C D J 30, 2015

C ABRILLO C OMMUNITY C OLLEGE D ISTRICT

A NNUAL F INANCIAL R EPORT

J UNE 30, 2015

CABRILLO COMMUNITY COLLEGE DISTRICT

TABLE OF CONTENTS

JUNE 30, 2015

FINANCIAL SECTION

Independent Auditor's Report

Management's Discussion and Analysis (Required Supplementary Information)

Basic Financial Statements - Primary Government

Statement of Net Position

Statement of Revenues, Expenses, and Changes in Net Position

Statement of Cash Flows

Fiduciary Funds

Statement of Net Position

Statement of Changes in Net Position

Discretely Presented Component Unit – Cabrillo College Foundation

Statement of Financial Position

Statement of Activities

Statement of Cash Flows

Notes to Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Other Postemployment Benefit (OPEB) Funding Progress

Schedule of the District's Proportionate Share of the Net Pension Liability

Schedule of District Contributions

SUPPLEMENTARY INFORMATION

District Organization

Schedule of Expenditures of Federal Awards

Schedule of Expenditures of State Awards

Schedule of Workload Measures for State General Apportionment Annual (Actual) Attendance

Reconciliation of Education Code Section 84362 (50 Percent Law) Calculation

Proposition 30 Education Protection Act (EPA) Expenditure Report

Reconciliation of Annual Financial & Budget Report CCFS–311 With Fund Financial Statement

Note to Supplementary Information

INDEPENDENT AUDITOR'S REPORTS

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters

Based on an Audit of Financial Statements Performed in Accordance with Government Auditing

Standards

Report on Compliance with Requirements That Could Have a Direct and Material Effect on

Each Major Program and on Internal Control Over Compliance in Accordance with OMB

Circular A-133

Report on State Compliance

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Summary of Auditor's Results

Financial Statement Findings and Recommendations

Federal Awards Findings and Questioned Costs

State Awards Findings and Questioned Costs

Summary Schedule of Prior Audit Findings

79

81

83

86

87

88

89

90

59

60

61

71

74

75

77

63

64

66

70

15

16

17

18

19

20

11

12

13

2

5

F

INANCIAL

S

ECTION

1

INDEPENDENT AUDITOR'S REPORT

Board of Trustees

Cabrillo Community College District

Aptos, California

Report on the Financial Statements

We have audited the accompanying financial statements of the business-type activities, the aggregate discretely presented component unit (Cabrillo College Foundation), and the aggregate remaining fund information of

Cabrillo Community College District (the District) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the Table of Contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, the aggregate discretely presented component unit, and the aggregate remaining fund information, as of June 30, 2015, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the

United States of America.

Emphasis of Matter - Change in Accounting Principles

As discussed in Notes 2 and 16 to the financial statements, in 2015, the District adopted new accounting guidance,

Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for

Pensions and GASB Statement No 71, Pension Transition for Contributions Made Subsequent to the

Measurement Date—an Amendment of GASB Statement No. 68 Our opinion is not modified with respect to these matters.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require the Management's Discussion and Analysis, the Schedule of Other Postemployment Benefits (OPEB) Funding Progress, the Schedule of the

District's Proportionate Share of the Net Pension Liability, and the Schedule of District Contributions as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. The accompanying supplementary information listed in the

Table of Contents, including the Schedule of Expenditures of Federal Awards, as required by (U.S. Office of

Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit

Organizations is presented for purposes of additional analysis and is not a required part of the basic financial statements.

3

The accompanying supplementary information, including the Schedule of Expenditures of Federal Awards, is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards , we have also issued our report dated December 31, 2015, on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control over financial reporting and compliance.

Pleasanton, California

December 31, 2015

4


MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED JUNE 30, 2015

USING THE ANNUAL REPORT

The purpose of this annual report is to provide readers with information about the activities programs and financial condition of the Cabrillo Community College District (the District) as of June 30, 2015. The report consists of three basic financial statements: the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, and Statement of Cash Flows and provides information about the District as a whole. This section of the annual financial report presents our discussion and analysis of the District's financial performance during the fiscal year that ended on June 30, 2015. Responsibility for the completeness and accuracy of this information rests with the District management.

OVERVIEW OF THE FINANCIAL STATEMENTS

Cabrillo Community College District's financial statements are presented in accordance with Governmental

Accounting Standards Board Statements No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments and No. 35, Basic Financial Statements - and Management

Discussion and Analysis - for Public College and Universities.

These statements allow for the presentation of financial activity and results of operations which focuses on the District as a whole. The entity-wide financial statements present the overall results of operations whereby all of the District's activities are consolidated into one total versus the traditional presentation by fund type. The focus of the Statement of Net Position is designed to be similar to the bottom line results of the District. This statement combines and consolidates current financial resources with capital assets and long-term obligations. The Statement of Revenues,

Expenses, and Changes in Net Position focuses on the costs of the District's operational activities with revenues and expenses categorized as operating and non-operating, and expenses are reported by natural classification.

The Statement of Cash Flows provides an analysis of the sources and uses of cash within the operations of the

District.

The California Community Colleges Chancellor's Office has recommended that all State community colleges follow the Business-Type Activity (BTA) model for financial statement reporting purposes.

FINANCIAL HIGHLIGHTS

 The District's primary funding source is based upon apportionment received from the State of

California. The primary basis of this apportionment is the calculation of Full Time Equivalent Students

(FTES). During the 2014-2015 fiscal year, the factored reported FTES were 10,896 as compared to

10,092 in the 2013-2014 fiscal year. The fully funded cap for fiscal year 2014-2015 is 10,887.

 The District continued several construction and modernization projects during 2014-2015. These projects are funded both through State construction revenues and through our voter approved general obligation bond. Please note that the 2004 bond program was completed in 2014-15. All funds were fully expended and projects were completed. The District is still working on various capital projects but as of July 1, 2015, these projects are funded from other funding sources.

 Costs for employee salaries and benefits increased compared to the 2013-2014 fiscal year due to negotiated salary increases, regular step and column move, as well as increases to health benefits and mandatory benefits. It is important to note that employee benefits costs include $548,974 for unfunded future retiree health benefits and $1,264,733 for current retiree health benefits. The increase in the benefit costs has been due to continued rising costs of health and welfare benefits paid on behalf of both current employees and retirees and increased contribution rates for PERS retirement contributions.

5




 During the 2014-2015 fiscal year, the District provided approximately $17 million in financial aid to students attending classes at the college. This aid was provided in the form of grants, scholarships, loans, and tuition reductions funded through the Federal government, State Chancellor's Office, and local funding.

THE DISTRICT AS A WHOLE

Net Position

Table 1

ASSETS

Current Assets

Cash and investments

Accounts receivable (net)

Other current assets

Total Current Assets

Noncurrent Assets

Capital assets (net)

Total Noncurrent Assets

Total Assets

DEFERRED OUTFLOWS OF RESOURCES

LIABILITIES

Current Liabilities

Accounts payable and accrued liabilities

Current portion of long-term debt

Total Current Liabilities

Long-term Debt

Total Liabilities

DEFERRED INFLOWS OF RESOURCES

NET POSITION

Invested in capital assets

Restricted

Unrestricted

Total Net Position

2015

$ 44,279,375

5,266,750

1,338,679

50,884,804

290,343,960

290,343,960

341,228,764

Restated

2014

$ 37,689,243

12,109,919

780,908

50,580,070

287,591,281

287,591,281

338,171,351

3,633,885 3,435,060

15,908,646

11,046,956

26,955,602

214,464,935

241,420,537

13,543,076

8,629,624

22,172,700

233,066,577

255,239,277

12,472,129 -

121,295,015

11,999,827

(42,324,859)

$ 90,969,983

115,941,832

12,635,169

$

(42,209,867)

86,367,134

6




Operating Results for the Year

The results of this year's operations for the District as a whole are reported in the Statement of Revenues,

Expenses, and Changes in Net Position.

Table 2

Operating Revenues

Tuition and fees

Auxiliary sales and charges

Total Operating Revenues

Operating Expenses

Salaries and benefits

Payment to students

Supplies, maintenance and other

Depreciation

Total Operating Expenses

Loss on Operations

Nonoperating Revenues

State apportionments

Property taxes

Grants and contracts

Net interest expense and bond refunding

Other nonoperating revenues (expenses)

Total Nonoperating Revenue

Other Revenues

State and local capital income

Net Increase in Net Position

$

2015

7,838,168

2,253

7,840,421

60,775,611

16,981,961

15,377,459

8,666,425

101,801,456

(93,961,035)

Restated

2014

$ 7,738,227

4,963

7,743,190

59,957,427

17,761,523

15,720,905

8,206,708

101,646,563

(93,903,373)

$

30,161,157

34,574,925

31,120,045

(4,322,985)

5,391,172

96,924,314

1,639,570

4,602,849

31,204,405

33,125,409

30,015,304

(3,997,322)

5,713,944

96,061,740

$

262,657

2,421,024

The District's primary revenue fund is the State apportionment calculation which is comprised of three sources of revenues: local property taxes, student enrollment fees, and State apportionment.

Auxiliary revenue consists of the bookstore operations. The college contracted with Barnes & Noble to provide services to the students and faculty of the college. The operations are self-supporting and contribute to the student programs on each campus.

Grant and contract revenues relate primarily to student financial aid as well as to specific Federal and State grants received for programs serving the students and programs of the District. These grant and program revenues are restricted as to the allowable expenses related to the programs.

Tuition and fee revenue includes enrollment fees of $4,695,484. The balance of the tuition and fee revenue line consists of other fees and revenues.

7




Changes in Cash Position

Table 3

Cash Provided by (Used in)

Operating activities

Noncapital financing activities

Capital financing activities

Investing activities

Net Increase in Cash

Cash, Beginning of Year

Cash, End of Year

2015 2014

$ (77,446,752)

86,968,572

(2,980,513)

48,825

6,590,132

$

37,689,243

44,279,375

$ (83,329,403)

87,334,753

(9,330,154)

42,758

(5,282,046)

$

42,971,289

37,689,243

The Statement of Cash Flows in the financial statements provides more detailed information about our cash receipts and payments during the year. This statement also assists users in assessing the District's ability to meet its obligations as they come due and its need for external financing. Our primary operating receipts are student tuition and fees and Federal, State, and local grants and contracts. The primary operating expense of the District is the payment of salaries and benefits to instructional and classified support staff.

While State apportionment revenues and property taxes are the primary source of noncapital related revenue, the GASB accounting standards require that this source of revenue is shown as non-operating revenue as it comes from the general resources of the State and not from the primary users of the college's programs and services – our students. The District depends upon this funding to continue the current level of operations.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At June 30, 2015, the District had $290.3 million in a broad range of capital assets, including land, buildings, and furniture and equipment. At June 30, 2014, our net capital assets were $287.6 million. The District is currently in the process of completing a capital improvement program with construction ongoing throughout the college campus. These projects are primarily funded through our general obligation bonds. These projects are accounted for within our Construction in Progress account until the project is completed at which time the cost of the buildings and/or improvements will be brought in to the depreciable Buildings and Improvement category.

Capital projects are continuing through the 2015-2016 fiscal year and beyond with primary funding through our general obligation bonds.

8




Land and construction in progress

Buildings and improvements

Furniture and equipment

Subtotal

Accumulated depreciation

Total

Table 4

Balance

Beginning of

$

Year

6,501,407

338,518,425

16,460,207

361,480,039

(73,888,758)

$ 287,591,281

Additions

$ 3,596,746

8,440,944

2,067,195

14,104,885

$

(8,666,425)

5,438,460

Deletions

$ (2,685,781)

-

(2,295,996)

(4,981,777)

$

2,295,996

(2,685,781)

Balance

End of

$

Year

7,412,372

346,959,369

16,231,406

370,603,147

$

(80,259,187)

290,343,960

Obligations

At the end of the 2014-2015 fiscal year, the District had $174.9 million in general obligation bonds outstanding.

These bonds are repaid annually in accordance with the obligation requirements through an increase in the assessed property taxes on property within the Cabrillo Community College District boundaries. Other obligations for the District include Certificates of Participation issued to fund various capital improvement projects throughout the District, capital leases, other notes payable and an aggregate net pension liability.

In addition to the above obligations, the District is obligated to employees of the District for vacation and load banking benefits.

General obligation bonds

Premiums and notes payable

Other liabilities

Total Long-term Debt

Table 5

Restated

Balance

Beginning of

Year

$ 177,107,406

1,659,944

62,928,851

$ 241,696,201

Additions

$ 4,146,384

274,489

-

$ 4,420,873

Deletions

$ 7,869,831

107,501

12,627,851

$ 20,605,183

Balance End of

Year

$ 173,383,959

1,552,443

50,575,489

$ 225,511,891

Amount due within one year $ 11,046,956

GENERAL FUND BUDGETARY HIGHLIGHTS

Over the course of the year, the District revises its budget as it attempts to deal with unexpected changes in revenues and expenditures. The Board of Trustees adopted the final amendment to the budget for the

2014-2015 fiscal year on September 8, 2014.

Within the Unrestricted General Fund, operating costs have continually increased. The State Budget has not kept pace with the increased operating costs, primarily in health and welfare benefits, especially in regards to the need to recognize post retirement benefits.

9




ECONOMIC FACTORS AFFECTING THE FUTURE OF THE CABRILLO COMMUNITY COLLEGE

DISTRICT

The economic position of the District is closely tied to the State of California as State apportionments and property taxes allocated to the District represent approximately 95 percent of the total unrestricted sources of revenues received within the General Fund. The District’s student enrollment continues to be a concern. There is uncertainty as to the actual level of funding the District will receive for student enrollment. Due to the implementation of legislative changes in instructional activities currently funded i.e. course repeatability, etc, the District continues to monitor enrollment and operating costs of the District to ensure ongoing financial stability and retain the reserve levels required by our Board of Trustees and the State Chancellor's Office.

CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, students, investors and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have questions about this report or need any additional financial information, contact the Cabrillo

Community College District, Victoria Lewis, Vice President of Administrative Services by phone at 831-479-

6406 or by email at vilewis@cabrillo.edu.

