C D J 30, 2014 AND 2013

C ABRILLO C OMMUNITY C OLLEGE D ISTRICT

A NNUAL F INANCIAL R EPORT

J UNE 30, 2014 AND 2013

CABRILLO COMMUNITY COLLEGE DISTRICT

TABLE OF CONTENTS

JUNE 30, 2014

FINANCIAL SECTION

Independent Auditor's Report

Management's Discussion and Analysis (Required Supplementary Information)

Basic Financial Statements - Primary Government

Statements of Net Position

Statements of Revenues, Expenses, and Changes in Net Position

Statements of Cash Flows

Fiduciary Funds

Statements of Net Position

Statements of Changes in Net Position

Discretely Presented Component Unit – Cabrillo College Foundation

Statements of Financial Position

Statement of Activities

Statements of Cash Flows

Notes to Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Other Postemployment Benefit (OPEB) Funding Progress

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

67

69

71

74

75

76

77

78

50

60

63

64

65

52

53

55

59

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 and the discretely presented component unit (Cabrillo College Foundation) of Cabrillo Community College District (the District) as of and for the years ended June 30, 2014 and 2013, 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 audits. We conducted our audits 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 audits 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

5000 Hopyard Road, Suite 335 Pleasanton, CA 94588 Tel: 925.734.6600 Fax: 925.734.6611 www.vtdcpa.com

F R E S N O  L A G U N A H I L L S  P A L O A L T O  P L E A S A N T O N  R A N C H O C U C A M O N G A  R I V E R S I D E  S A C R A M E N T O

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activities and the discretely presented component unit of the District as of June 30,

2014 and 2013, and the changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

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

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 audits 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.

3

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards , we have also issued our report dated December 2, 2014, 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 2, 2014

4


MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED JUNE 30, 2014 AND 2013

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, 2014. 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, 2014. 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 2013-2014 fiscal year, the factored reported FTES were 10,092 as compared to

10,894 in the 2012-2013 fiscal year. The fully funded cap for fiscal year 2013-2014 is 10,887.

 The District continued several construction and modernization projects during 2013-2014. These projects are funded both through State construction revenues and through our voter approved general obligation bond.

 Costs for employee salaries and benefits increased compared to the 2012-2013 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 $359,715 for unfunded future retiree health benefits and $1,177,234 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.

 During the 2013-2014 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.

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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)

Other noncurrent assets

Total Noncurrent Assets

Total Assets

LIABILITIES

Current Liabilities

Accounts payable and accrued liabilities

Current portion of long-term debt

Total Current Liabilities

Long-term Debt

Total Liabilities

NET POSITION

Invested in capital assets

Restricted

Unrestricted

Total Net Position

Operating Results for the Year

$

175,931,467

198,104,167

115,941,832

$

2014

37,689,243

12,109,919

780,908

50,580,070

287,591,281

-

287,591,281

338,171,351

13,543,076

8,629,624

22,172,700

12,635,169

11,490,183

140,067,184

$

$

2013

42,971,289

16,248,986

809,676

60,029,951

284,497,099

497,832

284,994,931

345,024,882

19,667,522

7,578,779

27,246,301

180,132,421

207,378,722

111,744,786

13,241,307

12,660,067

137,646,160

$ 36,155,191

19,571,401

1,261,780

56,988,372

246,608,746

516,980

247,125,726

304,114,098

15,474,396

6,109,916

21,584,312

186,366,874

207,951,186

$

2012

71,878,557

11,158,776

13,125,579

96,162,912

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.

6




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

Nonoperating Revenues

State apportionments

Property taxes

Total Operating Expenses

Loss on Operations

Grants and contracts

Net interest expense and bond refunding

Other nonoperating revenues (expenses)

Other Revenues

Total Nonoperating Revenue

State and local capital income

Net Increase in Net Position

$

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)

31,204,405

33,125,409

30,015,304

(3,997,322)

5,713,944

96,061,740

$

262,657

2,421,024

2013

$ 7,699,152

2,197,173

9,896,325

58,658,217

17,811,715

13,642,728

98,922,810

(89,026,485)

30,252,987

33,118,151

28,348,459

97,599,010

$

8,810,150

1,620,000

4,259,413

237,190

8,809,715

$

2012

6,369,695

2,719,868

9,089,563

104,012,722

(94,923,159)

$

61,790,891

19,661,561

14,666,160

7,894,110

30,011,383

31,811,941

31,513,756

(9,468,434)

5,140,827

89,009,473

611,173

(5,302,513)

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 $4,756,959 for 2013-2014 and $5,012,330 for 2012-2013.

The balance of the tuition and fee revenue line consists of other fees and revenues.

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Changes in Cash Position

Cash Provided by (Used in)

Operating activities

Noncapital financing activities

Capital financing activities

Investing activities

Net Increase (Decrease) in Cash

Cash, Beginning of Year

Cash, End of Year

Table 3

2014 2013

$ (83,329,403)

87,334,753

(9,330,154)

42,758

(5,282,046)

$

42,971,289

37,689,243

$ (80,440,319)

89,857,415

(2,650,180)

49,182

6,816,098

$

36,155,191

42,971,289

2012

$ (87,138,180)

84,607,535

(7,452,223)

140,460

(9,842,408)

$

45,997,599

36,155,191

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, 2014, the District had $287.6 million in a broad range of capital assets, including land, buildings, and furniture and equipment. At June 30, 2013, our net capital assets were $284.5 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 2014-2015 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

10,215,606

324,217,095

19,564,505

353,997,206

(69,500,107)

$ 284,497,099

Additions

$ 5,408,768

14,301,330

713,759

20,423,857

$

(8,206,708)

12,217,149

Deletions

$ (9,122,967)

-

(3,818,057)

(12,941,024)

$

3,818,057

(9,122,967)

Balance

End of

$

Year

6,501,407

338,518,425

16,460,207

361,480,039

$

(73,888,758)

287,591,281

Obligations

At the end of the 2013-2014 fiscal year, the District had $178.6 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, and other notes payable.

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

Land and construction in progress

Buildings and improvements


Subtotal

Accumulated depreciation

Total

Table 5

Balance

Beginning of

$

Year

10,215,606

324,217,095

19,564,505

353,997,206

(69,500,107)

$ 284,497,099

Additions

$ 5,408,768

14,301,330

713,759

20,423,857

$

(8,206,708)

12,217,149

Deletions

$ (9,122,967)

-

(3,818,057)

(12,941,024)

$

3,818,057

(9,122,967)

Balance

End of

$

Year

6,501,407

338,518,425

16,460,207

361,480,039

$

(73,888,758)

287,591,281

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

2013-2014 fiscal year on September 9, 2013.

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 94 percent of the total unrestricted sources of revenues received within the General Fund. The District’s student enrollment is currently down from the prior year. 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.

