MINNESOTA STATE UNIVERSITY MOORHEAD
A MEMBER OF THE
MINNESOTA STATE COLLEGES AND UNIVERSITIES SYSTEM
ANNUAL FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2010 and 2009
Prepared by:
Minnesota State University Moorhead
1104 7th Avenue South
Moorhead, MN 56563
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
MINNESOTA STATE UNIVERSITY MOORHEAD
ANNUAL FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2010 and 2009
TABLE OF CONTENTS
INTRODUCTION
Page
Transmittal Letter .................................................................................................................................. 5
Organization Chart ................................................................................................................................. 7
FINANCIAL SECTION
Independent Auditors’ Report ............................................................................................................. 10
Management’s Discussion and Analysis .............................................................................................. 13
Basic Financial Statements
Statements of Net Assets .............................................................................................................. 18
Minnesota State University Moorhead Foundation – Statements of Financial Position ............... 19
Statements of Revenues, Expenses, and Changes in Net Assets ................................................... 20
Minnesota State University Moorhead 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 .................................................................. 46
1
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2
INTRODUCTION
3
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4
Business Office
October 27, 2010
Minnesota State Colleges and Universities Board of Trustees
James H. McCormick, Chancellor
350 Wells Fargo Place
30 East 7th Street
St. Paul, MN 55101
Chancellor McCormick and the Board of Trustees:
I am pleased, as the tenth president of the University, to present the financial statements for Minnesota State
University Moorhead. The financial statements for fiscal year ended June 30, 2010 were prepared in
accordance with GASB Statement No. 34, utilizing the business type activity reporting model.
To our readers, this audited financial statement report is the ninth since the Minnesota Legislature created the
Minnesota State Colleges and Universities effective July 1, 1995. The Minnesota State Colleges and
Universities System combines all Minnesota public higher education institutions, other than the University of
Minnesota campuses. Minnesota State Colleges and Universities is an independent state agency comprised of
seven state universities and 25 two-year colleges, governed by a 15-member Board of Trustees.
Minnesota State University Moorhead is one of seven comprehensive Minnesota state universities
established to provide the citizens of Minnesota access to quality educational programs at moderate cost.
Minnesota State University Moorhead's primary responsibility is to provide baccalaureate programs to
residents of northwest and west central Minnesota. Through tuition reciprocity agreements, the University
also provides education to residents of several regional states and one province.
The University's mission states, "Minnesota State University Moorhead is a caring community promising all
students the opportunity to discover their passions, the rigor to develop intellectually and the versatility to
shape a changing world."
Minnesota State University Moorhead provides more than 80 academic programs within its four colleges.
The academic programs at the University are founded upon a common liberal studies experience and
emphasize developing the unique talents of each student. The University provides baccalaureate-level
programs in the liberal arts, natural and social sciences, teacher education, business and technology, the fine
arts, and professional areas. It provides selected graduate programs in response to regional needs. The
University encourages scholarly and creative endeavors that promote a connection between faculty and
students as well as engaged learning opportunities. The University enhances the quality of life in the region
with the professional, cultural, and recreational services offered by its students, faculty, and staff. For the
2009-10 school year, the University's student population totaled about 7,510 students, a slight increase from
the previous year.
MSUM Box 77 • 1104 7th Avenue South  Moorhead, Minnesota 56563
Phone: 218.477.22215 www.mnstate.edu
MSU Moorhead is an equal opportunity educator & employer and is a member of the Minnesota State Colleges & Universities System.
6
7
Doug Peters
Director of
Athletics
Daniel Kirk
Vice President for
Facilities and
Administration
Joan Justesen
Vice President for the
Alumni Foundation
Board of Directors
MSUM Alumni Foundation
Bette Midgarden
Vice President for
Academic Affairs
Warren Wiese
Vice President for
Student Affairs
Administrative
Assistant
Lori Eken
Executive Assistant
to the President
Maxine Pianka
Edna Szymanski
University President
Chancellor
James H. McCormick
Minnesota State Colleges and Universities
Board of Trustees
June 30, 2010
Doug Hamilton
Assistant to the President
for Media & Community
Relations
Student
Assistants
Administrative Staff Organizational Chart
Jean Hollaar
University Planning
and Budget Officer
The financial activity of the Minnesota State University Moorhead is included in this report. The
University is one of 32 colleges and universities included in the Minnesota State Colleges and Universities
Annual Financial Report which is issued separately.
The University’s portion of the Revenue Fund is also included in this report. The Revenue Fund
activity is included both in the Minnesota State Colleges and Universities Annual Financial Report and
in a separately issued Revenue Fund Annual Financial Report.
All financial activity of Minnesota State Colleges and Universities is included in the state of Minnesota
Comprehensive Annual Financial Report.
8
FINANCIAL SECTION
9
10
11
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12
MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited)
INTRODUCTION
The following discussion and analysis provides an overview of the financial position and activities of Minnesota
State University Moorhead for the fiscal year ended June 30, 2010, 2009 and 2008. This discussion has been
prepared by members of the University administrative team and should be read in conjunction with the financial
statements and the notes, which follow this section.
The University is one of 32 colleges and universities comprising the Minnesota State Colleges and Universities
System, which 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. The three
remaining trustees are students; one from a state university, a community college, and a technical college, each
serving 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 University is a welcoming educational community that offers rigorous courses of study and places high
expectations upon its 7,500 students. Our strong commitment to faculty-mentored undergraduate research and
intellectual growth provides students with continual opportunities for personal and professional achievement. The
University continues to foster an environment that encourages students to become versatile, thoughtful, innovative,
and engaged leaders who contribute to their professions and their communities.
Minnesota State University Moorhead values diversity and mutual respect and strives to instill these ideals
throughout the institution. The University honors its heritage as a respected, student-focused, public university and
continues to enhance our students' lives at the same time that it contributes to the community and the region. The
University offers graduate and professional programs that contribute to the state and region through increased
collaboration with local and state business, industry, and human services to assure optimal preparation of graduates.
The University builds upon a solid foundation of high quality teaching and learning as it commits to a future as the
premier liberal arts and sciences-based university in the region.
FINANCIAL HIGHLIGHTS
Total assets increased $13.9 million in 2010 following a $3.7 million increase in 2009. Total liabilities increased
$1.2 million in 2010, following a $0.2 million decrease in 2009. These changes resulted in net assets at June 30,
2010 and 2009 of $89 million and $76.4 million, respectively. The major factors impacting the financial position
have been the need to correct the structural deficit of the general fund, building improvements, and the impact of
decreased state appropriation from the State of Minnesota.
USING THE FINANCIAL STATEMENTS
The University’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 the generally accepted accounting principles (GAAP) as established by the Government
Accounting Standards Board (GASB) principles. The University has included a summary of significant accounting
policies in Note 1 to the financial statements. These statements establish standards for external financial reporting
for public colleges and universities and require that financial statements be presented on a consolidated basis to
focus on the University as a whole, with resources classified for accounting and reporting purposes into four net
asset categories.
13
STATEMENTS OF NET ASSETS
The statements of net assets present the financial position of the University at the end of the fiscal year and include
all assets and liabilities of the University. The difference between total assets and total liabilities (net assets) is one
indicator of the current financial condition of the University, while the change in net assets is an indicator of
whether the overall financial condition has improved or deteriorated during the year. Capital assets are stated at
historical cost less an allowance for depreciation.
A summary of the University’s assets, liabilities and net assets at June 30, 2010, 2009 and 2008, respectively,
follows.
