Associated Students of California State University, Chico Chico, California

Transcription

1 Associated Students of California State University, Chico Chico, California FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION WITH INDEPENDENT AUDITORS REPORT June 30, 2016, With Comparative Totals as of June 30, 2015

2 TABLE OF CONTENTS June 30, 2016 and 2015 Page Number Independent Auditors Report 1 FINANCIAL SECTION Statements of Financial Position 4 Statements of Functional Activities and Changes in Net Assets 5 Statements of Cash Flows 7 Notes to the Financial Statements 8 SUPPLEMENTARY INFORMATION SECTION Schedules of Activities of the Auxiliary Activities Fund 21 Schedules of Activity Fee Program Operations 22 Schedules of Student Union Operating Fund Operations 23 Schedules of Source of Funding and Expenses for Sponsored Programs 24 Schedule of Investments and Savings 25 Schedules of Net Position (CSU Format) 26 Schedules of Revenues, Expenses and Changes in Net Position (CSU Format) 27 Schedule of Supplementary Information (CSU Format) 28

3 INDEPENDENT AUDITORS REPORT To the Board of Directors Associated Students of California State University, Chico Chico, California We have audited the accompanying financial statements of Associated Students Inc. of California State University, Chico, (the Organization), a not for profit corporation and a component unit of California State University, Chico, which comprise the statements of financial position as of June 30, 2016; the related statements of functional activities and changes in net assets and cash flows for the year then ended; and the related notes to the financial statements. The prior year summarized comparative information has been derived from the Organization s 2015 financial statements; and, in our report dated September 18, 2015, we expressed an unmodified opinion on those financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits 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 auditors 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 Organization 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 Organization 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. Page 1

4 INDEPENDENT AUDITORS REPORT (Continued) Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Organization as of June 30, 2016 and 2015, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matter Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary information listed as supplementary information in the table of contents is presented for purposes of additional analysis as required by the California State University Chancellor s Office and is not a required part of the financial statements. Such information is the responsibility of management and was derived from, and relates directly to, the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. September 16, 2016 Chico, California Page 2

5 FINANCIAL SECTION

6 STATEMENTS OF FINANCIAL POSITION Student General Board Auxiliary Sponsored Campus Union (Activity Plant Designated Activities Programs Programs Operating Total All Funds June 30 Fee) Fund Fund Fund Fund Fund Fund Fund ASSETS Cash on hand and in banks $ 484,630 $ $ 1,551 $ 1,238,751 $ 238 $ 40,282 $ 179,044 $ 1,944,496 $ 1,323,588 Cash in investments 2,637,102 6,417 5,123, ,712 4,064,906 11,998,702 11,108,604 Total Cash and Cash Equivalents 3,121,732 7,968 6,362, ,994 4,243,950 13,943,198 12,432,192 Accounts and other receivables net 67,859 7, , , , ,977 Sponsored programs receivable 18,929 18,929 27,325 Interfund receivables (payables) 123,212 (839,195) (18,764) 734,747 Inventories 113, ,929 98,298 Prepaid expenses 13,012 17,528 72, ,256 40,771 Investments 1,000,000 1,000,000 2,000,000 2,000,000 Buildings and equipment net of accumulated depreciation 47, ,235 1,179,313 2,149,762 2,002,989 Long term deposits 20,000 20,000 20,000 TOTAL ASSETS $ 3,325,815 $ 47,214 $ 1,015,942 $ 7,796,418 $ 444 $ 206,994 $ 6,278,283 $ 18,671,110 $ 16,982,552 LIABILITIES AND NET ASSETS Liabilities Accounts payable $ 54,090 $ $ $ 102,583 $ 421 $ $ 195,963 $ 353,057 $ 377,882 Accrued expenses 192, , ,868 1,525,218 1,216,995 Deferred revenue 45, ,354 9, , ,835 Deposits held for others 206, , ,148 Postretirement benefit obligation 260, , ,904 1,140,219 1,085,080 Total Liabilities 552,662 1,501, ,994 1,145,900 3,407,715 3,161,940 Net Assets Unrestricted 2,773,153 47,214 1,015,942 6,294,703 5,132,383 15,263,395 13,820,612 TOTAL LIABILITIES AND NET ASSETS $ 3,325,815 $ 47,214 $ 1,015,942 $ 7,796,418 $ 444 $ 206,994 $ 6,278,283 $ 18,671,110 $ 16,982,552 The accompanying notes are an integral part of these financial statements. Page 4

