CENTURY COLLEGE
A MEMBER OF THE
MINNESOTA STATE COLLEGES AND UNIVERSITIES SYSTEM
ANNUAL FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2010 and 2009
Prepared by:
Century College
3300 Century Avenue South
White Bear Lake, MN 55110
Upon request, this publication is available in alternate formats by calling one of the following:
General number: (651) 201-1800
Toll free: 1-888-667-2848
TTY: (651) 282-2660
CENTURY COLLEGE
ANNUAL FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2010 and 2009
TABLE OF CONTENTS
INTRODUCTION
Page
Transmittal Letter ................................................................................................................................... 5
Organization Chart ................................................................................................................................. 9
FINANCIAL SECTION
Independent Auditors’ Report .............................................................................................................. 12
Management’s Discussion and Analysis .............................................................................................. 14
Basic Financial Statements
Statements of Net Assets ............................................................................................................... 18
Century College Foundation – Statements of Financial Position ................................................. 19
Statements of Revenues, Expenses, and Changes in Net Assets ................................................... 20
Century College Foundation – Statements of Activities ............................................................... 21
Statements of Cash Flows ............................................................................................................. 22
Notes to the Financial Statements ................................................................................................. 24
SUPPLEMENTAL 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 .................................................................. 44
1
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2
INTRODUCTION
3
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4
5
6
7
8
9
Dr. Ron Anderson
Vice President
Academic Affairs,
Finance and
Administration
Dr. Mike Bruner
Vice President
Student Services
Mary McKee
Vice President
Nancy Livingston
Continuing Education
Director of
and
Community Relations
Customized Training
President of Century College
Dr. Larry Litecky
James H. McCormick
Chancellor
Minnesota State
Colleges and Universities
Board of Trustees
June 30, 2010
Organizational Chart
Nick Maras
Executive Director
Century Foundation
Jo Matson
Director of Planning,
Institutional
Effectiveness and
Resource
Development
The financial activity of Century College is included in this report. The College is one of 32 colleges and
universities included in the Minnesota State Colleges and Universities Annual Financial Report which is
issued separately.
The College’s portion of the Revenue Fund is also included in this report. The Revenue Fund activity
is included both in the Minnesota State Colleges and Universities Annual Financial Report and in a
separately issued Revenue Fund Annual Financial Report.
All financial activity of Minnesota State Colleges and Universities is included in the state of Minnesota
Comprehensive Annual Financial Report.
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 Century
College, a member of Minnesota State Colleges and Universities for the fiscal years ended June 30, 2010, 2009
and 2008. This discussion has been prepared by management and should be read in conjunction with the
financial statements and accompanying notes, which follow this section.
The College is one of 32 colleges and universities comprising Minnesota State Colleges and Universities. The
Minnesota State Colleges and Universities system is governed by a 15 member Board of Trustees appointed by
the governor. Twelve trustees serve six-year terms, with at least one from each of Minnesota’s eight
congressional districts. Three student trustees, one from a state university, one from a community college and
one from a technical college, serve two-year terms. The Board of Trustees selects the Chancellor and has broad
policy responsibility for system planning, academic programs, fiscal management, personnel, admissions
requirements, tuition and fees, and policies and procedures.
The College is a two year comprehensive public institution of higher learning with approximately 14,700
students. Approximately 675 faculty and staff members are employed by the College.
The College’s mission is to inspire, prepare, and empower students to succeed in a changing world. The
College fulfills that mission through its offering of the first two years of a liberal arts education and more than
40 occupational programs in nearly 60 areas of study.
FINANCIAL HIGHLIGHTS
The College’s financial position improved during fiscal year 2010. Total assets increased 18 percent to $84.6
million, compared to $71.6 million in fiscal year 2009 and $64.6 million in fiscal year 2008. Total liabilities
rose to $30.4 million in fiscal year 2010, up from $28.3 million in fiscal year 2009 and $24.7 million in fiscal
year 2008. Total net assets, which represent the residual interest in the College’s assets after liabilities are
deducted, increased by 25 percent to $54.2 million in fiscal year 2010, up from $43.3 million in fiscal year
2009.
USING THE FINANCIAL STATEMENTS
The College’s financial report includes three financial statements: the statements of net assets, the statements of
revenues, expenses and changes in net assets, and the statements of cash flows. These financial statements are
prepared in accordance with applicable generally accepted accounting principles (GAAP) as established by the
Governmental Accounting Standards Board (GASB) through authoritative pronouncements. These GASB
statements establish standards for external financial reporting for public colleges and universities and require
that financial statements be presented on a consolidated basis to focus on the College as a whole, with resources
classified for accounting and reporting purposes into three net asset categories.
STATEMENTS OF NET ASSETS
The statements of net assets presents the financial position of the College at the end of the fiscal year and
includes 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.
14
A summary of the College’s assets, liabilities and net assets as of June 30, 2010, 2009 and 2008, respectively, is
as follows:
(In Thousands)
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total net assets
2010
$ 31,048
53,483
84,531
2009
$ 27,752
43,814
71,566
2008
$ 22,646
41,990
64,636
9,603
20,768
30,371
8,619
19,651
28,270
9,674
15,015
24,689
37,433
2,045
14,682
$ 54,160
32,286
1,010
10,000
$ 43,296
31,358
885
7,704
$ 39,947
Current assets consist primarily of cash, cash equivalents and accounts receivable, net of allowance. These
three items totaled $27.5 million at June 30, 2010, up from the prior fiscal year total of $25 million. This
represents an increase of $2.5 million (10 percent). The increase from fiscal year 2008 to 2009 was $4.9 million
(24 percent).
Current liabilities consist primarily of accounts payable and salaries payable. Accounts payable totaled $1.6
million at June 30, 2010, as compared to $1.7 million at June 30, 2009, and $2.5 million at June 30, 2008.
Salaries payable totaled $4.5 million at June 30, 2010, representing a 3 percent increase over the prior fiscal
year. Included within the salaries payable accrual is approximately two months of earned salary for faculty who
have elected to receive salaries over twelve months on a September 1 – August 31 academic year.
Net assets represent the residual interest in the College’s assets after liabilities are deducted. The College’s total
net assets as of June 30, 2010 were $54.2 million, which represents an increase of 25 percent over the prior
fiscal year’s total net assets of $43.3 million. The increase from June 30, 2008 to June 30, 2009 was $3.3
million. This significant increase in the College’s net assets is primarily attributable to increased investments in
capital assets net of related debt.
