California State University, Stanislaus Auxiliary and Business Services. Financial Statements and Supplemental Information

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1 California State University, Stanislaus Auxiliary and Business Services Financial Statements and Supplemental Information Years Ended June 30, 2014 and 2013

2 Financial Statements and Supplemental Information Years Ended June 30, 2014 and 2013 Table of Contents Page Independent Auditors Report 1 Financial Statements: Statements of Financial Position 2 Statements of Activities 3 Statements of Functional Expenses 4 Statements of Cash Flows 6 Notes to Financial Statements 7 Supplemental Information: Schedule of Net Position 18 Schedule of Revenues, Expenses, and Changes in Net Position 19 Other Information 20

3 INDEPENDENT AUDITORS REPORT To the Board of Directors of California State University, Stanislaus Auxiliary and Business Services We have audited the accompanying financial statements of California State University, Stanislaus Auxiliary and Business Services (a nonprofit organization), which comprise the statements of financial position as of June 30, 2014 and 2013, and the related statements of activities, functional expenses, and cash flows for the years 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 or error. Auditor s Responsibility Our responsibility is to express an opinion 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. 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 entity 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 entity 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of California State University, Stanislaus Auxiliary and Business Services as of June 30, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matter Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information included on pages is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. San Diego, California September 25, 2014

4 Statements of Financial Position June 30, 2014 and 2013 ASSETS Current Assets: Cash and cash equivalents $ 887,158 $ 915,393 Accounts receivable 75,764 70,424 Interest receivable 5,356 5,275 Prepaid and other assets 433 Total Current Assets 968, ,092 Other Assets: Investments 1,033, ,964 Property and equipment, net of accumulated depreciation 8,072,554 8,484,494 Bond issuance costs, net of accumulated amortization 28,562 31,827 Total Other Assets 9,135,022 9,513,285 Total Assets $ 10,103,733 $ 10,504,377 LIABILITIES AND NET ASSETS Current Liabilities: Accounts payable $ 29,753 $ 11,068 Interest payable 59,918 62,723 Due to related parties 11,299 34,483 Warrior card 41, ,649 Current portion of capital lease 88,410 88,118 Current portion of bond payable 240, ,000 Current portion of bond premium 22,292 15,819 Total Current Liabilities 493, ,860 Other Liabilities: Postretirement benefit obligation 147, ,785 Pension liability 1,155,390 1,155,390 Capital lease, net of current portion 4,335,562 4,423,972 Bond payable, net of current portion 2,365,000 2,605,000 Bond premium, net of current portion 125, ,529 Total Other Liabilities 8,128,810 8,481,676 Total Liabilities 8,621,993 9,032,536 Net Assets: Unrestricted: Undesignated 1 (8,000) Board designated 1,481,739 1,479,841 Total Net Assets 1,481,740 1,471,841 Total Liabilities and Net Assets $ 10,103,733 $ 10,504,377 See accompanying notes to financial statements. 2

5 Statements of Activities Years Ended June 30, 2014 and Revenue and Other Support: Commissions $ 591,086 $ 577,253 Rental income 650, ,000 Other 128,830 90,853 Total Revenue and Other Support 1,369,916 1,248,106 Expenses: Program services: Bookstore 549, ,619 Campus dining 295, ,098 Residential life village 365, ,626 Vending 3,517 7,660 Warrior card 25,039 26,420 Investment 3,368 5,353 Club colors 1, Farming activities 5,273 29,719 1,249,874 1,345,445 General and administrative 144, ,902 Total Expenses 1,394,519 1,466,347 Operating Loss (24,603) (218,241) NonOperating Revenue: Investment return, net 34,502 10,890 Increase (Decrease) in Net Assets 9,899 (207,351) Net Assets, beginning 1,471,841 1,679,192 Net Assets, ending $ 1,481,740 $ 1,471,841 See accompanying notes to financial statements. 3

6 Statement of Functional Expenses Year Ended June 30, 2014 Program Campus Residential Bookstore Dining Life Village Vending Accounting and legal $ 75,678 $ 75,678 $ 75,678 $ 3,220 Advertising Awards, gifts and donations Bank charges Benefits Depreciation and amortization 173,745 87, ,775 Insurance 10,911 9,796 17, Interest 232, ,740 Memberships and dues Minor equipment 4,618 Miscellaneous Outside services 21,198 49,149 3,289 Overhead, Chancellor's office Postage and freight 4 Repairs and maintenance 9,316 63,561 State pro rata charges Supplies 4,780 Taxes and licenses Travel Utilities 26,678 $ 549,999 $ 295,431 $ 365,489 $ 3,517 See accompanying notes to financial statements.

