Annual Financial Report
Years Ended June 30
2011 & 2010
A member of the Minnesota State Colleges and Universities system.
AN EQUAL OPPORTUNITY EDUCATOR/EMPLOYER/
UN EDUCADOR/EMPLEADOR DE OPORTUNIDAD IGUAL
2011 Audit Cover-2.indd 1
www.minnesota.edu
10/17/2011 10:49:40 AM
MINNESOTA STATE COMMUNITY
AND TECHNICAL 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:
Minnesota State Community and Technical College
Pat Nordick, Chief Financial Officer
150 2nd St W, Suite B
PO Box 309
Perham, MN 56573
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.
MINNESOTA STATE COMMUNITY AND TECHNICAL 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 ............................................................................................................... 24
Fergus Area College Foundation – Statements of Financial Position ........................................... 25
Statements of Revenues, Expenses, and Changes in Net Assets ................................................... 26
Fergus Area College Foundation – Statements of Activities ......................................................... 27
Statements of Cash Flows ............................................................................................................. 28
Notes to the Financial Statements ................................................................................................. 30
REQUIRED SUPPLEMENTARY INFORMATION SECTION
Schedule of Funding Progress for Net Other Postemployment Benefits ............................................. 53
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 .................................................................. 56
1
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2
INTRODUCTION
3
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4
5
6
7
8
9
Jerome Migler
Executive Vice President
Moorhead Campus Provost
Carrie Brimhall (Interim)
Vice President
Fergus Falls Campus Provost
Peter Wielinski
Vice President/Chief Student
Services Officer
Wadena Campus Provost
Tom Whelihan (Interim)
Vice President
Detroit Lakes Campus Provost
Dacia Johnson
Chief Human Resources Officer
Pat Nordick
Chief Financial Officer
David Overby
Chief Information Officer
Carol Totland
Executive Assistant
Kathy Brock
Vice President, Chief Academic
Officer
Dr. Peggy Kennedy
Interim President
Steven J. Rosenstone
Chancellor
Board of Trustees
MINNESOTA STATE COLLEGES AND UNIVERSITIES
MINNESOTA STATE COMMUNITY AND TECHNICAL COLLEGE
The financial activity of the Minnesota State Community and Technical 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.
10
FINANCIAL SECTION
11
12
13
MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited)
INTRODUCTION
The following discussion and analysis provides an overview of the financial position and activities of Minnesota
State Community and Technical College, a member of Minnesota State Colleges and Universities system, at
June 30, 2011, 2010 and 2009, and for the years then ended. This discussion has been prepared by management and
should be read in conjunction with the financial statements and the notes, which follow this section.
The College is located in the northwest and west central portion of the state of Minnesota and has campuses located
in the communities of Detroit Lakes, Fergus Falls, Moorhead, and Wadena. The College continues to receive strong
support from the communities, businesses, and industries that reside in them and it plays an important role in each of
the communities’ economic success.
Minnesota State Community and Technical College is one of 32 colleges and universities comprising Minnesota
State Colleges and Universities system. Minnesota State Colleges and Universities is 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 four 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.
The College is a comprehensive public institution of higher learning with 5,120 full year equivalent students and
781 employees that equate to 520 full time equivalent employees. It has seen continued enrollment growth with an
increase of 233 full year equivalent students between fiscal year 2010 and fiscal year 2011. Headcount continues to
increase with a 12 percent increase over the past four years. The College offers programs in the areas of health,
technology, trades, business, environmental studies, and general education. These programs are offered through
traditional on campus delivery as well as internet, corporate university, and post secondary options in the high
school.
Throughout the financial highlights and explanations of fiscal changes, the College will reference tornado damage.
On June 17, 2010 a F4 tornado went through the community of Wadena and caused extensive damage to the
Wadena campus. The College spent a significant amount of time and resources renovating the campus and
replacing and repairing equipment. The vast majority of the repairs were covered by the insurance carrier with some
assistance from the office of Federal Emergency Management Assistance. Although as of June 30, 2011 the College
is still finalizing the claim and waiting for final payment, the campus is completely operational and all equipment
has been repaired or replaced.
FINANCIAL HIGHLIGHTS
The College’s financial position continued to improve during fiscal year 2011 ending the year on June 30, 2011 with
assets of $62.8 million, an increase of $12.7 million over June 30, 2010, and liabilities of $21.9 million, an increase
of $4.2 million over June 30, 2010. These changes caused net assets, which represent the residual interest in assets
after liabilities are deducted, to increase by $8.6 million going from $32.4 million on June 30, 2010 to $41.0 million
on June 30, 2011. As you read through the financial statements note that a large share of the increase in our assets
as well as liabilities is related to the increase in construction activity through building enhancements as well as the
tornado renovations.
14
•
Total revenues increased by $6.8 million between 2010 and 2011. The operating revenue saw an increase
in net tuition revenue, fees, and sales. The increase in these areas is contributed to the increase in
enrollment of 233 full year equivalent students along with an improvement in our revenues generated
through our custom training division. The nonoperating revenue saw an increase in federal grants as a
result of higher financial aid awarded, capital appropriation due to an increase in construction activity, and
gains from disposal of assets because of the large insurance settlement from the Wadena tornado.
However, the College saw a decrease in the nonoperating revenue areas of general state appropriation and
private grants.
•
Operating expenses increased by 5.0 percent from fiscal year 2010 to fiscal year 2011. The largest increase
is supplies which saw an increase of $1.4 million. The increase is caused by an increase in cost of goods
sold as a result of our higher enrollment and more activity in the college bookstore as well as an increase in
the number of computers purchased in fiscal year 2011. Purchased services also increased due to higher
maintenance contracts from a new telephone system and minor renovations completed in order to be able to
house the Wadena School District high school students on the Wadena campus.
