Division of Business & Finance

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1 Division of Business & Finance Comptroller s Office Update November 14, 2014

2 Comptroller s Office Report Agenda Audits and Reviews» Annual Financial Audit» Athletics Procedures Review for NCAA Compliance Tuition Payment Plan Update Bond Rating Agency Review University Financial Statements 2

3 Comptroller s Office Report Audits and Reviews» The State audit is underway and is expected to conclude in December. This year, in addition to an audit of the financial statements, there will be a separate report issued on the University s Higher Education Institutional Aid (Title III) program.» Associate Vice Chancellor Angela Peterson (Campus Enterprises) and Athletics Director Earl Hilton are coordinating the NCAA s required annual review by an independent accountant of fiscal procedures followed by Division I athletics departments. The audit firm of McGladrey, LLP is again conducting the review of 31 athletics fiscal processes. The review is expected to wrap up by December in time for reporting to the NCAA in January. 3

4 In-House Tuition Payment Plan Update Last year the Treasurer s Office instituted an in-house tuition payment plan that provides an affordable, interest-free alternative to paying tuition and other campus expenses in full prior to each term. Benefits to the student include:» MORE TIME TO PAY: Make tuition more manageable by paying in monthly installments.» NO CREDIT CHECK» INTEREST-FREE ALTERNATIVE: Unlike traditional loans, the Plan charges no interest.» AUTOMATIC UPDATES: The Plan will automatically update for any changes made to the student account (i.e., class charges are added or student insurance is removed).» LOW ENROLLMENT FEE: $35 per student or $40 for late enrollment. Summary Totals for Tuition Pay Plans Year Fall Spring Totals % 4

5 Comptroller s Office Report Fitch Bond Rating Agency Review» In preparation for issuance of the financing for our $90 million student center, the Fitch Bond Rating Agency thoroughly reviewed the University s financial condition and academic positioning. The agency assigned A&T a rating of A+ with a Stable outlook. This rating, in concert with Moody s previous rating of A1 with a Stable outlook in 2012 bodes well for a successful bond sale, scheduled for December 5

6 RATING AGENCY PRESENTATION North Carolina A&T State University September 15, 2014

7 Table of Contents I. Overview, Governance, and Management II. III. IV. Academic Program Enrollment and Tuition/Fees Financial Operations and Information V. Legal Security and Structure of Debt VI. Conclusions / Questions Member: FINRA & SIPC, MSRB Registrant NC A&T, September 15,

8 Member: FINRA & SIPC, MSRB Registrant NC A&T, September 15, 2014 Financial Operations and Information

9 Operating Performance Financial Highlights NC A&T believes the budget process is key to ensuring effective management and efficient responses to unforeseen, contingency, or emergency events such as a decrease in statewide revenue collections, reductions in appropriations, or natural disasters. At the outset of the internal budget process, the University Budget Office will reserve generally 3% of the state-appropriated funds for such unforeseen events. The University has generated a net increase in revenues each year from 2010 to 2014 The target rate for endowment distributions to the University is currently 4.5% of the endowment s three year average calendar year-end market value with consideration for the real rate of inflation. Distributions from the endowment to the University are made without regard for whether its return was greater or less than the agreed upon spending level. However, current policy does not allow spending from an underwater endowment. Endowment funds distributed to the University are used primarily for student scholarships, endowed professorships, endowed departmental chairpersons, and academic support. Member: FINRA & SIPC, MSRB Registrant NC A&T, September 15,