7 Services Warrior Farming General and Card Investment Club Colors Activities Administrative Total $ 3,220 $ 3,220 $ 1,610 $ 3,158 $ 81,075 $ 322, ,113 9,113 3,500 2,159 5,659 8,781 8, , , ,209 1,100 1,100 7, , ,902 16,102 98,640 6,851 6, , ,879 6,945 6,945 1,720 5,908 12,408 3,974 3, ,678 $ 25,039 $ 3,368 $ 1,758 $ 5,273 $ 144,645 $ 1,394,519 4

8 Statement of Functional Expenses Year Ended June 30, 2013 Campus Residential Bookstore Dining Life Village Accounting and legal $ 96,658 $ 28,639 $ 128,878 Advertising 1,000 1,000 Awards, gifts and donations 3,000 Bank charges Benefits Depreciation and amortization 161, , ,918 Insurance 11,666 10,066 18,279 Interest 237, ,518 Loss on disposal of equipment 19,484 2,727 Minor equipment 3,444 Miscellaneous 163 Outside services 30,666 23,759 8,000 Overhead, Chancellor's office Postage and freight Repairs and maintenance 2,741 60, Salaries and benefits reimbursed to the University State pro rata charges Supplies 27 4,988 Taxes and licenses 3,577 Telephone Travel Utilities 22,618 $ 586,619 $ 257,098 $ 431,626 See accompanying notes to financial statements.

9 Program Services Warrior Farming General and Vending Card Investment Club Colors Activities Administrative Total $ 7,160 $ 7,200 $ $ $ $ 94,780 $ 363, ,400 5, ,083 3, ,699 (3,816) (3,816) 439, , ,034 22,211 4,980 2,519 10,943 1, ,218 2,184 4,999 69,608 14,194 14, ,938 29,602 29,602 3,960 3,960 4, ,061 3, , ,152 1,152 22,618 $ 7,660 $ 26,420 $ 5,353 $ 950 $ 29,719 $ 120,902 $ 1,466,347 5

10 Statements of Cash Flows Years Ended June 30, 2014 and Cash Flows from Operating Activities: Change in Net Assets $ 9,899 $ (207,351) Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation and amortization 421, ,612 Loss on disposal of equipment 22,211 Net realized and unrealized (gains) losses on investments (3,976) 16,644 Changes in operating assets and liabilities: Accounts receivable (5,340) (23,635) Interest receivable (81) 109 Due from related parties (433) 183,736 Accounts payable 18,685 1,488 Interest payable (2,805) (2,109) Due to related parties (23,184) 28,499 Warrior card (67,138) 16,037 Postretirement benefit obligation (2,164) (16,631) Pension liability (184,240) Bond premium amortization (15,819) (19,640) Net Cash Provided by Operating Activities 329, ,730 Cash Flows from Investing Activities: Purchases of property and equipment (6,377) (18,349) Proceeds from sale of investments 80,000 40,000 Purchases of investments (112,966) (631,015) Net Cash Used by Investing Activities (39,343) (609,364) Cash Flows from Financing Activities: Principal payments on capital lease (88,118) (82,991) Principal payments on bond payable (230,000) (220,000) Net Cash Used by Financing Activities (318,118) (302,991) Net Decrease in Cash and Cash Equivalents (28,235) (657,625) Cash and Cash Equivalents, beginning 915,393 1,573,018 Cash and Cash Equivalents, ending $ 887,158 $ 915,393 Supplemental Information: Cash paid for interest $ 360,905 $ 375,784 See accompanying notes to financial statements. 6

11 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 1 Organization and Summary of Significant Accounting Policies Nature of Activities California State University, Stanislaus Auxiliary and Business Services (Organization) was incorporated in the State of California on October 3, 1960, under the name of California State University, Stanislaus Foundation. Effective July 1, 1998, the Organization changed its name to California State University, Stanislaus Auxiliary and Business Services. The Organization also authorized the use of the name California State University, Stanislaus Foundation (Foundation) for a new nonprofit corporation. The operations and assets of noncommercial activities were transferred to the Foundation effective that date. The Organization was formed and operates as an auxiliary organization of California State University, Stanislaus (CSU Stanislaus or the University) which has campuses in Turlock and Stockton, California. The Organization arranges for services to students and faculty including dormitory, food service and campus bookstore. The bookstore and food services are provided by way of lease agreements with independent commercial vendors. Financial Statement Presentation The Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Unrestricted net assets represent expendable funds available for operations, which are not otherwise limited by donor restrictions. Temporarily restricted net assets consist of contributed funds subject to donorimposed restrictions contingent upon specific performance of a future event or a specific passage of time before the Organization may spend the funds. Permanently restricted net assets are subject to irrevocable donor restrictions requiring that the assets be maintained in perpetuity usually for the purpose of generating investment income to fund current operations. The Organization had no temporarily or permanently restricted net assets during the years ended June 30, 2014 and Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Income Taxes The Organization is a qualified nonprofit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code. However, the Organization remains subject to taxes on any net income which is derived from a trade or business, regularly carried on, and unrelated to its exempt purpose. The Organization follows accounting standards generally accepted in the United States of America related to the recognition of uncertain tax positions. The Organization recognizes accrued interest and penalties associated with uncertain tax positions as part of the statement of activities, when applicable. Management has determined that the Organization has no uncertain tax positions at June 30, 2014 or 2013 and therefore no amounts have been accrued. The Organization files informational and income tax returns in the United States, California and in local jurisdictions. With few exceptions, the Organization s federal income tax returns for the years prior to 2010 are closed. State and local jurisdictions have statutes of limitation that generally range from three to five years. 7

