Foundation of California State University, Monterey Bay

Transcription

1 Foundation of California State University, Monterey Bay Annual Report For the Years Ended

2 Annual Report For the Years Ended Table of Contents Page Independent Auditors Report 1 3 Management s Discussion and Analysis 4 16 Financial Statements for the Years ended Statements of Net Position 18 Statements of Revenues, Expenses and Changes in Net Position 19 Statements of Cash Flows Notes to Financial Statements Supplemental Information 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 (i)

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4 Board of Directors Foundation of California State University, Monterey Bay Seaside, California Page 2 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Foundation of California State University, Monterey Bay as of, and the changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 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 through 16 be presented to supplement the basic financial statements. Such information, although not a basic part of the financial statements, is required by the Government Accounting Standards Board, who 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 an opinion on the financial statements that collectively comprise the Foundation of California State University, Monterey Bay s basic financial statements. The accompanying supplementary information for inclusion in the financial statements of the California State University on pages 36 through 43 is presented for purposes of additional analysis as required by the California State University and is not a required part of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such 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 supplementary information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. 2

5 Board of Directors Foundation of California State University, Monterey Bay Seaside, California Page 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 12, 2013, on our consideration of the Foundation of California State University, Monterey Bay 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 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 the Foundation of California State University, Monterey Bay s internal control over financial reporting and compliance. Glenn Burdette Attest Corporation San Luis Obispo, California September 12,

6 Management s Discussion and Analysis The Foundation of California State University, Monterey Bay (Foundation) is an auxiliary in good standing of California State University, Monterey Bay (CSUMB or University). The Foundation is an IRC Section 501(c)(3) not-for-profit public benefit corporation and its primary objective is to support the University. The Foundation provides support for the advancement of education and to foster, encourage and promote the scientific, literary, educational and charitable activities of the University. In addition, the Foundation manages the endowment investments and provides accounting services to University Advancement. Foundation management believes that having this separate philanthropic organization will elevate the level of interest in University fundraising in the community, improve the University s ability to raise funds for scholarships and endowments, streamline the accounting process, and simplify investment tracking and reporting for all vested parties. As management of the Foundation, we offer readers of these financial statements this narrative overview and analysis of the financial activities of the Foundation for the fiscal years ended. We encourage readers to read the information presented here in conjunction with additional information that we have provided in the Foundation s financial statements, which follow this narrative. The Foundation s financial statements are presented here and are incorporated in the University s financial statements as a component unit. Financial Highlights At June 30, 2013, the Foundation s total net position increased by 13.7 percent or $2 million due to additions to endowments and improved market conditions. Total operating revenues decreased by 35.3 percent or $8 thousand from $23 thousand to $15 thousand. Total operating expenses increased by 14.7 percent or $23 thousand from $160 thousand to $183 thousand. Scholarship expenses increased by 34.9 percent or $42 thousand from $119 thousand to $161 thousand. Gifts and donations, noncapital increased by 34.2 percent or $194 thousand. Realized and unrealized gains and losses on investments resulted in a net loss of $533 thousand in 2011/12 for a decrease of $2.3 million or percent and in 2012/13 yielded a net change of $1.6 million or an increase of percent. Additions to permanent endowments declined by 83.5 percent or $855 thousand. 4

7 Management s Discussion and Analysis Overview of the Financial Statements This annual report consists of a series of financial statements. The Statements of Net Position, Statements of Revenues, Expenses and Changes in Net Position and Statements of Cash Flow (on pages 18 through 21) all provide information about the Foundation s activities and present a long-term view of its finances. These statements are prepared using the accrual basis of accounting which recognizes expenses when incurred and revenue when earned rather than when payment is made or received and is widely used by most private sector companies. They also report the Foundation s net position and change in net position. You can think of the Foundation s net position the difference between assets (plus deferred outflows of resources) and liabilities (plus deferred inflows of resources) as one way to measure the Foundation s financial health, or fiscal position. Over time, increases or decreases in the Foundation s net position are one indicator of whether its financial health is improving or deteriorating. Condensed Comparative Financial Information In fiscal year 2012/13, net position increased by $2 million or 13.7 percent over 2011/12. This increase is due to improved market earnings and a substantial endowment gift made by The Bernard Osher Foundation to the Osher Lifelong Learning Institute (OLLI) for scholarships. In fiscal year 2011/12, the Foundation s net position increased by $1 million or 7.5 percent over 2010/11. This increase was attributed to the large permanent endowment gift made by The Bernard Osher Foundation to the OLLI to help support and develop its non-credit educational program. 5

8 Management s Discussion and Analysis Table 1: Condensed Summary of Net Position as of June 30, 2013, 2012, and Assets Current assets $ 703,106 $ 512,478 $ 506,126 Noncurrent assets: Endowment investments 15,798,954 13,914,344 12,999,892 Other noncurrent assets 25, ,624 8,786 Total Assets 16,527,386 14,531,446 13,514,804 Liabilities Current liabilities 4,038 3,717 6,267 Total Liabilities 4,038 3,717 6,267 Net Position Restricted for: Nonexpendable endowments 9,630,678 9,461,366 8,437,485 Expendable 6,889,123 5,063,744 5,069,755 Unrestricted 3,547 2,619 1,297 Total Net Position $ 16,523,348 $ 14,527,729 $ 13,508,537 6

9 Management s Discussion and Analysis Graph 1: Breakdown of Current Assets as of June 30, 2013, 2012 and , , , , , , , , , , , ,000-3,132 5, ,936 Cash and cash equivalents Receivables Pledges receivable Other assets 2012/ / /11 Current assets, or assets that can normally be converted to cash in less than one year, consist of Cash and cash equivalents, Receivables, Pledges receivable, and Other assets. Cash and cash equivalents are held in checking and money market accounts. In 2012/13, Cash and cash equivalents increased by $38 thousand or 7.4 percent as a result of donations made to the annual fund campaign. In 2011/12, Cash and cash equivalents increased by 74.1 percent or $217 thousand from $293 thousand to $509 thousand as a result of receiving $150 thousand from an irrevocable trust and $100 thousand from a recurring donor for scholarships. Cash and cash equivalents are explained in more detail in Footnote 1 to the financial statements. In 2012/13, Receivables, increased by 4,701.5 percent or $147 thousand. This increase was due in large part to $440 thousand in donations received by the University Corporation of Monterey Bay (Corporation) of which, $140 thousand is due to the Foundation. Receivables decreased 98.4 percent or $196 thousand in 2011/12 as a result of the receipts of an irrevocable trust of $150 thousand and $50 thousand from the Corporation. 7

