BEMIDJI STATE UNIVERSITY
NORTHWEST TECHNICAL COLLEGE
ANNUAL
FINANCIAL
REPORT
For the years ended
june 30, 2011 and 2010
A member of the Minnesota State Colleges and Universities system, Bemidji State University is an equal opportunity educator and employer.
This document is available in alternative formats to individuals with disabilities by calling 1-800-475-2001 or 218-755-3883.
BSU Communications & Marketing 11-179
BEMIDJI STATE UNIVERSITY
A MEMBER OF THE
MINNESOTA STATE COLLEGES AND UNIVERSITIES SYSTEM
ANNUAL FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2011 and 2010
Prepared by:
Chief Financial Officer
Deputy Hall
Bemidji State University
1500 Birchmont Drive East
Bemidji, MN 56601-2699
Upon request, this publication is available in alternate formats by calling one of the following:
General number (651) 201-1800
Toll free: 1-888-667-2848
For TTY communication, contact Minnesota Relay Service at 7-1-1 or 1-800-627-3529.
BEMIDJI STATE UNIVERSITY
ANNUAL FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2011 and 2010
TABLE OF CONTENTS
INTRODUCTION
Page
Transmittal Letter .................................................................................................................................. 5
Organizational Chart ..............................................................................................................................7
FINANCIAL SECTION
Independent Auditors’ Report ..............................................................................................................10
Management’s Discussion and Analysis ..............................................................................................12
Basic Financial Statements
Statements of Net Assets .............................................................................................................. 22
Bemidji State University Foundation – Statements of Financial Position .....................................23
Statements of Revenues, Expenses, and Changes in Net Assets ...................................................24
Bemidji State University Foundation – Statements of Activities ..................................................25
Statements of Cash Flows .............................................................................................................26
Notes to the Financial Statements .................................................................................................28
REQUIRED SUPPLEMENTARY INFORMATION SECTION
Schedule of Funding Progress for Net Other Postemployment Benefits .............................................53
SUPPLEMENTARY SECTION
Components of Bemidji State University - Statement of Net Assets ...................................................56
Components of Bemidji State University - Statements of Revenues
Expenses, and Changes in Net Assets ..........................................................................................57
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 ...................................................................58
1
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2
INTRODUCTION
3
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4
5
6
Bemidji State Univer sity
Organizational Chart
MnSCU Board of Trustees
Steven J. Rosenstone
Chancellor
Richard Hanson
President
Administrative
Assistant
Jackie Carroll
Vice President for
Academic Affairs
Robert Griggs
(Interim)
Vice President for
Student Development &
Enrollment
Mary Ward
(Interim)
Vice President for
Finance &
Administration
William Maki
Executive Dir ector of
Univer sity Advancement
Robert Bollinger
Dean of Academics
Northwest Technical
College Bemidji
James Clark
(Interim)
Dir ector of
Communications &
Mar keting
Rose Jones
7
The financial activity of the Bemidji State University is included in this report. The University is one of 32
colleges and universities included in the Minnesota State Colleges and Universities Annual Financial
Report which is issued separately.
The University’s portion of the Revenue Fund is also included in this report. The Revenue Fund
activity is included both in the Minnesota State Colleges and Universities Annual Financial Report and
in a separately issued Revenue Fund Annual Financial Report.
All financial activity of Minnesota State Colleges and Universities is included in the state of Minnesota
Comprehensive Annual Financial Report.
8
FINANCIAL SECTION
9
10
11
MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited)
INTRODUCTION
The following discussion and analysis provides an overview of the financial position and activities of Bemidji State
University, a member of the Minnesota State Colleges and Universities System, for the years ended June 30, 2011,
2010, and 2009. This discussion has been prepared by management and should be read in conjunction with the
financial statements and the notes, which follow this section.
Bemidji State University (BSU) and Northwest Technical College (NTC) are aligned under the leadership of one
president. The institutions share administration, business services, information technology, select student services,
and some academic areas. BSU and NTC maintain separate institutional accreditation from the Higher Learning
Commission and all its student, personnel, and financial records are recorded in separate integrated student records
systems. For financial statement purposes, the records of BSU and NTC are then combined and referred to within
this document to as the University unless specifically noted.
Bemidji State University and Northwest Technical College are two of 32 colleges and universities comprising the
Minnesota State Colleges and Universities System. Minnesota State Colleges and Universities are governed by a 15
member board of trustees appointed by the Governor. Twelve trustees serve six-year terms, eight representing each
of Minnesota’s congressional districts and 4 serving at-large. Three student trustees: one from a state university, one
from a community college and one from a technical college, serve two-year terms. The Board of Trustees selects the
Chancellor and has broad policy responsibility for system planning, academic programs, fiscal management,
personnel, admissions requirements, tuition and fees, and policies and procedures.
BSU is a comprehensive public university founded in 1919, with current student enrollment of approximately 4,500
undergraduate students and 300 graduate students from nearly all 50 states and approximately 35 foreign countries.
The campus is comprised of 89 acres with 19 academic/student services buildings, seven residence buildings, and a
240 acre private forest. BSU offers more than 65 majors and pre-professional programs. Fourteen graduate
programs are offered, with online programs in education, special education, and industrial technology. BSU
operates with approximately 400 faculty members and 200 staff.
NTC was established in 1965 and has a current student enrollment of approximately 950 students. NTC has evolved
into a technological institution offering over 40 programs in business, health, industrial technology, and human
protective services. NTCs online offerings include programs in accounting, administrative assistant, general
business, medical office technology, nursing, and supervisory management. NTC operates with approximately 70
faculty members and 35 staff.
FINANCIAL HIGHLIGHTS
The University’s financial position improved during fiscal year 2011, and ended at June 30 with assets of $116.3
million and liabilities of $46.1 million compared to fiscal year 2010 with assets of $106.8 million and liabilities of
$40.7 million and fiscal year 2009 with assets of $101.6 million and liabilities of $40.8 million. The increase in total
assets was primarily due to a $2.9 million increase in current assets. The University made efforts in fiscal year 2011
to increase cash in anticipation of budgetary challenges. Net assets, which represent the residual interest in the
University’s assets after liabilities are deducted, are comprised of:
•
Invested in capital assets, net of related debt was $48.9 million for fiscal year 2011 compared with $49.2
million in fiscal year 2010 and $47.2 million in fiscal year 2009.
•
Restricted net assets were $7.3 million for fiscal year 2011, $7.3 million for fiscal year 2010 and $6.7
million for fiscal year 2009. Unrestricted net assets were $14.0 million for fiscal year 2011, $9.6 million for
fiscal year 2010, and $6.9 million for fiscal year 2009.
12
USING THE FINANCIAL STATEMENTS
The University’s financial report includes three financial statement: the statements of net assets, the statement of
revenues, expenses and changes in net assets and the statement of cash flows. These financial statements are
prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the Governmental
Accounting Standards Board (GASB) through authoritative pronouncements. These statements establish standards
for external financial reporting for public colleges and universities and require that financial statements be presented
on a consolidated basis to focus on the University as a whole, with resources classified for accounting and reporting
purposes into three net asset categories.
STATEMENTS OF NET ASSETS
The statements of net assets present the financial position of the University at the end of the fiscal year and include all
assets and liabilities of the University. The difference between total assets and total liabilities (net assets) is one
indicator of the current financial condition of the University. The change in net assets is an indicator of whether the
overall financial condition has improved or worsened during the year. Assets and liabilities are generally measured
using current values. One notable exception is capital assets, which are stated at historical cost less an allowance for
depreciation. A summary of the University’s assets, liabilities and net assets at June 30, 2011, 2010, and 2009,
follows:
(In Thousands)
2011
$ 35,018 $
9,221
Current assets
Current restricted assets
Noncurrent assets:
Student loans receivable, net
Capital assets, net
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Net assets
4,333
67,774
116,346
$
10,787
35,263
46,050
70,296 $
2010
32,095 $
1,942
4,249
68,497
106,783
11,480
29,193
40,673
66,110 $
2009
27,191
3,100
4,267
67,056
101,614
11,269
29,570
40,839
60,775
Unrestricted current assets consist primarily of cash, cash equivalents and investments which total $31.1 million at
June 30, 2011, $27.5 million at June 30, 2010, and $23.4 million at June 30, 2009. This represents approximately
5.0 months, 4.5 months, and 3.9 months of operating expenses (excluding depreciation) for fiscal years 2011, 2010
and 2009, respectively.
Included in current assets are accounts receivables. The accounts receivable balance ending June 30, 2011 was $1.3
million comprised primarily of tuition and fees, and room and board. The accounts receivable balance ending June
30, 2010 was $1.5 million while accounts receivable balance from 2009 to 2010 increased by 3.3 percent or $.05
million.
Current liabilities consist primarily of accounts payable and salaries payable. Accounts payable were $0.9 million at
June 30, 2011 compared to $1.4 million at June 30, 2010 compared to $0.8 million at June 30, 2009. Salaries
payable ending June 30, 2011 were $5.6 million compared to $5.6 million June 30, 2010 and $4.8 million June 30,
2009. In 2010, the increase in accounts payable was due to pending capital project payments. In 2011 and 2010, the
increase in salaries payable was due to Board Early Separation Incentive (BESI) distributions.
13
Net assets represent the residual interest in the University’s assets after liabilities are deducted.
The University’s net assets at June 30, 2011, 2010 and 2009, are summarized as follows:
(In Thousands)
Net Assets
2011
Invested in capital assets, net of related debt
$ 48,914 $
Restricted expendable, bond covenants
3,472
Restricted expendable, other
3,875
14,035
Unrestricted
Total net assets
$ 70,296 $
2010
49,197
3,874
3,475
9,564
66,110
2009
$ 48,157
3,273
2,494
6,851
$ 60,775
Invested in capital assets, net of related debt, represent the University’s capital assets net of accumulated
depreciation and outstanding principal balances of debt.
Restricted net assets include funding received for capital projects, revenue bond covenants and the University's
capital contribution for Perkins loans.
CAPITAL AND DEBT ACTIVITIES
One of the critical factors in continuing the quality of the University’s academic programs and residential life is the
development and renewal of its capital assets. The University continues to implement a long-range plan to
modernize its complement of older facilities, balanced with some new construction. Capital outlay totaled $4.1
million in 2011, $6.0 million in 2010, and $11.8 million in 2009. Capital expenses are primarily comprised of
replacement and renovation of facilities, as well as significant investments in equipment. The primary outlays for
2011 were for the implementation of the campus-wide emergency alert system, installation of new flooring in the
recreation center, and revenue fund roofing projects in progress. The two largest capital outlay projects for 2010
were for elevator modification and Bangsberg Hall tuck pointing and abatement while the majority for fiscal year
2009 was the renovation and addition to Sattgast Hall.