CAPITAL AND DEBT ACTIVITIES
One of the critical factors in continuing the quality of the College’s academic programs is the development and
renewal of its capital assets. The College continues to implement its long range plan to modernize its
complement of older facilities, balanced with new construction. Capital assets as of June 30, 2010 totaled $53.5
million, which is net of accumulated depreciation of $32 million. This represents an increase in capital assets of
22 percent over fiscal year 2009.
Bonds payable totaled $16.1 million on June 30, 2010, which is an increase of $1.2 million (8 percent) over
fiscal year 2009, due to an issuance of an additional $1.8 million in general obligation bonds in fiscal year 2010.
Additional information on capital and debt activities can be found in the notes to the financial statements.
15
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
The statements of revenues, expenses and changes in net assets presents the College’s results of operations for
the fiscal year. Users should note that GASB requires classification of state appropriations as nonoperating
revenue.
A summarized statement for the years ended June 30, 2010, 2009, and 2008, respectively, follows:
(In Thousands)
Operating revenues
Operating expenses
$
Operating loss
Nonoperating revenues and expenses, net
Income before other revenues and expenses
Other revenues, expenses, gains, or losses
Change in net assets
Net assets, beginning of year
Net assets, end of year
$
2010
28,778 $
(68,925)
2009
26,884 $
(65,299)
2008
$26,022
(61,394)
(40,147)
44,764
(38,415)
40,087
(35,372)
37,047
4,617
6,247
1,672
1,677
1,675
9,457
10,864
43,296
54,160
3,349
39,947
43,296
11,132
28,815
39,947
$
$
Certain prior year amounts have been reclassified to conform to current year presentation. These classifications
had no effect on net assets previously reported. Fiscal year 2009 federal and state grant revenue, in the amount
of $11.2 million and $3.7 million respectively, have been reclassified from operating to nonoperating revenue.
This reclassification increases the total operating loss by $14.9 million while increasing total nonoperating
revenue by the same amount.
Tuition and state appropriations are the primary sources of funding for the College’s academic programs.
Tuition revenue, reported net of scholarship allowances, increased 9 percent over last fiscal year. Although the
tuition rates approved by the Board increased by 5 percent in FY2010, the tuition amount students paid
increased by only 3 percent. The difference was mitigated through funds from the American Recovery and
Reinvestment Act. Enrollment increased by 14 percent, while students’ use of financial aid increased by 31
percent. The College’s appropriation was reduced to $22.6 million in fiscal year 2010, compared to
appropriations of $25.1 million and $24.3 million in fiscal years 2009 and 2008, respectively.
COMPONENT UNIT
The Century College Foundation is a component unit of Century College. As such, the separately audited
financial statements for the Foundation are included, but shown separately from those of the College in
compliance with the requirements of GASB Statement No. 39. The value of scholarships and equipment
contributed by, or passed through the Foundation was approximately $0.4 million for the fiscal year ended June
30, 2010.
16
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE
Looking toward the future, management believes that the College is positioned to continue its strong financial
condition and level of excellence. While state appropriation for the current biennium included a significant
unallotment, enrollment growth and continued strong financial management allowed the College to serve
growing numbers of students without reductions in staffing or services. Management remains concerned about
continued decline in state support into the next biennium, and the increased financial burden and pressures that
shrinking state support will place on students and the institution. In response, management has initiated multiyear budget planning spanning both biennia, and is taking proactive steps to ensure that it will be adequately
positioned to fulfill its mission and support continued growth.
The College has built a solid reserve and sufficient capacity to absorb the increased debt of its recent bonding
projects, and will continue to expand its capacity to assume future bonding debt in anticipation of much needed
future renovations and construction.
REQUEST FOR INFORMATION
This financial report is designed to provide a general overview of the College finances for all those with an
interest in the College’s finances. Questions concerning any of the information provided in this report or
requests for additional information should be addressed to:
Vice President of Finance and Administration
Century College
3300 Century Avenue North
White Bear Lake, Minnesota 55110
17
CENTURY COLLEGE
STATEMENTS OF NET ASSETS
AS OF JUNE 30, 2010 AND 2009
(IN THOUSANDS)
Assets
Current Assets
Cash and cash equivalents
Grants receivable
Accounts receivable, net
Prepaid expense
Inventory
Student loans and other assets, net
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
2010
$
Total Assets
22,629
1,145
3,224
1,109
1,199
37
29,343
2009
$
17,906
589
2,400
981
1,180
33
23,089
1,705
1,705
4,663
4,663
1,705
1,017
1,017
5,680
53,483
53,483
42,797
42,797
84,531
71,566
Liabilities
Current Liabilities
Salaries and benefits payable
Accounts payable
Unearned revenue
Payable from restricted assets
Interest payable
Funds held for others
Current portion of long-term debt
Other compensation benefits
Total current liabilities
Noncurrent Liabilities
Noncurrent portion of long-term debt
Other compensation benefits
Total noncurrent liabilities
4,530
728
1,692
844
33
72
1,076
628
9,603
4,389
1,098
1,254
565
19
76
651
567
8,619
14,990
5,778
20,768
14,262
5,389
19,651
Total Liabilities
30,371
28,270
37,433
132
1,913
14,682
32,286
1,010
10,000
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.
18
54,160
$
43,296
CENTURY COLLEGE FOUNDATION
STATEMENTS OF FINANCIAL POSITION
AS OF JUNE 30, 2010 AND 2009
(IN THOUSANDS)
2010
Assets
Current Assets
Cash and cash equivalents
Pledges receivable
Investments
Other assets
Total Assets
$
$
Liabilities and Net Assets
Current Liabilities
Accounts payable
Total Liabilities
$
Net Assets
Unrestricted
Temporarily restricted
Permanently restricted
Total Net Assets
2009
102
16
1,442
1
1,561
$
98
98
$
$
(19)
516
966
1,463
Total Liabilities and Net Assets
$
The notes are an integral part of the financial statements.
19
1,561
51
1,266
3
1,320
50
50
(2)
478
794
1,270
$
1,320
CENTURY COLLEGE
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
(IN THOUSANDS)
2010
Operating Revenues
Tuition, net
Fees, net
Sales, net
Restricted student payments
Other income
Total operating revenues
$
Operating Expenses
Salaries and benefits
Purchased services
Supplies
Repairs and maintenance
Depreciation
Financial aid, net
Other expense
Total operating expenses
Operating loss
Nonoperating Revenues (Expenses)
Appropriations
Federal grants
State grants
Private grants
Interest income
Interest expense
Total nonoperating revenues (expenses)
Income Before Other Revenues, Expenses, Gains, or Losses
Capital appropriations
Donated assets and supplies
Gain on disposal of capital assets
Change in net assets
Total Net Assets, Beginning of Year
Total Net Assets, End of Year
$
The notes are an integral part of the financial statements.
