CLAREMONT GRADUATE UNIVERSITY
Claremont, California
EIN 1-951664100-A1
Independent Auditor's Report in
Accordance with OMB Circular A-133
and Financial Statements
June 30, 2015 and 2014
CLAREMONT GRADUATE UNIVERSITY
June 30, 2015 and 2014
CONTENTS
Page
Report of Independent Auditors
Financial Statements and Related Footnotes
1-2
3 - 24
Report of Independent Auditors 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
25 - 26
Report of Independent Auditors on Compliance for the Major Federal Program and Report
on Internal Control Over Compliance as Required by OMB Circular A-133
27 - 29
Schedule of Findings and Questioned Costs
30 - 31
Management's Corrective Action Plan
32
Schedule of Prior Audit Findings
33 - 34
Supplemental Information
Schedule of Expenditures of Federal Awards
Notes to Schedule of Expenditures of Federal Awards
35 - 36
37
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees
Claremont Graduate University
Report on the Financial Statements
We have audited the accompanying financial statements of Claremont Graduate University (the
“University”), which comprise the statements of financial position as of June 30, 2015 and 2014, and the
related statements of activities and cash flows for the years then ended, and the related notes to the
financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of
the financial statements.
1
We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Claremont Graduate University as of June 30, 2015 and 2014, and the changes in its
net assets and its cash flows for the years then ended in accordance with accounting principles generally
accepted in the United States of America.
Other Matters
Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole.
The accompanying schedule of expenditures of federal awards, as required by Office of Management and
Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is presented
for purposes of additional analysis and is not a required part of the financial statements. Such
information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the financial statements. The information has
been subjected to the auditing procedures applied in the audit of the financial statements and certain
additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the financial statements or to the financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted
in the United States of America. In our opinion, the information is fairly stated, in all material respects, in
relation to the financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 29,
2015 on our consideration of the University’s internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the University’s internal
control over financial reporting and compliance.
Los Angeles, California
October 29, 2015
2
CLAREMONT GRADUATE UNIVERSITY
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
June 30, 2015 and 2014
2015
2014
Assets:
Cash and cash equivalents
Accounts receivable, net (Note 3)
Prepaid expenses and deposits
Contributions receivable, net (Note 4)
Notes receivable, net (Note 5)
Funds held in trust for others
Investments (Note 6)
Plant facilities, net (Note 8)
$
Total assets
295,648
4,522,224
2,463,539
6,246,323
1,219,703
696,531
191,521,815
69,419,572
$
51,726
5,391,573
2,253,439
5,534,919
1,437,814
673,883
198,055,132
71,180,056
$ 276,385,355
$ 284,578,542
$
$
Liabilities:
Accounts payable and accrued liabilities
Deposits and deferred revenues
Liability for staff retirement plan
Life income and annuities payable (Note 2)
Notes and bonds payable (Note 9)
Government advances for student loans
Asset retirement obligation
Total liabilities
6,539,609
3,014,201
1,581,387
1,608,523
53,673,979
1,526,834
839,802
9,951,841
3,076,550
454,807
1,808,576
54,027,733
1,594,656
787,321
68,784,335
71,701,484
38,706,891
49,035,192
119,858,937
42,094,404
48,979,630
121,803,024
207,601,020
212,877,058
$ 276,385,355
$ 284,578,542
Net Assets: (Note 10)
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these consolidated financial statements.
-- 32 --
CLAREMONT GRADUATE UNIVERSITY
CONSOLIDATED STATEMENT OF ACTIVITIES
For the year ended June 30, 2015
Temporarily
Restricted
Unrestricted
Revenues and releases of net assets:
Tuition and fees
Less financial aid discount
Net tuition and fees revenues
$
Gifts and private contracts
Federal grants and contracts
Spending policy income
Other investment income (loss)
Other revenue
Auxiliary enterprises
Release and reclassification of restricted
net assets
Total revenues and releases
of net assets
52,235,255
(12,443,372)
39,791,883
$
-
6,201,147
6,116,002
7,193,348
560,405
1,107,553
2,446,874
3,791,166
370,242
134,748
559,432
-
1,194,335
(1,194,335)
64,611,547
3,661,253
Permanently
Restricted
$
249,986
291,509
(105,390)
436,105
Total
2015
$
52,235,255
(12,443,372)
39,791,883
10,242,299
6,116,002
7,855,099
589,763
1,666,985
2,446,874
68,708,905
Expenses:
Instruction
Research
Academic support
Student services
Institutional support
Student aid
Auxiliary enterprises
34,217,828
7,737,764
7,345,422
3,719,446
12,469,986
624,540
3,102,924
-
-
34,217,828
7,737,764
7,345,422
3,719,446
12,469,986
624,540
3,102,924
Total expenses
69,217,910
-
-
69,217,910
(78,400)
(50,000)
92,823
Other changes in net assets:
Actuarial adjustment
Adjustments to contributions receivable
Net realized and unrealized gains (losses) on
investments, net of gain appropriations
Other comprehensive pension loss
Redesignation of net assets
(1,813,489)
(467,621)
3,356,323
Change in net assets
(3,387,513)
Net assets, beginning of year
42,094,404
Net assets, end of year
143,637
$
38,706,891
(3,124,128)
(353,163)
55,562
$
530,145
(3,003,160)
(4,407,472)
(467,621)
-
(1,944,087)
(5,276,038)
48,979,630
121,803,024
212,877,058
49,035,192
$ 119,858,937
$ 207,601,020
The accompanying notes are an integral part of these financial statements.
- 43 --
158,060
(50,000)
CLAREMONT GRADUATE UNIVERSITY
CONSOLIDATED STATEMENT OF ACTIVITIES
For the year ended June 30, 2014
Temporarily
Restricted
Unrestricted
Revenues and releases of net assets:
Tuition and fees
Less financial aid discount
Net tuition and fees revenues
$
Gifts and private contracts
Federal grants and contracts
Spending policy income
Other investment income
Other revenue
Auxiliary enterprises
Release and reclassification of restricted
net assets
Total revenues and releases
of net assets
52,712,976
(13,730,630)
38,982,346
$
-
3,943,271
6,743,071
7,136,236
704,131
1,309,646
2,404,692
818,071
97,282
115,070
11,462
-
3,150,459
(3,150,459)
64,373,852
(2,108,574)
Permanently
Restricted
$
4,306,039
453,088
(160,261)
4,598,866
Total
2014
$
52,712,976
(13,730,630)
38,982,346
9,067,381
6,743,071
7,686,606
658,940
1,321,108
2,404,692
66,864,144
Expenses:
Instruction
Research
Public service
Academic support
Student services
Institutional support
Student aid
Auxiliary enterprises
34,882,658
7,861,568
22,600
7,059,886
4,022,941
11,046,960
600,162
3,210,689
-
-
34,882,658
7,861,568
22,600
7,059,886
4,022,941
11,046,960
600,162
3,210,689
Total expenses
68,707,464
-
-
68,707,464
Other changes in net assets:
Actuarial adjustment of life income
and annuity liabilities
Net realized and unrealized gains (losses) on
investments, net of gain appropriations
Other comprehensive pension income
Gain on disposal of plant facilities
Gain (loss) on settlement
Redesignation of net assets
Change in net assets
-
Net assets, beginning of year
Net assets, end of year
$
172,323
632,834
5,445,336
184,904
397,124
(336,000)
41,108
9,054,473
(41,108)
399,973
-
1,398,860
7,077,114
5,631,673
14,107,647
40,695,544
41,902,516
116,171,351
198,769,411
48,979,630
$ 121,803,024
$ 212,877,058
42,094,404
$
The accompanying notes are an integral part of these financial statements.
-- 54--
805,157
14,899,782
184,904
397,124
(336,000)
-
CLAREMONT GRADUATE UNIVERSITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30, 2015 and 2014
2015
Cash flows from operating activities:
Change in net assets
Adjustments to reconcile change in net assets to net cash
provided by (used in) operating activities:
Depreciation expense
Amortization expense
Accretion expense
Change in allowance for doubtful accounts
Loss on settlement
Increase (decrease) in asset retirement obligation
Gain on disposal of plant facilities
Unrealized (gains) losses on investments
Other comprehensive pension (gain) loss
Staff retirement plan contributions over expense
Adjustment of actuarial liability
(Increase) decrease in accounts receivable
(Increase) decrease in prepaid expenses and deposits
(Increase) decrease in funds held in trust for others
(Increase) decrease in contributions receivable
Increase (decrease) in accounts payable and accrued liabilities
Increase (decrease) in deposits and deferred revenues
Contributions restricted for long-term purposes
Net cash provided by operating activities
$
Cash flows from investing activities:
Purchases of investments
Proceeds from sales of investments
Purchase of plant facilities
Proceeds from sales of plant facilities
Loans advanced to students
Collection of student loans
Net cash used in investing activities
Cash flows from financing activities:
Payments to annuity and life income beneficiaries
Investment income for annuity and life income contracts
Proceeds from notes and line of credit
Principal payments for notes and line of credit
Principal payments for bonds
Contributions restricted for endowment
Decrease in government advances for student loans
Net cash provided by (used in) financing activities
Net increase (decrease) in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flows:
Interest paid
The accompanying notes are an integral part of these financial statements.