10


STATEMENT OF NET POSITION – PRIMARY GOVERNMENT

JUNE 30, 2015

ASSETS

Current Assets

Cash and cash equivalents

Restricted cash and cash equivalents

Accounts receivable, net

Due from fiduciary funds

Prepaid expenses

Total Current Assets

Noncurrent Assets

Nondepreciable capital assets

Depreciable capital assets, net of depreciation

Total Noncurrent Assets

TOTAL ASSETS

DEFERRED OUTFLOWS OF RESOURCES

Current year pension contribution

LIABILITIES

Current Liabilities

Accounts payable

Interest payable

Due to fiduciary funds

Unearned revenue

Certificates of participation - current portion

Lease obligations - current portion

Related party liability - current portion

Bonds payable - current portion

Total Current Liabilities

Noncurrent Liabilities

Compensated absences payable

Bonds payable - noncurrent portion

Certificates of participation - noncurrent portion

Lease obligations - noncurrent portion

Other postemployment benefits - noncurrent portion

Aggregate net pension obligation

Total Noncurrent Liabilities

TOTAL LIABILITIES

DEFERRED INFLOWS OF RESOURCES

Difference between actual and expected rate of investment

NET POSITION

Net investment in capital assets

Restricted for:

Debt service

Educational programs

Unrestricted

TOTAL NET POSITION

The accompanying notes are an integral part of these financial statements.

11

$ 33,178,547

11,100,828

5,266,750

95,329

1,243,350

50,884,804

7,412,372

282,931,588

290,343,960

341,228,764

3,633,885

4,894,437

3,163,698

115,119

7,735,392

668,220

9,062

62,895

10,306,779

26,955,602

904,878

164,566,728

640,000

17,581

3,165,287

45,170,461

214,464,935

241,420,537

12,472,129

121,295,015

$

11,423,580

576,247

(42,324,859)

90,969,983


STATEMENT OF REVENUES, EXPENSES,

AND CHANGES IN NET POSITION – PRIMARY GOVERNMENT


OPERATING REVENUES

Student Tuition and Fees

Less: Scholarship discount and allowance

Net tuition and fees

Auxiliary Enterprise Sales and Charges

Bookstore

TOTAL OPERATING REVENUES

OPERATING EXPENSES

Salaries

Employee benefits

Payment to students

Supplies, materials, and other operating expenses and services

Depreciation

TOTAL OPERATING EXPENSES

OPERATING LOSS

NONOPERATING REVENUES (EXPENSES)

State apportionments, noncapital

Local property taxes, levied for general purposes

Local property taxes, levied for other specific purposes

Federal revenues

State revenues

Investment income, net

Interest expense on capital related debt

Transfer from fiduciary funds

Transfer to fiduciary funds

Other nonoperating revenues (expenses)

TOTAL NONOPERATING REVENUES (EXPENSES)

INCOME (LOSS) BEFORE OTHER REVENUES AND EXPENSES

State revenues, capital

TOTAL CAPITAL REVENUE

CHANGE IN NET POSITION

NET POSITION, BEGINNING OF YEAR, RESTATED

NET POSITION, END OF YEAR

$ 14,043,374

(6,205,206)

7,838,168

2,253

7,840,421

42,882,227

17,893,384

16,981,961

15,377,459

8,666,425

101,801,456

(93,961,035)

30,161,157

20,570,687

14,004,238

18,565,748

12,554,297

48,825

(4,371,810)

214,848

(135,902)

5,312,226

96,924,314

2,963,279

1,639,570

1,639,570

4,602,849

86,367,134

$ 90,969,983


12


STATEMENT OF CASH FLOWS – PRIMARY GOVERNMENT


CASH FLOWS FROM OPERATING ACTIVITIES

Tuition and fees

Payments to vendors for supplies and services

Payments to or on behalf of employees

Payments to students for scholarships and grants

Auxiliary enterprise sales and charges:

Bookstore

Net Cash Flows Used For Operating Activities

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

State apportionments

Property taxes - nondebt related

Federal grants and contracts

State grants and contracts

Local grants and contracts

Student organization and other agency transactions

Net Cash Flows From Noncapital Financing Activities

CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES

Purchase of capital assets

State revenue, capital projects

Property taxes - related to capital debt

Principal paid on capital debt

Interest paid on capital debt

Net Cash Flows Used For Capital Financing Activities

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received from investments

Net Cash Flows From Investing Activities

CHANGE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS, END OF YEAR

$ 7,838,168

(15,388,369)

(52,916,843)

(16,981,961)

2,253

(77,446,752)

30,161,157

20,570,687

18,565,748

12,279,808

5,312,226

78,946

86,968,572

(3,458,748)

1,639,570

14,004,238

(8,557,061)

(6,608,512)

(2,980,513)

48,825

48,825

6,590,132

37,689,243

$ 44,279,375


13


STATEMENT OF CASH FLOWS - PRIMARY GOVERNMENT, (Continued)


RECONCILIATION OF NET OPERATING LOSS TO NET CASH FLOWS FROM

OPERATING ACTIVITIES

Operating loss

Adjustments to Reconcile Operating Loss to Net Cash Flows used for

Operating Activities:

Depreciation and amortization expense

On behalf payments and OPEB change

Changes in Assets and Liabilities:

Prepaid expenses

Due from fiduciary funds

Net change in proportionate pension liabilities

Total Adjustments

Net Cash Flows Used For Operating Activities

CASH AND CASH EQUIVALENTS CONSIST OF THE FOLLOWING:


Restricted cash and cash equivalents

Total Cash and Cash Equivalents

NON CASH TRANSACTIONS

On behalf payments for benefits

$ (93,961,035)

8,666,425

1,906,988

(570,555)

12,784

6,498,641

16,514,283

$ (77,446,752)

$ 33,178,547

11,100,828

$ 44,279,375

$ 1,632,499


14


STATEMENT OF FIDUCIARY NET POSITION


ASSETS


Accounts receivable, net

Prepaid expenditures

Due from primary government

Total Assets

LIABILITIES

Accounts payable

Due to primary government

Unearned revenue

Due to student groups

Total Liabilities

NET POSITION

Restricted

Total Net Position

Trust

$ 825,473

17,000

-

21,538

864,011

Agency

Funds

$ 415,665

-

17,368

93,581

$ 526,614

10,117

70,097

-

-

80,214

$ 441

239,395

(6,821)

293,599

$ 526,614

$

783,797

783,797


15


STATEMENT OF CHANGES IN FIDUCIARY NET POSITION


ADDITIONS

Federal revenues

Local revenues

Total Additions

DEDUCTIONS

Books and supplies

Services and operating expenditures

Total Deductions

OTHER FINANCING SOURCES (USES)

Operating transfers out

Total Other Financing Sources (Uses)

Change in Net Position

Net Position - Beginning

Net Position - Ending

Trust

$ 21,775

2,368,731

2,390,506

207,255

1,953,793

2,161,048

(125,799)

(125,799)

103,659

680,138

$ 783,797


16


DISCRETELY PRESENTED COMPONENT UNIT

CABRILLO COLLEGE FOUNDATION

STATEMENT OF FINANCIAL POSITION

JUNE 30, 2015

ASSETS


Contributions receivable, net

Accounts receivable

Beneficial interest in split interest agreements

Prepaids and other assets

Notes receivable

Investments

TOTAL ASSETS

LIABILITIES AND NET ASSETS

Accounts payable, scholarships and projects payable

Net pension liability

Deferred inflows related to pension plans

Other post employment benefits

TOTAL LIABILITIES

NET ASSETS

Unrestricted

Temporarily restricted

Permanently restricted

TOTAL NET ASSETS

TOTAL LIABILITIES AND NET ASSETS

$ 3,785,593

1,447,794

54,517

530,609

43,528

62,895

22,214,182

28,139,118

$ 1,434,019

185,516

71,917

78,634

1,770,086

606,975

7,602,731

18,159,326

26,369,032

$ 28,139,118


17




STATEMENT OF ACTIVITIES


SUPPORT AND REVENUES

Contributions, net of uncollectible amounts

Investment income (loss), net of

investment expenses

Endowment management fee

In-kind contributions

Other income

Net assets released from restrictions

TOTAL SUPPORT AND REVENUES

EXPENSES

Program Services

Scholarships and awards

College support

Supporting Services

Management and general

Fundraising

TOTAL EXPENSES

Temporarily Permanently

Unrestricted Restricted Restricted

$ 390,601

8,460

324,657

16,344

150,048

1,877,909

2,768,019

904,816

1,291,900

269,818

265,427

2,731,961

CHANGE IN NET ASSETS 36,058

NET ASSETS, BEGINNING OF YEAR, RESTATED

NET ASSETS, END OF YEAR

570,917

$ 606,975

$ 1,687,308 $ 488,145

31,848

-

100,066

-

(1,877,909)

(58,687)

-

-

-

-

-

488,145

$

7,661,418

7,602,731

-

-

-

-

-

(58,687)

$

488,145

17,671,181

18,159,326

-

-

-

-

-

Total

$ 2,566,054

40,308

324,657

116,410

150,048

-

3,197,477

904,816

1,291,900

269,818

265,427

2,731,961

465,516

$

25,903,516

26,369,032


18




STATEMENT OF CASH FLOWS


CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets

Adjustments to reconcile change in net assets

to net cash provided (used) by operations

Depreciation

Change in valuation of split-interest agreement

Change in operating assets and liabilities

Contributions receivable

Accounts receivable

Prepaids and other assets

Accounts payable, scholarships and projects payable

Net pension obligation

Other post employment benefits

Net Cash Flows Provided By Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES

Note receivable from District

Additions to investments

Net Cash Flows Used By Investing Activities

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS, END OF YEAR

$ 465,516

1,463

3,595

263,713

9,787

6,960

59,592

(181,565)

8,791

637,852

44,000

(2,103,388)

(2,059,388)

(1,421,536)

$

5,207,129

3,785,593


19


NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2015

NOTE 1 - ORGANIZATION

The Cabrillo Community College District (the District) was established in 1959 as a political subdivision of the

State of California and is a comprehensive, public two-year institution offering educational services to residents of the surrounding area. The District operates under a locally elected seven-member Board of Trustees form of government, which establishes the policies and procedures by which the District operates. The Board must approve the annual budgets for the General Fund, special revenue funds, and capital project funds, but these budgets are managed at the department level. Currently, the District operates one campus located in Aptos,

California and a center in Watsonville. While the District is a political subdivision of the State of California, it is not a component unit of the State in accordance with the provisions of Governmental Accounting Standards

Board (GASB) Statement No. 61.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Reporting Entity

The District has adopted GASB Statement No. 61, Determining Whether Certain Organizations are Component

Units.

This statement amends GASB Statement No. 14, The Financial Reporting Entity, to provide additional guidance to determine whether certain organizations, for which the District is not financially accountable, should be reported as component units based on the nature and significance of their relationship with the District. The three components used to determine the presentation are: providing a "direct benefit", the "environment and ability to access/influence reporting", and the "significance" criterion. As defined by accounting principles generally accepted in the United States of America and established by the Governmental Accounting Standards

Board, the financial reporting entity consists of the primary government, the District, and the following component units:

Cabrillo College Foundation

The Cabrillo College Foundation (the Foundation) is a legally separate, tax-exempt component unit of the

District. The Foundation acts primarily as a fundraising organization to provide grants and scholarships to students and support to employees, programs, and departments of the District. The board of the Foundation consists of community members, alumni, and other supporters of the Foundation. Although the District does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereof that, the

Foundation holds and invests are restricted to the activities of the District by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the District, the Foundation is considered a component unit of the District. The Foundation is reported in separate financial statements because of the difference in its reporting model, as further described below.

The Foundation is a not-for-profit organization under Internal Revenue Code (IRC) Section 501(c)( 3) that reports, its financial results in accordance with Financial Accounting Standards Codifications. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. No modifications have been made to the Foundation's financial information in the District's financial reporting entity for these differences; however, significant note disclosures to the Foundation's financial statements have been incorporated into the District's notes to the financial statements. Separately issued financial statements may be obtained by contacting the Cabrillo College Foundation.

Complete financial statements for the Foundation can be obtained from the Foundation's Business Office at 6500

Soquel Avenue, Aptos CA 95003.

20



JUNE 30, 2015

Financing Corporation

The Cabrillo College Financing Corporation's financial activity is presented in the financial statements and included in the Capital Projects Fund and the Debt Service Fund. Certificates of participation issued by the

Corporation are included as long-term liabilities in the government-wide financial statements. Individuallyprepared financial statements are not prepared for Cabrillo College Financing Corporation.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

For financial reporting purposes, the District is considered a special-purpose government engaged only in business-type activities as defined by GASB Statements No. 34 and No. 35 as amended by GASB Statements

No. 37, No. 38, and No. 39. This presentation provides a comprehensive entity-wide perspective of the District's assets, liabilities, activities, and cash flows and replaces the fund group perspective previously required.

Accordingly, the District's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. The significant accounting policies followed by the District in preparing these financial statements are in accordance with accounting principles generally accepted in the United

States of America as prescribed by GASB. Additionally, the District's policies comply with the California

Community Colleges Chancellor's Office Budget and Accounting Manual . Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All material intraagency and intra-fund transactions have been eliminated.

Revenues resulting from exchange transactions, in which each party gives and receives essentially equal value, are classified as operating revenues These transactions are recorded on the accrual basis when the exchange takes place. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District, operating revenues consist primarily of student fees and auxiliary activities through the bookstore and cafeteria.

Non-exchange transactions, in which the District receives value without directly giving equal value in return, include State apportionments, property taxes, certain Federal and State grants, entitlements, and donations.

Property tax revenue is recognized in the fiscal year received. State apportionment revenue is earned based upon criteria set forth from the Community Colleges Chancellor's Office and includes reporting of full-time equivalent students (FTES) attendance. The corresponding apportionment revenue is recognized in the period the FTES are generated. Revenue from Federal and State grants and entitlements are recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements may include time and/or purpose requirements.

Operating expenses are costs incurred to provide instructional services including support costs, auxiliary services, and depreciation of capital assets. All other expenses not meeting this definition are reported as non-operating.

Expenses are recorded on the accrual basis as they are incurred, when goods are received, or services are rendered.

The District reports are based on all applicable GASB pronouncements, as well as applicable Financial

Accounting Standards Board (FASB) pronouncements issued on or before November 30, 1989, unless those pronouncements conflict or contradict GASB pronouncements The District has not elected to apply FASB pronouncements after that date.

