REPORT NO. 2011-039 NOVEMBER 2010 BROWARD COLLEGE Financial Audit For the Fiscal Year Ended June 30, 2010_part3 pptx

NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 The statement of net assets is presented in a classified format to distinguish between current and noncurrent assets and liabilities When both restricted and unrestricted resources are available to fund certain programs, it is the College’s policy to first apply the restricted resources to such programs followed by the use of the unrestricted resources The statement of revenues, expenses, and changes in net assets is presented by major sources and is reported net of tuition scholarship allowances Tuition scholarship allowances are the differences between the stated charge for goods and services provided by the College and the amount that is actually paid by the student or the third party making payment on behalf of the student The College calculated its tuition scholarship allowance by determining the amount of “coverage” applied from financial aid and other funds determined to be subject to tuition scholarship allowance as described in NACUBO Advisory Report 2000-05 Under this method, the College determined amounts by identifying those student transactions where the student’s classes or bookstore charges were paid by an applicable financial aid source The College maintains a detailed record of this activity in its Credit and Collection activity file at the financial aid and student level The statement of cash flows is presented using the direct method in compliance with GASB Statement No 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting Cash and Cash Equivalents The amount reported as cash and cash equivalents consists of cash on hand, cash in demand accounts, and cash with the State Treasury Special Purpose Investment Account (SPIA) and the State Board of Administration (SBA) Florida PRIME investment pool For reporting cash flows, the College considers all highly liquid investments with original maturities of three months or less to be cash equivalents Under this definition, the College considers amounts invested in the State Treasury SPIA and SBA Local Government Surplus Trust Fund Investment Pool, which effective July 1, 2009, is known as the Florida PRIME investment pool, to be cash equivalents College cash deposits are held in banks qualified as public depositories under Florida law All such deposits are insured by Federal depository insurance, up to specified limits, or collateralized with securities held in Florida’s multiple financial institution collateral pool required by Chapter 280, Florida Statutes Cash and cash equivalents that are externally restricted to make debt service payments, maintain sinking or reserve funds, or to purchase or construct capital or other restricted assets are classified as restricted At June 30, 2010, the College reported as cash equivalents at fair value $2,877,805 of moneys held in the State Treasury SPIA investment pool representing ownership of a share of the pool, not the underlying securities The SPIA carried a credit rating of Af by Standard & Poor’s and had an effective duration of 1.81 years at June 30, 2010 The College relies on policies developed by the State Treasury for managing interest rate risk or credit risk for this investment pool Disclosures for the State Treasury investment pool are included in the notes to financial statements of the State’s Comprehensive Annual Financial Report At June 30, 2010, the College reported as cash equivalents at fair value $29,030,131 of moneys held in Florida PRIME investment pool administered by the SBA pursuant to Section 218.405, Florida Statutes The College’s investments in the Florida PRIME investment pool, which the SBA indicates is a Securities This is trial version www.adultpdf.com 19 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 and Exchange Commission Rule 2a7-like external investment pool, as of June 30, 2010, are similar to money market funds in which shares are owned in the fund rather than the underlying investments The Florida PRIME investment pool carried a credit rating of AAAm by Standard & Poor’s and had a weighted-average days to maturity (WAM) of 46 days as of June 30, 2010 A portfolio’s WAM reflects the average maturity in days based on final maturity or reset date, in the case of floating-rate instruments WAM measures the sensitivity of the Florida PRIME investment pool to interest rate changes The investments in the Florida PRIME investment pool are reported at fair value, which is amortized cost Capital Assets College capital assets consist of land; construction in progress; buildings; other structures and improvements; furniture, machinery, and equipment; and assets under capital leases These assets are capitalized and recorded at cost at the date of acquisition or at estimated fair value at the date received in the case of gifts and purchases of State