20
24,047
2,819
781
599
532
28,778
2009
$
22,029
3,346
1,009
3
497
26,884
50,626
4,471
3,613
817
2,385
3,586
48,393
5,636
2,970
820
2,075
1,795
3,427
68,925
(40,147)
3,610
65,299
(38,415)
22,571
18,531
3,727
459
81
(605)
44,764
25,084
11,154
3,663
621
16
(451)
40,087
4,617
1,672
6,146
85
16
10,864
1,536
122
19
3,349
43,296
39,947
54,160
$
43,296
CENTURY COLLEGE FOUNDATION
STATEMENTS OF ACTIVITIES
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
(IN THOUSANDS)
2010
Support and Revenue
Contributions
Investment income (loss)
In-kind contributions
Realized losses
Unrealized gains and (losses)
Special events
Total support and revenue
$
Expenses
Program services
Scholarships
College activities
Total program services
Supporting services
Management and general
Fundraising expenses
Total supporting services
Total expenses
Change in Net Assets
Net Assets, Beginning of Year
472
(2)
307
(34)
177
12
932
2009
$
167
437
604
312
394
706
112
23
135
739
134
29
163
869
193
(492)
1,270
Net Assets, End of Year
$
The notes are an integral part of the financial statements.
21
419
30
153
(63)
(192)
30
377
1,463
1,762
$
1,270
CENTURY COLLEGE
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
(IN THOUSANDS)
2010
Cash Flows from Operating Activities
Cash received from customers
Cash payments to employees
Cash paid to suppliers for goods or services
Financial aid disbursements
Net cash flows used in operating activities
$
Cash Flows from Noncapital Financing Activities
Appropriations
Agency activity
Federal grants
State grants
Private grants
Net cash flows from noncapital financing activities
Cash Flows from Capital and Related Financing Activities
Capital appropriation
Proceeds from borrowing
Proceeds from sale of capital assets
Proceeds from bond premium
Investment in capital assets
Repayment of bond principal
Interest paid
Net cash flows used in capital and related financing activities
Cash Flows from Investing Activities
Investment earnings
Net cash flows from investing activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
$
The notes are an integral part of the financial statements.
22
2009
32,415
(50,066)
(16,786)
(3,615)
(38,052)
$
29,800
(47,765)
(17,082)
(1,767)
(36,814)
22,571
(4)
17,921
3,727
459
44,674
25,084
(40)
11,016
3,663
448
40,171
6,146
1,796
47
82
(11,629)
(719)
(598)
(4,875)
1,536
4,796
19
178
(4,545)
(711)
(460)
813
18
18
18
18
1,765
4,188
22,569
18,381
24,334
$
22,569
CENTURY COLLEGE
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
(IN THOUSANDS)
2010
Operating Loss
$
Adjustment to Reconcile Operating Loss to
Net Cash Flows used in Operating Activities
Depreciation
Donated supplies
Change in assets and liabilities
Inventory
Accounts receivable
Accounts payable
Salaries and benefits payable
Other compensation benefits
Unearned revenues
Other
Net reconciling items to be added to operating income
Net cash flow used in operating activities
Non-Cash Investing, Capital, and Financing Activities
Capital projects on account
Amortization of bond premium
$
$
23
(40,147)
2009
$
(38,415)
2,385
85
2,075
122
(19)
(824)
(548)
141
450
492
(67)
2,095
(38,052)
(154)
(488)
(149)
258
253
(277)
(39)
1,601
(36,814)
880
63
$
$
987
56
CENTURY COLLEGE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
Basis of Presentation — The reporting policies of Century College, a member of Minnesota State Colleges and
Universities system, conform to generally accepted accounting principles (GAAP) in the United States, as
prescribed by the Governmental Accounting Standards Board (GASB). The statements of net assets; statements
of revenues, expenses, and changes in net assets; and the statements of cash flows include the financial
activities of the College.
Financial Reporting Entity — Minnesota State Colleges and Universities is an agency of the state of Minnesota
and receives appropriations from the state legislature, substantially all of which are used to fund general
operations. The College receives a portion of Minnesota State Colleges and Universities’ appropriation. The
operations of most student organizations are included in the reporting entity because the Board of Trustees has
certain fiduciary responsibilities for these resources.
Discretely presented component units are legally separate organizations that raise and hold economic resources
for the direct benefit of a college or university in accordance with GASB Statement No. 39, Determining
Whether Certain Organizations are Component Units. The Century College Foundation is considered
significant to the College and is included as a discretely presented component unit and separately identified in
Note 15. Complete financial statements may be obtained from Century College Foundation, 3300 Century
Avenue North, White Bear Lake, MN 55110-1842.
Basis of Accounting — The basis of accounting refers to when revenues and expenses are recognized and
reported in the financial statements. The accompanying financial statements have been prepared as a special
purpose government entity engaged in business type activities. Business type activities are those that are
financed in whole or in part by fees charged to external parties for goods or services. Accordingly, these
financial statements have been presented using the economic resources measurement focus and the accrual basis
of accounting. Revenues are recognized when earned and expenses are recognized as they are incurred.
Eliminations have been made to minimize the double counting of internal activities. Interfund receivables and
payables have been eliminated in the statements of net assets.
Minnesota State Colleges and Universities applies all applicable Financial Accounting Standards Board
statements issued prior to November 30, 1989, and GASB statements issued since that date.
Budgetary Accounting — Budgetary accounting, which is the basis for annual budgets and the allocation of
state appropriations, differs from GAAP. Budgetary accounting includes all receipts and expenses up to the
close of the books in August for the budget fiscal year. Revenues not yet received by the close of the books are
not included. The criterion for recognizing expenses is the actual disbursement, not when the goods or services
are received.
The state of Minnesota operates on a two year (biennial) budget cycle ending on June 30 of odd numbered
years. Minnesota State Colleges and Universities is governed by a 15 member board of trustees appointed by
the Governor with the advice and consent of the state senate. The Board approves the College’s biennial budget
request and allocation as part of Minnesota State Colleges and Universities’ total budget.
Budgetary control is maintained at the College. The College’s President has the authority and responsibility to
administer the budget and can transfer money between programs within the College without Board approval.
The budget of the College can be legally amended by the authority of the Vice Chancellor/Chief Financial
Officer of Minnesota State Colleges and Universities.
