Financial Statements Together with Report of Independent Certified Public Accountants ST. JOSEPH S COLLEGE. For the years ended June 30, 2016 and 2015

Transcription

1 Financial Statements Together with Report of Independent Certified Public Accountants ST. JOSEPH S COLLEGE For the years ended

2 TABLE OF CONTENTS Page(s) Report of Independent Certified Public Accountants 1-2 Financial Statements: Statements of Financial Position as of 3 Statement of Activities for the year ended June 30, 2016, with summarized totals for Statement of Activities for the year ended June 30, Statements of Cash Flows for the years ended

3 Grant Thornton LLP 757 Third Avenue, 9th Floor New York, NY T F GrantThornton.com linkd.in/grantthorntonus twitter.com/grantthorntonus REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Trustees of St. Joseph s College: We have audited the accompanying financial statements of St. Joseph s College (the College ), which comprise the statements of financial position as of, and the related statements of activities and cash flows for the years 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. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 College 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 College 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. Grant Thornton LLP U.S. member firm of Grant Thornton International Ltd

4 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 St. Joseph s College as of, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. New York, New York December 23,

5 Statements of Financial Position As of ASSETS Cash and cash equivalents $ 1,212,834 $ 2,572,557 Student accounts receivable, net of allowance of $500,000 and $375,000 in 2016 and 2015, respectively 2,699,056 1,787,715 Contributions receivable, net (Note 3) 700, ,162 Student loans receivable, net of allowance of $ 61,000 in 2016 and $81,000 in 2015 (Note 3) 873, ,886 Other receivables, including government grants 1,027, ,202 Deferred charges and other assets 2,106,340 2,136,498 Investments, at fair value (Note 4) 31,157,357 33,745,057 Property, plant and equipment, net (Note 5) 63,086,207 63,641,661 Total assets $ 102,862,976 $ 106,696,738 LIABILITIES AND NET ASSETS LIABILITIES Accounts payable and accrued expenses $ 7,018,148 $ 7,117,335 Beneficial interest in trusts (Note 3) 734, ,433 Deferred revenue (Note 3) 4,250,523 4,002,589 Capital lease obligation 353, ,332 Long-term debt (Note 6) 24,505,000 25,270,000 U.S. Government grants refundable (Note 3) 691, ,041 Total liabilities 37,553,084 38,025,730 Commitments (Note 9) NET ASSETS Unrestricted (Notes 2 and 12) 51,162,591 54,280,825 Temporarily restricted (Notes 2 and 12) 2,572,876 3,466,313 Permanently restricted (Notes 2 and 12) 11,574,425 10,923,870 Total net assets 65,309,892 68,671,008 Total liabilities and net assets $ 102,862,976 $ 106,696,738 The accompanying notes are an integral part of these financial statements

6 Statement of Activities For the year ended June 30, 2016, with summarized totals for 2015 Temporarily Permanently Total Unrestricted Restricted Restricted REVENUES, GAINS AND OTHER SUPPORT Tuition and fees, net of scholarships and fellowships of $26,367,883 and $25,358,580 in 2016 and 2015, respectively $ 67,320,071 $ - $ - $ 67,320,071 $ 67,297,274 State appropriations 419, , ,322 Contributions 649, , ,848 1,956,277 1,526,211 Contributed services (Note 3) ,212 Government grants and contracted services 4,511, ,511,512 3,747,795 Special events, net (Note 8) 117, , ,947 Dillon Child Study Center fees 1,308, ,308,938 1,440,095 Investment income, net 224, , , ,709 Realized gains on sale of investments 163,926 80, ,681 2,210,505 Net appreciation (depreciation) in fair value of investments (Note 4) 530, , ,759 (1,480,773) Other 1,451,012 (94,108) - 1,356, ,383 Endowment income appropriated for expenditure 550,000 (550,000) Net assets released from restrictions and reclassifications 1,503,139 (1,528,846) 25, Total revenues, gains and other support 78,750,522 (893,437) 650,555 78,507,640 77,224,680 EXPENSES (Note 11) Instruction 36,309, ,309,662 37,414,020 Academic support 6,231, ,231,510 6,847,856 Student services 15,685, ,685,450 16,459,819 Institutional support (Note 10) 23,642, ,642,134 23,047,269 Total expenses 81,868, ,868,756 83,768,964 (Deficiency) excess of revenues, gains and other support over expenses (3,118,234) (893,437) 650,555 (3,361,116) (6,544,284) Net assets, beginning of year 54,280,825 3,466,313 10,923,870 68,671,008 75,215,292 Net assets, end of year $ 51,162,591 $ 2,572,876 $ 11,574,425 $ 65,309,892 $ 68,671,008 The accompanying notes are an integral part of this financial statement