-- 65 --
(5,276,038)
2014
$
14,107,647
2,458,013
(12,550)
52,481
(425,285)
11,640,004
467,621
658,959
(158,060)
1,240,902
(221,338)
(22,648)
(881,703)
106,405
(62,349)
(364,718)
9,199,696
2,585,834
(12,550)
47,420
146,484
336,000
55,620
(397,124)
(8,111,153)
(184,904)
(96,079)
(805,157)
(1,599,275)
(103,925)
(228,873)
1,493,697
832,842
(52,509)
(4,525,397)
3,488,598
(124,986,270)
118,885,802
(697,529)
75,500
196,344
(6,526,153)
(146,504,384)
136,436,589
(612,135)
397,124
125,250
(33,283)
(10,190,839)
(102,327)
1,080,776
5,765,000
(9,259,966)
(210,000)
364,718
(67,822)
(2,429,621)
(164,735)
549,778
21,092,808
(20,417,562)
(200,000)
4,525,397
(68,250)
5,317,436
$
243,922
51,726
295,648
$
(1,384,805)
1,436,531
51,726
$
2,772,902
$
2,801,708
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 1 – ORGANIZATION:
Founded in 1925, Claremont Graduate University (the University) is a member of The Claremont Colleges, located forty-five
miles east of Los Angeles. The member institutions (see Note 14) are academically independent but share some central programs
and services.
The University is a doctoral research intensive university with graduate programs in the social and information sciences, arts,
humanities, management, education, mathematics, public health, and botany. Each school within the University has a distinctive
academic focus and strong strategic goals. The University as a whole is committed to developing programs that nurture a
distinctive and distinguished signature education available to students. The objective of the University as a nonprofit
educational institution is to educate a diverse student population in graduate studies. The Blais Foundation (the Foundation) was
formed to engage in charitable and educational activities directed toward support of academic cooperation between the
University and the other Claremont Colleges. The Foundation is a separate 501(c)(3) nonprofit entity incorporated in the State of
California.
The University and the Foundation are nonprofit corporations exempt from federal income tax under Section 501(c)(3) of the
Internal Revenue Code and corresponding California provisions.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following accounting policies of the University are in accordance with those generally accepted for colleges and universities.
Basis of Presentation:
The accompanying consolidated financial statements are prepared on the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America (GAAP) in accordance with the American Institute of
Certified Public Accountants' Audit and Accounting Guide, "Not-for-Profit Entities".
Consolidated Financial Statements:
The activities of Blais Foundation are consolidated in the University's consolidated financial statements, as required by generally
accepted accounting principles.
Net Asset Categories:
The accompanying consolidated financial statements present information regarding the University’s consolidated financial
position and activities according to three categories of net assets: unrestricted, temporarily restricted, and permanently restricted.
The three categories are differentiated by donor restrictions.
Unrestricted net assets: Net assets that are not subject to donor-imposed restrictions.
Temporarily restricted net assets: Net assets that are subject to donor-imposed restrictions that have not yet been met and
accumulated earnings on permanently restricted assets. When a donor restriction expires or the accumulated earnings are
appropriated for expenditure, temporarily restricted net assets are reclassified to unrestricted net assets.
Permanently restricted net assets: Net assets that are subject to donor-imposed restrictions that the University maintain them
permanently. Generally, the donors permit the University to use all or part of the income earned on these assets for general or
specific purposes.
Revenue Recognition:
The University's revenue recognition policies are as follows:
Tuition and fees: Student tuition and fees are recorded as revenue in the year in which academic services are rendered. Student
tuition and fees received in advance of services to be rendered are recorded as deferred revenue.
Investment income: Investment income and gains and losses on investments and changes in other assets or liabilities are
reported as increases or decreases in unrestricted net assets unless their use is explicitly restricted by the donor.
Grants and contracts: As allowable expenditures under such agreements are incurred, revenue from Federal grants and
contracts are reported as an increase in unrestricted net assets.
--76 --
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Revenue Recognition, continued:
Contributions: Contributions, including unconditional promises to give, are recognized as revenue in the period received and
are reported as increases in the appropriate category of net assets. Contributions where donor restrictions are met within the
same fiscal year as the contribution is received are included in unrestricted net assets. Conditional promises to give are not
recognized until they become unconditional, that is when the conditions on which they depend are substantially met.
Contributions of assets other than cash are recorded at their estimated fair value at the date of gift. Contributions to be received
in future periods are discounted at an appropriate discount rate.
Expiration of donor-imposed restrictions: The expiration of a donor-imposed restriction on a contribution or on endowment
income is recognized in the period in which the restriction substantially expires. At that time, the related resources are
reclassified to unrestricted net assets. A restriction expires when the stipulated time period has elapsed, when the stipulated
purpose for which the resource was restricted has been fulfilled, or both. It is the University's policy to release the restrictions on
contributions of cash or other assets received for the acquisitions of long-lived assets when the long-lived assets are placed into
service.
Expense Allocation:
The consolidated statements of activities present expenses as decreases in unrestricted net assets and by functional classification.
Depreciation, interest expense, and operation and maintenance of plant expense are allocated to functional classifications based
on building square footage dedicated to that specific function.
Cash and Cash Equivalents:
For purposes of reporting cash flows, cash includes demand deposit bank accounts. Resources invested in money market funds
and short-term investments with original maturities of three months or less are classified as cash equivalents, except that any
such investments held by external investment managers are classified as investments. The University's cash and cash equivalent
accounts at times may exceed federally insured limits. The University has not experienced any losses in such accounts.
Deposits and Deferred Revenue:
Deposits and deferred revenue represent revenues collected but not substantially earned as of June 30. This is comprised of
revenue or deposits for student summer tuition recognized during the fall semester. As the summer semester is conducted over a
fiscal year period, deferred revenue is recorded for revenue related to those programs that take place in the next fiscal year.
Allowances for Doubtful Accounts:
Management has determined that the allowances for doubtful accounts are appropriate based on a periodic review of accounts.
Accounts are reviewed on an individual basis, taking into consideration individual facts and circumstances that may impact their
ability to be collected. However, in the interest of conservatism, a percentage of aged balances are assumed uncollectible. The
percentage varies based on the number of months the account is outstanding. Balances that are deemed uncollectible are written
off through a charge to bad debt expense or the provision for doubtful accounts and a credit to accounts receivable.
Investments:
Where permitted by law, the University pools investments for management purposes. The remaining investments are managed
as separate investments. Investments are reported at fair value, except for real estate investments, trust deed loans, and certain
other miscellaneous assets which are stated at cost. Venture capital investments are stated at fair value as of the most recent
valuation prior to year end. The University reviews and evaluates the values provided by the venture capital investment
managers and agrees with the valuation methods and assumptions used in determining the fair value of the alternative
investments. Those estimated fair values may differ significantly from the values that would have been used had a readily
available market for these securities existed. The cost of securities sold is determined by the average cost method and is used to
compute realized gains and losses. Unrealized gains and losses reflect the changes in the market values of investments from the
prior year. In the absence of explicit donor stipulation or legal restrictions investment income and gains and losses on
investments are reported as increases or decreases in unrestricted net assets. The date of record for investments is the trade date.
The University holds various investments, including mutual funds and bonds. The bonds and underlying securities in the mutual
funds are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain
investment securities and investment contracts and the level of uncertainty related to changes in the value of the investment
securities, it is at least reasonably possible that changes in risks in the near term would materially affect the University's account
balances and the amounts reported in the Consolidated Statements of Financial Position and the Consolidated Statements of
Activities.
The University’s investments also include funds held in trust by others. These funds consist of a separately invested endowment
which benefits doctoral studies at the University, and the funds of the Foundation included in the University’s consolidated
financial statements.
-- 87 -
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Management of Pooled Investments:
The University follows an investment policy that anticipates a greater long-range return through investing for capital
appreciation and accepts lower current yields from dividends and interest. In order to offset the effect of lower current yields for
current operations, the Board of Trustees has adopted a spending policy for pooled investments. The spending rate for the fiscal
year as approved by the Board of Trustees is 5% of the average market value at the end of the 12 contiguous quarters the last of
which ended on September 30 of the preceding fiscal year. If the ordinary income of pooled investments is insufficient to
provide the full amount of investment return specified, the balance may be appropriated from realized gains of the pooled
investments. At June 30, 2015 and 2014, these cumulative net realized gains totaling $31,832,890 and $26,687,475,
respectively, are available for appropriation under the University's spending policy.
