ASHEVILLE BUNCOMBE TECHNICAL COMMUNITY COLLEGE FOUNDATION, INC. (A Component Unit of Asheville Buncombe Technical Community College)

Transcription

1 ASHEVILLE BUNCOMBE TECHNICAL COMMUNITY COLLEGE FOUNDATION, INC. (A Component Unit of Asheville Buncombe Technical Community College) FINANCIAL STATEMENTS As of and for the Years Ended June 30, 2017 and 2016 And Report of Independent Auditor

2 TABLE OF CONTENTS REPORT OF INDEPENDENT AUDITOR... 1 FINANCIAL STATEMENTS Statements of Financial Position... 2 Statements of Activities Statements of Cash Flows... 5 Notes to the Financial Statements

3 Report of Independent Auditor The Board of Directors Asheville-Buncombe Technical Community College Foundation, Inc. Asheville, North Carolina We have audited the accompanying financial statements of Asheville-Buncombe Technical Community College Foundation, Inc. (the Foundation ), a component unit of Asheville-Buncombe Technical Community College, which comprise the statements of financial position as of June 30, 2017 and 2016, 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 audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Asheville-Buncombe Technical Community College Foundation, Inc. as of June 30, 2017 and 2016, 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. Charlotte, North Carolina September 8, 2017

4 STATEMENTS OF FINANCIAL POSITION ASSETS Current Assets: Cash and cash equivalents $ 2,780,654 $ 2,729,969 Contributions receivable 2,056,767 1,074,067 Other current assets 2,040 65,008 Total Current Assets 4,839,461 3,869,044 Noncurrent Assets: Foundation endowment, restricted 5,751,511 5,154,309 Long-term contributions receivable, net 1,604,654 2,541,608 Charitable remainder trusts receivable, net 1,506,862 1,543,648 Total Noncurrent Assets 8,863,027 9,239,565 Total Assets $ 13,702,488 $ 13,108,609 LIABILITIES AND NET ASSETS Current Liabilities: Accounts payable $ 2,310 $ 89 Funds held for others 8,367 9,305 Total Liabilities 10,677 9,394 Net Assets: Unrestricted 447, ,913 Temporarily restricted 9,533,422 9,138,655 Permanently restricted 3,711,375 3,570,647 Total Net Assets 13,691,811 13,099,215 Total Liabilities and Net Assets $ 13,702,488 $ 13,108,609 The accompanying notes to the financial statements are an integral part of these statements. 2

5 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2017 (WITH COMPARATIVE TOTALS FOR JUNE 30, 2016) Temporarily Permanently Unrestricted Restricted Restricted Total Total Support and Revenue: Contributions $ 55,273 $ 501,459 $ 85,459 $ 642,191 $ 774,151 Grant revenue - 102, , ,596 Investment gains (losses) - 532, ,429 (235,498) Change in value-charitable remainder trusts - (36,785) - (36,785) (30,694) Special events revenue 131, , ,765 Interest and investment income 26,484 64,773-91,257 81,516 In-kind contributions 165, , ,286 Other revenue 2, ,040 8,609 Transfer of funds to endowment (8,252) (47,017) 55, Net assets released from restrictions 722,092 (722,092) Total Support and Revenue 1,094, , ,728 1,629,600 1,132,731 Expenses: Program Expenses: Student scholarships 490, , ,367 Faculty and staff mini-grants 2, ,189 2,057 College personnel costs 166, , ,660 Grant funded expenses 92, , ,053 Equipment and supplies (gifted to College) 5, , ,774 Student stipends ,775 Student emergency aid 5, ,268 9,520 Technology projects 3, ,251 6,842 Faculty professional development ,110 Contributed service and facilities 29, ,653 54,788 Project expense 27, ,533 5,016 Other expenses 15, ,354 4,091 Total program expenses 838, ,283 1,813,053 Management and General Expenses: Administrative expense 10, ,008 5,724 College personnel costs ,967 Contributed services and facilities 65, ,845 64,613 Advertising ,229 Total supporting services 75, ,853 93,533 Fundraising expenses: Fundraising activities/events 53, ,270 51,478 Contributed goods and services 69, ,598 54,885 Total fundraising expenses 122, , ,363 Total Expenses 1,037, ,037,004 2,012,949 Change in net assets 57, , , ,596 (880,218) Net assets, beginning of year 389,913 9,138,655 3,570,647 13,099,215 13,979,433 Net assets, end of year $ 447,014 $ 9,533,422 $ 3,711,375 $ 13,691,811 $ 13,099,215 The accompanying notes to the financial statements are an integral part of these statements. 3

