BUNKER HILL COMMUNITY COLLEGE (an agency of the Commonwealth of Massachusetts)

Transcription

1 BUNKER HILL COMMUNITY COLLEGE INDEPENDENT AUDITORS' REPORTS AS REQUIRED BY THE UNIFORM GUIDANCE AND GOVERNMENT AUDITING STANDARDS AND RELATED INFORMATION JUNE 30, 2016

2 Independent Auditors' Reports as Required by the Uniform Guidance and Government Auditing Standards and Related Information June 30, 2016 C O N T E N T S Independent Auditors' Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 1-3 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 4-5 Schedule of Expenditures of Federal Awards 6-7 Notes to the Schedule of Expenditures of Federal Awards 8 Schedule of Findings and Questioned Costs 9-16 Required Auditee Information: Management s Summary Schedule of Prior Audit Findings Management s Corrective Action Plan 19-20

3 INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE To the Board of Trustees of Bunker Hill Community College Boston, Massachusetts Report on Compliance for Each Major Federal Program We have audited Bunker Hill Community College s (an agency of the Commonwealth of Massachusetts) (the College ) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the College s major federal programs for the year ended June 30, The College s major federal programs are identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of the College s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance ). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the College s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major Federal program. However, our audit does not provide a legal determination of the College s compliance. 25 Braintree Hill Office Park Suite 102 Braintree, MA P: F: Church Street Winchester, MA P: F:

4 Opinion on Each Major Federal Program In our opinion, the College complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Other Matters The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as Findings and Our opinion on each major federal program is not modified with respect to these matters. The College s responses to the noncompliance findings identified in our audit are described in the accompanying schedule of findings and questioned costs. The College s responses were not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses. Report on Internal Control over Compliance Management of the College is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the College s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the College s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, however, material weaknesses may exist that have not been identified.

5 We identified deficiencies in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as Findings and that we consider to be significant deficiencies. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirement of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Schedule of Expenditures of Federal Awards We have audited the financial statements of the College as of and for the year ended June 30, We have issued our report thereon dated November 21, 2016, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for the purposes of additional analysis as required by the Uniform Guidance. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Certified Public Accountants Braintree, Massachusetts February 14, 2017 (except for the Schedule of Expenditures of Federal Awards, for which the date is November 21, 2016)

6 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 To the Board of Trustees of Bunker Hill Community College Boston, Massachusetts We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Bunker Hill Community College (the College ), which comprise the statement of net position as of June 30, 2016, the related statements of revenues, expenses and changes in net position and cash flows for the year then ended, and the related notes to the financial statements, which collectively comprise the College's basic financial statements and have issued our report thereon dated November 21, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the College's internal control over financial reporting ( internal control ) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the College's internal control. Accordingly, we do not express an opinion on the effectiveness of the College's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 25 Braintree Hill Office Park Suite 102 Braintree, MA P: F: Church Street Winchester, MA P: F:

7 Compliance and Other Matters As part of obtaining reasonable assurance about whether the College's financial statements are free from 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 College'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 College's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Certified Public Accountants Braintree, Massachusetts November 21, 2016

8 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

9 Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Passed CFDA Pass-Through Entity Federal Through to Number Pass-Through Entity Award Number Expenditures Subrecipients STUDENT FINANCIAL ASSISTANCE CLUSTER U.S. Department of Education: Direct Awards: Federal Supplemental Educational Opportunity Grant N/A N/A $ 472,858 $ - Federal Work-Study Program N/A N/A 438,428 - Federal Pell Grant Program N/A N/A 24,767,177 - Federal Direct Student Loans N/A N/A 5,202,021 - Scholarships for Disadvantaged Students N/A N/A 300,000 - Total Student Financial Assistance Cluster 31,180,484 - TRIO CLUSTER U.S. Department of Education: Direct Awards: TRIO - Student Support Services N/A N/A 280,810 - TRIO - Talent Search N/A N/A 227,545 - Total TRIO Cluster 508,355 - RESEARCH & DEVELOPMENT CLUSTER U.S. National Science Foundation: Direct Awards: Education and Human Resource Grants N/A N/A 72,000 - Pass-through Awards: Education and Human Resource Grants University of Massachusetts - Boston B ,692 - Education and Human Resource Grants University of Massachusetts - Boston ,201 - Louis Stokes Alliances for Minority Participation University of Massachusetts - Boston , ,241 Mathematical and Physical Sciences Harvard University 5K12GM ,062 - Subtotal - Pass-through Awards 167,303 - U.S. Department of Health and Human Services: Pass-through Awards: Biomedical Research & Research Training University of Massachusetts - Boston 5R25GM ,326 - Biomedical Research & Research Training Tufts University 5K12GM ,180 - Subtotal - Pass-through Awards 14,506 - Total Research & Development Cluster 253,

