NORMANDALE COMMUNITY COLLEGE
A MEMBER OF THE
MINNESOTA STATE COLLEGES AND UNIVERSITIES SYSTEM
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2010
Prepared by:
Normandale Community College
9700 France Ave. S.
Bloomington, MN 55431
Upon request, this publication is available in alternate formats by calling one of the following:
General number: (651) 297-5579
Toll free: 1-888-667-2848
TTY: (651) 282-2660
NORMANDALE COMMUNITY COLLEGE
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2010
TABLE OF CONTENTS
INTRODUCTION
Page
Transmittal Letter ................................................................................................................................... 4
Organization Chart ................................................................................................................................. 7
FINANCIAL SECTION
Independent Auditors’ Report .............................................................................................................. 11
Management’s Discussion and Analysis .............................................................................................. 13
Basic Financial Statements
Statement of Net Assets ................................................................................................................ 18
Statement of Revenues, Expenses, and Changes in Net Assets .................................................... 19
Statement of Cash Flows ............................................................................................................... 20
Notes to the Financial Statements ................................................................................................. 22
SUPPLEMENTAL SECTION
Report on Internal Control Over Financial Reporting, Compliance, and
Other Matters Based on an Audit of Financial Statements Performed
in Accordance with Government Auditing Standards .................................................................. 40
1
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2
INTRODUCTION
3
4
5
6
7
Vice President
Academic Affairs
Julie A. Guelich
Vice President
Finance and Operations
Edward Wines
Lisa Wheeler
Vice President
Student Affairs
Assistant to the President
Angela Hernandez
President
Dr. Joseph P. Opatz
Chancellor
James H. McCormick
Minnesota State
Colleges and Universities
Board of Trustees
June 30, 2010
Organizational Chart
Michelle Thom
Chief Human Resources
Officer
The financial activity of the Normandale Community College is included in this report. The College is one
of 32 colleges and universities included in the Minnesota State Colleges and Universities Annual Financial
Report which is issued separately.
All financial activity of Minnesota State Colleges and Universities is included in the state of Minnesota
Comprehensive Annual Financial Report.
8
FINANCIAL SECTION
9
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10
11
12
MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited)
INTRODUCTION
The following discussion and analysis provide an overview of the financial position and activities of Normandale
Community College, a member of Minnesota State Colleges and Universities at June 30, 2010 and 2009 for the
years then ended. The College’s financial activity for fiscal year 2009, presented for comparison, was not audited.
This discussion has been prepared by management and should be read in conjunction with the financial statements
and accompanying notes, which follow this section.
Normandale Community College (the College) is one of 32 colleges and universities comprising Minnesota State
Colleges and Universities. The Minnesota State Colleges and Universities system is governed by a 15-member
Board of Trustees appointed by the Governor. Twelve trustees serve six-year terms, eight representing each of
Minnesota’s congressional districts and four serving at large. Three student trustees – one from a state university,
one from a community college and one from a technical college- serve two-year terms. The Board Trustees selects
the Chancellor and has broad policy responsibility for system planning, academic programs, fiscal management,
personnel, admissions requirements, tuition and fees.
The College is a comprehensive public institution of higher learning with approximately 15,000 students of which
26 percent are students of color. The average age of the student on campus is 24 years old. Approximately 8 percent
of our students represent the first generation in their family to attend college. The College employs approximately
582 full time equivalent staff and faculty members.
The College offers associate degrees and certificates and participates in the Minnesota Transfer Curriculum and is
accredited by the Higher Learning Commission. The largest programs based on enrollment are liberal arts, nursing
careers, business management, law enforcement, and engineering. Some of our nationally accredited programs
include dental hygiene, nursing, business management, music art, and theatre.
The College has over 70 different clubs and activities in areas such as honorary, drama and theater, music
ensembles, cultural and social concerns, recreational sports and student government.
FINANCIAL HIGHLIGHTS
The College experienced another strong year financially in fiscal year 2010. Assets totaled $92.7 million compared
to liabilities of $38.5 million. Net assets, which represents the residual interest in the College’s assets after liabilities
are deducted, is comprised of capital assets, net of related debt, of $30.5 million; restricted assets of $4 million and
unrestricted assets of $19.7 million.
Unrestricted cash and cash equivalents balances increased by $5.7 million fiscal year 2010. Operating revenues
increased $1.7 million and $1.2 million in fiscal years 2010 and 2009, respectively, as well as a full year equivalent
enrollment increase of approximately 8 percent in 2010. The College’s unprecedented enrollment growth continues
in 2011 and the institution has undertaken to increase its square footage in order to meet its classroom demand.
Total operating expenses increased by $2.5 million in 2010 after increasing $2.7 million in fiscal year 2009.