surplus property Additions, improvements, and other outlays that significantly extend the useful life of an asset are capitalized Other costs incurred for repairs and maintenance are expensed as incurred The College has a capitalization threshold of $5,000 for tangible personal property and $25,000 for buildings and other structures and improvements Depreciation is computed on the straight-line basis over the following estimated useful lives:  Buildings – 40 years  Other Structures and Improvements – 10 years  Furniture, Machinery, and Equipment:  Computer Equipment – years  Vehicles, Office Machines, and Educational Equipment – years  Furniture – years  Assets Under Capital Leases – 10 years Noncurrent Liabilities Noncurrent liabilities include principal amounts of bonds payable, capital leases payable, compensated absences payable, and other postemployment benefits payable that are not scheduled to be paid within the next fiscal year PRIOR PERIOD ADJUSTMENT The $2,174,117 adjustment to beginning net assets reported in the statement of revenues, expenses, and changes in net assets is to correct prior year accounting errors by decreasing the beginning net asset balance for prior year understatement of estimated insurance claims payable and related expenses INVESTMENTS The College’s Board of Trustees has adopted a written investment policy providing that surplus funds of the College shall be invested in those institutions and instruments permitted under the provisions of Florida Statutes Section 218.415(16), Florida Statutes, authorizes the College to invest in the Local Government Surplus Funds Trust Fund investment pool administered by the State Board of Administration; This is trial version www.adultpdf.com 20 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 interest-bearing time deposits and savings accounts in qualified public depositories, as defined by Section 280.02, Florida Statutes; direct obligations of the United States Treasury; obligations of Federal agencies and instrumentalities; securities of, or interests in, certain open-end or closed-end management type investment companies; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; and other investments approved by the College’s Board of Trustees as authorized by law State Board of Education Rule 6A-14.0765(3), Florida Administrative Code, provides that College loan, endowment, annuity, and life income funds may also be invested pursuant to Section 215.47, Florida Statutes Investments authorized by Section 215.47, Florida Statutes, include bonds, notes, commercial paper, and various other types of investments Investments set aside to make debt service payments, maintain sinking or reserve funds, or to purchase or construct capital assets are classified as restricted The College’s investments at June 30, 2010, are reported at fair value, as follows: Investment Type Amount State Board of Administration Fund B Surplus Funds Trust Fund State Board of Administration Debt Service Accounts United States Government Obligations Total College Investments $ 794,712 98,442 11,996,866 $ 12,890,020 State Board of Administration Fund B Surplus Funds Trust Fund On December 4, 2007, the State Board of Administration (SBA) restructured the Local Government Surplus Funds Trust Fund to establish the Fund B Surplus Funds Trust Fund (Fund B) Fund B, which is administered by the SBA pursuant to Sections 218.405 and 218.417, Florida Statutes, is not subject to participant withdrawal requests Distributions from Fund B, as determined by the SBA, are effected by transferring eligible cash or securities to the Florida PRIME investment pool, consistent with the pro rata allocation of pool shareholders of record at the creation date of Fund B One hundred percent of such distributions from Fund B are available as liquid balance within the Florida PRIME investment pool At June 30, 2010, the College reported investments at fair value of $794,712 for amounts held in Fund B The College’s investments in Fund B are accounted for as a fluctuating net asset value pool, with a fair value factor of 0.67353149 at June 30, 2010 The weighted-average life (WAL) of Fund B at June 30, 2010, was 8.05 years A portfolio’s WAL is the dollar-weighted average length of time until securities held reach maturity and is based on legal final maturity dates for Fund B as of June 30, 2010 WAL measures the sensitivity of Fund B to interest rate changes The College’s investment in Fund B is unrated State Board of Administration Debt Service Accounts The College reported investments at fair value totaling $98,442 at June 30, 2010, in the State Board of Administration Debt Service Accounts These investments are used to make debt service payments on bonds issued by the State Board of Education for the benefit of the College The College’s investments This is trial version www.adultpdf.com 21 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 