LINCOLN LAND COMMUNITY COLLEGE COMMUNITY COLLEGE DISTRICT #526 SPRINGFIELD, ILLINOIS COMPREHENSIVE ANNUAL FINANCIAL REPORT

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1 SPRINGFIELD, ILLINOIS COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Years Ended June 30, 2013 and 2012 Prepared by: Administrative Services Office Richard W. Vertrees Vice President Administrative Services

2 SPRINGFIELD, ILLINOIS TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal... Principal Officials... Chart of Organization... ASBO Certificate of Excellence in Financial Reporting... i-vii viii ix x FINANCIAL SECTION INDEPENDENT AUDITOR S REPORT MANAGEMENT S DISCUSSION AND ANALYSIS... MD&A 1-6 BASIC FINANCIAL STATEMENTS Statements of Net Position Statements of Revenues, Expenses and Changes in Net Position... 6 Statements of Cash Flows Discretely Presented Component Unit Lincoln Land Community College Foundation Statements of Financial Position... 9 Statements of Activities Notes to Financial Statements INDEPENDENT AUDITOR S REPORT ON SUPPLEMENTARY INFORMATION SUPPLEMENTARY INFORMATION Combining Schedules of Net Position Accounts, by Subfund Combining Schedules of Revenues, Expenses and Changes in Net Position, by Subfund Notes to Supplementary Information STATISTICAL SECTION Financial Trends Net Position by Component Changes in Net Position Revenue Capacity Assessed Value and Estimated Actual Value of Taxable Property Property Tax Rates Direct and Overlapping Governments Principal Taxpayers

3 SPRINGFIELD, ILLINOIS TABLE OF CONTENTS Continued Page STATISTICAL SECTION Continued Revenue Capacity Continued Property Tax Rates, Extensions, and Collections Debt Capacity Ratio of Outstanding Debt by Type Ratio of Net General Bonded Debt Outstanding Legal Debt Margin Computation of Direct and overlapping Bonded Debt, General obligation Bonds Demographic and Economic Information Demographic and Economic Statistics Major Employers Operating Information Operating Information and Employees Operating Statistics Capital Asset Statistics Student Enrollment Demographic Statistics SPECIAL REPORTS SECTION SUPPLEMENTAL FINANCIAL INFORMATION Certification of Chargeback Reimbursement UNIFORM FINANCIAL STATEMENTS Uniform Financial Statement No. 1 All Funds Summary Uniform Financial Statement No. 2 Summary of Capital Assets and Fixed Debt Uniform Financial Statement No. 3 Operating Revenues and Expenditures Uniform Financial Statement No. 4 Restricted Purposes Fund Revenues and Expenditures Uniform Financial Statement No. 5 Current Fund - Expenditures by Activity

4 SPRINGFIELD, ILLINOIS TABLE OF CONTENTS Continued SPECIAL REPORTS SECTION Continued Page ILLINOIS COMMUNITY COLLEGE BOARD STATE GRANTS FINANCIAL COMPLIANCE SECTION Independent Auditor s Report State Adult Education and Family Literacy Program Balance Sheet Statement of Revenues, Expenditures and Changes in Fund Balance Expenditure Amounts and Percentages for ICCB Grant Funds Only Career and Technical Education Program Improvement Grant Program Balance Sheet Statement of Revenues, Expenditures and Changes in Fund Balance Notes to Financial Statements State Grant Programs Independent Accountant s Report on the Schedule of Enrollment Data and Other Bases Upon Which Claims are Filed Schedule of Enrollment Data and Other Bases Upon Which Claims are Filed Reconciliation of Total Semester Credit Hours Documentation of Residence Verification Steps (Unaudited) Summary of Assessed Valuation (Unaudited)

5 INTRODUCTORY SECTION

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7 It was through the following institutional goals for fiscal year 2013 that the District carried out its mission: Goal I Student Access and Success The District is committed to promoting academic access and success as well as personal development for all students. Goal II Financial Strength The District is committed to fiscal responsibility and stewardship. Goal II Diversity and Cultural Competency The District is committed to strengthening cultural competency relative to a diverse and global society among faculty, staff and students. Goal III Economic Responsiveness The District is committed to providing leadership in meeting the economic needs of the community. Goal IV Community Engagement The District is committed to providing leadership in meeting the learning, cultural, social and recreational needs of the community. Goal V Diversity and Cultural Competency The District is committed to strengthening cultural competency relative to a diverse and global society among faculty, staff and students. Goal VI Operational Strength The District is committed to developing a work environment that promotes growth, development and open communication. The District is committed to ensuring educational excellence, recognizing diversity and multiculturalism, providing excellent facilities, using financial resources prudently and building partnerships to extend services to the District. Lincoln Land Community College serves approximately 13,800 students per year with an average age of 27. The students are comprised of 85.08% White Non-Hispanic, 10.23% African- American, 2.72% Hispanic, and the remaining 1.97% Asian and other. These statistics are based on end-of-year credit enrollment data. The District maintains its accounts and prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The accounting policies also conform to the Fiscal Management Manual published by the Illinois Community College Board. The ICCB requires accounting by funds in order that limitations and restrictions on resources can be easily monitored. The financial records of the District are maintained on the accrual basis of accounting, whereby all revenues are recorded when earned, and all expenses are recorded when they have been reduced to a legal obligation to pay. ii

