ASHEVILLE-BUNCOMBE TECHNICAL COMMUNITY COLLEGE FOUNDATION, INC. Audited Financial Statements

Transcription

1 ASHEVILLE-BUNCOMBE TECHNICAL COMMUNITY COLLEGE FOUNDATION, INC Audited Financial Statements Years Ended June 30, 2015 and 2014

2 Table of Contents Independent Auditors' Report... 1 Financial Statements: Statements of Financial Position... 3 Statements of Activities... 4 Statements of Cash Flows

3 Independent Auditors Report Board of Directors Asheville-Buncombe Technical Community College Foundation, Inc. Asheville, North Carolina We have audited the accompanying financial statements of Asheville-Buncombe Technical Community College Foundation, Inc., which comprise the statement of financial position as of June 30, 2015, and the related statement of activities and cash flows for the year then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Foundation's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Asheville-Buncombe Technical Community College Foundation, Inc. as of June 30, 2015, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. 1

4 Other Matter The financial statements of Asheville-Buncombe Technical Community College Foundation, Inc. as of and for the year ended June 30, 2014, were audited by other auditors whose report dated September 19, 2014, expressed an unmodified opinion on those financial statements. Asheville, North Carolina January 7,

5 Asheville Buncombe Technical Community College Foundation, Inc. Statements of Financial Position June 30, 2015 and 2014 ASSETS Current assets: Cash and cash equivalents $ 2,890,739 $ 2,373,786 Contributions receivable 1,011,666 1,022,094 Other current assets 4, Total current assets 3,906,662 3,396,825 Non-current assets: Foundation endowment - restricted 4,976,101 4,357,542 Restricted cash in endowment funds 75, ,241 Long-term pledges receivable (net) 3,464,683 4,245,048 Charitable remainder trusts receivable (net) 1,574,342 1,725,870 Total non-current assets 10,090,858 10,627,701 Total assets $ 13,997,520 $ 14,024,526 LIABILITIES Current liabilities: Accounts payable $ 483 $ - Funds held for others 17,604 9,712 Total liabilities 18,087 9,712 NET ASSETS Unrestricted 291, ,087 Temporarily restricted 10,357,694 10,630,443 Permanently restricted 3,330,144 3,097,284 Total net assets 13,979,433 14,014,814 Total liabilities and net assets $ 13,997,520 $ 14,024,526 See accompanying notes. 3

6 Statements of Activities Years ended June 30, 2015 and Temporarily Permanently Unrestricted Restricted Restricted Total SUPPORT AND REVENUE Contributions $ 40,406 $ 308,540 $ 157,128 $ 506,074 Contributions from primary government - 30,371 75, ,103 Grant revenue - 107, ,214 Contributions-Pledge Amortization - 219, ,635 Investment gains (losses) - (11,343) - (11,343) Change in value-charitable remainder trusts - (151,528) - (151,528) Special events revenue 91, ,821 Interest and investment income 13,455 48,426-61,881 In-kind contributions 163, ,932 Other revenue 4,346 22,203-26,549 Released by expenditure 846,293 (846,293) - - Total support and revenue 1,160,227 (272,749) 232,860 1,120,338 EXPENSES Program expenses: Student scholarships 475, ,964 Faculty and staff mini-grants 11, ,913 College personnel costs 26, ,100 Grant funded expenses 143, ,764 Equipment and supplies (gifted to College) 166, ,191 Student stipends 3, ,866 Student emergency aid 8, ,798 Technology projects 18, ,796 Faculty professional development 59, ,476 Contributed service and facilities 48, ,724 Other expenses 3, ,278 Total program expenses 966, ,870 Management and general expenses: Administrative expense 7, ,180 Contracted services 9, ,400 Contributed services and facilities 53, ,900 Software contracts 12, ,042 Other expenses 6, ,055 Total supporting services 88, ,577 Fundraising expenses: Fundraising activities/events 38, ,963 Contributed goods and services 61, ,309 Total fundraising expenses 100, ,272 Total expenses 1,155, ,155,719 Change in net assets 4,508 (272,749) 232,860 (35,381) NET ASSETS Beginning of year 287,087 10,630,443 3,097,284 14,014,814 End of year $ 291,595 $ 10,357,694 $ 3,330,144 $ 13,979,433 4

