FOR THE YEARS ENDED JUNE 30, 2011
2010
Prepared by:
Normandale Community College
9700 France Ave. S.
Bloomington, MN 55431

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.

INTRODUCTION
Page
Transmittal Letter ...................................................................................................................................4
Organizational Chart ..............................................................................................................................7
FINANCIAL SECTION
Independent Auditor’s Report .............................................................................................................. 10
Management’s Discussion and Analysis .............................................................................................. 13
Basic Financial Statements
Statement of Net Assets ................................................................................................................ 18
Statement of Revenues, Expenses, and Changes in Net Assets ..................................................... 19
Statement of Cash Flows ............................................................................................................... 20
Notes to the Financial Statements ................................................................................................. 22
REQUIRED SUPPLEMENTARY INFORMATION SECTION
Schedule of Funding Progress for Net Other Postemployment Benefits ............................................. 43
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 .................................................................. 46
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The financial activity of the Normandale Community 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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MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited)
INTRODUCTION
The following discussion and analysis provide an overview of the financial position and activities of Normandale
Community College, a member of Minnesota State Colleges and Universities at June 30, 2011, 2010 and 2009 for the years then ended. The College’s financial activity for fiscal year 2009, presented for comparison, was not audited. This discussion has been prepared by management and should be read in conjunction with the financial statements and accompanying notes, which follow this section.
Normandale Community College (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, 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 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 comprehensive public institution of higher learning with approximately 15,000 students of which
26 percent are students of color. The average age of the student on campus is 25 years old. Approximately 18 percent of our students represent the first generation in their family to attend college. The College employs approximately 609 full time equivalent staff and faculty members.
The College offers associate degrees and certificates and participates in the Minnesota Transfer Curriculum and is accredited by the Higher Learning Commission. The largest programs based on enrollment are liberal arts, nursing careers, business management, law enforcement, and engineering. Some of our nationally accredited programs include dental hygiene, nursing, business management, music art, and theatre.
The College has over 70 different clubs and activities in areas such as honorary, drama and theater, music ensembles, cultural and social concerns, recreational sports and student government.
FINANCIAL HIGHLIGHTS
The College experienced another strong year financially in fiscal year 2011. Assets totaled $102.8 million compared to liabilities of $42.3 million. Net assets, which represents the residual interest in the College’s assets after liabilities are deducted, is comprised of capital assets, net of related debt, of $30.4 million; restricted assets of $4.7 million and unrestricted assets of $25.4 million.
Unrestricted cash and cash equivalents balances increased by $7.6 million in fiscal year 2011. Operating revenues decreased $0.5 million in fiscal years 2011 and increased $1.9 and $1.2 million in fiscal years 2010 and 2009, respectively. The increase to non operating revenue due to federal stimulus revenue remained strong at $1.8 million in 2011 compared to $0.8 million in 2010. Gross tuition revenue increased by $1.6 million for fiscal year 2011. The increase was attributable to the tuition increase of 5 percent for fiscal year 2011. The College’s unprecedented enrollment growth of the previous decade continued in 2011 with a small enrollment increase of 0.4 percent. The accumulated growth over the years has required the institution to plan for increasing its classroom facility space in order to meet its student enrollment demand.
