century.edu
Annual
Financial Report
11
10
FOR THE YEARS ENDED
A MEMBER OF THE
M I N N E S O TA S TAT E
COLLEGES AND
UNIVERSITIES SYSTEM
June 30, 2011 and 2010
CENTURY COLLEGE
A MEMBER OF THE
MINNESOTA STATE COLLEGES AND UNIVERSITIES SYSTEM
ANNUAL FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2011 and 2010
Prepared by:
Century College
3300 Century Avenue South
White Bear Lake, MN 55110
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.
CENTURY COLLEGE
ANNUAL FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2011 and 2010
TABLE OF CONTENTS
INTRODUCTION
Page
Transmittal Letter ...................................................................................................................................5
Organization Chart .................................................................................................................................9
FINANCIAL SECTION
Independent Auditors’ Report ..............................................................................................................12
Management’s Discussion and Analysis ..............................................................................................14
Basic Financial Statements
Statements of Net Assets ...............................................................................................................18
Century College Foundation – Statements of Financial Position ................................................. 19
Statements of Revenues, Expenses, and Changes in Net Assets ...................................................20
Century College Foundation – Statements of Activities ...............................................................21
Statements of Cash Flows .............................................................................................................22
Notes to the Financial Statements .................................................................................................24
REQUIRED SUPPLEMENTARY INFORMATION SECTION
Schedule of Funding for Net Other Postemployment Benefits ........................................................... 47
SUPPLEMENTARY SECTION
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 .................................................................. 50
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INTRODUCTION
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5
6
7
8
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Dr. Susan Ehlers
Interim Vice President
of Academic Affairs
Dr. Mike Bruner
Vice President of
Student Services &
Facilities
Jeralyn Jargo
Vice President of
Continuing Ed &
Customized Training
Dr. Patrick Opatz
Vice President of
Finance & Administration
Dr. Ron Anderson
President of Century College
Dr. Steven J. Rosenstone
Chancellor
Board of Trustees
Minnesota State
Colleges and Universities
Nancy Livingston
Director of
Community Relations
CENTURY COLLEGE
3300 Century Avenue North
White Bear Lake, Minnesota 55110
MINNESOTA STATE COLLEGES AND UNIVERSITIES
Donald Long
Director of Resource
Development
Jill Greenhalgh
Executive Director
Foundation
The financial activity of Century College is included in this report. The College is one of 32 colleges and
universities included in the Minnesota State Colleges and Universities Annual Financial Report which is
issued separately.
The College’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.
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FINANCIAL SECTION
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13
MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited)
INTRODUCTION
The following discussion and analysis provides an overview of the financial position and activities of Century
College, a member of Minnesota State Colleges and Universities, for the fiscal 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 accompanying notes, which follow this section.
The College is one of 32 colleges and universities comprising Minnesota State Colleges and Universities. The
Minnesota State Colleges and Universities system is governed by a 15 member Board of Trustees appointed by
the governor. Twelve trustees serve six-year terms, with at least one from each of Minnesota’s eight
congressional districts. 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.
The College is a two year comprehensive public institution of higher learning with approximately 15,200
students. Approximately 700 faculty and staff members are employed by the College.
The College’s mission is to inspire, prepare, and empower students to succeed in a changing world. The
College fulfills that mission through its offering of the first two years of a liberal arts education and more than
40 occupational programs in nearly 60 areas of study.
FINANCIAL HIGHLIGHTS
The College’s financial position improved during fiscal year 2011. Total assets increased 3.4 percent to $87.3
million, compared to $84.6 million in fiscal year 2010 and $71.6 million in fiscal year 2009. Total liabilities
rose to $30.9 million in fiscal year 2011, up from $30.4 million in fiscal year 2010 and $28.3 million in fiscal
year 2009. Total net assets, which represent the residual interest in the College’s assets after liabilities are
deducted, increased by 4.2 percent to $56.4 million in fiscal year 2011, up from $54.2 million in fiscal year
2010.
USING THE FINANCIAL STATEMENTS
The College’s financial report includes three financial statements: the statements of net assets, the statements of
revenues, expenses and changes in net assets, and the statements of cash flows. These financial statements are
prepared in accordance with applicable generally accepted accounting principles (GAAP) as established by the
Governmental Accounting Standards Board (GASB) through authoritative pronouncements. These GASB
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 College 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 College at the end of the fiscal year and include
all assets and liabilities of the College as measured using the accrual basis of accounting. The difference
between total assets and total liabilities (net assets) is one indicator of the current financial condition of the
College, while the change in net assets is an indicator of whether the overall financial condition has improved or
worsened during the year. Capital assets are stated at historical cost less an allowance for depreciation, with
current year depreciation reflected as a period expense on the statements of revenues, expenses and changes in
net assets.
