COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2017

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1 COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2017 Leslie A. Jamison, CPA Dean of Finance 5100 Black Horse Pike Mays Landing, New Jersey

2 COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS Introductory Section Page(s) President s Letter 1 Transmittal Letter 2-6 Principal Officials 7 Organization Chart 8 Financial Section Independent Auditor s Report 9-11 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 Required Supplementary Information Part I: Management s Discussion and Analysis (Unaudited) Basic Financial Statements: Statements of Net Position 24 Statements of Revenues, Expenses, and Changes in Net Position 25 Statements of Cash Flows Notes to Financial Statements Required Supplementary Information Part II: RSI-1 Schedule of the College s Proportionate Share of the Net Pension Liability Public Employees Retirement System 70 RSI-2 Schedule of College s Contributions Public Employees Retirement System 71 Notes to Required Supplementary Information Part II 72 Supplemental Financial Information: Balance Sheets Statement of Changes in Fund Balances 75 Statement of Current Fund Revenues, Expenditures and Other Changes 76 Budget Comparison to Actual 77 Salary Expenditures 78 Single Audit Section Report on Compliance for Each Major Program and Report On Internal Control Over Compliance Required By The Uniform Guidance and State of New Jersey Circular OMB Schedule of Expenditures of Federal Awards Schedule of Expenditures of State Financial Assistance 83 Notes to the Schedules of Expenditures of Financial Awards 84 Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings 88 Statistical Section (Unaudited) Net Position 89 Capital Assets 90 Revenues by Source Current Unrestricted Fund Revenues by Source Expenditures by Natural Classification Current Unrestricted Fund Expenditures by Function Enrollment Data Demographic and Economic Statistics 104 Principal Employers 105 College Staffing 106

3 INTRODUCTORY SECTION

4 President s Letter Members of the Atlantic Cape Board of Trustees: I am pleased to provide you and the college community with the Comprehensive Annual Financial Report (CAFR) for Fiscal Year Atlantic Cape Community College, the first institution of higher education in Atlantic and Cape May counties, celebrated its 50th Anniversary this year. We have built an excellent reputation of providing high quality education and training to students at an affordable price. We are proud to partner with K-12, higher education, non-profit, and business and industry institutions to ensure that graduates of Atlantic Cape are not only prepared for the 21 st century workforce but are also active and positive contributors to our society. During this time period, Dr. Peter Mora retired in December 2016 after 41 years of service at Atlantic Cape, of which almost 12 years he served as President. Subsequently, I was hired as the College s ninth President arriving in late January As the data in this report suggests, Fiscal Year 2017 represented a challenging year due to a continual decline in enrollment leading to a decrease in unrestricted revenue. Demographic changes in Atlantic and Cape May Counties have led to a decline of year olds which represents over 90% of our customer base. While the demographic trend is seen across the State and the Country, the recent closing of five casinos has directly impacted our College s enrollment due to population loss. Other areas that have affected the budget include rising health care costs, negotiated salary increases and a reduction in State aid due to decline of enrollment. The College has used strategic finance to offset these budget impacts; however, this Spring, the College laid off 21 employees and continued to conservatively replace positions that had become vacant to help close the budget gap. The Board approved a fund balance transfer to balance the Fiscal Year 2017 budget. This fund balance transfer enabled the College to minimize the number of staff layoffs and keep tuition and fees affordable for students. Construction continues on the new Student Center at the Mays Landing campus, a Blueprint 2020 initiative which is a reflection of the College s priorities and commitment to student success, recruitment and retention. The facility will house Student Government and clubs, the Honors Program, a Veteran s Lounge, and labs for supplemental learning in math and English. The Student Center is expected to open for the Spring 2018 term. A special thanks to the finance department led by Dean Leslie Jamison for all their efforts to ensure the rigorous standards of the CAFR have been met. Thank you to the County of Atlantic and the County of Cape May for their continued support; and many thanks to the Board of Trustees for their leadership and advocacy. We will continue to work together to meet the needs of our students at all three campuses and continue to provide high quality education at an affordable price as we chart our course for the future. Sincerely, Dr. Barbara Gaba President Page 1

5 December 22, 2017 The Board of Trustees Atlantic Cape Community College Mays Landing, New Jersey We are pleased to provide you with the Comprehensive Annual Financial Report (CAFR) of Atlantic Cape Community College (the College) for the Fiscal Year ended June 30, The purpose of this report is to provide the Board of Trustees, college staff, citizens, and other interested parties with useful information concerning the College s operations and financial position. The College s Finance Office prepared this report. The responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the management of the College. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the College as of June 30, 2017, and for the Fiscal Year then ended. All disclosures necessary to enable the reader to gain an understanding of the College s financial activities in relation to its mission have been included. The Comprehensive Annual Financial Report is organized in four sections, as follows: 1. The Introductory Section contains the President s letter, this letter of transmittal with an overview of the College that includes factors affecting the financial condition and required supplementary information, a listing of principal officials, and the organizational chart. This letter of transmittal is designed to complement the Management s Discussion and Analysis (MD&A) and should be read in conjunction with it. 2. The Financial Section includes the MD&A, the basic financial statements and accompanying notes, required supplementary information, supplemental financial and management information, as well as the independent auditor s reports. 3. The Single Audit Section contains the report of the independent auditor s, the schedules of expenditures of federal awards and state financial assistance and notes to the schedules of expenditures of financial awards. 4. The Statistical Section includes selected unaudited financial and demographic information, generally presented on a multi-year basis. The organization, form and contents of this report were prepared in accordance with the standards prescribed by the Governmental Accounting Standards Board (GASB), the Government Finance Officers Association of the United States and Canada (GFOA), and the American Institute of Certified Public Accountants. College Information Atlantic Cape Community College is a two-year publicly supported community college operating under the provisions of N.J.S.A. 18A:64 A1, et seq. In December 1963, the State of New Jersey Department of Education granted approval for the establishment of the College, which became the second community college to be organized by the State on April 14, The College offers a wide range of programs to meet the needs of the surrounding community. Financial support is received from county and state governments. Page 2

6 The Board of Trustees of the College voted on August 28, 1998 to approve a resolution authorizing Atlantic Community College to enter into a joint venture college with Cape May County. Officials from the College, Atlantic County and Cape May County signed a contract outlining the terms of the agreement. The New Jersey Legislature approved changes to the New Jersey Community College funding formula. The jointure agreement became effective January 1, 1999, and the College was renamed Atlantic Cape Community College in February The Counties of Atlantic and Cape May provide support to the College based upon the funding formula specified in the jointure agreement. Atlantic County has eight voting members on the Board of Trustees of the College. Cape May County has four voting members on the Board of Trustees of the College. In addition to these voting members, both counties are represented on the Board of Trustees of the College by the Executive County Superintendent of Schools (Atlantic & Cape May) who is also a voting member. Also, one voting alumnus member from Atlantic or Cape May County is elected for a oneyear term by each year s graduating class. The College President serves as Ex-Officio on the Board of Trustees. The College serves Atlantic and Cape May counties in southern New Jersey from three campuses. The College s main campus in Mays Landing is situated on 541 acres in the picturesque New Jersey Pinelands, 15 miles west of Atlantic City's boardwalk and 45 miles from Philadelphia. The Charles D. Worthington Campus in Atlantic City provides a broad range of educational and related services to students, especially those who live and/or work in the Atlantic City area. The College s Cape May County campus in Cape May Court House uniquely supports students and the business community of Cape May County. For the Fiscal Year ended June 30, 2017, the College enrolled 8,183 credit students, compared to 8,860 the prior year. The Fall 2016 unduplicated credit student headcount was 5,909. Of these, 94.7% of the students are from either Atlantic or Cape May county. Atlantic Cape Community College accounts for approximately 4% of the 19 New Jersey community college student credit hour enrollments. The College s Workforce Development and Career Training programs provide students with training and necessary credentials to support business and industry needs. Under these programs, the College enrolled 3,851 students for the Fiscal Year ended June 30, Of these, 81.5% of the students are from either Atlantic or Cape May county. College Mission The mission of Atlantic Cape Community College is to: Create opportunity by providing access to excellent programs and services that successfully meet students educational goals The College offers more than 45 transfer and career degree programs. Students may choose from an Associate in Arts, Associate in Applied Science, Associate in Science, Associate in Fine Arts, industry certifications and continuing education professional development and training services. Nationally recognized programs are the College s Casino Career Institute and the Academy of Culinary Arts. The College is accredited by the Middle States Commission on Higher Education (MSCHE). Inquiries may be sent to: Middle States Commission on Higher Education at 3624 Market Street, 2 nd Floor West, Philadelphia, PA Telephone: (267) info@msche.org Spanish: espanolinfo@msche.org Professional associations have also accredited those professional-technical programs that require approval. Page 3

