Leading the Way for Lifelong Learning

Transcription

1 Leading the Way for Lifelong Learning ANNUAL REPORT University of Northern Colorado 2002 Annual Report 41

2 BOARD OF TRUSTEES AS OF JUNE 30, 2002 Dick Monfort Chairman Self-Employed Businessman/ Investor Greeley, CO Kevin Smith Vice-Chair Colorado Vice President Qwest Corporation Denver, CO Peter Coors CEO Coors Brewing Company Golden, CO Marjorie Kadlub Investor Windsor, CO ADMINISTRATION AS OF JUNE 30, 2002 Hank Brown President Marlene Strathe Provost Frances L. Schoneck Vice President for Administration and Treasurer to the Board of Trustees P. Kay Norton Vice President for University Affairs, General Counsel and Secretary to the Board of Trustees Michael Muftic Retired Physician Winter Park, CO Gil Carbajal Semi-Retired Fort Collins, CO Richard Poole Congressional Aide U.S. Senator Wayne Allard Denver, CO Barry Rothaus History Department College of Arts and Science University of Northern Colorado Greeley, CO Mark Davidson Student Representative Council University of Northern Colorado Greeley, CO Additional copies of the 2002 Annual Report may be obtained from: Office of the Assistant Vice President of Finance University of Northern Colorado th Street Campus Box 44 Greeley, CO (970) University of Northern Colorado 2002 Annual Report 1

3 Table of Contents Message from President Norton... 3 Leading the Way for Lifelong Learning... 4 University Financial Statements Management Letter... 6 Independent Auditors' Letter... 7 Management Discussion and Analysis... 8 Statement of Net Assets Statement of Revenues, Expenses and Changes in Net Assets Statement of Cash Flows Notes to Financial Statements Other Financial, Enrollment and Budget Data State Appropriated Budget Request Summary Auxiliary Services Budget Request Summary Actual and Projected Revenues and Expenditures Auxiliary Revenue, Student Recreation Center, Women s Resource, Health Center and Counseling Center Projects Institutional Information Enrollment Information University of Northern Colorado 2002 Annual Report

4 Message from President Norton The University of Northern Colorado is flourishing. During the past year, UNC has continued to distinguish itself through the accomplishments of its students, faculty and staff. We embrace our historic mission in teacher education while we also recognize that we are a multifaceted place with a wide array of strengths. Even in the face of a shrinking state budget, we continue to deliver the best university experience in the state to students. Our students thrive with the individual attention they receive. They are at the heart of what we do at UNC. We continue to focus university resources on students first by giving instruction priority in budgeting. Our operations are efficient, and we are financially accountable. We scrutinize our operations regularly, making decisions that maximize our ability to fulfill our core mission. We use transparent budget processes so that the fiscal affairs of the university are clear to all. We communicate the fact of our extraordinary efficiency to taxpayers, students, policy-makers, donors and grantmakers. And we work diligently to broaden the base of financial support from sources other than state revenue. UNC, like every other Colorado institution of higher education, will face budgeting challenges in the upcoming year. But we are well positioned to deal with those challenges. In the face of those challenges, we continue to remind students, parents and policy-makers that higher education is an investment. That investment clearly provides an economic benefit, but the lessons learned while earning a degree take students further than economic prosperity. UNC is committed to enriching human lives to developing and enhancing the human infrastructure that is vital to society. Sincerely, Kay Norton President University of Northern Colorado 2002 Annual Report 3

5 Leading the Way for Lifelong Learning Mission Statement The University of Northern Colorado shall be a comprehensive baccalaureate and specialized graduate research university with selective admission standards. The University shall offer a comprehensive array of baccalaureate programs and master s and doctoral degrees primarily in the field of education. The University of Northern Colorado has statewide authority to offer graduate programs for the preparation of educational personnel. The Commission shall include in its funding recommendations a level of general fund support for these programs. Vision Statement The University of Northern Colorado strives to be a leading student-centered university that promotes effective teaching, lifelong learning, the advancement of knowledge, research, and a commitment to service. Graduates are educated in the Liberal Arts and professionally prepared to live and contribute effectively in a rapidly changing, technologically advanced society. Description: The University of Northern Colorado is a comprehensive baccalaureate and specialized graduate research university with a continuing commitment to its historical role in the preparation of educators. The University offers a broad range of undergraduate and graduate programs in the arts, sciences, humanities, business, human sciences and education. The array and quality of UNC programs provide a unique resource to Colorado. All students are required to study in the liberal arts tradition, which prepares them to think and act responsibly in a dynamic, diverse and global society. Multicultural content and interdisciplinary programs enrich academic experiences. University curricula are designed to improve students competencies in critical thinking, communication, and problem solving, leadership, and technological applications. As a Carnegie Research Intensive Institution, the University of Northern Colorado s graduate programs emphasize advanced scholarship within a discipline and acquisition of professional abilities for career advancement. Graduate education includes a variety of master s degrees that complement the University s mission and purposes and a select number of doctoral programs that emphasize scholarship and research, clinical practice, pedagogy, or performance. The University provides a full range of student support services and recreational opportunities. The James A. Michener Library and the Music Library provide information resources through sophisticated technology and established collections. VALUES, PURPOSES AND GOALS The University provides services that support equal learning opportunities for all students. Learning occurs in an environment characterized by small classes taught by full-time faculty. UNC faculty, at both the graduate and undergraduate levels, subscribe to a teacher/scholar model in which excellence in instruction is complemented by activities in scholarship and service. Support for the continuous improvement of teaching, learning, scholarship and service is provided through University programs, policies and practices. 4 University of Northern Colorado 2002 Annual Report