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A summary of the College’s assets, liabilities and net assets as of June 30, 2011, 2010 and 2009, respectively, is
as follows:
(In Thousands)
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total net assets
2011
$ 31,180
56,195
87,375
2010
$ 31,048
53,483
84,531
2009
$ 27,752
43,814
71,566
10,215
20,717
30,932
9,603
20,768
30,371
8,619
19,651
28,270
40,881
1,916
13,646
$ 56,443
37,767
1,711
14,682
$ 54,160
32,286
1,010
10,000
$ 43,296
Current assets consist primarily of cash, cash equivalents and accounts receivable, net of allowance. These
three items totaled $28.3 million at June 30, 2011, up from the prior fiscal year total of $27.5 million. This
represents an increase of 2.8 percent. The increase from fiscal year 2009 to 2010 was $2.5 million or 10
percent.
Current liabilities consist primarily of accounts payable and salaries payable. Accounts payable totaled $1.8
million at June 30, 2011, as compared to $1.6 million at June 30, 2010, and $1.7 million at June 30, 2009.
Salaries payable totaled $5 million at June 30, 2011, representing a 10 percent increase over the prior fiscal
year. Included within the salaries payable accrual is approximately two months of earned salary for faculty who
have elected to receive salaries over twelve months on a September 1 – August 31 academic year.
Net assets represent the residual interest in the College’s assets after liabilities are deducted. The College’s total
net assets as of June 30, 2011 were $56.4 million, which represents an increase of 4.2 percent over the prior
fiscal year’s total net assets of $54.2 million. The increase from June 30, 2009 to June 30, 2010 was $10.9
million. This significant increase in the College’s net assets is primarily attributable to increased investments in
capital assets net of related debt.
CAPITAL AND DEBT ACTIVITIES
One of the critical factors in continuing the quality of the College’s academic programs is the development and
renewal of its capital assets. The College continues to implement its long range plan to modernize its
complement of older facilities, balanced with new construction. Capital assets as of June 30, 2011 totaled $56.2
million, which is net of accumulated depreciation of $34 million. This represents an increase in capital assets of
5 percent over fiscal year 2010.
Bonds payable totaled $15.7 million on June 30, 2011, which is a decrease of $0.5 million or 3 percent from
fiscal year 2010.
Additional information on capital and debt activities can be found in the notes to the financial statements.
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STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
The statements of revenues, expenses and changes in net assets represents the College’s results of operations for
the fiscal year. Users should note that GASB requires classification of State appropriations as nonoperating
revenue.
A summarized statement for the years ended June 30, 2011, 2010, and 2009, respectively, follows:
Operating revenue
Operating expense
(In Thousands)
2011
$
32,155 $
(78,617)
Operating loss
Nonoperating revenue and expense, net
Income before other revenues and expenses
Other revenues, expenses, gains, or losses
Change in net assets
Net assets, beginning of year
Net assets, end of year
$
2010
32,748 $
(72,895)
2009
30,567
(68,982)
(46,462)
46,487
(40,147)
44,871
(38,415)
40,087
25
2,258
4,724
6,140
1,672
1,677
2,283
54,160
56,443
10,864
43,296
54,160
3,349
39,947
43,296
$
$
Certain prior year amounts have been reclassified to conform to current year presentation. These classifications
had no effect on net assets previously reported. Starting with fiscal year 2011, cost of goods sold is classified as
an operating expense rather than offsetting revenue. Prior years have also been adjusted for comparability
purposes. The reclassification increases both total operating revenue and operating expense by $4.0 million in
fiscal year 2011.
Tuition and state appropriations are the primary sources of funding for the College’s academic programs, with
tuition becoming relatively more important. Tuition revenue increased by 6 percent primarily due to an
increase in enrollment of 3 percent and an increase in the tuition rate of 5 percent. Tuition revenue, net of
scholarship allowance decreased by 1 percent over last fiscal year. One of the reasons for the drop in net tuition
revenue is that the amount of financial aid disbursements increased by 19 percent. Although the tuition rates
approved by the Board increased by 5 percent in fiscal year 2011, the tuition rate students paid increased by
only 3 percent. The difference was mitigated through funds from the American Recovery and Reinvestment
Act. The College’s appropriation was reduced to $22.5 million in fiscal year 2011, compared to appropriations
of $22.6 million in fiscal year 2010 and $25.1 million in fiscal year 2009.
COMPONENT UNIT
The Century College Foundation is a component unit of Century College. As such, the separately audited
financial statements for the Foundation are included, but shown separately from those of the College in
compliance with the requirements of GASB Statement No. 39. The value of scholarships and equipment
contributed by, or passed through the Foundation was approximately $0.3 million for the fiscal year ended June
30, 2011.
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ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE
Looking toward the future, management believes that the College is positioned to continue its strong financial
condition and level of excellence. While state appropriation for the past biennium included a significant
unallotment, enrollment growth and continued strong financial management allowed the College to serve
growing numbers of students without reductions in staffing or services. Management remains concerned about
the continued decline in state support and the effect that may have on future tuition increases. In addition, the
sluggish economy will continue to put financial burden and pressures on students’ ability to pay for college,
which may have a negative effect on enrollment. To respond to these external factors, management has
initiated multi-year budget planning spanning two biennia, along with initiatives to increase efficiency and
student support, so that the college will be adequately positioned to fulfill its mission and support continued
growth.