12 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 1 Organization and Summary of Significant Accounting Policies, continued Cash and Cash Equivalents The Organization considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents. Accounts Receivable The accounts receivable arise in the normal course of operations. It is the policy of management to review the outstanding accounts receivable at year end, as well as the bad debt writeoffs experienced in the past, and establish an allowance for doubtful accounts for uncollectible amounts. A provision for doubtful accounts has not been established as management considers all accounts to be collectible based upon a favorable history over a substantial period of time. Investments The Organization carries investments in marketable securities with readily determinable fair values and all investments in debt securities at fair values in the statements of financial position. The fair value is determined using quoted market prices. The Organization s money market funds are reinvested into debt securities. Realized and unrealized gains and losses are included in the change in net assets in the statements of activities. Property and Equipment The Organization capitalizes all expenditures for property and equipment in excess of $5,000. Equipment and improvements are recorded at cost or at estimated fair value at date of gift if donated. Expenditures for maintenance and repairs are charged against operations. Depreciation is provided on a straightline basis over the estimated useful lives of the assets of three to 40 years. Fair Value Measurements The Organization defines fair value as the exchange price that would be received for an asset or paid for a liability in the principal or most advantageous market. The Organization applies fair value measurements to assets and liabilities that are required to be recorded at fair value under generally accepted accounting principles. Fair value measurement techniques maximize the use of observable inputs and minimize the use of unobservable inputs, and are categorized in a fair value hierarchy based on the transparency of inputs. The three levels are defined as follows: Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the same term of the financial instrument. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying value of cash, receivables, and payables approximates fair value as of June 30, 2014 and 2013, due to the relative short maturities of these instruments. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. 8

13 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 1 Organization and Summary of Significant Accounting Policies, continued Subsequent Events The Organization has evaluated subsequent events through September 25, 2014, which is the date the financial statements were available to be issued. Note 2 Cash and Cash Equivalents The Organization maintains its cash in bank deposit accounts that are insured by the Federal Deposit Insurance Corporation (FDIC) up to a limit of $250,000 per depositor. At June 30, 2014 and 2013, the Organization s deposits with financial institutions were fully insured. In addition, the Organization has deposited cash in the State Treasury s Local Agency Investment Fund (LAIF). Deposits in LAIF are carried at fair value as reported by LAIF and are not insured by the federal government nor the State of California. The Organization has not experienced any losses in its bank deposit accounts and believes it is not exposed to any significant credit risk on cash Deposits with financial institutions $ 358,661 $ 388,198 Investments in LAIF 528, ,195 Total cash and cash equivalents $ 887,158 $ 915,393 Investment in LAIF As of June 30, 2014 and 2013, investments are in LAIF, which is a voluntary program created by statute as an alternative for California s local governments and special districts that allows them to participate in a major investment portfolio. It is under the administration of the California State Treasurer s Office. The investment is considered a cash equivalent as it is used to fund any operating deficit. Realized gains, losses and interest income are included in investment return in the statements of activities. The Organization s investments in LAIF are measured and reported at fair value based on quoted prices for similar assets in an active market (level 2). 9

14 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 3 Investments The Organization s investments consist of marketable securities and corporate bonds, both of which are measured and reported at fair value on a recurring basis based on quoted prices available in active markets for identical investments as of the reporting date (level 1). The investments consist of: Mutual funds: Fixed income domestic $ 57,318 $ 52,985 Fixed income international 509, ,022 Domestic corporate bonds 467, ,957 $ 1,033,906 $ 996,964 Investment return is summarized as follows: Realized gains $ 247 $ 395 Unrealized gains (losses) 3,877 (17,039) Interest 29,118 24,779 Income from investments 33,242 8,135 Income from investment in LAIF 1,260 2,755 $ 34,502 $ 10,890 10