7 Long Term Strategic Financial and Operational Planning The College engages in an annual strategic and operational planning cycle that involves all levels of the organization. This planning process provides a framework to advance the College s mission and goals in order to meet the needs of the students and the community. Financial Information The College maintains its accounts and prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) as set forth by the Governmental and Financial Accounting Standards Boards (GASB and FASB) and the National Association of College and University Business Officers (NACUBO). The College follows GASB Statement No. 35 Basic Financial Statements and Management Discussion and Analysis for Public Colleges and Universities. The financial records are maintained on the accrual basis of accounting whereby all revenues are recorded when earned and all expenses are recorded when a legal obligation to pay exists. The notes to the financial statements expand upon the accounting principles applied. State statutes require an annual audit by an independent certified public accounting firm. The College s Board of Trustees selected the independent public accountants, Bowman & Company LLP, to audit the College s financial statements. Their report is included as part of the financial presentation. In accordance with GASB pronouncements, the College s financial statements include all funds and departments of the College (the primary government) and the Atlantic Cape Community College Foundation, Inc., its component unit. The Foundation is included in the College s reporting entity because of the significance of their operational and financial relationship with the College. Notes 2 and 22 to the financial statements give further information about the Foundation included in the financial statements. Internal Controls Management is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the College are protected from loss, theft, or misuse and to ensure adequate accounting information is available for the preparation of the financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and that the valuation of costs and benefits requires estimates and judgments by management. Budgetary Controls The College maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual budget approved by the College s Board of Trustees. The budget is prepared on an annual basis as part of the College s strategic planning process, and the recommended budget parameters are presented to the Budget, Finance and Audit Committee of the Board of Trustees for review. After these parameters are established, the annual budget request is developed and approved by the College Board of Trustees. The Atlantic Cape Community College Board of School Estimate approves the Atlantic and Cape May Counties appropriations. Page 4

8 Financial Reporting An automated financial record system captures all financial transactions and provides data for the preparation of this CAFR, including the audited financial statements. The CAFR is distributed to the College s Board of Trustees and executive management, federal and state agencies, and financial institutions as well as others throughout the general public. The Budget, Finance and Audit Committee of the Board of Trustees routinely monitors and reports on revenue collections compared to budget and actual expenses compared to budget, carefully reviewing variances. Internal management reports, customized to meet the information and decision-making needs at all levels of the organization, aid in the management of financial resources. Cash Management The College is governed by New Jersey statute when depositing funds or investing excess funds. The Board of Trustees approves all depositories and investment policies. All excess funds are invested in a prudent, conservative and secure manner with the intent to maximize investment income. Risk Management Comprehensive business insurance is purchased through a cooperative pool. The pool provides its members with property, liability, motor vehicle, and other miscellaneous insurance. The pool is a risk sharing public entity that is both an insured and self-administered group established for the purpose of providing low cost insurance coverage to its members. In addition the College participates in a selfinsurance pool for workers compensation. Economic Condition and Outlook After a decade of decline, the service area s employment finally leveled off in However, the region continues to have one of the nation s highest residential home foreclosure rates in the country. As a consequence of stability, the unemployment rate has improved from 13.5% in 2012 to 8.0% in 2016 as the employment force has contracted. Population growth rates in both counties continue to be negative as population which peaked in 2013 at 372,016 declined to 365,421 in The College plays a key role in providing the necessary workforce development and job training offerings to meet the current employment market needs. According to the N.J. Department of Labor and Workforce Development, N.J. can expect a 6.5% increase in employment opportunities by This rate is expected to be substantially lower in Atlantic (2.6%) and in Cape May (3.4%) counties. Many of the jobs with the greatest projected growth rates in this period are within the health and construction industries. Estimates of projected New Jersey employment by education and training requirements indicate that the occupations with a minimum requirement of an Associate Degree will increase by 9.1% by The College is facing challenges influenced by the economic climate of the State and Counties. Although College enrollments reached their highest levels in the spring semester of 2010, with over 7,600 credit students taking courses, enrollment has been declining, following a predicted decline in anticipated high school graduates which began in Fall semester 2016 saw an 8.5% decrease in overall enrollment compared to the same period in 2015, and Spring semester 2017 s enrollment declined 12% from Spring semester These enrollment decreases negatively impacted unrestricted revenues. Page 5

9 In addition to student tuition and fee revenue, the State of New Jersey and Counties of Atlantic and Cape May support the College. The counties have steadily supported the College with operating and capital appropriations. Although the State of New Jersey continues to experience economic constraints, it has maintained the same level of funding to the sector. The College has maintained its 4% share of that overall appropriation. In Fiscal Year 2017 students paid 58.9% toward the cost of education, with the counties funding 22.3% and the State 15.8%. The balance of revenue is provided by investment income and other sources. Operating costs in the areas of health and pension benefits, security, technology and renewal and replacement of facilities continue to escalate. The College is maintaining its program of cost containment, cost avoidance and revenue enhancement efforts, while continuing to operate within its resources. The College is challenged to provide exemplary services and continue its fiduciary responsibility of maintaining facilities with shrinking resources. Major initiatives by the College include addressing deferred maintenance on college campuses. A capital improvement plan supported by Chapter 12 and the Building Our Futures Act (state and county support) is ongoing. Student success and career planning centers at the Cape May and Atlantic City campuses were completed in Fiscal Year Construction of a new student success and career planning center at the Mays Landing campus is scheduled to be complete for Spring Two major construction projects, the STEM (Science, Technology, Engineering and Math) building on the Mays Landing campus and a hospitality wing on our Worthington Atlantic City campus opened during Fiscal Year Our ability to service students will be enhanced through our partnership with Rutgers University, who completed construction on a facility on our Mays Landing campus which opened for classes in September, College administration recognizes the challenges involved in providing the access that our students and community need. It will continue to maintain the balance between affordable tuition and fees while delivering quality services. Acknowledgments The timely preparation of the College s comprehensive annual financial report was made possible by the dedicated service of the entire staff of the Finance Office. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report. Respectfully submitted, Leslie A. Jamison Dean of Finance Page 6

10 (As of June 30, 2017) BOARD OF TRUSTEES Dave Coskey, Chairperson Maria K. Mento, Vice Chairperson James B Kennedy, Esq., Treasurer Alma Albarran-Martinez, Alumni Representative Ellen Byrne, Esq. Christina Clemans Brian G. Lefke Mary B. Long Thomas E. Milhous Donald J. Parker Dr. Richard Stepura, Interim Executive County Superintendant of Schools (Atlantic & Cape May) Maria Ivette Torres Helen W. Walsh Dr. Barbara Gaba, College President, Ex-Officio Louis J. Greco, Esquire, Board Attorney Jean McAlister, Board Secretary ATLANTIC COUNTY EXECUTIVE Dennis Levinson ATLANTIC COUNTY ADMINISTRATOR Gerald Del Rosso ATLANTIC COUNTY BOARD OF CHOSEN FREEHOLDERS Frank D. Formica, Chairman John Risley, Vice Chairman James A Bertino John L. Carman Ernest D. Coursey Richard R. Dase Amy L. Gatto Maureen Kern Alexander C. Marino CAPE MAY COUNTY DIRECTOR of OPERATIONS Michael Laffey CAPE MAY COUNTY BOARD OF CHOSEN FREEHOLDERS Gerald M. Thornton, Director Leonard C. Desiderio, Vice Director E. Marie Hayes Will Morey Jeffrey L. Pierson COLLEGE ADMINISTRATION Dr. Barbara Gaba, President Dr. Richard Perniciaro, Executive Vice President, Institutional Planning and Research and Facilities Dr. Otto Hernandez, Vice President of Academic Affairs Dr. Mitchell Levy, Vice President of Student Affairs Eileen Curristine, Dean of Human Resources, Public Safety and Compliance August Daquila Dean of Administration and Business Services Douglas Hedges, Dean of Information Technology Services Leslie Jamison, Dean of Finance Jean McAlister, Dean of Resource Development & President/Board Operations Andre Richburg, Dean,of Enrollment Management & College Relations Page 7

11 Board of Trustees College President Resource Development & President/Board of Trustees Operations Office of President/Board of Trustee Services Resource/Alumni Development Enrollment Management & College Relations College Relations Admissions & Recruitment Testing Financial Aid Finance Accounting/ Budgets Bursar s Office Information Technology Services Administrative Computing PC Services & Telephony Planning, Research, Facilities, Executive Support & WACC Campus Management Institutional Research, Planning & Assessment Facilities & Capital Projects WACC Campus Management Administration And Business Services Business Services Purchasing Perishable Storeroom Human Resources, Public Safety and Compliance Human Resources Public Safety Health Services & Compliance Student Affairs & CMCC Management Counseling and Support Services Student Development CMCC Management Enrollment Services Academic Affairs STEM Programs Academy of Culinary Arts Career Education Workforce Development Liberal Studies Academic Support Services Page 8