24
State appropriations do not lapse at year end. Any unexpended appropriation from the first year of a biennium
is available for the second year. Any unexpended balance may also carry over into future bienniums.
Capital Appropriation Revenue — Minnesota State Colleges and Universities is responsible for paying
one third of the debt service for certain general obligation bonds sold for capital projects, as specified in the
authorizing legislation. The portion of general obligation bond debt service that is payable by the state of
Minnesota is recognized by Minnesota State Colleges and Universities as capital appropriation revenue when
the related expenses are incurred. Individual colleges and universities are allocated cash, capital appropriation
revenue, and debt based on capital project expenses.
Cash and Cash Equivalents — The cash balance represents cash in the state treasury and demand deposits in
local bank accounts as well as cash equivalents. Cash equivalents are short term, highly liquid investments
having original maturities (remaining time to maturity at acquisition) of three months or less. Cash and cash
equivalents include amounts in demand deposits, savings accounts, cash management pools, repurchase
agreements, and money market funds.
Restricted cash is cash held for capital projects and cash in the Revenue Fund for capital projects and debt
service. The Revenue Fund is used to account for the revenues, expenses and net assets of revenue producing
facilities which are supported through usage. It has the authority to sell revenue bonds for the construction and
maintenance of revenue producing facilities.
All balances related to the state appropriation, tuition revenues, and most fees are in the state treasury. The
College also has two accounts in a local bank. The activities handled through their local bank include financial
aid, student payroll, auxiliary, and student activities.
Investments — The Minnesota State Board of Investment invests the College’s balances in the state treasury as
part of a state investment pool. This asset is reported as a cash equivalent. Interest income earned on pooled
investments is retained by the Office of the Chancellor and allocated to the schools as part of the appropriation
allocation process.
Receivables — Receivables are shown net of an allowance for uncollectible accounts.
Inventories — Inventories are valued at cost using the retail cost method.
Prepaid Expense — Prepaid expense consists primarily of deposits in the state of Minnesota Debt Service Fund
for future general obligation bond payments.
Capital Assets — Capital assets are recorded at cost or, for donated assets, at fair value at the date of
acquisition. Estimated historical cost has been used when actual cost is not available. Such assets are
depreciated or amortized on a straight line basis over the useful life of the assets. The estimated useful lives are
as follows:
Asset Type
Buildings
Building improvements
Equipment
Library collections
Life
35 years
20 years
3-20 years
7 years
Equipment includes all items with an original cost of $10,000 and over for items purchased since July 1, 2008;
$5,000 and over for items purchased between July 1, 2003 and June 30, 2008; and $2,000 and over for items
purchased prior to July 1, 2003.
Buildings, building improvements, and internally developed software include all projects with a cost of
$250,000 and over for projects started since July 1, 2008, and $100,000 and over for projects started prior to
July 1, 2008. All land and library collection purchases are capitalized regardless of amount spent.
25
Funds Held for Others — Funds held for others are primarily assets held for student organizations.
Long Term Liabilities — The state of Minnesota appropriates for and sells general obligation bonds to support
construction and renovation of Minnesota State Colleges and Universities’ facilities as approved through the
state’s capital budget process. The College is responsible for a portion of the debt service on the bonds sold for
some College projects. Other long term liabilities include compensated absences, net other postemployment
benefits, workers’ compensation, and early termination benefits.
Minnesota State Colleges and Universities may finance the construction, renovation and acquisition of facilities
for student residences and student unions through the sale of revenue bonds. These activities are accounted for
and reported in the Revenue Fund included herein. Details on the Revenue Fund bonds are available in the
separately audited and issued Revenue Fund financial report. Copies are available from the financial reporting
director, Minnesota State Colleges and Universities, Wells Fargo Place, 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 generally the result from exchange transactions such as payments received for providing services
and payments made for services or goods received. Nearly all of the College’s expenses are from exchange
transactions. Certain significant revenue streams relied upon for operations are recorded as nonoperating
revenues including state appropriations, federal, state and private grants.
Tuition, Fees, and Sales, Net — Tuition, fees, and sales are reported net of scholarship allowances of
$13,697,515 and $9,406,941 for fiscal years 2010 and 2009, respectively. Sales are also net of cost of goods
sold of $3,970,345 and $3,683,092 for fiscal years 2010 and 2009, respectively.
Restricted Student Payments – Restricted student payments consist of parking fees restricted for payment of
revenue bonds.
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
2010, $1,541,243 of federal aid was recognized as revenue related to the American Recovery and Reinvestment
Act of 2009. Of this amount, $595,821 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 classifications had no effect on net assets previously reported. Fiscal year 2009 federal and state grant
revenue, in the amount of $11,153,612 and $3,663,062 respectively, have been reclassified from operating to
nonoperating revenue. This reclassification increases the total operating loss by $14,816,674 while increasing
total nonoperating revenue by the same amount.
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,
26
and compensated absences. For fiscal year 2010, the estimate used to calculate the allowance for uncollectible
accounts was changed to align more closely with historical receivable collections.
Net Assets — The difference between assets and liabilities is net assets. Net assets are further classified for
accounting and reporting purposes into the following three net asset categories:
Invested in capital assets, net of related debt: Capital assets, net of accumulated depreciation, and
outstanding principal balances of debt attributable to the acquisition, construction, or improvement of
those assets.
Restricted expendable: Net assets subject to externally imposed stipulations. Net asset restrictions for
the College are as follows:
Restricted for bond covenants— revenue bond restrictions
Restricted for other — includes restrictions for the following:
Debt service — legally restricted for bond debt repayments.
Capital projects — restricted for completion of capital projects.
Faculty contract obligations — faculty development and travel required by contracts.
Net Assets Restricted for Other
(In Thousands)
2010
Debt service
$ 1,047
Capital projects
832
Faculty contract obligations
34
Total
$ 1,913
2009
981
8
21
$ 1,010
$
Unrestricted: Net assets that are not subject to externally imposed stipulations. Unrestricted net assets
may be designated for specific purposes by action of management, Office of the Chancellor, or the
Board of Trustees.
2. CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents — All balances related to the appropriation, tuition, and most fees are in the state
treasury. In addition, the College has two accounts in a local bank. The activities handled through local banks
include financial aid, student payroll, and student activities.
Minnesota Statutes, Section 118A.03, requires that deposits be secured by depository insurance or a
combination of depository insurance and collateral securities held in the state’s name by an agent of the state.
This statute further requires that such insurance and collateral shall be at least ten percent greater than the
amount on deposit.
