CONTINUING DISCLOSURE ANNUAL REPORT

Transcription

1 CONTINUING DISCLOSURE ANNUAL REPORT FISCAL YEAR ENDING JUNE 30, 2009 IN CONNECTION WITH THE CONTINUING DISCLOSURE OBLIGATIONS: $29,999, BUTTE-GLENN COMMUNITY COLLEGE DISTRICT (Butte and Glenn Counties, California) Election of 2002 General Obligation Bonds, Series A $3,940,000 CALIFORNIA COMMUNITY COLLEGE FINANCING AUTHORITY Lease Revenue Bonds, Series 2004A for Butte-Glenn Community College District $36,998,634 BUTTE-GLENN COMMUNITY COLLEGE DISTRICT (Butte and Glenn Counties, California) Election of 2002 General Obligation Bonds, Series B $17,900,000 BUTTE-GLENN COMMUNITY COLLEGE DISTRICT (Butte and Glenn Counties, California) Election of 2002 General Obligation Bonds, Series C BUTTE-GLENN COMMUNITY COLLEGE DISTRICT 3536 Butte Campus Drive Oroville, California 95965

2 $80,750,000 BUTTE-GLENN COMMUNITY COLLEGE DISTRICT Santa Clara County, California Election of 2002 General Obligation Bonds, Series A MATURITY DATE (August 1) CUSIP AK AL AM AN AP AQ AR AS AT AU AV AW AX5 February 1, AY3 i

3 $3,940,000 CALIFORNIA COMMUNITY COLLEGE FINANCING AUTHORITY Lease Revenue Bonds, Series 2004A for Butte-Glenn Community College District MATURITY DATE (November 1) CUSIP EQM EQN EQP EQQ EQR EQS EQT EQU EQV EQW1 ii

4 $36,998,634 BUTTE-GLENN COMMUNITY COLLEGE DISTRICT (Butte and Glenn Counties, California Election of 2002 General Obligation Bonds, Series B MATURITY DATE (August 1) CUSIP BE BF BG BH BJ BK BL BM BN BP BQ BR BS BT BU BV8 iii

5 $17,900,000 BUTTE-GLENN COMMUNITY COLLEGE DISTRICT (Butte and Glenn Counties, California) Election of 2002 General Obligation Bonds, Series C MATURITY DATE (August 1) CUSIP CE CF CG0 iv

6 CONTINUING DISCLOSURE ANNUAL REPORT FOR FISCAL YEAR ENDING JUNE 30, 2009 This Continuing Disclosure Annual Report has been prepared to satisfy the obligations of the Butte-Glenn Community College District (the District ), as provided under that certain Continuing Disclosure Certificate, dated June 6, 2002 (the 2002 Series A Disclosure Certificate ), executed by the District in connection with the issuance of its $29,999, Election of 2002 General Obligation Bonds, Series A (the 2002 Series A Bonds ), under that certain Continuing Disclosure Certificate, dated October 28, 2004 (the Series 2004A Refunding Disclosure Certificate ), executed by the District in connection with the issuance of $3,940,000 California Community College Financial Authority s Lease Revenue Bonds, Series 2004A for Butte-Glenn Community College District (the Series 2004A Bonds), under that certain Continuing Disclosure Certificate, dated July 18, 2005 (the Series 2002 Series B Disclosure Certificate ), executed by the District in connection with the issuance of its $36,998,634 Election of 2002 General Obligation Bonds, Series B (the 2002 Series B Bonds ), and under that certain Continuing Disclosure Certificate, dated May 7, 2009 (the 2002 Series C Disclosure Certificate, and together with the 2002 Series A Disclosure Certificate, the Series 2004A Certificate and the 2002 Series B Disclosure Certificate, the Disclosure Certificates ), executed by the District in connection with the issuance of its $17,900,000 Election of 2002 General Obligation Bonds, Series C (the 2002 Series C Bonds, and together with the 2002 Series A Bonds, the Series 2004A Bonds and the 2002 Series B Bonds, the Bonds ). The 2002 Series A Bonds have been issued pursuant to a resolution of the District dated April 24, 2002, and a resolution of the Board of Supervisors of Butte County (the County ) dated May 7, The Series 2004A Bonds have been issued pursuant to a pursuant to a Trust Agreement, dated as of August 1, 2004, by and between the California Community College Financing Authority and U.S. Bank National Association. The 2002 Series B Bonds have been issued pursuant to a resolution of the District dated April 24, 2002, and a resolution of the District dated April 27, 2005, and a resolution of the County dated May 10, The 2002 Series C Bonds have been issued pursuant to a resolution of the District, adopted March 25, 2009, and a resolution of the County adopted on April 7, As provided in Section 3 of the Disclosure Certificates, this Continuing Disclosure Annual Report is being prepared to be forwarded to the Municipal Securities Rulemaking Board through their EMMA website at for the benefit of the Beneficial Owners of the Bonds and the Participating Underwriter.. All capitalized terms used herein shall have the meanings set forth in the Disclosure Certificate. The following information is being provided as required under Section 4 of the Disclosure Certificates: 1. The audited financial statements of the District for the Fiscal Year ending June 30, 2009 are attached hereto as Exhibit A. 2. An update from the Official Statement relating to the 2002 Series A Bonds, dated May 23, 2002, the Official Statement relating to the Series 2004A Bonds, dated October 14, 2004, the Official Statement relating to the 2002 Series B Bonds, dated June 22, 2005, and the Official Statement relating to the 2002 Series C Bonds, dated April 22, 2009 (collectively, the Official Statements ), in regards to information contained in the following sections of the Official Statements: 1

