IONA COLLEGE. Financial Statements and Independent Auditor s Report. June 30, 2014 and 2013

Transcription

1 Financial Statements and Independent Auditor s Report The report accompanying these financial statements was issued by BDO USA, LLP, a Delaware limited liability partnership and the U.S. member of BDO International Limited, a UK company limited by guarantee.

2 Contents Independent Auditor s Report 1-2 Financial Statements Statements of Financial Position as of 4 Statement of Activities for the year ended June 30, Statement of Activities for the year ended June 30, Statements of Cash Flows for the years ended

3 Tel: Fax: Park Avenue New York, NY Independent Auditor s Report To the Board of Trustees of Iona College Report on the Financial Statements We have audited the accompanying financial statements of Iona College (the College ) which comprise the statement of financial position as of June 30, 2014, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud of error. Auditor s Responsibility 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the College s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the College s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 1

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Iona College as of June 30, 2014, and the changes in its net assets and its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Other Matter The 2013 financial statements of Iona College were audited by other auditors, whose report dated October 25, 2013 expressed an unmodified opinion on those financial statements. New York, New York October 27,

5 Financial Statements

6 Statements of Financial Position June 30, Assets Cash and cash equivalents $ 8,762 $ 6,329 Receivables: Accounts receivable from students, net 1, Federal Perkins loans to students, net 2,519 1,768 Other receivables 884 3,010 Contributions receivable, net 2,398 2,331 Prepaid expenses and other assets 1,496 1,925 Deposits held by bond trustees 3,620 3,605 Investments 100,845 73,980 Restricted use assets 979 1,024 Land, buildings and equipment, net 109, ,406 Total Assets $ 233,170 $ 201,824 Liabilities and Net Assets Liabilities Accounts payable and accrued expenses $ 7,547 $ 6,917 Deferred revenues and student deposits 2,220 4,039 Notes payable 3,622 - Long-term debt 35,852 31,224 Refundable advances from U.S. government 2,316 2,259 Accrued postretirement benefits 12,713 12,151 Total Liabilities 64,270 56,590 Net Assets Unrestricted 141, ,620 Temporarily restricted 10,638 8,132 Permanently restricted 16,891 16,482 Total Net Assets 168, ,234 Total Liabilities and Net Assets $ 233,170 $ 201,824 The accompanying notes are an integral part of this financial statement. 4

7 Statement of Activities Year Ended June 30, 2014 Unrestricted Temporarily Restricted Permanently Restricted Total Operating Revenues and other support: Tuition and fees $ 121,066 $ - $ - $ 121,066 Less: Scholarships and fellowships (43,755) - - (43,755) Net tuition and fees 77, ,311 Contributions 3, ,931 Investment return appropriated State appropriations Government grants: Student Aid Other Auxiliary enterprises 18, ,979 Other sources 2, ,438 Net assets released from restrictions 903 (903) - - Total operating revenues and other support 104, ,153 Expenses: Instruction 31, ,073 Academic support 7, ,927 Student services 19, ,872 Institutional support 20, ,866 Auxiliary enterprises 15, ,548 Total operating expenses 95, ,286 Increase in net assets from operating activities 9, ,867 Nonoperating Contributions ,823 Investment return, net 9,351 2,248-11,599 Net assets released from restrictions for capital additions 1,204 (1,204) - - Other net assets changes Change in postretirement benefit obligation, other than net periodic benefit cost (170) - - (170) Increase in net assets from nonoperating activities 11,522 1, ,799 Change in net assets 20,751 2, ,666 Net Assets, Beginning of Year 120,620 8,132 16, ,234 Net Assets, End of Year $ 141,371 $ 10,638 $ 16,891 $ 168,900 The accompanying notes are an integral part of this financial statement. 5

8 Statement of Activities Year Ended June 30, 2013 Unrestricted Temporarily Restricted Permanently Restricted Total Operating Revenues and other support: Tuition and fees $ 110,161 $ - $ - $ 110,161 Less: Scholarships and fellowships (38,195) - - (38,195) Net tuition and fees 71, ,966 Contributions 3, ,668 Investment return appropriated State appropriations Government grants: Student Aid Other Auxiliary enterprises 17, ,613 Other sources 2, ,232 Net assets released from restrictions 1,111 (1,111) - - Total operating revenues and other support 97, ,624 Expenses: Instruction 31, ,223 Academic support 7, ,769 Student services 19, ,445 Institutional support 21, ,551 Auxiliary enterprises 15, ,387 Total operating expenses 95, ,375 Increase in net assets from operating activities 2, ,249 Nonoperating Contributions 604 1, ,190 Investment return, net 4,739 1,219-5,958 Loss on debt refinancing (1,269) - - (1,269) Net assets released from restrictions for capital additions 2,245 (2,245) - - Net asset transfers 1,500 (1,482) (18) - Change in postretirement benefit obligation, other than net periodic benefit cost Increase (decrease) in net assets from nonoperating activities 8,035 (1,508) 568 7,095 Change in net assets 10,090 (1,314) 568 9,344 Net Assets, Beginning of Year 110,530 9,446 15, ,890 Net Assets, End of Year $ 120,620 $ 8,132 $ 16,482 $ 145,234 The accompanying notes are an integral part of this financial statement. 6