6 Leading the Way for Lifelong Learning Value: The University of Northern Colorado believes that its distinctive service to society can only be offered in a student-centered atmosphere of integrity that is grounded in honesty, trust, fairness, respect, and responsibility. For this reason, the University is committed to promoting an environment in which: academic integrity is valued and expected; excellence is sought and rewarded; teaching and learning flourish; diversity of thought and culture is respected; intellectual freedom is preserved and equal opportunity is afforded. Purposes and Goals: The University of Northern Colorado is committed to the following purposes and goals. To prepare a well educated citizenry whose understanding of issues enables them to be contributing members of a rapidly changing, technologically advanced, diverse society. To prepare undergraduate students. (1) Students will acquire a solid foundation of general knowledge in the liberal arts and sciences. (2) Students will develop a variety of competencies in critical thinking, communication, problem-solving and current technology. (3) Students will develop an appreciation for diversity, citizenship, artistic expression, and a positive, healthy lifestyle through educational, cultural, social, and recreational programs. (4) Students will develop a life-long commitment to scholarship and service. (5) Students will acquire depth of knowledge in a specialized scholarly discipline. (6) Students will acquire the knowledge and skills that prepare them for careers and/or advanced scholarly work. (7) Students will master methods of inquiry to acquire deeper understanding of their discipline. (8) Students will demonstrate knowledge of professional standards and practice. To prepare graduate students in specialized fields of study. (1) Students will acquire an appreciation for and ability to work in an increasingly diverse population. (2) Students will engage in scholarly activity, research, and creative endeavors to advance the knowledge and practices of the discipline. (3) Students will acquire advanced knowledge and skills consistent with the professional preparation and standards of the discipline. (4) Students will develop a commitment to scholarship and life-long learning. (5) Students will develop those competencies essential to assuming leadership positions in their professional fields. University of Northern Colorado 2002 Annual Report 5

7 Management's Responsibility for Financial Reporting The accompanying financial statements of the University of Northern Colorado for the year ended June 30, 2002, were prepared by the management in conformity with generally accepted accounting principles. The management of the University is responsible for the integrity and objectivity of these financial statements, which are presented on the accrual basis of accounting and, accordingly, include some amounts based upon judgement. Other financial information in the annual report is consistent with that in the financial statements. The system of internal accounting controls is designed to assure that the financial reports and the books of accounts properly reflect the transactions of the institution, in accordance with established policies and procedures as implemented by qualified personnel. The Board of Trustees of the University of Northern Colorado monitors the financial and accounting operations of the institution, including the review and discussion of periodic financial statements, the evaluation and adoption of budgets and the reporting of independent certified public accountants. Frances L. Schoneck Vice President for Administration and Treasurer to the Board of Trustees Michelle F. Quinn Assistant Vice President of Finance 6 University of Northern Colorado 2002 Annual Report

8 ANDERSON & WHITNEY, P.C. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS ADVISORS 1001 Ninth Avenue Greeley, Colorado (970) # FAX (970) Website: Members of the Legislative Audit Committee: Independent Auditors' Report We have audited the accompanying statement of net assets of the University of Northern Colorado (the University), a component unit of the State of Colorado, as of June 30, 2002, and the related statements of revenues, expenses and changes in net assets, and cash flows for the year then ended. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the University of Northern Colorado at June 30, 2002, and the results of its operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States. The Management s Discussion and Analysis on pages 11 through 17 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. In accordance with Government Auditing Standards, we have also issued our report dated September 26, 2002 on our consideration of the University s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. As discussed in Note 1 to the financial statements, the University adopted the provisions of the Governmental Accounting Standards Board Statement No. 35, Basic Financial Statements - and Management's Discussion and Analysis - for Public Colleges and Universities as of July 1, This results in a change in the format and content of the basic financial statements. September 26, West 11th Street, Suite 300 Greeley, Colorado (970) FAX (970) University of Northern Colorado 2002 Annual Report 7