Statements of Net Assets
(In Thousands)
2010
2009
2008
Assets
Current assets
$ 45,426 $ 37,863 $ 35,210
Current restricted assets
6,609
7,499
11,144
Noncurrent restricted assets
10
8,544
4,777
Noncurrent assets, net
99,156
83,378
82,450
Total assets
151,201 137,284 133,581
Liabilities
Current liabilities
17,615
14,719
14,428
Noncurrent liabilities
44,498
46,194
46,643
Total liabilities
62,113
60,913
61,071
Net assets
Invested in capital assets, net of related debt
61,671
55,645
54,383
Restricted expendable, bond covenants
8,457
7,561
5,117
Restricted expendable, other
6,178
4,426
4,253
Unrestricted
12,782
8,739
8,757
Total net assets
$ 89,088 $ 76,371 $ 72,510
Current unrestricted assets consist primarily of cash and cash equivalents and investments totaling $39.6 million at
June 30, 2010. This represents approximately 5.2 months of total operating expenses (excluding depreciation) for
the fiscal year 2010. Noncurrent assets of $99.2 million represent the value of the land, buildings, construction in
progress, equipment, library collections, and federal Perkins loans receivable. The total value for noncurrent assets
is reduced by accumulated depreciation.
Current liabilities consist primarily of accounts payable, salaries payable, compensated absences, workers’
compensation, current portion of long-term debt, and unearned revenue. Salaries payable totaled $6.5 million at
June 30, 2010. Faculty contracts paid over twelve months on a nine month school year, account for a significant
amount in salaries payable. Unearned revenue consists of summer session tuition and grant receipts received, but
not yet earned. At June 30, 2010, $1.9 million was being held as unearned revenue. Summer session began in May
and ended in August, 2010, with its tuition revenue being allocated based on the number of session days in fiscal
year 2010.
Noncurrent liabilities include $7.3 million in other compensation benefits including compensated absences, the
value of employee vacation/sick leave, and workers’ compensation as of June 30, 2010. This amount increased
from fiscal year 2009, and represents the aging work force at the University and the early retirement incentives. The
remaining balance of the noncurrent liabilities is mainly represented by revenue and general obligation bonds
payable, capital leases payable and capital contributions payable to the federal government for the capital used in the
Perkins loan program.
14
At June 30, 2010, the University’s net assets increased by $12.7 million over fiscal year 2009. Invested in capital
assets, net of related debt, represents the University’s capital assets net of accumulated depreciation and outstanding
principal balances of debt attributed to the acquisition, construction, and/or improvement of the assets. Restricted
net assets primarily include the amounts reserved for the University’s capital projects, Perkins loans, faculty
contracts, and bond covenants.
CAPITAL AND DEBT ACTIVITIES
One of the critical factors necessary to assure the quality of the University’s academic programs and residential life
experience is the development and renewal of its capital assets. The University continues to provide good
stewardship of university facilities through planning and execution of projects that address deferred maintenance in
older facilities, modernizing interiors and, when existing buildings cannot meet special needs, adding new
construction.
Revenue and general obligation bonds payable totaled $29.9 million at June 30, 2010, a $1.9 million decrease over
fiscal year 2009. These bonds are issued in order to finance construction and renovation of the student union and
residence hall buildings.
Capital asset expenditures totaled $11.9 million, $8.8 million and $11 million in fiscal years 2010, 2009 and 2008,
respectively. This significant financial commitment to capital asset development and renewal includes the projects
described below.
Utilizing resources provided through revenue bond, general obligation bond and University operating funds, the
University executed numerous repair, replacement, and restoration projects and completed a new facility. All
improvement projects were managed within budget and as scheduled and they incorporated the use of sustainable
design and energy efficient materials.
Major projects in fiscal year 2010:
Construction of the New $12 Million Dragon Wellness Center
Construction of this revenue bond funded project was significantly completed and the new facility opened for use in
April, 2009. The total project was completed and capitalized in fiscal year 2010. This facility promotes student
health and wellness and has proven to be a popular and heavily used addition to the campus.
Planning and Restoration of the $15 Million Lommen Hall Building
Funded in fiscal year 2009 through general obligation bonds, this remodeling project addresses significant deferred
maintenance within the 80 year old facility. When completed, it will provide the University with updated and more
energy efficient and functional classrooms, instructional labs and student service facilities. Design, development
and contract documents were completed during fall 2008. The project was bid and work was underway in early
spring, 2009. Remodeling of the first phase (west section) of the two phased Lommen Hall project progressed as
scheduled with $8.1 million of the remodeling completed in fiscal year 2010. Final project completion of phase two
(east section) is scheduled for spring 2011.
Remodeling of Livingston Lord Library and Information Technology Center
The 2008 legislature funded $0.4 million in planning through schematic design. By the end of fiscal year 2009, the
architectural designer was selected and under contract and work on the schematic design was completed.
Remodeling was completed in fiscal year 2010 with a cost of $2.5 million. The project extensively addresses a
significant backlog of deferred maintenance in this 50 year old facility. It provides improved learning and work
environments that support changing student needs, curriculum techniques and collaborative research/study.
15
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
The statements of revenues, expenses and changes in net assets present the University’s results of operations.
Tuition revenue continued to rise due to an increase in the tuition rate and converting to a banded tuition structure.
Tuition, auxiliary, sales, and room and board revenue totaled $48.9 million, an increase of $4.8 million over fiscal
year 2009, net of scholarship allowance of $11.4 million. The scholarship allowance is based on the actual
application of federal, state and private grant monies being applied to student accounts.
Beginning in fiscal year 2010, federal and state grant revenue is recognized as nonoperating revenue in accordance
with GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions. Fiscal year
2009 and 2008, operating and nonoperating revenue has been modified to reflect this change, $11 million and $10
million, respectively.
A re-cap of the statements of revenues, expenses, and changes in net assets for fiscal years ended June, 2010, 2009
and 2008, respectively, follows:
Statements of Revenues, Expenses, and Changes in Net Assets
(In Thousands)
Operating revenues and expenses
Operating revenues
Operating expenses
Operating loss
Nonoperating revenues and expenses, net
Income (loss) before other revenues, expenses, gains or losses
Other revenues, expenses, gains or losses
Change in net assets
Net assets, beginning of year
Net assets, end of year
2010
2009
$ 49,742 $ 44,782
(94,347)
(88,791)
(44,605)
(44,009)
48,590
44,682
3,985
673
8,732
3,188
12,717
3,861
76,371
72,510
$ 89,088 $ 76,371
2008
$ 43,562
(88,375)
(44,813)
44,199
(614)
3,034
2,420
70,090
$ 72,510
COMPONENT UNIT
The Minnesota State University Moorhead Alumni Foundation, Inc. is a component unit of Minnesota State
University Moorhead. As such, the separately audited financial statements for the Foundation are included but
shown separately from those of the University. The Foundation contributed $550,394 and $582,653 to University
scholarships for the years 2010 and 2009, respectively.
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE
Looking forward, declining state appropriation and pressure to limit tuition rate increases are the two major financial
hurdles the University will encounter in the near future. The state budget deficit for the 2012-2013 biennium is
projected at between $5.8 and $7 billion. In anticipation of lower state support, the University has reduced base
budget expenditures by over $1 million and is working to create a fiscal sustainability plan for the future.
One component of the fiscal sustainability plan will focus on generating more revenue through increased credit
generation. Removing disincentives in the tuition and fee structure (tuition is now banded), enhancing summer
offerings, and strengthening marketing and recruitment efforts were implemented this past year and are showing
results for increased revenue streams. Consolidation and reorganization using the LEAN process to create
16
efficiencies is crucial and the University continues to monitor the academic programs for both quality and cost
recovery ratios in order to promote fiscal sustainability.