The College has built a solid reserve and sufficient capacity to absorb the debt of its bonding projects, and will
continue to expand its capacity to assume future bonding debt in anticipation of much needed future renovations
and construction.
REQUEST FOR INFORMATION
This financial report is designed to provide a general overview of the College finances for all those with an
interest in the College’s finances. Questions concerning any of the information provided in this report or
requests for additional information should be addressed to:
Vice President of Finance and Administration
Century College
3300 Century Avenue North
White Bear Lake, Minnesota 55110
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CENTURY COLLEGE
STATEMENTS OF NET ASSETS
AS OF JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Assets
Current Assets
Cash and cash equivalents
Grants receivable
Accounts receivable, net
Prepaid expense
Inventory
Other assets
Total current assets
Current Restricted Assets
Cash and cash equivalents
Total restricted assets
Noncurrent Assets
Capital assets, net
Total noncurrent assets
2011
$
Total Assets
23,564
392
3,671
1,162
1,263
33
30,085
2010
$
22,629
1,145
3,224
1,109
1,199
37
29,343
1,095
1,095
1,705
1,705
56,195
56,195
53,483
53,483
87,375
84,531
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
Total noncurrent liabilities
5,000
1,601
1,377
245
31
9
1,112
840
10,215
4,530
728
1,692
844
33
72
1,076
628
9,603
14,538
6,179
20,717
14,990
5,778
20,768
Total Liabilities
30,932
30,371
40,881
293
1,623
13,646
37,767
132
1,579
14,682
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.
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56,443
$
54,160
CENTURY COLLEGE FOUNDATION
STATEMENTS OF FINANCIAL POSITION
AS OF JUNE 30, 2011 AND 2010
(IN THOUSANDS)
2011
Assets
Current Assets
Cash and cash equivalents
Pledges receivable
Investments
Other assets
Total Assets
$
$
Liabilities and Net Assets
Current Liabilities
Accounts payable
Total Liabilities
$
Net Assets
Unrestricted
Temporarily restricted
Permanently restricted
Total Net Assets
151
2
1,751
1
1,905
98
98
2010
$
$
$
(45)
754
1,098
1,807
Total Liabilities and Net Assets
$
The notes are an integral part of the financial statements.
19
1,905
102
16
1,442
1
1,561
98
98
(19)
516
966
1,463
$
1,561
CENTURY COLLEGE
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
Total nonoperating revenues (expenses)
Income Before Other Revenues, Expenses, Gains, or Losses
2010
23,901
2,643
4,358
799
454
32,155
$
53,555
6,331
7,693
1,088
2,704
3,502
3,744
78,617
(46,462)
50,626
4,471
7,583
817
2,385
3,586
3,427
72,895
(40,147)
22,453
21,770
2,433
287
162
(618)
46,487
22,678
18,531
3,727
459
81
(605)
44,871
25
Capital appropriations
Donated assets and supplies
Gain (loss) on disposal of capital assets
Change in net assets
4,724
2,172
92
(6)
2,283
Total Net Assets, Beginning of Year
6,039
85
16
10,864
54,160
Total Net Assets, End of Year
$
The notes are an integral part of the financial statements.
20
24,047
2,819
4,751
599
532
32,748
56,443
43,296
$
54,160
CENTURY COLLEGE FOUNDATION
STATEMENTS OF ACTIVITIES
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Temporarily
Restricted
Unrestricted
Support and Revenue
Contributions
In-kind contributions
Investment income (loss)
Realized gain (losses)
Unrealized gains
Special events
Reclassification of net assets
Net assets released from restrictions
Total support and revenue
$
67
146
8
6
21
(6)
356
598
$
424
9
2
146
13
(356)
238
Permanently
Restricted
$
41
(3)
39
62
(7)
132
2011
Total
$
2010
Total
532 $
146
14
41
214
21
968
472
307
(2)
(34)
177
12
932
Expenses
Program services
Scholarships
College activities
Total program services
Supporting services
Management and general
Fundraising
Total supporting services
Total expenses
152
298
450
-
-
152
298
450
192
412
604
157
17
174
624
-
-
157
17
174
624
112
23
135
739
Change in Net Assets
(26)
238
132
344
193
Net Assets, Beginning of Year
(19)
516
966
1,463
1,270
1,807 $
1,463
Net Assets, End of Year
$
(45)
The notes are an integral part of the financial statements.
21
$
754
$
1,098
$
CENTURY COLLEGE
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 payments for employees
Cash paid to suppliers for goods or services
Financial aid disbursements
Net cash flows used in operating activities
$
2010
31,363
(52,558)
(17,982)
(3,502)
(42,679)
$
32,415
(50,066)
(16,786)
(3,615)
(38,052)
Cash Flows from Noncapital Financing Activities
Appropriations
Agency activity
Federal grants
State grants
Private grants
Net cash flows from noncapital financing activities
22,453
(62)
22,553
2,433
287
47,664
22,678
(4)
17,921
3,727
459
44,781
Cash Flows from Capital and Related Financing Activities
Capital appropriation
Proceeds from borrowing
Proceeds from sale of capital assets
Proceeds from bond premium
Investment in capital assets
Repayment of bond principal
Interest paid
Net cash flows used in capital and related financing activities
2,172
604
130
(5,903)
(1,107)
(645)
(4,749)
6,039
1,796
47
82
(11,629)
(719)
(598)
(4,982)
Cash Flows from Investing Activities
Investment earnings
Net cash flows from investing activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
$
The notes are an integral part of the financial statements.