9 Management Discussion and Analysis Overview In June, 1999, the Governmental Accounting Standards Board (GASB) issued Statement Number 34 followed by Statement Number 35 in November, Together these statements require comprehensive changes to financial reporting for public colleges and universities. The standards were first applied in Colorado to financial statements for the fiscal year ending June 30, 2002 and resulted in statements that focus on the financial condition and results of operation for the University as a whole. In prior years the emphasis was on accounting for transactions through particular funds. The new statements are comprised of: the Statement of Net Assets; the Statement of Revenue, Expenses and Changes in Net Assets; and the Statement of Cash Flows. In addition, the University of Northern Colorado s (UNC s) financial report includes note disclosures and is prefaced by this Management Discussion and Analysis (MD & A). The MD & A is required by GASB standards to provide an easily readable analysis of financial activities based on currently known facts and is prepared by UNC management. Because this is the initial year for the new reporting standards, the discussion is limited to fiscal year 2002 results. In future reports, comparisons with the prior year will be made to enhance the value of the analysis. The Statement of Net Assets and the Statement of Revenue, Expenses and Changes in Net Assets report the University's net assets and changes in them. You can think of the University's net assets - the difference between assets and liabilities - as one way to measure the University's financial health, or financial position. Over time, increases or decreases in the University's net assets are one indicator of whether its financial health is improving or deteriorating. You will need to consider many other nonfinancial factors to assess the overall health of the University. Another way to assess the financial health of an institution is to look at the Statement of Cash flows. Its primary purpose is to provide relevant information about the cash receipts and cash payments of an entity during a period. This report presents the financial results of the University of Northern Colorado, a public comprehensive baccalaureate and specialized graduate research university. It incorporates the activities of the Student Media Corporation and the Alumni Association, blended component units (additional detail in Note 1). Financial Highlights The net assets of the University of Northern Colorado increased by $30.4 million to $142.5 million during the fiscal year ended June 30, The largest part of this increase ($24.9 million) is in net capital assets. Selected financial highlights for the fiscal year ended June 30, 2002 include: University assets total $221.8 million with liabilities of $79.3 million resulting in net assets of $142.5 million. Capital assets of $148.6 million comprise 67% of University assets. Total revenue was $156.8 million including $80.7 million of Operating Revenue and $42.3 million in State Appropriation. $150,000,000 $100,000,000 $50,000,000 $0 Year-end Net Assets Restricted Unrestricted Capital Assets Net of Debt Operating Expenses total $124.1 million including $84.5 million in personnel costs. 8 University of Northern Colorado 2002 Annual Report

10 Management Discussion and Analysis Statement of Net Assets The Statement of Net Assets is a financial snapshot of the University of Northern Colorado at June 30, It presents the fiscal resources of the university (assets), the claims against those resources (liabilities) and the residual available for future operations (net assets). Assets and liabilities are classified by liquidity as either current or non-current. Net assets are classified by the ways in which they may be used for future operations. University of Northern Colorado Condensed Statement of Net Assets At June 30, 2002 Assets Current Assets Capital Other Non-current Assets Total Assets Liabilities Current Liabilities Bonds Payable Other Non-current Liabilities Total Liabilities Net Assets Invested in Capital Assets net of Related Debt Restricted - Nonexpendable Restricted - Expendable Unrestricted Total Net Assets $ 44,946, ,633,144 28,271,291 $ 221,850,971 $ 14,407,813 60,132,780 4,785,806 $ 79,326,399 $ 106,985, ,541 10,238,897 24,918,805 $ 142,524,572 Liquid Assets Unrestricted cash and cash equivalents ($37.3 million) comprise 16.8% of the University s assets. The current ratio (current assets over current liabilities) is 3:1. Capital Assets UNC s single largest fiscal resource is its campus facility. Previously reflected at gross historical cost, public university asset values are now adjusted for depreciation. Capital assets net of $102,494,579 depreciation total $148,633,144. Capital Assets Net of Depreciation Land and Improvements Buildings Construction In Progress Library Books Equipment Art and Historical Treasures Total Capital Assets June 30, 2002 $ 11,672, ,970,972 11,933,113 6,645,887 2,567, ,630 $148,633, % 77.4% 8.0% 4.5% 1.7% 0.6% 100.0% University of Northern Colorado 2002 Annual Report 9