Given the challenges of the post-recession new normal, the University believes that long term strategies are essential
to assure that the campus endures and prospers in the face of decreasing state support and increasing competition for
students and resources. To that end, the University’s actions are guided by this theme of fiscal sustainability. At its
simplest, fiscal sustainability is creating the set of policies and practices that will assure that University revenue
(tuition, state allocation, other) is used to produce sufficient new revenue to enable continued achievement of the
University’s mission in the future decade and beyond.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of Minnesota State University Moorhead’s condition
for all those with an interest in the University’s finances. Questions concerning any of the information in the report
or requests for additional financial information should be addressed to:
Comptroller
Minnesota State University Moorhead
1104 South 7th Avenue
Moorhead, MN 56563
17
MINNESOTA STATE UNIVERSITY MOORHEAD
STATEMENTS OF NET ASSETS
AS OF JUNE 30, 2010 AND 2009
(IN THOUSANDS)
Assets
Current Assets
Cash and cash equivalents
Investments
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
Other assets
Construction in progress
Total noncurrent restricted assets
Total restricted assets
Noncurrent Assets
Student loans and other assets, net
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
Capital contributions payable
Total noncurrent liabilities
Total Liabilities
Net Assets
Invested in capital assets, net of related debt
Restricted expendable, bond covenants
Restricted expendable, other
Unrestricted
2010
$
Total Net Assets
$
The notes are an integral part of the financial statements.
18
33,383
6,260
1,149
1,746
1,517
653
718
45,426
2009
$
29,314
4,255
379
1,168
1,219
693
835
37,863
6,609
6,609
7,499
7,499
10
10
6,619
10
8,534
8,544
16,043
5,127
94,029
99,156
151,201
5,238
78,140
83,378
137,284
6,455
2,486
1,900
2,103
188
1,088
1,841
1,554
17,615
7,178
1,482
1,258
874
225
766
1,941
991
4
14,719
31,586
7,292
5,620
44,498
62,113
33,575
7,044
5,575
46,194
60,913
61,671
8,457
6,178
12,782
55,645
7,561
4,426
8,739
89,088
$
76,371
MINNESOTA STATE UNIVERSITY MOORHEAD FOUNDATION
STATEMENTS OF FINANCIAL POSITION
AS OF JUNE 30, 2010 AND 2009
(IN THOUSANDS)
2010
Assets
Current Assets
Cash and cash equivalents
Investments
Pledges and contributions receivable
Other receivables
Annuities/Remainder interests/Trusts
Total current assets
Noncurrent Assets
Long-term pledges receivable
Investment property
Property and equipment, net
Total noncurrent assets
Total Assets
$
$
Liabilities and Net Assets
Current Liabilities
Accounts payable
Interest payable
Annuities payable
Bonds payable/Notes payable
Total current liabilities
Noncurrent Liabilities
Unitrust liabilities
Annuities payable
Bonds payable/Notes payable
Total noncurrent liabilities
Total Liabilities
$
Net Assets
Unrestricted
Temporarily restricted
Permanently restricted
Total Net Assets
Total Liabilities and Net Assets
$
The notes are an integral part of the financial statements.
19
1,192
6,684
391
1
1,353
9,621
2,688
865
3,492
7,045
16,666
16
16
17
155
204
2009
$
$
$
668
6,015
406
1
1,177
8,267
881
1,166
3,641
5,688
13,955
32
16
16
147
211
204
195
3,388
3,787
3,991
352
186
3,544
4,082
4,293
337
5,781
6,557
12,675
283
3,495
5,884
9,662
16,666
$
13,955
MINNESOTA STATE UNIVERSITY MOORHEAD
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, net
Other income
Total operating revenues
$
Operating Expenses
Salaries and benefits
Purchased services
Supplies
Repairs and maintenance
Depreciation
Financial aid, net
Other expense
Total operating expenses
Operating loss
Nonoperating Revenues (Expenses)
Appropriations
Federal grants
State grants
Private grants
Interest income
Interest expense
Grants to other organizations
Total nonoperating revenues (expenses)
Income Before Other Revenues, Expenses, Gains, or Losses
Capital appropriations
Capital grants
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
29,942
4,609
2,721
11,622
848
49,742
2009
$
25,086
3,113
3,794
12,121
668
44,782
62,110
11,280
5,406
1,665
4,333
4,321
5,232
94,347
(44,605)
61,971
11,678
4,688
1,594
4,270
658
3,932
88,791
(44,009)
30,334
13,504
3,929
2,439
455
(1,623)
(448)
48,590
34,103
7,605
3,444
1,114
461
(1,524)
(521)
44,682
3,985
673
8,354
360
18
12,717
3,182
6
3,861
76,371
72,510
89,088
$
76,371
MINNESOTA STATE UNIVERSITY MOORHEAD FOUNDATION
STATEMENTS OF ACTIVITIES
FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
(IN THOUSANDS)
2010
Support and Revenue
Contributions
Investment income
Realized gains and (losses)
Unrealized gains and (losses)
Program income
Special events
Total support and revenue
$
Expenses
Program Services
Program services
Scholarships
University activities
Total program services
Supporting Services
Interest expense
Management and general
Fundraising expenses
Depreciation and amortization
Other expense
Total supporting services
Total expenses
4,153
332
146
324
407
10
5,372
2009
$
1,636
175
(751)
(866)
404
8
606
40
551
954
1,545
78
607
382
1,067
192
337
78
149
58
814
2,359
199
319
84
153
46
801
1,868
Change in Net Assets
3,013
(1,262)
Net Assets, Beginning of Year
9,662
10,924
$
Net Assets, End of Year
The notes are an integral part of the financial statements.
21
12,675
$
9,662
MINNESOTA STATE UNIVERSITY MOORHEAD
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 repayment of program loans
Cash paid to suppliers for goods or services
Cash payments to employees
Financial aid disbursements
Cash payments of program loans
Net cash flows used in operating activities
$
Cash Flows from Noncapital Financing Activities
Appropriations
Agency activity
Federal grants
State grants
Private grants
Grants to other organizations
Net cash flows from noncapital financing activities
Cash Flows from Capital and Related Financing Activities
Investment in capital assets
Capital appropriation
Capital grants
Proceeds from sale of capital assets
Proceeds from borrowing
Proceeds from bond premium and discounts
Interest paid
Repayment of lease principal
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
$
The notes are an integral part of the financial statements.