7 2014 Temporarily Permanently Unrestricted Restricted Restricted Total SUPPORT AND REVENUE Contributions $ 56,324 $ 353,493 $ 77,157 $ 486,974 Contributions from primary government Grant revenue - 81,157-81,157 Contributions-Pledge Amortization - 42,772-42,772 Investment gains (losses) 10, , ,169 Change in value-charitable remainder trusts - 296, ,337 Special events revenue - 70,575-70,575 Interest and investment income 8,872 95, ,579 In-kind contributions 177, ,019 Other revenue Released by expenditure 842,591 (842,591) - - Total support and revenue 1,095, ,889 77,157 1,748,841 EXPENSES Program expenses: Student scholarships 460, ,278 Faculty and staff mini-grants 9, ,930 College personnel costs 21, ,940 Grant funded expenses 307, ,015 Equipment and supplies (gifted to College) 6, ,997 Student stipends 21, ,110 Student emergency aid 2, ,203 Technology projects 24, ,000 Faculty professional development 3, ,491 Contributed service and facilities 101, ,433 Other expenses Total program expenses 958, ,397 Management and general expenses: Administrative expense 7, ,803 Contracted services Contributed services and facilities 45, ,512 Software contracts Other expenses 1, ,285 Total supporting services 55, ,227 Fundraising expenses: Fundraising activities/events 38, ,440 Contributed goods and services 34, ,807 Total fundraising expenses 73, ,247 Total expenses 1,086, ,086,871 Change in net assets 8, ,889 77, ,970 NET ASSETS Beginning of year 278,163 10,054,554 3,020,127 13,352,844 End of year $ 287,087 $ 10,630,443 $ 3,097,284 $ 14,014,814 See accompanying notes. 5

8 Statements of Cash Flows Years Ended June 30, 2015 and 2014 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ (35,381) $ 661,970 Adjustments to reconcile change in net assets to net cash provided by operating activities: Reinvested interest and investment income (51,093) (104,579) Investment losses (gains) 11,343 (489,169) Change in value-charitable remainder trusts 151,528 (296,337) Change in contribution receivable discount (209,207) - Net changes in assets and liabilities: Contributions receivable 1,000, ,072 Other current assets (3,312) 37,425 Accounts payable 483 (43,730) Funds held for others 7,892 - Net cash provided by operating activities 872, ,652 CASH FLOWS FROM INVESTING ACTIVITIES Transfers to Community Foundation of Western North Carolina (582,373) (50,000) Net (losses) proceeds from sales of investments 3,564 35,668 Net cash used by investing activities (578,809) (14,332) CASH FLOWS FROM FINANCING ACTIVITIES Decrease (increase) in restricted cash in endowment funds 223,509 (77,385) Net cash provided (used) by financing activities 223,509 (77,385) Net change in cash and cash equivalents 516, ,935 CASH AND CASH EQUIVALENTS Beginning of year 2,373,786 1,702,851 End of year $ 2,890,739 $ 2,373,786 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING TRANSACTIONS Reinvested earnings $ 51,093 $ 104,579 See accompanying notes. 6

9 NOTES TO FINANCIAL STATEMENTS ORGANIZATION AND NATURE OF FOUNDATION Asheville-Buncombe Technical Community College Foundation, Inc. (the "Foundation") supports the programs of Asheville-Buncombe Technical Community College (the "College") by providing scholarships to students, equipment and special technology to the College, mini-grants to faculty and staff, funding for renovation of selected facilities and for other programs. The Foundation was established in 1996 as a nonprofit corporation under the North Carolina "Non-Profit Corporation Act" and is a legally separate entity from the College. The Foundation qualifies for exemption from federal income taxes under section 501(c)(3) of the Internal Revenue code and is classified as a publicly supported organization by virtue of its status as an organization operated for the benefit of a college that is part of a governmental unit. The Foundation is supported primarily by contributions from the general public. Consistent with the Community College Laws of North Carolina for nonprofit corporations whose sole purpose is to support the community college system, the College provides various resources and services to the Foundation. The management, fund raising and administration of the Foundation are carried out by employees of the College. Office facilities for Foundation activities are also provided by the College. In addition, several of the financial functions of the Foundation are handled by, and processed through, the College's business services department. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accompanying basic financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Financial Statement Presentation ASC Codification Topic #958 establishes standards for external financial reporting by not-for-profit organizations and requires that resources be classified for accounting and reporting purposes into three net asset categories according to externally imposed restriction. Descriptions of the three net asset classes are as follows: Unrestricted Net Assets - Net assets that are not subject to donor-imposed restrictions and that are available for general operating expenses of the Foundation. Temporarily Restricted Net Assets - Net assets subject to donor-imposed restrictions as to the purpose and/or time of use. Permanently Restricted Net Assets - Net assets subject to donor-imposed restrictions that they be maintained permanently by the Foundation. Cash and Cash Equivalents For purposes of reporting on the statement of cash flows, the Foundation considers all unrestricted, highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents, unless Board designated or donor-restricted to long-term purposes. Unrestricted and temporarily restricted amounts invested in the State Treasurer's Short-Term Investment Fund by the College on behalf of the Foundation are considered to be cash equivalents. Restricted Cash in Endowment Funds is not considered a cash equivalent for the statement of cash flows, because it is designated for a restricted purpose. 7