8 ECONOMIC CONDITION AND OUTLOOK The District serves an area of approximately 4,115 square miles, which includes all or parts of the following counties Bond, Cass, Christian, DeWitt, Fayette, Greene, Logan, Macon, Macoupin, Mason, Menard, Montgomery, Morgan, Sangamon and Scott. The District draws students from communities large and small, from farms and urban areas, and from a broad range of ages, occupations, interests and needs. The District s tax base within Sangamon County is estimated to be: 69.32% residential, 5.49% farm,.30% industrial,.07% mineral, and 24.82% commercial. The total tax base amounts to $5,702,604,674 and has increased by 1.67% since last year. Student enrollment projections are being projected at a 1% decrease from last year. MAJOR INITIATIVES FOR THE YEAR: LLCC continues work toward reaccreditation in May 2014 AQIP (Academic Quality Improvement Program) is the method chosen by LLCC to maintain accreditation with the Higher Learning Commission. The AQIP steering team is headed by Drs. Chris McDonald and Tricia Kujawa. AQIP involves a summative review of work that includes a systems portfolio, completed action projects systems appraisal feedback reports, interactions with AQIP and the Higher Learning Commission, quality checkup reports and compliance with accreditation criteria. The AQIP Steering Team, in conjunction with faculty and staff, completed and submitted the systems portfolio, a summative review of the college s work over the last four years. Following a site visit in November 2013, a full reaffirmation is expected in spring AQIP action projects are improvement initiatives targeting specific areas or processes. Work was completed on the new student experience action project, with a renewed focus on student success and completion. LLCC instituted several new initiatives including a mandatory orientation for new degree- or certificate-seeking students, in addition to a pilot early alert program. Beginning in October 2012, a total of 2,026 students completed orientation for spring, summer and fall classes at the main campus and educational service area locations. An online version was designed for late registrants, as well as a parent and family orientation. A pilot early alert system tracked students at two weeks for attendance, and six to eight weeks for performance in several general education courses. Struggling students were then connected with support services to help them succeed. Also, a new resource and referral program tracked and assisted students with historically lower success rates. The Continuous Quality Improvement (CQI) action project continued. CQI s purpose is to introduce teamwork and improvement processes to make the college s decision-making process more efficient, inclusive and informed by data. Quality trainers, drawn from LLCC s faculty and staff, conducted two iterations of the CQI curriculum. CQI training for faculty and staff began this fall with the aim of providing everyone with the opportunity to participate. iii

9 Other action projects completed include strategic plan transformation and establishing and assessing shared governance. Surgical Technology program receives accreditation During the academic year, the college s new surgical technology program received a five-year accreditation from the Commission on Accreditation of Allied Health Education Programs (CAAHEP). LLCC s first surgical technology class graduated in December 2012, with all graduates currently employed in local hospitals. The second class will graduate in December New degrees and certificates awarded up significantly from previous year The total number of certificates and degrees awarded in was 2,528, up 19.4 percent from the previous year. With a new emphasis on increasing degree and certificate completions, Student Services worked closely with academic departments to identify students who were at or close to earning a degree or certificate in targeted programs, and auto-awarded those credentials when criteria had been met. FOR THE FUTURE: LLCC receives share of grant for Earn and Learn Advanced Manufacturing Career Lattice Program LLCC was one of 21 Illinois community colleges to share in a $12.9-million grant from the U.S. Labor Department and U.S. Department of Education for the Earn and Learn Advanced Manufacturing Career Lattice Program. LLCC receives $525,769 for the three-year program that targets Trade Adjustment Act workers, veterans and others seeking training to secure or maintain employment. The grants are part of the $2-billion federal Trade Adjustment Assistance Community College and Career Training (TAACCCT) initiative. Grant funds are being used to acquire new training equipment including robotics and a welding simulator, as well as to hire personnel to manage the project and facilitate partnerships with local manufacturers. Classes will begin in the academic year. LLCC will also receive $800,000 over three years in an Illinois Green Energy Network/Trade Adjustment Act grant focusing on sustainable, stackable certificate and degree programs. AQIP action projects underway AQIP institutions must always have at least three action projects underway with at least one project dealing directly with student learning. Action projects underway include: 1) the electronic portfolio project to enhance the assessment and documentation of student learning outcomes at the program level, 2) process mapping: systematic documenting of key processes to design and recommend a process mapping model that may be applied to processes throughout the college, and 3) using multiple measures for placement into mathematics courses to examine the college s process for initial academic placement into mathematics courses. LLCC Foundation launches $2.5-million endowment fund campaign The LLCC Foundation launched a $2.5-million endowment fund campaign called Grow Beyond in September. The annual earnings from the Foundation endowment fund provide vital iv