10 Management s Discussion and Analysis In 2012/13, Pledges receivable increased by $5 thousand or percent due to a pledge from 1 st Capital for the Business and Information Technology Building. The first installment was recognized as a current asset. Other assets in 2012/13 increased percent or $5 hundred. This amount consisted of prepaid expenses for membership dues. Graph 2: Breakdown of Noncurrent Assets as of June 30, 2013, 2012 and ,000,000 18,000,000 16,000,000 14,000,000 15,798,954 13,914,344 12,999,892 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 10, ,624 8,786 14,982 - Restricted cash & cash equivalents Pledges receivable, net Endowment investments 2012/ / /11 Noncurrent assets consist of Restricted cash and cash equivalents, Pledges receivable, and Endowment investments. Restricted cash and cash equivalents decreased by $94 thousand or 90.1 percent in 2012/13. The $100 thousand endowment gift to Imagine College was not received before the end of this fiscal year like it had in the previous year. In 2011/12, Restricted cash and cash equivalents increased by $96 thousand from $9 thousand to $105 thousand for a 1,090.8 percent change. The increase is a result of a $100 thousand donation to the Imagine College endowment received at the end of the fiscal year. Restricted cash and cash equivalents consist of cash or money market balances associated with endowments. 8

11 Management s Discussion and Analysis Pledges receivable increased by $15 thousand or percent due to a 1 st Capital Bank pledge in 2012/13 to support the Business and Information Technology Building. The balance of the pledge, net of discount and current portion, is recognized as a noncurrent asset. In 2012/13, Endowment investments increased from $13.9 million to $15.8 million for an increase of $1.9 million or 13.5 percent increase. The change in endowments is a result of $169 thousand in contributions to permanent endowments, $697 thousand to quasi and term endowments, $588 thousand in investment income, $1.1 million in realized and unrealized net gains, and $631 thousand in endowment distributions and scholarship expenses. Endowment investments increased to $13.9 million in 2011/12 from $13.0 million in 2010/11 for a 7.0 percent change or $900 thousand. The change is attributed to $1 million in contributions to permanent endowments, an additional $567 thousand in gifts and donations, noncapital, $433 thousand in endowment distributions and scholarship expenses, $402 thousand in investment income and dividends, and $533 thousand in realized and unrealized losses. 9

12 Management s Discussion and Analysis Graph 3: Breakdown of Current Liabilities as of June 30, 2013, 2012 and ,000 5,320 5,000 4,000 3,293 3,000 2,283 2,000 1, , Accounts payable Payable to Corporation Due to University 2012/ / /11 Current liabilities, amounts owed within one year, consist of Accounts payable, Payable to Corporation, and Due to University. Accounts payable decreased from $13 hundred to $5 hundred for a 64.0 percent decrease. This is a result of a decrease in the collection of sales tax on alumni merchandise sales which were transferred over to Barnes and Noble. In 2011/12, Accounts payable increased by 36.0 percent from $9 hundred to $13 hundred. The increase was due to additional sales and use tax payable due to increased activity. In 2012/13, Payable to Corporation increased to $3 thousand from $2 thousand for a $1 thousand or 44.2 percent increase. This is due to an increase in pro-card activity by alumni for outreach activities. Payable to the Corporation decreased by 57.1 percent from $5 thousand in 2010/11 to $2 thousand in 2011/12. This decrease was a result of emphasis being placed on timely submission and reconciliation of amounts due to and due from the Corporation. Due to University increased in 2012/13 by 92.5 percent or $1 hundred due to the purchase of parking permits for alumni events and special guests. The Due to University increased to $146 in 2011/12 due to a change in procedures for credit card processing. The University began charging the Foundation for credit card merchant fees which were previously charged to the Corporation in 2010/11. 10

13 Management s Discussion and Analysis Results of Operations In fiscal year 2012/13, the Foundation s net position increased by 13.7 percent or $2 million as a result of $866 thousand in contributions to the endowments, a strong investment market which generated $588 thousand in investment income, $1.1 million in appreciation of the endowment pool, and $631 thousand in endowment distributions and scholarship expenses. 11

14 Management s Discussion and Analysis Table 2: Condensed Summary of Changes in Net Position for Years Ended June 30, 2013, 2012, and Operating Revenues Sales and services of auxiliary enterprises $ 12,457 $ 20,817 $ 8,072 Other operating revenues 2,460 2,236 1,418 Total Operating Revenues 14,917 23,053 9,490 Operating Expenses Salaries and benefits 2, Scholarships 161, ,500 31,250 Other operating expenses 19,493 40,417 27,892 Total Operating Expenses 183, ,917 59,142 Operating Loss (168,575) (136,864) (49,652) Nonoperating Revenues (Expenses) Gifts and donations, noncapital 760, , ,875 Endowment distribution to Corporation (469,472) (313,604) (338,959) Other nonoperating revenues 1,703,889 (130,921) 2,265,744 Total Nonoperating Revenues (Expenses) 1,994, ,175 2,908,660 Other Changes in Net Position Capital grants and gifts - 10,000 - Special Item-transfer of net assets from Corporation - - 9,826,859 Additions to permanent endowments 169,312 1,023, ,670 Total Other Changes in Net Position 169,312 1,033,881 10,649,529 Increase in Net Position 1,995,619 1,019,192 13,508,537 Net Position Net position beginning of year 14,527,729 13,508,537 - Net position end of year $ 16,523,348 $ 14,527,729 $ 13,508,537 12

15 Management s Discussion and Analysis Graph 4: Breakdown of Operating Revenues for the Years Ended June 30, 2013, 2012 and ,000 20,817 20,000 15,000 12,457 10,000 8,072 5,000 2,460 2,236 1,418 - Sales and services of auxiliary enterprises Other operating revenues 2012/ / /11 Operating revenues consist of Sales and services of auxiliary enterprises and Other operating revenues. In 2012/13, Sales and services of auxiliary enterprises decreased $8 thousand to $12 thousand for a decrease of 40.2 percent. Alumni sales of merchandise was turned over to Barnes and Noble resulting in less sales. Sales and services of auxiliary enterprises increased by percent or $13 thousand from $8 thousand in 2010/11 to $21 thousand in 2011/12 and this was due to the effort to sell the remaining alumni inventory on hand. Other operating revenues increased in 2012/13 by 10.0 percent or $2 hundred, due to an increase in alumni interest and/or participation in the affinity insurance program administered by Liberty Mutual. Other operating revenues increased in 2011/12 from $1 thousand in 2010/11 to $2 thousand in 2011/12 for a change of 57.7 percent or $1 thousand. This change is a result of a new alumni affinity insurance sales program with Liberty Mutual for incentive donations. 13