12 FINANCIAL SECTION

13 INDEPENDENT AUDITOR S REPORT Board of Trustees Atlantic Cape Community College Mays Landing, New Jersey Report on the Financial Statements We have audited the accompanying financial statements of the business-type activities of Atlantic Cape Community College (the College ), a component unit of the County of Atlantic, State of New Jersey, and its discretely presented component unit (Atlantic Cape Community College Foundation), as of and for the fiscal years ended June 30, 2017 and 2016, and the related notes to the financial statements, which collectively comprise the College'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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of the discretely presented component unit, as of and for the fiscal year ended June 30, Those financial statements were audited by other auditors whose report thereon 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. The financial statements of the College s discretely presented component unit (Atlantic Cape Community College Foundation) were audited in accordance with auditing standards generally accepted in the United States of America, but were not audited in accordance with Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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 College s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the College s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Page 9 6 North Broad Street Suite 201 Woodbury, NJ P F

14 Opinions In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of Atlantic Cape Community College and the College s discretely presented component unit, as of June 30, 2017 and 2016, and the respective changes in financial position and, where applicable, cash flows for the fiscal years then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, schedule of the College s proportionate share of the net pension liability and schedule of College contributions, 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 generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the College's basic financial statements. The introductory section, supplemental financial information, and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying Schedules of Expenditures of Federal Awards and State Financial Assistance, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance) and State of New Jersey Circular OMB, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid, are presented for purposes of additional analysis and are also not a required part of the basic financial statements. The accompanying Schedules of Expenditures of Federal Awards and State Financial Assistance, and supplemental financial information are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedules of Expenditures of Federal Awards and State Financial Assistance, and supplemental financial information are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Page 10

15 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2017, on our consideration of Atlantic Cape Community College 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 College's internal control over financial reporting and compliance. Respectfully submitted, Woodbury, New Jersey December 22, 2017 BOWMAN & COMPANY LLP Certified Public Accountants & Consultants Page 11

16 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 INDEPENDENT AUDITOR S REPORT Board of Trustees Atlantic Cape Community College Mays Landing, New Jersey We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial statement audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the business-type activities of Atlantic Cape Community College (the College ), a component unit of the County of Atlantic, State of New Jersey, and its discretely presented component unit (Atlantic Cape Community College Foundation), as of and for the fiscal year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the College s basic financial statements, and have issued our report thereon dated December 22, The financial statements of the College s discretely presented component unit (Atlantic Cape Community College Foundation) were audited in accordance with auditing standards generally accepted in the United States of America, but were not audited in accordance with Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Atlantic Cape Community 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 opinions 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 Atlantic Cape Community 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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the College 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. Page 12 6 North Broad Street Suite 201 Woodbury, NJ P F

17 Compliance and Other Matters As part of obtaining reasonable assurance about whether Atlantic Cape Community 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. Respectfully submitted, BOWMAN & COMPANY LLP Certified Public Accountants & Consultants Woodbury, New Jersey December 22, 2017 Page 13

18 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) Management s discussion and analysis of the College s financial performance during the Fiscal Years ended June 30, 2017 and 2016, as well as Fiscal Year ended June 30, 2015 activity, is presented in this section of the annual financial report. Management prepared this discussion along with the financial statements and the related footnote disclosures, and this discussion should be read in conjunction with and is qualified in its entirety by the financial statements and footnotes. The financial statements, footnotes and this discussion are the responsibility of management. Using This Annual Report These financial statements focus on the College as a whole and are designed to emulate corporate presentation models whereby all College activities are consolidated into one total. The financial statements are prepared using the accrual basis of accounting which recognizes revenues when earned and expenses when incurred. This annual report consists of a series of financial statements prepared in accordance with Statement 35, Basic Financial Statements-and Management s Discussion and Analysis for Public Colleges and Universities, of the Governmental Accounting Standards Board. The College implemented these reporting standards for the Fiscal Year ended June 30, The Statement of Net Position presents all of the College s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference reported as net position. The assets and liabilities are reported in order of relative liquidity while net position is categorized as Net Investment in Capital Assets, Restricted, or Unrestricted. Over time, increases or decreases in net position are an indicator of the improvement or erosion of the College s financial health. The Statement of Revenues, Expenses, and Changes in Net Position focuses on the gross and net costs of College activities occurring during the year, and how these activities are supported. Revenues and expenses are reported as either operating or non-operating. State and county appropriations, federal and state student financial aid, as well as investment activities, are reported as non-operating and denote the dependency the College has on their support. Another way to assess the financial health of an institution is to look at the Statement of Cash Flows. Its primary purpose is to provide relevant information about the cash receipts and cash payments of an entity during a period. The Statement of Cash Flows also helps users assess: An entity s ability to generate future net cash flows Its ability to meet its obligations as they come due and Its needs for external financing The Comprehensive Annual Financial Report (CAFR) is presented in four sections: introductory, financial, single audit and statistical. The introductory section includes the President s letter, the transmittal letter, the College s principal officers, and an organizational chart. The financial section includes the reports of the independent auditor s, management s discussion and analysis, the basic financial statements, notes to the financial statements, required supplementary information, and supplemental financial and management information. The single audit section contains the report of the independent auditor s, the schedules of expenditures of federal awards and state financial assistance and notes to the schedules of expenditures of financial awards. The statistical section includes unaudited financial information. Page 14

19 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) Financial Highlights Fiscal Year 2017 Compared to 2016 Cash balances decreased by $4,355,849 during the year ended June 30, 2017, compared to an increase of $253,547 during the year ended June 30, This decrease in cash is partly due to an increase in federal, state, county and local receivables of $2,338,770 from June 30, 2016 to June 30, There was a 4.2% decrease in net tuition and fee revenues. Student credit hour enrollments continue a decline which began six years ago. This enrollment decline is partially mitigated by a 3.3% average increase in tuition and fee rates. College-wide, salaries and benefits increased by $1,160,661, or 3.3%. Included in this increase is the effect of GASB 68 adjustments causing an increase of $2,170,944 in benefits. Additions of $2,533,973 in buildings and improvements reflects the completion of major renovations to the existing cafeteria at the Mays Landing campus during the year ended June 30, Construction in progress additions of $7,202,887 are mainly a result of the construction of a student success and career planning center at the Mays Landing campus scheduled to open for the Spring 2018 semester. These capital projects were supported by State of New Jersey Chapter 12 funding and New Jersey Educational Facilities Authority Building Our Future Bonds matched by Atlantic County funds. The following summary of cash flows for the years ended June 30, 2017, 2016, and 2015 was prepared from the College s Statement of Cash Flows: Change FY2017 FY2016 FY2015 FY Cash provided (used) by: Operating activities $ (30,326,604) $ (29,986,496) $ (31,082,506) $ (340,108) Non-capital financing activities 28,886,732 30,735,091 32,459,328 (1,848,359) Capital and related financing activities (3,016,857) (576,192) 1,376,525 (2,440,665) Investing activities 100,880 81,144 77,724 19,736 Net increase (decrease) in cash (4,355,849) 253,547 2,831,071 (4,609,396) Cash, beginning of year 17,558,347 17,304,800 14,473, ,547 Cash, end of year $ 13,202,498 $ 17,558,347 $ 17,304,800 $ (4,355,849) The College s net position at June 30, 2017 increased $536,370. The major factor contributing to the increase in Fiscal Year 2017 is additions to net investment in capital assets. The College s financial position, as a whole, is healthy. However, the College has experienced a downturn in enrollment, and if the trend continues, it will have an effect on future years. Net position increased by 1.0% from the level at the previous year-end. A decrease of 11.0% in expendable restricted net position is primarily attributable to the change in the consent decree restricted net position and a decrease in the amount appropriated for encumbrances. Non-expendable net position increased by 1.2% as the College s endowments increased by $9,920. An increase of 6.5% in net investment in capital assets is due to capital additions in excess of depreciation expense and retirements. Total unrestricted net position decreased by 15.6%, mainly due to the Fiscal Year 2017 education and general operating margin of $(1,527,781) and the change in pension related items. Page 15

20 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) The summary schedule below is prepared from the College s Statement of Net Position. The schedule displays the change in net position from 2016 to 2017 and 2015 activity. FY2017 FY2016 FY2015 Change FY % Change Assets Current assets $ 16,359,474 $ 18,196,611 $ 18,539,624 $ (1,837,137) (10.1)% Noncurrent assets 79,111,128 74,708,021 71,494,519 4,403, % Total assets 95,470,602 92,904,632 90,034,143 2,565, % Deferred Outflows of Resources 12,702,895 5,612,130 2,170,090 7,090, % Liabilities Current liabilities 8,850,552 8,930,813 8,765,397 (80,261) (0.9)% Noncurrent liabilities 45,019,541 34,811,863 31,006,438 10,207, % Total liabilities 53,870,093 43,742,676 39,771,835 10,127, % Deferred Inflows of Resources 2,299,386 3,306,438 3,557,355 (1,007,052) (30.5)% Net Position Unrestricted (Deficit) (27,279,336) (23,603,807) (22,816,930) (3,675,529) (15.6)% Restricted 3,993,994 4,372,942 4,497,483 (378,948) (8.7)% Net investment in capital assets 75,289,360 70,698,513 67,194,490 4,590, % Total Net Position $ 52,004,018 $51,467,648 $ 48,875,043 $ 536, % Enrollment College enrollment is comprised of credit and non-credit full-time equated students (FTEs). A full time equated student represents a student or combination of students taking thirty (30) credits per academic year. FY2017 FY2016 FY2015 Change % FY Change Credit FTEs 4,068 4,544 4,903 ( 476) (10.5)% Non Credit FTEs (65) (33.2)% Leased/High School Curriculum (4) (17.4)% Total FTEs 4,218 4,763 5,104 (545) (11.4)% Page 16