7 A. Assessed Valuation The following table summarizes the taxable assessed valuation of property within the District. ASSESSED VALUATIONS Fiscal Years through Butte-Glenn Community College District Local Secured Utility Unsecured Total Butte County Portion $13,748,858,338 $21,878,301 $671,635,017 $14,442,371, ,405,501,008 19,279, ,732,830 16,153,513, ,887,111,136 8,367, ,659,282 17,668,137, ,780,634,685 7,930, ,715,626 18,625,281, ,669,990,892 7,930, ,784,787 18,545,706, ,315,245,031 5,152, ,925,807 18,188,323,215 Glenn County Portion $1,787,684,613 $2,579,414 $77,282,581 $1,867,546, ,972,254,917 2,766,255 83,588,552 2,058,609, ,220,398,406 1,848,677 90,753,011 2,313,000, ,376,258,664 1,848, ,017,511 2,480,124, ,430,096,155 1,848, ,159,952 2,536,104, ,379,972,321 1,848, ,327,213 2,484,148,211 Total District $15,536,542,951 $24,457,715 $748,917,598 $16,309,918, ,377,755,925 22,045, ,321,382 18,212,122, ,107,509,542 10,215, ,412,293 19,981,137, ,156,893,349 9,779, ,733,137 21,105,405, ,100,087,047 9,779, ,944,739 21,081,811, ,695,217,352 7,001, ,253,020 20,672,471,426 2

8 B. General Fund Revenues and Expenditures The table below summarizes the District s General Fund Revenues and Expenditures for Fiscal Year : GENERAL FUND BUDGET Butte-Glenn Community College District Fiscal Year REVENUES Federal $3,272,392 State 66,407,803 Local 19,370,594 TOTAL REVENUES 89,050,789 EXPENDITURES: Academic Salaries 24,909,547 Classified Salaries 17,640,131 Employee Benefits 15,919,622 Books and Supplies 2,368,340 Services and Other Operating Expenditures 25,923,834 Capital Outlay 1,099,000 TOTAL EXPENDITURES 87,860,474 EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES 1,190,315 Other Financing Sources (Uses) -- OTHER OUTGO 1,858,851 NET INCREASE (DECREASE) IN FUND (668,536) BALANCES BEGINNING FUND BALANCE 18,667,421 Prior Year Adjustments -- Adjusted Beginning Fund Balance -- ENDING FUND BALANCE $17,998,885 The information set forth in Part A above was obtained from California Municipal Statistics, Inc. and is believed by the District to be reliable but has not been independently verified by the District and is not guaranteed as to accuracy by the District. There can be no assurance on to the accuracy of such information and inquiries concerning the scope and methodology of procedures carried out to complete such information should be directed to California Municipal Statistics, Inc. BUTTE-GLENN COMMUNITY COLLEGE DISTRICT /s/ Andrew Suleski Vice President for Administration 3

9 EXHIBIT A AUDITED FINANCIAL STATEMENTS OF THE DISTRICT FOR FISCAL YEAR ENDING JUNE 30, 2009 (see attachment) A-1

10 COMPREHENSIVE ANNUAL FINANCIAL REPORT YEARS ENDED JUNE 30, 2009 AND 2008

11 TABLE OF CONTENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2009 AND 2008 Page INTRODUCTION... 1 INDEPENDENT AUDITORS' REPORT...2 MANAGEMENT'S DISCUSSION AND ANALYSIS (REQUIRED SUPPLEMENTARY INFORMATION)...4 BASIC FINANCIAL STATEMENTS Business-type Activities: Statements of Net Assets Statements of Revenues, Expenses, and Changes in Net Assets Statements of Cash Flows Discretely Presented Component Unit: Statements of Financial Position Statements of Activities Statements of Cash Flows...21 Notes to the Financial Statements...22 SUPPLEMENTARY INFORMATION Organization...62 Schedule of Expenditures of Federal Awards...63 Schedule of State Financial Awards...65 Schedule of Workload Measures for State General Apportionment...66 Reconciliation of Annual Financial and Budget Report (CCFS-311) with District Accounting Records...67 Combining Balance Sheet District Funds Included in the Reporting Entity...69 Combining Statement of Revenues, Expenditures/Expenses and Changes in Fund Equity District Funds Included in the Reporting Entity... 71

12 TABLE OF CONTENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2009 AND 2008 Page SUPPLEMENTARY INFORMATION Reconciliation of Fund Equity to Net Assets...75 Reconciliation of Change in Fund Equity to Increase in Net Assets...76 Notes to the Supplementary Information INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A INDEPENDENT AUDITORS' REPORT ON STATE COMPLIANCE REQUIREMENTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS... 87