10 Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair value in the statement of financial position. Unrealized and realized gains and losses are included in the change in net assets in the statement of activities. Contributions and Grants Depending on the existence and/or nature of any donor restrictions, contributions received are recorded as unrestricted, temporarily restricted or permanently restricted support. As restrictions expire, net assets are reclassified to unrestricted net assets and are reported on the statement of activities as "Net Assets Released from Restrictions." Donor-restricted contributions whose restrictions are met in the same year are recorded as unrestricted contributions. Contributed Services and Use of Facilities Contributed services are recognized if they require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. The services are recognized at estimated fair market value. Contributed use of facilities is also recognized at estimated fair market value. Property and Equipment Property and equipment purchases are recorded at cost. Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method. The capitalization threshold is $500. Endowments A donor's stipulation that requires a gift be invested in perpetuity, creates a permanently restricted endowment fund. The endowment principal consists of the fair value of the gift when received. Interest, dividends and investment appreciation on endowment accounts are used to fund a corresponding temporarily restricted scholarship account in the donor s name. Consistent with the Uniform Prudent Management of Institutional Funds Act (UPMIFA), enacted in North Carolina in 2009, the Foundation's policy continues to require the preservation of original value of gifts donated to the permanent endowment. As such, losses on the investments do not reduce the original value of gifts to an endowment, and accumulated investment income is temporarily restricted until appropriated for use. Investment income and gains on endowment funds are allocated to the corresponding temporarily restricted scholarship fund. Those amounts are appropriated for expenditure by the Foundation when scholarships are awarded. The Foundation considers the following factors in making a determination to appropriate or accumulate donorrestricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes of the donorrestricted endowment funds, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of investments, (6) other resources of the Foundation, and (7) the Foundation's investment policies. Charitable Remainder Trusts The Foundation recognizes irrevocable trusts in contributions and values the contribution and the corresponding asset at fair value. See Charitable Remainder Trusts Receivable (Net) on the Statements of Financial Position. Long-Term Pledges Receivable The Foundation recognizes the contributions from long-term pledges receivable at present value, with the discount amortized to contributions over the period during which collection is expected. 8

11 Fair Value Measurements The Foundation follows FASB ASC This standard establishes a single definition of fair value and a framework for measuring fair value. The standard also expands disclosures about fair value measurements. Fair Value is defined as, "the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. That is, fair value is based on an exit price, which may differ from the price paid to acquire the asset If there is a principal market for the asset, fair value represents the price in that market". Items carried at fair value on a recurring basis by the Foundation consist of funds invested with the Community Foundation of Western North Carolina and Charitable Remainder Trusts. Income Taxes/Uncertain Tax Positions The Foundation is exempt from federal income taxes under 501(c)(3) of the Internal Revenue Code. Exempt organizations, however, may be subject to income tax on unrelated business income. The Foundation had minimal income from unrelated business activities in 2014 and 2015 and was, therefore, not required to file Federal Form 990-T (Exempt Organization Business Income Tax Return). The organization believes that it has appropriate support for all tax positions taken, and as such, does not have any uncertain tax positions that are material to the financial statements. The organization's Forms 990 for 2012 and 2013, and 2014 are subject to examination by the IRS. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Functional Allocation of Expenses The Foundation reports its expenses in the functional areas of Program, Management and General, and Fundraising. Expenses that can be attributed to a specific area are assigned directly to that area. Other expenses that are common to two or more functions are allocated by management estimate. CONCENTRATION OF CREDIT RISK The State Treasurer's Short-Term Investment Fund ( STIF ) is a portfolio within the NC State Treasurer's Investment Pool, an external investment pool that is not registered with the SEC and does not have a credit rating. This investment pool is administered by the State Treasurer pursuant to GS c. The Foundation has not experienced any losses with its STIF holdings through the College, and the Foundation believes that it is not exposed to any significant credit risk on its STIF balances. At June 30, 2015 and 2014, the amount shown in the Statement of Financial Position as cash and cash equivalents includes $2,799,622 and $2,617,306, respectively, of STIF holdings. FUNDS HELD WITH COMMUNITY FOUNDATION OF WESTERN NORTH CAROLINA, INC. The Foundation maintained the following funds with the Community Foundation of Western North Carolina Foundation, Inc. The funds were established in May 2009 and are described as follows: Asheville-Buncombe Technical Community College Foundation Endowment Asheville-Buncombe Technical Community College Foundation established this account for its permanently restricted endowment funds. It allows the distribution of an annual spendable amount from investment income as provided for in the Community Foundation's investment and distribution policies. 9