7 Statement of Activities For the year ended June 30, 2015 Temporarily Permanently Unrestricted Restricted Restricted 2015 REVENUES, GAINS AND OTHER SUPPORT Tuition and fees, net of scholarships and fellowships of $25,358,580 $ 67,297,274 $ - $ - $ 67,297,274 State appropriations 419, ,322 Contributions 542, , ,705 1,526,211 Contributed services (Note 3) 736, ,212 Government grants and contracted services 3,747, ,747,795 Special events, net (Note 8) 86, , ,947 Dillon Child Study Center fees 1,440, ,440,095 Investment income, net 271, , ,709 Realized gains from sale of investments 2,166,797 43,708-2,210,505 Net appreciation in fair value of investments (Note 4) (1,626,788) 146,015 - (1,480,773) Other 651,497 (32,114) - 619,383 Endowment income appropriated for expenditure 519,050 (519,050) - - Net assets released from restrictions and reclassifications 1,710,884 (1,736,762) 25,878 - Total revenues, gains and other support 77,962,913 (1,048,816) 310,583 77,224,680 EXPENSES (Note 11) Instruction 37,414, ,414,020 Academic support 6,847, ,847,856 Student services 16,459, ,459,819 Institutional support (Note 10) 23,047, ,047,269 Total expenses 83,768, ,768,964 (Deficiency) excess of revenues, gains and other support over expenses (5,806,051) (1,048,816) 310,583 (6,544,284) Net assets, beginning of year 60,086,876 4,515,129 10,613,287 75,215,292 Net assets, end of year $ 54,280,825 $ 3,466,313 $ 10,923,870 $ 68,671,008 The accompanying notes are an integral part of this financial statement

8 Statements of Cash Flows For the years ended CASH FLOWS FROM OPERATING ACTIVITIES Decrease in net assets $ (3,361,116) $ (6,544,284) Adjustments to reconcile decrease in net assets to net cash used in operating activities: Depreciation 3,760,205 3,803,792 Net (appreciation) depreciation in fair value of investments (871,759) 1,480,773 Contributions restricted for endowment (624,848) (284,705) Realized gains on sale of investments (244,681) (2,210,505) Change in allowance for student accounts receivable 125,000 - Discount on contributions receivable (6,972) (10,328) Changes in assets and liabilities: (Increase) decrease in student accounts receivable (1,036,341) 29,864 Decrease (increase) in contributions receivable 300,684 (12,101) (Increase) decrease in other receivables, including government grants (93,280) 559,277 Decrease in deferred charges and other assets 30,158 51,722 (Decrease) increase in accounts payable and accrued expenses (99,187) 838,168 Increase in deferred revenue 247, ,479 Net cash used in operating activities (1,874,203) (2,176,848) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (2,896,963) (3,077,213) Student loans granted (99,000) (183,342) Student loan collections 110, ,626 Proceeds from sales of investments 29,076,904 37,529,426 Purchases of investments (25,372,764) (31,148,824) Net cash provided by investing activities 818,813 3,231,673 CASH FLOWS FROM FINANCING ACTIVITIES Contributions restricted for endowment 624, ,705 Change in beneficial interest in trust 9,878 (70,141) Payments on capital lease obligations (123,985) (83,868) Proceeds from loans payable - 200,000 Principal payments on long-term debt (765,000) (705,000) U.S. Government grants refundable (50,074) 46,816 Net cash used in financing activities (304,333) (327,488) Net (decrease) increase in cash and cash equivalents (1,359,723) 727,337 Cash and cash equivalents, beginning of year 2,572,557 1,845,220 Cash and cash equivalents, end of year $ 1,212,834 $ 2,572,557 Supplemental cash flow information: Cash paid for interest $ 1,232,466 $ 1,270,396 Capital expenditures funded by capital lease borrowings $ 307,788 $ 245,842 The accompanying notes are an integral part of these financial statements