13 INTRODUCTION AUDIT OBJECTIVES The financial and compliance audits of the Butte-Glenn Community College District had the following objectives: To determine the fairness of presentation of the District's financial statements in accordance with accounting principles generally accepted in the United States of America. To evaluate the adequacy of the systems and provisions affecting compliance with applicable federal and California laws and regulations, with which noncompliance would have a material effect on the District's financial statements and allowability of program expenditures for federal and California financial assistance programs. To evaluate the adequacy of the internal control structure sufficient to meet the requirements of auditing standards generally accepted in the United States of America for the purpose of formulating an opinion on the basic financial statements taken as a whole and sufficient to ensure compliance with federal and state regulations. To determine whether financial and financially related reports to state and federal agencies are presented fairly. To recommend appropriate actions to correct any noted areas where internal control compliance with applicable federal and state regulations could be improved. Page 1

14 NYSTROM & COMPANY LLP CERTIFIED PUBLIC ACCOUNTANTS REDDING, CALIFORNIA INDEPENDENT AUDITORS' REPORT Board of Trustees Butte-Glenn Community College District Oroville, California We have audited the accompanying financial statements of the business-type activities and the discretely presented component unit of the Butte-Glenn Community College District (District) as of and for the years ended June 30, 2009 and 2008, which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the standards prescribed by the California State Department of Finance. 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 audits provide a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the discretely presented component unit of the District, as of June 30, 2009 and 2008, and the respective changes in financial position and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2009, on our consideration of the Districts internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Page 2

15 NYSTROM & COMPANY LLP CERTIFIED PUBLIC ACCOUNTANTS The Management's Discussion and Analysis (MD&A) on pages 4 through 13 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. The remaining supplementary information as listed in the table of contents, including the Schedule of Expenditures of Federal Awards, which is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the schedule of State Financial Awards, which is presented for purpose of additional analysis as required by the California Community College Chancellor's Office, are not a required part of the basic financial statements of the District. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. )1100.&01 0 P 4' e.01/12117 LL1:7 December 21, 2009 Page 3

16 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2009 ACCOUNTING POLICIES MANAGEMENT'S DISCUSSION AND ANALYSIS The District accounts for its financial transactions in accordance with the policies and procedures of the Board of Governor's Budget and Accounting Manual. The District's financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (statements and interpretations). Governments are also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 (when applicable) that do not conflict with or contradict GASB pronouncements. Although the District has the option to apply FASB pronouncements issued after that date to its business-type activities and enterprise funds, the District has chosen not to do so. The more significant accounting policies established in GAAP and used by the District are discussed below. ACCOUNTING STANDARDS The format of these financial statements follows Governmental Accounting Standard's Board (GASB) Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis-for State and Local Governments, GASB Statement No. 35, Basic Financial Statements-and Management's Discussion and Analysis-for Public Colleges and Universities, and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, which amends GASB Statement 14, paragraphs 41 and 42, to provide guidance for determining and reporting whether certain organizations are components units. The California Community College Chancellor's Office (Chancellor's Office) recommended that all state community college districts follow the standards under the Business Type Activity (BTA) model. The District has adopted the BTA reporting model for these financial statements to comply with the recommendation of the Chancellor's Office and to report in a manner consistent and comparable with other community college districts. The following Management's Discussion and Analysis (MDA) provides an overview of the District's financial activities with emphasis on current year data. As required by the accounting principles, the annual report consists of three basic financial statements that provide information on the District as a whole: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Net Assets; and the Statement of Cash Flows. The information provided on the statements in the MDA includes all funds, including the Student Association and Agency funds, but excludes the Butte College Foundation. Each statement will be discussed separately. Page 4

17 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2009 Under the BTA model of financial reporting, a single entity-wide statement is required to report financial activity for all funds of the District. Revenues and expenses are categorized as either operating or non-operating. Capital assets are included in the statement presentations. FINANCIAL AND ATTENDANCE HIGHLIGHTS The District reported 11,681 full-time equivalent students (FTES) for on the Annual Attendance Report submitted to the California Community Colleges Chancellor's Office. Primary factors for the FTES increasing significantly in include increasing statewide high school graduation rates, a sharp increase in the unemployment rate, redirected CSU and UC students, and returning veterans. Butte College expects to fully restore its enrollment declines from prior years in Figure Full-Time Equivalent Students (FTES) ,968 11,918 11,480 11,016 10,773 11,681 FTES Fiscal Year The District received restoration funding in of approximately $4.1 million. Districts are permitted to "restore" lost FTES from enrollment declines in the previous three years. The District also received one-time property tax back fill revenue from the state of approximately $900,000. Neither the restoration nor the property tax back fill revenue were allocated to be spent in Annually, the District prioritizes new ongoing and one-time expenses via the planning process. In , the District approved an allocation of approximately $2.6 million in one-time expenses that included equipment replacement, program expansions, and sustainability initiatives. Even though the District had budgeted to reduce its reserves by approving one-time allocations, the combination of revenues described above, unexpended budget allocations and salary and benefit savings from unfilled vacancies allowed the District to increase its reserves from the prior year by approximately $2.8 million. Page 5