9 Statements of Cash Flows Years Ended June 30, Cash Flows from Operating Activities Change in net assets $ 23,666 $ 9,344 Adjustments to reconcile change in net assets to net cash flows provided by operating activities: Depreciation 5,567 5,503 Net appreciation in fair value of investments (11,090) (5,585) Loss on refinancing of long-term debt - 1,269 Net appreciation in fair value of cash and securities held by bond trustees (1) (5) Bad debt expense - student account receivable Bad debt expense, and cancellations - Perkins loans (8) 19 Loss on disposal of capital assets Change in fair value of restricted use asset 45 (43) Provision for losses on contributions receivable (76) (90) Change in discount on contributions receivable (89) 34 Amortization of original issue discount and bond issuance costs (89) (104) Contributions restricted for endowment (409) (586) Contributed investment securities (800) (294) Changes in assets and liabilities: Increase in accounts receivable from students (1,661) (129) Decrease (increase) in other receivables 2,126 (283) Decrease in contributions receivable Decrease in prepaid expenses and other assets Increase (decrease) in accounts payable and accrued expenses 630 (1,136) Decrease in deferred revenues and student deposits (1,819) (167) Increase in accrued postretirement benefits Net Cash Provided by Operating Activities 17,815 8,664 Cash Flows from Investing Activities Acquisition of land, buildings and equipment (8,731) (9,896) Proceeds from disposal of building Proceeds from sales of investments 54,229 15,172 Purchases of investments (69,204) (20,132) Federal Perkins loans advanced to students (1,068) (458) Federal Perkins loans collected from students Net Cash Used in Investing Activities (24,003) (14,946) Cash Flows from Financing Activities Contributions restricted for endowment Principal payments on long-term debt (358) (740) Proceeds from long-term debt 5,000 31,367 Proceeds from notes payable 3,750 - Payments to existing bondholders - (24,960) Bond issuance costs (222) (543) Net decrease in deposits held by bond trustees (15) (129) Change in refundable advances from U.S. government Net Cash Provided by Financing Activities 8,621 5,601 Net increase (decrease) in cash and cash equivalents 2,433 (681) Cash and Cash Equivalents, Beginning of Year 6,329 7,010 Cash and Cash Equivalents, End of Year $ 8,762 $ 6,329 Supplementary Disclosures Interest paid $ 1,379 $ 1,153 The accompanying notes are an integral part of this financial statement. 7

10 1. Organization Iona College was established in 1940 as a Catholic college in the tradition of the Christian Brothers and American Catholic higher education. Iona College (the College ) is a caring academic community, inspired by the legacy of Blessed Edmund Rice and the Christian Brothers, which embodies opportunity, justice, and the liberating power of education. Iona College s purpose is to foster intellectual inquiry, community engagement and an appreciation for diversity. From an initial class of ninety freshmen students, the College today is a co-educational, not-for-profit institution of higher education that has grown to a current enrollment of more than four thousand students studying on two campuses, at the New Rochelle campus in Westchester County and at a branch campus in Rockland County. Through major programs at the undergraduate and graduate levels, the College offers courses of study in the traditional liberal arts disciplines and in select pre-professional and professional programs for both traditional-age and returning-adult students. 2. Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying financial statements of the College have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. (b) Net Asset Classifications The College s net assets, revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the College and changes therein are classified and reported as follows: Unrestricted Net Assets are not subject to donor-imposed restrictions. All revenues, gains and losses that are not permanently or temporarily restricted by donors are included in this classification. All expenditures are reported in the unrestricted class of net assets, since the use of restricted contributions in accordance with the donors stipulations results in the release of the restriction. Unrestricted net assets may be designated for specific purpose by the Board of Trustees. Temporarily Restricted Net Assets generally result from contributions or inflows of assets whose use by the College is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the College pursuant to those stipulations or by law. Gifts of cash and other non-capital assets are reported as temporarily restricted operating revenue if the gifts are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose for the restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Permanently Restricted Net Assets are subject to donor-imposed restrictions to be held by the College in perpetuity. Generally, the donors of these assets permit the College to use all or part of the income earned on related investments for specific purposes. 8