22
53,220
534
(26,420)
(62,021)
(4,276)
(513)
(39,476)
2009
$
47,846
529
(25,415)
(60,867)
(613)
(428)
(38,948)
30,334
322
13,036
3,929
2,439
(448)
49,612
34,103
474
7,603
3,444
1,114
(521)
46,217
(10,258)
8,354
360
183
2,425
157
(1,780)
(147)
(4,627)
(5,333)
(8,913)
3,182
6
934
36
(1,488)
(203)
(1,240)
(7,686)
1,173
(3,034)
237
(1,624)
748
(174)
705
1,279
3,179
862
36,813
35,951
39,992
$
36,813
MINNESOTA STATE UNIVERSITY MOORHEAD
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
Loan principal repayments
Provision for loan defaults
Loans issued
Loans forgiven
Donated/Leased Supplies
Change in assets and liabilities
Accounts receivable
Inventory
Accounts payable
Salaries and benefits payable
Other compensation benefits
Capital contributions payable
Unearned revenues
Other liabilities
Net reconciling items to be added to operating income
Net cash flow used in operating activities
Non-Cash Transactions Investing, Capital, and Financing Activities:
Capital projects on account
Equipment purchased on account
Amortization of bond premium
23
(44,605)
2009
$
(44,009)
4,333
534
(21)
(513)
111
(1)
4,270
529
(20)
(428)
109
(515)
40
582
(723)
812
45
396
49
5,129
188
130
(299)
618
486
45
(418)
(149)
5,061
$
(39,476)
$
(38,948)
$
2,103
366
(67)
$
874
6
(55)
MINNESOTA STATE UNIVERSITY MOORHEAD
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 Minnesota State University Moorhead, a member of the
Minnesota State Colleges and Universities system, conform to generally accepted accounting principles
(GAAP) in the United States, as prescribed by the Governmental Accounting Standards Board (GASB). The
statements of net assets; statements of revenues, expenses, and changes in net assets; and statements of cash
flows include financial activities of Minnesota State University Moorhead.
Financial Reporting Entity — Minnesota State Colleges and Universities is an agency of the state of Minnesota
and receives appropriations from the state legislature, substantially all of which are used to fund general
operations. Minnesota State University Moorhead receives a portion of the Minnesota State Colleges and
Universities’ appropriation. The operations of most student organizations are included in the reporting entity
because the Board of Trustees has certain fiduciary responsibilities for these resources.
Discretely presented component units are legally separate organizations that raise and hold economic resources
for the direct benefit of a college or university in accordance with GASB Statement No. 39, Determining
Whether Certain Organizations are Component Units. Metropolitan State University Foundation is considered
significant to the University and is included as a discretely presented component unit and separately identified
in Note 16. Complete financial statements may be obtained from Metropolitan State University Foundation,
700 East Seventh Street, St. Paul, MN 55106-5000.
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 (FASB)
statements issued prior to November 30, 1989, and GASB statements issued since that date.
Budgetary Accounting — University budgetary accounting, which is the basis for annual budgets and the
allocation of state appropriations, differs from GAAP. University budgetary accounting includes all receipts
and expenses up to the close of the books in August for the budget fiscal year. Revenues not yet received by the
close of the books are not included. The criterion for recognizing expenses is the actual disbursement, not when
the goods or services are received.
The state of Minnesota operates on a two year (biennial) budget cycle ending on June 30 of odd numbered
years. Minnesota State Colleges and Universities is governed by a 15 member board of trustees appointed by
the Governor with the advice and consent of the state senate. The Board approves the University biennial
budget request and allocation as part of the Minnesota State Colleges and Universities’ total budget.
Budgetary control is maintained at the University. The University President has the authority and responsibility
to administer the budget and can transfer money between programs within the University without Board
approval. The budget of the University 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
bond sale proceeds are received. 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, debt service, and most fees are in the state
treasury. The University also has five accounts in two local banks. The activities handled through local banks
include financial aid, student payroll, auxiliary, and student activities.
Investments — The Minnesota State Board of Investment invests the University’s balances in the state treasury,
except for the Revenue Fund, as part of a state investment pool. This asset is reported as a cash equivalent.
Interest income earned on pooled investments is retained by the Office of the Chancellor and allocated to the
colleges and universities as part of the appropriation allocation process.
Cash in the Revenue Fund is invested separately. The Fund contracts with the Minnesota State Board of
Investment and U.S. Bank, N.A. for investment management services. Investments are reported at fair value.
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 first in, first out cost method.
Prepaid Expense — Prepaid expense consists primarily of deposits in the state of Minnesota Debt Service Fund
for future general obligation bond payments.
Capital Assets — Capital assets are recorded at cost or, for donated assets, at fair value at the date of
acquisition. Estimated historical cost has been used when actual cost is not available. Such assets are
depreciated or amortized on a straight line basis over the useful life of the assets.
Estimated useful lives are as follows:
Asset Type
Buildings
Building improvements
Equipment
Library collections
Useful Life
30-40 years
15-20 years
3-20 years
7 years
Equipment includes all items with an original cost of $10,000 and over for items purchased since July 1, 2009;
$5,000 and over for items purchased between July 1, 2003 and June 30, 2009; and $2,000 and over for items
25
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, 2009, and $100,000 and over for
projects started prior to July 1, 2009. 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 the Minnesota State Colleges and Universities’ facilities as approved through the
state’s capital budget process. The University is responsible for a portion of the debt service on the bonds sold
for some University projects. The University may also enter into capital lease agreements for certain capital
assets. Other long term liabilities include compensated absences, early termination, net other postemployment
benefits, workers’ compensation claims, notes payable, and capital contributions associated with Perkins Loan
agreements with the United States Department of Education.
Minnesota State Colleges and Universities may finance the construction, renovation, and acquisition of facilities
for student residences and student unions through the sale of revenue bonds. These activities are accounted for
and reported in the Revenue Fund portion 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, Wells Fargo Place, Minnesota State Colleges and Universities, 30 Seventh Street East, Suite
350, St. Paul, Minnesota 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 grants, which have not yet been earned under the
terms of the agreement, and room and board deposits received, but not yet earned.
Operating Activities — Operating activities as reported in the statements of revenues, expenses, and changes in
net assets are those that generally result from exchange transactions such as payments received for providing
services and payments made for services or goods received. Nearly all of the University’s expenses are from
exchange transactions. Certain significant revenue streams relied upon for operations are recorded as
nonoperating revenues including state appropriations, federal, state and private grants.
Tuition, Fees, and Sales, Net — Tuition, fees, and sales are reported net of scholarship allowances of
$11,159,005 and $10,641,788 for the fiscal years 2010 and 2009, respectively. Sales are also net of cost of
goods sold of $3,515,315 and $3,215,590 for fiscal years 2010 and 2009, respectively.
Restricted Student Payments — Restricted student payments consist of room, board, sales, and fee revenue
restricted for payment of revenue bonds, and are net of scholarship allowances of $205,660 and $396,971, for
fiscal years 2010 and 2009, respectively. Sales are also net of cost of goods sold of $81,792 and $78,873, for
fiscal years 2010 and 2009, respectively.
Federal Grants — Minnesota State University Moorhead participates in several federal grant programs. The
largest programs include Pell, Supplemental Educational Opportunity Grant, Carl Perkins, and Federal Work
Study. Federal Grant revenue is recognized as nonoperating revenue in accordance with GASB Statement
No. 33, Accounting and Financial Reporting for Nonexchange Transactions. During fiscal year 2010,
$3,178,450 of federal aid was recognized as revenue related to the American Recovery and Reinvestment Act of
2009. Of this amount, $638,644 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 University will
record such disallowance at the time the determination is made.
Reclassifications— Certain prior year amounts have been reclassified to conform to current year presentation.
These classifications had no effect on net assets previously reported. Fiscal year 2009 federal and state grant
revenue, in the amount of $7,605,359 and $3,443,851, respectively, have been reclassified from operating to
nonoperating revenue. This reclassification increases the total operating loss by $11,049,210 while increasing
total nonoperating revenue by the same amount.
26
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. 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 classified further for
accounting and reporting purposes into the following three net asset categories:
Invested in capital assets, net of related debt: Capital assets, net of accumulated depreciation, and
outstanding principal balances of debt attributable to the acquisition, construction or improvement
of those assets.
Restricted expendable: Net assets subject to externally imposed stipulations. Net asset restrictions
for the University are as follows:
Restricted for bond covenants — revenue bond restrictions.