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Total operating expenses increased by $1.6 million in 2011 after increasing $2.7 million in 2010. The two main expenses that increased were the increase in faculty development costs and equipment purchases below the capitalized threshold. Total net assets increased $6.3 million for fiscal year 2011, due primarily to increases in current assets such as cash and accounts receivable.
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. The 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.
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.
A summary of the College’s assets, liabilities and net assets as of June 30, 2011, 2010, and 2009, respectively, is as follows:
Current assets
Current restricted assets
Noncurrent restricted assets
Capital assets, net
(In Thousands)
2011 2010 2009
$ 41,828 $ 35,350 $ 28,081
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Net assets
9,190
11,599
40,208
102,825
16,033
962
40,348
92,693
16,724
4
40,775
85,584
13,686
28,578
9,860
28,597
9,337
28,774
42,264 38,457 38,111
$ 60,561 $ 54,236 $ 47,473
Current unrestricted assets consist primarily of cash and cash equivalents totaling $37.6 million at June 30, 2011.
Current restricted assets decreased by $6.8 million from June 30, 2010 due to debt service payments and the construction payments of the student center completed in August of 2011.
Current liabilities consist primarily of accounts payable, salaries and benefits payable and unearned revenue.
Salaries and benefits payable totaled $4.6 million at June 30, 2011, an increase of $0.2 million over the prior year attributable primarily to an additional day of payroll expense that was accrued. Salaries payable include
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approximately two months of earned salary for faculty payroll that have elected to receive salaries over twelve month on a September 1 – August 31 year. Payable from restricted assets increased $3.6 from the prior year attributable to the construction of the new student center.
Net assets represent the residual interest in the College’s assets after liabilities are deducted. The College’s net assets as of June 30, 2011, 2010, and 2009, respectively, are summarized as follows:
(In Thousands)
2011 2010 2009
Invested in capital assets, net of related debt $ 30,391 $ 30,507 $ 30,727
Restricted
Unrestricted
Total net assets
4,744 4,027 2,592
25,426 19,702 14,154
$ 60,561 $ 54,236 $ 47,473
Invested in capital assets, net of related debt represents the college’s capital assets net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction or improvement of those assets.
Restricted primarily includes donations received for specific purposes, capital projects, and debt service.
CAPITAL AND DEBT ACTIVITIES
One of the critical factors in continuing the quality of the College’s academic programs and student life is the development and renewal of its capital assets. The College continues to implement its master facilities plan to modernize its complement of older facilities, balanced with new construction. Capital assets as of June 30, 2011 totaled $51.8 million, net of accumulated depreciation of $27.0 million.
Capital outlays totaled $12.8 million, due largely to the fact that the College’s $15.7 million Student Center moved near completion. Capital expenditures are primarily comprised of recently completed new building, replacement and renovation of existing facilities, as well as investments in equipment. Current year capital asset additions were funded through general obligation bond and revenue bond funds. During fiscal year 2011, the College began work on a host of new capital projects, including the design of the Academic Partnership Center.
Construction in progress at June 30, 2011 increased to $12.5 million from a previous year balance of $1.2 million.
This is due to the near completion of the Kopp Student Addition and Renovation project. This project was funded out of revenue bond funds. All proceeds have been designated as restricted. Additional information on capital and debt activities can be found in Note 5 and 7 to the financial statements. Additional information on the construction in progress projects can be found in Note 15.
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 the year. When viewing the full statements, users should note that GASB requires classification of state appropriations and federal and state grants as nonoperating revenues.
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A summarized statement in table format for the years ending June 30, 2011, 2010 and 2009, respectively, follow:
Summarized Statements of Revenues, Expenses, and Changes in Net Assets
(In Thousands)
Operating revenue
Student tuition, fees, and sales
Less: scholarship allowances
Net student tuition, fees, and sales