11 (c) Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments consisting of money market funds with original maturities of three months or less at the time of purchase, except for such investments purchased with funds held by bond trustees or funds managed by external investment managers as part of the long- term investment strategy. (d) Allowances for Doubtful Accounts The allowances for doubtful accounts are provided based upon management s judgment, including such factors as prior collection history and type of receivable. The College writes off receivables when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. (e) Deferred Bond Issuance Costs The College capitalizes and amortizes bond issuance costs over the term of the bonds using the effective interest method, and is included in prepaid and other assets within the statement of financial position. (f) Deposits Held with Bond Trustees Deposits with bond trustees represent funds held by designated bond trustees for future application by the College to approved capital projects. (g) Investments Investments in publicly traded debt and equity securities are recorded at fair value generally determined on the basis of quoted market values. Investments that are not readily marketable are carried at estimated fair value as determined by the respective investment manager. Purchases and sales of securities are reflected on a trade-date basis. Gains and losses on sales of securities are determined based on average cost and are recorded in the statements of activities in the period in which the securities are sold. Dividends and interest are recognized as earned. The College s investments are pooled to facilitate their management. Investment return is allocated to unrestricted, temporarily restricted and permanently restricted funds based on donor restrictions or absence thereof on a unit basis that reflects the ratio of the related funds invested in the pooled portfolio to the total market value. (h) Restricted Use Assets Restricted use assets consist of one residence that was gifted to the College during fiscal year Under the terms of the contribution, the donors will continue to reside at the residence and the College will be entitled to occupy or sell the residence upon the death of the donors. 9

12 (i) Land, Buildings and Equipment Purchased land, buildings and equipment in excess of $5 are recorded at cost (or fair market value at date of donation, in the case of gifts). Repairs and maintenance costs are expensed as incurred. Additions to the library collections are expensed at the time of purchase. Depreciation is computed on a straight-line basis over the estimated useful lives of buildings (20-45 years), improvements (10-20 years) and equipment (4-10 years). (j) Refundable Advances from U.S. Government Funds provided by the U.S. government under the Federal Perkins loan program are loaned to qualified students and may be re-loaned after collection. These funds are ultimately refundable to the U.S. government and are presented in the accompanying statements of financial position as a liability. (k) Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Furthermore, fair value measurements are categorized within a threelevel hierarchy prioritizing the use of market-based information over entity- specific information. The hierarchy is based on the transparency of information used in the valuation of an asset or liability at the measurement date as follows: Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The type of investments in Level 1 include listed equities held in the name of the College, and exclude listed equities and other securities held indirectly through commingled funds. Level 2: Pricing inputs, including broker quotes, are generally those other than exchange quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Also included in Level 2 are investments measured using a net asset value ( NAV ) per share, or its equivalent, that may be redeemed at that NAV at the date of the statement of financial position or in the near term, which is generally considered to be within ninety days. Level 3: Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation. Investments that are included in this category generally include privately held investments and partnership interests. Also included in Level 3 are investments measured using a NAV per share, or its equivalent, that can never be redeemed at the NAV or for which redemption at NAV is uncertain due to lockup periods or other investment restrictions. 10

13 The carrying amount of the College s financial instruments approximates fair value because of their short maturity, except as follows. The fair value of investments, contributions receivable, and deposits held by trustees are discussed in Notes 3, 7, and 9, respectively. A reasonable estimate of the fair value of Federal Perkins loans to students could not be made because the loans are not saleable and can only be assigned to the U.S. government or its designees. The estimated fair value of the College s long-term debt is based on the discounted future cash payments to be made for each issue. The discount rate used approximates current market rates for loans of similar maturities and credit quality. (l) Tuition and Fees and Auxiliary Enterprises Revenue Revenue is recorded on the accrual basis of accounting at net realizable amounts. The College derives its revenue primarily from student tuition and fees, and auxiliary enterprises (which primarily relate to student and campus activities). Tuition and matriculation deposits and other payments for upcoming semesters and trimesters that were received prior to fiscal year-end are reported as deferred revenues. (m) Contributions Contributions, which include unconditional promises to give (pledges), are recognized as revenues in the period received. Contributions to be received after one year are discounted at an appropriate discount rate. Amortization of the discount is recorded as additional contribution revenue in accordance with the donor-imposed restrictions, if any, on the contributions. The carrying value of contributions receivable has been reduced by an appropriate allowance for uncollectible accounts, based on historical collection experience, and therefore, approximates net realizable value. Receivables are written off in the period in which they are deemed to be uncollectible and payments subsequently received are recorded as income in the period received. Gifts of long-lived assets such as land, buildings, or equipment are reported at fair value as unrestricted support, unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used, and gifts of cash or other assets that can only be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, expirations of donor restrictions are reported when the donated or acquired long-lived assets are placed in service. In contrast to unconditional promises as described above, conditional promises (primarily bequest intentions) are not recorded until donor contingencies are substantially met. (n) Grants and Contracts Revenue from grants and contracts is recognized as the related expenses are incurred in accordance with the terms of the respective grant or contract agreement. Amounts received in advance are reported as deferred revenues. 11