•
Total net assets continue to grow, increasing from $32.4 million in fiscal year 2010 to $41.0 in fiscal year
2011. The unrestricted portion of the College’s net assets increased from fiscal year 2010 to fiscal year
2011 by $1.7 million. This increase is due to a concerted effort by the College to improve its cash balance.
USING THE FINANCIAL STATEMENTS
The financial report includes three financial statements: the statement 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 the Generally Accepted Accounting Principles (GAAP) as established by the Government
Accounting Standards Board (GASB) through authoritative pronouncements.
STATEMENTS OF NET ASSETS
The Statements of Net Assets present the financial position of the College at the end of each fiscal year and include
all assets and liabilities as measured under 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. Capital assets are stated
at historical cost less an allowance for depreciation with current year depreciation reflected as a period expense on
the Statement of Revenues, Expenses, and Changes in Net Assets. A summary of assets, liabilities and net assets at
June 30, 2011, 2010 and 2009, is as follows (in thousands):
Assets, Liabilities, and Net Assets
2011
2010
Current assets
$ 20,630
$ 17,885
Current restricted assets
2 ,620
564
Noncurrent assets
Restricted assets
14
—
Student loans, other
148
159
Capital assets, net
39,432
31,476
Total assets
62,844
50,084
Current liabilities
Noncurrent liabilities
Total liabilities
Net assets
8,656
13,226
21,882
$ 40,962
15
7,395
10,319
17,714
$ 32,370
2009
$ 14,835
82
—
172
29,336
44,425
6,387
10,144
16,531
$ 27,894
Current assets consist primarily of cash and cash equivalents which totaled $17.7 million at June 30, 2011, reflecting
a $3.8 million increase over the prior year. This represents approximately 3.8 months of total expenses (excluding
depreciation). The other large current asset is accounts receivable which totaled $3.5 million at June 30, 2011 which
is a $916 thousand increase from June 30, 2010. The vast majority of the increase in accounts receivable relates to
the insurance settlement that has been agreed upon by the insurance carrier but has not yet been received, which
amounts to $810 thousand. The balance of the increase is due to an increase in general student receivables which is
a result of an increase in enrollment. The College also saw an increase in prepaid expense which was a result of a
larger amount of bonding due to an increase in our construction activity in fiscal year 2011. The decrease in
inventory is due to the College not having any carpentry houses completed and waiting for sale at June 30, 2011.
Noncurrent assets of $39.6 million consist mainly of land, buildings, construction in progress, equipment, and
library collections and is reduced by accumulated depreciation. Noncurrent assets increase by $8.0 million over
June 30, 2010 as a result of capitalizing the renovations from the tornado damage in Wadena in the amount of $2.5
million, the completion of one large and four smaller building projects totaling $4.7 million, and an increase in
construction in progress as a result of the commencement of three new building projects and a parking lot expansion
project.
Current liabilities consist primarily of salaries payable and accounts payable. Salaries payable totaled $3.9 million
at June 30, 2011, an increase of $223 thousand from June 30, 2010. Faculty receiving their salaries over twelve
months while working a nine month contract account for the majority of the salaries payable. The increase from
June 30, 2010 to June 30, 2011 was largely the result of higher salaries for the summer term because of an increase
in the number of courses offered. Accounts payable totaled $1.7 million at June 30, 2011, an increase of $451
thousand from June 30, 2010. The college purchased equipment to construct a wind tower on the Fergus Falls
campus that was received in June, but the billing was not sent until late July. This resulted in $214 thousand
increase to accounts payable. The other large expense that resulting in an increase from fiscal year 2010 was the
purchase of laptop computers at the end of June from the federal stimulus funds in the amount of $231 thousand.
Payable from restricted assets also increased by $419 thousand because of increased construction activity, and
capital leases payable saw an increase of $121 thousand because of a capital lease used to purchase a new telephone
system.
Unearned revenue, another large current liability, is primarily the portion of summer session tuition received, but not
yet earned as well as grants received but not yet earned. The summer tuition revenue is allocated based upon the
number of session days in each fiscal year. Summer tuition revenues received that are in excess of the calculated
amount earned are considered unearned revenue for the purposes of these statements. Unearned revenue decreased
from June 30, 2010 to June 30, 2011 by $66 thousand.
Noncurrent liabilities increased by $2.9 million as a result of an increase of $918 thousand in general obligation
bonds payable and a $1.6 million increase in revenue bonds payable. The increase in general obligation bonds
payable is the result of a increase in building construction activity. In fiscal year 2011 the College sold revenue
bonds for the first time that are being used to construct a wellness center on the Moorhead campus.
16
Net assets represent the residual interest in the assets after liabilities are deducted.
The College’s net assets at June 30, 2011, 2010 and 2009 are summarized as follows (in thousands):
Net Assets
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total net assets
2011
$ 31,285
953
8,724
$ 40,962
2010
$ 24,657
669
7,044
$ 32,370
2009
$ 22,388
674
4,832
$ 27,894
The College’s net assets increased by $8.6 million during fiscal year 2011 increasing from $32.4 million on
June 30, 2010 to $41.0 million on June 30, 2011. The major factor for this increase was the investment in capital
assets, net of related debt which increased from $24.7 million to $31.2 million. This increase is a result of
capitalization of building projects, construction in progress of three new projects and the capitalization of the
Wadena tornado renovations offset by an increase in general obligation bonds payable and related accumulated
depreciation. Unrestricted net assets also increase by $1.7 million as a result of the College purposefully budgeting
and managing operations in order to increase its unrestricted fund balance. The College’s cash reserves have
increased for four consecutive years.
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 $39.4 million, net of
accumulated depreciation of $31.1 million. This compares to $31.5 million as of June 30, 2010, net of accumulated
depreciation of $29.2 million. Capital expenses are primarily comprised of new construction, renovations to
existing facilities and investments in equipment. Current year capital asset additions were funded through capital
appropriations in the amount of $5.0 million which is funded through general obligation bonds, insurance proceeds
of $2.4 million, with the remainder through operating revenues and general appropriation.