9 1. DESCRIPTION OF COLLEGE AND MISSION STATEMENT St. Joseph s College (the College ) was founded in 1916 in Brooklyn, New York and exists today on its original campus in Brooklyn and a campus in Patchogue, New York. The College serves a diverse community of academically eligible students who live within commuting distance of either the Brooklyn or Patchogue campus. The College is an independent not-for-profit institution providing academic undergraduate and graduate level programs. The mission of the College is to provide strong academic and value-oriented programs, rooted in a liberal arts tradition that supports provision for career preparation and enhancement. The College aims in this way to prepare each student for a life characterized by integrity, intellectual and spiritual values, social responsibility, and service - a life that is worthy of the College s motto, Esse non videri: To be and not to seem. The College is classified as a 501(c)(3) organization and is exempt from federal income taxes under Section 501(a) of the Internal Revenue Code ( IRC ) and a similar provision of the New York State tax laws. Accordingly, no provision for income taxes has been reflected in the accompanying financial statements. Donors may generally deduct contributions for income tax purposes to the extent allowable by law. 2. BASIS OF PRESENTATION The College prepares its financial statements in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ), using the accrual basis of accounting. Accordingly, the College s resources are classified and reported based upon the existence or absence of donor-imposed restrictions, as follows: Unrestricted - net assets that are not subject to donor imposed restrictions and, therefore, are available to meet the College s objectives. Unrestricted net assets may also be designated by the College s Board of Trustees (Note 12). Temporarily Restricted - consist of net assets subject to donor-imposed restrictions that either expire with the passage of time or can be fulfilled and removed by the actions of the College pursuant to those restrictions. At, temporarily restricted net assets consisted of the following: Beneficial interest in trusts $ 520,464 $ 623,537 Purpose restricted contributions 385, ,818 Capital projects and scholarships (Note 12) 1,666,519 2,673,958 $ 2,572,876 $ 3,466,

10 Permanently Restricted - include funds wherein donors have stipulated that the principal contributed be invested and maintained permanently. Income earned from those investments is available for expenditures according to those restrictions, if any, imposed by the donors. At June 30, 2016 and 2015, permanently restricted net assets consisted of donor-restricted scholarship funds aggregating to $11,574,425 and $10,923,870, respectively. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents Cash and cash equivalents include cash held in banks and money market funds. The College considers all highly liquid financial instruments with original maturities of three months or less to be cash equivalents. Cash equivalents are carried at fair value, which approximates cost. The College maintains its cash and cash equivalents in various bank accounts and money market funds that, at times, may exceed federally insured limits. The College s cash and cash equivalent accounts were placed with high credit quality financial institutions. The College has not experienced, nor does it anticipate, any losses in such accounts. Fair Value Measurements The FASB issued Accounting Standards Codification ( ASC ) Topic 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value, which focuses on an exit price between market participants in an orderly transaction. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information and establishes a three-level hierarchy for fair value measurements based on the transparency of information used in the valuation of an asset or liability as of the measurement date. Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories: Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Level 2 - Pricing inputs, including broker quotes, generally other than those exchange quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. Level 3 - Pricing inputs are unobservable for the assets or liability and includes situations where there is little, if any, market activity. The inputs into the determination of fair value require significant management judgment or estimation determined through the use of models or other valuation methodologies. Investments that are included in this category generally include privately held investments and partnership interests. The College also measures certain investments using a net asset value ( NAV ) per share, however, in May 2015, guidance was issued that exempts investments measured using NAV from categorization within the fair value hierarchy and related disclosures. Instead, entities are required to separately disclose the information required for assets measured using the NAV practical expedient. Entities are also required to show the carrying amount of investments measured using the NAV practical expedient as a reconciling item between the total amount of investments categorized within the fair value hierarchy and total investments measured at fair value on the face of the financial statements. The guidance requires retrospective application and is effective for fiscal years beginning after December 15, 2016, however the College has early adopted, as permitted