6 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016 Temporarily Permanently 2016 Unrestricted Restricted Restricted Total Support and Revenue: Contributions $ 56,421 $ 577,227 $ 140,503 $ 774,151 Grant revenue 5, , ,596 Investment gains (losses) - (235,498) - (235,498) Change in value-charitable remainder trusts - (30,694) - (30,694) Special events revenue 131, ,765 Interest and investment income 18,545 62,971-81,516 In-kind contributions 174, ,286 Other revenue 588 8,021-8,609 Transfer of funds to endowment (12,000) 12, Net assets released from restrictions 1,736,662 (1,736,662) - - Total Support and Revenue 2,111,267 (1,119,039) 140,503 1,132,731 Expenses: Program expenses: Student scholarships 498, ,367 Faculty and staff mini-grants 2, ,057 College personnel costs 105, ,660 Grant funded expenses 124, ,053 Equipment and supplies (gifted to College) 926, ,774 Student stipends 14, ,775 Student emergency aid 9, ,520 Technology projects 6, ,842 Faculty professional development 61, ,110 Contributed service and facilities 54, ,788 Project expense 5, ,016 Other expenses 4, ,091 Total program expenses 1,813, ,813,053 Management and general expenses: Administrative expense 5, ,724 College personnel costs 19, ,967 Contributed services and facilities 64, ,613 Advertising 3, ,229 Total supporting services 93, ,533 Fundraising expenses: Fundraising activities/events 51, ,478 Contributed goods and services 54, ,885 Total fundraising expenses 106, ,363 Total Expenses 2,012, ,012,949 Change in net assets 98,318 (1,119,039) 140,503 (880,218) Transfer of net assets based on donor request - (100,000) 100,000 - Net assets, beginning of year 291,595 10,357,694 3,330,144 13,979,433 Net assets, end of year $ 389,913 $ 9,138,655 $ 3,570,647 $ 13,099,215 The accompanying notes to the financial statements are an integral part of these statements. 4

7 STATEMENTS OF CASH FLOWS YEARS ENDED Cash flows from operating activities: Change in net assets $ 592,596 $ (880,218) Adjustments to reconcile change in net assets to net cash from operating activities: Reinvested interest and investment income (64,773) (62,971) Investment (gains) losses (532,429) 235,498 Change in value-charitable remainder trusts 36,785 30,694 Change in contribution receivable discount (46,737) (76,925) Net changes in assets and liabilities: Contributions receivable ,599 Other current assets 62,968 (60,751) Accounts payable 2,221 (394) Funds held for others (938) (8,299) Net cash from operating activities 50, ,233 Cash flows from investing activities: Transfers to Community Foundation of Western North Carolina - (350,735) Cash flows from financing activities: Decrease in restricted cash in endowment funds - 75,732 Net increase (decrease) in cash and cash equivalents 50,685 (160,770) Cash and cash equivalents, beginning of year 2,729,969 2,890,739 Cash and cash equivalents, end of year $ 2,780,654 2,729,969 Supplemental disclosure of noncash investing transactions: Reinvested earnings $ 64,773 $ 62,971 The accompanying notes to the financial statements are an integral part of these statements. 5