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STATEMENTS OF NET POSITION – PRIMARY GOVERNMENT

JUNE 30, 2014AND 2013

2014

ASSETS

Current Assets

Cash and cash equivalents

Restricted cash and cash equivalents

Accounts receivable, net

Due from fiduciary funds

Prepaid expenses

Deferred charges

Total Current Assets

Noncurrent Assets

Deferred charges - noncurrent portion

Nondepreciable capital assets

Depreciable capital assets, net of depreciation

Total Noncurrent Assets

TOTAL ASSETS

LIABILITIES

Current Liabilities

Accounts payable

Interest payable

Tax and revenue anticipation note

Early retirement incentive

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

Certificates of participation - noncurrent portion

Lease obligations - noncurrent portion

Related party liability - noncurrent portion

OPEB liability

Bonds payable - noncurrent portion

Total Noncurrent Liabilities

TOTAL LIABILITIES

NET POSITION

Net investment in capital assets

Restricted for:

Debt service

Educational programs

Unrestricted

TOTAL NET POSITION

$ 23,781,370

13,907,873

12,109,919

108,113

672,795

-

50,580,070

-

6,501,406

281,089,875

287,591,281

338,171,351

3,396,364

1,771,726

4,395,783

-

5,809

3,973,394

643,230

9,062

44,000

7,933,332

22,172,700

915,788

1,308,220

26,643

62,895

2,890,798

170,727,123

175,931,467

198,104,167

115,941,832

11,908,295

726,874

11,490,183

$ 140,067,184

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

11

2013

$ 25,149,836

17,821,453

16,248,986

188,169

602,359

19,148

60,029,951

497,832

10,215,606

274,281,493

284,994,931

345,024,882

3,416,949

2,225,241

8,825,505

79,300

17,229

5,103,298

618,510

6,993

44,000

6,909,276

27,246,301

959,060

1,951,450

26,225

62,895

2,513,925

174,618,866

180,132,421

207,378,722

111,744,786

11,172,407

2,068,900

12,660,067

$ 137,646,160


STATEMENTS 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

Gain on debt refunding

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

CHANGE IN NET POSITION

NET POSITION, BEGINNING OF YEAR

RESTATEMENT

NET POSITION, END OF YEAR

2014

$ 13,908,819

(6,170,592)

7,738,227

4,963

7,743,190

42,872,469

17,084,958

17,761,523

15,720,905

8,206,708

101,646,563

(93,903,373)

31,204,405

19,054,703

14,070,706

19,588,664

10,426,640

42,758

(4,040,080)

-

278,222

(134,530)

5,570,252

96,061,740

2,158,367

262,657

2,421,024

137,646,160

-

$ 140,067,184

2013

$ 13,791,950

(6,092,798)

7,699,152

2,197,173

9,896,325

41,408,446

17,249,771

17,811,715

13,642,728

8,810,150

98,922,810

(89,026,485)

30,252,987

19,708,538

13,409,614

19,645,928

8,702,531

49,182

(49,182)

1,620,000

324,729

(154,530)

4,089,213

97,599,010

8,572,525

237,190

8,809,715

96,162,912

32,673,533

$ 137,646,160


12


STATEMENTS 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

Cash received from issuance of debt

Principal paid on debt

Principal paid on capital debt

Principal partially refunded 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

2014 2013

$ 7,626,919

(14,778,699)

(58,421,063)

(17,761,523)

$ 7,371,482

(13,432,911)

(58,764,348)

(17,811,715)

4,963

(83,329,403)

2,197,173

(80,440,319)

33,540,267

19,054,703

19,669,695

8,589,733

6,336,663

143,692

87,334,753

32,205,583

19,708,538

20,875,233

8,613,782

8,284,080

170,199

89,857,415

(5,169,350)

262,657

14,070,706

8,365,000

(12,864,571)

(7,535,641)

-

(6,458,955)

(9,330,154)

(5,611,775)

357,741

13,409,614

44,198,266

-

(8,036,649)

(40,125,000)

(6,842,377)

(2,650,180)

42,758

42,758

(5,282,046)

$

42,971,289

37,689,243

49,182

49,182

6,816,098

36,155,191

$ 42,971,289


13


STATEMENTS OF CASH FLOWS - PRIMARY GOVERNMENT, Continued


2014 2013

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:

Receivables, net

Prepaid expenses

Due from fiduciary funds

Accounts payable and accrued liabilities

Unearned revenue

Total Adjustments

Net Cash Flows Used For Operating Activities

$ (93,903,373) $ (89,026,485)

$

8,206,708

1,672,918

898,314

446,544

80,056

279,052

(1,009,622)

10,573,970

(83,329,403) $

8,810,150

1,554,245

(327,670)

(96,410)

(43,168)

(6,621)

(1,304,360)

8,586,166

(80,440,319)

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

$ 23,781,370

13,907,873

$ 37,689,243

$ 25,149,836

17,821,453

$ 42,971,289

$ 1,339,317 $ 1,212,218


14


STATEMENTS OF FIDUCIARY NET POSITION


ASSETS


Accounts receivable, net

Prepaid expenditures

Due from primary government

Nondepreciable capital assets

Total Assets

LIABILITIES

Accounts payable

Due to primary government

Unearned revenue

Due to student groups

Total Liabilities

NET POSITION

Restricted

Total Net Position

Trust

$ 842,358

21,731

-

-

-

864,089

2014

Agency

Funds

$

$

891,386

20,332

5,809

214,163

1,131,690

-

145,115

38,836

-

-

183,951

680,138

$ 680,138

$ 16,430

283,440

176

831,644

$ 1,131,690

Trust

$ 855,355

26,493

-

-

-

881,848

2013

Agency

Funds

$

$

1,186,941

15,652

17,229

1,219,822

-

-

34,021

31,721

-

-

65,742

$ 2,585

156,448

1,489

1,059,300

$ 1,219,822

816,106

$ 816,106


15


STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION


$

2014

Trust

2,341,083

2,341,083

ADDITIONS

Local revenues

Total Additions

DEDUCTIONS

Books and supplies

Services and operating expenditures

Total Deductions

OTHER FINANCING SOURCES (USES)

Operating transfers out

Change in Net Position

Net Position - Beginning

Net Position - Ending

217,062

2,158,321

2,375,383

2013

Trust

$ 2,593,865

2,593,865

199,963

2,187,733

2,387,696

(101,668)

(135,968)

816,106

$ 680,138

(123,668)