21



JUNE 30, 2015

The financial statements are presented in accordance with the reporting model as prescribed in GASB Statement

No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments, and GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public

Colleges and Universities, as amended by GASB Statements No. 37, No. 38, and No. 39. The business-type activities model followed by the District requires the following components of the District's financial statements:

 Management's Discussion and Analysis

 Basic Financial Statements for the District as a whole including: o Statements of Net Position - Primary Government o Statements of Revenues, Expenses, and Changes in Net Position - Primary Government o Statements of Cash Flows - Primary Government o Financial Statements for the Fiduciary Funds including: o Statements of Fiduciary Net Position o Statements of Changes in Fiduciary Net Position

 Notes to the Financial Statements

Cash and Cash Equivalents

The District's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of one year or less from the date of acquisition. Cash equivalents also include unrestricted cash with county treasury balances for purposes of the Statement of Cash Flows. Restricted cash and cash equivalents represent balances restricted by external sources such as grants and contracts or specifically restricted for the repayment of capital debt.

Investments

In accordance with GASB Statement No. 31, Accounting and Reporting for Certain Investments and for External

Investment Pools, investments held at June 30, 2015 are stated at fair value. Fair value is estimated based on quoted market prices at year-end. Short-term investments have an original maturity date greater than three months, but less than one year at a time of purchase. Long-term investments have an original maturity of greater than one year at the time of purchase.

Restricted Assets

Restricted assets arise when restrictions on their use change the normal understanding of the availability of the asset. Such constraints are either imposed by creditors, contributors, grantors, or laws of other governments or imposed by enabling legislation. Restricted assets represent investments required by debt covenants to be set aside by the District for the purpose of satisfying certain requirements of the bonded debt issuance.

Accounts Receivable

Accounts receivable include amounts due from the Federal, State and/or local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the District's grants and contracts.

Accounts receivable also consists of tuition and fee charges to students and auxiliary enterprise services provided to students, faculty, and staff, the majority of each residing in the State of California. The District provides for an allowance for uncollectible accounts as an estimation of amounts that may not be received. This allowance is based upon management's estimates and analysis. The allowance was estimated at $3,983,939 for the year ended

June 30, 2015.

22



JUNE 30, 2015

Prepaid Expenses

Prepaid expenditures or expenses represent payments made to vendors and others for services that will benefit periods beyond June 30.

Capital Assets and Depreciation

Capital assets are long-lived assets of the District as a whole and include land, construction-in-progress, buildings, infrastructure and equipment. The District maintains an initial unit cost capitalization threshold of $5,000 and an estimated useful life greater than one year. Assets are recorded at historical cost, or estimated historical cost, when purchased or constructed. The District’s infrastructure consists primarily of road network connecting the different buildings of the campus. Donated capital assets are recorded at estimated fair market value at the date of donation. Improvements to building and land that significantly increase the value or extend the useful life of the assets are capitalized; the costs of routine maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are charged as an operating expense in the year in which the expense was incurred. Major outlays for capital improvements are capitalized as construction-in-progress as the projects are constructed.

Depreciation of capital assets is computed and recorded utilizing the straight-line method. Estimated useful lives of the various classes of depreciable capital assets are as follows: buildings and infrastructure, 50 years; improvements, 25 years; equipment, 3 to 8 years.

Accrued Liabilities and Long-term Obligations

All payables, accrued liabilities, and long-term obligations are reported in the entity-wide financial statements.

Debt Issuance Costs, Premiums and Discounts

Debt premiums and discounts as well as issuance costs related to prepaid insurance costs are amortized over the life of the bonds using the straight-line method.

Deferred Outflows/Inflows of Resources

In addition to assets, the Statement of Net Position also reports deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. The District reports deferred outflows of resources for current year pension contributions.

In addition to liabilities, the Statement of Net Position reports a separate section for deferred inflows of resources.

This separate financial statement element represents an acquisition of net position that applies to a future period and so will not be recognized as revenue until then. The District reports deferred inflows of resources for the difference between actual and expected rate of return on investments specific to the net pension liability.

23



JUNE 30, 2015

Pensions

For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions and pension expense, information about the fiduciary net position of the California State Teachers' Retirement

System (CalSTRS) and the California Public Employees' Retirement System (CalPERS) plan for schools

(the Plans) and additions to/deductions from the Plans' fiduciary net position have been determined on the same basis as they are reported by CalSTRS and CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Member contributions are recognized in the period in which they are earned. Investments are reported at fair value.

Compensated Absences

Accumulated unpaid employee vacation benefits are accrued as a liability as the benefits are earned. The entire compensated absence liability is reported on the entity-wide financial statements. The amounts have been recorded in the fund from which the employees, who have accumulated the leave, are paid. The District also participates in "load banking" with eligible academic employees whereby the employee may teach extra courses in one period in exchange for time off in another period. Sick leave is accumulated without limit for each employee based upon negotiated contracts. Leave with pay is provided when employees are absent for health reasons; however, the employees do not gain a vested right to accumulated sick leave. Employees are never paid for any sick leave balance at termination of employment or any other time. Therefore, the value of accumulated sick leave is not recognized as a liability in the District's financial statements. However, retirement credit for unused sick leave is applicable to all classified school members who retire after January 1, 1999. At retirement, each member will receive .004 year of service credit for each day of unused sick leave. Retirement credit for unused sick leave is applicable to all academic employees and is determined by dividing the number of unused sick days by the number of base service days required to complete the last school year, if employed full time.

Unearned Revenue

Unearned revenue arises when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period or when resources are received by the District prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the

District has a legal claim to the resources, the liability for unearned revenue is removed from the combined balance sheet and revenue is recognized. Unearned revenue includes (1) amounts received for tuition and fees prior to the end of the fiscal year that are related to the subsequent fiscal year and (2) amounts received from

Federal and State grants received before the eligibility requirements are met.

Noncurrent Liabilities

Noncurrent liabilities include bonds and notes payable, certificates of participation, lease obligations, a related party note, compensated absences, OPEB obligations and an aggregate net pension liability with maturities greater than one year.

24



JUNE 30, 2015

Net Position

GASB Statements No. 34 and No. 35 report equity as "Net Position" and represent the difference between assets and liabilities. The net position is classified according to imposed restrictions or availability of assets for satisfaction of District obligations according to the following net asset categories:

Net Investment in Capital Assets consists of capital assets, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets. To the extent debt has been incurred, but not yet expended for capital assets, such accounts are not included as a component invested in capital assets - net of related debt.

Net position is reported as restricted when there are limitations imposed of their use, either through enabling legislation adopted by the District, or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. The District first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted resources are available.

None of the District's net position has resulted from enabling legislation adopted by the District.

Unrestricted : Net position that is not subject to externally imposed constraints. Unrestricted net position may be designated for specific purposes by action of the Board of Trustees or may otherwise be limited by contractual agreements with outside parties.

When both restricted and unrestricted resources are available for use, it is the District's practice to use restricted resources first and the unrestricted resources when they are needed. The government wide financial statements report $11,999,827 of restricted net position.

State Apportionments

Certain current year apportionments from the State are based on financial and statistical information of the previous year. Any corrections due to the recalculation of the apportionment are made in February of the subsequent year and are recorded in the District's financial records when received. When known and measurable, these recalculations and corrections are accrued in the year in which the FTES are generated.

Property Taxes

Secured property taxes attach as an enforceable lien on property as of January 1. The County Assessor is responsible for assessment of all taxable real property. Taxes are payable in two installments on November 1 and

February 1 and become delinquent on December 10 and April 10, respectively. Unsecured property taxes are payable in one installment on or before August 31. The County of Santa Cruz bills and collects the taxes on behalf of the District. Local property tax revenues are recorded when received.

The voters of the District passed General Obligation Bonds for the acquisition, construction, and remodeling of certain District property. As a result of the passage of the Bonds, property taxes are assessed on the property within the District specifically for the repayment of the debt incurred. The taxes are assessed, billed, and collected as noted above and remitted to the District through the County Tax Assessors office when collected.

25



JUNE 30, 2015

Board of Governors Grants (BOGG) and Fee Waivers

Student tuition and fee revenue is reported net of allowances and fee waivers approved by the Board of Governors through BOGG fee waivers in the Statement of Revenues, Expenses, and Changes in Net Position. Scholarship discounts and allowances represent the difference between stated charges for enrollment fees and the amount that is paid by students or third parties making payments on the students' behalf. To the extent that fee waivers have been used to satisfy tuition and fee charges, the District has recorded a scholarship discount and allowance.

Federal Financial Assistance Programs

The District participates in federally funded Pell Grants, SEOG Grants, and Federal Work-Study programs, as well as other programs funded by the Federal government. Financial aid to students is either reported as operating expenses or scholarship allowances, which reduce revenues. The amount reported as operating expense represents the portion of aid that was provided to the student in the form of cash. Scholarship allowances represent the portion of aid provided to students in the form of reduced tuition. These programs are audited in accordance with the Single Audit

Act Amendments of 1996, and the U.S. Office of Management and Budget's revised Circular A-133, Audits of States,

Local Governments, and Non-Profit Organizations and the related Compliance Supplement .

On-Behalf Payments

GASB Statement No. 24 requires direct on behalf payments for fringe benefits and salaries made by one entity to a third party recipient for the employees for another legally separate entity be recognized as revenues and expenditures by the employer entity. The State of California makes direct on behalf payments to CalSTRS on behalf of all community colleges in California. The California Department of Education has issued a fiscal advisory instructing districts not to record the revenue and expenditures for the on behalf payments within the funds and accounts of a district. The amount of the on behalf payments made for the District for the year ended

June 30, 2015, was $1,632,499 for CalSTRS. This amount is reflected in the District's audited financial statements.

26



JUNE 30, 2015

Estimates

The preparation of the financial statements with accounting principles generally accepted in the United States of

America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Interfund Activity

Interfund transfers and interfund receivables and payables are eliminated during the consolidation process in the

Primary Government and Fiduciary Funds' financial statements, respectively.

Foundation Financial Statement Presentation

The Cabrillo College Foundation presents its financial statements in accordance with Statement of Financial

Accounting Codifications. Under these reporting requirements, the Foundation is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. As permitted by the codification, the

Foundation does not use fund accounting.

Permanently Restricted Net Assets : Net assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. Generally, the donors of these assets permit the Foundation to use all or part of the income earned on related investments for general or specific purposes.

Temporarily Restricted Net Assets : Net assets subject to donor-imposed stipulations that will be met by actions of the Foundation and/or the passage of time.

Unrestricted Net Assets : Net assets not subject to donor-imposed restrictions.

Revenues and expenses are recorded when incurred in accordance with the accrual basis of accounting. Revenues are reported as increases in the unrestricted net assets classification unless use of the related assets is limited by donor-imposed restrictions. Contributions, including unconditional promises to give, are recognized as revenue in the period received. Conditional promises to give are not recognized as revenue until the conditions on which they depend are substantially met. Contributions for in-kind gifts from outside sources are recorded at their fair market value on the date of the donation.

Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law.

Investments are reported at fair value in accordance with FASB Accounting Standards Codification (ASC) 820,

Fair Value Measurements and Disclosures .

The Foundation is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the

Internal Revenue Code and related California Franchise Tax Codes.

27



JUNE 30, 2015

Change in Accounting Principles

In June 2012, the GASB issued Statement No. 68 , Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27 .

The primary objective of this Statement is to improve accounting and financial reporting by State and local governments for pensions. It also improves information provided by State and local governmental employers about financial support for pensions that is provided by other entities. This

Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency.

This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local

Governmental Employers , as well as the requirements of Statement No. 50, Pension Disclosures , as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. The requirements of Statements No. 27 and No. 50 remain applicable for pensions that are not covered by the scope of this Statement.

The scope of this Statement addresses accounting and financial reporting for pensions that are provided to the employees of State and local governmental employers through pension plans that are administered through trusts that have the following characteristics:

 Contributions from employers and nonemployer contributing entities to the pension plan and earnings on those contributions are irrevocable.





Pension plan assets are dedicated to providing pensions to plan members in accordance with the benefit terms.

Pension plan assets are legally protected from the creditors of employers, nonemployer contributing entities, and the pension plan administrator. If the plan is a defined benefit pension plan, plan assets also are legally protected from creditors of the plan members.

This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources and deferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service.

Note disclosure and required supplementary information requirements about pensions also are addressed.

Distinctions are made regarding the particular requirements for employers based on the number of employers whose employees are provided with pensions through the pension plan and whether pension obligations and pension plan assets are shared. Employers are classified in one of the following categories for purposes of this

Statement:

 Single employers are those whose employees are provided with defined benefit pensions through singleemployer pension plans—pension plans in which pensions are provided to the employees of only one employer (as defined in this Statement).

28



JUNE 30, 2015

 Agent employers are those whose employees are provided with defined benefit pensions through agent multiple-employer pension plans—pension plans in which plan assets are pooled for investment purposes, but separate accounts are maintained for each individual employer so that each employer's share of the pooled assets is legally available to pay the benefits of only its employees.

 Cost-sharing employers are those whose employees are provided with defined benefit pensions through cost-sharing multiple-employer pension plans—pension plans in which the pension obligations to the employees of more than one employer are pooled, and plan assets can be used to pay the benefits of the employees of any employer that provides pensions through the pension plan.

In addition, this Statement details the recognition and disclosure requirements for employers with liabilities

(payables) to a defined benefit pension plan and for employers whose employees are provided with defined contribution pensions. This Statement also addresses circumstances in which a nonemployer entity has a legal requirement to make contributions directly to a pension plan.

The District has implemented the Provisions of this Statement for the year ended June 30, 2015.

In November 2013, the GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an Amendment of GASB Statement No. 68 .

The objective of this Statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial

Reporting for Pensions .

The issue relates to amounts associated with contributions, if any, made by a State or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government's beginning net pension liability.

Statement No. 68 requires a State or local government employer (or nonemployer contributing entity in a special funding situation) to recognize a net pension liability measured as of a date (the measurement date) no earlier than the end of its prior fiscal year. If a State or local government employer or nonemployer contributing entity makes a contribution to a defined benefit pension plan between the measurement date of the reported net pension liability and the end of the government's reporting period, Statement No. 68 requires that the government recognize its contribution as a deferred outflow of resources. In addition, Statement No. 68 requires recognition of deferred outflows of resources and deferred inflows of resources for changes in the net pension liability of a

State or local government employer or nonemployer contributing entity that arise from other types of events. At transition to Statement No. 68, if it is not practical for an employer or nonemployer contributing entity to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions, paragraph 137 of Statement No. 68 required that beginning balances for deferred outflows of resources and deferred inflows of resources not be reported.

Consequently, if it is not practical to determine the amounts of all deferred outflows of resources and deferred inflows of resources related to pensions, contributions made after the measurement date of the beginning net pension liability could not have been reported as deferred outflows of resources at transition. This could have resulted in a significant understatement of an employer or nonemployer contributing entity's beginning net position and expense in the initial period of implementation.