18 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2009 The $84.9 million General Obligation Bond the District passed in March 2002 to fund capital construction projects continued in full swing. The Art building was completed in August 2009 and the Student and Administrative Services building was completed in December Funds from these bonds, coupled with revenues from the State Capital Outlay Program, will enable the District to complete the build-out of the campus and meet future projected enrollment growth. The District completed the sale of all bonds with the issuance of Series C in May STATEMENT OF NET ASSETS The Statement of Net Assets presents the assets, liabilities, and net assets of the District as of the end of the fiscal year using the accrual basis of accounting, which is similar to that used by most private sector institutions. Net assets, the difference between assets and liabilities, are one way to measure the financial health of the District. The net asset data allows readers to determine the resources available to continue the operations of the District. The net assets of the district consist of three major categories: Invested in capital assets, net of related debt The District's equity in property, plant, and equipment. Restricted net assets (distinguishing between major categories of restriction.) The constraints placed on the use of the assets are externally imposed by creditors such as through debt covenants, grantors, contributors, or laws or regulations of other governments or imposed through constitutional provisions or enabling legislation. Unrestricted net assets The District can use these assets for any lawful purpose. Although unrestricted, the District's governing board may place internal restrictions on these net assets, but retain the power to change, remove, or modify those restrictions. NET ASSETS Restricted 3.1% Invested in Capital Assets 69.4% Page 6

19 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, % Change Assets CURRENT ASSETS Cash and cash equivalents $ 46,379,300 $ 41,172,469 13% Restricted cash and cash equivalents 1,746,833 2,743,750-36% Accounts receivable 20,440,032 15,067,470 36% Inventories and other assets 631, ,508 20% Total current assets 69,197,364 59,510,197 16% NONCURRENT ASSETS Restricted cash and cash equivalents 25,326,191 34,877,757-27% Non-depreciable capital assets 60,056,376 18,065, % Depreciable capital assets, net 101,744, ,885,379-1% Deferred costs, net 1,398,327 1,199,239 17% Total noncurrent assets 188,525, ,028,258 20% Total Assets $ 257,722,423 $ 216,538,455 19% LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities $ 9,699,643 $ 7,811,648 24% Deferred revenue 8,814,701 5,601,707 57% Amounts held for others 147, ,659 9% Commitments and contingencies 283, ,020 1% Compensated absences, current portion 1,117,211 1,163,625-4% Long-term debt, current portion 1,141, ,000 61% Total current liabilities 21,203,582 15,700,659 35% NONCURRENT LIABILITIES Compensated absences, noncurrent portion 2,893,429 1,830,602 58% Long-term debt, noncurrent portion 89,791,566 68,716,298 31% Total noncurrent liabilities 92,684,995 70,546,900 31% Total Liabilities 113,888,577 86,247,559 32% NET ASSETS Investments in capital assets - net 99,834,665 86,402,721 16% Restricted 4,442,804 5,546,251-20% Unrestricted 39,556,377 38,341,924 3% Total Net Assets 143,833, ,290,896 10% Total Liabilities and Net Assets $ 257,722,423 $ 216,538,455 19% Current cash and cash equivalents consist mainly of cash in the county treasury. Cash has increased as the overall amount of grants and contracts has increased. Restricted cash and cash equivalents consist of all special revenue funds, capital project funds (including bond funds), and fiduciary funds. The decrease in the current year is due to capital outlay expenditures. Receivables include revenues earned but not received by year-end and receivables from state and federal grants as well as the system wide deferral of state general apportionment. Page 7

20 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2009 Nondepreciable Capital Assets includes land and items not yet placed in service. The large increase in the current year relates to the Arts building and the Student and Administrative Services building which were still construction in progress at June 30, Depreciable Capital Assets are the historical value of existing buildings and equipment as well as the addition of newly constructed buildings and new equipment purchased less accumulated depreciation. The footnotes to the financial statements contain a breakdown of the net assets. Accounts payable and accrued liabilities consist of payables due to vendors, accrued payroll related liabilities, bond interest accrued, and retentions payable. Deferred revenue relates mainly to federal, state, and local program funds received but not yet earned as of the end of the fiscal year. Most grant funds are earned when expended (up to the grant amount awarded). Also included are deferred enrollment fees for the fiscal year of $2,770,649. Commitments and contingencies include amounts held for other agencies. Long-term debt, current portion includes amounts due in the next fiscal year for bonds payable and notes payable. Increase in current year is due to the issuance of Series C in May Long-term liabilities (non-current portion) are long-term debt to be paid in one year or later. Compensated absences payable, bonds payable, and lease revenue bonds payable are the primary components of the non-current portion. Restricted net assets consist of net assets held for scheduled maintenance and special repair, construction, and bond debt service. Unrestricted Net Assets include an amount reserved for non-cash assets, prepayments, and amounts reserved for capital and other projects. The Board's Budget Criteria states that the District will develop a budget that achieves and maintains at least a 5% contingency reserve in the General Fund. The District also maintains a reserve for budget planning and a reserve for retiree benefit liabilities in the General Fund. Reserves are maintained in other funds at prudent levels. Total Assets increased 19% during the current year as a result of the building projects for Arts and Student and Administrative Services. Total Net Assets increased 10% during the current year because of the building projects and an overall increase in unrestricted balances across several funds. Total Liabilities increased 32% as the result of issuing Series C bonds for capital construction projects and financing the installation of Solar Phase II projects. Page 8