Construction in progress as of June 30, 2011 includes the plumbing repair project in the physical education building
and Birch Hall Renovation project at BSU along with the restroom renewal and ADA code compliance project at
NTC. Construction in progress as of June 30, 2010 funded through operating funds included the following projects:
replacement of the multipurpose floor in the campus recreation center, enhancements to the keyless entry system in
the residence halls, emergency alert system for all campus buildings, and asset preservation and replacement
projects funded from capital bonding funds in 2009 and 2010. Additional information for capital project
commitments can be found in Note 16 to the financial statements.
Long-term debt totaled $26.6 million at June 30, 2011, $20.1 million at June 30, 2010, and $20.8 million at June 30,
2009. The additional borrowing incurred in fiscal year 2011 is for the Birch Hall Renovation project. General
obligation bonds have financed Sattgast Hall addition and renovation. Revenue fund bonds funded the renovation of
Linden Hall. Additional information on capital and debt activities can be found in Notes 6 and 8 to the financial
statements.
14
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
The statements of revenues, expenses and changes in net assets present the University’s results of operations.
(In Thousands)
Operating revenue:
Tuition, auxiliary and sales, net
Restricted student payments, net
Other income
Total operating revenue
2011
$ 29,444
9,559
451
39,454
2010
$ 26,552
9,028
542
36,122
2009
$ 26,004
8,153
705
34,862
Nonoperating revenue:
State and capital appropriations
Private grants and interest income
Federal and state grants
Total nonoperating revenue
Total revenue
24,647
1,832
18,375
44,854
84,308
27,735
1,628
18,657
48,020
84,142
35,473
2,451
13,761
51,685
86,547
Operating expense:
Salaries and benefits
Supplies, services and other
Depreciation
Financial aid, net
Total operating expenses
50,463
21,941
4,813
1,943
79,160
50,060
21,015
4,500
2,335
77,910
49,017
22,858
4,166
1,483
77,524
Nonoperating expense
Total expense
962
80,122
897
78,807
824
78,348
4,186
66,110
$ 70,296
5,335
60,775
$ 66,110
8,199
52,576
$ 60,775
Increase in net assets
Net assets, beginning of year
Net assets, end of year
Tuition, fees, and state appropriations are the primary sources of funding for the University’s academic and
residential life programs. Net tuition, auxiliary and sales revenue increased by 10.9 percent in fiscal year 2011 and
increased only slightly by 2.1 percent in fiscal year 2010 from fiscal year 2009 levels. The net restricted student
payments increased by 5.9 percent in fiscal year 2011, increased by 10.7 percent in fiscal year 2010 and increased
9.2 percent in fiscal year 2009.
Federal and state grants decreased 1.5 percent in fiscal year 2011 after increasing by 35.5 percent in fiscal year 2010
and increasing by 10.4 percent in fiscal year 2009. Federal funding from the American Recovery and Reinvestment
Act of 2009 (ARRA) along with an increase in financial aid funds were the main contributors to the $4.9 million
increase in fiscal year 2010. In fiscal year 2011, federal grants increased again by $.7 million offsetting decreases to
state grants of $1.01 million primarily to a reduction in the state grant financial aid program.
15
The following graphic depicts the revenue trends by source over the past three fiscal years.
As noted in the following chart, the demographic of our students continues to demand more flexibility in taking their
courses. This change is reflected in the ratio of on-campus credits to distance (mainly on-line) credits. For fiscal
year 2010 and 2011, these ratios have changed to 76.6 percent and 74.5 percent respectively on-campus and 23.4
percent and 25.5 percent respectively off-campus. In fiscal year 2009, the ratio was 78.3 percent on-campus and
21.9 percent off- campus. Overall credit enrollment for fiscal year 2011 increased by 3.8 percent.
Total operating expenses increased $1.3 million or 1.6 percent between fiscal year 2011 and 2010 after increasing
$0.4 million or .5 percent between fiscal years 2010 and 2009. Salaries and benefits increased $.4 million or .01
percent between fiscal years 2011 and 2010 after increasing $1.0 million or 2.1 percent between fiscal years 2010
16
and 2009. The increases in 2011 and 2010 are primarily due to the one-time Board Early Separation Incentive. The
faculty collective bargaining agreement(s) for the University had no salary increases for the fiscal year 2010 and
2011 agreement(s). There were no across-the-board wage increases in the staff contracts with less than half of the
staff eligible for progression step increases during the year. Depreciation expense increased by $0.3 million or 7.0
percent between fiscal years 2011 and 2010 after increasing by $0.3 million or 8.0 percent due to the completion of
the Sattgast Hall project from fiscal years 2009 to 2010. The increase in fiscal years 2011 and 2010 was due to the
completion of the Sattgast Hall project. In fiscal year 2010, six months of depreciation was recognized while in
fiscal year 2011, a full year of depreciation was recorded.
Net assets increased by $4.2 million or 6.3 percent in fiscal year 2011 after increasing $5.3 million or 8.8 percent in
fiscal year 2010 and increasing 15.6 percent in fiscal year 2009. The increase in 2011 was primarily due to a $4.5
million increase in unrestricted net assets . Operating reserves were added to in 2011 to buffer a potential loss of
enrollment due to academic program reductions. The increase in 2010 was primarily due to the access to stimulus
funding and conservative spending in preparation for budgetary challenges in the next biennium while the increase
in 2009 was primarily due to the capital assets because of the Sattgast project.
17
COMPONENT UNIT
The Bemidji State University Foundation is a component unit of University. As such, the separately audited
financial statements for the foundation are included, but shown separately from those of the University in
compliance with the requirements of GASB Statement No. 39. The Foundation contributed $677,896, $653,793,
and $772,664 to the University for the fiscal years ended June 30, 2011, 2010, and 2009 respectively.
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE
The University is coming off a year that saw significant budget reductions, primarily to deal with the deficit the
State of Minnesota has been facing. The institutions engaged in process termed recalibration. Our recalibration was
intensely focused on our students and their learning. Four academic programs were eliminated with another
eighteen academic programs seeing reductions in the number of full-time faculty members. Approximately $4.5
million was reduced from the base operating budget between fiscal year 2011 and 2012. Reducing and reshaping
existing programs was an important component of balancing the budget for the next biennium. More importantly,
recalibration also included the commitment to efficient, timely and cost effective programming and support for our
students.
There is a focus to not concentrate solely on the context of being in a period of a tremendous resource challenge, but
to also focus on the extraordinary opportunity to sharpen our focus and to more clearly articulate a future
educational environment focused on sustainability, innovation, and distinction. New faculty positions have been
added in areas of growth such as business and mass communications and in areas of distinction such as Native
American Studies. The University is committed to building for the future by ensuring we have both the
organizational and financial flexibility to respond. Past performance is becoming less relevant as we plan for the
future.
The University has concentrated its efforts in enrollment management. With tuition and fee income being the
primary source of revenue, maintaining and growing the number of credits sold is paramount. Enrollment targets
have been established that take into account challenging regional demographics and the rapid growth and demand in
on-line learning. The role of a residential campus will continue to be debated as enrollment numbers are projected
in the future. While we are geographically disadvantaged based on where significant population growth is occurring,
technologies are changing that assist us in dealing with this fact. Our credit enrollment has increased by 12.9
percent the past seven years – 10.7 percent at BSU and 25.8 percent at NTC. With all the changes that occurred
during last academic year, BSU did establish a separate enrollment contingency reserve of $1.2 million for the
biennium to deal with an immediate decrease. Fall 2011 enrollment indicates our credit generation for fiscal year
2012 will be down approximately 1.3 percent from the prior year. This exceeded our initial projections by 1.5
percent so we met our budgetary enrollment target.
18
BSU has the highest tuition rate among state universities and Northwest Technical College has the highest rate
among two-year colleges within the Minnesota State Colleges and Universities System. During the past several
years, either the state legislature or the Board of Trustees has had a tuition cap, which has reduced individual
institution flexibility. This factor has been one in keeping us as the highest cost schools in the system. We have
raised our tuition rate less than the maximum many years during this period, however it has not been enough to
change our position from more dramatic tuition increases that happened 10-12 years ago. Fortunately, our tuition
revenue has been stable and we have received support from our constituents that is important to maintaining quality
and access as our state appropriations have continued to decline. As we plan for the future, we expect that tuition
increases will be modest in the foreseen future. Our new chancellor has pledged new ways of doing business to
keep tuition affordable.
Since fiscal year 2006, BSU and NTC’s state appropriation funding has been allocated as a single appropriation that
is then allocated locally to each institution. Our state appropriation for fiscal year 2012 was 22.7 percent less that it
was in 2006. This percentage loss is about 8.5 percent greater than the total percentage loss the system experienced
during this period. BSU and NTC’s share of the allocation continues to decrease each year so in our planning
parameters, we have continued to plan an external loss (amount to Minnesota State Colleges and Universities
System from the State of Minnesota) and an internal loss (amount allocated through the allocation model to BSU
and NTC). As we plan for fiscal year 2014 and beyond, we do not foresee our appropriation levels recovering and
are planning for them to decrease even further.
In forecasting our revenue, the most important variable in our planning will be reaching the enrollment number that
our operating budget is based on when setting the budget. On the expenditure side, personnel projections are the
most important variable. Faculty salaries were frozen for fiscal year 2010 and 2011 and negotiations continue for
fiscal year 2012 and 2013. While financially increased compensation could be difficult to afford, it will be
important to continue to plan for increases. We have planned for 2.5 percent compensation increases for each of the
next two years. While faculty compensation is the largest operating expenditure of our operating budget, it is also
critical for the University to continue to have the ability to attract the highest quality faculty so we need to plan that
though faculty contracts have not increased costs much the past few years, they may return to more traditional
pattern at a faster rate than our revenue will increase. This phenomenon will put increasing pressure to continue to
use reallocation of resources as the main source of funds to invest in new programs and to increase investments in
others.
19
The Foundation and other philanthropic pursuits will receive a much higher priority in the future. Privately-raised
funds will allow us to provide support for our faculty and students in ways that will not be available from our main
historical sources of revenue – state appropriation and tuition revenue. Our endowed funds currently total $12.7
million. Over the next five years, there is a goal to approximately triple the amount of endowment funds available.
Primary use of the annual distributions from the endowment will be for student scholarships and support of specific
academic programs. It is important that we are more aggressive going after this source of revenue with the uncertain
outlook and recent history regarding funding from the state.