8 Note 1 Organization and nature of Foundation Asheville-Buncombe Technical Community College Foundation, Inc. (the Foundation ) supports the programs of Asheville-Buncombe Technical Community College (the College ) by providing scholarships to students, equipment and special technology to the College, mini-grants to faculty and staff, funding for renovation of selected facilities, and other programs. The Foundation was established in 1996 as a non-profit corporation under the North Carolina Non-Profit Corporation Act and is a legally separate entity from the College. The Foundation qualifies for exemption from federal income taxes under Section 501(c)(3) of the Internal Revenue Code ( IRC ) and is classified as a publicly supported organization by virtue of its status as an organization operated for the benefit of a college that is part of a governmental unit. The Foundation is supported primarily by contributions from the general public. Note 2 Summary of significant accounting policies Basis of Accounting The accompanying basic financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ). Financial Statement Presentation Accounting Standards Codification ( ASC ) Topic No. 958 establishes standards for external financial reporting by not-for-profit organizations and requires that resources be classified for accounting and reporting purposes into three net asset categories according to externally imposed restriction. Descriptions of the three asset classes are as follows: Unrestricted Net Assets Net assets that are not subject to donor-imposed restrictions and that are available for general operating expenses of the Foundation. Temporarily Restricted Net Assets Net assets subject to donor-imposed restrictions as to the purpose and/or time of use. Permanently Restricted Net Assets Net assets subject to donor-imposed restrictions that they be maintained permanently by the Foundation. Cash and Cash Equivalents For the purposes of reporting on the statement of cash flows, the Foundation considers all unrestricted, highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents, unless Board designated or donor-restricted to long-term purposes. Unrestricted and temporarily restricted amounts invested in the State Treasurer s Short-Term Investment Fund by the College on behalf of the Foundation are considered to be cash equivalents. Restricted Cash in Endowment Funds is not considered a cash equivalent for the statement of cash flows, because it is designated for a restricted purpose. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair value in the statements of financial position. Unrealized and realized gains and losses are included in the statements of activities. Contributions and Grants Depending on the existence and/or nature of any donor restrictions, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support. As restrictions expire, net assets are reclassified to unrestricted net assets and are reported on the statement of activities as Net assets released from restrictions. Donor-restricted contributions whose restrictions are met in the same year are recorded as unrestricted contributions. 6

9 Note 2 Summary of significant accounting policies (continued) Contributed Services and Use of Facilities Contributed services are recognized if they require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. The services are recognized at estimated fair value. Contributed use of facilities is also recognized at estimated fair value. The management, fund raising, and administration of the Foundation are carried out by employees of the College. Office facilities for Foundation activities are also provided by the College. In addition, several of the financial functions of the Foundation are handled by, and processed through, the College s business services department. The estimated values have been reflected in the accompanying financial statements as in-kind donations with a like amount included in expenses. Property and Equipment Property and equipment purchases are recorded at cost. Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method. The capitalization threshold is $500. Charitable Remainder Trusts The Foundation recognizes the irrevocable trusts in contributions and values the contribution and the corresponding asset at fair value. See charitable remainder trusts receivable, net on the statements of financial position. Long-Term Contributions Receivable The Foundation recognizes the contributions from long-term contributions receivable at present value, with the discount amortized to contributions over the period during which collection is expected. Fair Value Measurements The Foundation follows Financial Accounting Standards Board ( FASB ) ASC This standard establishes a single definition of fair value and a framework for measuring fair value. The standard also expands disclosures about fair value measurements. Fair value is defined as, the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. That is, fair value is based on an exit price, which may differ from the price paid to acquire the asset if there is a principal market for the asset, fair value represents the price in that market. Items carried at fair value on a recurring basis by the Foundation consist of funds invested with the Community Foundation of Western North Carolina and charitable remainder trusts. Income Taxes/Uncertain Tax Positions The Foundation is exempt from federal income taxes under Section 501(c)(3) of the IRC. Exempt organizations, however, may be subject to income tax on unrelated business income. The Foundation had minimal income from unrelated business activities in 2017 and 2016 and was, therefore, not required to file Federal Form 990-T (Exempt Organization Business Income Tax Return). The Foundation believes that it has appropriate support for all tax positions taken, and as such, does not have any uncertain tax positions that are material to the financial statements. 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 period. Actual results could differ from those estimates. Functional Allocation of Expenses The Foundation reports its expenses in the functional areas of Program, Management and General, and Fundraising. Expenses that can be attributed to a specific area are assigned directly to that area. Other expenses that are common to two or more functions are allocated by management estimates. 7