Continued enrollment growth was the key driver to higher costs in the past year. The two main expenses that
increased were the related expenses for added faculty to support new course offerings and the increase in financial
aid to students. Total net assets increased $6.8 million for fiscal year 2010, due primarily to increases in current
assets such as cash and accounts receivable.
13
USING THE FINANCIAL STATEMENTS
The College’s financial report includes three financial statements; the Statements of Net Assets, the Statements of
Revenues, Expenses and Changes in Net Assets, and the Statements of Cash Flows. The financial statements are
prepared in accordance with applicable generally accepted accounting principles (GAAP) as established by the
Governmental Accounting Standards Board (GASB) through authoritative pronouncements.
STATEMENTS OF NET ASSETS
The statements of net assets present the financial position of the College at the end of the fiscal year and include all
assets and liabilities of the College as measured using the accrual basis of accounting. The difference between total
assets and total liabilities – net assets – is one indicator of the current financial condition of the College, while the
change in net assets is an indicator of whether the overall financial condition has improved or worsened during the
year. Capital assets are stated at historical cost less an allowance for depreciation, with current year depreciation
reflected as a period expense on the statements of revenues, expenses, and changes in net assets.
A summary of the College’s assets, liabilities and net assets as of June 30, 2010 and 2009, respectively, is as
follows:
(In Thousands)
Current assets
Current restricted assets
Noncurrent assets
Capital assets, net
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total net assets
2010
$ 35,350
16,033
962
40,348
92,693
(Unaudited)
2009
$
28,081
16,274
4
40,775
85,584
9,860
28,597
38,457
9,337
28,774
38,111
30,507
4,027
19,702
$ 54,236
30,727
2,592
14,154
47,473
$
Current unrestricted assets consist primarily of cash and cash equivalents totaling $29.9 million at June 30, 2010.
Unrestricted cash and cash equivalents increased by $5.7 million from June 30, 2009 due to increased tuition and fee
revenue and the careful management of expenses.
14
Current liabilities consist primarily of accounts payable, salaries payable and unearned revenue. Unrestricted
accounts payable increased by $0.2 million. Salaries payable totaled $4.5 million at June 30, 2010, an increase of
$0.5 million over the prior year attributable primarily to an increase in additional class offerings and the
corresponding faculty payroll. Salaries payable include approximately two months of earned salary for faculty
payroll that have elected to receive salaries over twelve month on a September 1 – August 31 year. Unearned
revenue, consisting primarily of the portion of summer tuition and grants received, but not yet earned, increased by
less than $0.4 million in 2010.
Net assets represent the residual interest in the College’s assets after liabilities are deducted.
CAPITAL AND DEBT ACTIVITIES
One of the critical factors in continuing the quality of the College’s academic programs and student life is the
development and renewal of its capital assets. The College continues to implement its master facilities plan to
modernize its complement of older facilities, balanced with new construction. Capital assets as of June 30, 2010
totaled $41.3 million, net of accumulated depreciation of $26.2 million.
Capital outlays totaled $2.7 million, due largely to the fact the school’s $7 million Activities Building Classroom
Addition and Renovation project moved near completion. Capital expenditures are primarily comprised of recently
completed new building, replacement and renovation of existing facilities, as well as investments in equipment.
Current year capital asset additions were funded through capital appropriations and one-time usages of institutional
resources. During the fiscal year, the College began work on a host of new capital projects, including the design cost
for the Academic partnership Center and renovations to the Student Center.
Construction in progress, at June 30, 2010, decreased to $1.2 million from a previous year balance of $6.4 million.
This is due to the completion of the Activities Building Classroom Addition and Renovation project being moved to
being capitalized. In 2009, the college was a first time recipient of revenue bond funds that will be used for its
upcoming Kopp Student Center Addition and Renovation. All proceeds have been designated as restricted and will
begin being spent in fiscal year 2010. Additional information on capital and debt activities can be found in Note 5
and 7 to the financial statements. Additional information can be found in Note 14 on the construction in progress
projects.
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
The statements of revenues, expenses and changes in net assets present the College’s results of operations for the
year. When viewing the full statement, users should note that GASB requires classification of state appropriations
and federal and state grants as nonoperating revenue.