Construction in progress at June 30, 2011 totaled $3.9 million and includes activity from three facility projects and
one parking lot project. Those projects include $2.9 million as part of a $5.45 million construction project on the
Moorhead campus to design and construct additional space for library and trades program needs, $763 thousand of a
$1.1 million roofing project on the Fergus Falls campus, $190 thousand of a $525 thousand classroom rightsizing
project on the Wadena campus, and $116 thousand of a $302 thousand parking lot expansion project at Moorhead.
Additional information on capital activities and long term debt can be found in Notes 6 and 8.
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
The Statements of Revenues, Expenses and Changes in Net Assets present the College’s results of operations for
each year. When reviewing the full statement, users should note that GASB requires classification of state
appropriations as nonoperating revenue.
17
A summarized statement for the year ended June 30, 2011, 2010 and 2009 follows (in thousands):
Statement of Revenues, Expenses and Changes in Net Assets
2011
2010
2009
$ 19,457 $
—284
19,741
20,094
—
502
20,596
19,618
17,257
738
5,042
2,560
339
45,554
66,623
20,131
15,331
1,261
3,189
—
99
40,011
59,752
22,216
10,517
749
339
—
654
34,475
55,071
Operating expense:
Salaries and benefits
Supplies and services
Depreciation
Financial aid, net
Other
Total operating expense
36,292
14,456
2,114
1,885
2,921
57,668
36,102
12,284
1,998
2,250
2,279
54,913
35,539
11,529
1,893
1,047
2,741
52,749
Nonoperating expense:
Loss on disposal of assets
Grants to other organizations
Interest expense
Total nonoperating expense
Total expense
—
26
337
363
58,031
45
—
318
363
55,276
14
14
294
322
53,071
8,592
32,370
$ 40,962
4,476
27,894
$ 32,370
2,000
25,894
27,894
Operating revenue:
Tuition, fees, books, net
Restricted student payments, net
Other revenue
Total operating revenue
$ 20,783
106
180
21,069
Nonoperating revenue:
State appropriations
Federal and State grants
Private grants
Capital appropriations
Gain on disposal of assets
Other
Total nonoperating revenue
Total revenue
Increase in net assets
Net assets, beginning of year
Net assets, end of year
$
Tuition and state appropriations are the primary sources of funding for academic programs and college operations.
Student tuition, fees, and book revenue net of scholarship allowance totaled $20.8 million as of June 30, 2011. This
compares to $19.5 million as of June 30, 2010 and represents an increase of $1.3 million. The increase is a result of
a combination of an increase in student enrollment of 233 full year equivalents (FYE) coupled with a tuition
increase of 2 percent, along with a higher level of customized training which was an increase of $391 thousand over
fiscal year 2010. The other main source of revenue for annual operations is general state appropriations which
decreased $513 thousand from fiscal year 2010. The state of Minnesota continues to see lower revenues and
therefore has reduced appropriation to many of the state agencies including higher education. Federal and state
grants also increased because of higher federal financial aid processed . This was offset by reduction in state grant
financial aid. Private grants decreased by $523 thousand which was caused by significantly fewer grants received in
fiscal year 2011 as compared to the prior year. The remaining large variance was from gain on disposal of assets
which was from the insurance proceeds received from the Wadena tornado settlement.
18
The following graph depicts the revenue trends by source over the past three fiscal years.
The primary categories for resources spent are compensation and benefits, along with supplies and services.
Compensation and benefits increased from $36.1 million on June 30, 2010 to $36.3 million on June 30, 2011. This
slight expense increase was due to a slight increase in faculty staffing to accommodate the increased student
enrollment. Supplies and services increased from $12.3 million on June 30, 2010 to $14.5 million on June 30, 2011.
This increase is due to several things including purchasing of laptop computers in excess of the normal purchasing
cycle, replacement of supplies and small equipment items destroyed by the Wadena tornado, and minor remodeling
of northeast wing of Wadena campus to accommodate the Wadena high school students for school years 2011 and
2012.
19
The following three graphs depict the expenditure percentages by expense type for fiscal years 2011, 2010, and
2009.
Expenses Fiscal Year 2011
Other
5%
Financial Aid
3%
Depreciation
4%
Supply/Service
25%
Salary/Benefit
63%
20
FOUNDATIONS
Included with the financial statements are the statement of financial position and statement of activities for the
Fergus Area College Foundation. The Foundation saw an improvement in its total net assets of $707 thousand over
June 30, 2010. The increase was the result of a higher level of endowment gifts as well as higher unrealized gains
compared to fiscal year 2010. In addition to the Fergus Area College Foundation, the College has three other small
foundations that are in early development at the campuses in Detroit Lakes, Moorhead, and Wadena. Once their
activity reaches a level of materiality the College will include their financial activity as part of future financial
statements.
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE
Looking toward the future, management believes that the College needs to continue to be vigilant in preparing for
the programs, services, and educational changes that will be needed in the next decade. The College continues to
invest in programs and services for the online learner. The College believes this mode of academic delivery will
continue to increase in the foreseeable future With the ever increasing competition for enrollment, the College will
continue to explore new growth opportunities by looking at alternative delivery methods and modalities as well as
looking for new market penetration.
Adequate state appropriation will continue to be a concern for fiscal years 2012 and beyond and the College remains
concerned that future appropriation funding will not keep pace with inflationary growth. In the past three fiscal
years the state appropriation the College received for general operations has decreased by 12 percent. The weak
economic outlook for the next biennium for the State of Minnesota is of great concern as it likely will have a direct
impact on the appropriation the College will be receiving in the near future. This, along with continued pressures to
maintain low tuition increases will put extreme pressure on the College to reallocate current expenditures in order to
be able to invest in new programs and services that current and future students and industry will demand. It will be
imperative to continue to be vigilant in financial planning, including continued review of all programs and services
to ensure efficient delivery as well as searching out new program opportunities. In addition, the College will
continue to look at shared programs and services to ensure that all resources are being used as efficiently as possible.