22
89
89
18
18
325
1,765
24,334
22,569
24,659
$
24,334
CENTURY COLLEGE
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
Donated supplies
Change in assets and liabilities
Inventory
Accounts receivable
Accounts payable
Salaries and benefits payable
Other compensation benefits
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
Amortization of bond premium
$ (40,147)
2,704
92
$
$
23
(46,462)
2010
(64)
(447)
758
470
613
(345)
2
3,783
(42,679)
396
73
2,385
85
(19)
(824)
(548)
141
450
492
(67)
2,095
$ (38,052)
$
880
63
CENTURY COLLEGE
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 Century College, a member of Minnesota State Colleges and
Universities system, conform to generally accepted accounting principles (GAAP) in the United States, as
prescribed by the Governmental Accounting Standards Board (GASB). The statements of net assets; statements
of revenues, expenses, and changes in net assets; and the statements of cash flows include the financial
activities of the College.
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 College receives a portion of 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 Century College Foundation is considered
significant to the College and is included as a discretely presented component unit and separately identified in
Note 17. Complete financial statements may be obtained from Century College Foundation, 3300 Century
Avenue North, White Bear Lake, MN 55110-1842.
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 — Budgetary accounting, which is the basis for annual budgets and the allocation of
state appropriations, differs from GAAP. 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 College’s biennial budget
request and allocation as part of Minnesota State Colleges and Universities’ total budget.
Budgetary control is maintained at the College. The College’s President has the authority and responsibility to
administer the budget and can transfer money between programs within the College without Board approval.
The budget of the College can be legally amended by the authority of the Vice Chancellor/Chief Financial
Officer of Minnesota State Colleges and Universities.
24
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.
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 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 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
College also has two accounts in a local bank. The activities handled through their local bank include financial
aid, student payroll, auxiliary, and student activities.
Investments — The Minnesota State Board of Investment invests the College’s balances in the state treasury as
part of a state investment pool. This asset is reported as a cash equivalent. Interest income earned on pooled
investments is allocated to the colleges and universities.
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. The estimated useful lives are
as follows:
Asset Type
Buildings
Building improvements
Equipment
Library collections
Life
35 years
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 include 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.
25
Funds Held for Others — Funds held for others are primarily assets held for student organizations.
Long Term Liabilities — The state of Minnesota appropriates for and sells general obligation bonds to support
construction and renovation of Minnesota State Colleges and Universities’ facilities as approved through the
state’s capital budget process. The College is responsible for a portion of the debt service on the bonds sold for
some College projects. Other long term liabilities include compensated absences, net other postemployment
benefits, workers’ compensation, and early termination benefits.
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 financial report. Copies are available from the Financial Reporting
Director, Minnesota State Colleges and Universities, 30 7th St. E., Suite 350, St. Paul, MN 55101-7804.
Unearned Revenue — Unearned revenue consists primarily of tuition received, but not yet earned, for summer
session. It also includes amounts received from grant programs 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 generally the result from exchange transactions such as payments received for providing services
and payments made for services or goods received. Nearly all of the College’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.
Tuition, Fees, and Sales, Net — Tuition, fees, and sales are reported net of scholarship allowances. See Note 11
for additional information.
Restricted Student Payments – Restricted student payments consist of parking fees restricted for payment of
revenue bonds. See Note 11 for additional information.
Federal Grants — The College participates in several federal grant programs. The largest programs include
Pell, TRIO, Carl D. Perkins, Federal Work Study, National Science Foundation, and Supplemental Educational
Opportunity Grant. 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, $1,190,740 and $1,541,243 of federal aid was recognized as revenue related to the American
Recovery and Reinvestment Act of 2009, respectively. Of these amounts, $587,538 and $595,821, respectively,
was used to mitigate tuition increases that 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 College 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
$3,970,475, reported in fiscal year 2010 as a reduction to sales revenue, was reclassified to an operating
expense. Capital appropriation revenue in the amount of $106,532 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 $334,787 was reclassified to invested in capital assets, net of
related debt net assets.
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.
26
Net Assets — The difference between assets and liabilities is net assets. Net assets are further 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 College are as follows:
Restricted for bond covenants— revenue bond restrictions
Restricted for other — includes restrictions for the following:
Debt service — legally restricted for bond debt repayments.
Capital projects — restricted for completion of capital projects.
Faculty contract obligations — faculty development and travel required by contracts.
Net Assets Restricted for Other
(In Thousands)
2011
Debt service
$ 1,613
Faculty contract obligations
10
Total
$ 1,623
•
2.
2010
$ 1,545
34
$ 1,579
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.