15
A summarized statement in table format for the years ending June 30, 2010 and 2009, respectively, follows:
Summarized Statements of Revenues, Expenses and Changes in Net Assets
(In Thousands)
Operating revenue
2010
Student tuition, fees, and sales
Less scholarship allowances
Net student tuition, fees, and sales
Restricted student payments
Other revenue
Total operating revenue
$
39,152
(10,560)
28,592
1,036
285
29,913
(Unaudited)
2009
$
35,186
(7,321)
27,865
—
299
28,164
Non-operating revenue:
State appropriations
Federal Grants
Other
Total nonoperating revenue
Total revenue
21,313
13,214
3,553
38,080
67,993
26,794
7,493
2,988
37,275
65,439
Operating expense:
Salaries and benefits
Supplies and services
Depreciation
Financial aid
Other expense
Total operating expense
43,468
8,321
2,135
2,519
3,867
60,310
42,568
8,072
1,960
1,292
3,941
57,833
Non-operating expense:
Interest expense and other
Total nonoperating expense
Total expense
920
920
61,230
491
491
58,324
Change in net assets
Net assets, beginning of year
Net assets, end of year
6,763
47,473
54,236
7,115
40,358
47,473
$
$
Tuition and state appropriations are the primary sources of funding for the College’s academic programs. Tuition
revenue increased in fiscal year 2010 as a result of a 3 percent increase in tuition rates as well as an 8 percent
increase in full year equivalent students. Total state and capital appropriations decreased in fiscal year 2010 by $5.5
million to $21.3 million. Much of the decline can be explained by the decrease in capital funding the college
received in 2010 as the major capital projects, most notable the Activities Building Classroom Addition and
Renovations project was completed . During the fiscal year 2010, federal grants increased by $5.7 million. Part of
the increase in federal grant revenue was received through the American Recovery and Reinvestment Act of 2009 to
16
mitigate 2 percent of the 5 percent tuition rate increase and for education and general expenditures. The amount
contributed to the federal grant increase that is American Recovery and Reinvestment Act aid is $1 million. The
remainder of the increase in federal grant revenue is largely due to the increase in federal financial aid to students.
Resources expended for compensation increased $0.9 million to $43.5 million in fiscal year 2010, due primarily to
increased faculty effort. Resources expended for compensation were $42.6 million in fiscal year 2009. Supplies and
service expenses increased $0.2 million in fiscal year 2010, due mainly to architectural and engineering fees the
College assumes as it began work on the new capital projects mentioned above.
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE
Looking to the future, management believes that the College is positioned to continue its strong financial condition
and level of excellence, even in uncertain times. Enrollment growth continued to be strong in fiscal year 2010 as
many displaced workers turned to the College to seek out new job skills. Due to the state’s economic downturn,
management was charged with increasing its programming while holding or cutting expenses. Strong financial
management will continue to be a cornerstone upon which the College relies on in order to uphold its customary
level of service while procuring funding for the refurbishment of the institution’s facilities.
The College has tasked itself with the challenge of keeping tuition increases well below inflation so as to allow it to
continue to provide a broad array of affordable educational opportunities to its student body, a significant proportion
of who are underserved. One-time federal stimulus funds have allowed the college to continue this effort for the next
biennium, and the College is committed to finding inventive ways to keep costs low in a sustainable manner.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of Normandale Community College’s finances for all
those with an interest in the College’s finances. Questions concerning any of the information provided in this report
or requests for additional financial information should be addressed to:
Ed Wines, V.P. of Finance and Operations
Normandale Community College
9700 France Avenue South
Bloomington, MN 55431
17
NORMANDALE COMMUNITY COLLEGE
STATEMENT OF NET ASSETS
AS OF JUNE 30, 2010
(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
Construction in progress
Total noncurrent restricted assets
Total restricted assets
Noncurrent Assets
Capital assets, net
Total noncurrent assets
Total Assets
2010
$
29,924
1,498
305
1,442
1,144
871
166
35,350
16,033
16,033
962
962
16,995
40,348
40,348
92,693
Liabilities
Current Liabilities
Salaries and benefits payable
Accounts payable
Unearned revenue
Payable from restricted assets
Interest payable
Funds held for others
Current portion of long-term debt
Other compensation benefits
Other liabilities
Total current liabilities
Noncurrent Liabilities
Noncurrent portion of long-term debt
Other compensation benefits
Total noncurrent liabilities
24,366
4,231
28,597
Total Liabilities
38,457
4,477
983
2,516
230
175
44
911
511
13
9,860
Net Assets
Invested in capital assets, net of related debt
Restricted expendable, bond covenants
Restricted expendable, other
Unrestricted
30,507
1,564
2,463
19,702
Total Net Assets
$
The notes are an integral part of the financial statements.
18
54,236
NORMANDALE COMMUNITY COLLEGE
STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2010
(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
23,539
3,313
1,740
1,036
285
29,913
43,468
5,231
1,956
1,134
2,135
2,519
3,867
60,310
(30,397)
Nonoperating Revenues (Expenses)
Appropriations
Federal grants
State grants
Private grants
Interest income
Interest expense
Total nonoperating revenues (expenses)
19,754
13,214
2,800
660
93
(919)
35,602
Income Before Other Revenues, Expenses, Gains, or Losses
5,205
Capital appropriations
Loss on disposal of capital assets
Change in net assets
1,559
(1)
6,763
Total Net Assets, Beginning of Year
47,473
Total Net Assets, End of Year
$
The notes are an integral part of the financial statements.