21
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of Minnesota State Community and Technical
College’s 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 financial information should be addressed to:
Chief Financial Officer
Minnesota State Community and Technical College
150 2nd Street Southwest
Perham, MN 56573
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MINNESOTA STATE COMMUNITY & TECHNICAL 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
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
15,100
499
3,513
846
608
30
34
20,630
2010
$
13,389
279
2,597
648
912
30
30
17,885
2,620
2,620
564
564
14
14
2,634
564
148
39,432
39,580
159
31,476
31,635
62,844
50,084
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
3,943
1,705
767
983
20
6
713
519
8,656
3,720
1,254
833
564
571
453
7,395
9,012
4,018
196
13,226
6,247
3,877
195
10,319
Total Liabilities
21,882
17,714
31,285
11
942
8,724
24,657
669
7,044
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.
24
40,962
$
32,370
FERGUS AREA COLLEGE FOUNDATION
STATEMENTS OF FINANCIAL POSITION
AS OF JUNE 30, 2011 AND 2010
(IN THOUSANDS)
2011
Assets
Current Assets
Cash and cash equivalents
Investments
Other receivables
Total Assets
$
$
Liabilities and Net Assets
Current Liabilities
Accounts payable
Total Liabilities
$
Net Assets
Unrestricted
Temporarily restricted
Permanently restricted
Total Net Assets
2010
100
3,432
11
3,543
71
71
$
$
$
103
546
2,823
3,472
Total Liabilities and Net Assets
$
The notes are an integral part of the financial statements.
25
3,543
59
2,700
6
2,765
-
95
201
2,469
2,765
$
2,765
MINNESOTA STATE COMMUNITY & TECHNICAL 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
Room and board and 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
Federal grants
State grants
Private grants
Interest income
Interest expense
Grants to other organizations
Total nonoperating revenues (expenses)
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
13,516
2,032
5,235
106
180
21,069
2010
$
36,292
4,691
8,123
1,642
2,114
1,885
2,921
57,668
(36,599)
36,102
4,626
6,706
952
1,998
2,250
2,279
54,913
(35,172)
19,618
15,490
1,767
738
109
(337)
(26)
37,359
20,131
13,046
2,285
1,261
42
(318)
36,447
760
Capital appropriations
Donated assets and supplies
Gain (loss) on disposal of capital assets
Change in net assets
1,275
5,042
230
2,560
8,592
Total Net Assets, Beginning of Year
Total Net Assets, End of Year
$
The notes are an integral part of the financial statements.
26
12,743
1,878
4,836
284
19,741
32,370
40,962
3,189
57
(45)
4,476
$
27,894
32,370
FERGUS AREA COLLEGE FOUNDATION
STATEMENTS OF ACTIVITIES
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Temporarily
Restricted
Unrestricted
Support and Revenue
Endowment gifts
$
Program income
Investment income
Fundraising income
Unrealized gains
Net assets released from restrictions
Total support and revenue
Expenses
Program services
Scholarships
Total program services
Supporting services
Management and general
Fundraising
Total supporting services
Total expenses
Change in Net Assets
Net Assets, Beginning of Year
Net Assets, End of Year
$
39
59
130
228
$
91
76
308
(130)
345
Permanently
Restricted
$
354
354
2011
Total
$
2010
Total
354 $
91
115
59
308
927
56
87
114
48
215
520
145
145
-
-
145
145
147
147
74
1
75
220
-
-
74
1
75
220
64
1
65
212
8
345
354
707
308
95
201
2,469
2,765
2,457
3,472 $
2,765
103
$
The notes are an integral part of the financial statements.
27
546
$
2,823
$
MINNESOTA STATE COMMUNITY & TECHNICAL 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 repayment of program loans
Cash paid to suppliers for goods or services
Cash payments for employee salaries
Cash payments for employee benefits
Financial aid disbursements
Cash payments of program loans
Net cash flows used in operating activities
$
2010
20,775
17
(16,406)
(26,357)
(9,538)
(1,885)
(15)
(33,409)
$
19,248
9
(14,250)
(26,265)
(9,519)
(2,252)
(4)
(33,033)
Cash Flows from Noncapital Financing Activities
Appropriations
Federal grants
State grants
Private grants
Agency activity
Grants to other organizations
Net cash flows from noncapital financing activities
19,618
15,218
1,767
738
6
(26)
37,321
20,131
13,084
2,285
1,261
36,761
Cash Flows from Capital and Related Financing Activities
Investment in capital assets
Capital appropriation
Proceeds from sale of capital assets
Proceeds from insurance
Proceeds from borrowing
Proceeds from bond premium
Interest paid
Repayment of lease principal
Repayment of note principal
Repayment of bond principal
Net cash flows used in capital and related financing activities
(9,376)
5,042
1,988
2,988
312
(417)
(58)
(136)
(535)
(192)
(3,748)
3,189
13
479
21
(324)
(137)
(450)
(957)
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.
28
47
47
2
2
3,767
2,773
13,953
17,720
$
11,180
13,953
MINNESOTA STATE COMMUNITY & TECHNICAL COLLEGE
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
2011
Operating Loss
$
Adjustment to Reconcile Operating Loss to
Net Cash Flows used in Operating Activities
Depreciation
Provision for loan defaults
Loan principal repayments
Loans issued
Loans forgiven
Donated supplies and equipment 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 assets and liabilities
Net reconciling items to be added to operating income
Net cash flow used in operating activities
Non-Cash Investing, Capital, and Financing Activites
Capital projects on account
Donated equipment
Loss on retirement of capital assets
Amortization of bond premium
$
$
29
(36,599)
2010
$
(35,172)
2,114
5
17
(15)
3
90
1,998
5
9
(4)
4
57
304
(280)
538
223
207
1
(14)
(3)
3,190
(33,409)
(81)
(561)
435
(32)
286
(2)
68
(43)
2,139
(33,033)
983
140
(64)
62
$
$
651
(45)
40
MINNESOTA STATE COMMUNITY AND TECHNICAL 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 Minnesota State Community and Technical College (the
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
statements of cash flows include financial activities of Minnesota State Community and Technical 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. Minnesota State Community and Technical 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.