82,501

733,605

$ 816,106


16


DISCRETELY PRESENTED COMPONENT UNIT

CABRILLO COLLEGE FOUNDATION

STATEMENTS OF FINANCIAL POSITION

JUNE 30, 2014 AND 2013

ASSETS

Current Assets


Contributions receivable, net

Accounts receivable

Beneficial interest in split interest agreements

Prepaids and other assets

Notes receivable

Investments

Total Current Assets

Noncurrent Assets

Depreciable capital assets, net of depreciation

TOTAL ASSETS

LIABILITIES AND NET ASSETS

Current Liabilities

Accounts payable, scholarships and projects payable

Other post employment benefits

TOTAL LIABILITIES

NET ASSETS

Unrestricted

Temporarily restricted

Permanently restricted

TOTAL NET ASSETS

TOTAL LIABILITIES AND NET ASSETS

2014 2013

$ 5,207,129

1,711,507

64,304

348,688

50,488

106,895

20,110,794

27,599,805

1,463

27,601,268

$ 4,318,174

2,125,577

5,978

282,249

64,149

106,895

18,381,452

25,284,474

$

4,748

25,289,222

$ 1,374,427

69,843

1,444,270

824,399

7,661,418

17,671,181

$

26,156,998

27,601,268

$ 1,610,729

61,052

1,671,781

823,138

6,038,869

16,755,434

$

23,617,441

25,289,222


17




STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2014

WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2013

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

CHANGE IN NET ASSETS

NET ASSETS, BEGINNING OF YEAR

NET ASSETS, END OF YEAR

Unrestricted

$ 392,250

7,857

300,391

28,064

125,600

2,349,329

3,203,491

2014

Temporarily Permanently

Restricted Restricted

$ 1,248,785 $ 915,747

2,670,413

52,680

-

-

(2,349,329)

1,622,549

-

-

-

-

-

915,747

Total

$ 2,556,782

2,678,270

300,391

80,744

125,600

-

5,741,787

2013

$ 3,483,199

1,750,788

256,617

94,648

138,954

-

5,724,206

598,183

2,035,344

289,364

279,339

3,202,230

1,261

$

823,138

824,399

-

-

-

-

$

1,622,549

6,038,869

7,661,418

-

-

-

-

-

-

915,747

$

16,755,434

17,671,181

598,183

2,035,344

289,364

279,339

3,202,230

2,539,557

$

23,617,441

26,156,998

788,225

1,460,774

319,389

254,966

2,823,354

2,900,852

$

20,716,589

23,617,441


18




STATEMENTS 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

Other post employment benefits

Net Cash Flows Provided (Used) 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

2014

$ 2,539,557

2013

$ 2,900,852

3,285

(66,439)

414,070

(58,326)

13,661

(236,302)

8,791

-

2,618,297

4,386

(282,249)

591,026

54,934

1,305

(282,266)

16,803

3,004,791

-

(1,729,342)

(1,729,342)

(106,895)

(2,940,535)

(3,047,430)

888,955

$

4,318,174

5,207,129

(42,639)

$

4,360,813

4,318,174


19


NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2014 AND 2013

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 and Scotts Valley. 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, is 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, 2014 AND 2013

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 and No. 38. 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 intra-agency 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, 2014 AND 2013

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 and No. 38. 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, 2014 and 2013, 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 $3,765,179 and $3,422,713 for the years ended June 30, 2014 and 2013, respectively.

22



JUNE 30, 2014 AND 2013

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.

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.

23



JUNE 30, 2014 AND 2013

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.

Current Loans

Current loans consist of amounts outstanding at June 30, 2014, for Tax and Revenue Anticipation Notes. The notes were issued as short-term obligations to provide cash flow needs. This liability is offset with cash deposits in the Santa Cruz County Treasurer, which have been set aside to repay the notes.

Noncurrent Liabilities

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

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 $140,067,184 of restricted net position, of which $726,874 is restricted by enabling legislation.

24



JUNE 30, 2014 AND 2013

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 Bond, 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.

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 the California

State Teachers' Retirement System (CalSTRS) and the California Public Employees' Retirement System

(CalPERS) 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, 2014, was $1,339,317 for CalSTRS. This amount is reflected in the District's audited financial statements.

25



JUNE 30, 2014 AND 2013

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 entity-wide financial statements.

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.

26



JUNE 30, 2014 AND 2013

Change in Accounting Principles

As the result of implementing GASB Statement No. 65, Items Previously Reported as Assets and Liabilities , the

District has included approximately $517,000 in interest expense as a result of no longer deferring and amortizing bond issuance costs.

New Accounting Pronouncements

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 non-employer 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, non-employer 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, 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).

27



JUNE 30, 2014 AND 2013

 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 costsharing 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 non-employer entity has a legal requirement to make contributions directly to a pension plan.

This Statement is effective for fiscal years beginning after June 15, 2014. Early implementation is encouraged.

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.

28



JUNE 30, 2014 AND 2013

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.

The provisions of this Statement are required to be applied simultaneously with the provisions of Statement

No. 68.

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.

Investment in the State Investment Pool -

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

29



JUNE 30, 2014 AND 2013

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, 2014, 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

$

$

1,774,751

55,000

35,859,492

37,689,243

$

$

573,256

1,160,488

1,733,744

30



JUNE 30, 2014 AND 2013

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

35,512,992

$ 35,859,492

$ 346,500

35,524,251

$ 35,870,751

0.10 Years

1.56 Years

County Pool

Investment Type - Fiduciary funds

$

Cost

1,160,488

Fair

Value

$ 1,160,856

Maturity

Date

1.56 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

35,524,251

35,870,751 $

Not Required Rating as of

To Be Year End

Rated

$ -

Aaa

$ 346,500

35,524,251

35,524,251

-

$ 346,500

County Pool

Investment Type - Fiduciary funds

$

Fair

Value

1,160,856

Not Required Rating as of

To Be Year End

$

Rated

1,160,856

Aaa

$ -

31



JUNE 30, 2014 AND 2013

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, 2014, approximately $2,041,000 of the District's cash balance of approximately

$2,714,000 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, 2014, the

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

32



JUNE 30, 2014 AND 2013

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

2014 2013

Federal Government

Categorical aid

State Government

Apportionment

Categorical aid

Educational protection account

Restricted lottery

Construction funds

Local Government

Other local sources

Subtotal

Student receivables

Less allowance for uncollectible accounts

Subtotal

Total

$

$

984,036

7,097,429

455,079

16,583

350,596

172,087

677,623

9,753,433

6,121,665

(3,765,179)

2,356,486

12,109,919

$

$

1,065,607

8,903,589

543,061

546,285

261,022

120,551

1,554,071

12,994,186

6,677,513

(3,422,713)

3,254,800

16,248,986

Local Government

Other local sources

Fiduciary Funds

2014 2013

$ 21,731

$ 21,731

$ 26,493

$ 26,493

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, 2014 and 2013, the Foundation's contributions receivable consisted of $1,711,507 and $2,125,577 respectively. These amounts were primarily short-term donations. The contributions receivable amounts are net of an allowance for uncollectible contributions of approximately $26,000 and $29,000 at June 30, 2014 and 2013, respectively.