Endowment Funds:
The Board of Trustees of the University interprets the California Uniform Prudent Management of Institutional Funds Act
(UPMIFA) to state that the University, in the absence of explicit donor stipulations to the contrary, may appropriate for
expenditure or accumulate so much of an endowment as the University determines prudent for the uses, benefits, purposes, and
duration for which the endowment fund is established. Therefore, the University classifies as permanently restricted net assets
the original value of gifts to the endowment and the accumulations made in accordance with the donor intent. The remaining
portion of the donor-restricted endowment fund is classified as temporarily restricted net assets until those amounts are
appropriated for expenditure by the University in a manner consistent with the standard of prudence prescribed by California
UPMIFA which includes the:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Duration and preservation of the donor-restricted endowment fund
Mission of the University and purpose of the endowment fund
General economic conditions
Possible effects of inflation and deflation
Expected total return from income and appreciation of investments
Other resources of the University
Investment policy of the University
Funds with Deficiencies:
From time to time, as a result of market declines, the fair value of certain donor restricted endowments falls below the level that
the donor or UPMIFA requires the University to retain as a fund of perpetual duration. Deficiencies of this nature have been
recorded as reductions in unrestricted net assets and were approximately $1,659,000 and $1,064,000 at June 30, 2015 and 2014,
respectively. As the market value of the investments increase, the deficiency will reverse.
Fair Value of Financial Instruments:
A financial instrument is defined as a contractual obligation that ultimately ends with the delivery of cash or an ownership
interest in an entity. Disclosures included in these notes regarding the fair value of financial instruments have been derived
using external market sources, estimates using present value or other valuation techniques.
The University carries most investments and its beneficial interest in trusts held by a third party at fair value. Cash and cash
equivalents and other investments are carried at cost which is considered to approximate fair value. Fair value is defined as the
price that would be received to sell an asset (i.e. the “exit price”) in an orderly transaction between market participants at the
measurement date. Fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value and gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements).
-- 98 --
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Fair Value of Financial Instruments, continued:
The three levels of the fair value hierarchy are as follows:
Level 1 – Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the University has
the ability to access at the measurement date;
Level 2 – Inputs other than quoted prices that are observable for the asset either directly or indirectly, including inputs in markets
that are not considered to be active;
Level 3 – Inputs that are unobservable.
Inputs are used in applying the valuation techniques and broadly refer to the assumptions that the University uses to make
valuation decisions, including assumptions about risk. Inputs may include quoted market prices, recent transactions, manager
statements, periodicals, newspapers, provisions within agreements with investment managers and other factors. An investment’s
level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not
necessarily correspond to the University’s perceived risk of that investment.
The investments in cash equivalents, mutual funds, and certain domestic and international equities are valued based on quoted
market prices, and are therefore typically classified within Level 1.
The investments in fixed income and other investment funds valued using net asset value per share (NAV) or its equivalent as
reported by investment managers, and that have trading activity and the ability to redeem at NAV on or near the reporting date,
are classified within Level 2.
The investments in hedge funds, private equity funds, limited partnerships, and the University's beneficial interest in trusts held
by third parties, which are recorded within contributions receivable, are valued utilizing unobservable inputs, and are therefore
classified within Level 3. These assets are presented in the accompanying consolidated financial statements at fair value. The
University has concurred with the fair value as provided by the investment manager and may incorporate management
assumptions and best estimates after considering a variety of internal and external factors. Such value generally represents the
University’s proportionate share of the partner’s capital of the investment partnerships or the University's allocations in
investment funds.
The general partners of the underlying investment partnerships generally value their investments at fair value. Investments with
no readily available market are valued at an estimated fair value by referring to meaningful third party transactions, comparable
public market valuations, and/or the income approach. Consideration is also given to financial condition and operating results of
the investment, the amount that the investment partnerships can reasonably expect to realize upon the sale of the securities, and
any other factors deemed relevant. An investment can be carried at acquisition price (cost) if little has changed since the initial
investment of the company and is most representative of fair value. Investments with a readily available market (listed on a
securities exchange or traded in the over-the-counter market) are valued at quoted market prices or at an appropriate discount
from such price if marketability of the securities is restricted.
Although the University uses its best judgment in determining the fair value, there are inherent limitations in any methodology.
Future confirming events could affect the estimates of fair value and could be material to the consolidated financial statements.
These events could also affect the amount realized upon liquidation of the investments.
9 ---10
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Plant Facilities:
Plant facilities consist of property, plant and equipment which are stated at cost representing the original purchase price or the
fair value at the date of the gift, less accumulated depreciation computed on a straight-line basis over the estimated useful lives
of buildings, permanent improvements, and equipment. The University capitalizes all buildings and building improvements with
a cost basis over $100,000 as well as equipment and land improvements with a cost basis over $25,000. The University has
adopted time frames for depreciation of 7 years for equipment and 40 years for buildings. The cost and accumulated
depreciation of assets sold or retired are removed from the accounts and the related gains or losses are included in the
Consolidated Statements of Activities. Asset retirement obligations are recorded based on estimated settlement dates and
methods. Expenditures for maintenance, repairs, and renewals are charged to expense as incurred.
Proceeds from the disposal of equipment acquired with federal funds will be transferred to the federal awarding agency. No
federal project equipment was disposed of during the years ended June 30, 2015 and 2014. No property or equipment has been
acquired with restricted assets where title may revert to another party.
Annuity and Life Income Contracts and Agreements:
The University has legal title to annuity and life income contracts and agreements subject to life interests of beneficiaries. Life
income and annuities payable represent actuarially determined liabilities for contractual obligations under gift annuities,
unitrusts, and pooled income funds. No significant financial benefit is now being or can be realized until the contractual
obligations are released. However, the costs of managing these contracts and agreements are included in operating expenditures.
The University uses the actuarial method of recording annuity and life income contracts and agreements. Under this method, the
asset is recorded at fair value when a gift is received. The present value of the aggregate annuity payable is recorded as a
liability, based upon life expectancy tables, and the remainder is recorded as a contribution in the appropriate net asset category.
The liability account is credited with investment income and gains and is charged with investment losses and payments to
beneficiaries. Periodic adjustments are made between the liability account and the net asset account for actuarial gains and
losses. The actuarial liability is based on the present value of future payments discounted at rates ranging from 4.8% to 8.9%
and over estimated lives according to Annuity 2003 Unisex Mortality Tables at June 30, 2015 and 2014.
Income Taxes:
The University had no unrecognized tax benefits, and no uncertain tax positions at June 30, 2015 and 2014. The University is
no longer subject to income tax examinations by taxing authorities for years before 2011 for its federal filing and for years
before 2010 for its state filings.
Use of Estimates:
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Redesignation of Net Assets:
Certain amounts previously received from donors have been transferred among net asset categories due to changes in donor
designations.
10 -- 11
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 3 - ACCOUNTS RECEIVABLE:
Accounts receivable at June 30, 2015 and 2014 are as follows:
Student accounts
Grants and contracts
Claremont Colleges and other
$
Less allowance for doubtful accounts receivable
Net accounts receivable
$
2015
4,166,832
851,287
614,745
5,632,864
(1,110,640)
4,522,224
$
$
2014
5,221,046
1,015,278
637,442
6,873,766
(1,482,193)
5,391,573
NOTE 4 - CONTRIBUTIONS RECEIVABLE:
Unconditional promises to give are included in the consolidated financial statements as contributions receivable and revenue of
the appropriate net asset category. Unconditional promises to give were discounted at rates ranging from 1.9% to 5.2% and are
expected to be realized in the following years ending June 30:
In one year or less
Between one year and five years
More than five years
$
Less discount to present value
Net contributions receivable
$
2015
3,756,251
2,129,425
493,954
6,379,630
(133,307)
6,246,323
$
$
2014
2,126,190
3,001,640
557,659
5,685,489
(150,570)
5,534,919
Management has determined that an allowance for doubtful accounts for contributions receivable is not necessary based on a
periodic review of accounts.
Contributions receivable at June 30, 2015 and 2014 are intended for the following uses:
General Support
Endowment
Total
$
2015
3,853,597
2,392,726
$
2014
3,029,091
2,505,828
$
6,246,323
$
5,534,919
The University also has a conditional promise to give totaling $1,000,000. This promise to give is contingent upon the
University obtaining matching funds. The purpose of the promise is for an endowed professorship. As the amount is
conditional, it is not recognized as revenue until the condition is met.
- 12
11 --
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 4 - CONTRIBUTIONS RECEIVABLE, CONTINUED:
The University is beneficiary to certain trusts where a third party acts as trustee. The present value of these interests is recorded
in contributions receivable on the Consolidated Statements of Financial Position.
The following tables present the beneficial interest in trusts carried on the Consolidated Statements of Financial Position by level
within the valuation hierarchy as of June 30, 2015 and 2014:
Level 1
Nonredeemable securities:
Beneficial interest in trusts held by
third parties
$
Level 2
-
$
Level 1
Nonredeemable securities:
Beneficial interest in trusts held by
third parties
$
$
-
$
$
719,023
776,352
-
$
Additions/
(Maturities)
$
404
14,870
719,023
Actuarial
Adjustment
$
Additions/
(Maturities)
$
548,724
2015
$
Level 3
$
Balance at
June 30, 2013
Beneficial interest in trusts held by
third parties
-
Level 2
Balance at
June 30, 2014
Beneficial interest in trusts held by
third parties
Level 3
(170,703)
Actuarial
Adjustment
$
(72,199)
548,724
2014
$
719,023
Balance at
June 30, 2015
$
548,724
Balance at
June 30, 2014
$
719,023
The significant unobservable inputs used in the fair value measurement of the University's beneficial interest in trusts are the
mortality rate and risk factor used in the rate to discount the cash flow of the trusts. The mortatility rate ranged from 1-21 years
and the risk rate ranged from 3-4%. Significant increases (decreases) in any of the inputs would result in a significantly lower
(higher) fair value measurement. Beneficial interest in trusts classified as Level 3 are valued based on the discounted cash flow
of the income and expenses from the underlying assets and liabilities in the trusts over the estimated lives of the income
beneficiaries of the trusts.