11 The carrying amounts of cash and cash equivalents, receivables, other assets, accounts payable and accrued expenses and other liabilities approximate fair value due to the short-term nature of these financial instruments. Investments Investments are measured and reported at fair value. Changes in fair value are reported as net investment income in the accompanying statements of activities. The fair value of debt and equity securities with a readily determinable fair value is based on quotations obtained from national security exchanges. Purchases and sales of securities are reflected on a trade-date basis. Gains and losses on sales of securities are based on average cost and are recorded in the statements of activities in the period in which the securities are sold. Dividends are accrued based on the ex-dividend date. Interest is recognized as earned. All investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and such changes could materially affect the amounts reported in the statements of financial position. Property, Plant and Equipment, Net Property, plant and equipment are recorded at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the following useful lives: Buildings 60 years Building improvements 10 years Furniture and equipment 10 years Computers and related equipment 3-8 years Costs for repairs and maintenance are charged to expense as incurred. Construction in progress, if any, is carried at cost incurred to date and, when completed, is transferred to the appropriate property, plant or equipment category and depreciated in accordance with the College s policies, as stated above. Revenue Recognition Revenue is recognized in the period earned. The College derives its revenue principally from student tuition and fees, government grants and aid, contributions and investment returns. The carrying value of student receivables has been reduced by an appropriate allowance for uncollectible accounts, based on historical collection experience, and therefore, approximates net realizable value. Receivables are written off in the period in which they are deemed to be uncollectible. Amounts received in advance are reported as deferred revenues. Contributed Services Contributed services provided by religious personnel prior to July 1, 2015 were historically recognized based on the difference between the compensation paid to religious personnel and the comparable compensation that would have been paid to lay persons, if lay persons were to occupy such positions

12 Beginning in fiscal 2016, the College began paying religious personnel at fair market value for the services provided and, therefore, no contributed services were recognized during the year ended June 30, Contributions and Beneficial Interests The College records contributions of cash and other assets when an unconditional promise to give is received from a donor. Contributions are recorded at the fair value of the assets received and are classified as either permanently restricted, temporarily restricted or unrestricted, based upon donor-imposed restrictions, if any. The College reports gifts of cash or other assets as restricted support if they are received with donor restrictions that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the accompanying financial statements as net assets released from restrictions. The College reports pledges expected to be collected within one year at net realizable value. Pledges to be paid to the College over a period of years are recorded at their estimated present value using a risk-adjusted rate (ranging from 3% - 6%). At, contributions receivable were due as follows: Less than one year $ 595,644 $ 692,378 One to five years 206, , ,694 1,102,378 Less: discount to present value (101,244) (108,216) Total contributions receivable, net $ 700,450 $ 994,162 The College has legally enforceable rights and claims to assets held under split-interest agreements created by donors. Under the terms of the split-interest agreements, the donors contribute assets to the College in exchange for a promise by the College to make payments for a specified period of time (usually the donor s lifetime) to the donor or to individuals or organizations designated by the donor. At the inception of the split-interest agreement, the excess of the fair value of assets over the present value of payments to be made to the donor or stated beneficiary is recognized as a charitable contribution. Subsequent changes to the present value of payments are reported as change in the accompanying statements of activities. The assets held for the split interest agreements are reported within investments in the accompanying statements of financial position at fair value totaling $850,509 and $843,377 in 2016 and 2015, respectively. Liabilities for the expected payments are reported as beneficial interests in trusts in the accompanying statements of financial position at the estimated present value of future cash outflows, based on appropriate discount rates and mortality tables. Discount rates range from 3% - 6%. The College invests the assets in accordance with relevant state laws

13 Student Loans Receivable The College makes uncollateralized loans to students based on financial need. Student loans are funded through Federal government loan programs. At, student loans, net, represented approximately 0.85% and 0.83% of total assets, respectively. At June 30, student loans consisted of the following: Federal loan programs $ 934,250 $ 965,886 Less: allowance for doubtful accounts: Beginning of year (81,000) (73,000) Decrease (increase) in allowance 20,000 (8,000) End of year (61,000) (81,000) Student loans receivable, net $ 873,250 $ 884,886 The College participates in the Perkins federal revolving loan program. The availability of funds for loans under the program is dependent on reimbursements to the pool from repayments on outstanding loans. Funds advanced by the Federal government of $691,967 and $742,041 at, respectively, are ultimately refundable to the government and are classified as liabilities in the accompanying statements of financial position. Outstanding loans cancelled under the program result in a reduction of the funds available for loan and a decrease in the liability to the government. At, the following amounts were past due under student loan programs: Past due less than 240 $ 122,729 $ 154,150 Past due greater than 240 less than 2yrs 23,432 33,778 Past due greater than 2 yrs less than 5yrs 40,552 54,912 Past due greater than 5 yrs 58,871 80,120 Total $ 245,584 $ 322,960 Allowances for doubtful accounts are established based on prior collection experience and current economic factors which, in management s judgment, could influence the ability of loan recipients to repay the amounts per the loan terms. Amounts due under the Perkins Loan program are guaranteed by the government and, therefore, no reserves are placed on any past due balances under the program. The Federal Perkins Loan extension Act of 2015, enacted on December 18, 2015, extended the Perkins Loan Program through September 30,