21 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) Revenue The College received its revenue from three main sources: tuition and fees, state aid and county support. Nonoperating revenues include $11.8 million in student financial aid received by the College for participating in the Pell Grant Program. The balance of revenue was received from miscellaneous sources that included grants, investment income, and other income. Tuition Rates The College charged $ per in-county general education student credit hour (SCH) for an average of $1,800 per term during Fiscal Year In Fiscal Years 2016 and 2015, the tuition charged was $ and $113.00, respectively, per in-county student credit hour. General Fee The College charged $22.00 per student credit hour for an average of $ per term during Fiscal Year The general fee that was charged during Fiscal Years 2016 and 2015 was $21.30 and $20.60, respectively. In Fiscal Year 2015, the information services fee, previously charged separately, was incorporated into the general fee. The following chart illustrates sources of revenue for the year ended June 30, 2017: FY2017 Revenues by Source <1% <1% 17% 4% 1% 1% <1% 23% 15% 11% 26% Total Revenue $54,841,506 Page 17

22 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) Fiscal Year 2017 Compared to 2016 From 2016 to 2017, there was a 1.6% decrease in the College s total revenue from $55.8 million to $54.8 million. Operating revenue decreased by 9.9% or $1.8 million from the level achieved during the previous year. Of that total, net tuition and fee revenue decreased 4.2%, or $546 thousand, mainly attributable to a decline in enrollment. Operating revenues from federal, state and local grants and contracts total $2.9 million. Federal grants and contracts operating revenue decreased 29.6%, or $994 thousand, mainly due to the U.S. Department of Labor s WIA Dislocated Worker Formula Grants and Trade Adjustment Assistance Community College Career and Training Program grant which took place in Fiscal Year Other state and local grants and contracts decreased by 45.2%, or $340 thousand, primarily due to the workforce training grants and contracts which took place in Fiscal Year Net nonoperating revenues decreased by 4.5%, or $1.4 million. The Atlantic and Cape May Counties appropriation to the College increased $23 thousand, or.3%. The State of New Jersey appropriation for operating costs decreased by 1.9%, or $106 thousand. Federal student financial aid, such as PELL and SEOG, decreased 10.2%, or $1.4 million. State student financial aid (excluding loans) decreased by 7.2% or $154 thousand. Charitable contributions increased 46.1%, or $185 thousand. Investment revenue increased 24.3%, or $20 thousand. Capital appropriations increased by $2.0 million, or 27.8%, largely attributable to major renovations to the cafeteria on the Mays Landing campus which were completed in Fiscal Year Capital appropriations reflects the support by federal, state and county agencies for the College s master facilities plan. Expenses The following chart illustrates the relative size of operating expenses for the year ended June 30, 2017: FY2017 Operating Expenses By Functional Clasification 8% 9% <1% 26% 13% 23% 10% 9% 1% Total Operating Expenses $53,982,853 Page 18

23 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) The College engages in an annual strategic and operational planning cycle that involves all levels of the organization. This planning process provides a framework to advance the College s mission and goals in order to meet the needs of the students and the community. The schedule below lists the College s strategic goals for , and the current unrestricted fund budgeted and expended amounts for the Fiscal Year ended June 30, 2017: FY2017 Revised Budget Amount FY2017 Expended Amount Goal 1 $ 1,516,208 $ 1,513,325 Connect and engage students with opportunities to be successful. Goal 2 4,886,517 4,876,895 Assist students in creating and fulfilling their academic and career Plan. Goal 3 16,935,401 16,760,886 Increase the number of students who successfully Complete their educational goals. Goal 4 16,247,458 16,159,732 Lead the institution to excellence through continuous improvement and the effective and efficient use of resources to maximize student success. $ 39,585,584 $ 39,310,838 The following chart illustrates the relative size of current unrestricted fund operating expenses for the year ended June 30, 2017 by strategic goal: Current Unrestricted Fund % Expenditures by Strategic Goal Fiscal Year July 1, 2016 to June 30, 2017 Goal 4 41% Goal 1 4% Page 19

24 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) Fiscal Year 2017 Compared to 2016 Operating expenses increased by 1.7% or $921 thousand over the prior year. Overall, salaries of $23.9 million decreased by 3.8% or $949 thousand, and fringe benefits of $12.0 million increased 21.4%, or $2.1 million. Included in this increase is the effect of GASB 68 adjustments causing an increase of $2.2 million in benefits. The College s cost for medical benefits is offset by employee contributions which began on July 1, A comparison of operating expenses for the years ended June 30, 2017, 2016 and 2015 is illustrated in the following graph: Comparative Expenses by Function Operating Results The following summary of operating results displays the change from 2016 to 2017 and 2015 activity and was prepared from the College s Statement of Revenues, Expenses, and Changes in Net Position: Change FY2017 FY2016 FY2015 FY Total Operating Revenue $16,192,000 $17,965,138 $16,666,193 $ (1,773,138) Total Operating Expenses 53,982,853 53,061,643 51,727, ,210 Operating Loss (37,790,853) (35,096,505) (35,061,307) 2,694,348 Net Nonoperating Revenue 29,047,483 30,426,056 32,334,250 (1,378,573) Loss Before Net Other Revenues (8,743,370) (4,670,449) (2,727,057) 4,072,921 Capital Appropriation 9,269,879 7,254,485 8,502,101 2,015,394 Additions to Permanent Endowments 9,861 8,569 9,654 1,292 Increase in Net Position 536,370 2,592,605 5,784,698 $ (2,056,235) Net Position, Beginning of Year 51,467,648 48,875,043 43,090,345 Net Position, End of Year $52,004,018 $51,467,648 $48,875,043 Page 20

25 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) Fiscal Year 2017 Budget to Actual Comparison Comparing the total original budget to actual activity for the current unrestricted fund, the College earned 95.7% of original budgeted revenues and expended 96.8% of original budgeted expenditures. Encumbrances at June 30, 2017, subject to automatic re-appropriation in FY2018, totaled $89,878. The summary schedule below is prepared from the College s Supplemental Financial Information, Budget Comparison to Actual for the Fiscal Year ended June 30, Original Adjusted Actual Variance from Budget Revised Budget Activity Original Budget over (under) Total Education and General Income $ 38,875,106 $ 37,228,924 $ 37,205,184 $ (1,669,922) ABP Reimbursement 600, , ,873 (22,127) Adjusted Education and General Income 39,475,106 37,798,924 37,783,057 (1,692,049) Total Education and General Expenditures 40,600,000 39,585,584 39,310,838 (1,289,162) Education and General Operating Margin $ (1,124,894) $ (1,786,660) $ (1,527,781) $ (402,887) The variance in revenues was $(1,692,049). This negative variance resulted primarily from less credit tuition and student fees realized than budgeted due to the decline in enrollment and from a shortfall of continuing education revenues. These budget shortfalls were partially offset by higher than budgeted interest income, costs recovered and other revenue. The original revenue budget was based on an average decrease of 5% from the prior year projected student credit hour enrollments. Actual enrollments of 122,048 student credit hours (excluding dual enrollment) were 10.5% less than the prior year, and under budget projections by 6.4%. Savings in actual salaries and benefits expenditures from the original budgeted amount total $906,177 and are reflected in the total education and general expenditures original budget variance of $(1,289,162). The savings are primarily an outcome of cost containment strategies used by management and lower adjunct and overload costs resulting from the decline in enrollment. The educational and general operating margin for Fiscal Year 2017 was $(1,527,781), and an additional $89,878 was appropriated for encumbrances carried forward to Fiscal Year Student activities resulted in net funds used of $1,228. A fund balance transfer during Fiscal Year 2017 was approved by Board Resolution for a content management system totaling $80,000. The adjusted net operating margin was $(1,608,790). Facilities Expansion Plans Two major construction projects, the STEM (Science, Technology, Engineering and Math) building on the Mays Landing campus and a hospitality wing on our Worthington Atlantic City campus opened during Fiscal Year These projects were funded by federal US EDA, State of New Jersey Chapter 12, CRDA, and College funds, with matching funds from Atlantic County. Page 21