Net unrealized gains (losses) on beneficial interest in trusts in the tables above are reflected in the line "Actuarial adjustment" on
the Consolidated Statements of Activities.
It is the policy of the University to provide full disclosure to the Audit Committee of the Board of Trustees of any "RelatedParty Transactions".
The University receives contributions and promises to give from members of the Board of Trustees. Total contributions from
trustees during fiscal years ended June 30, 2015 and 2014 totaled $428,776 and $642,438, respectively. At June 30, 2015 and
2014 contributions receivable from members of the Board of Trustees totaled $92,608 and $207,608, respectively.
NOTE 5 - NOTES RECEIVABLE:
Notes receivable at June 30, 2015 and 2014 are as follows:
Federal loan funds - student notes receivable
Less allowance for doubtful notes receivable
Net notes receivable
$
2015
1,277,976
(58,273)
$
2014
1,549,820
(112,006)
$
1,219,703
$
1,437,814
Federal loan funds receivable represents a revolving loan fund administered by the University, funded by the federal Perkins
loan program. A corresponding liability, reporting the amount owed to the federal government should the University exit the
program, is included on the Consolidated Statements of Financial Position. Allowances have been established based on
experience, and balances deemed uncollectible are written off through a charge to bad debt expense or the provision for doubtful
accounts and a credit to accounts receivable. The University follows federal guidelines for determining when student loans are
delinquent or past due for both federal and institutional loans.
-- 12
13 --
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 6 - INVESTMENTS:
Where permitted by gift agreement and/or applicable government regulations, investments are pooled. Pooled investments and
allocation of pooled investment income are accounted for on a unit value method. The following is a summary of data pertaining
to this method for the years ended June 30, 2015 and 2014:
2015
2014
Unit market value at end of year
$
211.40
$
216.92
Net ordinary investment income per unit
$
0.51
$
0.05
Units owned:
Unrestricted net assets
146,043
150,247
Temporarily restricted net assets
-
1,658
Permanently restricted net assets
680,000
678,460
826,043
830,365
Total units
The following schedule summarizes the University's investment returns for the years ended June 30, 2015 and 2014:
Dividends and interest
Rent and other investment income
Realized gains, net
Unrealized gains (losses), net
$
Less investment expense
Net investment return
$
2015
2,336,156
296,488
14,688,463
(11,640,004)
5,681,103
(1,643,713)
4,037,390
$
$
2014
2,227,617
436,905
14,461,428
8,111,153
25,237,103
(1,991,775)
23,245,328
The following schedule summarizes the University's investment returns as presented on the Consolidated Statements of
Activities for the years ended June 30, 2015 and 2014:
2015
2014
Endowment payout
$
7,855,099
$
7,686,606
Other investment income
589,763
658,940
(4,407,472)
14,899,782
Net realized and unrealized gains (losses) on investments, net of gain appropriations
$
- 14
13 --
4,037,390
$
23,245,328
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 6 - INVESTMENTS, CONTINUED:
The following schedule summarizes the assets in pooled investments and the assets held as separate investments at June 30, 2015
and 2014:
Investments:
Cash equivalents
Common stock
Domestic
International
Long only equity managed funds - domestic
Mutual funds
Equity hedge funds
Domestic long/short
Global long only
International long/short
International long only
Hedge funds
Domestic distressed
International distressed
Private equity limited partnership interests
Fixed income
Total return strategy
Interest and FOREX derivatives-international
Real properties
Trust deed loans
Funds held in trust by others
Other assets
$
Total investments
2015
15,984,707
$
2014
15,744,049
2,091,075
17,238
57,659,626
831,616
3,437,457
23,590
64,950,387
1,260,436
32,405,979
4,870,046
24,654,423
36,449,407
6,849,992
15,138,721
16,786,518
3,854,585
10,040,039
19,782,403
2,676,843
9,554,048
1,231,988
8,678,688
53,613
262,362
11,695,693
403,619
1,886,141
7,774,029
53,613
322,963
11,761,682
389,371
$ 191,521,815
$ 198,055,132
2015
2014
$ 169,351,488
15,407,090
$ 174,096,498
13,484,771
$ 184,758,578
$ 187,581,269
$
3,546,481
$
612,320
5,961,898
$
3,546,481
$
6,574,218
$
5,274,407
(2,057,651)
$
5,412,062
(1,512,417)
$
3,216,756
$
3,899,645
The following schedule shows investments by category:
Endowment and funds functioning as endowment:
Pooled
Separately invested
Total endowment and funds functioning as endowment
Annuity and life income contracts and agreements:
Pooled
Separately invested
Total annuity and life income contracts and agreements
Other investments:
Pooled
Separately invested
Total other investments
Total investments:
Total pooled
Total separately invested
Total investments
$ 174,625,895
16,895,920
$ 180,120,880
17,934,252
$ 191,521,815
$ 198,055,132
The University holds certain investments at the original appraisal value and does not revalue the assets on a recurring basis. At
June 30, 2015 and 2014 investments held at cost were $329,975 and $390,573, respectively, which the University believes
approximates fair value.
14 --- 15
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 7 - FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS:
The following table presents the investments held by third parties carried on the Consolidated Statements of Financial Position
by level within the valuation hierarchy as of June 30, 2015:
Level 1
Cash and cash equivalents
Common stock
Domestic
International
Long only equity managed funds - domestic
Mutual funds
Equity hedge funds
Domestic long/short
Global long only
International long/short
International long only
Hedge funds
Domestic distressed
International distressed
Private equity limited partnership interests
Fixed income
Total return strategy
Interest and FOREX derivatives-international
Funds held in trust by others
Other assets
Total
$
Level 2
15,984,707
$
2,091,075
17,238
57,659,626
831,616
$
2015
-
-
$
-
15,984,707
2,091,075
17,238
57,659,626
831,616
-
10,322,173
4,870,046
22,281,802
22,083,806
2,372,621
32,405,979
4,870,046
24,654,423
-
7,110,652
-
9,675,866
3,854,585
10,040,039
16,786,518
3,854,585
10,040,039
8,678,688
-
1,231,988
8,678,688
11,695,693
389,619
56,705,605
$ 191,191,840
1,231,988
11,695,693
389,619
$
Level 3
-
89,901,562
$
44,584,673
$
The following table presents the investments held by third parties carried on the Consolidated Statements of Financial Position
by level within the valuation hierarchy as of June 30, 2014:
Level 1
Cash and cash equivalents
Common stock
Domestic
International
Long only equity managed funds - domestic
Mutual funds
Equity hedge funds
Domestic long/short
International long/short
International long only
Hedge funds
Domestic distressed
International distressed
Private equity limited partnership interests
Fixed income
Total return strategy
Interest and FOREX derivatives-international
` Funds held in trust by others
` Other assets
Total
$
Level 2
15,744,049
$
3,437,457
23,590
64,950,387
1,260,436
$
-
2014
-
$
15,744,049
3,437,457
23,590
64,950,387
1,260,436
-
29,632,298
6,849,992
15,138,721
6,817,109
-
36,449,407
6,849,992
15,138,721
-
7,656,503
-
12,125,900
2,676,843
9,554,048
19,782,403
2,676,843
9,554,048
7,774,029
-
1,886,141
7,774,029
11,761,682
375,374
38,947,929
$ 197,664,559
1,886,141
11,761,682
375,374
$
Level 3
-
99,439,116
$
59,277,514
- 15
16 --
$
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 7 - FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS, CONTINUED:
The following table includes a rollforward of the amounts for the year ended June 30, 2015 and 2014 for assets classified within
Level 3:
Equity hedge funds
Domestic long/short
International long only
Hedge funds
Domestic distressed
International distressed
Private equity
Fixed income
Alternative long/short funds
Balance at
June 30, 2014
Total Realized
and Unrealized
Gains (Losses)
$
$
12,125,900
2,676,843
9,554,048
38,947,929
1,007,216
(127,379)
104,502
Total Realized
and Unrealized
Gains (Losses)
$
$
(182,891)
12,923,317
11,222,280
1,952,240
302,317
(568,520)
11,248,418
(474,389)
478,459
$
35,872,474
14,232,851
3,500,000
25,222,567
$
725,980
7,000,000
600,000
2,461,217
2,474,416
-
$
12,535,633
(3,557,658)
-
$
(2,836,119)
(814,883)
(9,908,660)
$
9,675,866
3,854,585
10,040,039
$
2,339,267
22,083,806
2,372,621
8,678,688
$
56,705,605
Balance at
Other Activity [1] June 30, 2014
Sales
$
3,584,288
(1,000,000)
(376,824)
114,440
17,363
(2,700,000)
$
Purchases
(302,777)
$
$
3,500,000
$
Balance at
Other Activity [1] June 30, 2015
Sales
1,285,986
1,454,144
1,249,586
104,659
$
Balance at
June 30, 2013
-
$
(523,077)
(390,842)
33,925
7,774,029
$
Equity hedge funds
Domestic long/short
Hedge funds
Domestic distressed
International distressed
Private equity
Fixed income
Alternative long/short funds
Interest and FOREX
derivatives-international
6,817,109
-
Purchases
-
$
-
$
6,817,109
(3,349,658)
(86,691)
(3,636,525)
1
62,397
12,125,900
2,676,843
9,554,048
(3,000,000)
-
7,774,029
(175,682)
$ (10,248,556)
$
62,398
$
38,947,929
[1] Represents transfers in and out of Level 3 including investment income reinvested, and reflects cash and related adjustments to cash positions
allocated during the fiscal year.
