PRINCE GEORGE S COMMUNITY COLLEGE 301 Largo Road Largo, Maryland 20774

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1 PRINCE GEORGE S COMMUNITY COLLEGE 301 Largo Road Largo, Maryland REQUEST FOR PROPOSAL #16-07 AUDITING SERVICES January 8, 2016 Submit Sealed Competitive Proposals to: Office of Procurement and Contracting Prince George s Community College 301 Largo Road Largo, Maryland Proposal Due Date: February 16, :00 A.M. There will be a pre-proposal conference at 10:00 a.m., on January 15, 2016, in Kent Hall, Room 262, Prince George s Community College, 301 Largo Road, Largo, Maryland. All interested firms are strongly encouraged to attend this conference. Any questions related to the proposal requirements or the proposal process may be directed to Ms. Lynnette Ellington, Procurement Coordinator, via at lellington@pgcc.edu. In the event the college closes as a result of inclement weather or for other unanticipated reasons proposals will be due on the next business day that the college is officially open, at the same time. PROSPECTIVE CONTRACTORS WHO HAVE RECEIVED THIS DOCUMENT FROM A SOURCE OTHER THAN INDICATED SHOULD IMMEDIATELY CONTACT THE ISSUING OFFICE AND PROVIDE THEIR NAME AND MAILING ADDRESS IN ORDER THAT AMENDMENTS TO THE RFP OR OTHER COMMUNICATIONS CAN BE SENT TO THEM. ANY PROSPECTIVE CONTRACTORS WHO FAIL TO NOTIFY THE ISSUING OFFICE WITH THIS INFORMATION ASSUME COMPLETE RESPONSIBILITY IN THE EVENT THAT THEY DO NOT RECEIVE COMMUNICATIONS FROM THE ISSUING OFFICE PRIOR TO THE CLOSING DATE. 1

2 BOARD OF TRUSTEES PRINCE GEORGE S COMMUNITY COLLEGE REQUEST FOR PROPOSAL #16-07 AUDITING SERVICES The College invites competitive sealed proposals for services of a certified public accounting firm having a minimum of ten (10) years of experience in providing the services required through this proposal. The proposing firm must supply, as part of the proposal, a listing of five (5) client references from educational institutions that fall under GASB, of a similar nature. Firms must have experience in governmental/higher education auditing experience to audit the college s records and financial statements for the year ending June 30, The contract period will be for three (3) years, with the sole option of the College to extend up to two (2) additional one year periods based on satisfactory performance. All addenda, including questions and answers, will be posted on the College s Procurement website at and emaryland Marketplace website at It is the bidder s responsibility to monitor these sites and download the addenda. One (1) original plus four (4) copies of the technical proposal and one (1) original of the price proposal, shall be submitted to the Procurement Office, located in Kent Hall, Room 264, not later than 10:00 a.m. on February 16, Proposals must be valid for 90 days. It is the intent of the College to award the contract by mid-march, Final audit reports are due by September 25th of each year. The College reserves the right to accept or reject any and all proposals, in whole or in part, received as a result of this RFP; to waive minor irregularities or technicalities, or to negotiate with all responsible Bidders, in any manner necessary, to serve the best interest of the College. Further, the College reserves the right to make an award in whole, in part, or no award at all. INSTRUCTIONS TO BIDDERS 1. Preparing your proposal: Prior to preparing your proposal, familiarize yourself with the specifications and all other documents. 2. In filling out Proposal Forms: a. Use only forms supplied by the college. b. Make an original and four copies for submission. See Paragraph j. below. c. Fill in all spaces. d. Do not alter or change any wording in the proposal form. e. List all addenda received. Failure to list all addenda may disqualify your proposal. f. Sign the original and four copies of the completed proposal form in pen and ink. Individuals: Sign with full name and address. 2

3 Partnerships: A general partner must sign and state his or her address. List the names and addresses of all other partners. Corporations: An authorized office of the corporation must sign on behalf of the corporation. Include the name and address of the corporation and affix the corporate seal. Print or Type the names of all signers below their signatures. g. Attach the Bid Proposal Affidavit. Failure to submit a properly executed Bid Proposal Affidavit with proposal response may lead to the disqualification of bidder. h. Attach references. i. Place the original and four copies of the completed and signed proposal form, and all attachments in an envelope addressed to: Board of Trustees of Prince George s Community College, c/o Interim Director of Procurement, Kent Hall, Room 264, 301 Largo Road, Largo, Maryland 20774, bearing on the outside the name and address of the bidder, the title of the proposal and the proposal closing time and date. j. Seal and Deliver: Delivery, whether by mail or otherwise, must be made to the Office of Procurement and Contracting, Kent Hall, Room 264, prior to the submission date and time. Late proposals will not be accepted. Proposals received after the date and time designated for receipt of Proposals cannot be accepted and will be returned to firms unopened. Any proposal may be withdrawn prior to the Proposal submittal date and time; however, all Proposals are considered final after the date and time for receipt of Proposals. Final Proposals may not be withdrawn, or canceled for a period of 90 days after the time and date designated for receipt of final Proposals. Proposals will not be accepted via fax. The college will not accept oral proposals, proposals submitted via the telephone, or electronically. 3. Reserved Rights: The Board of Trustees of Prince George s Community College reserves the right to reject any or all Proposals or to accept any proposal in the college s best interest, and to waive any formalities, informalities or technicalities as it deems necessary, appropriate and in the college s best interest. The college reserves the right, prior to award, to negotiate such changes with the most qualified responsive bidder and to award a contract incorporating such agreed upon changes to that bidder. Final award of contract is subject to the availability of funding for this project. 4. Discrepancies: Should a bidder find discrepancies in the specifications, or be in doubt of the meaning or intent of any contract documents, bidder shall request a clarification from the Office of Procurement and Contracting not later than seven days prior to the proposal submission date (Saturdays and Sundays excluded), so that an addendum or other clarification may be issued. Failure to request such a clarification is a waiver to any claim by the bidder for a price adjustment to compensate for additional costs incurred by reason of later clarification of the contract documents. 3

4 5. Late Penalty Charge: The contractor shall be liable for a late penalty charge in the amount of one thousand dollars ($1,000) per day for each day that any assigned task remains uncompleted beyond the specified time for completion; however, that due amount shall be taken for any time extensions to which the contractor is entitled under the contract. 6. MBE Participation The College has established a MBE goal for this project, with mandatory 25% MBE participation. It is the policy of Prince George s Community College to encourage minority businesses and local businesses to provide goods and services for the performance of College functions. Minority businesses include non-profit entities organized to promote the interests of handicapped persons and firms that are 51% owned and controlled by a member(s) of socially or economically disadvantaged minority groups, which include: Blacks, Hispanics, American Indians, Alaska natives, Asians, Pacific Islanders, women, and the mentally or physically disabled. The contractor is required to demonstrate that a mandatory minimum 25% of the subcontractors and/or vendors anticipated to be retained by the Contractor for the College s project are minority firms. NONDISCRIMINATION IN PROCUREMENT The Board of Trustees is committed to a policy of nondiscrimination and equal opportunity in all procurement activities, to the end that the college purchases and contracts shall be solicited and entered into without regard to the race, color, religion, sex, marital status, age, handicap or national origin or status as a Vietnam War Veteran, qualified disabled veteran, or qualified individual with a disability, of any bidder, prospective bidder, vendor or contractor. MINORITY BUSINESS ENTERPRISES ARE ENCOURAGED TO PARTICIPATE IN THIS SOLICITATION. MINORITY BUSINESS ENTERPRISE YES NO CERTIFICATION # 4

5 TABLE OF CONTENTS INTRODUCTION.. 7 TENTATIVE TIME FRAME FOR PROCESS OF SELECTION OF FIRM, CONTRACT AWARD, AND NOTICE TO PROCEED.. 7 CONTACT POINT...8 INTERPRETATIONS, DISCREPANCIES, OMISSIONS 8 CHANGES TO THE PROPOSAL SPECIFICATIONS 8 PROPOSAL FORMS. 9 LATE PROPOSALS 9 INCLEMENT WEATHER AND OTHER UNANTICIPATED COLLEGE CLOSINGS. 9 ERRORS IN PROPOSALS. 9 PROPOSAL DOCUMENTS.. 9 SUBMISSION OF PROPOSALS. 10 CRITERIA FOR EVALUATION OF PROPOSAL. 11 AWARD OR REJECTION OF PROPOSALS 12 PRINCE GEORGE S COMMUNITY COLLEGE RESERVED RIGHTS. 12 RIGHT TO ACCEPT OR REJECT PROPOSALS.. 12 GOVERNING LAW 13 RELATIONSHIP OF PROPOSAL AND FINAL CONTRACT FORMAT AND OUTLINE FOR SEALED COMPETITIVE PROPOSALS 14 SECTION I TITLE PAGE...14 SECTION II PRICE PROPOSAL. 14 SECTION III QUALIFICATIONS OF FIRM

6 TABLE OF CONTENTS (CONT.) SECTION IV CONFLICT OF INTEREST 18 SECTION V ETHICS STATEMENT.18 SECTION VI FIRMS PROPOSED PROJECT SCHEDULE 18 SECTION VII ADDITIONAL INFORMATION. 18 STATEMENT OF COLLEGE REQUIREMENTS. 18 GENERAL PROVISIONS.18 INSURANCE REQUIREMENTS 19 SCOPE OF SERVICE 21 PROPOSAL FORMS: PRICE PROPOSAL FORM 23 CONFLICT OF INTEREST STATEMENT 27 ETHICS STATEMENT.28 EXHIBITS AND FORMS.29 PGCC AUDITED FINANCIAL STATEMENTS FINAL PGCC FORM SBCC-CC4 FINAL PGCC FORM 990 BLANK PAGE INSTRUCTIONS AND REGULATIONS FOR BIDDING MANDATORY PROCUREMENT CONTRACT PROVISIONS MINORITY BUSINESS ENTERPRISE PARTICIPATION PROVISIONS MINORITY BUSINESS ENTERPRISE UTILIZATION AFFIDAVIT MINORITY BUSINESS ENTERPRISE PARTICIPATION SCHEDULE BID PROPOSAL AFFIDAVIT 6

7 INTRODUCTION Prince George s Community College is seeking proposals for the following professional services: An audit of: the college s financial statements for the year ending June 30, 2016; the Foundation for the year ending June 30, 2016; Full Time Equivalent (FTE) Enrollment report included in the Maryland Higher Education Annual Financial Report. PELL, SEOG and College Work Study Programs and any other A-133 federal programs. As a part of these services the following additional documents are requested: Management Letter identifying any material weaknesses addressed to the Board of Trustees; Operational concerns letter addressed to the Vice President for Administrative Services identifying less than material concerns. Additionally, the college requests proposals related to the Foundation to include the audit of the Foundation only, and the Foundation and Federal Internal Revenue Service (IRS) Form 990. All audited statements with related opinions are to be bound and printed and delivered to the college 5 business days prior to September 30, PDF files of the final documents must be sent to the college within 10 days of the submission date. Thirty five copies of each report not including tax returns are to be prepared and forwarded to the Dean of Financial Affairs. TENTATIVE TIME FRAME FOR PROCESS OF SELECTION FOR FIRM, CONTRACT AWARD, AND NOTICE TO PROCEED: January 8, 2016 Advertisement placed in local newspaper. RFP posted on emaryland Marketplace and the college website January 15, 2016 Pre-proposal Conference 10:00 a.m. Kent Hall, Room 262 Prince George s Community College 301 Largo Road Largo, Maryland January 20, :00 p.m. Cut-off for questions February 16, 2016 Due date for proposals. All proposals are due in the Office 10:00 a.m. of Procurement and Contracting, Kent Hall, Room 264, Prince George s Community College, 301 Largo Road, Largo, Maryland prior to the date and time stated. February 22 March 4 March 10, 2016 Review of proposals by committee Recommendation of award of contract 7

8 1.0 CONTACT POINT INSTRUCTIONS TO FIRMS SUBMITTING PROPOSALS All contact with Prince George s Community College regarding any matter concerning this Request for Proposal (RFP) must be made through Ms. Lynnette Ellington, Procurement Coordinator, at lellington@pgcc.edu. Under no circumstances are the firms including third party firms, or their staffs, allowed to contact other college staff, faculty or any related constituency for purposes associated with the RFP, including but not limited to, obtaining or providing additional information. Firms failing to comply with this requirement may be disqualified. The college may, at its discretion, designate one or more of its employees as a liaison(s) to firms. This designation would most likely occur after the deadline for submission of Proposals. Communication between a firm and the college could then occur through a liaison(s). 2.0 INTERPRETATION, DISCREPANCIES AND OMISSIONS 2.1 Firms must carefully examine the proposal documents. Should any firm find discrepancies or omissions in this RFP, or be in doubt as to the meaning of any aspect of this document, the firm should direct inquiries and /or requests for clarification of the documents, specifications or the process as a whole to: Ms. Lynnette Ellington, Procurement Coordinator, at lellington@pgcc.edu. 2.2 All questions regarding the proposal shall be directed, via , to Ms. Lynnette Ellington, not later than 1:00 p.m. on January 20, Firms are advised that the college reserves the right to use its best judgment in choosing to respond or not respond to any questions received after the above stated cut-off date for questions. 2.3 Clarifications of the RFP, in the form of addenda, will be posted to the college s website and the emaryland Marketplace website, by the college, to all firms of record, who have obtained Proposal documents, as the college deems it appropriate and necessary to do so. The college reserves the right to waive any and all Proposal technicalities, formalities or informalities at any time prior to or after the date of receipt of proposals as it deems appropriate and in the college s best interest. 3.0 CHANGES TO THE PROPOSAL SPECIFICATIONS The college reserves the right to change the contents of this Request for Proposal (RFP) where necessary for the proper fulfillment of the intentions of this RFP. The mailing, in a United States Post Office box, or the faxing of a written communication or an , notice or order, addressed to a firm, at the business address filed with the college, or the business fax number or address filed with the college, shall be considered as sufficient service upon the firm of such communication, notice or order, and the date of said communication shall be the date of such mailing/faxed/ ed communication. 8

9 4.0 PROPOSAL FORMS Firms are hereby advised that failure to use or fully complete the college s proposal forms as provided herein for the submission of proposals may result in a firm s proposal being determined to be technically non-responsive. Moreover, firms shall attach to the front of the proposal a copy of their State of Maryland professional license. 5.0 LATE PROPOSALS It is the firm s responsibility to ensure that their Proposals are received in the Office of Procurement and Contracting no later than the date and time specified in this RFP. Late Proposals will not be considered and will be returned to firms unopened. 6.0 INCLEMENT WEATHER AND OTHER UNANTICIPATED COLLEGE CLOSINGS In the event the college closes as a result of inclement weather or for other unanticipated reasons, proposals will be due on the next business day that the college is officially open, at the same time. 7.0 ERRORS IN PROPOSALS 7.1 Firms are responsible for the accuracy of their quoted prices. In the event of a discrepancy between a unit price and its extension, the unit price will govern. In the event of a discrepancy between written words and figures on the Proposal Forms the amount stated in written words shall govern. 7.2 Proposals may be amended or withdrawn by the firm up to the date and time designated for receipt of Proposals. After that time, in the event of an error, Proposals may not be amended. All Proposals are considered final after the date for receipt of Proposals. Proposals may not be withdrawn, modified or canceled for a period of 90 days after the date designated for receipt of Proposals. The college does however, reserve the right to contact any or all firms to verify information included in their Proposal and to clarify any questions regarding the information submitted in the Proposal, in order to ascertain whether the Proposals received are both responsive and responsible. The college also reserves the right to waive any formalities, informalities or technicalities in evaluation of the Proposals as are deemed appropriate, necessary and in the college s best interest. 8.0 PROPOSAL DOCUMENTS 8.1 In making copies of the Proposal documents available on the above terms, the college does so only for the purpose of obtaining Proposals on the work described in the RFP. The college does not grant permission for any other use of these documents. 9

10 9.0 SUBMISSION OF PROPOSALS Firms must submit four (4) copies, one (1) signed original of their proposals and attachments to the following address: In a sealed envelope/box, clearly marked: Ms. Lynnette Ellington Procurement Coordinator Kent Hall, Room 264 Prince George s Community College 301 Largo Road Largo, Maryland REQUEST FOR PROPOSAL #16-07 AUDITING SERVICES Moreover, firms shall attach to the front of the proposal a copy of their State of Maryland professional license. Proposals will be accepted up to but not later than 10:a.m., February 16, Firms are responsible for ensuring that proposals are received by the above office prior to the deadline. Proposals received after the deadline will not be considered. Proposals will not be accepted via fax or . The college will not accept oral proposals or proposals submitted via the telephone. Any response to this RFP will be considered a legal offer. Quoted prices must be firm for a minimum of ninety (90) days from the deadline for receipt of proposals. 9.1 VENDOR COSTS INCURRED BY RESPONDING FIRMS All costs incurred by the responding firms associated with the preparation, submission, and presentation of proposals, and attendance at meetings, including but not limited to, costs related to transportation, meals, lodging and other related expenses, will be the sole responsibility of the respondent(s) and will not, under any circumstances be reimbursed by the college. The successful bidder(s) will be responsible for all costs associated in the performance of the auditing service contract PROPOSALS 10.1 The college may make such investigations as are deemed necessary to determine the ability of a firm to perform the work as specified herein The college reserves the right to clarify information submitted in a Proposal to determine whether an error has been made or whether a waiver of formality, informality or technicality is appropriate. Firms shall furnish the college all such information and data necessary for the college to determine if the Proposal is responsible and responsive to the college s requirements as stated herein. 10

11 11.0 CRITERIA FOR EVALUATION OF PROPOSAL 11.1 Firms proposals will be evaluated with the objective of selecting a firm best qualified to conduct the college s audit and is responsive to the college s requirements and which best meets the current and future operational needs of the college Firms are hereby advised that the college may give priority consideration to those firms which have had experience in conducting audits for other higher educational institutions and/or college foundations. Therefore, although cost is a significant factor, it will not be the sole determinant in the final award of contract. The college will specifically evaluate proposals on the basis of the specific criteria and percentage weights outlined below: 1. Understanding of contract requirements and ability to satisfy the desired characteristics. 10% 2. Administrative, management and staffing. 15% 3. Firm reputation, qualifications, financial stability 25% 4. Cost 15% 5. Experience involving accounting pronouncements specifically those applicable to the college and foundation audits. 10% 6. Higher education experience and references. 25% The firm needs to score at least a minimum of 80 points to be considered for possible interview The college reserves the right to clarify information submitted in a proposal to determine whether an error has been made or whether a waiver of formality, informality or technicality is appropriate. Firms shall furnish the college all such information necessary for the college to determine if the proposal is responsible and responsive to the college s requirements as stated herein Proposals received by the closing deadline will be initially reviewed for compliance with the RFP. Proposals that are incomplete or that fail to comply with the RFP requirement may be classified as non-responsive and may be returned to the proposing firm Compliant technical proposals will be evaluated by an evaluation committee and the Procurement and Contracting Office. After determining compliance with the RFP minimum requirement, the evaluation committee will assess and score each responsive technical proposal in accordance with the criteria above 11.6 The price proposal will be opened after the technical scoring and combined with the technical scores to determine a total score. Technical criteria will be given greater weight than price. At the discretion of the Interim Director of Procurement following scoring and recommendation by the evaluation committee, the College may establish a short list of qualified firms who may be contacted for an interview, request for clarification, presentation or demonstration. 11