This Statement amends paragraph 137 of Statement No. 68 to require that, at transition, a government recognize a beginning deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability. Statement No. 68, as amended, continues to require that beginning balances for other deferred outflows of resources and deferred inflows of resources related to pensions be reported at transition only if it is practical to determine all such amounts.

29



JUNE 30, 2015

The District has implemented the Provisions of this Statement for the year ended June 30, 2015.

As the result of implementing GASB Statement No. 68, the District has restated the beginning net position in the government-wide Statement of Net Position, effectively decreasing net position as of July 1, 2014, by

$53,700,050. The decrease results from recognizing the net pension liability, net of related deferred outflows of resources.

New Accounting Pronouncements

In February 2015, the GASB issued Statement No. 72, Fair Value Measurement and Application .

This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements.

The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015.

Early implementation is encouraged.

In June 2015, the GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and Related

Assets That Are Not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB

Statements No. 67 and No. 68 .

The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose external financial reports of State and local governments for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency.

This Statement establishes requirements for defined benefit pensions that are not within the scope of Statement

No. 68, Accounting and Financial Reporting for Pensions , as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement No. 68. It also amends certain provisions of Statement No. 67, Financial Reporting for Pension Plans , and Statement No. 68 for pension plans and pensions that are within their respective scopes.

The requirements of this Statement extend the approach to accounting and financial reporting established in

Statement No. 68 to all pensions, with modifications as necessary to reflect that for accounting and financial reporting purposes, any assets accumulated for pensions that are provided through pension plans that are not administered through trusts that meet the criteria specified in Statement No. 68 should not be considered pension plan assets. It also requires that information similar to that required by Statement No. 68 be included in notes to financial statements and required supplementary information by all similarly situated employers and nonemployer contributing entities.

30



JUNE 30, 2015

This Statement also clarifies the application of certain provisions of Statements No. 67 and No. 68 with regard to the following issues:

 Information that is required to be presented as notes to the ten-year schedules of required supplementary information about investment-related factors that significantly affect trends in the amounts reported.

 Accounting and financial reporting for separately financed specific liabilities of individual employers and nonemployer contributing entities for defined benefit pensions.

 Timing of employer recognition of revenue for the support of nonemployer contributing entities not in a special funding situation.

The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2016.

Early implementation is encouraged.

In June 2015, the GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other

Than Pension Plans . The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of State and local governmental OPEB plans for making decisions and assessing accountability. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency.

This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than

Pension Plans , as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer

Plans . It also includes requirements for defined contribution OPEB plans that replace the requirements for those

OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans , as amended, Statement No. 43, and Statement No. 50, Pension Disclosures .

Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions , establishes new accounting and financial reporting requirements for governments whose employees are provided with OPEB, as well as for certain nonemployer governments that have a legal obligation to provide financial support for OPEB provided to the employees of other entities.

The scope of this Statement includes OPEB plans—defined benefit and defined contribution—administered through trusts that meet the following criteria:

 Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable.

 OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms.

 OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, and the OPEB plan administrator. If the plan is a defined benefit OPEB plan, plan assets also are legally protected from creditors of the plan members.

31



JUNE 30, 2015

This Statement also includes requirements to address financial reporting for assets accumulated for purposes of providing defined benefit OPEB through OPEB plans that are not administered through trusts that meet the specified criteria.

The requirements of this Statement are effective for financial statements for periods beginning after June 15,

2016. Early implementation is encouraged.

In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment

Benefits Other Than Pension . The primary objective of this Statement is to improve accounting and financial reporting by State and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by State and local governmental employers about financial support for OPEB that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter-period equity, and creating additional transparency.

This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by

Employers for Postemployment Benefits Other Than Pensions , as amended, and No. 57, OPEB Measurements by

Agent Employers and Agent Multiple-Employer Plans , for OPEB. Statement No. 74, Financial Reporting for

Postemployment Benefit Plans Other Than Pension Plans , establishes new accounting and financial reporting requirements for OPEB plans.

The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of State and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures.

For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed.

In addition, this Statement details the recognition and disclosure requirements for employers with payables to defined benefit OPEB plans that are administered through trusts that meet the specified criteria and for employers whose employees are provided with defined contribution OPEB. This Statement also addresses certain circumstances in which a nonemployer entity provides financial support for OPEB of employees of another entity.

In this Statement, distinctions are made regarding the particular requirements depending upon whether the OPEB plans through which the benefits are provided are administered through trusts that meet the following criteria:

 Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable.

 OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms.

 OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, the OPEB plan administrator, and the plan members.


2017. Early implementation is encouraged.

32



JUNE 30, 2015

In June 2015, the GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments . The objective of this Statement is to identify—in the context of the current governmental financial reporting environment—the hierarchy of generally accepted accounting principles

(GAAP). The "GAAP hierarchy" consists of the sources of accounting principles used to prepare financial statements of State and local governmental entities in conformity with GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and non-authoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP.

This Statement supersedes Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for

State and Local Governments .


2015, and should be applied retroactively. Earlier implementation is permitted.

Comparative Financial Information

Comparative financial information for the prior year has been presented for additional analysis; certain amounts presented in the prior year data may have been reclassified in order to be consistent with the current year's presentation.

NOTE 3 - CASH AND INVESTMENTS

Policies and Practices

The District is authorized under California Government Code to make direct investments in local agency bonds, notes, or warrants within the State; U.S. Treasury instruments; registered State warrants or treasury notes; securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of deposit placed with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements; medium term corporate notes; shares of beneficial interest issued by diversified management companies, certificates of participation, obligations with first priority security; and collateralized mortgage obligations.

Investment in County Treasury The District is considered to be an involuntary participant in an external investment pool as the District is required to deposit all receipts and collections of monies with their County

Treasurer ( Education Code Section (ECS) 41001). The fair value of the District's investment in the pool is reported in the accompanying financial statements at amounts based upon the District's pro-rata share of the fair value provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio).

The balance available for withdrawal is based on the accounting records maintained by the County Treasurer, which is recorded on the amortized cost basis.

Restricted Cash – The District has a contractual requirement to keep one year’s COP payment in a reserve fund.

33



JUNE 30, 2015

General Authorizations

Limitations as they relate to interest rate risk, credit risk, and concentration of credit risk are indicated in the schedules below:

Mutual Funds

Authorized

Investment Type

Local Agency Bonds, Notes, Warrants

Registered State Bonds, Notes, Warrants

U.S. Treasury Obligations

U.S. Agency Securities

Banker's Acceptance

Commercial Paper

Negotiable Certificates of Deposit

Repurchase Agreements

Reverse Repurchase Agreements

Medium-term Corporate Notes

Money Market Mutual Funds

Mortgage Pass-Through Securities

County Pooled Investment Funds

Local Agency Investment Fund (LAIF)

Joint Powers Authority Pools

Maximum

Remaining

Maturity

5 years

5 years

5 years

5 years

180 days

270 days

5 years

1 year

92 days

5 years

N/A

N/A

5 years

N/A

N/A

N/A

Maximum

Percentage of Portfolio

None

None

None

None

40%

25%

30%

None

20% of base

30%

20%

20%

20%

None

None

None

Maximum

Investment

In One Issuer

None

None

None

None

30%

10%

None

None

None

None

10%

10%

None

None

None

None

Summary of Deposits and Investments

Deposits and investments as of June 30, 2015, consist of the following:

Primary government

Cash in banks

Cash in revolving

Investments - cash equivalents

Total Deposits and Investments

Fiduciary government

Cash in banks

Investments - cash equivalents

Total Deposits and Investments

$

$

1,851,790

55,000

42,372,585

44,279,375

$

$

295,975

945,163

1,241,138

34



JUNE 30, 2015

Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The

District manages its exposure to interest rate risk by investing in the County pool and having the pool purchase a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

Specific Identification of the District’s Investments

Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuation is provided by the following schedule that shows the distribution of the District's investment by maturity:

Investment Type - Primary government Cost

Fair

Value

Maturity

Date

U.S. Treasury

County Pool

Total

$ 346,500

42,026,085

$ 42,372,585

$ 346,500

42,078,373

$ 42,424,873

0.08 Years

1.25 Years

County Pool

Investment Type - Fiduciary funds

$

Cost

945,163

Fair

Value

$ 946,339

Maturity

Date

1.25 Years

Credit Risk

Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.

This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

Presented below is the actual rating as of the year-end for each investment type.

Investment Type - Primary government

U.S. Agencies

County Pool

Total

Fair

Value

$

$ 346,500

42,078,373

42,424,873 $

Not Required Rating as of

To Be Year End

Rated

$ -

Aaa

$ 346,500

42,078,373

42,078,373

-

$ 346,500

County Pool

Investment Type - Fiduciary funds

Fair

Value

$ 946,339

Not Required Rating as of

To Be Year End

$

Rated

946,339

Aaa

$ -

35



JUNE 30, 2015

Concentration of Credit Risk

The investment policy of the District contains no limitations on the amount that can be invested in any one issuer beyond the amount stipulated by the California Government code. There were no investments in any one issuer that represent five percent or more of the total investments.

Custodial Credit Risk - Deposits

This is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a policy for custodial credit risk. However, the California Government Code requires that a financial institution secure deposits made by State or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under State law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agency. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. As of June 30, 2015, approximately $3,162,000 of the District's cash balance of approximately

$3,834,000 was exposed to custodial credit risk because it was uninsured but it is collateralized with securities held by the pledging institution's trust department, or agent, but not in the name of the District.

Custodial Credit Risk - Investments

This is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. As of June 30, 2015, the

District has no custodial credit risk on the investment in US Bank of $346,500.

36



JUNE 30, 2015

NOTE 4 - ACCOUNTS RECEIVABLE

Accounts receivable for the District consisted primarily of intergovernmental grants, entitlements, interest, and other local sources.

The accounts receivable are as follows:

Primary Government

Federal Government

Categorical aid

State Government

Categorical aid

Restricted lottery

Local Government

Other local sources

Subtotal

Student receivables

Less allowance for uncollectible accounts

Subtotal

Total

$

$

801,685

719,942

862,562

770,141

3,154,330

6,096,359

(3,983,939)

2,112,420

5,266,750

Local Government

Other local sources

Fiduciary Funds

$ 17,000

The District computes an allowance for uncollectible student accounts receivable based on a percentage of aged outstanding amounts at June 30. The allowance includes all student receivables older than ninety days, thirty percent of student receivables aged between sixty-one to ninety days old, and ten percent of student receivables aged between thirty-one and sixty days old.

Discretely Presented Component Unit

At June 30, 2015, the Foundation's contributions receivable was $1,447,794. This amount was primarily shortterm donations. The contributions receivable amount is net of an allowance for uncollectible contributions of approximately $12,000 at June 30, 2015.

37



JUNE 30, 2015

NOTE 5 - CAPITAL ASSETS

Capital asset activity for the District for the fiscal year ended June 30, 2015, was as follows:

Capital Assets Not Being Depreciated

Land

Construction in progress

Total Capital Assets Not

Being Depreciated

Capital Assets Being Depreciated

Land improvements

Infrastructure

Buildings


Total Capital Assets

Being Depreciated

Total Capital Assets

Balance

Beginning of

Year

6,501,407

Additions/

Adjustments

$ 4,164,679

2,336,728

$ -

3,596,746

3,596,746

Deductions

$ -

2,685,781

2,685,781

Balance End of

Year

$ 4,164,679

3,247,693

7,412,372

13,916,410

49,076,942

275,525,073

16,460,207

-

-

8,440,944

2,067,195

-

-

-

2,295,996

354,978,632

361,480,039

10,508,139

14,104,885

2,295,996

4,981,777

13,916,410

49,076,942

283,966,017

16,231,406

363,190,775

370,603,147

Less Accumulated Depreciation

Land improvements

Infrastructure

Buildings


Total Accumulated Depreciation

Net Capital Assets Being Depreciated

Net Capital Assets

7,207,499

10,139,407

44,365,102

12,176,750

73,888,758

281,089,874

$ 287,591,281

482,078

981,547

5,827,160

1,375,640

8,666,425

1,841,714

$ 5,438,460

-

-

-

2,295,996

2,295,996

$ 2,685,781

-

7,689,577

11,120,954

50,192,262

11,256,394

80,259,187

282,931,588

$ 290,343,960

Depreciation expense for the year was $8,666,425.

Net interest expense for the year ended June 30, 2015 was $13,985,150, $7,842,142 of which was capitalized during the year.


Net capital assets for the Cabrillo College Foundation was $0 for the year ended June 30, 2015. Depreciation expense was $1,463 for 2015.

38



JUNE 30, 2015

NOTE 6 - ACCOUNTS PAYABLE

Accounts payable for the District consisted of the following:

Vendors

Accrued payroll and benefits

State categorical aid

Apportionment

Total

Primary Government

$ 2,925,397

1,187,180

7,905

773,955

$ 4,894,437

Vendors

Fiduciary Funds

$ 10,558


The liabilities of the Cabrillo College Foundation consist primarily of amounts owed for scholarships and projects totaling $1,434,019 for the year ended June 30, 2015.

NOTE 7 - UNEARNED REVENUE

Unearned revenue consisted of the following:

Federal categorical aid

State categorical aid

Enrollment fees

Other local

Total

Primary Government

$ 7,186

4,439,983

2,874,679

413,544

$ 7,735,392

Enrollment fees

Fiduciary Funds

$ (6,821)

NOTE 8– TAX AND REVENUE ANTICIPATION NOTES (TRANS)

On March 5, 2014, the District issued a $4,365,000 Tax and Revenue Anticipation Note bearing interest at 2.0 percent. The note was issued to supplement cash flows. Interest and principal was due and payable on December

31, 2014.

39



JUNE 30, 2015

Changes in the outstanding liability for the Tax and Revenue Anticipation Notes are as follows:

Issue Date

March 5, 2014

Rate Maturity Date

2.00% December 31, 2014

Outstanding

July 1, 2014 Additions Interest

$ 4,395,783 $ $ -

Outstanding

Deductions June 30, 2015

$ 4,395,783 $ -

NOTE 9 - INTERFUND TRANSACTIONS

Interfund Receivables and Payables (Due To/Due From)

Interfund receivable and payable balances arise from interfund transactions and are recorded by all funds affected in the period in which transactions are executed. Interfund activity within the governmental funds and fiduciary funds has been eliminated respectively in the consolidation process of the basic financial statements. Balances owing between the primary government and the fiduciary funds are not eliminated in the consolidation process.

As of June 30, 2015, the amounts owed between the primary government and the fiduciary funds were $95,329 and $115,119, respectively.