10 Note 2 Summary of significant accounting policies (continued) Future Pronouncements The FASB issued Accounting Standards Update ( ASU ) , Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, effective for fiscal years beginning after December 15, The pronouncement changes presentation and disclosure requirements for not-for-profit entities to provide more relevant information about their resources (and the changes in those resources) to donors, grantors, creditors, and other users. The pronouncement includes qualitative and quantitative requirements in the following areas: Net asset classes, investment return, expenses, liquidity and availability of resources, and presentation of operating cash flows. Management is currently evaluating the impact of this standard on the Foundation s financial statements. Note 3 Concentration of credit risk The State Treasurer s Short-Term Investment Fund ( STIF ) is a portfolio within the North Carolina State Treasurer s Investment Pool, an external investment pool that is not registered with the U.S. Securities and Exchange Commission and does not have a credit rating. This investment pool is administered by the State Treasurer pursuant to GS c. The Foundation has not experienced any losses with its STIF holding through the College, and the Foundation believes that it is not exposed to any significant credit risk on its STIF balances. At June 30, 2017 and 2016, the amount shown in the statements of financial position as cash and cash equivalents includes $2,720,013 and $2,705,913, respectively, of STIF holdings. Note 4 Funds held with Community Foundation of Western North Carolina, Inc. The Foundation maintained the following fund with the Community Foundation of Western North Carolina Foundation, Inc. The funds were established in May 2009 and are described as follows: Asheville-Buncombe Technical Community College Foundation Endowment Asheville-Buncombe Technical Community College Foundation established this account for its permanently restricted endowment funds. It allows the distribution of an annual spendable amount from investment income as provided for in the Community Foundation s investment and distribution policies. The components of the funds and the activity for the Asheville-Buncombe Technical Community College Foundation Endowment are summarized as follows for the years ended June 30: Asset value as of July 1 $ 5,154,309 $ 4,976,101 Current year activity: Cash transfers and withdrawals, net - 350,735 Investment income and interest 64,773 62,971 Investment gain (loss) 560,165 (210,568) Community Foundation fees (27,736) (24,930) Asset value as of June 30 $ 5,751,511 $ 5,154,309 8

11 Note 5 Endowment funds The Foundation s endowment consists of approximately 70 individual donor-restricted funds established for a variety of purposes. A donor s stipulation that requires a gift be invested in perpetuity creates a permanently restricted endowment fund. The endowment principal consists of the fair value of the gift when received. Interest, dividends, and investment appreciation on endowment accounts are used to fund a corresponding temporarily restricted scholarship account in the donor s name. As required by GAAP, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. Endowment net asset composition by restriction as of June 30, 2017 and 2016, consists of the following donor-restricted endowed funds: Temporarily Permanently Unrestricted Restricted Restricted Total Board-designated funds $ 156,527 $ - $ - $ 156,527 Donor-restricted funds - 1,931,671 3,711,375 5,643,046 June 30, 2017 $ 156,527 $ 1,931,671 $ 3,711,375 $ 5,799,573 Board-designated funds $ 156,527 $ - $ - $ 156,527 Donor-restricted funds - 1,536,425 3,570,647 5,107,072 June 30, 2016 $ 156,527 $ 1,536,425 $ 3,570,647 $ 5,263,599 The Board of Directors of the Foundation has interpreted the Uniform Prudent Management of Institutional Funds Act ( UPMIFA ) 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 Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment and (b) the original value of subsequent gifts to the permanent endowment. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: 1. The duration and preservation of the fund, 2. The purposes of the Foundation and the donor-restricted endowment fund, 3. General economic conditions, 4. The possible effect of inflation and deflation, 5. The expected total return from income and the appreciation of investments, 6. Other resources of the Foundation, and 7. The investment policies of the Foundation. The Foundation chooses to spend only a portion of investment income earned (including changes in the value of investments) each year. Under the policy established by the Board, 4% of the average market value of the endowment investments at the end of the previous three years (twelve quarters) has been authorized for expenditure. The remaining amount, if any, is retained to be used in future years when the amount computed using the spending policy exceeds the investment income. 9