16 Management s Discussion and Analysis Graph 5: Breakdown of Operating Expenses for the Years Ended June 30, 2013, 2012 and , , , , , , , ,000 80,000 60,000 40,000 20,000-2,749 31,250 19,493 40,417 27,892 Salaries & benefits Scholarships Other operating expenses 2012/ / /11 Operating expenses consist of Salaries and benefits, Scholarships, and Other operating expenses. In 2012/13, Salaries and benefits were reimbursed to the University for student wages and benefits. These wages were to support student advisers of the Recruitment in Science Education (RISE) program. There were no wages prior to the 2012/13 year. Scholarships continued to increase as expected, from $120 thousand in 2011/12 to $161 thousand in 2012/13. This 34.9 percent increase is a result of more scholarship recipients in the Imagine College program. In 2011/12, Scholarships increased by percent or $89 thousand and this was due to the Imagine College endowment awarding scholarships for the first time to its participants. Other operating expenses decreased in 2012/13 by 51.8 percent or $21 thousand from $40 thousand to $19 thousand. There was an entry to reclassify the marketing and promotional materials out of inventory in 2011/12 that did not exist in 2012/13. In 2011/12, Other operating expenses increased 44.9 percent or $12 thousand from $28 thousand in 2010/11 to $40 thousand. This increase was due to expensing the prior year s balance of the Alumni Association s inventory. 14

17 Management s Discussion and Analysis In 2012/13, Gifts and donations, noncapital increased to $760 thousand from $567 thousand in 2011/12 for a 34.2 percent change or $194 thousand increase. A $500 thousand gift from The Bernard Osher Foundation to OLLI and a $100 thousand donation to Imagine College accounted for most of the activity. In 2011/12, Gifts and donations, noncapital decreased by 42.3 percent or $415 thousand to $567 thousand from $982 thousand in 2010/11, due to a significant match from a grant received and revenue from an irrevocable trust recognized in 2010/11. The Endowment distribution to Corporation of $469 thousand represents the annual endowment payout for scholarships and professorships. This represents a 49.7 percent change or $156 thousand increase for 2012/13. The Foundation Board authorizes disbursements as of December 31 each year from all eligible endowments. A transfer is then made in June to the Corporation for scholarship and professorship expenses for the following academic year. In 2012/13, the Foundation recognized $1.1 million in realized and unrealized gains as a result of an improved market. This is a significant improvement compared to 2011/12 whereby a loss of $533 thousand was recognized. Other Changes in Net Position In 2012/13, additions to permanent endowments totaled $169 thousand. The proceeds from a charitable gift annuity of $94 thousand and two other significant gifts totaling $48 thousand account for most of the additions. In 2011/12, additions to permanent endowments of $1 million were made. Most of this amount was a donation of $950 thousand to OLLI to help establish the OLLI endowment. Currently Known Facts, Decisions and Conditions The Foundation s management believes the following will impact future reporting periods: Market Conditions Endowment investments account for 95.6 percent of the Foundation s total assets. The Foundation manages its investments via its Investment Committee, which works in conjunction with the investment consultant, Wurts & Associates. It is important to remember that the majority of the Foundation s investments participate in a long-term investment strategy and that there is a smoothing effect of returns over time. Future investment earnings will continue to fluctuate and be affected by interest rate fluctuations and uncertain market conditions. 15

18 Management s Discussion and Analysis Requests for Information This report is designed to provide an overview of the Foundation s finances for those with an interest in this area. Questions concerning any of the information found in this report or requests for additional information should be directed to: Controller University Corporation at Monterey Bay 100 Campus Center Corporation Building, Suite 111A Seaside, CA

19 Financial Statements For the Years Ended 17

20 Statements of Net Position Assets Current Assets: Cash and cash equivalents $ 547,224 $ 509,346 Receivables: Corporation 150,312 3,132 University 70 - Pledges receivable, net 5,000 - Prepaid expenses and other assets Total Current Assets 703, ,478 Noncurrent Assets: Restricted cash and cash equivalents 10, ,624 Pledges receivable, net 14,982 - Endowment investments 15,798,954 13,914,344 Total Noncurrent Assets 15,824,280 14,018,968 Total Assets 16,527,386 14,531,446 Liabilities Current Liabilities: Accounts payable 464 1,288 Payable to Corporation 3,293 2,283 Due to University Total Current Liabilities 4,038 3,717 Total Liabilities 4,038 3,717 Net Position Net Position: Restricted for: Nonexpendable - endowments 9,630,678 9,461,366 Expendable: Pledges receivable 19,982 - Scholarships 3,456,435 2,134,654 Capital Projects - 10,000 Other 3,412,706 2,919,090 Unrestricted 3,547 2,619 Total Net Position $ 16,523,348 $ 14,527,729 The accompanying notes are an integral part of these financial statements. 18

21 Statements of Revenues, Expenses and Changes in Net Position Years Ended Operating Revenues: Sales and services of auxiliary enterprises $ 12,457 $ 20,817 Other operating revenues 2,460 2,236 Total Operating Revenues 14,917 23,053 Operating Expenses: Salaries and benefits 2,749 - Supplies and services 5,189 4,508 Travel 1, Scholarships 161, ,500 Other operating expenses 13,299 35,164 Total Operating Expenses 183, ,917 Operating Loss (168,575) (136,864) Nonoperating Revenues (Expenses): Gifts and donations, noncapital 760, ,700 Endowment distribution to Corporation (469,472) (313,604) Investment income 587, ,862 Realized and unrealized gains and losses on investments 1,116,065 (532,783) Net Nonoperating Revenues (Expenses) 1,994, ,175 Other Changes in Net Position: Capital grants and gifts - 10,000 Additions to permanent endowments 169,312 1,023,881 Net Other Changes in Net Position 169,312 1,033,881 Increase in Net Position 1,995,619 1,019,192 Net Position: Net position - beginning of year 14,527,729 13,508,537 Net position - end of year $ 16,523,348 $ 14,527,729 The accompanying notes are an integral part of these financial statements. 19