15 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 4 Property and Equipment Property and equipment consist of the following: Balance Balance Description June 30, 2013 Additions Retirements Transfers June 30, 2014 Cost: Land $ 287,300 $ $ $ $ 287,300 Buildings 5,926,828 5,926,828 Leasehold improvements 6,008,727 6,008,727 Equipment, furniture and fixtures 505,259 6,377 (91,008) 420,628 Computer software 27,866 (27,866) Total cost 12,755,980 6,377 (118,874) 12,643,483 Less accumulated depreciation: Buildings (2,461,601) (156,510) (2,618,111) Leasehold improvements (1,398,854) (225,816) (1,624,670) Equipment, furniture and fixtures (383,165) (35,991) 91,008 (328,148) Computer software (27,866) 27,866 Total accumulated depreciation (4,271,486) (418,317) 118,874 (4,570,929) Property and Equipment, net $ 8,484,494 $ (411,940) $ $ $ 8,072,554 Balance Balance Description June 30, 2012 Additions Retirements Transfers June 30, 2013 Cost: Land $ 287,300 $ $ $ $ 287,300 Buildings 5,926,828 5,926,828 Leasehold improvements 6,056,054 (47,327) 6,008,727 Equipment, furniture and fixtures 629,844 18,349 (115,068) (27,866) 505,259 Computer software 27,866 27,866 Total cost 12,900,026 18,349 (162,395) 12,755,980 Less accumulated depreciation: Buildings (2,304,946) (156,655) (2,461,601) Leasehold improvements (1,195,484) (232,362) 28,992 (1,398,854) Equipment, furniture and fixtures (474,892) (47,331) 111,192 27,866 (383,165) Computer software (27,866) (27,866) Total accumulated depreciation (3,975,322) (436,348) 140,184 (4,271,486) Property and Equipment, net $ 8,924,704 $ (417,999) $ (22,211) $ $ 8,484,494 11

16 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 5 Capital Lease The Organization has entered into a lease agreement as lessee for financing the acquisition of the bookstore from the State of California. The lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. Future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2014 are as follows: Year Ending June 30, Payment Principal Interest 2015 $ 317,700 $ 88,410 $ 229, ,300 93, , ,850 98, , , , , , , ,286 Thereafter 6,401,875 3,927,665 2,474,210 $ 7,996,050 $ 4,423,972 $ 3,572,078 Interest expense for the years ended June 30, 2014 and 2013 was $232,469 and $237,5167, respectively. Note 6 LongTerm Debt On April 1, 2008, the Organization entered into a loan agreement with the Board of Trustees of the California State University (Board). In conjunction with the issuance of the Systemwide Revenue Bonds Series 2008A, the Organization requested $3,845,000 to refund previously issued bonds, which were used in the development and construction of the Residential Life Village II. The loan bears interest at a rate varying from 3.5 to 5 percent per annum. Principal and unpaid interest will be due and payable on or before May 1 and November 1 in each year, through November 1, The bonds were issued at premium in the amount of $213,809, which is being amortized over the life of the bonds. The bond issuance cost was $48,964, which is also being amortized over the life of the bonds. Amortization was $3,625 at June 30, 2014 and $3,264 at June 30, Principal maturities of the bond payable are as follows: Year Ending June 30, Principal Interest 2015 $ 240,000 $ 115, , , ,000 93, ,000 82, ,000 69, ,295, ,834 $ 2,605,000 $ 587,326 Interest expense for the years ending June 30, 2014 and 2013 was $109,740 and $116,518, respectively. 12

17 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 6 LongTerm Debt, continued Bond issuance cost and bond premium amortizations are as follows: Year Ending June 30, Issuance Cost Premium 2015 $ 3,264 $ 22, ,264 11, ,264 5, ,264 20, ,264 24, ,242 62,453 $ 28,562 $ 147,529 Note 7 Board Designated Net Assets Designated funds consist of funds reserved for the following items: Residential life village plant $ 587,914 $ Bookstore activities 256, ,521 Residential life village activities 196, ,962 Postretirement benefits 147, ,785 Dining activities 129, ,506 General and administrative 63,240 57,926 Dining plant 50, ,000 Bookstore facility 36,000 28,800 Warrior cash 12,221 15,409 Vending activities 3,575 5,990 Pension liability 360,000 Stockton auxiliary campus 257,942 $ 1,481,739 $ 1,479,841 13