The University is continuing to poise itself to meet the challenges of the future. Continuing to plan financially over
a multi-year period will help ensure we build in the flexibility needed in our budgets to advance our strategic agenda
while also ensuring we have a fiscally-sustainable institution.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview Bemidji State University’s financial position. Those
interested in the University’s finances should direct questions concerning any of the information provided in this
report or requests for additional financial information to:
Chief Financial Officer
Deputy Hall
Bemidji State University
1500 Birchmont Drive N.E.
Bemidji, MN 56601
20
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21
BEMIDJI STATE UNIVERSITY
STATEMENTS OF NET ASSETS
AS OF JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Assets
Current Assets
Cash and cash equivalents
Investments
Grants receivable
Accounts receivable, net
Prepaid expense
Inventory
Student loans, net
Other assets
Total current assets
Current Restricted Assets
Cash and cash equivalents
Total current restricted assets
Noncurrent Restricted Assets
Construction in progress
Total noncurrent restricted assets
Total restricted assets
Noncurrent Assets
Student loans, net
Capital assets, net
Total noncurrent assets
2011
$
Total Assets
28,620 $
2,499
646
1,316
1,055
136
600
146
35,018
2010
26,952
597
1,107
1,519
1,073
167
600
80
32,095
9,221
9,221
1,942
1,942
660
660
9,881
1,942
4,333
67,114
71,447
4,249
68,497
72,746
116,346
106,783
Liabilities
Current Liabilities
Salaries and benefits payable
Accounts payable
Unearned revenue
Payable from restricted assets
Interest payable
Funds held for others
Current portion of long-term debt
Other compensation benefits
Total current liabilities
Noncurrent Liabilities
Noncurrent portion of long-term debt
Other compensation benefits
Capital contributions payable
Total noncurrent liabilities
5,600
945
1,441
229
185
291
1,224
872
10,787
5,652
1,405
1,704
315
101
438
1,157
708
11,480
25,335
5,458
4,470
35,263
18,909
5,822
4,462
29,193
Total Liabilities
46,050
40,673
48,914
3,472
3,875
14,035
49,197
3,874
3,475
9,564
70,296 $
66,110
Net Assets
Invested in capital assets, net of related debt
Restricted expendable, bond covenants
Restricted expendable, other
Unrestricted
Total Net Assets
$
The notes are an integral part of the financial statements.
22
BEMIDJI STATE UNIVERSITY FOUNDATION
STATEMENTS OF FINANCIAL POSITION
AS OF JUNE 30, 2011 AND 2010
(IN THOUSANDS)
2011
Assets
Current Assets
Cash and cash equivalents
Investments
Pledges and contributions receivable
Other receivables and other assets
Total current assets
Noncurrent Assets
Long-term pledges receivable
Annuities/Remainder interests/Trusts
Property and equipment, net
Other assets
Total noncurrent assets
Total Assets
$
$
Liabilities and Net Assets
Current Liabilities
Accounts payable
Annuities payable
Interest payable
Notes payable
Total current liabilities
Noncurrent Liabilities
Annuities payable
Notes payable
Total noncurrent liabilities
Total Liabilities
$
Net Assets
Unrestricted
Temporarily restricted
Permanently restricted
Total Net Assets
Total Liabilities and Net Assets
$
The notes are an integral part of the financial statements.
23
2010
11
14,830
593
15
15,449
334
111
309
33
787
16,236
54
18
3
75
$
$
$
60
12,896
752
29
13,737
689
108
307
35
1,139
14,876
24
20
3
2
49
171
732
903
978
212
732
944
993
595
2,555
12,108
15,258
395
2,874
10,614
13,883
16,236
$
14,876
BEMIDJI STATE UNIVERSITY
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
2011
Operating Revenues
Tuition, net
Fees, net
Sales, net
Restricted student payments, net
Other income
Total operating revenues
$
Operating Expenses
Salaries and benefits
Purchased services
Supplies
Repairs and maintenance
Depreciation
Financial aid, net
Other expense
Total operating expenses
Operating loss
Nonoperating Revenues (Expenses)
Appropriations
Federal grants
State grants
Private grants
Interest income
Interest expense
Grants to other organizations
Total nonoperating revenues (expenses)
Income Before Other Revenues, Expenses, Gains, or Losses
Capital appropriations
Donated assets and supplies
Gain (loss) on disposal of capital assets
Change in net assets
Total Net Assets, Beginning of Year
Total Net Assets, End of Year
$
The notes are an integral part of the financial statements.
24
23,445 $
3,067
2,932
9,559
451
39,454
2010
21,326
2,788
2,438
9,028
542
36,122
50,463
10,471
4,885
1,933
4,813
1,943
4,652
79,160
(39,706)
50,060
9,662
4,542
1,637
4,500
2,335
5,174
77,910
(41,788)
23,951
14,661
3,714
1,740
234
(963)
(142)
43,195
24,772
13,933
4,724
1,551
177
(898)
(100)
44,159
3,489
2,371
696
20
(19)
4,186
2,963
1
5,335
66,110
70,296 $
60,775
66,110
BEMIDJI STATE UNIVERSITY FOUNDATION
STATEMENTS OF ACTIVITIES
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Temporarily
Restricted
Unrestricted
Support and Revenue
Contributions
Endowment gifts
Unrealized gains (losses)
Investment income
Program income
Other income
Net assets released from restrictions
Total support and revenue
$
Expenses
Program services
Scholarships
Special projects
Total program services
Supporting services
Management and general
Fundraising
Total supporting services
Total expenses
345 $
46
345
28
3
2,802
3,569
1,341 $
1,807
39
29
(3,535)
(319)
Permanently
Restricted
- $
761
733
1,494
2011
Total
2010
Total
1,686 $
761
46
2,152
67
32
4,744
2,444
891
(15)
1,410
67
30
4,827
678
2,182
2,860
-
-
678
2,182
2,860
680
1,452
2,132
172
337
509
3,369
-
-
172
337
509
3,369
136
305
441
2,573
1,494
1,375
2,254
Change in Net Assets
200
Net Assets, Beginning of Year
395
2,874
10,614
13,883
11,629
595 $
2,555 $
12,108 $
15,258 $
13,883
Net Assets, End of Year
$
(319)
The notes are an integral part of the financial statements.
25
BEMIDJI STATE UNIVERSITY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
2011
Cash Flows from Operating Activities
Cash received from customers
Cash repayment of program loans
Cash paid to suppliers for goods or services
Cash payments for employees
Financial aid disbursements
Cash payments of program loans
Net cash flows used in operating activities
$
39,605
473
(22,060)
(50,715)
(1,924)
(620)
(35,241)
2010
$
36,318
512
(20,589)
(49,202)
(2,317)
(534)
(35,812)
Cash Flows from Noncapital Financing Activities
Appropriations
Agency activity
Federal grants
State grants
Private grants
Grants to other organizations
Net cash flows from noncapital financing activities
23,951
(147)
14,911
3,714
1,585
(142)
43,872
24,772
(137)
13,357
4,724
1,551
(100)
44,167
Cash Flows from Capital and Related Financing Activities
Investment in capital assets
Capital appropriation
Proceeds from sale of capital assets
Proceeds from borrowing
Proceeds from bond premium
Interest paid
Repayment of lease principal
Repayment of note principal
Repayment of bond principal
Net cash flows from capital and related financing activities
(4,413)
696
8
7,489
227
(811)
(27)
(1,131)
2,038
(6,734)
2,963
16
705
96
(1,023)
(350)
(26)
(1,230)
(5,583)
Cash Flows from Investing Activities
Proceeds fom sales and maturities of investments
Purchase of investments
Investment earnings
Net cash flows from investing activities
335
(2,208)
151
(1,722)
Net Increase in Cash and Cash Equivalents
100
156
256
8,947
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
$
The notes are an integral part of the financial statements.
26
28,894
37,841
3,028
$
25,866
28,894
BEMIDJI STATE UNIVERSITY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
2011
Operating Loss
$
Adjustment to Reconcile Operating Income to
Net Cash Flows used in Operating Activities
Depreciation
Provision for loan defaults
Loan principal repayments
Loans issued
Loans forgiven
Donated property not capitalized
Change in assets and liabilities
Inventory
Accounts receivable
Accounts payable
Salaries and benefits payable
Other compensation benefits
Capital contributions payable
Unearned revenues
Other
Net reconciling items to be added to operating income
Net cash flow used in operating activities
Non-Cash Investing, Capital, and Financing Activities
Capital projects on account
Change in fair market value of investment
Investment earnings on account
Amortization of bond premium
Donated land
$
$
27
(39,706)
2010
$
(41,788)
4,813
(18)
473
(620)
81
155
4,500
(65)
512
(534)
107
-
31
204
(210)
(52)
(199)
8
(52)
(149)
4,465
(35,241)
20
(49)
310
807
51
18
243
56
5,976
(35,812)
240
29
15
59
20
$
$
576
19
18
42
-
BEMIDJI STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
1.
SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
Basis of Presentation — The reporting policies of Bemidji State University, a member of the Minnesota State
Colleges and Universities system, conform to generally accepted accounting principles (GAAP) as prescribed
by the Governmental Accounting Standards Board (GASB). The statements of net assets; statements of
revenues, expenses and changes in net assets; and statements of cash flows include financial activities of
Bemidji State University.
Financial Reporting Entity — Minnesota State Colleges and Universities is an agency of the state of Minnesota
and receives appropriations from the state legislature, substantially all of which are used to fund general
operations. The University receives a portion of the Minnesota State Colleges and Universities’ appropriation.
The operations of most student organizations are included in the reporting entity because the Board of Trustees
has certain fiduciary responsibilities for these resources.
Discretely presented component units are legally separate organizations that raise and hold economic resources
for the direct benefit of a college or university in accordance with GASB Statement No. 39, Determining
Whether Certain Organizations are Component Units. The Bemidji State University Foundation, Inc. is
considered significant to the University and is included as a discretely presented component unit and separately
identified in Note 17. Complete financial statements may be obtained from the Bemidji State University
Foundation, 1501 Birchmont Drive Northeast, Bemidji, MN 56601-2699.
Basis of Accounting — The basis of accounting refers to when revenues and expenses are recognized and
reported in the financial statements. The accompanying financial statements have been prepared as a special
purpose government entity engaged in business type activities. Business type activities are those that are
financed in whole or in part by fees charged to external parties for goods or services. Accordingly, these
financial statements have been presented using the economic resources measurement focus and the accrual basis
of accounting. Revenues are recognized when earned and expenses are recognized as they are incurred.
Eliminations have been made to minimize the double counting of internal activities. Interfund receivables and
payables have been eliminated in the statements of net assets.
Minnesota State Colleges and Universities applies all applicable Financial Accounting Standards Board
statements issued prior to November 30, 1989, and GASB statements issued since that date.
Budgetary Accounting — University budgetary accounting, which is the basis for annual budgets and the
allocation of state appropriations, differs from GAAP. University budgetary accounting includes all receipts
and expenses up to the close of the books in August for the budget fiscal year. Revenues not yet received by the
close of the books are not included. The criterion for recognizing expenses is the actual disbursement, not when
the goods or services are received.
The state of Minnesota operates on a two year (biennial) budget cycle ending on June 30 of odd numbered
years. Minnesota State Colleges and Universities is governed by a 15 member board of trustees appointed by
the Governor with the advice and consent of the state senate. The Board approves the biennial budget request
and allocation as part of the Minnesota State Colleges and Universities’ total budget.
Budgetary control is maintained at the University. The University President has the authority and responsibility
to administer the budget and can transfer money between programs within the University and College without
Board approval. The budget of the University can be legally amended by the authority of the Vice
Chancellor/Chief Financial Officer.