21 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2009 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS The Condensed Statement of Revenues, Expenses and Changes in Net Assets present the operating results of the District. The purpose of the statement is to present the revenues received by the District, both operating and non-operating, and the expenses paid by the district, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the District. State general apportionment funds, while budgeted for operations, are considered non-operating revenues according to generally accepted accounting principles. Changes in total net assets on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses, and Changes in Net Assets. Operating revenues are received for providing goods and services to the various customers and constituencies of the District. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the District. Condensed Statement of Revenues, Expenses and Changes in Net Assets Operating revenues $ 54,066,706 $ 53,439,853 Operating expenses 108,234, ,939,780 Operating loss (54,167,958) (55,499,927) Non-operating revenues and expenses 56,435,192 58,131,079 Other revenues 11,275,716 12,439,633 Increase in net assets 13,542,950 15,070,785 Net assets - beginning of year 130,290, ,220,111 Net assets - end of year $ 143,833,846 $ 130,290,896 Page 9

22 MANAGEMENTS DISCUSSION AND ANALYSIS JUNE 30, 2009 TOTAL REVENUES Investment Property Taxes Income and Other 2.0% Revenue 12.9% State Taxes and Other 2.7% Tuition and Fees 4.5% Grants and Contracts 34.4% State Apportionments and Revenues 39.2% Auxiliary 4.3% Tuition and fees consist of enrollment fees, nonresident tuition, and other fees amounting to $8,488,501, less Board of Governor tuition waivers of $2,875,184. Enrollment fees of $26 per unit are set by the state for all community colleges. Grants and contracts consist of federal, state, and local restricted revenue. The District receives and manages several large technology grants that benefit the community college system. Auxiliary sales and charges are primarily bookstore and food service sales revenue. State apportionment represents total general apportionment earned less enrollment fees and property taxes. Property taxes and other revenue consist primarily of taxes received from Butte and Glenn Counties. Investment activities relate primarily to interest earned on balances in the county treasury. State taxes and other consists primarily of state lottery revenue. Page 10

23 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2009 OPERATING EXPENSES (BY NATURAL CLASSIFICATION) Expenses By Natural Classification % Change Compensation $ 44,799,018 $ 43,472,213 3% Employee benefits 14,756,782 14,248,095 4% Supplies, materials, other operating expenses, and services 25,942,473 32,479,323-20% Utilities 1,387,929 1,291,029 8% Depreciation 3,468,504 3,374,910 3% Payments to students 17,879,958 14,074,210 27% Total Operating Expenses $ 108,234,664 $ 108,939,780-1% Compensation and employee benefit expenses consist of all academic and classified positions. Change in compensation relates to step, column, and longevity increases as well as additional employees for grant programs. Employee benefits were expected to increase due to an overall increase in compensation as well as rate increases in medical premiums and PERS. These increases were offset by approximately $1.8 million due to the District recognizing excess funds held by our workers compensation JPA. This cash with fiscal agent amount resulted in a decrease of workers compensation expenditures. Supplies, materials, other operating expenses and services consist of those non-capital expenditures made by the District. The decrease is due to reduced spending in categorical programs and restricted funding sources. The utility expense increase is due to new building construction and rate increases. Conservation efforts continue to hold down overall costs and consumption. Depreciation includes a full year of depreciation for numerous assets capitalized at the end of the previous fiscal year as well as for new capital additions made in the current year. Payments to students are generally made possible through student service grants. These payments will fluctuate with the amount of funding available for these grants. The current year change is due to Pell grants increasing approximately $3.8 million. The following graph reflects expenditures for all funds. TOTAL EXPENSES Depreciation 3.2% Supplies, Materials, and Other Operating 24.0% Payments to Students 16.5% Salaries 41.4% Utilities 1. 3% Employee Benefits 13.6%

24 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2009 STATEMENT OF CASH FLOWS The Statement of Cash Flows provides information about the District's financial results by reporting its major sources and uses of cash. This information assists readers in assessing the District's ability to generate revenue, meet its obligations as they come due, and evaluate its need for external financing. The statement is divided into several parts. The first section deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from non-capital financing activities and shows the sources and uses of those funds. The third section deals with the cash used for the acquisition and construction of capital and related items. The fourth section deals with cash flows from investing activities. This section reflects the cash received and spent for short-term investments and any interest paid or received on those investments. Condensed Statement Of Cash Flows % Change Cash provided (used) by: Operating activities $ (44,980,730) $ (54,861,187) -18% Noncapital financing activities 50,754,836 55,093,571-8% Capital and related financing activities (13,845,888) (7,537,329) 84% Investment activities 2,730,130 4,817,150-43% Net increase (decrease) in Cash (5,341,652) (2,487,795) 115% Cash and cash equivalents, beginning of year 78,793,976 81,281,771-3% Cash and cash equivalents, end of year $ 73,452,324 $ 78,793,976-7% Cash receipts from operating activities consist primarily of federal, state, and local grants and contracts. Cash outlays were primarily payments to suppliers and payments to or on behalf of employees. General apportionment and property taxes are the primary sources of non-capital financing activities. The purchase and construction of capital assets is the main use of cash for capital and related financing activities. Investment activities relate primarily to interest earned on balances in the county treasury. ECONOMIC FACTORS THAT MAY AFFECT THE FUTURE On July 28, 2009, the Governor signed a budget package that revised the budget adopted by the Legislature in February. This budget imposed deep cuts to the community college system by reducing spending by over $680 million from the amount approved in February. Even with additional student fee revenue and one-time federal funds, these cuts are considered the deepest cuts in the history of California's community colleges. With booming enrollment from record high school graduates, redirected four-year students, returning veterans, and the newly unemployed, the budget will significantly constrain access and limit essential student services. These cuts are expected to reduce enrollment by 250,000 students statewide. Page 12