10 financial resources for scholarships and direct student support, instructional excellence and achievement and programs and supporting activities. The campaign is expected to run three years. FINANCIAL INFORMATION Internal Controls. Management of the District is responsible for establishing and maintaining internal controls designed to ensure that the assets of the District are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America. The internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management. Tests are made by the District s independent auditors to determine the adequacy of the internal controls, including that portion related to federal financial assistance programs, as well as to determine that the District has complied with applicable laws and regulations. No findings were presented in the Comprehensive Annual Financial Report. Budgetary Controls. In addition, the District maintains budgetary controls. The objective of the budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the District s Board of Trustees. Activities of the funds are included in the annual appropriated budget. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established within each individual fund. The District also maintains an encumbrance accounting system as a technique of accomplishing budgetary control. The actual revenues compared to budget for the General Fund were more than budget by $453,480. The actual expenditures compared to budget for the General Fund were less than budget by $531,644. Debt Administration. During fiscal year 2009 the District sold $35,200,000 in debt certificates which were paid in full February 1, 2009 with the proceeds from $34,970,000 General Obligation Bond Series 2008A issue. The District is responsible for making semi-annual payments of interest which are due June 15 and December 15 and principal payments which are due annually each December 15. The principal payments will vary starting at $550,000 in 2009 and ending with $3,580,000 in The interest rate also varies from 3.00% in 2009 and ends at 5.00% in During fiscal year 2001 the District entered into a lease agreement with the Lincoln Land Community College Foundation. The Foundation sold $3,150,000 of Economic Development Revenue Bonds and the District is responsible for making semi-annual payments to the Foundation, which are due each September 1 and March 1. The payments will vary starting at $138, in 2001 and ending at $141, in 2020 with interest rates varying from 5.90% to 6.34%, the payments include both principal and interest. During fiscal year 2013 the District entered into a 7-year note for Energy Conservation Projects. The District is responsible for quarterly principal payments of $42,857 at a rate of 1.85% interest. v

11 Cash Management. For the purpose of overall investment of excess funds, the District is governed by the Illinois Public College Act, and the statutes governing investment of public funds of the Illinois Revised Statutes (Chapter et. Seq.) The fiduciary responsibility for said investments is entrusted to the District s Board of Trustees, who have delegated that function to the Treasurer of the District. In keeping with existing Board policy, all investments of excess funds are made in a prudent conservative and secure manner and in accordance with the guidelines detailed in the District Investment Policy No 6.8. The investment income for all funds totaled $174,422 in fiscal year The average rate of return was.04% to.75% depending on the depository account for fiscal year As of June 30, 2013, investments were in banks and savings and loans, U.S. Treasury notes or shares of the Illinois Fund or the School District Liquid Asset Fund Plus. RISK MANAGEMENT The District participates in the Illinois Community College Risk Management Consortium (Consortium), which was established in 1981 by several Chicago area community colleges as a means of reducing the cost of general liability insurance. The Consortium is a public entity risk pool currently operating as a common risk management and insurance program for the member colleges. The main purpose of the Consortium is to jointly self-insure certain risks up to an agreed-upon retention limit, and to obtain excess catastrophe coverage and aggregate stop-loss reinsurance over the selected retention limit. In 1992, the Consortium added Worker s Compensation coverage. In fiscal year 2013, the District paid $493,429 to the Consortium for property, liability and worker s compensation protection. Since the Consortium requests initial payments to cover substantially any losses to be incurred for the policy year, the District anticipates no future liabilities for incurred losses. The District has established a two-tier self-insurance health insurance plan administered by a third party. The District maintains adequate reserves to cover potential losses. OTHER INFORMATION Awards/Recognitions. The District has continued to receive the Certificate of Excellence in Financial Reporting from the Association of School Business Officials for each fiscal year beginning with the fiscal year that ended June 30, Independent Audit. The Illinois Public Community College Act requires an annual audit of the books of accounts, financial records and transactions of all funds of the District. The audit is done by independent certified public accountants that are selected by the Board of Trustees. This requirement has been complied with and the auditing firm has issued an unqualified opinion. ICCB Recognition Visit. The Illinois Community College Board conducted a five-year recognition visit in June Their report contained one compliance and several advisory recommendations. Acknowledgments. The preparation of this report in a timely manner would not have been possible without the dedicated service of the entire staff of the business and accounting office. vi

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13 PRINCIPAL OFFICIALS Year Ended June 30, 2013 Board of Trustees Position Term Expires Justin Reichert Chair 2019 Craig Findley Vice Chair 2017 Jerry Wesley Secretary 2017 Kent Gray Trustee 2017 Wayne Rosenthal Trustee 2019 Jeff Fulgenzi Trustee 2017 Dennis Shackelford Trustee 2019 Garrett Belville Student Trustee 2014 Officers of the College Charlotte J. Warren President Richard W. Vertrees Vice President, Administrative Services Eileen Tepatti Vice President, Academic Services Lesley Frederick Vice President, Student Services Judy Joziatis Vice President, Workforce Development Esteban Cruz Chief Information Officer A. Lynn Whalen Executive Director, College Relations/Marketing Official Issuing Report Richard W. Vertrees Mary McGee Karie Longhta Vice President, Administrative Services Associate Vice President, Budget, Financial Planning & Analysis Associate Vice President of Finance Division Issuing Report Administrative Services viii