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents — All balances related to the appropriation, tuition, and most fees are in the state
treasury. In addition, the College has two accounts in a local bank. The activities handled through local banks
include financial aid, student payroll, 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 ten percent greater than the
amount on deposit.
The following table summarizes cash and cash equivalents:
Year Ended June 30
(In Thousands)
Carrying Amount
Cash, in bank
$
Cash, trustee account (US Bank)
Total local cash and cash equivalents
Total treasury cash accounts
Grand Total
$
2011
2,054
335
2,389
22,270
24,659
2010
1,666
339
2,005
22,329
$ 24,334
$
At June 30, 2011 and 2010, the College’s bank checking balance was $3,095,882 and $2,152,658, respectively.
These balances were adjusted by items in transit to arrive at the College’s bank cash balance.
The College’s balance in the state 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.
27
The College’s balance in the state 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.
Investments — The Minnesota State Board of Investment manages the majority of the state’s investments. All
investments managed by the 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 College 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 College’s policy for reducing its exposure to credit risk is to comply with Minnesota Statutes,
Section 118A.04. 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 College’s policy for reducing this risk of loss is to comply with
Board procedure 7.5.1which 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 an investment. The College complies with Board procedure 7.5.1 that recommends considering fluctuating
interest rates and cash flow needs when purchasing short term and long term debt investments.
3. ACCOUNTS RECEIVABLE
The accounts receivable balances are made up primarily of receivables from individuals. At June 30, 2011 and
2010, the total accounts receivable balances for the College were $5,270,152 and $4,500,106, respectively, less
an allowance for uncollectible accounts of $1,599,085 and $1,276,059, respectively.
Summary of Accounts Receivable at June 30
(In Thousands)
2011
2010
Tuition
$ 3,047 $ 2,499
Fees
719
547
Sales and service
309
275
Third party obligations
415
358
Other
780
821
Total accounts receivable
5,270
4,500
Allowance for doubtful accounts
(1,599)
(1,276)
Total net accounts receivable
$ 3,671 $ 3,224
28
The allowance for uncollectible accounts has been computed based on the following aging schedule:
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 of funds which have been deposited in the state’s Debt Fund Service for future general
obligation bond payments in the amounts of $1,099,321 and $1,046,733 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 $62,618 and $62,428, respectively, stemming from prepaid software maintenance agreements and prepaid
contractual support.
5. CAPITAL ASSETS
Summaries of changes in capital assets for fiscal years 2011 and 2010 follow.
Year Ended June 30, 2011
(In Thousands)
Beginning
Balance
Increases Decreases
Description
Capital assets, not depreciated:
Land
$
Construction in progress
Total capital assets, not depreciated
1,012
6,865
7,877
$
—
4,660
4,660
$
—
—
—
Completed
Construction
$
—
(8,823)
(8,823)
Ending
Balance
$
1,012
2,702
3,714
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
71,160
4,637
1,401
77,198
—
539
239
778
—
93
203
296
8,823
—
—
8,823
79,983
5,083
1,437
86,503
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
27,820
2,999
773
31,592
2,156
343
205
2,704
—
71
203
274
—
—
—
—
29,976
3,271
775
34,022
Total capital assets, depreciated, net
45,606
Total capital assets, net of depreciation $ 53,483
$
29
(1,926)
2,734 $
22
22
$
8,823
—
$
52,481
56,195
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases Decreases
Description
Capital assets, not depreciated:
Land
$
Construction in progress
Total capital assets, not depreciated
1,012
2,522
3,534
$
—
11,491
11,491
$
—
—
—
Completed
Construction
$
—
(7,148)
(7,148)
Ending
Balance
$ 1,012
6,865
7,877
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
64,012
4,953
1,364
70,329
—
372
225
597
—
688
188
876
7,148
—
—
7,148
71,160
4,637
1,401
77,198
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
25,960
3,329
760
30,049
1,860
325
200
2,385
—
655
187
842
—
—
—
—
27,820
2,999
773
31,592
(1,788)
$ 9,703 $
34
34
7,148
—
45,606
$ 53,483
Total capital assets, depreciated, net
40,280
Total capital assets, net of depreciation $ 43,814
$
6. 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
Capital expenditures
$ 151 $
36
Purchased services
561
319
Supplies
506
218
Inventory
4
5
Employee reimbursements
130
86
Repairs and maintenance
61
21
Other
188
43
Total
$ 1,601 $ 728
In addition, as of June 30, 2011 and 2010, the College had payables from restricted assets in the amounts of
$244,940 and $773,392, which were related to capital projects financed by general obligation bonds.
Additionally, as of June 30, 2010, the College had payables from restricted assets in the amount of $70,667
related to capital projects in the Revenue Fund. There were no payables from restricted assets as of June 30,
2011.