19
54,236
NORMANDALE COMMUNITY COLLEGE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2010
(IN THOUSANDS)
2010
Cash Flows from Operating Activities
Cash received from customers
Cash paid to suppliers for goods or services
Cash payments to employees
Financial aid disbursements
Net cash flows used in operating activities
$
34,037
(16,184)
(42,730)
(2,558)
(27,435)
Cash Flows from Noncapital Financing Activities
Appropriations
Agency activity
Federal grants
State grants
Private grants
Net cash flows from noncapital financing activities
19,754
44
13,300
2,800
660
36,558
Cash Flows from Capital and Related Financing Activities
Investment in capital assets
Capital appropriation
Proceeds from issuance of debt
Proceeds from bond premium
Interest paid
Repayment of bond principal
Net cash flows from capital and related financing activities
(3,295)
1,559
449
111
(955)
(999)
(3,130)
Cash Flows from Investing Activities
Proceeds from sales and maturities of investments
Purchase of investments
Investment earnings
Net cash flows from investing activities
1,499
(2,497)
57
(941)
Net Increase in Cash and Cash Equivalents
5,052
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
$
The notes are an integral part of the financial statements.
20
40,905
45,957
NORMANDALE COMMUNITY COLLEGE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2010
(IN THOUSANDS)
2010
Operating Loss
$
Adjustment to Reconcile Operating Loss
Net Cash Flows used in Operating Activities
Depreciation
Change in assets and liabilities
Inventory
Accounts receivable
Accounts payable
Salaries and benefits payable
Other compensation benefits
Capital contributions payable
Unearned revenues
Other
Net reconciling items to be added to operating income
Net cash flows used in operating activities
Non-Cash Investing, Capital, and Financing Activities
Capital projects on account
Amortization of bond premium
2,135
$
$
21
(30,397)
22
(274)
233
472
266
(39)
268
(121)
2,962
(27,435)
230
31
NORMANDALE COMMUNITY COLLEGE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
Basis of Presentation — The reporting policies of Normandale Community College, a member of Minnesota
State Colleges and Universities system, conform to generally accepted accounting principles (GAAP) in the
United States, as prescribed by the Governmental Accounting Standards Board (GASB). The statement of net
assets; statement of revenues, expenses, and changes in net assets; and the statement of cash flows include the
financial activities of Normandale Community College.
Financial Reporting Entity — Minnesota State Colleges and Universities is an agency of the state of Minnesota
and receives appropriations from the state legislature, substantially all of which are used to fund general
operations. Normandale Community College receives a portion of Minnesota State Colleges and Universities’
appropriation. The operations of most student organizations are included in the reporting entity because the
Board of Trustees has certain fiduciary responsibilities for these resources.
Basis of Accounting — The basis of accounting refers to when revenues and expenses are recognized and
reported in the financial statements. The accompanying financial statements have been prepared as a special
purpose government entity engaged in business type activities. Business type activities are those that are
financed in whole or in part by fees charged to external parties for goods or services. Accordingly, these
financial statements have been presented using the economic resources measurement focus and the accrual basis
of accounting. Revenues are recognized when earned and expenses are recognized as they are incurred.
Eliminations have been made to minimize the double counting of internal activities. Interfund receivables and
payables have been eliminated in the statements of net assets.
Minnesota State Colleges and Universities applies all applicable Financial Accounting Standards Board
statements issued prior to November 30, 1989, and GASB statements issued since that date.
Budgetary Accounting — Budgetary accounting, which is the basis for annual budgets and the allocation of
state appropriations, differs from GAAP. Budgetary accounting includes all receipts and expenses up to the
close of the books in August for the budget fiscal year. Revenues not yet received by the close of the books are
not included. The criterion for recognizing expenses is the actual disbursement, not when the goods or services
are received.
The state of Minnesota operates on a two year (biennial) budget cycle ending on June 30 of odd numbered
years. Minnesota State Colleges and Universities is governed by a 15 member board of trustees appointed by
the Governor with the advice and consent of the state senate. The Board approves the College’s biennial budget
request and allocation as part of Minnesota State Colleges and Universities’ total budget.
Budgetary control is maintained at the College. Normandale Community College’s President has the authority
and responsibility to administer the budget and can transfer money between programs within the College
without Board approval. The budget of the College can be legally amended by the authority of the Vice
Chancellor/Chief Financial Officer of Minnesota State Colleges and Universities.
State appropriations do not lapse at year end. Any unexpended appropriation from the first year of a biennium
is available for the second year. Any unexpended balance may also carry over into future bienniums.
Capital Appropriation Revenue — Minnesota State Colleges and Universities is responsible for paying
one third of the debt service for certain general obligation bonds sold for capital projects, as specified in the
authorizing legislation. The portion of general obligation bond debt service that is payable by the state of
Minnesota is recognized by Minnesota State Colleges and Universities as capital appropriation revenue when
the related expenses are incurred. Individual colleges and universities are allocated cash, capital appropriation
revenue, and debt based on capital project expenses.