Other
Total operating revenue
Nonoperating revenue:
State appropriations
Other
Total nonoperating revenue
Total revenue
Operating expense:
Salaries and benefits
Supplies and services
Depreciation
Financial aid
Other
Total operating expense
Nonoperating expense:
Interest expense and other
Total nonoperating expense
Total expense
Change in net assets
Net assets, beginning of year
Net assets, end of year
2011 2010 2009
$ 45,940 $ 44,318 $ 39,136
(12,427) (10,560) ( 7,321)
33,513
48
33,758
285
31,815
299
33,561 34,043 32,114
20,923
18,944
39,867
73,428
44,464
13,227
2,242
2,293
3,827
66,053
21,313
16,767
38,080
72,123
43,468
12,451
2,135
2,519
3,867
64,440
26,794
10,481
37,275
69,389
42,568
12,022
1,960
1,292
3,941
61,783
1,050
1,050
67,103
920
920
65,360
491
491
62,274
6,325
54,236
6,763
47,473
7,115
40,358
$ 60,561 $ 54,236 $ 47,473
Tuition and state appropriations are the primary sources of funding for the College’s academic programs. Tuition revenue increased in fiscal year 2011 as a result of a 5 percent increase in tuition rates. Total state and capital appropriations decreased in fiscal year 2011 by $0.4 million to $20.9 million. Much of the decline can be explained by the decrease in state appropriation funding the College received in 2011. During fiscal year 2011, federal grants increased by $2.7 million. $1.6 million of the increase in federal grant revenue was received through the American
Recovery and Reinvestment Act of 2009 to mitigate 2 percent of the 5 percent tuition rate increase and for education and general expenditures. The remainder of the increase in federal grant revenue is largely due to the increase in federal financial aid to students.
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Resources expended for compensation increased $1.0 million to $44.5 million in fiscal year 2011, due primarily to increased faculty effort. Resources expended for compensation were $43.5 million and $42.5 million in fiscal years
2010 and 2009 respectively. Supplies and service expenses increased $0.8 million in fiscal year 2011, due mainly to architectural and engineering fees the College assumed as it began work on the new capital projects mentioned above and equipment purchases below the capitalized threshold.
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE
Looking to the future, the College is positioned to continue its strong financial condition and level of excellence, even in uncertain times. While enrollment continued to be strong in fiscal year 2011, as many displaced workers turned to the College to seek out new job skills, some modest decline in enrollment is expected for the next few years as the number of traditional high school graduates continues to decline; the college is anticipating that the next few years will also see a decline in state appropriations. An integrated planning and budgeting process has become the planning tool the College is using to better align its high quality educational programs and services for students.
The College has undertaken the task of reorganizing the delivery of academic and other support services with the view to reducing the cost of these services; conversations will continue regarding the cost of delivering instruction.
Both of these efforts are designed to keep tuition increases low so a broad array of affordable educational opportunities for students can continue, including the large number of underserved students.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of Normandale Community 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:
Ed Wines, V.P. of Finance and Operations
Normandale Community College
9700 France Avenue South
Bloomington, MN 55431
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NORMANDALE COMMUNITY COLLEGE
STATEMENTS OF NET ASSETS
AS OF JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Assets
Current Assets
Cash and cash equivalents
Investments
Grants receivable
Accounts receivable, net
Prepaid expense
Inventory
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
Capital assets, net
Total noncurrent assets
Total Assets
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
Other liabilities
Total current liabilities
Noncurrent Liabilities
Noncurrent portion of long-term debt
Other compensation benefits
Total noncurrent liabilities
Total Liabilities
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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2011
$ 37,585
-
400
1,747
1,108
812
176
41,828
9,190
9,190
11,599
11,599
20,789
40,208
40,208
102,825
2010
$ 29,924
1,498
305
1,442
1,144
871
166
35,350
16,033
16,033
962
962
16,995
40,348
40,348
92,693
4,657
905
2,503
3,847
173
79
936
553
33
13,686
24,145
4,433
28,578
42,264
4,477
983
2,516
230
175
44
911
511
13
9,860
24,366
4,231
28,597
38,457
30,391
1,970
2,774
25,426
$ 60,561
30,507
1,564
2,463
19,702
$ 54,236