14 (o) Operating Indicator The accompanying statements of activities distinguish between operating and nonoperating activities. Items which the College considers nonoperating activities include contributions related to endowment purposes, capital campaigns and projects, and bequests; investment income, gains and losses; temporarily restricted releases associated with capital projects; and postretirement changes other than net periodic benefit cost and other items considered to be more of an unusual or non-recurring nature. All other activity is classified as part of operating activities. (p) Functional Expenses Operation and maintenance expenses, depreciation of plant assets and interest on longterm debt are allocated to program and supporting activities based upon the primary use of the facilities. (q) Direct Grants to Students During fiscal years 2014 and 2013, the College administered the New York State Tuition Assistance Program ( TAP ) and the Pell Grants Program ( Pell ), a federally funded Title IV program. In fiscal years 2014 and 2013, students of the College were awarded TAP and Pell grants aggregating approximately $7,713 and $7,077, respectively. Because these are direct grants to students, the College does not include these amounts in its accompanying financial statements. (r) Income Taxes Iona College is a tax-exempt organization as described in Section 501(c)(3) of the Internal Revenue Code (the Code), and is generally exempt from federal income taxes on related income pursuant to Section 501(a) of the Code. The College has processes presently in place to ensure the maintenance of its tax-exempt status. The College recognizes the effect of uncertain tax positions only if those positions are more likely than not of being sustained. Management has determined that the College has no uncertain tax positions that would require financial statement recognition or disclosure. The College is not currently under examination by any taxing jurisdiction. It s Federal and state income tax returns for years subsequent to 2010 are still subject to examination. The College is, however, subject to federal and state income tax on unrelated business income. (s) Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies at the date of the financial statements and revenues and expenses recognized during the reporting period. Actual results could differ from those estimates. 12

15 (t) Concentrations of Credit Risk Financial instruments that potentially subject the College to concentrations of credit risk consist principally of cash and cash equivalents and investments. The College maintains its cash and cash equivalents in various bank accounts and money market funds that, at times, may exceed federally insured limits. The College s cash and cash equivalent accounts were placed with high credit quality financial institutions, and the College has not experienced, nor does it anticipate, any losses in such accounts. The College maintains a portfolio of diversified investments, managed by an investment advisor, with a financial objective to provide ongoing support to the College while preserving the purchasing power of the investments over the long term. The fair values reported in the statement of financial position are exposed to various risks including changes in the equity markets, the interest rate environment, and general economic conditions. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the fair value of investment securities, it is reasonably possible that the amounts reported in the accompanying financial statements could change materially in the near term. (u) Reclassifications Certain amounts in the 2013 financial statements have been reclassified to conform to the 2014 presentation. 3. Investments Investments, at fair value, at consist of the following: Cash equivalents $ 1,643 $ 239 Corporate stocks and mutual funds Multi-Strategy Bond Fund 20,937 19,706 Multi-Strategy Equity Fund 62,941 37,574 Government Money Market Fund 10,543 12,735 Multi-Strategy Commodities Fund 3,435 3,187 Limited Partnership 1, Cash value of life insurance The following are descriptions of the College s investment categories: Cash Equivalents $ 100,845 $ 73,980 Cash equivalents include money market instruments invested in dollar-denominated, high-quality, short-term instruments, mainly issued by the federal government. On June 30, 2014, the College moved $1,400 to cash equivalents, and subsequently invested the funds in fixed accounts. These investments are considered level 1 investment.