Minnesota State Community and Technical College began on July 1, 2004, and is comprised of four campuses
located in the Minnesota communities of Detroit Lakes, Fergus Falls, Moorhead and Wadena.
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 Fergus Area College Foundation is considered
significant to the College and is included as a discretely presented component unit and separately identified in
Note 18. Complete financial statements may be obtained from the Fergus Area College Foundation, 1414
College Way, Fergus Falls, MN 56537.
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 apply all applicable Financial Accounting Standards Board
statements issued prior to November 30, 1989, and GASB statements issued since that date.
Budgetary Accounting — College budgetary accounting, which is the basis for annual budgets and the
allocation of state appropriation, differs from GAAP. College 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 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.
30
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.
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 six accounts in local banks. The activities handled through the 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,
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 contacts with the Minnesota State Board of
Investment and U.S. Bank, N.A. for investment management services. Investments are reported at fair value.
Restricted investments are investment held in Revenue Fund for capital projects and debt service.
Information about the cash in the state treasury and invested by the State Board of Investment, including deposit
and investment risk disclosures, can be obtained from the State of Minnesota Comprehensive Annual Financial
Report, Minnesota Management and Budget, 400 Centennial Building, 658 Cedar Street, St. Paul, MN 55155.
Receivables — Receivables are shown net of an allowance for uncollectibles.
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
35 years
Building improvements 20 years
Equipment
3-20 years
Library collections
7 years
31
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.
Funds Held for Others — Funds held for others are 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.
Minnesota State College and Universities may finance the construction, renovation and acquisition of facilities
for student residencies, student wellness centers, 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 College and Universities, 30 7th St. E., Suite
350, St. Paul, Minnesota 55101-7804.
The College may also enter into capital lease agreements for certain capital assets. Other long term liabilities
include compensated absences, other postemployment benefits, workers’ compensation claims, and notes
payable.
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 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, and investment income.
Unearned Revenue — Unearned revenue consists primarily of tuition received, but not yet earned, for summer
or fall session. It also includes amounts received from grants which have not yet been earned under the terms of
the agreement.
Tuition, Fees, and Sales, Net— Tuition, fees, and sales are reported net of scholarship allowances. See Note 11
for additional information.
Federal Grants — The College participates in several federal grant programs. The largest programs include
Pell, Supplemental Educational Opportunity Grant and Federal Work Study. Federal Grant revenue is
recognized as nonoperating revenue in accordance with GASB Statement No. 33, Accounting and Financial
Reporting for Nonexchange Transactions. During fiscal year s 2011 and 2010, $1,355,957 and $910,924 of
federal aid was recognized as revenue related to the American Recovery and Reinvestment Act of 2009
respectively. Of this amount, $364,431 and $325,373, 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 with current year
presentation. These classifications had no effect on net assets previously reported. Cost of goods sold in the
amount of $3,746,928, reported in fiscal year 2010 as a reduction to sales revenue, was reclassified to an
operating expense. Capital appropriation revenue in the amount of $227,573 was reclassified as state
appropriation revenue. These reclassifications had no effect on total operating loss.
32
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 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
Minnesota State Community and Technical College are as follows:
Restricted for bond covenants – revenue bond restrictions
Restricted for other — includes restrictions for the following:
Donations — restricted per donor requests.
Loans — College capital contributed for Perkins loans.
Capital Projects – restricted for completion of capital projects.
Debt service — legally restricted for bond repayments.
Faculty contract obligations — faculty development and travel required by contracts.
Net Assets Restricted for Other
(In Thousands)
2011
2010
Donations
$
6 $
7
Loans
32
32
Capital Projects
2
—
Debt service
877
608
Faculty contract obligations
25
22
Total
$ 942 $ 669
•
2.
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, 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 College has six 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.
33
The following table summarizes cash and cash equivalents:
Year Ended June 30
(In Thousands)
Carrying Amount
2011
Cash, in bank
$ 1,093
Cash, trustee account (US Bank)
1,438
Money market
29
Cash, local accounts
2,560
Cash, treasury account
15,160
Total cash and cash equivalents $ 17,720
$
$
2010
1,219
—
29
1,248
12,705
13,953
At June 30, 2011 and 2010, the College’s bank balances were $990,280 and $997,890 respectively. These
balances were adjusted by items in transit to arrive at the College’s cash in bank balance. The College’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 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, the 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 7.5.1 that 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 investments.
34
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 $4,585,026 and $3,504,955, less an allowance
for uncollectible receivables of $1,071,734 and $907,925, respectively.
Summary of Accounts Receivable at June 30
(In Thousands)
2011
2010
Tuition
$ 2,032 $ 1,775
Due from other campus
304
332
Sales and services
374
424
Fees
392
375
Room and board
47
40
Insurance proceeds
810
—
Third party obligations
468
377
Other
158
182
Total accounts receivable
4,585
3,505
Less allowance for uncollectible accounts
(1,072)
(908)
Net accounts receivable
$ 3,513 $ 2,597
The allowance for uncollectible accounts has been computed based on the following aging schedules:
Allowance
Age
Percentage
Less than 1 year
15
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 $805,498 and $608,090 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 year. Also included in prepaid expense for fiscal years 2011
and 2010 is $40,733 and 39,677, respectively, stemming from prepaid software maintenance agreements and
prepaid contractual support.