18 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 8 Pension Plan Plan Description The Organization is a member of the California Public Employees Retirement System (PERS), an agent multipleemployer public employee retirement system that acts as a common investment and administrative agent for participating entities within the State of California. The four auxiliary organizations at California State University, Stanislaus (Auxiliaries), contribute to PERS through the Organization. All direct fulltime employees in the Organization are covered by the plan (reimbursed employees are covered by the CSU Stanislaus plan). The defined benefit plan uses the Entry Age Normal Actuarial Cost Method, which is a projected benefit cost method. According to this cost method, the normal cost for an employee is the level amount which would fund the projected benefit if it were paid annually from the date of employment until retirement. The Auxiliaries fund the plan based upon a percentage of qualified payrolls. The rate is set by statute and is currently %. Contributions are invested by PERS. Starting July 1, 2008, the Organization s fulltime employees were paid by California State University, Stanislaus. The Organization has not participated in PERS since The total unfunded pension benefit obligation for this plan at June 30, 2012 is noted below and relates to the four auxiliaries at California State University, Stanislaus. The Organization has recorded a liability of $1,155,390 at June 30, 2014 and 2013, for the unfunded portion of the plan for all four auxiliaries, and has recorded a related party receivable for the portion owed to them by the University Student Union of California State University, Stanislaus and the Associated Students Incorporated of California State University, Stanislaus. Funded State of Pooled Plan Valuation date June 30, 2012 Accrued liabilities $ 839,968,292 Actuarial value of assets $ 743,174,027 Unfunded liability (excess assets) $ 96,794,265 Funded status 88.48% Annual covered payroll $ 193,877,169 Unfunded liability (excess assets) as a % of covered payroll 49.93% The significant actuarial assumptions used to calculate the above pension benefit obligation is as follows: Investment rate of return (net of administrative expenses) 7.50% Salary growth (depending on age, services, and type of employment) 3.3% 14.45% Inflation 2.75% Overall payroll growth 3.00% Actuarial information as of June 30, 2014 and 2013 is currently unavailable. PERS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the PERS annual financial report may be obtained from the CalPERS Headquarters Office, Lincoln Plaza North, 400 Q Street, Sacramento, California Information about benefits and contributions expected to be paid in each of the next five fiscal years and the five years thereafter have not been provided by PERS. Annual Pension Cost Total contributions, including member and employer contributions, paid by the Organization during the year ended June 30, 2014 were $8,859. No contributions were paid by the Organization during the year ended June 30,

19 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 9 PostRetirement Benefit Plan The Organization provides lifetime postretirement medical coverage to employees (and their dependents) who retire at age 50 or older with at least five years of service with the Organization, the Associated Students Inc. of California State University, Stanislaus or the University Student Union of California State University Stanislaus. The Organization pays a portion of the cost of the benefit, up to a predetermined cap. Retirees are responsible for costs in excess of the cap. At June 30, 2014 and 2013, the Organization had two retired employees who were eligible to participate in the plan. The two retired employees covered under this plan were originally employees of the California State University, Stanislaus Foundation. During the year ended June 30, 2009, the Organization agreed to pay for the employees postretirement benefits because the Foundation had no discretionary funds to pay this obligation. The plan s obligations and funded status for the Organization at June 30, 2014 and 2013 are as follows: Obligations and Funded Status at June Change in Benefit Obligation: Benefit obligation at beginning of year $ 149,785 $ 166,416 Interest cost 6,611 6,258 Actuarial (gain) loss 3,016 (10,911) Benefits paid (11,791) (11,978) Benefit obligation at end of year $ 147,621 $ 149,785 Funded Status: Benefit obligation $ 147,621 $ 149,785 Unrecognized net actuarial loss (251,272) (266,883) Accrued benefit cost (398,893) (416,668) Measurement date June 30, 2014 June 30, 2013 Unfunded status at end of year $ (147,621) $ (149,785) Amounts Recognized in the Statement of Financial Position: Noncurrent liabilities 147, ,785 Net Periodic Benefit Cost: Interest cost 6,611 6,258 Amortization of net gain (12,595) (12,596) Net periodic benefit cost $ (5,984) $ (6,338) 15

20 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 9 PostRetirement Benefit Plan, continued Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing costs between the employer and plan members to that point. Actuarial Methods and Assumption Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and the plan members to that point. The actuarial methods and assumption used include techniques that are designed to reduce the effects of shortterm volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the longterm perspective of the calculations. Assumptions Weightedaverage assumptions used to determine benefit obligations at June 30: Discount rate 4.31% 4.60% Expected longterm return on plan assets N/A N/A Rate of compensation increase N/A N/A Health care cost trend rate assumed for next year 6.40% 6.70% Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.50% 5.50% Year that the rate reaches the ultimate trend rate 4 yrs 5 yrs Expected Benefit Payments 2015 $ 7, , , , ,954 Years ,348 16

21 Notes to Financial Statements Years Ended June 30, 2014 and 2013 Note 10 Related Party Transactions The Organization enters into transactions with related parties, including: California State University, Stanislaus University Student Union of California State University, Stanislaus California State University, Stanislaus Foundation Associated Students Incorporated of California State University, Stanislaus Transactions with related parties consist of the following: Payments Made to Related Parties California State University, Stanislaus $ (1,235,207) $ (1,272,413) California State University, Stanislaus Foundation (1,000) Associated Students Incorporated of California State University, Stanislaus (500) (2,223) University Student Union of California State University, Stanislaus (6,882) (3,526) $ (1,243,589) $ (1,278,162) Payments Received from Related Parties California State University, Stanislaus $ 710,107 $ 682,910 California State University, Stanislaus Foundation 875 1,750 Associated Students Incorporated of California State University, Stanislaus 7,632 31,838 University Student Union of California State University, Stanislaus 11,625 37,872 $ 730,239 $ 754,370 Amounts Due (to) from Related Parties California State University, Stanislaus $ (10,021) $ (33,200) University Student Union of California State University, Stanislaus (1,278) (1,283) $ (11,299) $ (34,483) The Organization often also makes contributions of gifts to the University. There were no gifts given during the years ended June 30, 2014 and 2013, respectively. 17