11 Management Discussion and Analysis Liabilities The University s commitments of resources include: amounts owed to vendors; leases of equipment; and deferred revenue, for example, tuition and fee money received by June 30, 2002, but related to instructional services to be provided in fiscal year Compensated absences or vacation accrued by employees of $2.7 million is another significant liability. The single largest liability however, is $63,270,000 in outstanding bond principal. Long-term Debt In July 2001 UNC issued bonds totaling $50,000,000 par. These bonds advance refunded the previously issued 1997 bonds and provided funding for West Campus Dining Improvements, Parking, and additional Auxiliary Facility Improvements. Ratings by Moody s Investor Service and Standard & Poor s, based on insured bonds, were Aaa and AAA respectively. The underlying ratings were A2 and A. Other outstanding bonds include 1994 issuance and the 1998 issuance, both of which were for Auxiliary projects and the refunding of prior bonds. Bond maturities range from 2003 to Net Assets Net assets are the resources available for future operations, that is, assets reduced by liabilities. The University s largest class of assets is its capital assets, and even after consideration of related debt, Capital Assets Net of Debt comprise 75% of UNC s net assets. It is important to recognize that the Unrestricted Net Assets of almost $25 million include resources that, while unrestricted under legal and financial reporting definitions, are in fact dedicated to particular purposes. Most notably, the Unrestricted Net Assets include $7 million earmarked for other Auxiliary and general campus capital projects. Remaining Unrestricted Net Assets include departmental operating funds; Auxiliary Enterprise working capital; reserves; and the net assets of the Student Media Corporation and Alumni Association. Net Assets June 30, 2002 Capital Assets Net of Debt Unrestricted Student Loans Bond Reserve Non-expendable Other Restricted $ 106,985,329 24,918,805 9,284, , , ,647 $142,524,572 Unrestricted 17.49% Student Loans 6.51% Restricted 7.45% Bond Reserve 0.53% Nonexpendable 0.27% Capital Assets Net of Debt 75.06% Other Restricted 0.14% 10 University of Northern Colorado 2002 Annual Report

12 Management Discussion and Analysis Statement of Revenues, Expenses and Changes in Net Assets The Statement of Revenues, Expenses and Changes in Net Assets presents the financial activity of the University of Northern Colorado over the fiscal year. The focus is on Operating Revenues and Expenses and it is important to recognize that the new GASB standards require state appropriations to be reported as Non-operating Revenue. University of Northern Colorado Condensed Statement of Revenues, Expenditures and Changes in Net Assets For the Year Ended June 30, 2002 Operating Revenues Net Tuition and Fees Grants and Contracts Auxiliary Other Total Operating Revenues Operating Expenses Educational and General Auxiliary Depreciation Total Operating Expenses Operating Loss Non-operating Revenues State Appropriations Other Income Before Other Capital Appropriations Net Other Items Increase in Net Assets Net Assets- Beginning of Year Net Assets- End of Year $ 32,159,991) 19,037,633) 26,346,214) 3,159,159) $ 80,702,997) $ 97,506,861) 17,866,440) 8,765,627) $ 124,138,928) $ (43,435,931) $ 42,352,302) 2,845,650) $ 1,762,021) $ 27,372,422) 1,222,932) $ 30,357,375) 112,167,198) $142,524,573) University of Northern Colorado 2002 Annual Report 11

13 Management Discussion and Analysis Total Revenues Revenue from all sources total $156.8 million with $80.7 million of that being Operating Revenue and an additional $42.3 million being UNC s general fund appropriation from the State of Colorado. Capital appropriations to UNC were also significant in fiscal year 2002 totaling $27.4 million with almost $20 million for Ross Hall. Investment Income 2% Other Non- Operating 2% Total Revenues Capital Appropriations 17% Operating 52% Tuition and Fees 21% Grants & Contracts 12% State Appropriations 27% Auxiliary Revenue 17% Other Operating 2% Operating Revenues Operating revenue is derived from Tuition and Fees - $32,159,991; Auxiliary Activity - $26,346,214; Grants & Contracts - $19,037,633 and Other - $3,159,159. Under the new GASB standards, tuition and fees are now shown net of $8,117,521 in scholarship allowances. Scholarship allowances are those portions of UNC tuition and fees which are paid by other revenues, primarily federal and state grants for financial aid but also general institutional scholarships. This is one of the significant changes from prior financial reporting standards, which required presentation of the flow of resources through various funds. Almost 60% of the Operating Grants and Contract revenue is federal and state financial aid. More than half of the non-governmental grants are from the UNC Foundation. Grants & Contracts Revenue Federal Financial Aid State Financial Aid Federal Grants State & Local Grants Non-governmental Grants $ 5,707,573 5,209,099 4,974, ,500 2,282,285 $19,037, % 27.4% 26.1% 4.5% 12.0% 100.0% 12 University of Northern Colorado 2002 Annual Report