30
7. 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
Revenue bonds
Total long term debt
$
589
11,147
4,330
16,066
$
$
130
604
—
734
$
$
Ending
Balance
73
692
385
1,150
$
$
$
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases
Decreases
Liabilities for:
Bond premium
General obligation bonds
Revenue bonds
Total long term debt
$
570
10,013
4,330
14,913
$
$
82
1,796
—
1,878
$
$
$
$
589
11,147
4,330
16,066
$
—
722
390
1,112
$
Ending
Balance
63
662
—
725
$
646
11,059
3,945
15,650
Current
Portion
Current
Portion
$
—
691
385
1,076
$
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
$
$
5,512
—
646
248
6,406
$
$
678
86
477
284
1,525
$
$
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
$
$
5,350 $
1
482
123
5,956 $
31
Ending
Balance
Decreases
368 $
—
364
203
935 $
524
—
153
235
912
$
$
Decreases
206 $
1
200
78
485 $
5,666
86
970
297
7,019
Current
Portion
$
$
Ending
Balance
5,512 $
—
646
248
6,406 $
623
86
—
131
840
Current
Portion
524
—
—
104
628
Bond Premium — In fiscal years 2011 and 2010, bonds were issued resulting in premiums of $129,704 and
$81,852, respectively. Amortization is calculated using the straight line method and amortized over the
remaining life of the bonds.
General Obligation Bonds — The state of Minnesota sells general obligation bonds to finance most capital
projects. The interest rate on these bonds ranges from 2.0 to 5.5 percent. 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 College’s share.
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 hall, food
service, student union, and other revenue-producing and related facilities at the state colleges and universities.
Revenue bonds currently outstanding have interest rates between 2 percent to 4 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 parking lot and from student fees. These revenue bonds are payable
through fiscal year 2020. Annual principal and interest payments on the bonds are expected to require less than
64.07 percent of net reserves. The total principal and interest remaining to be paid on the bonds is $4,603,338.
Principal and interest paid for the current year and total customer net revenues were $511,850 and $798,942
respectively.
Compensated Absences — College 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 service earlier
than planned.
Net Other Postemployment Benefit — 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 9 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 $297,507
and $247,595 at 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.
32
Principal and interest payment schedules are provided in the following table for general obligation bonds and
revenue bonds. There are no payment schedules for bond premium, compensated absences, early termination
benefits, other postemployment benefits, or workers’ compensation.
Fiscal Years
2012
2013
2014
2015
2016
2017-2021
2022-2026
2027-2031
Total
Long Term Debt Repayment Schedule
(In Thousands)
General
Obligation Bonds
Revenue Bonds
Principal Interest
Principal
Interest
$
722 $
521
$
390 $
121
688
488
400
112
688
454
410
102
688
420
420
91
687
386
430
79
3,401
1,427
1,895
153
3,073
625
—
—
1,112
72
—
—
$ 11,059 $ 4,393
$
3,945 $
658
8. EARLY TERMINATION BENEFITS
Minnesota State College Faculty (MSCF) contract
The MSCF contract allows former Minnesota Community College Association (MCCFA) 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
June 30, 2011.
Fiscal Year
2011
Number of Faculty
3
Future Liability
(In thousands)
$ 86
9. NET OTHER POSTEMPLOYMENT BENEFITS
The College 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 15 retirees receiving health benefits from the health plan.
Annual 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
33
determined in accordance with the parameters of GASB Statement No. 45, Accounting and Financial Reporting
by Employers for Postemployment Benefits OtherThan 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 fiscal years 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)
$ 471 $ 360
Interest on net OPEB obligation
31
23
Adjustment to ARC
(25)
(19)
Annual OPEB cost
477
364
Contributions during the year
(153)
(200)
Increase in net OPEB obligation
324
164
Net OPEB obligation, beginning of year
646
482
Net OPEB obligation, end of year
$ 970 $ 646
The College’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 year net OPEB obligation
Annual OPEB cost
Employer contribution
End of year net OPEB obligation
Percentage contributed
$
$
2011
646
477
(153)
970
32.08%
$
$
2010
482
364
(200)
646
54.95%
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
Actuarial
Value of
Assets
July 1, 2010
(a)
—
Schedule of Funding Progress
(In Thousands)
Unfunded
Actuarial
Actuarial Accrued
Funded
Accrued
Liability
Ratio
Liability
Covered
Payroll
UAAL as a
Percentage of
Covered Payroll
(b)
$ 4,272
(c)
$ 39,982
((b - a)/c)
10.68%
(b - a)
$ 4,272
(a/b)
0.00%
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
34
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 health care
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.
10. LEASE AGREEMENTS
Operating Leases — The College is committed under nine lease agreement types for equipment and rental
space. These leases are considered for accounting purposes to be operating leases.
Lease expenses for the years ended June 30, 2011 and 2010, totaled approximately $230,455 and $225,011,
respectively.