NORMANDALE COMMUNITY COLLEGE
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Operating Revenues
Tuition, net
Fees, net
Sales, net
Restricted student payments, net
Other income
Total operating revenues
Operating Expenses
Salaries and benefits
Purchased services
Supplies
Repairs and maintenance
Depreciation
Financial aid, net
Other expense
Total operating expenses
Operating loss
Nonoperating Revenues (Expenses)
Appropriations
Federal grants
State grants
Private grants
Interest income
Interest expense
Grants to other organizations
Total nonoperating revenues (expenses)
2011
$ 23,523
3,106
5,585
1,299
48
33,561
44,464
5,300
7,143
(32,492)
784
2,242
2,293
3,827
66,053
19,616
15,902
2,161
662
219
(1,004)
(6)
37,550
Income Before Other Revenues, Expenses, Gains, or Losses
Capital appropriations
Loss on disposal of capital assets
Change in net assets
Total Net Assets, Beginning of Year
Total Net Assets, End of Year
5,058
1,307
(40)
6,325
$
54,236
60,561
2010
$ 23,539
3,313
5,870
1,036
285
34,043
43,468
5,231
6,086
1,134
2,135
2,519
3,867
64,440
(30,397)
20,504
13,214
2,800
660
93
(919)
-
36,352
5,955
809
(1)
6,763
$
47,473
54,236
The notes are an integral part of the financial statements.
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NORMANDALE COMMUNITY COLLEGE
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Cash Flows from Operating Activities
Cash received from customers
Cash paid to suppliers for goods or services
Cash payments for employees
Financial aid disbursements
Net cash flows used in operating activities
Cash Flows from Noncapital and Related Financing Activities
Appropriations
Agency activity
Federal grants
State grants
Private grants
Grants to other organizations
Net cash flows from noncapital financing activities
Cash Flows from Capital and Related Financing Activities
Investment in capital assets
Capital appropriation
Proceeds from sale of capital assets
Proceeds from issuance of debt
Proceeds from bond premium
Interest paid
Repayment of bond principal
Net cash flows used in capital and related financing activities
Cash Flows from Investing Activities
Proceeds from sales and maturities of investments
Purchase of investments
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
2011 2010
$ 33,208
(17,120)
(43,978)
(2,293)
(30,183)
$ 34,037
(16,184)
(42,730)
(2,558)
(27,435)
19,616
34
15,842
2,161
662
(6)
38,309
20,504
44
13,300
2,800
660
37,308
-
(9,170)
1,307
7
340
449
(964)
(927)
(8,958)
(3,295)
809
-
449
111
(955)
(999)
(3,880)
1,498
-
152
1,650
818
$
45,957
46,775
1,499
(2,497)
57
(941)
5,052
$
40,905
45,957
The notes are an integral part of the financial statements.
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NORMANDALE COMMUNITY COLLEGE
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
(IN THOUSANDS)
Operating Loss
Adjustment to Reconcile Operating (Loss) to
Net Cash Flows used in Operating Activities
Depreciation
Change in assets and liabilities
Inventory
Accounts receivable
Accounts payable
Salaries and benefits payable
Other compensation benefits
Capital contributions payable
Unearned revenues
Other
Net reconciling items to be added to operating income
Net cash flows used in operating activities
Non-Cash Investing, Capital, and Financing Activities
Capital projects on account
Amortization of bond premium
Investment earnings on account
$
2011 2010
(32,492) $ (30,397)
2,242 2,135
$
59
(305)
(78)
180
244
-
(47)
14
2,309
(30,183) $
22
(274)
233
472
266
(39)
268
(121)
2,962
(27,435)
$ 3,847
65
6
$ 230
31
-
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NORMANDALE COMMUNITY 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 Normandale Community 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 Normandale Community 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. Normandale Community 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.
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. Normandale Community 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.
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.
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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.
Normandale Community 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, 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 are allocated to the colleges and universities.
Cash in the Revenue Fund is invested separately. The Fund contracts with the Minnesota State Board of
Investment and U.S. Bank, N.A. for investment management services. Investments are reported at fair market value. Restricted investments are investments held in the Revenue Fund for capital projects and debt service.
Receivables — Receivables are shown net of an allowance for uncollectible accounts.
Inventories — Inventories are valued at cost using the retail average 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 Life
Buildings 35 years
Building improvements 20 years
Equipment 3-20 years
Library collections 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.
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
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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 and fall sessions. 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 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.
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 fee revenue 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 year 2011 and 2010, $1,612,030 and $996,775 of federal aid was recognized as revenue related to the American Recovery and Reinvestment Act of 2009, respectively. Of this amount, $563,266 and $573,014, 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
$4,129,737 reported in fiscal year 2010 as a reduction to sales revenue, was reclassified to an operating expense. Capital appropriation revenue in the amount of $750,157 was reclassified as state appropriation revenue.
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.
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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
Normandale Community 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.
Donations — restricted per donor requests.
Donations
Total
Restricted for Other
(In Thousands)
2011 2010
Debt service
Capital projects
Faculty contract obligations
801
22
1,328
26
25 25
$ 2,774 $ 2,463
•
Unrestricted: Net assets that are not subject to externally imposed stipulations. Unrestricted net assets may be designated for specific purposes by action of management, the System Office, or the Board of
Trustees.
2.
CASH, CASH EQUIVALENTS AND INVESTMENTS
Cash and Cash Equivalents — All balances related to the appropriation, tuition, and most fees are in the state treasury. In addition, the 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 10 percent greater than the amount on deposit.
The following table summarizes cash and cash equivalents, including amounts reported as restricted cash.
Cash and Cash Equivalents at June 30
(In Thousands)
Carrying Amount 2011 2010
Cash - in bank
Money markets
Cash, trustee- (US Bank)
$ 1,288 $ 1,039
2,180 680
1,350 12,299
Total local cash and cash equivalents 4,818 14,018
Total treasury cash accounts 41,957 31,939
Grand Total $ 46,775 $ 45,957
25