12 12.0 AWARD OR REJECTION OF PROPOSALS 12.1 The proposal will be awarded to the firm or firms complying with all the provisions of this RFP and the stated criteria, subject to the availability of funding and provided it is in the best interest of Prince George s Community College to award the contract. The college reserves the right to award a contract in the aggregate or award separate contracts in the best interest of the college Prince George s Community College reserves the right to reject any or all proposals, at any time, whenever such is in the best interest of the college The college reserves the right to reject any Proposal if the evidence submitted by, or investigation of, such firm fails to satisfy the college that such firm is qualified to carry out the obligations of the contract therein Conditional proposals will not be accepted, i.e. hourly rates If the firm, to whom an award is made, shall fail to execute the contract as specified, the award may be annulled and the contract awarded to the second most responsive and responsible firm, and such firm shall fulfill every stipulation included herein, as if the firm were the original party to whom the award was made, or again, the college may at that point reject any and/or all of the proposals as its interest may require PRINCE GEORGE S COMMUNITY COLLEGE RESERVED RIGHTS Prince George s Community College reserves the right to: 13.1 Negotiate with more than one firm; 13.2 Negotiate services different from those proposed by a firm; 13.3 Acquire third party services if deemed to be in the best interest of the college; 13.4 Adopt any or all portions of a firm s proposal to best serve the needs of the college; 13.5 Modify or waive minor irregularities, inconsistencies and technical defects in firms proposals if deemed to be in the best interest of the college; 13.6 Decide whether or not work is to be subcontracted; 13.7 Approve the selection of subcontractors, if any RIGHT TO ACCEPT OR REJECT PROPOSALS The college reserves the right to accept or reject any or all firm proposals or parts thereof received as a result of this RFP. A firm s proposals may be rejected for one or more, but limited to the following reasons: 12

13 14.1 Failure of firm(s) to submit proposals within the time frame specified herein; 14.2 Failure of firm(s) to provide required/requested information; 14.3 Failure of firm(s) to respond to a request for clarification, presentation or demonstration; 14.4 Failure of firms(s) to follow the prescribed RFP preparation, submission and response format instructions; 14.5 Collusion among or between firms; 14.6 Unbalanced proposals; that is proposals in which the prices quoted for some items are out of proportion to those quoted for other items; 14.7 Lack of responsibility on the part of the proposing firm(s); 14.8 Financially instability; 14.9 Failure of firm(s) to successfully negotiate a contract GOVERNING LAW Any contract negotiated as a result of this RFP will be governed by the laws of the State of Maryland. The successful firm shall at all times observe and comply with Federal, State of Maryland and local laws, ordinances, orders, codes and regulations existing at the time of or enacted subsequent to the execution of a contract which in any manner affects the firm s ability to perform contractual requirements RELATIONSHIP OF PROPOSAL AND FINAL CONTRACT 16.1 The proposal of the successful firm will be attached to and will become an integral part of the negotiated final contact. END OF SECTION 13

14 FORMAT AND OUTLINE FOR SEALED COMPETITIVE PROPOSALS All Proposals are expected to be prepared in accordance with the format listed below. Furthermore, five (5) copies of the Proposal (an original and four copies) should be submitted, signed, sealed and endorsed with the statement Request for Proposal #16-07: Auditing Services clearly marked on the front of the Proposal envelope. Proposals should be mailed or delivered in person, to the Office of Procurement and Contracting, as indicated above under the time frame for firm selection, et al. Proposals not in conformance with or responsive to the stated requirements may be rejected at the discretion of college officials. Firms shall provide the required information separated into the following sections: 1.0 Title Page; 2.0 Firm s Proposal Price separate sealed envelope; 3.0 Firm s Statement of Qualifications; 4.0 Conflict of Interest Statement; 5.0 Ethics Statement; 6.0 Firm s Proposed Project Schedule; 7.0 Additional Information. SECTION 1.0 TITLE PAGE: As a minimum, the title page shall include the name of the proposal (Response to Prince George s Community College Request for Proposal #Auditing Services); the name and working address of the proposing company; the name, telephone number, and address of the primary company person to be contacted with reference to the proposal; and the date of submission. SECTION 2.0 PRICE PROPOSAL: The college has asked firms to provide various pricing to provide the auditing services as outlined herein and firms may choose to provide pricing for all or any single option. These options are as follows: 2.1 Base Proposal: Proposal price to provide all auditing services as outlined herein; 2.2 Alternate One Proposal: Proposal price if Foundation audit and Internal Revenue Service (IRS) Form 990 were excluded from the required services. 2.3 Alternate Two Proposal: Proposal price to perform only the college Foundation audit and IRS Form

15 2.4 Alternate Three Proposal: Proposal price to perform only the college Foundation audit. The college has requested this breakout of pricing so it may retain the right to award the contract in its entirety to a single firm, or to divide the award into two separate contracts such that the Foundation audit or the Foundation audit and Form 990 would be awarded under a separate contract to a competing vendor. The proposal should identify and describe any anticipated potential audit problems, the firm s approach to resolving these problems and any special assistance that will be requested from the college. REPORT FORMAT The proposal should include sample formats for required reports. NO DOLLARS SHOULD BE INCLUDED IN THE TECHNICAL PROPOSAL. SEALED COST PROPOSAL: 1. Total All-Inclusive Maximum Price The sealed cost proposal should contain all pricing information relative to performing the audit engagement as described in this Request for Proposal. The total, all-inclusive maximum price to be bid is to contain all direct and indirect costs including all out-of-pocket expenses. The college will not be responsible for expenses incurred in preparing and submitting the technical proposal or the sealed cost proposal. Such costs should not be included in the proposal. The first page of the sealed cost proposal should include the following information: a. Name of firm b. Certification that the person signing the proposal is entitled to represent the firm, empowered to submit the bid, and authorized to sign a contract with the college. c. A Total All-Inclusive Maximum price for the Fiscal year ending June 30, 2016 engagement, and for each of the next four fiscal years. Rates by Partner, Specialist, Supervisory and Staff Level Time Hours Anticipated for Each The second page of the Sealed Cost Proposal should include a Schedule of Professional Fees and Expenses, presented in the format attached which supports the total all-inclusive maximum price for Fiscal Year ending June 30, The Price Proposal Form included within the Project Proposal Forms section of this RFP, must be used in submitting a Proposal. The Proposing firm s failure to use this form may result in the Proposal being rejected for technical non-responsiveness. Moreover, it is the Proposing firm s 15

16 responsibility to ensure that they have received all addenda and receipt of addenda must be acknowledged by the proposing firm on the Proposal Form. Failure by a proposing firm to acknowledge receipt of addenda, if any, may also result in a firm s Proposal being determined to be technically non-responsive. SECTION 3.0 QUALIFICATIONS OF FIRM Prince George s Community College may contact references as it deems necessary to determine the ability of the firm to meet all the terms of the stated specifications. Moreover, the college and/or the College Foundation reserves the right to request any other information and data for the purpose of determining the firm s ability to perform the contract that it deems necessary. The following information related to firms qualifications must be provided. No Proposal form has been included for the provision of this information, therefore firms may use their own letterhead in responding to this section. 3.1 Firms shall provide a statement certifying that the firm and the staff performing the audit, meet all requirements of the Maryland State Board of Licensing & Regulation for the provision of the aforementioned services, including, but not limited to, independence, requisite skills and experience, continued professional education, and peer review. 3.2 Firm References refer to 3.4 and In providing references the following information should be included: Name of the reference; The address, phone number, and address of the individual(s) who can be contacted for the reference; Firm shall note those clients that are new clients within the past three years; 3.3 Firm shall indicate those clients lost in the past five years and the reasons for the losses. 3.4 The firm will supply as part of the proposal a listing of no less than five (5) clients, other than Prince George s Community College, preferably institutions of higher education or non-profit entities. 3.5 Firms shall also supply as part of this section, a listing of no less than five (5) Foundation or other non-profit clients. 3.6 Finally, in addition to the above required reference information, firms shall include in their proposal responses to the following questions regarding the firm s qualifications: Describe your firm. What are your strengths? What is your firm s philosophy? Explain your approach to the audit of a complex database system. Does your firm use an audit software package? 16

17 3.6.3 Describe the firm s approach to assessing internal control risk. Specify college and higher education experience Describe the firm s current involvement in higher education concerns Describe the firm s knowledge and experience in federal financial aid, grants and contracts, and A-133 audits Describe the firm s knowledge and experience in higher education and Foundation audits. Specify any and all FASB & GASB pronouncements new to years ending June 30, 2016 that may apply What type of publications does your firm issue on a regular basis that would be of interest to our institution? Please provide copies as part of your response Describe briefly training courses, computer software, internal control checklists or other forms of assistance that could be made available to the college Identify the office that would be assigned to the audit. What is the size of staff in this office (by staff level and field) and the number of clients currently handled by this office? Describe the governmental and nonprofit experience of the office identified above, with particular emphasis on other higher education institutions and then foundations. Indicate the length of time the firm has held these engagements Identify the partners, managers, and senior auditors who would be responsible for the audit and provide resumes for each The college is interested in continuity of staff in the college s audit. The college reserves the right to review all resumes of staff assigned to the college s audit and reserves the right to reject staff assigned to the college and request staff replacement for any task performed unsatisfactorily by the firm s personnel. Describe what has been the audit staff turnover experience in the office, which would be assigned to do the college s audit What are the firm s policies on staff education in relation to developing competence in higher education audits? Describe any staff training programs currently available that are used for this purpose What are the firm s policies on staff education in relation to financial aid audits? Describe any staff training programs in financial aid that are used for this purpose Describe the firm s capabilities and commitment to provide management services in the field of higher education and College Foundation. Identify those unique to this field. 17

18 Describe the firm s approach to containing the costs of financial statement audits for institutions of higher education and their foundations. SECTION 4.0 CONFLICT OF INTEREST In compliance with the State Public Ethics and Conflict of Interest Law, Annotated Code of Maryland, Section , etc., acquisitions from a business in which the trustee or employee has an interest are prohibited. Interest is deemed present if the trustee or employee or a spouse, parent, child, brother or sister of the trustee or employee has an interest and the trustee or employee knows of the interest. A copy of the Conflict of Interest Statement is attached as Section 4.0 under the Proposal Forms Section of the RFP and must be completed and returned with the firm s Proposal package. SECTION 5.0 ETHICS STATEMENT In compliance with the Public Ethics Law contained in the Maryland Annotated Code, Section , etc., it is illegal for any officer or employee of an agency conducting the procurement to solicit or obtain any proprietary or source selection information regarding the procurement prior to the award of contract. A copy of the Ethics Statement is attached as Section 5.0 under the Proposal Forms Section and must be completed and returned with the firm s package. SECTION 6.0 FIRM S PROPOSED PROJECT SCHEDULE Firms shall use this section to provide a detailed project schedule, which clearly outlines for the college how they schedule the work to be completed for the college s audit. There is no form provided in the Proposal Form section for the provision of this information. Firms may use their own letterhead in responding to this section. SECTION 7.0 ADDITIONAL INFORMATION The following information must be submitted with the bid proposal response to be considered for final contract award: 7.1 Copies of the firm s audited/unaudited financial statements or some other documentation which can appropriately support the company s financial stability, as deemed necessary and appropriate to determine firm qualification for award of contract. 7.2 Copies of the firm s license(s) to conduct audits in the State of Maryland. STATEMENT OF COLLEGE REQUIREMENTS: General Provisions: 1.0 It is the responsibility of the firm to insure that all services to be performed under the awarded contract shall be done in strict compliance with all applicable Federal, State and local codes, as well as any other applicable laws and regulations. In the event that a provision or specification in this RFP is in conflict with applicable laws and regulations, 18

19 the firm must inform the college, indicate such in his/her proposal and propose alterations to the conditions specified. Additionally, all audit work is to be performed in accordance with the generally accepted auditing standards as set forth by the American Institute of Certified Public Accountants (AICPA) and, where applicable, in accordance with generally accepted governmental auditing standards. Any suspected cases of substandard audits will be reported by the College to the AICPA and the State Board of Accountancy. 2.0 The contract term for this next year s audit shall start after Board of Trustees approval, approximately March The contract period will be for three (3) years, with the sole option of the College to extend up to two (2) additional one year periods based on satisfactory performance (the normal contract period being from July 1 through June 30), given that the contract price is still competitive, the basic scope of work covered under contract has not substantially changed, service has been satisfactory, and the contract terms are mutually agreeable to both parties. The contract may, however, be terminated by either party, by giving at least thirty (30) days prior written notice. 3.0 The college and the Foundation shall permit access to the college s financial records and files as needed and will provide an appropriate office/working area for auditors use while on campus. 4.0 INSURANCE REQUIREMENTS: It is the college s requirement that all insurance requirements be met for the stated limits. Furthermore, the college does require that all insurance be held by the primary contracting company. Finally, the college will not accept a cross indemnification statement. 4.1 Errors and Omissions Insurance: The successful firm shall, at its own cost, obtain and maintain such insurance as will protect the college from any legal or equitable claims which may arise from the operations under the contract, whether such operations are by the firm or by any other person directly or indirectly employed by them. The amount of Errors and Omissions Insurance shall not be less than $2,000, Compensation, Liability and Property Damage Insurance: The successful firm shall, at its own cost, obtain and maintain such insurance as will protect the company and the college from any legal or equitable claims for cleanup, damages, and personal injury, which may arise from the operations under the contract, whether such operations are by the firm or by any other person directly or indirectly employed by them. Moreover, the successful firm shall indemnify, hold harmless and assist Prince George s Community College, in defending, handling or responding to any and all claims involving the services provided under this contract. This information shall be clearly stated on the Certificate of Insurance. 19

20 The college shall be named as an additional insured on all policies required under the contract. This information shall be clearly stated on the Certificate of Insurance. All policies shall be in a non-cancelable form and obtained, and kept in force for a period of not less than one year following completion of the contract. Workmen s Compensation Insurance should be in compliance with and as required by the laws of Maryland. The employer s liability insurance shall under no circumstances be less than $1,000,000 for injuries sustained by any one person and $1,000,000 for injuries sustained by two or more persons in any one accident. The amount of public liability (bodily damage) insurance shall not be less than $1,000,000 per occurrence or $1,000,000 annual aggregate, public liability (property damage) shall not be less than $1,000,000 per occurrence or $1,000,000 annual aggregate. In addition, an umbrella will be required in an amount not less than $1,000,000. The firm shall also be required to carry the following types of insurance in the amounts stated: Any other appropriate insurance that may be required to properly protect the firm and the college in the final contract award. 4.3 All insurance is to be issued in the name of Prince George s Community College and the successful firm as their respective interests appear; however, a separate owner s protective liability policy will be required to be issued in the name of the college to cover its interests. The college shall be furnished with certified evidence that insurance issued is in the name of the firm and college and is in full force and effect and in appropriate form. 4.4 Evidence that all insurance coverage s have been issued in the college s name must be provided prior to award of contract. 4.5 No acceptance and/or approval of any insurance by the college shall be construed as relieving or excusing the firm from any liability or obligations imposed upon either or both of them by the provisions of the contract documents. 5.0 The college s contract with the successful firm will consist of the college s RFP, any subsequent addenda issued by the college related to the RFP, the firm s proposal response, all related communication regarding the firm s proposal (after submission including the engagement letter as outlined in item 6.0 below) and the college s purchase order. 6.0 The successful firm shall prepare an engagement letter restating the scope of the audit engagement, any additional assignments over and above the regular audit, including price, the time periods when both interim and year-end work are to be completed, the target date for completion and significant expectations and responsibilities of the institution in preparing for the audit. 7.0 The firm shall submit itemized invoices throughout the course of the college s audit. Payment will be made net 30 days providing that the invoice is not in dispute. 20

21 SCOPE OF SERVICE Prince George s Community College is seeking a firm(s) to provide auditing services for Prince George s Community College and Prince George s Community College Foundation for the fiscal year ending June 30, Audit services are to be performed during the months of June, July, August, and September The audit will require the following reports to be issued: 1.0 Opinion on the College s financial statements; 2.0 Opinion on the Foundation s financial statements; 3.0 Preparation of Internal Revenue Service Form 990, if awarded; 4.0 Compliance and internal control structure reports required by OMB Circular A-133; 5.0 Opinion on the SBCC-CC-4, Enrollment Report, as required by the Maryland Higher Education Commission; 6.0 Management letters (for College and Foundation) and no material weaknesses letter; 7.0 Reports and meetings, as may be required, by management and the Board of Trustees. Upon completion of draft reports, the firm will conduct a conference with the Vice President for Administrative Services, Dean of Financial Affairs, the Senior Accountant and others who may be directly impacted by the recommendations, to review the financial reports, auditors findings, conclusions, and recommendations. The final reports must be reviewed by the Vice President for Administrative Services before issuance of a final report. Thirty five (35) copies of the applicable final reports must be delivered to the Dean of Financial Affairs five business days prior to September 30, Additionally, the firm must conduct a separate conference with the Director of the Foundation to review the financial report, auditors findings, conclusions, and recommendations. Final reports must be delivered to the Dean of Financial Affairs five business days prior to September 30, PDF files of all final reports must be sent to the Dean of Financial Affairs within 10 days of the final report delivery. 21

22 PROPOSAL FORMS 22

23 PRINCE GEORGE S COMMUNITY COLLEGE PRICE PROPOSAL FORM REQUEST FOR PROPOSAL # SECTION 2.0 PRICE PROPOSAL ITEM DESCRIPTION ANNUAL COST 2.1 Base Proposal: Total cost to provide $ comprehensive audit services as outlined herein. 2.2 Alternate One Proposal: Cost to provide auditing services outlined herein, excluding the Foundation Audit and Internal Revenue Service Form 990. $ 2.3 Alternate Two Proposal: Cost to provide auditing services for Prince George s Community College Foundation s financial statements and Internal Revenue Service Form 990. $ 2.4 Alternate Three Proposal: Cost to provide auditing services for Prince George s Community College Foundation only $ 2.5 Any other costs (Please itemize below) Description $ $ $ $ 23

24 Schedule of Professional Fees and Expenses Audit of the Fiscal Year Ending June 30, 2016 Financial Statements Standard Quoted Hourly Hourly Hours Rates Rates TOTAL Partners Managers Supervisory Staff Staff Other (Specify) SUBTOTAL Total for services described in RFP Out-of-Pocket Expenses Meals & Lodging Transportation Other (Specify) =================================================================== TOTAL All-Inclusive Maximum Price For Fiscal Year 2016 Audit: =================================================================== NOTE: Provide a Total All-Inclusive Maximum Price for each of the next four fiscal years as well: FY 2017 Audit FY 2018 Audit FY 2019 Audit FY 2020 Audit 24

25 2.6 By submitting a proposal, the undersigned hereby agrees that from his/her own investigation, he/she has satisfied himself/herself as to the nature and locations of the work, the general and local conditions and all matters which may in any way affect the work or its performance, and that as a result of such examination and investigation, he/she fully understands the intent and purpose of the documents and conditions of submitting a proposal. Claims for additional compensation and/or extensions of time because of the firm s failure to follow the foregoing procedure, and to familiarize himself/herself with the contract documents and all conditions, which might affect the work, will not be allowed. 2.7 ACCEPTANCE OF PROPOSAL The undersigned agrees that this Proposal may be held by the college for a period not to exceed 90 days from the date stated for opening of the Proposals. If written notice of acceptance of this Proposal is mailed, telegraphed or delivered to the undersigned within the time noted above, after the date of the opening of the Proposals, or at any time hereafter before this Proposal is withdrawn, the undersigned agrees that it will execute and deliver a contract in the form prescribed by the college in accordance with the Proposal as accepted. It is understood and agreed that the college reserves the right to award a contract in the aggregate or separate contracts in the best interest of the college, to reject any or all Proposals, to waive any informalities in the Proposal, and to hold all Proposals for the period above noted. 2.8 TIME FOR COMPLETION OF WORK The undersigned agrees, if awarded the contract, to commence work within 10 (ten) consecutive calendar days after date of issuance of written notice to proceed and to complete the contract work within time frame specified within the RFP. 2.9 We acknowledge receipt of the following Addenda: No., dated No., dated No., dated No., dated 25

26 2.10 SIGNATURE OF FIRM: If submitted by an individual, partnership, or non-incorporated organization: By Firm Name Signature of Firm Representative Title Business Address Names and Addresses of Members of Firm: Dated this day of, If submitted by a corporation: By Firm Name Signature of Individual Representing Corporation Title Business Address Title of Individual Representing Corporation County State of Incorporation 26