10 Schedule of Expenditures of Federal Awards - Continued Year Ended June 30, 2016 Passed CFDA Pass-Through Entity Federal Through to Number Pass-Through Entity Award Number Expenditures Subrecipients NON-CLUSTER U.S. Department of Education: Direct Awards: Higher Education Institutional Aid N/A N/A $ 374,177 $ - Pass-through Awards: Career and Technical Education - Basic Grants to States Massachusetts Department of Education Q 449,511 - Career and Technical Education - Basic Grants to States Massachusetts Department of Education A 62,645 - Subtotal - Pass-through Awards 512,156 - U.S. Department of Labor: Direct Awards: Trade Adjustment Assistance Community College and Career Training Grant Pass-through Awards: Trade Adjustment Assistance Community College and Career Training Grant N/A N/A 527, Massasoit Community College V ,845 - U.S Department of State: Pass-through Awards: One-Time International Exchange Grant Program NOVA ,412 - National Endowment for the Humanities: Pass-through Awards: Teaching and Learning Resources and Curriculum Development University of Massachusetts - Boston ME ,964 - Total Non-Cluster 1,896,354 - Total Federal Funds $ 33,839,002 $ - See accompanying notes to schedule of expenditures of federal awards

11 Notes to the Schedule of Expenditures of Federal Awards June 30, 2016 Note 1 - Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal grant activities of Bunker Hill Community College (the "College") under programs of the Federal Government for the year ended June 30, The information on this Schedule is prepared in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance ). Because the Schedule presents only a selected portion of the operations of the College, it is not intended to and does not present the financial position, changes in net position or cash flows of the College. Note 2 - Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance. Note 3 - Indirect Cost Rate The College has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. Note 4 - Federal Direct Student Loans Program The College disbursed $5,202,021 of loans under the Federal Direct Student Loans program, which include Stafford Subsidized and Unsubsidized Loans and Parent Plus Loans. It is not practical to determine the balances of loans outstanding to students of the College under this program as of June 30, The College is only responsible for the performance of certain administrative duties and, accordingly, these loans are not included in the College's financial statements

12 Schedule of Findings and Questioned Costs Year Ended June 30, 2016 Section I Summary of Auditors Results: Financial Statements Type of auditors report issued: Unmodified Internal control over financial reporting: Material weaknesses identified? yes x no Significant deficiencies identified that are not considered to be material weaknesses? yes x no Noncompliance material to the financial statements noted? yes x no Federal Awards Type of auditors report issued on compliance for major programs: Unmodified Internal control over major programs: Material weaknesses identified? yes x no Significant deficiencies identified that are not considered to be material weaknesses? x yes no Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance? x yes no - 9 -

13 Schedule of Findings and Questioned Costs - Continued Year Ended June 30, 2016 Identification of Major Programs Name of Federal Program or Cluster CFDA Number Student Financial Assistance Cluster Federal Supplemental Educational Opportunity Grant Program Federal Work-Study Program Federal Pell Grant Program Federal Direct Student Loans (Note 4) Scholarships for Disadvantaged Students Dollar threshold used to distinguish between type A and type B programs: $1,015,170 Auditee qualified as a low-risk auditee? x yes no

14 Schedule of Findings and Questioned Costs - Continued Year Ended June 30, 2016 Section II Financial Statement Findings: None

15 Schedule of Findings and Questioned Costs - Continued Year Ended June 30, 2016 Section III Federal Award Findings and Questioned Costs: Finding number: Federal agency: U.S. Department of Education Programs: Federal Pell Grant Program and Federal Direct Student Loans CFDA # s: and Award year: 2016 Criteria 34 C.F.R. Section (b)(2): A school shall, unless it expects to submit its next student status confirmation report to the Secretary within the next sixty days, notify the Secretary within thirty days if it discovers that a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan has been made to or on behalf of a student who: i. Enrolled at that school but has ceased to be enrolled on at least a half-time basis; ii. Has been accepted for enrollment at that school but failed to enroll on at least a halftime basis for the period for which the loan was intended; or iii. Has changed his or her permanent address. The Dear Colleague Letter GEN-12-6 (the Letter ) issued by ED on March 30, 2012 states that in addition to student loan borrowers, Enrollment Reporting files will include two additional groups of students: Pell Grant and Perkins Loan recipients. Condition In a sample of forty students who either graduated, withdrew from the institution, or became enrolled on at least a half-time basis, we noted the following: Six students were never reported to NSLDS. Three students' status changes were reported incorrectly to NSLDS, of which two students had the incorrect effective date reported. Two students were not reported to NSLDS within the required time frame and reported the incorrect effective date. The time frame taken to report the status change ranged from 78 to 121 days