33



JUNE 30, 2014 AND 2013

NOTE 5 - CAPITAL ASSETS

Capital asset activity for the District for the fiscal year ended June 30, 2014, was as follows:

Balance

Beginning of

Year, Restated Additions Deductions

Capital Assets Not Being Depreciated

Land

Construction in progress

Total Capital Assets Not

Being Depreciated

$ 4,164,679

6,050,927

10,215,606

$ -

5,408,768

5,408,768

$

9,122,967

9,122,967

-

Balance

End of Year

$ 4,164,679

2,336,728

6,501,407

Capital Assets Being Depreciated

Land improvements

Infrastructure

Buildings


Total Capital Assets

Being Depreciated


Less Accumulated Depreciation

Land improvements

Infrastructure

Buildings


Total Accumulated Depreciation

Net Capital Assets Being Depreciated

Net Capital Assets

13,916,410

49,076,942

261,223,743

19,564,505

-

14,301,330

-

713,759

-

3,818,057

-

-

13,916,410

49,076,942

275,525,073

16,460,207

343,781,600

353,997,206

6,682,702

9,157,860

38,855,503

14,804,042

69,500,107

274,281,493

$ 284,497,099

15,015,089

20,423,857

524,797

981,547

5,509,599

1,190,765

8,206,708

6,808,381

$ 12,217,149

3,818,057

12,941,024

3,818,057

-

3,818,057

$ 9,122,967

-

-

-

354,978,632

361,480,039

7,207,499

10,139,407

40,547,045

15,994,807

73,888,758

$

281,089,874

287,591,281

Depreciation expense for the year was $8,206,708.

Net interest expense for the year ended June 30, 2014 was $10,156,327, $6,131,541 of which was capitalized during the year.

34



JUNE 30, 2014 AND 2013

Capital asset activity for the District for the fiscal year ended June 30, 2013, was as follows:

Balance

Beginning of

Year, Restated Additions Deductions

Capital Assets Not Being Depreciated

Land

Construction in progress

Total Capital Assets Not

Being Depreciated

$ 4,164,679

11,627,325

15,792,004

$ -

5,611,775

5,611,775

$

11,188,173

11,188,173

-

Capital Assets Being Depreciated

Land improvements

Infrastructure

Buildings



Being Depreciated


13,864,799

49,076,942

242,082,007

19,156,484

324,180,232

339,972,236

51,611

19,141,736

-

408,021

19,601,368

25,213,143 11,188,173

-

-

-

-

-

$

10,215,606

Balance

End of Year

4,164,679

6,050,927

13,916,410

49,076,942

261,223,743

19,564,505

343,781,600

353,997,206

Less Accumulated Depreciation

Land improvements

Infrastructure

Buildings


Total Accumulated Depreciation

Net Capital Assets Being Depreciated

Net Capital Assets

6,115,186

8,176,313

33,291,035

13,107,423

60,689,957

263,490,275

$ 279,282,279

567,516

981,547

5,564,468

1,696,619

8,810,150

10,791,218

$ 16,402,993

-

-

-

-

$ 11,188,173

-

-

6,682,702

9,157,860

38,855,503

14,804,042

69,500,107

274,281,493

$ 284,497,099

Depreciation expense for the year was $8,810,150.

Net interest expense for the year ended June 30, 2013 was $8,413,195, all of which was capitalized during the year.


Net capital assets for the Cabrillo College Foundation in the amounts of $1,463 and $4,748, respectively, for the years ended June 30, 2014 and 2013, consisted primarily of equipment. Depreciation expense was $3,285 and

$4,386 for 2014 and 2013, respectively.

35



JUNE 30, 2014 AND 2013

NOTE 6 - ACCOUNTS PAYABLE

Accounts payable for the District consisted of the following:

Vendor

Accrued payroll and benefits

State categorical aid

Apportionment

Total

Primary Government

2014 2013

$ 2,135,320

1,043,129

$ 2,229,010

1,179,683

5,279

212,636

$ 3,396,364

8,256

-

$ 3,416,949

Fiduciary Funds

2014

$ 161,545

2013

$ 36,606 Vendor


The liabilities of the Cabrillo College Foundation consist primarily of amounts owed for scholarships and projects totaling $1,374,427 and $1,610,729, respectively, for the years ended June 30, 2014 and 2013.

NOTE 7 - UNEARNED REVENUE

Unearned revenue consisted of the following:

State categorical aid

Enrollment fees

Other local

Total

Enrollment fees

Primary Government

2014 2013

$ 285,114

2,969,959

718,321

$ 3,973,394

$

$

784,084

3,662,943

656,271

5,103,298

Fiduciary Funds

2014 2013

$ 176 $ 1,489

NOTE 8– TAX AND REVENUE ANTICIPATION NOTE (TRAN)

On July 17, 2013, the District issued a $4,000,000 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 June 30,

2014.

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 are due and payable on December

31, 2014. The District recorded the cash available to make the principal and interest payments as with the corresponding liability and associated interest as a current loan.

36



JUNE 30, 2014 AND 2013

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

Issue Date Rate Maturity Date

February 28, 2013 2.00% December 31, 2013

July 17, 2013 2.00% June 30, 2014

March 5, 2014 2.00% December 31, 2014

Outstanding

July 1, 2013

$ 8,825,505

-

-

$ 8,825,505

Additions

$ -

4,000,000

4,365,000

$ 8,365,000

Interest

$ -

39,066

$

30,783

69,849

$

Outstanding

Deductions June 30, 2014

8,825,505

4,039,066

$ -

-

-

$ 12,864,571

4,395,783

$ 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, 2014, the amounts owed between the primary government and the fiduciary funds were $108,113 and $5,809, 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 2014 fiscal year, the amount transferred to the primary government from the fiduciary fund amounted to $278,222. The amount transferred to the fiduciary funds from the primary government amounted to $134,530.