27 Names and Addresses of Officers: Business Address President Business Address President Business Address President Dated this day of, Small business Minority business enterprise Minority Certification #: END OF SECTION SECTION 4.0 CONFLICT OF INTEREST STATEMENT: The undersigned hereby affirms and attests that to the best of my knowledge, no trustee, employee, spouse, parent, child, brother or sister of the trustee or employee, own assets in this business, and as of this date are employed by Prince George s Community College. Authorized Signature Date END OF SECTION 27

28 SECTION 5.0 ETHICS STATEMENT In compliance with the Public Ethics Law et al., contained in the Maryland Annotated Code, Section , I hereby affirm that no employee of or representative for our company assisted the college in drafting of specifications, invitations for Proposals or a request for Proposals for this procurement, nor did any employee of or representative for our company assist or represent another person, directly or indirectly, who is submitting a Proposal for this procurement. Company Authorized Signature Date END OF SECTION NOTE: SECTIONS 3.0, 6.0, AND 7.0 SHOULD BE ATTACHED AFTER THIS PAGE. 28

29 EXHIBITS AND FORMS 29

30 Prince George's Community College Financial Statements For the Years Ended June 30, 2015 and 2014 BoNDBEEBE ACCOUNTANTS & ADVISORS

31 PRINCE GEORGE'S COMMUNITY COLLEGE TABLE OF CONTENTS FOR THE YEARS ENDED JUNE 30, 2015 AND 2014 REPORT OF INDEPENDENT AUDITORS MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL STATEMENTS Statements of Net Position Statements of Revenues, Expenses and Changes in Net Position Statements of Cash Flows Statements of Fiduciary Net Position OPEB Trust Fund Statements of Changes in Fiduciary Net Position OPEB Trust Fund Notes to Financial Statements SCHEDULE OF FUNDING PROGRESS FOR OTHER POSTEMPLOYMENT BENEFITS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 SCHEDULE OF FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

32 BoNDBEEBE ACCOUNTANTS & ADVISORS REPORT OF INDEPENDENT AUDITORS Board of Trustees Prince George's Community College Largo, MD Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities, the discretely presented component unit, and each major fund of Prince George's Community College (the College), a component unit of Prince George's County, Maryland as of and for the years ended June 30, 2015 and 2014, and the related notes to the financial statements, which collectively comprise the College's basic financial statements as listed in the table of contents. 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 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 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. A PROFESSIONAL CORPORATION WITH OFFICES IN BETHESDA, MD AND ALEXANDRIA, VA

33 REPORT OF INDEPENDENT AUDITORS Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, the discretely presented component unit and each major fund of Prince George's Community College as of June 30, 2015 and 2014, and the respective changes in financial position and, where applicable, cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of a Matter During the fiscal year ended June 30, 2015, the College adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions and related GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement No. 68. As a result of the implementation of GASB Statements No. 68 and 71, the College reported a restatement for the change in accounting principle (see Note 20). Our opinion was not modified with respect to the restatement. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on Pages 4-14 and the schedules of funding progress and employer contributions for other postemployment benefits on Page 44 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board which considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the College's basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic 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 basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole. 2

34 REPORT OF INDEPENDENT AUDITORS Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 6, 2015 on our consideration of the College's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Prince George's Community College's internal control over financial reporting and compliance. A Professional Corporation Bethesda, MD October 6,

35 Prince George's Community College Management's Discussion and Analysis June 30, 2015

36 Management's Discussion and Analysis The objective of management s discussion and analysis is to assist readers of the College s financial statements to better understand the financial position and operating activities for the fiscal year ended June 30, 2015, with comparative information for the year ended June 30, Since this management discussion and analysis is designed to focus on current activities, resulting changes and currently known facts, please read it in conjunction with the College's basic financial statements and the footnotes. Responsibility for the completeness and fairness of the information rests with the College. Using This Annual Report The financial statements are presented with the inclusion of the Prince George s Community College Foundation (the Foundation) as a component unit. In 2004 the Governmental Accounting Standards Board (GASB) issued Statement 39, Determining Whether Certain Organizations are Component Units. The statement addresses the conditions under which institutions should include associated fund-raising or research foundations as component units in their financial statements. Under this statement the Foundation meets criteria qualifying it as a component unit. The Foundation is included in the accompanying financial statements in a separate column. However, the following discussion and analysis does not include the Foundation s financial condition and activities. The financial statements comply with the GASB Statements 34/35. In June 1999, the GASB released Statement No. 34 Basic Statement and Management s Discussion and Analysis for State and Local Governments, which established a new reporting format for the governmental type annual financial statement. In November of the same year, GASB also released Statement No. 35, Basic Financial Statement and Management s Discussion and Analysis for Public Colleges and Universities. This pronouncement established a new reporting standard for public colleges and universities. It allows the College's financial statements to emulate corporate presentation models whereby all College activities are consolidated into one total annual financial statement. As required by GASB No. 35, the annual financial statement consists of three basic financial statements that provide financial information on the College as a whole. Statement of Net Assets Statement of Revenues, Expenses and Changes in Net Assets Statement of Cash Flows The focus of the Statement of Net Assets is designed to be similar to "bottom line" results for a corporation. This statement combines and consolidates current financial resources (short-term spendable resources) with capital assets. The Statement of Revenues, Expenses, and Changes in Net Assets focuses on both the gross costs and the net costs of College activities that are supported mainly by the county, state, student tuition and fees, and other revenues. This approach is intended to summarize and simplify the user's analysis of the cost of the various College services to students and the community.

37 The Statement of Cash Flows provides additional information about how changes in the accounts and income affect cash and cash equivalents. The statement compares cash flows for 2015 and 2014 providing information about the flow of cash in and out of the college. The cash flow statement is a cash basis report on three types of financial activities: operating activities, investing activities, and financing activities. Non-cash activities are usually reported in the footnotes. The purpose of the statement is to provide information on the college s liquidity and solvency and its ability to change cash flows in future circumstances and to provide additional information for evaluating changes in assets, liabilities and equity. Prior to GASB 34/35 governmental entities were not required to recognize capital assets as a depreciable expense. However, since then the college has been required to record depreciation as an operating expense that has an impact on the overall financial position of the College. The annual depreciation expense, which is $9.2 million in FY2015, appears on the Statement of Revenues, Expenses and Changes in Net Assets. Beginning in July 1, 2007 the College implemented GASB Statement Number 43, Financial Reporting for Post Employment Benefit Plans Other Than Pension Plans and GASB Statement Number 45, Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions. The College established an irrevocable trust in the amount of $7,139,657 to fund this obligation and added $2,559,781 and $2,747,000 to the trust in FY2011 and FY2012 respectively. In FY2014 the amount added to the trust was $1,600,000 and in FY2015 $1,500,000 was added. GASB requires the College to have an actuarial valuation done on the plan every other year. This was completed in June 2014 and will be completed again in FY2016. In FY2015 the College implemented GASB Statement Number 68, Accounting and Financial Reporting for Pensions. The objective of this statement is to improve accounting and financial reporting by state and local government employers for the pensions in which they are involved. The impact of this implementation was the recognition of a $3.2 million net pension liability in FY2015 and to record deferred inflows and outflows related to changes in actuarial assumptions and investment activity allowed to be amortized by GASB 68. Contributions to the Maryland State Retirement System (MSRS) are no longer treated as a current period expense, but as assets called deferred outflows. Financial and Enrollment Highlights Operating tuition and fee revenue for credit classes decreased by 3.8% due to a drop in student enrollment. This reduction could have an impact on state aid in future years. The College has increased efforts toward achieving its institutional priorities of enrollment, retention, student success and completion. To that end, senior administration is currently evaluating the merits of a variety of tuition incentive programs. Noncredit revenue increased substantially by 21.6% as WDCE (Work Force Development and Continuing Education) offered more classes in various locations around the county and increased contract training. Because non-credit revenue is approximately 6.2% of the total operating revenue for the College, this reduced the overall tuition and fee revenue by 1.9% between FY2014 and FY2015.

38 Tuition & Fees FY2015 FY2014 % Increase Credit $37,955,700 $39,459, % Non-Credit 3,804,208 3,127, % Total $41,759,908 $42,586, % Credit enrollment decreased by 3.3% with total student FTE s of 8, in FY2014 and 8, in FY2015. Over the past few years several factors have contributed to the recent decrease in enrollment: changes in financial aid regulations, fewer county high school graduates, the state of the economy, etc. Non-credit enrollment increased by 6.5% from 4, in FY2014 to 4, in FY2015. Overall enrollment increased by.13% due to the increase in non-credit enrollment over the two fiscal years. Enrollment FY2015 FY2014 % Increase Credit 8, , % Non-Credit 4, , % Total 13, , % State appropriations were budgeted to be $26,009,164 for FY2015. However, after a reduction made by the Board of Public Works, the amount the College received was a decrease of $798,510. Initially during the budget development process the County increased the College budget by $4.8 million. This money was to be used to support the following functions: expansion of health care programs, casino job training, College and Career Readiness Act, and increased scholarships for county students. The College was notified by the County in mid-october that the $4.0 million recommended increase will not be met. Because of this the College curtailed many of these programs. Therefore, County appropriations for operations increased by $800,000. This increase was made to offset the reduction of $800,000 made by Maryland National Capital Parks and Planning in its contribution to the College. Total funding for all federal programs decreased by $229,786 or.87% from $26.3 million in FY2014 to $26.1 in FY2015. There are a number of factors contributing to this overall decrease: PELL, College Work Study (CWS); increases in other programs including the Department of Labor s Instep Program, National Science Foundation s CyberWatch program and the Department of Justice s program for violence presentation. Compared to FY2014, state grant programs increased by 27.8% in FY2015. State grants totaled $2.5 million in FY2014 and $3.2 million in FY2015. The College absorbed the public schools ESOL Program a few years ago along with the staffing for the program. In FY2014 the College received $764,192 for the ESOL program. The amount of funding for this program increased to $924,880 in FY2015. The College also took over the literacy programs and this funding totaled $789,664 in FY2015. A new program entitled College & Science, Technology, Engineering, and Mathematics (STEM) Prep Readiness awarded to the College in FY2014 continued in FY2015 with expenses of $127,136 compared to FY2014 when the program used $20,365. There was also an increase in the Information Technology (IT) Early College grant providing $14,435 in FY 2014 and $558,637 in FY2015. Two new state grants provided funding for the Employment Advancement Right Now (EARN) MD Implementation Program and Health Personnel shortage Incentives Grant (HPSIG) Program.

39 County grant programs declined minimally from $405,516 in FY2014 to $392,940 in FY2015. The largest grant in the county category is the Social Services Program. The Prince George s Social Services Program decreased from $358,317 in FY2014 to $344,532 in FY2015. Between FY2012 and FY2013 the personnel working on this program were transferred to the county budget and, at that time, the College program saw a significant decrease in the program. The funding for the Children s Developmental Clinic was eliminated between FY2014 and FY2015. Net Assets -Net assets are reported as external restrictions or availability of assets for satisfaction of College obligations. Restricted net assets are reported as either expendable or non-expendable. NonExpendable Net Assets (In Millions) Expendable Capital Endow- Quasi- Student Scholar- Re- Unre- Year Assets Ment Endow Loans ships stricted stricted Total Change (0.1) (7.3) 5.6 The total net assets increased by $5.6 million from $170.0 million in FY2014 to $175.6 million as of June 30, This increase is due to the completion of several projects. Projects completed in FY2015 include the renovation of Annex A, the renovation of Rennie Forum, and expansion at University Town Center. Ongoing projects consist of the renovation of the Facilities Management Building, the Circulation and Roadway Project, design of renovation on Lanham Hall, the installation of 2 new modular buildings (Annex B & C) with a parking lot, the design of a Culinary Arts building, and the design of the renovation of the Queen Anne building. Some of these projects won t be completed for several years. Student loans and scholarships stayed the same. Restricted net assets decreased as the funding from the Center for Minority Business Development was used to create the Center for Entrepreneurial Leadership. Unrestricted net assets decreased by $7.3 million between FY2014 and FY2015. The College used some of its fund balance from the Capital Expense Reserve fund to enhance facilities and maintain existing buildings. Revenues, Expenses and Changes in Net Assets The Statement of Revenues, Expenses and Changes in Net Assets presents the revenues earned and the expenses incurred during the year. Activities are classified as either operating or nonoperating. Generally, a public college will report an operating loss as the required financial reporting model classifies state and local appropriations, in addition to grants, as non-operating revenues. The utilization of capital assets is reflected in the financial statements as depreciation. The components of the revenues, expenses and changes in the College s net assets for the years ended June 30, 2015 and 2014 follows:

40 Operating Revenue and Expenses FY2015 FY2014 Operating revenues: Student tuition and fees (Net of Scholarships) $ 26,678,618 $ 26,678,000 Federal grants 26,142,413 26,372,199 Gifts & Grants 1,005, ,147 Auxiliary enterprises 649, ,069 Agency 207, ,239 Other 456, ,091 State paid retirement 5,856,306 5,500,611 Total operating revenues $ 60,995,604 $ 60,044,356 Operating expenses: Instruction $ 41,586,853 $ 39,181,289 Research 30,460 50,100 Public service 372, ,407 Academic support 18,942,619 17,263,243 Student services 10,432,769 10,529,964 Institutional support 26,037,191 25,194,390 Plant operations and maintenance 10,402,575 10,509,142 Scholarships 6,535,522 6,455,624 State paid retirement 5,856,306 5,500,611 Depreciation 9,181,209 8,130,526 Total operating expenses $ 129,378,141 $ 123,186,296 Operating loss $ (68,382,536) $ (63,141,940) Nonoperating Revenues and Expenses State appropriation $ 25,210,654 $ 24,412,143 Statewide programs 348, ,904 County appropriation 30,345,300 29,545,300 County programs 700,000 1,500,000 Restricted donations, grants, scholarships 4,512,751 3,523,605 Earnings on Investments 18,321 22,949 Interest expense (60,334) (82,138) Net nonoperating revenues $ 61,075,419 $ 59,284,763 Net Income (7,307,118) (3,857,177) Capital appropriations 16,092,950 4,092,335 Increase in net assets $ 8,785,932 $ 235,158 Increase in Net Position Before the Cumulative Effect of a Change in Accounting Principle $ (3,128,919) $ - Net Position at Beginning of Year - as Previously Stated $ 169,944,531 $ - Net Assets at Beginning of Year $ 166,815,612 $ 169,709,373 Net Assets at End of Year $ 175,601,444 $ 169,944,531

41 Revenue consists of student tuition and fees (net of scholarship allowance), state and county appropriations, federal grants, auxiliary operations, state paid retirement benefits, and other revenue. Tuition revenue (Net) remained flat due to declining enrollment. The county appropriation increased as a direct offset to the decrease in the allocation from Maryland National Capitol Parks and Planning. The state appropriation increased due to funding using the CADE formula. The formula uses enrollment figures from FY2013 to provide the allocation. In FY2013 the FTE enrollment of the College was 12, eligible FTE s causing the increase in the state allocation. Federal grant dollars decreased by $229,786 million. Comparative information is shown below: Variance FY2015 FY2014 Amount Percent Student Tuition (Net) $ 26,678,618 $ 26,678,000 $ % County Appropriations 30,345,300 29,545, , % State Appropriations 25,210,654 24,412, , % Grants 26,142,413 26,372,199 (229,786) -0.87% Auxilliary 649, ,069 (78,839) % Other 13,044,808 11,593,408 1,451, % Total revenues $ 122,071,023 $ 119,329,119 $ 2,741, % Sources of Revenues FY % 10.7% 21.9% 21.4% 20.7% 24.9% Student Tuition County Appropriations State Appropriations Grants Auxilliary Other Auxiliary enterprises consist of commissions paid to the College by the bookstore and the dining hall. This category decreased by $78,839. The bookstore is operated by Nebraska Books and pays a commission to the College for books sold in the bookstore. Thompson Hospitality provides dining hall, catering and vending services at the College. The category for other revenue consists of rental income from building use, sales and services sold in College Life Services, state paid retirement benefits paid on the College s behalf, and restricted donations, grants and scholarships. Overall the category increased by $1.5 million. The category of restricted gifts and grants increased from $131,147 in FY2014 to $1,005,184 in FY2015. This increase is due to a $1

42 million program funded by the county called INET (Intergovernmental Network). The program provided computers for the expansion at UTC. In FY2013 an MOU between the College and the Foundation was signed obligating the Foundation to pay the College $2.0 million in support of the expenses for technical/audio visual equipment in the Center for Health Studies. According to GASB Standard 33, the revenue for this $2.0 million was recorded in FY2013 although the agreement calls for the Foundation to pay the money over a period of 4 years beginning in FY2013. The Foundation has honored this commitment. Non-operating revenue consists of the appropriations from state and county governments, restricted scholarships and donations, both local and state programs, interest earnings and expenses. Operating expenses show how the College spends money. Overall expenses increased between FY2014 and FY2015 by $6.2 million. Below is a functional comparison of these costs. Variances FY2015 FY2014 Amount Percent Instruction $ 41,586,853 $ 39,181,289 $ 2,405, % Research 30,460 50,100 (19,640) % Public Service 372, ,407 1, % Academic Support 18,942,619 17,263,243 1,679, % Student Services 10,432,769 10,529,964 (97,195) -0.92% Institutional Support 26,037,191 25,194, , % Plant Operations 10,402,575 10,509,142 (106,567) -1.01% Scholarships 6,535,522 6,455,624 79, % State Paid Retirement 5,856,306 5,500, , % Depreciation Expense 9,181,209 8,130,526 1,050, % Total expenses $ 129,378,141 $ 123,186,296 $ 6,191, % Operating Expenses - FY % 5.05% 4.53% 32.14% 8.04% 0.02% 20.12% 8.06% 14.64% 0.29% Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations Scholarships State Paid Retirement Depreciation Expense

43 Some expenditure functions increased and highlights of these increases include: Instructional area due to increases in adjunct faculty and full time faculty pay, and contracted services because of the purchase of software to create an electronic version of the class schedule (Digital Architecture) and the use of more electronic resources in the library. Academic support increases due to increases in salaries for both full time and part time staff. Institutional support increased by $842,801 due to increases in legal expenses, workers compensation payments, and increased use of consultants in various areas. Depreciation increased by 12.92% as furniture and equipment for expansions at UTC, LCC and Annex A began to be depreciated. The amount the state paid for MSRS increased due to the increase in salaries and the number of people participating in the retirement system. Capital Assets This financial report includes a presentation of capital assets, which include the recording of depreciation with respect to those assets. The capital assets as of June 30, 2015 and 2014 are presented below. During FY2015 there was an increase in net capital assets of $11.7 million. Construction in Progress increased from $7.9 million in FY2014 to $18.0 million in FY2015 with many projects underway including the additional modular buildings, the architectural and engineering designs for the renovation Lanham and Queen Anne buildings, the design for the Culinary Arts Center, the renovation of the Facilities Management building, and the continuation of the Circulation and Roadway projects. Depreciation increased because the furniture and equipment in the Center for Health Studies became depreciable in FY2014. In FY2015 the equipment and furniture in Rennie Forum and Annex A became depreciable. Readers desiring additional information on capital asset activity should review the relevant disclosures in the Notes to the Financial Statements, Note 9, Capital Assets. Capital Assets FY2015 FY2014 Land $ 2,772,440 $ 2,772,440 Buildings 127,294, ,729,530 Furniture & Equipment 13,276,892 15,126,534 $ 143,343,847 $ 131,628,504 Conditions Impacting Future Financial and Results of Operations There are three major components of the College s budget: tuition and fees, county revenue and state revenue. Given the fact that both the county and state provide significant resources to the College, the economic condition of the state and local region has a major bearing on the future economic health of the College. The following are some of the factors that impact the future of the College:

44 Initial budget documents approved by the county included an additional $4.8 million to enhance or implement specific programs. However, 6 months into FY2015 the county determined it could not provide this additional funding. When the $4 million was eliminated movement on the following programs was severely curtailed: o Expansion of programs for health care - $1.5 million o Casino job training - $1.2 million o College and Career Readiness Act - $1 million o Scholarships of $300,000. County resources are not projected to increase for several years. The College and Maryland National Capital Parks and Planning (MNCPP) have had an ongoing relationship for the use of the Natatorium and fields for county programs. MNCPP reduced the amount it paid the College from $2.5 million to $1.5 million in between FY2012 and F2013. Another reduction of $800,000 was made by MNCPP in FY2014. The county has made up for this difference in both FY2014 and FY2015 as county programs continue. State appropriations continue to be a concern as a new governor completes his first year in office. State funding was reduced to community colleges in FY2015 in an effort to balance the budget. The College has relied on increased funding due to increased enrollment using the CADE formula. But as enrollment declines the College could be faced with more reductions in revenue from the state in future years. The state s economic situation continues to be challenged. The State has reduced funding to Health Manpower Programs and is now charging a fee to community colleges for the review of new academic programs. The College remains focused on the continuation of its FY Strategic Initiative Plan. This plan was developed with much college input. It focuses on Envision Success and how the entire college community can work to transform students lives. The budget is developed in support of the strategic plan and how the plan supports Envision Success. Money has been set aside each year for new and emerging ideas in support of the strategic initiatives. The four overarching goals of the strategic plan are: 1. Enhancing pathways that guide students to achieve their goals. 2. Cultivating a welcoming and responsive learning environment. 3. Fostering partnerships to respond to a diverse and evolving community and workforce. 4. Promoting and supporting collaborative institutional culture for communication, decision-making and governance. Enrollment continues to be an issue for the College. The FY2015 budget was developed projecting credit FTE at 8,814. Credit enrollment for FY2015 declined to 8,167. This substantial reduction was partially offset by the increase in non-credit enrollment. Since FY2012 all enrollment has dropped from 13, to 13, in FY2015. This is a decrease of 6% that will have an impact on state funding in future years. Credit enrollment for the fall semester of 2015 continues to show a decline of 4 4.5%.

