Budget and Finance

UNIVERSITY OF CINCINNATI JUNE 30, 2008

Cash and Cash Equivalents—The University considers all highly liquid investments purchased with an

original maturity of three months or less to be cash equivalents. At June 30, 2008, the carrying amount of

the University’s cash and cash equivalents for all funds is $75,285,000 as compared to bank balances of

$85,854,000. The difference between the carrying amount and the bank balances is caused primarily by

deposits in transit and outstanding checks.

Of the University’s bank balances, $210,000 is covered by federal depository insurance; mutual funds hold
cash equivalents of $76,991,000; $6,099,000 is in public funds collateralized pools; and the balance of
$2,554,000 is uncollateralized. The University does not have a policy for custodial credit risk.

Investments — The fair value of University investments at June 30 is (in thousands):

2008 2007

U. S. government, agency and treasury securities $ 35,696 $ 38,896

Corporate notes and bonds 108,783 41,052

Corporate stocks 244,540 267,934

Mutual funds 491,049 523,885

Other securities 69,755 75,216

Real estate 12,687 12,687

Total investments 962,510 959,670

Less current investments (see detail below) 53,916 11,097

Non-current investments $908,594 $948,573

Current investment detail (in thousands):

2008 2007

U. S. government, agency and treasury securities $10,952 $ 4,568

Corporate notes and bonds 42,964 6,487

Mutual funds - 42

Total current investments $53,916 $11,097

Alternative Investments (please refer to Note 1-C, Summary of Significant Accounting Policies, regarding

valuation of alternative investments) of $416 million are included within mutual funds and other securities in

the summary schedule of investments above.

At June 30, 2008 and 2007, other securities included $82,580,000 and $81,045,000 net of $14,781,000 and

$14,534,000 of loan loss reserves, respectively, of loans made to certain nonprofit entities for the purpose of

developing residential and commercial facilities on the borders of the campus. Currently, these loans are

secured primarily by mortgages on parcels of land purchased by these nonprofit entities. Some of these

mortgages are subordinated to external financing arranged by these entities. These loans bear interest at

6%. The University expects repayment once the residential and commercial facilities have streams of rental

income. Loan loss reserves are estimated based on aggregate cash flows projections for the projects and

independent appraisals of the underlying undeveloped real estate. The loan loss reserves are reflected in

non-operating revenues (expenses), as a component of the increase in fair value of investments.

The University has recorded the investments in the table above in the following categories: $107,507,000 of

investments and $855,003,000 of endowment investments. Also, included in endowment investments as

reported on the Statement of Net Assets are $240,324,000 invested predominately in equities held in donor-

stipulated irrevocable trusts.

(^)
GASB Statement 40 requires government entities to categorize investments by interest rate risk, credit risk,
and custodial credit risk.