22 Statements of Cash Flows Years Ended Cash Flows from Operating Activities: Receipts from sales and services of auxiliary enterprises $ 12,387 $ 20,817 Payments to vendors (7,018) (4,912) Payments to Corporation 1,010 (3,037) Payments to University (161,115) (119,354) Other receipts 2,460 2,236 Other payments (13,799) (21,228) Net Cash Used by Operating Activities (168,824) (125,478) Cash Flows from Noncapital Financing Activities: Gifts and donations 593, ,146 Additions to permanent endowments 169,312 1,023,881 Endowment distribution to Corporation (469,472) (313,604) Net Cash Provided by Noncapital Financing Activities 293,143 1,473,423 Cash Flows from Capital Related Financing Activities: Capital grants and gifts - 10,000 Net Cash Provided by Capital Related Financing Activities - 10,000 Cash Flows from Investing Activities: Proceeds from sale of investments 591,543 1,342,020 Purchase of investments (1,360,088) (2,789,255) Investment income received 587, ,862 Net Cash Used by Investing Activities (180,721) (1,045,373) Net Increase (Decrease) in Cash (56,402) 312,572 Cash and Cash Equivalents - Beginning of year 613, ,398 Cash and Cash Equivalents - End of Year $ 557,568 $ 613,970 The accompanying notes are an integral part of these financial statements 20

23 Statements of Cash Flows (Continued) Years Ended Reconciliation of Cash and Cash Equivalents to Statements of Net Position: Cash and cash equivalents $ 547,224 $ 509,346 Restricted cash and cash equivalents 10, ,624 Cash and Cash Equivalents - End of Year $ 557,568 $ 613,970 Reconciliation of Operating Loss to Net Cash Used by Operating Activities: Operating loss $ (168,575) $ (136,864) Adjustments to reconcile operating loss to net cash used by operating activities: Change in assets and liabilities: Prepaid expenses and other assets (500) 13,936 Accounts payable (824) 341 Payable to Corporation 1,010 (3,037) Due to University Net Cash Used by Operating Activities $ (168,824) $ (125,478) Supplemental Schedule of Noncash Financing and Investing Activities: Contributions of investments $ 9,030 $ 8,440 Increase (Decrease) in fair value of investments $ 1,116,065 $ (532,783) The accompanying notes are an integral part of these financial statements 21

24 Notes to Financial Statements NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Reporting Entity The Foundation of California State University, Monterey Bay (Foundation), a nonprofit 501(c)(3) public benefit corporation, began operations in July 2010 to support the academic mission of the California State University, Monterey Bay (University). The Foundation is an auxiliary organization of the University and is presented in the University's financial statements as a component unit. The Foundation is governed by the Board of Directors (Board), which is comprised of community members, the University President, a faculty member, and a student member. The activities administered by the Foundation include the following: Fund development, including support for alumni programs Fundraising activities Endowment management Private giving Fund management Public relations and community outreach programs Basis of Presentation The Financial statements have been prepared using the economic resources measurement focus and the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board (GASB). Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants, gifts, and similar items are recognized as soon as all eligibility requirements have been met. Other Accounting Policies Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments purchased with original maturities of three months or less. The Foundation considers all balances in demand deposit and money market accounts to be cash equivalents for the purposes of the Statements of Net Position and Statements of Cash Flows. 22

25 Notes to Financial Statements NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments Investments are reported at fair value using quoted market prices at the financial statement date. Realized and unrealized gains and losses are included in the Statements of Revenues, Expenses and Changes in Net Position. Receivables Receivables consist of monies due from the University Corporation at Monterey Bay (Corporation) and the University. No allowance for doubtful accounts is calculated as management believes these receivables are collectible. Pledges Receivable Pledges are unconditional promises to make future payments to the Foundation. Pledges receivable are recognized as gift revenue in the period pledged when all applicable eligibility requirements are met. Multi-year pledges are recorded at the net present value of expected future cash flows net of discounts and the allowance for doubtful accounts. There was no allowance for doubtful accounts as of June 30, Net pledges receivable of $19,982 at June 30, 2013 include $20,000 for campus programs support less the unamortized discount of $18. At June 30, 2013, $5,000 was due in one year or less and $14,982 was due in one to five years. Conditional pledges which depend on the occurrence of a specified future or uncertain event, are recognized as gift revenue when the conditions are substantially met. Endowments Endowments are managed in a unitized investment pool. Investment earnings and related expenses are allocated based upon each individual endowment s unit market value. Endowment investments include cash and money market funds. In January 2009, California adopted the Uniform Prudent Management of Institutional Funds Act (UPMIFA) and therefore has the ability to spend from endowments that are underwater. Under UPMIFA, there is elimination of the historic dollar value rule and the Foundation may spend from these endowments as it determines is prudent after considering donor intent, the purpose of the fund and relevant economic factors. Also, there is broader investment freedom as long as decisions are made with regard to the overall resources of the institution and its charitable purpose. In April 2011, the Foundation Board approved a 70/30 hybrid spending policy. 70% of the spending rate is determined by last year s spending adjusted for inflation as calculated by CPI (Consumer Price Index) as of December and the remaining 30% is determined by 4.5% of the average of the endowment s market value for the last twelve quarters. This spending policy was used to determine the payout rate for the 2013/14 academic year, resulting in $458 thousand. For the 2012/13 academic year, the hybrid spending policy was used in the calculation and the resulting payout was $314 thousand. Endowment 23

26 Notes to Financial Statements NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) reserves (accumulated net appreciation) on term, quasi and true endowments totaling $2.7 million as of June 30, 2013, were included in restricted-expendable net position. Net Position The Foundation s net position is required to be classified for accounting and reporting purposes into the following net position categories: Net investment in capital assets includes capital assets, net of accumulated depreciation and amortization, deferred outflows of resources, less the outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets. The Foundation does not have any assets in this category. Restricted, nonexpendable consists of net position subject to externally imposed restrictions that they must be retained in perpetuity. Net position in this category consists of permanent endowments held by the Foundation. Restricted, expendable consists of net position subject to externally imposed restrictions that can be fulfilled by the actions of the Foundation pursuant to those restrictions or that expire by the passage of time. Unrestricted consists of all other categories of net position. Unrestricted may be designated for use by management of the Foundation. These designations limit the area of operations for which expenditures of net position may be made and require that unrestricted net position be used to support future operations in these areas. The Foundation has adopted a policy of utilizing restricted expendable funds, when available, prior to unrestricted funds. Classification of Current and Noncurrent Assets and Liabilities The Foundation considers assets to be current that can reasonably be expected, as part of its normal business operations, to be converted to cash and be available for liquidation of current liabilities within twelve months of the Statements of Net Position date. Liabilities that can reasonably be expected, as part of normal business operations, to be liquidated within twelve months of the Statements of Net Position date are considered to be current. All other assets and liabilities are considered to be noncurrent. 24