45 Some examples of items that have the potential to impact funding for the College are: o o o o o Plans to redesign both the reading and English developmental courses MGM s presence in the development of programs at National Harbor in Oxon Hill Implementation of the Integrative Planning and Advising Services (IPAS) program. Organizational realignment Emphasis on dual enrollment for high school students Construction on campus continues with the renovation of the Facilities Building, the completion of the circulation and roadway project, renovation of Lanham Hall, the addition of 2 new modular buildings (Annexes B & C), the design a the new culinary arts building, and architectural design of renovations to the Queen Anne building. All of these projects will have an impact on future operating expenses at the College. Additional Information This financial report is designed to provide interested parties with a general overview of the College s finances. If you have questions about this report or need additional financial information, please contact Prince George s Community College, Office of Financial Services, 301 Largo Road, Largo, MD Special thanks go to Betty Fale, Toni Hill, Sandy Hoover, Robin Micheletti, Roy Riley, Christopher Tucker, Bridgett Watson, Kalika White and all the people working in the financial services area for their contributions and dedication to the College, therefore making this document possible.

46 FINANCIAL STATEMENTS

47 PRINCE GEORGE'S COMMUNITY COLLEGE STATEMENT OF NET POSITION JUNE 30, 2015 ASSETS Prince George's Communi~ College Current assets Cash and cash equivalents $ 32,213,380 Accounts receivable - net of allowance of $9,046, ,987,941 Grants receivable 1,858,462 Pledges receivable Inventories - at average cost 105,495 Prepaid expenses 1,587,289 Accrued interest and dividends Total current assets 55,752,567 Other assets Investments Pledges receivable Grants receivable - net of discount of $6, ,564 Land 2,772,440 Buildings and improvements - net of accumulated depreciation of $45,743, ,294,515 Furniture and equipment - net of accumulated depreciation of $27,581,778 13,276,892 Total other assets 143,987,411 TOTAL ASSETS $ 199, 739,978 DEFERRED OUTFLOWS $ 485,868 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 12,160,489 Compensated absences 262,996 Capital lease obligations 1,816,403 Deferred revenue 1,781,149 Total current liabilities 16,021,037 Non-current liabilities Compensated absences 2,266,791 Capital lease obligations 1,366,188 Net OPEB obligation 1,396,019 Net pension liability 3,221,728 Component Unit - Prince George's Community College Foundation $ 420, ,255 18,458 8, ,534 7,337,215 51,810 7,389,025 $ 8,292,559 $ $ 1,366,743 34,312 1,401,055 Total non-current liabilities 8,250,726 TOTAL LIABILITIES $ 24,271,763 DEFERRED INFLOWS $ 352,639 $ 1,401,055 $ NET POSITION Invested in capital assets - net of related debt $ 140,318,208 Restricted for Non-expendable Endowment Expendable Student loans 181,465 Scholarships and fellowships 46,025 Entrepreneurial and technology programs 2,577,198 Unrestricted 32,478,548 TOTAL NET POSITION $ 175,601,444 See Notes to Financial Statements $ 2,120,514 5,052,595 {281,605} $ 6,891,504 15

48 PRINCE GEORGE'S COMMUNITY COLLEGE STATEMENT OF NET POSITION JUNE 30, 2014 ASSETS Prince George's Communi~ College Current assets Cash and cash equivalents $ 41,309,278 Accounts receivable - net of allowance of $8, 199,869 12,067,345 2,419,837 Pledges receivable Inventories - at average cost 98,249 Prepaid expenses 1,853,308 Accrued interest and dividends Total current assets 57,748,017 Other assets Investments Pledges receivable Grants receivable - net of discount of $17,263 1,082,737 Land 2,772,440 Buildings and improvements - net of accumulated depreciation of $41,299, ,729,530 Furniture and equipment - net of accumulated depreciation of $23,457,615 15,126,534 Total other assets 132,711,241 TOT AL ASSETS $ 190,459,258 DEFERRED OUTFLOWS $ LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 10,195,914 Compensated absences 216,673 Capital lease obligations 1,782,574 Deferred revenue 1,896,418 Total current liabilities 14,091,579 Non-current liabilities Compensated absences 2,279,853 Capital lease obligations 2,718,652 Net OPES obligation 1,424,643 Total non-current liabilities 6,423,148 TOTAL LIABILITIES $ 20,514,727 DEFERRED INFLOWS $ NET POSITION Invested in capital assets - net of related debt $ 127,284,228 Restricted for Non-expendable Endowment Expendable Student loans 181,465 Scholarships and fellowships 31,365 Entrepreneurial and technology programs 2,661,454 Unrestricted 39,786,019 TOTAL NET POSITION $ 169,944,531 Component Unit - Prince George's Community College Foundation $ 784, ,927 31,217 33,585 1,451,964 6,944,869 61,854 7,006,723 $ 8,458,687 $ $ 1,703,595 1,703,595 $ 1,703,595 $ $ 2,117,153 4,866,661 {228,722} $ 6,755,092 See Notes to Financial Statements 16

49 PRINCE GEORGE'S COMMUNITY COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2015 OPERATING REVENUES AND EXPENSES Prince George's Communi~ College Component Unit - Prince George's Community College Foundation Operating revenues Student tuition and fees - net of scholarship allowance of $15,081,290 $ 26,678,618 Federal grants and contracts 26, 142,413 Gifts and grants 1,005, 184 Auxiliary enterprises 649,230 Agency revenues 207,077 State paid retirement benefits 5,856,306 Other revenues 456,776 Total operating revenues 60,995,604 Operating expenses Instructional 41,586,853 Research 30,460 Public service 372,637 Academic support 18,942,619 Student services 10,432,769 Institutional support 26,037, 191 Plant operations and maintenance 10,402,575 Scholarships and fellowships 6,535,522 State paid retirement benefits 5,856,306 Depreciation expense 9,181,209 Total operating expenses 129,378,141 OPERATING LOSS {68,382,537} NON-OPERATING REVENUES (EXPENSES) State of Maryland appropriations 25,210,654 County appropriation 30,345,300 Restricted donations-scholarships 626 Restricted gifts and grants 4,512,125 State of Maryland programs 348,727 Interest expense (60,334) Earnings from invested funds 18,321 County programs 700,000 NON-OPERATING REVENUES 61,075,419 INCOME (LOSS) BEFORE OTHER REVENUES, EXPENSES, GAINS OR LOSSES (7,307, 118) Capital appropriations 16,092,950 Additions to permanent endowments INCREASE IN NET POSITION BEFORE THE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 8,785,832 NET POSITION AT BEGINNING OF YEAR - AS PREVIOUSLY REPORTED 169,944,531 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE {3, 128,919} NET POSITION AT BEGINNING OF YEAR -AS RESTATED 166,815,612 $ 1,013, ,643 1,411, ,328 1,028,970 1,563,298 {152, 122} 285, , ,051 3, ,412 6,755,092 NET POSITION AT END OF YEAR $ 175,601,444 $ 6,891,504 See Notes to Financial Statements 17

50 PRINCE GEORGE'S COMMUNITY COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2014 OPERATING REVENUES AND EXPENSES Prince George's Communi~ College Component Unit - Prince George's Community College Foundation Operating revenues Student tuition and fees - net of scholarship allowance of $15,908,740 $ 26,678,000 Federal grants and contracts 26,372,199 Gifts and grants 131,147 Auxiliary enterprises 728,069 Agency revenues 199,239 State paid retirement benefits 5,500,611 Other revenues 435,091 Total operating revenues 60,044,356 Operating expenses Instructional 39,181,289 Research 50,100 Public service 371,407 Academic support 17,263,243 Student services 10,529,964 Institutional support 25,194,390 Plant operations and maintenance 10,509,142 Scholarships and fellowships 6,455,624 State paid retirement benefits 5,500,611 Depreciation expense 8,130,526 Total operating expenses 123, 186,296 OPERA TING REVENUE (LOSS) (63, 141,940} NON-OPERATING REVENUES (EXPENSES) State of Maryland appropriations 24,412,143 County appropriation 29,545,300 Restricted donations-scholarships 1,571 Restricted gifts and grants 3,522,034 State of Maryland programs 362,904 Interest expense (82,138) Earnings from invested funds 22,949 County programs 1,500,000 NON-OPERATING REVENUES 59,284,763 INCOME (LOSS) BEFORE OTHER REVENUES, EXPENSES, GAINS OR LOSSES (3,857, 177) Capital appropriations 4,092,335 Additions to permanent endowments INCREASE IN NET POSITION 235,158 NET POSITION AT BEGINNING OF YEAR 169,709,373 $ 1,117, ,336 1,251, , ,545 1,104, , , ,353 1,100,134 28,756 1, 128,890 5,626,202 NET POSITION AT END OF YEAR $ 169,944,531 $ 6,755,092 See Notes to Financial Statements 18

51 PRINCE GEORGE'S COMMUNITY COLLEGE STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2015 AND 2014 CASH FLOWS FROM OPERATING ACTIVITIES Student tuition and fees Grants and contracts Payments to suppliers Payments to employees Payments for benefits Payments for utilities Payments for scholarships Auxiliary enterprise charges, concessions and other revenue CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State appropriations County appropriations Gifts and grants received for other than capital purposes - private CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital appropriations Purchases of capital assets Financing agreement proceeds (repayments) Principal paid on capital leases Interest paid on capital leases CASH FLOWS FROM INVESTING ACTIVITIES Earnings from invested funds DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES Operating loss Adjustment to reconcile operating loss to net cash provided by operating activities Depreciation expense (Increase) decrease in Accounts receivable - net Inventories Prepaid expenses Grants receivable - net Deferred outflows Increase (decrease) in Accounts payable and accrued liabilities Deferred revenue Compensated absences Net OPES obligation Net pension liability Deferred inflows NET CASH USED BY OPERATING ACTIVITIES $ $ $ $ ,052,218 $ 26,345,325 27,027,693 27,870,728 (20,981,990) (21,219,215) (66,908,944) (63,730,611) (15,082,143) (14,713,152) (3,011,459) (2,642,976) (6,278,676) (6, 195,645) 2,318,266 1,499,411 {55,865,035} {52, 786, 135} 25,559,381 24,780,296 31,845,300 31,045,300 4,512,750 3,523,605 61,917,431 59,349,201 7, 108,906 3,512,075 (20,368,320) (8,836,864) (615,968) (1,846,867) (1, 701,438) {60,334} {82, 138} {15, 166,615} {7,724,333} 18,321 22,949 (9,095,898) (1,138,318) 41,309,278 42,447,596 32,213,380 $ 41,309,278 (68,382,537) $ (63, 141,940) 9,181,209 8,130, , ,106 (7,246) 33, , , , ,825 (62,816) 1,854, ,479 (115,269) 99,789 33,262 (7,313) (28,624) (114,708) (330,243) 352,639 {55,865,035} $ {52, 786, 135} See Notes to Financial Statements 19

52 PRINCE GEORGE'S COMMUNITY COLLEGE STATEMENTS OF FIDUCIARY NET POSITION OPEB TRUST FUND JUNE 30, 2015 AND 2014 ASSETS Cash and cash equivalents Interest and dividends receivable Investments - at fair value Mutual funds - equity Mutual funds - fixed income Equities TOTAL ASSETS LIABILITIES NET POSITION $ $ ,360,741 $ 2,006,997 35,841 29,307 4,979, 111 3,654,657 7,289,962 6,279,261 9,994,323 9,336,610 22,263,396 19,270,528 23,659,978 21,306,832 23,659,978 $ 21,306,832 See Notes to Financial Statements 20

53 PRINCE GEORGE'S COMMUNITY COLLEGE STATEMENTS OF CHANGES IN FIDUCIARY NET POSITION OPEB TRUST FUND FOR THE YEARS ENDED JUNE 30, 2015 AND 2014 ADDITIONS Employer contributions $ ,500,000 $ 1,600,000 Investment income Net appreciation in fair value of investments Interest and dividends 245,613 2,521, , , ,599 3,012,834 TOTAL ADDITIONS 2,425,599 4,612,834 DEDUCTIONS Investment fees NET INCREASE NET POSITION AT BEGINNING OF YEAR NET POSITION AT END OF YEAR $ 72,453 61,339 2,353, 146 4,551,495 21,306,832 16,755,337 23,659,978 $ 21,306,832 See Notes to Financial Statements 21

54 PRINCE GEORGE'S COMMUNITY COLLEGE NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2015 AND 2014 NOTE 1: REPORTING ENTITY Prince George's Community College (the College) is considered a body politic under Maryland state law as an instrumentality of Maryland (the State). The College is governed by a nine-member Board of Trustees (the Board) composed of a student elected by the students to serve on the Board for a one-year term and eight members who are appointed for five-year terms by the Governor of Maryland with the advice and consent of the State Senate. The College's budget is subject to approval by the Prince George's County (the County) Council. State funding is received based on full-time equivalent students enrolled. For 2015 and 2014, the State authorized a funding ceiling of $25,210,654 and $24,412, 143, respectively. Although the College is not a County agency, as a result of the College's relationship with the County, the College's financial statements are considered component unit statements and are properly included in the Comprehensive Annual Financial Report of the County, in accordance with accounting principles generally accepted in the United States of America. In accordance with Governmental Accounting Standards Board (GASB) Statement No. 39, Determining Whether Certain Organizations are Component Units, Prince George's Community College Foundation (the Foundation) is discretely presented as a component unit of the College in these financial statements. The Foundation is a separate legal, tax-exempt organization established to enhance the College's mission through fundraising that benefits the College and its programs. The 24 member Board of the Foundation as of June 30, 2015 is self-perpetuating and consists of graduates and friends of the College. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources or income thereon that the Foundation holds and invests are restricted to the activities of the College by donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the College, the Foundation is considered a component unit of the College. During the years ending June 30, 2015 and 2014, the Foundation contributed $970,901 and $934,695, respectively, to the College for both restricted and unrestricted purposes. Complete financial statements for the Foundation can be obtained by writing the Executive Director, Prince George's Community College Foundation, Inc., 301 Largo Road, A312, Largo, MD NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for Public Colleges and Universities, identifies three types of special-purpose governments (SPG): (1) those engaged only in governmental activities, (2) those engaged only in business-type activities, and (3) those engaged in both governmental and business-type activities. Governmental activities are generally financed through taxes, intergovernmental revenues and other non-exchange transactions. Business-type activities, on the other hand, are financed in whole or in part by fees charged to external parties for goods and services. Given the importance of tuition, fees and other exchange-type transactions in financing higher education, the College follows the reporting model required of SPG's engaged in business-type activities (BT A). Colleges reporting as BTA's follow GASB standards applicable to proprietary (enterprise) funds. The financial statements of the College have been prepared on the accrual basis of accounting whereby all revenues are recorded when earned and all expenses are recorded when they have been reduced to a legal contractual obligation to pay. The statements are intended to report the public institution as an economic unit that includes all measurable assets and liabilities, financial and capital, of the institution. The College's financial statements are prepared using the format of a special-purpose government engaged only in business-type activities with an economic resources measurement focus and the accrual basis of accounting. 22

55 NOTES TO FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued The statements of revenues, expenses and changes in net position for special-purpose governments engaged in BTA's requires an operating/non-operating format to be used. The College has elected to report operating expenses by functional classification. The statements of cash flows are presented using the direct method which depicts cash flows from operating activities and a reconciliation of operating cash flows to operating income. Colleges engaged in and reporting as BT A's follow GASB standards applicable to proprietary (enterprise) funds. GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, as amended, permits such entities to apply all accounting principles generally accepted in the United States of America that are developed for business enterprises except for those that conflict with or contradict GASB pronouncements. One of the primary purposes of financial reporting is to account for resources received and used. In certain situations both restricted and unrestricted assets may be available to cover an expense incurred. In those cases, as long as the expense meets all the requirements of the restricted assets, restricted resources would be applied first. The College's tuition and fees revenue is reported net of any scholarship allowance. The scholarship allowance represents the amount of dollars the College receives as tuition from outside resources such as the Title IV Federal Grant Program. Funds received for tuition costs from other outside resources are reported in the appropriate revenue classification. The Foundation is a private, non-profit organization that reports under accounting principles generally accepted in the United States of America. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. Limited presentation modifications have been made to the Foundation's financial statement format included in the College's financial statements. Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingencies, if any, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents Cash equivalents are items that are readily convertible to cash while carrying an insignificant risk of change in value. Cash equivalents have maturities of three months or less at the date of acquisition. Short-term investments included as cash and cash equivalents consist of the Maryland Local Government Investment Pool. All such shortterm investments for the College are carried at amortized cost. Short-term investments held by the Foundation classified as cash and cash equivalents are carried at fair value. Operating and Non-Operating Components Financial statement operating components include all transactions and other events that are not defined as capital and related financing, non-capital financing or investing activities. The College's principal on-going operations determine operating flow activities. On-going operations of the College include, but are not limited to, providing intellectual, cultural and social services through two-year associate degree programs, continuing education programs, workforce development programs and continuous learning programs. Operating revenues of the College consists of tuition and fees, grants and contracts, and auxiliary enterprise revenues. 23