16 Corporate stocks and mutual funds Corporate stocks and mutual funds consist of investments in publicly traded U.S. and foreign common and preferred equities and mutual funds. The fair value of these investments is based on quoted market prices. Investments that are listed on an exchange are valued, in general, at the last reported sale price. These investments are considered a level 1 investment. Multi-Strategy Bond Fund The investment objective of the fund is to offer an actively managed, multi-manager investment program that will provide, in a single fund, broad exposure to global debt markets. The fund seeks to add value above the return of the broad U.S. bond market over a full market cycle, as measured by the Barclays Capital U.S. Aggregate Bond Index and, due to its strategy and manager diversification, to reduce volatility in comparison to that of invested in the index. The fund uses a multi-manager approach, allocating assets to investment funds managed by third party investment managers. The fund allocates assets in a diversified portfolio of fixed income securities and strategies, including but not limited to global bonds, inflation-indexed bonds, high yield bonds, emerging markets debt and opportunistic fixed income strategies. The fund is considered a level 2 investment. Multi-Strategy Equity Fund This fund allocates assets across a broad spectrum of equity strategies in proportions the Investment Manager considers optimal for a fully diversified equity portfolio. The majority of the Fund s assets generally are invested directly or indirectly in a portfolio of common stocks, and securities convertible into common stocks, of U.S. companies. Additionally the Fund seeks to diversify its portfolio by allocating assets to common stocks and other equity securities of foreign companies in both developed and emerging markets. The Fund s allocation to the U.S. equity market includes exposure to companies in the S&P 500 Composite Index, the benchmark for the Fund, as well as companies not included in the index. The fund uses a multi-manager approach, allocating assets to investment funds managed by third party investment manager. The fund is considered a level 2 investment. Government Money Market Fund This fund is typically invested at 100% in obligations issued or guaranteed as to principal and interest by the U.S. government or its agencies and seeks to maximize current income, to the extent consistent with the preservation of capital and liquidity and the maintenance of the stable $1.00 per share net asset value (the NAV ). The fund is considered a level 1 investment. 14

17 Multi-Strategy Commodities Fund This fund allocates assets across a broad spectrum of commodity-oriented asset categories. The fund pursues a multi-strategy approach to investing in the commodities markets, which include but are not limited to futures, options on futures and forward contracts on exchange traded agricultural goods, metals, minerals, energy products and foreign currencies. The fund uses a multi-manager approach, allocating assets to investment funds managed by third party investment manager. The fund seeks to outperform its benchmark, the Dow Jones-AIG Commodity Index. The fund is considered a level 2 investment. Limited Partnership The College has committed to fund a total of $7,500 to three limited partnerships; the unfunded commitments as of June 30, 2014 are $6,438. The partnership interests are locked and do not have any redemption rights until the partnership commitments are satisfied. The partnerships objective is to achieve long-term capital appreciation and superior risk-adjusted net returns through equity investments. This investment is valued at NAV and considered to be a level 3 investment. Life Insurance This category includes life insurance policies donated to the College that have cumulative face amounts of approximately $1,000 at both. The life insurance policy is considered a level 1 investment. Investment return, net, for the years ended consists of the following: June 30, 2014 Unrestricted Temporarily Restricted Total Dividends and interest on investments (net of expenses of $137) $ 932 $ 360 $ 1,292 Net appreciation in fair value of investments 8,419 2,671 11,090 Total return on investments 9,351 3,031 12,382 Investment return appropriated for operations - (783) (783) Nonoperating Portion $ 9,351 $ 2,248 $ 11,599 15

18 June 30, 2013 Unrestricted Temporarily Restricted Total Dividends and interest on investments (net of expenses of $117) $ 688 $ 340 $ 1,028 Net appreciation in fair value of investments 4,051 1,534 5,585 Total return on investments 4,739 1,874 6,613 Investment return appropriated for operations - (655) (655) Nonoperating Portion $ 4,739 $ 1,219 $ 5,958 The following table summarizes investments by level within the College s fair value hierarchy as of June 30, 2014: Level 1 Level 2 Level 3 Total Cash equivalents $ 1,643 $ - $ - $ 1,643 Corporate stocks and mutual funds Multi-Strategy Bond Fund - 20,937-20,937 Multi-Strategy Equity Fund - 62,941-62,941 Government Money Market Fund 10, ,543 Multi-Strategy Commodities Fund - 3,435-3,435 Limited Partnerships - - 1,043 1,043 Cash value of life insurance $ 12,489 $ 87,313 $ 1,043 $ 100,845 The following table summarizes investments by level within the College s fair value hierarchy as of June 30, 2013: Level 1 Level 2 Level 3 Total Cash equivalents $ 239 $ - $ - $ 239 Corporate stocks and mutual funds Multi-Strategy Bond Fund - 19,706-19,706 Multi-Strategy Equity Fund - 37,574-37,574 Government Money Market Fund 12, ,735 Multi-Strategy Commodities Fund - 3,187-3,187 Limited Partnerships Cash value of life insurance $ 13,193 $ 60,467 $ 320 $ 73,980 16

19 The following table summarizes the changes in fair value associated with Level 3 assets for the year ended June 30, 2014: Limited Partnerships Fair value, July 1, 2013 $ 320 Purchases 705 Unrealized gains 18 Fair value, June 30, 2014 $ 1,043 The following table summarizes the changes in fair value associated with Level 3 assets for the year ended June 30, 2013: Limited Partnerships Fair value, July 1, 2012 $ 122 Purchases 220 Unrealized losses (22) Fair value, June 30, 2013 $