14 Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 reporting period. Actual results could differ from those estimates. Income Taxes The College adopted the provisions of Accounting Standard Codification ( ASC ) 740 Accounting for Uncertainties in Income Taxes. ASC clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return, including issues relating to financial statement recognition and measurement. This section provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more-likely-than-not to be sustained if the position were to be challenged by a taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged. The College is exempt from federal and New York income taxation by virtue of being an organization described in Section 501(c)(3) of the IRC and similar provisions of the New York State tax code. Nevertheless, the College may be subject to tax on income unrelated to its exempt purpose, unless that income is otherwise excluded by the Code. The tax years ended June 30, 2013, 2014, 2015 and 2016 are still open to audit for both federal and state purposes. Management believes that there are no uncertain tax positions within its financial statements. Reclassification of Prior Year Presentation Certain information in the fiscal 2015 financial statements has been reclassified to conform to the fiscal 2016 presentation. There were no changes in total assets, liabilities, revenues, expenses or changes in net assets as reflected in the fiscal 2015 financial statements. 4. INVESTMENTS The College records investments with readily determinable fair values and all investments in debt securities at fair value, with gains and losses included in the accompanying financial statements. At, the College s investments were comprised of the following: 2016 Unrealized Fair Value Cost Appreciation Common stocks $ 19,379,570 $ 12,612,446 $ 6,767,124 Corporate bonds 5,262,154 4,940, ,921 Mutual funds 850, ,350 43,158 25,492,232 18,360,029 7,132,203 Temporary cash investments 5,665,125 5,665,125 - Total investments $ 31,157,357 $ 24,025,154 $ 7,132,

15 Unrealized Fair Value Cost Appreciation Common stocks $ 19,260,424 $ 13,166,728 $ 6,093,696 Corporate bonds 4,825,764 4,677, ,079 Mutual funds 843, ,708 18, ,929,565 18,669,121 6,260,444 Temporary cash investments 8,815,492 8,815,492 - Total investments $ 33,745,057 $ 27,484,613 $ 6,260,444 For the years ended, the College incurred investment expenses of approximately $97,058 and $107,000, respectively, which are netted within investment income in the accompanying financial statements. For the years ended, net accumulated appreciation (depreciation) in the fair value of investments was comprised of the following: Unrealized appreciation in fair value of investments at beginning of year $ 6,260,444 $ 7,741,217 Unrealized appreciation in fair value of investments at end of year 7,132,203 6,260,444 Net appreciation (depreciation) during fiscal year $ 871,759 $ (1,480,773) For the years ended, the current year net appreciation (depreciation) in fair value of investments was reflected in the accompanying statements of activities as follows: Unrestricted net assets $ 530,982 $ (1,626,788) Temporarily restricted net assets 340, ,015 Total $ 871,759 $ (1,480,773) The following table presents the College s fair value hierarchy for its investments, measured at fair value, as of Fair Value Level 1 Level 2 Level 3 Common stocks $ 19,379,570 $ 19,379,570 $ - $ - Corporate bonds 5,262,154 5,262, Mutual funds 850, , Temporary cash investments 5,665, Total $ 31,157,357 $ 25,492,232 $ - $ -

