Serra Catholic High School, Inc.

Transcription

1 Serra Catholic High School, Inc. Financial Statements Year Ended June 30, 2011 with Independent Auditor s Report

2 TABLE OF CONTENTS Independent Auditor's Report 1 Financial Statements: Statement of Financial Position 2 Statement of Activities 3 Statement of Cash Flows 4 Notes to Financial Statements 5

3 Independent Auditor s Report Most Reverend David A. Zubik Bishop of the Catholic Diocese of Pittsburgh Board of Directors Serra Catholic High School, Inc. We have audited the accompanying statement of financial position of Serra Catholic High School, Inc. (School) as of June 30, 2011 and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of the School s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the School as of June 30, 2011, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Pittsburgh, Pennsylvania February 3,

4 STATEMENT OF FINANCIAL POSITION JUNE 30, 2011 Assets Cash and cash equivalents $ 242,005 Accounts receivable 16,519 Pledges receivable 43,400 Tuition receivable, net of allowance of $281,681 98,098 Prepaid expenses 500 Fixed assets 2,800,305 Less: accumulated depreciation (1,844,833) Total fixed assets 955,472 Total Assets $ 1,355,994 Liabilities and Net Assets Liabilities: Accounts payable $ 22,784 Advanced tuition 126,424 Compensated absences payable 139,968 Accrued payroll 170,855 Total Liabilities 460,031 Net Assets: Unrestricted: Unrestricted - designated 47,936 Unrestricted - other 718,370 Total Unrestricted 766,306 Temporarily restricted 129,657 Total Net Assets 895,963 Total Liabilities and Net Assets $ 1,355,994 See accompanying notes to financial statements. 2

5 STATEMENT OF ACTIVITIES Change in Unrestricted Net Assets: Support and revenues: Tuition and fees $ 2,196,630 Donations and bequests 10,587 Fundraising income 721,794 Other income 41,442 Food service program 154,890 Student activity program 96,724 Pupil transportation operation 41,531 Athletic program 170,649 Bookstore operation 22,996 Total support and revenues 3,457,243 Expenses: Program services: Food service program 155,638 Instructional 1,482,302 Operation and maintenance 234,643 Property and liability 53,613 Student activity program 94,463 Pupil transportation operation 94,779 Athletic program 246,257 Bookstore operation 18,939 Other programs 22,789 Depreciation expense 79,090 Total program services 2,482,513 Administration expense 657,780 Fundraising expense 355,832 Development expense 171,446 Total expenses 3,667,571 Net Change in Unrestricted Net Assets before Subsidy (210,328) Operating subsidy from the Catholic Diocese of Pittsburgh 110,000 Net Change in Unrestricted Net Assets (100,328) Temporarily Restricted Net Assets: Donations for: Art 850 Scholarships 11,507 Capital projects 117,300 Net Change in Temporarily Restricted Net Assets 129,657 Change in Net Assets 29,329 Net Assets: Beginning of year 866,634 End of year $ 895,963 See accompanying notes to financial statements. 3

6 STATEMENT OF CASH FLOWS Cash Flows From Operating Activities: Change in net assets $ 29,329 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation 79,090 Gain/loss on disposal of fixed assets (180) Change in: Accounts receivable 615 Pledges receivable (45,650) Tuition receivable 16,582 Deposits from other organizations 43,073 Accounts payable 16,542 Accrued payroll 9,227 Compensated absences payable (12,147) Advanced tuition 60,627 Net cash provided by (used in) operating activities 197,108 Cash Flows From Investing Activities: Purchase of fixed assets (42,646) Sale of fixed assets 2,130 Net cash provided by (used in) investing activities (40,516) Cash Flows From Financing and Related Activities: Capital campaign pledges received 2,250 Net cash provided by (used in) financing and related activities 2,250 Net Increase (Decrease) in Cash and Cash Equivalents 158,842 Cash and Cash Equivalents: Beginning of year 83,163 End of year $ 242,005 See accompanying notes to financial statements. 4

7 1. ORGANIZATION Serra Catholic High School of Pittsburgh, Pennsylvania (School) opened September 5 th, 1961, as a non-profit education facility. The School educates children from ninth through twelfth grades. The School s mission is to educate students in a Christian environment in which they feel valued and respected as persons. In valuing the individual, the School is also dedicated to providing a structured and disciplined learning environment in which each individual student has the opportunity to fulfill his/her individual potential. In keeping with the Franciscan tradition of educating the whole person, the School seeks to prepare students to be productive members of today s pluralistic society, capable of making moral and ethical choices grounded in Christian values. The School is associated with the Catholic Diocese of Pittsburgh (Diocese). Through this relationship, the School receives financial support from the Diocese through receipt of operating subsidies. During fiscal year 2007, a separate not-for-profit corporation, Serra Catholic High School, Inc. (Nonprofit) was incorporated to operate the School. A Services Agreement was entered into by the Diocese and the Nonprofit and formalized on December 14, The Services Agreement outlines services to be provided by various offices of the Diocese for the benefit of the Nonprofit. On March 29, 2010, the Diocese transferred title of the School s real property to the Nonprofit. As of July 1, 2010, the School s remaining liabilities and operations had been transferred from the Diocese to the Nonprofit. In prior years, the financial statements for the School reported elements of assets and liabilities held for the Nonprofit by the Diocese. The beginning net asset balance reported represents the Nonprofit s book balance at July 1, The accompanying financial statements reflect the financial activity and account balances of the Nonprofit for the year ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities. Under accounting principles generally accepted in the United States of America, net assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Nonprofit and changes therein are reported as follows: 5