56 NOTES TO FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued Financial statement non-operating components include transactions and other events that are defined as capital and related financing activities, non-capital financing activities, and investing activities. Non-capital financing activities include borrowing money for purposes other than to acquire, construct or improve capital assets and repaying those amounts borrowed, including interest. Also included are certain inter-fund and intergovernmental receipts and payments such as state appropriations. Capital financing activities include (a) acquiring and disposing of capital assets used in providing services or producing goods, (b) borrowing money for acquiring, constructing, or improving capital assets and repaying the amounts borrowed, including interest and (c) paying for capital assets obtained from vendors on credit. Investing activities include acquiring and disposing of debt or equity instruments. Restricted Net Position - Expendable and Non-Expendable The College's restricted net position has constraints placed upon it either: (a) externally imposed by creditors, granters, contributors, or laws/regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation. Non-expendable net position is required to be maintained in perpetuity. Expendable net position, for which there are externally imposed constraints, is obligated or expended within the condition(s) of the constraints. Property, Plant and Equipment Fixed assets are capitalized at cost and depreciated over their estimated useful service lives. Since the College is a component unit of the County, the College follows the estimated useful lives used by the County. Buildings and improvements Furniture and equipment 50 years 3-20 years Depreciation is computed using the straight-line method. Purchases of property, plant and equipment at a cost of $5,000 or more are capitalized at cost. Additions constructed or purchased by State or County governmental agencies are stated at the cost incurred for such additions by the agency. Donated equipment is recorded at fair market value on the date received. Intangible Assets The College follows GASS 51, Accounting and Financial Reporling for Intangible Assets. This Statement requires the capitalization of intangible assets such as land easements and internally developed software. The College's policy is to capitalize any intangible asset that exceeds $250,000. Management has determined that the College had no intangible assets that were required to be capitalized at June 30, 2015 and Third Party Payments The College follows GASS No. 24, Accounting and Financial Reporling for Cerlain Grants and Other Financial Assistance, which requires the College to recognize revenues and expenditures for third party payments made by the State related to College personnel. Accordingly, the College has included "on behalf' payments made by the State during fiscal years 2015 and 2014 of $4,956,180 and $4,680,085, related to Maryland State Retirement System (MSRS) plans in the statements of revenues, expenses and changes in net position. The College has also included "on behalf' payments of $900, 126 and $820,526 during 2015 and 2014, respectively, made by the State, passed through to the College, on behalf of College personnel, related to the optional retirement plans in the statements of revenues, expenses and changes in net position. Subsequent Events In preparing these financial statements, management of the College has evaluated events and transactions that occurred after June 30, 2015 for potential recognition or disclosure in the financial statements. These events and transactions were evaluated through October 6, 2015, the date that the financial statements were available to be issued. 24

57 NOTES TO FINANCIAL STATEMENTS NOTE 3: CASH AND INVESTMENTS The College currently uses two financial institutions and the Maryland Local Government Investment Pool (MLGIP) for its investment activity. The MLGIP is a State authorized investment vehicle established to assist local government units in their investment activity. For fiscal years 2015 and 2014, the College transferred excess funds to the MLGIP on a routine basis, and retained in the College's general checking account sufficient balances for ordinary daily cash disbursements. The general checking account is maintained at a federally insured commercial bank. The College has purchased additional collateral protection for the balance above the FDIC insured amount. The book balance of the College's deposits was $2,261,821 and $2,714,568 at June 30, 2015 and 2014, respectively. The College's bank balance was $4,210,472 and $3,256,038 as of June 30, 2015 and 2014, respectively, in its cash accounts. The College is bound by the provisions of Article 95, Section 22 of the Annotated Code of Maryland in its investment activities. In the opinion of management, the College is in compliance with all provisions of the Annotated Code of Maryland, and all funds are properly secured and protected to the fullest extent possible. The College's cash and investments, exclusive of those held in the MLGIP, are categorized in the following table to indicate the level of risk assumed by the College at year-end. Category 1 includes all FDIC insured bank deposits. Category 2 includes any overnight repurchase agreements with collateral held by the dealer bank's trust department in the College's name, certificates of deposit with collateral held by a third-party custodian not in the College's name and all commercial bank deposits over $250,000 since such banks must post collateral daily to the total amount of such deposits in the form of U.S. government, State of Maryland or Maryland political subdivisions' securities. The investment type and level of risk assumed as of June 30, 2015 and 2014 is consistent with the College's investments during the year. Category 1 Category 2 Total Carrying Amount Total Market Value 2015 Cash on hand Cash deposits Mutual fund $ $ $ 250,000 2,011,821 1,027 2,585 $ 2,261,821 1,027 2,585 2,261,821 2,018 Pooled separate accounts - investments in State's investment pool (MLGIP) 29,947,947 29,947,947 $ 250,000 $ 2,012,848 $ 32,213,380 $ 32,214, Cash on hand Cash deposits Mutual fund Pooled separate accounts - investments in State's investment pool (MLGIP) $ $ $ 250,000 2,464,568 1,027 4,739 $ 2,714,568 1,027 38,588,944 4,739 2,714,568 2,186 38,588,944 $ 250,000 $ 2,465,595 $ 41,309,278 $ 41,310,437 25

58 NOTES TO FINANCIAL STATEMENTS NOTE 3: CASH AND INVESTMENTS - continued The College follows GASB Statement No. 40, Deposit and Investment Risk Disclosures, an amendment to GASB Statement No. 3 which establishes and modifies disclosure requirements related to investment and deposit risks: Interest Rate Risk Credit Risk Custodial Credit Risk Concentrations of Credit Risk Foreign Currency Risk As of June 30, 2015, the College had the following investments and maturities. Investment Maturities {in Months} Investment Type Fair Value Less Than Maryland Local Government Investment Pool $ 29,947,947 $ 29,947,947 $ $ $ Mutual fund 2,018 N/A N/A N/A N/A $ 29,949,965 $ 29,947,947 $ $ $ Interest Rate Risk As a means of limiting its exposure to fair value losses arising from interest rates, the College's investment policy limits the maturity length to one year with special exception provided to purchase securities exceeding one year if the maturity of such investments are made to coincide as nearly as practicable with the expected use of the funds. Credit Risk The College's investment policy does allow investments in Money Market Treasury Funds. These funds must be operated in accordance with Securities and Exchange Commission Rule 2a-7 and have the highest possible rating from at least one nationally recognized statistical rating organization (NRSRO) as designated by the SEC. The Maryland Local Government Investment Pool functions as a U.S. Treasury Money Market Fund and is under contract with the State of Maryland Treasurer's Office. Standard & Poor's rated the Maryland Local Government Investment Pool AAA. Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the College would not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. The College maintains excess cash deposits of $2,011,821 over the FDIC limit of $250,000. In the event of the failure of the counterparty, the College has purchased additional collateral protection for the balance above the FDIC insured amount to ensure recovery of the amount in excess of the FDIC limit. Concentrations of Credit Risk The College's investment policy requires diversification by instrument at time of purchase as no more than 50% of the College's total investment portfolio may be invested in a single security type with the exception of U.S. Treasury securities, authorized pools such as the Maryland Local Government Investment Pool, repurchase agreements, and money market funds. Such investments are further diversified through a requirement that no more than 50% of the total investment portfolio be invested with a single financial institution, subject to the same exception noted in regard to security types. 26

59 NOTES TO FINANCIAL STATEMENTS NOTE 3: CASH AND INVESTMENTS - continued GASB Statement No. 40, Deposit and Investment Risk Disclosures, requires disclosure if an entity holds more than 5% of its investments in a single type of security. As of June 30, 2015, investment in the Maryland Local Government Investment Pool is 99.9% of the College's total investments. Foreign Currency Risk In accordance with Article 95, Section 22 and Section of the State Finance and Procurement Article of the Annotated Code of Maryland, the College is restricted to Banks (financial institutions) chartered in the State of Maryland and Bankers acceptances of domestic banks. Repurchase agreements must be backed by obligations of the United States, its agencies or instrumentalities. The College by 'Investment Policy and Procedures' Section H is limited to qualified public depositories as established by Maryland law for depository services. Prince George's Community College Foundation Cash, Cash Equivalents and Investments The following information is provided with respect to the credit risk associated with the Foundation's cash, cash equivalents and investments at June 30, 2015 and The Foundation considers cash in demand deposit accounts, and cash held within an investment account to be cash equivalents. The balances in these accounts are subject to electronic transfer for investment purposes and at times exceed federally insured limits. However, management does not believe the Foundation is subject to any significant credit risk as a result of these deposits. Investments in bonds and equities with readily determinable fair market values are presented at fair market value. Investment income or loss (including realized gains and losses on investments and interest) is included in non-operating revenues (expenses). The Finance Committee of the Foundation's Board of Directors establishes the investment policies, objectives and guidelines. The Foundation's investments are categorized by levels of credit risk as either Category 1, insured or registered funds held by the Foundation or its agent in the Foundation's name, or as non-categorized as follows: As of June 30, 2015 Catego!Y 1 Non-Categorized Market Value Cost Cash equivalents $ $ 326,715 $ 326,715 $ 326,715 U.S. treasury security 61,577 61,577 42,524 Bonds 3,855,422 3,855,422 3,894,137 Equities, ETF's and mutual funds 3,420,216 3,420,216 3,390,824 $ $ 7,663,930 $ 7,663,930 $ 7,654,200 As of June 30, 2014 Cash equivalents $ $ 506,786 $ 506,786 $ 506,786 U.S. treasury securities 548, , ,452 Bonds 2,195,753 2,195,753 2,132,813 Equities, ETF's and mutual funds 4,139,721 4,139,721 2,199,970 Certificate of deposit 60,463 60, ,192 60,679 $ $ 7,451,655 $ 7,451,655 $ 5,969,892 27

60 NOTES TO FINANCIAL STATEMENTS NOTE 3: CASH AND INVESTMENTS - continued The Foundation's investment income for the fiscal years 2015 and 2014 is summarized below: Interest and dividends $ 238,463 $ 240,728 Unrealized gains (losses) on investments (1,476,253) 706,764 Realized gains on investments 1,525,844 15,491 $ 288,054 $ 962,983 NOTE 4: FAIR VALUE - PRINCE GEORGE'S COMMUNITY COLLEGE FOUNDATION Accounting principles generally accepted in the United States of America define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, establish a fair value reporting hierarchy and define three broad levels of inputs (the assumptions that market participants would use in pricing the asset or liability) as noted below: Level 1 Inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets may include securities that are traded in an active exchange market or actively traded in over-the-counter markets. Level2 Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Foundation's U.S. treasury securities, equities and exchange traded funds, mutual funds, and cash equivalents have quoted prices in active markets for identical assets, that the reporting entity has the ability to access at the measurement date. Bonds and certificates of deposit are priced using models such as benchmarks yields, yield curves, exchange pricing model, and similar traded securities. The valuation methodology was not changed during the year ended June 30, Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to net assets. For the year ended June 30, 2015, there were no transfers in or out of levels 1, 2, or 3. 28

61 NOTES TO FINANCIAL STATEMENTS NOTE 4: FAIR VALUE - PRINCE GEORGE'S COMMUNITY COLLEGE FOUNDATION - continued As of June 30, 2015 and 2014, the Foundation's assets measured at fair value on a recurring basis are summarized by level within the fair value hierarchy as follows: 2015 Level 1 Level2 Level 3 Total Fair Value U.S. treasury security $ 61,577 $ $ $ 61,577 Bonds 3,855,422 3,855,422 Equities, ETF's and mutual funds 3,420,216 3,420,216 Cash equivalents 326, ,715 $ 3,808,508 $ 3,855,422 $ $ 7,663, Level 1 Level2 Level3 Total Fair Value U.S. treasury securities $ 548,932 $ $ $ 548,932 Bonds 2,195,753 2,195,753 Equities, ETF's and mutual funds 4,139,721 4,139,721 Certificate of deposit 60,463 60,463 Cash equivalents 506, ,786 $ 5,195,439 $ 2,256,216 $ $ 7,451,655 NOTE 5: ENDOWMENT - PRINCE GEORGE'S COMMUNITY COLLEGE FOUNDATION The Foundation's endowment consists of 50 individual funds (the Funds) established for a variety of purposes. As required by generally accepted accounting principles (GAAP), net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. Interpretation of Relevant Law The Board of Trustees of the Foundation has interpreted the State Prudent Management of Institutional Funds Act (SPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donorrestricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (a) The duration and preservation of the fund (b) The purposes of the Foundation and the donor-restricted endowment fund (c) General economic conditions ( d) The possible effect of inflation and deflation (e) The expected total return from income and the appreciation of investments (f) Other resources of the Foundation (g) The investment policies of the Foundation 29

62 NOTES TO FINANCIAL STATEMENTS NOTE 5: ENDOWMENT - PRINCE GEORGE'S COMMUNITY COLLEGE FOUNDATION - continued The Foundation had the following changes in the endowment net assets during the years ended June 30, 2015 and 2014: Un restricted Temporarily Restricted 2015 Permanently Restricted Total Endowment net assets at beginning of year $ $ 1,777,943 $ 2, 117, 153 $ 3,895,096 Contributions Appropriation of endowment assets for expenditure Endowment net assets after contributions and expenditures 1,777,943 2,117,633 3,895,576 Investment return Investment income Net appreciation (depreciation) realized and unrealized 224,612 60,561 13,852 (10,971) 238,464 49,590 Endowment net assets at end of year $ $ 2,063,116 $ 2,120,514 $ 4,183,630 ============= Unrestricted Temporarily Restricted 2014 Permanently Restricted Total Endowment net assets at beginning of year $ $ 824,590 $ 2,088,397 $ 2,912,987 Contributions Appropriation of endowment assets for expenditure 19,126 19, 126 Endowment net assets after contributions and expenditures 824,590 2,107,523 2,932,113 Investment return Investment income Net appreciation (depreciation) realized and unrealized 368, ,825 3,723 5, , ,732 Endowment net assets at end of year $ $ 1,777,943 $ 2,117,153 $ 3,895,096 ========== Funds with Deficiencies From time to time, the fair value of assets associated with individual donor restricted endowment funds may fall below the level that the donor or SPMIFA requires the Foundation to retain as a fund of perpetual duration. In accordance with GAAP, deficiencies of this nature are reported in unrestricted net assets. There were no funds with deficiencies as of June 30, 2015 and

63 NOTES TO FINANCIAL STATEMENTS NOTE 5: ENDOWMENT - PRINCE GEORGE'S COMMUNITY COLLEGE FOUNDATION - continued Return Objectives and Risk Parameters The Foundation has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets consist of those assets of donor-restricted funds that the Foundation must hold in perpetuity or for a donor-specified period(s). Under this policy, as approved by the Board of Trustees, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of the S&P 500 index while assuming a moderate level of investment risk. The Foundation expects its endowment funds, over time, to provide an average rate of return of approximately 6% annually. Actual returns in any given year may vary from this amount. Strategies Employed for Achieving Objectives To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. Spending Policy and How the Investment Objectives Relate to Spending Policy The Foundation has a policy of annually distributing a variable amount of the accumulated investment earnings from its endowment assets. The amount is based on 1) a percentage generally not to exceed 50% of investment returns, and 2) the needs of the students that the endowments are established to support. In this way, management feels that the corpus of the assets will be maintained in perpetuity. NOTE 6: RETIREMENT PLANS MSRS - Administered Plans The employees of the College are covered by one of the following defined benefit pension plans affiliated with the State Retirement and Pension System of Maryland (the 'System'), a public employee retirement system administered by the State Retirement Agency: The Teachers' Retirement System of the State of Maryland The Teachers' Pension System of the State of Maryland The Employees' Retirement System of the State of Maryland The Employees' Pension System of the State of Maryland During the 1979 legislative session, the Maryland General Assembly created, effective January 1, 1980, The Pension System for Teachers of the State of Maryland and The Pension System for Employees of the State of Maryland. Prior to this date, all teachers and related positions were required to be members of The Teachers' Retirement System of the State of Maryland, and non-certified positions were members of The Employees' Retirement System of the State of Maryland. All College employees who were members of the "Retirement System" at January 1, 1980 could remain in that System, or elect to join the "Pension System". All teachers hired within the state after December 31, 1979 must join the "Pension System for Teachers". All non-certified employees hired within the state after December 31, 1979 must join the "Pension System for Employees". The "Employees' Retirement System" covers those employees not covered by the teachers' plans. The State of Maryland is able to modify these plans. The plans are classified as cost-sharing, multiple-employer defined benefit plans. 31

64 NOTES TO FINANCIAL STATEMENTS NOTE 6: RETIREMENT PLANS - continued Benefits Provided These pension plans provide pension benefits and death and disability benefits. A member may retire after 25 years of service from the Retirement System, and as early as age 55 and 15 years of service from the Pension System. Members enrolled prior to July 1, 2011 are vested after accumulating at least 5 years of eligibility service. Members enrolled on or after July 1, 2011 are vested after accumulating at least 10 years of eligibility service. Funding Policy Both the "Retirement System" and the "Pension System" for teachers and non-certificated employees are jointly contributory. Under the "Retirement System" employees contribute 5%-7% of their total gross salary and under the "Pension System" employees contribute 7% of their gross salary. Effective January 1, 1980, in accordance with the law governing the Systems, all benefits of the Systems are funded in advance. Annually appropriated employer contribution rates for retirement benefits are determined using the entry age normal cost method. The method produces an employer contribution rate consisting of (1) an amount for normal cost (the estimated amount necessary to finance benefits earned by employees during the current service year), and (2) the amount for amortization of the unfunded actuarial accrued liability. Contributions In 2015 and 2014, participants contributed the following amounts: Teachers' Retirement System $ 45,110 $ 59,628 Employees' Retirement System 1,135 3,184 Teachers' Pension System 2,165,713 2,073,161 Employees' Pension System 311, ,153 $ 2,523,797 $ 2,438,126 A total of 755 and 764 College employees participated in MSRS in 2015 and 2014, respectively. College contributions totaling $439,263 (9.8% of covered payroll) and $423,052 (10% of covered payroll) in 2015 and 2014, respectively, and contributions by the State of Maryland to the Maryland Retirement Pension System on behalf of the College totaling $4,956, 180 and $4,680,085, were made in accordance with actuarially determined contribution requirements based on an actuarial valuations performed as of June 30, 2014 and June 30, Additional contributions were made by the State of Maryland to the Optional Retirement System on behalf of the College as described below. Total annual pension costs contributed by the State of Maryland were $5,856,306 and $5,500,611 for 2015 and 2014, respectively. The contributions made by the State of Maryland on behalf of the College were recognized as both revenue and expenses as required by GASB Statement No. 24, Accounting and Financial Reporting for Certain Grants and Other Financial Assistance. The College has a responsibility for funding contributions for employees that are members of the Employees' Retirement System of the State of Maryland. Therefore, the College has been instructed to treat this plan as a costsharing multiple-employer defined benefit pension plan. 32

65 NOTES TO FINANCIAL STATEMENTS NOTE 6: RETIREMENT PLANS - continued Pension Costs At June 30, 2015, the College reported a liability of $3,221, 728 for its proportionate share of the net pension liability in accordance with the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions. The net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The College's proportion of the net pension liability was based on the College's contributions to the System in relation to total system contributions including direct aid from the State of Maryland. At June 30, 2014, the College's proportionate share was 1.82%. At June 30, 2014, the College did not recognize a similar liability as the retirement plans and contributions to these plans were accounted for in accordance with the provisions of GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers (GASB 27), which did not have a provision for recognition of a proportionate share of the net pension liability. The pension liability amount reflected a reduction due to direct aid provided to the System. The amount recognized by the College as its proportionate share of the net pension liability, the direct aid, and total portion of the net pension liability that was associated with the College were as follows as of June 30, 2015: College's proportionate share of the net pension liability $ 3,221,728 State's proportionate share of the net pension liability associated with the College 38,862,649 $ 42,084,377 For the year ended June 30, 2015, the College recognized pension expense of $398,843. For the year ended June 30, 2014, the College recognized pension expense of $423,052 in accordance with the provisions of GASB 27. At June 30, 2015 and 2014, the College reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflow of Resources Deferred Inflow of Resources June 30, 2015 Changes in assumptions $ 46,605 $ Net difference between projected and actual investment earnings 352,639 Contributions subsequent to the measurement date 439,263 $ 485,868 $ 352,639 33

66 NOTES TO FINANCIAL STATEMENTS NOTE 6: RETIREMENT PLANS - continued Actuarial Assumptions The total pension liability as of June 30, 2015 was determined by rolling forward the Employees' Maryland State Retirement and Pension System's total pension liability as of the June 30, 2014 actuarial valuation using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial cost method - Entry Age Normal Amortization method - Level Percentage of Payroll, Closed Inflation - 2.9% general, 3.4% wage Salary increases % to 11.9%, including inflation Discount rate % Investment rate of return % Mortality - RP-2000 Combined Healthy Mortality Table projected to the year 2025 The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of geometric real rates of return were adopted by the System after considering input from the System's investment consultant and actuary. For each major asset class that is included in the System's target asset allocation, these best estimates are summarized in the following table: Asset class Target Allocation Long-Term Expected Real Rate of Return Public equity 35 % 4.70 % Fixed income % Credit opportunity % Real return % Absolute return % Private equity % Real estate % Cash % 100 % 34

