REPORT NO. 2011-108 FEBRUARY 2011 SEMINOLE STATE COLLEGE OF FLORIDA Financial Audit_part5 pot

FEBRUARY 2011 REPORT NO. 2011-108 SEMINOLE STATE COLLEGE OF FLORIDA A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) J UNE 30, 2010 33 13. LITIGATION The College is involved in several pending and threatened legal actions. The range of potential loss from all such claims and actions, as estimated by the College’s legal counsel and management, should not materially affect the College’s financial position. 14. SCHEDULE OF STATE REVENUE SOURCES Revenue from State sources for current operations is primarily from the College Program Fund administered by the Florida Department of Education under the provisions of Section 1011.81, Florida Statutes. In accordance with Section 1011.84, Florida Statutes, the Legislature determines each college’s apportionment considering the following components: base budget, which includes the State appropriation to the College Program Fund in the current year plus the related student tuition and fees assigned in the current General Appropriations Act; the cost-to-continue allocation, which consists of incremental changes to the base budget, including salaries, price levels, and other related costs; enrollment workload adjustments; operation costs of new facilities adjustments; and new and improved program enhancements, which are determined by the Legislature. Student fees in the base budget plus student fee revenues generated by increases in fee rates are deducted from the sum of these components to determine the net annual State apportionment to each college. The State allocates gross receipts taxes, generally known as Public Education Capital Outlay money, to the College on an annual basis. The College is authorized to receive and expend these resources only upon applying for and receiving an encumbrance authorization from the Florida Department of Education. The following is a summary of State revenue sources and amounts: Source Amount College Program Fund 28,856,779$ Gross Receipts Tax (Public Education Capital Outlay) 9,178,016 4,071,129 Bright Futures Scholarship Program 2,669,826 Florida Student Assistance Grants 1,087,456 Restricted Contracts and Grants 706,370 Motor Vehicle License Tax (Capital Outlay and Debt Service) 572,800 Other State Sources 166,611 Total 47,308,987$ Education Enhancement Trust Fund (Lottery) 15. FUNCTIONAL DISTRIBUTION OF OPERATING EXPENSES The functional classification of an operating expense (instruction, academic support, etc.) is assigned to a department based on the nature of the activity, which represents the material portion of the activity attributable to the department. For example, activities of an academic department for which the primary departmental function is instruction may include some activities other than direct instruction such as public service. However, when the primary mission of the department consists of instructional program elements, This is trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011-108 SEMINOLE STATE COLLEGE OF FLORIDA A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) J UNE 30, 2010 34 all expenses of the department are reported under the instruction classification. The operating expenses on the statement of revenues, expenses, and changes in net assets are presented by natural classifications. The following are those same expenses presented in functional classifications as recommended by NACUBO: Functional Classification Amount Instruction 33,889,940$ Academic Support 6,828,299 Student Services 9,262,415 Institutional Support 11,946,301 Operation and Maintenance of Plant 14,271,672 Scholarships and Fellowships 21,847,246 Depreciation 6,647,279 Auxiliary Enterprises 596,868 Total Operating Expenses 105,290,020$ 16. CURRENT UNRESTRICTED FUNDS The Southern Association of Colleges and Schools, Commission on Colleges, which establishes the accreditation requirements for institutions of higher education, requires a disclosure of the financial position of unrestricted net assets, exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets. To meet this requirement, statements of net assets and revenues, expenses, and changes in net assets for the current unrestricted funds are presented, as follows: This is trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011-108 SEMINOLE STATE COLLEGE OF FLORIDA A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) J UNE 30, 2010 35 ASSETS Current Assets: Cash and Cash Equivalents 10,834,128$ Accounts Receivable, Net 3,177,361 Due from Other Governmental Agencies 393,106 Due from Component Unit 49,797 Prepaid Expenses 723,715 TOTAL ASSETS 15,178,107$ LIABILITIES Current Liabilities: Accounts Payable 744,067$ Salary and Payroll Taxes Payable 1,017,642 Deferred Revenue 7,573 Deposits Held for Others 117,887 Compensated Absences Payable 122,617 Total Current Liabilities 2,009,786 Noncurrent Liabilities: Compensated Absences Payable 4,912,448 Other Postemployment Benefits Payable 54,351 Total Noncurrent Liabilities 4,966,799 TOTAL LIABILITIES 6,976,585 TOTAL NET ASSETS 8,201,522 TOTAL LIABILITIES AND NET ASSETS 15,178,107$ Statement of Current Unrestricted Funds Net Assets This is trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011-108 SEMINOLE STATE COLLEGE OF FLORIDA A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) J UNE 30, 2010 36 REVENUES Operating Revenues: Student Tuition and Fees, Net of Scholarship Allowances of $15,046,562 17,815,697$ Federal Grants and Contracts 105,343 State and Local Grants and Contracts 149,488 Nongovernmental Grants and Contracts 603,762 Sales and Services of Educational Departments 16,507 Auxiliary Enterprises 1,403,808 Other Operating Revenues 151,699 Total Operating Revenues 20,246,304 EXPENSES Operating Expenses: Personnel Services 53,485,496 Scholarships and Waivers 603 Utilities and Communications 2,547,756 Contractual