Thomas Jefferson University
Reports on Federal Financial Assistance
Programs in Accordance with
the OMB Uniform Guidance
For the Year Ended June 30, 2016
Federal Identification Number 23-1352651
Thomas Jefferson University
Reports on Federal Awards
in Accordance with the OMB Uniform Guidance
Index
June 30, 2016
Page(s)
Part I – Financial Statements
Report of Independent Auditor ......................................................................................................................1-2
Consolidated Financial Statements and Notes to Consolidated Financial Statements ........................... 3–43
Part II – Schedule of Expenditures of Federal Awards
Schedule of Expenditures of Federal Awards .......................................................................................... 44–56
Notes to Schedules of Expenditures of Federal Awards .......................................................................... 57–58
Part III – Reports on Internal Control and Compliance
Report of Independent Auditor 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 ......................................................... 59–60
Report of Independent Auditor on Compliance with Requirements
That Could Have a Direct and Material Effect on Each Major Program and on
Internal Control Over Compliance in Accordance with the OMB Uniform Guidance ......................... 61–63
Part IV – Findings
Schedule of Findings and Questioned Costs ............................................................................................ 64–66
Summary Schedule of Status of Prior Audit Findings .................................................................................... 67
Management’s Views and Corrective Action Plans ........................................................................................ 68
Report of Independent Auditors
To the Board of Trustees
Thomas Jefferson University:
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Thomas Jefferson University and
its subsidiaries (the “University”), which comprise the consolidated balance sheets as of June 30, 2016 and
2015, and the related consolidated statements of operations and changes in unrestricted net assets, of
changes in net assets, and of cash flows for the year ended June 30, 2016, and the related notes to the
financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated 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 consolidated 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 the consolidated financial statements based on our audits.
We conducted our audit 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 audit to obtain reasonable assurance about whether the consolidated financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on our judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error. In making those risk assessments, we consider internal control relevant to the University’s
preparation and fair presentation of the consolidated 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 University’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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Thomas Jefferson University and its subsidiaries as of
June 30, 2016 and 2015, and the results of their operations, changes in net assets and their cash flows for
the year ended June 30, 2016 in accordance with accounting principles generally accepted in the United
States of America.
PricewaterhouseCoopers LLP, Two Commerce Square, Suite 1800, 2001 Market Street, Philadelphia, PA 19103-7045
T: (267) 330 3000, F: (267) 330 3300, www.pwc.com/us
Other Matters
Consolidating Information
Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements
taken as a whole. The consolidating information on pages 42-43 is the responsibility of management and
was derived from and relates directly to the underlying accounting and other records used to prepare the
consolidated financial statements. The consolidating information has been subjected to the auditing
procedures applied in the audit of the consolidated financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the consolidated financial statements or to the consolidated financial statements
themselves and other additional procedures, in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the consolidating information is fairly stated, in all material
respects, in relation to the consolidated financial statements taken as a whole. The consolidating
information is presented for purposes of additional analysis of the consolidated financial statements
rather than to present the financial position, results of operations and cash flows of the individual entities
and is not a required part of the consolidated financial statements. Accordingly, we do not express an
opinion on the financial position, results of operations and cash flows of the individual entities.
Other Information
Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements
as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance) and is not a required part of the consolidated 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 consolidated financial statements. The information has been subjected
to the auditing procedures applied in the audit of the consolidated financial statements and certain
additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the consolidated financial statements or to the consolidated
financial statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal
awards is fairly stated, in all material respects, in relation to the consolidated 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 27,
2016 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 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.
Philadelphia, Pennsylvania
October 27, 2016
2
Thomas Jefferson University
Consolidated Balance Sheets
June 30, 2016 and 2015
(In Thousands)
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, less allowance for doubtful accounts
of $63,825 in 2016 and $52,161 in 2015
Inventory
Pledges receivable, current
Insurance recoverable
Assets whose use is limited, current
Other current assets
Total current assets
2016
2015
$301,743
1,055,436
$244,364
1,029,742
380,961
38,750
29,720
27,869
19,952
27,575
1,882,006
399,392
37,921
18,226
32,416
19,595
24,379
1,806,035
Long-term investments
Assets whose use is limited, noncurrent
Assets held by affiliated foundation
Pledges receivable, noncurrent
Goodwill
Insurance recoverable
Loans receivable from students, net
Land, buildings and equipment, net
Other noncurrent assets
Total assets
895,851
152,810
8,624
98,923
160,311
144,464
26,810
1,468,987
28,671
$4,867,457
930,205
144,925
8,781
82,686
25,964
134,544
26,417
1,389,913
18,011
$4,567,481
$23,595
42,674
8,766
15,710
243,206
198,126
16,412
548,489
$22,110
51,459
7,400
13,185
269,464
214,530
17,844
595,992
Long-term obligations
Accrued pension liability
Federal student loan advances
Deferred revenues
Accrued professional liability claims
Accrued workers' compensation claims
Interest rate swap contracts
Other noncurrent liabilities
Total liabilities
1,060,925
481,101
15,651
7,339
339,962
19,821
43,609
19,218
2,536,115
955,550
289,383
18,247
8,040
311,259
22,856
29,826
21,913
2,253,066
Net assets:
Unrestricted
Noncontrolling interest in joint venture
Temporarily restricted
Permanently restricted
Total net assets
1,663,397
74,569
302,327
291,049
2,331,342
1,745,968
4,290
280,446
283,711
2,314,415
$4,867,457
$4,567,481
Liabilities and Net Assets
Current liabilities:
Current portion of:
Long-term obligations
Accrued professional liability claims
Accrued workers' compensation claims
Deferred revenues
Accounts payable and accrued expenses
Accrued payroll and related costs
Grant and contract advances
Total current liabilities
Total liabilities and net assets
The accompanying notes are an integral part of the consolidated financial statements.
3
Thomas Jefferson University
Consolidated Statement of Operations and Changes in Unrestricted Net Assets
For the Year Ended June 30, 2016
(In Thousands)
Operating revenues, gains and other support:
Net patient service revenue
Provision for bad debts
Net patient service revenue less provision for bad debts
Grants and contracts
Tuition and fees, net
Investment income
Contributions
Other revenue
Net assets released from restrictions
Total operating revenues, gains and other support
$2,773,060
(102,714)
2,670,346
91,589
122,689
24,133
3,862
188,464
37,576
3,138,659
Operating expenses:
Salaries and wages
Employee benefits
Supplies
Purchased services
Depreciation and amortization
Interest
Insurance
Utilities
Rent
Other
Total operating expenses
1,380,462
361,808
536,418
186,154
158,972
35,914
52,696
38,356
45,696
247,868
3,044,344
Income from operations
94,315
Nonoperating items and other changes in unrestricted net assets, net:
Loss on investments, net
Investment income net of amounts classified as operating revenue
Gain on investment in ROSH acquisition
Interest rate swap contracts
Reclassification of net assets
Contributions and government grants for capital projects
Value of noncontrolling interest - ROSH acquistion
Net assets released from restrictions used for purchase of
property and equipment
Donated capital received
Increase in pension liability
Distributions to noncontrolling interest
Decrease in unrestricted net assets from nonoperating items and other changes in net assets
11,469
799
(192,989)
(3,195)
(106,607)
Decrease in unrestricted net assets
($12,292)
The accompanying notes are an integral part of the consolidated financial statements.
4
(4,071)
2,249
21,906
(17,546)
(173)
4,088
70,856
Thomas Jefferson University
Consolidated Statement of Changes in Net Assets
For the Year Ended June 30, 2016
(In Thousands)
Unrestricted net assets:
Revenues, gains and other support
$3,138,659
Expenses
(3,044,344)
Nonoperating items and other changes in unrestricted net assets, net
(106,607)
Decrease in unrestricted net assets
(12,292)
Temporarily restricted net assets:
Contributions
65,447
Gain on investments, net
527
Investment income
5,683
Net assets released from restrictions
(49,045)
Changes in net assets held by an affiliated foundation
(157)
Change in value of split interest agreements/annuities
(716)
Reclassification of net assets
142
Increase in temporarily restricted net assets
21,881
Permanently restricted net assets:
Contributions
11,750
Net loss on externally held trusts
(4,443)
Reclassification of net assets
31
Increase in permanently restricted net assets
7,338
Increase in net assets
16,927
Net assets, beginning of year
2,314,415
Net assets, end of year
$2,331,342
The accompanying notes are an integral part of the consolidated financial statements.
5
Thomas Jefferson University
Consolidated Statement of Cash Flows
For the Year Ended June 30, 2016
(In Thousands)
Cash flows from operating activities:
Increase in net assets
Adjustments to reconcile changes in net assets to net cash
provided by operating activities:
Increase in pension liability
Depreciation and amortization
Bond premium amortization
Provision for bad debts
Assets held by affiliated foundation
Gain on investments, net
Gain on sale of assets
Recognition of vesting in Premier stock
Donated capital received
Net loss on interest rate swap contracts
ROSH noncontrolling interest
Distribution to noncontrolling interest
Contributions and government grants designated for acquisition of long-term assets
Net change due to:
Accounts receivable
Pledges receivable
Inventory
Other current and noncurrent assets
Accounts payable and accrued expenses
Accrued payroll and related costs
Grant and contract advances
Deferred revenues
Accrued pension liability
Insurance recoverable
Accrued professional liability claims
Accrued workers' compensation claims
Dividend received from Five Pointe Professional Liability Insurance Company
Other current and noncurrent liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Assets whose use is limited increase
Assets whose use is limited decrease
Acquisition of ROSH, net of cash acquired
Purchase of land, buildings and equipment
Purchases of investments
Sales of investments
Student loans issued
Student loans repaid
Net cash used in investing activities
$16,927
192,989
158,972
(2,941)
102,714
157
(24,750)
(3)
(3,897)
(799)
13,783
(70,856)
3,195
(17,974)
(77,508)
(27,731)
305
(5,823)
(28,022)
(17,285)
(1,432)
253
(1,271)
(5,373)
19,918
(1,669)
19,761
(2,608)
239,032
(115,953)
107,711
(62,686)
(214,757)
(1,467,100)
1,461,453
(5,151)
4,758
(291,725)
Cash flows from financing activities:
Distribution to noncontrolling interest
Proceeds from donated capital
Contributions and government grants designated for acquisition of long-term assets
Federal student loan advances
Proceeds from long-term obligations
Repayment of long-term obligations
Net cash provided by financing activities
Net increase in cash and cash equivalents
(3,195)
799
17,974
(2,596)
119,580
(22,490)
110,072
57,379
Cash and cash equivalents at beginning of period
244,364
Cash and cash equivalents at end of period
$301,743
Supplemental disclosures:
Interest paid (net of amount capitalized)
Accounts payable related to buildings and equipment
The accompanying notes are an integral part of the consolidated financial statements.
6
$42,264
$17,950
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The accompanying financial statements represent the consolidated financial position, results
of operations, changes in net assets and cash flows of Thomas Jefferson University, TJUH
System (“TJUHS”), and Abington Health (“AH”) collectively referred to as TJU.
Thomas Jefferson University is an independent, non-profit corporation organized under the
laws of the Commonwealth of Pennsylvania and recognized as a tax-exempt organization
pursuant to Section 501(c)(3) of the Internal Revenue Code. Thomas Jefferson University has
a tripartite mission of education, research, and patient care. Thomas Jefferson University
conducts research and offers undergraduate and graduate instruction through the Sidney
Kimmel Medical College, and the Jefferson Colleges of Nursing, Pharmacy, Health
Professions, Population Health, and Biomedical Sciences. Thomas Jefferson University has
approximately 3,700 students and is located in Philadelphia, Pennsylvania.
TJUHS is an integrated healthcare organization that provides inpatient, outpatient, and
emergency care services through acute care, ambulatory care, physician, and other primary
care services for residents of the Greater Philadelphia Region. TJU is the sole corporate
member of TJUHS.
Effective, May 1, 2015 TJU and AH merged to form a new organization that will serve the
greater Philadelphia area and further expand and enhance its tripartite mission of education,
research and patient care. AH is a not for profit healthcare organization located in suburban
Philadelphia and controlling entity of Abington Memorial Hospital, Lansdale Hospital
Corporation and Abington Health Foundation. The merger of TJU and AH was effected by
reconstituting the governing board of TJU to provide for equal representation by both TJU
and AH, and designating TJU as sole corporate member of AH. Effective the date of the
merger, TJU became a new entity for financial reporting purposes.
TJU includes the accounts of subsidiaries of Thomas Jefferson University including 1100
Walnut Associates; 925 Walnut Corporation; and the accounts of subsidiaries of TJUHS,
including Thomas Jefferson University Hospitals, Inc. (TJUH); Jefferson University
Physicians (“JUP”); Jefferson Physician Services; the Atrium Corporation; Jeffex, Inc.;
Methodist Associates in Healthcare, Inc.; JeffCare, Inc.; Jeffcare Alliance, LLC; Jefferson
University Radiology Associates (“JURA”, an 80% owned joint venture), Jefferson
Comprehensive Concussion Center (“JCCC”, a 66% owned joint venture), the Riverview
Surgery Center at the Navy Yard, LP (“Riverview”, a 51% owned joint venture), Rothman
Orthopaedic Specialty Hospital, LLC (“ROSH” a 54% owned joint venture), Accountable
Care Organization (“the ACO” a 40% owned joint venture), and Mount Laurel Risk Retention
Group, Inc.(“MLRRG”) and Five Pointe Insurance Componay (“Five Pointe”), (49% owned
joint venture insurance entities).
7
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Subsequent Events
On July 1, 2016, pursuant to the terms of an integration agreement, TJU became the sole
corporate member of Aria Health System. Aria is a not for profit healthcare organization
located in Philadelphia and Bucks County, Pennsylvania. TJU acquired all of the assets and
liabilities of Aria and the TJU board was reconstituted to include 10 members designated by
Aria. This business combination will be accounted for as an acquisition. The acquisition of
Aria is intended to enhance access to high quality, cost effective care to the communities
served by both organizations and to enhance the educational and research mission of TJU.
On August 9, 2016, TJU and Kennedy Health System, Inc. signed an integration agreement
related to a possible business combination.
On September 9, 2016, TJU and Philadelphia University signed an integration agreement
related to a possible business combination.
TJU has performed an evaluation of subsequent events through October 27, 2016, which is
the date the financial statements were issued.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of TJU. All
significant intercompany accounts and transactions have been eliminated.
Financial Statement Presentation
The accompanying consolidated financial statements have been prepared on an accrual basis.
TJU classifies net assets as follows:
Unrestricted Net Assets are those assets that are available for the support of operations and
whose use is not externally restricted, although their use may be limited by other factors such
as by board designation.
Temporarily Restricted Net Assets are subject to legal or donor imposed restrictions that will
be met by actions of TJU and/or the passage of time. These net assets include gifts
donated for specific purposes and capital appreciation on permanent endowment, which is
restricted by Pennsylvania law on the amounts that may be expended in a given year.