The state appropriations do not lapse at year end. Any unexpended appropriation from the first year of a
biennium is available for the second year. Any unexpended balance may also carry over into future bienniums.
28
Capital Appropriation Revenue — Minnesota State Colleges and Universities is responsible for paying
one third of the debt service for certain general obligation bonds sold for capital projects, as specified in the
authorizing legislation. The portion of general obligation bond debt service that is payable by the state of
Minnesota is recognized by the Minnesota State Colleges and Universities as capital appropriation revenue
when the related expenses are incurred. Individual colleges and universities are allocated cash, capital
appropriation revenue, and debt based on capital project expenses.
Cash and Cash Equivalents — The cash balance represents cash in the state treasury and demand deposits in
local bank accounts as well as cash equivalents. Cash equivalents are short term, highly liquid investments
having original maturities (remaining time to maturity at acquisition) of three months or less. Cash and cash
equivalents include amounts in demand deposits, savings accounts, cash management pools, repurchase
agreements, and money market funds.
Restricted cash is cash held for capital projects and cash in the Revenue Fund is for capital projects and debt
service. The Revenue Fund is used to account for the revenues, expenses and net assets of revenue producing
facilities, which are supported through usage. It has the authority to sell revenue bonds for the construction and
maintenance of revenue producing facilities.
All balances related to the state appropriation, tuition revenues, and most fees are in the state treasury. The
University also has accounts in local banks. The activities handled through local banks include financial aid,
student payroll, auxiliary, and student activities.
Investments — The Minnesota State Board of Investment invests the University’s balances in the state treasury,
except for the Revenue Fund, as part of a state investment pool. This asset is reported as a cash equivalent.
Interest income earned on pooled investments is retained by the Office of the Chancellor and allocated to the
colleges and universities as part of the appropriation allocation process.
Cash in the Revenue Fund is invested separately. The Fund contracts with the Minnesota State Board of
Investment and U.S. Bank, N.A., for investment management services. Investments are reported at fair value.
Receivables — Receivables are shown net of an allowance for uncollectible accounts.
Inventories — Inventories are valued at cost using the retail cost method.
Prepaid Expense — Prepaid expense consists primarily of deposits in the state of Minnesota Debt Service Fund
for future general obligation bond payments.
Capital Assets — Capital assets are recorded at cost or, for donated assets, at fair value at the date of
acquisition. Estimated historical cost has been used when actual cost is not available. Such assets are
depreciated or amortized on a straight line basis over the useful life of the assets. Estimated useful lives are as
follows:
Buildings
Building Improvements
Equipment
Library Collections
35-40 years
15-20 years
3-20 years
7 years
Equipment includes all items with an original cost of $10,000 and over for items purchased since July 1, 2008;
$5,000 and over for items purchased between July 1, 2003 and June 30, 2008; and $2,000 and over for items
purchased prior to July 1, 2003. Buildings, building improvements, and internally developed software includes
all projects with a cost of $250,000 and over for projects started since July 1, 2008, and $100,000 and over for
projects started prior to July 1, 2008. All land and library collection purchases are capitalized regardless of
amount spent.
29
Funds Held for Others — Funds held for others are primarily assets held in a custodial capacity such as student
organizations, student loans or for other clearing accounts that serve as a flow-through conduit.
Long Term Liabilities — The state of Minnesota appropriates for and sells general obligation bonds to support
construction and renovation of the Minnesota State Colleges and Universities’ facilities as approved through the
state’s capital budget process. The University is responsible for a portion of the debt service on the bonds sold
for some University projects. The University may also enter into capital lease agreements for certain capital
assets. Other long term liabilities include notes payable, compensated absences, net other postemployment
benefits, workers’ compensation claims, early termination benefits, and capital contributions associated with
Perkins loan agreements with the U.S. Department of Education.
Minnesota State Colleges and Universities may finance the construction, renovation, and acquisition of facilities
for student residences and student unions through the sale of revenue bonds. These activities are accounted for
and reported in the Revenue Fund included herein. Details on the Revenue Fund bonds are available in the
separately audited and issued Revenue Fund annual financial report. Copies are available from the Financial
Reporting Director, Minnesota State Colleges and Universities, 30 7th St. E., Suite 350, St. Paul, Minnesota
55101-7804.
Unearned Revenue — Unearned revenue consists primarily of tuition received, but not yet earned, for summer
session. It also includes room deposits and amounts received from grants which have not yet been earned under
the terms of the agreement.
Operating Activities — Operating activities as reported in the statements of revenues, expenses and changes in
net assets are those that generally result from exchange transactions such as payments received for providing
services and payments made for services or goods received. Nearly all of the University’s expenses are from
exchange transactions. Certain significant revenue streams relied upon for operations are recorded as
nonoperating revenues, including state appropriations, federal, state and private grants, and investment income.
Tuition, Fees, and Sales, Net — Tuition, fees, and sales are reported net of scholarship allowances. See Note 12
for additional information.
Restricted Student Payments — Restricted student payments consist of room, board, sales, and fee revenue
restricted for payment of revenue bonds, and are net of scholarship allowances. See Note 12 for additional
information.
Federal Grants — The University participates in several federal grant programs. The largest programs include
Pell, Supplemental Educational Opportunity Grant, Federal Work Study, TRIO, and AmeriCorps. Federal grant
revenue is recognized as nonoperating revenue in accordance with GASB Statement No. 33, Accounting and
Financial Reporting for Nonexchange Transactions. During fiscal years 2011 and 2010, $1,149,492 and
$1,979,768 of federal aid was recognized as revenue related to the American Recovery and Reinvestment Act of
2009, respectively. Of this amount, $490,293 and $415,726, respectively, was used to mitigate tuition
increases, which would have otherwise been necessary. Expenditures under government contracts are subject to
review by the granting authority. To the extent, if any, that such a review reduces expenditures allowable under
these contracts, the University will record such disallowance at the time the determination is made.
Reclassifications— Certain prior year amounts have been reclassified to conform to current year presentation.
These reclassifications had no effect on net assets previously reported. Cost of goods sold in the amount of
$689,257, reported in fiscal year 2010 as a reduction to sales revenue, was reclassified to an operating expense.
Capital appropriation revenue in the amount of $388,610 was reclassified as state appropriation revenue. These
reclassifications had no effect on total operating loss. Additionally, fiscal year 2010 restricted expendable net
assets restriction in the amount of $828,901 was reclassified to invested in capital assets, net of related debt.
30
Use of Estimates — To prepare the basic financial statements in conformity with generally accepted accounting
principles, management must make estimates and assumptions. These estimates and assumptions may affect the
reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The most significant areas that require the use of management’s
estimates relate to allowances for uncollectible accounts, scholarship allowances, workers’ compensation claims,
and compensated absences.
Net Assets — The difference between assets and liabilities is net assets. Net assets are furthered classified for
accounting and reporting purposes into the following three net asset categories:
• Invested in capital assets, net of related debt: Capital assets, net of accumulated depreciation and
outstanding principal balances of debt attributable to the acquisition, construction or improvement of those
assets.
• Restricted expendable: Net assets subject to externally imposed stipulations. Net asset restrictions for the
University are as follows:
Restricted for bond covenants — revenue bond restrictions
Restricted for other — includes restrictions for the following:
Donations — restricted per donor requests.
Loans — University capital contributed for Perkins loans.
Capital projects — restricted for completion of capital projects.
Debt service — legally restricted for bond debt repayments.
Faculty contract obligations — faculty development and travel required by contracts.
Net Assets Restricted for Other
(In Thousands)
2011
2010
Donations
$ 541 $ 521
Loans
497
502
Capital projects
61
797
Debt service
2,205
1,070
Faculty contract obligations
571
585
Total
$ 3,875 $ 3,475
• Unrestricted: Net assets that are not subject to externally imposed stipulations. Unrestricted net assets may
be designated for specific purposes by action of management, the System Office, or the Board of Trustees.
2.
CASH, CASH EQUIVALENTS, AND INVESTMENTS
Cash and Cash Equivalents — All balances related to the appropriation, tuition, and most fees are in the state
treasury. In addition, the University has two checking and five savings accounts in local banks. The activities
handled through local banks include financial aid, student payroll, auxiliary, and student activities.
Minnesota Statutes, Section 118A.03, requires that deposits be secured by depository insurance or a
combination of depository insurance and collateral securities held in the state’s name by an agent of the state.
This statute further requires that such insurance and collateral shall be at least 10 percent greater than the
amount on deposit.
31
The following table summarizes cash and cash equivalents:
Year Ended June 30
(In Thousands)
Carrying Amount
Cash, in bank
$
Restricted cash
Cash, trustee account (US Bank)
Total local cash and cash equivalents
Total treasury cash accounts
Grand Total
$
2011
2,568
3,791
5,430
11,789
26,052
37,841
2010
1,432
1,941
829
4,202
24,692
$ 28,894
$
At June 30, 2011 and 2010, the University’s local bank balances were $2,456,800 and $2,008,472, respectively.
These balances were adjusted by items in transit to arrive at the University’s cash in bank balance.
The University’s balance in the treasury, except for the Revenue Fund, is invested by the Minnesota State Board
of Investment as part of the state investment pool. This asset is reported as a cash equivalent.
The cash accounts are invested in short term, liquid, high quality debt securities.
Investments —The Minnesota State Board of Investment manages the majority of the state’s investments. All
investments managed by Minnesota State Board of Investment are governed by Minnesota Statutes, Chapters
11A and 356A. Minnesota Statutes, Section 11A.24, broadly restricts investments to obligations and stocks of
United States and Canadian governments, their agencies and registered corporations, other international
securities, short term obligations of specified high quality, restricted participation as a limited partner in venture
capital, real estate, or resource equity investments, and the restricted participation in registered mutual funds.
Generally when applicable, the statutes limit investments to those rated within the top four quality rating
categories of a nationally recognized rating agency. The statutes further prescribe the maximum percentage of
fund assets that may be invested in various asset classes and contain specific restrictions to ensure the quality of
the investments.
Within statutory parameters, Minnesota State Board of Investment has established investment guidelines and
benchmarks for all funds under its management. These investment guidelines and benchmarks are tailored to
the particular needs of each fund and specify investment objectives, risk tolerance, asset allocation, investment
management structure, and specific performance standards.
Custodial Credit Risk — Custodial credit risk for investments is the risk that in the event of a failure of the
counterparty, the University will not be able to recover the value of the investments that are in the possession of
an outside party. Board procedure 7.5.1 requires compliance with Minnesota Statutes, Section 118A.03, and
further excludes the use of FDIC insurance when meeting collateral requirements.
Credit Risk — Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. The University’s policy for reducing its exposure to credit risk is to comply with Minnesota
Statutes, Section 118A.03. This statute limits investments to the top quality rating categories of a nationally
recognized rating agency.