Net appreciation (depreciation) on investments in the table above are reflected in the line "Net realized and unrealized (losses) on investments, net of
gain appropriations" on the Consolidated Statements of Activities. Net unrealized gains (losses) on investments included in the Consolidated
Statements of Activities for Level 3 assets still held at June 30, 2015 and 2014 is approximately $(183,000) and $(1,737,000), respectively.
The estimated fair value of the University's bonds payable was $52,756,000 and $53,143,000 at June 30, 2015 and 2014 respectively. This fair
value was estimated based upon the discounted amount of future cash outflows at current rates available to the University for debt of the same
remaining maturities. The University determined these CEFA bonds to be Level 2 measurements in the fair value hierarchy.
The University’s policy is to recognize transfers in and transfers out as of the first day of the reporting period in which the change in circumstances
causing the transfer occurred.
- -176 --
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 7 - FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS, CONTINUED:
The following table shows the fair value, unfunded commitments, and redemption restrictions for investments reported at NAV
as of June 30, 2015:
Unfunded
Strategies
Redemption
Redemption
and Other
Fair Value at
Commitments /
June 30, 2015
Capital Calls
Frequency
Notice Period
Restrictions
Equity hedge funds
Domestic long/short
Global long only
International long only
$
32,405,979
None
Quarterly to
none
Monthly
60-75 days
[1]
4,870,046
None
6 days
[7]
24,654,423
None
Monthly to
quarterly
10-60 days
[4]
16,786,518
$4,507,684
20-90 days
[2]
3,854,585
$1,375,749
Monthly to
annual
None
N/A
[6]
10,040,039
$4,096,389
None
N/A
[3]
8,678,688
None
Quarterly
65-90 days
[5]
Hedge funds
Domestic distressed
International distressed
Private equity limited
partnership interests
Fixed income - alternative
Interest and FOREX
derviatives - international
$ 101,290,278
Private Equity held at year-end have remaining lives ranging from 2 to 9 years with commitments due estimated as $9,980,000
from 2015 through June of 2024.
[1] Hedge Funds Domestic - Primarily equity hedge funds that are skewed toward long positions and biased toward the United
States. Includes funds with a current one to three year lock, and one fund in redemption.
[2] Hedge Funds-Domestic Distressed includes equity and/or debt of companies that are experiencing financial or operating
difficulties and that are in the process of emerging from such problems through debt restructuring, Chapter 11 (or similar)
reorganization or liquidation as well as in structured securities including mortgage and asset backed securities. Strategies
employ position level and portfolio hedges to various degrees via cash and synthetic securities.
[3] Private Equity is invested with managers whose investment strategies consist of direct investments in the debt and equity of
private and public companies. These include event driven, relative value investments, private equity positions including buyouts, turnarounds, distressed hard assets, opportunistic private commercial real estate, and venture capital. There are no
redemption rights available for investors other than the liquidation of assets held by the fund or termination of the limited
partnership which will result in a distribution of capital to investors.
[4] Hedge Funds‐International includes funds that are skewed toward long positions to achieve long term capital growth through
investing in equity and equity related securities. The international funds are geographically concentrated in Asia, including
China, India, and ASEAN countries. One fund with a current one year lock.
[5] Fixed Income-Alternative emphasizes long/short and other relative value strategies within an investment horizon ranging
from 3 months to 3 years. Employs multi-strategy including but not limited to long/short, currency including FOREX
derivatives, international and other relative value investment vehicles. Typically long volatility and short credit risk.
Withdrawal may not be greater than 1/3 over a 12 month period on one fund and includes one fund with a current one year soft
lock and a 25% level gate thereafter.
[6] Hedge Funds - International Distressed - Concentrated investments in less liquid distressed opportunities across Europe,
focused on tangible assets, corporate refinancing, and structured credit transactions. Seeks to capitalize on forced selling by
stressed financial institutions, government-related entities, and middle-market corporations in response to comprehensive policy
reform mandates and significant near-term liquidity constraints. No right to redemption until termination of the partnership.
[7] Hedge Funds - Global Equity Long Only: Equity hedge funds skewed towards long global equities with market
capitalizations in excess of $500M.
--18
17- -
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 8 - PLANT FACILITIES:
Plant facilities are recorded at cost or estimated fair value at date of donation and consist of the following at June 30, 2015 and
2014:
2015
Land and land improvements
Buildings
Equipment
Construction in progress
$
22,214,357
71,345,394
4,481,267
1,458,689
2014
$
99,499,707
(30,080,135)
Less accumulated depreciation
Net plant facilities
$
69,419,572
22,157,498
70,826,755
4,481,267
1,336,658
98,802,178
(27,622,122)
$
71,180,056
NOTE 9 - NOTES AND BONDS PAYABLE:
Notes and Bonds Payable:
At June 30, 2015 and 2014 notes and bonds payable were comprised of the following:
2015
Term note - mortgage
Term note - equipment
Term note - residential properties
Bonds issued through the California Educational Facilities Authority (CEFA):
Series 2007 A
Series 2008 A
$
Unamortized net premium, net of issuance costs
Total notes and bonds payable
$
703,042
2,099,890
2014
$
716,849
4,698
2,201,351
36,000,000
14,260,000
36,000,000
14,470,000
53,062,932
611,047
53,392,898
634,835
53,673,979
$
54,027,733
In March 2007, the University issued CEFA Revenue Bonds Series 2007 A in the aggregate principal amount of $36,000,000.
The CEFA Series 2007 A Bonds are due in annual installments ranging from $65,000 in 2017 to $3,570,000 in 2042. Interest is
payable semiannually at 5.0%.
The CEFA Series 2007 A Bonds are issued on a parity with the CEFA Series 1999 A Bonds and the Bonds are not collateralized.
Bond interest expense for the years ended June 30, 2015 and 2014 totaled $1,778,691 and $1,778,691.
-- 19
18 -
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 9 - NOTES AND BONDS PAYABLE, CONTINUED:
In August 2008, the University issued CEFA Revenue Bonds Series 2008 A in the aggregate principal amount of $15,000,000
due in 2038. The weighted average maturity of the Issue is 17.344 years. The CEFA Series 2008 A Bonds are due in annual
installments ranging from $210,000 to $865,000. Interest is payable semiannually at rates ranging from 4.0% to 6.0%.
Bond interest expense for CEFA Series 2008 A for the years ended June 30, 2015 and 2014 totaled $767,779 and $775,912,
respectively.
The University has a Term Note for the amount of $703,042. The Term Note carries a variable interest rate of LIBOR + 1.25%.
This floating rate is offset with an interest rate swap contract resulting in a fixed rate of 7%. Monthly principal payments are
fixed by the bank and monthly interest payments vary based on the outstanding principal balance in addition to rate movements
for the month. At June 30, 2015 and 2014, the interest rate was 1.4%. The maturity date on the note is October 1, 2036. The
Term Note agreement contains various restrictive covenants which include the maintenance of certain financial ratios, as defined
in the agreement, and is secured by real property.
On July 17, 2013, the University entered into a Term Loan with Grandpoint Bank in the amount of $2,250,000 for the purchase
of two residential properties adjacent to the University. This Term Loan carries a fixed interest rate of 5.65% with a maturity
date of 2028, and restrictive covenants requiring the maintenance of certain financial ratios as defined in the loan agreement.
There is a minimum required payment amount of $224,423.75, per year. The Term Loan is secured by the subject properties,
which are income producing and used for faculty/staff rental housing.
Line of Credit:
The University has a $6,000,000 line of credit with a bank. Any borrowings on the line would bear interest at either a
fluctuating rate equal to the highest of the following three rates in effect on such day: 1) the Prime Rate, 2) 1.5% above Daily
One Month LIBOR, 3) Federal Funds Rate plus 1.5%, or at a fixed rate per annum determined by the bank to be 1.75% above
LIBOR in effect on the first day of the applicable Fixed Rate Term. At June 30, 2015 and 2014, there was a balance of $0 and
$3,375,000, respectively, on the line of credit. The outstanding balance on the line of credit is included in the accounts payable
and accrued liabilities line item on the Consolidated Statements of Financial Position. The maturity date on this line of credit is
April 1, 2016.