22 SUPPLEMENTAL INFORMATION

23 Schedule of Net Position June 30, 2014 (for inclusion in the California State University) Assets Current assets: Cash and cash equivalents $ 358,661 Shortterm investments 528,497 Accounts receivable, net 81,120 Leases receivable, current portion Notes receivable, current portion Pledges receivable, net Prepaid expenses and other assets Total current assets 968,278 Noncurrent assets: Restricted cash and cash equivalents Accounts receivable, net Leases receivable, net of current portion Notes receivable, net of current portion Student loans receivable, net Pledges receivable, net Endowment investments Other longterm investments 1,033,906 Capital assets, net 8,072,554 Other assets 433 Total noncurrent assets 9,106,893 Total assets 10,075,171 Deferred outflows of resources: Unamortized loss on refunding(s) Total deferred outflows of resources Liabilities Current liabilities: Accounts payable 41,052 Accrued salaries and benefits payable Accrued compensated absences current portion Unearned revenue Capitalized lease obligations current portion 88,410 Longterm debt obligations current portion 240,000 Claims liability for losses and LAE current portion Depository accounts current portion Other liabilities 101,429 Total current liabilities 470,891 Noncurrent liabilities: Accrued compensated absences, net of current portion Unearned revenue Grants refundable Capitalized lease obligations, net of current portion 4,335,562 Longterm debt obligations, net of current portion 2,512,529 Claims liability for losses and LAE, net of current portion Depository accounts Other postemployment benefits obligation 147,621 Other liabilities 1,155,390 Total noncurrent liabilities 8,151,102 Total liabilities 8,621,993 Deferred inflows of resources: Deferred inflows from SCAs, grants, and others Total deferred inflows of resources Net position: Net investment in capital assets 896,052 Restricted for: Nonexpendable endowments Expendable: Scholarships and fellowships Research Loans Capital projects Debt service Other Unrestricted 557,126 Total net position $ 1,453,178 See independent auditors' report. 18

24 Schedule of Revenues, Expenses, and Changes in Net Position Year Ended June 30, 2014 (for inclusion in the California State University) Revenues: Operating revenues: Student tuition and fees, gross $ Scholarship allowances (enter as negative) Student tuition and fees (net of scholarship allowances of $ 0) Grants and contracts, noncapital: Federal State Local Nongovernmental Sales and services of educational activities Sales and services of auxiliary enterprises, gross 1,241,086 Scholarship allowances aux ent (enter as negative) Sales and services of auxiliary enterprises (net of scholarship allowances of $ 0) 1,241,086 Other operating revenues 118,830 Total operating revenues 1,359,916 Expenses: Operating expenses: Instruction Research Public service Academic support Student services 477,661 Institutional support Operation and maintenance of plant 153,067 Student grants and scholarships Auxiliary enterprise expenses Depreciation and amortization 418,317 Total operating expenses 1,049,045 Operating income (loss) 310,871 Nonoperating revenues (expenses): State appropriations, noncapital Federal financial aid grants, noncapital State financial aid grants, noncapital Local financial aid grants, noncapital Nongovernmental and other financial aid grants, noncapital Other federal nonoperating grants, noncapital Gifts, noncapital 10,000 Investment income (loss), net 34,502 Endowment income (loss), net Interest expense (342,209) Other nonoperating revenues (expenses) Net nonoperating revenues (expenses) (297,707) Income (loss) before other additions 13,164 State appropriations, capital Grants and gifts, capital Additions (reductions) to permanent endowments Increase (decrease) in net position 13,164 Net position: Net position at beginning of year, as previously reported 1,440,014 Restatements Net position at beginning of year, as restated 1,440,014 Net position at end of year $ 1,453,178 See independent auditors' report. 19

