REPORT NO. 2009-116 FEBRUARY 2009 SOUTH FLORIDA COMMUNITY COLLEGE _part2 pot

FEBRUARY 2009 REPORT NO. 2009-116 -7- 6-30-08 6-30-07 12-31-07 12-31-06 Operating Expenses Personnel Services 17,151$ 16,124$ Scholarships and Waivers 1,899 1,338 1,005 427 Utilities and Communications 1,634 1,445 Contractual Services 1,231 2,916 Other Services and Expenses 2,087 2,585 327 429 Materials and Supplies 2,642 2,111 197 276 Depreciation 2,569 2,217 64 58 Total Operating Expenses 29,213$ 28,736$ 1,593$ 1,190$ Operating Expenses (In Thousands) College Component Unit $ $ The following chart presents the College’s operating expenses for the 2007-08 and 2006-07 fiscal years: Operating Expenses: College (In Thousands) $17,151 $1,899 $1,634 $1,231 $2,087 $2,642 $2,569 $16,124 $1,338 $1,445 $2,916 $2,585 $2,111 $2,217 $0 $10,000 $20,000 Personnel Services Scholarships and Waivers Utilities and Communications Contractual Services Other Services and Expenses Materials and Supplies Depreciation 2006-07 2007-08 College operating expense changes were the result of the following factors: ¾ The personnel services expenses’ increase of approximately $1.03 million was primarily caused by a 5 percent annual salary increase to faculty and staff (salary expenditures of $650,000) and increased contributions to retirement and social security of $296,000. In addition, other postemployment health care benefits of $30,131 and compensated absences of $30,000 contributed to this increase. ¾ Scholarships and waivers increased by $562,000. The amount presented for scholarships and waivers is reduced by the scholarship allowance. As such, the College actually awarded scholarships of $3,750,906 in the 2007-08 fiscal year as compared to $2,951,660 awarded in the 2006-07 fiscal year, which is an overall 27 percent increase in gross scholarships awarded to students. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -8- ¾ Utilities and communication charges increased $189,000 primarily due to increases in electrical rates and air conditioning for additional square footage in the newly completed Health and Science Education Center. ¾ Contractual services decreased $1.69 million due to the loss of the grant that funded the operations of the Florida Center for Dual Addictions. Component unit operating expense changes were the result of the following factors: ¾ The South Florida Community College Foundation, Inc. (Foundation), awarded $1 million in scholarships, an increase of $577,425. In the current year, an individual donor gave a significant gift to the Take Stock in Children program that paid for scholarships that did not occur in the prior year. ¾ Other services and expenses decreased by $102,500 and materials and supplies expense decreased by $79,000 because the Foundation did not do as much renovation in the Hotel Jacaranda as in the prior year. Nonoperating Revenues and Expenses Certain revenue sources that the College relies on to provide funding for operations, including State appropriations, certain gifts and grants, and investment income, are defined by GASB as nonoperating. Nonoperating expenses include capital financing costs and other costs related to capital assets. The following summarizes the College’s nonoperating revenues and expenses for the 2007-08 and 2006-07 fiscal years: 2007-08 2006-07 State Appropriations 17,374$ 16,820$ Gifts and Grants 4,814 4,190 Investment Income 299 359 Other Nonoperating Revenue 2 Gain on Disposal of Capital Assets 335 Interest on Capital Asset-Related Debt (5) Net Nonoperating Revenues 22,822$ 21,366$ Nonoperating Revenues (Expenses): College (In Thousands) Nonoperating revenues changes were the result of the following factors: ¾ State appropriations increased in total by $553,934. While the College was originally awarded $17,665,678, cutbacks to balance the State budget reduced appropriations by $549,713. ¾ Gifts and grants in total increased by $624,163. Student aid increased by $797,499, mainly attributable to increases in Bright Futures scholarships and Pell grants and other gifts and grants decreased $173,336. ¾ College investment income decreased $59,684 as a result of lower interest rates. This seems contrary to the Foundation investment income increase of $128,000; however, the Foundation is reported on the calendar year and rates have dropped since their year end of December 31, 2007. Also, the Foundation invests in many types of investments and the College only invests in low risk, cash equivalents. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -9- ¾ The increase in other nonoperating revenues was caused primarily by a gain recognized during the course of capital renovations. Other Revenues, Expenses, Gains, or Losses This category is mainly composed of capital appropriations and capital grants, contracts, gifts, and fees. The following summarizes the College’s other revenues, expenses, gains, or losses for the 2007-08 and 2006-07 fiscal years: 2007-08 2006-07 Capital Appropriations 7,207$ 5,801$ Capital Grants, Contracts, Gifts, and Fees 576 960 Total 7,783$ 6,761$ Other Revenues, Expenses, Gains, or Losses: College (In Thousands) The $1.4 million increase in capital appropriations revenue is primarily attributable to PECO appropriations for renovations on the Highlands campus and at the Lake Placid Center. The $383,764 decrease in capital grants, contracts, and fees is mainly attributable to the transfer, during the prior year, of the Lake Placid Center to the College as donated property at market value of $760,000. T HE STATEMENT OF CASH FLOWS Another way to assess the financial health of an institution is to look at the statement of cash flows. Its primary purpose is to provide relevant information about the cash receipts and cash payments of an entity during a period. The statement of cash flows also helps users assess: ¾ An entity’s ability to generate future net cash flows. ¾ Its ability to meet its obligations as they come due. ¾ Its need for external financing. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -10- A summary of the College’s cash flows for the 2007-08 and 2006-07 fiscal years is presented in the following table: 2007-08 2006-07 Cash Provided (Used) by: Operating Activities (23,350)$ (19,652)$ Noncapital Financing Activities 22,215 21,052 Capital and Related Financing Activities (195) 185 Investing Activities 299 359 Net Increase (Decrease) in Cash and Cash Equivalents (1,031) 1,944 Cash and Cash Equivalents, Beginning of Year 8,831 6,888 Cash and Cash Equivalents, End of Year 7,800$ 8,832$ Condensed Statement of Cash Flows: College (In Thousands) Major sources of funds came from State appropriations ($17.4 million), capital appropriations ($4.9 million), gifts and grants ($4.8 million), and net student tuition and fees ($2 million). Changes in cash and cash equivalents were the result of the following factors: ¾ Cash used by operating activities increased approximately $3.7 million. Tuition and fees provided $305,938 more while grants and contracts provided $2.2 million less than in the 2006-07 fiscal year. Personnel expenses increased by $731,119, benefits increased by $294,981, scholarship increased by $552,417, and utilities and communications increased by $188,737. While the ancillaries brought in additional cash flows of $134,719, the auxiliaries saw their cash flows slightly reduced by $231,451. Payments to suppliers declined $1.5 million in direct correlation to the declining level of construction activity similar to other receipts and payments. ¾ The increase of just under $1.2 million dollars from noncapital financing activities was primarily caused by the $553,934 increase in State appropriations and an additional $624,164 in gifts and noncapital financial grants. ¾ Net cash used from capital activities reflects a decline in construction activity of $4.9 million from the prior year. Similarly, purchases of capital assets decreased $4.1 million. In total during the year, capital expenditures exceeded capital cash flows by $195,450 despite a $384,854 increase in capital grants. ¾ A lower rate of return on investments resulted in a $59,691 decrease in investment income. These factors contributed to an overall decrease in cash of $1,031,247. CAPITAL ASSETS AND DEBT ADMINISTRATION C APITAL ASSETS At June 30, 2008, the College had $85.6 million in capital assets, less accumulated depreciation of $27 million, for net capital assets of $58.6 million. Depreciation charges for the current fiscal year totaled $2.6 million. The following table summarizes the College’s capital assets for the 2007-08 fiscal year: This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -11- Capital