8 Unrestricted Net Assets Used to accumulate all unrestricted and board-designated resources from operations. It represents the portion of the net assets of the Nonprofit that is neither permanently restricted nor temporarily restricted by donor-imposed stipulations. As of June 30, 2011, the board-designated funds are intended to be used for various activities and maintenance expenses to occur within the next year. Temporarily Restricted Net Assets Net assets whose use is limited by donor-imposed stipulations that either expire with the passage of time or can be fulfilled and removed by actions of the Nonprofit pursuant to those stipulations. Permanently Restricted Net Assets Represents net assets with a donor-imposed restriction that stipulates that resources be maintained permanently, but permits the Nonprofit to use up or expend part or all of the income derived from the donated assets. There were no permanently restricted net assets at June 30, All donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a donor restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), restricted net assets are reclassified as unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Donor-restricted contributions received whose restrictions are met in the same reporting period are reported in the statement of activities as unrestricted support. Catholic Institutional Deposit and Loan Fund Trust A portion of the cash balance includes monies deposited with the Catholic Institutional Deposit and Loan Fund Trust ( Deposit and Loan Fund ). The Deposit and Loan Fund was established by the Diocese to pool excess funds of the related organizations within the Diocese for investment purposes and to provide loans for building programs, maintenance, and temporary operational requirements. Deposits held within the Deposit and Loan Fund totaled $681 at June 30,

9 Cash and Cash Equivalents The Nonprofit considers all highly liquid investments with maturity date of three months or less when purchased to be cash equivalents. Cash and cash equivalents for purposes of the statement of cash flows exclude permanently restricted cash and cash equivalents. The carrying value of cash, which includes all checking and savings accounts deposited with a local bank, is equal to its fair value. Income Taxes During the year ended June 30, 2011, the Nonprofit was listed in the Official Catholic Directory (OCD). This listing provides exemption from federal income tax for all Catholic institutions listed in the OCD for that year. Accordingly, no provision for income taxes has been provided in the financial statements. Accounting Estimates The preparation of financial statements in conformity with the 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 at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of Risk Financial instruments, which potentially expose the Nonprofit to a concentration of credit risk, include cash and cash equivalents. As a matter of policy, the Nonprofit only maintains cash balances with financial institutions having a high credit quality. Cash and cash equivalents are deposited at a local bank or with the Deposit and Loan Fund. At June 30, 2011, the carrying amount of the Nonprofit s deposits was $242,005, and the bank balance was $246,920, which was fully insured by federal depository insurance. Tuition Receivable Tuition receivable is presented net of an allowance for uncollectable tuition. The Nonprofit reviews the outstanding tuition receivable regularly, and amounts where the collectability is uncertain are reserved in the year the determination is made. 7

10 Accounts Receivable Accounts receivable are reported at amounts management expects to collect on balances outstanding at year-end. Accounts receivable are considered fully collectible by management and, accordingly, no allowance for doubtful accounts is considered necessary. Pledges Receivable Pledges receivable are reported at amounts management expects to collect as appropriate on balances outstanding at year-end. Advance Tuition Advance tuition represents prepayments of tuition and fees for the subsequent school year. These deposits are considered to be unearned revenue as of June 30, Compensated Absences The Nonprofit accrues compensated absences that have been earned, but not yet paid, as of year-end. Compensated absences consist of sick days, personal days, and the Voluntary Early Separation Incentive (VESI) agreements payable. Accumulated sick days and personal days are paid to employees upon resignation and retirement after 10 years of service. The VESI plan was established to provide long-term teachers the opportunity to separate early from active teaching as well as to afford the Nonprofit the opportunity to derive operational savings through decreased instructional costs in subsequent years. The VESI plan is available to any full-time teacher who has a combination of years of service and age which equals seventy or higher by September 1 of the school year in which the separation would begin. Balances at June 30, 2011 reflect only amounts due to current employees of the Nonprofit and do not reflect the accumulated sick and personal days earned for those teachers who had previously been employed at the Nonprofit and then transferred to a different school within the Diocese. The amount of potential liability resulting from these teachers transferring between schools is not known and is not able to be estimated at year-end. This liability is also contingent on the teachers use of previously accumulated sick days prior to retirement. It is management s belief, based on history, that any such liability resulting from teachers transferring between schools is not material to the financial statements; however, the possibility exists that this amount could be significant. The balances as of June 30, 2011 are as follows: 8