12 The components of the funds and the activity for the Asheville-Buncombe Technical Community College Foundation Endowment is summarized as follows for the years ended June 30, 2015 and 2014: Asset value as of June 30, 2014: $ 4,357,542 $ 3,746,518 Current year activity: Cash transfers and withdrawals, net 582,373 50,000 Investment income and interest 51,093 42,967 Investment gains 8, ,783 Community foundation fees (22,994) (24,726) Asset Value as of June 30, 2015: $ 4,976,101 $ 4,357,542 EQUIPMENT AND SOFTWARE The Foundation's equipment and software consists of the following as of June 30: Donor Management Software $ 23,600 $ 23,600 Accumulated Depreciation (23,600) (23,600) Equipment and Software, Net $ - $ - TEMPORARILY RESTRICTED NET ASSETS The Foundation holds temporarily restricted net assets in over 200 funds. The purposes are summarized as follows, with the number of funds indicated as of June 30: Funds Amount Funds Amount Scholarship Funds 129 $ 898, $ 1,833,552 Endowed Scholarship Funds 74 1,681, ,486,629 Mini-Grant and Other Projects 4 11, ,330 Grant Projects , ,015 Business Incubator/Technology 4 42, ,000 Brumit Family Culinary Building 1 1,512, ,725,870 General Support in Trusts 2 6,102, ,245,047 Total Temporarily Restricted Net Assets 232 $ 10,357, $ 10,630,443 PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets included 74 scholarship endowment funds with a total value of $3,330,144 as of June 30, 2015 and 70 scholarship funds with a total value of $3,097,284 as of June 30,

13 CHARITABLE REMAINDER TRUSTS The Foundation has been named a beneficiary in four trusts. The trusts became fully irrevocable in January 2006 when the donors relinquished their rights to change the Foundation as a beneficiary in each trust. The valuation is based on the estimated future value of the trust assets less the annual annuity distribution to the donors, with the result discounted to present value. The trust assets are re-valued annually. The statements of activities include a loss from the change in value of $151,528 for the year ended June 30, 2015 and a gain from the change in value of $296,337 for the year ended June 30, The year-end values of the trusts are as follows as of June 30: Estimated Future Value $ 2,442,322 $ 2,811,260 Less: Discount to Present Value (867,980) (1,085,390) Charitable Remainder Trusts, Net of Discount $ 1,574,342 $ 1,725,870 The Foundation has also been named a beneficiary in several other charitable remainder trusts that do not meet the criteria for recording in income because they are either revocable or the donors have reserved the right to change the named beneficiaries. LONG-TERM PLEDGES RECEIVABLE Long-term pledges receivable consisted of the following as of June 30, 2015 and 2014: Brumit Family - $2,500,000 Donation to the Foundation upon the death of the last surviving spouse. The donation is designed to establish the Janice and Joe Brumit Building Endowment. The endowment may be used to provide for the acquisition and ongoing support and maintenance of the Brumit Building on the campus of Asheville-Buncombe Technical Community College. $44,054 and $42,772 of the discount was amortized to contribution income during the years ended June 30, 2015 and 2014, respectively. Ferguson Family - $5,000,000 Donation to secure the naming rights to the Asheville-Buncombe Technical Community College Health and Workforce Building to be constructed on the Victoria Road campus. The donation will be funded through annual contributions of $1 million a year for five years, beginning on December 1, Remaining annual contributions will be made by December 1 each year, ending on December 1, The fair values of the pledges receivable are calculated as follows as of June 30: Estimated Future Value - Brumit Donation $ 2,500,000 $ 2,500,000 Estimated Future Value - Ferguson Donation 3,000,000 4,000,000 Less: Discount to Present Value - Brumit (987,459) (1,031,513) Less: Discount to Present Value - Ferguson (47,858) (223,439) Less: Current Portion of Ferguson Donation (1,000,000) (1,000,000) Long-term Pledges Receivable, Net of Discount $ 3,464,683 $ 4,245,048 11