25 1 Restricted cash and cash equivalents at June 30, 2014: Portion of restricted cash and cash equivalents related to endowments $ All other restricted cash and cash equivalents Total restricted cash and cash equivalents $ 2.1 Composition of investments at June 30, 2014: Current Unrestricted Current Restricted Total Current Noncurrent Unrestricted Noncurrent Restricted Total Noncurrent Total State of California Surplus Money Investment Fund (SMIF) $ $ $ $ $ $ $ State of California Local Agency Investment Fund (LAIF) 528, , ,497 Wachovia Short Term Fund Wachovia Medium Term Fund Wachovia Equity Fund CSU Consolidated Investment Pool (includes SWIFT and 0948 SMIF) Common Fund Short Term Fund Common Fund Others Debt securities Equity securities 467, , ,163 Fixed income securities (Treasury notes, GNMA's) Land and other real estate Certificates of deposit Notes receivable Mutual funds 566, , ,743 Money market funds Collateralized mortgage obligations: Inverse floaters Interestonly strips Agency passthrough Partnership interests (includes private passthrough) Alternative investments Hedge funds Other major investments: Total investments 528, ,497 1,033,906 1,033,906 1,562,403 Less endowment investments (enter as negative number) Total investments, net of endowments $ 528,497 $ $ 528,497 $ 1,033,906 $ $ 1,033,906 $ 1,562, Investments held by the University under contractual agreements at June 30, 2014 : Portion of investments in note 2.1 held by the University under contractual agreements: 2.3 Restricted current investments at June 30, 2014 related to: None Total restricted current investments at June 30, 2014 $ Agree with FN 2 above 2.4 Restricted noncurrent investments at June 30, 2014 related to: Endowment Investments None Total restricted noncurrent investments at June 30, 2014 $ Agree with FN 2 above CALIFORNIA STATE UNIVERSITY, STANISLAUS AUXILIARY AND BUSINESS SERVICES Other Information June 30, 2014 (for inclusion in the California State University) See independent auditors' report. 20

26 Other Information June 30, 2014 (for inclusion in the California State University) 3 Capital assets 3.1 Composition of capital assets at June 30, 2014: (A) (B) Balance June 30, 2013 Prior Period Adjustments Reclassifications Balance June 30, 2013 (Restated) Additions Reductions Transfer of completed CWIP Nondepreciable/Nonamortizable capital assets: Land and land improvements $ 287,300 $ $ $ 287,300 $ $ Balance June 30, 2014 $ $ 287,300 Works of art and historical treasures Construction work in progress (CWIP) Intangible assets: Intangible assets Rights and easements Patents, copyrights and trademarks Internally generated intangible assets in progress Licenses and permits Other intangible assets: None Total intangible assets Total nondepreciable/nonamortizable capital assets 287, , ,300 Depreciable/Amortizable capital assets: Buildings and building improvements 5,926,828 5,926,828 5,926,828 Improvements, other than buildings Infrastructure Leasehold improvements 6,008,727 6,008,727 6,008,727 Personal property: Equipment 505, ,259 6,377 (91,008) 420,628 Library books and materials Intangible assets: Intangible assets Software and websites 27,866 27,866 (27,866) Rights and easements Patents, copyrights and trademarks Licenses and permits Other intangible assets: None Total intangible assets 27,866 27,866 (27,866) Total depreciable/amortizable capital assets 12,496,546 12,496,546 6,377 (146,740) 12,356,183 Total capital assets 12,783,846 12,783,846 6,377 (146,740) 12,643,483 Less accumulated depreciation/amortization: (enter as negative number, except for reduction, enter as positive number) Buildings and building improvements (2,461,601) (2,461,601) (156,510) (2,618,111) Improvements, other than buildings Infrastructure Leasehold improvements (1,398,854) (1,398,854) (225,816) (1,624,670) Personal property: Equipment (383,165) (383,165) (35,991) 91,008 (328,148) Library books and materials Intangible assets: Intangible assets Software and websites (27,866) (27,866) 27,866 Rights and easements Patents, copyrights and trademarks Licenses and permits Other intangible assets: None Total intangible assets (27,866) (27,866) 27,866 Total accumulated depreciation/amortization (4,299,352) (4,299,352) (418,317) 146,740 (4,570,929) Total capital assets, net $ 8,484,494 $ $ $ 8,484,494 $ (411,940) $ $ $ 8,072,554 Net to zero Net to zero See independent auditors' report. 21

27 Other Information June 30, 2014 (for inclusion in the California State University) 3.2 Detail of depreciation and amortization expense for the year ended June 30, 2014: Depreciation and amortization expense related to capital assets Amortization expense related to other assets Total depreciation and amortization $ 418,317 $ 418,317 4 Longterm liabilities activity schedule Balance June 30, 2013 Prior Period Adjustments Reclassifications Balance June 30, 2013 (Restated) Additions Reductions Balance June 30, 2014 Current Portion Longterm Portion Accrued compensated absences $ $ $ $ $ $ $ $ $ Capitalized lease obligations: Gross balance 4,512,090 4,512,090 (88,118) 4,423,972 88,410 4,335,562 Unamortized premium / (discount) on capitalized lease obligation Total capitalized lease obligations 4,512,090 4,512,090 (88,118) 4,423,972 88,410 4,335,562 Agree with FN 5 Longterm debt obligations: Auxiliary revenue bonds 2,835,000 2,835,000 (230,000) 2,605, ,000 2,365,000 Other bonds (nonrevenue bonds) Commercial paper Notes payable related to SRB Other: (list by type) None Total 2,835,000 2,835,000 (230,000) 2,605, ,000 2,365,000 Agree with FN 6 Agree with FN 6 Unamortized bond premium / (discount) 163, ,348 (15,819) 147, ,529 Unamortized loss on refunding Total longterm debt obligations 2,998,348 2,998,348 (245,819) 2,752, ,000 2,512,529 Total longterm liabilities $ 7,510,438 $ $ $ 7,510,438 $ $ (333,937) $ 7,176,501 $ 328,410 $ 6,848,091 5 Future minimum lease payments Capital lease obligations Year Ending June 30: Principal Only Interest Only Principal and Interest , , , , , , , , , , , , , , , , ,868 1,599, , ,854 1,601, ,072, ,411 1,602, ,377, ,077 1,598, Total minimum lease payments 7,996,050 Less: amounts representing interest 3,572,078 Present value of future minimum lease payments 4,423,972 Less: current portion (88,410) Capitalized lease obligation, net of current portion $ 4,335,562 See independent auditors' report. 22