16 Schedule of Findings and Questioned Costs - Continued Year Ended June 30, 2016 Finding number: Continued Federal agency: U.S. Department of Education Programs: Federal Pell Grant Program and Federal Direct Student Loans CFDA # s: and Award year: 2016 Cause The College uses a third party, the National Student Clearinghouse (the NSC ) to facilitate the reporting of changes in enrollment data to the NSLDS. As with any third party arrangements for the administration of Title IV programs, the College remains responsible for submitting timely, accurate and complete information within federal guidelines. Effect Student enrollment status changes were not reported accurately and within the required time frame, which may result in the students entering repayment status later than the required time frame. Questioned Costs Not applicable Perspective Our sample was not, and was not intended to be, statistically valid. Of 45 students selected for testing, 11 students or 24% of our sample was determined to have either an incorrect status reported to NSLDS, no status change reported to NSLDS, or a status change not reported timely to NSLDS. Identification as a Repeat Finding, if applicable See finding included in the summary schedule of prior year findings. Recommendation We recommend that management strengthen their oversight of the NSLDS reporting to ensure that timely and accurate reporting of enrollment information is made to the NSLDS in order for them to be in compliance with the requirements. We also recommend that management establish and enforce specific administrative procedures, according to which those students who unofficially withdrew from the College will be identified and subsequently reported to the NSLDS within prescribed time frames. We recommend that the College discuss the reason(s) for the delay in reporting from the NSC to NSLDS with the NSC audit resource team. Submitting additional roster files would also reduce the likelihood of this finding occurring in the future

17 Schedule of Findings and Questioned Costs - Continued Year Ended June 30, 2016 Finding number: Continued Federal agency: U.S. Department of Education Programs: Federal Pell Grant Program and Federal Direct Student Loans CFDA # s: and Award year: 2016 Views of Responsible Officials Management concurs with audit finding and has implemented the following corrective action plan: 1. Bunker Hill Community College will report enrollment status updates on a bi-weekly basis. This reporting increase will be conducted in order to prevent late enrollment status submissions. 2. The Registrar s office has its own Business Analyst, who will assist the Registrar and Associate Registrar with generating and submitting files along with trouble shooting and updating file errors. 3. The Financial Aid office will conduct a semester review of random students on NSLDS to verify accurate student status reporting has reached NSLDS in a timely manner. 4. The Financial Aid office will place all students receiving federal financial aid on transfer monitoring to ensure enrollment updates from the National Clearinghouse has reached NSLDS

18 Schedule of Findings and Questioned Costs - Continued Year Ended June 30, 2016 Finding number: Federal agency: U.S. Department of Education Program: Federal Direct Student Loans CFDA #: Award year: 2016 Criteria The Higher Education Act of 1965, as amended Section 471 states that except as otherwise provided therein, the amount of need of any student for financial assistance under this title (except subparts 1 or 2 or part A) is equal to - (1) the cost of attendance of such student, minus (2) the expected family contribution for such student, minus (3) estimated financial assistance not received under this title (as defined in section 480(j)). Condition The Financial Aid Office is responsible for awarding student federal, state and institutional financial aid. The Federal Government requires the College to compare the students Cost of Attendance ( COA ) with the students Estimated Family Contribution ( EFC ) and Estimated Financial Assistance ( EFA ). EFA must include all grants and scholarships the College anticipates the student will receive regardless of the source. The total aid awarded to a student cannot exceed the students COA. Federal, state and institutional aid is awarded by the Financial Aid Office. Testing revealed that 1 student was over-awarded Title IV aid. Cause A student was awarded $4,500 of Direct Subsidized Loans when the COA less the EFC was $4,400. Effect Of the 40 students selected for testing, one student was over-awarded a Direct Subsidized loan. Questioned Costs $