20 The College has a policy which permits investments that do not have a readily determinable fair value, as such, has elected to use the net asset value per share (the NAV ) as calculated on the reporting entity s measurement date as the fair value of the investment. The College measures the fair value of an investment that does not have a readily determinable fair value, based on the NAV of the investments as a practical expedient, without further adjustments, unless it is probable that the investment will be sold at an amount significantly different than the NAV. If the practical expedient NAV is not as of the reporting entity s measurement date, then the NAV is adjusted to reflect any significant events that would materially affect the value of the security and the NAV of the College as of the valuation date. In using the NAV as a practical expedient, certain attributes of the investments, that may impact the fair value of the investment, are not considered in measuring fair value. Attributes of those investments include the investment strategies of the investees and may also include, but are not limited to, restrictions on the investor s ability to redeem its investments at the measurement date at NAV as well as any unfunded commitments. A listing of the investments held by the College and their attributes, that may qualify for these valuations consist of the following as of June 30: June 30, 2014 Fair Value Unfunded Commitments Redemption Frequency Redemption Notice Period Cash equivalents $ 1,643 $ - Daily None Multi-Strategy Bond Fund 20,937 - Monthly 6 days Multi-Strategy Equity Fund 62,941 - Monthly 6 days Government Money Market Fund 10,543 - Daily None Multi-Strategy Commodities Fund 3,435 - Monthly 6 days Limited Partnership 1,043 6,438 Lock-up N/A $ 100,542 $ 6,438 June 30, 2013 Fair Value Unfunded Commitments Redemption Frequency Redemption Notice Period Cash equivalents $ 239 $ - Daily None Multi-Strategy Bond Fund 19,706 - Monthly 6 days Multi-Strategy Equity Fund 37,574 - Monthly 6 days Government Money Market Fund 12,735 - Daily None Multi-Strategy Commodities Fund 3,187 - Monthly 6 days Limited Partnership 320 4,143 Lock-up N/A $ 73,761 $ 4,143 18

21 4. Temporarily and Permanently Restricted Net Assets At, temporarily and permanently restricted net assets consist of the following: Temporarily restricted net assets: Real estate $ 979 $ 1,024 Capital projects 704 1,288 Other program support 1, Endowed activities Scholarships 6,701 4,393 Total Temporarily Restricted Net Assets $ 10,638 $ 8, Permanently restricted net assets, the income of which is temporarily restricted for: Scholarships $ 14,534 $ 14,162 Professorship for Jewish and Catholic Studies 1,000 1,000 Endowment support for operations Support of the Arts Academic Support Mentorship Program Total Permanently Restricted Net Assets $ 16,891 $ 16,482 Net assets restricted for real estate as of consists of one residence that was gifted to the College during fiscal year Under the terms of the contribution, the donors will continue to reside at the residence and the College will be entitled to occupy or sell the residence upon the death of the donors. The fair value of the residence was based on independent valuations techniques and is classified as a Level 2 asset within the College s fair value hierarchy. Fair market value of this residence was $979 at June 30, 2014 and $1,024 at June 30, Endowments The College classifies net assets associated with donor-restricted endowment funds in accordance with the requirements of the New York State Uniform Prudent Management of Institutional Funds Act ( NYPMIFA ). As a result of this interpretation, the College classifies as permanently restricted net assets: (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment; and, the (c) accumulations to the permanent endowment made in accordance with the directions of the applicable donor gift instrument, at the time the accumulation is added to the fund.

22 The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until such amounts are appropriated for expenditure by the College in a manner consistent with the standard of prudence prescribed by NYPMIFA. In accordance with NYPMIFA, the College considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: Duration and preservation of the endowment fund; Purposes of the College and the endowment fund; General economic conditions; The possible effects of inflation and deflation; The expected total return from income and the appreciation of investments; Other College resources; Alternatives to expenditure of the endowment fund; and The College s investment policy. The College has a policy of appropriating for distribution each year the Board of Trustees approved spending rate of its endowment fund s average fair value. In March of 2014, the Board of Trustees authorized the College to change from a five year average, and use the market value average of the qualifying endowment investment pool at the end of the previous three fiscal years, effective for the year ended June 30, In establishing this policy, the College considered the long-term expected return on its endowment. Accordingly, over the long term, the College expects the current spending policy to grow at a pace at least equal to inflation. This is consistent with the College s investment policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets held in perpetuity or for a specified term as well as to provide additional real growth through new gifts and investment return. The College s endowment includes both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments (quasi-endowments). Donor-restricted funds are funds that the College must hold in perpetuity or for donor-specified periods. Under this policy, as approved by the Board of Trustees, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of appropriate benchmarks without putting the assets at imprudent risk. To satisfy its long-term objectives, the College relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The College targets a diverse asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. 20