14 Management Discussion and Analysis Expenses Operating Expenses of $124.1 million comprise the largest part of expenses and other losses which also include $2,151,900 in interest related to bond financing and $190,004 in loss on disposal of assets. Historically, expenses have been shown by function but the standards now permit presentation either by function or natural classification. Public institutions of higher education in Colorado have elected to continue the functional presentation. Operating Expense by Function Instruction Research Public Service Academic Support Student Services Institutional Support Operation of Plant Scholarships & Fellowships Auxiliary Operating Expenditures Depreciation Total Operating Expenses $ 48,052,554 2,207,219 1,395,721 12,090,933 13,582,705 9,048,830 8,496,155 2,632,744 17,866,440 8,765,627 $124,138, % 1.8% 1.1% 9.7% 10.9% 7.3% 6.8% 2.1% 14.4% 7.1% 100.0% From a natural classification perspective, the largest expenditure is for personnel. Operating Expenses by Natural Class Personnel Costs Cost of Goods Sold Other Operating Expenses Depreciation Total Operating Expenses $ 84,553,805 7,525,118 23,294,378 8,765,627 $124,138, % 6.0% 18.8% 7.1% 100.0% Statement of Cash Flows The Statement of Cash Flows provides information about the cash activity over the past year. A summary is presented here with more detail on the actual statement. Just as the State Appropriation is not part of Operating Revenue on the Statement of Revenue, Expenses and Changes in Net Assets, cash flows from the State Appropriation are not considered Operating, but Non-capital Financing. University of Northern Colorado Condensed Statement of Cash Flows For the Year Ended June 30, 2002 Cash Flows Provided/(Used) by: Operating Activities Noncapital Financing Capital and Related Financing Investing $ (28,953,657) 42,490,948) 11,831,494) 3,194,407) UNC has bond proceeds of $19 million not yet expended for their intended purpose. These bond proceeds plus cash from the sale of the KUNC license (see note 17) and increased reserves contribute to the significant net increase in cash. Net Increase in Cash Beginning Cash Balance Ending Cash Balance $ 28,563,192 28,134,475 $ 56,697,667 University of Northern Colorado 2002 Annual Report 13

15 Management Discussion and Analysis Economic Outlook UNC s financial future depends on many factors. From the resources side, student enrollment and support from the State of Colorado are critical. From the expenditure side, the cost of retaining qualified personnel, energy costs and administrative efficiency are important. Student Headcount Enrollment Fiscal Year On-Campus 13,081 13,009 13,083 Percent Change 0.6% -0.6% The University Plan includes a number of enrollment goals and strategies. It is believed that our on-campus enrollment could increase to about 15,000 from the current level. Enrollment over the last few years has been fairly constant. Preliminary results for Fall 2002 suggest similar enrollment levels for fiscal year Fiscal Year Resident FTE Enrollment On-Campus 9, , , Percent Change 0.5% 0.6% Resident enrollment measured by full-time equivalency (FTE) or 30 academic credit hours is also important, as it is the basis for funding from the State of Colorado. Preliminary Fall 2002 estimates suggest a resident FTE increase of about 1.5% from Fall The fiscal year 2003 total will also include enrollments through June The revenues and competing public needs of the State of Colorado play a critical role in the University of Northern Colorado s finances. In fiscal year 2002 the State s economic situation forced budgetary reductions, which impacted UNC by $1.6 million or 3.7% of the original State Appropriation. The outlook for fiscal year 2003 is one of continued fiscal constraint. In light of the current downturn in State revenues, the University has initiated a plan to continue to provide quality instruction within the resources available. Tuition for was increased by 6.2% and 7.7% for residents and non-residents respectively. UNC s tuition remains competitive in the mid-range for Colorado universities. Resource strategies have been employed to streamline administration and redirect funding to the classrooms. Significant funds have been identified and set aside to address fiscal 2003 budgetary reductions. The University expects to continue to find financial solutions to allow it to fulfill its educational mission. 14 University of Northern Colorado 2002 Annual Report