67 NOTES TO FINANCIAL STATEMENTS NOTE 6: RETIREMENT PLANS - continued Discount Rate The discount rate used to measure the total pension liability was 7.65%. This single discount rate was based on the expected rate of return on pension plan investments of 7.65%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate and that contributions from employers will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Pension Liability Sensitivity The following presents the College's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the College's proportionate share of the net pension liability would be if it were calculated using a discount rate one percentage point lower or one percentage point higher than the current discount rate: Current 1 % Decrease Discount Rate 1 % Increase Discount rate College's proportionate share of the net pension liability $ 6.65 % 4,642,915 $ 7.65 % 3,221,728 $ 8.65 % 2,031,304 Pension Plan Fiduciary Net Position Detailed information about the System's fiduciary's net position is available in a separately-issued System financial report which may be requested by writing to the State Retirement and Pension System of Maryland, 120 East Baltimore Street, Baltimore, MD or by calling Optional Retirement Plans All full-time professional employees who are not members of any of the other retirement plans must participate in an optional retirement plan. The optional retirement programs chosen by the MSRS were Fidelity Investments and Teacher's Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF). As of June 30, 2015, 170 employees, or 43.40% of all eligible employees, participate in one of the optional retirement plans. As of June 30, 2015, 29 employees participate in the Fidelity plan and 141 in the TIAA-CREF plan. Contributions for the Fidelity participants were $141,999 in 2015 and $134,321in2014. Contributions forthe TIAA-CREF participants were $758, 127 in 2015 and $686,204 in The optional retirement plans are portable, defined contribution plans, which provide for immediate vesting of benefits to the employee. Upon retirement, TIAA-CREF and Fidelity participants have a number of options for payment of their vested benefits. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. Plan participants are not required to make any contributions, but have the option of making additional contributions to a supplemental plan. The College has no financial responsibility for contributions to TIAA-CREF or Fidelity since the State makes all employer contributions (7.25% of salary), except where such costs are covered under special programs. 35

68 NOTES TO FINANCIAL STATEMENTS NOTE 7: OTHER POSTEMPLOYMENT BENEFITS Plan Description The College provides other post-employment benefits (OPEB) to eligible retired employees through a single employer plan. The benefits, benefit levels, employee contributions and employer contributions are governed by the College and can be amended by the College through its personnel manual with the approval of the Board of Trustees. The plan is accounted for as a trust fund, as an irrevocable trust was established to account for the plan. The plan does not issue a separate report. Benefits Provided The College provides post-employment health care and life insurance benefits. To be eligible for benefits, an employee must qualify for retirement under one of the State retirement plans. All health care benefits are provided through the College's Health Care Insurance Plan. After 1 O years of service employees can qualify for insurance benefits, and all eligible employees will pay a percentage of the premium for Health, Dental and Vision Insurance benefits (HMO and PPO) including spousal coverage. The allocation of health care cost between the college and the former employee is based on the number of years of service of the retiring employee. These former employees also receive employer-paid life insurance. Membership At July 1, membership consisted of: Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not yet receiving them Active employees Participating employers Funding Policy The College establishes the contribution percentages between the College and the retirees. The College contributes percentages ranging from 50% to 90% of the cost of the premium based on the number of years of fulltime service with the College at the time of retirement. For the fiscal years ended June 30, 2015 and 2014, retirees made contributions of $7 43,914 and $725,455, respectively, and the College contributed $2, 196,624 and $2,098,708, or 3.3% and 3.3% of total payroll, respectively. Annual OPEB Costs and Net OPEB Obligation The College's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation as of June 30, is as follows: Percentage of Annual OPEB Annual OPEB Cost Employer Net OPEB Cost Contributed Contributions Obligation 2013 $ 3,742, % $ 2, 120,027 $ 1,539, $ 3,584, % $ 2,098,708 $ 1,424, $ 3,668, % $ 2,196,624 $ 1,396,019 36

69 NOTES TO FINANCIAL STATEMENTS NOTE 7: OTHER POSTEMPLOYMENT BENEFITS - continued The net OPEB obligation as of June 30, was calculated as follows: Annual required contribution (ARC) $ 3,640,000 $ 3,556,000 $ 3,692,000 Interest on net OPEB obligation 110, , ,000 Adjustment to ARC {82,000} {80,000} {142,000} Annual OPEB cost 3,668,000 3,584,000 3,742,000 Contributions made for current benefits (2, 196,624) (2,098, 708) (2, 120,027) Contribution made to trust {1,500,000} {1,600,000} {1,500,000} Increase (decrease) in net OPEB obligation (28,624) (114,708) 121,973 Net OPEB obligation at beginning of year 1,424,643 1,539,351 1,417,378 Net OPEB obligation at end of year $ 1,396,019 $ 1,424,643 $ 1,539,351 Funded Status and Funding Progress The funded status of the plan as of July 1, was as follows: Actuarial accrued liability (AAL) $ 63,471,000 $ 60,970,000 $ 58,637,000 Actuarial value of plan assets 18,737,000 16,755,000 12,554,000 Unfunded actuarial accrued liability (UAAL) $ 44,734,000 $ 44,215,000 $ 46,083,000 Funded ratio (actuarial value of plan assets/ml) 29.5 % 27.5 % 21.4 % Covered payroll (active plan members) 33,740,000 32,599,000 34,391,000 UAAL as a percentage of covered payroll % % % Actuarial valuations of an on-going plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress is presented as required supplementary information and presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The College funds the trust on an on-going basis. In accordance with GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, a valuation is required every two years. The valuation was completed prior to June 30, 2014 to provide information for 2014 and The computation of the valuation was made as of July 1, Had the valuation been performed as of June 30, 2013, there would be no material difference. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and 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 plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. 37

70 NOTES TO FINANCIAL STATEMENTS NOTE 7: OTHER POSTEMPLOYMENT BENEFITS - continued Significant assumptions underlying the obligation calculation are as follows: Actuarial method and Projected unit credit cost method Investment rate of return (net of administrative expenses) and % Healthcare cost trend and Varies by pre/post-medicare eligibility. The medical/prescription trend starts at 8.0%/6.5% pre/post 65 and 8.5%/6.5% pre/post 65, and decreases each year to an ultimate rate of 5.0% for both pre/post 65 for the year beginning July 1, 2022 and subsequent years Amortization period of UAAL - Open period of 30 years, as a level percentage of payroll. Remaining amortization period at June 30, 2015 was 3 years. NOTE 8: ACCOUNTS RECEIVABLE Accounts receivable relate to transactions involving student tuition and fee billings, governmental appropriations, student loans and financial aid. Receivables are shown net of any allowance for doubtful accounts Capital improvement program $ 14,837,821 $ 5,743,624 Tuition and fees - student receivable 1,822,930 1,986,535 Tuition and fees - contracts 1,334, ,767 Financial aid 199,494 1,494, 166 Governmental appropriations 749,632 1,549,632 Other accounts receivable 1,044, ,621 NOTE 9: PROPERTY, PLANT AND EQUIPMENT $ 19,987,941 $ 12,067,345 Changes in individual components in the plant assets for the years ended June 30, 2015 and 2014, are summarized below: Building and Furniture and Land Improvements Equipment Balance at July 1, 2013 $ 2,772,440 $ 110,027,352 $ 15,985,779 Depreciation (4, 158,273) (3,972,254) Construction in progress 7,860, ,805 Additions 700,609 Retirements (982,560) Capitalized lease additions 2,142,460 Accumulated depreciation on retirements 976,695 Balance at June 30, ,772, , 729,530 15, 126,534 Depreciation (4,444,527) (4,736,682) Construction in progress 18,009, ,004 Additions 1,940,803 Retirements (612,519) Capitalized lease additions 528,233 Accumulated depreciation on retirements 612,519 Balance at June 30, 2015 $ 2,772,440 $ 127,294,515 $ 13,276,892 38

71 NOTES TO FINANCIAL STATEMENTS NOTE 10: CONTINGENT LIABILITIES AND COMMITMENTS Legal Issues The College has been named as a defendant in various lawsuits. Two of these have been settled out of court and a few are in the early stages of investigation. Based on the information currently available, it is management's opinion that the expected outcome of these matters will not have a material adverse effect on these financial statements. Grant and Contract Costs Most grants and cost reimbursable contracts specify the types of expenditures for which the grant or contract funds may be used. Various reimbursements procedures are used for Federal awards received by the College. Consequently, timing differences between expenditures and program reimbursements can exist at the beginning and the end of the year. Deferred balances at yearend represent an excess of cash receipts over reimbursable expenditures to date. The excess cash receipts have been included in deferred income. The expenditures made by the College under some of these grants and contracts are subject to audit by the granter. Commitments The College has six ongoing construction projects as part of the Capital Improvement Program. The projects include: Circulation & Roadway Improvements Facilities Management Building Renovation Fire Alarm System Upgrade Lanham Hall Renovation and Addition Culinary Arts Center Project Queen Anne Fine Arts Building Renovation Of these projects, Circulation & Roadway Improvements, Fire Alarm System Upgrade, and the Facilities Management Building Renovation project are all in the construction phase and the remaining three are in the design phase. The Circulation & Roadway Improvements project which began in FY 2011, is scheduled to be completed in October 2015 and has a remaining construction cost of approximately $2.8 million. The Fire Alarm project which began in FY 2015 is scheduled to be completed in April 2016 and has a cost of $2.0 million. The Facilities Management Building renovation which began in FY 2015 is scheduled to be completed in January 2016 and has a remaining construction cost of $5.7 million. The following table reflects supplemental information about the projects in the design phase in the Capital Improvement Program. Design Cost (Remaining) Design Start Date Design Estimated Completion Construction Award Construction Start Date Lanham Hall Renovation Culinary Arts Center Queen Anne Fine Arts $ 453,000 FY 2013 $ 457,000 FY 2014 $ 2,264,000 FY 2014 FY 2016 FY 2016 FY 2016 Not finalized FY 2016 Not finalized FY 2016 Not finalized FY

72 NOTES TO FINANCIAL STATEMENTS NOTE 10: CONTINGENT LIABILITIES AND COMMITMENTS - continued As reflected on the statement of net position, the College has an unrestricted net position balance of $32.5 million at June 30, Included in this total is $26.4 million in the Capital Expenses Reserve Fund (CERF). This fund is used for construction projects not covered by the state and county Capital Improvement Program. Of the $26.4 million balance in CERF, $10.6 million is committed to various capital projects to include: the renovation of Annex A (formerly Childtime), the purchase of modular buildings (Annex Band C), telephone upgrade, and renovation of the handball courts. NOTE 11: COUNTY FUNDING OF THE COLLEGE For fiscal years 2015 and 2014, the County funded the operations of the College as follows: County revenue - operations funding Total expenditures (excludes matching and fund transfers for restricted grants) Percent of current expenditures funded $ 30,345,300 $ 29,545,300 $ 99,385,655 92,928, % 31.8 % NOTE 12: CAPITAL LEASE OBLIGATIONS The College has entered into several capital lease agreements that terminate on various dates through the fiscal year ending June 30, 2019 for various equipment and temporary buildings. The capital lease agreements may be canceled by the College at the end of any fiscal year if funds are not appropriated for future payment. The original cost of the assets acquired under these capital leases is $13,688,775 and $13,240,955 and the accumulated amortization totals $9,379,047 and $7,691,061 at June 30, 2015 and 2014, respectively. As of June 30, 2015, total future minimum capital lease payments for the years ended June 30, are as follows: Total payments Interest portion Principal obligation $ 1,849, , , ,731 3,233,977 (51,386) $ 3,182,591 On September 1, 2012 the College entered into a $10 million Master Lease Agreement with Banc of America Public Capital Corp. ("Lessor"), an affiliate of Bank of America. During FY2013, under the Master Lease Agreement the College entered into two separate leases, whereby the College leased $4,883,236 in information technology hardware and related equipment and financed certain software licenses (the "Assets") for a period of 48 months directly from the Lessor. During FY2014, the College entered into two additional leases under the Master Lease Agreement in the amount of $1,526,492 for telecom switches and computers. During FY2015, the College entered into one additional lease under the Master Lease Agreement in the amount of $528,233 for an upgrade of network equipment. The College has the right to purchase the Assets at the end of the 48-month term for $1.00. In addition, the College has the right to purchase the Assets and terminate the Master lease Agreement upon 30 days' written notice. Payments on the Master Lease Agreement are due quarterly. The weighted average effective interest rate under the Master Lease Agreement is 1.1 %. The College has accounted for the Master Lease Agreement as a financing transaction and amounts owed are included in capital lease obligations, current and noncurrent in the statements of net position. 40

73 NOTES TO FINANCIAL STATEMENTS NOTE 13: OPERATING LEASE OBLIGATIONS The College has entered into several lease agreements for rentals of facilities. Rentals are at rates subject to annual increases and expire through August 31, These lease arrangements are classified as operating leases. As of June 30, 2015, total future minimum operating lease payments for the years ended June 30, are as follows: 2016 $ 1,849, ,089, ,187, ,256, ,326,660 Thereafter 2,494,783 $ 13,204,202 Rent expense for the years ended June 30, 2015 and 2014 was $1,821,945 and $1,289,589, respectively. NOTE 14: SELF-INSURANCE The College is self-insured for health and dental benefits provided to its employees. To protect itself against significant losses, the College has stop-loss insurance policies in place for individual participant claims in excess of $125,000 per year and aggregate annual participant claims in excess of $8,676,069. The College has a contract with an administrative service provider to process participant claims under these programs. Incurred but not reported health claims as of June 30, 2015 and 2014 were estimated to be $777,829 and $519,417, respectively, and are included in accounts payable and accrued liabilities on the statements of net position. NOTE 15: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities represent amounts due at June 30, 2015 and 2014 for goods and services received prior to the end of the fiscal year Salaries and wages $ 3,448,706 $ 3,312,331 Benefits 3,384,663 1,847,489 Services and supplies 4,360,923 4, 157,681 Payroll withholdings 28,736 47,510 Unclaimed checks 100, , 186 Financial aid 833, ,357 Other 3,406 12,360 $ 12, 160,489 $ 10,195,914 41

74 NOTES TO FINANCIAL STATEMENTS NOTE 16: LONG-TERM LIABILITIES Long-term liabilities, inclusive of the current portion, for the years ended June 30, 2015 and 2014 are: Balance at Balance at June 30, 2014 Additions Retirements June 30, 2015 Compensated absences $ 2,496,526 $ 310,930 $ (277,669) $ 2,529,787 Capital lease obligations 4,501, ,233 (1,846,868) 3,182,591 Net OPES obligation 1,424,643 3,668,000 (3,696,624) 1,396,019 Net pension liability 3,551,971 {330,243} 3,221,728 $ 8,422,395 $ 8,059,134 $ {6, 151,404} $ 10,330,125 Balance at Balance at June 30, 2013 Additions Retirements June 30, 2014 Compensated absences $ 2,503,838 $ 228,023 $ (235,335) $ 2,496,526 Capital lease obligations 4,676,172 1,526,492 (1,701,438) 4,501,226 Net OPES obligation 1,539,351 3,584,000 {3,698, 708} 1,424,643 NOTE 17: OPERATING EXPENSES $ 8,719,361 $ 5,338,515 $ {5,635,481} $ 8,422,395 The statements of revenues, expenses and changes in net position show expenses by functional expense classification. The following are operating expenses by natural classification: Salaries and benefits $ 83,628,853 $ 78,319,562 Contracted services 13,650,938 14,007,635 Supplies 3,736,937 3,897,677 Communications 748, ,519 Conferences and meetings 940, ,005 Scholarships 6,278,676 6,195,645 Utilities 3,011,460 2,642,977 Tuition waivers 207, ,032 Insurance 833, ,521 Bad debt 1,016,018 1, 197,026 Depreciation 9,181,209 8,130,526 Other 288, ,560 State paid benefits 5,856,306 5,500,611 NOTE 18: INCOME TAXES $ 129,378,141 $ 123,186,296 Legal counsel for the College is of the opinion that all income of the College is exempt from income tax under Section 115 of the Internal Revenue Code (IRC) except for that income, if any, which Section 512(a) of the IRC defines as unrelated business taxable income. Management believes there to be no unrelated business taxable income for the years ended June 30, 2015 and The Foundation is exempt from income tax under Section 501 (c)(3) of the IRC, and applicable state statutes, except as to unrelated business income. In addition, the IRS has determined that the Foundation is a publicly supported organization as described in Sections 509(a)(1) and 170(b)(i)(A)(vi) of the IRC. Management of the Foundation believes there to be no unrelated business income for the years ending June 30, 2015 and 2014, respectively. 42

75 NOTES TO FINANCIAL STATEMENTS NOTE 19: CONCENTRATIONS For the year ended June 30, 2015, approximately 10.5% of the College's labor force was covered by a collective bargaining agreement. The collective bargaining agreement is effective through June 30, NOTE 20: CHANGE IN ACCOUNTING PRINCIPLE During the year ended June 30, 2015, the College adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions and related GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement No. 68. These pronouncements require the restatement of the July 1, 2014 net position of the College as shown as follows: Net position as of July 1, as previously reported Cumulative effect of application of GASB 68, net pension liability Cumulative effect of application of GASB 71, deferred outflow of resources for College contributions made to the Plan during fiscal year ending June 30, 2014 Net position as of July 1, as restated $ 169,944,531 (3,551,971) 423,052 $ 166,815,612 43

76 PRINCE GEORGE'S COMMUNITY COLLEGE SCHEDULE OF FUNDING PROGRESS FOR OTHER POSTEMPLOYMENT BENEFITS BASED ON ACTUARIAL VALUATION DATA AS OF JULY 1, 2014 The GASB has issued Statement Number 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The following schedule is required and represents six years of funded status and funding progress for the College. Please refer to Note 7 of the financial statements on pages for a more detailed description of the College's reporting of Other Postemployment Benefits (OPEB) for FY2014. Actuarial UAAL as a Actuarial Actuarial Accrued Percentage of Valuation Value of Liability (AAL) Unfunded AAL Funded Ratio Covered Covered Payroll Date Assets {a} - Ent!}'. Age {b} {UAAq {b-a} {a I b} Pa~roll {c} {{b - a} I c~ 7/1/2008 $ $ 57,221,000 $ 57,221, % $ 37,431, % 7/1/2009 $ $ 50,012,000 $ 50,012, % $ 38,531, % 7/1/2010 $ $ 52,306,000 $ 52,306, % $ 39,687, % 7/1/2011 $ 10,715,000 $ 56,307,000 $ 45,592, % $ 33,228, % 7/1/2012 $ 12,554,000 $ 58,637,000 $ 46,083, % $ 34,391, % 7/1/2013 $ 16,755,000 $ 60,970,000 $ 44,215, % $ 32,599, % Schedule of Contributions Required Amount Percentage Fiscal Year Ended Contribution Contributed Contributed June 30, 2009 $ 5,254,000 $ 1,577, % June 30, 2010 $ 4,129,000 $ 8,817, % June 30, 2011 $ 4,324,000 $ 4,323, % June 30, 2012 $ 3,610,000 $ 4,939, % June 30, 2013 $ 3,692,000 $ 3,620, % June 30, 2014 $ 3,556,000 $ 3,698, % See Notes to Financial Statements 44