At June 30, 2011 and 2010, the College’s bank checking and money market balances were $3,468,222 and
$1,718,652, 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.
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 7.5.1which 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.
As of June 30, 2011 and 2010, the College had investments in US agencies in the amount $0 and $1,497,965 with a weighted maturity of 0.76 years.
26

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 $2,763,700 and $2,333,560, respectively, less an allowance for uncollectible accounts of $1,016,488 and $891,758, respectively.
Tuition
Fees
Summary of Accounts Receivable at June 30
(In Thousands)
2011 2010
$ 1,695 $ 1,470
379 281
Sales and services
Other
Total accounts receivable
204
485
236
347
2,763 2,334
Allowance for doubtful accounts
Total net accounts receivable
(1,016) (892)
$ 1,747 $ 1,442
The allowance for uncollectible accounts has been computed based on the following aging schedule:
Age
Less than 1 year
1 to 3 years
3 to 5 years
Over 5 years
Allowance
Percentage
15
45
70
95
4.
PREPAID EXPENSE
Prepaid expense consists primarily of $1,049,207 and $1,083,870 for fiscal years 2011 and 2010, respectively, which has been deposited in the state’s Debt Service Fund for future general obligation bond payments.
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. Additionally, the remainder of prepaid expense, $59,134 for fiscal year 2011 and $60,252 for fiscal year 2010, consists of prepaid funds for software maintenance.
27