16 Statement of Net Assets ASSETS Current Assets: Cash and cash equivalents Student accounts receivable, net Other accounts receivable, net Student loans receivable, net Inventories Other current assets Total Current Assets Noncurrent Assets Restricted cash Restricted investments Student loans receivable, net Other noncurrent assets Non-depreciable Capital Assets: Land Land improvements Construction in progress Art & historical treasures Depreciable Capital Assets: Land improvements (Less Accum Depr. of $3,618,042) Buildings and improvements (Less Accum Depr. of $68,760,430) Leasehold improvements (Less Accum Depr. of $495,403) Equipment (Less Accum Depr. of $8,562,693) Library holdings (Less Accum Depr. of $21,058,011) Total Noncurrent Assets TOTAL ASSETS LIABILITIES Current liabilities: Accounts payable Accrued liabilities Deferred revenue Capital leases payable, current portion Bonds payable, current portion Compensated absence liabilities Other long term liabilities, current portion Total Current Liabilities Noncurrent liabilities: Bonds payable Capital lease payable Other long term liabilities Compensated absence liabilities Total Noncurrent Liabilities TOTAL LIABILITIES NET ASSETS Invested in capital assets, net of debt Restricted for: Nonexpendable purposes Scholarships/fellowships Academic support Expendable purposes Scholarships/fellowships Loans Capital projects Other Unrestricted TOTAL NET ASSETS JUNE 30, 2002 $ 37,347,768 4,166, ,297 1,237,036 1,020, ,837 44,946,536 19,349, ,994 6,754,102 1,476,296 4,848,368 2,488,526 11,933, ,630 4,335, ,970, ,567,824 6,645, ,904, ,850,971 2,628,975 2,630,138 5,730,232 92,825 1,030, ,793 1,643,850 14,407,813 60,132, ,901 2,574,174 2,095,731 64,918,586 79,326, ,985, ,141 1, ,480 9,284, ,000 1,167 24,918,805 $142,524,572 * See accompanying notes to financial statements University of Northern Colorado 2002 Annual Report 15

17 Statement of Revenue, Expenses and Changes in Net Assets YEAR ENDED JUNE 30, 2002 REVENUES Operating revenues: Student tuition and fees (including $3,259,926 of revenues pledged for bonds and net of scholarship allowances of $8,117,521) Federal grants and contracts (including $50,536 of revenues pledged for bonds) State and local grants and contracts Nongovernmental grants and contracts Sales and services of educational activities Auxiliary operating revenue (including $24,304,974 of revenues pledged for bonds and net of scholarship allowances of $1,059,662) Other operating revenue (including $516,426 of revenues pledged for bonds) Total operating revenues EXPENSES Operating expenses: Educational and general Instruction Research Public service Academic support Student services Institutional support Operation of plant Scholarships & fellowships Auxiliary operating expenditures Depreciation Total operating expenses Operating income (loss) $ 32,159,991) 10,681,749) 6,073,599) 2,282,285) 2,490,421) 26,346,214) 668,738) 80,702,997) 48,052,554) 2,207,219) 1,395,721) 12,090,933) 13,582,705) 9,048,830) 8,496,155) 2,632,744) 17,866,440) 8,765,627) 124,138,928) (43,435,931) NONOPERATING REVENUES (EXPENSES) State appropriations Investment income (net of investment expense of $6,705) Interest on capital asset related debt Other nonoperating revenues Net nonoperating revenues Income before other revenues, (expenses) gains, or (losses) Capital appropriations Capital grants and gifts Loss on disposal of capital assets Special Item - Sale of KUNC license Increase in net assets Net Assets Net assets - beginning of year Net assets - end of year 42,352,302) 3,194,407) (2,151,900) 1,689,247) 45,084,056) 1,648,125) 27,372,422) 266,565) (190,004) 1,260,266) 30,357,374) 112,167,198) $ 142,524,572) * See accompanying notes to financial statements 16 University of Northern Colorado 2002 Annual Report

18 Statement of Cash Flows YEAR ENDED JUNE 30, 2002 CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received: Tuition and fees Sales of services Sales of products Grants and contracts Student loans collected Other receipts Cash Payments: Payments to or for employees Payments to suppliers Scholarships disbursed Student loans disbursed Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: State appropriations, noncapital Agency inflows Agency outflows Transfers from (to) other funds Net cash provided (used) by noncapital financing activities $ 32,380,948) 33,077,570) 51,453) 19,920,124) 2,142,662) 1,952,801) (84,845,516) (29,684,856) (2,386,280) (1,562,563) (28,953,657) 42,352,302) 32,146,825) (31,998,904) (9,275) 42,490,948) CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: State appropriations, capital Capital grants, contracts & gifts Proceeds from sale of capital assets Gain (Loss) on disposal of capital assets Proceeds from capital debt Acquisition or construction of capital assets Principal paid on capital debt Interest paid on capital debt Net cash provided (used) by capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES : Investment earnings Net cash provided (used) by investing activities Net Increase (Decrease) in Cash Beginning cash balance Ending cash balance 27,372, ,565 1,260,266 (190,004) 48,332,604 (33,193,090) (29,930,810) (2,086,459) 11,831,494) 3,194,407) 3,194,407) 28,563,192) 28,134,475) $ 56,697,667) Reconciliation of net operating revenues (expenses) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile: Depreciation expense Other revenues and additions (external rent) Decrease (increase) in assets: Cash invested with custodian Receivables, net Inventories & prepaids Increase (decrease) in liabilities: Accounts payable Accrued payroll Deferred revenues Other liabilities Compensated absences Net cash provided (used) by operating activities $ (43,435,931) 8,765,627) 1,689,247) (3,740) (101,653) (1,032,387) (1,200,254) 618,027) 5,597,711) 78,433) 71,263) $ (28,953,657) * See accompanying notes to financial statements University of Northern Colorado 2002 Annual Report 17