Permanently Restricted Net Assets are subject to donor-imposed restrictions that require the
original contribution be maintained in perpetuity by TJU, but permits the use of the
investment earnings for general or specific purposes.
TJU’s measure of operations in the consolidated statement of operations and changes in net
assets includes revenues from patient services, grants and contracts, tuition and fees,
unrestricted contributions, net assets released from restriction, distribution of investment
returns based on the TJU’s spending policy and other sources.
8
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Non-operating activities presented in the consolidated statement of operations and changes in
net assets includes investment returns net of amounts classified as operating revenue in
accordance with the TJU’s spending policy, gains and losses on derivative financial
instruments, contributions and governmental grants for capital projects, net assets released
from restriction for capital purposes, gain on investment and value of noncontrolling interest
of the ROSH acquisition, distributions to noncontrolling interests and the net actuarial loss of
the defined benefit plan.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements. Management
considers critical accounting policies to be those that require more significant judgments and
estimates in the preparation of the financial statements including, but not limited to,
recognition of net patient service revenue, which includes contractual allowances and
provisions for bad debt; recognition of estimates for healthcare professional and general
liabilities; determination of fair values of certain financial instruments; and assumptions for
measurement of pension obligations. Management relies on historical experience and other
assumptions believed to be reasonable relative to the circumstances in making judgments and
estimates. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and investments in highly liquid debt instruments
with maturity of three months or less when purchased and are carried at cost, which
approximates fair value, except that any such investments purchased with funds on deposit
with bond trustees or with funds held in self-insurance trust arrangements are classified as
assets whose use is limited or purchased by investment managers of TJU’s long-term
investment fund are classified as investments.
Short-term investments
Investments classified as short-term investments are available to fund current operations as
needed and exclude quasi-endowment funds, donor restricted endowment funds (including
beneficial interests in perpetual trusts administrered by third parties), investments held under
split-interest agreements and investments subject to the equity method.
Charitable Medical Care Provided
TJU provides medically necessary services to all patients regardless of their ability to pay.
Some patients qualify for charity care based on policies established by TJU and are therefore
not responsible for payment for all or a part of their healthcare services. These policies allow
for the provision of free or discounted care in circumstances where requiring payment would
impose financial hardship on the patient. Charges for services rendered to patients who meet
TJU’s guidelines for charity care are not separately recorded in the accompanying
consolidated financial statements.
9
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
TJU maintains records to identify and monitor the level of charity care provided. These
records include the amount of charges foregone for services and supplies furnished. Such
amounts have been excluded from net patient service revenue. Management estimates that the
cost of charity care provided by TJU was $21.8 million for the year ended June 30, 2016.
These amounts do not include the provision for bad debts of $102.7 million in 2016 which are
reflected as deductions in net patient service revenue. The estimated costs of providing charity
services are based on a calculation which applies a ratio of costs to charges to the gross
uncompensated charges associated with providing care to charity patients. The ratio of cost to
charges is calculated based on the TJU total expenses divided by gross patient service
revenue.
Net Patient Service Revenue
Net patient service revenue is reported at the estimated net realizable amounts from patients,
third-party payers and others for services rendered, including estimated retroactive
adjustments under reimbursement agreements with third-party payers. Retroactive
adjustments are considered in the recognition of revenue on an estimated basis in the period
the related services are rendered and are adjusted in future periods as final settlements are
determined.
Revenue from the Medicare and Medicaid fee-for-service programs accounted for
approximately 24.1% and 3.3%, respectively, of net patient service revenue in 2016. Most
payments to TJU from the Medicare and Pennsylvania Medicaid programs for inpatient
hospital services are made on a prospective basis. Under these programs, payments are made
at a pre-determined specific rate for each discharge based on a patient’s diagnosis. Additional
payments are made to TJU as a teaching and disproportionate share hospital, as well as for
cases that have an extremely long length-of-stay or unusually high costs. Laws governing the
Medicare and Medicaid programs are complex and subject to interpretation. Services billed to
the Medicare program are subject to external review for both medical necessity and billing
compliance. Medicare cost reports for all years, except 2011, 2014, 2015 and 2016 have been
audited and final settled as of June 30, 2016. No significant adjustments are expected. In
addition, TJU received funds from the Philadelphia Hospital Assessment program and the
Medical Assistance Modernization Act-Quality Care Assessment program in the amount of
$93.5 million in 2016 and are recorded in net patient service revenue. TJU paid taxes in
respect to these programs amounting to $78.9 million in 2016 and are recorded in other
operating expenses. Both programs were designed to provide supplemental funding for
licensed acute care hospitals with the Philadelphia Hospital Assessment program specifically
designated for hospital emergency services.
TJU has also entered into agreements with certain commercial insurance carriers, health
maintenance organizations and preferred provider organizations. The basis for payment to
TJU under these agreements includes prospectively determined rates per discharge, discounts
from established charges, prospectively determined daily rates and capitated rates. Revenue
from Blue Cross and Aetna USHC amounted to 30.9% and 9.4% of TJU net patient service
revenue in 2016.
10
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Accounts Receivable, Allowance for Doubtful Accounts, Provision for Bad Debt
TJU records an allowance for doubtful accounts and bad debt expense for estimated losses
resulting from non-payment for accounts receivable for services from patients. TJU accounts
for uncollectible accounts receivable balances from third-party commercial insurers as
reductions to net patient service revenue rather than bad debt expense. Management routinely
evaluates account collection history, economic conditions, and trends in health care coverage
in determining the sufficiency of the allowance for doubtful accounts and provision for bad
debts. Accounts receivable are written off against the allowance for doubtful accounts when
management determines that recovery is unlikely and collection efforts cease. The allowance
for doubtful accounts increased by the bad debt expense and other adjustments of $114.1
million and decreased due to writeoffs of $102.5 million in 2016.
Grants and Contracts
Grant and contract revenue primarily represents research activity sponsored by governmental
and private sources. TJU recognized operating revenues based on direct expenditures and
related facilities and administrative cost rate (F&A) as follows for the year ended June 30,
2016 (in thousands):
Federal agencies
Non-federal agencies
Total
Direct
Expenditures
$43,939
24,394
$68,333
F&A
Cost
$18,821
4,435
$23,256
Total
$62,760
28,829
$91,589
TJU’s primary source of federal sponsored support is the Department of Health and Human
Services. Facilities and administrative costs recovered on federally sponsored programs are
generally based on predetermined rates negotiated with the Federal Government while
recovery on all other sponsored projects is based on rates negotiated with the respective
sponsor. Funds received for sponsored research activity are subject to audit. Based upon
information currently available, management believes that any liability resulting from such
audits will not materially affect the financial position or operations of TJU.
Tuition and Fees
TJU provides financial aid to eligible students in the form of direct grants, loans and
employment during the academic year. Tuition and fees have been reduced by certain grants
and scholarships in the amount of $9.4 million in 2016.
Contributions
Contributions, including unconditional promises to donate cash and other assets, are
recognized at fair value on the date of receipt, recognized as revenue in the period received
and are reported as increases in the appropriate net asset category based on donor restrictions.
All contributions are considered to be available for unrestricted use unless specifically
restricted by the donor. Pledges received which are to be paid in future periods, and
contributions restricted by the donor for specific purposes are reported as temporarily
11
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
restricted or permanently restricted support that increases those net asset classes. When a
donor restriction expires, that is, when a time restriction ends or stipulated purpose restriction
is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets.
Collections
TJU capitalizes works of art, historical treasures, or similar assets (collectively, Collections).
Collections are recorded at fair value at the date of the contribution. Collections of
approximately $5.7 million and $5.6 million are included in other noncurrent assets on the
consolidated balance sheets at June 30, 2016 and 2015.
Investments
Investments are stated at fair value. The fair value of all debt and equity securities with a
readily determinable fair value are based on quotations obtained from national securities
exchanges. The alternative investments, which are not readily marketable, are carried at
estimated fair values as provided by the investment managers. As a practical expedient, TJU
is permitted under the Fair Value Measurement standard to estimate the fair value
of an investment in an investment company at the measurement date using the reported net
asset value (NAV). Adjustment is required if TJU expects to sell the investment at a value
other than NAV or if the NAV is not calculated in accordance with US generally accepted
accounting principles (US GAAP). TJU’s investments are valued based on the most current
NAV adjusted for cash flows when the reported NAV is not at the measurement date. This
amount represents fair value of these investments at June 30, 2016. TJU performs additional
procedures including due diligence reviews on its alternative investments and other
procedures with respect to the capital account or NAV provided to ensure conformity and
compliance with valuation procedures in place, the ability to redeem at NAV at the TJU
measurement date and existence of certain redemption restrictions at the measurement date.
TJU reviews the values as provided by the investment managers and believes that the carrying
amount of these investments is a reasonable estimate of fair value. Because alternative
investments are not readily marketable, their estimated values are subject to uncertainty and
therefore may differ from the value that would have been used had a ready market for such
investments existed.
The Commonwealth of Pennsylvania has not adopted the Uniform Management of
Institutional Funds Act (UMIFA) or the Uniform Prudent Management of Institutional Funds
Act (UPMIFA). Rather, the Pennsylvania Act governs the investment, use and management of
TJU’s endowment funds. The Pennsylvania Act allows a nonprofit to elect to appropriate for
expenditure an investment policy that seeks the long-term preservation of the real value of the
investments. In accordance with the Pennsylvania Act, the objectives of TJU’s investment
policy is to provide a level of spendable income which is sufficient to meet the current and
future budgetary requirements of TJU and which is consistent with the goal of protecting the
purchasing power of the investments. The calculation of the spendable income for endowment
funds of TJU is based on 75% of the prior year spendable income and 25% of the calculated
two year average of the endowment market value multiplied by 4.75%; the sum of which is
adjusted by an inflation factor. The calculation of the spendable income for endowment funds
of AH is based on 6% of the calculated three year average of the endowment market value.
12
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
TJU’s financial instruments that are exposed to concentrations of credit risk consist primarily
of cash and cash equivalents and investments. These funds are held in various high-quality
financial institutions managed by TJU personnel and outside advisors. TJU maintains its cash
and cash equivalents in financial institutions, which at times exceed federally insured limits.
Investment in Assets of Affiliated Foundation
The Methodist Hospital Foundation (the “Foundation”), a separate corporation not under the
control of TJU, accepts gifts and bequests and engages in fundraising activities for the benefit
of Methodist Hospital. The Board of Trustees of the Foundation, at its sole discretion, is
authorized to contribute Foundation funds to Methodist Hospital. Underlying investments
held by the Foundation with restrictions benefiting only Methodist Hospital amounting to
$8.6 million and $8.8 million at June 30, 2016 and 2015, respectively, are presented in the
consolidated balance sheets. While the sole purpose of the Foundation is to support
Methodist Hospital, this accounting treatment does not imply that the Foundation’s assets or
investment income are those of TJU. The consolidated balance sheets do not reflect or
establish the legal relationship, agency or otherwise, between the Foundation and TJU, or any
right to assets owned by the Foundation. The by-laws of the Foundation provide that all
assets held by it shall not be subject to attachments, execution, or sequestration for any debt,
obligation or liability of TJU or any other person or entity. In particular, the Foundation is not
party to or obligated by any debt instrument of TJU, and assets owned by the Foundation are
not subject to the lien of any such debt instrument.
Split Interest Agreements
TJU’s split-interest agreements consist of charitable gift annuities, pooled income funds,
charitable remainder trusts and a charitable lead trust. Contribution revenue for charitable gift
annuities and charitable remainder trusts is recognized at the date the agreement is
established, net of the liability recorded for the present value of the estimated future
payments. Contribution revenue for pooled income funds is recognized upon establishment of
the agreement at the fair value of the estimated future receipts discounted for the estimated
time period to complete the agreement.
Loans Receivable from Students
Many students receive financial aid that consists of scholarship grants, work-study
opportunities and student loans. TJU participates in various federal revolving loan programs,
in addition to administering institutional loan programs. Student loan programs are funded by
donor contributions, other institutional sources, and governmental programs, primarily the
Federal Perkins Loan Program. The amounts received from the federal government’s portion
of federal loan programs are ultimately refundable to the federal government and are reported
as a liability on TJU’s consolidated balance sheets as federal student loan advances.
Determination of the fair value of student loans receivable is not practicable.
13
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Student loans receivable, net of allowance for doubtful accounts, consists of the following at
June 30, 2016 and 2015 (in thousands):
2016
Direct student loans
Allowance for doubtful accounts
Net
Federally-sponsored student loans
Total
2015
$20,663
(3,896)
$20,476
(3,796)
16,767
16,680
10,043
9,737
$26,810
$26,417
TJU assesses the adequacy of the allowance for doubtful accounts related to direct student
loans receivable by performing evaluations of the student loan portfolio, including a
review of the aging of the student loan receivable balances and of the default rate by loan
program in comparison to prior years. The level of allowance is adjusted based on the results
of this analysis. The federally-sponsored student loans receivable represents amounts due
from current and former students under various Federal Government loan programs. For
direct student loans it is TJU’s policy to reserve 100% of a loan when the loan is
delinquent 2 years or more; a reserve of 85% is recorded for loans delinquent more than 270
days and less than 2 years. TJU considers the allowance recorded at June 30, 2016 to be
reasonable and adequate to absorb potential credit losses inherent in the student loan portfolio.
Land, Buildings, and Equipment, net
Land, buildings, and equipment are carried at cost on the date of acquisition or fair value on
the date of donation in the case of gifts. Depreciation expense is computed on a straight-line
basis over the estimated useful lives of the assets, excluding land. All gifts of land, buildings,
and equipment are recorded as unrestricted nonoperating activities unless explicit donor
stipulations specify how the donated assets must be used. Interest expense on borrowed funds
used for construction, net of interest income earned on unexpended amounts, is capitalized
during the construction period.
14
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Goodwill
Goodwill is an asset representing the future economic benefits arising from other assets
acquired in a business combination that are not individually identified and separately
recognized. Any excess of the purchase price over the estimated fair value of the identifiable
net assets acquired is recorded as goodwill. The determination of the estimated fair value of
net assets acquired requires managements’s judgment and often involves the use of significant
estimates and assumptions. When necessary, TJU consults with external advisors to assist in
the determination of fair value. The change in the carrying amount of goodwill for the year
ended June 30, 2016 is as follows:
Balance as of July 1, 2015
Goodwill
Accumulated impairment losses
$26,244
(280)
25,964
Goodwill acquired during 2016
Impairment losses
134,512
(165)
Balance as of June 30, 2016
Goodwill
Accumulated impairment losses
160,756
(445)
$160,311
Conditional Asset Retirement Obligation
A conditional asset retirement obligation is a legal obligation to perform an asset retirement
activity in which the timing and/or method of settlement are conditional on a future event that
may or may not be within the control of the entity. TJU has asset retirement obligations
arising from regulatory requirements to perform certain asset retirement activities at the time
that certain buildings and equipment are disposed of or renovated. A conditional asset
retirement obligation of $5.2 million and $5.4 million as of June 30, 2016 and 2015,
respectively, is included within other noncurrent liabilities in the consolidated balance sheets.