5.
LOANS RECEVIABLE
Loans receivable balances consist of loans under the Federal Perkins Loan Program. The federal government
provides the funding for the loans with amounts collected used for new loan advances. The Minnesota State
Colleges and Universities loans collection unit is responsible for loan collections. As of June 30, 2011 and June
30, 2010, the loans receivable for this program totaled $213,267 and $217,717, respectively, less an allowance
for uncollectible loans of $35,071 and $29,150 respectively.
35
6.
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
Capital assets, not depreciated:
Land
Construction in progress
Total capital assets, not depreciated
$
1,181 $
2,063
3,244
140 $
9,122
9,262
Decreases
— $
—
—
Completed
Construction
Ending
Balance
— $
(7,227)
(7,227)
1,321
3,958
5,279
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
51,659
5,222
505
57,386
—
799
86
885
—
161
68
229
7,227
—
—
7,227
58,886
5,860
523
65,269
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
25,598
3,264
292
29,154
1,557
483
74
2,114
—
98
68
166
—
—
—
—
27,155
3,649
298
31,102
28,232
31,476 $
(1,229)
8,033 $
7,227
—
34,167
$ 39,446
Completed
Construction
Ending
Balance
Total capital assets, depreciated, net
Total capital assets, net
$
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases
Capital assets, not depreciated:
Land
Construction in progress
Total capital assets, not depreciated
$
1,181 $
362
1,543
— $
3,934
3,934
63
63 $
Decreases
— $
—
—
— $
(2,233)
(2,233)
1,181
2,063
3,244
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
50,099
5,062
503
55,664
—
333
85
418
673
173
83
929
2,233
—
—
2,233
51,659
5,222
505
57,386
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
24,638
2,930
303
27,871
1,459
466
73
1,998
499
132
84
715
—
—
—
—
25,598
3,264
292
29,154
27,793
29,336 $
(1,580)
2,354 $
214
214 $
2,233
—
28,232
$ 31,476
Total capital assets, depreciated, net
Total capital assets, net
$
Within the building and improvement increases to capital assets is the renovation project to the Wadena
campuses for repairs to the building following the June 2010 tornado that struck the community. The College
capitalized $2,488,492 in fiscal year 2011 for those renovations which was funded by proceeds received from
the insurance settlement.
36
7.
ACCOUNTS PAYABLE
Accounts payable represent amounts due for goods and services received prior to the end of a fiscal year.
Summary of Accounts Payable at June 30
(In Thousands)
2011
2010
Purchased services
$ 695 $ 700
Supplies
604
233
Employee benefits
56
89
Inventory
102
122
Repairs and maintenance
219
23
Capital projects
—
87
Other
29
—
Total
$ 1,705 $ 1,254
In addition, as of June 30, 2011 and 2010, the College had payable from restricted assets in the amounts of
$982,616 and $563,816, which was 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
Capital leases
Notes payable
Revenue bond
Total long term debt
$
$
336
5,683
—
799
—
6,818
$
312
1,428
300
—
1,560
3,600
$
$
62
437
58
136
—
693
Ending
Balance
$
$
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases Decreases
Liabilities for:
Bond premium
General obligation bonds
Notes payable
Total long term debt
$
$
355
5,658
936
6,949
$
$
37
21
479
—
500
$
$
40
454
137
631
586
6,674
242
663
1,560
9,725
Current
Portion
$
$
Ending
Balance
$
$
336
5,683
799
6,818
—
507
58
148
—
713
Current
Portion
$
$
—
435
136
571
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
$
$
3,490
110
647
83
4,330
$
$
295
108
373
51
827
Decreases
$
$
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
$
$
3,405
108
464
67
4,044
$
$
252
61
304
83
700
374
32
131
83
620
Decreases
$
$
167
59
121
67
414
Ending
Balance
$ 3,411
186
889
51
$ 4,537
Ending
Balance
$ 3,490
110
647
83
$ 4,330
Current
Portion
$ 375
122
—
22
$ 519
Current
Portion
$ 374
44
—
35
$ 453
Bond Premium— In fiscal years 2011 and 2010 bonds were issued, resulting in premiums of $294,611and
$21,158, respectively. In fiscal year 2011, revenue bonds were issued resulting in a premium of $17,531.
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 in the 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 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
their 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 bonds 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 construction of a student wellness center. Revenue bonds currently outstanding
have interest rates between 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
3.12 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $2,419,484.
Principal and interest paid for the current year and total customer net revenues were $ 19,611 and $ 106,787
respectively.
38
Notes Payable — Notes payable consists of state energy efficiency program loans. Some loans received under
this program are interest free while others charge interest. The loans are granted by energy companies in order
to improve energy efficiency in college and university buildings. The College has only interest charging loans
at the present time.
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. The range of interest rates charged to the current notes
is 4.81 to 9.90 percent.
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 by faculty 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 Management and Budget manages the self insured workers’
compensation claims activities. The reported liability for workers’ compensation of $50,767 and $82,899 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.
Capital Contributions — The liability of $195,917 and $195,022 at June 30, 2011 and 2010, respectively,
represents the amount the College would owe the federal government if it were to discontinue the Perkins loan
program. The net change was an increase of $895 in fiscal year 2011, and a decrease of $2,364 in fiscal year
2010.
Principal and interest payment schedules are provided in the following table for general obligation bonds,
revenue bonds, capital leases, and notes payable. There are no payment schedules for compensated absences,
early termination benefits, other postemployment benefits, workers’ compensation, or capital contributions.