Assets Beginning Additions Reductions Ending Balance Balance Land 2,478$ $ $ 2,478$ Artwork 402 2 404 Buildings 56,441 9,911 1,477 64,875 Other Structures and Improvements 9,541 2,360 309 11,592 Furniture, Machinery, and Equipment 2,753 248 131 2,870 Construction in Progress 10,554 4,568 11,747 3,375 Total 82,169 17,089 13,664 85,594 Less, Accumulated Depreciation: Buildings 17,637 1,483 1,936 17,184 Other Structures and Improvements 6,878 793 185 7,486 Furniture, Machinery, and Equipment 2,156 293 130 2,319 Total Accumulated Depreciation 26,671 2,569 2,251 26,989 Capital Assets, Net 55,498$ 14,520$ 11,413$ 58,605$ Capital Assets: College (In Thousands) The College made several additions during the current fiscal year. The Health and Science Building was completed along with several site improvements to accommodate shifting student flow because the new building is large. Renovations to building F, C, C2, and T were started and almost completed during the year. Renovations to the Auditorium and to the Lake Placid Center are underway but are still in the planning phases. Other projects completed included the addition of a parking lot to the Hardee Center, upgrades to the College’s computer network, and a telephone system upgrade. Projects that are currently underway include renovations to the amphitheatre area on the Highlands campus. College Trustees have approved a $7.3 million budget for capital projects for 2008-09. More detailed information about the College’s capital assets is presented in the notes to financial statements. D EBT ADMINISTRATION At fiscal year-end, the College was debt free. During the 2007-08 fiscal year, there were no bond sales. Additional information about the College’s long-term liabilities is presented in the notes to the financial statements. ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE South Florida Community College‘s economic condition is closely tied to that of the State of Florida. Because of limited economic growth and increased demand for State resources, only a modest increase in State funding is anticipated in the coming year. In response to the lack of substantial State appropriation increases, the Board of Trustees increased the tuition rate 6 percent to take effect beginning with the Fall 2009 term. The College’s current financial and capital plans indicate that the infusion of additional financial resources from an increase in tuition rates will be necessary to maintain its present level of services. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -12- REQUESTS FOR INFORMATION Questions concerning information provided in the MD&A, and financial statements and notes thereto, or requests for additional financial information should be addressed to the Controller, South Florida Community College, 600 West College Drive, Avon Park, Florida 33825. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -13- BASIC FINANCIAL STATEMENTS College Component Unit ASSETS Current Assets: Cash and Cash Equivalents 3,812,332$ 613,580$ Restricted Cash and Cash Equivalents 327,097 Investments 3,631,237 Accounts Receivable 292,706 181,621 Due from Other Governmental Agencies 5,787,427 Due from Component Unit 56,738 Inventories 18,662 Prepaid Expenses 224,438 20,386 Total Current Assets 10,519,400 4,446,824 Noncurrent Assets: Restricted Cash and Cash Equivalents 3,660,759 462,877 Investments 3,903,196 Depreciable Capital Assets, Net 52,348,466 1,221,326 Nondepreciable Capital Assets 6,256,682 317,720 Total Noncurrent Assets 62,265,907 5,905,119 TOTAL ASSETS 72,785,307$ 10,351,943$ LIABILITIES Current Liabilities: Accounts Payable 276,321$ 134,685$ Salary and Payroll Taxes Payable 246,849 Retainage Payable 262,426 Deferred Revenue 427,028 Deposits Held for Others 309,027 6,100 Long-Term Liabilities - Current Portion: Compensated Absences Payable 90,647 Total Current Liabilities 1,612,298 140,785 Noncurrent Liabilities: Compensated Absences Payable 1,885,241 Postemployment Health Care Benefits Payable 30,131 Total Noncurrent Liabilities 1,915,372 TOTAL LIABILITIES 3,527,670 140,785 SOUTH FLORIDA COMMUNITY COLLEGE A COMPONENT UNIT OF THE STATE OF FLORID A STATEMENT OF NET ASSETS A s of June 30, 2008 This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -14- College Component Unit NET ASSETS Invested in Capital Assets, Net of