Services 2,035,655 Other Services and Expenses 4,586,125 Materials and Supplies 2,755,436 Total Operating Expenses 65,411,071 Operating Loss (45,164,767) NONOPERATING REVENUES State Appropriations 32,927,908 Gifts and Grants 2,874,753 Investment Income 42,411 Other Nonoperating Revenues 21,853 Net Nonoperating Revenues 35,866,925 Loss Before Other Revenues, Expenses, Gains, or Losses (9,297,842) Transfers from Other Funds 14,462,588 Increase in Net Assets 5,164,746 Net Assets, Beginning of Year 3,036,776 Net Assets, End of Year 8,201,522$ Statement of Current Unrestricted Funds Revenues, Ex p enses, and Chan g es in Net Assets 17. SUBSEQUENT EVENTS During the 2010 legislative session, the College received Public Education Capital Outlay funds for the purchase of 25 acres of land adjacent to the existing Altamonte Springs campus. This land includes three existing buildings of over 90,000 square feet. On July 29, 2010, the College closed on this purchase at a cost This is trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011-108 SEMINOLE STATE COLLEGE OF FLORIDA A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) J UNE 30, 2010 37 of $22.5 million with payments of $500,100 made as a deposit, $12,500,000 made at closing, and the $10 million balance plus interest due by July 29, 2011. On September 29, 2010, the College closed on a 2.58 acre parcel of land adjacent to the south entrance of the Sanford/Lake Mary Campus. The purchase price of this property was $600,000 and was funded with general operating funds. This is trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011-108 SEMINOLE STATE COLLEGE OF FLORIDA OTHER REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS – OTHER POSTEMPLOYMENT BENEFITS PLAN 38 Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability (AAL) AAL Funded Covered of Covered Valuation Assets (2) (UAAL) Ratio Payroll Payroll Date (1) (a) (b) (b-a) (a/b) (c) [(b-a)/c] 7/1/2007 $ 715,854$ 715,854$ 0% 31,261,578$ 2.3% 7/1/2009 $ 822,003$ 822,003$ 0% 34,652,305$ 2.4% Notes: (1) (2) The initial OPEB actuarial calculation was performed as of July 1, 2007, for the College as it im p lemented the p rovisions of GASB 45. The College's OPEB actuarial valuation used the projected unit credit actuarial method to estimate the unfunded actuarial liabilities. This is trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011-108 SEMINOLE STATE COLLEGE OF FLORIDA OTHER REQUIRED SUPPLEMENTARY INFORMATION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION 39 1. SCHEDULE OF FUNDING PROGRESS – OTHER POSTEMPLOYMENT BENEFITS PLAN The July 1, 2009, unfunded actuarial accrued liability (UAAL) of $822,003 was 14.8 percent higher than the July 1, 2007, UAAL of $715,854. The increase was due to the expected growth of liabilities over time and demographic changes of approximately $133,000. Updated participation and medical trend assumptions accounted for an additional $55,000 increase in the liability. These increases were partially offset by a decrease in the UAAL of $82,000 resulting from updated claims costs, contributions, and the revised mortality assumption. This is trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011-108 40 AUDITOR GENERAL STATE OF FLORIDA G74 Claude Pepper Building 111 West Madison Street Tallahassee, Florida 32399-1450 The President of the Senate, the Speaker of the House of Representatives, and the Legislative Auditing Committee INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS We have audited the financial statements of Seminole State College of Florida, a component unit of the State of Florida, and its discretely presented component unit as of and for the fiscal year ended June 30, 2010, which collectively comprise the College’s basic financial statements, and have issued our report thereon included under the heading INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS. Our report on the financial statements was modified to include a reference to other auditors. 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. Other auditors audited the financial statements of the discretely presented component unit as described in our report on the College’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit, we considered the College’s internal control over financial reporting as a basis for designing our auditing procedures 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 College’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the College’s internal control over financial reporting. 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 College’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting 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 financial reporting DAVID W. MARTIN, CP A AUDITOR GENERAL PHONE: 850-488-5534 F AX: 850-488-6975 This is trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011-108 41 that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the College’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, rules, 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. Pursuant to Section 11.45(4), Florida Statutes, this report is a public record and its distribution is not limited. Auditing standards generally accepted in the United States of America require us to indicate that this report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, David W. Martin, CPA February 9, 2011 This is trial version www.adultpdf.com . FEBRUARY 2011 REPORT NO. 2011- 108 SEMINOLE STATE COLLEGE OF FLORIDA A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) J UNE. trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011- 108 SEMINOLE STATE COLLEGE OF FLORIDA A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) J UNE. the College closed on this purchase at a cost This is trial version www.adultpdf.com FEBRUARY 2011 REPORT NO. 2011- 108 SEMINOLE STATE COLLEGE OF FLORIDA A COMPONENT UNIT OF THE STATE OF FLORIDA