Long Term Debt Repayment Schedule
(In Thousands)
Fiscal Years
2012
2013
2014
2015
2016
2017-2021
2022-2026
2027-2031
2032-2036
Total
$
$
General
Obligation Bonds
Principal
Interest
507
$
309
430
287
430
267
408
246
406
227
2,023
838
1,922
355
548
45
—
—
6,674
$ 2,574
Revenue Bonds
Capital Leases
Notes Payable
Principal
Interest
Principal
Interest
Principal Interest
$
—
$
72 $
58
$
6
$
148
$ 31
55
64
59
5
138
23
60
62
62
3
117
16
60
60
63
1
45
12
60
59
—
—
49
10
335
261
—
—
166
13
395
189
—
—
—
—
485
90
—
—
—
—
110
3
—
—
—
—
$ 1,560
$
860 $
242
$ 15
$
663 $ 105
39
9.
EARLY TERMINATION BENEFITS
Minnesota State College Faculty (MSCF) contract
Early termination benefits are defined as benefits received for discontinuing services earlier than planned. The
MSCF contract allows former United Technical College Educators (UTCE) faculty members who meet certain
eligibility and combination of age and years of service requirements to receive an early termination 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
members as of the end of fiscal years 2011 and 2010 follow:
Fiscal Year
2011
2010
Number
of Faculty
8
5
Future Liability
(In Thousands)
$ 186
110
10. 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 14 retirees receiving health benefits from the health plan.
Annual OPEB Cost and Net OPEB Obligation — The annual other postemployment benefit (OPEB) cost 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 Post Employment 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 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)
Annual required contribution (ARC)
Interest on net OPEB obligation
Adjustment to ARC
Annual OPEB Cost
Contributions during the year
Increase in net OPEB obligation
OPEB obligation, beginning of year
OPEB obligation, end of year
40
2011
2010
$ 367 $
31
(25)
373
(131)
242
647
$ 889 $
300
22
(18)
304
(121)
183
464
647
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
647
373
(131)
889
2010
464
304
(121)
$ 647
$
35.12%
39.80 %
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)
Actuarial
Unfunded
Accrued
Actuarial Accrued
Funded
Liability
Liability
Ratio
Covered
Payroll
UAAL as a
Percentage of
Covered Payroll
(b)
$ 3,103
(c)
$ 27,364
((b - a)/c)
11.34 %
(b - a)
$ 3,103
(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
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
11. LEASE AGREEMENTS
Operating Leases — The College is committed under various leases primarily for building space and office
equipment. These leases are considered for accounting purposes to be operating leases. Lease expenditures for
the years ended June 30, 2011 and 2010, totaled approximately $361,204 and $417,643, respectively.
41
Future minimum lease payments for existing lease agreements are listed in the following table.
Year Ended June 30
(In Thousands)
Fiscal Year
Amount
2012
$ 380
2013
170
2014
169
2015
6
Total $ 725
Capital Leases – During fiscal year 2011 the College entered into one capital lease in the amount of $300,000
for the purchase of a telephone system. The lease meets the criteria of a capital lease as defined by FASB ASC
840, Leases. The term of the lease is for five years.
Income Leases —The College has entered into several income lease agreements primarily for building space.
Lease income for the years ended June 30, 2011 and 2010, totaled $89,102 and $22,351, respectively, and is
included in other income in the statements of revenues, expenses, and changes in net assets.
Future expected income receipts for existing lease agreements are listed in the following table.
Year Ended June 30
(In Thousands)
Fiscal Year
Amount
2012
$
88
2013
15
2014
15
Total
$ 118
12. TUITION, FEES, AND SALES, NET
The following table provides information related to tuition, fees, and sales revenue:
Description
Tuition
Fees
Room and board and sales
Restricted student payments
Total
For the Year Ended June 30
(In Thousands)
2011
Scholarship
Gross
Allowance
Net
$ 24,750 $ (11,234) $ 13,516
2,977
(945)
2,032
6,294
(1,059)
5,235
106
—
106
$ 34,127 $ (13,238) $ 20,889
42
$
$
Gross
22,387
2,618
5,861
—
30,866
2010
Scholarship
Allowance
$
(9,644) $
(740)
(1,025)
—
$ (11,409) $
Net
12,743
1,878
4,836
—
19,457
13. OPERATING EXPENSES BY FUNCTIONAL CLASSIFICATION
The following table provides 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
3,020
2,779
16,075
98
4,056
471
—
—
$ 26,499
$
Benefits
1,241
1,244
5,373
40
1,638
257
—
—
$
9,793
$
$
$
Other
3,194
2,781
5,766
179
2,726
4,845
1,885
—
21,376
$
$
Interest
40
37
199
1
53
7
—
(337)
—
$
$
Total
7,495
6,841
27,413
318
8,473
5,580
1,885
(337)
57,668
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
3,200
2,590
15,927
90
4,250
507
—
—
$ 26,564
$
Benefits
1,259
1,135
5,279
32
1,587
246
—
—
$
9,538
$
$
$
Other
2,313
2,998
5,300
100
1,720
4,130
2,250
—
18,811
$
$
Interest
39
33
187
1
51
7
—
(318)
—
$
$
Total
6,811
6,756
26,693
223
7,608
4,890
2,250
(318)
54,913
14. EMPLOYEE PENSION PLANS
The College participates in four retirement plans: the State Employees Retirement Fund, administered by the
Minnesota State Retirement System; the Public Employees Retirement Fund, administered by the Public
Employees Retirement Association; the Teachers Retirement Fund, administered by the Minnesota Teachers
Retirement Association; and 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, MN 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 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.
43
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
$ 325
2010
270
2009
286
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, MN 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 the College were:
(In Thousands)
Fiscal Year
Amount
2011
$ 165
2010
168
2009
176
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.
44
The administrative agent for 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, Ste 1100, Bloomington, MN 55437.