37



JUNE 30, 2014 AND 2013

NOTE 10 - LONG-TERM OBLIGATIONS

Long-term Obligations Summary

The changes in the District's long-term obligations during the 2014 fiscal year consisted of the following:

Bonds and Notes Payable

General obligation bonds

Capital appreciation bonds

Subtotal

Related party note payable

Bond premiums

Total Bonds and Notes Payable

Other Liabilities

Compensated absences

Certificates of participation

Capital lease

Other postemployment benefits

Total Other Liabilities

Total Long-term Debt

Balance

Beginning of Year

Additions/

Accretion Deductions

Balance

End of Year

$ 102,760,000

77,151,592

179,911,592

106,895

1,616,550

181,635,037

$ -

4,105,090

4,105,090

-

-

4,105,090

$ 5,375,000

1,534,276

6,909,276

-

63,501

6,972,777

$ 97,385,000

79,722,406

177,107,406

106,895

1,553,049

178,767,350

Due in

One Year

$ 6,090,000

1,779,831

7,869,831

44,000

63,501

7,977,332

959,060

2,569,960

33,218

2,513,925

6,076,163

-

-

10,342

376,873

387,215

43,272

618,510

7,855

-

669,637

915,788

1,951,450

35,705

2,890,798

5,793,741

$ 187,711,200 $ 4,492,305 $ 7,642,414 $ 184,561,091

-

643,230

9,062

-

652,292

$ 8,629,624

The changes in the District's long-term obligations during the 2013 fiscal year consisted of the following:

Bonds and Notes Payable

General obligation bonds

Capital appreciation bonds

Subtotal

Related party note payable

Bond premiums

Total Bonds and Notes Payable

Other Liabilities

Compensated absences

Certificates of participation

Capital lease

Other postemployment benefits

Total Other Liabilities

Total Long-term Debt

Balance

Beginning of Year

$ 109,345,000

76,250,081

185,595,081

-

1,680,051

187,275,132

Additions/

Accretion

$ 38,505,000

4,056,511

42,561,511

106,895

-

42,668,406

Deductions

$ 45,090,000

3,155,000

48,245,000

-

63,501

48,308,501

Balance

End of Year

$ 102,760,000

77,151,592

179,911,592

106,895

1,616,550

181,635,037

Due in

One Year

$ 5,375,000

1,534,276

6,909,276

44,000

63,501

7,016,777

1,294,760

1,735,000

-

2,171,898

5,201,658

$ 192,476,790

1,529,860

34,966

342,027

1,906,853

335,700

694,900

1,748

-

1,032,348

959,060

2,569,960

33,218

2,513,925

6,076,163

$ 44,575,259 $ 49,340,849 $ 187,711,200

-

618,510

6,993

-

625,503

$ 7,642,280

38



JUNE 30, 2014 AND 2013

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. The net proceeds were used to purchase U.S. securities. Those securities were deposited into an irrevocable trust with an escrow agent to provide for partial future debt service payments on the 2004

Series A and 2004 Refunding Bonds. In 2014, the escrow agent continued making payments on the 2004 Series

A and 2004 Refunding Bonds that were refunded and the debt service to maturity amounts of the remaining outstanding balance. At June 30, 2014, the balance in the escrow account was $40,737,937.

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 2014 of which a portion of the grant has been allocated for construction and remodeling.

39



JUNE 30, 2014 AND 2013

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 Interest

Date 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, 2013

$ 25,733,973

6,822,318

9,461,020

12,405,000

22,593,540

65,170,741

37,725,000

$ 179,911,592

Issued/

Accreted

$ 1,456,696

350,341

530,370

-

170,368

1,597,315

-

$ 4,105,090

Redeemed

$ 1,210,540

323,736

-

3,505,000

1,275,000

410,000

185,000

$ 6,909,276

Bonds

Outstanding

June 30, 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

The bonds mature through 2040 as follows:

Fiscal Year

2015

2016

2017

2018

2019

2020-2024

2025-2029

2030-2034

2035-2039

2040

Total

Accretion to date:

Principal

$

8,195,903

8,744,262

5,808,441

$

$

7,869,831

7,667,728

28,263,921

29,697,235

13,980,149

29,200,180

2,658,176

142,085,826

35,021,580

177,107,406

Interest to

Maturity

$ 6,598,203

6,534,387

6,495,299

6,387,885

6,426,281

32,701,271

25,570,114

36,544,980

29,231,014

$

4,955,905

161,445,339

$

Total

14,468,034

14,202,115

14,691,202

15,132,147

12,234,722

60,965,192

55,267,349

50,525,129

58,431,194

$

7,614,081

303,531,165

40



JUNE 30, 2014 AND 2013

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 2014 as follows:

Year Ending

June 30,

2015

2016

Total

Principal

$

$

44,000

62,895

106,895

Interest to be determined to be determined

$ -

Total

$

$

44,000

62,895

106,895

Certificates of Participation

The certificates of participation mature through 2018 as follows:

Year Ending

June 30,

2015

2016

2017

2018

Total

Principal

$ 643,230

668,220

310,000

330,000

$ 1,951,450

Interest

$ 81,002

57,014

$

32,000

16,500

186,516

Total

$ 724,232

724,232

$

725,234

342,000

2,515,698

Capital Lease

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

Year Ending

June 30,

2015

2016

2017

2018

2019

Total

Less: Amount Representing Interest

Present Value of Minimum Lease Payments

Lease

Payment

$ 9,062

9,062

9,062

7,313

1,206

$

35,705

659

35,046

41



JUNE 30, 2014 AND 2013

Equipment under capital leases at June 30, 2014 include the following:

Equipment

Less: Accumulated Depreciation

Total

$ 43,170

(9,767)

$ 33,403

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, 2014 is $915,788.

Other Postemployment Benefit (OPEB) Obligation

The District’s annual required contribution for the year ended June 30, 2014 was $1,641,606, contributions made by the District during the year were $1,264,733 and the balance at the beginning of the year was $2,513,925. As of June 30, 2014, the net OPEB obligation was $2,890,798. See Note 11 for additional information regarding the

OPEB obligation and the postemployment benefit plan.

Early Retirement Incentive

On September 20, 2012, the District and the Cabrillo College Federation of Teachers entered into an agreement for a retirement incentive program. In order to participate in the program, regular faculty members must meet

STRS eligibility requirements, retire into the STRS retirement system, have ten years or more of service credit in the District and specify a retirement date of no later than August 1, 2013. Faculty who met the eligibility requirements were offered the following:

Ten years and less than fifteen years of service $ 8,000

Fifteen years and less than twenty years of service $10,000

Twenty years or more of service $15,000

Payments to six faculty who accepted the incentive totaling $79,300 were paid in full at June 30, 2014.

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 113 retirees and beneficiaries currently receiving benefits, no terminated plan members entitled to but not yet receiving benefits, and 418 active plan members.

42



JUNE 30, 2014 AND 2013

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

Funding Policy

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 2013-2014, the District contributed $1,264,733 to the Plan, all of which was used for current premiums (approximately 77 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 asset/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

$ 1,641,606

1,264,733

376,873

2,513,925

$ 2,890,798

43



JUNE 30, 2014 AND 2013

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

2012

2013

2014

Actual

Contribution

$ 1,133,273

$ 1,177,234

$ 1,264,733

Annual Required Percentage

Contribution

$ 1,593,612

Contributed

71%

$

$

1,519,261

1,641,606

77%

77%

Net OPEB

Obligation

$ 2,171,898

$ 2,513,925

$ 2,890,798

Funded Status and Funding Progress

The Plan is not funded, however, as of June 30, 2014, the District has set aside approximately $3.2 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, 2014 was 24 years. The actuarial value of assets was not determined in this actuarial valuation.