consist of United States Treasury securities, with maturity dates of six months or less, and are reported at fair value The College relies on policies developed by the State Board of Administration for managing interest rate risk or credit risk for this account Disclosures for the Debt Service Accounts are included in the notes to financial statements of the State’s Comprehensive Annual Financial Report Other Investments The College’s other investments at June 30, 2010, consisted of United States government obligations totaling $11,996,866 The following risks apply to these investments: Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment The College’s investment policy requires that the maximum effective maturity of an individual security shall be five years from the date of purchase The College’s investments in United States Government obligations have maturity dates of August 15, 2012, and November 15, 2012 Credit Risk: Credit risk is the risk that an issuer or other counterparty will not fulfill its obligations United States Government obligations are not considered to have credit risk Custodial Credit Risk: Custodian credit risk is the risk that, in the event of the failure of the counterparty to a transaction, the College will not be able to recover that value of investments or collateral securities that are in the possession of an outside party The College’s investment policy provides that securities will be designated as an asset of the College and held in safekeeping by a third-party custodial bank or other third-party custodial institution The College’s $11,996,866 of investments in United States Government obligations are held by the safekeeping agent in the name of the College Concentration of Credit Risk: Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer United States Government obligations are not considered to have concentration of credit risk Component Unit Investments Investments held by the College’s component unit at December 31, 2009, are reported at fair value as follows: This is trial version www.adultpdf.com 22 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 Investment Type Amount Marketable Securities Equities: Foreign Domestic Other: Alternative Investments Fixed Income Money Market Funds Total Component Unit Investments $ 16,043,030 20,465,283 7,766,555 18,116,492 2,314,523 $ 64,705,883 ACCOUNTS RECEIVABLE Accounts receivable represent amounts for student fee deferments, various student services provided by the College, salary overpayments, returned checks, unused credit memos, and returns in transit These receivables are reported net of a $290,870 allowance for uncollectible accounts NOTES RECEIVABLE Notes receivable represent student loans made under the short-term loan program, financial aid overpayments, and fee deficiencies Notes receivable are reported net of a $1,845,809 allowance for uncollectible notes DUE FROM OTHER GOVERNMENTAL AGENCIES This amount primarily consists of $41,277,431 of Public Education Capital Outlay allocations due from the State for construction of College facilities DUE FROM AND TO COMPONENT UNIT/COLLEGE The College reported a due from component unit of $527,707, which represents expenditures made by the College that will be reimbursed by the component unit The College’s financial statements are reported for the fiscal year ended June 30, 2010 The College’s component unit’s financial statements are reported for the fiscal year ended December 31, 2009 Accordingly, although the College reported an amount due from the component unit on the statement of net assets, no amount is reported for the component unit as a payable to the College INVENTORIES Inventories consist of items for resale by the campus bookstore and office and educational supplies maintained in the central stores warehouse The bookstore inventories are valued using the last invoice cost, which approximates the first-in, first-out, method of inventory valuation The central stores inventory is valued using the weighted-average cost method Consumable laboratory supplies, teaching materials, and office supplies on hand in College departments are expensed when purchased, and are not considered material Accordingly, these items are not included in the reported inventory This is trial version www.adultpdf.com 23 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 CAPITAL ASSETS Capital assets activity for the fiscal year ended June 30, 2010, is shown below: Description Beginning Balance Adjustments (1) Nondepreciable Capital Assets: Land Construction in Progress $ 3,692,517 22,393,426 $ Total Nondepreciable Capital Assets $ 26,085,943 Depreciable Capital Assets: Buildings Other Structures and Improvements Furniture, Machinery, and Equipment Assets Under Capital Leases $ 214,357,751 14,499,592 19,206,171 12,975,539 Total Depreciable Capital Assets $ 133,328,223 $ 3,692,517 4,122,791 $ 28,935,246 $ 7,815,308 $ $ 243,292,997 