7 STATEMENTS OF FUNCTIONAL ACTIVITIES AND CHANGES IN NET ASSETS Student General Board Auxiliary Sponsored Campus Union (Activity Plant Designated Activities Programs Programs Operating Total All Funds Years Ended June 30 Fee) Fund Fund Fund Fund Fund Fund Fund UNRESTRICTED NET ASSETS Revenues and Other Support Wildcat Store, Dining Services, and other sales $ $ $ $ 9,625,198 $ $ $ $ 9,625,198 $ 9,368,469 Student activity fees 2,206,916 2,206,916 2,147,852 Return of student union surplus fees 4,880,296 4,880,296 4,308,084 Student programs 66, , , ,263 Sponsored and campus program receipts 474, , , ,073 Contract services 123, , ,545 Interest income 18,126 12,911 29,473 20,015 80,525 36,908 Gifts 9,830 9,830 10,993 Other income 152, , , , ,803 Total Revenues and Other Support 2,577,720 13,107 9,979, , ,089 5,585,467 18,881,436 18,682,990 Expenses Program services: Campus and student programs 1,335, , , ,911 2,319,566 2,129,447 Community programs 285, , ,543 Auxiliary activities cost of sales 2,999,198 2,999,198 2,948,270 Auxiliary activities operating costs 4,635,838 4,635,838 4,481,919 Facility operations 2,662,325 2,662,325 2,418,727 Total Program Services 1,621,115 7,635, , ,365 2,916,236 12,902,226 12,337,906 Supporting services: Contract services and operational support costs 763, , ,446 2,209,506 2,388,214 Facility support costs 915, ,696 1,911,354 2,099,634 Depreciation expense 7, , , , ,712 Total Support Services 770,763 1,554,322 2,189,813 4,514,898 4,832,560 Total Expenses $ 2,391,878 $ $ $ 9,189,358 $ 474,474 $ 255,365 $ 5,106,049 $ 17,417,124 $ 17,170,466 Page 5

8 STATEMENTS OF FUNCTIONAL ACTIVITIES AND CHANGES IN NET ASSETS (Continued) Student General Board Auxiliary Sponsored Campus Union (Activity Plant Designated Activities Programs Programs Operating Total All Funds Years Ended June 30 Fee) Fund Fund Fund Fund Fund Fund Fund Increase (Decrease) in Unrestricted Net Assets Before Transfers $ 185,842 $ $ 13,107 $ 790,221 $ $ (4,276) $ 479,418 $ 1,464,312 $ 1,512,524 Transfers Plant fund transfer (18,079) 18,079 Other fund transfers 54,375 (171,054) 4, ,403 Other Pension changes other than net periodic benefit cost (4,932) (7,656) (8,941) (21,529) 226,182 Increase in Unrestricted Net Assets 217,206 18,079 13, , ,880 1,442,783 1,738,706 Unrestricted Net Assets Beginning of Year 2,555,947 29,135 1,002,835 5,683,192 4,549,503 13,820,612 12,081,906 Unrestricted Net Assets End of Year $ 2,773,153 $ 47,214 $ 1,015,942 $ 6,294,703 $ $ $ 5,132,383 $ 15,263,395 $ 13,820,612 The accompanying notes are an integral part of these financial statements. Page 6

9 STATEMENTS OF CASH FLOWS Student General Board Auxiliary Sponsored Campus Union (Activity Plant Designated Activities Programs Programs Operating Total All Funds Years Ended June 30 Fee) Fund Fund Fund Fund Fund Fund Fund Cash and Equivalents Beginning of Year $ 2,732,647 $ $ 1,349 $ 5,923,860 $ $ 175,148 $ 3,599,188 $ 12,432,192 $ 12,015,131 CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets net of transfers 217,206 18,079 13, , ,880 1,442,783 1,738,706 Adjustments to reconcile changes in net assets to net cash provided by operating activities: Depreciation 7, , , , ,712 (Gain) Loss on sale or disposal of equipment (2,400) (2,400) 6,591 (Increase) Decrease due to noncash current assets: Receivables net (7,408) (6,488) 64,327 8,474 (11,568) 47,337 1,494,646 Interfund receivables (payables) 77,424 (127,351) (6,557) 56,484 Inventories (15,631) (15,631) 4,208 Prepaid expenses (6,295) (2,133) (54,057) (62,485) 13,992 Increase (Decrease) due to noncash liabilities: Accounts payable 21,592 (130,071) (1,702) 85,356 (24,825) (624,353) Accrued expenses 73, , , ,223 13,990 Deferred revenue 1,069 (121,568) (4,109) (124,608) 178,138 Deposits held for others 31,846 31,846 33,322 Postretirement benefit obligation 12,154 20,200 22,785 55,139 (205,796) NET CASH PROVIDED BY OPERATING ACTIVITIES 389,085 25,142 6, , ,846 1,055,934 2,049,417 2,998,156 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (2,000,000) Purchase of equipment (25,142) (102,097) (413,572) (540,811) (583,974) Proceeds from sale of equipment 2,400 2,400 2,879 NET CASH USED BY INVESTING ACTIVITIES (25,142) (102,097) (411,172) (538,411) (2,581,095) Increase in Cash and Equivalents 389,085 6, , , ,762 1,511, ,061 Cash and Equivalents End of Year $ 3,121,732 $ $ 7,968 $ 6,362,316 $ 238 $ 206,994 $ 4,243,950 $ 13,943,198 $ 12,432,192 The accompanying notes are an integral part of these financial statements. Page 7