19 Notes to Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The University of Northern Colorado is a component unit of the State of Colorado. The financial statements of the University include all of the integral parts of the University s operations. The University applied various criteria to determine if it is financially accountable for any organization which would require that organization to be included in the University s reporting entity. These criteria include fiscal dependency, financial benefit/ burden relationship, selection of governing authority, designation of management, ability to significantly influence operations and accountability for fiscal matters. As required by generally accepted accounting principles, these financial statements present the University (primary government) and its component units. The component units discussed below are included in the University s reporting entity because of the significance of their operational or financial relationships with the University in accordance with Government Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity, which was adopted by the University for fiscal year Blended Component Units Student Media Corporation ( Media Corporation ): The Media Corporation was organized under state law with a primary objective to publish the official school newspaper of the University. The Media Corporation is governed by a Board of Directors comprised of various University administrators, certain student members, and members of the community. The Media Corporation is reported as if it were a part of the University due to the financial dependency of the Media Corporation on the University and because its main objective is to provide the University s official newspaper. Complete financial statements can be obtained from their administrative office. Alumni Association of the University of Northern Colorado ( Alumni Association ): The Alumni Association was organized under state law with a purpose of facilitating broad support for the University among alumni. The Alumni Association is governed by a Board of Directors consisting of 23 members of the Association. The Alumni Association is reported as if it were a part of the University due to financial dependency of the Alumni Association on the University. Complete financial statements can be obtained from their administrative office. Discretely Presented Component Units The University has no component units which are required to be presented as discretely presented component units. Related Organization The University of Northern Colorado Foundation, Inc.: The University of Northern Colorado Foundation, Inc. (the Foundation) has been excluded from the reporting entity. The Foundation is a separate legal entity which is fully independent from the University, is not financially dependent upon the University, has a separately elected Board of Directors and, as such, has substantial autonomy and separate government entity characteristics. The Foundation has no fiscal accountability to the University. Basis of Accounting: For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University's financial statements have been 18 University of Northern Colorado 2002 Annual Report

20 Notes to Financial Statements presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation is incurred. All significant intra-agency transactions have been eliminated. The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless the FASB standards conflict with Governmental Accounting Standards Board (GASB) standards. The University has elected not to apply FASB pronouncements issued after the applicable date. Cash Equivalents: For purposes of the statements of cash flows, the University considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Funds invested through the State Treasurer's Cash Management Program are considered cash equivalents. Investments: The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the statements of revenues, expenses, and changes in net assets. Accounts Receivable: Accounts receivable consists of tuition and fee charges to students and auxiliary enterprise services provided to students, faculty and staff. Accounts receivable also include amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grant and contracts. Accounts receivable are recorded net of estimated uncollectible amounts. Inventories: Inventories are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Noncurrent Cash and Investments: Cash and investments that are externally restricted to make debt service payments, maintain sinking or reserve funds, or to purchase or contract capital or other noncurrent assets, are classified as noncurrent assets in the statements of net assets. Capital Assets: Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, and land improvements that significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 years for buildings, 20 years for land improvements, 10 years for library books, and 3 to 10 years for equipment. Deferred Revenues: Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned. Compensated Absences: Employees' compensated absences are accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as accrued compensated absence in the statement of net assets and as a component of compensation and benefit expense in the statement of revenues, expenses and changes in net assets. Noncurrent Liabilities: Noncurrent liabilities include (1) principal amounts of revenue bonds payable, notes payable, and capital lease obligations with contractual maturities greater than one year; (2) estimated amounts University of Northern Colorado 2002 Annual Report 19