Restricted for other — includes restrictions for the following:
Donations — restricted per donor requests.
Loans — University capital contributed for Perkins loans.
Capital projects — restricted for completion of capital projects.
Debt service — legally restricted for bond debt repayments.
Faculty contract obligations — faculty development and travel required by contracts.
Restricted for Other
(In Thousands)
2010
Donations
$
16
Loans
639
Capital projects
3,437
Debt service
1,462
Faculty contract obligations
624
Total
$ 6,178
2009
16
634
2,068
1,171
537
$ 4,426
$
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, CASH EQUIVALENTS, AND INVESTMENTS
Cash and Cash Equivalents — All balances related to the appropriation, tuition, and most fees are in the state
treasury. In addition, the University has five accounts in two local banks. The activities handled through local
banks include financial aid, student payroll, auxiliary, and student activities.
Minnesota Statutes, Section 118A.03, requires that deposits be secured by depository insurance or a
combination of depository insurance and collateral securities held in the state’s name by an agent of the state.
This statute further requires that such insurance and collateral shall be at least ten percent greater than the
amount on deposit.
27
Cash and Cash Equivalents at June 30
(In Thousands)
Carrying Amount
2010
Cash, in bank
$
773
Repurchase agreements
595
Cash, trustee account (US Bank)
2,741
Total local cash and cash equivalents
4,109
Total treasury cash accounts
35,883
Grand Total
$ 39,992
2009
358
2,844
7,499
10,701
26,112
$ 36,813
$
At June 30, 2010 and 2009, Minnesota State University Moorhead’s local bank balances were $937,000 and
$2,445,214, respectively. These bank balances were adjusted by items in transit to arrive at the University’s
cash in bank balance.
The University’s balance in the treasury, except for the Revenue Fund, is invested by the Minnesota State Board
of Investment as part of the state investment pool. This asset is reported as a cash equivalent.
The cash accounts are invested in short term, liquid, high quality debt securities.
Investments — The Minnesota State Board of Investment manages the majority of the state’s investments. All
investments managed by 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 the
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 assets 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 University will not be able to recover the value of the investments that are in the possession of
an outside party. Board procedure 7.5.1 requires compliance with Minnesota Statutes, Section 118A.03, and
further excludes the use of FDIC insurance when meeting collateral requirements.
Credit Risk — Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. The University’s policy for reducing its exposure to credit risk is to comply with Minnesota
Statutes, Section 118A.04. This statute limits investments to the top quality rating categories of a nationally
recognized rating agency.
At June 30, 2010 and 2009, Minnesota State University Moorhead had debt securities rated equivalent to
Standard and Poor’s AAA.
Concentration of Credit Risk — Concentration of credit risk is the risk of loss attributed to the magnitude of a
government’s investment in a single issuer. The University’s policy for reducing this risk of loss is to comply
Board procedure 7.5.1 which recommends investments be diversified by type and issuer.
28
Interest Rate Risk — Interest rate risk is the risk that changes in interest rates will adversely affect the fair value
of an investment. The University complies with Board procedure 7.5.1 that recommends considering
fluctuating interest rates and cash flow needs when purchasing short term and long term debt investments.
As of June 30, Minnesota State University Moorhead had the following investments and maturities:
Fair Value of Investments at June 30
(In Thousands)
2010
Weighted
Fair
Maturity
Investment Type
Value
(In Years)
3.99
U.S. agencies
$ 3,520
3,520
Total
3.99
Portfolio weighted average maturity
2,740
Certificates of deposit
Total fair value
$ 6,260
2009
Fair
Value
$ 1,666
1,666
2,589
$ 4,255
Weighted
Maturity
(In Years)
8.44
8.44
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
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 State Board of Investment. 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 University had no security lending allocation for fiscal years 2010 and 2009.
29
The following tables provide 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 University were $2,863,932 and $2,412,028, respectively,
less an allowance for uncollectible receivables of $1,118,296 and $1,244,178, respectively.
Summary of Accounts Receivable at June 30
(In Thousands)
2010
Tuition
$ 1,389
Fees
406
Room and board
477
Sales and services
194
Third party obligations
66
Interest income
63
Other
269
Total accounts receivable
2,864
Less allowance for uncollectible accounts
(1,118)
Net accounts receivable
$ 1,746
2009
$ 1,277
483
373
93
87
––
99
2,412
(1,244)
$ 1,168
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
4.
Fiscal Year 2009
Allowance
Percentage
15%
45%
70%
95%
Allowance
Percentage
Less than 1 year
2%
1 to 2 years
50%
Over 2 years 100%
PREPAID EXPENSE
Prepaid expense consists of $1,462,243 and $1,171,086 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. In addition, as of June 30, 2010, the University had prepaid expense of $54,976 and $47,566
at June 30, 2010 and 2009 for software license fees, respectively.
30
5.
LOANS RECEIVABLE
The loans receivable balance consists of loans under the Federal Perkins Loan Program. The federal
government provides most of the funding for the loans with amounts collected used for new loan advances.
Minnesota State Colleges and Universities’ loan collections unit is responsible for the Minnesota State
University Moorhead’s loan collections. As of June 30, 2010 and 2009, the total loans receivable for this
program were $6,067,906 and $6,200,515, respectively, less an allowance for uncollectible loans of $340,896
and $362,258, respectively.
6.
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
$
6,759 $
Construction in progress
10,367
Total capital assets, not depreciated
17,126
Capital assets, depreciated:
Buildings and improvements
125,507
Equipment
10,174
Library collections
2,780
Total capital assets, depreciated
138,461
Less accumulated depreciation:
Buildings and improvements
58,743
Equipment
8,475
Library collections
1,695
Total accumulated depreciation
68,913
Total capital assets, depreciated, net
69,548
Total capital assets, net of depreciation $ 86,674 $
–– $
10,849
10,849
––
657
346
1,003
3,609
341
383
4,333
(3,330)
7,519 $
Completed
Construction
–– $
––
––
Description
Capital assets, not depreciated:
Land
$
6,759 $
Construction in progress
5,720
Total capital assets, not depreciated
12,479
Capital assets, depreciated:
Buildings and improvements
121,988
Equipment
9,985
Library collections
2,971
Total capital assets, depreciated
134,944
Less accumulated depreciation:
Buildings and improvements
55,276
Equipment
8,245
Library collections
1,714
Total accumulated depreciation
65,235
Total capital assets, depreciated, net
69,709
Total capital assets, net of depreciation $ 82,188 $
31
–– $
6,613
6,613
1,553
365
225
2,143
3,467
406
397
4,270
(2,127)
4,486 $
–– $ 6,759
(10,988)
10,228
(10,988)
16,987
––
246
445
691
10,988
––
––
10,988
––
82
445
527
164
164 $
––
––
––
––
10,988
–– $
Year Ended June 30, 2009
(In Thousands)
Beginning
Balance
Increases
Decreases
–– $
––
––
Ending
Balance
136,495
10,585
2,681
149,761
Completed
Construction
62,352
8,734
1,633
72,719
77,042
94,029
Ending
Balance
–– $ 6,759
(1,966)
10,367
(1,966)
17,126
––
176
416
592
1,966
––
––
1,966
––
176
416
592
––
–– $
––
––
––
––
1,966
–– $
125,507
10,174
2,780
138,461
58,743
8,475
1,695
68,913
69,548
86,674
7.
ACCOUNTS PAYABLE
Accounts payable represents amounts due at June 30 for goods and services received prior to the end of the
fiscal year.