10 NOTES TO THE FINANCIAL STATEMENTS 1. NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Activities The Associated Students Inc. of California State University, Chico (the Organization), a not for profit organization of the students at California State University, Chico (CSU, Chico), operates various auxiliary enterprises, including a student store (Wildcat Store) and campus dining services; receives student union and activity fees to support student related programs; and acquires assets for the benefit of the student body and the campus community. The Organization also administers sponsored and campus programs for the benefit of the student body and the campus community. The accompanying financial statements combine the accounts and the results of operations of the General Fund, Plant Fund, Board Designated Fund, Auxiliary Activities Fund, Student Union Operating Fund, Campus Programs Fund, and Sponsored Programs Fund in accordance with reporting instructions received from the Office of the Chancellor of the California State University. Basis of Accounting The financial statements of the Organization have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles includes the use of estimates that affect the financial statements. Accordingly, actual results could differ from those estimates. Comparative Financial Information The financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Organization s financial statements for the year ended June 30, 2015, from which the summarized information was derived. Fund Accounting The accounts of the Organization are maintained in accordance with the principles of fund accounting. Under fund accounting, resources for various purposes are classified for accounting and reporting purposes into funds established according to their nature and purpose. Separate accounts are maintained for each fund. In accordance with Financial Accounting Standards Board (FASB), Accounting Standards Codification (ASC) , Not For Profit Balance Sheet Presentation, net assets are classified as unrestricted, temporarily restricted, or permanently restricted based on the absence or existence and type of donor imposed restrictions. The funds are organized into seven categories as follows: 1. General (Activity Fee) Fund: This fund is used to account for activity fee funds and all financial resources except those required to be accounted for in another fund. 2. Plant Fund: This fund is used to account for acquisition of physical properties and funds expended and invested in physical properties for the General Fund. Page 8

11 NOTES TO THE FINANCIAL STATEMENTS (Continued) 3. Board Designated Fund: This fund is used to account for all amounts specifically allocated by the Board of Directors to certain programs. These funds have been used for Board of Director approved programs, which primarily benefit students. The Board of Directors designated funds with the intent to allow the funds to grow to a principal balance of $1 million when the earnings can be used to support student programs and services. 4. Auxiliary Activities Fund: This fund is used to account for the operations of ongoing revenue producing activities. Included in this fund are the operations of the Wildcat Store and Dining Services. The Organization has an agreement with Follett Higher Education Group, Inc. (Follett), in which Follett operates the Wildcat Store. The agreement provides for a commission to be paid on gross revenues as defined. The commission is calculated as 16.6% of the first $8 million in gross revenues, plus 17.6% on gross revenues in excess of $8 million, with a minimum commission of $1.1 million to be paid during the year. In and subsequent years, the guaranteed minimum commission shall be 90% of the commission paid to the Organization in the immediate preceding year. The agreement expires on June 30, 2019, and is automatically renewed for up to three additional two year terms, under the same terms and conditions set forth in the agreement, unless either party notifies the other of its intent to not renew. 5. Sponsored Programs Fund: This fund reflects the activity of sponsored grants and contracts for instruction, research, and community service programs. These programs are funded by external agencies. 6. Campus Programs Fund: This fund accounts for all restricted funds except for Sponsored Program Funds. It includes resources administered by the Organization on behalf of campus organizations (agency accounts). 7. Student Union Operating Fund: This fund accounts for the programs and operations of the Bell Memorial Union and the Wildcat Recreation Center buildings. Cash and Cash Equivalents The Organization considers cash and cash equivalents to include cash on hand and commercial checking and savings accounts, time certificates of deposit, and other short term deposits in the Local Agency Investment Fund (LAIF). At times, such investments may be in excess of the Federal Deposit Insurance Corporation insurance limits of $250,000. The Organization secured a contract for deposit of monies with Tri Counties Bank whereby deposits up to $2.5 million will be subject to the security provided to local public agencies. The Organization has a significant concentration of cash invested in LAIF. The LAIF pool is managed by the State of California Treasurer s Office with oversight provided by the Local Investment Advisory Board (LIAB). Page 9

12 NOTES TO THE FINANCIAL STATEMENTS (Continued) Fair Value Measurements The Organization accounts for certain assets and liabilities in accordance with FASB ASC 820, Fair Value Measurements and Disclosures. The Organization measures some assets for fair value on a recurring basis as described in note 2. The Organization may be required, from time to time, to measure certain assets and liabilities at fair value on a non recurring basis. These include assets that are adjusted for the lower of cost or market, such as an inventory valuation. The Organization classifies its fair value assets and liabilities into a hierarchy of three levels based on the markets in which they are traded and the reliability of the assumptions used to determine fair value. The asset or liability measurement level within the hierarchy is based on the lowest level of any assumption that is significant to the measurement. Valuations within the hierarchy levels are based upon the following: Level 1: Level 2: Level 3: Quoted market prices for identical instruments traded in active exchange markets. Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model based valuation techniques for which all significant assumptions are observable or can be corroborated by observable market data. Model based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect an organization s estimates of assumptions that market participants would use on pricing an asset or liability. Valuation techniques include management s judgment and estimation which may be significant. Accounts Receivable Financial instruments that potentially subject the Organization to credit risk are primarily related party receivables and amounts due from grants. Based on the past payment history, the Organization writes off all balances over 12 months. At June 30, 2015, the allowance for doubtful account balances was $6,591. At June 30, 2016, no allowance for doubtful account balances was deemed necessary. Interfund Receivables and Payables payables as they occur. The Organization records direct interfund receivables and Inventories Food and supplies inventories are stated at the lower of cost or market on a first in, firstout basis. Page 10