16 2015 Fair Value Level 1 Level 2 Level 3 Common stocks $ 19,260,424 $ 19,260,424 $ - $ - Corporate bonds 4,825,764 4,825, Mutual funds 843, , Temporary cash investments 8,815, Total $ 33,745,057 $ 24,929,565 $ - $ - 5. PROPERTY, PLANT AND EQUIPMENT, NET At, property, plant and equipment, net, consisted of the following: Brooklyn Campus: Land $ 524,599 $ 524,599 Buildings and improvements 41,003,285 40,780,775 Furniture and equipment 12,651,068 12,227,156 54,178,952 53,532,530 Accumulated depreciation and amortization (30,798,290) (29,140,428) 23,380,662 24,392,102 Patchogue Campus: Land 6,563,760 6,533,141 Buildings and improvements 56,457,904 54,345,830 Furniture and equipment 15,100,154 14,684,518 78,121,818 75,563,489 Accumulated depreciation and amortization (38,416,273) (36,313,930) 39,705,545 39,249,559 Total property, plant and equipment, net $ 63,086,207 $ 63,641,661 Depreciation and amortization expense for the years ended, totaled $3,760,205 and $3,803,792, respectively. 6. LONG-TERM DEBT In March 2015, the College received a $200,000 non-interest bearing loan from a vendor. The proceeds of the loan were used to finance capital improvements to the kitchen and dining facilities on the Patchogue campus. In accordance with the terms of the agreement, the College is required to make monthly debt service payments of $4,000, during the school year months of September through June. The first payment was due in September of

17 Future debt service payments are comprised of the following: Year Ending June 30, Principal 2017 $ 40, , , ,000 Total $ 160,000 In August 2010, the Dormitory Authority of the State of New York (the Authority ), issued $27,795,000 of St. Joseph s College Revenue Bonds, Series 2010, to be used to (1) pay all or a portion of the costs of the construction of an Athletic Facility on the Brooklyn Campus, the construction of an outdoor Athletic Facility on the Long Island Campus and a renovation that converted classrooms into science labs on the Long Island Campus, and (2) make a deposit to the Debt Service Fund (approximately $2 million for each of the years ended ). These bonds stipulate certain financial covenants, with which, the College was not in compliance in fiscal 2016 or 2015; however, the College obtained a waiver of such covenants. The College is required to make monthly payments for principal and interest on the related bond issue when due. Future debt service payments are due as follows: Year Ending June 30, Principal Interest Debt Service 2017 $ 750,000 $ 1,208,013 $ 1,958, ,000 1,181,325 1,956, ,000 1,151,663 1,956, ,000 1,118,863 1,953, ,000 1,084,219 1,954,219 Thereafter 20,310,000 9,030,786 29,340,786 Total $ 24,345,000 $ 14,774,869 $ 39,119, PENSION PLAN The College maintains a defined contribution retirement plan (the Plan ) covering substantially all fulltime employees who meet certain age and service requirements. For the years ended June 30, 2016 and 2015, the College contributed $ 1,887,615 and $1,838,745, respectively, to the Plan, which represented 6% of annual compensation for all eligible employees

18 8. SPECIAL EVENTS For the years ended, the College recorded revenues from the following special events: Gross Revenues Direct Expenses Net Revenues Special Event Unrestricted: Golf outing $ 159,343 $ 127,171 $ 42,193 $ 41,138 $ 117,150 $ 86,033 Temporarily restricted: Dinner dance - 215,718-69, ,914 Total $ 159,343 $ 342,889 $ 42,193 $ 110,942 $ 117,150 $ 231,947 For the years ended, net revenues from the golf outing were unrestricted, but internally designated to be used for athletics. For the year ended June 30, 2015, net revenues from the dinner dance were restricted by donors for use in support of current scholarships. 9. COMMITMENTS The College has entered into various capital and operating leases, which are subject to future minimum payments as follows: Year Ending June 30, 2017 $ 1,129, , , , ,054 Thereafter 467,205 Total $ 5,355, FUNDRAISING EXPENSES Fundraising expenses are included in institutional support in the accompanying statements of activities. For the years ended, fundraising costs totaled $773,079 and $856,011, respectively. For purposes of reporting fundraising expenses, the College includes only those fundraising costs incurred by its development office