Cash and Cash Equivalents at June 30
(In Thousands)
Carrying Amount
2010
Cash , in bank
$
1,666
Cash, trustee account (US Bank)
—
Total local cash and cash equivalents
1,666
Total treasury cash accounts
22,668
Grand Total
$ 24,334
27
2009
2,441
2,410
4,851
17,718
$ 22,569
$
At June 30, 2010 and 2009, the College’s bank checking balance was $2,152,658 and $2,730,181, 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 SBI as
part of the state investment pool. This asset is reported as a cash equivalent.
Investments — The Minnesota SBI manages the majority of the state’s investments. All investments managed
by the State Board of Investment are governed by Minnesota Statutes, Chapters 11A and 356A. Minnesota
Statutes, Section 11A.24, broadly restricts investments to obligations and stocks of United States and Canadian
governments, their agencies and registered corporations, other international securities, short term obligations of
specified high quality, restricted participation as a limited partner in venture capital, real estate, or resource
equity investments, and the restricted participation in registered mutual funds. Generally, when applicable, the
statutes limit investments to those rated within the top four quality rating categories of a nationally recognized
rating agency. The statutes further prescribe the maximum percentage of fund assets that may be invested in
various asset classes and contain specific restrictions to ensure the quality of the investments.
Within statutory parameters, Minnesota State Board of Investment has established investment guidelines and
benchmarks for all funds under its management. These investment guidelines and benchmarks are tailored to
the particular needs of each fund and specify investment objectives, risk tolerance, asset allocation, investment
management structure, and specific performance standards.
Custodial Credit Risk — Custodial credit risk for investments is the risk that in the event of a failure of the
counterparty, the College will not be able to recover the value of the investments that are in the possession of an
outside party. Board procedure 7.5.1 requires compliance with Minnesota Statutes, Section 118A.03 and
further excludes the use of FDIC insurance when meeting collateral requirements.
Credit Risk — Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. The College’s policy for reducing its exposure to credit risk is to comply with Minnesota Statutes,
Section 118A.04. This statute limits investments to the top quality rating categories of a nationally recognized
rating agency.
Concentration of Credit Risk — Concentration of credit risk is the risk of loss attributed to the magnitude of a
government’s investment in a single issuer. The College’s policy for reducing this risk of loss is to comply with
Board procedure 7.5.1which recommends investments be diversified by type and issuer.
Interest Rate Risk — Interest rate risk is the risk that changes in interest rates will adversely affect the fair value
of an investment. The College complies with Board procedure 7.5.1 that recommends considering fluctuating
interest rates and cash flow needs when purchasing short term and long term debt investments.
Securities Lending Transactions — State statutes do not prohibit the state of Minnesota from participating in
securities lending transactions. The Minnesota State Board of Investment has, by way of custodial trust
agreements, authorized State Street Bank and Trust Company (State Street) and Wells Fargo Bank, Minnesota,
N.A. (Wells Fargo) to act as agents in lending Minnesota’s securities to broker/dealers and banks pursuant to a
form of loan agreement.
During fiscal years 2010 and 2009, State Street and Wells Fargo lent, on behalf of the state of Minnesota,
certain securities held by State Street or Wells Fargo as custodian and received cash (both United States and
foreign currency) and securities issued or guaranteed by the United States government, sovereign debt of
foreign countries and irrevocable bank letters of credit as collateral. The securities lending activity for Wells
Fargo ceased in May 2009. Neither State Street nor Wells Fargo has the ability to pledge or sell collateral
securities absent a borrower default. Borrowers were required to deliver collateral for each loan in amounts
equal to not less than 100 percent of the fair value of the loaned securities.
The state of Minnesota did not impose any restrictions during the fiscal years on the amount of the loans that
either State Street or Wells Fargo made on its behalf. State Street and Wells Fargo indemnified the state of
Minnesota by agreeing to purchase replacement securities or return the cash collateral in the event a borrower
28
failed to return a loaned security or pay distributions thereon. No borrower failed to return loaned securities or
pay distributions thereon during fiscal years 2010 or 2009. In addition, there were no losses during the fiscal
years resulting from default of the borrowers, State Street, or Wells Fargo.
During fiscal years 2010 and 2009, the state of Minnesota and the borrowers maintained the right to terminate
all securities lending transactions on demand. The cash collateral received on each loan was invested in the
separately managed funds of the Minnesota SBI. Because the loans were terminable at will, their duration did
not generally match the duration of the investments made with cash collateral. On June 30, 2010 and 2009, the
state of Minnesota had no credit risk exposure to borrowers because the amounts the state owed the borrowers
exceeded the amounts the borrowers owed the state.
The College had no security lending allocation for State Street for fiscal years 2010 and 2009. The following
table provides information related to the securities invested by State Street:
Security Lending Analysis, State Street, at June 30
(In Thousands)
2010
2009
Fair value of securities on loan
$3,720,274
$6,587,602
Collateral held
3,845,017
6,829,949
Average duration
8 days
37 days
Average weighted maturity
43 days
201 days
3. ACCOUNTS RECEIVABLE
The accounts receivable balances are made up primarily of receivables from individuals. At June 30, 2010 and
2009, the total accounts receivable balances for the College were $4,500,106 and $3,649,961, respectively, less
an allowance for uncollectible accounts of $1,276,059 and $1,250,414, respectively.
Summary of Accounts Receivable at June 30
(In Thousands)
2010
2009
Tuition
$ 2,499 $ 2,088
Fees
547
453
Sales and service
275
—
Third party obligations
358
557
Other
821
552
Total accounts receivable
4,500
3,650
Allowance for doubtful accounts
(1,276)
(1,250)
Total net accounts receivable
$ 3,224 $ 2,400
The allowance for uncollectible accounts has been computed based on the following aging schedules:
Fiscal Year 2010
Less than 1 year
1 to 3 years
3 to 5 years
Over 5 years
Fiscal Year 2009
Allowance
Percentage
15%
45%
70%
95%
Less than 1 year
1 to 2 years
Over 2 years
29
Allowance
Percentage
2%
50%
100%
4. PREPAID EXPENSE
Prepaid expense consists of $1,046,733 and $980,965 for fiscal years 2010 and 2009, 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, a portion of the prepaid expense, $62,428 for fiscal year 2010, consists of
prepaid funds for software maintenance.
5. CAPITAL ASSETS
Summaries of changes in capital assets for fiscal years 2010 and 2009 follow.