Interfund Operating Transfers

Operating transfers between funds of the District are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use restricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Operating transfers within the funds of the

District have been eliminated in the consolidation process. Transfers between the primary government and the fiduciary funds are not eliminated in the consolidation process. During the 2015 fiscal year, the amount transferred to the primary government from the fiduciary fund amounted to $214,848. The amount transferred to the fiduciary funds from the primary government amounted to $135,902.

40



JUNE 30, 2015

NOTE 10 - LONG-TERM OBLIGATIONS

Long-term Obligations Summary

The changes in the District's long-term obligations during the 2015 fiscal year consisted of the following:

Balance

Beginning of Year

(as restated)

Additions/

Accretion Deductions

Balance

End of Year

Due in

One Year

Bonds and Notes Payable

General obligation bonds

Capital appreciation bonds

Subtotal

Related party note payable

Bond premiums

Total Bonds and Notes Payable

$ 97,385,000

79,722,406

177,107,406

106,895

1,553,049

178,767,350

$

4,146,384

-

4,146,384

4,146,384

-

-

$ 6,090,000

1,779,831

7,869,831

44,000

63,501

7,977,332

$ 91,295,000

82,088,959

173,383,959

62,895

1,489,548

174,936,402

$ 8,505,000

1,738,278

10,243,278

62,895

63,501

10,369,674

Other Liabilities

Compensated absences

Certificates of participation

Capital lease

Other postemployment benefits

Aggregate net pension obligation

Total Other Liabilities

Total Long-term Debt

915,788

1,951,450

35,705

2,890,798

57,135,110

62,928,851

274,489

274,489

$ 241,696,201 $ 4,420,873

-

-

-

-

10,910

643,230

9,062

-

11,964,649

12,627,851

$ 20,605,183

904,878

1,308,220

26,643

3,165,287

45,170,461

50,575,489

$ 225,511,891

-

668,220

9,062

-

-

677,282

$ 11,046,956

Description of Bonds

Payments on the general obligation bonds are made by the Bond Interest and Redemption Fund with local revenues. Payments on the Certificates of Participation (COPs) and the related party note payable are made by the Debt Service Fund. Capital lease payments are made by the General – Unrestricted Fund. The compensated absences and other postemployment benefits will be paid for by the fund for which the employee worked.

The District issued 1998 Series A, B, C and D in the amount of $ 85,000,000 as authorized by voter election held within the Cabrillo Community College District boundaries. The bond proceeds were used to finance the construction and renovation of various District facilities and are paid through ad valorem taxes.

On June 2, 2004, the District issued the 2004 Series A bonds totaling $59,997,760 and on March 27, 2007, the

District issued the 2004 Series B bonds totaling $58,498,505 to finance the construction and renovation of various

District facilities.

On May 22, 2012, the District issued the 2012 Refunding Bonds in the amount of $38,505,000. The proceeds were used to advance refund a portion of the outstanding 2004 Series A Bonds and a portion of the outstanding

2004 Refunding Bonds.

41



JUNE 30, 2015

Description of Related Party Note

On May 14, 2013, the District obtained $106,895 through a loan agreement with the Cabrillo College Foundation in order to facilitate the purchase of furniture and equipment for the Building 800 Renovation Project.

Description of Certificates of Participation

In February 1998, the District issued certificates of participation in the amount of $3,450,000. The proceeds from the issuance were used to finance the acquisition of various capital assets.

On July 11, 2012, the District obtained $1,529,860 through a direct lease purchase agreement (STEM COP loan) with a bank to finance costs associated with the Building 800 Renovation Project to accommodate the science, technology, engineering, and math programs (STEM). The bank will purchase the lease bonds at a rate of 2.75 percent for four years. Repayment of the loan including interest will be from annual proceeds received from the

STEM Articulation Program Grant awarded to Cabrillo College in 2015 of which a portion of the grant has been allocated for construction and remodeling.

Description of Capital Lease

The District has entered into lease agreements for office equipment. These agreements are in substance a purchase (capital lease) and are reported as capital lease obligations.

Debt Maturity

General Obligation Bonds

Issue

Date

2/16/2000

4/20/2001

6/27/2002

5/18/2004

5/18/2004

3/27/2007

5/22/2012

Maturity

Date

Interest

Rate

8/1/2024 4.00-6.30%

5/1/2026 5.01-5.80%

7/1/2027 3.00-5.70%

8/1/2018 2.00-5.70%

8/1/2028 2.00-5.80%

8/1/2039 4.79-4.87%

8/1/2027 2.00-5.00%

Original

Issue

$ 30,000,000

20,002,009

22,997,991

32,410,000

59,997,760

58,498,505

38,505,000

Bonds

Outstanding

July 1, 2014

$ 25,980,129

6,848,923

9,991,390

8,900,000

21,488,908

66,358,056

37,540,000

$ 177,107,406

Issued/

Accreted

$ 1,390,185

338,071

560,070

-

184,448

1,673,610

-

$ 4,146,384

Redeemed

$ 1,151,367

305,606

322,858

3,955,000

1,500,000

450,000

185,000

$ 7,869,831

Bonds

Outstanding

June 30, 2015

$ 26,218,947

6,881,388

10,228,602

4,945,000

20,173,356

67,581,666

37,355,000

$ 173,383,959

42



JUNE 30, 2015

The bonds mature through 2040 as follows:

Fiscal Year

2016

2017

2018

2019

2020

2021-2025

2026-2030

2031-2035

2036-2040

Total

Accretion to date:

$

Principal

7,667,728

8,195,903

8,744,262

5,808,441

4,972,346

30,150,598

25,728,023

13,744,894

$

29,203,800

134,215,995

$

39,167,964

173,383,959

$

$

Interest to

Maturity

6,534,387

6,495,299

6,387,885

6,426,281

6,435,672

32,958,139

25,504,806

34,538,969

29,565,698

154,847,136

$

$

Total

14,202,115

14,691,202

15,132,147

12,234,722

11,408,018

63,108,737

51,232,829

48,283,863

58,769,498

289,063,131

Related Party Note Payable

Interest on the related party note payable is at the annual rate equivalent to the monthly money market rate earned by the Cabrillo College Foundation for other concurrent investments. The note may be prepaid in whole or in part at any time without penalty. The related party note payable matures through 2016 as follows:

Year Ending

June 30,

2016

Principal

$ 62,895

Interest to be determined

Total

$ 62,895

Certificates of Participation

The certificates of participation mature through 2018 as follows:

Year Ending

June 30,

2016

2017

2018

Total

Principal

$ 668,220

310,000

330,000

$ 1,308,220

Interest

$ 57,014

32,000

16,500

$ 105,514

Total

$ 725,234

725,234

342,000

$ 1,792,468

43



JUNE 30, 2015

Capital Lease

The District's liability on its lease agreements through 2019 with an option to purchase are as follows:

Year Ending

June 30,

2016

2017

2018

2019

Total

Less: Amount Representing Interest

Present Value of Minimum Lease Payments

Lease

Payment

$ 9,062

9,062

7,313

1,206

26,643

2,448

$ 24,195

Equipment under capital leases at June 30, 2015 include the following:

Equipment

Less: Accumulated Depreciation

Total

$ 43,170

(15,163)

$ 28,007

Amortization of the leased equipment under capital leases is included with depreciation expense.

Accumulated Unpaid Employee Vacation

The long-term portion of accumulated unpaid employee vacation for the District at June 30, 2015 is $904,878.

Other Postemployment Benefit (OPEB) Obligation

The District’s annual required contribution for the year ended June 30, 2015 was $1,641,980, contributions made by the District during the year were $1,367,491 and the balance at the beginning of the year was $2,890,798. As of June 30, 2015, the net OPEB obligation was $3,165,287. See Note 11 for additional information regarding the

OPEB obligation and the postemployment benefit plan.

NOTE 11 - POSTEMPLOYMENT HEALTH CARE PLAN AND OTHER POSTEMPLOYMENT

BENEFITS (OPEB) OBLIGATION

The District provides postemployment health care benefits for retired employees in accordance with negotiated contracts with the various bargaining units of the District.

Plan Description

The Postemployment Benefit Plan (the "Plan") is a single-employer defined benefit healthcare plan administered by the Cabrillo Community College District. The Plan provides medical insurance benefits to eligible retirees and their spouses. Membership of the Plan consists of 135 retirees and beneficiaries currently receiving benefits, 28 terminated plan members entitled to but not yet receiving benefits, and 460 active plan members.

44



JUNE 30, 2015

Benefit types provided

Duration of Benefits

Required Service

Minimum Age

Dependent Coverage

College Contribution %

College Cap

Faculty

Medical only

To age 70

10 years**

55

Yes*

100%

Lowest cost HMO***

Management

Medical only

To age 70

10 years

50

Yes*

100%

Active cap

Classified and

Confidential

Medical only

To age 65

10 years

50

Yes

100%

Lowest cost HMO

* Spouse benefits are only provided until the retiree reaches age 65

** Must be consecutive years

*** Those hired prior to the 2008-09 school year receive the same cap as active employees

Contribution Information

The contribution requirements of Plan members and the District are established and may be amended by the

District and the District's bargaining units. The required contribution is based on projected pay-as-you-go financing requirements with an additional amount to prefund benefits as determined annually through agreements between the District and the bargaining units. For fiscal year 2014-2015, the District contributed $1,367,491 to the Plan, all of which was used for current premiums (approximately 83 percent of total premiums).

Annual OPEB Cost and Net OPEB Obligation

The District's annual OPEB cost (expense) is calculated based on the annual required contribution of the employer

(ARC), an amount actuarially determined in accordance with the payments of GASB Statement No. 45. The

ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial accrued liabilities (UAAL) (or funding costs) over a period not to exceed

30 years. The following table shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the District's net OPEB obligation to the Plan:

Annual required contribution

Contributions made

Increase in net OPEB obligation

Net OPEB obligation, beginning of year

Net OPEB obligation, end of year

$ 1,641,980

1,367,491

274,489

2,890,798

$ 3,165,287

45



JUNE 30, 2015

Trend Information

Trend information for the annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the past four years is as follows:

Year Ended

June 30

2013

2014

2015

Actual

Contribution

$ 1,177,234

$ 1,264,733

$ 1,367,491

Annual Required Percentage

Contribution Contributed

$

$

1,519,261

1,641,606

$ 1,641,980

77%

77%

83%

Net OPEB

Obligation

$ 2,513,925

$ 2,890,798

$ 3,165,287

Funded Status and Funding Progress

The Plan is not funded, however, as of June 30, 2015, the District has set aside approximately $3.8 million for these costs. The actuarial accrued liability was based on the October 1, 2013 actuarial valuation. Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the Plan and the annual required contribution of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Other Postemployment Benefits

Funding Progress, presented as required supplementary information, follows the notes to the financial statements and presents multi-year trend information about whether the actuarial value of Plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive Plan (the Plan as understood by the employer and the Plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and the Plan members to that point.

The actuarial methods and assumptions used include techniques that are designed to reduce the effects of shortterm volatility in actuarial accrued liabilities and the actuarial values of assets, consistent with the long-term perspective of the calculations.

In the October 1, 2013, actuarial valuation, the entry age normal method was used. The actuarial assumptions included a 4.75 percent investment rate of return (net of administrative expenses), based on the plan being funded in an irrevocable employee benefit trust invested in a combined equity and fixed income portfolio. Healthcare cost trend rates were estimated at 4.00 percent and take College contribution caps into account. The UAAL is being amortized at a level percentage of payroll method assuming a 2.75 percent annual increase in payroll. The remaining amortization period at June 30, 2015 was 23 years. The actuarial value of assets was not determined in this actuarial valuation.

46



JUNE 30, 2015

NOTE 12 - RISK MANAGEMENT

Insurance Coverage

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

Joint Powers Authority Risk Pools

During fiscal year ending June 30, 2015, the District contracted with the Statewide Association of Community

Colleges (“SWACC”) Joint Powers Authority (JPA) for property and liability insurance coverage. Settled claims have not exceeded this commercial coverage in any of the past three years. There has not been a significant reduction in coverage from the prior year.

Workers' Compensation

The intent of the JPA is to achieve the benefit of a reduced premium for the District by virtue of its grouping and representation with other participants in the JPA. The workers' compensation experience of the participating districts is calculated as one experience, and a common premium rate is applied to all districts in the JPA. Each participant pays its workers' compensation premium based on its individual rate. Total savings are then calculated and each participant's individual performance is compared to the overall saving. A participant will then either receive money from or be required to contribute to the "equity-pooling fund." This "equity pooling" arrangement insures that each participant shares equally in the overall performance of the JPA. Participation in the JPA is limited to K-12 and community college districts that can meet the JPA's selection criteria.

Insurance Program/Company Name

Northern California Community College Pool

Statewide Association of Community Colleges

Schools Excess Liability Fund

Type of Coverage

Workers' Compensation

Property and Liability

Excess Liability

Limits

Statutory Limits

$ 250,000,000

$ 35,000,000

Employee Medical Benefits

The District has contracted with the Self Insured Schools of California (SISC) to provide employee medical and surgical benefits. SISC is a shared risk pool comprised of several educational agencies throughout California.

Rates are set through an annual calculation process. The District pays a monthly contribution, which is placed in a common fund from which claim payments are made for all participating districts. Claims are paid for all participants regardless of claims flow. The Board of Directors has a right to return monies to a district subsequent to the settlement of all expenses and claims if a district withdraws from the pool.

NOTE 13 - EMPLOYEE RETIREMENT SYSTEMS

Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Academic employees are members of CalSTRS and classified employees are members of CalPERS.

47



JUNE 30, 2015

The District implemented GASB Statements No. 68 and No. 71 for the fiscal year ended June 30, 2015. As a result, the District reported its proportionate share of the net pension liabilities, pension expense, and deferred inflow of resources for each of the above plans and a deferred outflow of resources for each of the above plans as follows:

CalSTRS

CalPERS

Pension Plan

Total

Proportionate

Share of Net

Pension Liability

$ 31,315,217

13,855,244

$ 45,170,461

Deferred

Outflow of

Resources

$ 1,877,629

1,756,256

$ 3,633,885

Proportionate

Share of Deferred

Inflow of Resources

$ 7,711,313

4,760,816

$ 12,472,129

Proportionate

Share of

Pension Expense

$

$

2,703,514

1,231,448

3,934,962

The details of each plan are as follows:

California State Teachers' Retirement System (CalSTRS)


The District contributes to the State Teachers' Retirement Plan (STRP) administered by CalSTRS. STRP is a cost-sharing multiple-employer public employee retirement system defined benefit pension plan. Benefit provisions are established by State statutes, as legislatively amended, within the State Teachers' Retirement Law.