19 11. ALLOCATION OF CERTAIN EXPENSES The College allocates operation and maintenance of plant, depreciation and amortization, and interest expense based on proportional expenditures using estimates of building square footage and the functional use of each facility financed by debt. For the years ended, the following allocation of expenses was included within the respective functional categories in the accompanying statements of activities: 2016 Operation and Depreciation and Maintenance Amortization Interest Total Instruction $ 2,166,956 $ 1,213,354 $ 394,389 $ 3,774,699 Academic support 1,083, , ,195 1,887,350 Student services 1,625, , ,792 2,831,025 Institutional support 1,896,087 1,061, ,090 3,302,862 $ 6,771,738 $ 3,791,732 $ 1,232,466 $ 11,795, Operation and Depreciation and Maintenance Amortization Interest Total Instruction $ 2,201,742 $ 1,227,302 $ 406,527 $ 3,835,571 Academic support 1,100, , ,263 1,917,785 Student services 1,651, , ,895 2,876,678 Institutional support 1,926,524 1,073, ,711 3,356,124 $ 6,880,444 $ 3,835,318 $ 1,270,396 $ 11,986, ENDOWMENT The College s endowment includes both donor-restricted endowed funds, principally established for student scholarships and, funds designated by the Board of Trustees to function as endowments. As required by U.S. GAAP, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donorimposed restrictions. In September 2010, the State of New York enacted the New York Prudent Management of Institutional Funds Act ( NYPMIFA ), its version of the Uniform Prudent Management of Institutional Funds Act ( UPMIFA ). All not-for-profit corporations formed in the State of New York are required to adopt NYPMYFA

20 The Board of Trustees of the College through its approved investment policy guidelines has interpreted NYPMIFA as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds, absent explicit donor stipulation to the contrary. As a result of this interpretation, the College classifies as permanently restricted net assets (a) the original value of the gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated by the Board of Trustees in a manner consistent with the standard of prudence prescribed by NYPMIFA. In accordance with NYPMIFA, the College considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds. The duration and preservation of the fund. 1. The purpose of the organization and the donor-restricted endowment fund. 2. General economic condition. 3. The possible effect of inflation and deflation. 4. The expected total return from income and the appreciation of investments. 5. Other resources of the College. 6. The investment policy of the College. Where appropriate, alternatives to spending from the donor-restricted endowment fund and the possible effects on the College are also considered. The spending policy of the College is that the long-term target for the annual amount distributed from the investments shall be 5.0% or less of the investment balance, calculated using a 3-year moving average of fair values, adjusted for contributions and distributions, which management determined to be substantially equivalent to a 5 year average. The following illustrates the changes in the College s endowment net assets as of : 2016 Temporarily Permanently Unrestricted Restricted Restricted Total Donor restricted endowment $ - $ 1,470,427 $ 11,574,425 $ 13,044,852 Board designated (quasi) 12,851, ,851,291 Total $ 12,851,291 $ 1,470,427 $ 11,574,425 $ 25,896,

21 Temporarily Permanently Unrestricted Restricted Restricted Total Donor restricted endowment $ - $ 1,412,359 $ 10,923,870 $ 12,336,229 Board designated (quasi) 12,060, ,060,255 Total $ 12,060,255 $ 1,412,359 $ 10,923,870 $ 24,396, The following summarizes endowment related activities for the year ended June 30, 2016: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, beginning of year $ 12,060,255 $ 1,412,359 $ 10,923,870 $ 24,396,484 Investment return: Investment income and realized gains 318, , ,016 Net unrealized appreciation 472, , ,089 Total investment return 791, ,068-1,399,104 Gifts received , ,848 Change in donor intent ,707 25,707 Appropriations for expenditures - (550,000) - (550,000) - (550,000) 650, ,555 Endowment net assets, end of year $ 12,851,291 $ 1,470,427 $ 11,574,425 $ 25,896,143 The following summarizes endowment related activities for the year ended June 30, 2015: 2016 Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, beginning of year $ 39,675,394 $ 1,487,401 $ 10,613,287 $ 51,776,082 Investment return: Investment income and realized gains 2,280, ,463-2,500,037 Net unrealized (depreciation) appreciation (1,561,715) 224,545 - (1,337,170) Total investment return 718, ,008-1,162,867 Gifts received , ,705 Transfers and change in donor intent (28,333,998) - 25,878 (28,308,120) Appropriations for expenditures - (519,050) - (519,050) (28,333,998) (519,050) 310,583 (28,542,465) Endowment net assets, end of year $ 12,060,255 $ 1,412,359 $ 10,923,870 $ 24,396,

22 13. SUBSEQUENT EVENTS The College evaluated its June 30, 2016 financial statements for subsequent events through December 23, 2016, the date its financial statements were available to be issued and, determined that there were no subsequent events that required adjustment or disclosure to the accompanying financial statements