12 Note 5 Endowment funds (continued) Changes in endowment net assets for the years ended June 30, 2017 and 2016 are as follows: Temporarily Permanently Unrestricted Restricted Restricted Total Balance, June 30, 2015 $ 156,527 $ 1,685,250 $ 3,330,144 $ 5,171,921 Investment income: Investment income, net of fees 1,221 61,750-62,971 Realized and unrealized losses (6,759) (228,739) - (235,498) Net investment loss (5,538) (166,989) - (172,527) Contributions 5, , , ,490 Transfers - 12,000-12,000 Amounts appropriated for expenditure - (126,285) - (126,285) Balance, June 30, ,527 1,536,425 3,570,647 5,263,599 Investment income: Investment income, net of fees 1,125 63,648-64,773 Realized and unrealized losses 17, , ,435 Net investment income 18, , ,208 Contributions - 2,615 85,459 88,074 Transfers (18,136) (56,944) 55,269 (19,811) Amounts appropriated for expenditure - (129,497) - (129,497) Balance, June 30, 2017 $ 156,527 $ 1,931,671 $ 3,711,375 $ 5,799,573 From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires the Foundation to retain as a fund of perpetual duration (underwater losses). There were no material deficiencies of this nature reported in unrestricted net assets as of June 30, 2017 and 2016, respectively. Any deficiencies will be the result of unfavorable market fluctuations and continued appropriation for certain programs that was deemed prudent by the Board of Directors. Subsequent gains that restore the fair value of the assets of the endowment fund to the required level will be classified as an increase in unrestricted net assets. 10

13 Note 6 Temporarily restricted net assets The Foundation holds temporarily restricted net assets in over 240 funds. The purposes are summarized as follows, with the number of funds indicated as of June 30: Funds Amount Funds Amount Scholarship funds 142 $ 1,068, $ 880,840 Endowed scholarship funds 70 1,931, ,536,425 Mini-grant and other projects 7 14, ,004 Grant projects , ,724 Business incubator/technology 4 50, ,134 Brumit Family Culinary Building 1 1,604, ,557,917 General support in trusts 2 4,742, ,866,611 Total temporarily restricted net assets 243 $ 9,533, $ 9,138,655 Note 7 Charitable remainder trusts The Foundation has been named a beneficiary in four trusts. The trusts became fully irrevocable in January 2006 when the donors relinquished their rights to change the Foundation as a beneficiary in each trust. The valuation is based on the estimated future value of the trust assets less the annual annuity distribution to the donors, with the result discounted to present value. The trust assets are re-valued annually. The statements of activities include a loss from the change in value of $36,785 and $30,694 for the years ended June 30, 2017 and 2016, respectively. The year-end values of the trusts are as follows as of June 30: Estimated future value $ 2,120,306 $ 2,280,670 Less discount to present value (613,444) (737,022) Charitable Reminder Trusts, net of discount $ 1,506,862 $ 1,543,648 The Foundation has also been named a beneficiary in several other charitable remainder trusts that do not meet the criteria for recording in income because they are either revocable or the donors have reserved the right to change the named beneficiaries. 11

14 Note 8 Contributions receivable Contributions receivable consisted of the following as of June 30, 2017 and 2016: Brumit Family - $2,500,000 Donation to the Foundation upon the death of the last surviving spouse. The donation is designed to establish the Janice and Joe Brumit Building Endowment. The endowment may be used to provide for the acquisition and ongoing support and maintenance of the Brumit Building on the campus of Asheville-Buncombe Technical Community College. $46,738 and $45,376 of the discount were amortized to contribution income during the years ended June 30, 2017 and 2016, respectively. Ferguson Family - $5,000,000 Donation to secure the naming rights to the Ferguson Allied Health and Workforce Development Building to be constructed on the Victoria Road Campus. The donation will be funded through annual contributions of $1 million a year for five years, beginning on December 1, Remaining annual contributions will be made by December 1 each year, ending on December 1, The fair values of the contributions receivable are calculated as follows as of June 30: Estimated future value - Brumit donation $ 2,500,000 $ 2,500,000 Estimated future value - Ferguson donation 2,000,000 2,000,000 Other pledges 56,766 74,067 Less discount to present value - Brumit (895,345) (942,083) Less discount to present value - Ferguson - (16,309) Total Pledges Receivable 3,661,421 3,615,675 Less current portion of Pledges Receivable (2,056,767) (1,074,067) Long-Term Pledges Receivable, net $ 1,604,654 $ 2,541,608 Note 9 Fair value measurements of assets and liabilities In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the Foundation discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The guidance establishes three levels of fair value as follows: Level 1 Valuation is based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical investments; Level 2 Valuation is based on inputs other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value can be determined through the use of models or other valuation methodologies; and Level 3 Valuation is based on unobservable inputs in situations where there is little or no market activity for the asset or liability and the reporting entity makes estimates and assumptions related to pricing of the asset or liability including assumptions regarding risk. 12