Summary of Accounts Payables at June 30
(In Thousands)
2010
2009
Purchased services
$ 780
$ 133
Supplies
465
445
Repairs & maintenance
150
120
Inventory
280
94
Other
811
690
Total
$ 2,486
$ 1,482
In addition, as of June 30, 2010 and 2009, the University had payable from restricted assets in the amounts of
$2,103,362 and $873,832, respectively, which was related to capital projects financed by general obligation
bonds and revenue bonds.
8.
LONG TERM OBLIGATIONS
Summaries of amounts due within one year are reported in the current liability section of the statements of net
assets.
The changes in long term debt for fiscal years 2010 and 2009 follow:
Description
Liabilities for:
Bond premium
Capital leases
General obligation bonds
Revenue bonds
Total long term debt
Description
Liabilities for:
Bond premium
Capital leases
General obligation bonds
Notes payable
Revenue bonds
Total long term debt
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases Decreases
$
457
3,690
12,515
18,854
$ 35,516
$
156
––
2,425
––
$ 2,581
$
$
67
147
843
3,613
4,670
Ending
Balance
$
546
3,543
14,097
15,241
$ 33,427
Year Ended June 30, 2009
(In Thousands)
Beginning
Balance
Increases
Decreases
$
$
476
3,893
12,450
34
19,267
36,253
$
$
32
36
––
934
––
––
970
$
$
55
203
869
34
413
1,714
Current
Portion
$
––
155
939
747
$ 1,841
Ending
Balance
$
457
3,690
12,515
––
18,854
$ 35,516
Current
Portion
$
––
147
836
––
958
$ 1,941
The changes in other compensation benefits for fiscal years 2010 and 2009 follow:
Description
Liabilities for:
Compensated absences
Early termination benefits
Net other postemployment benefits
Workers’ compensation
Total other compensation benefits
Description
Liabilities for:
Compensated absences
Early termination benefits
Net other postemployment benefits
Workers’ compensation
Total other compensation benefits
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases
$
$
7,041
177
505
312
8,035
$ 2,469
628
474
404
$ 3,975
Decreases
$
$
Year Ended June 30, 2009
(In Thousands)
Beginning
Balance
Increases
$
$
6,646
119
267
516
7,548
$
988
177
462
59
$ 1,686
2,567
177
307
113
3,164
Decreases
$
$
593
119
224
263
1,199
Ending
Balance
$ 6,943
628
672
603
$ 8,846
Current
Portion
$
673
628
––
253
$ 1,554
Ending
Balance
$ 7,041
177
505
312
$ 8,035
Current
Portion
$
$
689
177
––
125
991
Bond Premium — In fiscal years 2010 and 2009, bonds were issued resulting in premiums, net of $156,288 and
$35,982 at June 30, 2010 and 2009, respectively. Amortization is calculated using the straight line method and
amortized over the remaining life of the bonds.
Capital Leases — Liabilities for capital leases include those leases that meet the criteria in FASB Accounting
Standards Codification (ACS) 840, Leases (previously FAS 13). See Note 11 for additional information.
General Obligation Bonds Liability — The state of Minnesota sells general obligation bonds to finance most of
the Minnesota State Colleges and Universities’ capital projects. The interest rate on these bonds ranges from
2.0 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 University’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 state universities. Revenue bonds
currently outstanding have interest rates of 4.25 percent to 6.5 percent.
The revenue bonds are payable solely from, and collateralized by, an irrevocable pledge of revenues to be
derived from the operation of the financed buildings and from student fees. These revenue bonds are payable
through 2026. Annual principal and interest payments on the bonds are expected to require less than 11.95
percent of net revenues. The total principal and interest remaining to be paid on the bonds is $21.4 million.
33
Principal and interest paid for the current year and total customer net revenues were $1.8 million and
$11.9 million, respectively.
Compensated Absences — University employees accrue vacation leave, sick leave, and compensatory leave at
various rates within limits specified in the collective bargaining agreements. The liability for compensated
absences is payable as severance pay under specific conditions. This leave is liquidated only at the time of
termination from state employment.
Early Termination — Early termination benefits are the benefits received for discontinuing services earlier than
planned. See Note 9 for details.
Net Other Postemployment Benefits — Other postemployment benefits are health insurance benefits for certain
retired employees under a single employer fully insured plan. Under the health benefits program retirees are
required to pay 100 percent of the total premium cost. Since the premium is a blended rate determined on the
entire active and retiree population, the retirees are receiving an implicit rate subsidy. See Note 10 for further
details.
Workers’ Compensation — The state of Minnesota Department of Management and Budget manages the self
insured workers’ compensation claims activities. The reported liability for workers’ compensation of $603,117
and $312,059 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.
Capital Contributions — The liability of $5,619,569 and $5,574,833 at June 30, 2010 and 2009 represents the
amount the University would owe the federal government if it were to discontinue the Perkins loan program.
The net change is $44,736 and $44,779 for the fiscal years 2010 and 2009, respectively.
Principal and interest payment schedules are provided in the following tables for revenue bonds, general
obligation bonds, notes payable, and capital leases. There are no payment schedules for bond
premium/discount, compensated absences, early termination benefits, other postemployment, workers’
compensation, or capital contributions.
Fiscal Years
2011
2012
2013
2014
2015
2016-2020
2021-2025
2026-2030
2031-2032
Total
9.
Long Term Debt Repayment Schedule
(In Thousands)
General
Capital Leases
Obligation Bonds
Principal Interest
Principal Interest
$
155 $ 184
$
939 $
671
164
175
939
626
105
167
920
580
103
162
920
534
109
156
901
489
638
687
4,405
1,777
830
495
3,744
728
1,079
246
1,329
105
360
14
––
––
$ 3,543 $ 2,286
$ 14,097 $ 5,510
Revenue Bonds
Principal Interest
$
747 $ 676
779
640
821
603
854
564
888
524
3,849
2,069
5,318
992
1,985
89
––
––
$ 15,241 $ 6,157
EARLY TERMINATION BENEFITS
Early termination benefits are defined as benefits received for discontinuing services earlier than planned.
Minnesota Statutes section 136F.481 authorized the Minnesota State Colleges and Universities Board of
Trustees to implement an early separation incentive program in fiscal year 2010. Additionally, the Inter Faculty
34
Organization (IFO) bargaining unit contract provides for this benefit. The following is a description of the
different benefit arrangements including the number of retired employees receiving the benefit and the amount
of future liability as of the end of fiscal years 2010 and 2009.
MnSCU Board Early Separation Incentive Program — Employees of the University accepted incentives in the
form of contributions to a health care savings plan and cash payments in return for voluntarily separating from
employment by the University. The number of employees who received this benefit and the amount of future
liability for those employees as of the end of fiscal year 2010 follow:
Fiscal Year
2010
Number
of Faculty
4
Future Liability
(In Thousands)
$ 260
Inter Faculty Organization (IFO) contract — The IFO contract allows faculty members who meet certain
eligibility and combination of age and years of service requirements to receive an early termination incentive
cash payment based on base salary at time of separation, as well as an amount equal to the employer’s
contribution for one year’s health insurance premiums deposited in his/her health care savings plan at time of
separation. The cash incentive can be paid either in one or two payments. The number of retired faculty who
received this benefit and the amount of future liability for those faculty members as of the end of fiscal years
2010 and 2009 follow:
Fiscal Year
2010
2009
Number
of Faculty
13
7
Future Liability
(In Thousands)
$ 368
177
10. NET OTHER POSTEMPLOYMENT BENEFITS
The University provides health insurance benefits for certain retired employees under a single employer fully
insured plan, as required by Minnesota Statute, 471.61, subdivision 2B. Active employees who retire when
eligible to receive a retirement benefit from a Minnesota public pension plan and do not participate in any other
health benefits program providing coverage similar to that herein described, will be eligible to continue
coverage with respect to both themselves and their eligible dependent(s) under the health benefits program.