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases
Decreases
Description
Capital assets, not depreciated:
Land
$
Construction in progress
Total capital assets, not depreciated
1,012
2,522
3,534
$
—
11,491
11,491
$
—
—
—
Completed
Construction
$
—
(7,148)
(7,148)
Ending
Balance
$
1,012
6,865
7,877
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
64,012
4,953
1,364
70,329
—
372
225
597
—
688
188
876
7,148
—
—
7,148
71,160
4,637
1,401
77,198
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
25,960
3,329
760
30,049
1,860
325
200
2,385
—
655
187
842
—
—
—
—
27,820
2,999
773
31,592
Total capital assets, depreciated, net
40,280
Total capital assets, net of depreciation $ 43,814
$
30
(1,788)
9,703 $
34
34
$
7,148
—
$
45,606
53,483
Year Ended June 30, 2009
(In Thousands)
Beginning
Balance
Increases Decreases
Description
Capital assets, not depreciated:
Land
$
Construction in progress
Total capital assets, not depreciated
1,012
290
1,302
$
—
3,573
3,573
$
—
—
—
Completed
Construction
$
—
(1,341)
(1,341)
Ending
Balance
$ 1,012
2,522
3,534
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
62,671
4,860
1,350
68,881
—
125
201
326
—
32
187
219
1,341
—
—
1,341
64,012
4,953
1,364
70,329
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
24,389
3,052
752
28,193
1,571
309
195
2,075
—
32
187
219
—
—
—
—
25,960
3,329
760
30,049
1,341
—
40,280
$ 43,814
Total capital assets, depreciated, net
40,688
Total capital assets, net of depreciation $ 41,990
$
(1,749)
1,824 $
—
—
$
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)
2010
2009
Capital expenditures
$ 36 $ 422
Purchased services
319
424
Supplies
218
61
Inventory
5
28
Employee reimbursements
86
117
Repairs and maintenance
21
11
Other
43
35
Total
$ 728 $ 1,098
In addition, as of June 30, 2010 and 2009, the College had payables from restricted assets in the amounts of
$773,392 and $256,980, which was related to capital projects financed by general obligation bonds. As of June
30, 2010 and 2009, the College had payables from restricted assets in the amount of $70,667 and $307,644
related to capital projects in the Revenue Fund.
31
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 2010 and 2009 follow:
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
$
570
10,013
4,330
14,913
$
$
82
1,796
—
1,878
$
$
448
10,183
—
10,631
$
$
178
466
4,330
4,974
$
63
662
—
725
$
Year Ended June 30, 2009
(In Thousands)
Beginning
Balance
Increases
$
Ending
Balance
Decreases
$
$
56
636
—
692
$
$
$
Ending
Balance
Decreases
$
589
11,147
4,330
16,066
Current
Portion
$
570
10,013
4,330
14,913
$
—
691
385
1,076
Current
Portion
$
—
651
—
651
$
The changes in other compensation benefits for fiscal years 2010 and 2009 follow:
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
Liabilities for:
Compensated absences
Early termination benefits
Net other postemployment benefits
Workers’ compensation
Total other compensation benefits
$
$
5,350
1
482
123
5,956
$
$
368
—
364
203
935
$
$
Year Ended June 30, 2009
(In Thousands)
Beginning
Balance
Increases
$
$
5,178 $
84
296
145
5,703 $
32
Ending
Balance
Decreases
483 $
—
355
81
919 $
206
1
200
78
485
$
$
Decreases
311 $
83
169
103
666 $
5,512
—
646
248
6,406
Current
Portion
$
$
Ending
Balance
5,350 $
1
482
123
5,956 $
524
—
—
104
628
Current
Portion
517
1
—
49
567
Bond Premium — In fiscal years 2010 and 2009, bonds were issued resulting in premiums of $81,852 and
$177,895, respectively. Amortization is calculated using the straight line method and amortized over the
remaining life of the bonds.
General Obligation Bonds Liability — 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 Liability — The Revenue Fund is authorized by Minnesota Statutes, Section 136F.98, to issue
revenue bonds whose aggregate principal shall not exceed $300,000,000 at any time. The proceeds of these
bonds are used to finance the acquisition, construction, and remodeling of buildings for dormitory, residence
hall, food service, student union, and other revenue-producing and related facilities at the state colleges and
universities. Revenue bonds currently outstanding have interest rates between 2 percent to 4 percent.
The revenue bonds are payable solely from, and collateralized by, an irrevocable pledge of revenues to be
derived from the operation of the financed parking lot and from student fees. These revenue bonds are payable
through fiscal year 2020. Annual principal and interest payments on the bonds are expected to require less than
63.78 percent of net reserves. The total principal and interest remaining to be paid on the bonds is $5,117,113.
Principal and interest paid for the current year and total customer net revenues were $118,442 and $802,597
respectively.
Compensated Absences — College employees accrue vacation leave, sick leave, and compensatory leave at
various rates within limits specified in the collective bargaining agreements. The liability for compensated
absences is payable as severance pay under specific conditions. This leave is liquidated only at the time of
termination from state employment.
Early Termination Benefits — Early termination benefits are benefits received for discontinuing service earlier
than planned.
Net Other Postemployment Benefit — Other postemployment benefits are health insurance benefits for certain
retired employees under a single employer fully insured plan. Under the health benefits program retirees are
required to pay 100 percent of the total premium cost. Since the premium is a blended rate determined on the
entire active and retiree population, the retirees are receiving an implicit rate subsidy. See Note 8 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 $247,595
and $122,845 at June 30, 2010 and 2009, 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.
33
Principal and interest payment schedules are provided in the following table for general obligation bonds and
revenue bonds. There are no payment schedules for bond premium, compensated absences, early termination
benefits, other postemployment benefits, or workers’ compensation.
Fiscal Years
2011
2012
2013
2014
2015
2016-2020
2021-2025
2026-2030
Total
Long Term Debt Repayment Schedule
(In Thousands)
General
Obligation Bonds
Revenue Bonds
Principal Interest
Principal
Interest
$
691 $
530
$
385 $
129
692
498
390
121
658
464
400
112
658
432
410
102
658
399
420
91
3,267
1,510
2,325
232
3,000
726
—
—
1,523
119
—
—
$ 11,147 $ 4,678
$
4,330 $
787
8. 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, 2008, there were approximately 24 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 OtherThan Pensions. The ARC represents a level of funding that, if
paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed 30 years.