19 Schedule of Findings and Questioned Costs - Continued Year Ended June 30, 2016 Finding number: Continued Federal agency: U.S. Department of Education Program: Federal Direct Student Loans CFDA #: Award year: 2016 Perspective Our sample was not, and was not intended to be, statistically valid. Of 40 students selected for testing, one student was awarded financial aid in excess of the students cost of attendance (2.5% of the total sample). Identification as a Repeat Finding, if applicable Not applicable Recommendation The College should strengthen the review process to ensure that financial aid is not awarded in excess of the students cost of attendance. Views of Responsible Officials Management concurs with audit finding and effective immediately, the Financial Aid office will review over-award reports on a weekly basis vs. monthly in order to adjust any overawards due to budget changes

20 Management s Summary Schedule of Prior Audit Findings Year Ended June 30, 2016 Finding number: Federal agency: U.S. Department of Education Programs: Student Financial Assistance Cluster CFDA # s: Multiple Award year: 2015 Condition Federal regulations state that any unearned Title IV grant or loan assistance received by a student must be refunded to the Title IV programs within 45 days of a student s withdrawal from the institution. The academic institution is responsible for the calculation of the earned and unearned portion of Title IV assistance using a standard Return of Title IV Funds form ( R2T4 ). Award Year 2015: Out of a sample of twenty-three students who were determined to have withdrawn from the College, one student s funds were returned fifty-two days past the determination date of that student s withdrawal. Current Year Status All required Return of Title IV calculations performed in 2016 were completed in the required 45 days or less. The implementation of a daily auto-generated file transmitting to COD ensured that all funds were returned on the same day the adjustment was made to the student account

21 Management s Summary Schedule of Prior Audit Findings - Continued Year Ended June 30, 2016 Finding numbers: and Federal agency: U.S. Department of Education Programs: Federal Pell Grant Program and Federal Direct Student Loans CFDA # s: and Award years: 2015 and 2014 Condition The Federal Government requires the College to report student enrollment changes to the National Student Loan Data System ( NSLDS ) within sixty days. Award Year 2015: Out of a sample of forty students with enrollment status changes, two of the students status change dates were not reported within the appropriate time frame to the NSLDS. Eight students status changes were reported incorrectly or not at all to the NSLDS and three students whose status as graduated were not reported to the NSLDS. Award Year 2014: Out of a sample of twenty-five students with enrollment status changes, two of the students status change dates were not reported within the appropriate time frame to the NSLDS. Current Year Status The College continues to improve the enrollment reporting process. In addition to corrective action plans put into place this year, the Academic Records office created a new policy and procedure in May of 2016 for enrollment and graduation reporting. The Registrar, Associate Registrar and the Business Analyst are now meeting periodically to review 1) how enrollment records are updated 2) how enrollment data is audited and errors are identified, resolved and prevented 3) the schedule for the submissions 4) the procedure for the submissions and 5) any other pertinent related information. At least one other person in the Academic Records office is now trained to create and submit the enrollment and graduation files

22 Management s Corrective Action Plan Finding number: Federal agency: U.S. Department of Education Program: Federal Pell Grant Program and Federal Direct Student Loans CFDA #: and Award year: 2016 Corrective Action Plan Management has implemented the following corrective action plan: 1. Bunker Hill Community College will report enrollment status updates on a bi-weekly basis. This reporting increase will be conducted in order to prevent late enrollment status submissions. 2. The Registrar s office has its own Business Analyst, who will assist the Registrar and Associate Registrar with generating and submitting files along with trouble shooting and updating file errors. 3. The Financial Aid office will conduct a semester review of random students on NSLDS to verify accurate student status reporting has reached NSLDS in a timely manner. 4. The Financial Aid office will place all students receiving federal financial aid on transfer monitoring to ensure enrollment updates from the National Clearinghouse has reached NSLDS. Timeline for Implementation of Corrective Action Plan Ongoing, beginning fall 2016 Contact Person Melissa Holster, Executive Director of Student Financial Services Marika Hamilton, Executive Director, Academic Services and Registrar

23 Management s Corrective Action Plan - Continued Finding number: Federal agency: U.S. Department of Education Programs: Federal Direct Student Loans CFDA # s: Award year: 2016 Corrective Action Plan The Financial Aid office will review over-award reports on a weekly basis vs. monthly in order to adjust any over-awards due to budget changes. Timeline for Implementation of Corrective Action Plan Effective immediately Contact Person Melissa Holster, Executive Director of Student Financial Services

