentucky Employees Retirement System and the Kentucky Teachers' Retirement System was based on a projection of the University's long-term share of contributions to the pension plans relative to the projected contributions of all participating universities, actuarially determined. Long-term debt includes bonds payable for housing and dining system and energy-related equipment and technology equipment purchased under a Master Lease Agreement. During the year, total liabilities and deferred inflows increased by $8.9 million, primarily due to increases in the net pension liability and deferred inflows of resources related to pension funding.
Net Position: Net position of the University was $8.7 million at June 30, 2017 and was reported in three net position categories: invested in capital assets, net of related debt $72.7 million, restricted nonexpendable $8.7 million, and unrestricted $(72.7) million.
Statement of Revenues, Expenses and Changes in Net Position
The Statement of Revenues, Expenses and Changes in Net Position is prepared on the accrual basis of accounting, whereby revenues and assets are recognized when the service is provided and expenses and liabilities are recognized when others provide the service, regardless of when cash is exchanged. All items that increase or decrease net position must appear on the Statement of Revenues, Expenses and Changes in Net Position as revenues, expenses, gains or losses.
Financial activities are reported as either operating or non-operating. GASB Statement No. 35 requires state appropriations, gifts, investment income and endowment income to be classified as non-operating revenues. Accordingly, the University reports an operating loss prior to the addition of non-operating revenues. The utilization of long-lived capital assets is reflected in the financial statements as depreciation, which amortizes the cost of an asset over its expected useful life. Tuition revenue is reduced by gift scholarships and institutional aid, and is reported net of scholarship allowances in the financial statements. A summarized comparison of the University's revenues, expenses and changes in net position for the years ended June 30, 2017 and June 30, 2016 is as follows.
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