13 NOTES TO THE FINANCIAL STATEMENTS (Continued) Building and Equipment Building and equipment are stated at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives using the straight line method. Planned major maintenance is accounted for using the directexpense method. Expenditures for new construction, major renewals and replacements, and equipment costing over $2,500, are capitalized. Deposits Held for Others The Organization administers funds for certain student and related organizations. The deposits held for others represent the amounts of funds held for student and related organizations. The Organization receives revenue for administering these funds. Revenue Recognition Revenue is recognized on the accrual basis of accounting. Student Union fees are recognized as revenue when they are transferred from CSU, Chico. Sponsored programs revenue from grants and contracts is recognized as funds are expended. Grants and Contracts Grants and contracts are received from federal and state governmental agencies and various other organizations. The Organization receives an administration fee for indirect overhead costs and recognizes this fee as income over the life of the grant or contract as a percentage of total expenditures or salaries and wages as specified in the grant or contract. Shipping and Handling Costs Shipping and handling costs are included in cost of sales. Income Taxes The Organization is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code. The Organization functionally supports CSU, Chico, and has been classified in accordance with Section 509(a)(3), Type III. The Organization has not entered into any activities that would jeopardize its tax exempt status. Income from certain activities not directly related to the Organization s tax exempt purpose is subject to taxation as unrelated business income. However, expenses associated with the unrelated business income exceed the income or are insignificant. Accordingly, no provision for income taxes is required. The Organization files exempt organization returns in the U.S. federal and California jurisdictions. The federal returns for tax years 2013 and beyond, and the California returns for tax years 2012 and beyond, remain subject to examination by the taxing authorities. The Organization accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in the Organization s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740, Income Taxes, also provides guidance on derecognition and measurement of a tax position taken or expected to be taken in a tax return. Based on this analysis, a liability is recorded if uncertain tax benefits have been received. The Organization s practice is to recognize interest and penalties, if any, related to uncertain tax positions in the tax expense. There were no uncertain tax positions identified or related interest and penalties recorded as of June 30, 2016, and the Organization does not expect this to change significantly over the next 12 months. Subsequent Events Management has evaluated subsequent events through September 16, 2016, the date on which the report was available to be issued. Page 11

14 NOTES TO THE FINANCIAL STATEMENTS (Continued) 2. FAIR VALUE MEASUREMENTS The following is a schedule of the Organization s assets at fair value, by level within the fair value hierarchy. Level 1 Level 2 Level 3 Local Agency Investment Fund June 30, 2016 $ $ 11,998,702 $ June 30, 2015 $ $ 11,108,604 $ Investments Brokered certificates of deposit June 30, 2016 $ $ 2,000,000 $ June 30, 2015 $ $ 2,000,000 $ The fair values of the LAIF pool at June 30, 2016 and 2015, were % and %, respectively, of the carrying values and are deemed to not represent a material difference. The LAIF pool includes assetbacked securities representing 2.81% and 2.08% of the total portfolio as of June 30, 2016 and 2015, respectively, which is subject to market risk as interest rates fluctuate. 3. INVENTORIES Inventories consisted of the following: June Food and supplies $ 113,929 $ 98,298 Page 12

15 NOTES TO THE FINANCIAL STATEMENTS (Continued) 4. BUILDINGS AND EQUIPMENT NET June Building improvements $ 2,076,908 $ 2,060,953 Equipment and furnishings 4,251,313 3,808,524 Vehicles 337, ,469 Subtotal 6,665,690 6,206,946 Less: Accumulated depreciation 4,515,928 4,203,957 Buildings and Equipment Net $ 2,149,762 $ 2,002,989 Depreciation expense charged to operations for the years ended June 30, 2016 and 2015, amounted to $394,038 and $344,712, respectively. 5. POSTRETIREMENT BENEFIT OBLIGATION The Organization sponsors a defined benefit postretirement plan that covers both salaried and nonsalaried career employees. The postretirement plan provides an extension of medical and dental benefits provided after an employee retires. The postretirement plan is contributory with retiree contributions adjusted annually. To be eligible for the postretirement plan, the employees have a vesting period to 10 years of credited service and attainment of age 60 with the Organization. The accumulated postretirement benefit obligation is a standardized measure of the present value of postretirement benefits estimated to be payable in the future as a result of employee service to date. The postretirement benefit obligation at June 30, 2016, was computed based on an actuarial valuation performed as of July 1, 2014, with estimates for costs and amortization through June 30, 2016, including consideration of the 2011 postretirement plan amendment. As of the June 30, 2011, plan amendment, the postretirement plan provides a monthly fixed participant benefit of $200. Retirees previously enrolled in the postretirement plan will continue to receive benefits of $200 or $400 for a participant or a participant and spouse, respectively. The postretirement plan will be funded on the pay as you go basis. Page 13

