1. Information from the Chancellor’s Office Chapter 5 Presented by CSU and KPMG, LLP

2. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 2 Revenue Bond Passdown Schedule Rollforward of debt

3. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 3 Revenue Bond Passdown Schedule (cont’d) GAAP passdown entries Current year activities Sectioned by net asset categories Invested in capital assets, net of related debt Restricted expendable debt service Restricted expendable capital projects Unrestricted

4. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 4 Revenue Bond Passdown Schedule (cont’d) GAAP passdown entries (cont’d) Types of entries in invested in capital assets, net of related debt Current year principal payment from debt service transfers from campus Reclassify next year’s principal debt obligation from noncurrent to current

5. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 5 Revenue Bond Passdown Schedule (cont’d) GAAP passdown entries (cont’d) Types of entries in restricted expendable debt service Current year interest expense (may be capitalizable) Current year interest receivable - 4 th quarter SMIF (reverse in following year) Debt service transfers-in from campus Transfer-in of bond proceeds set aside to pay future debt services Investment income Investment income from bond proceeds above (may be capitalizable) Accrued interest payable (reverse in following year) Increase/decrease to investments based on above transactions

6. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 6 Revenue Bond Passdown Schedule (cont’d) GAAP passdown entries (cont’d) Types of entries in restricted expendable debt service (cont’d) Reclassify debt service reserves internally imposed to unrestricted net assets (reverse in following year)

7. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 7 Revenue Bond Passdown Schedule (cont’d) GAAP passdown entries (cont’d) Types of entries in restricted expendable capital projects BAN (Bond Anticipation Note) proceed Interest expense from BAN (may be capitalizable) LT-debt obligation from BAN issuance Accrued interest payable (reverse in following year)

8. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 8 Revenue Bond Passdown Schedule (cont’d) GAAP passdown entries (cont’d) Types of entries in restricted expendable capital projects (cont’d) Current year interest receivable - 4 th quarter SMIF (reverse in following year) Record BAN payoff Transfer-out of bond proceeds set aside to pay future debt services LT-debt obligation from bond issuance Investment income Investment income from unexpended bond proceeds by project (may be capitalizable) Unamortized bond premium/discount Current year amortization Increase/decrease to investments based on above transactions

9. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 9 Revenue Bond Passdown Schedule (cont’d) GAAP passdown entries (cont’d) Types of entries in unrestricted Reclassify debt service reserves internally imposed from restricted expendable debt service net assets (reverse in following year) Centralized campus union maintenance and repair fund 0575 activities

10. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 10 Revenue Bond Passdown Schedule (cont’d) Footnote disclosure - YES, note 7 Interest rate Maturity date Original issue amount Outstanding balance at 6/30 Future principal and interest payments

11. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 11 Additional Schedules Provided by CO SRB Sources and Uses Summary - This schedule supports the revenue bond passdown entries and is used to tie-out the amount transferred to escrow agent on the SCF.

12. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 12 Additional Schedules Provided by CO Interagency Transfer Schedule - This schedule is used to reconcile to the state appropriations revenue, noncapital on the SRECNA (refer to Chapter 4, Section 4-13).

13. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 13 Additional Schedules Provided by CO SWIFT (SystemWide Investment Fund Trust) Rollforward - This schedule is used to prepare the investment section on the SCF and the reconciliation of investment income on the SRECNA from the CSU pooled investments. Investments Held by CO Rollforward Schedule – This schedule is used to tie-out the ending investments held by CO for SCO funds 0576, 0578, and 0575 (for applicable campuses). Please note the ending balance on this schedule is prior to any reclassification entries on the passdown schedules (e.g. entries 2.4, 2.5, 3.5 and 4.4).

14. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 14 Capitalize Interest Campus needs to determine if the capitalization of interest is required for projects that are contained in its CWIP accounts. CWIP accounts can be broken out into 4 key categories: 1. Projects acquired using gifts, grants or State of California capital appropriations No interest capitalization required 2. Project that are self-funded by the Campus No interest capitalization required if not applicable or immaterial Documentation if applicable 3. Projects funded with taxable debt No interest capitalization required if not applicable or immaterial Documentation if applicable

15. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 15 Capitalize Interest (cont’d) Campus needs to determine if the capitalization of interest is required for projects that are contained in its CWIP accounts. CWIP accounts can be broken out into 4 key categories: (cont’d) 4. Projects funded with tax-exempt debt Most likely result in interest capitalization Capitalize interest cost less interest earned until assets are ready for intended use For the portion of interest costs and interest earnings that are related to assets which have been placed in service, entries are recorded as presented in the pass down schedule. For the portion of interest cost and interest earnings that are related to CWIP, campus needs to capitalize such amounts, i.e. to record the net amount as an addition to CWIP.

16. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 16 Calculation of Future Funding Commitment Receivable (Payable) Represents amounts due to (from) CSURMA from the campuses to fund the estimated liability as of year end. Calculated as follows: Campus’ simple average contribution to total liabilities multiplied by receivable (payable) adjusted for campus prepayments received as of June 30. Actuarial reports are received detailing each campus’ respective liability for workers’ compensation (WC), general liability (GL), AIME, AO WC, AO AGPIP-SIR. The campus’ percentage relative to the totals for WC and GL are calculated. Then a simple average is calculated based on both WC and GL.

17. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 17 Calculation of Campus Liability Workers’ Compensation [{Percentage of total campus WC liability to total liability} * by total liability] * by campus relative percentage of WC (percentage of campus specific WC to total WC). General Liability [{Percentage of total campus GL liability to total liability} * by total liability] * by campus relative percentage of GL (percentage of campus specific GL to total GL). Sum of WC and GL to obtain total campus liability. Percentage calculated to CSURMA total liability.

18. May 22, 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 18 Reference Passdown schedules will be available on the Chancellor’s Office website at: http://www.calstate.edu/sfsr/gaap / Revenue Bonds available by August 20 Risk Pool available by September 30