22
Cash and Cash Equivalents — The cash balance represents cash in the state treasury and demand deposits in
local bank accounts as well as cash equivalents. Cash equivalents are short term, highly liquid investments
having original maturities (remaining time to maturity at acquisition) of three months or less. Cash and cash
equivalents include amounts in demand deposits, savings accounts, cash management pools, repurchase
agreements, and money market funds.
Restricted cash is cash held for capital projects and cash in the Revenue Fund for capital projects and debt
service. The Revenue Fund is used to account for the revenues, expenses and net assets of revenue producing
facilities which are supported through usage. It has the authority to sell revenue bonds for the construction and
maintenance of revenue producing facilities.
All balances related to the state appropriation, tuition revenues, and most fees are in the state treasury.
Normandale Community College also has two accounts in a local bank. The activities handled through their
local bank include financial aid, student payroll, auxiliary, and student activities.
Investments — The Minnesota State Board of Investment (SBI) 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.
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.
23
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 those that generally result from exchange transactions such as payments received for providing
services and payments made for services or goods received. Nearly all of the College’s expenses are from
exchange transactions. Certain significant revenue streams relied upon for operations are recorded as
nonoperating revenues including state appropriations, federal, state and private grants.
Tuition, Fees, and Sales, Net — Tuition, fees, and sales are reported net of scholarship allowances of
$10,559,125 for fiscal year 2010. Sales are also net of cost of goods sold of $4,129,737 for fiscal year 2010.
Restricted Student Payments — Restricted student payments consist of fee revenue restricted for payment of
revenue bonds.
Federal Grants — Normandale Community 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, $996,775 of federal aid was recognized as revenue related to the American Recovery
and Reinvestment Act of 2009. Of this amount, $573,014 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.
Use of Estimates — To prepare the basic financial statements in conformity with generally accepted accounting
principles, management must make estimates and assumptions. These estimates and assumptions may affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The most significant areas that require the use of management’s
estimates relate to allowances for uncollectible accounts, scholarship allowances, workers’ compensation
claims, and compensated absences.
Net Assets — The difference between assets and liabilities is net assets. Net assets are further classified for
accounting and reporting purposes into the following three net asset categories:
Invested in capital assets, net of related debt: Capital assets, net of accumulated depreciation, and
outstanding principal balances of debt attributable to the acquisition, construction, or improvement of
those assets.
Restricted expendable: Net assets subject to externally imposed stipulations. Net asset restrictions for
Normandale Community College are as follows:
Restricted for other — includes restrictions for the following:
Debt service — legally restricted for bond debt repayments.
Capital projects — restricted for completion of capital projects.
Faculty contract obligations — faculty development and travel required by contracts.
Donations — restricted per donor requests.
24
Net Assets Restricted for Other
(In Thousands)
2010
Debt service
$ 1,084
Capital projects
1,328
Faculty contract obligations
26
Donations
25
Total
$ 2,463
Unrestricted: Net assets that are not subject to externally imposed stipulations. Unrestricted net assets
may be designated for specific purposes by action of management, 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 College has two accounts in a local bank. The activities handled through local banks
include financial aid, student payroll, and student activities.
Minnesota Statutes, Section 118A.03, requires that deposits be secured by depository insurance or a
combination of depository insurance and collateral securities held in the state’s name by an agent of the state.
This statute further requires that such insurance and collateral shall be at least 10 percent greater than the
amount on deposit.
Cash and Cash Equivalents at June 30
(In Thousands)
Carrying Amount
2010
Cash , in bank
$ 1,039
Money markets
680
Total local cash and cash equivalents
1,719
Total treasury cash accounts
44,238
Grand Total
$ 45,957
At June 30, 2010, the College’s bank checking and money market balances were $1,718,652. These balances
were adjusted by items in transit to arrive at the College’s bank cash balance.
The College’s balance in the state treasury, except for the Revenue Fund, is invested by the Minnesota State
Board of Investment as part of the state investment pool. This asset is reported as a cash equivalent.
The cash accounts are invested in short term, liquid, high quality debt securities.
Investments — The Minnesota State Board of Investment manages the majority of the state’s investments. All
investments managed by the State Board of Investment are governed by Minnesota Statutes, Chapters 11A and
356A. Minnesota Statutes, Section 11A.24, broadly restricts investments to obligations and stocks of United
States and Canadian governments, their agencies and registered corporations, other international securities,
short term obligations of specified high quality, restricted participation as a limited partner in venture capital,
real estate, or resource equity investments, and the restricted participation in registered mutual funds.