77 PRINCE GEORGE'S COMMUNITY COLLEGE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2015 Federal Grant Number/Pass to FEDERAL GRANTOR/PASS-THROUGH through Grantors, GRANTOR/PROGRAM TITLE CFDA Number Grantors Number Ex~enditures U.S. DEPARTMENT OF EDUCATION Student Financial Aid - Cluster P063P / Federal Pell Grant P063P $ 20,088,345 Federal Direct Student Loans P0268K ,899,371 Federal Pell Administrative Allowance P063Q ,200 Federal College Work Study P033A ,903 SEOG P007A ,098 Federal Job Locator P033A ,313 Total Student Financial Aid - Cluster TRIO - Cluster Student Support Services A P042A ,218 FY13 Upward Bound A P047A ,588 Veterans Upward Bound A P047V ,654 Total TRIO - Cluster Pass-through from MSDE: FY 14 Perkins Program Improvement / ,932 FY 15 Perkins Program Improvement / ,591 $ 31,518, ,460 Pass-through from MD DLLR: FY14 Adult Education and Family Literacy Services A POOP , 158,458 TOTAL U.S. DEPARTMENT OF EDUCATION 34,117,671 NATIONAL SCIENCE FOUNDATION Research and Development - Cluster National CyberWatch: Cybersecurity Education Solutions for the Nation DUE ,402,284 Subcontract with Howard University: Partnership for Reduced Dimensional Materials DMR ,628 NSF Center for Integrated Quantum Materials DMR ,994 Total Research and Development- Cluster TOTAL NATIONAL SCIENCE FOUNDATION 1,431,906 1,431,906 US DEPARTMENT OF VETERANS AFFAIRS Veterans Assistance Program ,396 TOTAL US DEPARTMENT OF VETERANS AFFAIRS 5,396 5,396 45

78 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FEDERAL GRANTOR/PASS-THROUGH GRANTOR/PROGRAM TITLE DEPARTMENT OF LABOR INsTEP - Information Technology Education & Career Pathways Subcontract with Montgomery Community College Cyber-Technology Pathways Across Maryland (CPAM) Pass-thru from Department of Health and Human Services thru MD Office of Refugee ESL for Legal Refugees/Asylees Federal Grant Number/Pass through Grantors, CFDA Number Grantors Number TC A TC A FIA/ORA to Expenditures 1,304,514 9,711 38,274 TOTAL DEPARTMENT OF LABOR 1,352,499 DEPARTMENT OF DEFENSE Subcontract with University of Texas at San Antonio Cyberwatch: MidAtlantic Regional Collegiate Cyber Defense Competition FA ,000 TOTAL DEPARTMENT OF DEFENSE 16,000 DEPARTMENT OF JUSTICE Violence Prevention Center at Prince George's Community College WA-AX , 199 TOTAL DEPARTMENT OF JUSTICE 61, 199 US DEPARTMENT OF AGRICULTURE Pass-through from MSDE: Summer Food Service Program ,201 TOTAL US DEPARTMENT OF AGRICULTURE 2,201 DEPARTMENT OF HEALTH AND HUMAN SERVICES Pass-through from MSDE: Child Care Career and Professional Development Fund / ,909 TOTAL DEPARTMENT OF HEALTH AND HUMAN SERVICES 47,909 INTERNAL REVENUE SERVICE Subcontract with HRDC I Maryland Cash Campaign VITA Maryland Cash Campaign VITA0101 7,000 TOTAL INTERNAL REVENUE SERVICE TOTAL EXPENDITURES OF FEDERAL AWARDS 7,000 $ 37,041,781 46

79 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS NOTE 1: BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of Prince George's Community College for the year ended June 30, The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Because the schedule presents only a selected portion of the operations of Prince George's Community College, it is not intended to and does not present the financial position, change in net position or cash flows of Prince George's Community College. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) (B) Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-21, Cost Principles for Educational Institutions, wherein certain types of expenditures are not allowable or are limited as to reimbursements. Pass-through entity identifying numbers are presented where available. NOTE 3: SUBRECIPIENTS Of the federal expenditures presented in the schedule, the College provided federal awards to subrecipients as follows: CFDA Number Program Name NSF: National Cyberwatch: Cybersecurity Education Solutions for the Nation Amount Provided to Subrecipients $ 205,

80 BoNDBEEBE ACCOUNTANTS & ADVISORS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Trustees Prince George's Community College Largo, MD We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities, the discretely presented component component unit, and each major fund of Prince George's Community College (the College), a component unit of Prince George's County, Maryland as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the College's basic financial statements and have issued our report thereon dated October 6, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the College's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the College's internal control. Accordingly, we do not express an opinion on the effectiveness of the College's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the College's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. A PROFESSIONAL CORPORATION WITH OFFICES IN BETHESDA, MD AND ALEXANDRIA, VA ~21 48

81 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. A Professional Corporation Bethesda, MD October 6,

82 BoNDBEEBE ACCOUNTANTS & AD\'ISORS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Board of Trustees Prince George's Community College Largo, MD Report on Compliance for Each Major Federal Program We have audited Prince George's Community College (the College)'s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the College's major federal programs for the year ended June 30, The College's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the College's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the College's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the College's compliance. Opinion on Each Major Federal Program In our opinion, the College, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, A PROFESSIONAL CORPORATION WITH OFFICES IN BETHESDA, MD AND ALEXANDRIA, VA ~21 50

83 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Other Matters The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items: Finding Number CFDA Number Program (or Cluster} Name Com~liance Reguirement , , Special Tests & Provisions , Student Financial Aid Cluster Enrollment Reporting Special Tests and Provisions , , Disbursements to or on Behalf , Student Financial Aid Cluster of Students , , Eligibility - Eligibility for , Student Financial Aid Cluster Individuals All All Federal Programs Reporting INsTEP - Information Technology Education & Activities Allowed or Career Pathways Unallowed, Reporting Our opinion on each major federal program is not modified with respect to these matters. The College's response to the noncompliance findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The College's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Internal Control Over Compliance Management of the College is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the College's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the College's internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and question costs as items , , , and to be significant deficiencies. 51

84 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 The College's responses to the internal control over compliance findings identified in our audit are described in the accompanying schedule of findings and questioned costs. The College's responses were not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A Accordingly, this report is not suitable for any other purpose. A Professional Corporation Bethesda, MD October 6,

85 PRINCE GEORGE'S COMMUNITY COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2015 Significant deficiencies identified that are not considered to be material weakness es? Noncom liance material to financial statements noted? Internal control over ma or ro rams? Federal awards Material weakness es identified? Significant deficiencies identified that are not considered to be material weaknesses? r r r fx r, pc pc , , , A, A SECTION 11- FINANCIAL STATEMENT FINDINGS: I Reference Number I 53

86 SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION Ill - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS: Reference Number Student Financial Aid Cluster Criteria: A student's enrollment status determines eligibility for in-school status, deferment and grace periods, as well as for the payment of interest subsidies for Direct Loans. Reporting enrollment in a timely and accurate manner is critical for effective management of the programs. Questioned Costs Condition: During our testing of the College's compliance on Special Tests & Provisions - Enrollment Reporting, with respect to the above criteria, we noted inaccurate reporting for five students whose enrollment was less than half-time. Perspective Information: While the College obtained documentation to properly determine students' enrollment status, inaccurate programming lead to a systematic error in producing and submitting accurate enrollment reports. Cause of the Condition: Queries used for enrollment reporting omitted non-traditional grades (i.e. Q, F-administrative) that would have properly reflected students' enrollment. Effect or Potential Effect: Students whose deferment status changed were incorrectly reported. Recommendations: Internal reports should be reviewed to ensure that the impact of non-traditional grades are evaluated and properly included, as applicable. Views of Responsible Officials and Planned Corrective Actions: Prior to Fall Semester 2015 the college grading scheme contained a "Q" grade used to identify unofficial withdrawals for nonattendance and discontinued attendance. The college's ERP system did not recognize a "Q" grade as a withdrawal status and therefore counted the course a current enrollment. Effective Fall Semester 2015 a new grading scheme has been implemented and the use of the "Q" grade has been eliminated. The Offices of Planning and Institutional Research, Admissions and Records, Financial Aid and Enrollment Services are currently evaluating the best approach to ensure all enrollment statuses have been reported correctly. Any errors identified will be corrected. None 54

87 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Reference Number Student Financial Aid Cluster Criteria: (A) The College may not make a disbursement to a student unless the student is registered at least half-time (34 CFR section (a)(2)). (B) The College must review and document a student's eligibility before it disburses funds each payment period (34 CFR , , and (g)). Condition: (A) During our testing of the College's compliance on Special Tests and Provisions - Disbursements to or on Behalf of Students, with respect to the above criteria, we noted one instance where a disbursement was made to an ineligible student. (B) During our testing of the College's compliance on Special Tests and Provisions - Disbursements to or on Behalf of Students, with respect to the above criteria, we noted one instance where a disbursement was made to an ineligible student. Perspective Information: (A) Inaccurate criteria rules designed to evaluate eligibility prior to disbursement were systematically applied for students in similar scenarios. (B) The student's unique circumstance, whereby a student withdrew from all courses prior to completing the application process, including receiving a valid Expected Family Contribution contributed to the incorrect determination of the student eligibility. Cause of the Condition: (A) System programming did not use the proper benchmark for the determination of disbursement of Direct Loans. (B) The student was deemed eligible at the beginning of the Spring term and was retroactively awarded aid for the Fall term. The student was incorrectly awarded aid for the Fall, as post withdrawal disbursements can only be applied for courses that were completed. Effect or Potential Effect: (A) Direct Loans were disbursed to an ineligible student. (B) A Pell grant was disbursed to an ineligible student. Recommendations: (A) System programming should be reviewed and systematically tested to ensure proper results. (B) A secondary review should be performed by management to ensure that compliance requirements are met. Views of Responsible Officials and Planned Corrective Actions: (A) Funds have been refunded back to the loan program. All award year loan disbursements have been re-evaluated to ensure enrollment in at least 6 credits at the time of disbursement. A college-developed customization to the software caused improper loan disbursements when a specific condition existed on a student account. The customization has been corrected and tested to ensure disbursement will no longer occur under this condition. The College has contracted with the software provider/developer to review the financial aid system parameters, rules and customizations to assist with identification and correction of potential non-compliance areas. (B) Funds have been refunded back to the Pell program. As stated above, the system is being currently reviewed for potential non-compliance settings. Additionally, a second level of review will be performed before a post withdrawal disbursement is made. Questioned Costs $2,236 55

88 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Reference Number Student Financial Aid Cluster Criteria: Student financial aid recipients must maintain good standing or satisfactory academic progress. Condition: During our testing of the College's compliance on Eligibility - Eligibility for Individuals, with respect to the above criteria, we noted three instances where students were awarded financial aid but should not have been deemed eligible, since they failed to meet satisfactory academic progress requirements set forth by the College. Perspective Information: Communication of deadlines and acceptance of satisfactory academic progress appeals was inconsistent with respect to the published deadlines and in some cases acceptance of appeals beyond the deadline. Cause of the Condition: Appeals received after the deadline date were processed and approved without adequate documentation to support the reason an exception was made to the deadline requirement. Effect or Potential Effect: Questioned Costs aid. Students not meeting satisfactory academic progress requirements were awarded financial Recommendations: Since appeal reviews are performed by multiple individuals/departments, communication of deadlines should be clearly communicated and made available for reference to ensure compliance. Views of Responsible Officials and Planned Corrective Actions: The College acknowledges Consumer Information pertaining to Satisfactory Academic Progress Appeals was not updated to reflect the current policy. Consumer Information read: Students may submit an Academic Plan Appeal beginning June 1st for the Fall Semester. All appeals must be received by the deadline date of July 1st. Students who failed to meet the deadline, or who were not enrolled in the Fall Semester may submit the Academic Plan Appeal Request Form for the Spring Semester ONLY. Students must meet with an academic advisor to complete an Academic Plan. Consumer Information should have read: Students may submit an Academic Plan Appeal beginning June 1st for the Fall Semester. All appointments with an academic advisor must be made by the deadline date of July 1st. Students who fail to make an appointment by the deadline, or who were not enrolled in the Fall Semester may submit the Academic Plan Appeal Request Form for the Spring Semester ONLY. The College is currently reviewing the SAP Appeal Policy to ensure both the Consumer Information and Procedures Manual are updated to reflect the most current policy and procedure. The maintenance of Consumer Information will be a specific responsibility identified in job descriptions. The review of Consumer Information will be included in the Financial Aid Quality Assurance Plan which is currently under development $6,011 56

89 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Reference Number All Federal Programs Criteria: Recipients of federal awards are required to submit timely and accurate reports to the Federal Audit Clearinghouse. Condition: During our testing of the College's compliance with Reporting requirements, it was noted that the College did not submit the Data Collection Form within the required timeframe. Perspective Information: While the audit report was completed and submitted timely to state reporting agencies, the complete reporting package, including the Data Collection Form, which is filed on an annual basis, was not completed by the deadline. Cause of the Condition Miscommunication and medical leave of key audit personnel contributed to the delay in completing and providing the form to the College for transmittal. Effect or Potential Effect: The College did not fully comply with certain reporting requirements. Recommendations: The College and Auditor should maintain periodic contact to ensure that all reports have been completed and submitted by the required due date. Views of Responsible Officials and Planned Corrective Actions: Questioned Costs The College concurs. The Federal Clearinghouse requires the A-133 Single Audit Report be submitted within 30 days after the receipt of the audit. In the future, this date will be marked in the calendar in the Accounting Office and the Dean of Financial Services to ensure this tardiness does not occur in the future None 57

90 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Reference Number CFDA: INsTEP - Information Technology Education & Career Pathways Criteria: (1) The use of grant funds to pay costs of a participant's tuition (including scholarship), books, fees and other personal expenditures; incentive payments for participants such as performance-based cash bonuses, wages of participants (included the wages of students participating in cooperative education programs, Registered Apprenticeship or internships) are deemed unallowable activities. (2) The College must maintain an official fiscal policies and procedures manual. (3) A mechanism for tracking administrative expenses should be maintained under the regulation. Condition: During the year ended June 30, 2015, the Department of Labor conducted a Monitoring Review/program review and had the following findings: (1) The College expended and received reimbursement for costs associated with a virtual lab, which are deemed unallowable. (2) Evidence of communication and training using an official policies and procedures manual was not readily determinable as a result of the College only maintaining a policies and procedures manual in draft form. (3)Administrative expenses were not properly reported and also did not properly report accrued expenditures or unliquidated obligations on the ETA-9130 report for the quarter ended March 31, Perspective Information: (1) and (2) The Uniform Administration Requirements at 29 CFR (b) (3) requires recipients' financial management systems to have effective control over and accountability for all funds, property and other assets; and with written procedure for determining reasonableness, allocability and allowability of costs in accordance with Federal cost principles and terms of the contract. (1) Pervasive characteristics of the target population along with the interpretation of allowable costs were key factors in the College's assessment in incurring costs deemed part of the primary objective of the grant. (2) The College was operating on procedures outlined in the draft financial procedures manual but assessment could not be determined whether the draft manual would develop into an approved final product. (3) Federal regulations at 29 CFR (b) (1) requires accurate, current and complete disclosure of the financial results of each federally-sponsored project in accordance with the reporting requirements at paragraph The definition of administrative costs for grantees is the WIA definition at 20 CFR The College must re-evaluate the expenditures to date and ensure proper expense classification for future filings. Cause of the Condition: (1) Expenditures including the purchase of prepaid testing vouchers for IT certifications, thumb drives and other expenses relating to virtual labs were incorrectly deemed by the College as allowable costs (2) The policies and procedures manual maintained and used by the College was labeled as "Draft". (3) Administrative costs compiled and other information submitted by the College did not meet the definition as stated in the regulations. Effect or Potential Effect: (1) The College expended and received reimbursement for expenses deemed as unallowable costs. (2) Training and communication regarding policies and procedures could not be evidenced based on existing protocol and maintenance of the policies and procedures manual in draft form. (3) Information reported on form ETA-9130 was inaccurate and did not comply with standards. Recommendations: (1) The College is awaiting additional instruction but has been advised that the College can petition its Grant Officer as outlined by the September 18, 2015 correspondence from the U.S. Dept of Labor- Employment and Training Administration. (2) The College has resolved this finding based on re-submission of documents as reflected on the September 18, 2015 correspondence from the U.S. Dept of Labor-Employment and Training Administration. (3) The College is awaiting additional instruction as reflected on the September 18, 2015 correspondence from the U.S. Dept of Labor- Employment and Training Administration. Views of Responsible Officials and Planned Corrective Actions: All disallowed expenses have been identified, credited to the restricted fund and posted to the College's operating fund. The Accounting Office has developed a procedure for all grants where no expenses are approved before the Grants Project Manager meets with the Grants Accountant regarding necessary paperwork. All documentation received by the Grants Project Manager is reviewed by the Grants Accountant prior to any purchases being made. This gives a better level of review between the two offices and identification of disallowed expenses. Shortly after the Department of Labor Monitoring Review, the College distributed via to the college community and posted on the Financial Services portal page, two manuals, - Financial Services Procedures Manual and Procurement and Contracting Procedures Manual. Training on these procedures will occur during the fiscal year. Questioned Costs $181,062 58

91 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2015 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Reference Testing of the College's compliance on Special Tests & Provisions - Return of Title IV Funds, resulted with a student not being identified for a Return of Title IV calculation. Status: Reports to identify potential Return of Title IV students have been improved with additional enhancements still in progress. In the College's original response, it was indicated that we would request and track Intent to Return Confirmations for students enrolled in modular courses where the student had dropped courses and the later module had not yet started. A programming request was submitted and during the initial stages it was determined that the most effective approach to this situation was to perform a Return of Title IV at the time the first course withdrawal took place and to reverse the calculation when the student began attendance in the later module course. Reference Testing of the College's compliance on Special Tests & Provisions - Return of Title IV, resulted with two instances where timely determination for Return of Title IV was not met. Status: The College has created and filled a new staff position, Program Director of Compliance. This position is responsible for quality assurance of the various aspects of financial aid. This includes validating the production environment data and outcomes after all software updates. This is in addition to the testing performed prior to the updates being implemented in our Production environment Reference Testing of the College's compliance on Eligibility - Eligibility for Individuals, resulted in one instance where an eligible student was not awarded FSEOG but whose application appears to have been completed prior to other students who received FSEOG funding. Status: The packaging policy of SEOG was revised by removing the priority filing date. The ERP financial aid system parameters, rules and settings were not allowing the packaging of aid using a filing date. The College has contracted with the software provider to assist with the identification and correction of potential non-compliance areas. Reference Testing of the College's compliance on Special Tests & Provisions - Verification, resulted in an untimely award adjustment as a result of a change in eligibility. Status: The College continues to utilize a third party servicer for verification. A pro-rated sampling of files is selected for a quality assurance review. The sampling selected for review consists of 5% of verifications performed by the third party servicer and 5% performed by the College. If the error rate exceeds 2% the sample size will be increased. If the error rate remains the same or higher, an analysis will be done to identify and correct deficiencies. 59

92 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS Reference Testing of the College's compliance on Matching, Level of Effort, Earmarking, resulted with the College not meeting the minimum threshold for students employed in community service activities. Status: Fiscal Year 2015 Federal Work-Study (FWS) expenditures were reconciled bi-weekly. Beginning FY 2016, reconciliation of FWS will be on a monthly basis which is within federal regulations. 60

93 Annual Financial Report to the Maryland Higher Education Commission from Prince George's Community College Summary Statement of Revenues and Expenditures For The Fiscal Year Ended June 30, 2015 (With Accountants' Reporl Thereon) BoNDBEEBE ACCOUNTANTS & ADVISORS

94 BoNDBEEBE ACCOUNTANTS & ADVISORS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Trustees Prince George's Community College Largo, Maryland Report on the Annual Financial Report to the Maryland Higher Education Commission We have audited the Annual Financial Report to the Maryland Higher Education Commission (Form SBCC CC-4, pages 1 through 15) from Prince George's Community College (the College) and the enrollment data included therein, for the year ended June 30, Management's Responsibility for the Annual Financial Report to the Maryland Higher Education Commission Management is responsible for the preparation and fair presentation of this report in accordance with accounting principles generally accepted in the United States of America and the guidelines provided by the Maryland Higher Education Commission; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the report and information that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the report, 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 report 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 report. 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 report referred to above presents fairly, in all material respects, the information, including enrollment data, contained therein for the year ended June 30, 2015 on the basis specified in the instructions for the preparation of this report, published by the Maryland State Board of Community Colleges (SBCC) and adopted by the Maryland Higher Education Commission effective July 1, Emphasis of Matter In connection with our audit, nothing came to our attention that caused us to believe that the College failed to comply with the principles and procedures, specified in the instructions published by the SBCC, governing the interrelationship between the current unrestricted general fund and the auxiliary enterprise fund during the year ended June 30, 2015; however, our audit was not directed primarily toward obtaining knowledge of noncompliance. The report is intended solely for filing with the Maryland Higher Education Commission and should not be used for any other purpose. A Professional Corporation Bethesda, MD October 7, 2015 A PROFESSIONAL CORPORATION WITH OFFICES IN BETHESDA, MD AND ALEXANDRIA, VA ~21