24 FINANCIAL STATEMENTS AND MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2016

25 Financial Statements and Management s Discussion and Analysis C O N T E N T S Independent Auditors Report 1-2 Management s Discussion and Analysis (Unaudited) 3-28 Financial Statements: Statements of Net Position 29 Statements of Revenues, Expenses and Changes in Net Position 30 Statements of Cash Flows 31 Notes to the Financial Statements Required Supplementary Information: Schedules of Proportionate Share of the Net Pension Liability (Unaudited) 64 Schedules of Contributions (Unaudited) 65 Notes to the Required Supplementary Information (Unaudited) 66 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 67-68

26 INDEPENDENT AUDITORS REPORT To the Board of Trustees of Bunker Hill Community College Boston, Massachusetts Report on the Financial Statements We have audited the accompanying financial statements of Bunker Hill Community College (an agency of the Commonwealth of Massachusetts) (the " College"), which comprise the statements of net position as of and for the years ended and the related statements of revenues, expenses and changes in net position and cash flows for the years then ended, and the related notes to the financial statements, which collectively comprise the College's basic financial statements as listed in the table of contents. We also audited the financial statements of Bunker Hill Community College Foundation, Inc. (the Foundation ) as of June 30, 2016 and 2015, and the related statements of revenues, expenses, and changes in net position and cash flows for the years then ended. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 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 that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 25 Braintree Hill Office Park Suite 102 Braintree, MA P: F: Church Street Winchester, MA P: F:

27 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bunker Hill Community College as of, and the changes in net position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Required Supplementary Information Accounting principles generally accepted in the United States of America require that management's discussion and analysis on pages 3-28, the schedules of proportionate share of the net pension liability on page 64, the schedules of contributions of page 65 and the notes to the required supplementary information on page 66 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental 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 and assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 21, 2016, on our consideration of Bunker Hill Community College'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 Bunker Hill Community College's internal control over financial reporting and compliance. Certified Public Accountants Braintree, Massachusetts November 21, 2016

28 Management s Discussion and Analysis (Unaudited) The following discussion and analysis provides management s view of the financial position of Bunker Hill Community College (the College ) as of, and the changes in net position for the years then ended. This analysis should be read in conjunction with the College s financial statements and notes thereto, which are also presented in this document. The College is a public institution of higher education that served over 14,000 students in spring 2016 semester, with 156 full time faculty, 612 adjunct faculty, and 325 staff members for the year ended June 30, Campuses are located in Boston and Chelsea, Massachusetts. In addition, the College offers programs at four off campus locations throughout the greater Boston area. The College offers 69 programs leading to associate degrees including two concentrations that prepare students to enter technical programs and 51 certificate programs. Financial Highlights At June 30, 2016, the College s assets and deferred outflows were $73,211,991 and its liabilities and deferred inflows were $38,485,165 resulting in net position of $34,726,826. This represents an increase in net position of $2,488,262 for fiscal year By contrast, at June 30, 2015, the College s assets and deferred outflows were $70,431,810 and its liabilities and deferred inflows were $38,193,246 resulting in net position of $32,238,564. This represents an increase in net position of $3,199,769 for fiscal year June Invested in capital assets, net of related liabilities $ 27,277,967 $ 25,390,311 $ 23,956,616 Unrestricted 7,448,859 6,848,253 5,082,179 Total net position $ 34,726,826 $ 32,238,564 $ 29,038,795 The College will use the unrestricted net assets for its plant fund, capital development plan, technology upgrades, instructional equipment needs and provide planned academic and support services to students. The increase in the College s net position of $2,488,262 in fiscal year 2016 and $3,199,769, in fiscal year 2015 was due primarily to an increase in the direct unrestricted State appropriation that was driven by the performance based budget formula

29 Management s Discussion and Analysis - Continued (Unaudited) Overview of the Financial Statements The College s financial statements comprise two primary components: 1) the financial statements and 2) the notes to the financial statements. Additionally, the financial statements focus on the College as a whole, rather than upon individual funds or activities. Bunker Hill Community College Foundation (the Foundation ) is a legally separate tax exempt component unit of Bunker Hill Community College. The Foundation acts primarily as a fundraising organization to supplement the resources that are available to the College in support of its programs. The Board of the Foundation is self-perpetuating and consists of business and civic leaders in the greater Boston area. Although the College does not control the timing or the amount of receipts from the Foundation, the resources received or held by the Foundation are restricted to the activities of the College by the donors. Because these resources held by the Foundation can only be used by or are for the benefit of the College, the Foundation is considered a component unit of the College and is discretely presented in the College s financial statements. Management s Discussion and Analysis is required to focus on the College, not its component unit. The Financial Statements The financial statements are designed to provide readers with a broad overview of the College s finances and comprise three basic statements: The Statements of Net Position present information on all of the College s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the College is improving or deteriorating. The Statements of Revenues, Expenses, and Changes in Net Position present information showing how the College s net position changed during the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., the payment for accrued compensated absences or the receipt of amounts due from students and others for services rendered)