Related Debt 58,605,148$ 1,539,046$ Restricted: Nonexpendable: Endowment 4,366,073 Expendable: Grants and Loans 131,372 3,940,987 Scholarships 25,600 Capital Projects 8,764,395 Unrestricted 1,731,122 365,052 Total Net Assets 69,257,637 10,211,158 TOTAL LIABILITIES AND NET ASSETS 72,785,307$ 10,351,943$ The accompanying notes to financial statements are an integral part of this statement. SOUTH FLORIDA COMMUNITY COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA STATEMENT OF NET ASSETS (Continued) As of June 30, 2008 This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -15- Colle g e Component Unit REVENUES Operating Revenues: Student Tuition and Fees, Net of Scholarship Allowances of $1,851,571 1,894,611$ $ Federal Grants and Contracts 262,653 State and Local Grants and Contracts 60,198 Nongovernmental Grants and Contracts 155,820 Sales and Services of Educational Departments 591,147 Auxiliary Enterprises 1,036,793 Other Operating Revenues 45,551 210,710 Total Operating Revenues 4,046,773 210,710 EXPENSES Operating Expenses: Personnel Services 17,151,444 Scholarships and Waivers 1,899,335 1,004,852 Utilities and Communications 1,634,036 Contractual Services 1,230,904 Other Services and Expenses 2,087,097 326,992 Materials and Supplies 2,641,529 197,087 Depreciation 2,569,087 63,767 Total Operating Expenses 29,213,432 1,592,698 Operating Loss (25,166,659) (1,381,988) NONOPERATING REVENUES State Appropriations 17,374,161 Gifts and Grants 4,814,130 1,525,267 Investment Income 299,111 737,335 Net Realized and Unrealized Gain on Investments 9,248 Other Nonoperating Revenues 114 Gain on Disposal of Capital Assets 334,781 Net Nonoperating Revenues 22,822,297 2,271,850 Income (Loss) Before Other Revenues, Expenses, Gains, or Losses (2,344,362) 889,862 Capital Appropriations 7,206,652 Capital Grants, Contracts, Gifts, and Fees 576,472 Total Other Revenues 7,783,124 Increase in Net Assets 5,438,762 889,862 Net Assets, Beginning of Year 63,818,875 9,321,296 Net Assets, End of Yea r 69,257,637$ 10,211,158$ The accompanying notes to financial statements are an integral part of this statement. SOUTH FLORIDA COMMUNITY COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS For the Fiscal Year Ended June 30, 2008 This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009-116 -16- Colle g e CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees, Net 2,096,027$ Grants and Contracts 191,678 Payments to Suppliers (5,962,696) Payments for Utilities and Communications (1,634,036) Payments to Employees (13,573,752) Payments for Employee Benefits (3,444,052) Payments for Scholarships (1,899,335) Auxiliary Enterprises 1,028,866 Sales and Service of Educational Departments 591,147 Other Payments (744,106) Net Cash Used by Operating Activities (23,350,259) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations 17,374,161 Gifts and Grants Received for Other Than Capital or Endowment Purposes 4,814,130 Other Nonoperating Receipts 27,060 Net Cash Provided by Noncapital Financing Activities 22,215,351 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Appropriations 4,935,412 Capital Grants and Gifts 571,471 Proceeds from Sale of Capital Assets 4,291 Purchases of Capital Assets (5,706,624) Net Cash Used by Capital and Related Financing Activities (195,450) CASH FLOWS FROM INVESTING ACTIVITIES Investment Income 299,111 Net Cash Provided by Investing Activities 299,111 Net Decrease in Cash and Cash Equivalents (1,031,247) Cash and Cash Equivalents, Beginning of Year 8,831,435 Cash and Cash Equivalents, End of Yea r 7,800,188$ SOUTH FLORIDA COMMUNITY COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA STATEMENT OF CASH FLOWS For the Fiscal Year Ended June 30, 2008 This is trial version www.adultpdf.com . addressed to the Controller, South Florida Community College, 600 West College Drive, Avon Park, Florida 33825. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009- 116 -13- BASIC. 140,785 SOUTH FLORIDA COMMUNITY COLLEGE A COMPONENT UNIT OF THE STATE OF FLORID A STATEMENT OF NET ASSETS A s of June 30, 2008 This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009- 116. investments and the College only invests in low risk, cash equivalents. This is trial version www.adultpdf.com FEBRUARY 2009 REPORT NO. 2009- 116 -9- ¾ The increase in other nonoperating revenues