11 Fixed Assets VESI agreements $ 17,144 Sick and personal days 122,824 Total compensated absences $ 139,968 Expenditures for fixed assets in excess of $500 are capitalized at cost. Property and equipment are being depreciated over estimated useful lives of five to forty years using a straight-line method, with a half of a year s depreciation recognized in the years of acquisition and disposal. The cost of maintenance and repairs is expensed as incurred. On March 29, 2010, the fixed assets associated with the School were transferred from the Diocese to the Nonprofit. These fixed assets were recorded at historical cost less accumulated depreciation by the Nonprofit at the time of the transfer because of the relationship between the Diocese and the Nonprofit. Pending Accounting Standards The Financial Accounting Standards Board (FASB) has issued ASU , Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. While the implementation guidance for the standard specifically states that unconditional promises to give are not considered financing receivables, receivables that arise from exchange transactions and contracts could meet the definition of a financing receivable. The standard requires specific disclosures relating to placing financing receivables on nonaccrual status, past due receivables, risk elements, allowances for doubtful accounts, and a description of monitoring of credit quality of financing receivables. The requirements of ASU are generally effective for nonprofit organizations (those that aren t defined as a public entity ) in periods ending on or after December 15, Subsequent Events Subsequent events have been evaluated through the Independent Auditor's Report date, which is the date the financial statements were available to be issued. 3. PROPERTY, EQUIPMENT, AND IMPROVEMENTS Property, equipment, and improvements are recorded at cost and are being depreciated over their useful lives. The useful life of buildings and fixtures is 40 years; all other asset classes have a useful life of five years. A summary of fixed assets at June 30, 2011 is as follows: 9

12 Land $ 104,004 Buildings and fixtures 2,253,996 Furnishings and equipment 394,836 Vehicles 47,469 Less: accumulated depreciation (1,844,833) $ 955, PLEDGES RECEIVABLE During the fiscal year, the Nonprofit received pledges from various donors for capital improvements and operations. At June 30, 2011, unconditional promises to give that have not been paid have been recorded as pledges receivable. As of the fiscal year-end, all pledges are considered collectable. For the year ended June 30, 2011, $43,400 of pledges are due to the Nonprofit. 5. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets at June 30, 2011 are restricted for the following purposes: Art $ 850 Scholarships 11,507 Capital projects 117,300 $ 129,657 The funds restricted for capital projects are going to be used toward the renovation of the physics lab and for other future capital projects. 6. LEASES The Nonprofit leases office equipment with future non-cancelable payments under the two separate leases totaling $1,098 per month through February During the fiscal year, the Nonprofit renewed the leases for an additional five-year term. The annual amounts of lease payments required are as follows at June 30, 2011: 10

13 Year Ending June 30, Lease Payments 2012 $ 7, , , , ,946 Total $ 36,194 Total rental expense relating to these leases for the fiscal year 2011 was $11, DONATED GOODS, SERVICES, AND SUPPLIES The Nonprofit received, without charge, donations of various goods that were sold at the Juniper Journey auction. The estimated fair value of these donations is not required to be reported on the statement of activities at the time the donations are received, as the proceeds from the sale of these items are reported as part of fundraising event revenue. The estimated fair value of donated goods for the year ended June 30, 2011 is as follows: Special event auction items $ 43,887 In addition, a substantial number of volunteers have donated their time to the Nonprofit s various program services. Such donations do not meet the criteria for inclusion in the accompanying financial statements, but do benefit the Nonprofit. 8. SPECIAL EVENTS The following is a schedule of special event revenue and expenses for the year ended June 30, 2011: 11

14 Annual appeal $ 212,331 Christmas raffle 76,883 Auction 85,290 Scrip program 240,143 Magazine drive 24,400 Golf outing 18,405 Walk-a-thon 5,214 Candy drive 12,209 Fashion show 11,970 Golden anniversary 30,064 Other fundraising 4,885 Less cost of events (355,832) Total $ 365, RETIREMENT PLANS The Diocese administers a multi-employer, non-contributory defined benefit plan covering all lay employees of the Nonprofit, parishes, and other participating Catholic organizations who meet eligibility requirements (Lay Plan). Responsibility for funding the Lay Plan is shared by all participating Diocesan affiliated organizations. The Lay Plan is not subject to the benefit accrual and participation requirements of the Employee Retirement Income Security Act of 1974 (ERISA). Total contributions to the Lay Plan are made by the Nonprofit on behalf of the eligible lay persons employed by them were $130,476 for the year ended June 30, The Nonprofit also participates in a retirement plan through TIAA-CREF. All employees are eligible to contribute funds to this retirement plan; however, the only employees eligible to elect that their employer contribution be directed to this plan are teachers and principals and vice principals who were previously employed as teachers. All other administrative employees are required to have their employer contributions directed to the Lay Plan. The contribution rate in effect for the year ended June 30, 2011 was 8.5%. Total contributions to this plan by the Nonprofit on behalf of the eligible persons employed by them were $35,439 for the year ended June 30,