30 Management s Discussion and Analysis - Continued (Unaudited) Overview of the Financial Statements - Continued The Statements of Cash Flows are reported on the direct method. The direct method of cash flows reporting portrays net cash flows from operations as major classes of operating receipts (e.g., tuition and other student fees) and disbursements (e.g., payments to employees). GASB Statement No. 34 and No. 35 require this method to be used. In accordance with GASB Statement No. 39, the Foundation is not required to present the statement of cash flows. The financial statements can be found on pages of this report. The College reports its activity as a business type activity using the economic resources measurement focus and full accrual basis of accounting. The College is an agency of the Commonwealth of Massachusetts (the Commonwealth). Therefore, the results of the College s operations, its net assets and its cash flows are also summarized in the Commonwealth s Annual Financial Report in its government wide financial statements. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the financial statements. The notes provide information regarding both the accounting policies and procedures the College has adopted as well as additional detail of certain amounts contained in the financial statements. The notes to the financial statements can be found on pages of this report. Financial Analysis As noted earlier, net position may serve over time as a useful indicator of the College s financial position. At the close of fiscal year 2016, assets exceeded liabilities by $34,726,826 compared to $32,238,564 in fiscal year

31 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued The College s FY 2016 net position of $34,726,826 includes investment in capital assets of $27,277,967 (e.g., land, buildings and improvements, and equipment), less any related liabilities such as capital leases used to acquire those assets. The College uses these capital assets to provide services to students, faculty, and administration; consequently, these assets are not available for future spending. Although the College s investment in its capital assets is reported net of related liabilities, it should be noted that the resources needed to repay these liabilities must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Also, in addition to the liabilities noted above, which are reflected in the College s financial statements, the Commonwealth regularly provides financing for certain capital projects through the issuance of general obligation bonds. These borrowings by the Commonwealth are not reflected in these financial statements. Summary of the College s Net Position Between 2016 and 2015 June 30 Dollar Percentage Change Change Current assets $ 24,349,913 $ 28,510,612 $ (4,160,699) -15% Noncurrent assets 44,179,954 39,485,145 4,694,809 12% Deferred outflows 4,682,124 2,436,053 2,246,071 92% Total assets and deferred outflows 73,211,991 70,431,810 2,780,181 4% Current liabilities 13,325,276 15,969,432 (2,644,156) -17% Noncurrent liabilities 23,950,384 20,636,000 3,314,384 16% Deferred inflows 1,209,505 1,587,814 (378,309) -24% Total liabilities and 38,485,165 38,193, ,919 1% deferred inflows Net position: Invested in capital assets, net of related debt 27,277,967 25,390,311 1,887,656 7% Unrestricted 7,448,859 6,848, ,606 9% Total net position $ 34,726,826 $ 32,238,564 $ 2,488,262 8% - 6 -

32 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Summary of the College s Net Assets June 30 Between 2015 and Dollar Percentage 2015 (Restated) Change Change Current assets $ 28,510,612 $ 23,980,011 $ 4,530,601 19% Noncurrent assets 39,485,145 37,680,100 1,805,045 5% Deferred outflows 2,436,053 1,913, ,140 27% Total assets and deferred outflows 70,431,810 63,574,024 6,857,786 11% Current liabilities 15,969,432 12,803,629 3,165,803 25% Noncurrent liabilities 20,636,000 21,731,600 (1,095,600) -5% Deferred inflows 1,587,814-1,587, % Total liabilities and 38,193,246 34,535,229 3,658,017 11% deferred inflows Net position: Invested in capital assets, net of related debt 25,390,311 23,956,616 1,433,695 6% Unrestricted 6,848,253 5,082,179 1,766,074 35% Total net position $ 32,238,564 $ 29,038,795 $ 3,199,769 11% As stated earlier, the increase in the College s net position of $2,488,262 in fiscal year 2016 and $3,199,769 in fiscal year 2015 was due primarily to an increase in the direct unrestricted State appropriation that was driven by the performance based budget formula