14 ix FY13 Organizational Chart

15 Association of School Business Officials International The Certificate of Excellence in Financial Reporting Award is presented to Lincoln Land Community College For Its Comprehensive Annual Financial Report (CAFR) For the Fiscal Year Ended June 30, 2012 The CAFR has been reviewed and met or exceeded ASBO International s Certificate of Excellence standards Ron McCulley, CPPB, RSBO President John D. Musso, CAE, RSBA Executive Director x

16 FINANCIAL SECTION

17 INDEPENDENT AUDITOR S REPORT To the Board of Trustees Lincoln Land Community College Community College District #526 Springfield, Illinois Report on the Financial Statements We have audited the accompanying basic financial statements of Lincoln Land Community College, Community College District #526 (the District) as of and for the years ended June 30, 2013 and 2012, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the Table of Contents. 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 basic financial statements based on our audit. We did not audit the financial statements of the Lincoln Land Community College Foundation, the discretely presented component unit. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented component unit, is based solely on the report of the other auditors. 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The financial statements of the Lincoln Land Community College Foundation were not audited in accordance with Government Auditing Standards. 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 1

18 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. Opinion In our opinion, based on our audit and the report of other auditors, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the District, and the District s discretely presented component unit, Lincoln Land Community College Foundation as of June 30, 2013 and 2012, and the changes in financial position and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter The District adopted GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, during the year ended June 30, Statement No. 63 added new classifications on the statements of net position and changed net assets to net position. Statement No. 65 changed the classifications of certain items on the statement of net position to the new classifications contained in the GASB Statement No. 63. The adoption of these statements had no effect on any of the District s net position as of and for the year ended June 30, 2013, except as disclosed in Note 11. Our opinion is not modified with respect to this matter. Retrospective Adjustment As discussed in Note 11 to the financial statements, the District has adjusted its fiscal year 2012 financial statements to retrospectively apply the implementation of GASB Statements No. 63 and 65. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis as listed in the table of contents 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 2

19 generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 9, 2013, on our consideration of the District's internal control over financial reporting and 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District s internal control over financial reporting and compliance. Springfield, Illinois October 9,

20 Management s Discussion and Analysis This section of Lincoln Land Community District s Comprehensive Annual Financial Report presents management s discussion and analysis of the District s financial activity during the fiscal year ended June 30, 2013, 2012 and Since this management s discussion and analysis is designed to focus on current activities, resulting change and currently known facts, please read it in conjunction with the transmittal letter (pages i-vii), the District s basic financial statements (pages 4-11) and the footnotes (pages 12-34). Responsibility for the completeness and fairness of this information rests with the District. Using This Annual Report The financial statement focuses on the District as a whole. The Management, Discussion and Analysis letter is presented in comparison form. The District financial basic statements (see pages 4-34) are designed to emulate corporate presentation models whereby all District activities are consolidated into one total. The focus of the Statements of Net Position is designed to be similar to bottom line results for the District. This statement combines and consolidates current financial resources (short-term spendable resources) with capital assets. The Statements of Revenues, Expenses, and Changes in Net Position focus on both the gross costs and the net costs of District activities, which are supported by property taxes, student tuition and fees and state revenues. This approach is intended to summarize and simplify the user s analysis of cost of various District services to students and the public. Financial Highlights As of June 30, 2013, 2012 and 2011, the District s net positions were $65,969,561, $63,605,890 and $61,948,509 which represent 51.0%, 55.5% and 61.9%, respectively, the net investment in capital assets. Unrestricted resources were 18.8%, 16.4% and 15.3%, of total net position. The restricted resources were 30.2%, 28.1% and 22.8%, in 2013, 2012 and 2011 respectively. The Districts current assets totaled $59,509,868, $58,141,022 and $77,568,993. Cash and cash equivalents represent 47.1%, 39.0% and 27.6% of the total current assets. Total liabilities and deferred inflows of resources are $61,212,420, $61,593,831 and $76,255,782 for 2013, 2012 and 2011 respectively; 43.0%, 43.0% and 52.5% current liabilities and deferred inflows of resources and 57.0%, 57.0% and 47.5% are non-current liabilities. Total operating expenses at June 30, 2013, 2012 and 2011 were $72,209,040, $69,702,532 and $64,976,337. Instructional support represents 30.8%, 32.4% and 32.6% of the total expenses. Academic Support and Student Services represented 23.7%, 24.4% and 24.4% of the total costs. Institutional support represented the next largest cost category at 20.2%, 18.0% and 18.9% of the total operating expenses. Fiscal year 2013, 2012 and 2011 depreciation was $3,187,886, $2,506,335 and $1,978,762; 4.4%, 3.6% and 3.1% of the total costs. Total operating revenues at June 30, 2013, 2012 and 2011 were $15,654,595, $14,543,864 and $14,491,321. Student tuition and fees represent 60.4%, 61.5% and 62.7%; while auxiliary enterprise revenue represents 33.7%, 35.8% and 34.7% of the total operating revenues. MD&A 1

