{Central Michigan University}
BOARD OF TRUSTEES
September 17, 2015
Central Michigan University
Presentation to Board of Trustees
1
Summary of Presentation to Board of Trustees:
• Audited Financial Statements



Clean, unmodified opinion – highest level of assurance
Emphasis of Matter for Adoption of GASB 68
Reporting Entity
 Blended with the University statements
o CMU College of Business Administration Foundation
o CMU Foundation
 Discretely presented within the University statements
o Central Health Advancement Solutions
PLANTE MORAN
Central Michigan University
Reporting Entity Relationship
2
Central Michigan
University
Central Health
Advancement
Solutions
CMU Medical
Education
Partners
Saginaw Cooperative
Hospitals, dba previously
Synergy Medical Education
Association, current dba
CMU Medical Education
Partners
PLANTE MORAN
Central Michigan University
Financial Highlights
3
Summary of Presentation to Board of Trustees:
• Graphics Presentation with 2015 and 2014 financial highlights






$51.1 million increase in total assets and deferred outflows, primarily due to a
$32.6 million increase in net capital assets and an increase of $24.8 million in
restricted cash for unspent bond proceeds
$141.2 million increase to total liabilities and deferred inflows, primarily due to
an increase of $40.1 million increase long-term debt and an increase of $93.4
million in net pension liability related to the implementation of GASB 68
$20.1 million increase in operating revenue, primarily from increased student
tuition revenue and revenue from auxiliary enterprises
$12.8 million increase in operating expenses, primarily from a $6.8 million
increase in compensation ($1.7 million was benefit increases) due to added
FTE’s and compensation increases
$27.9 million decrease in nonoperating revenue, primarily due to a $34.8 million
decrease in investment income mostly due to unrealized losses as a result of
unfavorable market conditions offset by a $6.8 million increase in state
appropriations
Overall, net position decreased $90.2 million ($91.5 million due to adoption of
GASB 68) to a total of $603.8 million
PLANTE MORAN
Central Michigan University
Revenues, Expenses and Changes in Net Position (in millions)
4
336.1
451.9
2015
117.1
1.3
316.0
439.1
2014
143.6
20.5
0
50
100
150
200
250
300
350
Millions Operating Expenses
Operating Revenues
Nonoperating & Other Revenues - Net
Change in Net Position
PLANTE MORAN 4
400
450
Central Michigan University
Operating Revenues – Comparative (in millions)
5
State & Local
Grants &
Contracts Auxiliary
Departmental
Enterprises
1%
Activities
24%
6%
Federal Grants
& Contracts
2%
Tuition and
Fees
67%
2015 Operating Revenue = 336.1 million
5
PLANTE MORAN
State & Local
Grants &
Departmental Contracts
Activities
2%
6%
Auxiliary
Enterprises
23%
Federal
Grants &
Contracts
2%
Tuition and
Fees
67%
2014
Operating
Revenue
= $316.0
million
2015
Operating
Revenue
= $... million
Central Michigan University
2015 Operating Expenses (in millions)
6
Operation/maint.
6%
Depreciation
6%
Auxiliary
enterprises
20%
Student
loan/other
less than
1%
Instruction
36%
Scholarships/
fellowships
4%
Institutional
Support
8%
Student Services
4%
Research
2%
Academic
Support
9%
Public service
4%
Operating expenses were $451.9 million and $439.1 million in 2015 and 2014, respectively
with little change in percentage by area or classification.
PLANTE MORAN
Central Michigan University
Non-operating and Other Revenues (Expenses) (in millions)
7
$90
$80
80.8
74.0
$70
$60
$50
37.4
$40
28.4
$30
28.3
$20
4.4 2.6
$10
$0
0.0
1.6 4.6
State Operating Appropriations
Interest on Capital Debt
Capital Gifts
0.1
2.0 2.8
-5.8 2014
-5.3 2015
-$10
4.8
Gifts
Other
Permanent Endwoments
Investment Income
Pell Grants
Non-operating and other revenues (expenses) totaled $117.1 million and $143.6 million
in 2015 and 2014, respectively.
7
PLANTE MORAN
Central Michigan University
Assets and Deferred Outflows – Comparative (in millions)
8
Deferred
outflows
1%
Deferred
outflows
1%
Cash & cash Receivables Other assets
1%
equivalents
8%
3%
Restricted cash
and cash
equivalents
2%
Capital assets
51%
LT investments
34%
2015
Cash & cash Receivables
equivalents 8%
Other assets
4%
1%
LT
investments
36%
Capital assets
50%
2014
Assets and deferred outflows were $998.3 million and $947.2 million in 2015 and 2014, respectively.
8
PLANTE MORAN
Central Michigan University
Liabilities and Deferred Inflows – Comparative (in millions)
9
2015
2015
Long term debt
51%
Net pension
liability
24%
Federal Perkins
1%
Accounts
payable/
accrued liab.
16%
Unearned
Fair value of Accrued revenue
derivative compensated 4%
2%
2%
Long term debt
61%
Federal Perkins
2%
Accounts
payable/
accrued liab.
24%
2014
2014
Fair value of
Accrued
derivative
compensated
3%
4%
Unearned
revenue
6%
Liabilities and Deferred Inflows were $394.5 million and $253.3 million in 2015 and 2014, respectively.
9
PLANTE MORAN
Central Michigan University
Net Position (formerly known as Net Assets)
Millions
10
350
300
250
200
150
100
50
0
322.5
317.6
273.2
161.2
76.8
54.8 43.4
48.2
2015
2014
Net investment in capital assets
Restricted - expendable
Restricted - nonexpendable
Unrestricted
Net Position totaled $603.8 million and $693.9 million in 2015 and 2014, respectively.
10
PLANTE MORAN
Central Michigan University
Results of Audit
11
• The scope of our audit was as planned.
• Complete cooperation was given to us throughout the audit by
everyone at the University.
• Letter Comments:

Upcoming items
 GASB issues Statement No. 72, Fair Value Measurement and Application
 GASB issues Statement No. 75, Accounting for Postemployment Benefits
• Audit of the Federal Programs is complete.

Only major (tested) program was the Student Financial Aid Cluster

We noted one finding from our testing that is a common issue around
timeliness of return of funds when a student withdraws
PLANTE MORAN
Central Michigan University
Upcoming Pronouncement
12
• GASB issues Statement No. 72, Fair Value Measurement and
Application

Provides guidance on determining a fair value measurement for
financial reporting purposes

Requires enhanced disclosures including a breakout of investments
by “level” based on the amount of subjectivity in the fair value
measurement

Will be effective for June 30, 2016
PLANTE MORAN
Central Michigan University
Upcoming Pronouncement
13
• GASB Issues Statement No. 75, Accounting for Postemployment
Benefits Other Than Pensions

Applicable to all governments (not just Michigan)

Postemployment benefits for retiree healthcare

Recording the unfunded OPEB obligation as a liability on University’s
Statement of Position

University’s proportionate share of MPSERS liability

Very similar to GASB No. 68 except applicable to OPEB

Will directly reduce unrestricted net position in year of implementation
(June 30, 2018)
PLANTE MORAN
{Thank you}
We appreciate the opportunity to
serve Central Michigan University