Generally, when applicable, the statutes limit investments to those rated within the top four quality rating
categories of a nationally recognized rating agency. The statutes further prescribe the maximum percentage of
fund assets that may be invested in various asset classes and contain specific restrictions to ensure the quality of
the investments.
25
Within statutory parameters, the State Board of Investment has established investment guidelines and
benchmarks for all funds under its management. These investment guidelines and benchmarks are tailored to
the particular needs of each fund and specify investment objectives, risk tolerance, asset allocation, investment
management structure, and specific performance standards.
Custodial Credit Risk — Custodial credit risk for investments is the risk that in the event of a failure of the
counterparty, the College will not be able to recover the value of the investments that are in the possession of an
outside party. Board procedure 7.5.1 requires compliance with Minnesota Statutes, Section 118A.03 and
further excludes the use of FDIC insurance when meeting collateral requirements.
Credit Risk — Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. The College’s policy for reducing its exposure to credit risk is to comply with Minnesota Statutes,
Section 118A.04. This statute limits investments to the top quality rating categories of a nationally recognized
rating agency.
Concentration of Credit Risk — Concentration of credit risk is the risk of loss attributed to the magnitude of a
government’s investment in a single issuer. The College’s policy for reducing this risk of loss is to comply with
Board procedure 7.5.1which recommends investments be diversified by type and issuer.
Interest Rate Risk — Interest rate risk is the risk that changes in interest rates will adversely affect the fair value
of an investment. The College complies with Board procedure 7.5.1 that recommends considering fluctuating
interest rates and cash flow needs when purchasing short term and long term debt investments.
As of June 30, 2010, the College had investments in US agencies in the amount of $1,497,965 with a weighted
maturity of 0.76 years.
Securities Lending Transactions — State statutes do not prohibit the state of Minnesota from participating in
securities lending transactions. The Minnesota State Board of Investment (SBI) 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.
26
The College had no security lending allocation for fiscal year 2010. The following tables provide information
related to the securities invested by State Street:
Security Lending Analysis, State Street, at June 30
(In Thousands)
2010
Fair value of securities on loan
$3,720,274
Collateral held
3,845,016
Average duration
8 days
Average weighted maturity
43 days
3. ACCOUNTS RECEIVABLE
The accounts receivable balances are made up primarily of receivables from individuals. At June 30, 2010, the
total accounts receivable balance for the College was $2,333,560, less an allowance for uncollectible accounts
of $891,758.
Summary of Accounts Receivable at June 30
(In Thousands)
2010
Tuition
$ 1,470
Fees
281
Sales & Services
236
Other
347
Total accounts receivable
2,334
Allowance for doubtful accounts
(892)
Total net accounts receivable
$ 1,442
The allowance for uncollectible accounts has been computed based on the following aging schedule:
Age of Receivable
Less than 1 year
1 to 3 years
3 to 5 years
Over 5 years
Allowance
Percentage
15%
45%
70%
95%
4. PREPAID EXPENSE
Prepaid expense consists of $1,083,870 for fiscal year 2010, 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, $60,252 for fiscal year 2010, consists of prepaid funds for software
maintenance.
27
5. CAPITAL ASSETS
Summaries of changes in capital assets for fiscal year 2010 are as follows:
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
532
6,399
6,931
$
—
2,216
2,216
$
—
—
—
Completed
Construction
$
—
(7,405)
(7,405)
Ending
Balance
$
532
1,210
1,742
Capital assets, depreciated:
Buildings and improvements
Equipment
Library collections
Total capital assets, depreciated
53,113
3,248
1,884
58,245
—
191
261
452
—
49
260
309
7,405
—
—
7,405
60,518
3,390
1,885
65,793
Less accumulated depreciation:
Buildings and improvements
Equipment
Library collections
Total accumulated depreciation
21,360
1,969
1,069
24,398
1,581
285
269
2,135
—
48
260
308
—
—
—
—
22,941
2,206
1,078
26,225
7,405
—
39,568
$ 41,310
Total capital assets, depreciated, net
33,847
Total capital assets, net of depreciation $ 40,778
$
(1,683)
533 $
1
1
$
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
Capital expenditures
$
45
Purchased services
428
Supplies
168
Employee Salaries and Benefits
181
Repairs and maintenance
52
Other
109
Total
$
983
In addition, as of June 30, 2010, the College had payables from restricted assets in the amount of $18,407 which
were related to capital projects financed by general obligation bonds. Also as of June 30, 2010, the College had
payables from restricted assets in the amount of $211,671 related to capital projects in the Revenue Fund.