28 Other Information June 30, 2014 (for inclusion in the California State University) 6 Longterm debt obligation schedule Revenue Bonds All Other LT Debt Obligations Total LT debt obligations Year ended June 30: Principal Only Interest Only Principal and Interest Principal Only Interest Only Principal and Interest Principal Only Interest Only Principal and Interest 2015 $ 240, , , , , , , , , , , , ,000 93, , ,000 93, , ,000 82, , ,000 82, , ,000 69, , ,000 69, , ,295, ,834 1,417,834 1,295, ,834 1,417, $ 2,605, ,326 3,192,326 2,605, ,326 3,192,326 Agree with FN4 7 Calculation of net position per Statement of Net Position (SNP) 7.1 Net investment in capital assets Capital assets, net of accumulated depreciation $ 8,072,554 Capitalized lease obligations current portion (88,410) Capitalized lease obligations, net of current portion (4,335,562) Longterm debt obligations current portion (240,000) Longterm debt obligations, net of current portion (2,512,529) Portion of o/s debt that is unspent at yearend (i.e. unspent bond proceeds) (enter as positive number) Unamortized loss on debt refunding Other adjustments: (please list) Rounding (1) Net position net investment in capital assets, per SNP $ 896, Restricted for nonexpendable endowments Portion of restricted cash and cash equivalents related to endowments $ Endowment investments Other adjustments: (please list) None Net position Restricted for nonexpendable endowments per SNP $ See independent auditors' report. 23

29 Other Information June 30, 2014 (for inclusion in the California State University) Note 8 Transactions with Related Entities Payments to University for salaries of University personnel working on contracts, grants, and other programs 2,724 Payments to University for other than salaries of University personnel 1,235,207 Payments received from University for services, space, and programs 710,107 Giftsinkind to the University from discretely presented component units Gifts (cash or assets) to the University from discretely presented component units 5,917 Accounts (payable to) University (enter as negative number) (10,021) Other amounts (payable to) University (enter as negative number) Accounts receivable from University Other amounts receivable from University Note 9 Other Postemployment Benefits Obligation (OPEB) Annual required contribution (ARC) $ (2,164) Contributions during the year: (enter as negative number) Increase in net OPEB obligation (NOO) (2,164) NOO beginning of year 149,785 NOO end of year $ 147,621 Percentage of annual OPEB cost contributed during the year ended June 30, % 10 Pollution remediation liabilities under GASB 49: (List brief description and dollar amounts) Descriptions: Amount None $ Total pollution remediation liabilities Less: current portion (enter as negative number) Pollution remediation liabilities, net of current portion $ See independent auditors' report. 24

30 Other Information June 30, 2014 (for inclusion in the California State University) Note 11 Prior Period Adjustments 11.1 The nature and amount of the prior period adjustment(s) recorded to beginning net position: Net Position Class Amount Net position as of June 30, 2013, as previously reported $ 1,440,014 Transaction1 Transaction2 Transaction3 Transaction4 Transaction5 Transaction6 Transaction7 Transaction8 Transaction9 Transaction10 Net position as of June 30, 2013, as restated $ 1,440, Provide a detailed breakdown of the journal entries (at the financial statement line items level) booked to record each prior period adjustment as listed above: Transaction1 Debit Credit < Insert description < Select Net Position Classification Net Position Classification $ $ Transaction2 < Insert description < Select Net Position Classification Net Position Classification Transaction3 < Insert description < Select Net Position Classification Net Position Classification See independent auditors' report. 25

31 Other Information June 30, 2014 (for inclusion in the California State University) Transaction4 < Insert description < Select Net Position Classification Net Position Classification Transaction5 < Insert description < Select Net Position Classification Net Position Classification Transaction6 < Insert description < Select Net Position Classification Net Position Classification Transaction7 < Insert description < Select Net Position Classification Net Position Classification Transaction8 < Insert description < Select Net Position Classification Net Position Classification Transaction9 < Insert description < Select Net Position Classification Net Position Classification Transaction10 < Insert description < Select Net Position Classification Net Position Classification See independent auditors' report. 26