25 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2009 For California community colleges, the major features of the revised budget include the following: - Student fees increased from $20 to $26 per credit unit effective fall 2009 (this increase generates $80 million in revenues that is to mitigate cuts to the community colleges) - An estimated allocation of $130 million in federal funds provided through the state stabilization provisions of American Recovery and Reinvestment Act of 2009 (ARRA). The actual amount of funding received by community colleges was reduced to $35 million - Elimination of all growth funds - No cost-of-living-adjustment (COLA) on general apportionment - $333 million in cuts to categorical programs. Cuts to specific categorical programs vary from no cut to total elimination, with most programs facing cuts between 16 and 32 percent after accounting for the one-time federal backfill. - $120 million reduction to general purpose funds - A budgeted local property tax shortfall of $53 million - A budgeted student fee revenue shortfall of $21 million - Language authorizing the Chancellor to reduce base workload measures in proportion to cuts in general apportionment funding. This provision will bring the enrollment expectations used in the apportionment process in line with the level of funding provided by the state. Legislative intent language states that districts should, to the greatest extent possible, make reductions in course sections in areas other than workforce training, transfer, and basic skills. - Language authorizing community college districts to transfer funds out of certain categorical programs and into any other categorical program included in the state budget. It is likely that the deep cuts contained in the revised budget will place new strains on districts as they attempt to maintain core student services and baseline administrative functions. The District recently received approval of "center status" for one of its newly constructed educational centers from the California Community Colleges Chancellor Office and California Postsecondary Education Commission. The District will receive an additional base allocation of $1 million for an approved center serving over 1,000 full-time equivalent students. There are some concerns regarding the state's ability to meet its funding commitments in the coming year. The District feels confident that it has the fiscal strength and reserves, as well as the potential for funded restoration, to be able to weather the storm of any budget cuts. As always, prudent fiscal management practices will remain in place to ensure the District has adequate reserves to sustain operations during more difficult budget years. Page 13

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27 STATEMENTS OF NET ASSETS June 30, ASSETS Current assets: Cash and cash equivalents $ 46,379,300 $ 41,172,469 Restricted cash and cash equivalents 1,746,833 2,743,750 Accounts receivable, net 20,440,032 15,067,470 Inventories and other assets 631, ,508 Total current assets 69,197,364 59,510,197 Noncurrent assets: Restricted cash and cash equivalents 25,326,191 34,877,757 Nondepreciable capital assets 60,056,376 18,065,883 Depreciable capital assets, net 101,744, ,885,379 Deferred costs, net 1,398,327 1,199,239 Total noncurrent assets 188,525, ,028,258 Total assets $ 257,722,423 $ 216,538,455 LIABILITIES Current liabilities: Accounts payable $ 6,361,250 $ 4,013,128 Accrued liabilities 3,338,393 3,798,520 Deferred revenue 8,814,701 5,601,707 Amounts held for others 147, ,659 Commitments and contingencies 283, ,020 Compensated absences, current portion 1,117,211 1,163,625 Long-term debt, current portion 1,141, ,000 Total current liabilities 21,203,582 15,700,659 Noncurrent liabilities: Long-term debt, noncurrent portion 89,791,566 68,716,298 Other long-term liabilities 2,893,429 1,830,602 Total noncurrent liabilities 92,684,995 70,546,900 Total liabilities 113,888,577 86,247,559 NET ASSETS Investments in capital assets, net of related debt 99,834,665 86,402,721 Restricted - expendable 4,442,804 5,546,251 Unrestricted 39,556,377 38,341,924 Total net assets 143,833, ,290,896 Total liabilities and net assets $ 257,722,423 $ 216,538,455 The accompanying notes are an integral part of these financial statements. Page 14

28 STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS Years Ended June 30, OPERATING REVENUES Tuition and fees $ 8,488,501 $ 7,744,175 Less: scholarship discount and allowance 2,875,184 2,471,619 Net tuition and fees 5,613,317 5,272,556 Grants and contracts, non-capital: Federal 18,601,699 14,680,422 State 24,135,261 28,151,562 Local 295, ,842 Auxiliary enterprise sales and charges 5,421,090 4,991,471 Total operating revenues 54,066,706 53,439,853 OPERATING EXPENSES Salaries 44,799,018 43,472,213 Employee benefits 14,756,782 14,248,095 Payments to students 17,879,958 14,074,210 Supplies, materials, and other operating expenses and services 25,942,473 32,479,323 Utilities 1,387,929 1,291,029 Depreciation 3,468,504 3,374,910 Total operating expenses 108,234, ,939,780 OPERATING LOSS (54,167,958) (55,499,927) NON-OPERATING REVENUES (EXPENSES) State apportionments, non-capital 42,525,996 41,819,002 Local property taxes 11,370,796 11,263,642 State taxes and other revenues 1,567,123 1,794,589 Investment income 2,482,017 4,562,000 Interest expense (3,352,293) (3,310,156) Other non-operating revenues 1,841,553 2,002,002 Total non-operating revenues 56,435,192 58,131,079 INCOME BEFORE OTHER REVENUES AND EXPENSES 2,267,234 2,631,152 State apportionments and grants, capital 6,524,527 7,874,525 Local property taxes, capital 4,751,189 4,565,108 INCREASE IN NET ASSETS 13,542,950 15,070,785 NET ASSETS, BEGINNING OF YEAR 130,290, ,220,111 NET ASSETS, END OF YEAR $ 143,833,846 $ 130,290,896 The accompanying notes are an integral part of these financial statements. Page 15