28
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 year 2010 follows:
Liabilities for:
Bond premium
General obligation bonds
Revenue bond
Total long term debt
Year Ended June 30, 2010
(In Thousands)
Beginning
Balance
Increases
$
171
9,772
15,700
25,643
$
$
111
449
—
560
$
Ending
Balance
Decreases
$
31
727
168
926
$
$
251
9,494
15,532
25,277
$
Current
Portion
$
—
732
179
911
$
The changes in other compensation benefits for fiscal year 2010 follows:
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
$
$
3,964
123
377
12
4,476
$
$
431
114
308
23
876
Ending
Balance
Decreases
$
$
305
123
172
10
610
$
$
4,090
114
513
25
4,742
Current
Portion
$
$
387
114
—
10
511
Bond Premium — In fiscal year 2010 bonds were issued resulting in a premium of $111,060. 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 2.5 percent and 5.75 percent.
The revenue bonds are payable solely from, and collateralized by, an irrevocable pledge of revenues to be
derived from the operation of the financed buildings and from student fees. These revenue bonds are payable
through fiscal year 2026. Annual principal and interest payments on the bonds are expected to require less than
76.6 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $23,752,618.
Principal and interest paid for the current year and total customer net revenues were $630,170 and $1,712,369
respectively.
29
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 — Early termination benefits are benefits received for discontinuing service earlier than
planned. See Note 8 for additional information.
Net Other Postemployment Benefit — Other postemployment benefits are health insurance benefits for certain
retired employees under a single employer fully insured plan. Under the health benefits program retirees are
required to pay 100 percent of the total premium cost. Since the premium is a blended rate determined on the
entire active and retiree population, the retirees are receiving an implicit rate subsidy. See Note 9 for further
details.
Workers’ Compensation — The state of Minnesota Department of Management and Budget manages the self
insured workers’ compensation claims activities. The reported liability for workers’ compensation of $24,450
at June 30, 2010 is based on claims filed for injuries to state employees occurring prior to the fiscal year end
and is an undiscounted estimate of future payments.
Principal and interest payment schedules are provided in the following table for general obligation bonds and
revenue bonds. There are no payment schedules for bond premiums, compensated absences, early termination
benefits, other postemployment benefits, or workers’ compensation
Long Term Debt Repayment Schedule
(In Thousands)
General
Revenue
Fiscal Years
Obligation Bonds
Bonds
Principal Interest
Principal
Interest
2011
$
732 $
445 $
179 $
695
2012
732
410
187
686
2013
732
375
636
669
2014
732
339
659
646
2015
732
303
691
620
2016-2020
3,057
1,028
3,635
2,634
2021-2025
2,069
369
4,580
1,708
2026-2030
708
59
4,965
561
Total
$ 9,494 $ 3,328 $ 15,532 $
8,219
8. EARLY TERMINATION BENEFITS
The Minnesota State College Faculty (MSCF) contract allows former Minnesota Community College
Association (MCCFA) faculty members who meet certain eligibility and combination of age and years of
service requirements to receive an early retirement incentive cash payment based on base salary at time of
separation, as well as an amount equal to the employer’s contribution for one year’s health insurance premiums
deposited in his/her health care savings plan at time of separation. The cash incentive can be paid either in one
or two payments.
The number of retired faculty who received this benefit and the amount of future liability for those faculty
members, as of the end of fiscal year 2010, follow.
Fiscal Year
2010
Number of Faculty
3
30
Future Liability
(In thousands)
$ 114
9. NET OTHER POSTEMPLOYMENT BENEFITS
The College provides health insurance benefits for certain retired employees under a single employer fully
insured plan, as required by Minnesota Statute 471.61 subdivision 2B. Active employees who retire when
eligible to receive a retirement benefit from a Minnesota public pension plan and do not participate in any other
health benefits program providing coverage similar to that herein described, will be eligible to continue
coverage with respect to both themselves and their eligible dependent(s) under the health benefits program.
Retirees are required to pay 100 percent of the total premium cost. Since the premium is a blended rate
determined on the entire active and retiree population, the retirees are receiving an implicit rate subsidy.
Annual OPEB Cost and Net OPEB Obligation — The annual other postemployment benefit (OPEB) cost
(expense) is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially
determined in accordance with the parameters of GASB Statement No. 45, Accounting and Financial Reporting
by Employers for Postemployment Benefits Other Than Pensions. The ARC represents a level of funding that, if
paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed 30 years.
The following table shows the components of the annual OPEB cost for 2010, 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)
$ 305
Interest on net OPEB obligation
17
Adjustment to ARC
(14)
Annual OPEB cost
308
Contributions during the year
(172)
Increase in net OPEB obligation
136
Net OPEB obligation, beginning of year
377
Net OPEB obligation, end of year
$ 513
The College’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB
obligation for fiscal year 2010 are 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
377
308
(172)
513
55.84%
31
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)
$ 2,340
(c)
$ 33,242
((b - a)/c)
7.04%
(b - a)
$ 2,340
(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.
10. LEASE AGREEMENTS
Operating Leases — The College is committed under various leases primarily for office equipment. These
leases are considered for accounting purposes to be operating leases. Lease expenses for the year ending June
30, 2010 totaled $10,691.