Concentration of Credit Risk — Concentration of credit risk is the risk of loss attributed to the magnitude of a
government’s investment in a single issuer. The University’s policy for reducing this risk of loss is to comply
with Board procedure 7.5.1 which recommends investments be diversified by type and issuer.
Interest Rate Risk — Interest rate risk is the risk that changes in interest rates will adversely affect the fair value
of a debt investment. The University complies with Board procedure 7.5.1 that recommends considering
fluctuating interest rates and cash flow needs when purchasing short term and long term investments.
32
As of June 30, the University had the following investments:
Fair Value as of June 30
(In Thousands)
Investment Type
2011
Stock
$
80
Certificate of deposit
2,419
Total
$ 2,499
3.
2010
52
545
$ 597
$
ACCOUNTS RECEIVABLE
The accounts receivable balances are made up primarily of receivables from individuals and businesses. At
June 30, 2011 and 2010, the total accounts receivable balances for the University were $1,830,852 and
$2,064,873, respectively, less an allowance for uncollectible receivables of $515,104 and $545,303,
respectively.
Summary of Accounts Receivable at June 30
(In Thousands)
2011
Tuition
$ 1,199
Room and board
245
Sales and services
121
Fees
120
Interest
11
Other
135
Total accounts receivable
1,831
Allowance for uncollectible accounts
(515)
Net accounts receivable
$ 1,316
2010
$ 1,302
128
130
94
1
409
2,064
(545)
$ 1,519
The allowance for uncollectible accounts has been computed based on the following aging schedules:
Allowance
Age
Percentage
15
Less than 1 year
1 to 3 years
45
3 to 5 years
70
Over 5 years
95
4.
PREPAID EXPENSE
Prepaid expense consists primarily of funds which have been deposited in the state’s Debt Service Fund for
future general obligation bond payments in the amounts of $995,145 and $1,070,284 for fiscal years 2011 and
2010, respectively. Minnesota Statutes, Section 16A.641, requires all state agencies to have on hand on
December 1 of each year an amount sufficient to pay all general obligation bond principal and interest due, and
to become due, through July 1 of the second fiscal year. Also, included in prepaid expense for fiscal years 2011
and 2010 is $59,524 and $2,241 stemming from prepaid software maintenance agreements and prepaid
contractual support.
5.
LOANS RECEIVABLE
Loans receivable balances consist of loans under the Federal Perkins Loan Program. The federal government
provides most of the funding for the loans with amounts collected used for new loan advances. Minnesota State
Colleges and Universities’ loan collections unit is responsible for loan collections for the University.
33
At June 30, 2011 and 2010, the total loans receivable for this program were $5,300,467 and $5,234,522,
respectively, less an allowance for uncollectible loans of $367,545 and $385,591, respectively.
6.
CAPITAL ASSETS
Summaries of changes in capital assets for fiscal years 2011 and 2010 follow:
Year Ended June 30, 2011
(In Thousands)
Beginning
Completed
Balance Increases Decreases Construction
Capital assets, not depreciated:
Land
$
Construction in progress
Total capital assets, not depreciated
1,091 $
56
2,163
3,287
3,254
3,343
$
—
—
—
$
Ending
Balance
— $
(3,892)
(3,892)
1,147
1,558
2,705
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
125,576
9,595
3,295
138,466
—
271
503
774
184
563
458
1,205
3,892
—
—
3,892
129,284
9,303
3,340
141,927
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
64,343
7,061
1,819
73,223
3,783
553
477
4,813
184
536
458
1,178
—
—
—
—
67,942
7,078
1,838
76,858
Total capital assets depreciated, net
Total capital assets, net
$
65,243
(4,039)
68,497 $ (696) $
27
27
3,892
—
$
Year Ended June 30, 2010
(In Thousands)
Beginning
Completed
Balance
Increases Decreases Construction
Capital assets, not depreciated:
Land
$
Construction in progress
Total capital assets, not depreciated
1,091
6,861
7,952
$
—
4,853
4,853
$
—
—
—
$
65,069
67,774
$
Ending
Balance
— $
(9,551)
(9,551)
1,091
2,163
3,254
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
116,025
9,937
3,212
129,174
—
570
537
1,107
—
912
454
1,366
9,551
—
—
9,551
125,576
9,595
3,295
138,466
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
60,915
7,353
1,802
70,070
3,428
601
471
4,500
—
893
454
1,347
—
—
—
—
64,343
7,061
1,819
73,223
59,104
67,056
(3,393)
$ 1,460 $
9,551
—
65,243
$ 68,497
Total capital assets depreciated, net
Total capital assets, net
$
34
19
19
$
7.
ACCOUNTS PAYABLE
Accounts payable represent amounts due for goods and services received prior to the end of the fiscal year.
Summary of Accounts Payable at June 30
(In Thousands)
2011
2010
Purchased services
$ 253 $ 226
Supplies
117
219
Capital projects
11
261
Repairs and maintenance
262
523
Other payables
302
176
Total
$ 945 $1,405
In addition, as of June 30, 2011 and 2010, Minnesota State Colleges and Universities had payable from
restricted assets in the amounts of $229,016 and $314,797, which were related to capital projects financed by
general obligation bonds and revenue bonds.
8.
LONG TERM OBLIGATIONS
Summaries of amounts due within one year are reported in the current liability section of the statements of net
assets.
The changes in long term debt for fiscal years 2011 and 2010 follow:
Year Ended June 30, 2011
(In Thousands)
Beginning
Balance
Increases Decreases
Liabilities for:
Bond premium
General obligation bonds
Notes payable
Revenue bonds
Total long term debt
$
358
9,437
371
9,900
$ 20,066
$
227
21
—
7,468
$ 7,716
$
$
59
712
27
425
1,223
Ending
Balance
$
526
8,746
344
16,943
$ 26,559
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases Decreases
Liabilities for:
Bond premium
Capital leases
General obligation bonds
Notes payable
Revenue bonds
Total long term debt
$
304
350
9,444
397
10,305
$ 20,800
$
$
35
96
—
705
—
—
801
$
$
42
350
712
26
405
1,535
Current
Portion
$
$
Ending
Balance
$
358
—
9,437
371
9,900
$ 20,066
—
706
30
488
1,224
Current
Portion
$
—
—
704
28
425
$ 1,157
The changes in other compensation benefits for fiscal years 2011 and 2010 follow:
Year Ended June 30, 2011
(In Thousands)
Beginning
Balance
Increases
Liabilities for:
Compensated absences
Early termination benefits
Net other postemployment benefits
Workers’ compensation
Total other compensation benefits
11
$
5,903
103
485
39
6,530
$
$
$
51
220
445
141
857
Decreases
$
589
103
326
39
1,057
$
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases
Liabilities for:
Compensated absences
Early termination benefits
Net other postemployment benefits
Workers’ compensation
Total other compensation benefits
$
$
5,646
320
382
131
6,479
$ 1,317
—
390
30
$ 1,737
Decreases
$
$
1,060
217
287
122
1,686
Ending
Balance
$ 5,365
220
604
141
$ 6,330
Current
Portion
$
$
Ending
Balance
$ 5,903
103
485
39
$ 6,530
590
220
—
62
872
Current
Portion
$
$
588
103
—
17
708
Bond Premium — In fiscal years 2011 and 2010, bonds were issued resulting in premiums of $227,887 and
$95,610, respectively. Amortization is calculated using the straight line method and amortized over the average
remaining life of the bonds.
Capital Leases — Liabilities for capital leases include those leases that meet the criteria of FASB Accounting
Standards Codification (ASC) 840, Leases. See Note 11 for details.
General Obligation Bonds— The state of Minnesota sells general obligation bonds to finance most of the
Minnesota State Colleges and Universities’ capital projects. The interest rate on these bonds ranges from 2
percent to 5.5 percent. The Minnesota State Colleges and Universities is responsible for paying one third of the
debt service for certain general obligation bonds sold for those capital projects, as specified in the authorizing
legislation. This debt obligation is allocated to the colleges and universities based upon the specific projects
funded. The general obligation bond liability included in these financial statements represents the University’s
share.
Notes Payable — Notes payable consists of State Energy Efficiency Program loans granted by energy
companies in order to improve energy efficiency in college and university buildings. Projects completed under
Minnesota Statutes, Section 16C.14, have an interest component. The interest rate is tied to the prime interest
rate at the time of the project.
Revenue Bonds— The Revenue Fund is authorized by Minnesota Statutes, Section 136F.98, to issue revenue
bonds whose aggregate principal shall not exceed $300,000,000 at any time. The proceeds of these bonds are
used to finance the acquisition, construction and remodeling of buildings for dormitory, residence halls, food
service, student union, and other revenue producing and related facilities at the state universities. Revenue
bonds currently outstanding have interest rates of 3 percent and 5 percent.
The revenue bonds are payable solely from, and collateralized by, an irrevocable pledge of revenues to be
derived from the operation of the financed buildings and from student fees. These revenue bonds are payable
through fiscal year 2032. Annual principal and interest payments on the bonds are expected to require less than
36
8.96 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $24,375,159.
Principal and interest paid for the current year and total customer net revenues were $905,064 and $10,105,184,
respectively.
Compensated Absences — University employees accrue vacation leave, sick leave and compensatory leave at
various rates within limits specified in the collective bargaining agreements. The liability for compensated
absences is payable as severance pay under specific conditions. This leave is liquidated only at the time of
termination from state employment.
Early Termination Benefits — Early termination benefits are benefits received for discontinuing services earlier
than planned. See Note 9 for additional information.
Net Other Postemployment Benefits — Other postemployment benefits are health insurance benefits for certain
retired employees under a single employer fully insured plan. Under the health benefits program retirees are
required to pay 100 percent of the total premium cost. Since the premium is a blended rate determined on the
entire active and retiree population, the retirees are receiving an implicit rate subsidy. See Note 10 for further
details.
Workers’ Compensation — The state of Minnesota Department of Management and Budget manages the self
insured workers’ compensation claims activities. The reported liability for workers’ compensation of $140,586
and $38,506 as of June 30, 2011 and 2010, respectively, is based on claims filed for injuries to state employees
occurring prior to the fiscal year end, and is an undiscounted estimate of future payments.
Capital Contributions — The liabilities of $4,470,466 and $4,462,123 at June 30, 2011 and 2010, respectively,
represent the amounts the University would owe the federal government if it were to discontinue the Perkins
loan program. The net increase is $8,343 and $18,071 for the fiscal years 2011 and 2010 respectively.
Principal and interest payment schedules are provided in the following table for general obligation bonds, notes
payable and revenue bonds. There are no payment schedules for bond premium, compensated absences, early
termination benefits, net other postemployment benefits, or workers’ compensation.
(In Thousands)
2012
2013
2014
2015
2016
2017-2021
2022-2026
2027-2031
2032-2036
Total
9.