44



JUNE 30, 2014 AND 2013

NOTE 12 - RISK MANAGEMENT

Insurance Coverages

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, 2014, 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

$ 45,000,000

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 retirement plans maintained by agencies of the State of

California. Certificated employees are members of the California State Teachers' Retirement System (CalSTRS) and classified employees are members of the California Public Employees' Retirement System (CalPERS).

45



JUNE 30, 2014 AND 2013

CalSTRS


The District contributes to CalSTRS, a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalSTRS. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and survivor benefits to beneficiaries. As a result of the Public Employee

Pension Reform Act of 2013 (PEPRA), changes have been made to the defined benefit pension plan effective

January 1, 2013. Benefit provisions are established by State statutes, as legislatively amended, within the State

Teachers' Retirement Law. CalSTRS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the CalSTRS annual financial report may be obtained from CalSTRS, 100 Waterfront Place, West Sacramento, CA 95605.

Funding Policy

Active members are required to contribute 8.0 percent of their salary, and the District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the CalSTRS Teachers' Retirement Board. The required employer contribution rate for fiscal year

2014-2013 was 8.25 percent of annual payroll. The contribution requirements of the plan members are established by State statute. The District's contributions to CalSTRS for the fiscal years ended June 30, 2014,

2013, and 2012, were $1,981,732, $1,912,413, and $2,001,248, respectively, and equal 100 percent of the required contributions for each year.

CalPERS


The District contributes to the School Employer Pool under CalPERS a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and survivor benefits to plan members and beneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the Public

Employees' Retirement Laws. CalPERS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the CalPERS' annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA 95811.

Funding Policy

Active plan members are required to contribute 7.0 percent of their salary, and the District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the CalPERS Board of Administration. The required employer contribution rate for fiscal year 2014-2013 was 11.442 percent of covered payroll. The contribution requirements of the plan members are established by State statute. The District's contributions to CalPERS for the fiscal years ended June 30, 2014,

2013, and 2012, were $1,480,755, $1,425,076, and $1,523,074, respectively, and equal 100 percent of the required contributions for each year.

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.

46



JUNE 30, 2014 AND 2013

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, 2014, 2013, and 2012, which amounted to $1,339,317, $1,212,218, and $1,173,504, respectively, (5.541 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, 2014, 2013, and 2012. 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.

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

During the year ended June 30, 2014, the District made payments of $280,913 and $9,166,354, and $688,858, 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, 2014.

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, 2014.

47



JUNE 30, 2014 AND 2013

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 $80,744 and $94,648 for 2014 and 2013, respectively.

Construction Commitments

As of June 30, 2014, the District had the following commitments with respect to the unfinished capital projects:

CAPITAL PROJECT

480V switch gear and transformer

Buildings 1550/1660 HVAC replacement

Buildings 1400/1500 HVAC design renovation

Remaining

Construction

Commitment

$ 22,162

52,162

123,400

$ 197,724

Expected

Date of

Completion

January 2015

March 2015 to be determined

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

NOTE 16 - SUBSEQUENT EVENT

The District issued $4,710,000 of Tax and Revenue Anticipation Notes dated July 2, 2014. The notes mature on

June 30, 2015 and yield 2.0 percent interest. The notes were sold to supplement cash flow.

48

R

EQUIRED

S

UPPLEMENTARY

I

NFORMATION

49


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

$ 42,872,469

UAAL as a

Percentage of

Covered Payroll

([b - a] / c)

24.8%

30.3%

33.7%

50

S

UPPLEMENTARY

I

NFORMATION

51


DISTRICT ORGANIZATION

JUNE 30, 2014

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

Susan True

Donna Ziel

Margarita Carillo

Rachael Spencer

Ed Banks

Gary Reece

Alan Smith

BOARD OF TRUSTEES

OFFICE

Chair

Vice Chair

Clerk

Member

Member

Member

Member

TERM EXPIRES

2016

2016

2014

2016

2016

2014

2014

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

52


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

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:

Temporary Assistant to Needy Families (TANF)

California State Preschool Program (CSPP)

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

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

Child Development: Federal General (CCTR) - Matching

Child Development: Federal General (CCTR) - Discretionary

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

84.048

84.243

84.141A

84.031C

84.031S

17.258

17.260

17.260

17.258

93.558

93.575

93.575

93.575

93.596

93.575

93.575

93.859

[1]

[1]

[1]

[1]

03303

[2]

[1]

[1]

[1]

03573

[2]

[2]

[2]

[2]

[2]

13609

15136

13609

15136

[2]

[2]

$ 13,247,763

265,675

3,170,252

232,699

619,624

44,025

25,344

887,698

431,149

18,924,229

21,250

24,650

3,900

3,030

52,830

24,812

5,572

31,476

65,988

31,867

15,202

29,592

36,561

241,070

See accompanying note to supplementary information.

53


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

Collaborative Research: Engaged Interdisciplinary Learning in

Sustainability Information and Communication Technologies

Total National Science Foundation

SMALL BUSINESS ADMINISTRATION

Passed through Humboldt State University:

Small Business Development Center

Small Business Development Center- Workforce Investment Board

Total

10.558

10.217

64.028

47.076

47.076

47.076

59.037

59.037

03628

S014238

[1]

03787

03787

03787

[2]

[2]

Federal

Expenditures

$ 17,419

2,097

19,516

2,898

79,403

96,102

7,658

183,163

132,958

32,000

164,958

$ 19,588,664

[1]

[2]

Pass through number not applicable.

Pass through number not available.