26 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) The State of New Jersey authorized a 2007 allocation totaling $6,244,000 of Chapter 12 funds (Public Law 1971) to renovate facilities at the college s Worthington Atlantic City and Mays Landing campuses. Atlantic County issued bonds to fund the construction, and the State shared the debt service equally with the County. A 2008 allocation of $9,009,000 is designated for deferred maintenance and capital improvements and new construction based on master plan priorities. A 2010 allocation of $2,352,750 bonded by Atlantic County in November, 2011 is designated for the STEM building. A 2012 allocation of $8,500,000 and 2013 allocation of $1,500,000 supported campus renovations, including repurposing Building A, academic classrooms. A 2014 allocation of $4,200,000 will support the construction of a Student Success/ Career and Planning Center. A 2015 allocation of $3,200,000 is designated for academic, lab and office renovations at the Mays Landing campus, fire suppression and plumbing upgrades, as well as exterior upgrades to the Worthington Atlantic City Campus. A 2016 allocation of $3,000,000 is designated for the Student Success/ Career and Planning Center on the Mays Landing campus. In Fiscal Year 2014, the State of New Jersey, Secretary of Higher Education awarded the College four Building Our Future Bond Act grants totaling $6,841,115, with Atlantic and Cape May Counties providing 25% in matching funds for each county s share, providing an additional amount of $2,280,372. The Building Our Future Bond Act provides funds for the construction of higher education buildings, the expansion of additional facilities, and the acquisition and installation of additional and upgraded equipment for the purpose of increasing academic capacity. The College is using the funds for renovations of existing academic buildings, the construction of a Student Success/ Career and Planning Center on the Mays Landing campus, and the renovation of space to create Student Success/ Career and Planning Centers at the Worthington Atlantic City and Cape May County campuses. In Fiscal Year 2014, the College entered into a $803,542 lease agreement with the New Jersey Educational Facilities Authority for the State of New Jersey s Higher Education Equipment Leasing Fund Program for the purpose of providing educational equipment. The lease agreement requires that the College pay 25% of the debt service of which Atlantic and Cape May counties will provide the funds proportionately. Capital asset activity for the Fiscal Year ended June 30, 2017 was as follows: Beginning Ending Balance Additions Retirements Balance Land $2,370,097 $ - $ - $ 2,370,097 Construction in Progress 1,656,439 7,202,887 (968,854) 7,890,472 Land Improvements 2,391, ,391,004 Infrastructure 224, , ,933 Buildings and Improvements 96,391,722 2,533,973-98,925,695 Furniture and Equipment 12,890, ,844 (311,868) 12,873,590 Library Collection 1,359,467 13,557 (120,703) 1,252,321 Other Improvements 9, ,600 Leasehold Improvements 121, ,295 Other Assets 3,120,132 64,996-3,185,128 Total 120,535,217 10,597,343 (1,401,425) 129,731,135 Less Accumulated Depreciation and Amortization (49,836,704) (5,028,518) 423,447 (54,441,775) Capital Assets, Net $70,698,513 $ 5,568,825 $(977,978) $75,289,360 Page 22

27 MANAGEMENT S DISCUSSION AND ANALYSIS (UNAUDITED) Economic Factors That Affect The Future Although the College s financial position is currently healthy, the economic position of the College is closely tied to that of the State of New Jersey and the Counties of Atlantic and Cape May. The College s state and county appropriations and many state and local grants and contracts are influenced by the economic climate of the state and counties. Other factors that affect college tuition and fee revenues include population growth rate, unemployment rate, and the number of high school graduates in Atlantic and Cape May counties. The performance of the regional economy, especially Atlantic County, continues to lag behind that of both the nation and state as the employment loss due to the closing of five casino hotels from 2014 to 2016 which resulted in the loss of over 20,000 employees. The employment decline continued through 2015 with a leveling off in Without the needed employment growth, many residents in the labor force have moved from the region. While this has moderated the unemployment rate, it has also resulted in a decline of overall school enrollments over the entire ten-year period and an aging of the population in general. With the expansion of the capacity of the region s four-year institution, the competition for college students has resulted in enrollment declines. These trends in the college s service area indicate that enrollment pressures will be negative to neutral for the near term. As the region attempts to grow its economic base, declines should moderate. Salaries and benefits account for 81.4% of the College s unrestricted operating expenses. The College s four bargaining agreements were renegotiated in Fiscal Year 2015 for the period July 1, 2014 to June 30, This report reflects negotiated increases for Fiscal Year Health benefit costs continue to rise. Beginning in Fiscal Year 2011, all covered full-time employee salaries began to contribute to health benefits costs. Their contributions totaled $1.0 million in Utilities and telephone expenses amounted to $1.6 million, or 4% of total unrestricted expenses. As new buildings in the master plan are completed, facilities costs will increase. This increase will be partially offset by expected savings on electricity costs from the solar projects on the Mays Landing and Cape May campuses. The cost of technology continues to grow and, in order to offer exemplary programs, the College must continue to provide instruction, support, and maintenance at a cost of $2.7 million annually. This includes costs to support the College s Colleague management information system on which implementation was completed in Planning for the maintenance of aging facilities and identifying the funding sources required is ongoing. The College currently relies heavily on Chapter 12 funding supported by the counties and state. Most of the College s equipment needs are currently funded through grants from various agencies and equipment leasing fund programs made available through the State. Funds from the college s facilities fee, which is charged on a per student credit hour basis, are dedicated to deferred maintenance. It should be noted that the Board of Trustees has recognized $21.8 million needed for capital projects identified in the College s facilities master plan. Contacting the College s Financial Management This financial report is designed to provide readers with a general overview of Atlantic Cape Community College s finances and to demonstrate the College s accountability for the resources it receives. Questions concerning this report or requests for additional financial information should be directed to Leslie A. Jamison, Dean of Finance, 5100 Black Horse Pike, Mays Landing, N.J Page 23

28 STATEMENTS OF NET POSITION AS OF JUNE 30, 2017 and Component Component College Unit College Unit ASSETS Current assets: Cash and cash equivalents $ 9,380,730 $ 357,848 $ 13,548,839 $ 285,038 Security deposits 1,414 2,309 Investments 1,262,868 1,001,433 Accounts receivable: Students, net of allowance of $1,061,260 and $1,131,983 respectively 987, ,836 Federal, state, county, local 5,331,872 2,993,102 Other 115,321 8,100 50,328 1,990 Pledges receivable 113,065 82,641 Inventories 95,932 96,414 Prepaid expenses 426,160 5, ,683 9,601 Other 20,150 50,100 Total current assets 16,359,474 1,747,170 18,196,611 1,380,703 Noncurrent assets: Restricted cash and cash equivalents 3,821,768 4,009,508 Restricted investments 2,944,229 2,843,288 Capital assets, non-depreciable (Note 16) 10,260,569 4,026,536 Capital assets, net of accumulated depreciation of $54,441,775 and $49,836,704 respectively (Note 16) 65,028,791 66,671,977 Total noncurrent assets 79,111,128 2,944,229 74,708,021 2,843,288 Total assets 95,470,602 4,691,399 92,904,632 4,223,991 DEFERRED OUTFLOWS OF RESOURCES Related to pensions (Note 14) 12,702,895 5,612,130 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 6,424, ,607 6,383, ,574 Unearned revenue 2,079,516 48,026 2,293,055 26,292 Current portion: Deposits 7,064 8,720 Compensated absences 314, ,518 Equipment leasing fund 25,006 25,005 Total current liabilities 8,850, ,633 8,930, ,866 Noncurrent liabilities: Deposits 168,135 94,243 Compensated absences 1,562,763 1,672,733 Equipment leasing fund 124, ,985 Net pension liability (Note 14) 43,163,663 32,894,902 Total noncurrent liabilities 45,019,541-34,811,863 - Total liabilities 53,870, ,633 43,742, ,866 DEFERRED INFLOWS OF RESOURCES Related to pensions (Note 14) 2,299,386 3,306,438 NET POSITION Net Investment in capital assets 75,289,360 70,698,513 Restricted for: Nonexpendable: Scholarships and fellowships 835,685 2,976, ,765 2,901,507 Expendable 3,158, ,834 3,547, ,300 Unrestricted (Deficit) (27,279,336) 400,846 (23,603,807) 351,318 Total net position $ 52,004,018 $ 4,023,766 $ 51,467,648 $ 3,716,125 The accompanying notes are an integral part of the financial statements Page 24