33 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Summary of Changes in Net Position Between 2016 and 2015 Years Ended June 30 Dollar Percentage Change Change Operating: Tuition and fees, net of scholarship allowances $ 27,741,884 $ 25,718,887 $ 2,022,997 8% Grants and contracts 33,234,443 36,068,844 (2,834,401) (8) Other operating revenues 2,363,992 2,652,068 (288,076) (11) Total operating revenues 63,340,319 64,439,799 (1,099,480) (2) Total operating expenses 95,353,544 92,252,715 3,100,829 3 Operating loss (32,013,225) (27,812,916) (4,200,309) 15 Nonoperating: Total state support 34,945,847 30,784,194 4,161, Net other nonoperating (444,360) 228,491 (672,852) (294) Total nonoperating 34,501,487 31,012,685 3,488, Total change in net position 2,488,262 3,199,769 (711,507) (22) Net position, beginning of year 32,238,564 29,038,795 3,199, Net position, end of year $ 34,726,826 $ 32,238,564 $ 2,488,262 8% - 8 -

34 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Summary of Changes in Net Position Year Ended June 30 Between 2015 and Dollar Percentage 2015 (Restated) Change Change Operating: Tuition and fees, net of scholarship allowances $ 25,718,887 $ 26,145,752 $ (426,865) (2)% Grants and contracts 36,068,844 36,131,398 (62,554) Other operating revenues 2,652,068 2,075, , Total operating revenues 64,439,799 64,352,535 87,264 Total operating expenses 92,252,715 92,419,630 (166,915) Operating loss (27,812,916) (28,067,095) 254,179 (1) Nonoperating: Total state support 30,784,194 27,490,023 3,294, Net other nonoperating 228,491 1,762,080 (1,533,588) (87) Total nonoperating 31,012,685 29,252,103 1,760,583 6 Total change in net position 3,199,769 1,185,008 2,014, Net position, beginning of year 29,038,795 27,853,787 1,185,008 4 Net position, end of year $ 32,238,564 $ 29,038,795 $ 3,199,769 11% - 9 -

35 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Auxiliary enterprises 1% Operation Revenues by Source Tuition and fees, less scholarships and allowances 44% Grants and contracts 52% Other sources 3% Tuition and fees, less scholarships and allowances increased by 8% in fiscal year 2016 compared to a decrease of 2% in fiscal year Tuition and fees, less scholarship allowances were 44% of total operating revenue in fiscal year 2016 compared to 40% in fiscal year Federal, State, Local and Private Grants and contracts revenue decreased by 2% compared to fiscal year 2015 and was 52% of total operating revenue in fiscal year

36 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued 120,000 93, , ,403 Student Credits 115, , , ,000 Number of Student credits 80,000 60,000 40,000 20,000 - FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Fiscal Years Fall Spring Summer The growth in overall student enrollment solidifies the College s position as the largest of the fifteen Community Colleges in the Commonwealth of Massachusetts

37 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued International Students 1, Number of Students and Countries Semesters Series1 Series2 The College experienced an increase in international students enrollment by 100 students in spring 2016 compared to spring This is the highest enrollment of international students in the history of the College at 952 students in spring

38 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued 40 State Support Over the Past Seven Years 35 $ (Millions) Fiscal Years State appropriation - GAA and supplemental State support - GAA, supplemental and capital Total state support - GAA, supplemental, capital and fringe Total state support and Formula - GAA, supplemental, capital,fringe and ARRA The seven-year trend analysis shows that for the year ended June 30, 2016, there has been an increase in general and supplemental state appropriation. The analysis also shows that there has been an increase in performance based funding

39 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Fall Credit Head Count 15,000 14,000 14,023 14,253 14,047 13,000 13,522 12,934 Credit head count 12,000 11,000 10,000 11,009 12,364 9,000 8,000 7, Fiscal Years The College s head count has increased consistently over the years to over 14,253 students in spring 2015 semester and declined marginally by 106 students in Spring 2016 to 14,047 students

40 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Grants and Contracts $ (Thousands) 30,000 25,000 20,000 15,000 10,000 5,000 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY Fed Pell grant Mass Cash grant Others - Fed Others - State Local & private Grants and Contracts $ (Thousands) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Local & private Others - State Others - Fed Mass Cash grant - FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY

41 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Major grants and contracts received by the College for 2016 included the following: PELL grant from US Department of Education in the amount of $24,767,177 for student financial aid. This is a decrease of $2,133,719 (8%) from 2015 and a decrease of $2,211,870 (8%) from SEOG grant from US Department of Education in the amount of $472,858 for student financial aid. This is a decrease of $7,948 from 2015 and a decrease of $91,737 from Nursing grant from US Department of Health and Human Services in the amount of $300,000 for student financial aid. This is an increase of $31,260 from 2015 and $65,525 from MASS CASH grant from Massachusetts Board of Higher Education in the amount of $1,618,331 for student financial aid. This is an increase of $37,361 from 2015 and an increase of $190,269 from MASS grant from Massachusetts Board of Higher Education in the amount of $1,018,812 for student financial aid. This is a decrease of $13,965 from 2015 and a decrease of $30,737 from TRIO grant from U.S. Department of Education of $508,355. This is a decrease of $49,621 from 2015 and a decrease of $21,666 from Grants and contracts from other sources in the amount of $5,895,609 for specific purposes. This is an increase of $648,930 and $345,976 from 2015 and 2014, respectively: State Appropriated grants received for MCAS of $157,200. Department of Higher Education grants received for Adult Basic Education of $639,589, Perkins Vocational grant of $449,511 and TITLE III grant of $374,177. Local grants received from the Center for Allied Health of $36,754. United States Department of Labor grants received: through Quinsigamond Community College of $17,934; through Collin College, Texas of $164,616; through Passaic Community College of $527,

42 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Auxiliary enterprises (Workforce development contracts) revenue decreased by 13% or $73,222 in fiscal year Tuition and fees received by the College included the following: Between 2016 and 2015 Years Ended June 30, Dollar Percentage Change Change Tuition $ 12,492,913 $ 12,374,889 $ 118,024 1% Student fees 33,924,949 32,179,969 1,744,980 5 Waivers (1,603,955) (1,068,833) (535,122) 50 Tuition and fees, net $ 44,813,907 $ 43,486,025 $ 1,327,882 3% Between 2015 and 2014 Years Ended June 30, Dollar Percentage Change Change Tuition $ 12,374,889 $ 11,978,411 $ 396,478 3% Student fees 32,179,969 31,343, ,776 3 Waivers (1,068,833) (537,320) (531,513) 99 Tuition and fees, net $ 43,486,025 $ 42,784,284 $ 701,741 2%

43 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Comparison of Expenses by Function Between 2016 and 2015 Years Ended June 30, Dollar Percentage Change Change Instruction $ 37,331,673 $ 35,535,156 $ 1,796,517 5% Academic support 11,956,651 11,420, ,927 5 Student services 11,951,175 11,306, ,507 6 Scholarships and fellowships 12,511,212 14,014,278 (1,503,066) (11) Operation and maintenance of plant 7,883,555 7,364, ,400 7 Institutional support and other 11,297,093 10,678, ,329 6 Depreciation and amortization 2,422,185 1,932, , $ 95,353,544 $ 92,252,715 $ 3,100,829 3% Between 2015 and 2014 Years Ended June 30, Dollar Percentage Change Change Instruction $ 35,535,156 $ 35,506,159 $ 28,997 % Academic support 11,420,724 10,517, ,050 9 Student services 11,306,668 11,347,953 (41,285) Scholarships and fellowships 14,014,278 15,058,596 (1,044,318) (7) Operation and maintenance of plant 7,364,155 7,122, ,356 3 Institutional support and other 10,678,764 10,693,460 (14,696) Depreciation and amortization 1,932,970 1,561, , $ 92,252,715 $ 91,807,723 $ 444,992 %

44 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued Institutional support 12% Operational Expenses by Source Depreciation 3% Scholarships and fellowships 13% Instruction 39% Operation & maintenance of plant 9% Student services 12% Academic support 11% Highlights of operating expense activity: Of the total operating expenses in fiscal year 2016 of $95,353,544, 77% relates to instruction, academic support, student services, and scholarship and fellowships. Of the total operating expenses in fiscal year 2015 of $92,252,715, 78% relates to instruction, academic support, student services, and scholarship and fellowships

45 Management s Discussion and Analysis - Continued (Unaudited) Financial Analysis - Continued The expenditure on instruction in fiscal year 2016 increased mainly due to the employment of additional faculty and adjunct faculty in response to the increase in student enrollment and academic programs. The expenditure on scholarships and fellowships decreased by 11% or $1,503,066 in fiscal year 2016 due to an overall decrease in grant aid other than those applied to tuition and fees. In fiscal year 2015, the decrease was 7% or $1,044,318. Employee Profile 1,200 1, Numbers FT faculty Adj. faculty Admin Professional Classified Total staffing Employee Type FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY