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Business and Policy Areas
Business and Policy Areas

Economic Condition Reporting

February 18, 2004 

Mr. David Bean

Director of Research

Governmental Accounting Standards Board

401 Merritt 7

PO Box 5116

Norwalk, CT  06856-5116


Re:  Project No. 13-1E


Dear David:


Thank you for the opportunity to provide input on the Exposure Draft (ED) on Economic Condition Reporting:  The Statistical Section (an amendment to NCGA Statement 1). The National Association of College and University Business Officers (NACUBO) appreciates the Board’s openness to public comment.


NACUBO’s comments were developed with input from our Accounting Principles Council.  The council consists of higher education volunteers from member institutions who are knowledgeable in a variety of matters, including external financial reporting, governmental accounting and reporting, not-for-profit accounting and reporting, managerial accounting and reporting, and financial analysis.  NACUBO’s overall reaction to the proposal is favorable.  Our comments are organized according to the three issues raised by the Board in the ED.


Issue 1:  Evaluation of the objectives of each of the five categories of statistical information.


  1. We support presenting Financial Trends Information through an analysis of Net Assets and Changes in Net Assets.


  1. We support presenting Revenue Capacity Information for “own-source revenues,” which (for most of our constituents in public higher education) consist of tuition and fees charged to students; hospital patient revenues; grants and contracts; and sales and service (including auxiliaries) revenues.  Revenue base and rates are meaningful notions for tuition, fees, and hospital revenues; however, further guidance from GASB would be helpful for other types of revenues typical in college and university environments.  Disclosing principal revenue payers would not be meaningful when reporting on students or patients.  For community colleges that have the authority to levy property taxes, information regarding revenue base, revenue rates, and principal revenue payers is readily accessible and accordingly not burdensome to report.


  1. Debt capacity information is maintained internally and published in official statements when new long-term debt is issued. Therefore, we support presenting some debt capacity information, including ratios of outstanding debt, direct and overlapping debt (for community colleges with taxing authority), debt limitations, and pledged-revenue coverage.  Debt ratios based on some sort of per capita measure as described in paragraph 24 would not be appropriate for higher education institutions, but other ratios such as debt capacity may be helpful to the reader.  Because much of this information is already presented in the MD&A and notes to financial statements, we encourage the Board to refrain from requiring redundant information in the statistical section. We recommend additional guidance concerning information to be presented in the statistical section vis-à-vis other sections of the annual financial report.


  1. We support the presentation of limited demographic and economic information.  The customer base of public institutions is not necessarily limited to the political or geographical boundaries of the state.  Local demographic and economic information could be presented, but statistics regarding population, personal income, unemployment rates, and principal employers will not add much value to the readers of financial statements.  Rather, this section could more appropriately report characteristics of student or patient populations (e.g. applications, matriculations, graduations.).   Distinguishing attributes of an institution’s mission and clientele could be compared with other state-supported institutions.  NACUBO recommends guidance on meaningful measures of college and university demographic and economic information and can work with the Board on this effort.


  1. We support presenting operating information as delineated in the ED.  The number of institutional employees, relevant operating indicators, and capital asset information are typically available and useful to financial statement readers. We caution against capital asset disclosure redundancy. 



Issue 2:  Evaluation of the requirement to prepare a schedule of overlapping debt.


            As indicated in our response to Issue 1(c) above, few institutions have taxing authority and therefore most do not have the issue of overlapping debt.  Many community colleges with taxing authority prepare such a schedule to comply with the requirements of producing a CAFR.    We do not view this requirement to be unduly burdensome.



Issue 3:  Other recommendations to facilitate usefulness or implementation of the Statement.


NACUBO believes that readers will benefit from the types of information outlined in the ED.  Our position is that the proposed statistical information be optional for those not preparing a CAFR but, if presented, should be consistent for all public institutions of higher education.  We suggest the Board give additional thought to:


·       Presentation parameters for special-purpose governments that do not have taxing authority

·       Ensuring that proposed disclosures do not duplicate required supplementary information and notes to the financial statements.



In closing, we wish to express our appreciation for the opportunity to comment on this ED.  We look forward to answering any questions the Board or staff may have about our response.  Please address questions or feedback to Sue Menditto, Senior Manager, NACUBO Accounting and Finance Programs at 202-861-2542 or






Mark A. Olson

Executive Vice President



Susan M. Menditto

Senior Manager, Accounting and Finance Programs