23 The following table summarizes endowment net asset composition by type of fund as of June 30, 2014: Unrestricted Temporarily Restricted Permanently Restricted Total Donor-restricted endowment funds $ - $ 6,576 $ 15,387 $ 21,963 Board-designated endowment funds 78, ,333 Total Funds $ 78,333 $ 6,576 $ 15,387 $ 100,296 The following table summarizes changes in endowment net assets for the fiscal year 2014: Unrestricted Temporarily Restricted Permanently Restricted Total Endowment net assets, beginning of year $ 49,879 $ 4,304 $ 15,068 $ 69,251 Investment return: Interest and dividends ,272 Investment return 8,402 2,683-11,085 Total return on investments 9,302 3,055-12,357 Contributions Board designation of investments for endowment 13, ,881 Appropriations for expenditure - (783) - (783) Transfers and other changes 5, ,271 Endowment Net Assets, End of Year $ 78,333 $ 6,576 $ 15,387 $ 100,296 21

24 The following table summarizes endowment net asset composition by type of fund as of June 30, 2013: Unrestricted Temporarily Restricted Permanently Restricted Total Donor-restricted endowment funds $ - $ 4,304 $ 15,068 $ 19,372 Board-designated endowment funds 49, ,879 Total Funds $ 49,879 $ 4,304 $ 15,068 $ 69,251 The following table summarizes changes in endowment net assets for the fiscal year 2013: Unrestricted Temporarily Restricted Permanently Restricted Total Endowment net assets, beginning of year $ 33,391 $ 3,233 $ 14,452 $ 51,076 Investment return: Interest and dividends ,008 Investment return 4,081 1,388-5,469 Total return on investments 4,751 1,726-6,477 Contributions Donor designated changes - - (18) (18) Net asset transfers 2, ,785 Board designation of investments for endowment 8, ,952 Appropriations for expenditure - (655) - (655) Endowment Net Assets, End of Year $ 49,879 $ 4,304 $ 15,068 $ 69,251 From time to time, the fair value of the assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires the College to retain as a fund of perpetual duration. These deficiencies generally result from unfavorable market fluctuations that occur shortly after the investment of new permanently restricted contributions and the continued appropriation for certain programs that are deemed prudent by the Board of Trustees. At, there were no cumulative deficiencies of this nature that were required to be charged to unrestricted net assets. 22

25 6. Land, Buildings and Equipment, Net Land, buildings and equipment, net consist of the following at : Buildings $ 141,266 $ 124,395 Improvements 21,744 38,156 Equipment 32,358 32, , ,700 Less: accumulated depreciation (95,671) (90,137) 99, ,563 Land 9,850 2,732 Construction in progress $ 109,942 $ 107,406 Depreciation expense for the years ended was $5,567 and $5,503, respectively. Construction in progress for the year ended consists primarily of restoration to a speech pathology lab on campus and other smaller projects around the campus. The College recognizes a liability for the fair value of conditional asset retirement obligations if the respective fair values can be reasonably estimated. This liability is initially recorded as an increase to the associated asset and depreciated over the remaining useful life of the asset. As of, the College has recognized a liability of approximately $195 and $186, respectively, representing the fair value of these conditional asset retirement obligations associated with potential legal environmental remediation costs which is included in accounts payable and accrued expense on the accompanying statements of financial position. The accretion expense related to this conditional asset retirement obligation for the years ended June 30, 2014 and 2013 was $9. The College also owns three parcels of land valued at $109 and $110 as of, respectively, that are held for sale and are included within prepaid expenses and other assets in the accompanying statements of financial position. These properties are recurring fair value measurements and are classified as Level 2 assets within the College s fair value hierarchy as of. 7. Receivables Student accounts receivable are net of an allowance for uncollectible amounts of approximately $744 and $362 at, respectively. During the years ended June 30, 2014 and 2013, the College did not originate or have any loans outstanding from students funded solely with institutional resources. Other receivables include amounts principally due from government agencies associated with grants and federal loan programs. 23