21 Net non operating revenue totaled $58,918,116, $56,918,743 and $53,146,663 respectively. The increase in fiscal year 2013 non-operating revenues relates to the increase SURS on behalf payments. Property taxes represent 46.4%, 46.9% and 49.4%, while state and federal grant and contracts represents 54.9%, 54.0% and 52.3% of the total non-operating revenue. The District has continually monitored their revenue stream and expenses and due to the consolidated effort of the District s administration, the District continues to maintain a healthy financial position. Financial Analysis of the District as a whole: Net Position as of June 30, (in millions) Current and Other Assets $59.5 $58.1 $77.6 Capital Assets $67.7 $67.1 $60.6 Total Assets $127.2 $125.2 $138.2 Current Liabilities $13.0 $13.5 $14.6 Long-Term Liabilities $34.9 $35.1 $36.2 Deferred Inflows of Resources $13.3 $13.0 $25.5 Total Liabilities and Deferred Inflows of Resources $61.2 $61.6 $76.3 Net Position Net Investment in Capital Assets $33.7 $35.3 $38.4 Restricted $19.9 $17.8 $14.0 Unrestricted $12.4 $10.5 $9.5 Total Net Position $66.0 $63.6 $61.9 This schedule is prepared from the District s Statement of Net Position (pages 4-5) which is presented on an accrual basis of accounting; whereby, assets are capitalized and depreciated. There were no major changes between fiscal year 2013 and 2012 between the Districts total assets and total liabilities and deferred inflows of resources. The changes in current assets and capital assets between fiscal year 2012 and 2011 was the result of restricted cash balance being used to pay for construction of new buildings and remodeling which were started and completed between the two fiscal years. MD&A 2

22 The following is a graphic illustration of Net Position: Net Position Investment in Capital Assets Restricted Unrestricted Operating Results for the year Ended June 30, (in millions) Operating Revenue Tuition and Fees $9.5 $8.9 $9.1 Auxiliary $5.3 $5.2 $5.0 Other $0.9 $0.4 $0.4 Total $15.7 $14.5 $14.5 Less Operating Expenses $72.2 $69.7 $65.0 Net Operating Expenses ($56.5) ($55.2) ($50.5) Non-operating Revenue Property Taxes $27.4 $26.7 $26.3 State Grants and Contracts $15.7 $13.5 $10.9 Federal and Local Grants & Contracts $16.7 $17.3 $16.9 Investment Income $0.2 $0.2 $0.3 Interest Expense ($1.6) ($0.5) ($1.1) Other Non-operating Revenues (Expenses) $0.7 ($0.0) ($0.0) Loss on disposal ($0.0) ($0.2) ($0.1) Total $58.9 $57.0 $53.1 MD&A 3

23 Increase Before Contributions $2.4 $1.8 $2.7 Contributions $0.0 $0.0 $0.0 Increase in Net Position $2.4 $1.8 $2.7 Net Position, Beginning of Year $63.6 $61.9 $61.6 Prior Period Adjustment 0.00 (.1) 0.0 Net Position, End of Year $66.0 $63.6 $61.9 Total Revenues $74.5 $71.4 $67.6 The District received contributions from the State Universities Retirement System of $10,069,863, $7,032,466 and $5,529,487 for years ending June 30, 2013, 2012, and 2011, respectively. The increase in contributions from the State Universities Retirement System was due to the State of Illinois contributing funds for previous fiscal years, which is reflected in nonoperating revenues, state grants and contracts. Under non-operating revenue, the increase in 2013 interest expense is due to bond projects being capitalized in Therefore, no additional interest expense was capitalized in The following is a graphic illustration of Revenues by Source: Revenue by Source Tuition and Fees Auxiliary Other Property Taxes State Grants and Contracts Federal and Local Grants & Contracts Investment Income MD&A 4

24 Operating Expenses for the Year Ended June 30, (in millions) Operating Expense Instruction $22.3 $22.6 $21.2 Academic Support $6.3 $5.4 $5.2 Student Services $10.8 $11.7 $10.6 Public Service $2.5 $1.9 $1.4 Auxiliary services $0.9 $0.6 $0.5 Institutional Support $14.6 $12.6 $12.3 Operations & Maintenance Plant $5.4 $6.4 $5.7 Tuition Chargeback $0.0 $0.0 $0.0 Auxiliary enterprises $6.3 $6.0 $6.0 Depreciation $3.2 $2.5 $2.0 Other $0.0 $0.0 $0.0 Total $72.2 $69.7 $65.0 Increases in the operating expenses are due in part to salary increases and the increase in the SURS on behalf contribution payments. The Institutional Support increased in 2013 due to the write off of Illinois Veteran grants, Illinois National Guard grants and MIA-POW grants. The following is a graphic illustration of Operating Expenses: Operating Expenses Instruction Academic Support Student Services Public Service Auxiliary services Institutional Support Operations & Maintenance Plant MD&A 5