16 NOTES TO THE FINANCIAL STATEMENTS (Continued) The following table sets forth the changes in the postretirement benefit obligation and the funded status of the postretirement plan: June CHANGE IN POSTRETIREMENT BENEFIT OBLIGATION Postretirement Benefit Obligation Beginning of Year $ 1,085,080 $ 1,290,876 Service cost 63,965 61,930 Interest cost 43,702 40,569 Actuarial loss and other adjustments (13,786) (272,941) Benefits paid (38,742) (35,354) Postretirement Benefit Obligation End of Year $ 1,140,219 $ 1,085,080 FUNDED STATUS Postretirement Benefit Obligation End of Year $ 1,140,219 $ 1,085,080 Unamortized prior service cost 251, ,628 Unrecognized net actuarial loss (181,460) (201,878) Items Not Yet Recognized as a Component of Net Periodic Benefit Cost 70,221 91,750 Accrued Benefit Cost $ 1,210,440 $ 1,176,830 Funded Status End of Year $ (1,140,219) $ (1,085,080) The components of net periodic benefit cost are as follows: June Net Periodic Benefit Cost Service cost $ 63,965 $ 61,930 Interest cost 43,702 40,569 Amortization of prior service costs (41,947) (41,947) Amortization of net actuarial loss 6,632 8,973 Net Periodic Benefit Cost $ 72,352 $ 69,525 The expected amortization to be recognized next year is as follows: Amounts included in net assets that are expected to be recognized as net periodic benefit cost during the fiscal year ended June 30, 2016: Amortization of prior service cost $ (41,947) Amortization of net actuarial loss 6,632 Total Amortization Expected to be Included in Net Periodic Benefit Cost June 30, 2017 $ (35,315) Page 14

17 NOTES TO THE FINANCIAL STATEMENTS (Continued) The expected benefits to be paid over the next nine years are as follows: Years Ended June $ 48, , , , ,910 Total $ 602,476 The assumptions used to determine the postretirement benefit obligation are as follows: June Weighted Average Assumptions Used to Determine the Benefit Obligation Discount rate 4.10% 4.10% Health care cost trend rate assumed for next year 6.40% 6.40% Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.00% 5.00% Year that the rate reaches the ultimate trend rate Page 15

18 NOTES TO THE FINANCIAL STATEMENTS (Continued) 6. NET ASSET RESERVES The Board of Directors of the Organization, under guidelines established by the Chancellor s Office, developed reserve policies for net assets. Future increases in net assets will also be reserved by these policies. Net asset reserves are as follows: Student General Board Auxiliary Union (Activity Plant Designated Activities Operating June 30, 2016 Fee) Fund Fund Fund Fund Fund Total Investments in plant and equipment $ $ 47,214 $ $ 923,235 $ 1,179,313 $ 2,149,762 Reserve for facilities upgrade 1,200,000 1,200,000 Reserve for working capital 200, ,000 1,389,176 1,714,176 Contingency reserve 120,666 35,000 83, ,017 Capital replacement reserve 22,490 75, , ,490 Reserve for allocated funds 1,015,942 1,015,942 Future operations reserve 2,500,000 2,500,000 Total Net Asset Reserves 343,156 47,214 1,015,942 4,858,235 2,901,840 9,166,387 Available for general purposes 2,429,997 1,436,468 2,230,543 6,097,008 Total Net Assets $ 2,773,153 $ 47,214 $ 1,015,942 $ 6,294,703 $ 5,132,383 $ 15,263,395 Page 16

19 NOTES TO THE FINANCIAL STATEMENTS (Continued) 7. STUDENT UNION FEES Construction of the Bell Memorial Union (BMU) was authorized by a student vote in 1964, and the original building was completed in Legal title to the building is retained by the California State University Trustees (the Trustees). Of the $1,500,000 in original building construction costs, $1,100,000 was financed with the original debt fully repaid in In spring 1996, a referendum was approved by the students at CSU, Chico, to increase the Student Union fee for funding to expand and remodel the BMU. Additionally, the Organization s Board of Directors approved a project to provide space in the remodeled Student Union for the Wildcat Store. Construction of the projects began in December 1998, with final completion in July 2001, for a total of $33,433,639 in building construction and financing costs. Of the total costs, $23,370,000 was financed by the issuance of revenue bonds. In August 2007, the revenue bonds were refinanced with system wide revenue bonds in the amount of $18,525,000, which bear interest at an average coupon rate of 5.0%. The system wide revenue bonds are payable in annual principal and interest installments of approximately $1,421,000 until the entire debt is repaid in This refinancing decentralized the Student Union fees so they can be used for operations in the year collected. The decentralized bonds do not require reserves. The system wide revenue bonds are not a liability of the state of California, but are a special obligation of the Trustees payable from, and secured by, the mandatory Student Body Center fee. In spring 2005, a referendum was approved by the students at CSU, Chico, to increase the Student Union fee by $175 per semester beginning when the Wildcat Recreation Center (the WREC) opened. This fee was approved to provide debt service for the construction costs and operating expenses for the WREC. Construction began in July 2007, with completion in August Construction costs for the WREC were approximately $68,665,000. Funds for construction were provided by the sale of system wide revenue bonds in the amount of $66,425,000, interest earned during construction and capitalized interest earnings of $562,000, net bond premium of $930,000, and student fees of $748,000. These bonds are not a liability of the state of California, but are a special obligation of the Trustees payable from, and secured by, the mandatory Student Body Center fee. The students at CSU, Chico, voted to require that students pay Student Union fees to service the above described debt, through the mandatory Student Body Center fee, and to operate the Student Union and the WREC. Student Union fees totaled $12,942,291 and $12,735,034 for the years ended June 30, 2016 and 2015, respectively. CSU, Chico, collects Student Union fees and transfers to the Trustees the amount necessary to fund the annual debt service requirement. The remaining student fees are available for transfer to the Organization after the reserve requirements of the Chancellor s Office Executive Order No. 994 have been met and any outstanding liabilities to CSU, Chico, have been paid. The Auxiliary Activities Fund reimburses the Student Union for the space it occupies in proportion to the Trustees annual debt service. Page 17