Future minimum lease payments for existing lease agreements follow:
Year Ended June 30
(In Thousands)
Fiscal Year
Amount
2011
$
24
2012
24
2013
20
2014
13
Total
$
81
32
11. 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)
Description
Salaries/
Benefits
Other
Total
Academic support
$ 5,270 $ 2,781 $ 8,051
Institutional support
3,392
2,920
6,312
Instruction
25,125
1,303
26,428
Operation & maintenance of plant
2,008
2,746
4,754
Public service
134
296
430
Student services
6,110
1,233
7,343
Auxiliary enterprises
1,429
909
2,338
Depreciation
—
2,135
2,135
Scholarships & fellowships
—
2,519
2,519
$ 43,468
Total operating
$ 16,842 expenses
$ 60,310
12. 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.
33
Required contributions for Normandale Community College were:
(In Thousands)
Fiscal Year Amount
2010
$ 343
2009
323
2008
287
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.
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 Normandale Community College were:
(In Thousands)
Fiscal Year Amount
2010
$ 348
2009
385
2008
400
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.
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.
34
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 Normandale Community College were:
(In Thousands)
Fiscal Year Employer
Employee
2010
$ 1,033
$ 773
2009
983
734
2008
845
633
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:
Maximum
Eligible
Annual
Member Group
Compensation
Contributions
Minnesota Association of Professional Employees Unclassified
$6,000 to $40,000
$ 1,700
Middle Management Association Unclassified
6,000 to 40,000
1,700
Minnesota State College Faculty Association
6,000 to 56,000
2,500
Administrators
6,000 to 60,000
2,700
Other Unclassified Members
6,000 to 40,000
1,700
The College matches amounts equal to the contributions made by participants. The contributions are made
under the authority of Minnesota Statutes, Chapter 354C.
Required contributions for Normandale Community College were:
(In Thousands)
Fiscal Year
Amount
2010
$ 580
2009
537
2008
554
35
13. 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 Normandale Community College’s
Student Union in the amount of $15,700,261.
Normandale Community College’s Portion of the Revenue Fund
(In Thousands)
2010
CONDENSED STATEMENT OF NET ASSETS
Assets
Current assets
$ 1,798
Current restricted assets
16,014
Noncurrent restricted assets
962
Total assets
18,774
Liabilities
Current liabilities
626
Noncurrent liabilities
15,257
Total liabilities
15,883
Net Assets:
Restricted
2,891
Total net assets
$ 2,891
CONDENSED STATEMENT OF REVENUES,
EXPENSES, AND CHANGE IN NET ASSETS
Operating revenues
Operating expenses
Net operating income
Non operating revenues (expenses)
Change in net assets
Net assets, beginning of year
Net asset, end of year
CONDENSED STATEMENT OF CASH FLOWS
Net cash provided (used) by:
Operating activities
Investing activities
Capital and related financing activities
Net increase
Cash, beginning of year
Cash, end of year
36
$
$
$
1,712
(40)
1,672
(414)
1,258
1,633
2,891
1,706
33
(1,309)
430
17,352
$ 17,782
14. COMMITMENTS
Normandale Community College has three outstanding projects that total $1,209,713 in construction in process
at June 30, 2010. The majority of the outstanding amount pertains to a $15.7 million project for the Kopp
Student Center addition and renovation and replacement of brick, windows, and flashing. Another project that
the College incurred some construction costs for is the Academic Partnership Center. This project was funded
for $1 million and was just started as of June 30, 2010. The other project funded for $810 thousand is the
replacement of boilers and to complete phase two of the hot water loop in the college services building.
15. 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
$2,500 - $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
Normandale Community College retains the risk of loss. The College did not have any settlements in excess of
coverage the last three years.
Minnesota State Colleges and Universities participates in the State Employee Group Insurance Plan, which
provides life insurance and hospital, medical, and dental benefits coverage through provider organizations.
Workers’ compensation is covered through state participation in the Workers’ Compensation Reinsurance
Association, which pays for catastrophic workers’ compensation claims. Other workers’ compensation risks are
covered through self insurance for which Minnesota State Colleges and Universities pays the cost of claims
through the state Workers’ Compensation Fund. A Minnesota State Colleges and Universities workers’
compensation payment pool helps institutions manage the volatility of such claims. Annual premiums are
assessed by the pool based on salary dollars and claims history. From this pool all workers’ compensation
claims are paid to the state Workers’ Compensation Fund.
The following table presents changes in the balances of workers’ compensation liability during the fiscal year
ended June 30, 2010.
(In Thousands)
Fiscal Year Ended 6/30/10
Beginning
Liability
$ 12
Net Additions
& Changes
$ 23
37
Payments
$ 10
Ending
Liability
$ 25
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SUPPLEMENTAL SECTION
39
40
41
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42