27 Notes to Financial Statements NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Classification of Revenues and Expenses The Foundation considers operating revenues and expenses in the Statements of Revenues, Expenses and Changes in Net Position to be those revenues and expenses that result from exchange transactions or from other activities that are connected directly to the Foundation s primary functions. Exchange transactions include charges for services rendered and the acquisition of goods and services. In accordance with GASB Statement No. 35, certain significant revenues relied upon and budgeted for fundamental operational support of the core mission of the Foundation are mandated to be recorded as Nonoperating revenues. Nonoperating revenues and expenses include the Foundation s net investment income, private gifts for other than capital purposes and endowment distributions to the Corporation. Capital gifts and additions to permanent endowments are classified as Other changes in net position. 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 liabilities as of 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. Reclassifications Certain reclassifications have been made to the prior year financial statements to conform with the current year presentation. Income Taxes The Foundation is qualified as a tax exempt organization under the provision of Section 501(c)(3) of the Internal Revenue Code and is exempt from federal and state income taxes on related income. As such, the Foundation is generally not subject to federal or state income taxes. However, the Foundation remains subject to income taxes on any income which is derived from a trade or business, regularly carried on and not in furtherance of the purpose for which it was granted exemption. No income tax provision has been recorded as the net income, if any, from any unrelated trade or business, in the opinion of management, is not material to the financial statements taken as a whole. 25

28 Notes to Financial Statements NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Recent Pronouncements In November 2010, the GASB issued GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements, effective for periods beginning after December 15, Implementation of this Statement did not impact the financial statements of the Foundation. In November 2010, the GASB issued GASB Statement No. 61, The Financial Reporting Entity: Omnibus, effective for periods beginning after June 15, Implementation of this Statement did not impact the financial statements of the Foundation. In December 2010, the GASB issued GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, effective for periods beginning after December 15, Implementation of this Statement did not impact the financial statements of the Foundation. In June 2011, the GASB issued GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, effective for periods beginning after December 15, Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. This Statement also amends the net asset reporting requirements in Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments, and other pronouncements. Implementation of this Statement did not have a significant impact on the financial statements of the Foundation. In June 2011, the GASB issued GASB Statement No. 64, Derivative Instruments: application of Hedge Accounting Termination Provisions-an amendment of GASB Statement No. 53, which became effective for the year ended June 30, Implementation of this Statement did not impact the financial statements of the Foundation. 26

29 Notes to Financial Statements NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In March 2012, the GASB issued GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, effective for periods beginning after December 15, Statement No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. Implementation of this Statement did not impact the financial statements of the Foundation. In March 2012, the GASB issued GASB Statement No. 66, Technical Corrections an amendment of GASB Statements No. 10 and No. 62, effective for periods beginning after December 15, Statement No. 66 improves accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. In addition, the Statement amends Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues. Management has not currently determined what, if any, impact the implementation of this Statement may have on the financial statements of the Foundation. In June 2012, the GASB issued GASB Statement No. 67, Financial Reporting for Pension Plans-an amendment of GASB Statement No. 25, effective for periods beginning after June 15, Because the Foundation does not have any employees, management does not believe there will be any impact of this Statement on the financial statements of the Foundation. In June 2012, the GASB issued GASB Statement No. 68, Accounting and Financial Reporting for Pensions-an amendment of GASB Statement No. 27, effective for periods beginning after June 15, Because the Foundation does not have any employees, management does not believe there will be any impact of this Statement on the financial statements of the Foundation. In January 2013, the GASB issued GASB Statement No. 69, Government Combinations and Disposals of Government Operations, effective for periods beginning after December 15, Management has not currently determined what, if any, impact the implementation of this Statement may have on the financial statements of the Foundation. 27

30 Notes to Financial Statements NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In April 2013, the GASB issued GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, effective for periods beginning after June 15, Management has not currently determined what, if any, impact the implementation of this Statement may have on the financial statements of the Foundation. Subsequent Events Events subsequent to June 30, 2013 have been evaluated through September 12, 2013, which is the date the financial statements were available to be issued. Management did not identify any subsequent events that required disclosure. NOTE 2. DEPOSITS Deposits The Foundation maintains cash for operating needs in checking, deposit and money market accounts, with Federal Deposit Insurance Corporation (FDIC) insured financial institutions. At June 30, 2013, the Foundation s checking, deposit and money market accounts were insured by the FDIC up to $250,000. At June 30, 2013, the Foundation had $298,112 in uninsured cash deposits. NOTE 3. INVESTMENTS Investments comprised the following at : Noncurrent Noncurrent Mutual Funds: Equity Funds $ 10,567,818 $ 9,201,252 Bond Funds 4,328,733 3,859,813 All Asset Fund 902, ,279 Total $ 15,798,954 $ 13,914,344 Investment Policies The Foundation s Board oversees the management of its investments and establishes investment policy. The Board has delegated to its Investment Committee the implementation of the investment policy. The Investment Committee establishes 28

31 Notes to Financial Statements NOTE 3. INVESTMENTS (Continued) investment guidelines and selects investment managers. The Foundation prohibits investments that jeopardize the safety of principal concept or non-profit status of the Foundation. The Board of Trustees of the California State University (CSU) adopted a resolution urging auxiliary boards that make corporate investments to issue statements of social responsibility and to follow those precepts in examining past and considering future investments. The Foundation s Board recognizes and accepts its social responsibility with respect to the investment of funds. The endowed portfolio is an investment pool in which a large number of individual endowments participate in order to benefit from diversification and economies of scale. The primary investment objective of the endowed investment portfolio is growth of principal sufficient to preserve purchasing power and to provide income to support current and future expenditures consistent with endowment restrictions. The long term goal is that the total return on the portfolio, net of investment and administration fees, should equal the rate of inflation, plus the payout rate which is used to support current activities. Investments authorized by the Investment Committee include high quality, readily marketable securities. The equity portion of the investments may include both domestic and international equities, including foreign currency denominated, common and preferred stocks and actively managed and passive (index) strategies. Overall, the investments are measured against the Standard & Poor s 500, Russell 2500, MSCI Europe, Australasia, and Far East (EAFE), MSCI All County World Index (ACWI) ex US and MSCI Emerging Markets indices. The fixed income portion of the investments may include both domestic and international securities, along with common bond substitutes. Investment guidelines establish set ranges for the percentage of the total bond portfolio that can be invested in U.S. government, investment grade, non-investment grade and foreign bonds. The fixed income portfolio is measured against the Barclays Capital Aggregate Bond, Barclays Capital US TIPS and Barclays Capital High Yield Bond indices. The All Asset Fund portion includes funds which seek to achieve a real rate of return in excess of U.S. inflation. These funds can be made up of a mixture of stocks, bonds and other assets such as commodities. The portfolio is measured against the HFRI Fund of Funds index. 29

