Cornell University 2011-2012 Annual Report - DFA Home - Cornell ...

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars in thousands)B. Pension and Postretirement PlansThe University’s employee pension plan coverage is provided by two basic types of plan: one based on a predeterminedlevel of funding (defined contribution), and the other based on a level of benefit to be provided (defined benefit).The primary defined contribution plans for Endowed Ithaca and for exempt employees (those not subject to the overtimeprovisions of the Fair Labor Standards Act) at the Medical College are carried by the Teachers Insurance and AnnuityAssociation, the College Retirement Equities Fund, the Vanguard Group (Medical College only), and Fidelity Investments(Endowed Ithaca only), all of which permit employee contributions. Total pension costs of the Endowed Ithaca and MedicalCollege plans for the fiscal years ending June 30, 2012 and 2011 amounted to $86,273 and $84,107, respectively.The Medical College maintains the University’s only defined benefit plan. The participants include non-exempt employeesat the Medical College who meet the eligibility requirements for participation. The plan was frozen in 1976 for exemptemployees at the Medical College and the accrued benefits were merged with the active non-exempt retirement plan in 1989.In accordance with Employee Retirement Income Security Act (ERISA) requirements for the defined benefit plans, theUniversity must fund annually with an independent trustee an actuarially determined amount that represents normal costsplus amortization of prior service costs over a forty-year period that began on July 1, 1976.The University also provides health and life insurance benefits for eligible retired employees and their dependents. Althoughthere is no legal obligation for future benefits, the cost of postretirement benefits must be accrued during the service livesof employees. The University elected the prospective transition approach and is amortizing the transition obligation over20 years, through fiscal year 2012-13.C. Obligations and Funded StatusThe following table sets forth the pension and postretirement plans’ obligations and funded status as of June 30:SUMMARY OF OBLIGATIONS AND FUNDED STATUSPension benefitsOther postretirement2012 2011 2012 2011Change in plan assetsFair value of plan assets at beginning of year $ 55,614 $ 42,277 $ 168,229 $ 132,237Actual return on plan assets 1,337 9,646 (2,022) 29,859Employer contribution 6,205 6,052 9,272 8,632Benefits paid (2,599) (2,361) (2,849) (2,499)Fair value of plan assets at end of year $ 60,557 $ 55,614 $ 172,630 $ 168,229Change in benefit obligationBenefit obligation at beginning of year $ 73,912 $ 76,100 $ 381,785 $ 357,452Service cost (benefits earned during the period) 5,233 5,151 15,427 15,698Interest cost 4,605 4,172 21,068 20,900Plan amendments - (967) - -Actuarial (gain)/loss 43 (8,183) (16,781) (20)Gross benefits paid (2,599) (2,361) (16,675) (13,657)Less: federal subsidy on benefits paid - - 2,528 1,412Projected benefit obligation at end of year $ 81,194 $ 73,912 $ 387,352 $ 381,785Funded status $ (20,637) $ (18,298) $ (214,722) $ (213,556)Amounts recognized in the consolidatedStatement of financial position $ (20,637) $ (18,298) $ (214,722) $ (213,556)Amounts recorded in unrestricted net assets not yet amortized as components of net periodic benefit costNet transition obligation $ - $ - $ 3,644 $ 7,289Prior service cost (875) (967) (214) (290)Net actuarial (gain)/loss 10,170 7,481 32,333 34,606Amount recognized as reduction in unrestricted net assets $ 9,295 $ 6,514 $ 35,763 $ 41,60526