14,499,592 19,208,504 12,975,539 $ $ 10,664,611 $ $ 28,935,246 (662,770) 1,335,567 670,464 (662,770) 127,710,830 Total Depreciable Capital Assets, Net $ Ending Balance 28,935,246 86,960,382 13,259,742 17,047,319 10,443,387 Total Accumulated Depreciation $ Reductions 10,664,611 261,039,053 Less, Accumulated Depreciation: Buildings Other Structures and Improvements Furniture, Machinery, and Equipment Assets Under Capital Leases Additions 30,270,813 670,464 (579,339) 6,035,407 177,485 1,334,681 994,727 (579,339) $ 8,542,300 (83,431) $ 21,728,513 664,409 289,976,632 92,995,789 13,437,227 17,138,252 11,438,114 664,409 $ 135,009,382 6,055 $ 154,967,250 Note: (1) Adjustments relate to prior year deletions removed in the 2009-10 fiscal year 10 GRAVES MUSEUM ARTIFACTS On March 28, 2005, the Unites States Bankruptcy Court named Broward College recipient of the Graves Museum of Archaeology and Natural History Collection Out of 20 major collections and 30 small collections of donated assets, approximately 60 percent have been fully cataloged and all artifacts have been photographed College staff indicated it will take several more years to fully catalog the entire collection While the collection is undoubtedly quite valuable and irreplaceable, the College has not placed a dollar valuation on these items and, accordingly, the financial statements not include these assets 11 DEFERRED REVENUE Deferred revenue of $655,658 consists primarily of student tuition and fees received prior to fiscal year-end related to subsequent accounting periods 12 LONG-TERM LIABILITIES Long-term liabilities of the College at June 30, 2010, include bonds payable, capital leases payable, compensated absences payable, and other postemployment benefits payable Long-term liabilities activity for the fiscal year ended June 30, 2010, is shown below: This is trial version www.adultpdf.com 24 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 Description Beginning Balance Additions Reductions Ending Balance Current Portion 4,255,580 $ 1,055,000 1,011,157 3,435,219 $ 22,065,000 2,347,495 9,577,384 $ 1,100,000 1,140,035 599,907 Bonds Payable Capital Leases Payable Compensated Absences Payable Other Postemployment Benefits Payable $ 23,120,000 3,358,652 8,757,023 $ 2,174,117 1,693,960 214,193 3,653,884 Total Long-Term Liabilities $ 37,409,792 $ 5,949,540 $ 5,715,569 $ 37,643,763 $ 2,839,942 Bonds Payable The various bonds were issued to finance capital outlay projects of the College The following is a description of the bonded debt issues Capital Outlay Bonds The State Board of Education issues capital outlay bonds on behalf of the College These bonds mature serially and are secured by a pledge of the College’s portion of the State-assessed motor vehicle license tax and by the State’s full faith and credit The State Board of Education and the State Board of Administration administer the principal and interest payments, investment of debt service resources, and compliance with reserve requirements Capital Improvement Revenue Bonds, Series 2008A These bonds are issued by the State Board of Administration, Division of Bond Finance on behalf of the College and authorized by Article VII, Section 11(d) of the Florida Constitution, Sections 215.57 through 215.83, and 1009.23, Florida Statutes, and other applicable provisions of law Principal and interest on these bonds is secured by and payable solely from a first lien pledge of the capital improvement fees collected pursuant to Section 1009.23(11), Florida Statutes, by the participating colleges on parity with the outstanding 2006A and 2008A Bonds and any additional bonds issued subsequent to the issuance of the 2008A Bonds The 2008A Bonds constitute the second series of bonds to be issued pursuant to the Master Authorizing Resolution Upon the issuance of additional bonds, all bonds will share a parity first lien on the pledged revenues of all colleges participating in any series of bonds then outstanding These bonds will share the lien of such additional bonds on the 2006A and 2008A pledged revenues and on the revenues pledged by colleges participating in such additional bonds These bonds were issued for the construction of a multi-level parking structure at the College’s Central Campus The College had the following bonds payable at June 30, 2010: Bond Type Amount Outstanding Interest Rates (Percent) Annual Maturity To State Board of Education Capital Outlay Bonds: Series 2005B Capital Improvement Revenue Bonds: Series 2008A $ 4,090,000 5.0 2020 3.4 - 5.0 2028 Total $ 22,065,000 17,975,000 This is trial version www.adultpdf.com 25 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 Annual requirements to amortize all bonded debt outstanding as of June 30, 2010, are as follows: Fiscal Year Ending June 30 Principal Capital Outlay Bonds Interest 2011 2012 2013 2014 2015 2016-2020 $ Total $ 4,090,000 Fiscal Year Ending June 30 400,000 420,000 440,000 