Future minimum lease payments for existing lease agreements follow:
Year Ended June 30
(In Thousands)
Amount
Fiscal Year
2012
$
125
2013
45
2014
30
Total
$
200
11. TUITION, FEES, SALES, AND RESTRICTED STUDENT PAYMENTS
The following tables provide 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
$ 37,929 $ (14,028) $ 23,901
3,985
(1,342)
2,643
5,355
(997)
4,358
799
—
799
$ 48,068 $ (16,367) $ 31,701
35
Gross
$ 35,829
3,928
5,558
599
$ 45,914
2010
Scholarship
Allowance
$ (11,782) $
(1,109)
(807)
—
$ (13,698) $
Net
24,047
2,819
4,751
599
32,216
12. OPERATING EXPENSES BY FUNCTIONAL CLASSIFICATION
The following tables provide information related to operating expenses by functional classification:
For the Year Ended June 30, 2011
(In Thousands)
Description
Academic support
Institutional support
Instruction
Public service
Student services
Auxiliary enterprises
Scholarships & fellowships
Less interest expense
Total operating expenses
Salaries
5,489
3,981
23,057
1,232
6,453
442
—
—
$ 40,654
$
Benefits
1,975
1,614
6,774
304
2,081
153
—
—
$
12,901
$
$
$
Other
3,856
4,628
5,503
311
2,571
4,691
3,502
—
25,062
$
$
Interest
86
65
344
18
98
7
—
(618)
—
$
$
Total
11,406
10,288
35,678
1,865
11,203
5,293
3,502
(618)
78,617
For the Year Ended June 30, 2010
(In Thousands)
Description
Academic support
Institutional support
Instruction
Public service
Student services
Auxiliary enterprises
Scholarships & fellowships
Less interest expense
Total operating expenses
Salaries
5,950
3,598
21,253
1,384
6,136
409
—
—
$ 38,730
$
Benefits
2,025
1,262
6,005
500
1,873
231
—
—
$
11,896
$
$
$
Other
3,132
3,404
4,952
555
2,261
4,379
3,586
—
22,269
$
$
Interest
94
58
326
23
96
8
—
(605)
—
$
$
Total
11,201
8,322
32,536
2,462
10,366
5,027
3,586
(605)
72,895
13. EMPLOYEE PENSION PLANS
The College participates in four 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; the Public Employees Retirement Fund, administered by the Public Employees
Retirement Association; and the Minnesota State Colleges and Universities Defined Contribution Retirement
Plan.
State Employees Retirement Fund (SERF)
Pension fund information is provided by 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 55103-3000.
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
36
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 the College were:
(In Thousands)
Fiscal Year Amount
2011
$ 461
2010
420
2009
398
Teachers Retirement Fund (TRF)
Pension fund information is provided by Minnesota Teachers Retirement Association (TRA), 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 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, as an employer for some participants, are 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 the College were:
(In Thousands)
Fiscal Year Amount
2011
$ 443
2010
472
2009
474
37
General Employees Retirement Fund (GERF)
Pension fund information is provided by the Public Employees Retirement Association of Minnesota, 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 Public
Employees Retirement Association of Minnesota at 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103.
The GERF is a cost sharing multiple employer defined benefit plan. Former employees of various
governmental subdivisions including counties, cities, school districts, and related organizations participate in
the plan. Normal retirement age is 65. 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 members are 1.2 percent and 1.7 percent. 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 GERF is Minnesota Statutes, Chapter 353. GERF establishes the employer and
employee contribution rates on a calendar year basis rather than on a fiscal year basis. For the period January 1,
2008 through December 31, 2008, employee and employer contribution rates were 6 percent and 6.5 percent,
respectively. For the period January 1, 2009 through December 31, 2009, employee and employer contribution
rates were 6 percent and 6.75 percent, respectively. For the period January 1, 2010 through December 31, 2010,
employee and employer contribution rates were 6 percent and 7 percent, respectively. For the period January 1,
2011 through December 31, 2011, employee and employer contribution rates are 6.25 percent and 7.25 percent,
respectively. Actual contributions were 100 percent of required contributions.
Required contributions for the College were:
(In Thousands)
Employee
Fiscal Year Employer
$
$
2011
32
27
2010
33
27
33
29
2009
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 and 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 TIAA-CREF,
Normandale Lake Office Park, 8000 Norman Center Drive, Suite 1100, Bloomington, MN 55437.
Individual Retirement Account Plan (IRAP)
Participation — Every 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
38
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 percent and 4.5 percent, respectively. The contributions are made under the authority of Minnesota Statutes,
Chapter 354B.
Required contributions for the College were:
(In Thousands)
Fiscal Year Employer
Employee
2011
$
1,160
$
869
2010
1,067
803
2009
1,002
754
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:
Member Group
Minnesota Association of Professional Employees Unclassified
Middle Management Association Unclassified
Minnesota State College Faculty Association
Administrators
Other Unclassified Members
Eligible
Compensation
$6,000 to $40,000
6,000 to 40,000
6,000 to 56,000
6,000 to 60,000
6,000 to 40,000
Maximum
Annual
Contributions
$ 1,700
1,700
2,500
2,700
1,700
The College 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 College were:
(In Thousands)
Amount
Fiscal Year
2011
$ 740
2010
650
2009
606
39
14. 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. Minnesota State Colleges and Universities issued revenue bonds to finance the College’s
parking lot.