32 Notes to Financial Statements NOTE 3. INVESTMENTS (Continued) Investment Risk Factors There are many factors that can affect the value of investments. Some, such as custodial credit risk, concentration of credit risk, and foreign currency risk may affect both the equity and fixed income securities. Equity securities respond to such investment behavioral factors as economic conditions, individual company earnings, performance and market liquidity, while fixed income securities are sensitive to credit risks and changes in interest rates. Equity securities held by the Foundation through mutual funds comprised $10,567,818 or 66.9 percent of the total investments of the Foundation. Equities are subject to both unsystematic and systematic risk. Unsystematic risk is the risk of a price change due to the unique circumstances of a specific security or group of related securities. The Foundation addresses unsystematic risk by investing in widely diversified equity mutual funds. Equity securities are also subject to systematic risk or market risk. Systematic risk recognizes that equity securities, as an asset class, can change in value as a result of such factors as inflation, exchanges rates, political instability, war, economic conditions and interest rates. This type of risk is not specific to a particular company or industry and cannot be substantially mitigated by diversification. Credit Risk Fixed income securities are subject to credit risk, which is the chance that a bond issue will fail to pay interest or principal in a timely manner, or that negative perceptions of the issuer s ability to make these payments will cause security prices to decline. The following schedule of credit risk profile of Foundation s investments summarizes the fair value of the fixed income securities subject to credit risk. The Foundation maintains policies to manage credit risk which include requiring minimum credit ratings issued by nationally recognized statistical rating organizations, including Standard and Poor s or Moody s Investor Services, for certain investments. For investments in securities rated below investment grade, the Foundation and its investment advisor monitor the investments and fund manager to determine if the portfolio is managed according to the stated guidelines. A security s tier can be established either by an independent rating organization or by a determination of the investment adviser. Money market fund shares and U.S. government securities are automatically considered Tier 1 securities. 30

33 Notes to Financial Statements NOTE 3. INVESTMENTS (Continued) The credit ratings of the Foundation s fixed income securities held in investments and money market funds at June 30, 2013, are as follows: Fair Value Rating Bond Mutual Funds: JP Morgan High Yield $ 793,645 (1) PIMCO Total Return 2,859,675 (2) Vanguard Inflation-Protected Securities 675,413 AAA Money Market Fund: Schwab Advisor Cash Reserve Premier 878 Tier 1 Total $ 4,329,611 (1) Credit ratings range from BAA to CAA or lower with 47.6% at B rating. (2) Credit ratings range from AAA to below B with 68% at AAA rating. Custodial Credit Risk Custodial risk is the risk that in the event of the failure of the custodian, the investments may not be returned. Substantially all of the Foundation s investments are issued, registered or held in the name of the Foundation by custodian banks and brokers, as its agent. Other types of investments represent ownership interest that do not exist in physical or book entry form. Concentration of Credit Risk Concentration of credit risk is the risk associated with a lack of diversification, such as having substantial investments in a few individual issuers; thereby exposing the organization to greater risks resulting from adverse conditions or developments. The Foundation maintains investment policies that limit the holdings of any individual security (except those issued or guaranteed by the federal government) to 10% of invested funds. GASB requires disclosure of investments in any one individual issuer that represent 5% or more of total investments. The Foundation had no investments that exceeded this threshold at June 30, 2013 or

34 Notes to Financial Statements NOTE 3. INVESTMENTS (Continued) Interest Rate Risk Interest rate risk is the risk that fixed income securities will decline because of rising interest rates. The Foundation measures interest rate risk using the weighted average maturity method. The weighted average maturities of the Foundation s fixed income securities and money market funds at June 30, 2013, were as follows: Weighted Average Maturity Fair Value Bond Mutual Funds: JP Morgan High Yield $ 793, PIMCO Total Return 2,859, Vanguard Inflation-Protected Securities 675, Money Market Fund: Schwab Advisor Cash Reserve Premier Total $ 4,329,611 Foreign Currency Risk Exposure from foreign currency risk results from investments in foreign currency denominated equity or fixed income investments. The Foundation maintains international equity investments by investing in international mutual funds that are broadly diversified over many developed and emerging markets. Exposure from foreign currency risk from these investments is permitted and it may be fully or partially hedged by the individual mutual fund managers but hedging is not permitted for speculation or to create leverage. As of June 30, 2013, the exposure to foreign currency risk of the International Equity Funds was as follows: 32

35 Notes to Financial Statements NOTE 3. INVESTMENTS (Continued) Currency Fair Value Euro $ 1,339,508 British Pound 567,005 Japanese Yen 515,802 South African Rand 195,024 Chinese Yuan 173,321 Korean Won 14,162 Brazilian Real 141,064 Swiss Franc 3,790 Taiwan Dollar 126,920 Indian Rupee 85,928 Other Currencies 766,956 Total International Funds Subject to Foreign Currency Risk $ 3,929,480 NOTE 4. OPERATING AGREEMENTS CSU The Foundation entered into an operating agreement with the Trustees of the CSU on March 1, 2011 with a term end date of June 30, It describes the terms and conditions under which the Foundation may operate as an auxiliary organization within the CSU. No amounts are paid to the Trustees of the CSU under this agreement. Corporation On July 1, 2010 the Foundation entered into an agreement with the Corporation for accounting and financial reporting services. This agreement will renew automatically in 12-month increments unless terminated by choice by either party. The Corporation currently does not charge the Foundation for services; however, it reserves the right to establish an annual fixed fee in future years. NOTE 5. RISK MANAGEMENT The Foundation manages its risk through the purchase of insurance through California State University Risk Management Authority (CSURMA)/Auxiliaries Organization Risk Management Authority (AORMA), a joint powers public entity risk pool, for coverage of liability and general organizational risk. CSURMA/AORMA provides self insured 33