A full description of the pension plan regarding benefit provisions, assumptions (for funding, but not accounting purposes), and membership information is listed in the June 30, 2013, annual actuarial valuation report, Defined

Benefit Program Actuarial Valuation. This report and CalSTRS audited financial information are publically available reports that can be found on the CalSTRS website under Publications at: http://www.calstrs.com/member-publications.

Benefits Provided

The STRP provides retirement, disability, and survivor benefits to beneficiaries. Benefits are based on members' final compensation, age, and years of service credit. Members hired on or before December 31, 2012, with five years of credited service are eligible for the normal retirement benefit at age 60. Members hired on or after

January 1, 2013, with five years of credited service are eligible for the normal retirement benefit at age 62. The normal retirement benefit is equal to 2.0 percent of final compensation for each year of credited service.

The STRP is comprised of four programs: Defined Benefit Program, Defined Benefit Supplement Program, Cash

Balance Benefit Program, and Replacement Benefits Program. The STRP holds assets for the exclusive purpose of providing benefits to members and beneficiaries of these programs. CalSTRS also uses plan assets to defray reasonable expenses of administering the STRP. Although CalSTRS is the administrator of the STRP, the State is the sponsor of the STRP and obligor of the trust. In addition, the State is both an employer and nonemployer contributing entity to the STRP.

The District contributes exclusively to the STRP Defined Benefit Program, thus disclosures are not included for the other plans.

48



JUNE 30, 2015

The STRP provisions and benefits in effect at June 30, 2015, are summarized as follows:

Hire date

Benefit formula

Benefit vesting schedule

Benefit payments

Retirement age

Monthly benefits as a percentage of eligible compensation

Required employee contribution rate

Required employer contribution rate

Required state contribution rate

STRP Defined Benefit Program

On or before

December 31, 2012

On or after

January 1, 2013

2% at 60

5 years of service

Monthly for life

60

2% at 62

5 years of service

Monthly for life

62

2.0% - 2.4%

8.15%

8.88%

5.95%

2.0% - 2.4%

8.15%

8.88%

5.95%

Contributions

Required member, District, and State of California contribution rates are set by the California Legislature and

Governor and detailed in Teachers' Retirement Law. The contribution rates are expressed as a level percentage of payroll using the entry age normal actuarial method. In accordance with AB 1469, employer contributions into the CalSTRS will be increasing to a total of 19.1 percent of applicable member earnings phased over a seven-year period. The contribution rates for each plan for the year ended June 30, 2015, are presented above, and the

District's total contributions were $1,877,629.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of

Resources Related to Pensions

At June 30, 2015, the District reported a liability for its proportionate share of the net pension liability that reflected a reduction for State pension support provided to the District. The amount recognized by the District as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with the District were as follows:

Total net pension liability, including State share:

District's proportionate share of net pension liability

State's proportionate share of the net pension liability associated with the District

Total

$ 31,315,217

18,909,480

$ 50,224,697

The net pension liability was measured as of June 30, 2014. The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating college districts and the State, actuarially determined. At June 30, 2015, the District's proportion was 0.0536 percent.

49



JUNE 30, 2015

For the year ended June 30, 2015, the District recognized pension expense of $2,703,514 and revenue of

$1,632,499 for support provided by the State. At June 30, 2015, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Resources

$ 1,877,629

Deferred Inflows of Resources

$ Pension contributions subsequent to measurement date

Differences between projected and actual earnings

on pension plan investments

Total $ 1,877,629

-

$

7,711,313

7,711,313

The deferred outflow of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016.

The deferred inflow of resources will be amortized over a closed five-year period and will be recognized in pension expense as follows:

Year Ended

June 30,

2016

2017

2018

2019

Total

Amortization

$ 1,927,828

1,927,828

1,927,828

1,927,829

$ 7,711,313


Total pension liability for STRP was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2013, and rolling forward the total pension liability to June 30, 2014. The financial reporting actuarial valuation as of June 30, 2013, used the following methods and assumptions, applied to all prior periods included in the measurement:

Valuation date

Measurement date

Experience study

Actuarial cost method

Discount rate

Investment rate of return

Consumer price inflation

Wage growth

June 30, 2013

June 30, 2014

July 1, 2006 through June 30, 2010

Entry age normal

7.60%

7.60%

3.00%

3.75%

CalSTRS uses custom mortality tables to best fit the patterns of mortality among its members. These custom tables are based on RP2000 series tables adjusted to fit CalSTRS experience.

50



JUNE 30, 2015

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense, and inflation) are developed for each major asset class. The best estimate ranges were developed using capital market assumptions from CalSTRS general investment consultant. Based on the model for CalSTRS consulting actuary investment practice, a best estimate range was determined assuming the portfolio is re-balanced annually and that the annual returns are lognormally distributed and independent from year to year to develop expected percentile for the long-term distribution of annualized returns. The assumed asset allocation is based on board policy for target asset allocation in effect on February 2, 2012, the date the current experience study was approved by the board. Best estimates of 10-year geometric real rates of return and the assumed asset allocation for each major asset class used as input to develop the actuarial investment rate of return are summarized in the following table:

Asset Class

Global equity

Private equity

Real estate

Inflation sensitive

Fixed income

Cash/liquidity

Assumed Asset

Allocation

47%

12%

15%

5%

20%

1%

Long-term

Expected Real

Rate of Return

4.50%

6.20%

4.35%

3.20%

0.20%

0.00%

Discount Rate

The discount rate used to measure the total pension liability was 7.60 percent. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Projected inflows from investment earnings were calculated using the long-term assumed investment rate of return (7.60 percent) and assuming that contributions, benefit payments, and administrative expense occurred midyear. Based on these assumptions, the STRP's fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability.

The following presents the District's proportionate share of the net pension liability calculated using the current discount rate, as well as what the net pension liability would be if it were calculated using a discount rate that is one percent lower or higher than the current rate:

Discount Rate

1% decrease (6.60%)

Current discount rate (7.60%)

1% increase (8.60%)

Net Pension

Liability

$

$

48,812,234

31,315,217

$ 16,725,885

51



JUNE 30, 2015

California Public Employees' Retirement System (CalPERS)


Qualified employees are eligible to participate in the School Employer Pool (SEP) under CalPERS, a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS.

Benefit provisions are established by State statutes, as legislatively amended, within the Public Employees'

Retirement Law.

A full description of the pension plan regarding benefit provisions, assumptions (for funding, but not accounting purposes), and membership information is listed in the June 30, 2013, annual actuarial valuation report. This report and CalPERS audited financial information are publicly available reports that can be found on the

CalPERS website under Forms and Publications at: https://www.calpers.ca.gov/page/forms-publications .

Benefits Provided

CalPERS provides service retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members who must be public employees and beneficiaries. Benefits are based on years of service credit, a benefit factor, and the member's final compensation. Members hired on or before December 31, 2012, with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. Members hired on or after January 1, 2013, with five years of total service are eligible to retire at age 52 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after five years of service. The Basic Death

Benefit is paid to any member's beneficiary if the member dies while actively employed. An employee's eligible survivor may receive the 1957 Survivor Benefit if the member dies while actively employed, is at least age 50 (or age 52 for members hired on or after January 1, 2013), and has at least five years of credited service. The cost of living adjustments for each plan are applied as specified by the Public Employees' Retirement Law.

The CalPERS provisions and benefits in effect at June 30, 2015, are summarized as follows:

Hire date

Benefit formula

Benefit vesting schedule

Benefit payments

Retirement age

Monthly benefits as a percentage of eligible compensation

Required employee contribution rate

Required employer contribution rate

School Employer Pool (CalPERS)

On or before

December 31, 2012

On or after

January 1, 2013

2% at 55

5 years of service

Monthly for life

55

2% at 62

5 years of service

Monthly for life

62

1.1% - 2.5%

7.000%

11.771%

1.0% - 2.5%

6.000%

11.771%

52



JUNE 30, 2015

Contributions

Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on July 1 following notice of a change in the rate. Total plan contributions are calculated through the CalPERS annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The contribution rates are expressed as a percentage of annual payroll. The contribution rates for each plan for the year ended June 30, 2015, are presented above, and the total District contributions were $1,756,256.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of

Resources Related to Pensions

As of June 30, 2015, the District reported net pension liabilities for its proportionate share of the CalPERS net pension liability totaling $13,855,244. The net pension liability was measured as of June 30, 2014. The District's proportion of the net pension liability was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating college districts, actuarially determined. At June 30, 2015, the District's proportion was 0.1220 percent.

For the year ended June 30, 2015, the District recognized pension expense of $1,231,448. At June 30, 2015, the

District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Resources

$ 1,756,256

Deferred Inflows of Resources

$ Pension contributions subsequent to measurement date

Differences between projected and actual earnings on

pension plan investments

Total $ 1,756,256 $

4,760,816

4,760,816

The deferred outflow of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016.

The deferred inflow of resources will be amortized over a closed five-year period and will be recognized in pension expense as follows:

Year Ended

June 30,

2016

2017

2018

2019

Total

Amortization

$ 1,190,204

1,190,204

$

1,190,204

1,190,204

4,760,816

53



JUNE 30, 2015


Total pension liability for the SEP was determined by applying update procedures to a financial reporting actuarial valuation as of June 30, 2013, and rolling forward the total pension liability to June 30, 2014. The financial reporting actuarial valuation as of June 30, 2013, used the following methods and assumptions, applied to all prior periods included in the measurement:

Valuation date

Measurement date

Experience study

Actuarial cost method

Discount rate

Investment rate of return

Consumer price inflation

Wage growth

June 30, 2013

June 30, 2014

July 1, 1997 through June 30, 2011

Entry age normal

7.50%

7.50%

2.75%

3.00%

Mortality assumptions are based on mortality rates resulting from the most recent CalPERS experience study adopted by the CalPERS Board. For purposes of the post-retirement mortality rates, those revised rates include five years of projected ongoing mortality improvement using Scale AA published by the Society of Actuaries.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations, as well as the expected pension fund cash flows. Using historical returns of all the funds' asset classes, expected compound returns were calculated over the short-term (first ten years) and the longterm (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class

Global equity

Global fixed income

Private equity

Real estate

Inflation sensitive

Infrastructure and Forestland

Liquidity

Assumed Asset

Allocation

47%

19%

12%

11%

6%

3%

2%

Long-term

Expected Real

Rate of Return

5.25%

0.99%

6.83%

4.50%

0.45%

4.50%

-0.55%

54



JUNE 30, 2015

Discount Rate

The discount rate used to measure the total pension liability was 7.50 percent. The projection of cash flows used to determine the discount rate assumed the contributions from plan members and employers will be made at statutory contribution rates. Based on these assumptions, the School Employer Pool fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine total pension liability.

The following presents the District's proportionate share of the net pension liability calculated using the current discount rate, as well as what the net pension liability would be if it were calculated using a discount rate that is one percent lower or higher than the current rate:

Discount rate

1% decrease (6.50%)

Current discount rate (7.50%)

1% increase (8.50%)

Net Pension

Liability

$ 24,305,260

$ 13,855,244

$ 5,123,201

Tax Deferred Annuity/Social Security

As established by Federal law, all public sector employees who are not members of their employer's existing retirement system (CalSTRS or CalPERS) must be covered by Social Security or an alternative plan. The District has elected to use Social Security as its alternative plan.

On Behalf Payments

The State of California makes contributions to CalSTRS and CalPERS on behalf of the District. These payments consist of State General Fund contributions to CalSTRS for the fiscal years ended June 30, 2015, 2014, and 2013, which amounted to $1,632,499, $1,339,317, and $1,212,218, respectively, (5.679 percent) of salaries subject to

CalSTRS. Contributions are no longer appropriated in the annual Budget Act for the legislatively mandated benefits to CalPERS. Therefore, there is no on behalf contribution rate for CalPERS. No contributions were made for CalPERS for the years ended June 30, 2015, 2014, and 2013. Under accounting principles generally accepted in the United States of America, these amounts are to be reported as revenues and expenditures. These amounts have been reflected in the basic financial statements as a component of non-operating revenue and employee benefit expense.

NOTE 14 - PARTICIPATION IN PUBLIC ENTITY RISK POOLS AND JOINT POWERS AUTHORITIES

The District is a member of the Statewide Association of Community Colleges (“SWACC”) Joint Powers

Authority, Self Insured Schools of California (“SISC”) and Northern California Community College Pool

(“NCCCP”) Joint Powers Authority (JPAs). The District pays annual premiums for its property liability, health benefits and workers' compensation coverage. The relationship between the District and the JPAs are such that they are not component units of the District for financial reporting purposes.

The JPAs have budgeting and financial reporting requirements independent of member units and their financial statements are not presented in these financial statements; however, transactions between the JPAs and the

District are included in these statements. Audited financial statements are available from the respective entities.

55



JUNE 30, 2015 AND 2014

The District's share of year-end assets, liabilities, or fund equity has not been calculated.

During the year ended June 30, 2015, the District made payments of $262,801, and $9,514,768, and $606,850, to

SWACC, SISC and NCCCP, respectively.

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Grants

The District receives financial assistance from Federal and State agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the District. However, in the opinion of management, any such disallowed claims will not have a material adverse effect on the overall financial position of the District at June 30, 2015.

Litigation

The District is involved in various litigations arising from the normal course of business. In the opinion of management and legal counsel, the disposition of all litigation pending is not expected to have a material adverse effect on the overall financial position of the District at June 30, 2015.

Related Party Transactions

On May 14, 2013, the District obtained $106,895 through a loan agreement with the Cabrillo College Foundation

(the Foundation) in order to facilitate the purchase of furniture and equipment for the Building 800 Renovation

Project. Interest on the related party note payable is at the annual rate equivalent to the monthly money market rate earned by the Cabrillo College Foundation for other concurrent investments. The note may be prepaid in whole or in part at any time without penalty.

Donated office space was provided by the District employees on behalf of the Foundation. Donated services include the value of Foundation audit services paid by the District as part of its agreement with the Foundation.

Donated supplies and materials include items donated to the Foundation for the use of the Foundation or the

District. Donated facilities, services and materials totaled $116,410.

Construction Commitments

As of June 30, 2015, the District had the following commitments with respect to the unfinished capital projects:

CAPITAL PROJECT

Student Activities Center-West boiler replacement

Upper Campus underground sewer relining

Parking lot and roadway repair

Parking lot perimeter and horticulture road

Remaining

Construction

Commitment

$ 41,810

30,808

1,875

196,416

$ 270,909

Expected

Date of

Completion

July 2015

August 2015

Ongoing

Ongoing

The projects are funded through a combination of general obligation bonds, certificates of participation, and capital project apportionments from the State Chancellor's Office.