29 STATEMENTS OF CASH FLOWS Years Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES: Tuition and fees $ 5,542,157 $ 5,316,372 Federal grants and contracts 18,350,984 14,419,814 State grants and contracts 26,755,569 26,066,482 Local grants and contracts 356, ,992 Payments to/on behalf of employees (44,314,143) (43,478,900) Payments for benefits (13,758,727) (13,182,300) Payments for scholarships and grants (17,879,958) (14,074,210) Payments to suppliers (25,097,905) (34,860,097) Payments for utilities (1,387,929) (1,291,029) Auxiliary enterprise sales and charges 5,138,168 4,968,185 Other receipts 1,314, ,504 Net cash used by operating activities (44,980,730) (54,861,187) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: State apportionments, non-capital 37,917,324 42,014,300 Local property taxes, non-capital 11,206,865 11,263,642 State taxes and other revenues 1,630,647 1,815,629 Net cash provided by non-capital financing activities 50,754,836 55,093,571 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: State apportionments and grants, capital 6,413,421 4,851,395 Local property taxes, capital 4,751,189 4,565,108 Proceeds from issuance of general obligation bonds 18,170,072 Purchases of capital assets (39,072,882) (13,252,074) Payment of bond issuance costs (268,151) Interest paid on capital debt (3,129,537) (3,150,660) Principal paid on capital debt (710,000) (551,098) Net cash used by capital and related financing activities (13,845,888) (7,537,329) CASH FLOWS FROM INVESTING ACTIVITIES: Interest on investments 2,730,130 4,817,150 Net cash provided by investing activities 2,730,130 4,817,150 (Continued on following page) The accompanying notes are an integral part of these financial statements. Page 16

30 STATEMENTS OF CASH FLOWS Years Ended June 30, NET DECREASE IN CASH AND CASH EQUIVALENTS (5,341,652) (2,487,795) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 78,793,976 81,281,771 CASH AND CASH EQUIVALENTS, END OF YEAR $ 73,452,324 $ 78,793,976 COMPONENTS OF CASH AND CASH EQUIVALENTS: Cash and cash equivalents $ 46,379,300 $ 41,172,469 Restricted cash and cash equivalents, current 1,746,833 2,743,750 Restricted cash and cash equivalents, noncurrent 25,326,191 34,877,757 Total cash and cash equivalents $ 73,452,324 $ 78,793,976 RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: Operating loss $ (54,167,958) $ (55,499,927) Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation expense 3,468,504 3,374,910 On behalf payments 998,055 1,065,795 Other receipts 966, ,207 (Increase) decrease in: Accounts receivable, net (800,490) (562,384) Inventories and other assets (104,691) (74,235) Increase (decrease) in: Accounts payable 932,015 1,138,654 Accrued liabilities (518,352) (22,120) Deferred revenue 3,212,994 (1,798,044) Amounts held for others 12,469 9,717 Commitments and contingencies 4,058 (3,444,932) Compensated absences 46,623 15,172 Other post employment benefit liability 969,790 Net cash used by operating activities $ (44,980,730) $ (54,861,187) NON-CASH CAPITAL AND RELATED FINANCING ACTIVITIES: In fiscal year 2009 the District financed a portion of the Solar Project - Phase II costs through a capital lease in the amount of $3,951,549. The accompanying notes are an integral part of these financial statements. Page 17

31 BUTTE COLLEGE FOUNDATION AND SUBSIDIARY STATEMENTS OF FINANCIAL POSITION ASSETS June 30, CURRENT ASSETS: Cash and cash equivalents $ 163,937 $ 194,766 Investments 728, ,556 Other assets 16,460 12,407 Total current assets 908,911 1,039,729 PROPERTY AND EQUIPMENT: Property and equipment, cost 12,781 12,781 Less accumulated depreciation 1,303 1,303 Property and equipment, net 11,478 11,478 OTHER ASSETS: Investments, noncurrent 1,187,736 1,380,599 Assets held by others 30,000 30,000 Total other assets 1,217,736 1,410,599 Total assets $ 2,138,125 $ 2,461,806 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable $ 12,480 $ 14,185 Depository liability 458, ,195 Total current liabilities 471, ,380 NET ASSETS: Unrestricted (209,316) 174,057 Temporarily restricted 353, ,524 Permanently restricted 1,522,368 1,449,845 Total net assets 1,666,699 2,030,426 Total liabilities and net assets $ 2,138,125 $ 2,461,806 The accompanying notes are an integral part of these financial statements. Page 18