The line of credit agreement contains various restrictive covenants which include the maintenance of certain financial ratios, as
defined in the agreement.
The maturity of notes and bonds payable at June 30, 2015 is as follows:
Principal
Amount
$
344,699
407,383
889,582
1,037,528
1,145,948
49,237,792
Fiscal Years Ending June 30,
2016
2017
2018
2019
2020
Thereafter
$
-- 20
19 --
53,062,932
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 10 - NET ASSETS:
2015
Unrestricted:
Funds functioning as endowment
Plant and other
$
Total unrestricted
$
31,534,660
10,559,744
38,706,891
42,094,404
39,455,762
8,354,768
1,224,662
42,632,337
4,929,384
1,417,909
49,035,192
48,979,630
34,234
982,314
118,842,389
34,234
3,807,318
117,961,472
119,858,937
121,803,024
$ 207,601,020
$ 212,877,058
Temporarily restricted:
Endowment
Restricted for specific purposes
Annuity and life income contracts and agreements
Total temporarily restricted
Permanently restricted:
Student loans
Annuity and life income contracts and agreements
Endowment
Total permanently restricted
Total net assets
28,864,653
9,842,238
2014
NOTE 11 - ENDOWMENT NET ASSETS:
The net assets of the University include permanent endowment and funds functioning as endowment. Permanent endowments
are subject to the restrictions of gift instruments requiring in perpetuity that the principal be invested and the income only be
utilized as provided for under the California UPMIFA. While funds functioning as endowment have been established by the
Board of Trustees to function as endowment, any portion of such funds may be expended.
Changes in the University's endowment for the years ended June 30, 2015 and 2014 were as follows:
Investment returns:
Earned income
Change in realized and unrealized net
appreciation of investments
$
Net investment returns
Net investment returns used
Net cumulative investment returns
Other changes:
Gifts
Other
Total other changes in endowed net assets
Net change in endowed net assets
$
$
515,139
$
2,197,491
(3,176,575)
530,145
3,133,419
7,462,201
(1,466,604)
(3,176,575)
-
1,045,284
(340,228)
5,330,910
(1,806,832)
5,995,597
(3,176,575)
705,056
3,524,078
1,630
(6,637,362)
-
249,986
(74,125)
251,616
(6,711,487)
(6,635,732)
-
175,861
(6,459,871)
880,917
(2,935,793)
(3,176,575)
29,504,788
$
-
Total Endowment
2015
5,779,849
(640,135)
Endowed net assets, beginning of year
Endowed net assets, end of year
1,682,352
Permanently
Restricted
Temporarily
Restricted
Unrestricted
28,864,653
42,632,337
117,961,472
190,098,597
$
39,455,762
$ 118,842,389
$ 187,162,804
$
At June 30, 2015, endowed net assets consists of the following assets:
Contributions receivable, net
Investments
Collections and works of art
$
28,864,653
-
$
39,455,762
-
$
Total endowed net assets
$
28,864,653
$
39,455,762
$ 118,842,389
21--- 20
2,392,726
116,438,163
11,500
2,392,726
184,758,578
11,500
$ 187,162,804
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 11 - ENDOWMENT NET ASSETS, CONTINUED:
Temporarily
Restricted
Unrestricted
Investment returns:
Earned income
$
Change in realized and unrealized net appreciation
(depreciation) of investments
Net investment returns
Net investment returns used
Net cumulative investment returns
Other changes:
Gifts
Other
Total other changes in endowed net assets
Net change in endowed net assets
Endowed net assets, beginning of year
Endowed net assets, end of year
$
100,911
$
Permanently
Restricted
-
$
314,459
Total Endowment
2014
$
415,370
12,755,062
9,054,316
399,973
22,209,351
12,855,973
(7,027)
9,054,316
-
714,432
(33,373)
22,624,721
(40,400)
12,848,946
9,054,316
681,059
22,584,321
430
(8,594,271)
-
4,306,039
42,882
4,306,469
(8,551,389)
(8,593,841)
-
4,348,921
(4,244,920)
4,255,105
9,054,316
5,029,980
18,339,401
25,249,683
33,578,021
112,931,492
171,759,196
$
42,632,337
$ 117,961,472
$ 190,098,597
$
29,504,788
At 2014, endowed net assets consists of the following assets:
Contributions receivable, net
Investments
Collections and works of art
$
29,504,788
-
$
42,632,337
-
$
2,505,828
115,444,144
11,500
2,505,828
187,581,269
11,500
Total endowed net assets
$
29,504,788
$
42,632,337
$ 117,961,472
$ 190,098,597
2015
2014
At June 30, 2015 and 2014, endowment net assets consists of the following:
Unrestricted endowment
Funds functioning as endowment
Funds with deficiencies
Total unrestricted endowment funds
$
Temporarily restricted endowment
Portion of endowment funds subject to a time restriction under California UPMIFA
Without purpose restriction
With purpose restriction
Total temporarily restricted endowment funds
Permanently restricted endowment
Total endowment net assets
--22
21 --
30,523,837
(1,659,184)
28,864,653
$
30,568,854
(1,064,066)
29,504,788
34,915,090
4,540,672
37,500,862
5,131,475
39,455,762
42,632,337
118,842,389
117,961,472
$ 187,162,804
$ 190,098,597
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 12 - FUND RAISING EXPENSE:
Institutional support expenses in the Consolidated Statements of Activities for the years ended June 30, 2015 and 2014 include
$1,142,080 and $1,623,614, respectively, of expenses related to fund raising.
NOTE 13 - EMPLOYEE BENEFIT PLANS:
The University participates with other members of The Claremont Colleges (Note 14) in a defined contribution retirement plan
that provides retirement benefits for employees through Teachers Insurance and Annuity Association and The College
Retirement Equity Fund. Under this defined contribution plan, University contributions are used to purchase individual annuity
contracts and investments equivalent to retirement benefits earned. Vesting provisions are full and immediate. Benefits
commence upon retirement, and pre-retirement survivor death benefits are provided. University contributions to the plan for the
years ended June 30, 2015 and 2014 totaled $2,685,641 and $2,813,784, respectively.
The Claremont University Consortium administers a defined benefit plan (the Plan) covering substantially all nonacademic
employees of the University, along with those of the other Claremont Colleges. The Plan is funded in accordance with Employer
Retirement Income Security Act of 1974 (ERISA). The benefits are based on years of service, career average compensation, and
amount of employee contributions. Plan assets are invested primarily in a diversified group of equity and fixed-income
securities. At June 30, 2015 and 2014, the University's allocation of the net pension cost was $75,787 and $123,809,
respectively. The University's allocation of the accrued benefit liability at June 30, 2015 and 2014 was $1,581,387 and
$454,807, respectively. As of June 30, 2004 the Plan was curtailed. Under the curtailment the accrued benefits earned as of
June 30, 2005 were frozen and no future benefits will be earned under the plan. The impact of the curtailment is a reduction to
the benefit obligation. Additional information on the Plan can be obtained from the audited financial statements of the
Claremont University Consortium.
NOTE 14 - AFFILIATED INSTITUTIONS:
The University is a member of an affiliated group of institutions known as The Claremont Colleges, comprised of Pomona
College, Claremont Graduate University, Scripps College, Claremont McKenna College, Harvey Mudd College, Pitzer College,
Keck Graduate Institute, and Claremont University Consortium. Each member is a separate corporate entity governed by its own
board of trustees. Claremont University Consortium is the central coordinating institution that provides common student and
administrative services and certain central facilities for all The Claremont Colleges. The costs of these services and facilities are
shared by the members of the group. The University paid $4,575,230 and $4,313,579 for these services and facilities, which
included $1,853,451 and $1,788,166 for library operations and acquisitions, for the years ended June 30, 2015 and 2014,
respectively.
NOTE 15 - COMMITMENTS AND CONTINGENCIES:
Occasionally, the University is involved in lawsuits arising in the ordinary course of its operation. In the opinion of
management, the ultimate resolution of these lawsuits is not expected to have a material effect on the University's financial
position or change in net assets.
Certain federal grants, including financial aid which the University administers and for which it receives reimbursements, are
subject to audit and final acceptance by federal granting agencies. Current and prior year costs of such grants are subject to
adjustment upon audit. The amount of expenditures that may be disallowed by the grantor, if any, cannot be determined at this
time, although the University expects such amounts, if any, would not have a significant impact on the financial position of the
University.
--23
22 --
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015 and 2014
NOTE 16 - SUBSEQUENT EVENTS:
Subsequent events are events or transactions that occur after the Consolidated Statement of Financial Position date but before
consolidated financial statements are issued. The University recognizes in the consolidated financial statements the effects of all
subsequent events that provide additional evidence about conditions that existed at the date of the Consolidated Statement of
Financial Position, including the estimates inherent in the process of preparing the consolidated financial statements. The
University’s consolidated financial statements do not recognize subsequent events that provide evidence about conditions that
did not exist at the date of the Consolidated Statement of Financial Position but arose after the Consolidated Statement of
Financial Position date and before consolidated financial statements are issued.