56



JUNE 30, 2015 AND 2014

NOTE 16 – RESTATEMENT

The District adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions and GASB

Statement No 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an

Amendment of GASB Statement No. 68 in the current year. The effect on the current fiscal year for the beginning balances of net pension liabilities, and pension related deferred outflows and deferred inflows is as follows:

Net Position

Net Position - Beginning

Restatement - GASB 68 and 71

Net Position - Beginning as Restated

$ 140,067,184

$

(53,700,050)

86,367,134

57

R

EQUIRED

S

UPPLEMENTARY

I

NFORMATION

58


SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB)

FUNDING PROGRESS


Actuarial

Valuation

Date

March 1, 2008

April 1, 2010

October 1, 2013

Actuarial Value of Assets (a)

$

$

$

-

-

-

Actuarial

Accrued

Liability

(AAL) -

Method

Used (b)

$ 11,588,442

$ 12,570,618

$ 14,427,987

Unfunded

AAL

(UAAL)

(b - a)

$ 11,588,442

$ 12,570,618

$ 14,427,987

Funded Ratio

(a / b)

$ -

$ -

$ -

Covered

Payroll (c)

$ 46,796,540

$ 41,429,101

$ 42,882,227

UAAL as a

Percentage of

Covered Payroll

([b - a] / c)

24.8%

30.3%

33.6%

59


SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE

NET PENSION LIABILITY


CalSTRS

District's proportion of the net pension liability

District's proportionate share of the net pension liability

State's proportionate share of the net pension liability associated with the District

Total

District's covered - employee payroll

District's proportionate share of the net pension liability as a percentage of its

covered - employee payroll

Plan fiduciary net position as a percentage of the total pension liability

2015

0.0536%

$ 31,315,217

18,909,480

$ 50,224,697

$ 28,418,678

110%

77%

CalPERS

District's proportion of the net pension liability

District's proportionate share of the net pension liability


District's proportionate share of the net pension liability as a percentage of its

covered - employee payroll

Plan fiduciary net position as a percentage of the total pension liability

0.1220%

$ 13,855,244

$ 14,453,791

96%

83%

Note : In the future, as data become available, ten years of information will be presented.

60


SCHEDULE OF THE DISTRICT CONTRIBUTIONS


CalSTRS

Contractually required contribution

Contributions in relation to the contractually required contribution

Contribution deficiency (excess)


Contributions as a percentage of covered - employee payroll

CalPERS

Contractually required contribution

Contributions in relation to the contractually required contribution

Contribution deficiency (excess)


Contributions as a percentage of covered - employee payroll

Note : In the future, as data become available, ten years of information will be presented.

2015

$ 1,877,629

(1,877,629)

$ -

$ 28,331,261

7%

$ 1,756,256

(1,756,256)

$ -

$ 14,550,966

12%

61

S

UPPLEMENTARY

I

NFORMATION

62


DISTRICT ORGANIZATION

JUNE 30, 2015

The Cabrillo Community College District was established in January 1959 and serves all of Santa Cruz County, the northern portion of Monterey County, and the western portion of San Benito County. There were no changes in the boundaries of the District during the current year.

MEMBER

Donna Ziel

Margarita Carillo

Gary Reece

Rachael Spencer

Ed Banks

Alan Smith

Christina Cuevas

BOARD OF TRUSTEES

OFFICE

Chair

Vice Chair

Clerk

Member

Member

Member

Member

TERM EXPIRES

2018

2016

2018

2016

2016

2018

2016

Dr. Laurel Jones

Victoria Lewis

Dr. Kathleen Welch

Dennis Bailey - Fougnier

ADMINISTRATION

President and District Superintendent

Vice President, Administrative Services

Vice President, Instruction

Vice President, Student Services

63


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


Federal

Catalog

Number

Pass-Through

Entity

Identifying

Number

Federal

Expenditures Grantor/Program or Cluster Title

U.S. DEPARTMENT OF EDUCATION

Financial Aid Cluster

Pell Grants

Supplemental Education Opportunity Grant Program

Direct Loans

Federal Work Study

Vocational and Technical Education Act

Passed through California Community College System's Office

Career and Technical Education - Basic Grants to States

Tech Prep Education

Passed through Santa Cruz County Office of Education:

First 5 - Race to the Top

Higher Education Act:

Migrant Education: High School Equivalency

Title III - Higher Education Institutional Aid

Title V - Strengthening Institutions

Total U.S. Department of Education

U.S. DEPARTMENT OF LABOR

Passed through County of Santa Cruz:

Workforce Investment Act, Adult Program

Workforce Investment Act, Dislocated Workers

ARRA - Workforce Investment Act, Dislocated Workers

ARRA - Workforce Investment Act, Adult Programs, Green Jobs

Total U.S. Department of Labor

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Passed through California Community College System's Office:

Medi-Cal Administrative Activities (MAA)

Temporary Assistant to Needy Families (TANF)

Child Development: Family Child Care Home (CFCC) - Discretionary

Child Development: Federal General (CCTR) - Matching

Passed through University of California, Santa Cruz:

Infant/Toddler Care Program

Passed through ACCESS:

Biomedical Research and Research Training

Total U.S. Department of Health and Human Services

84.063

84.007

84.268

84.033

17.258

17.260

17.260

17.258

93.778

93.558

93.575

93.596

93.575

93.859

84.048

84.243

84.412

84.141A

84.031C

84.031S

[1]

[1]

[1]

[1]

03303

[2]

[2]

[1]

[1]

[1]

03573

[2]

[2]

[2]

[2]

[2]

15136

13609

[2]

[2]

$ 12,813,645

307,759

2,587,776

239,164

705,409

43,269

10,500

23,760

908,762

164,008

17,804,052

28,416

27,903

2,373

1,773

60,465

57,250

28,070

96,204

67,007

29,592

14,784

292,907

See accompanying note to supplementary information.

64


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

(CONTINUED)


Federal

Catalog

Number

Pass-Through

Entity

Identifying

Number Grantor/Program or Cluster Title

U.S. DEPARTMENT OF AGRICULTURE

Passed through California Department of Education:

Child and Adult Care Food Program

Passed through University of California, Santa Cruz:

An Institutional Partnership Model for Sustainable Agriculture

Curriculum Development and Recruitment of Underrepresented

Students in California

Total U.S. Department of Agriculture

U.S. DEPARTMENT OF VETERAN'S AFFAIRS

Post 9/11 - Veteran's Educational Assistance

NATIONAL SCIENCE FOUNDATION

Passed through National Institute of Health:

Science, Technology, and Energy, Expanding Potential (STEEP)

Math and Science Curriculum for the Digital Bridge Academy

Early Concept Grants for Exploring Research (EAGER)

Scholars Program for Engineering College Students (SPECS)

Total National Science Foundation

SMALL BUSINESS ADMINISTRATION

Passed through Humboldt State University:

Small Business Development Center

Small Business Development Center-Jobs Act

Small Business Development Center- Workforce Investment Board

Total

10.558

10.217

64.028

47.076

47.076

47.076

47.076

59.037

59.037

59.037

03628

S014238

[1]

03787

03787

[1]

[1]

[2]

[2]

[2]

Federal

Expenditures

$ 17,321

21,982

39,303

1,979

3,243

39,487

110,818

1,070

154,618

173,448

9,246

36,838

219,532

$ 18,572,856

[1]

[2]

Pass through number not applicable.

Pass through number not available.


65


SCHEDULE OF EXPENDITURES OF STATE AWARDS


PROGRAM

GENERAL FUND-Restricted

Student Equity

Lottery Instructional

Health Services/State Program

DSPS

CARE

EOPS

Student Financial Aid

Child Care Train Consortium - CDTC

Foster Parent - FKCE

Puente Project Through UCOP

Learning Works - MARC

MESA CCCP 13/14

MESA CCCP 14/15

Matriculation

Faculty/Staff Diversity

TANF-State-FTTW

CalWorks-FTTW

CA ECE Mentor Program

CalWorks-WIA FTTW

CalWorks-WIA Work

FTTW WIA CAW WS Perf Based

CalWorks-WIA Perf Based

FTTW WFSN

CTE Nursing Enrollment Growth

Basic Skills Apportionment 12/13



Current

Year

Program Entitlements

Prior

Year

Total

Entitlement

$ 591,262

364,175

14,868

1,273,365

35,257

273,977

430,245

22,100

116,255

1,500

-

-

50,500

1,537,658

6,013

28,070

240,912

1,000

66,687

61,303

-

-

100,000

217,937

-

-

90,000

$ -

555,365

-

-

-

-

-

-

-

-

11,751

13,765

-

-

-

-

-

-

-

-

6,753

-

-

-

47,113

57,080

-

$ 591,262

919,540

14,868

1,273,365

35,257

273,977

430,245

22,100

116,255

1,500

11,751

13,765

50,500

1,537,658

6,013

28,070

240,912

1,000

66,687

61,303

-

6,753

100,000

217,937

47,113

57,080

90,000


66

Cash

Received

Accounts

Receivable

Program Revenues

Unearned

Revenue

Accounts

Payable

Total

Revenue

Program

Expenditures

$ 591,262

158,246

14,868

1,273,365

35,257

273,977

430,245

19,275

58,128

1,500

11,751

13,765

30,300

1,537,658

6,013

28,070

240,912

1,000

48,429

7,240

1,727

10,313

100,000

217,937

47,113

57,080

90,000

$ -

205,929

-

-

-

-

-

2,925

58,127

-

-

-

19,497

-

-

-

-

-

13,394

30,867

3,646

8,914

-

-

-

-

-

$ 462,883

-

-

-

-

-

-

-

-

-

4,347

-

-

578,783

-

-

-

-

1,012

-

5,373

14,249

25,457

-

-

-

70,227

$ -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

5,198

-

-

-

-

-

-

-

$ 128,379

364,175

14,868

1,273,365

35,257

273,977

430,245

22,200

116,255

1,500

7,404

13,765

49,797

958,875

6,013

28,070

240,912

1,000

60,811

32,909

-

4,978

74,543

217,937

47,113

57,080

19,773

$ 128,379

364,175

-

1,273,365

35,257

42,645

43,245

22,200

116,255

1,500

7,404

13,765

49,797

958,875

6,013

28,070

240,912

1,000

60,811

32,909

-

4,978

74,543

217,937

47,113

57,080

19,773

67


SCHEDULE OF EXPENDITURES OF STATE AWARDS

FOR THE YEAR ENDED JUNE 30, 2015 (continued)

Options For Recovery (OFR)

PROGRAM

Special Training For Adoptive Parents (STAP)

BEC

DSN

DSN In-Region

Academic Affairs - Teacher's Preparation Pipeline

SIE 13-14

Prop 39 CEM Improvement

WD 2.0

BACCC

CTE Community Collaborative 12 140 411

CA DOE Linked Learning

AB86 Adult Ed

BAWFC

Subtotal

Current

Year

$ 234,973

167,466

-

-

Program Entitlements

Prior

Year

$

50,493

93,798

-

-

Total

Entitlement

$ 234,973

167,466

50,493

93,798

-

120,000

-

28,500

86,573

-

4,020

-

86,573

120,000

4,020

28,500

65,020 65,020

19,996

-

18,750

-

16,947

17,811,388

-

63,189

24,368

222,334

-

1,236,602

19,996

63,189

43,118

222,334

16,947

19,047,990

CHILD DEVELOPMENT FUND

Childcare Tax Bailout Through Apportionment

Child Development

CA Department of Education-CACFP State Nutrition

CA Department of Education-CSPP

CA Department of Education-CRPM Renovation and Repair

CA Department of Education-CRPM 1085 Renovation and Repair

CA Department of Education - CSPP

CA Department of Education - CCTR

CA Department of Education - CFCC

Santa Cruz County Office of Education - QRIS/RTT

Subtotal

Grand Total

61,778

3,832

700

58,800

9,357

-

-

79,394

113,992

8,800

336,653

$ 18,148,041

-

-

-

-

-

-

-

-

-

-

-

$ 1,236,602

61,778

3,832

700

58,800

9,357

-

-

79,394

113,992

8,800

336,653

$ 19,384,643

68

Cash

Received

$ 179,177

141,714

58,890

-

53,146

53,497

4,020

5,062

-

19,996

63,189

38,431

199,653

-

10,772,867

Accounts

Receivable

$ 55,796

25,752

-

89,045

48,707

-

-

23,438

65,020

-

-

4,687

-

16,947

672,691

Program Revenues

Unearned

Revenue

$ -

-

28,860

-

26,573

14,498

-

-

-

-

-

-

136,170

-

4,431,060

Accounts

Payable

$ -

-

1,000

-

-

1,707

-

-

-

-

-

-

-

-

7,905

Total

Revenue

$ 234,973

167,466

29,030

89,045

75,280

37,292

4,020

28,500

65,020

19,996

63,189

43,118

63,483

16,947

7,006,593

Program

Expenditures

$ 234,973

167,466

29,030

89,045

75,280

37,292

4,020

28,500

65,020

19,996

63,189

43,118

63,483

16,947

6,373,393

61,778

3,832

709

57,227

2,339

-

-

56,348

91,360

8,800

282,393

$ 11,055,260

-

-

-

1,573

-

-

-

23,046

22,632

-

47,251

$ 719,942

-

-

-

-

123

-

-

-

-

8,800

8,923

$ 4,439,983

-

-

-

-

-

-

-

-

-

-

-

$ 7,905

61,778

3,832

709

58,800

2,216

-

-

79,394

113,992

-

320,721

$ 7,327,314

61,778

3,832

709

58,800

2,216

-

-

79,394

113,992

-

320,721

$ 6,694,114

69


SCHEDULE OF WORKLOAD MEASURES FOR STATE

GENERAL APPORTIONMENT – ANNUAL/ACTUAL ATTENDANCE


Reported

Data

CATEGORIES

A. Summer Intersession (Summer 2014 only)

1. Noncredit **

2. Credit

C. Primary Terms (Exclusive of Summer Intersession)

1. Census Procedure Courses

(a) Weekly Census Contact Hours

(b) Daily Census Contact Hours

8.03

581.32

B. Summer Intersession (Summer 2015 - prior to July 1, 2015)

1. Noncredit **

2. Credit

-

619.13

6,836.02

253.70

2. Actual Hours of Attendance Procedure Courses

(a) Noncredit **

(b) Credit

3. Alternative Attendance Accounting Procedure

(a) Weekly Census Procedure Courses

(b) Daily Census Procedure Courses

(c) Noncredit Independent Study/Distance

Education Courses

D. Total FTES

172.83

802.94

1,453.00

169.18

-

10,896.15

Audit

Adjustments

-

-

-

-

-

-

-

-

-

-

-

-

SUPPLEMENTAL INFORMATION

E. In-Service Training Courses (FTES)

H. Basic Skills Courses and Immigrant Education

1. Noncredit **

2. Credit

CCFS-320 Addendum

CDCP Noncredit FTES

469.70

98.33

374.80

-

Centers FTES

1 Noncredit **

2 Credit

Information is as of Form 320 recertification dated October 1, 2015.