29 STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and Component Component College Unit College Unit REVENUES Operating Revenues: Student tuition and fees (including chargebacks and net of allowances of $11,193,510 and $ 12,464,026 $ 13,010,267 $11,810,732 respectively) Gifts and contributions $ 875,243 $ 661,900 Federal grants and contracts 2,367,206 3,361,387 State and local grants and contracts 411, ,873 Nongovernmental grants and contracts 127, ,422 Sales and services of educational departments 67,627 75,981 Other operating revenues 626, , Auxillary enterprises - student activities 127, ,656 Total operating revenues 16,192, ,243 17,965, ,401 EXPENSES Operating Expenses: Instructional 13,976,029 14,708,794 Public service 733, ,480 Academic support 4,689,638 4,979,425 Student services 5,565,654 5,199,629 Institutional support 12,196, ,167 10,241, ,591 Operations and maintenance of plant 7,182,560 6,999,871 Scholarship and student aid 4,481, ,822 5,262, ,359 Depreciation and amortization 5,028,518 4,662,374 Auxillary enterprises - student activities 128, ,898 Total operating expenses 53,982, ,989 53,061, ,950 Total operating income (loss) (37,790,853) (98,746) (35,096,505) 12,451 NONOPERATING REVENUES (EXPENSES) State appropriations 5,396,752 5,502,421 State appropriations - alternate benefit program 577, ,119 County appropriations 8,431,319 8,408,622 Federal student financial aid 12,001,269 13,359,985 State student financial aid 1,990,726 2,144,892 Gifts 586, ,750 Investment income 100, ,809 81,144 (69,279) Insurance proceeds 291,976 2,680 Repairs funded by capital appropriations and insurance proceeds (332,144) (109,865) Gain on equipment disposals 2,064 10,308 Net nonoperating revenues (expenses) 29,047, ,809 30,426,056 (69,279) Income (loss) before net other revenues (8,743,370) 233,063 (4,670,449) (56,828) OTHER REVENUES Capital appropriations 9,269,879 7,254,485 Additions to permanent endowments 9,861 74,579 8,569 23,636 Total other revenues 9,279,740 74,579 7,263,054 23,636 Changes in net position 536, ,642 2,592,605 (33,192) NET POSITION Net position - beginning of year 51,467,648 3,716,125 48,875,043 3,749,317 Net position - end of year $ 52,004,018 $ 4,023,767 $ 51,467,648 $ 3,716,125 The accompanying notes are an integral part of the financial statements Page 25

30 STATEMENTS OF CASH FLOWS (COLLEGE ONLY) FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 CASH FLOWS FROM OPERATING ACTIVITIES Tuition and fees (including chargebacks) Grants and contracts Payments to suppliers Payments to employees Payments for scholarships and student aid Other receipts Net cash used in operating activities $ ,391,311 2,863,538 (18,023,496) (23,990,575) (3,510,002) 942,620 (30,326,604) $ ,372,787 3,705,651 (18,135,765) (24,754,770) (4,523,411) 1,349,012 (29,986,496) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State appropriations County appropriations Noncapital grants received - student financial aid Gifts and grants received for other than capital purposes Net cash provided by noncapital financing activities 5,976,895 8,431,447 13,891, ,768 28,886,732 6,244,209 8,408,708 15,633, ,233 30,735,091 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital appropriations Proceeds from sale of capital assets Insurance proceeds Payments to suppliers Purchase of capital assets Construction in progress Private gifts for endowment purposes Net cash used in capital and related financing activities 6,695,167 11, ,560 (332,144) (2,425,601) (7,202,887) 9,861 (3,016,857) 7,678,512 17,918 2,680 (109,865) (7,066,341) (1,107,665) 8,569 (576,192) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments Net cash provided by investing activities 100, ,880 81,144 81,144 Net increase (decrease) in cash (4,355,849) 253,547 Cash - beginning of year Cash - end of year $ 17,558,347 13,202,498 $ 17,304,800 17,558,347 RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE COMPARATIVE STATEMENTS OF NET POSITION: Unrestricted Current Restricted Noncurrent $ $ 9,380,730 3,821,768 13,202,498 $ $ 13,548,839 4,009,508 17,558,347 The accompanying notes are an integral part of the financial statements Page 26

31 STATEMENTS OF CASH FLOWS (COLLEGE ONLY) FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 (CONTINUED) RECONCILIATION OF NET OPERATING REVENUES (EXPENSES) TO NET CASH USED IN OPERATING ACTIVITIES: Operating loss Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation expense Pension expense Noncash Student awards -textbook scholarships Change in assets and liabilities Student accounts receivable Federal, state, county and local receivables Other accounts receivable Inventories Prepaid expenses Other assets Accounts payable and accrued liabilities Deposits Deferred revenue Deferred outflow of resources - related to pensions: Contributions made after the measurement date Compensated absences Other liabilities Net cash used in operating activities $ $ (37,790,853) 5,028,518 3,484,051 29,700 (102,059) 125,194 (577) ,523 4, ,888 72,236 (213,539) (1,313,107) (16,058) 982 (30,326,604) $ $ (35,096,505) 4,662,374 1,549,505 8,900 84, ,514 (11,205) (13,204) (556) 3,085 63,987 (81,756) (142,528) (1,294,723) 47,688 (145) (29,986,496) NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Donated textbook vouchers $ - $ 50,000 The accompanying notes are an integral part of the financial statements Page 27

32 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 1: ORGANIZATION Atlantic Cape Community College (the College) is a two-year publicly supported community college operating under the provisions of N.J.S.A. 18A:64 A1, et seq. The College, which is located in Atlantic and Cape May Counties, New Jersey, offers a wide range of programs to meet the needs of the surrounding community. Financial support is received from county and state governments. The Board of Trustees of the College voted on August 28, 1998 to approve a resolution authorizing Atlantic Community College to enter into a joint venture college with Cape May County. Officials from the College, Atlantic County and Cape May County signed a contract outlining the terms of the agreement. The New Jersey Legislature approved changes to the New Jersey Community College funding formula. The jointure agreement became effective January 1, The Counties of Atlantic and Cape May provide support to the College based upon the funding formula specified in the jointure agreement. Atlantic County has eight voting members on the Board of Trustees of the College. Cape May County has four voting members on the Board of Trustees of the College. In addition to these voting members, both counties are represented on the Board of Trustees of the College by the Executive County Superintendent of Schools (Atlantic & Cape May) who is also a voting member. Also, one voting alumnus member from Atlantic or Cape May County is elected for a oneyear term by each year s graduating class. The College President serves as Ex-Officio on the Board of Trustees. Atlantic Cape Community College is a component unit of the County of Atlantic as described in Governmental Accounting Standards Board Statement No. 14 The Financial Reporting Entity. These financial statements would be either blended or discretely presented as part of the County s financial statements if the County prepared its financial statements in accordance with GASB Statement No. 34 Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments. The County of Atlantic currently follows a basis of accounting and reporting model prescribed by the State of New Jersey, Department of Community Affairs, Division of Local Government Services. Therefore, the financial statements of the College are not presented with the County of Atlantic. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Component Units In evaluating how to define the College for financial reporting purposes, management has considered all potential component units. The decision to include any potential component units in the financial reporting entity was made by applying the criteria set forth in GASB Statements No. 14, The Financial Reporting Entity, as amended by GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, and GASB Statement No. 61, The Financial Reporting Entity: Omnibus an amendment of GASB Statements No. 14 and No. 34, and GASB Statement No. 80, Blending Requirements for Certain Component Units an amendment of GASB Statement No. 14. Blended component units, although legally separate entities, are in-substance part of the government s operations. Each Discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government. The basic-but not the only-criterion for including a potential component unit within the reporting entity is the governing body s ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. Other manifestations of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations, and accountability for fiscal matters. A second criterion used in evaluating potential component units is the scope of public service. Application of this criterion involves considering whether the activity benefits the government and / or its citizens. Page 28

33 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Component Units (Continued) A third criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the government is able to exercise oversight responsibilities. Finally, the nature and significance of a potential component unit to the primary government could warrant its inclusion within the reporting entity. Based upon the application of these criteria, the College has determined that Atlantic Cape Community College Foundation, Inc. (the Foundation) meets the requirement for discrete presentation in the financial statements of the College. In accordance with GASB Statements No. 34 and No. 35, certain presentation adjustments to the financial statements of the Foundation were required to conform to the classification and display requirements in the aforementioned GASB Statements, as applicable to the College. The Foundation is a legally separate, tax-exempt entity, and acts primarily as a fund-raising organization to provide funding and support to Atlantic Cape Community College, its students and educational endeavors, through special event fund-raising and community philanthropy. Although the College does not control the timing or amount of receipts from the Foundation, the majority of resources, or income thereon, which the Foundation holds and invests, is restricted to the activities of the College by the donors. During the fiscal years ended June 30, 2017 and 2016, the College received payments of $583,664 and $445,466 from the Foundation for scholarships, other contributions and capital asset donations. Complete financial statements for the Foundation can be obtained from the Foundation Office at 5100 Black Horse Pike, Mays Landing, NJ Basis of Accounting The College prepares its financial statements in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB), including GASB Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments, and GASB Statement No. 35, Basic Financial Statements and Management s Discussion and Analysis for Public Colleges and Universities, and the National Association of College and University Business Officers (NACUBO). The College follows the business-type activities reporting requirements of GASB Statement Nos. 34 and 35 for financial reporting purposes. Such financial statements are prepared on the accrual basis. The Foundation reports as a not-for-profit organization under Financial Accounting Standards Board (FASB) standards. As a result, certain revenue recognition criteria and presentation features are different from GASB revenue recognition and presentation features. Fund Accounting In order to ensure observance of limitations and restrictions placed on the use of resources available to the College, the accounts of the College are maintained in accordance with the principles of fund accounting. The procedure of fund accounting is one by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund. However, in the accompanying financial statements, all funds are combined for an entity-wide presentation to meet the financial reporting requirements under accounting principles generally accepted in the United States of America as promulgated by GASB. Page 29