14 FAIR VALUE MEASUREMENTS Fair values of assets measured on a recurring basis at June 30, 2015 are as follows: Quoted Prices In Active Significant Markets for Other Significant Identical Assets Observable Unobservable Fair Value (Level 1) lnputs (Level 2) lnputs (Level 3) Investments with Community Foundation of WNC $ 4,948,291 $ - $ 4,948,291 $ - Beneficial Interest in Remainder Trusts 1,574, ,574,342 $ 6,522,633 $ - $ 4,948,291 $ 1,574,342 Fair values of assets measured on a recurring basis at June 30, 2014 are as follows: Quoted Prices In Active Significant Markets for Other Significant Identical Assets Observable Unobservable Fair Value (Level 1) lnputs (Level 2) lnputs (Level 3) Investments with Community Foundation of WNC $ 4,357,542 $ - $ 4,357,542 $ - Beneficial Interest in Remainder Trusts 1,725, ,725,870 $ 6,083,412 $ - $ 4,357,542 $ 1,725,870 Financial assets valued using Level 1 inputs are based on unadjusted quoted market prices within active markets. Financial assets valued using Level 2 inputs are based primarily on quoted prices for similar assets in active or inactive markets. Financial assets valued using Level 3 inputs are based primarily on unobservable inputs and require that management make assumptions to value the assets. Fair value for the Beneficial Interests in Remainder Trusts (Level 3) is determined by estimating the present values of the future distributions expected to be received. Inputs include June 30, 2015 and 2014 values of the investments in the trusts, data from published life expectancy tables and a 3% discount rate. There have been no changes in valuation techniques and related inputs. 12

15 Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Beneficial Interest in Remainder Trusts July 1, 2013 $ 1,429,533 Total gains 296,337 July 1, ,725,870 Total losses (151,528) June 30, 2015 $ 1,574,342 COLLEGE PERSONNEL EXPENSES The Foundation disburses grant and other funding to support specific positions. Expenses during the audit year were incurred in the following areas as of June 30: Lavender Program Administration $ 23,553 $ - OCA Program Coordinator 2,547 21,940 Total College Personnel Expenses $ 26,100 $ 21,940 RELATED PARTY TRANSACTIONS The Foundation is discretely presented as a component unit of the College s financial statements in accordance with standards established by the Governmental Accounting Standards Board. The Foundation exists primarily to provide financial assistance and other support to the College. The College operates on a fiscal year ended June 30. The Foundation has reimbursed the College $475,964 and $454,001 for scholarships for the years ended June 30, 2015 and 2014, respectively. The Foundation has also reimbursed the College $124,770 and $6,997 for equipment for the years ended June 30, 2015 and 2014, respectively. The Foundation's programs are carried out by College employees, who divide their time between College and Foundation activities. These employees include Grant Writer/Coordinator, Foundation Accountant and Administrative Assistant, College Relations among others. Contributed services of $163,932 and $177,019 from the College have been recognized in both income and expenses on the statements of activities to reflect the estimated value of the specialized services received by the Foundation during the years ended June 30, 2015 and 2014, respectively. The Foundation has unconditional promises to give due from a Board member of $2,500,000 as of June 30, 2015 and GRANT FUNDED EXPENSES The Foundation disburses grant funding to the College to support specific grant-funded projects. Disbursements were made during the audit year in connection with following grants as of June 30: 13

16 Renewable Energy Training (DOE Grants) $ - $ 73,657 Bank of America Jump Start 29, Nursing Program (CarePartners) 25,000 25,000 Other Grant Projects 89, ,613 Total Grant Funded Expenses $ 143,764 $ 307,015 SPECIAL EVENTS The Foundation's fundraising events during the year included its annual golf tournament, as well as other smaller events. Event income and direct expenses, excluding in-kind contributions, for the audit year were as follows as of June 30: Event Revenue $ 91,821 $ 70,575 Less: Direct Event Expenses (38,963) (32,194) Net Event Income $ 52,858 $ 38,381 ENDOWMENT POLICY The Foundation chooses to spend only a portion of investment income earned (including changes in the value of investments) each year. Under the policy established by the Board, 4 percent of the average market value of the endowment investments at the end of the previous three years has been authorized for expenditure. The remaining amount, if any, is retained to be used in future years when the amount computed using the spending policy exceeds the investment income. SUBSEQUENT EVENTS Management considered subsequent events occurring between June 30, 2015 and January 7, 2016, the date the financial statements were available to be issued, and did not identify any events necessitating disclosure. 14