26 The College makes uncollateralized loans to students based on financial need, which are funded through federal government loan programs. The College participates in the Perkins federal revolving loan program. The availability of funds for loans under the program is dependent on reimbursements to the pool from repayments on outstanding loans. Funds advanced by the Federal government of $2,316 and $2,259 at June 30, 2014, and 2013, respectively, are ultimately refundable to the government and are classified as liabilities in the statements of financial position. Outstanding loans cancelled under the program result in a reduction of the funds available for loan and a decrease in the liability to the government. At, net student loans as part of the Perkins federal revolving loan program represented 1.08% and 0.88% of total assets, respectively. At June 30, student loans issued under the Perkins federal revolving loan program consisted of the following: Federal government programs $ 3,235 $ 2,494 Less allowance for doubtful accounts: Beginning of year (726) (720) Decreases (increases) 10 (6) End of year (716) (726) Perkins Loans Receivable, Net $ 2,519 $ 1, Not in repayment status $ 1,792 $ 1,025 Current In default less than 9 months In default greater than 9 months Federal Government Programs $ 3,235 $ 2,494 Management regularly assesses the adequacy of the allowance for credit losses by performing a review of the aging of the receivable detail, including key statistical information such as the cohort default rate, defaulted loans entering current status, and composition of borrowers in default. All loans in default greater than nine months are fully reserved while loans under nine months delinquent are reserved for at 50%. Management believes that the allowance for credit losses is adequate to absorb credit losses inherent in the portfolio as of that date. 24

27 At, contributions receivable consist primarily of amounts to be collected in future years in connection with the College s previous capital campaigns and initiatives, as follows: Amounts expected to be collected in: Less than one year $ 1,232 $ 1,330 One to five years 1,700 1,700 2,932 3,030 Less: discount to present value (5.0%) (258) (347) Less: allowance on contributions receivable (276) (352) $ 2,398 $ 2,331 Contributions receivable include an amount from one donor representing approximately 58% and 56% of the gross receivable balance at, respectively. 8. Note Payable During March 2014, the College entered into a note payable with an outside Limited Liability Corporation. The note is secured by property, includes interest at a rate of 5% per annum, and matures February Maturities of notes payable are as follows: Principal 2015 $ Thereafter 1,420 $ 3,622 Interest expense under this note payable for the years ended was $63 and $-0-, respectively. 25

28 9. Long-Term Debt Land, buildings and equipment includes various facilities financed through revenue obligations of the Dormitory Authority of the State of New York (the Authority ) and the City of New Rochelle Corporation for Local Development. The following debt obligations were outstanding at June 30, 2014 and 2013: (A) (B) (C) Revenue Bonds of 2012A, 2.0% to 5.0% (net of premium of $1,646 in 2014) $ 24,471 $ 24,621 Revenue Bonds of 2012B, 2.0% to 3.625% (net of discount of $124 in 2014) 6,481 6,603 City of New Rochelle 2013 Revenue Bonds (based on index floating rate that bears interest at a rate of 70% of LIBOR plus 140 basis calculated daily; to be converted to a new index and interest rate after the 5th anniversary of purchase of the bonds) 4,900 - $ 35,852 $ 31,224 (A) (B) (C) On July 13, 2012, the Authority issued $22,825 of insured revenue bonds ( Revenue Bonds of 2012A ) on behalf of the College. The proceeds of this issue were used to refund the Revenue Bonds of Of the Revenue Bonds of 2012A, $14,230 of the bonds will mature serially through 2027, of which $14,230 was outstanding at June 30, In addition, $8,595 of the bonds are due July 1, On July 13, 2012, the Authority issued $6,735 of insured revenue bonds ( Revenue Bonds of 2012B ) on behalf of the College. The proceeds of this issue were used for the construction of a dormitory building. Of the Revenue Bonds of 2012B, $2,500 of the bonds will mature serially through 2027, of which $2,370 was outstanding at June 30, In addition, $1,140 and $3,095 of the bonds are due July 1, 2032 and July 1, 2042, respectively. On October 1, 2013, the City of New Rochelle Corporation for Local Development, issued $5,000 of its Revenue Bonds ( Revenue Bond of 2013 ). The proceeds of this issue were used as reimbursement for the purchase of properties contiguous to the campus. Security for the Revenue Bonds of 2013 is on parity with existing and future bondholders and contains financial covenants consistent with existing bonds. Of the Revenue Bonds of 2013, $2,410 of the bonds will mature serially through 2024, of which $2,310 was outstanding at June 30, In addition, $1,260 and $1,330 of the bonds are due July 1, 2029 and October 1, 2033, respectively. As security for its obligations under the Revenue Bonds of 2012A and the Revenue Bonds of 2012B, the College has granted to the Authority a first mortgage on the projects and a security interest in room rents, tuition, and fees. The amount of the security interest in room rents, tuition, and fees is equal to the maximum amount of principal, sinking fund installments of, and interest on, any bonds coming due in the current or any future bond year (the Pledged Revenues ). The College is required to maintain certain liquidity and debt service financial covenants, for all the bonds, that were satisfied as of June 30,