5.
CAPITAL ASSETS
Summaries of changes in capital assets for fiscal years 2011 and 2010 follow.
Year Ended June 30, 2011
Description
Capital assets, not depreciated:
(In Thousands)
Beginning
Balance Increases Decreases
Completed
Construction
Land
Construction in progress
Capital assets, depreciated:
$ 532
1,210
$ —
12,455
$ —
—
Total capital assets, not depreciated 1,742 12,455 —
$ —
(1,164)
(1,164)
Ending
Balance
$ 532
12,501
13,033
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
60,518 — —
3,390 113 1,222
1,885
65,793
2,206
26,225
221
334
2,242
252
1,474
22,941 1,725 —
252 1,172
1,078 265 252
1,424
1,164
—
—
1,164
—
—
—
—
61,682
2,281
1,854
65,817
24,666
1,286
1,091
27,043
Total capital assets, depreciated, net 39,568 (1,908) 50
Total capital assets, net of depreciation $ 41,310 $ 10,547 $ 50 $
1,164
—
Description
Capital assets, not depreciated:
Land
Year Ended June 30, 2010
$
(In Thousands)
Beginning
Balance
532 $
Increases
—
Decreases
Completed
Construction
$ — $ —
38,774
$ 51,807
Ending
Balance
$ 532
Construction in progress
Total capital assets, not depreciated 6,931 2,216 —
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
6,399 2,216 —
53,113
3,248
1,884
58,245
—
191
261
452
—
49
260
309
21,360 1,581 —
1,969 285 48
1,069 269 260
(7,405)
(7,405)
7,405
—
—
7,405
—
—
—
Total accumulated depreciation 24,398 2,135 308
Total capital assets, depreciated, net 33,847 (1,683) 1 7,405
Total capital assets, net of depreciation $ 40,778 $ 533 $ 1 $ —
—
1,210
1,742
60,518
3,390
1,885
65,793
22,941
2,206
1,078
39,568
$ 41,310
26,225
28

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
Purchased services
Supplies
$ — $ 45
400 428
207 168
Employee Salaries and Benefits 62 181
Repairs and maintenance 70 52
Other 166 109
Total $ 905 $ 983
In addition, as of June 30, 2011 and 2010, the College had payables from restricted assets in the amounts of
$103,905 and $18,407, which were related to capital projects financed by general obligation bonds. Also as of
June 30, 2011 and 2010, the College had payables from restricted assets in the amount of $3,742,809 and
$211,671 which were related to capital projects in the Revenue Fund.
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
Ending
Balance
Current
Portion
$
$
251 $
9,494
15,532
25,277 $
449 $
340
—
789 $
65 $
741
179
635 $
9,093
15,353
985 $ 25,081 $
—
749
187
936
Liabilities for:
Bond premium
General obligation bonds
Revenue bonds
Total long term debt
Liabilities for:
Bond premium
General obligation bonds
Revenue bonds
Total long term debt
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance Increases Decreases
$ 171 $
9,772
15,700
111
449
—
$ 31
727
168
$
$ 25,643 $ 560 $
Ending
Balance
251 $
9,494
15,532
926 $ 25,277 $
Current
Portion
—
732
179
911
29

The changes in other compensation benefits for fiscal years 2011 and 2010 follow:
Year Ended June 30, 2011
(In Thousands)
Liabilities for:
Compensated absences
Early termination benefits
Net other postemployment benefits
$
Workers’ compensation
Total other compensation benefits $
Beginning
Balance
4,090
114
513
25
$
4,742 $
Increases
401
76
397
56
930
Decreases
$
$
387
114
162
23
686
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance Increases Decreases
$
$
Ending
Balance
4,104
76
748
58
4,986
Ending
Balance
$
$
Current
Portion
452
76
—
25
553
Current
Portion
Liabilities for:
Compensated absences
Early termination benefits
Net other postemployment benefits
$
Workers’ compensation
Total other compensation benefits $
3,964 $
123
377
12
4,476 $
431 $
114
308
23
876 $
305 $ 4,090 $ 387
123
172
114
513
114
—
10 25 10
610 $ 4,742 $ 511
Bond Premium — In fiscal years 2011 and 2010, bonds were issued resulting in a premium of $448,966 and
$111,060, 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 residence hall, food service, student union, and other revenue-producing and related facilities at the college. Revenue bonds currently outstanding have interest rates between 2.50 percent and 5.75 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 2030. Annual principal and interest payments on the bonds are expected to require less than
67.07 percent of net revenues. The total principal and interest remaining to be paid on the bonds is
$22,878,022. Principal and interest paid for the current year and total customer net revenues were $872,278 and
$1,300,520 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.
30