Reclassifications
Certain amounts in the prior year have been reclassified to conform to the current year
presentation.
New Accounting Standards
The Financial Accounting Standards Board ("FASB") issued an accounting standard update in
May 2014 regarding the accounting for and disclosure of revenue recognition. Specifically,
the update outlined a single comprehensive model for entities to use in accounting for revenue
arising from contracts with customers. The guidance was effective for annual periods
beginning after December 15, 2016, which allowed for full retrospective adoption of prior
period data or a modified retrospective adoption. Early adoption was not permitted. In July
2015, the FASB issued an update to delay the effective date of the new revenue standard by
15
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
one year, or, in other words, to be effective for annual and interim periods beginning after
December 15, 2017. Entities will be permitted to adopt the new revenue standard early, but
not before the original public organization effective date. TJU is currently evaluating the
effects of this guidance.
The FASB issued an accounting standard update in May 2015 regarding the required
disclosures for entities that elect to measure the fair value of certain investments using the net
asset value per share (or its equivalent) practical expedient in accordance with the fair value
measurement authoritative guidance. The update removes the requirement to categorize
within the fair value hierarchy investments using the NAV as a practical expedient, and also,
limits the requirement to make certain other disclosures, for all such investments. The
amendments in this update are effective for fiscal years beginning after December 15, 2016,
and interim periods within those fiscal years, and should be applied on a retrospective basis
for the periods presented. Early adoption is permitted. TJU adopted this standard in 2016 and
separately reports these investments within the fair value hierarchy footnote disclosure.
The FASB issued an accounting standard update in February 2016 regarding the accounting
for leases. The update requires the recognition of lease assets and lease liabilities by lessees
for those leases classified as operating leases under previous accounting guidance. The
amendments in this update are effective for fiscal years beginning after December 15, 2018,
and interim periods within those fiscal years. Early adoption is permitted. TJU is currently
evaluating the effects of this guidance.
The FASB issued an accounting standard update in August 2016 regarding the presentation of
net asset classifications and information presented in financial statements and notes about a
not-for-profit entity’s liquidity, financial performance, and cash flows. The main provisions of
this update include reducing the presentation of net asset classes from three to two, without
donor restrictions and with donor restrictions, enhanced disclosures on net assets, qualitative
information on the management of liquid resources and quantitative information on financial
assets to meet cash needs. The amendments in this update are effective for fiscal years
beginning after December 15, 2017, and interim periods within those fiscal years. Early
adoption is permitted. TJU is currently evaluating the effects of this guidance.
2. BUSINESS COMBINATION
On June 30, 2016 TJUH acquired a controlling interest in ROSH, a surgical specialty hospital
located in Bensalem, Pennsylvania. At June 30, 2015, TJUH held a 15% noncontrolling
interest. On June 30, 2016 TJUH acquired an additional 39% ownership interest for $66.7
million. The purchase included cash acquired of $4.1 million and assumed debt of $1.2
million. The acquisition of ROSH is an effort by the various healthcare organizations of TJU
to increase access to high quality care to patients in the most cost effective, clinically
appropriate setting. The accompanying consolidated balance sheet at June 30, 2016 includes
the accounts of ROSH. TJU allocated $9.0 million of the purchase price to a tradename,
which was assigned an indefinite life. The goodwill of $132.6 million arising from the
acquisition consists of the excess of the estimated aggregate value of ROSH over the
16
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
estimated fair value of the identifiable net assets, noncontrolling interest and existing TJUH
equity interest. The enterprise value of ROSH was estimated using the income approach
under a controlling premise of value. The valuation of the acquisition date fair value of
TJUH’s previously held 15% noncontrolling interest and other noncontrolling interests is
based upon their proportionate share of the value of the aggregate equity less a discount for
lack of control and marketability. The determination of the applicable discounts related to
noncontrolling interests considered premiums paid to acquire control of comparable public
companies. As of June 30, 2016, the allocation of the purchase price for the ROSH acquisition
has not been finalized and the one-year measurement period has not ended. Further
adjustments may be necessary as a result of TJU’s assessment of additional information
related to the fair value of assets acquired and liabilities assumed. The following table
summarizes the consideration paid for ROSH and the amounts of the assets acquired and
liabilities assumed recognized at the acquisition date, as well as the fair value at the
acquisition date of the noncontrolling interest in ROSH (in thousands):
Consideration:
Cash
Fair value of equity interest in ROSH held
before the acquisition
Recognized amounts of identifiable asets acquired
and liabilities assumed:
Cash and cash equivalents
Accounts receivable
Inventory
Other assets
Equipment and leasehold improvements
Tradename
Liabilities
Noncontrolling interest
Goodwill
Acquisition related costs included in consolidated
statement of operations
17
$66,749
23,106
$89,855
$4,062
6,774
1,134
1,131
11,369
9,000
(5,391)
28,079
(70,856)
132,632
$89,855
$410
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
3. NET ASSETS
Restricted net assets as of June 30, 2016 and 2015 are categorized as follows (in thousands):
2016
Temporarily restricted
Pledges
Gifts restricted for operating or capital purposes
and loan funds
Undistributed net gains on permanently restricted
Assets
2015
$92,957
$67,225
114,724
110,790
94,646
102,431
Total – Temporarily restricted
302,327
280,446
Permanently restricted assets
291,049
283,711
$593,376
$564,157
Total restricted net assets
Temporarily restricted net assets are available for the following purposes at June 30, 2016 and
2015 (in thousands):
2016
2015
University operations
Clinical operations
Education and research
Total temporarily restricted net assets
$14,218
90,183
197,926
$12,245
96,098
172,103
$302,327
$280,446
Permanently restricted net assets are restricted to investment in perpetuity, the income from
which is expendable to support the following at June 30, 2016 and 2015 (in thousands):
2016
University operations
Clinical operations
Education and research
Total permanently restricted net assets
18
2015
$9,053
88,658
193,338
$8,550
88,919
186,242
$291,049
$283,711
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
4. ASSETS WHOSE USE IS LIMITED
Assets whose use is limited are presented in the consolidated balance sheets at June 30, 2016
and 2015 consist of the following (in thousands):
2016
Board designated funds for plant replacement and expansion
Board designated funds for self-insurance arrangements
Debt service funds
Women’s Board and Medical Staff funds
Restricted for capital purposes
Deferred compensation fund
Escrow account – physician practice acquisition
Escrow account-Inspira Health Network collaboration
Total
Less current portion
Noncurrent portion
2015
$128,153
19,617
113
517
12,274
1,454
600
10,034
$172,762
(19,952)
$152,810
$126,113
19,252
500
493
7,100
1,054
10,008
$164,520
(19,595)
$144,925
5. INVESTMENTS
Investments are presented in the consolidated balance sheets under the following
classifications (in thousands):
2016
$1,055,436
19,952
895,851
152,810
$2,124,049
Short-term investments
Assets whose use is limited, current
Long-term investments
Assets whose use is limited, noncurrent
19
2015
$1,029,742
19,595
930,205
144,925
$2,124,467
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
A summary of investments at June 30, 2016 and 2015 is as follows (in thousands):
Cash and cash equivalents
Equity securities
Fixed income securities
Funds:
Global equity
Fixed income
Real estate
Other mutual funds
Private equity
Real estate
Hedge funds
External trusts
Investments subject to equity method and other
2016
2015
$36,740
5,876
719,467
$55,380
5,992
691,224
225,216
236,746
11,118
434,059
111,053
23,143
162,915
97,530
60,186
$2,124,049
248,961
225,067
10,050
435,193
87,139
22,537
169,398
102,512
71,014
$2,124,467
Most private investment funds (private equity, real asset funds) are structured as closed-end,
commitment-based investment funds where TJU commits a specified amount of capital upon
inception of the fund (i.e., committed capital) which is then drawn down over a specified
period of the fund's life. Such funds generally do not provide redemption options for
investors and, subsequent to final closing, do not permit subscriptions by new or existing
investors. Accordingly, TJU generally holds interests in such funds for which there is no
active market, although in some situations, a transaction may occur in the "secondary market"
where an investor purchases a limited partner’s existing interest and remaining commitment.
The fund managers may value the underlying private investment based on an appraised value,
discounted cash flow, industry comparable or some other method. TJU values these limited
partnerships at NAV.
Unlike private investment funds, hedge funds are generally open-end funds as they typically
offer subscription and redemption options to investors. The frequency of such subscriptions or
redemptions is dictated by such fund's governing documents. The amount of liquidity
provided to investors in a particular fund is generally consistent with the liquidity and risk
associated with the underlying portfolio (i.e., the more liquid the investments in the portfolio,
the greater the liquidity provided to the investors). The fund managers invest in a variety of
securities which may not be quoted in an active market. Illiquid investments may be valued
based on appraised value, discounted cash flow, industry comparable or some other method.
The methods described above may produce a fair value calculation that may not be indicative
of a net realized value or reflective of future fair values. Furthermore, while TJU believes its
20
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to demine the fair value of certain financial
instruments could result in a different estimate of fair value at the reporting date.
TJU’s direct investments in equity and fixed income securities are considered liquid assets
because they are traded on established markets with enough participants to absorb sale
transactions without materially impacting the current price of the asset. The underlying assets
in TJU’s investments in equity and fixed income funds are traded on established markets with
enough participants to absorb sale transactions without materially impacting the current price.
The funds are priced daily and provide next day availability on all transaction requests.
TJU’s investment in real asset funds provide for monthly liquidity on transaction requests.
Private equity investments have limited liquidity or redemption options. Liquidity for private
investments can be accomplished via a secondary sale transaction. When available,
distributions typically take place on a quarterly basis. TJU has made commitments to various
private equity and real asset limited partnerships. The total amount of unfunded commitments
is $113.1 million and $112.8 million at June 30, 2016 and 2015, respectively. TJU expects
these funds to be called over the next 3 to 5 years.
2016
Private equity
Real estate
2015
$110,858
2,283
$109,605
3,173
$113,141
$112,778
Hedge funds provide quarterly liquidity with 60 to 90 days notice prior to the quarter’s end
limiting TJU’s ability to respond quickly to changes in market conditions. Liquidity of
individual hedge funds vary based on various factors and may include "gates", "holdbacks"
and "side pockets" imposed by the manager of the hedge fund, as well as redemption fees
which may also apply. Depending on the redemption options available, it may be possible that
the reported NAV represents fair value based on observable data such as ongoing redemption
and/or subscription activity. In the cases of a holdback, TJU considers the significance of the
holdback, its impact on the overall valuation and the associated risk that the holdback amount
will not be fully realized based on a prior history of adjustments to the initially reported NAV.
For those private equity, real estate limited partnerships, or hedge-fund of fund transactions
where valuations dated on the last business day of the calendar year are available, the
valuations will be based on the most recent capital account statement (monthly/quarterly),
adjusted for interim cash flow activity (contributions, distributions, fees).
Investments subject to the equity method and other includes $43.8 million and $54.5 million
for TJU’s investment in Five Pointe Insurance Company at June 30, 2016 and 2015,
respectively.
21
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Beneficial interests in perpetual trusts, which are administered by independent trustees, are
mainly comprised of domestic and international equity securities and domestic fixed income
securities.
A summary of investments held under split-interest agreements is as follows at June 30, 2016
and 2015 (in thousands):
2016
Charitable gift annuities
Pooled income funds
Charitable lead trust
Charitable remainder trusts
2015
$13,380
10
1,091
9,982
$14,338
11
1,251
10,492
$24,463
$26,092
Investment income, realized gains and unrealized gains included in the consolidated
statements of operations and changes in net assets are comprised of the following in 2016:
Investment income included in operating income:
Interest and dividends
Endowment payout
Net realized gains on sales of investments
Bucks County Specialty Hospital, LLC
Delaware Valley Accountable Care Organization
Investment income included in nonoperating income:
Interest and dividends
Endowment payout
Gain on investment in ROSH acquisition
Net realized and unrealized losses
Total
$9,218
13,632
1,913
1,823
(2,453)
$24,133
$15,701
(13,632)
21,906
(3,891)
$20,084
$44,217
22
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
6. ENDOWMENT FUNDS
TJU’s endowments consist of 840 individual funds established for a variety of purposes. The
endowment includes both donor-restricted endowment funds and funds designated by the
Board of Trustees to function as endowments. Net assets associated with each of these groups
of funds are classified and reported based upon the existence or absence of donor-imposed
restrictions.
At June 30, 2016, the endowment net asset composition by type of fund consisted of the
following (in thousands):
Donor-restricted funds
Quasi-endowment funds
Total funds
Temporarily Permanently
Unrestricted
Restricted
Restricted
$145,550
$286,281
($2,444)
358,039
$355,595
$145,550
$286,281
Total
$429,387
358,039
$787,426
Changes in endowment net assets for the fiscal year ended June 30, 2016, consisted of the
following (in thousands):
Temporarily Permanently
Unrestricted
Restricted
Restricted
Total
Endowment net assets,
$271,151
$156,519
$280,363
$708,033
beginning of year
Investment return:
Investment income
Net appreciation (depreciation)
(realized and unrealized)
Total investment gain (loss)
Contributions
Appropriation of endowment
assets for expenditure
Transfers of University
resources and matching gifts
Endowment net assets,
end of year
392
1,139
1,614
2,006
3,313
4,452
(4,455)
(4,455)
472
2,003
588
1,625
10,380
12,593
(13,633)
(12,876)
95,483
(4,170)
(7)
91,306
$355,595
$145,550
$286,281
$787,426
23
1,531
-
(26,509)
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
At June 30, 2015, the endowment net asset composition by type of fund consisted of the
following (in thousands):
Donor-restricted funds
Quasi-endowment funds
Total funds
Temporarily Permanently
Unrestricted
Restricted
Restricted
$156,519
$280,363
($1,520)
272,671
$271,151
$156,519
$280,363
Total
$435,362
272,671
$708,033
From time to time, the fair value of assets associated with individual donor-restricted
endowment funds may fall below the level that the donor requires TJU to retain as a fund of
perpetual duration. Shortfalls of this nature, which are reported in unrestricted net assets,
were $2.4 million and $1.5 million as of June 30, 2016 and 2015, respectively. These
shortfalls resulted from unfavorable market fluctuations that occurred shortly after the
investment of new permanently restricted contributions and continued appropriation for
certain programs that was deemed prudent by TJU.
7. FAIR VALUE MEASUREMENT
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair
value. The hierarchy 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). 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 TJU has the ability to access at the measurement date;
Level 2 Inputs other than quoted prices that are observable for the asset or liability either
directly or indirectly, including inputs in markets that are not considered to be
active;
Level 3 Inputs that are not currently observable.