20 NOTES TO THE FINANCIAL STATEMENTS (Continued) CSU, Chico, and the Chancellor s Office held reserves as follows: June 30, 2016 Revenue fund reserve $ 18,921,611 Repair and replacement reserve 2,849,833 Total Reserves Held by CSU, Chico, and Chancellor's Office $ 21,771, RETIREMENT PLANS The Organization participates in the California Public Employees Retirement System (CalPERS). Annually, CalPERS determines the required employer contribution rate for each participating agency. The required contribution rates for the Organization were % and % for years ended June 30, 2016 and 2015, respectively. To participate in the CalPERS plan, employees hired prior to 2013 were required to contribute 7.000% of their earnings to which the Board of Directors agreed to contribute 2.000% of the employees required contribution, bringing the total employer contribution rate to %. Employees hired on January 1, 2013, or later are required to contribute 6.250% of their earnings. Expenses recognized for the CalPERS plan amounted to $556,448 and $590,853 for the years ended June 30, 2016 and 2015, respectively. The Organization also sponsors two 401(k) profit sharing plans with one plan servicing exempt employees and one plan servicing non exempt employees. The plans cover substantially all employees who attained the age of 21 and completed a minimum of 1,000 hours of service per year. Employees may direct contributions from earnings into the 401(k) profit sharing plans. Employer contributions into the plans are at the discretion of the Board of Directors; there were no contributions in 2016 and Administrative expenses recognized for the 401(k) profit sharing plans amounted to $40,465 and $41,307 for the years ended June 30, 2016 and 2015, respectively. 9. RELATED PARTY TRANSACTIONS Campus Food Service Agreement Under contract with CSU, Chico, the Organization provides residential dining services, in the stateowned residence halls, for the students of the six campus residence halls. The contract for the fiscal year was negotiated and signed by both parties on October 21, The contract for the fiscal year was negotiated and signed by both parties on May 31, The contract for provided for reimbursement of all operational costs plus a fixed fee of $425,000. Page 18

21 NOTES TO THE FINANCIAL STATEMENTS (Continued) Operating Lease and Facility Use Agreements The Organization operates as an auxiliary organization to CSU, Chico, under an operating lease agreement negotiated every ten years. An operating lease agreement, ending December 31, 2026, was negotiated and signed by both parties on December 30, 2015, whereby $300,000 plus 2.25% of Wildcat Store and Dining Services cash operations net sales are payable at the end of each fiscal year. As required by the operating lease agreement, CSU, Chico, directs the operating lease payments to the CSU, Chico Research Foundation (the Research Foundation). The Organization uses certain CSU, Chico, facilities under lease agreements requiring rental payments or space trade. These facilities include the BMU (nominal), Residence Dining, certain warehouse space, and Creekside Coffee. CSU, Chico, provides facilities for the Child Development Laboratory at no cost. Business, Financial, and Information Technology Services For the years ended June 30, 2016 and 2015, the Organization, by contract, provided information technology services to the Research Foundation. For the year ended June 30, 2015, the Organization, by contract, provided business and financial services to the Research Foundation. The following is a schedule of transactions with related parties: June Transactions With CSU, Chico Payments to University for salaries of University personnel $ $ 3,500 Payments to University for other than salaries of University personnel $ 1,131,661 $ 1,092,688 Payments received from University for services, space, and programs $ 12,431,080 $ 11,337,635 Gifts (cash or assets) to the University from recognized Auxiliary Organization $ 250,042 $ 245,509 Accounts payable to University $ (114,974) $ (53,914) Accounts receivable from University $ 153,986 $ 98,636 Other amounts receivable from University $ 55,142 $ 57,717 Transactions With the Research Foundation Revenue for business, financial, and information technology services $ 123,884 $ 743,545 Accounts receivable from Research Foundation $ 2,084 $ 61,962 Accounts payable to Research Foundation for operating lease and facility use agreements with CSU, Chico $ (573,020) $ (566,151) Page 19

22 SUPPLEMENTARY INFORMATION SECTION

23 SCHEDULES OF ACTIVITIES OF THE AUXILIARY ACTIVITIES FUND Dining Services Wildcat Cash Residence Combined Total Years Ended June 30 Store Operations Dining Halls Total Sales $ $ 4,364,950 $ 4,166,465 $ 8,531,415 $ 8,531,415 $ 8,268,469 Cost of sales 1,643,338 1,355,860 2,999,198 2,999,198 2,948,270 Sales commissions 1,093,783 1,093,783 1,100,000 Gross Profit 1,093,783 2,721,612 2,810,605 5,532,217 6,626,000 6,420,199 Operating Expenses Salaries and wages 1,200,454 1,454,893 2,655,347 2,655,347 2,457,686 Employee benefits 266, , , , ,043 Administrative, accounting, and professional 58, , , , , ,102 Utilities 52, , , , ,558 Telephone 7,820 10,121 2,210 12,331 20,151 24,602 Depreciation 17, ,026 3, , , ,840 Travel and meetings 5,495 8,109 13,604 13,604 17,011 Repairs and maintenance 1, ,971 29, , , ,951 Operating supplies 177, , , , ,240 Rent 310, , , , ,315 Contributions to CSU, Chico 366, , , , ,151 Postage and freight ,979 Insurance 13,841 23,513 20,851 44,364 58,205 72,832 Advertising 17, ,722 18,722 17,082 Wildcat Store and credit card charges ,298 3, , , ,067 Other ,088 31, , , ,020 Total Operating Expenses 829,942 2,919,572 2,422,101 5,341,673 6,171,615 5,909,479 Income (Loss) From Operations 263,841 (197,960) 388, , , ,720 Other income 229, , , , ,239 Other expenses (14,656) (3,889) (18,545) (18,545) (16,074) Other fund transfers (250,023) 38,584 40,385 78,969 (171,054) (388,277) Pension changes other than net periodic benefit cost (7,656) (7,656) (7,656) 80,076 Net Income (Loss) $ 243,531 $ (57,020) $ 425,000 $ 367,980 $ 611,511 $ 665,684 Page 21