Early Termination Benefits — Early termination benefits are benefits received for discontinuing service earlier than planned. See Note 8 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 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 $57,110 and $24,450 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.
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 premiums, compensated absences, early termination benefits, other postemployment benefits, or workers’ compensation
Long Term Debt Repayment Schedule
(In Thousands)
Fiscal Years
General
Obligation Bonds Revenue Bonds
Principal Interest Interest
2012 $ 749 418 $ 187 $
636
659
691
686
669
646
620
2017-2021 3,012 924
2022-2026 1,798 301
2027-2031 584 38
720
3,750
4,805
3,905
591
2,463
1,496
354
9,093 15,353 $ 7,525
8.
EARLY TERMINATION BENEFITS
Early termination benefits are defined as benefits received for discontinuing services earlier than planned.
The Minnesota State College Faculty (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 members, as of the end of fiscal years 2011 and 2010 follow.
Fiscal Year Number of Faculty
Future Liability
(In Thousands)
2011
2010
1
3
$ 76
114
31

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 17 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 determined in accordance with the parameters of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions . The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years.
The following table shows the components of the annual OPEB cost for 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
Contributions during the year
Increase in net OPEB obligation
Net OPEB obligation, beginning of year
Net OPEB obligation, end of year
$ 397 $ 305
9 17
(9) (14)
397 308
(162) (172)
235 136
513 377
$ 748 $ 513
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)
2011
Beginning of year OPEB obligation $ 513
Annual OPEB cost 397
Employer contribution (162)
Net OPEB obligation $ 748
2010
$ 377
308
$
(172)
513
Percentage contributed 40.81% 55.84%
32

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.
Schedule of Funding Progress
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(a)
July 1, 2010
—
(In Thousands)
Actuarial
Accrued
Liability
(b)
$ 3,617
Unfunded
Actuarial Accrued
Liability
(b - a)
$ 3,617
Funded
Ratio
Covered
Payroll
(a/b) (c)
0.00%
$ 34,443
UAAL as a
Percentage of
Covered Payroll
((b - a)/c)
10.50%
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 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 various leases primarily for office equipment. These leases are considered for accounting purposes to be operating leases. Lease expenses for the years ended June
30, 2011 and 2010, totaled approximately $22,046 and $10,691, respectively.
Future minimum lease payments for existing lease agreements follow:
Year Ended June 30
(In Thousands)
Fiscal Year Amount
2012 $ 24
2013
2014
Total $
20
13
57
33

11.
TUITION, FEES, AND SALES, NET
The following table provides information related to tuition, fees, and sales revenue:
For the Year Ended June 30
Tuition
Fees
Sales
Description Gross
$ 34,123 $ (10,600) $ 23,523 $ 32,514 $ (8,975) $ 23,539
4,327
6,191
(In Thousands)
2011
Scholarship
Allowance
(1,221)
Net
3,106
(606) 5,585
Gross
4,363
6,405
2010
Scholarship
Allowance
(1,050)
(535)
Net
3,313
5,870
Restricted student payments 1,299
Total $ 45,940 $
—
(12,427) $
1,299 1,036
33,513
—
44,318 $ (10,560) $
1,036
33,758
12.
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
Salaries Benefits
Other Interest
$ 4,883 $ 1,603 $ 3,785 $ 67 $
Total
10,338
Institutional support
Instruction
Public service
Research
Student services
Auxiliary enterprises
Scholarships & fellowships
Less interest expense
Total operating expenses
2,829
20,108
99
—
5,095
954
—
—
917
6,280
27
—
1,395
274
—
—
3,413
4,381
275
5
2,005
5,432
2,293
$ 33,968 $ 10,496 $ 21,589 $
39
1
—
67
544
—
7,198
286 31,055
402
5
8,562
— (1,004) (1,004)
— $
7,204
2,293
66,053
Academic support
Institutional support
Instruction
Public service
Student services
Auxiliary enterprises
Scholarships & fellowships
Less interest expense
Total operating expenses
Description
For the Year Ended June 30, 2010
(In Thousands)
Salaries Benefits
Other Interest
$ 4,161 $ 1,364 $
2,642
20,134
914
6,208
3,400 $
3,319
4,329
117 $
75
Total
9,042
6,950
557 31,228
118
5,040
1,154
—
23
1,366
344
—
312
1,969
5,124
2,519
3
135
32
—
456
8,510
6,654
2,519
— — — (919)
$ 33,249 $ 10,219 $ 20,972 $ — $
(919)
64,440
34