22.74

1,117.68


70

-

-

-

-

-

-

Audited

Data

8.03

581.32

-

619.13

469.70

98.33

374.80

-

22.74

1,117.68

6,836.02

253.70

172.83

802.94

1,453.00

169.18

-

10,896.15


RECONCILI ATION OF

EDUCATION CODE

SECTION 84362 (50 PERCENT LAW) CALCULATION


Object/TOP

Codes

ECS 84362 A

Instructional Salary Cost

AC 0100 - 5900 and AC 6110

Reported Data

Audit

Adjustments Revised Data Reported Data

ECS 84362 B

Total CEE

AC 0100 - 6799

Audit

Adjustments Revised Data

Academic Salaries

Instructional Salaries

Contract or Regular

Other

Total Instructional Salaries

Noninstructional Salaries

Contract or Regular

Other

Total Noninstructional Salaries

Total Academic Salaries

Classified Salaries

Noninstructional Salaries

Regular Status

Other

Total Noninstructional Salaries

Instructional Aides

Regular Status

Other

Total Instructional Aides

Total Classified Salaries

Employee Benefits

Supplies and Material

Other Operating Expenses

Equipment Replacement

Total Expenditures

Prior to Exclusions

1100

1300

1200

1400

2100

2300

2200

2400

3000

4000

5000

6420

$ 11,925,986

8,687,509

20,613,495

-

-

-

20,613,495

$ -

-

-

-

-

-

-

$ 11,925,986

8,687,509

20,613,495

20,613,495

-

-

-

-

-

-

1,151,415

313,533

1,464,948

1,464,948

6,225,651

-

808,546

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1,151,415

313,533

1,464,948

1,464,948

6,225,651

808,546

-

-

29,112,640 29,112,640

$ 11,925,986

8,687,509

20,613,495

4,361,489

707,708

5,069,197

25,682,692

$ -

-

-

-

-

-

-

$ 11,925,986

8,687,509

20,613,495

4,361,489

707,708

5,069,197

25,682,692

9,403,687

686,952

10,090,639

-

-

-

1,151,415

313,533

1,464,948

11,555,587

12,680,009

1,455,656

6,277,159

29,867

-

-

-

-

-

-

-

-

9,403,687

686,952

10,090,639

1,151,415

313,533

1,464,948

11,555,587

12,680,009

1,455,656

6,277,159

29,867

57,680,970 57,680,970


71


RECONCILIATION OF




ECS 84362 A


AC 0100 - 5900 and AC 6110

Object/TOP

Codes Reported Data

Audit

Adjustments Revised Data Reported Data

ECS 84362 B

Total CEE

AC 0100 - 6799

Audit


Exclusions

Activities to Exclude

Instructional Staff - Retirees' Benefits and

Retirement Incentives

Student Health Services Above Amount

Collected

Student Transportation

Noninstructional Staff - Retirees' Benefits

and Retirement Incentives

Objects to Exclude

Rents and Leases

Lottery Expenditures

Academic Salaries

Classified Salaries

Employee Benefits

Supplies and Materials

Software

Books, Magazines, and Periodicals

Instructional Supplies and Materials

Noninstructional Supplies and Materials

Total Supplies and Materials

5900

6441

6491

6740

5060

1000

2000

3000

4000

4100

4200

4300

4400

$ $ $ -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

$ $ $ -

-

-

-

-

-

-

-

15,271 -

1,249,578

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

15,271

-

1,249,578

-

-

-

-

-

-

-

-


72


RECONCILIATION OF




Other Operating Expenses and Services

Capital Outlay

Library Books

Equipment

Equipment - Additional

Equipment - Replacement

Total Equipment

Total Capital Outlay

Other Outgo

Total Exclusions

Total for ECS 84362,

50 Percent Law

Percent of CEE (Instructional Salary

Cost/Total CEE)

50% of Current Expense of Education

ECS 84362 A ECS 84362 B


AC 0100 - 5900 and AC 6110

Object/TOP

Codes Reported Data

5000 $ -

Audit


$ $ -

Reported Data

$ -

Total CEE

AC 0100 - 6799

Audit


$ $ -

6300

6400

6410

6420

7000

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

15,245

-

4,415

-

4,415

19,660

-

1,284,509

-

-

-

-

-

-

-

15,245

-

4,415

-

-

19,660

-

1,284,509

$ 29,112,640 $ $ 29,112,640

51.62% 51.62%

$ 56,396,461 $ $ 56,396,461

$

100.00%

28,198,231 $

100.00%

28,198,231


73


PROPOSITION 30 EDUCATION PROTECTION ACT (EPA) EXPENDITURE REPORT


Activity Classification

Object

Code Unrestricted

EPA Proceeds:

Activity Classification

8630

Activity

Code

Salaries and Benefits

(Obj 1000-3000)

Operating

Expenses

(Obj 4000-5000)

Capital Outlay

(Obj 6000)

$ 9,982,558

Total

Instructional Activities

Total Expenditures for EPA

Revenues Less Expenditures

1000-5900 $ 9,982,558

$ 9,982,558

$ -

-

$ -

-

$ 9,982,558

$ 9,982,558

$ -

74


RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT (CCFS-311)

WITH FUND FINANCIAL STATEMENTS


None noted.

75


NOTES TO SUPPLEMENTARY INFORMATION


NOTE 1 - PURPOSE OF SCHEDULES

District Organization

This schedule provides information about the District's governing board members and administration members.

Schedule of Expenditures of Federal Awards

The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant activity of the District and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the United States Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations .

The following schedule provides a reconciliation between revenues reported on the Statement of Revenues,

Expenditures and Changes in Net Position and the related expenditures reported on the Schedule of Expenditures of Federal Awards. The reconciling amounts consist primarily of funds that in the previous period were recorded a revenues but were unspent, or were recorded in the current period as revenues that have not been expended as of

June 30, 2015.

CFDA

Number Amount Description

Total Federal Revenues from the Statement of Revenues, Expenses and Change in Net Assets

California State Preschool Program

Expenditures per Schedule of Expenditures of Federal Awards

93.596

$

$

18,565,748

7,108

18,572,856

Schedule of Expenditures of State Awards

The accompanying Schedule of Expenditures of State Awards includes the State grant activity of the District and is presented on the modified accrual basis of accounting. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. The information in this schedule is presented to comply with reporting requirements of the California State Chancellor's Office.

Schedule of Workload Measures for State General Apportionment Annual (Actual) Attendance

FTES is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of State funds, including restricted categorical funding, are made to community college districts. This schedule provides information regarding the annual attendance measurements of students throughout the District.

Reconciliation of Education Code Section 84362 (50 Percent Law) Calculation

ECS 84362 requires the District to expend a minimum of 50 percent of the unrestricted General Fund monies on salaries of classroom instructors. This is reported annually to the State Chancellor's Office. This schedule provides a reconciliation of the amount reported to the State Chancellor's Office and the impact of any audit adjustments and/or corrections noted during the audit.

76


Proposition 30 Education Protection Act (EPA) Expenditure Report

This schedule provides the District's summary of receipts and uses of the monies received through the EPA.

Reconciliation of Annual Financial and Budget Report (CCFS-311) With Fund Financial Statements

This schedule provides the information necessary to reconcile the fund balance of all funds reported on the

Form CCFS-311 to the District's internal fund financial statements.

77

I

NDEPENDENT

A

UDITOR

'

S

R

EPORTS

78

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Trustees


Aptos, California

We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the

Comptroller General of the United States, the basic financial statements of the business-type activities, and the discretely presented component unit, and the aggregate remaining fund information, of Cabrillo Community

College District (the District) as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the District's basic financial statements and have issued our report thereon dated December 31, 2015.

Emphasis of Matter - Change in Accounting Principles

As discussed in Notes 2 and 16 to the financial statements, in 2015, the District adopted new accounting guidance,

GASB Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No 71, Pension

Transition for Contributions Made Subsequent to the Measurement Date—an Amendment of GASB Statement No.

68 Our opinion is not modified with respect to these matters.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

79

Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified.

Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing

Standards.

Purpose of This Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing

Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


December 31, 2015

80

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR

EACH MAJOR PROGRAM AND REPORT ON INTERNAL CONTROL

OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133

Board of Trustees


Aptos, California

Report on Compliance for Each Major Federal Program

We have audited Cabrillo Community College District's (the District) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the District's major Federal programs for the year ended June 30, 2015. The District's major Federal programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and

Questioned Costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its Federal programs.


Our responsibility is to express an opinion on compliance for each of the District's major Federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the

United States; and OMB Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations .

Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major Federal program occurred. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements and performing such other procedures as we consider necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federal program. However, our audit does not provide a legal determination of the District's compliance.

81

Opinion on Each Major Federal Program

In our opinion, the District complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended

June 30, 2015.

Report on Internal Control Over Compliance

Management of the District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the District's internal control over compliance with the types of requirements that could have a direct and material effect on each major Federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major

Federal program and to test and report on internal control over compliance in accordance with OMB

Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a Federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a

Federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133.

Accordingly, this report is not suitable for any other purpose.


December 31, 2015

82

INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE

Board of Trustees


Aptos, California

Report on State Compliance

We have audited Cabrillo Community College District's (the District) compliance with the types of compliance requirements as identified in the California Community Colleges Chancellor's Office District Audit Manual issued in August 2014 that could have a direct and material effect on each of the District's programs as noted below for the year ended June 30, 2015.

Management's Responsibility

Management is responsible for compliance with the requirements identified in the California Community

Colleges Chancellor's Office District Audit Manual issued in August 2014.


Our responsibility is to express an opinion on compliance of each of the District's State programs based on our audit of the types of compliance requirements referred to above. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States; and the standards and procedures identified in the California Community Colleges Chancellor's Office District Audit

Manual . These standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above could have a material effect on the applicable programs noted below. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements and performing such procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the District's compliance with those requirements.

Unmodified Opinion

In our opinion, the District complied, in all material respects, with the compliance requirements referred to above that are applicable to the programs noted below that were audited for the year ended June 30, 2015.

83

Other Matters

In connection with the audit referred to above, we selected and tested transactions and records to determine the

District's compliance with State laws and regulations applicable to the following:

Section 421 Salaries of Classroom Instructors (50 Percent Law)

Section 423 Apportionment for Instructional Service Agreements/Contracts

Section 424 State General Apportionment Funding System

Section 425 Residency Determination for Credit Courses

Section 426 Students Actively Enrolled

Section 427 Concurrent Enrollment of K-12 Students in Community College Credit Courses

Section 430 Schedule Maintenance Program

Section 431 Gann Limit Calculation

Section 435 Open Enrollment

Section 438 Student Fees – Health Fees and Use of Health Fee Funds

Section 439 Proposition 39 Clean Energy

Section 440 Intersession Extension Programs

Section 474 Extended Opportunity Programs and Services (EOPS) and Cooperative Agencies Resources for Education (CARE)

Section 475 Disabled Student Programs and Services (DSPS)

Section 479 To Be Arranged (TBA) Hours

Section 490 Proposition 1D State Bond Funded Projects

Section 491 Proposition 30 Education Protection Account Funds

The District did not have Proposition 1D State Bond Funded Projects expenditures, therefore, the compliance tests within this section were not applicable.

The District has no intersession extension programs; therefore, the compliance tests within this section were not applicable.


December 31, 2015

84

S

CHEDULE OF

F

INDINGS AND

Q

UESTIONED

C

OSTS

85


SUMMARY OF AUDITOR'S RESULTS


FINANCIAL STATEMENTS

Type of auditor's report issued:

Internal control over financial reporting:

Material weaknesses identified?

Significant deficiencies identified?

Noncompliance material to financial statements noted?

FEDERAL AWARDS

Internal control over major Federal programs:

Material weaknesses identified?

Significant deficiencies identified?

Type of auditor's report issued on compliance for major Federal programs:

Any audit findings disclosed that are required to be reported in accordance with

Section .510(a) of OMB Circular A-133?

Identification of major Federal programs:

CFDA Numbers Name of Federal Program or Cluster

84.007, 84.033, 84.063, 84.268

Student Financial Aid Cluster

84.031C

Title III-Higher Education Institutional Aid

Dollar threshold used to distinguish between Type A and Type B programs:

Auditee qualified as low-risk auditee?

STATE AWARDS

Type of auditor's report issued on compliance for State programs:

Unmodified

No

None reported

No

No

None reported

Unmodified

No

$300,000

Yes

Unmodified

86


FINANCIAL STATEMENT FINDINGS AND RECOMMENDATIONS


None reported.

87


FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS


None reported.

88


STATE AWARDS FINDINGS AND QUESTIONED COSTS


None reported.

89


SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS


None reported.

90

C D J 30, 2015

INANCIAL

ECTION

EQUIRED

UPPLEMENTARY

NFORMATION

UPPLEMENTARY

NFORMATION

(CONTINUED)

EDUCATION CODE

EDUCATION CODE

EDUCATION CODE

PROPOSITION 30 EDUCATION PROTECTION ACT (EPA) EXPENDITURE REPORT

NDEPENDENT

UDITOR

S

EPORTS

CHEDULE OF

INDINGS AND

UESTIONED

OSTS

Related documents

Products

Support

C D J 30, 2015

INANCIAL

ECTION

EQUIRED

UPPLEMENTARY

NFORMATION

UPPLEMENTARY

NFORMATION

(CONTINUED)

EDUCATION CODE

EDUCATION CODE

EDUCATION CODE

PROPOSITION 30 EDUCATION PROTECTION ACT (EPA) EXPENDITURE REPORT

NDEPENDENT

UDITOR

S

EPORTS

CHEDULE OF

INDINGS AND

UESTIONED

OSTS

Related documents

Add this document to collection(s)

Add this document to saved

Suggest us how to improve StudyLib