25 Capital Assets, Net June 30, Capital Assets Land and Improvements $12.8 $12.5 $12.3 Building $79.0 $75.9 $47.1 Technology $2.2 $2.2 $2.1 Equipment $8.0 $8.1 $5.2 Total $102.1 $98.7 $66.7 Less Accumulated Depreciation $36.1 $33.1 $30.8 Net Capital Assets $66.0 $65.6 $35.9 Construction in Progress $1.7 $1.4 $24.7 Current year additions net of depreciation amounted to $3,482,878, $32,542,692, and $24,743,339 for years ending June 30, 2013, 2012, and For further detail see footnote 5 on Capital Assets page 25. The increase in buildings is due to the completion of one 2008A bond projects and completion of four PHS projects. General Long-term Debt June 30, Leases Payable $2.8 $3.1 $3.5 Notes Payable $1.2 $0.1 $0.0 Bonds Payable $32.3 $33.0 $33.8 Bond discount ($0.3) ($0.3) ($0.3) Compensated Absences $1.1 $1.0 $1.0 Total $37.1 $36.9 $37.9 The current portion of the general long-term debt due within the next twelve months is $2,242,925, for further details see footnote 4 long-term debt pages The increase in notes payable represents a 7-year note for an energy construction project. The District uses its current resources to pay for all other prior year s outstanding obligations. Requests for Information This financial report has been prepared in full disclosure to provide the reader with an overview of the District s financial operations. If the reader has questions or would like additional information about the District, please direct the request to the Associate Vice President of Finance, 5250 Shepherd Road, P.O. Box 19256, Springfield, IL MD&A 6

26 BASIC FINANCIAL STATEMENTS

27 SPRINGFIELD, ILLINOIS STATEMENTS OF NET POSITION June 30, 2013 and ASSETS CURRENT ASSETS Cash, cash equivalents and investments $ 28,027,564 $ 22,721,904 Restricted cash 3,755,183 5,811,321 Accounts receivable: Property taxes 17,994,562 18,124,658 Government claims 2,711,038 3,406,891 Student tuition and fees 5,810,618 6,742,064 Other receivables, net 685, ,489 Prepaid expenses 8,000 53,602 Inventories 517, ,093 Total current assets 59,509,868 58,141,022 NONCURRENT ASSETS Land 514, ,354 Construction-in-progress 1,712,544 1,373,793 Depreciable capital assets, net of accumulated depreciation 65,445,215 65,170,552 Total non-current assets 67,672,113 67,058,699 Total assets 127,181, ,199,721 (continued) See accompanying notes to financial statements. 4

28 SPRINGFIELD, ILLINOIS STATEMENTS OF NET POSITION June 30, 2013 and LIABILITIES CURRENT LIABILITIES Accounts payable $ 1,294,522 $ 1,794,147 Accrued expenses 1,371,003 1,238,328 Claims payable 400, ,865 Other liabilities 822, ,086 Interest payable 124, ,184 Unearned student tuition and fees 6,628,473 6,983,095 Unearned revenue 152,009 33,507 Bonds, contracts and leases payable 1,429,519 1,145,674 Compensated Absences 813, ,174 Total current liabilities 13,035,686 13,492,060 NON-CURRENT LIABILITIES Bonds, contracts and leases payable 34,546,187 34,821,575 Compensated absences 328, ,192 Total non-current liabilities 34,874,524 35,110,767 Total liabilities 47,910,210 48,602,827 DEFERRED INFLOWS OF RESOURCES Unearned property taxes 13,302,210 12,991,004 Total deferred inflows of resources 13,302,210 12,991,004 NET POSITION Net investment in capital assets 33,652,593 35,314,982 Restricted for capital projects 5,012,291 3,504,173 Restricted for debt service 372, ,418 Restricted for grant purposes 132, ,865 Restricted for audit purposes 70,999 63,949 Restricted for liability insurance 1,818,441 1,339,994 Restricted for working cash 12,500,000 12,500,000 Unrestricted 12,410,098 10,447,509 TOTAL NET POSITION $ 65,969,561 $ 63,605,890 See accompanying notes to financial statements. 5

29 SPRINGFIELD, ILLINOIS STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION For the Years Ended June 30, 2013 and OPERATING REVENUES Student tuition and fees, tuition chargebacks, net of scholarship allowances $ 9,451,339 $ 8,946,818 Auxiliary enterprise revenue 5,288,624 5,214,154 Facilities revenue 19,547 15,131 Other operating revenue 895, ,761 Total operating revenues 15,654,595 14,543,864 OPERATING EXPENSES Instruction 22,254,094 22,586,520 Academic support 6,336,339 5,385,852 Student services 10,782,781 11,669,788 Public services 2,464,577 1,890,808 Auxiliary services 872, ,576 Institutional support 14,608,740 12,608,295 Operation and maintenance of plant 5,390,026 6,380,416 Tuition chargebacks 43,700 41,811 Auxiliary enterprise 6,268,041 6,030,131 Depreciation 3,187,886 2,506,335 Total operating expenses 72,209,040 69,702,532 OPERATING INCOME (LOSS) (56,554,445) (55,158,668) NON-OPERATING REVENUES (EXPENSES) Property taxes and corporate personal property replacement taxes 27,359,604 26,719,056 State grants and contracts 15,749,962 13,456,496 Federal grants and contracts 16,647,270 17,293,599 Investment earnings 174, ,239 Interest expense (1,649,756) (518,525) Other non-operating revenues (expenses) 656,943 (17,360) Loss on disposal of assets (20,329) (177,762) Total non-operating revenues (expenses) 58,918,116 56,918,743 CHANGE IN NET POSITION 2,363,671 1,760,075 NET POSITION - BEGINNING OF YEAR 63,605,890 61,948,509 PRIOR PERIOD ADJUSTMENT - (102,694) NET POSITION - BEGINNING OF YEAR, AS RESTATED 63,605,890 61,845,815 NET POSITION - END OF YEAR $ 65,969,561 $ 63,605,890 See accompanying notes to financial statements. 6