Retirees are required to pay 100 percent of the total premium cost. Since the premium is a blended rate
determined on the entire active and retiree population, the retirees are receiving an implicit rate subsidy. As of
July 1, 2008 there were approximately 30 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 Post Employment Benefits Other Than Pensions. The ARC represents a level of funding that,
if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed 30 years.
35
The following table shows the components of the annual OPEB cost for 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
Annual required contribution (ARC)
Interest on net OPEB obligation
Adjustment to ARC
Annual OPEB Cost
Contributions during the year
Increase in net OPEB obligation
OPEB obligation, beginning of year
OPEB obligation, end of year
$ 470
24
(20)
474
(307)
167
505
$ 672
2009
$
459
13
(10)
462
(224)
238
267
$ 505
The University’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)
2010
505
$
Beginning of year net OPEB obligation
Annual OPEB cost
474
Employer contribution
(307)
$
End of year net OPEB obligation
672
Percentage contributed
64.77%
$
$
2009
267
462
(224)
505
48.49%
Funding Status — There are currently no assets that have been irrevocably deposited in a trust for future health
benefits. Therefore, the actuarial value of assets is zero.
Actuarial
Valuation
Date
July 1, 2008
Schedule of Funding Progress
(In Thousands)
Actuarial
Actuarial
Unfunded
Value of
Accrued
Accrued
Funded
Covered
Assets
Liability
Liability
Ratio
Payroll
(a)
(b)
(b - a)
(a/b)
(c)
$ 5,394 $ 5,394
—
0.00% $ 47,831
UAAL as a
Percentage of
Covered Payroll
((b - a)/c)
11.28%
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 healthcare
36
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.
11. LEASE AGREEMENTS
Operating Leases — Minnesota State University Moorhead is committed under various leases primarily for
building space, including three leases with the Minnesota State University Moorhead Alumni Foundation, Inc.
These leases are considered for accounting purposes to be operating leases. Lease expenses for the years ended
June 30, 2010 and 2009, totaled approximately $137,314 and $225,785, respectively.
Future minimum lease payments for existing lease agreements are as follows:
Year Ended June 30
(In Thousands)
Fiscal Year Amount
2011
$ 103
2012
91
2013
43
Total
$ 237
Included in the capital leases are two leases with the Foundation, Inc. In fiscal year 2003, the Foundation and
the Revenue Fund entered into a $3,940,000, 30 year capital lease for John Neumaier Hall Apartments. As of
June 30, 2010, related accumulated depreciation for the apartment building totaled $1,028,778. Also, in fiscal
year 2003, the Foundation constructed the Hendrix Health Center on land owned by the University, while
entering into a ten year capital lease for $525,000. The related accumulated depreciation for the Hendrix Health
Center totaled $125,417 as of June 30, 2010.
The agreements meet the criteria of capital leases, as defined by FASB ASC 840, Leases (previously FAS 13),
which defines a capital lease generally as one which transfers benefits and risk of ownership to the lessee. The
terms of the agreements provide options to purchase at any time during the lease period. Current and
noncurrent portions are reported separately. See Note 8 for principal and interest payment schedules.
12. OPERATING EXPENSES BY FUNCTIONAL CLASSIFICATION
The following tables provide information related to operating expenses by functional classification:
For the Year Ended June 30, 2010
(In Thousands)
Salaries/
Description
Benefits
Other
Academic support
$ 7,261
$ 1,917
Institutional support
5,717
3,378
Instruction
32,185
1,683
Operation & maintenance of plant
3,514
2,919
Public service
475
502
Research
84
555
Student services
7,855
3,553
Auxiliary enterprises
5,019
9,076
Depreciation
––
4,333
Scholarships & fellowships
––
4,321
Total operating expenses
$ 62,110
$ 32,237
37
Total
$ 9,178
9,095
33,868
6,433
977
639
11,408
14,095
4,333
4,321
$ 94,347
For the Year Ended June 30, 2009
(In Thousands)
Salaries/
Description
Benefits
Other
Academic support
$ 6,489
$ 1,072
Institutional support
4,841
4,135
Instruction
33,359
1,026
Operation & maintenance of plant
3,970
4,153
Public service
751
624
Research
229
260
Student services
8,076
2,447
Auxiliary enterprises
4,256
8,175
Depreciation
––
4,270
Scholarships & fellowships
––
658
Total operating expenses
$ 61,971
$ 26,820
Total
$ 7,561
8,976
34,385
8,123
1,375
489
10,523
12,431
4,270
658
$ 88,791
13. EMPLOYEE PENSION PLANS
The University participates in three retirement plans: the State Employees Retirement Fund, administered by the
Minnesota State Retirement System; the Teachers Retirement Fund, administered by the Minnesota Teachers
Retirement Association; and the Minnesota State Colleges and Universities Defined Contribution Retirement
Plan.
State Employees Retirement Fund (SERF)
Pension fund information is provided by the Minnesota State Retirement System, which prepares and publishes
its own stand alone comprehensive annual financial report, including financial statements and required
supplementary information. Copies of the report may be obtained directly from Minnesota State Retirement
System at 60 Empire Drive, Suite 300, St. Paul, Minnesota 55103.
The SERF is a cost sharing, multiple employer defined benefit plan. All classified employees are covered by
this plan. A classified employee is one who serves in a civil service position. Normal retirement age is 65. The
annuity formula is the greater of a step rate with a flat rate reduction for each month of early termination, or a
level rate (the higher step rate) with an actuarial reduction for early termination. 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 percent. 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 Minnesota State University Moorhead were:
(In Thousands)
Fiscal Year
Amount
2010
$ 488
2009
530
2008
492
38
Teachers Retirement Fund (TRF)
Pension fund information is provided by the Minnesota Teachers Retirement Association, which prepares and
publishes its own stand alone comprehensive annual financial report, including financial statements and
required supplementary information. Copies of the report may be obtained directly from Teachers Retirement
Association at 60 Empire Drive, Suite 400, St. Paul, Minnesota 55103.
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 those 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 termination, or a level rate (the higher step rate) with an actuarial based reduction for early termination.
The applicable rates for coordinated members are 1.2 percent and 1.7 percent for service rendered before
July 1,2006, and 1.4 percent and 1.9 percent for service rendered on or after July 1, 2006. Minnesota State
Colleges and Universities, as an employer for some participants, is liable for a portion of any unfunded accrued
liability of this fund.
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 0.5 percent increase occurring every
July 1 over four years until it reaches a contribution rate of 7.5 percent on July 1, 2014. Actual contributions
were 100 percent of required contributions.
Required contributions for Minnesota State University Moorhead were:
(In Thousands)
Fiscal Year
Amount
2010
$ 421
2009
437
2008
394
Minnesota State Colleges and Universities Defined Contribution Retirement Fund
General Information — The 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, Chapter 354C. The plans are designed to provide retirement benefits to
Minnesota State Colleges and Universities unclassified employees. An unclassified employee is one who
belongs to Minnesota State Colleges and Universities specific bargaining units. The plans cover unclassified
teachers, librarians, administrators and certain other staff. The plans are mandatory for qualified employees.
Vesting occurs immediately. The administrative agent of the two plans is Teachers Insurance and Annuity
Association College Retirement Equities Fund (TIAA-CREF). Separately issued financial statements can be
obtained from 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.