The following table shows the components of the annual OPEB cost for fiscal years 2010 and 2009, the amount
actually contributed to the plan, and changes in the net OPEB obligation:
Components of the Annual OPEB Cost
(In Thousands)
2010
2009
Annual required contribution (ARC)
$ 360 $ 352
Interest on net OPEB obligation
23
14
Adjustment to ARC
(19)
(11)
Annual OPEB cost
364
355
Contributions during the year
(200)
(169)
Increase in net OPEB obligation
164
186
Net OPEB obligation, beginning of year
482
296
Net OPEB obligation, end of year
$ 646 $ 482
34
The College’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB
obligation for fiscal years 2010 and 2009 were as follows:
For Year Ended June 30
(In Thousands)
Beginning of year OPEB obligation
Annual OPEB cost
Employer contribution
Net OPEB obligation
Percentage contributed
$
$
2010
482
364
(200)
646
54.95%
$
$
2009
296
355
(169)
482
47.61%
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, 2008
(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)
$ 3,718
(c)
$ 38,778
((b - a)/c)
9.59%
(b - a)
$ 3,718
(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, 2008 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 8.97 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.
9. LEASE AGREEMENTS
Operating Leases — The College is committed under nine lease agreement types for equipment and rental
space. These leases are considered for accounting purposes to be operating leases.
Lease expenses for the years ended June 30, 2010 and 2009, totaled approximately $225,011 and $73,812,
respectively.
35
Future minimum lease payments for existing lease agreements follow:
Year Ended June 30
(In Thousands)
Fiscal Year
Amount
2011
$
93
2012
52
2013
45
2014
30
Total
$
220
Income Leases — The College entered into an income lease agreement beginning July 1, 2009, primarily for
building space. Future expected income receipts are $12,000 in fiscal year 2011.
10. OPERATING EXPENSES BY FUNCTIONAL CLASSIFICATION
The following table provides information related to operating expenses by functional classification:
For the Year Ended June 30, 2010
(In Thousands)
Salaries/
Description
Benefits
Other
Total
Academic support
$ 7,522 $ 2,398 $ 9,920
Institutional support
4,584
2,956
7,540
Instruction
25,711
2,241
27,952
Operation & maintenance of plant
2,874
2,531
5,405
Public service
1,777
381
2,158
Student services
7,554
1,523
9,077
Auxiliary enterprises
604
298
902
Depreciation
—
2,385
2,385
Scholarships & fellowships
—
3,586
3,586
Total operating expenses
$ 50,626
Total operating
$ 18,299 expenses
$ 68,925
For the Year Ended June 30, 2009
(In Thousands)
Salaries/
Description
Benefits
Other
Total
Academic support
$ 7,213 $ 2,159 $ 9,372
Institutional support
4,312
3,444
7,756
Instruction
25,775
2,084
27,859
Operation & maintenance of plant
2,728
2,927
5,655
Public service
1,477
346
1,823
Student services
6,445
1,380
7,825
Auxiliary enterprises
443
696
1,139
Depreciation
—
2,075
2,075
Scholarships & fellowships
—
1,795
1,795
Total operating expenses
$ 48,393 $ 16,906 $ 65,299
36
11. 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.
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. Beginning July 1, 2007 the funding
requirement for both employer and employee was 4.25%. The funding contribution rate increases 0.25 percent
in each of the subsequent years until reaching 5 percent from July 1, 2010, and thereafter. For the period July 1,
2009 to June 30, 2010, the funding requirement is 4.75 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
2010
$ 420
2009
398
2008
333
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.
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.
37
The statutory authority for TRF is Minnesota Statutes, Chapter 354. Effective July 1, 2007, the funding
requirement is 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 .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
2010
$ 472
2009
474
2008
460
Public Employees Retirement Fund (PERF)
Pension fund information is provided by the Public Employees Retirement Association of Minnesota, which
prepares and publishes its own stand alone comprehensive annual financial report, including financial
statements and required supplementary information. Copies of the report may be obtained directly from Public
Employees Retirement Association at 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103.
The PERF is a cost sharing multiple employer defined benefit plan. Former employees of various governmental
subdivisions including counties, cities, school districts, and related organizations participate in the plan.
Normal retirement age is 65. The annuity formula is the greater of a step rate with a flat reduction for each
month of early retirement, or a level rate (the higher step rate) with an actuarially based reduction for early
retirement. The applicable rates for members are 1.2 percent and 1.7 percent. Minnesota State Colleges and
Universities, as an employer for some participants, is liable for a portion of any unfunded accrued liability of
this fund.
The statutory authority for PERF is Minnesota Statutes, Chapter 353. Effective January 1, 2008, the funding
requirement for employees was 6 percent and 6.5 percent for employers. Effective January 1, 2009 and again
January 1, 2010, employer contributions increased .25 percent respectively. Beginning January 1, 2011
contribution rates for both employees and employers will increase .25 percent. Actual contributions were 100
percent of required contributions.
Required contributions for the College were:
(In Thousands)
Fiscal Year Employer
Employee
$
$
2010
33
27
2009
33
29
39
34
2008
Minnesota State Colleges and Universities Defined Contribution Retirement Fund
General Information — The Minnesota State Colleges and Universities Defined Contribution Retirement Fund
includes two plans, an Individual Retirement Account Plan and a Supplemental Retirement Plan. Both plans are
mandatory, tax deferred, single employer defined contribution plans authorized by Minnesota Statutes, Chapters
354B and 354C. The plans are designed to provide retirement benefits to Minnesota State Colleges and
Universities unclassified employees. An unclassified employee is one who belongs to Minnesota State Colleges
and Universities specific bargaining units. The plans cover unclassified teachers, librarians, administrators, and
certain other staff. The plans are mandatory for qualified employees. Vesting occurs immediately.
38
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 — Each employee who is in unclassified service is required to participate in TRF or IRAP upon
achieving eligibility. An unclassified employee is one who serves in a position deemed unclassified according
to Minnesota statutes. This includes presidents, vice presidents, deans, administrative or service faculty,
teachers, and other managers and professionals in academic and academic support programs. Eligibility begins
with the employment contract for the first year of unclassified service in which the employee is hired for more
than 25 percent of a full academic year, excluding summer session. An employee remains a participant of the
plan, even if employed for less than 25 percent of a full academic year in subsequent years.
Contributions — There are two member groups participating in the IRAP, a faculty group and an administrators
group. For 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
2010
$
1,067
$
803
2009
1,002
754
2008
891
662
Supplemental Retirement Plan (SRP)
Participation — Each unclassified employee who has completed two full time years of unclassified service with
Minnesota State Colleges and Universities must participate upon achieving eligibility. The eligible employee is
enrolled on the first day of the fiscal year following completion of two full time years. Vesting occurs
immediately and normal retirement age is 55.