32 BUTTE COLLEGE FOUNDATION AND SUBSIDIARY STATEMENTS OF ACTIVITIES Years Ended June 30, CHANGES IN UNRESTRICTED NET ASSETS: Revenues, gain and other support: Contributions: Public support $ 29,778 $ 23,911 Value of services provided by Butte-Glenn Community College District 285, ,482 Total contributions 315, ,393 Other revenues, gains and support: Investment return (loss), net of investment fees (110,762) (53,219) Depository liability management 7,765 16,217 Gain on sale of equipment 13,698 Food services 9,722 Total other revenues, gains (losses) and support (102,997) (13,582) Net assets released from restriction 107, ,245 Total revenues, gains and other support 320, ,056 Expenses: Program services: Scholarships 279, ,326 Programs and grants 63, ,348 Total program services expenses 342, ,674 Supporting services: Management and general 71,797 95,680 Management and general - In-kind 285, ,482 Food services 3,267 12,178 Total supporting services expenses 360, ,340 Total expenses 703, ,014 CHANGE IN UNRESTRICTED NET ASSETS (383,373) (228,958) (Continued on following page) The accompanying notes are an integral part of these financial statements. Page 19

33 BUTTE COLLEGE FOUNDATION AND SUBSIDIARY STATEMENTS OF ACTIVITIES Years Ended June 30, CHANGES IN TEMPORARILY RESTRICTED NET ASSETS: Revenues, gain and other support: Contributions: Public support $ 235,587 $ 238,528 Total contributions 235, ,528 Special events: Gross revenue 61,948 82,972 Less: Expenses (28,280) (31,702) Total special events 33,668 51,270 Other revenues, gains and support: Investment return (loss), net of investment fees (214,409) (107,043) Total other revenues, gains (losses) and support (214,409) (107,043) Net assets released from restriction (107,723) (228,245) CHANGE IN TEMPORARILY RESTRICTED NET ASSETS (52,877) (45,490) CHANGES IN PERMANENTLY RESTRICTED NET ASSETS: Endowment fund contributions 72,523 66,238 CHANGE IN PERMANENTLY RESTRICTED NET ASSETS 72,523 66,238 CHANGE IN NET ASSETS (363,727) (208,210) NET ASSETS, BEGINNING OF YEAR 2,030,426 2,238,636 NET ASSETS, END OF YEAR $ 1,666,699 $ 2,030,426 The accompanying notes are an integral part of these financial statements. Page 20

34 BUTTE COLLEGE FOUNDATION AND SUBSIDIARY STATEMENTS OF CASH FLOWS Years Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ (363,727) $ (208,210) Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation 2,197 Net realized and unrealized (gains) losses on investments 389, ,105 Gain on sale of equipment (13,698) (Increase) decrease in: Accounts receivable 63,168 Other assets (4,053) Increase (decrease) in: Accounts payable (1,705) 13,885 Depository liability 41,751 (964,061) Net cash provided (used) by operating activities 62,152 (743,614) CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for investments (3,066,231) (199,783) Reinvested investment return, net of investment fees (38,650) (197,354) Proceeds from the sale of investments 3,011,900 98,294 Proceeds from the sale of equipment 28,000 Net cash used by investing activities (92,981) (270,843) NET DECREASE IN CASH AND CASH EQUIVALENTS (30,829) (1,014,457) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 194,766 1,209,223 CASH AND CASH EQUIVALENTS, END OF YEAR $ 163,937 $ 194,766 The accompanying notes are an integral part of these financial statements. Page 21

35 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2009 AND 2008 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Butte-Glenn Community College District (District) is a community college governed by an elected seven-member Board of Trustees. The District provides educational services to the local residents of the surrounding area. The District consists of one community college located in Oroville, California and satellite campuses throughout the bi-county area. The District identified the Butte College Foundation (Foundation) as its only potential component unit. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in generally accepted accounting principles (GAAP) including GASB Statement 14 as amended by GASB Statement 39. GASB Statement 39 provides three criteria for requiring a legally separate, tax-exempt organization to be discretely presented as a component unit of the reporting entity. These criteria are the "direct benefit" criterion, the "entitlement/ability to access" criterion, and the "significance" criterion. The Foundation was established as a legally separate, not-for-profit corporation to support the District and its students. It contributes to various scholarship funds for the benefit of District students and contributes directly to the District. The Foundation's assets are significant to the District's financial statements. Therefore, the District has classified the Foundation as a component unit that will be discretely presented in the District's annual financial statements. BASIS OF PRESENTATION AND ACCOUNTING The financial statement presentation required by GASB Statements No. 34, 35, 37, 38, and 39 provides a comprehensive, entity-wide perspective of the District's overall financial position, results of operations and cash flows, and replaces the fund-group perspective previously required. The District now follows the "business-type activities" reporting requirements of GASB Statement No. 34 that provides a comprehensive one-line look at the District's financial activities. The basic financial statements of the Butte-Glenn Community College District have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The District has elected to follow GASB pronouncements and not Financial Accounting Standards Board (FASB) pronouncements after 1989, as presented by GASB Statement No. 20. (Continued on following page) Page 22