Inputs are used in applying the various valuations techniques and broadly refer to the
assumption that market participants use to make valuation decisions. An investments level
within the fair value hierarchy is based on the lowest level of any input that is significant to
the fair value measurement. However, the determination of what constitutes “observable”
requires significant judgment. The categorization of an investment within the hierarchy is
based upon the pricing transparency of the instrument and does not necessarily correspond to
TJU’s perceived risk of that instrument.
24
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Level 1 - Investments whose values are based on quoted market prices in active markets, are
therefore classified within Level 1. Typically, securities traded on the NYSE, AMEX,
NASDAQ and other major exchanges will be classified as Level 1. These assets include
active listed equities, certain U.S. government obligations, mutual funds and certain money
market securities. For investments regularly traded on any recognized securities or
commodities exchange, the closing price on such exchange (or, if applicable, as reported on
the consolidated transactions reporting system) on the last trading date at the end of the fiscal
year is used. In the case of securities regularly traded in the over-the-counter market, the
closing bid quotations for long positions and the closing asked quotation for short positions on
the trading date ending on or preceding the end of the fiscal year is used.
Level 1 Liquidity – Daily based on quoted market value at time of transaction or at daily
NAV.
Level 2 - Investments that trade in markets that are not considered to be active, but are valued
based on quoted market prices, dealer quotations or alternative pricing sources supported by
observable inputs are classified within Level 2. They include investment- common trust
equity and fixed income funds, corporate grade bonds, high yield bonds and certain mortgage
products. These assets are valued based on quoted market prices in active markets or dealer
quotations and are categorized as Level 2. There were no transfers between Levels 1 and 2
during 2016.
Level 2 Liquidity – Daily based on quoted market value at time of transaction or at daily
NAV.
Level 3- Investments classified within Level 3 have significant unobservable inputs, as they
trade infrequently or not at all. Level 3 instruments include externally held trust funds.
Level 3 Liquidity – No liquidity available as the assets are mainly comprised of donor
restricted externally held trust funds of which TJU has a perpetual interest in the annual
income stream.
The fair value of TJU’s interest rate swaps related to its debt obligations are based on thirdparty valuations independent of the counterparties. As the fair values of interest rate swaps
are determined based on inputs that are readily available or can be derived from information
available in public markets, TJU has categorized interest rate swaps as Level 2.
The following table presents the short term and long term investments, and assets whose use
is limited carried on the consolidated balance sheet by level within the valuation hierarchy or
NAV as of June 30, 2016 (in thousands):
25
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Cash and cash equivalents
Equity securities
Fixed income securities
Funds:
Global equity
Fixed income
Real asset
Other mutual funds
Private equity
Real estate
Hedge funds
External trusts
Total
Level 1
$36,740
3,376
156,511
Level 2
$0
562,956
Level 3
$0
-
17
225,199
118,571
11,118
7,861
$925,705
97,530
$97,530
341,318
$537,962
NAV
$0
2,500
-
Total
$36,740
5,876
719,467
118,175
84,880
111,053
23,143
162,915
$502,666
225,216
236,746
11,118
434,059
111,053
23,143
162,915
97,530
$2,063,863
Investments not subject to fair value leveling or fair value at NAV at June 30, 2016 totaled
$60.2 million.
The following table presents the other liabilities carried on the consolidated balance sheet by
level within the valuation hierarchy as of June 30, 2016 (in thousands):
Interest rate swaps
Level 1
-
Level 2
$43,609
Level 3
-
Total
$43,609
The following table presents the short term and long term investments, and assets whose use
is limited carried on the consolidated balance sheet by level within the valuation hierarchy or
NAV as of June 30, 2015 (in thousands). Certain amounts have been reclassified to conform
to the current year presentation.
Cash and cash equivalents
Equity securities
Fixed income securities
Funds:
Global equity
Fixed income
Real asset
Other mutual funds
Private equity
Real estate
Hedge funds
External trusts
Total
Level 1
$55,380
3,492
181,443
Level 2
$0
509,781
Level 3
$0
-
342,244
$582,559
248,961
108,899
10,050
7,392
2,287
$887,370
100,225
$100,225
26
NAV
$0
2,500
-
Total
$55,380
5,992
691,224
116,168
85,557
87,139
22,537
169,398
$483,299
248,961
225,067
10,050
435,193
87,139
22,537
169,398
102,512
$2,053,453
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Investments not subject to fair value leveling or fair value at NAV at June 30, 2015 totaled
$71.0 million.
The following table presents the other liabilities carried on the consolidated balance sheet by
level within the valuation hierarchy as of June 30, 2015 (in thousands):
Interest rate swaps
Level 1
-
Level 2
$29,826
Level 3
-
Total
$29,826
The following table include a roll-forward of the amounts for the year ended June 30, 2016 (in
thousands) for investments classified within Level 3. The classification of an investment
within Level 3 is based upon the significance of the unobservable inputs to the overall fair
value measurement.
Balance at July 1, 2015
Acquisitions
Dispositions
Realized gain/(loss), net
Unrealized gain/(loss), net
Transfers in
Balance at June 30, 2016
External
Trusts
$100,225
(4,982)
2,287
$97,530
8. PLEDGES RECEIVABLE
A summary of pledges receivable is as follows at June 30, 2016 and 2015, respectively (in
thousands):
2016
2015
Unconditional promises expected to be collected in:
Less than one year
One year to five years
Over five years
Less: unamortized discount and allowance
for doubtful accounts
27
$29,720
67,249
71,600
168,569
$18,226
45,147
78,000
141,373
(39,926)
$128,643
(40,458)
$100,915
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
The discount rate ranges from 0.9% to 5.5%. TJU’s largest pledge comprises 55% and 72%
of the pledge receivable at June 30, 2016 and 2015, respectively. At June 30, 2016 TJU was
the recipient of a conditional pledge of $2.6 million for the expansion of a clinical program.
9. LAND, BUILDINGS AND EQUIPMENT
2016
Land and land improvements
Buildings and building improvements
Equipment
Leasehold improvements
Construction in progress
Less: accumulated depreciation
Total land, buildings and equipment, net
$116,724
1,779,815
1,378,811
98,997
92,674
(1,998,034)
$1,468,987
2015
$115,848
1,731,186
1,285,717
65,962
33,473
(1,842,273)
$1,389,913
TJU uses straight-line depreciation over the assets’ estimated lives, which are as follows:
Land improvements
Buildings and building improvements
Equipment
Leasehold improvements
10-20 years
18-40 years
3-15 years
5-20 years
28
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
10. LONG-TERM OBLIGATIONS
Interest Rate at
Final M aturity
June 30, 2016
2040
5.00%
2016
2015
TJU
Fixed rate obligations:
2006 Series A Revenue Bonds
Unamortized premium and issue costs
2006 Series B Revenue Bonds
35,510
380
471
2040
4.00% - 5.00%
75,000
75,000
2042
3.00% - 5.00%
40,950
2,281
2,438
2051
3.00%-5.25%
301,805
301,805
(256)
Unamortized premium and issue costs
2015 Series A Revenue Bonds
911
40,405
3.625% - 5.25%
Unamortized premium and issue costs
2012 Series Revenue Bonds
$25,500
863
2032
Unamortized premium and issue costs
2010 Series Revenue Bonds
$25,500
Unamortized premium and issue costs
Total fixed rate obligations
(270)
41,320
23,025
23,928
505,058
511,508
60,000
60,000
Variable rate obligations:
2015 Series B Revenue Bonds
2046
0.75%
Unamortized issue costs
2015 Series C Revenue Bonds
(563)
2042
1.04%
35,125
2042
1.11%
34,875
2042
1.05%
35,125
2042
1.11%
34,875
2042
1.06%
20,950
2042
1.66%
29,050
Unamortized issue costs
2015 Series D Revenue Bonds
(144)
Unamortized issue costs
2015 Series E Revenue Bonds
(143)
Unamortized issue costs
2015 Series F Revenue Bonds
(144)
Unamortized issue costs
2015 Series G Revenue Bonds
(143)
Unamortized issue costs
2015 Series H Revenue Bonds
(86)
Unamortized issue costs
(123)
Total variable rate obligation
Total Revenue Bonds
(582)
8,885
(157)
8,820
(156)
8,880
(157)
8,820
(156)
5,965
(94)
29,050
(130)
248,654
128,988
753,712
640,496
Capital lease obligations
2022
14,947
7,812
Other
2017
1,196
40
769,855
648,348
5,930
8,790
Total TJU
Abington Health
Fixed rate obligations:
1993 Series A Revenue Bonds
2022
4.70% - 6.10%
Unamortized premium and issue costs
2009 Series A Revenue Bonds
(114)
2033
3.00% - 5.25%
110,770
2031
3.25% - 5.00%
138,415
Unamortized premium and issue costs
2012 Series A Revenue Bonds
(537)
Unamortized premium and issue costs
(134)
121,280
(600)
138,415
9,976
11,320
264,440
279,071
50,000
50,000
314,440
329,071
Variable rate obligations:
2012 Series B Revenue Bonds
2035
0.69%
Total Revenue Bonds
Other
Total Abington Health
Total
29
225
241
314,665
329,312
$1,084,520
$977,660
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
All Revenue bonds were issued by certain financing authorities as limited obligations of the
authorities payable from amounts received under loan agreements with TJU and AH,
respectively. The bonds are subject to optional redemption prior to maturity on specified
dates at a price equal to 100% of the principal amount, plus any accrued interest. The bond
agreements contain certain covenants, including financial covenants that require TJU to
generate net revenue (as defined) at least equal to 110% of maximum annual debt service
requirements. TJU was in compliance with this financial covenant requirement at June 30,
2016.
The Series 2015 A through H Revenue Bonds were issued in February 2015. The proceeds
provided funds to refinance the Series 2008 A and B Revenue Bonds, Series 2014 A and B
Notes and to provide funds for certain capital projects. The Series 2015 C through G Revenue
Bonds were structured as drawdown bonds and purchased by certain financial institutions.
These financial institutions agreed to advance funds available to be drawn through September
1, 2016 up to the maximum principal amount. At June 30, 2016, the maximum principal
amount of each of the Series 2015 C through G Revenue Bonds has been drawn.
Maturities for long-term debt for each of the next five years are as follows (in thousands):
2017
2018
2019
2020
2021
Thereafter
$22,501
21,573
22,201
22,867
22,179
$939,370
TJU had available unsecured lines of credit from various banks of $45.0 million and $47.0
million at June 30, 2016 and 2015, respectively, under which there were no borrowings at
June 30, 2016 and 2015, respectively. No compensating balances are required or maintained.
30
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
11. DERIVATIVE FINANCIAL INSTRUMENTS
TJU entered into derivative transactions for the purpose of reducing the impact of fluctuations
in interest rates under the terms of various interest rate swap contracts. The fair value of these
derivative instruments at June 30, 2016 and 2015 in the consolidated balance sheets is as
follows (in thousands):
TJU Receives
TJU Pays
Notional
Amount at
June 30, 2016
Expiration
2/1/34
67% of United
States Dollar
LIBOR (one
Month)
2.98%
$67,260
$67,260
Noncurrent
liability
$10,749
$7,634
Expiration
5/1/18
67% of United
States Dollar
LIBOR (one
Month)
4.542%
$15,540
$15,415
Noncurrent
liability
$999
$1,527
Expiration
9/1/45
67% of United
States Dollar
LIBOR (one
Month)
3.925%
$5,103
$5,103
Noncurrent
liability
$23,726
$14,977
Expiration
5/1/27
68% of United
States Dollar
LIBOR (one
Month)
3.980%
$42,200
$42,325
Noncurrent
liability
$9,174
$8,022
Expiration
5/1/27
68% of United
States LIBOR
(Five Year
minus 0.293%)
$73,475
$73,700
Noncurrent
liability
($719)
($1,777)
Expiration
5/1/27
68% of United
States LIBOR
(Five Year
minus 0.325%)
$42,200
-
Noncurrent
liability
($320)
($557)
Amended /
Expiration Date
68% of
United
States Dollar
LIBOR (one
Month)
68% of
United
States Dollar
LIBOR (one
Month)
Notional
Amount at
June 30, 2015
Balance Sheet
Location
Fair Value at
June 30,
2016
Fair Value at
June 30,
2015
The London InterBank Offered Rate (“LIBOR”) with a one month maturity ranged from
0.19% to 0.45% (average rate of 0.33%) in 2016. The LIBOR rate with a the five year
maturity ranged from 0.96% to 1.83% (average rate of 1.43%) in 2016. A nonoperating loss
of $17.6 million is included in the consolidated statement of operations and changes in net
assets for the valuation of interest rate swap contracts ($13.8 million) and net settlement
payments to counterparties ($3.8 million) in 2016. Accumulated losses on interest rate swap
contracts of $43.6 million and $29.8 million at June 30, 2016 and 2015, respectively, are
reflected in the consolidated balance sheets.
31
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
12. OPERATING LEASES
TJU has lease obligations for buildings, equipment and ambulatory facilities under various
operating leases. Lease expenses charged to operations were $45.7 million in 2016. At June
30, 2016 the minimum future non-cancelable rental lease commitments are as follows (in
thousands):
2017
2018
2019
2020
2021
Thereafter
$28,816
25,734
22,242
18,865
15,485
101,252
$212,394
13. PENSION PLANS
Retirement benefits are provided to certain employees through direct payments to various
funds. Employees not subject to TJU’s defined benefit plans may be eligible to participate in
one of the following defined contribution arrangements. TJU’s share of the cost of these
benefits for the year ended June 30, 2016 was as follows (in thousands):
Plan
TJU faculty and senior
administrators
Description
9% to 13% of eligible compensation based
upon age
TJU non-faculty and
non-union
4.5% of eligible compensation, plus matching
contribution of 25% of the first 6% of employee
contributions
18,068
10% of eligible compensation for physicians
and 3.5% to 5.5% of eligible compensation for
non-physicians based upon years of service
14,873
2% to 5% of eligible compensation based upon
years of services, plus matching contribution of
50% of the first $2,000 of employee
contributions
2,918
JUP
Abington Health
2016
$20,104
$55,963
TJU also has non-contributory defined benefit pension plans for certain full-time employees.
The TJU and AH plans are frozen to new entrants. Commensurate with the freeze of each of
these plans to new entrants, existing employees that met certain age and years of service
32
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
thresholds were eligible to remain in the plans and continue to earn benefits. Benefits under
the non-contributory defined benefit plans are based on the employee’s years of service and
compensation during the years preceding retirement. Contributions to the plan are
designed to meet the minimum funding requirements of the Employee Retirement Income
Security Act of 1974.