Individual Retirement Account Plan (IRAP)
Participation — Every employee who is in unclassified service is required to participate in TRA 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 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
$ 1,039 $
782
2010
1,020
765
2009
1,000
751
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 the eligible compensation up to a defined maximum
annual contribution as specified in the following table:
Maximum
Annual
Member Group
Eligible Compensation Contributions
Minnesota Association of Professional Employees Unclassified
Middle Management Association Unclassified
Administrators
Other Unclassified Members
$ 6,000 to
6,000 to
6,000 to
6,000 to
$$40,000
40,000
60,000
40,000
$ 1,700
1,700
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)
Fiscal Year
Amount
2011
$ 546
2010
510
2009
510
45
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.
Minnesota State Colleges and Universities issued revenue bonds to finance Minnesota State Community and
Technical College in the amount of $1,560,000.
Minnesota State Community and Technical College Portion of
the Revenue Fund
(In Thousands)
2011
CONDENSED STATEMENT OF NET ASSETS
Assets
Current assets
$
32
Current restricted assets
1,640
Noncurrent restricted assets
14
Total assets
1,686
Liabilities
Current liabilities
24
Noncurrent liabilities
1,578
Total liabilities
1,602
Net Assets:
Restricted
84
Total net assets
$
84
CONDENSED STATEMENT OF REVENUES,
EXPENSES, AND CHANGE IN NET ASSETS
Operating revenues
Operating expenses
Net operating income
Non operating revenues (expenses)
Change in net assets
Net assets, beginning of year
Net asset, end of year
CONDENSED STATEMENT OF CASH FLOWS
Net cash provided (used) by:
Operating activities
Investing activities
Capital and related financing activities
Net increase
Cash, beginning of year
Cash, end of year
$
$
107
(4)
103
(19)
84
—
84
$
104
(1)
1,569
1,672
—
$ 1,672
16. COMMITMENTS
During fiscal year 2011, construction continued on the $5.45 million library addition on the Moorhead campus,
the $1.07 million roof repair project on the Fergus Falls campus, and $525 thousand classroom rightsizing
project on the Wadena campus. As of June 30, 2011, $2.88 million had been expended on the library addition,
$753 thousand had been expended on the roof repair project, and $190 thousand had been expended on the
classroom rightsizing project. The library project is expected to be completed by October 2011, and the other
two projects will be completed by December 2011.
46
New commitments made by the College during fiscal year 2011 include a $302 thousand parking lot expansion
in Moorhead which will be financed with student parking fees and a $1.25 million wellness center on the
Moorhead campus that is financed with revenue bonds. The revenue bonds will be repaid with a student
wellness fee assessed to all students on the Moorhead campus.
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 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 College also purchased optional physical damage coverage for their newest or most expensive
vehicles.
Property and casualty coverage is required by Minnesota State Colleges and Universities policy. The College
has selected optional coverage for student health services professional liability.
Property coverage offered by the Minnesota Risk Management Fund is as follows:
Coverage Type
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
Minnesota State Community and Technical College retains the risk of loss. The College did not have any
settlements in excess of coverage the last three years.
The Minnesota Risk Management Fund purchased student intern professional liability and dental clinics
professional liability on the open market for the College.
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.
47
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 06/30/11
Fiscal Year Ended 06/30/10
Beginning
Liability
$
83
$
67
Additions
51
83
$
Payments
& Other
Reductions
83
67
Ending
Liability
$
51
83
18. COMPONENT UNITS
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations Are Component
Units, the following foundation affiliated with Minnesota State Community and Technical College is a legally
separate, tax exempt entity and reported as a component unit.
The Fergus Area 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 of 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 value of scholarships and equipment contributed by or passed through the Foundation was $144,788 and
$147,597 for the fiscal years ended June 30, 2011 and 2010, respectively.
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 FASB 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 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.
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.
Summary of Investments at June 30
(In Thousands)
Investments
2011
2010
Common stock
$
60 $
62
Mutual funds
2,769
2,031
Fixed income securities / Bonds
317
355
Other investments
286
252
Total investments
$ 3,432 $ 2,700
48
Endowment Funds— The Foundation’s endowment includes donor-restricted funds. 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
Net appreciation
Amounts Appropriated for Expenditures
Net Assets, End of Year
Temporarily
Unrestricted
Restricted
$
— $
71
—
70
39
76
—
308
(39)
(130)
$
— $
395
Total Net
Endowment
Permanently
Assets
Restricted
$
2,468 $
2,539
354
424
1
116
—
308
—
(169)
$
2,823 $
3,218
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
Net appreciation
Amounts appropriated for expenditures
Other transfers
Net assets, end of year
Unrestricted
(47) $
—
37
—
(37)
47
$
— $
Temporarily
Restricted
$
87
76
214
(129)
(177)
71
Total Net
Permanently
Endowment
Restricted
Assets
$
2,412 $
2,365
56
143
—
113
—
214
—
(166)
—
(130)
$
2,468 $
2,539
19. IMPAIRMENT OF CAPITAL ASSET
On June 17, 2010 an F4 tornado swept through the southwest portion of the City of Wadena. The tornado
damaged and destroyed a large number of buildings within the city including buildings owned and operated by
the College. Extensive damaged occurred to the main campus building as well as out buildings at the
lineworker location. In addition to building damage, the College received damages to vehicles, equipment, and
landscaping. During fiscal year 2011 the facilities were renovated to bring the building back to pre-tornado
condition and all equipment was replaced. The final insurance claims have been presented to the carrier and are
being reviewed. It is the expectation by the College that all reimbursements on the claims will be covered by
the insurance carrier and payment will be received by the end of December 2011.
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REQUIRED SUPPLEMENTARY
INFORMATION SECTION
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52
MINNESOTA STATE COMMUNITY AND TECHNICAL COLLEGE
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)
$ 2,788
$ 2,788
0.00%
2,788
2,788
0.00
3,103
3,103
0.00
53
Covered
Payroll
(c)
$ 26,105
26,216
27,364
UAAL as a
Percentage of
Covered Payroll
((b - a)/c)
10.68%
10.63
11.34
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SUPPLEMENTARY SECTION
55
56
57
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