30 SPRINGFIELD, ILLINOIS STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2013 and CASH FLOWS FROM OPERATING ACTIVITIES Tuition and fees $ 10,028,163 $ 10,130,705 Payments to employees (29,285,295) (28,998,927) Payments to suppliers (29,931,467) (32,775,197) Auxiliary enterprise charges 5,288,624 5,214,154 Other receipts 832, ,070 Net cash from operating activities (43,067,940) (45,885,195) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State grants and contracts 6,367,992 4,689,693 Federal grants and contracts 16,655,230 16,824,350 Property taxes and corporate personal property replacement taxes 27,800,906 25,879,726 Other receipts 670,606 - Net cash from non-capital financing activities 51,494,734 47,393,769 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchases of capital assets (3,696,732) (9,171,987) Note proceeds 1,200,000 74,401 Principal paid on bonds, contracts and leases (1,205,206) (1,045,738) Interest paid on bonds, contracts and leases (1,649,756) (518,525) Net cash from capital and related financing activities (5,351,694) (10,661,849) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 174, ,239 Net cash from investing activities 174, ,239 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,249,522 (8,990,036) CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 28,533,225 37,523,261 CASH AND CASH EQUIVALENTS - END OF YEAR $ 31,782,747 $ 28,533,225 CASH AND CASH EQUIVALENTS Cash and cash equivalents $ 28,027,564 $ 22,721,904 Restricted cash 3,755,183 5,811,321 TOTAL CASH AND CASH EQUIVALENTS $ 31,782,747 $ 28,533,225 (continued) See accompanying notes to financial statements. 7

31 SPRINGFIELD, ILLINOIS STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2013 and RECONCILIATION OF OPERATING LOSS TO NET CASH FROM OPERATING ACTIVITIES Operating loss $ (56,554,445) $ (54,166,944) Adjustments to reconcile operating loss to net cash from operating activities: Depreciation 3,187,886 2,506,335 On-behalf SURS paid by State 10,069,863 7,032,466 Changes in assets and liabilities: (Increase) decrease in receivables 730, ,070 (Increase) decrease in inventories 278,778 (148,381) (Increase) decrease in prepaids 45,602 (20,188) Increase (decrease) in accounts payable (624,522) (1,545,913) Increase (decrease) in accrued expenditures 132,675 (13,517) Increase (decrease) in other liabilities (189,381) 72,484 Increase (decrease) in unearned revenue (236,120) 218,271 Increase (decrease) in compensated absences 91,377 45,122 NET CASH FROM OPERATING ACTIVITIES $ (43,067,940) $ (45,885,195) Schedule of non-cash items: SURS contribution paid by state $ 10,069,863 $ 7,032,466 See accompanying notes to financial statements. 8

32 FOUNDATION SPRINGFIELD, ILLINOIS STATEMENTS OF FINANCIAL POSITION June 30, 2013 and CURRENT ASSETS Cash and cash equivalents $ 566,297 $ 437,549 Accrued interest receivable Receivables: Contributions 52,511 54,847 Related party 35,325 37,637 Investments 3,534,185 3,244,570 Net investment in capital lease 1,668,735 1,839,490 Land held for programs 165, ,000 Land held for investment 293, ,533 Capital assets, less accumulated depreciation and amortization of $18,723 and $18,644 in 2013 and 2012, respectively - 79 TOTAL ASSETS $ 6,315,603 $ 6,072,719 LIABILITIES AND NET ASSETS Liabilities: Grants payable $ 26,929 $ 19,916 Scholarships payable 207, ,012 Accounts payable 154, ,855 Interest payable 33,825 37,237 Bonds payable 1,668,735 1,839,490 Total liabilities 2,091,128 2,201,510 NET ASSETS (DEFICIT) Unrestricted (296,087) (267,454) Temporarily restricted 1,665,226 1,468,244 Permanently restricted 2,855,336 2,670,419 Total net assets 4,224,475 3,871,209 TOTAL LIABILITIES AND NET ASSETS $ 6,315,603 $ 6,072,719 See accompanying notes to financial statements. 9