The University has evaluated subsequent events through October 29, 2015, which is the date the consolidated financial
statements are issued, and concluded that there were no events or transactions requiring disclosure.
--24
23 --
REPORT OF INDEPENDENT AUDITORS 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
To the Board of Trustees
Claremont Graduate University
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of Claremont Graduate
University (the “University”), which comprise the statement of financial position as of June 30, 2015, and
the related statements of activities and cash flows for the year then ended, and the related notes to the
financial statements, and have issued our report thereon dated October 29, 2015.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the University’s internal
control over financial reporting (“internal control”) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinion on the financial statements,
but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control.
Accordingly, we do not express an opinion on the effectiveness of the University’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies
may exist that were not identified. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
-3
25 -
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the University’s financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the result of that testing, and not to provide an opinion on the effectiveness of the
entity’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the entity’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Los Angeles, California
October 29, 2015
- 26
4-
REPORT OF INDEPENDENT AUDITORS ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE
AS REQUIRED BY OMB CIRCULAR A-133
To the Board of Trustees
Claremont Graduate University
Report on Compliance for Each Major Federal Program
We have audited Claremont Graduate University’s (the “University’s”) compliance with the types of
compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a
direct and material effect on each of the University’s major federal programs for the year ended June 30,
2015. The University’s major federal programs are identified in the summary of auditor's results section
of the accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and
grants applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the University’s major federal
programs based on our audit of the types of compliance requirements referred to above. We conducted
our audit of compliance in accordance with auditing standards generally accepted in the United States of
America; the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we
plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types
of compliance requirements referred to above that could have a direct and material effect on a major
federal program occurred. An audit includes examining, on a test basis, evidence about the University’s
compliance with those requirements and performing such other procedures as we considered necessary
in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. However, our audit does not provide a legal determination of the University’s
compliance.
-527 -
Opinion on Each Major Federal Program
In our opinion, Claremont Graduate University complied, in all material respects, with the types of
compliance requirements referred to above that could have a direct and material effect on each of its
major federal programs for the year ended June 30, 2015.
Report on Internal Control Over Compliance
Management of the University is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered the University’s internal control over compliance
with the types of requirements that could have a direct and material effect on each major federal
program to determine the auditing procedures that are appropriate in the circumstances for the
purpose of expressing an opinion on compliance for each major federal program and to test and report
on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of
expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not
express an opinion on the effectiveness of the University’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or a combination of deficiencies, in internal control over compliance such that
there is a reasonable possibility that material noncompliance with a type of compliance requirement of a
federal program will not be prevented, or detected and corrected, on a timely basis. A significant
deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal
control over compliance with a type of compliance requirement of a federal program that is less severe
than a material weakness in internal control over compliance, yet important enough to merit attention
by those charged with governance.
-6
28 -
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies and therefore, material
weaknesses or significant deficiencies may exist that were not identified. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
we identified a deficiency in internal control over compliance, as described in the accompanying
schedule of findings and questioned costs as item 2015-001 that we consider to be a significant
deficiency.
The University’s response to the internal control over compliance finding identified in our audit is
described in the accompanying schedule of findings and questioned costs. The University’s response was
not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express
no opinion on the response.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Los Angeles, California
October 29, 2015
-7
29 -
CLAREMONT GRADUATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2015
Section I - Summary of Auditor’s Results
Financial Statements
Type of auditor’s report issued:
Unmodified
Internal control over financial reporting:

Material weakness(es) identified?
Yes
No

Significant deficiency(ies) identified?
Yes
None reported
Yes
No
Noncompliance material to financial statements noted?
Federal Awards
Internal control over major federal programs:

Material weakness(es) identified?
Yes
No

Significant deficiency(ies) identified?
Yes
None reported
Yes
No
Any audit findings disclosed that are required to be reported
in accordance with section 510(a) of Circular A-133?
Identification of Major Federal Programs
CFDA Numbers
Name of Federal Program or Cluster
Type of Auditor’s
Report Issued
Various
Student financial assistance cluster
Unmodified
Various
Research and development cluster
Unmodified
Dollar threshold used to distinguish between type A and type B programs:
Auditee qualified as low-risk auditee?
Yes
Section II - Financial Statement Findings
None reported
-8
30 -
$300,000
No
CLAREMONT GRADUATE UNIVERSITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2015
Section III – Federal Award Findings and Questioned Costs
FINDING 2015-001 – Special Tests and Provisions – Return of Title IV Funds: Significant Deficiency
in Internal Control
CFDA
Number
Federal Agency/Pass-through Entity Program Name
Various
U.S Department of Education –
Student financial assistance cluster
Award Number
Award Year
Various
Year Ended
June 30, 2015
Questioned
Costs
$0
Criteria: As a result of students withdrawing from an institution before substantial completion of their
current academic period and being determined as having not earned 100 percent of their received title IV
assistance, an institution must return the total amount of unearned Title IV assistance. A student is
determined to have earned 100 percent of their received financial assistance if his or her withdrawal date
is after the completion of more than 60 percent of (1) the calendar days in the payment period or period of
enrollment for a program measured in credit hours, or (2) the clock hours scheduled to be completed for
the payment period or period of enrollment for a program measured in clock hours. The unearned amount
of Title IV assistance to be returned is calculated by subtracting the amount of Title IV assistance earned by
the student, from the amount of Title IV aid that was disbursed to the student as of the date of the
institution's determination that the student withdrew (34 CFR section 668.22).
An institution must determine the withdrawal date for a student who withdraws without providing
notification to the institution no later than 30 days after the end of the earlier of the: (1) payment period or
period of enrollment, (2) academic year in which the student withdrew, or (3) educational program from
which the student withdrew (34 CFR section 668.22(j)). Returns of Title IV funds are required to be
deposited or transferred into the SFA account or electronic funds transfers initiated to the Department of
Education as soon as possible, but no later than 45 days after the date the institution determines that the
student withdrew (34 CFR section 668.173(b)).
Condition/Context: For the 2014-2015 award year we selected 5 students who withdrew from their
current period of enrollment. All 5 of the students withdrew before they had completed 60 percent of their
respective period of enrollment.
Out of the 5 students that required a return of title IV assistance, there were 3 students whose unearned
title IV assistance was returned after the 45 day requirement. Returns of the unearned title IV from these
students was completed on dates that were between 72 and 91 days after the students had notified the
University of their withdrawal and all unearned title IV assistance from these students was returned to the
ED before the end of the fiscal year and.
Effect: Title IV assistance received but unearned by the University was not returned to the Department of
Education in a timely manner as prescribed by Federal requirements.
Cause: Management was relying on their financial assistance software to automatically refund Title IV
assistance for withdrawn students. The system failed to return Title IV assistance in a timely manner and
there was no manual review control to detect and prevent the noncompliance with Federal requirements.
Recommendation: We recommend that the University design procedures to monitor the return of Title IV
assistance and design and implement internal controls to prevent non-compliance.
Views of responsible officials and planned corrective actions: See the attached Corrective Action Plan
prepared by the University.
-931 -
- 32 -
CLAREMONT GRADUATE UNIVERSITY
SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED JUNE 30, 2015
The following were reported as findings in the audit of Claremont Graduate University (the “University” or
“CGU”) for the year ended June 30, 2014.
FINDING 2014-001 – Financial Close and Reporting Process, Significant Deficiency
CFDA#: N/A
Federal Program: N/A
Federal Agency: N/A
Award Year: N/A
Recommendation: We recommend that the University’s management strengthen, and ensure consistent
application of, their policies and procedures regarding resolution of payroll account reconciling items,
monitoring and evaluating: debt covenant compliance and temporarily restricted net assets. In addition,
we recommend that those responsible for these activities keep current on accounting and reporting
pronouncements issued by standard setters.
Management’s Corrective Action Plan: The Payroll office will undergo a substantial training program to
understand the back-end processes that need to take place. The Office of Finance and Administration will
confirm that all reconciling, monitoring, and evaluating of payroll activities are being conducted routinely
and according to GAAP standard. Management will encourage training and compliance consistent with the
recommendation for improvement resultant from the audit process. We will ensure that this objective is
met during the balance of fiscal year 2014-2015. The University will enhance monitoring of temporarily
restricted net asset expenditures. The corrective action will include periodic review of subject accounts to
prevent unauthorized spending. The University will adhere to all required debt covenant reporting
according to the frequency of each loan agreement. We will monitor all measurements needed to meet
disclosure requirements with each financial institution.
Status of Finding: Corrected
FINDING 2014-002 – Special Tests and Provisions - Verification: Instance of Noncompliance
CFDA#: Various
Federal Program: Student financial assistance cluster
Federal Agency: Department of Education
Award Year: 2013‐2014
Recommendation: We recommend that the University amend its current verification policy to include this
additional information so that applicants are aware of all potential implications if selected for verification.
Management’s Corrective Action Plan: Working in conjunction with Student Affairs, we continue to train
staff and review processes to accurately record and submit all documentation timely, as required by federal
standards. With new staff in place, Student Affairs is better positioned to meet all applicable regulations
with the goal of clearing this finding. The Office of Finance and Administration will follow up to review
progress on a quarterly basis.
-11
33 -
CLAREMONT GRADUATE UNIVERSITY
SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED JUNE 30, 2015
Status of Finding: Corrected
FINDING 2014‐003 – Special Tests and Provisions – Enrollment Reporting – Significant Deficiency in
Internal Controls and Instances of Noncompliance
CFDA#: Various
Federal Program: Student financial assistance cluster
Federal Agency: Department of Education
Award Year: 2013‐2014
Recommendation: We recommend that the University design procedures to monitor the enrollment
reporting process and design and implement internal controls to prevent non-compliance. In addition, the
University should follow up on special cases to ensure timely determination of student enrollment statuses.
Management’s Corrective Action Plan: Working in conjunction with Student Affairs, we continue to train
staff and review processes to accurately record and submit all documentation timely, as required by federal
standards. With new staff in place, Student Affairs is better positioned to meet all applicable regulations
with the goal of clearing this finding. The Office of Finance and Administration will follow up to review
progress on a quarterly basis.
Status of Finding: Corrected
FINDING 2014-004 – Special Tests and Provisions – Student Loan Repayments - Significant
Deficiency in Internal Controls and Instances of Noncompliance
CFDA#: 84.038
Federal Program: Student financial assistance cluster
Federal Agency: Department of Education
Award Year: 2013‐2014
Recommendation: The University should develop and establish policies and procedures to adequately
monitor the defaulted loans referred to the external collection agencies on a timely basis.
Management’s Corrective Action Plan: The CUC Student Loan Collections unit of Financial Services has
reviewed and recalled all Perkins Loans that have been with an outside collection agency for twelve months
or more. CUC filled the vacant student loan specialist position in November 2013 and on a go forward basis
will ensure compliance with the requirements of the Perkins Loan Program.
Status of Finding: Corrected
-12
34 -
CLAREMONT GRADUATE UNIVERSITY
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2015
Pass-Through Entity
Identifying Number
Federal Grantor/Pass-Through Grantor/Program or Cluster Title
Federal CFDA
Number
Federal Expenditures
Student Financial Assistance Cluster
Department of Education
Direct Programs
Federal Work-Study Program
Federal Perkins Loan Program
Federal Direct Student Loans
Teacher Education Assistance for College and Higher Education Grants
84.033
84.038
84.268
84.379
$
353,786
75,500
28,996,331
61,265
Subtotal Department of Education
29,486,882
Total Student Financial Assistance Cluster
29,486,882
Research and Development Cluster
USDA Forest Service
Direct Program
The Get to Know Your Neighbors Research Program
10.UNKNOWN
Subtotal USDA Forest Service
5,780
5,780
Department of Defense
Office of Naval Medical Logistics Command
Passed Through from Leidos, Inc.
Naval Medical Research and Development
N62645-14-C-4010
12.340
Subtotal Department of Defense
13,948
13,948
Department of Interior
Passed Through from Charles River Analytics Inc.
Multimodal Neurobiology of Narratives
D12PC00397
12.UNKNOWN
Subtotal Department of Interior
63,209
63,209
Department of Transportation
Passed Through from Regents of University Minnesota
Roadway Safety Institute
H003662403
20.701
Subtotal Department of Transportation
18,728
18,728
National Science Foundation
Passed through from Harvey Mudd College
Computer and Information Science and Engineering
Direct Program
Social, Behavioral, and Economic Sciences
Education and Human Resources
Passed through from Regents of University of Michigan
Education and Human Resources
CNS1339404
DUE-1161121
47.070
20,134
47.075
47.076
74,460
239,700
47.076
Subtotal National Science Foundation
16,676
350,970
Department of Education
Office of Postsecondary Education
Passed Through from Regents of University of California
Fund for the Improvement of Postsecondary Education
Office of Special Education and Rehabilitative Services
Passed Through from Vanderbilt University
Special Education - Personnel Development to Improve Services and Results for
Children with Disabilities
Office of Postsecondary Education
Passed Through from Project Grad Los Angeles
Gaining Early Awareness and Readiness for Undergraduate Programs
Office of Elementary and Secondary Education
Direct Program
Baccalaureate Degrees in Science, Technology, Engineering, Mathematics, and
Critical Foreign Languages and Master's Degrees in Science, Technology,
Engineering, Mathematics, and Critical Foreign Languages
Subtotal Department of Education
S-000411
84.116
43,844
19174-S1
84.325
745,840
P334A110119
84.334
117,339
84.381B
84,828
991,851
The accompanying notes are an integral part of this schedule
--- 35
34
31 ---
CLAREMONT GRADUATE UNIVERSITY
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2015
Pass-Through Entity
Identifying Number
Federal Grantor/Pass-Through Grantor/Program or Cluster Title
Department of Health and Human Services
National Institute of Drug Abuse
Direct Programs
Family Smoking Prevention and Tobacco Control Act Regulatory Research
Federal CFDA
Number
Federal Expenditures
93.077
773,825
Subtotal National Institute of Drug Abuse
773,825
Health Resources and Services Administration
Passed Through from Donor Network of Arizona
Grants to Increase Organ Donations
Passed Through from St. Vincent Medical Center
Grants to Increase Organ Donations
Direct Programs
Grants to Increase Organ Donations
1R39OT22057-01-00
93.134
16,663
NOT AVAILABLE
93.134
605
93.134
454,554
Subtotal Health Resources and Services Administration
471,822
National Institute of Health
Direct Program
Drug Abuse and Addiction Research Programs
Passed Through from Beckman Research Institute of the City of Hope
Research Infrastructure Programs
Cancer Detection and Diagnosis Research
Passed Through from University of Southern California
Cancer Detection and Diagnosis Research
Passed Through from California State University of Fullerton
Cancer Centers Support Grants
Direct Programs
Cancer Research Manpower
Cardiovascular Diseases Research
Passed Through from Regents of University of Michigan
Biomedical Research and Research Training
Direct Program
Child Health and Human Development Extramural Research
93.279
1,196,395
50072.91498.6220
1R03CA172985
93.351
93.394
23,240
39,261
156233
93.394
122,767
S-4934-CGU
93.397
347,930
93.398
93.837
28,588
384,491
93.859
87,869
93.865
548,555
R01GM088750
Subtotal National Institute of Health
2,779,096
Subtotal Department of Health and Human Services
4,024,743
Total Research and Development Cluster
5,469,229
Other Programs
Department of Defense
Office of the Chief of Naval Research
Passed Through from Regents of University of California
Basic and Applied Scientific Research
1295 G NA112
12.300
108,383
Subtotal Department of Defense
108,383
Department of State
Bureau of Educational and Cultural Affairs
Direct Program
Academic Exchange Programs - Teachers
19.408
187,474
Subtotal Department of State
187,474
The accompanying notes are an integral part of this schedule
Total Other Programs
295,857
Total Expenditures of Federal Awards
$
The accompanying notes are an integral part of this schedule
--36
35 --
- 32 -
35,251,968
CLAREMONT GRADUATE UNIVERSITY
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2015
NOTE 1 – BASIS OF PRESENTATION:
The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of
Claremont Graduate University (the University) under programs of the federal government for the year ended June 30,
2015. The information in this schedule is presented in accordance with the requirements of the Office of Management
and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations . The
Schedule presents only a selected portion of the operations of the University, and is not intended to and does not
present the financial position, changes in net assets or cash flows of the University.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are
recognized following the cost principles contained in OMB Circular A-21, Cost Principles for Education Institutions ,
wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity
identifying numbers are presented where available.
NOTE 3 – INDIRECT COSTS:
For the year ended June 30, 2015, the University has an approved predetermined indirect cost rate which is effective
from July 1, 2013 through June 30, 2017. The base rates for on-campus and off-campus research for the year ended
June 30, 2015 are 38.40% and 23.00%, respectively.
NOTE 4 – LOAN ADVANCES:
The federal student loan program listed subsequently is administered directly by the University and balances and
transactions related to this program are included in the University's basic financial statements. Loans made during the
year are included in the federal expenditures in the Schedule. The balance of loans outstanding at June 30, 2015
consists of:
CFDA Number
Program Name
84.038
Federal Perkins Loan Program
Outstanding
Balance
$1,277,976
NOTE 5 – ADMINISTRATIVE COST ALLOWANCE RECEIVED UNDER CAMPUS BASED PROGRAMS:
During the year ended June 30, 2015, the University claimed no administrative cost allowance for the Perkins Loan
Program.
NOTE 6 – SUBRECIPIENTS
Of the federal expenditures presented in the Schedule, the University provided federal awards to subrecipients as
follows:
CFDA Number
84.381B
93.134
93.837
93.865
Program Name
Baccalaureate Degrees in Science, Technology, Engineering
Grants to Increase Organ Donations
Cardiovascular Diseases Research
Child Health and Human Development Extramural Research
37
--- 36
35 ---
Amount
Provided to
Subrecipients
$
12,485
50,623
127,192
261,024