General
Obligation Bonds
Principal Interest
$
706 $ 409
681
377
682
345
657
312
641
280
2,803
958
2,039
360
537
36
—
—
$ 8,746 $ 3,077
Notes Payable
Principal
Interest
$
30 $ 17
34
15
38
13
41
11
46
9
155
12
—
—
—
—
—
—
$
344 $ 77
Revenue Bonds
Principal
Interest
$
488 $
719
755
666
783
638
807
609
832
579
4,598
2,384
5,225
1,401
2,955
424
500
13
$ 16,943 $ 7,433
EARLY TERMINATION BENEFITS
Early termination benefits are defined as benefits received for discontinuing services earlier than planned.
Certain bargaining unit contracts—Minnesota State College Faculty (MSCF), Inter Faculty Organization (IFO),
and Minnesota State University Association of Administrative Service Faculty (MSUAASF)—provide for this
benefit. The following is a description of the different benefit arrangements for each contract, including the
number of retired faculty receiving the benefit, and the amount of future liability as of the end of fiscal years
2011 and 2010.
37
Inter Faculty Organization (IFO) contract
The IFO contract allows faculty members who meet certain eligibility and combination of age and years of
service requirements to receive an early retirement incentive cash payment based on base salary at time of
separation, as well as an amount equal to the employer’s contribution for one year’s health insurance premiums
deposited in his/her health care savings plan at time of separation. The cash incentive can be paid either in one
or two payments.
The number of retired faculty who received this benefit and the amount of future liability for those faculty, as of
the end of fiscal years 2011 and 2010 follow:
Fiscal Year
2011
2010
Number
of Faculty
8
3
Future Liability
(In Thousands)
$ 151
89
Minnesota State University Association of Administrative Service Faculty (MSUAASF) contract
The MSUAASF contract allows faculty members who meet certain eligibility and combination of age and years
of service requirements to receive an early retirement incentive cash payment based on base salary at time of
separation, as well as an amount equal to the employer’s contribution for one year’s health insurance premiums
deposited in his/her health care savings plan at time of separation. The cash incentive can be paid either in one
or two payments.
The number of retired faculty who received this benefit and the amount of future liability for those faculty as of
the end of fiscal years 2011 and 2010 follow:
Fiscal Year
2011
2010
Number
of Faculty
3
1
Future Liability
(In Thousands)
$ 69
14
Board Early Separation Incentive (BESI)
In July 2009, the Minnesota State Colleges and Universities system Board implemented a policy that allowed
colleges and universities to implement time-limited early separation incentives authorized by Minnesota
Statutes section 136F.481 (2009 Laws of Minnesota, Chapter 169, Article 6, Sections 1 and 2). The goal of the
incentive program is to encourage early separation of selected employees from employment with Minnesota
State Colleges and Universities, in order to: reduce salary and benefit obligations in anticipation of reduced
state funding; reallocate resources to departments and programs in response to changing needs or strategic
objectives; or achieve other cost savings or efficiencies. The eligibility requirements for employees are being at
least 55 years of age and having five years of continuous service with the university need to be met at the time
of separation.
The University had offered three time-limited BESI programs over the last two fiscal years. The first BESI plan
was made available in late February 2010 and had the following terms and conditions: available for all eligible
employees in the following bargaining units: AFSCME, MAPE, Commissioner’s Plan, and IFO and the
financial offer for the classified units (AFSCME, MAPE, and Commissioner’s Plan was 2.5 percent of current
base annual wage times years of service at the university ; while for the IFO it was a one-time lump sum
payment of $40,000. A total of fifteen faculty and staff accepted the offer and were paid a total of BESI
payments of $460,671 in fiscal year 2010.
38
The second BESI plan was made available in October 2010 and had the following terms and conditions:
focused on the IFO and MSCF faculty of certain programs (art history, chemistry, English (maximum of 3),
history, library (maximum of 1), modern languages, music, physics (maximum of 2), professional education
(maximum of 4), technological studies (maximum of 3), NTC accounting (maximum of 1), and NTC
counseling; focused on NTC MAPE and AFSCME staff in the student services area and the financial offer was
a full-year’s base salary for the IFO and MSCF faculty and 3.0 percent of current base annual wage times years
of service at the college for the AFSCME and MAPE staff. A total of ten faculty members accepted the offer
and were paid a total of BESI payments of $755,429.
The third BESI plan was available in January 2011 that focused on the two of the largest non-instructional
departments - selected areas within information technology (MMA supervisors only) and physical plant
(buildings, grounds, and trades MMA and AFSCME employees). The financial offer was 3.0 percent of current
base annual wage times years of service at the university. One MMA employee accepted the offer and was paid
out a BESI payment of $62,593.
10. NET OTHER POSTEMPLOYMENT BENEFITS
The University provides health insurance benefits for certain retired employees under a single employer fully
insured plan, as required by Minnesota Statute, 471.61, Subdivision 2B. Active employees who retire when
eligible to receive a retirement benefit from a Minnesota public pension plan and do not participate in any other
health benefits program providing coverage similar to that herein described, will be eligible to continue
coverage with respect to both themselves and their eligible dependent(s) under the health benefits program.
Retirees are required to pay 100 percent of the total premium cost. Since the premium is a blended rate
determined on the entire active and retiree population, the retirees are receiving an implicit rate subsidy. As of
July 1, 2010, there were approximately 42 retirees receiving health benefits from the health plan.
OPEB Cost and Net OPEB Obligation — The annual other postemployment benefit (OPEB) cost (expense) is
calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined
in accordance with the parameters of GASB Statement No. 45, Accounting and Financial Reporting by
Employers for Postemployment Benefits Other Than Pensions. 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
liabilities (or funding excess) over a period not to exceed 30 years.
The following table shows the components of the annual OPEB cost for 2011 and 2010, the amount actually
contributed to the plan, and changes in the net OPEB obligation:
Components of the Annual OPEB Cost
(In Thousands)
2011
2010
Annual required contribution (ARC)
$ 441 $ 387
Interest on net OPEB obligation
23
18
Adjustment to ARC
(19)
(15)
Annual OPEB cost
445
390
Contributions during the year
(326) (287)
Increase in net OPEB obligation
119
103
Net OPEB obligation, beginning of year
485
382
Net OPEB obligation, end of year
$ 604 $ 485
39
The University’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net
OPEB obligation for fiscal years 2011 and 2010 were as follows:
For Year Ended June 30
(In Thousands)
Beginning of the year net OPEB obligation $
Annual OPEB cost
Employer contribution
$
End of year net OPEB obligation
Percentage contributed
2011
485
445
(326)
604
73.26%
$
$
2010
382
390
(287)
485
73.59%
Funding Status — There are currently no assets that have been irrevocably deposited in a trust for future health
benefits. Therefore, the actuarial value of assets is zero.
Actuarial
Valuation
Date
July 1, 2010
Actuarial
Value of
Assets
(a)
—
Schedule of Funding Progress
(In Thousands)
Unfunded
Actuarial
Actuarial Accrued
Funded
Accrued
Liability
Ratio
Liability
(b)
(b - a)
(a/b)
$5,063
$5,063
0.00%
Covered
Payroll
(c)
$39,511
UAAL as a
Percentage of
Covered Payroll
((b - a)/c)
12.81%
Actuarial Methods and Assumptions — Actuarial valuations involve 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 healthcare cost trends. Amounts determined regarding
the funded status of the plan and the annual required contributions of the employer are subject to continual
revision as actual results are compared with past expectations and new estimates are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (as understood by the
employer and the plan members) and include the types of benefits provided at the time of each valuation. The
actuarial methods and assumptions used include techniques that are designed to reduce the effects of short term
volatility in actuarial accrued liabilities, consistent with the long term perspective of the calculations.
In the July 1, 2010 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial
assumptions included a 4.75 percent discount rate, which is based on the estimated long term investment yield
on the general assets, using an underlying long term inflation assumption of 3 percent. The annual healthcare
cost trend rate is 6.25 percent initially, reduced incrementally to an ultimate rate of 5 percent after twenty years.
The unfunded actuarial accrued liability is being amortized as a level dollar amount over an open 30 year
period.
40
11. LEASE AGREEMENTS
Operating Leases — The University is committed under various leases primarily for building space. These
leases are considered for accounting purposes to be operating leases. Lease expenses for the years ended
June 30, 2011 and 2010, totaled $389,977 and $236,628, respectively. Future obligations consist primarily of
an operating lease for the City of Bemidji’s Regional Event Center starting October 2010. For more
information, see Note 16. Future minimum lease payments for existing lease agreements are as follows:
Year Ended June 30
(In Thousands)
Fiscal Year
Amount
2012
$ 504
2013
380
2014
324
2015
324
2016
325
2017-2021
1,240
2022-2026
1,396
2027-2031
1,361
Total
$ 5,854
12. TUITION, FEES, AND SALES, NET
The following table provides information related to tuition, fees, and sales revenue:
Description
Tuition
Fees
Sales
Restricted student payments
Total
For the Year Ended June 30
(In Thousands)
2011
Scholarship
Gross
Allowance
Net
$ 37,699 $ (14,254) $ 23,445
3,874
(807)
3,067
3,147
(215)
2,932
9,979
(420)
9,559
$ 54,699 $ (15,696) $ 39,003
$
$
Gross
34,019
3,655
2,640
9,534
49,848
2010
Scholarship
Allowance
$ (12,693) $
(867)
(202)
(506)
$ (14,268) $
Net
21,326
2,788
2,438
9,028
35,580
13. OPERATING EXPENSES BY FUNCTIONAL CLASSIFICATION
The following tables provides information related to the operating expenses by functional classification:
For the Year Ended June 30, 2011
(In Thousands)
Description
Academic support
Institutional support
Instruction
Public service
Research
Student services
Auxiliary enterprises
Scholarships & fellowships
Less interest expense
Total operating expenses
Salaries
4,240
4,574
20,656
62
141
6,010
2,862
—
—
$ 38,545
$
Benefits
1,302
1,892
5,708
24
28
1,975
989
—
—
$ 11,918
$
41
$
$
Other
2,928
4,583
5,990
101
46
5,262
7,844
1,943
—
28,697
$
$
Interest
54
62
291
2
77
477
—
(963)
—
$
$
Total
8,524
11,111
32,645
187
217
13,324
12,172
1,943
(963)
79,160
For the Year Ended June 30, 2010
(In Thousands)
Description
Academic support
Institutional support
Instruction
Public service
Research
Student services
Auxiliary enterprises
Scholarships & fellowships
Less interest expense
Total operating expenses
Salaries
4,803
5,104
19,758
104
269
6,031
2,169
—
—
$ 38,238
$
Benefits
1,436
1,922
5,437
31
55
1,999
942
—
—
$
11,822
$
$
$
Other
3,027
4,105
5,612
210
43
4,226
8,292
2,335
—
27,850
$
$
Interest
112
126
452
2
6
144
56
—
(898)
—
$
$
Total
9,378
11,257
31,259
347
373
12,400
11,459
2,335
(898)
77,910
14. EMPLOYEE PENSION PLANS
The University participates in three retirement plans: the State Employees Retirement Fund administered by the
Minnesota State Retirement System; the Teachers Retirement Fund administered by the Minnesota Teachers
Retirement Association; and the Minnesota State Colleges and Universities Defined Contribution Retirement
Plan.