95 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY STATEMENT OF REVENUES FOR FISCAL YEAR ENDING JUNE 30, 2015 Un restricted Current Fund Restricted Current Fund EXHIBIT I Total Revenue Revenue sources Student tuition and Fees: Credit $ 37,955,700 Non- credit 3,804,208 Total Student Tuition and Fees 41,759,908 $ - $ 37,955,700 3,804,208 41,759,908 Governmental: Federal State Local Total Government 25,210,654 30,345,300 55,555,954 26,142,413 26,142,413 3,242,640 28,453, ,940 30,738,240 29,777,993 85,333,947 Total Sales and Services of Educational Activities (Auxiliary Enterprise) Other: Gifts and Grants Other- Miscellaneous Total Other Total Revenues 905,184 1,719,671 2,624,855 $ 100,356, ,545 1,781, ,726, ,545 3,508,400 $ 30,661,538 $ 131,018,448 SBCC-CC-4 REV 06-13

96 PRINCE GEORGE'S COMMUNITY COLLEGE FINANCIAL STATEMENT RECONCILIATION FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT l(a) Unrestricted Current Fund Restricted Current Fund Financial Statements Total Revenue Revenue sources EXHIBIT 1 SUMMARY STATEMENT OF REVENUES Governmental: Federal State Add: State Paid Retirement Benefits Local Total Government $ $ - 25,210,654 30,345,300 55,555,954 $ $ 26,142,413 3,242, ,940 29,777,993 $ - 5,856,306 $ 5,856,306 $ $ 26, 142,413 28,453,294 5,856,306 30,738,240 91, 190,253 Total Revenues (Exhibit I) $ 100,356,910 $ 30,661,538 $ 5,856,306 $ 136,874,754 EXHIBIT II AND EXHIBIT IV SUMMARY STATEMENT OF EXPENDITURES Total Education and General Expenditures Add: State Paid Retirement Benefits Total Expenditures Reconciled $ 99,385,655 $ 30,745,794 $ - $ 130,131,449 5,856,306 5,856,306 $ 99,385,655 $ 30,745,794 $ 5,856,306 $ 135,987,755 SBCC-CC-4 REV a

97 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY STATEMENT OF CURRENT FUND EXPENDITURES BY FUNCTION FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT II Unrestricted General Current Fund Restricted Current Fund Revenues: Total Revenues (Exhibit I) $ 100,356,910 $ 30,661,538 ========== Expenditures by Function: Instructional Research Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships & Fellowships Total Education and General Expenditures 33,942,995 7,925, , ,547 17,090 19,673, ,953 8,460,084 1,417,527 26,886,245 26,351 9,678,041 3, ,445 21,083,001 99,385,655 30,745,794 Total Mandatory Transfers Total Education & General Expenditures and Mandatory Transfers 99,385,655 30,745,794 Total Auxiliary Enterprises Total Other Transfers Total Transfers, Expenditures and Mandatory Transfers $ 99,385,655 $ 30,745,794 ====="'====== SBCC-CC-4 REV

98 PRINCE GEORGE'S COMMUNITY COLLEGE EDUCATION AND GENERAL EXPENDITURES OF THE UNRESTRICTED CURRENT FUND BY FUNCTION AND OBJECT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT Ill Acct. No. Operations and Public Academic Student Institutional Maintenance Object Classification Instruction Research Service Support Services Support of Plant Scholarships and Fellowships Total 5XXX 60XX 61XX 61XX 62XX 63XX 64XX 65XX 66XX 67XX 68XX 69XX Compensation (including Fringe Benefits) $ 33,099,193 $ 50 $ 350,857 $ 14,105,292 $ 7,710,034 $ 17,922,496 $ 5,261,725 Contracted Services 274, ,308, ,036 6,188,101 1,021,309 Supplies and Materials 383, , , , ,592 Furniture and Equipment 130,064 1,457,536 19, ,391 94,437 Communications 5, ,326 16, ,252 Conferences/Meetings 49,897 3,974 68,655 65, ,207 3,917 Grants/Subsidies Utilities 117,399 2,894,060 Insurance and Tuition Waivers 833,058 Overhead Recovery 215,794 Open Open Total Expenditures $ 33,942,995 $ 50 $ 355,547 $ 19,673,248 $ 8,460,084 $ 26,886,245 $ 9,678,041 $ 49,405 $ 78,499,051 11,317,119 1,724,181 2, 139, , , , ,600 3,011, ,440 1,040, ,794 $ 389,445 $ 99,385,655 SBCC-CC-4 REV

99 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY STATEMENT OF EDUCATION AND GENERAL EXPENDITURES BY FUND AND OBJECT FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT IV Unrestricted Current Fund Restricted Current Fund Total Expenditures Account Number Object Classification 5XXX 60XX 61XX 61XX 62XX 63XX 64XX 65XX 66XX 67XX 68XX 69XX Compenstaion (including Fringe Benefits) 78,499,051 Contracted Services 11,317,119 Supplies and Materials 1,724,181 Furniture and Equipment 2,139,494 Communications 747,937 Conferences/Meetings 557,521 Grants/Subsidies 132,600 Utilities 3,011,460 Insurance and Tuition Waivers 1,040,499 Overhead Recovery 215,794 Open Open Total Expenditures 99,385,655 5,101,329 83,600,381 2,453,251 13,770, ,744 1,881, ,567 2,797, , , ,282 21,083,001 21,215,601 3,011,460 1,040,499 1,088,730 1,304,523 30,745, , 131,449 Total Mandatory Transfers Total Expenditures and Mandatory Transfers $ 99,385,655 $ 30,745,794 $ 130, 131,449 SBCC-CC-4 REV

100 PRINCE GEORGE'S COMMUNITY COLLEGE COMPUTATION OF ADJUSTED COST PER FTE AND PERCENTAGE OF LOCAL CONTRIBUTION FOR FISCAL YEAR ENDED JUNE 30, 2015 EXHIBITV The finalized State aid adjustment or payment for the fiscal year will be made with the November State aid payment. Certification will be made to the respective political subdivisions based on the following information. 1. Total Unrestricted Current General Fund Operating expenditures (from Exhibit II) $ 99,385, Subtract any expenditures included in 1. above which do not fall within the definition of Unrestricted Current General operating expenditures. List and specify items below. Indicate objects and functions in which these expenditures are shown on Exhibits Ill and IV. Item Object Function Amount a) b) c) d) e) f) Comp. Absence Capital Lease Pension Liability $ 199, ,617 40,240 Total Deductions 3. Adjusted Unrestricted Current Operating Expenditures (Line 1 less sum of 2a thru 2e) $ 1,092,979 $ 98,292, Total FTE students for fiscal year (from Exhibit VI) 13, Total Adjusted Unrestricted Current Operating Expenditures I Total FTE students (yields adjusted cost per FTE) $ 7, Total Maryland eligible FTE students (from Exhibit VI) 12, State aid paid fiscal year ending June 30, 2015 (Exclude State paid benefits)(complete Exhibit XI) (Based on two prior years audited FTEs) 8. Total Local Contributions* 9. Percentage of adjusted Unrestricted Current Expenditures contributed by local political subdivision (Line 8 I Line 3) * $ 25,210,654 $ 30,345, % * Regional community colleges must supply this information for each county supporting the college. SBCC-CC-4 REV

101 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY OF FULL TIME EQUIVALENT STUDENT TUITION AND FEES FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT VI FTE Students Student Tuition and Fees Eligible Students In-County (credit) Out-of-County (credit) Noncredit Total Eligible Students 7, $ 35, 146, ,343,632 4, ,712, , $ 40,202,757 Ineligible Students Credit Out-of-State Other ,241, ,939 Noncredit Out-of-State Other Total Ineligible Students , $ 1,557,152 Total Students 13, $ 41,759,908 SBCC-CC-4 REV

102 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY OF RESTRICTED FEDERAL GRANT PROGRAMS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT VII Program Title 6/30/2014 Balance Revenues Expenditures/ 6/30/2015 Transfers Balance Federal Government College Work Study SEOG I Job Locator & Developer PELL Grant PELL Admin Allow Veterans Educational Assistance DOL INsTEP CPAM Cyber-Technology Pathways Across Maryland 21129, NSF National CyberWatch CESN, National NSF PROM NSF CIQM FY15 UTSA Cyberwatch CCDC Student Support Services FY13 Upward Bound Veterans Upward Bound Summer Food Service Program AC3 Professional Development FY DOJ Violence Prevention Center AC3 Professional Development FY ESL for Legal Refugees/Asylees VITA Grant Tax Year /21326/21327/21328/21329/21330/21331 FY15 Adult Ed FY 14 Perkins, Program Improvement FY 15 Perkins, Program Improvement Take the Challenge MSDE Teachers Ed Art Collaborative Reading Workshop CSM Safe Communities 21916/21929 FY09 Perkins NSF PREM 21937,38,39 High Performance Workplace HIV/AIDS TAPP For the Future MSDE Infant & Toddler Pre-Service $ - $ 257, ,098 8,313 20,088,345 94,210 35,550 5,893 1,304,514 9,711 1,402,284 18,628 10,994 16, , , ,654 2,201 1,285 61, ,909 38,274 7,000 1,158,458 46, , , ,948 $ 257,903 $ 251,098 8,313 20,088,345 13, ,560 5, ,304,514 9,711 1,402,284 18,628 10,994 16, , , ,654 2,201 1,285 61, ,909 38,274 7,000 1, 158,458 46, , , ,948 Total Federal Government Programs $ 106,938 $ 26,165,260 $ 26,142,413 $ 129,785 SBCC-CC-4 REV

103 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY OF RESTRICTED STATE GRANT PROGRAMS FOR THE FISCAL ENDED JUNE 30, 2015 EXHIBIT VIII Program Title 6/30/2014 Balance Revenues Expenditures/ Transfers 6/30/2015 Balance State Government State I PT RN_PGSR Educ. Assistance PT Grant Program Maryland Higher Education ESOL 22109, 10 Con Ed Infant & Toddler 22112, 13 Health Manpower Shortage Bowie ATOD Governor's CC Initiative Nursing Students Retention FY14 HPSIG IT Early College IT Early College EARN MD Implementation Grant 22169/22170 FY15 Adult Ed Program $ 4,249 39,045 88,000 6,655 76,351 2, ,444 $ - $ - 39,045 (6,900) 81, , , , , , ,269 15,000 14, , ,637 90,000 48,926 9,200 9, , ,664 $ 4,249 2, 180 6,655 76,351 2, , , College & STEM Prep Readiness FY14 AD.AP.TS. 53,835 12,413 73, , ,413 14,982 9,843 Total State Government Programs $ 287,848 $ 3,099,092 $ 3,242,640 $ 144,300 SBCC-CC-4 REV

104 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY OF RESTRICTED LOCAL GRANT PROGRAMS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT IX Program Title 6/30/2014 Balance Revenues Expenditures/ Transfers 6/30/2015 Balance County Government Prince George's Social Services Living Well Infants and Toddlers Program FY15 Infants and Toddlers Program PGPS Summer Science Cable Aux $ - 49,078 (24) $ 344,532 $ 344,532 5,332 21,737 21,737 18,477 18,477 2,862 2,862 $ 43,746 (24) Total County Government Programs $ 49,054 $ 387,608 $ 392,940 $ 43,722 SBCC-CC-4 REV

105 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY OF OTHER SOURCES OF CURRENT FUNDS REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT X Other Revenue Sources Amount Gifts/Grants: Unrestricted Fund County INET donation Restricted Fund Non Government Gifts and Grants (See Exhibit X (A) for detail) Foundation Technology Program restricted revenue recognized per GASB33 Total Current Fund Gifts $ 905, ,718 10,827 $ 1,781,729 Other - Miscellaneous: Investment Income SW & HMP Facilities Rental RHEC Sales & Services Miscellaneous MD Parks and Planning Restricted Sales & Services Total Other - Miscellaneous Total Other Revenue Sources $ 18, , , ,955 13, , ,000 7,000 1,726,671 $ 3,508,400 SBCC-CC-4 REV

106 PRINCE GEORGE'S COMMUNITY COLLEGE SUMMARY OF RESTRICTED GIFTS AND GRANTS PROGRAMS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT X (A) 6/30/2014 Expenditures/ 6/30/2015 Program Title Balance Revenues Transfers Balance Gifts & Grants Adult Ed $ 8,231 $ $ $ 8, MHC Brown vs. BOE 1,426 1, Upward Bound Parents Upward Bound Six Flags Trip MEAEOPP College Goal Sunday Hillman Entrepenauers Program 178, , APA NGMS 9,148 9, American Smoke Out Psych Coll Center Path to Financial Independence 7, , Maryland CASH Campaign 10,509 10, AACC Survey 1,565 1, NACME Pipeline 2,811 2, METLIFE Roadmap Project 5,786 3,330 2, Moneywise Mini Grant Data Mining Student Success 3,487 3, FY12 Statefarm Youth Service Day 1,198 1, Bridge to Success Pilot Project Rain Garden Grant Program 3,000 3, FY12 Path to Financial Independence 15,801 15, Plus 50 Encore Completion Program 7,628 5,000 10,839 1, Hospitality Express for Success 13,338 2,000 10,392 4, VITA Weinberg Tax Year ,855 2, Earned Income Tax Credit Program 15,319 1,856 13, Americas Civil Rights Struggle FY14 MEAEOPP College Goal Sunday FY14 Hospitality Express 4 Success 15,000 12,000 1,187 25, APA BEA MATOP 1, VITA Weinberg 5,800 5, MEAEOPP College Goal Sunday 1, The Nielsen Company Scholars 5,000 5, VITA Weinberg Tax Year ,500 6, FY15 BEA APA MATOP 1,000 1, FY11 Foundation Grant Awards 3,622 3, FY13 Foundation Grant Awards 1,719 1, FY15 Foundation Grant Awards 11, , Children's Dev Clinic 41,713 5,231 36, ,3,4 Foundation Grant Awards 9,010 26,379 29,067 6, Bluebird Festival 37,541 37, Service Leaming Cable Aux 261, , , , Collegian Center F.l.V.E. Works BOA Health Is Wealth Initiative 24,439 10,288 14, Placement Job Fair 3,170 3, Stepping Stones Initiative 8,889 8, Lockheed Martin Academy 22,958 22, Math Tournament Competition NBC Universal Health is Wealth 1,266 1, IPAS Solution at PGCC 50,000 50, Health Science Programs 3,787 3, Entrepreneurship Develop Program Fannie Mae Financial Literacy NCC Program Sponsorships 101, , Stepping Stones - WOW 22,789 22, Dream Seat 8,484 8, Meyer Foundation Lotus Project 6,636 6, Dreamkeepers 5,145 5, Veterans Center at PGCC 22, , UpwardBound Donations FY15 Entrepreneurship Development Program 8,306 8, Trauma and Emergency Medicine 101, , FY15 Prince Georges Saves College Prep Partnership Metro Ebony Theatre 2,050 2, MD Hwy Safety Alcohol Survey SBCC-CC-4 REV02-88 Total Gifts and Grants $ 473,593 $ 737,299 $ 865,718 $ 345, a

107 PRINCE GEORGE'S COMMUNITY COLLEGE RECONCILIATION OF STATE AID FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT XI Amount 12, State Aid $1, $ 16, 157,020 Flat Grant (Fixed Cost Adjustment) 9,852, 144 Part-Time Grant Low Income Student Grant Other (specify below) State Reduction (798,510) Total State Aid $ 25,210,654 SBCC-CC-4 REV

108 PRINCE GEORGE'S COMMUNITY COLLEGE RECONCILIATION OF MARYLAND FULL TIME EQUIVALENT STUDENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT XII Summer Credit Enrollment (CC-2) Summer Noncredit Enrollment (CC-3) Fall Credit Enrollment (CC-2) Fall Noncredit Enrollment (CC-3) Spring Credit Enrollment (CC-2) Spring Noncredit Enrollment (CC-3) Other Credit Enrollment (CC-2) Other Noncredit Enrollment (CC-3) Total Enrollment Eligible Maryland FTEs Accepted by MHEC , , , , $ 12, Maryland FTEs Now Claimed ~er Audit , , , , $ 12, Total Eligible Maryland FTEs accepted by MHEC during fiscal year. 12, xxxxxxx Additional Eligible Maryland FTEs claimed per audit* (deletions) xxxxxxx Total Eligible Maryland FTEs 12, , Total Unduplicated Part-Time Students** * When additional FTEs not previously reported are claimed as a result of the audit, a properly executed CC-2 or CC-3 must be filed with the CC-4 to substantiate the claim. **This number of FTEs will be the basis for the payment of State aid two years hence. FTEs shall be reported to the second decimal place. SBCC-CC-4 REV

109 PRINCE GEORGE'S COMMUNITY COLLEGE STUDENT FACULATY RATIO (CREDIT COURSES ONLY) FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT XIII Total Credit Hours Generated (Per Exhibit VI) 245,024 Total Credit Hours Taught FY Student-Faculty Ratio (Total credit hours generated divided by total course credit hours taught) NOTE: Information for the computation of the student-faculty ratio is to be supplied by the chief academic officer in conformity with the guidelines decided upon by the Maryland Council of Community College Academic Deans as follows: Student credit hours generated and course credit hours taught are to be measured at the end of the third week of classes. Laboratory courses and independent study courses are to be excluded from the denominator if they did not appear independently on the printed class schedule. Continuing education (noncredit) courses are to be excluded. Includes all sessions (Summer and Winter). SBCC-CC-4 REV

110 PRINCE GEORGE'S COMMUNITY COLLEGE FUNDING OF STATEWIDE PROGRAMS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 ( 1) Fall (2) Spring CC-2A CC-2A EXHIBIT XIV TOTAL 1. TOTAL OUT-OF-COUNTY/CITY STUDENTS ENROLLED IN STATEWIDE PROGRAMS* TOTAL CREDIT HOURS* 1,844 1,664 3, TOTAL TUITION DIFFERENTIAL* $ 156,740 $ 141,440 $ 298, 180 REDUCTION BASED ON STATE ALLOCATION (30,702) (27,706) (58,408) ADJ TOTAL TUITION DIFFERENTIAL* 126, , ,772 TOTAL STATE AID RECEIVED FOR STATEWIDE PROGRAMS Add: Receivable From State FY15 126, ,734 49, ,772 49,632 Minus: Receivable From State Prior Year (49,632) (49,632) TOTAL AUDITED STATE AID FOR STATEWIDE PROGRAMS $ 126,038 $ 113,734 $ 239,772 * Per SBCC-CC-2A form. SBCC-CC-4 REV

111 PRINCE GEORGE'S COMMUNITY COLLEGE FUNDING OF STATEWIDE PROGRAMS FOR THE FISCAL YEAR ENDED JUNE 30, 2015 EXHIBIT XV Optional Retirement System Reimbursements Amount Due (To) From MHEC from Prior Year (FY2014) Reimbursement Requested from MHEC (Invoiced FY 2015) Add (Less) Additional Audit Adjustment Less Amount Received from MHEC Net Balance Due From I (To) MHEC $ , 126 (849,953) $ 50,372 Teachers Retirement and Pension System Reimbursements to MHEC Amount Due To (From) MHEC from Prior Year (FY2014) Required Reimbursement Reported to MHEC Less Additional Audit Cost Less Amount Paid to MHEC FY 2015 $ 278,995 6,165 (278,995) Net Balance Due From I (To) MHEC $ 6,165 Total Amount Due From I (To) MHEC $ 56,537 SBCC-CC-4 REV

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