34 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Contributions Contributions, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year are discounted at an appropriate discount rate commensurate with the risks involved. Amortization of discount is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. An allowance for uncollectible contributions receivable is provided based upon management s judgment including such factors as prior collection history, type of contribution and nature of fund-raising activity. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents includes petty cash, amounts in deposits, and short-term investments with original maturities of three months or less. Certificates of deposit that have original maturity dates of more than three months but less than twelve months from the date of purchase are classified as investments. Cash in excess of daily requirements is invested in short-term marketable securities consisting of commercial paper, certificates of deposit and U.S. Treasury obligations. Such investments with maturities of three months or less are deemed to be cash equivalents for the purpose of the College s financial statement presentation. Cash is categorized as restricted in compliance with purpose restrictions, such as endowment provisions, Board of Trustee funds designations, or federal, state, or other external agency requirements. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. GASB 40 requires that disclosure be made as to the credit rating of all fixed income securities except obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government. The cash management fund is unrated. New Jersey statutes require that county colleges deposit public funds in public depositories located in New Jersey that are insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation, or by any other agency of the United States that insures deposits made in public depositories. County colleges are also permitted to deposit public funds in the State of New Jersey Cash Management Fund. New Jersey statutes require public depositories to maintain collateral for deposits of public funds that exceed depository insurance limits as follows: The market value of the collateral must be equal to at least 5% of the average daily balance of collected public funds on deposit. Page 30

35 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Credit Risk (Continued) In addition to the above collateral requirements, if the public funds deposited exceed 75% of the capital funds of the depository, the depository must provide collateral having a market value at least equal to 100% of the amount exceeding 75%. All collateral must be deposited with the Federal Reserve Bank of New York, the Federal Reserve Bank of Philadelphia, the Federal Home Loan Bank of New York, or a banking institution that is a member of the Federal Reserve System and has capital funds of not less than $25,000,000. Accounts Receivable Accounts receivable consists of tuition and fees charged to students and various other receivables. Accounts receivable are recorded net of estimated uncollectible amounts. Revenues are charged and an allowance is credited with a provision for uncollectible accounts based on experience and on any unusual circumstances that may affect the ability of students or student sponsors to meet their obligations. It is the College policy to write off uncollectible accounts after two years of delinquency. Accounts deemed uncollectible are charged against this allowance. Accounts receivable are reported net of an accumulated allowance of $1,061,260 and $1,131,983 as of June 30, 2017 and 2016, respectively. Tuition Each year the Board of Trustees sets tuition and fee rates based on a per credit hour rate. Rates vary based upon residence within Atlantic and Cape May Counties, out of county, out of state and international students. Inventory Inventory is valued at cost, with cost being determined on a first-in, first-out basis. Prepaid Expenses Prepaid expenses represent payments made to vendors for services that will benefit periods beyond June 30, Capital Assets Capital assets include land, building and improvements, equipment and infrastructure assets, such as sewer. Capital assets are defined by the College as assets with an initial unit cost of $2,500 or more, or, an aggregate purchase greater than $15,000. The costs of normal maintenance and repairs that do not add value to the asset are not capitalized. Major outlays for capital assets are capitalized as projects are constructed. Such assets are recorded at historical cost and net of accumulated depreciation and amortization of $54,441,775 and $49,836,704 for the years ended June 30, 2017 and 2016, respectively. Non-Current Liabilities Non-current liabilities include (1) principal amounts of equipment leasing obligations with contractual maturities greater than one year; (2) estimated amounts for accrued compensated absences and other liabilities that will not be paid within the next fiscal year. Page 31

36 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) On-Behalf Payments for Pension Contributions In fiscal year 1997, the College adopted the requirements of Governmental Accounting Standards Board (GASB) Statement No. 24 Accounting and Financial Reporting for Certain Grants and Other Financial Assistance. GASB Statement No. 24 recommends that revenue and expenditures be recorded in the financial statements for the State of New Jersey Pension payments for the Alternate Benefit Program (ABP). Depreciation and Amortization Depreciation has been applied using the straight-line method, with the half-year convention, over the following useful lives: Buildings and improvements 40 years Infrastructure 40 years Improvements (acquired after June 30, 2005) 15 years Other improvements (acquired after June 30, 2006) 25 years Small building 20 years Equipment and furnishings 10 years Vehicles 7 years Library books and audiovisual equipment 7 years Computer equipment (acquired after June 30, 2001) 5 years Amortization has been applied over the term of the applicable lease as follows: Leasehold improvements 2.5 to 5 years Other assets 5 to 20 years Depreciation and amortization expense amounted to $5,028,518 and $4,662,374 for the years ended June 30, 2017 and 2016, respectively. Classification of Revenue The College has classified its revenues as either operating or non-operating revenues in accordance with GASB Statement No. 33 Accounting and Financial Reporting for non-exchange Transactions. Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship discounts and allowances, (2) sales and services of auxiliary enterprises, net of scholarship discounts and allowances and (3) most federal and state grants and contracts as well as federal appropriations. Non-operating revenues include activities that have the characteristics of non-exchange transactions, such as gifts and contributions, and other revenue sources that are defined as non-operating revenues by GASB Statement No. 9 Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting and GASB No. 35, such as state appropriations and investment income. Unearned Revenue Unearned revenue represents tuition revenue that has been received on or before June 30, 2017 for classes that are scheduled in Summer and Fall It may also include cash which has been received for grants and/ or commissions but not yet earned. Enrollment from an academic term (for example, summer session) which is conducted over a fiscal year end, is reported totally within the fiscal year in which the term is predominantly conducted. The first Summer 2017 session began May 22, Page 32

37 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Scholarship Discounts and Allowances Student tuition and fee revenues are reported net of scholarship discount and allowances in the statement of revenues, expenses and changes in net position. Scholarship discount and allowances are the difference between the stated charge for goods and services provided by the College, and the amount that is paid by students and/or third parties making payments on the students behalf. Certain government grants, such as Pell grants, as well as other federal grants and state grants are recorded as either operating or non-operating revenue in the College s financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees, the College has recorded a scholarship discount and allowance. The amount of scholarship discount and allowances for the fiscal years ended June 30, 2017 and 2016 was $11,193,510 and $11,810,732, respectively. Federal Financial Assistance Programs The College participates in the following federally funded financial assistance programs: Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Federal Work-Study Grants and Federal Direct Loan Programs (FDLP). Federal programs are audited in accordance with the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Income Taxes The College is a political subdivision of the State of New Jersey and is excluded from Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended. Deferred Outflows and Deferred Inflows of Resources The statement of net position reports separate sections for deferred outflows of resources and deferred inflows of resources. Deferred outflows of resources, reported after total assets, represents a reduction of net position that applies to a future period(s) and will be recognized as an outflow of resources (expense) at that time. Deferred inflows of resources, reported after total liabilities, represents an acquisition of net position that applies to a future period(s) and will be recognized as an inflow of resources (revenue) at that time. Transactions are classified as deferred outflows of resources and deferred inflows of resources only when specifically prescribed by the Governmental Accounting Standards Board (GASB) standards. The College is required to report the following as deferred outflows of resources and deferred inflows of resources: Defined Benefit Pension Plans - The difference between expected (actuarial) and actual experience, changes in actuarial assumptions, net difference between projected (actuarial) and actual earnings on pension plan investments, changes in the College s proportion of expenses and liabilities to the pension as a whole, differences between the College s pension contribution and its proportionate share of contributions, and the College s pension contributions subsequent to the pension valuation measurement date. Compensated Absences Compensated absences are those absences for which employees will be paid for vacation and sick leave when used. A liability is accrued for compensated absences that are earned and unused in accordance with College policy at June 30 th of each fiscal year. Page 33

38 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public Employees' Retirement System ( PERS ) and additions to/deductions from PERS s fiduciary net position have been determined on the same basis as they are reported by the plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Net Position The College s net position is classified as follows: Net Investment in Capital Assets represents the College s total investment in capital assets, net of accumulated depreciation. Restricted for Nonexpendable Net Position include resources in which the College is prohibited from expending the principal portion of the funds and is legally or contractually obligated to spend the interest earnings in accordance with restrictions imposed by external third parties. Restricted for Expendable Net Position include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties. Unrestricted Net Position represent resources derived from student tuition and fees, state and county appropriations and sales and services of educational departments or auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College and may be used at the discretion of the Board to meet current expenses for any purposes. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. The College s policy is to first utilize available restricted expendable, and then unrestricted, resources in the conduct of its operations. Impact of Recently Issued Accounting Principles Recently Issued and Adopted Accounting Pronouncements The College implemented the following GASB Statements for the fiscal year ended June 30, 2017: Statement No. 80, Blending Requirements for Certain Component Units an amendment of GASB Statement No. 14. This Statement amends the blending requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of Statement No. 39, Determining Whether Certain Organizations Are Component Units. The adoption of this Statement had no impact on the basic financial statements of the College. Page 34