24 SCHEDULES OF ACTIVITY FEE PROGRAM OPERATIONS Years Ended June REVENUES Activity Fees $ 2,206,916 $ 2,147,852 Programs Campus programs 468, ,061 Student programs 50 Community programs 71,530 81,096 Government affairs 5,000 5,000 Interest income 18,079 11,338 Administrative 38,380 38,593 Total Programs 601, ,088 TOTAL REVENUES 2,808,320 2,741,940 EXPENSES Programs Campus programs 1,436,913 1,324,889 Student programs 109,556 71,917 Community programs 285, ,543 Government affairs 247, ,234 Administrative 542, ,473 TOTAL EXPENSES 2,622,478 2,459,056 Excess Revenues From Operations 185, ,884 Other fund transfers 54,375 50,192 Pension changes other than net periodic benefit cost (4,932) 51,232 Excess Revenues $ 235,285 $ 384,308 Page 22

25 SCHEDULES OF STUDENT UNION OPERATING FUND OPERATIONS Years Ended June REVENUES Return of Surplus Revenue Funds $ 4,880,296 $ 4,308,084 Revenue From Noncommercial Operations Recreation programs 281, ,431 Interest income 20,015 10,410 Other income 403, ,904 Reimbursements 786, ,485 Total Revenue From Noncommercial Operations 1,491,860 1,499,230 TOTAL REVENUES 6,372,156 5,807,314 EXPENSES Salaries and wages 2,278,020 2,078,420 Employee benefits 877, ,021 Operating expenses: Travel 107, ,400 Insurance 52,498 63,207 Supplies 169, ,009 Communications 49,585 48,660 Printing and advertising 22,271 36,791 Depreciation 246, ,671 Accounting and other professional services 947, ,526 Repairs and maintenance 216, ,469 Program expenses 253, ,318 Utilities 556, ,293 Other miscellaneous 113, ,920 TOTAL EXPENSES 5,892,738 5,556,705 Excess Revenues From Operations 479, ,609 Internal transfers 112, ,727 Pension changes other than net periodic benefit cost (8,941) 94,874 Excess Revenues $ 582,880 $ 455,210 Page 23

26 SCHEDULES OF SOURCE OF FUNDING AND EXPENSES FOR SPONSORED PROGRAMS Years Ended June Source of Funding (Direct) Federal funds $ 149,064 $ 164,444 State of California and local governments 297, ,593 Total Direct Sources 446, ,037 Source of Indirect Cost Reimbursements Federal government 10,524 9,829 State of California and local governments 17,030 15,272 Total Indirect Cost Reimbursements 27,554 25,101 Total Funding $ 474,474 $ 477,138 Direct Expenses Personnel services: Salaries and wages $ 284,787 $ 278,735 Employee benefits 114, ,477 Operating expenses 47,866 56,825 Total Direct Expenses 446, ,037 Indirect Expenses Personnel services: Salaries and wages 14,325 13,650 Employee benefits 7,120 8,108 Operating expenses 6,109 3,343 Total Indirect Expenses 27,554 25,101 Total Expenses $ 474,474 $ 477,138 Page 24

27 SCHEDULE OF INVESTMENTS AND SAVINGS Market Date of Maturity Interest June 30, 2016 Cost Value Purchase Date Rate Short Term Investment Pools Local Agency Investment Fund State Pool $ 11,998,702 $ 11,998,702 Various On demand 0.43% Investments Certificates of Deposit $ 2,000,000 $ 2,000,000 Various Various 1.329% *Interest rates vary. Stated rate is approximate average for the year. Page 25

28 SCHEDULES OF NET POSITION (CSU FORMAT) June ASSETS Current Assets Cash and cash equivalents $ 1,944,496 $ 1,323,588 Short term investments 11,998,702 11,108,604 Accounts receivable net 340, ,302 Prepaid expenses and other current assets 217, ,069 Total Current Assets 14,501,348 12,959,563 Noncurrent Assets Other long term investments 2,000,000 2,000,000 Capital assets net 2,149,762 2,002,989 Other assets 20,000 20,000 Total Noncurrent Assets 4,169,762 4,022,989 TOTAL ASSETS 18,671,110 16,982,552 LIABILITIES Current Liabilities Accounts payable 353, ,882 Accrued salaries and benefits payable 628, ,384 Accrued compensated absences current portion 233, ,914 Unearned revenue 182, ,835 Other liabilities 578, ,150 Total Current Liabilities 1,975,490 1,831,165 Noncurrent Liabilities Accrued compensated absences net of current portion 85,012 70,547 Depository accounts 206, ,148 Other postemployment benefits obligations 1,140,219 1,085,080 Total Noncurrent Liabilities 1,432,225 1,330,775 TOTAL LIABILITIES 3,407,715 3,161,940 NET POSITION Net investment in capital assets 2,149,762 2,002,989 Unrestricted 13,113,633 11,817,623 TOTAL NET POSITION $ 15,263,395 $ 13,820,612 Page 26