54


SCHEDULE OF EXPENDITURES OF STATE AWARDS


PROGRAM

GENERAL FUND-Restricted

Lottery Instructional

DSPS

CARE

EOPS

Student Financial Aid

CAL Grant

Child Care Train Consortium - CDTC

Foster Parent - FKCE

Puente Project Through UCOP

Learning Works - MARC

MESA CCCP 13/14

Matriculation

Faculty/Staff Diversity

TANF-State-FTTW

CalWorks-FTTW

CA ECE Mentor Program

CalWorks-WIA FTTW

CalWorks-WIA Perf Based

RN Enrollment Growth

AHEC Projects Center

MALC

Basic Skills Apportionment 12/13

Basic Skills Apportionment 13/14

Current

Year

Program Entitlements

Prior

Year

Total

Entitlement

$ 383,325

1,153,200

77,902

384,417

420,950

821,740

20,825

116,255

1,500

-

50,500

651,204

6,299

24,812

234,385

1,000

72,366

12,390

164,000

-

95,715

1,978

90,000

$ 641,904

100

-

-

-

-

-

-

-

29,732

-

-

-

-

-

-

-

-

-

7,373

42,562

75,204

-

$ 1,025,229

1,153,300

77,902

384,417

420,950

821,740

20,825

116,255

1,500

29,732

50,500

651,204

6,299

24,812

234,385

1,000

72,366

12,390

164,000

7,373

138,277

77,182

90,000


55

Cash

Received

Accounts

Receivable

Program Revenues

Unearned

Revenue

Accounts

Payable

Total

Revenue

Program

Expenditures

$ 202,562

1,153,200

77,902

384,417

420,950

809,879

20,825

58,128

-

29,732

30,300

651,204

6,299

24,812

234,385

1,000

51,613

9,064

164,000

7,373

84,240

77,182

90,000

$ 180,863

-

-

-

-

11,861

-

58,127

1,500

-

6,435

-

-

-

-

-

20,753

3,326

-

-

1,403

-

-

$ -

-

-

-

-

-

-

-

-

11,751

-

-

-

-

-

-

-

6,753

-

-

-

47,113

57,080

$ -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

$ 383,425

1,153,200

77,902

384,417

420,950

821,740

20,825

116,255

1,500

17,981

36,735

651,204

6,299

24,812

234,385

1,000

72,366

5,637

164,000

7,373

85,643

30,069

32,920

$ 383,425

1,153,300

77,902

384,417

420,950

821,740

20,825

116,255

1,500

17,981

36,735

651,204

6,299

24,812

234,385

1,000

72,366

5,637

164,000

7,373

85,643

30,069

32,920

56


SCHEDULE OF EXPENDITURES OF STATE AWARDS (Continued)


Options For Recovery (OFR)

PROGRAM

Special Training For Adoptive Parents (STAP)

YEP

BEC

DSN

DSN In-Region

Academic Affairs - Teacher's Preparation Pipeline

SIE 13-14

Sched. Maint. Transfer 13-14

WD 2.0

BACCC

CTE Community Collaborative 11 140 411

CTE Community Collaborative 12 140 411

CA DOE Linked Learning

AB86 Adult Ed

BAWFC

Subtotal

CHILD DEVELOPMENT FUND

Childcare Tax Bailout Through Apportionment

CA Department of Education - CACFP State Nutrition

CA Department of Education-CRPM 1085 Renovation and Repair

CA Department of Education - CSPP

CA Department of Education - CCTR

CA Department of Education - CFCC

Prior Year Adjustment - CFCC

Subtotal

Grand Total

Current

Year

$ 239,922

Program Entitlements

Prior

Year

$ -

Total

Entitlement

$ 239,922

167,466

-

-

200,000

144,157

189,886

-

-

167,466

144,157

189,886

200,000

100,000

-

134,776

134,774

-

120,000

-

-

100,000

120,000

134,776

134,774

122,804 122,804

20,000

-

-

80,000

226,800

30,002

6,118,503

-

292,740

318,150

-

-

23,883

2,008,495

20,000

292,740

318,150

80,000

226,800

53,885

8,126,998

61,778

741

-

65,578

52,089

107,860

-

288,046

$ 6,406,549

-

-

18,924

-

-

-

(13,641)

5,283

$ 2,013,778

61,778

741

18,924

65,578

52,089

107,860

(13,641)

293,329

$ 8,420,327

57

Cash

Received

$ 187,536

143,184

112,907

107,886

80,000

40,000

107,574

134,776

134,774

-

-

292,740

221,394

60,000

113,400

-

6,325,238

Accounts

Receivable

$ 52,386

24,282

31,250

31,507

26,202

-

5,556

-

-

71,980

-

-

49,751

-

-

22,741

599,923

Program Revenues

Unearned

Revenue

$ -

-

-

-

-

26,573

-

4,020

-

-

-

-

16,184

4,368

108,934

-

282,776

Accounts

Payable

$ -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Total

Revenue

$ 239,922

167,466

144,157

139,393

106,202

13,427

113,130

130,756

134,774

71,980

-

292,740

254,961

55,632

4,466

22,741

6,642,385

Program

Expenditures

$ 239,922

167,466

144,157

139,393

106,202

13,427

113,130

130,756

134,774

71,980

-

292,740

254,961

55,632

4,466

22,741

6,642,485

61,778

741

13,315

70,443

50,554

99,615

(13,641)

282,805

$ 6,608,043

-

-

5,609

-

1,535

8,245

-

15,389

$ 615,312

-

-

-

4,865

-

-

-

4,865

$ 287,641

-

-

-

-

-

-

-

-

$ -

61,778

741

18,924

65,578

52,089

107,860

(13,641)

293,329

$ 6,935,714

61,778

741

18,924

65,578

52,089

107,860

-

306,970

$ 6,949,455

58


SCHEDULE OF WORKLOAD MEASURES FOR STATE

GENERAL APPORTIONMENT – ANNUAL/ACTUAL ATTENDANCE


Reported

Data

Audit

Adjustments

CATEGORIES

A. Summer Intersession (Summer 2013 only)

1. Noncredit **

2. Credit

4.58

241.71

B. Summer Intersession (Summer 2014 - prior to July 1, 2014)

1. Noncredit **

2. Credit

-

10.36

C. Primary Terms (Exclusive of Summer Intersession)

1. Census Procedure Courses

(a) Weekly Census Contact Hours

(b) Daily Census Contact Hours

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

7,412.93

217.82

132.48

676.23

1,276.20

119.94

-

10,092.25

-

-

-

-

-

-

-

-

-

-

-

-

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

172.79

80.09

377.65

-

Centers FTES

1 Noncredit **

2 Credit

Information is as of Form 320 recertification dated October 1, 2014.