21 Notes to Financial Statements (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets. Net Assets: The University's net assets are classified as follows: Invested in capital assets, net of related debt: This represents the University's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties. Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University, and may be used at the discretion of the governing board to meet current expenses for any purpose. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. Classification of Revenue: The University has classified its revenue as either operating or nonoperating revenues according to the following criteria: Operating Revenues: Operating revenues generally result from providing goods and services for instruction, public service or related support services to an individual or entity separate from the University. Nonoperating Revenues: Nonoperating revenues are those revenues that do not meet the definition of operating revenues. Nonoperating revenues include state appropriations for operations, gifts, investment income and insurance reimbursement revenue. Application of Restricted and Unrestricted Resources: The University's policy is to first apply an expense against restricted resources then towards unrestricted resources, when both restricted and unrestricted resources are available to pay an expense. Financial Statement Presentation and Changes in Accounting Principles: In June 1999, GASB approved Statement No. 34, "Basic Financial Statements and Management's Discussion and Analysis for State and Local Government". This was followed by the approval of Statement No. 35. "Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities". The State of Colorado is required to implement GASB No. 34 as of and for the year ended June 30, As a component unit of the State of Colorado, the University is also required to adopt GASB No. 34 and 35. The University has elected to follow the financial statement presentation guidelines for special-purpose governments engaged only in business-type activities as outlined in GASB No. 34. Those guidelines require the financial statements to be prepared using an entity-wide perspective. Therefore, the financial statements report the University's assets, liabilities, and net assets, revenues, expenses and changes in net assets, and cash flows for the University as a whole, rather than by fund, as previously required. 20 University of Northern Colorado 2002 Annual Report

22 Notes to Financial Statements The University was required to make the following significant changes in accounting principles to conform to GASB No. 34 and 35: 1) Scholarship Allowances: Financial aid awarded to students by the University that is used to pay University charges such as tuition, fees, residence hall charges and board is recognized as a scholarship allowance rather than as financial aid expense, as previously required. A scholarship allowance directly reduces the appropriate revenues. To the extent that financial aid awarded exceeds University charges to students, the University recognizes financial aid expense. 2) Summer School Revenue and Expense: The University is required to recognize summer school revenue and expense in the period earned or incurred rather than in one fiscal year, as previously required. 3) Depreciation Expense: The University is required to record depreciation expense for capital assets. Previously depreciation expense was not recognized. 4) Acquisitions of Capital Assets and Payments of Debt Principal: Under the fund perspective, the University recognized an expenditure or fund deduction for the acquisition of capital assets and payment of debt principal. Under the entity-wide perspective, these items are not considered an expense against operations. Net assets at July 1, 2001 were reduced by $95,295,521 for the cumulative effect of these changes on years prior to fiscal year Land and beginning net assets have been adjusted to reflect the addition of Arlington Park property for a value of $1,297,296, (the buildings were disposed of in fiscal year 2001). The property was purchased with the intent to demolish the buildings, therefore the costs that had been allocated to buildings was reallocated to land. 2. CASH, CASH EQUIVALENTS AND INVESTMENTS At June 30, 2002, the University had $55,946,111 on deposit with the State Treasurer. Detailed information on the State Treasurer's pooled cash and investments is available from that office. At June 30, 2002, the University had $29,668 cash on hand and the carrying amount of the University's deposits in banks was $115,498 and the bank balance was $3,443,811. Of this bank balance, the entire amount was collateralized by the institution's agent in the institution's name or was covered by collateral held in the pledging institution's trust department in the name of the public deposit pool, as required by the Public Deposit Protection Act. No monies were uninsured or uncollateralized. The statutes of the State of Colorado authorize agencies of the state to invest in certificates of deposit, money market certificates, bonds or other interest-bearing obligations of the United States, state, county and school district bonds, and state, county and municipal warrants. The Colorado Public Deposit Protection Act requires financial institutions to pledge collateral having a market value of at least 102 percent of the aggregate public deposits not insured by federal depository insurance. Eligible collateral includes municipal bonds, U.S. government securities, mortgages, and deeds of trust. The University deposits cash with the Colorado State Treasurer as required by Colorado Revised Statutes (CRS). The State Treasurer pools these deposits and invests them in securities approved by CRS The University reports its share of the Treasurer's unrealized gains or losses based on its participation in the State Treasurer's pool. All of the Treasurer's investments are reported at fair value, which is determined based on quoted market prices at June 30, The State Treasurer does not invest any of the pool resources in any external investment pool, and there is no assignment or income related to participation in the pool. The unrealized gains or losses included in "Investment Income" reflect only the change in fair value during the current fiscal year. Additional information on the Treasurer's pool may be obtained in the State of Colorado's Comprehensive Annual Financial Report. Cash/investments with custodian of $1,297,384 at June 30, 2002, includes U.S. Treasury securities with a cost basis of $627,527 and market value of $640,592. The maturity dates range from September 30, 2002 through May 15, 2007 with a yield from percent to percent. University of Northern Colorado 2002 Annual Report 21