Contributions — Participants contribute 5 percent of eligible compensation up to a defined maximum annual
contribution as specified in the following table:
Member Group
Minnesota Association of Professional Employees Unclassified
Middle Management Association Unclassified
Minnesota State College Faculty Association
Administrators
Other Unclassified Members
Eligible
Compensation
$6,000 to $40,000
6,000 to 40,000
6,000 to 56,000
6,000 to 60,000
6,000 to 40,000
Maximum
Annual
Contributions
$ 1,700
1,700
2,500
2,700
1,700
The College matches amounts equal to the contributions made by participants. The contributions are made
under the authority of Minnesota Statutes, Chapter 354C.
Required contributions for the College were:
(In Thousands)
Fiscal Year
Amount
2010
$ 650
2009
606
2008
492
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12. SEGMENT INFORMATION
A segment is an identifiable activity reported as a stand alone entity for which one or more revenue bonds are
outstanding. A segment has a specific identifiable revenue stream pledged in support of revenue bonds and has
related expenses, gains and losses, assets, and liabilities that are required by an external party to be accounted
for separately. Minnesota State Colleges and Universities issued revenue bonds to finance the College’s
parking lot.
Century College’s Portion of the Revenue Fund
(In Thousands)
2010
CONDENSED STATEMENTS OF NET ASSETS
Assets
Current assets
Restricted assets
Noncurrent assets
Total assets
Liabilities
Current liabilities
Noncurrent liabilities
Total liabilities
Net Assets:
Restricted
Unrestricted (deficit)
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
CONDENSED STATEMENTS OF CASH FLOWS
Net cash provided (used) by:
Operating activities
Investing activities
Capital and related financing activities
Net increase (decrease)
Cash, beginning of year
Cash, end of year
$
189
932
3,929
5,050
2009
$
509
4,009
4,518
$
$
$
$
$
981
(449)
532
803
(223)
580
(40)
540
(8)
532
782
—
(4,094)
(3,312)
4,409
1,097
3
4,406
1,017
5,426
1,032
4,402
5,434
$
$
$
$
$
8
(16)
(8)
3
—
3
(11)
(8)
—
(8)
3
(8)
4,414
4,409
—
4,409
13. COMMITMENTS
The College has three outstanding projects that total $6.9 million in construction in progress at June 30, 2010.
The majority of the outstanding project amounts pertain to a $7.9 million project to renovate classrooms and
other spaces vacated after the completion of the Science/Library building in 2009. Also included in the project
is a new student center in the existing west campus building and enhancement of student support service areas.
The project is scheduled for completion in December 2010. The two smaller projects involve replacing air
handlers, and repairing and replacing exterior masonry on the college’s horticulture building.
40
14. RISK MANAGEMENT
Minnesota State Colleges and Universities is exposed to various risks of loss related to tort; theft of, damage to,
or destruction of assets; error or omissions; and employer obligations. Minnesota State Colleges and
Universities manages these types of risks through Minnesota insurance plans including the state of Minnesota
Risk Management Fund and other purchased insurance coverage.
Automobile liability coverage is required by the state and is provided by the Minnesota Risk Management
Fund. Property and casualty coverage is required by Minnesota State Colleges and Universities policy.
Property coverage offered by the Minnesota Risk Management Fund are as follows:
Coverage
Institution deductible
Fund responsibility
Primary re-insurer coverage
Multiple re-insurers’ coverage
Bodily injury and property damage per person
Bodily injury and property damage per occurrence
Annual maximum paid by fund, excess by reinsurer
Maintenance deductible for additional claims
Amount
$50,000
Deductible to $1,000,000
$1,000,001 to $25,000,000
$25,000,001 to $1,000,000,000
$500,000
$1,500,000
$4,000,000
$25,000
The College retains the risk of loss. The College did not have any settlements in excess of coverage the last
three years.
Minnesota State Colleges and Universities participates in the State Employee Group Insurance Plan, which
provides life insurance and hospital, medical, and dental benefits coverage through provider organizations.
Workers’ compensation is covered through state participation in the Workers’ Compensation Reinsurance
Association, which pays for catastrophic workers’ compensation claims. Other workers’ compensation risks are
covered through self insurance for which Minnesota State Colleges and Universities pays the cost of claims
through the state Workers’ Compensation Fund. A Minnesota State Colleges and Universities workers’
compensation payment pool helps institutions manage the volatility of such claims. Annual premiums are
assessed by the pool based on salary dollars and claims history. From this pool all workers’ compensation
claims are paid to the state Workers’ Compensation Fund.
The following table presents changes in the balances of workers’ compensation liability during the fiscal years
ended June 30, 2010 and 2009.
(In Thousands)
Fiscal Year Ended 6/30/10
Fiscal Year Ended 6/30/09
Beginning
Liability
$ 123
145
Net Additions
& Changes
$ 203
81
41
Payments
$ 78
103
Ending
Liability
$ 248
123
15. COMPONENT UNITS
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations Are Component
Units, the following foundation affiliated with the College is a legally separate, tax exempt entity and reported
as a component unit.
The Century College Foundation is a separate legal entity formed for the purpose of obtaining and disbursing
funds for the sole benefit of the College. The College does not appoint any members to the board and the
resources held by the Foundation can only be used by, or for, the benefit of the College. The Foundation’s
relationship with the institution is such that exclusion of the Foundation’s financial statements would cause the
College’s financial statements to be misleading or incomplete. The Foundation is considered a component unit
of the College and their statements are discretely presented in the College’s financial statements.
The Foundation’s financial statements have been prepared on the accrual basis of accounting in accordance with
generally accepted accounting principles as prescribed by the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 958-205, Presentation of Financial Statements (previously FAS
117).
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 are to be used.
Permanently Restricted Net Assets: Net assets subject to donor imposed stipulations that they be
maintained permanently by each foundation. Generally, the donors of these assets permit the
foundation to use all or part of the income earned on any related investments for general or specific
purposes.
The value of scholarships and equipment contributed by or passed through the Foundation was $447,021 and
$422,228 for the fiscal years ended June 30, 2010 and 2009, respectively.
Investments — The Foundation’s investments are presented in accordance with FASB ASC 958-320,
Investments-Debt, and Equity Securities (previously FAS 124). Under ASC 958-320, investments in
marketable securities with readily determinable fair values and all investments in debt securities are reported at
their fair values in the statement of financial position.
Schedule of Investments
(In Thousands)
Investments
2010
2009
Money market accounts
$ 466 $ 526
Fixed income mutual funds
98
43
Equity based mutual funds
545
320
Equity securities
333
377
Total investments
$ 1,442 $ 1,266
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SUPPLEMENTAL SECTION
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