Century College’s Portion of the Revenue Fund
(In Thousands)
2011
CONDENSED STATEMENTS OF NET ASSETS
Assets
Current assets
$
341
Restricted assets
850
Noncurrent assets
3,722
Total assets
4,913
Liabilities
Current liabilities
438
Noncurrent liabilities
3,611
Total liabilities
4,049
Net Assets:
Restricted
807
Unrestricted (deficit)
57
Total net assets
$
864
CONDENSED STATEMENTS OF REVENUES,
EXPENSES, AND CHANGES IN NET ASSETS
Operating revenues
Operating expenses
Net operating income
Nonoperating revenues (expenses)
Change in net assets
Net assets, beginning of year
Net assets, end of year
CONDENSED STATEMENTS OF CASH FLOWS
Net cash provided (used) by:
Operating activities
Investing activities
Capital and related financing activities
Net increase (decrease)
Cash, beginning of year
Cash, end of year
$
$
$
$
800
(386)
414
(82)
332
532
864
591
29
(577)
43
1,097
1,140
2010
$
189
932
3,929
5,050
509
4,009
4,518
$
$
$
646
(114)
532
803
(223)
580
(40)
540
(8)
532
$
782
—
(4,094)
(3,312)
4,409
$ 1,097
15. COMMITMENTS
The College has four outstanding projects that total $2.7 million in construction in progress at June 30, 2011.
The majority of the outstanding project amounts pertain to a $1.6 million project to build out a mezzanine
creating classrooms and faculty offices. The project was completed in August 2011.
40
16. 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 manages these types of risks through Minnesota insurance plans including the state of Minnesota
Risk Management Fund and other purchased insurance coverage.
Automobile liability coverage is required by the state and is provided by the Minnesota Risk Management
Fund. Property and casualty coverage is required by Minnesota State Colleges and Universities policy.
Property coverage offered by the Minnesota Risk Management Fund are as follows:
Coverage
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
Amount
$50,000
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 College retains the risk of loss. The College did not have any settlements in excess of coverage the last
three years.
Minnesota State Colleges and Universities participates in the State Employee Group Insurance Plan, which
provides life insurance and 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.
The following table presents changes in the balances of workers’ compensation 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
$ 248
123
Additions
$ 284
203
41
Payments
& Other
Reductions
$ 235
78
Ending
Liability
$ 297
248
17. COMPONENT UNITS
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations Are Component
Units, the following foundation affiliated with the College is a legally separate, tax exempt entity and reported
as a component unit.
The Century College Foundation is a separate legal entity formed for the purpose of obtaining and disbursing
funds for the sole benefit of the College. The College does not appoint any members to the board and the
resources held by the Foundation can only be used by, or for, the benefit of the College. The Foundation’s
relationship with the institution is such that exclusion of the Foundation’s financial statements would cause the
College’s financial statements to be misleading or incomplete. The Foundation is considered a component unit
of the College and their statements are discretely presented in the College’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 are to 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.
The value of scholarships and equipment contributed by or passed through the Foundation was $298,061 and
$411,639 for the fiscal years ended June 30, 2011 and 2010, respectively.
Investments — The Foundation’s investments are presented in accordance with FASB ASC 958-320,
Investments-Debt, 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
(In Thousands)
Investments
2011
2010
Money market accounts
$ 478 $ 466
Fixed income mutual funds
110
98
Equity based mutual funds
730
545
Equity securities
433
333
Total investments
$ 1,751 $ 1,442
42
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
Change in value of trusts
Contributions
Investment income
Amounts appropriated for expenditures
Other transfers
Net assets, end of year
Temporarily
Unrestricted
Restricted
$
(6) $
56
6
154
—
—
—
10
—
(14)
—
(7)
$
— $
199
Total Net
Permanently
Endowment
Restricted
Assets
966 $
1,016
$
101
261
41
41
(3)
7
—
(14)
(7)
(14)
$
1,098 $
1,297
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
Change in value of trusts
Contributions
Investment income
Other transfers
Net assets, end of year
Temporarily
Unrestricted
Restricted
$
(29) $
16
23
13
—
3
—
24
—
—
$
(6) $
56
43
Total Net
Permanently
Endowment
Restricted
Assets
794 $
781
$
79
115
80
83
(5)
19
18
18
$
966 $
1,016
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REQUIRED SUPPLEMENTARY
INFORMATION SECTION
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CENTURY COLLEGE
SCHEDULE OF FUNDING PROGRESS FOR NET OTHER POSTEMPLOYMENT BENEFITS
Actuarial
Valuation
Date
July 1, 2006
July 1, 2008
July 1, 2010
Schedule of Funding Progress
(In Thousands)
Actuarial Actuarial
Unfunded
Value of Accrued Actuarial Accrued Funded
Assets
Liability
Liability
Ratio
(a)
(b)
(b - a)
(a/b)
—
$ 3,850
$ 3,850
0.00%
—
3,718
3,718
0.00
—
4,272
4,272
0.00
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Covered
Payroll
(c)
$ 33,256
35,214
39,982
UAAL as a
Percentage of
Covered Payroll
((b - a)/c)
11.58%
10.56
10.68
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SUPPLEMENTARY SECTION
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50
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