33 FOUNDATION SPRINGFIELD, ILLINOIS STATEMENT OF ACTIVITIES For the Year Ended June 30, 2013 Temporarily Permanently Unrestricted Restricted Restricted Total REVENUES AND GAINS Contributions, net of allowance $ 2,735 $ 326,162 $ 159,917 $ 488,814 In-kind contributions 260,005 38,067 25, ,072 Interest from capital lease 106, ,852 Investment income 70, , ,615 Special event 93, ,619 Grant - 10,800-10,800 Rent 40, ,807 Checking interest 1, ,350 Net assets released from restrictions 396,950 (396,950) - - Total revenues and gains 973, , ,917 1,354,929 EXPENSES Scholarships and other assistance 490, ,404 Management and general 296, ,931 Fundraising 214, ,328 Total expenses 1,001, ,001,663 Increase (decrease) in net assets (28,633) 196, , ,266 NET ASSETS - BEGINNING OF YEAR (267,454) 1,468,244 2,670,419 3,871,209 NET ASSETS - END OF YEAR $ (296,087) $ 1,665,226 $ 2,855,336 $ 4,224,475 See accompanying notes to financial statements. 10

34 FOUNDATION SPRINGFIELD, ILLINOIS STATEMENT OF ACTIVITIES. For the Year Ended June 30, 2012 Temporarily Permanently Unrestricted Restricted Restricted Total REVENUES AND GAINS Contributions, net of allowance $ 20,332 $ 248,221 $ 34,780 $ 303,333 In-kind contributions 253,480 71, ,906 Interest from capital lease 116, ,996 Investment income 12,279 33,819-46,098 Special event 112, ,648 Grant - 13,212-13,212 Rent 40, ,806 Net assets released from restrictions 365,413 (365,413) - - Total revenues and gains 921,954 1,265 34, ,999 EXPENSES Scholarships and other assistance 461, ,307 Management and general 306, ,110 Fundraising 181, ,144 Total expenses 948, ,561 Increase (decrease) in net assets (26,607) 1,265 34,780 9,438 NET ASSETS - BEGINNING OF YEAR (240,847) 1,466,979 2,635,639 3,861,771 NET ASSETS - END OF YEAR $ (267,454) $ 1,468,244 $ 2,670,419 $ 3,871,209 See accompanying notes to financial statements. 11

35 NOTES TO FINANCIAL STATEMENTS June 30, 2013 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of Lincoln Land Community College District # 526 (the District) have been prepared in conformity with accounting principles generally accepted in the United States of America, as applied to government units (hereinafter referred to as generally accepted accounting principles (GAAP)). The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting principles. In addition, the District presents its financial statements in accordance with accounting practices prescribed or permitted by the Illinois Community College Board (ICCB). The following is a summary of the more significant policies of the District. A. Organization The District is an Illinois community college operating under the mandates and guidelines of the Illinois Board of Higher Education and the Illinois Community College Board (ICCB). The District includes all or portions of 15 counties in central Illinois, including: Bond, Cass, Christian, DeWitt, Fayette, Greene, Logan, Macon, Macoupin, Mason, Menard, Montgomery, Morgan, Sangamon and Scott. The District provides academic classes to students in the area as well as community education classes in some outlaying communities. B. Reporting Entity The District is governed by an elected seven member Board of Trustees and a student representative. For financial reporting purposes, the District has included all funds, organizations, agencies, boards, commissions, and authorities for which the District is financially accountable. Under the criteria specified in Governmental Accounting Standards Board (GASB) Statement No. 39, Determining Whether Certain Organizations are Component Units, the District has included the Lincoln Land Community College Foundation (Foundation) as a discretely presented component unit. The primary criterion for including a potential component unit within the reporting entity under GASB Statement No. 39 is the financial accountability that the elected officials of the primary government have for the component unit. The criteria used in assessing financial accountability consist of (1) the primary government is financially accountable if it appoints a voting majority of the organization's governing body, and (a) it is able to impose its will on that organization, or (b) there is a potential for the 12

36 NOTES TO FINANCIAL STATEMENTS Continued 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued B. Reporting Entity Continued organization to provide specific financial benefits or impose specific financial burdens on the primary government; and (2) the primary government may be financially accountable if the organization is fiscally dependent. The Foundation is a legally separate, tax-exempt organization that exists for the principal purpose of aiding and assisting the District in achieving its educational research and service goals and responsibilities. The 15-member board of the Foundation is self-perpetuating and consists of graduates and friends of the District. Although the District does not control the timing or amount of receipts from the Foundation, the majority of resources, or income thereon, the Foundation holds and invests are restricted to the activities of the District by the donors. Because these restricted resources held by the Foundation can only be used by, or for the benefit of, the District, the Foundation is considered a component unit of the District. The Foundation is also reported on in separate financial statements because of the difference in its reporting model, as further described below. The Foundation is a private not-for-profit organization that reports under Financial Accounting Standards Board (FASB) standards, including FASB Statement No. 117, Financial Reporting for Not for- Profit Organizations. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. No modifications have been made to the Foundation's financial information in the accompanying financial statements for these differences; however, significant footnote disclosures related to the Foundation's financial statements have been incorporated into the footnotes to the District's financial statements. Complete financial statements may be obtained by contacting the Foundation office. C. Measurement Focus and Basis of Accounting For financial reporting purposes, the District is considered a special purpose government engaged only in business-type activities. Accordingly, the District's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All intra-agency transactions have been eliminated. 13