The accounting guidance for defined benefit pension plans requires employers to recognize
the overfunded or underfunded projected benefit obligation (“PBO”) of a defined benefit
pension plan as an asset or liability in the balance sheet. The PBO represents the actuarial
present value of benefits attributable to employee service rendered to date, including the
effects of estimated future salary increases. The accounting guidance also requires employers
to recognize annual changes in gains or losses, prior service costs, or other
credits that have not been recognized as a component of net periodic pension cost through
unrestricted net assets.Effective beginning with the fiscal year ending June 30, 2017, TJU is
changing the method used to calculate service cost and interest cost. The calculation of
service cost and projected benefit obligation will utilize a split discount rate approach, where
separate discount rates are calculated for determining each based on their respective expected
cash flows. Additionally, the calculation of the interest cost will begin to utilize an approach
that applies the individual spot rates from the full yield curve against the expected benefit
payments for each year rather than using the single equivalent discount rate applied to all
future years. This change will be accounted for as a change in accounting estimate that is
reflected prospectively. These changes do not impact the calculation of the projected benefit
obligation or the discount rate. Gains or losses arising from this change will be deferred into
future accounting periods.
The components of the net pension plan financial position on the consolidated balance sheets
are as follows (in thousands):
2016
Change in projected benefit obligation:
Benefit obligation, beginning of year
Service cost
Interest cost
Net experience loss
Benefits paid
Projected benefit obligation, end of year
Change in plan assets:
Fair value of plan assets, beginning of year
Actual return of plan assets
Employer contributions
Benefit payments
Fair value of plan assets, end of year
Plan funded status
33
2015
$1,271,828
35,428
57,945
157,495
(52,230)
$1,470,466
$1,196,082
36,390
53,021
14,725
(28,390)
$1,271,828
$982,445
20,087
39,063
(52,230)
$989,365
$919,983
38,716
52,136
(28,390)
$982,445
($481,101)
($289,383)
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Amounts recognized in unrestricted net assets consist of:
Net actuarial loss
2016
2015
$522,608
$329,619
The accumulated benefit obligation at June 30, 2016 and 2015 was as follows:
2016
Accumulated benefit obligation
2015
$1,307,075
$1,136,683
The components of pension expense for the plans for the year ended June 30, 2016 were as
follows (in thousands):
Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial loss
Net periodic benefit cost
$35,428
57,945
(73,501)
17,920
37,792
Other changes in plan assets and benefit
obligations recognized in unrestricted net assets:
Net actuarial loss
Amortization of net actuarial loss
Total recognized in unrestricted net assets
Total recognized in net periodic benefit cost and
unrestricted net assets
210,909
(17,920)
192,989
$230,781
The estimated actuarial loss that will be amortized from unrestricted net assets during the
upcoming fiscal year is $23.1 million.
The average assumptions used to estimate the June 30 pension obligation were as follows:
Discount rate
Rate of compensation increase
Expected return on plan assets
34
2016
2015
3.86%
3.71%
7.43%
4.62%
3.78%
7.43%
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
The average assumptions used to determine periodic benefit costs were as follows:
Discount rate
Rate of compensation increase
Expected return on plan assets
2016
2015
4.63%
3.78%
7.43%
4.49%
3.07%
7.42%
A summary of the plans’ targeted and actual asset allocations are as follows:
Cash
Bonds
Global equity
Real estate and other
Percentage of
Plan Assets
June 30, 2016
2%
31%
62%
5%
100%
Targeted
Range
0-5%
25-45%
45-65%
5-10%
Percentage of
Plan Assets
June 30, 2015
2%
28%
64%
6%
100%
The portfolios utilize a long-term asset allocation strategy that allows management to
rebalance the asset allocation back to target levels on a monthly basis. Short-term compliance
with the target ranges can be impacted by the severity of market conditions. The expected
long-term rate of return for the plan’s assets are based on the historical return of each of the
above categories, weighted based on the target allocations for each class. The assets of the
defined benefit pension plan are invested in a manner that is intended to preserve the
purchasing power of the plan’s assets and provide payments to beneficiaries. Thus, a rate of
return objective of inflation plus 5% is targeted.
TJU expects to contribute $33.8 million during fiscal year 2017.
Projected benefit payments for the next five years are as follows (in thousands):
2017
2018
2019
2020
2021
$39,656
43,827
47,566
52,482
57,398
35
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
The following table presents the plan assets by level within the valuation hierarchy, as
discussed in Note 6, as of June 30, 2016 (in thousands):
Cash and cash equivalents
Equity securities
Fixed income securities
Funds:
Global equity
Fixed income
Private equity
Real estate
Hedge funds
Total
Level 1
$9,275
310,117
1,268
Level 2
$6,415
69,177
Level 3
$0
-
651
$321,311
224,730
89,242
51
$389,615
-
NAV
$0
$0
75,511
151,125
Total
$15,690
385,628
221,570
2,184
1,069
48,550
$278,439
224,730
89,242
2,886
1,069
48,550
$989,365
The following table presents the plan assets by level within the valuation hierarchy, as
discussed in Note 6, as of June 30, 2015 (in thousands). Certain amounts have been
reclassified to conform to the current year presentation.
Cash and cash equivalents
Equity securities
Fixed income securities
Funds:
Global equity
Fixed income
Private equity
Real estate
Hedge funds
Total
Level 1
$15,033
301,635
308
Level 2
$4,161
59,202
Level 3
$0
-
2,041
$319,017
249,636
74,783
52
$387,834
$0
NAV
$0
76,030
140,533
Total
$19,194
377,665
200,043
2,604
1,154
55,273
$ 275,594
249,636
74,783
4,697
1,154
55,273
$982,445
Participation in Multiemployer Defined Benefit Pension Plan
TJU is a participating employer in The Pension Fund for Hospital and Health Care Employees
– Philadelphia and Vicinity (the Pension Fund), a jointly-trusted multiemployer defined
benefit pension plan. The Pension Fund is operated for the benefit of Chapter 1199C of the
American Federation of State, County and Municipal Employees (the Union). Information
about the Pension Fund and the University’s participation is summarized as follows.
The employer identification number for the Pension Fund is 23-2627428. At the date the
financial statements were issued Form 5500 was not available for the plan years ending in
2016. TJU’s contribution to the Pension Fund was $6.2 million for the year ended June 30,
36
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
2016. The contributions represent approximately 28% of the contributions to the Pension
Fund. A six year collective-bargaining agreement was approved by the Union effective
July 1, 2012. TJU contributions as a percentage of covered payroll to the Pension Fund over
the remaining term of the agreement is as follows:
2017
2018
18.75%
20.50%
For the Plan Years beginning January 1, 2014 and January 1, 2015, the Pension Fund was
determined to be in endangered status (also referred to as yellow zone status) under the
Pension Protection Act of 2006. Accordingly, the Pension Fund is subject to a funding
improvement plan. The zone status is based on information that TJU received from the plan
and is certified by the plan’s actuary. Among other factors, plans in the yellow zone are
generally less than 80 percent funding.
At January 1, 2015, the most recent date for which such information is available, the projected
benefit obligation of the Pension Fund exceeded the plan assets by $214.6 million.
14. PROFESSIONAL LIABILITY CLAIMS
TJU, TJUHS and AH maintain professional liability insurance under both self-insured and
alternative risk financing insurance programs for the distinct services each provides. For all
self-insured programs TJU, TJUHS and AH accrue for estimated retained risk liability arising
from both asserted and unasserted claims. The estimate of liability is based upon an analysis
of historical claims data as prepared by independent actuaries.
The professional liability insurance program for TJU and TJUHS is administered through a
policyholder-owned, Vermont-domiciled, risk retention group, the MLRRG. For the
professional liability coverage only, the MLRRG is 100% reinsured by a non-profit captive
protected cell insurance company, Five Pointe, domiciled in Delaware. TJU holds a 49%
ownership interest in MLRRG and TJUHS holds a 49% ownership interest in Five Pointe.
The remaining ownership interest in each entity is held by other regional non-profit hospitals
and/or health systems.
The professional liability insurance program for AH is administered through a policyholderowned, Vermont-domiciled, risk retention group, Cassatt RRG (“CRRG”). CRRG is owned
by various regional non-profit hospitals including AH. AH holds a 16.7% ownership interest
in CRRG. CRRG reinsures with Cassatt Insurance Company, LTD which is owned by the
other regional non-profit hospitals, including AH, and incorporated as an insurance company
under the laws of Bermuda.
For both TJUHS and AH the first (“primary”) layer of coverage is claims-made coverage with
limits of $500,000 per medical incident and $2,500,000 annual aggregate per hospital and
$500,000 per medical incident and $1,500,000 annual aggregate per physician. The limits for
37
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
this primary coverage layer are statutorily prescribed in Pennsylvania. In addition for TJUHS,
a $1,000,000 per medical incident and $3,000,000 annual aggregate limit is provided for
scheduled dentists, as well as physicians and residents practicing in Delaware and New
Jersey. At June 30, 2016, TJUHS non-healthcare provider entities are provided with a shared
$1,000,000 per incident and $3,000,000 annual aggregate limit of liability.
The second layer of professional liability coverage for TJUHS and AH is provided through
Pennsylvania’s Medical Care Availability and Reduction of Error Fund (the “MCARE
Fund”). This second layer, required by statute, consists of coverage with limits of $500,000
per claim and $1,500,000 annual aggregate per hospital and per employed physician/resident
at June 30, 2016. The annual assessments for MCARE Fund coverage are based on the
schedule of occurrence rates approved by the Insurance Commissioner of Pennsylvania for
the Pennsylvania Professional Liability Joint Underwriting Association multiplied by an
annual assessment percentage. This assessment is recognized as an expense in the period
incurred. No provision has been made for future MCARE Fund assessments as the unfunded
portion of the MCARE Fund liability cannot be reasonably estimated.
For TJUHS, liabilities for potential losses in excess of the primary and MCARE layers up to
$5,000,000 each medical incident and $5,000,000 aggregate retention excess of a $7,000,000
each and every medical incident retention are based on actuarially-determined estimates,
which reflect a 65% confidence level and a 3% discount rate for 2016 and 2015. These
estimates are based on historical information along with certain assumptions about future
events. Changes in assumptions for such considerations as medical costs and actual
experience could cause these estimates to change.
TJUHS maintains claims-made excess catastrophic professional liability insurance coverage
through Five Pointe in the amount of $95,000,000 per medical incident and $95,000,000
annual aggregate attaches excess of a $12,000,000 each and every medical incident
retention. The attachment point of the excess professional liability insurance coverage
decreases to $7,000,000 each and every medical incident after a $5,000,000 aggregate
retention is exhausted excess of the $7,000,000 each and every medical incident retention.
The retention amounts are inclusive of the primary and MCARE layers of coverage. For
TJU’s miscellaneous professional liability exposure the excess professional liability insurance
coverage attaches excess of $1,000,000 per claim and $3,000,000 annual aggregate. Five
Pointe reinsured 100% of this risk to seven currently A-rated insurers (ACE, XL, Lloyd’s
Syndicates, Berkley, Zurich, Endurance, and Swiss Re). A separate limit of $95,000,000 per
occurrence and $95,000,000 aggregate is also maintained to
provide liability insurance coverage excess of the primary general, auto, employers and
aviation liability coverages.
For AH, liabilities for potential professional liability losses in excess of the primary and
MCARE layers, Cassatt Insurance Company provides coverage up to a $4,000,000 claim
limit and through reinsurance provides layered excess professional liability coverage of
38
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
$15,000,000 per claim with a $45,000,000 annual aggregate. In addition, CRRG provides an
umbrella liability policy with limits of $49,000,000 per occurrence and $49,000,000 annual
aggregate for the general, auto, employers and aviation liability exposures. The excess
professional and umbrella policies coverage limits are shared with the various regional nonprofit hospital owners of CRRG and Cassatt Insurance Company Ltd.
The MLRRG provides a $2,000,000 per occurrence and $4,000,000 annual aggregate general
liability coverage limit for TJU and TJUHS. The MLRRG retains 100% of the general
liability coverage exposure.
CRRG provides a $1,000,000 per occurrence and $2,000,000 annual aggregate general
liability coverage limit for AH.
For MLRRG the premiums charged for the primary professional and general liability layers of
coverage are determined by an independent actuary, based on loss and loss adjustment
expense experience and other factors, at a 65% confidence level and a 3% discount rate for
2016 and 2015 and include a charge for premium tax and operating expenses.
For CRRG the premiums charged for the primary professional and general liability layers of
coverage are determined by an independent actuary, based on loss and loss adjustment
expense experience and other factors, at an expected level and a 3.5% discount rate for 2016
and 2015.
TJU has accrued professional liability claims of $382.6 million and $362.7 million at June 30,
2016 and 2015, respectively, of which $42.7 million and $51.5 million were current. The
interest rates used to discount malpractice claims ranged from 3.0% to 3.5% at June 30, 2016
and 2015. Anticipated insurance recoveries associated with these liabilities for June 30, 2016
and 2015 is $169.4 and $166.0 million, respectively.
15. WORKERS’ COMPENSATION CLAIMS
TJU is self-insured for its workers’ compensation exposures. TJU accrues for its workers’
compensation liability based upon actuarial estimates using discount rates ranging from 3% to
3.5%. Accrued workers’ compensation liabilities were $28.6 million and $30.3 million at
June 30, 2016 and 2015, respectively. These amounts are presented in the accompanying
consolidated balance sheets.
16. COMMITMENTS AND CONTINGENCIES
Letters of Credit
TJU had open letters of credit aggregating $28.6 million and $25.8 million at June 30, 2016
and 2015, respectively, primarily related to self-insurance arrangements for workers’
compensation. The letters of credit expire between December 31, 2016 and February 20,
2018.
39
Thomas Jefferson University
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
Litigation
TJU is involved in litigation and regulatory investigations arising in the ordinary course of
business. In the opinion of management, all such matters are adequately covered by
commercial insurance or by accruals, and if not so covered, are without merit or are of such
kind, or involve such amounts, as would not have a material adverse effect on the financial
position or results of operations of TJU.
17. FUNCTIONAL CLASSIFICATION
Clinical
Operations
Salaries and wages
Employee benefits
Supplies
Purchased services
Insurance
Utilities
Interest
Depreciation and amortization
Rent
Other expenses
Total
$1,134,247
293,817
512,876
176,229
50,161
27,114
26,059
131,675
33,055
152,971
$2,538,204
Research and
Other Sponsored
Instruction
Programs
$65,229
18,043
3,086
4,129
325
3,549
5,950
9,893
2,869
11,638
$124,711
Auxiliary
Activities
$67,910
17,695
12,579
2,318
22
4,821
11,802
2,837
18,484
$138,468
Academic
Support
$7,911
993
97
3,350
31
1,358
3,902
5,513
172
16,961
$40,288
Student
Services
$3,110
954
105
73
17
23
1,629
$5,911
$3,430
1,038
340
55
345
3
89
64
521
$5,885
Institutional
Support
$98,625
29,268
7,335
2,157
1,152
6,676
45,664
$190,877
Total
$1,380,462
361,808
536,418
186,154
52,696
38,356
35,914
158,972
45,696
247,868
$3,044,344
18. NONCONTROLLING INTEREST
TJU has a controlling interest in certain joint ventures in healthcare related organizations.
The amount not owned by TJU is shown as a noncontrolling interest. The following table
presents the changes in consolidated unrestricted net assets attributable to the controlling
financial interest of TJU and the noncontrolling interest (in thousands):
Noncontrolling Interests
Controlling
Consolidated
Interest
Balance June 30, 2015
Riverview
JURA
JCCC
ROSH
$1,745,968
$3,372
$459
$459
91,697
2,195
403
20
Distributions to NCI
-
(2,695)
(500)
ROSH acquisition
-
-
Income from operations
Other changes, net
Balance June 30, 2016
(174,268)
$1,663,397
-
$4,290
$1,750,258
2,618
94,315
-
-
(3,195)
(3,195)
-
70,856
70,856
70,856
-
-
-
$362
$479
$0
Total
-
$2,872
40
Total
$70,856
$74,569
(174,268)
$1,737,966
Supplemental Information
Thomas Jefferson University
Unaudited Pro Forma Information
(in thousands)
TJU's operating revenues, gains and other support, changes in unrestricted net assets, temporarily
restricted net assets and permanently restricted net assets for the year ended June 30, 2016, as if the
acquisition of the controlling interest in Rothman Orthopaedic Specialty Hospital, LLC by Thomas
Jefferson University Hospital had occurred at July 1, 2015, are:
Supplemental pro forma
information for 7/1/2015
to 6/30/2016
Operating
Revenues, Gains
& Other Support
Change in
Unrestricted Net
Assets
Change in
Temporarily
Restricted Net
Assets
$3,187,904
($931)
$21,881
41
Change in
Permanently
Restricted Net
Assets
$7,338
Thomas Jefferson University
Unaudited Consolidating Balance Sheets
June 30, 2016 and 2015
(In Thousands)
2016
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, less allowance for doubtful accounts
of $63,825 in 2016 $52,161 in 2015
Inventory
Pledges receivable
Insurance recoverable
Assets whose use is limited, current
Other current assets
Total current assets
TJU
AH
2015
Eliminations
$181,996
641,503
291,077
34,854
21,554
15,376
19,952
19,163
935,656
90,423
3,896
8,166
12,493
0
8,412
946,889
763,819
140,423
8,624
92,961
146,483
111,538
26,810
999,156
23,331
$3,248,801
-
TJU
AH
Consolidated
$301,743
1,055,436
$108,854
397,051
$135,510
632,691
$244,364
1,029,742
(539)
(539)
380,961
38,750
29,720
27,869
19,952
27,575
1,882,006
303,944
33,990
18,226
19,054
19,595
17,391
918,105
95,448
3,931
13,362
0
6,988
887,930
399,392
37,921
18,226
32,416
19,595
24,379
1,806,035
132,032
12,387
5,962
13,828
32,926
469,831
5,340
$1,619,195
($539)
895,851
152,810
8,624
98,923
160,311
144,464
26,810
1,468,987
28,671
$4,867,457
782,509
137,339
8,781
72,447
11,971
99,886
26,417
916,512
14,613
$2,988,580
147,696
7,586
10,239
13,993
34,658
473,401
3,398
$1,578,901
930,205
144,925
8,781
82,686
25,964
134,544
26,417
1,389,913
18,011
$4,567,481
12,517
30,566
8,381
15,710
174,759
135,300
16,412
393,645
11,078
12,108
385
68,986
62,826
155,383
(539)
(539)
23,595
42,674
8,766
15,710
243,206
198,126
16,412
548,489
8,697
38,332
7,165
11,949
202,006
163,744
17,844
449,737
13,413
13,127
235
1,236
67,458
50,786
146,255
22,110
51,459
7,400
13,185
269,464
214,530
17,844
595,992
Long-term obligations
Accrued pension liability
Federal student loan advances
Deferred revenues
Accrued professional liability claims
Accrued workers' compensation claims
Interest rate swap contracts
Other noncurrent liabilities
Total liabilities
757,338
191,685
15,651
7,339
294,690
12,823
43,609
5,863
1,722,643
303,587
289,416
45,272
6,998
13,355
814,011
(539)
1,060,925
481,101
15,651
7,339
339,962
19,821
43,609
19,218
2,536,115
639,651
145,496
18,247
8,040
265,275
15,978
29,826
5,811
1,578,061
315,899
143,887
45,984
6,878
16,102
675,005
955,550
289,383
18,247
8,040
311,259
22,856
29,826
21,913
2,253,066
Net assets:
Unrestricted
Noncontrolling interest in joint venture
Temporarily restricted
Permanently restricted
Total net assets
1,001,972
74,569
234,000
215,617
1,526,158
661,425
68,327
75,432
805,184
-
1,663,397
74,569
302,327
291,049
2,331,342
987,456
4,290
211,609
207,164
1,410,519
758,512
68,837
76,547
903,896
1,745,968
4,290
280,446
283,711
2,314,415
$3,248,801
$1,619,195
($539)
$4,867,457
$2,988,580
$1,578,901
$4,567,481
Long-term investments
Assets whose use is limited, noncurrent
Assets held by affiliated foundation
Pledges receivable
Goodwill, net
Insurance recoverable
Loans receivable from students, net
Land, buildings and equipment, net
Other noncurrent assets
Total assets
$119,747
413,933
Consolidated
Liabilities and Net Assets
Current liabilities:
Current portion of:
Long-term obligations
Accrued professional liability claims
Accrued workers' compensation claims
Deferred revenues
Accounts payable and accrued expenses
Accrued payroll and related costs
Grant and contract advances
Total current liabilities
Total liabilities and net assets
42
Thomas Jefferson University
Unaudited Consolidating Statement of Operations and Changes in Unrestricted Net Assets
For the Year Ended June 30, 2016
(In Thousands)
TJU
Operating revenues, gains and other support:
Net patient service revenue
Provision for bad debts
Net patient service revenue less provision for bad debts
Grants and contracts
Tuition and fees, net
Investment income
Contributions
Other revenue
Net assets released from restrictions
Total operating revenues, gains and other support
AH
Eliminations
Consolidated
$1,928,441
(77,596)
1,850,845
91,186
119,871
23,975
3,862
163,345
24,485
2,277,569
$844,619
(25,118)
819,501
403
2,818
158
25,399
13,091
861,370
(280)
(280)
$2,773,060
(102,714)
2,670,346
91,589
122,689
24,133
3,862
188,464
37,576
3,138,659
998,773
261,311
404,285
90,269
110,654
23,454
45,567
30,370
37,512
220,886
2,223,081
381,488
100,497
132,133
95,885
48,318
12,460
7,129
7,986
8,184
27,463
821,543
201
(481)
(280)
1,380,462
361,808
536,418
186,154
158,972
35,914
52,696
38,356
45,696
247,868
3,044,344
54,488
39,827
-
94,315
Nonoperating items and other changes in unrestricted net assets, net:
Gain (loss) on investments, net
Investment income (loss) net of amounts classified as operating revenue
Gain on investment in ROSH acquisition
Interest rate swap contracts
Reclassification of net assets
Contributions and government grants for capital projects
Change in noncontrolling interest in joint venture
Net assets released from restrictions used for purchase of property and equipment
Donated capital received
Increase in pension liability
Distributions to noncontrolling interest
Increase (decrease) in unrestricted net assets from nonoperating items and other changes in net assets
2,778
(13,083)
21,906
(17,546)
(173)
4,088
70,856
8,494
799
(44,617)
(3,195)
30,307
(6,849)
15,332
2,975
(148,372)
(136,914)
-
(4,071)
2,249
21,906
(17,546)
(173)
4,088
70,856
11,469
799
(192,989)
(3,195)
(106,607)
Increase (decrease) in unrestricted net assets
$84,795
($97,087)
Operating expenses:
Salaries and wages
Employee benefits
Supplies
Purchased services
Depreciation and amortization
Interest
Insurance
Utilities
Rent
Other
Total operating expenses
Income from operations
43
$0
($12,292)
Schedule of Expenditures of Federal Awards
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Student Financial Assistance Cluster
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
Scholarships for Health Professions Students from
Disadvantaged Backgrounds
Nursing Student Loans
Outstanding loans as of July 1, 2015
New loans issued during 2016
Health Professions Student Loans, Including Primary
Care Loans/Loans for Disadvantaged Students
Outstanding loans as of July 1, 2015
New loans issued during 2016
DEPARTMENT OF EDUCATION
Federal Supplemental Educational Opportunity Grants
Federal Work-Study Program
Administrative cost allowance
Federal Pell Grant Program
Federal Perkins Loans
Outstanding loans as of July 1, 2015
New loans issued during 2016
Administrative cost allowance
Federal Direct Student Loans
Total Student Financial Assistance Cluster
CFDA
93.925
Direct
$
300,000
PassThrough
$
Pass-Through Entity
-
Pass-Through Entity
Sponsor Number
Total
Expenditures
$
300,000
Passed to
Subrecipients
$
-
93.364
93.364
1,314,988
236,000
-
1,314,988
236,000
-
93.342
93.342
1,063,175
65,000
-
1,063,175
65,000
-
2,979,163
-
2,979,163
-
84.007
84.033
84.033
84.063
104,233
624,954
120,051
1,152,107
-
104,233
624,954
120,051
1,152,107
-
84.038
84.038
84.038
84.268
7,358,731
1,870,750
21,848
70,133,178
-
7,358,731
1,870,750
21,848
70,133,178
-
81,385,852
-
81,385,852
-
84,365,015
-
84,365,015
-
The accompanying notes are an integral part of this schedule.
44
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Research and Development Cluster
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
National Institutes of Health
Federal Award
Federal Award
Federal Award
Federal Award
Federal Award
Federal Award - HHSN268201100026C
Environmental Health
Environmental Health
Oral Diseases and Disorders Research
Research Related to Deafness and Communication
Disorders
Research Related to Deafness and Communication
Disorders
Research and Training in Complementary and
Integrative Health
Research and Training in Complementary and
Integrative Health
Mental Health Research Grants
Mental Health Research Grants
Mental Health Research Grants
Mental Health Research Grants
CFDA
PassThrough
Direct
Pass-Through Entity
93.RD
93.RD
93.RD
93.RD
-
10,062
15,241
(16,027)
76,926
Mayo Clinic
Mayo Clinic
Cynvenio Biosystems
Mayo Clinic
Sloan-Kettering Institute for
56 Cancer Research
442,221 University of Rochester
84,774 Trustees of Boston University
93.RD
93.RD
93.113
93.113
93.121
15,580
1,114,555
-
93.173
-
93.173
-
93.213
4,097
-
93.213
93.242
93.242
93.242
93.242
645,607
-
27,596
(4,419)
6,482
42,206
3,439 Monell Chemical Senses Center
27,652 Ohio State University
Pass-Through Entity
Sponsor Number
HHSN2612012000321
HHSN261201200042I
HHSN2612013000073C
HHSN261201200042
-
R01ES021534
R21DE024954
56
15,580
1,114,555
442,221
84,774
13,211
-
R01DC013626
3,439
-
R01DC013626
27,652
-
4,097
-
27,596
645,607
(4,419)
6,482
42,206
35,959
-
NCI #8443
R25AT003580
University of Pennsylvania
University of Pennsylvania
Pathways to Housing PA
R01MH055687
R01MH061975
R01MH10457
45
Passed to
Subrecipients
10,062
15,241
(16,027)
76,926
Palmer College
The accompanying notes are an integral part of this schedule.
Total
Expenditures
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Research and Development Cluster
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
National Institutes of Health (continued)
Mental Health Research Grants
Mental Health Research Grants
Alcohol Research Programs
Alcohol Research Programs
Drug Abuse and Addiction Research Programs
Discovery and Applied Research for Technological
Innovations to Improve Human Health
Discovery and Applied Research for Technological
Innovations to Improve Human Health
Minority Health and Health Disparities Research
Minority Health and Health Disparities Research
Trans-NIH Research Support
Research Infrastructure Programs
Research Infrastructure Programs
Cancer Cause and Prevention Research
Cancer Cause and Prevention Research
Cancer Detection and Diagnosis Research
Cancer Detection and Diagnosis Research
Cancer Detection and Diagnosis Research
Cancer Detection and Diagnosis Research
Cancer Treatment Research
Cancer Treatment Research
Cancer Treatment Research
Cancer Treatment Research
Cancer Treatment Research
CFDA
PassThrough
Direct
Pass-Through Entity
93.242
93.242
93.273
93.273
93.279
1,095,346
609,202
24,259 Temple University
26,744 Temple University
35,979 Temple University
-
93.286
57,389
-
93.286
93.307
93.307
93.310
93.351
93.351
93.393
93.393
93.394
93.394
93.394
93.394
93.395
93.395
345,304
78,438
796,273
1,665,706
1,428,948
-
85,585
133,661
135,679
98,328
77,493
(33)
22,729
8,788
175,043
93.395
93.395
93.395
-
R01MH077908
R01MH091113
Passed to
Subrecipients
(6,019)
113,718
57,389
40,108
P01CA140043
85,585
345,304
133,661
135,679
78,438
98,328
796,273
77,493
1,665,706
(33)
22,729
8,788
1,428,948
175,043
195,083
9,711
259,760
63,426
-
U10CA180860
U10CA180868
U24CA180803
4,747
210,514
21,128
-
R21AA023630
R01EB017766
University of Pennsylvania
University of Michigan
P60MD006900
R21GM110184
University of Pittsburgh
P50OD010996
University of Pennsylvania
R01CA184315
University of Pittsburgh
JBS Science, Inc.
ImCare Biotech, LLC
U01CA086402
R44CA165312
R44CA165314
The accompanying notes are an integral part of this schedule.
Total
Expenditures
24,259
26,744
1,095,346
35,979
609,202
University of Delaware
Wistar Institute
Washington University of St.
4,747 Louis
210,514 NRG Oncology Foundation Inc.
21,128 American College of Radiology
46
Pass-Through Entity
Sponsor Number
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
CFDA
PassThrough
Direct
Pass-Through Entity
Pass-Through Entity
Sponsor Number
Total
Expenditures
Passed to
Subrecipients
Research and Development Cluster
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
National Institutes of Health (continued)
Cancer Treatment Research
93.395
-
Cancer Treatment Research
93.395
-
Cancer Treatment Research
Cancer Treatment Research
Cancer Treatment Research
93.395
93.395
93.395
-
Cancer Treatment Research
Cancer Biology Research
Cancer Biology Research
93.395
93.396
93.396
4,355,286
-
Cancer Biology Research
Cancer Centers Support Grants
Cancer Research Manpower
Cancer Control
Cancer Control
93.396
93.397
93.398
93.399
93.399
2,719,901
410,602
36,981
-
Cardiovascular Diseases Research
Cardiovascular Diseases Research
Cardiovascular Diseases Research
Cardiovascular Diseases Research
Cardiovascular Diseases Research
93.837
93.837
93.837
93.837
93.837
4,273,670
-
Cardiovascular Diseases Research
Lung Diseases Research
Lung Diseases Research
Lung Diseases Research
93.837
93.838
93.838
93.838
846,468
-
American College of Radiology
42,249 Imaging Network
American College of Radiology
51,420 Imaging Network
American College of Radiology
56,361 Imaging Network
58,223 RTOG Foundation, Inc.
98 John Wayne Cancer Institute
Sloan-Kettering Institute for
20 Cancer Research
(137) University of Pennsylvania
Lankenau Institute for Medical
74,153 Research
87,285 Frontier Science & Technology
Research Foundation, Inc.
71,632 University of Washington
52,474 Duke University
10,104 Duke University
(3,946) Yale University
Oregon Health Sciences
10,649 University
598,277 University of Pennsylvania
441,943 Rutgers University
The accompanying notes are an integral part of this schedule.
47
U10CA180820
42,249
-
UG1CA189828
51,420
-
U10CA021115
U10CA180868
P01CA029605
56,361
58,223
98
-
U10 CA027469
20
4,355,286
(137)
180,840
-
PSATJU00
74,153
2,719,901
410,602
36,981
87,285
64,887
-
R01HL114760
R01HL105448
U10HL084904
R01HL115295
4,273,670
71,632
52,474
10,104
(3,946)
156,617
-
10,649
846,468
598,277
441,943
128,410
124,697
21,665
R01CA092900
R01CA191191
R01HL111033
P01HL114471
P01HL114471
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Research and Development Cluster
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
National Institutes of Health (continued)
Lung Diseases Research
Blood Diseases and Resources Research
Blood Diseases and Resources Research
Blood Diseases and Resources Research
Arthritis, Musculoskeletal and Skin Diseases
Research
Arthritis, Musculoskeletal and Skin Diseases
Research
Diabetes, Digestive, and Kidney Diseases
Extramural Research
Diabetes, Digestive, and Kidney Diseases
Extramural Research
CFDA
PassThrough
Direct
93.838
93.839
93.839
93.839
1,831,597
-
93.846
3,652,001
93.846
-
93.847
2,857,582
Pass-Through Entity
Pass-Through Entity
Sponsor Number
40,000 University of Maryland
R01HL104119
350 University of North Carolina
R01HL106009
508,265 Children's Hospital of Philadelphia P01HL110860
Passed to
Subrecipients
40,000
1,831,597
350
508,265
147,977
240,275
3,652,001
195,062
19,761
-
2,857,582
242,530
(20)
-
U01DK096037
217,919
-
19,761 Drexel University
Total
Expenditures
R21AR066821
-
93.847
-
Albert Einstein Healthcare
(20) Network
93.847
-
217,919 George Washington University
93.847
-
37,990 University of Pennsylvania
P30DK019525
37,990
-
93.847
-
4,020 Northwestern University
R01DK100924
4,020
-
Extramural Research Programs in the
Neurosciences and Neurological Disorders
93.853
5,885,001
5,885,001
147,691
Extramural Research Programs in the
Neurosciences and Neurological Disorders
93.853
-
4,343 Rutgers University
R01NS038384
4,343
-
Extramural Research Programs in the
Neurosciences and Neurological Disorders
93.853
-
(583) Johns Hopkins University
U01NS062851
(583)
-
Extramural Research Programs in the
Neurosciences and Neurological Disorders
93.853
-
29,038 Johns Hopkins University
U01NS080824
29,038
-
Diabetes, Digestive, and Kidney Diseases
Extramural Research
Diabetes, Digestive, and Kidney Diseases
Extramural Research
Diabetes, Digestive, and Kidney Diseases
Extramural Research
U01K083027
-
The accompanying notes are an integral part of this schedule.
48
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Research and Development Cluster
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
National Institutes of Health (continued)
Extramural Research Programs in the
Neurosciences and Neurological Disorders
Extramural Research Programs in the
Neurosciences and Neurological Disorders
Extramural Research Programs in the
Neurosciences and Neurological Disorders
Extramural Research Programs in the
Neurosciences and Neurological Disorders
Allergy, Immunology and Transplantation
Research
Allergy, Immunology and Transplantation
Research
Allergy, Immunology and Transplantation
Research
Allergy, Immunology and Transplantation
Research
Allergy, Immunology and Transplantation
Research
Allergy, Immunology and Transplantation
Research
Allergy, Immunology and Transplantation
Research
Allergy, Immunology and Transplantation
Research
Allergy, Immunology and Transplantation
Research
Biomedical Research and Research Training
Biomedical Research and Research Training
Biomedical Research and Research Training
Biomedical Research and Research Training
Biomedical Research and Research Training
CFDA
PassThrough
Direct
Pass-Through Entity
Pass-Through Entity
Sponsor Number
Total
Expenditures
Passed to
Subrecipients
93.853
-
35,379 Temple University
R01NS079635
35,379
-
93.853
-
3,288 Temple University
U01NS062091
3,288
-
93.853
-
46,170 University of Pennsylvania
U01NS094340
46,170
-
93.853
-
39,010 Case Western Reserve University
U01NS090407
39,010
-
93.855
6,109,080
6,109,080
1,455,233
R42AI073064
103,098
-
R42AI081334
12,062
-
Molecular Targeting
103,098 Technologies, Inc.
Molecular Targeting
12,062 Technologies, Inc.
93.855
-
93.855
-
93.855
-
23,715 New York Blood Center
R01AI078314
23,715
-
93.855
-
106,085 University of Pennsylvania
R33AI105856
106,085
-
93.855
-
144,475 University of Pennsylvania
R01AI118694
144,475
-
93.855
-
(5,043) Georgia Regents University
U01AI083005
(5,043)
-
93.855
-
268,180 Duke University
R01AI110007
268,180
-
93.855
93.859
93.859
93.859
93.859
93.859
4,447,039
-
29,542
4,454
302,703
52,363
29,122
University of Alabama
R01AI121354
University of Pennsylvania
University of Pennsylvania
University of Minnesota
Health Research Inc.
RGM080396
P01GM055876
R01GM107175
R01GM061576
29,542
4,447,039
4,454
302,703
52,363
29,122
193,376
-
The accompanying notes are an integral part of this schedule.
49
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Research and Development Cluster
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
National Institutes of Health (continued)
Child Health and Human Development Extramural
Research
Child Health and Human Development Extramural
Research
Child Health and Human Development Extramural
Research
Child Health and Human Development Extramural
Research
Child Health and Human Development Extramural
Research
Aging Research
Aging Research
Aging Research
Aging Research
Aging Research
Aging Research
Aging Research
Vision Research
Vision Research
CFDA
PassThrough
Direct
93.865
114,740
93.865
-
Pass-Through Entity
Pass-Through Entity
Sponsor Number
52,945 University of Alabama
93.865
-
93.865
-
93.865
93.866
93.866
93.866
93.866
93.866
93.866
1,104,509
-
93.866
93.867
93.867
1,563,684
48,064,586
4,631 University of Delaware
University of California, San
2,037 Diego
63,731 Yeshiva University
3,862
26,636
471,431
68,665
107,063
Johns Hopkins University
Johns Hopkins University
Wake Forest University
University of Connecticut
University of Michigan
Oregon Health Sciences
49,976 University
7,678 University of Pennsylvania
Total
Expenditures
Passed to
Subrecipients
114,740
66,110
U01HD045033
52,945
-
R01HD062588
4,631
-
R24HD050837
2,037
-
R01HD082814
63,731
1,104,509
3,862
26,636
471,431
68,665
107,063
105,005
36,257
-
49,976
1,563,684
7,678
319,760
-
54,306,585
4,551,349
14,668
-
83,321
22,786
R01AG041781
R01AG046274
R01AG045551
R01AG044054
R01AG047986
R21AG044607
R01EY026525
6,241,999
Centers for Disease Control
Disabilities Prevention
Centers for Disease Control and Prevention
Investigations and Technical Assistance
Centers for Disease Control and Prevention
Investigations and Technical Assistance
Centers for Disease Control and Prevention
Investigations and Technical Assistance
93.184
-
93.283
83,321
93.283
93.283
Children's Hospital of
14,668 Philadelphia
U27DD000862
-
-
National Association of Chronic
86,826 Disease Directors
U58DP002759
86,826
-
-
61,832 Wills Eye Hospital
U01DP005127
61,832
-
The accompanying notes are an integral part of this schedule.
50
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
CFDA
PassThrough
Direct
Pass-Through Entity
Pass-Through Entity
Sponsor Number
Total
Expenditures
Passed to
Subrecipients
Research and Development Cluster
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
Centers for Disease Control (continued)
Centers for Disease Control and Prevention
Investigations and Technical Assistance
93.283
-
Surveillance for Diseases Among Immigrants and
Refugees financed in part by Prevention and Public
Health Funds (PPHF)
93.755
30,646
Preventive Health and Health Services Block Grant
funded solely with Prevention and Public Health
Funds (PPHF)
93.758
-
Health Care Improvement
90,106 Foundation
Preventive Health and Health Services Block Grant
funded solely with Prevention and Public Health
Funds (PPHF)
93.758
-
Preventive Health and Health Services Block Grant
93.991
Assistance Programs for Chronic Disease Prevention
and Control
93.945
12,853 Nationalities Service
U50CK000459
12,853
-
30,646
13,384
SAP #4100053824
90,106
-
Health Care Improvement
24,309 Foundation
SAP #4100069641
24,309
-
-
Health Care Improvement
(485) Foundation
SAP #4100053824
(485)
-
-
3,663 Wills Eye Hospital
U58DP002655
3,663
-
-
113,967
Administration for Community Living
Special Programs for the Aging_Title III, Part
D_Disease Prevention and Health Promotion
Services
93.043
-
ACL National Institute on Disability, Independent
Living, and Rehabilitation Research
93.433
543,230
543,230
293,772
407,739
1,135 Philadelphia Corporation on Aging
1,135
The accompanying notes are an integral part of this schedule.
51
1-0381-50-3116
36,170
1,135
-
543,230
101,866
544,365
101,866
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Agency for Healthcare Research and Quality
Research on Healthcare Costs, Quality and
Outcomes
Research on Healthcare Costs, Quality and
Outcomes
CFDA
PassThrough
Direct
93.226
-
93.226
-
Health Resources and Services Administration
Maternal and Child Health Federal Consolidated
Programs
Maternal and Child Health Federal Consolidated
Programs
Maternal and Child Health Federal Consolidated
Programs
Coordinated Services and Access to Research for
Women, Infants, Children, and Youth
Advanced Nursing Education Grant Program
Geriatric Academic Career Awards
Nurse Education, Practice Quality and Retention
Grants
ARRA Grants for Training in Primary Care
Medicine
and Dentistry Training and Enhancement
Grants for Primary Care Training and Enhancement
PPHF Geriatric Education Centers
1,747 Dartmouth College
45,589 University of Pennsylvania
Pass-Through Entity
Sponsor Number
Total
Expenditures
Passed to
Subrecipients
R01HS021747
1,747
-
R01HS023614
45,589
-
47,336
-
2,286
-
47,336
93.110
2,286
93.110
-
14,209 Children's Hospital of Philadelphia
H30MC24050
14,209
-
93.110
-
13,996 Florida State University
R40MC28854
13,996
-
93.153
93.247
93.250
(9,094)
22,497
H12HA24852
171,904
(9,094)
22,497
-
93.359
-
30,269
-
93.403
93.884
93.969
59,250
916,809
38,110
59,250
916,809
38,110
7,684
28,360
1,260,236
36,044
136,373
-
136,373
-
1,029,858
Administration for Children and Families
Abandoned Infants
Pass-Through Entity
93.551
-
-
171,904 Mazzoni Center
Lewis and Clark Community
30,269 College
UD7HP28529
230,378
136,373 Nemours Foundation
136,373
The accompanying notes are an integral part of this schedule.
52
#90CB0190-01-00
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Office of the Secretary
Hospital Preparedness Program (HPP) Ebola
Preparedness and Response Activities
National Bioterrorism Hospital Preparedness
Program
National Bioterrorism Hospital Preparedness
Program
National Bioterrorism Hospital Preparedness
Program
Centers for Medicare and Medicaid Services
Federal Award
Federal Award
Health Care Innovation Awards (HCIA)
Substance Abuse and Mental Health Services
Administration
Substance Abuse and Mental Health Services
Projects of Regional and National Significance
Substance Abuse and Mental Health Services
Projects of Regional and National Significance
CFDA
PassThrough
Direct
Pass-Through Entity
93.817
-
700,047 Commonwealth of Pennsylvania
93.889
253,538
93.889
-
20,692 Commonwealth of Pennsylvania
93.889
-
82,546 Commonwealth of Pennsylvania
253,538
803,285
-
52,176
13,706
1,311
-
67,193
93.243
87,454
-
93.RD
93.RD
93.610
Quality Insights of Pennsylvania
Quality Insights of Pennsylvania
Nemours Foundation
Pass-Through Entity
Sponsor Number
SAP#4100070353
Total
Expenditures
Passed to
Subrecipients
700,047
-
253,538
-
SAP#4100062568
20,692
-
SAP#4100062721
82,546
-
1,056,823
-
52,176
13,706
1,311
-
67,193
-
HHSM-500-2013-00177C
HHSM-500-2013-13011
1C1CMS331017-03-00
87,454
-
20,593
-
228,474
-
4,173
-
93.243
-
20,593
Commonwealth of Pennsylvania
CONTRACT #SM58386
Substance Abuse and Mental Health Services
Projects of Regional and National Significance
93.243
-
228,474
U79-SM061750-01
Drug Free Communities Support Programs Grant
93.276
-
4,173
Commonwealth of Pennsylvania
United Communities Southeast
Philadelphia
87,454
253,240
340,694
-
50,092,633
8,074,711
58,167,344
4,725,429
The accompanying notes are an integral part of this schedule.
53
SP020451
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
CFDA
PassThrough
Direct
Pass-Through Entity
Pass-Through Entity
Sponsor Number
Total
Expenditures
Passed to
Subrecipients
Research and Development Cluster
DEPARTMENT OF DEFENSE
Department of Defense
Military Medical Research and Development
Military Medical Research and Development
Military Medical Research and Development
12.420
12.420
12.420
1,570,442
-
24,314
34,321
Military Medical Research and Development
Military Medical Research and Development
Research and Technology Development
Research and Technology Development
Federal Award
Federal Award
12.420
12.420
12.910
12.910
12.RD
12.RD
-
106,198
52,222
237,000
38,199
33,274
3,995
1,570,442
529,523
NATIONAL SCIENCE FOUNDATION
National Science Foundation
Biological Sciences
Engineering Grants
Federal Award
NATIONAL AERONAUTICS AND SPACE
ADMINISTRATION
National Aeronautics and Space Administration
Exploration
Federal Award
Federal Award
47.074
47.041
47.RD
43.003
43.RD
43.RD
Wills Eye Hospital
University of California, Davis
Sloan-Kettering Institute for Cancer
Research
Duke University
University of Pennsylvania
Creatv MicroTech, Inc.
Luna Innovations
Christopher Reeve Foundation
161,057
-
216,040 Rensselaer Polytechnic Institute
12,271 Rensselaer Polytechnic Institute
161,057
228,311
337,156
-
2,712 Wyle Laboratories, Inc.
6,687 Wyle Laboratories, Inc.
337,156
9,399
The accompanying notes are an integral part of this schedule.
54
W81XWH-12-2-0097
W81XWH-14-1-0589
1,570,442
24,314
34,321
28,630
-
W81XWH-15-2-0018
W81XWH-15-1-0467
#N66001-14-2-31
W911NF-14-C-0098
FA8650-15-M-5004
W81XWH-13-2-0040
106,198
52,222
237,000
38,199
33,274
3,995
-
2,099,965
-
161,057
216,040
12,271
-
389,368
-
337,156
2,712
6,687
42,787
-
346,555
42,787
EEC-0812056
Data Sharing Project
NNJI4ZSA001N-OMNIBUS
NNJ15HK11B
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Research and Development Cluster
DEPARTMENT OF VETERANS AFFAIRS
Department of Veterans Affairs
Intergovernmental Personnel Act
Federal Award - VA248-12-C-0153
CFDA
64.RD
64.RD
Total Research and Development Cluster
Other Sponsored Programs
DEPARTMENT OF JUSTICE
U.S. District Court
Federal Award - 0313-02013-02
Federal Award - 0313-02016-02
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
Health Resources and Services Administration
HIV Emergency Relief Project Grants
HIV Emergency Relief Project Grants
Maternal and Child Health Services Block Grant to
the States
16.UO1
16.UO1
PassThrough
Direct
Pass-Through Entity
Sponsor Number
Total
Expenditures
Passed to
Subrecipients
11,075
4,383
-
11,075
4,383
-
15,458
-
15,458
-
52,176,746
8,841,944
61,018,690
4,796,846
11,991
12,390
-
11,991
12,390
-
24,381
-
24,381
-
129,681
46,840
-
93.914
93.914
-
93.994
-
Centers for Disease Control
Centers for Disease Control and Prevention
Investigations and Technical Assistance
Centers for Disease Control and Prevention
Investigations and Technical Assistance
Centers for Disease Control and Prevention
Investigations and Technical Assistance
HIV Prevention Activities Health Department Based
HIV Prevention Activities Health Department Based
Preventive Health Services Sexually Transmitted
Diseases Control Grants
Pass-Through Entity
129,681 City of Philadelphia
46,840 City of Philadelphia
2,604 Access Matters
13-20712 R5336
13-20712 R6336
16-0401
179,125
2,604
-
179,125
-
93.283
-
34,326 Access Matters
15-0403
34,326
-
93.283
-
49,496 Access Matters
16-0403
49,496
-
93.283
93.940
93.940
-
1,817 Access Matters
25,441 City of Philadelphia
22,362 City of Philadelphia
16-0401
12-20446 CPB5037
16-20359 CPB6037
1,817
25,441
22,362
-
93.977
-
154
-
133,596
-
-
154 Access Matters
133,596
The accompanying notes are an integral part of this schedule.
55
16-0401
Thomas Jefferson University
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2016
Federal Program
Other Sponsored Programs
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
Office of Population Affairs
Family Planning Services
Family Planning Services
Family Planning Services
Family Planning Services
Family Planning Services
Administrations for Children and Families
Social Services Block Grant
Substance Abuse and Mental Health Services
Administration
Block Grants for Prevention and Treatment of
Substance Abuse
Block Grants for Prevention and Treatment of
Substance Abuse
Block Grants for Prevention and Treatment of
Substance Abuse
CFDA
93.217
93.217
93.217
93.217
93.217
93.667
Pass-Through Entity
-
49,050
21,284
40,958
59,189
87,293
-
257,774
Access Matters
Access Matters
Access Matters
Access Matters
Access Matters
-
5,026 Access Matters
-
5,026
Pass-Through Entity
Sponsor Number
16-0401
15-4011
16-4011
15-4001
16-4001
16-0401
Total
Expenditures
Passed to
Subrecipients
49,050
21,284
40,958
59,189
87,293
-
257,774
-
5,026
-
5,026
-
93.959
-
253,276 City of Philadelphia
13-20512
253,276
-
93.959
-
34,991 City of Philadelphia
13-20512
34,991
-
93.959
-
364,970 City of Philadelphia
13-20511
364,970
-
653,237
1,253,139
-
24,381
Total Other Sponsored Programs
Total Federal Award Expenditures
PassThrough
Direct
$
136,566,142
653,237
1,228,758
$ 10,070,702
The accompanying notes are an integral part of this schedule.
56
$ 146,636,844 $ 4,796,846
Thomas Jefferson University
Notes to Schedules of Expenditures of Federal Awards
June 30, 2016
1.
Reporting Entity
Thomas Jefferson University (the “University”) is an independent, non-profit corporation
organized under the laws of the Commonwealth of Pennsylvania and recognized as a tax-exempt
organization pursuant to Section 501(c)(3) of the Internal Revenue Code. Thomas Jefferson
University has a tripartite mission of education, research, and patient care. Thomas Jefferson
University conducts research and offers undergraduate and graduate instruction through the
Sidney Kimmel Medical College, and the Jefferson Colleges of Nursing, Pharmacy, Health
Professions, Population Health, and Biomedical Sciences. TJU has approximately 3,700 students
and is located in Philadelphia, Pennsylvania. Thomas Jefferson University provides patient care
through an integrated healthcare organization providing inpatient, outpatient, and emergency care
services through acute care, ambulatory care, physician, and other primary care services for
residents of the Greater Philadelphia Region. For the year ended June 30, 2016, the integrated
healthcare organization included TJUH System (TJUHS) and Abington Health (AH). Federal
Identification Numbers for reporting entities included in this report are 23-1352651 for TJU, 232829095 for Thomas Jefferson University Hospital, and 23-1352152 for Abington Memorial
Hospital.
2.
Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards (the “Schedule”) presents a
summary of those activities of the University for the year ended June 30, 2016. Negative amounts
represent current year adjustments of amounts reported in prior years. CFDA and pass through
entity numbers are included when available. The information in this schedule is presented in
accordance with the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (the “Uniform
Guidance”). Therefore, some amounts presented in this schedule may differ from amounts
presented in, or used in the preparation of, the basic consolidated financial statements of the
University.
For purposes of the Schedule, federal awards include all grants, contracts and similar agreements
entered into directly by the University with agencies and departments of the federal government
and all sub awards to the University by nonfederal organizations pursuant to federal grants,
contract and similar agreements.
3.
Summary of Significant Accounting Policies
Expenditures reported in the Schedule are reported on the accrual basis of accounting.
Expenditures include a portion of costs associated with general university activities which are
allocated to awards under negotiated formulas commonly referred to as facilities and
administrative cost rates.
Expenditures for federal student financial aid programs are recognized as incurred and include
Federal Pell program grants to students, the federal share of students’ FSEOG program grants,
Federal Work-Study program earnings, loans to students under federally guaranteed programs and
certain other federal financial assistance grants for students and administrative cost allowances,
where applicable.
57
Thomas Jefferson University
Notes to Schedules of Expenditures of Federal Awards
June 30, 2016
Expenditures for other federal awards of the University are determined using the cost accounting
principles and procedures set forth in the Uniform Guidance. Under these cost principles, certain
expenditures are not allowable or are limited as to reimbursement.
Expenditures for certain non-student financial aid awards include indirect costs. The University
applies its predetermined approved facilities and administrative rate when charging indirect costs
to federal awards rather than the 10% de minimis cost rate as described in Section 200.414 of the
Uniform Guidance.
4.
Student Loan Programs
The Federal student loan programs listed below are administered directly by the University and
balances and transactions relating to these programs are included in the University’s consolidated
financial statements. Loans outstanding at the beginning of the year, the administrative cost
allowance and loans made during the year are included in the federal expenditures presented in the
Schedule. The balance of loans outstanding at June 30, 2016 consists of:
Health Professions Student Loans, Including Primary Care
Loans/Loans for Disadvantaged Students
Nursing Student Loans
Perkins Loan Programs
5.
CFDA #
Loan Balance
93.342
$
93.364
84.038
911,142
1,325,515
7,806,990
Federal Direct Loan Program (FDLP)
During the fiscal year ended June 30, 2016 the University processed new loans to students under
the Direct Student Loan Program CFDA # 84.268, which includes subsidized and unsubsidized
Stafford Loans and Supplemental Loans for Students. The University is responsible only for the
performance of certain administrative duties with respect to the FDLP and, accordingly, these loans
are not included in the University's basic combined financial statements. Loans made during the
year are included in the federal expenditures presented in the Schedule. It is not practical to
determine the balance of loans outstanding under these programs at June 30, 2016.
58
Report of Independent Auditor 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
Thomas Jefferson University:
We have audited, 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, the consolidated financial statements of Thomas
Jefferson University and its subsidiaries (the “University”), which comprise the consolidated balance
sheets as of June 30, 2016 and 2015, and the related consolidated statements of operations and changes in
unrestricted net assets, of changes in net assets, and of cash flows for the year ended June 30, 2016, and
the related notes to the consolidated financial statements, and have issued our report thereon dated
October 27, 2016.
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. 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.
PricewaterhouseCoopers LLP, Two Commerce Square, Suite 1800, 2001 Market Street, Philadelphia, PA 19103-7045
T: (267) 330 3000, F: (267) 330 3300, www.pwc.com/us
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 results 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.
Philadelphia, Pennsylvania
October 27, 2016
60
Report of Independent Auditor on Compliance with Requirements That Could Have a
Direct and Material Effect on Each Major Program and on Internal Control over
Compliance in Accordance with the OMB Uniform Guidance
To the Board of Trustees
Thomas Jefferson University:
Report on Compliance for Each Major Federal Program
We have audited Thomas Jefferson University and its subsidiaries’ (the “University”) compliance with the
types of compliance requirements described in the OMB 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, 2016.
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 federal statutes, regulations and the terms and conditions
of its federal awards 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 the audit requirements of Title 2 U.S. Code of
Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance
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.
Opinion on Each Major Federal Program
In our opinion, the 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, 2016.
PricewaterhouseCoopers LLP, Two Commerce Square, Suite 1800, 2001 Market Street, Philadelphia, PA 19103-7045
T: (267) 330 3000, F: (267) 330 3300, www.pwc.com/us
Other Matters
The results of our auditing procedures disclosed instances of noncompliance, which are required to be
reported in accordance with the Uniform Guidance and which are described in the accompanying schedule
of findings and questioned costs as item 2016-001. Our opinion on each major federal program is not
modified with respect to this matter.
The University's response to the noncompliance findings identified in our audit is described in the
accompanying Management’s Views and Corrective Action Plans. 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.
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 the Uniform Guidance, 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 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.
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. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
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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 the
Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Philadelphia, Pennsylvania
March 31, 2017
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Thomas Jefferson University
Schedule of Findings and Questioned Costs
Year Ended June 30, 2016
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?
Significant deficiency(ies) identified that are not
considered to be material weaknesses?
Non-compliance material to financial
statements noted?
_____ yes
_____ yes
__ X__ no
__ X__ none noted
_____ yes
__ X__ no
Federal Awards
Internal control over major programs:


Material weakness(es) identified?
Significant deficiency(ies) identified that are not
considered to be material weaknesses?
___ yes
___ yes
__ X__ no
__ X__ none reported
Type of auditor’s report issued on compliance for major programs: Unmodified
Any audit findings disclosed that are required to be
reported in accordance with 2 CFR 200.516(a)?
_X_ yes
__ __ no
Identification of major programs
CFDA Number(s):
Name of Federal and City Program or Cluster
Various
Various
93.959
Research and Development Cluster
Student Financial Aid Cluster
Block Grants for Prevention & Treatment of
Substance Abuse
Dollar threshold used to distinguish between type A
and type B programs:
Auditee qualified as low-risk auditee?
$3,000,000
Section II – Financial Statement Findings
There are no matters to report.
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__X__ yes
_____ no
Thomas Jefferson University
Schedule of Findings and Questioned Costs
Year Ended June 30, 2016
Section III – Federal Award Findings and Questioned Costs
Finding 2016-001: Loan Disbursement Notification
Grantor:
Program:
CFDA#:
Title:
Award Year:
Department of Education
Student Financial Aid Cluster
84.268
Federal Direct Student Loans
07/2015-06/2016
Condition
For the Student Financial Aid Cluster, the University is required to provide each student a written
notification regarding Direct Loan disbursements to the student’s account, informing the student of the
anticipated date and amount of the disbursement. Because the University does not obtain affirmative
confirmation of the student’s acceptance of the loan, the notice must be sent no earlier than 30 days
before and no later than 7 days after crediting the student’s account. PwC selected a sample of 25 students
for testing covering both the fall 2015 and spring 2016 semesters. We noted the following with respect to
the sample selected for testing:


For seven of the 25 students selected, the University was unable to provide the notifications sent
to the students. Therefore, it could not be determined whether the loan notification
communication was sent timely to those selected students. One of the seven students was missing
notification for both the fall 2015 and spring 2016 semesters. One of the other seven students was
missing notification for the spring 2016 semester. The remaining five students were missing
notifications for the spring 2016 semester. For the remaining 18 students, we were able to observe
that the notifications were sent in a timely manner, either as a result of e-mail communications
from the student or other related correspondence in management’s files.
For ten of the 25 students selected, loan notifications were not made between 30 days before or 7
days after the loan disbursement. Each of these related to the spring 2016 semester.
Criteria
Per 34 CFR 668.165(a) - “Except in the case of a post-withdrawal disbursement made in accordance with
§668.22(a)(5), if an institution credits a student's account at the institution with Direct Loan, FFEL,
Federal Perkins Loan, or TEACH Grant Program funds, the institution must notify the student or parent
of the anticipated date and amount of the disbursement. The institution must provide the notice no earlier
than 30 days before, and no later than 7 days after, crediting the student account at the institution, if the
institution does not obtain affirmative confirmation from the student under paragraph (a)(6)(i) of this
section.
Cause
At the time the notifications were sent, the methodology for creating the email notifications from the
student accounts system did not result in an automatic back-up of such emails. In addition, the process
was manually launched, resulting in the potential for notifications that did not comply with the required
timeline.
Effect
The students may not have been properly or timely notified of the disbursements as required by the
Department of Education requirements criteria above.
Questioned Costs
None
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Thomas Jefferson University
Schedule of Findings and Questioned Costs
Year Ended June 30, 2016
Recommendation
We recommend the University implement a process to ensure the retention of all notifications sent to
each student, including the date the notification was sent. In addition, we recommend the University
establish procedures that ensure the notifications are made within the timelines indicated in 34 CFR
668.165(a).
Management’s Views and Corrective Action Plan
Following these findings are management’s views and corrective action plan.
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Thomas Jefferson University
Summary Schedule of Status of Prior Audit Findings
Year Ended June 30, 2016
Status of Prior Year Findings
There are no findings from prior year that require an update in this report.
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