15 Note 9 Fair value measurements of assets and liabilities (continued) The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. When available, the Foundation uses unadjusted quoted market prices to determine the fair value of investment securities, and they are included in Level 1. For investments held in partnerships, the Foundation uses other inputs including the Net Asset Value ( NAV ) per share estimated by the investment partnerships general manager. Such investments may not have readily available market values and may be subject to certain redemption restrictions. As part of the adoption of ASU , such investments are measured at fair value using the NAV per share practical expedient and have not been classified under the fair value hierarchy. Fair values of assets are measured on a recurring basis at June 30, 2017, are as follows: Quoted Prices In Active Significant Assets Markets for Other Measured at Identical Assets Observable Unobservable Fair Value (Level 1) (Level 2) (Level 3) Investments with Community Foundation of WNC (a) $ 5,751,511 $ - $ - $ - Beneficial interest in remainder trusts 1,506, ,506,862 $ 7,258,373 $ - $ - $ 1,506,862 Fair values of assets are measured on a recurring basis at June 30, 2016, are as follows: Quoted Prices In Active Significant Assets Markets for Other Measured at Identical Assets Observable Unobservable Fair Value (Level 1) (Level 2) (Level 3) Investments with Community Foundation of WNC (a) $ 5,154,309 $ - $ - $ - Beneficial interest in remainder trusts 1,543, ,543,648 $ 6,697,957 $ - $ - $ 1,543,648 (a) In accordance with ASC Subtopic , certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statements of financial position. Fair value for the beneficial interests in remainder trusts (Level 3) is determined by estimating the present values of the future distributions expected to be received. Inputs include June 30, 2017 and 2016, values of the investments in the trusts, data from published life expectancy tables, and a 3% discount rate. There have been no changes in the valuation techniques and related inputs. 13

16 Note 9 Fair value measurements of assets and liabilities (continued) Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Beneficial Interest in Remainder Trusts July 1, 2015 $ 1,574,342 Present value adjustment (30,694) June 30, ,543,648 Present value adjustment (36,786) June 30, 2017 $ 1,506,862 Note 10 College personnel expenses The Foundation disburses grant and other funding to support specific personnel positions at the College. Expenses were incurred for the following programs in the years ending June 30: Lavender Program Administration $ 7,766 $ 20,884 Volunteer Coordinator - 19,967 OTA Program Coordinator 158,322 84,776 Total College Personnel Expenses $ 166,088 $ 125,627 Note 11 Related party transactions The Foundation is discretely presented as a component unit of the College s financial statements in accordance with standards established by the Governmental Accounting Standards Board. The Foundation exists primarily to provide financial assistance and other support to the College. The College operates on a fiscal year ended June 30. The Foundation has reimbursed the College $490,981 and $498,367 for scholarships for the years ended June 30, 2017 and 2016, respectively. The Foundation has also reimbursed the College $5,264 and $651,356 for equipment and $10,697 and $307,788 for supplies for the years ended June 30, 2017 and 2016, respectively. The Foundation s programs are carried out by College employees, who divide their time between College and Foundation activities. These employees include a Grant Writer/Coordinator, Foundation Accountant, Administrative Assistant, and College Relations, among others. Contributed services of $151,556 and $159,887 from the College have been recognized in both income and expenses on the statements of activities to reflect the estimated value of the specialized services received by the Foundation during the years ended June 30, 2017 and 2016, respectively. The Foundation has unconditional promises to give due from a Board member of $2,500,000 as of June 30, 2017 and

17 Note 12 Grant funded expenses The Foundation disburses grant funding to the College to support specific grant-funded projects. Disbursements were made during the audit year in connection with the following grants for the years ending June 30: Bank of America Jump Start $ 4,086 $ 35,887 Kauffman 57,832 - Nursing Program (CarePartners) 25,000 25,000 Other Grant Projects 5,784 63,166 Total Grant Funded Expenses $ 92,702 $ 124,053 Note 13 Special events The Foundation s fundraising events during the year included its annual golf tournament, as well as other smaller events. Event income and direct expenses, excluding in-kind contributions, were as follows for the years ending June 30: Event revenue $ 131,374 $ 131,765 Less direct event expenses (53,270) (51,478) Net Income from Special Events $ 78,104 $ 80,287 Note 14 Subsequent events Management considered subsequent events occurring through September 8, 2017, the date the financial statements were available to be issued, and did not identify any events necessitating disclosure. 15