460,000 485,000 1,885,000 $ 204,500 184,500 163,500 141,500 118,500 224,750 $ 1,037,250 $ Total 604,500 604,500 603,500 601,500 603,500 2,109,750 $ 5,127,250 Capital Improvement Revenue Bonds Principal Interest Total 2011 2012 2013 2014 2015 2016-2020 2021-2025 2026-2028 $ 700,000 725,000 750,000 780,000 810,000 4,560,000 5,625,000 4,025,000 Total $ 17,975,000 $ 769,284 744,784 719,409 691,284 662,034 2,789,269 1,727,356 383,363 $ 1,469,284 1,469,784 1,469,409 1,471,284 1,472,034 7,349,269 7,352,356 4,408,363 $ 8,486,783 $ 26,461,783 In prior years, portions of the State Board of Education, Capital Outlay Bonds, Series 1998A and 2000A were refunded and considered defeased in substance by placing a portion of the proceeds of the new bonds in an irrevocable trust to provide for future debt service payments on the old bonds Accordingly, the trust account assets and the liabilities for the defeased bonds are not included in the College’s statement of net assets The defeased bonds are not reported as outstanding debt on the College’s statement of net assets As of June 30, 2010, $3,055,000 of State Board of Education, Capital Outlay Bonds, Series 1998A, and $1,190,000 of State Board of Education, Capital Outlay Bonds, Series 2000A, are considered defeased in-substance Capital Leases Payable In April 1997, energy management equipment in the amount of $12,975,539 was acquired under several capital lease agreements The stated interest rates ranged from 3.29 percent to 3.61 percent Future minimum payments under the capital lease agreements and the present value of the minimum payments as of June 30, 2010, are as follows: This is trial version www.adultpdf.com 26 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 Fiscal Year Ending June 30 Amount 2011 2012 2013 2014 $ 2,444,510 97,015 Total Minimum Payments Less, Amount Representing Interest Present Value of Minimum Payments 1,202,919 857,916 306,598 77,077 $ 2,347,495 Compensated Absences Payable College employees may accrue annual and sick leave based on length of service, subject to certain limitations regarding the amount that will be paid upon termination The College reports a liability for the accrued leave; however, State appropriations fund only the portion of accrued leave that is used or paid in the current fiscal year Although the College expects the liability to be funded primarily from future appropriations, generally accepted accounting principles not permit the recording of a receivable in anticipation of future appropriations At June 30, 2010, the estimated liability for compensated absences, which includes the College’s share of the Florida Retirement System and FICA contributions, totaled $9,577,384 The current portion of the compensated absences liability is the amount estimated based upon the average of the projected terminal leave payouts calculated from the first projection year from the calculation of the compensated absences liability Other Postemployment Benefits Payable The College follows Governmental Accounting Standards Board Statement No 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, for certain postemployment benefits administered by the College Plan Description The Other Postemployment Benefits Plan (Plan) is a single-employer defined benefit plan administered by the College Pursuant to the provisions of Section 112.0801, Florida Statutes, former employees who retire from the College are eligible to participate in the College’s self-insured health and hospitalization plan for medical and prescription drug coverages The College subsidizes the premium rates paid by retirees by allowing them to participate in the Plan at reduced or blended group (implicitly subsidized) premium rates for both active and retired employees These rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the Plan on average than those of active employees The College does not offer any explicit subsidies for retiree coverage Retirees are required to enroll in the Federal Medicare program for their primary coverage as soon as they are eligible The College does not issue a stand-alone report and is not included in the annual report of a public employee retirement system or another entity Funding Policy Benefit provisions are pursuant to provisions of Section 112.0801, Florida Statutes, and benefits may be amended by the Board of Trustees Contribution requirements of the College and Plan members are established and may be amended through recommendations of the Insurance Committee and actions from the Board of Trustees The College has not advance-funded or established a funding methodology for the annual other postemployment benefit (OPEB) costs or the net OPEB obligation, and This is trial version www.adultpdf.com 27 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 the Plan is financed on a pay-as-you-go basis For the 2009-10 fiscal year, 106 retirees received other postemployment benefits The