State Employees Retirement Fund (SERF)
Pension fund information is provided by the Minnesota State Retirement System, which prepares and publishes
its own stand alone comprehensive annual financial report, including financial statements and required
supplementary information. Copies of the report may be obtained directly from Minnesota State Retirement
System at 60 Empire Drive, Suite 300, St. Paul, Minnesota 55103.
The SERF is a cost sharing, multiple employer defined benefit plan. All classified employees are covered by
this plan. A classified employee is one who serves in a civil service position. Normal retirement age is 65.
The annuity formula is the greater of a step rate with a flat rate reduction for each month of early retirement, or
a level rate (the higher step rate) with an actuarial reduction for early retirement. The applicable rates for each
year of allowable service are 1.2 percent and 1.7 percent of the members’ average salary, which is defined as
the highest salary paid in five successive years of service. Minnesota State Colleges and Universities, as an
employer for some participants, is liable for a portion of any unfunded accrued liability of this fund.
The statutory authority for SERF is Minnesota Statutes, Chapter 352. For fiscal year 2009 the funding
requirement for both employer and employee was 4.5 percent. For fiscal year 2010 the funding requirement
was 4.75 percent for both employer and employee. For fiscal year 2011 the funding requirement was 5 percent
for both employer and employee. Actual contributions were 100 percent of required contributions.
Required contributions for Bemidji State University were:
(In Thousands)
Amount
Fiscal Year
2011
$ 479
2010
460
2009
443
42
Teachers Retirement Fund (TRF)
Pension fund information is provided by the Minnesota Teachers Retirement Association, which prepares and
publishes its own stand alone comprehensive annual financial report, including financial statements and
required supplementary information. Copies of the report may be obtained directly from Teachers Retirement
Association at 60 Empire Drive, Suite 400, St. Paul, Minnesota 55103-3000.
The TRF is a cost sharing, multiple employer defined benefit plan. Teachers and other related professionals
may participate in TRF. Normal retirement age is 65. Coordinated membership includes participants who are
covered by the Social Security Act. The annuity formula is the greater of a step rate with a flat reduction for
each month of early retirement, or a level rate (the higher step rate) with an actuarially based reduction for early
retirement. The applicable rates for coordinated members are 1.2 percent and 1.7 percent for service rendered
before July 1, 2006, and 1.4 percent and 1.9 percent for service rendered on or after July 1, 2006. Minnesota
State Colleges and Universities, an employer for some participants, is liable for a portion of any unfunded
accrued liability of this fund.
The statutory authority for TRF is Minnesota Statutes, Chapter 354. For fiscal years 2009, 2010 and 2011 the
funding requirement was 5.5 percent for both employer and employee coordinated members. Beginning July 1,
2011, both employee and employer contribution rate increases will be phased in with a 0.5 percent increase,
occurring every July 1 over four years, until it reaches a contribution rate of 7.5 percent on July 1, 2014. Actual
contributions were 100 percent of required contributions.
Required contributions for Bemidji State University were:
(In Thousands)
Amount
Fiscal Year
2011
$ 422
2010
454
2009
471
Minnesota State Colleges and Universities Defined Contribution Retirement Fund
General Information — The Minnesota State Colleges and Universities Defined Contribution Retirement Fund
includes two plans; an Individual Retirement Account Plan and a Supplemental Retirement Plan. Both plans
are mandatory, tax deferred, single employer defined, contribution plans authorized by Minnesota Statutes,
Chapters 354B and 354C. The plans are designed to provide retirement benefits to Minnesota State Colleges
and Universities unclassified employees. An unclassified employee is one who belongs to Minnesota State
Colleges and Universities specific bargaining units. The plans cover unclassified teachers, librarians,
administrators and certain other staff. The plans are mandatory for qualified employees. Vesting occurs
immediately. The administrative agent of the two plans is Teachers Insurance and Annuity Association College
Retirement Equities Fund (TIAA-CREF). Separately issued financial statements can be obtained from TIAACREF, Normandale Lake Office Park, 8000 Norman Center Drive, Suite 1100, Bloomington, MN 55437.
Individual Retirement Account Plan (IRAP)
Participation — Each employee who is in unclassified service is required to participate in TRF or IRAP upon
achieving eligibility. An unclassified employee is one who serves in a position deemed unclassified according
to Minnesota Statutes. This includes presidents, vice presidents, deans, administrative or service faculty,
teachers, and other managers and professionals in academic and academic support programs. Eligibility begins
with the employment contract for the first year of unclassified service in which the employee is hired for more
than 25 percent of a full academic year, excluding summer session. An employee remains a participant of the
plan, even if employed for less than 25 percent of a full academic year in subsequent years.
Contributions — There are two member groups participating in the IRAP, a faculty group and an administrators
group. For both faculty and administrators, the employer and employee statutory contribution rates are 6
43
percent and 4.5 percent, respectively. The contributions are made under the authority of Minnesota Statutes,
Chapter 354B.
Required contributions for Bemidji State University were:
(In Thousands)
Fiscal Year Employer
Employee
2011
$ 1,020
$
770
2010
998
749
2009
957
716
Supplemental Retirement Plan (SRP)
Participation — Every unclassified employee who has completed two full time years of unclassified service
with Minnesota State Colleges and Universities must participate upon achieving eligibility. The eligible
employee is enrolled on the first day of the fiscal year following completion of two full time years. Vesting
occurs immediately and normal retirement age is 55.
Contributions — Participants contribute 5 percent of eligible compensation up to a defined maximum annual
contribution as specified in the following table:
Eligible
Max. Annual
Compensation
Contribution
Member Group
Inter Faculty Organization
$ 6,000 to 51,000 $
2,250
MN State University Association of Administrative & Service Faculty
6,000 to 50,000
2,200
Administrators
6,000 to 60,000
2,700
Middle Management Association Unclassified
6,000 to 40,000
1,700
Minnesota Association of Professional Employees Unclassified
6,000 to 40,000
1,700
Commissioner’s Plan
6,000 to 40,000
1,700
The University matches amounts equal to the contributions made by participants. The contributions are made
under the authority of Minnesota Statutes, Chapter 354C. Required contributions for the University were:
(In Thousands)
Fiscal Year Amount
2011
$ 594
2010
564
2009
558
15. SEGMENT INFORMATION
A segment is an identifiable activity reported as a stand- alone entity, for which one or more revenue bonds are
outstanding. A segment has a specific identifiable revenue stream pledged in support of revenue bonds and has
related expenses, gains and losses, assets and liabilities that are required by an external party to be accounted for
separately.
44
Minnesota State Colleges and Universities issues revenue bonds to finance the University dormitories and
student unions.
Bemidji State University Portion of the Revenue Fund
(In Thousands)
2011
2010
CONDENSED STATEMENTS OF NET ASSETS
Assets:
Total current assets
Total current restricted assets
Total noncurrent restricted assets
Total noncurrent assets
Total assets
Liabilities:
Total current liabilities
Total noncurrent liabilities
Total liabilities
Net Assets:
Invested in capital assets, net of related debt
Restricted net assets
Total net assets
$
CONDENSED STATEMENTS OF REVENUES,
EXPENSES, AND CHANGES IN NET ASSETS
Total operating revenues
Total operating expenses
Operating gain
Total nonoperating revenues (expenses)
Total gain on disposal of capital assets
Change in net assets
Total net assets, beginning of year
Total net assets, end of year
$ 10,155 $ 9,631
(8,437)
(9,022)
1,718
609
(435)
(353)
(2)
—
1,281
256
8,065
7,809
$ 9,346 $ 8,065
CONDENSED STATEMENTS OF CASH FLOWS
Net cash provided (used) in
Operating activities
Capital and related financing activities
Investing activities
Net increase
Cash, beginning of year
Cash, end of year
45
$
4,466 $ 4,730
9,205
1,626
660
—
13,207
12,458
27,538
18,814
1,516
16,676
18,192
$
4,603
4,743
9,346 $
1,145
9,604
10,749
3,394
4,671
8,065
2,809 $ 1,526
4,409
(1,227)
43
105
7,261
404
6,040
5,636
$ 13,301 $ 6,040
16. COMMITMENTS
During fiscal year 2011, the University received the proceeds of $6,500,000 from the system revenue bond
sale. Subsequent to year end, the construction contract was awarded. The current contract award is $6,030,537
with an expected completion date of April 2012.
In July 2011, Northwest Technical College began negotiations with an unrelated third party to lease
approximately 11,200 square feet at the former Bemidji Sports Centre building near the NTC campus at 808
Bemidji Drive NE. Terms of a five-year lease have been agreed to in principle and work is being completed to
finalize the lease so the HVAC, plumbing, and fire-fighting academic programs can move into the building
during fall semester 2011. The current plan is for the lease to begin on November 1, 2011. The base rent of the
lease would be for five years, totaling $507,099 with an additional $80,000 in payments in consideration for
improvements made by the owner for the benefit of the college.
17. RISK MANAGEMENT
Minnesota State Colleges and Universities is exposed to various risks of loss related to tort; theft of, damage to,
or destruction of assets; error or omissions; and employer obligations. Minnesota State Colleges and
Universities manage these risks through state of Minnesota insurance plans including the state of Minnesota
Risk Management Fund and through purchased insurance coverage.
Automobile liability coverage is required by the state and is provided by the Minnesota Risk Management
Fund. The University purchases optional physical damage coverage for their newest or most expensive
vehicles.
While property and casualty coverage is required by Minnesota State Colleges and Universities policy,
campuses may select optional coverage. The University purchased optional coverage for professional liability
for employed physicians and student health services professional liability. Property coverage offered by the
Minnesota Risk Management Fund is as follows:
Institution deductible
Fund responsibility
Primary re-insurer coverage
Multiple re-insurers’ coverage
Bodily injury and property damage per person
Bodily injury and property damage per occurrence
Annual maximum paid by fund, excess by reinsurer
Maintenance deductible for additional claims
$25,000
Deductible to $1,000,000
$1,000,001 to $25,000,000
$25,000,001 to $1,000,000,000
$500,000
$1,500,000
$4,000,000
$25,000
The University retains the risk of loss. The University did not have any settlements in excess of coverage in the
last three years.
The Minnesota Risk Management Fund purchased student intern professional liability, dental clinics
professional liability, and a variety of bonds on the open market for the University and College.
Minnesota State Colleges and Universities participates in the State Employee Group Insurance Plan, which
provides life insurance, hospital, medical, and dental benefits coverage through provider organizations.