36 Notes to Financial Statements NOTE 5. RISK MANAGEMENT (Continued) risk with purchase of excess insurance. The Foundation maintains general liability insurance coverage for individual claims up to $20,000,000 per occurrence. Errors and omission claims under $25,000 are self insured. There have been no settlements in the past year that have exceeded insurance limits. There are no self insurance claims liabilities recorded in the accompanying financial statements because any amounts at June 30, 2013, are expected to be minimal. Likewise, no amounts have been paid to CSURMA/AORMA by June 30, 2013, related to the Foundation s estimated future funding for claims liability. NOTE 6. RELATED PARTY TRANSACTIONS The Foundation is involved in transactions with the Corporation and the University. Amounts at June 30 and transactions for the years then ended are summarized below: University: Foundation receivable from the University $ 70 $ - Foundation payable to the University Expenses for salaries of University personnel working on contracts, grants, and other programs 2,749 - Expenses for other than salaries of University personnel 1,008 18,089 Gifts, grants, or capital contributions to the University 16,000 11,000 Corporation: Foundation receivable from the Corporation 150,312 3,132 Foundation payable to the Corporation 3,293 2,283 Expense reimbursements to Corporation 9,679 11,898 Endowment distribution to Corporation 469, ,604 Fundraising proceeds from Corporation 56, ,666 34

37 Supplemental Information 35

38 Schedule of Net Position June 30, 2013 (for inclusion in the California State University) Assets: Current assets: Cash and cash equivalents $ 547,224 Short-term investments Accounts receivable, net 150,382 Leases receivable, current portion Notes receivable, current portion Pledges receivable, net 5,000 Prepaid expenses and other assets 500 Total current assets 703,106 Noncurrent assets: Restricted cash and cash equivalents 10,344 Accounts receivable, net Leases receivable, net of current portion Notes receivable, net of current portion Student loans receivable, net Pledges receivable, net 14,982 Endowment investments 15,798,954 Other long-term investments Capital assets, net Other assets Total noncurrent assets 15,824,280 Total assets 16,527,386 Deferred outflows of resources: Unamortized loss on refunding(s) Total deferred outflows of resources Liabilities: Current liabilities: Accounts payable 4,038 Accrued salaries and benefits payable Accrued compensated absences current portion Unearned revenue Capitalized lease obligations current portion Long-term debt obligations current portion Self-insurance claims liability - current portion Depository accounts Other liabilities Total current liabilities 4,038 Noncurrent liabilities: Accrued compensated absences, net of current portion Unearned revenue Grants refundable Capitalized lease obligations, net of current portion Long-term debt obligations, net of current portion Self-insurance claims liabilities, net of current portion Depository accounts Other postemployment benefits obligation Other liabilities Total noncurrent liabilities Total liabilities 4,038 Deferred inflows of resources: Deferred inflows from SCAs, grants, and others Total deferred inflows of resources Net Position: Net investment in capital assets Restricted for: Nonexpendable endowments 9,630,678 Expendable: Scholarships and fellowships 3,456,435 Research Loans Capital projects Debt service Other 3,432,688 Unrestricted 3,547 Total net position $ 16,523,348 36

39 Schedule of Revenues, Expenses, and Changes in Net Position Year Ended June 30, 2013 (for inclusion in the California State University) Revenues: Operating revenues: Student tuition and fees (net of scholarship allowances of $ 0 ) $ Grants and contracts, noncapital: Federal State Local Nongovernmental Sales and services of educational activities Sales and services of auxiliary enterprises (net of scholarship allowances of $ 0 ) 12,457 Other operating revenues 2,460 Total operating revenues 14,917 Expenses: Operating expenses: Instruction Research Public service Academic support Student services Institutional support 22,242 Operation and maintenance of plant Student grants and scholarships 161,250 Auxiliary enterprise expenses Depreciation and amortization Total operating expenses 183,492 Operating income (loss) (168,575) Nonoperating revenues (expenses): State appropriations, noncapital Federal financial aid grants, noncapital State financial aid grants, noncapital Local financial aid grants, noncapital Nongovernmental and other financial aid grants, noncapital Other federal nonoperating grants, noncapital Gifts, noncapital 760,465 Investment income (loss), net Endowment income (loss), net 1,703,889 Interest Expenses Other nonoperating revenues (expenses) (469,472) Net nonoperating revenues (expenses) 1,994,882 Income (loss) before other additions 1,826,307 State appropriations, capital Grants and gifts, capital Additions (reductions) to permanent endowments 169,312 Increase (decrease) in net position 1,995,619 Net position: Net position at beginning of year, as previously reported 14,527,729 Restatements Net position at beginning of year, as restated 14,527,729 Net position at end of year $ 16,523,348 37

40 1 Restricted cash and cash equivalents at June 30, 2013: Portion of restricted cash and cash equivalents related to endowments $ 10,344 All other restricted cash and cash equivalents - Total restricted cash and cash equivalents $ 10, Composition of investments at June 30, 2013: Current Unrestricted Foundation of California State University, Monterey Bay Other Information June 30, 2013 (for inclusion in the California State University) Current Restricted Total Current Noncurrent Unrestricted Noncurrent Restricted Total Noncurrent State of California Surplus Money Investment Fund (SMIF) $ State of California Local Agency Investment Fund (LAIF) Wachovia Short Term Fund Wachovia Medium Term Fund Wachovia Equity Fund CSU Consolidated Investment Pool (includes SWIFT and 0948 SMIF) Common Fund - Short Term Fund Common Fund - Others Debt securities Equity securities Fixed income securities (Treasury notes, GNMA's) Land and other real estate Certificates of deposit Notes receivable Mutual funds ,798,954 15,798,954 15,798,954 Money Market funds Collateralized mortgage obligations: - Inverse floaters Interest-only strips Agency pass-through Partnership interests (includes private pass-through) Alternative investments Hedge funds Other major investments: - - Add description Add description Add description Add description Add description Add description Total investments ,798,954 15,798,954 15,798,954 Less endowment investments t (enter as negative number) (15,798,954) 954) (15,798,954) 954) (15,798,954) 954) Total investments Investments held by the University under contractual agreements at June 30, 2013: Portion of investments in note 2.1 held by the University under contractual agreements at June 30, 2013 : Restricted current investments at June 30, 2013 related to: Amount Add description $ Add description Add description Add description Add description Add description Add description Total restricted current investments at June 30, 2013 $ 2.4 Restricted noncurrent investments at June 30, 2013 related to: Amount Endowment investment $ 15,798,954 Add description Add description Add description Add description Add description Add description Add description Total restricted noncurrent investments at June 30, 2013 $ 15,798,954 Total 38