College provided required contributions of $214,193 toward the annual OPEB cost, comprised of benefit payments made on behalf of retirees for claims expenses (net of reinsurance), administrative expenses, and reinsurance premiums Retiree contributions totaled $605,355 Annual OPEB Cost and Net OPEB Obligation The College’s annual OPEB cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of Governmental Accounting Standards Board Statement No 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions The ARC represents a level of funding that if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years The following table shows the College’s annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the College’s net OPEB obligation: Description Amount Normal Cost (Service Cost for One Year) Amortization of Unfunded Actuarial Accrued Liability Interest on Normal Cost and Amortization $ 1,003,837 680,805 - Annual Required Contribution Interest on Net OPEB Obligation Adjustment to Annual Required Contribution 1,684,642 86,965 (77,647) Annual OPEB Cost (Expense) Contribution Toward the OPEB Cost 1,693,960 (214,193) Increase in Net OPEB Obligation Net OPEB Obligation, Beginning of Year 1,479,767 2,174,117 Net OPEB Obligation, End of Year $ 3,653,884 The College’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation as of June 30, 2010, and for the transition and preceding years were as follows: Fiscal Year Annual OPEB Cost Beginning Balance, July 1, 2007 2007-08 2008-09 2009-10 Percentage of Annual OPEB Cost Contributed $ Net OPEB Obligation $ 1,507,246 1,568,993 1,693,960 20.4% 37.9% 12.6% This is trial version www.adultpdf.com 28 1,200,270 2,174,117 3,653,884 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 Funded Status and Funding Progress As of October 1, 2009, the most recent valuation date, the actuarial accrued liability for benefits was $18,692,337, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability of $18,692,337 and a funded ratio of percent The covered payroll (annual payroll of active participating employees) was $63,329,742 for the 2009-10 fiscal year, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 29.5 percent Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future Examples include assumptions about future employment and termination, mortality, and healthcare cost trends Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future The Schedule of Funding Progress, presented as required supplementary information following the notes to financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive Plan provisions, as understood by the employer and participating members, and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and participating members The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations The College’s OPEB actuarial valuation as of October 1, 2009, used the entry age cost actuarial method to estimate the unfunded actuarial liability as of June 30, 2010, and the College’s 2009-10 fiscal year ARC This method was selected because it was the most common method used for government pension valuation and spreads the costs evenly throughout the collective careers of those in the covered workforce Because the OPEB liability is currently unfunded, the actuarial assumptions included a percent rate of return on invested assets The actuarial assumptions also included a payroll growth rate of percent per year, and an annual healthcare cost trend rate of percent for the 2009-10 fiscal year, reduced by 0.5 percent per year, to an ultimate rate of percent after eight years The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis The remaining amortization period at June 30, 2010, was 27 years 13 RETIREMENT PROGRAMS Florida Retirement System Essentially all regular employees of the College are eligible to enroll as members of the State-administered Florida Retirement System (FRS) Provisions relating to FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida Statutes; and Florida Retirement System Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail FRS is a single retirement system administered by the Department of Management Services, Division of Retirement, and consists of two cost-sharing, multiple-employer retirement plans and other nonintegrated programs These include a This is trial version www.adultpdf.com 29 ... by the component unit The College? ??s financial statements are reported for the fiscal year ended June 30, 2010 The College? ??s component unit’s financial statements are reported for the fiscal year. .. bonds issued by the State Board of Education for the benefit of the College The College? ??s investments This is trial version www.adultpdf.com 21 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT... 23 NOVEMBER 2010 REPORT NO 2011-039 BROWARD COLLEGE A COMPONENT UNIT OF THE STATE OF FLORIDA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 CAPITAL ASSETS Capital assets activity for the