39
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 the 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 354C.
Required contributions for Minnesota State University Moorhead were:
Fiscal Year
2010
2009
2008
(In Thousands)
Employer
$ 1,411
1,355
1,158
Employee
$ 1,046
1,009
862
Supplemental Retirement Plan (SRP)
Participation — Each employee who has completed two full time years of unclassified service with Minnesota
State Colleges and Universities must participate upon achieving eligibility. The eligible employee is enrolled
on the first day of the fiscal year following completion of two full time years. Vesting occurs immediately and
normal retirement age is 55.
Contributions — Participants contribute 5 percent of the eligible compensation up to a defined maximum
annual contribution as specified in the following table:
Member Groups
Inter-Faculty Organization
Minnesota State University Administrative & Service Faculty
Administrators
Other Unclassified Members
Eligible
Compensations
$6,000 to $51,000
6,000 to 50,000
6,000 to 60,000
6,000 to 40,000
Maximum
Annual
Contributions
$ 2,250
2,200
2,700
1,700
The University matches amounts equal to the contributions made by participants. The contributions are made
under the authority of Minnesota Statute, Chapter 354C.
Required contributions for Minnesota State University Moorhead were:
(In Thousands)
Fiscal Year
Amount
2010
$ 712
2009
776
2008
699
40
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 to be accounted for separately by an
external party. Minnesota State Colleges and Universities issues revenue bonds to finance the University’s
dormitories and student unions.
Minnesota State University Moorhead’s Portion of the Revenue Fund
(In Thousands)
CONDENSED STATEMENTS OF NET ASSETS
Assets
Current assets
Restricted assets
Capital assets
Total assets
Liabilities
Current liabilities
Noncurrent liabilities
Total liabilities
Net Assets
Invested in capital assets, net of related debt
Restricted for
Capital projects
Bond covenants
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 assets, end of year
CONDENSED STATEMENTS OF CASH FLOWS
Net cash provided (used) by
Operating activities
Capital and related financing activities
Investing activities
Net decrease
Cash, beginning of year
Cash, end of year
2010
$
10,023
4,542
23,902
38,467
2009
$
8,951
15,225
16,655
40,831
2,295
17,827
20,122
2,378
21,357
23,735
6,451
7,467
––
11,894
18,345
2,068
7,561
$ 17,096
11,914
(10,489)
1,425
(176)
1,249
17,096
$ 18,345
$ 12,598
(9,746)
2,852
(535)
2,317
14,779
$ 17,096
$
$
$
$
$
2,959
(4,260)
190
(1,111)
15,016
13,905
3,890
444
(6,706)
(2,372)
17,388
$ 15,016
15. COMMITMENTS
As of June 30, 2010, Minnesota State University Moorhead has $10.23 million in construction in progress, of
which $9.39 million is related to the renovation of Lommen Hall. The estimated completion date of this project
is January 1, 2011 with a total project cost of $15.2 million.
41
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 manage these risks through state of Minnesota insurance plans including the state of Minnesota
Risk Management Fund and through purchased insurance coverage.
Automobile liability coverage is required by the state and is provided by the Minnesota Risk Management
Fund. The University also purchased optional physical damage coverage. Property and casualty coverage is
required by Minnesota State Colleges and Universities policy. The University also purchased optional
professional liability for employed physicians, and student health services professional liability coverage.
Property coverage offered by the Minnesota Risk Management Fund is as follows:
Coverage Type
Institution deductible
Fund responsibility
Primary reinsurance coverage
Multiple reinsurance 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
$2,500 to $250,000
Deductible to $1,000,000
$1,000,001 to $25,000,000
$25,000,001 to $1,000,000,000
$500,000
$1,500,000
$4,000,000
$25,000
The University retains the risk of loss and did not have any settlements in excess of coverage in the last three
years. The Minnesota Risk Management Fund purchased student intern professional liability on the open
market for the University.
Minnesota State Colleges and Universities participates in the State Employee Group Insurance Plan, which
provides life insurance, hospital, medical, and dental benefits coverage through provider organizations.
Workers’ compensation is covered through state participation in the Workers’ Compensation Reinsurance
Association, which pays for catastrophic workers’ compensation claims. Other workers’ compensation risks are
covered through self insurance for which Minnesota State Colleges and Universities pays the cost of claims
through the state Workers’ Compensation Fund. A Minnesota State Colleges and Universities workers’
compensation payment pool helps institutions manage the volatility of such claims. Annual premiums are
assessed by the pool based on salary dollars and claims history. From this pool, all workers’ compensation
claims are paid to the state Workers’ Compensation Fund.
The following table presents changes in the balances of workers’ compensation liability during the fiscal years
ended June 30, 2010 and 2009:
Fiscal Years Ended
June 30, 2010
June 30, 2009
(In Thousands)
Beginning
Net Additions
Liability
& Changes
$ 312
$ 404
516
59
42
Payments
$ 113
263
Ending
Liability
$ 603
312
17. COMPONENT UNITS
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations Are Component
Units, the following foundation affiliated with Minnesota State University Moorhead is a legally separate, tax
exempt entity, and reported as a component unit.
The Minnesota State University Moorhead Alumni Foundation, Inc. is a separate legal entity formed for the
purpose of obtaining and disbursing funds for the sole benefit of the University. The University does not
appoint any members of the board and the resources held by the Foundation can only be used by, or for, the
benefit of the University. The Foundation’s relationship with the institution is such that exclusion of the
Foundation’s financial statements would cause the University’s financial statements to be misleading or
incomplete. The Foundation is considered a component unit of the University and their statements are
discretely presented in the University’s financial statements.
The Foundation’s financial statements have been prepared on the accrual basis of accounting in accordance with
generally accepted accounting principles as prescribed by the FASB ASC 958-205, Presentations 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 subject to donor imposed restrictions as to how the assets be
used.
Permanently Restricted: 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 any Foundation purposes.
The University received from the Foundation $550,394 and $582,653 in restricted funds for fiscal years 2010
and 2009, respectively. These proceeds were used for scholarships. The University has lease agreements with
the Foundation for rental properties owned by the Foundation. Information about the leases is found in Note 11.
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 position.
Schedule of Investments at June 30
(In Thousands)
2010
Money market & certificate of deposit
$ 253
Fixed income/bonds/US treasuries
34
Balanced mutual funds
––
Equity securities
5,892
Property held for investment
865
Other investments
505
Total investments
$ 7,549
43
2009
281
477
404
4,795
1,166
58
$ 7,181
$
Capital Assets— Summaries of the Foundations’ capital assets for fiscal years 2010 and 2009 are:
Schedule of Capital Assets at June 30
(In Thousands)
Investments
2010
Capital assets, not depreciated:
Land
$ 425
Total capital assets, not depreciated
425
Capital assets, depreciated
Building and improvements
4,667
Total capital assets, depreciated
4,667
(1,600)
Total accumulated depreciation
Total capital assets depreciated, net
3,067
Total capital assets, net
$ 3,492
2009
$
425
425
4,667
4,667
(1,451)
3,216
$ 3,641
Long Term Obligations — The Foundation has a dormitory bond loan payable of $3,398,403 and a note payable
of $145,502 with Bremer Bank. Future scheduled debt payments are as follows:
Year Ended June 30
(In Thousands)
$ 155
2011
164
2012
105
2013
103
2014
109
2015
2,907
Thereafter
$ 3,543
Total
44
SUPPLEMENTAL SECTION
45
46
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