29 SCHEDULES OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION (CSU FORMAT) Years Ended June REVENUES Operating Revenues Student tuition and fees $ 7,087,212 $ 6,455,936 Grants and contracts noncapital: Federal 159, ,273 State 313, ,865 Local 1,000 1,000 Sales and services of auxiliary enterprises 9,950,106 9,835,501 Other operating revenues 1,028,200 1,653,579 TOTAL OPERATING REVENUES 18,539,992 18,422,154 EXPENSES Operating Expenses Public services 285, ,543 Student services 3,193,293 2,988,358 Institutional support 1,594,286 1,891,493 Operation and maintenance of plant 2,415,023 2,406,062 Student grants and scholarships 235, ,416 Auxiliary enterprise expenses 9,049,054 8,739,947 Depreciation and amortization 394, ,712 TOTAL OPERATING EXPENSES 17,166,035 16,957,531 Operating Income 1,373,957 1,464,623 Nonoperating Revenues (Expenses) Gifts noncapital 9,830 10,993 Investment income net 80,525 36,908 Other nonoperating revenues (expenses) (21,529) 226,182 Net Nonoperating Revenues 68, ,083 Increase in Net Position 1,442,783 1,738,706 Net Position Beginning of Year 13,820,612 12,081,906 Net Position End of Year $ 15,263,395 $ 13,820,612 Page 27

30 SCHEDULE OF SUPPLEMENTARY INFORMATION (CSU FORMAT) Current Noncurrent June 30, 2016 Unrestricted Unrestricted Total Composition of Investments State of California Local Agency Investment Fund (LAIF) $ 11,998,702 $ $ 11,998,702 Certificates of Deposit 2,000,000 2,000,000 Total Investments $ 11,998,702 $ 2,000,000 $ 13,998,702 Current Noncurrent June 30, 2016 Unrestricted Unrestricted Total Investments Held by the University Under Contractual Agreement Portion of Investments Held by the University Under Contractual Agreements $ $ $ Fair Value Measurements Using Quoted Prices in Active Significant Significant Markets for Other Unobservable Identical Assets Observable Inputs Net Asset June 30, 2016 Total (Level 1) (Level 2) (Level 3) Value (NAV) Fair Value Hierarchy in Investments State of California Local Agency Investment Fund (LAIF) $ 11,998,702 $ $ 11,998,702 $ $ Certificates of deposit 2,000,000 2,000,000 Total Investments $ 13,998,702 $ $ 13,998,702 $ $ Page 28

31 SCHEDULE OF SUPPLEMENTARY INFORMATION (CSU FORMAT) (Continued) Balance Balance July 1, 2015 Additions Reductions Transfers June 30, 2016 COMPOSITION OF CAPITAL ASSETS AT JUNE 30, 2016 Nondepreciable Capital Assets Works of art and historical treasures $ $ $ $ $ Total Nondepreciable Capital Assets Depreciable Capital Assets Buildings and building improvements 2,060,954 15,954 2,076,908 Equipment 4,145, ,857 (82,067) 4,588,782 Total Depreciable Capital Assets 6,206, ,811 (82,067) 6,665,690 Total Capital Assets 6,206, ,811 (82,067) 6,665,690 Less: Accumulated Depreciation Buildings and building improvements (1,207,050) (100,500) (1,307,550) Equipment (2,996,907) (293,538) 82,067 (3,208,378) Total Accumulated Depreciation (4,203,957) (394,038) 82,067 (4,515,928) TOTAL CAPITAL ASSETS NET $ 2,002,989 $ 146,773 $ $ $ 2,149,762 Detail of depreciation and amortization expense for the year ended June 30, 2016 $ 394,038 Page 29

32 SCHEDULE OF SUPPLEMENTARY INFORMATION (CSU FORMAT) (Continued) Long term liabilities activity schedule: Balance Balance Current Long Term Description July 1, 2015 Additions Reductions June 30, 2016 Portion Portion Accrued compensation absences $ 285,461 $ 238,102 $ (204,982) $ 318,581 $ 233,569 $ 85,012 June 30, 2016 Auxiliary Organizations FASB Net Position Net Investment in Capital Assets Capital assets net of accumulated depreciation $ 2,149,762 Net Position Net Investment in Capital Assets $ 2,149,762 June 30, 2016 Amount Other Postemployment Benefits Obligation (OPEB) Annual Required Contribution (ARC) $ 93,881 Contributions during the year (38,742) Increase in Net OPEB Obligation (NOO) 55,139 NOO Beginning of Year 1,085,080 NOO End of Year $ 1,140,219 Page 30