18.48

993.84

-

-

-

-

-

-

Audited

Data

4.58

241.71

-

10.36

7,412.93

217.82

132.48

676.23

1,276.20

119.94

-

10,092.25

172.79

80.09

377.65

-

18.48

993.84


59


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

$ 11,818,050

8,762,941

20,580,991

-

-

-

20,580,991

$ -

-

-

-

-

-

-

$ 11,818,050

8,762,941

20,580,991

20,580,991

-

-

-

-

-

-

1,281,507

336,981

1,618,488

1,618,488

5,888,200

-

-

436,776

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1,281,507

336,981

1,618,488

1,618,488

5,888,200

436,776

-

-

28,524,455 28,524,455

$ 11,818,050

8,762,941

20,580,991

4,535,808

774,296

5,310,104

25,891,095

$ -

-

-

-

-

-

-

$ 11,818,050

8,762,941

20,580,991

4,535,808

774,296

5,310,104

25,891,095

9,208,833

731,423

9,940,256

-

-

-

1,281,507

336,981

1,618,488

11,558,744

12,392,802

1,520,657

6,185,391

232,917

-

-

-

-

-

-

-

-

9,208,833

731,423

9,940,256

1,281,507

336,981

1,618,488

11,558,744

12,392,802

1,520,657

6,185,391

232,917

57,781,606 57,781,606


60


RECONCILIATION OF




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

ECS 84362 A


AC 0100 - 5900 and AC 6110

Object/TOP

Codes Reported Data

Audit


ECS 84362 B

Total CEE

AC 0100 - 6799

Audit


5900

6441

6491

6740

5060

1000

2000

3000

4000

4100

4200

4300

4400

$ $ $ -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

$ $ $ -

-

-

-

-

-

-

-

12,126

1,389,541

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

12,126

-

1,389,541

-

-

-

-

-

-

-

-


61


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

Total CEE

AC 0100 - 5900 and AC 6110

Object/TOP

Codes Reported Data

Audit


AC 0100 - 6799

Audit


5000 $ $ $ $ $ $ -

6300

6400

6410

6420

7000

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

18,702

-

-

232,917

232,917

251,619

-

1,653,286

-

-

-

-

-

-

-

18,702

-

-

232,917

232,917

251,619

-

1,653,286

$ 28,524,455 $ $ 28,524,455

50.82% 50.82%

$ 56,128,320 $ $ 56,128,320

$

100.00%

28,064,160 $

100.00%

28,064,160


62


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)

$ 8,164,989

Total

Instructional Activities

Total Expenditures for EPA

Revenues Less Expenditures

1000-5900 $ 8,299,500

$ 8,299,500

$ -

-

$ -

-

$ 8,299,500

$ 8,299,500

$ (134,511)

63


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

WITH FUND FINANCIAL STATEMENTS


None noted.

64


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 .

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.

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.

65

I

NDEPENDENT

A

UDITOR

'

S

R

EPORTS

66

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 Cabrillo Community College District

(the District) and its discretely presented component unit as of and for the years ended June 30, 2014 and 2013, 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 2, 2014.

Internal Control Over Financial Reporting

In planning and performing our audits 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 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.

67


F R E S N O  L A G U N A H I L L S  P A L O A L T O  P L E A S A N T O N  R A N C H O C U C A M O N G A  R I V E R S I D E  S A C R A M E N T O

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audits 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 audits 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 2, 2014

68

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 OMB Circular A-133 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, 2014. 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.


F R E S N O  L A G U N A H I L L S  P A L O A L T O  P L E A S A N T O N  R A N C H O C U C A M O N G A  R I V E R S I D E 

S A C R A M E N T O

69

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, 2014.

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 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 2, 2014

70

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 December 2013 that could have a direct and material effect on each of the District's programs as noted below for the year ended June 30, 2014.

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 December 2013.


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 for Each of the Programs

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, 2014.


F R E S N O  L A G U N A H I L L S  P A L O A L T O  P L E A S A N T O N  R A N C H O C U C A M O N G A  R I V E R S I D E 

S A C R A M E N T O

71

Other Matters

We noted a certain matter that we reported to management of the District in a separate letter dated December 2,

2014.

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 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


December 2, 2014

72

S

CHEDULE OF

F

INDINGS AND

Q

UESTIONED

C

OSTS

73


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

84.007, 84.033, 84.063, 84.268

Name of Federal Program or Cluster

Student Financial Aid Cluster

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

74


FINANCIAL STATEMENT FINDINGS AND RECOMMENDATIONS


None reported.

75


FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS


None reported.

76


STATE AWARDS FINDINGS AND QUESTIONED COSTS


None reported.

77


SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

FOR THE YEAR ENDED JUNE 30 2014

Except as specified in previous sections of this report, summarized below is the current status of all audit findings reported in the prior year's Schedule of Findings and Questioned Costs.

2013-001 Finding – To Be Arranged Hours (TBA)

Significant Deficiency - Compliance

Criteria or Specific Requirement

Pursuant to Title 5, Sections 58003.1(b) and (c), the TBA portion of a course uses an alternative method for regularly scheduling a credit course. In addition, Legal Advisory 08-02 To Be Arranged

(TBA) Hours Compliance Advice indicates that documentation is required to substantiate that each student has completed the TBA requirements as appropriate for either the Weekly or Daily census attendance accounting procedures.

Condition

We noted that contact hours for students where documentation of participation for at least 50 minutes of the To Be Arranged time was not available had not been removed from the Annual Form 320.

Questioned Costs

6.40 FTES should have been removed from weekly courses to remove contact hours of students who did not demonstrate TBA activity participation. Extrapolated FTES based on the ratio of contact hours in error would be 13.92. This is calculated based on an error rate of 23 percent, multiplied by the population of 31,274 contact hours for TBA courses.

Context

We reviewed 21 TBA weekly courses and 4 TBA daily courses out of a population of approximately

164 courses. We noted that TBA contact hours of 3,410.60 of 14,596 tested, or 23 percent of those tested, were not supported by documented attendance records.

Effect

FTES reported on the Annual Form 320 were overstated and the District may have received apportionment funding for those FTES.

Cause

The District did not have a process to capture and reduce the Annual Form 320 for those students who did not participate in To Be Arranged Hours.

Recommendation

We recommend the District review participation records for all To Be Arranged courses and remove contact hours for those students who are not participating.

Current Status

Implemented.

78


SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

FOR THE YEAR ENDED JUNE 30 2014

2013-002 Finding – Student Fees - Instructional Materials

Significant Deficiency – Compliance

Criteria or Specific Requirement

CCR Title V 59400-59408 sets certain requirements for Colleges that charge instructional fees.

Section 55440(d) of the California Code of Regulations and Section 4.7 of the Student Fee Handbook provides that no student may be prevented from participating in a field trip due to lack of funds.

Essentially, Colleges may not charge a mandatory fee for a field trip unless it exempts students who do not have sufficient funds to pay the fee.

Condition

In 1 out of 10 courses reviewed, we noted the following:

 The course fee for a camping trip was identified as mandatory rather than optional,

 Course expenditures included two unallowable costs; an instructional aide stipend and a tire repair.

Questioned Costs

 $10,000 based on a fee of $500 charged to 20 students enrolled in the course.

 $1,000 instructional aide stipend and $96.96 tire repair.

 No extrapolated costs as this was the only such course in the population.

Context

We reviewed the class schedule and selected ten courses for review that charged mandatory instructional fees.

Effect

The District does not appear to be in compliance with notifying students of a process that would exempt students who do not have sufficient funds to pay the mandatory fees.

Cause

No process was in place to notify students that mandatory instructional field trip fees could be waived for students who do not have sufficient funds to pay mandatory fees.

Recommendation

We recommend the District ensure that a mandatory fee exemption process is established and that students are notified of the process to apply for an exemption through materials provided to the students at the beginning of the course or through other publication methods.

Current Status

Implemented.

79

C D J 30, 2014 AND 2013

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

Pleasanton, California

CHEDULE OF

INDINGS AND

UESTIONED

OSTS

Related documents

Products

Support

C D J 30, 2014 AND 2013

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

Pleasanton, California

CHEDULE OF

INDINGS AND

UESTIONED

OSTS

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