41 Other Information June 30, 2013 (for inclusion in the California State University) 3.1 Composition of capital assets at June 30, 2013: N/A Balance Transfers of Balance Prior period June 30, 2012 Completed Balance June 30, 2012 Adjustments Reclassifications (restated) Additions Reductions CWIP June 30, 2013 Nondepreciable/nonamortizable capital assets: Land and land improvements $ Works of art and historical treasures Construction work in progress (CWIP) Intangible assets: Rights and easements Patents, copyrights and trademarks Internally generated intangible assets in progress Licenses and permits Other intangible assets: Total intangible assets Total nondepreciable/nonamortizable capital assets Depreciable/amortizable capital assets: Buildings and building improvements Improvements, other than buildings Infrastructure Leasehold improvements Personal property: Equipment Library books and materials Intangible assets: Software and websites Rights and easements Patents, copyright and trademarks Licenses and permits Other intangible assets: Total intangible assets Total depreciable/amortizable capital assets Total capital assets Less accumulated depreciation/amortization: Buildings and building improvements Improvements, other than buildings Infrastructure Leasehold improvements Personal property: Equipment Library books and materials Intangible assets: Software and websites Rights and easements Patents, copyright and trademarks Licenses and permits Other intangible assets: Total intangible assets Total accumulated depreciation/amortization Total capital assets, net $

42 3.2 Detail of depreciation and amortization expense for the year ended June 30, 2013: N/A Depreciation and amortization expense related to capital assets $ Amortization expense related to other assets Total depreciation and amortization $ Foundation of California State University, Monterey Bay Other Information June 30, 2013 (for inclusion in the California State University) 4 Long-term liabilities activity schedule: N/A Balance Balance Prior period June 30, 2012 Balance Current Long-term June 30, 2012 adjustments Reclassifications (restated) Additions Reductions June 30, 2013 portion portion Accrued compensated absences $ - - Capitalized lease obligations: Gross balance - - Unamortized premium / (discount) on capitalized lease obligations - - Total capitalized lease obligations - - Long-term debt obligations: Revenue Bonds - - Other bonds (non-revenue Bonds) - - Commercial Paper - - Note Payable related to SRB - - Other: Add description - - Add description - - Add description - - Add description - - Add description - - Add description - - Total long-term debt obligations - - Unamortized bond premium / (discount) - - Unamortized loss on refunding - - Total long-term debt obligations, net Total long-term liabilities $ 5 Future minimum lease payments - capital lease obligations: N/A Principal and Principal Interest Interest Year ending June 30: Total minimum lease payments Less amounts representing interest Present value of future minimum lease payments Less: current portion Capitalized lease obligation, net of current portion $ 40

43 6 Long-term debt obligation schedule N/A Foundation of California State University, Monterey Bay Other Information June 30, 2013 (for inclusion in the California State University) All other long-term Revenue Bonds debt obligations Total Principal and Principal and Principal and Principal Interest Interest Principal Interest Interest Principal Interest Interest Year ending June 30: 2014 $ Total $ Calculation of net position Auxiliary Organizations Total GASB FASB Auxiliaries 7.1 Calculation of net position - Net investment in capital assets Capital assets, net of accumulated depreciation $ Capitalized lease obligations - current portion Capitalized lease obligations, net of current portion Long-term debt obligations - current portion Long-term debt obligations, net of current portion Portion of outstanding debt that is unspent at year-end Other adjustments: (please list) Add description Add description Add description Add description Add description Net position - net investment in capital asset $ 7.2 Calculation of net position - Restricted for nonexpendable - endowments Portion of restricted cash and cash equivalents related to endowments $ 10,344 10,344 Endowment investments 15,798,954 15,798,954 Other adjustments: (please list) Less: Expendable quasi and term endowments (FMV) (4,029,925) (4,029,925) Less: Expendable appreciation (dividends/gains) of true endowments (2,148,695) (2,148,695) Add description Add description Add description Add description Add description Add description Add description Add description Net position - Restricted for nonexpendable - endowments per SNP $ 9,630,678 9,630,678 41

44 Other Information June 30, 2013 (for inclusion in the California State University) 8 Transactions with Related Entities Amount Payments to University for salaries of University personnel working on contracts, grants, and other programs $ 2,749 Payments to University for other than salaries of University personnel 1,008 Payments received from University for services, space, and programs Gifts-in-kind to the University from Auxiliary Organizations Gifts (cash or assets) to the University from recognized Auxiliary Organizations 16,000 Accounts (payable to) University (enter as negative number) (281) Other amounts (payable to) University (enter as negative number) Accounts receivable from University 70 Other amounts receivable from University 9 Other Postemployment Benefits Obligation (OPEB) N/A Annual required contribution (ARC) $ Contributions during the year Increase (decrease) in net OPEB obligation (NOO) NOO - beginning of year NOO - end of year $ 10 Pollution remediation liabilities under GASB Statement No. 49: N/A Description Amount Add description $ Add description Add description Add description Add description Add description Add description Add description Add description Add description Total pollution remediation liabilities $ Less: current portion Pollution remediation liabilities, net of current portion 42

45 Other Information June 30, 2013 (for inclusion in the California State University) 11 The nature and amount of the prior period adjustment(s) recorded to beginning net position N/A Net Position Class Amount Dr. (Cr.) Net position as of June 30, 2012, as previously reported $ 14,527,729 Prior period adjustments: 1 (list description of each adjustment) 2 (list description of each adjustment) 3 (list description of each adjustment) 4 (list description of each adjustment) 5 (list description of each adjustment) 6 (list description of each adjustment) 7 (list description of each adjustment) 8 (list description of each adjustment) 9 (list description of each adjustment) 10 (list description of each adjustment) Net position as of June 30, 2012, as restated $ 14,527,729 Provide a detailed breakdown of the journal entries (at the financial statement line item level) booked to record each prior period adjustment: Debit Credit Net position class: 1 (breakdown of adjusting journal entry) $ Net position class: 2 (breakdown of adjusting journal entry) Net position class: 3 (breakdown of adjusting journal entry) Net position class: 4 (breakdown of adjusting journal entry) Net position class: 5 (breakdown of adjusting journal entry) Net position class: 6 (breakdown of adjusting journal entry) Net position class: 7 (breakdown of adjusting journal entry) Net position class: 8 (breakdown of adjusting journal entry) Net position class: 9 (breakdown of adjusting journal entry) Net position class: 10 (breakdown of adjusting journal entry) 43

46

47 Board of Directors Foundation of California State University, Monterey Bay Seaside, California Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Foundation s financial statements are free of 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. 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 purposes. Glenn Burdette Attest Corporation San Luis Obispo, California September 12,