Workers’ compensation is covered through state participation in the Workers’ Compensation Reinsurance
Association, which pays for catastrophic workers’ compensation claims. Other workers’ compensation risks are
covered through self insurance for which Minnesota State Colleges and Universities pays the cost of claims
through the state Workers’ Compensation Fund. A Minnesota State Colleges and Universities’ workers’
compensation payment pool helps institutions manage the volatility of such claims. Annual premiums are
assessed by the pool based on salary dollars and claims history. From this pool all workers’ compensation
claims are paid to the state Workers’ Compensation Fund.
46
The following table presents changes in the balances of workers’ compensation claims liability during the fiscal
years ended June 30, 2011 and 2010.
(In Thousands)
Fiscal Year Ended 6/30/11 $
Fiscal Year Ended 6/30/10
Beginning
Liability
39
131
Payments
& Other
Net Additions
Reductions
$
141
$
39
$
30
122
Ending
Liability
141
39
18. RELATED PARTY TRANSACTIONS
During fiscal year 2011, the University entered into two related party transactions with the Foundation. Total
expenditures for the properties acquired were $182,043. The fair market value of the land purchased was
capitalized at $45,778. The appraised value of the house was approximately $155,000. This asset was
expensed as the value of the asset was below the University’s capitalization threshold.
19. COMPONENT UNITS
In accordance with Governmental Accounting Standards Board (GASB) Statement No. 39, Determining
Whether Certain Organizations Are Component Units, the following foundation affiliated with Bemidji State
University is a legally separate, tax exempt entity and reported as a component unit.
The Bemidji State University Foundation is a separate legal entity formed for the purpose of obtaining and
disbursing funds for the sole benefit of the University. The University does not appoint any members of the
board and the resources held by the Foundation can only be used by, or for, the benefit of the University.
The Foundation’s relationship with the institution is such that exclusion of the Foundation’s financial statements
would cause the University financial statements to be misleading or incomplete. The Foundation is considered
a component unit of the University and their statements are discretely presented in the University’s financial
statements.
The Foundation’s financial statements have been prepared on the accrual basis of accounting in accordance with
generally accepted accounting principles as prescribed by the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 958-205, Presentation of Financial Statements. Net assets, which
are classified on the existence or absence of donor imposed restrictions, are classified and reported according to
the following classes:

Unrestricted Net Assets: Net assets that are not subject to donor imposed stipulations.

Temporarily Restricted Net Assets: Net assets subject to donor imposed restrictions as to how the
assets be used.

Permanently Restricted Net Assets: Net assets subject to donor imposed stipulations that they be
maintained permanently by each foundation. Generally, the donors of these assets permit the
foundation to use all or part of the income earned on any related investments for general or specific
purposes.
In fiscal years 2011 and 2010, Bemidji State University received $677,896 and $653,793, respectively, from its
Foundation. These proceeds were used for student scholarships.
47
Investments — The Foundation’s investments are presented in accordance with FASB ASC 958-320, InvestmentsDebt and Equity Securities. Under ASC 958-320, investments in marketable securities with readily determinable
fair values and all investments in debt securities are reported at their fair values in the statement of financial
position.
Schedule of Investments at June 30
(In Thousands)
Investments
2011
Money market & certificate of deposit $ 138
Fixed income/bonds/U.S. treasuries
3,753
Equity based mutual funds
8,374
Real estate
1,824
Other investments
741
Total investments
$ 14,830
2010
260
4,592
5,455
1,160
1,429
$12,896
$
Capital Assets — Summaries of the foundations’ capital assets for fiscal years 2011and 2010 are:
Schedule of Capital Assets at June 30
(In Thousands)
Investments
2011
Capital assets, depreciated
Buildings and improvements
$ 557
Equipment
86
643
Total capital assets, depreciated
Less accumulated depreciation
334
$ 309
Total capital assets depreciated, net
2010
$ 532
124
656
349
$ 307
Long Term Obligations — Bemidji State University Foundation, Inc. has a $732,250 secured note from
Security Bank USA. The full principle balance of the note is payable on August 21, 2013. Interest only
payments will be due quarterly, calculated as a variable interest rate.
Endowment Funds— The Foundation’s endowment includes both donor-restricted funds and funds designated
by the Foundation Board of Trustees to function as endowments. As required by generally accepted accounting
principles, net assets associated with endowment funds, including funds designated by the Board of Trustees to
function as endowments, are classified and reported based on the existence or absence of donor-imposed
restrictions.
Changes in endowment net assets as of June 30, 2011 are as follows:
Schedule of Endowment Net Assets
As of June 30, 2011
(In Thousands)
Net assets, beginning of year
Contributions
Investment income
Amounts appropriated for expenditures
Other transfers
Net assets, end of year
Temporarily
Unrestricted
Restricted
$
97 $
(47)
28
24
14
926
(28)
(289)
—
(89)
$
111 $
525
48
Total Net
Permanently
Endowment
Restricted
Assets
10,436 $
10,486
$
889
941
691
1,631
—
(317)
37
(52)
$
12,053 $
12,689
Changes in endowment net assets as of June 30, 2010 are as follows:
Schedule of Endowment Net Assets
As of June 30, 2010
(In Thousands)
Net assets, beginning of year
Contributions
Investment income
Amounts appropriated for expenditures
Other transfers
Net assets, end of year
Temporarily
Unrestricted
Restricted
$
90 $
(496)
28
23
10
727
(31)
(262)
—
(39)
$
97 $
(47)
49
Total Net
Permanently
Endowment
Restricted
Assets
9,267 $
8,861
$
864
915
279
1,016
—
(293)
26
(13)
$
10,436 $
10,486
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50
REQUIRED SUPPLEMENTARY
INFORMATION SECTION
51
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52
BEMIDJI STATE UNIVERSITY
SCHEDULE OF FUNDING PROGRESS FOR NET OTHER POSTEMPLOYMENT BENEFITS
Actuarial
Valuation
Date
July 1, 2006
July 1, 2008
July 1, 2010
Actuarial
Value of
Assets
(a)
—
—
—
Schedule of Funding Progress
(In Thousands)
Actuarial
Unfunded
Accrued Actuarial Accrued Funded
Liability
Liability
Ratio
(b)
(b - a)
(a/b)
$ 4,167
$ 4,167
0.00%
4,733
4,733
0.00
5,063
5,063
0.00
53
Covered
Payroll
(c)
$ 37,825
35,617
39,511
UAAL as a
Percentage of
Covered Payroll
((b - a)/c)
11.02%
13.29
12.81
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SUPPLEMENTARY SECTION
As of July 1, 2004, the Bemidji campus of the former Northwest Technical College was aligned with Bemidji
State University under the name Northwest Technical College – Bemidji. The activities of the College were
consolidated with the University effective July 1, 2005 and were first included in the University’s fiscal year
2006 annual financial report. Included in the supplementary section are the unaudited financial statements of
both individual institutions.
55
BEMIDJI STATE UNIVERSITY (Unaudited)
STATEMENTS OF NET ASSETS
AS OF JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Assets
Current Assets
Cash and cash equivalents
Investments
Grants receivable
Accounts receivable, net
Prepaid expense
Inventory
Student loans, net
Other assets
Total current assets
Current Restricted Assets
Cash and cash equivalents
Total current restricted assets
Nncurrent Restricted Assets
Construction in progress
Total noncurrent restricted assets
Total restricted assets
Noncurrent Assets
Student loans, net
Capital assets, net
Total noncurrent assets
$
Total Assets
Bemidji
State
Northwest
Technical
College -
University
Bemidji
24,899 $
1,897
553
804
922
25
600
100
29,800
Total
3,721
602
93
512
133
111
46
5,218
$
28,620 $
2,499
646
1,316
1,055
136
600
146
35,018
2010
26,952
597
1,107
1,519
1,073
167
600
80
32,095
9,219
9,219
2
2
9,221
9,221
1,942
1,942
660
660
9,879
2
660
660
9,881
1,942
4,333
61,040
65,373
6,074
6,074
4,333
67,114
71,447
4,249
68,497
72,746
105,052
11,294
116,346
106,783
Liabilities
Current Liabilities
Salaries and benefits payable
Accounts payable
Unearned revenue
Payable from restricted assets
Interest payable
Funds held for others
Current portion of long-term debt
Other compensation benefits
Total current liabilities
Noncurrent Liabilities
Noncurrent portion of long-term debt
Other compensation benefits
Capital contributions payable
Total noncurrent liabilities
4,890
749
1,229
227
185
291
1,111
796
9,478
710
196
212
2
113
76
1,309
5,600
945
1,441
229
185
291
1,224
872
10,787
5,652
1,405
1,704
315
101
438
1,157
708
11,480
23,782
4,754
4,470
33,006
1,553
704
2,257
25,335
5,458
4,470
35,263
18,909
5,822
4,462
29,193
Total Liabilities
42,484
3,566
46,050
40,673
44,506
3,472
3,749
10,841
4,408
126
3,194
48,914
3,472
3,875
14,035
49,197
3,874
3,475
9,564
62,568 $
7,728
70,296 $
66,110
Net Assets
Invested in capital assets, net of related debt
Restricted expendable, bond covenants
Restricted expendable, other
Unrestricted
Total Net Assets
$
56
$
BEMIDJI STATE UNIVERSITY (Unaudited)
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Bemidji
State
University
Operating Revenues
Tuition, net
Fees, net
Sales, net
Restricted student payments, net
Other income
Total operating revenues
$
Operating Expenses
Salaries and benefits
Purchased services
Supplies
Repairs and maintenance
Depreciation
Financial aid, net
Other expense
Total operating expenses
Operating income (loss)
Nonoperating Revenues (Expenses)
Appropriations
Private grants
Federal grants
State grants
Interest income
Interest expense
Grants to other organizations
Total nonoperating revenues (expenses)
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital appropriations
Donated assets and supplies
Gain (loss) on disposal of capital assets
Change in net assets
Total Net Assets, Beginning of Year
Total Net Assets, End of Year
$
57
20,745 $
2,838
2,388
9,559
369
35,899
Northwest
Technical
College Bemidji
2,700 $
229
544
82
3,555
Total
23,445 $
3,067
2,932
9,559
451
39,454
2010
21,326
2,788
2,438
9,028
542
36,122
43,633
9,861
3,643
1,755
4,324
1,218
4,127
68,561
(32,662)
6,830
610
1,242
178
489
725
525
10,599
(7,044)
50,463
10,471
4,885
1,933
4,813
1,943
4,652
79,160
(39,706)
50,060
9,662
4,542
1,637
4,500
2,335
5,174
77,910
(41,788)
20,534
1,474
11,334
3,193
207
(892)
(142)
35,708
3,417
266
3,327
521
27
(71)
7,487
23,951
1,740
14,661
3,714
234
(963)
(142)
43,195
24,772
1,551
13,933
4,724
177
(898)
(100)
44,159
3,046
443
3,489
2,371
539
20
(9)
3,596
157
(10)
590
696
20
(19)
4,186
2,963
1
5,335
58,972
62,568 $
7,138
7,728 $
66,110
70,296 $
60,775
66,110
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