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; 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 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 $ 379
2010
2009
343
323
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, 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,
35

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 $ 334
2010 348
2009 385
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 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
2010
2009
$ 1,065
1,033
983
$ 800
773
734
36

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 contribu t e 5 percent of eligible compensation up to a defined maximum annual contribution as specified in the following table:
Member Group
Eligible
Compensation
Maximum
Annual
Contributions
Minnesota Association of Professional Employees Unclassified $ 6,000 to $ 40,000 $ 1,700
Middle Management Association Unclassified 6,000 to 40,000 1,700
Minnesota State College Faculty Association 6,000 to 56,000 2,500
Administrators 6,000 to 60,000 2,700
Other Unclassified Members 6,000 to 40,000 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 $ 591
2010 580
2009 537
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.
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Minnesota State Colleges and Universities issued revenue bonds to finance Normandale Community College’s
Student Union in the amount of $15,700,261.
Normandale Community College Portion of the Revenue Fund
(In Thousands)
2011 2010
CONDENSED STATEMENTS OF NET ASSETS
Assets
Current assets
Current restricted assets
Noncurrent restricted assets
Total assets
Liabilities
Current liabilities
Noncurrent liabilities
$ 2,210
9,086
11,599
22,895
4,170
15,078
$ 1,798
16,014
962
18,774
626
15,257
Total liabilities
Net Assets:
Restricted
Total net assets
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 asset, end of year
$
19,248
1,300
(40)
1,260
(504)
15,883
3,647 2,891
$ 3,647 $ 2,891
$ 1,712
(40)
1,672
(414)
756
2,891
1,258
1,633
$ 3,647 $ 2,891
CONDENSED STATEMENTS OF CASH FLOWS
Net cash provided by (used in):
Operating activities $ 1,251
Investing activities
Capital and related financing activities
Net increase (decrease)
Cash, beginning of year
46
7,832
(6,535)
17,782
$ 1,706
33
1,309
430
17,352
Cash, end of year $ 11,247 $ 17,782
15.
COMMITMENTS
The College had two outstanding projects that totaled $12,500,639 in construction in process at June 30, 2011.
The Kopp Student Center addition and renovation, estimated to cost $15.7 million, was completed in August
2011. The college had incurred some construction costs for the Academic Partnership Center. Planning and design for the project, estimated at $1 million and was competed in October 2011.
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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 Amount
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
$1,000 - $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 year ended June 30, 2011 and 2010.
(In Thousands)
Beginning
Payments
& Other Ending
Liability Additions
Fiscal Year Ended 6/30/11 $ 25 $ 56
Reductions
$ 23
Liability
$ 58
Fiscal Year Ended 6/30/10 12 23 10 25
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NORMANDALE COMMUNITY COLLEGE
SCHEDULE OF FUNDING PROGRESS FOR NET OTHER POSTEMPLOYMENT BENEFITS
Actuarial
Valuation
Date
Actuarial
Value of
Assets
(a)
July 1, 2010
—
Schedule of Funding Progress
(In Thousands)
Actuarial
Accrued
Liability
(b)
Unfunded
Actuarial Accrued
Liability
(b - a)
Funded
Ratio
Covered
Payroll
(a/b) (c)
UAAL as a
Percentage of
Covered Payroll
((b - a)/c)
$ 3,617 $ 3,617
0.00% $ 34,443
10.50%
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