10 Statement of Revenues, Expenses, and Change in Net Assets Statement of Revenues, Expenses, and Changes in Net Assets For the Fiscal Years Ended June 30, Operating Revenues Unaudited Student Tuition and Fees $35,214,805 $38,377,232 $45,034,536 $49,980,990 $52,472,310 Federal Appropriations 6,517,982 8,015,251 7,184,767 8,380,102 8,288,731 Federal Grants and Contracts 25,907,342 23,361,958 22,424,485 20,959,664 22,674,725 State and Local Grants and Contract 1,313,910 1,065,056 1,268,882 1,874,583 1,649,147 Nongovernmental Grants and Contract 952, , ,764 1,301,434 1,231,868 Sales and Services, Net 21,165,290 22,275,516 23,276,361 23,485,145 23,839,753 Interest Earnings on Loans 3,953 12,487 4,168 4,184 3,764 Other Operating Revenues 1,557,937 1,215,837 1,658,076 1,853,573 2,291,916 Total Operating Revenues 92,634,047 95,256, ,552, ,839, ,452,214 Operating Expenses Salaries and Benefits 151,169, ,995, ,312, ,912, ,890,423 Supplies and Materials 18,700,102 18,723,479 19,154,910 17,239,417 14,556,120 Services 39,272,950 42,619,059 42,379,509 42,842,908 43,290,739 Scholarships and Fellowships 20,903,539 23,306,140 20,242,096 19,161,756 19,428,444 Utilities 5,565,272 6,068,721 5,249,842 5,319,557 5,403,654 Depreciation 10,042,060 10,771,027 11,177,716 11,193,508 11,183,047 Total Operating Expenses 245,653, ,484, ,516, ,670, ,752,427 Operating Loss (153,019,813) (164,228,295) (152,964,100) (149,830,399) (141,300,213) Nonoperating Revenues ( Expenses ) State Appropriations 92,355,360 93,559,050 94,181,746 97,542,271 92,665,165 State Aid Federal Recovery Funds 6,463,199 6,476,211 Noncapital Grants Student Financial Aid 38,630,408 43,541,001 36,425,019 35,683,112 36,545,317 Other Noncapital Grants 17,865,027 43,366,944 35,991,976 10,052,390 11,470,114 Noncapital Gifts 1,188,783 1,167,614 1,132,754 1,911,378 2,257,015 Investment Income 2,222,111 3,325,542 1,275,540 3,406,048 5,137,819 Interest and Fees on Debt (1,038,134) (766,126) (716,047) (972,247) (996,319) Grants to Gateway University Research Park (10,184,267) (29,980,250 (18,465,527) - - Other Nonoperating Revenues (Expenses) (234,623) (323,791) (452,723) (827,868) (1,279,421) Net Nonoperating Revenues 147,267, ,356, ,372, ,795, ,799,690 Income (Loss) Before Other Revenues, Expenses, Gains, or Losses (5,751,950) (3,872,100) (3,591,362) (3,035,315) 4,499,477 Other Revenues Capital Appropriations 451,700 2,832,239 Refund of Prior Year s Capital (191,481) Appropriations Capital Grants 4,617,686 13,119,019 2,758,702 1,636,175 17,859 Capital Gifts 1,043, ,728 Additions to Endowments 2,033,967 3,055,764 2,682,330 2,327,836 3,242,424 Increase (Decrease) in Net 1,224,241 12,302,683 2,893,259 1,380,396 10,723,727 Revenues Net Assets Beginning Net Assets 357,569, ,793, ,096, ,989, ,370,253 Restatement of Net Assets Ending Net Assets $ 358,793,915 $ 371,096,598 $ 373,989,857 $ 375,370,253 $ 386,093,980 The University posted strong operating results in 2014 through a combination of tuition increases and tightened expense controls. Member: FINRA & SIPC, MSRB Registrant NC A&T, September 15,

11 Condensed Statement of Net Assets Assets Condensed Statement of Net Assets As of June 30, Unaudited Current Assets $ 63,934,397 $ 59,848,888 $ 51,057,125 $ 52,729,910 $ 63,043,929 Noncurrent Capital Assets, Net of Accumulated Depreciation 313,406, ,334, ,316, ,842, ,497,378 Other Noncurrent Assets 21,095,764 28,183,159 32,085,655 45,411,150 41,912,356 Total Assets $398,436,734 $411,366,849 $ 408,459,183 $419,983,489 $433,404,663 Liabilities Current Liabilities 17,389,033 16,867,825 11,290,438 10,925,781 10,796,285 Noncurrent Liabilities 22,253,786 23,402,426 23,178,788 33,687,355 36,760,754 Total Liabilities $ 39,642,819 $ 40,270,251 $ 34,469,226 $ 44,613,136 $ 47,557,039 Net Assets Investment in Capital Assets, Net of Related Debt 298,610, ,050, ,894, ,006, ,666,231 Restricted - nonexpendable 18,431,198 22,182,994 24,951,895 27,371,100 30,613,482 Restricted - expendable 6,829,562 8,704,561 9,631,603 13,533,188 17,787,459 Unrestricted 34,922,937 30,158,225 28,512,199 26,459,261 29,026,908 Total Net Assets $358,793,915 $371,096,598 $ 373,989,957 $375,370,353 $386,045,080 Member: FINRA & SIPC, MSRB Registrant NC A&T, September 15,

12 Questions? 12

Financial Statements (Unaudited) June 30, 2015

Financial Statements (Unaudited) June 30, 2015 STATEMENTS OF NET POSITION (in $1,000s) June 30, 2015 Component Units 2015 2015 ASSETS Current Assets Cash and cash equivalents $ 5,777 $ 44,501 Short-term