39 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Impact of Recently Issued Accounting Principles (Continued) Recently Issued and Adopted Accounting Pronouncements (Continued) Statement No. 82, Pension Issues and amendment of GASB Statements No. 67, No. 68, and No. 73. This Statement addresses issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. The adoption of this Statement did not have a significant impact on the basic financial statements of the College. Recently Issued Accounting Pronouncements The GASB has issued the following Statements that will become effective for the College for the fiscal year ending June 30, 2018: Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. The Statement will become effective for the College in fiscal year Management has not yet determined the impact of this Statement on the basic financial statements of the College. Reclassifications Certain accounts in the prior year financial statements have been reclassified for comparative purposes to conform to the presentation in the current year financial statements. NOTE 3: SUPPORT OF THE COLLEGE State Aid The New Jersey Department of Treasury, Office of Management and Budget (OMB) allocates the annual appropriation for community college operating aid according to credit hour enrollments as prescribed by N.J.S.A. 18A:64A-22. County Aid Support is provided by the Counties of Atlantic and Cape May and from in-county, out-of-county, and out-of-state students who pay tuition and fees up to approximately $2,223, $3,093 and $3,873, respectively, per full-time student for each of the two academic semesters. Page 35

40 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 3: SUPPORT OF THE COLLEGE (CONTINUED) County Aid (Continued) The Board of School Estimate of Atlantic Cape Community College (consisting of four members of the Boards of Chosen Freeholders (two from each county) and two members of the College s Board of Trustees) adopts a budget for each fiscal year ending June 30 and levies the amount necessary to be raised during that fiscal period on the Atlantic County and Cape May County Boards of Chosen Freeholders. The Counties operate on a calendar year fiscal period and generate the necessary revenue through a levy on a local property in the form of taxation. NOTE 4: ECONOMIC DEPENDENCY The College receives a substantial amount of its support from federal, state and county governments. A significant reduction in the level of support, if this were to occur, would have an effect on the College s programs and activities. NOTE 5: CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of the following as of June 30, 2017 and 2016: Cash and cash equivalents: Cash on hand $ 1,900 1,900 Cash (bank accounts) 8,138,025 14,515,466 New Jersey Cash Management Fund 5,062,573 3,040,981 $ 13,202,498 17,558,347 Bank balances of cash amounted to $8,377,375 and $14,855,071 as of June 30, 2017 and 2016, respectively of which $250,000 was FDIC insured. Bank balances in excess of insured amounts are collateralized in accordance with the provisions of the Governmental Unit Deposit Protection Act (GUDPA). New Jersey Cash Management Fund During the year, the College participated in the New Jersey Cash Management Fund. The Fund is governed by regulations of the State investment Council, who prescribe standards designed to insure the quality of the investments in order to minimize risk to the Fund s participants. Deposits with the New Jersey Cash Management Fund are not subject to FDIC or GUDPA categorizations. At June 30, 2017 and 2016, the College had $5,062,573 and $3,040,981, respectively, invested in the Fund. NOTE 6: ENDOWMENTS Donor restricted endowments totaled $835,685 and $825,765 for the fiscal years ended June 30, 2017 and Investments, if any, are stated at fair value at the date of the financial statements. Page 36

41 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 7: INVENTORIES Inventory for the college at June 30, 2017 and 2016 consisted of the following: Supplies $ 75,229 $ 72,982 Perishable Stores 20,703 23,432 $ 95,932 $ 96,414 NOTE 8: NON-CURRENT LIABILITIES Non-current liability activity for the fiscal years ended June 30, 2017 and 2016 was as follows: June 30, 2016 Additions Reductions June 30, 2017 Current Portion Deposits Compensated Absences Equipment Leasing Fund Net Pension Liability $ 102,963 $ 72,236 $ - $ 175,199 $ 7,064 1,893, ,990 32,894, ,120-18,180,277 (317,178) (25,004) (7,911,516) 1,877, ,986 43,163, ,430 25,006 - $ 35,066,106 $ 18,553,633 $ (8,253,698) $ 45,366,041 $ 346,500 June 30, 2015 Additions Reductions June 30, 2016 Current Portion Deposits Compensated Absences Equipment Leasing Fund Net Pension Liability $ $ 184,719 1,845, ,993 28,947,163 31,177,438 $ $ - 262,651-9,424,267 9,686,918 $ $ (81,756) $ (214,963) (25,003) (5,476,528) (5,798,250) $ 102,963 1,893, ,990 32,894,902 35,066,106 $ $ 8, ,518 25, ,243 NOTE 9: COMPENSATED ABSENCES College employees may accrue annual vacation and sick leave based on length of service but subject to certain limitations regarding the amount that will be paid in the event of retirement or termination. Personal time earned but unused at June 30 is rolled into sick leave and accounted for in compensated absences. The estimated costs of compensated absences, including the college s FICA match, for which employees are vested is estimated at $1,877,193 and $1,893,251 for the fiscal years ended June 30, 2017 and 2016, respectively. Page 37

42 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 10: NET POSITION The following is a summary of Net Position balances of the College for the fiscal years ended June 30, 2017 and 2016: Net Investment in Capital Assets Gross $ 75,289,390 $ 70,698,513 Related Debt Total Net Invested In Capital Assets 75,289,390 70,698,513 Restricted Net Position Nonexpendable Scholarships and Fellowships 835, ,765 Expendable Grants, Scholarships and Fellowships 223, ,591 Consent Decree 210, ,778 State Unemployment Fund 775, ,000 Capital Projects 878, ,421 Renewal and Replacement Reserve (JEC Bond Act) 891, ,170 Student Government 89,307 90,534 Appropriated for Encumbrances 89, ,683 Subtotal Expendable 3,158,309 3,547,177 Total Restricted Net Position 3,993,994 4,372,942 Unrestricted Net Position (Deficit) Assignment to FY18 and FY17 Budget 1,093,216 1,124,894 Pension Related Items (32,760,154) (30,589,210) Undesignated before Pension Related Items 4,387,602 5,860,509 Total Unrestricted Net Position (Deficit) (27,279,336) (23,603,807) TOTAL NET POSITION $ 52,004,018 $ 51,467,648 NOTE 11: NONCASH DONATIONS During the fiscal years ended June 30, 2017 and 2016, the college received the following non-cash donations that have been reflected in the financial statements: Student textbook vouchers $ 0 $ 50,000 Page 38

43 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 12: EXPENDITURES Operating expenditures by natural classification for the fiscal years ended June 30, 2017 and 2016 were: Compensation: Salaries Staff benefits Total Compensation $ 23,856,062 11,987,261 35,843,323 $ 24,805,205 9,877,457 34,682,662 Other Expenditures: Supplies and other Utilities and telephone Insurance Repairs and maintenance Rent Depreciation and amortization Scholarship and student aid Travel Total other expenses before auxiliary enterprises 5,843,985 1,566, , ,213 21,299 5,028,518 4,481, ,708 18,010,594 5,539,948 1,633, , ,320 7,284 4,662,374 5,262, ,147 18,216,083 Auxiliary Enterprises Student activities expenses 128, ,898 Total Expenditures $ 53,982,853 $ 53,061,643 NOTE 13: DEFERRED COMPENSATION SALARY ACCOUNT The College offers its employees a Deferred Compensation Plan in accordance with Internal Revenue Service Code 457. The Plan, available to full time employees at their option, permits employees to defer a portion of their salary to future years. The deferred compensation is not available to participants until termination, retirement, death or unforeseeable emergency. Amounts deferred under Section 457 plans must be held in trust for the exclusive benefit of participating employees and not be accessible by the College or its creditors. The Plan is administered by the College through TIAA-CREF. NOTE 14: PENSION PLANS The College participates in several retirement plans, administered by the State of New Jersey, Division of Pensions and Benefits (the Division ), covering its employees the Public Employees' Retirement System (PERS), the New Jersey Alternate Benefit Program (ABP) and the Defined Contribution Retirement Program (DCRP). PERS is a defined benefit pension plan while ABP and DCRP are defined contribution pension plans. Generally, all employees, except certain part-time employees, participate in one of these plans. Page 39

44 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) The State issues a publicly available Comprehensive Annual Financial Report (CAFR) of the State of New Jersey Division of Pensions and Benefits, which includes financial statements, required supplementary information and detailed information about the PERS s fiduciary net position. This CAFR can be obtained by writing to the State of New Jersey or by visiting the website below. State of New Jersey Division of Pensions and Benefits P.O. Box 295 Trenton, New Jersey General Information About the Pension Plans Plan Descriptions Public Employees' Retirement System - The PERS is a cost-sharing multiple-employer defined benefit pension plan which was established as of January 1, 1955, under the provisions of N.J.S.A. 43:15A. The PERS s designated purpose is to provide retirement, death, disability and medical benefits to certain qualified members. Membership in the PERS is mandatory for substantially all full-time employees of the College, provided the employee is not required to be a member of another stateadministered retirement system or other state pensions fund or local jurisdiction s pension fund. The PERS s Board of Trustees is primarily responsible for the administration of the PERS. Alternate Benefit Program - The ABP is a tax-sheltered, defined contribution retirement program for certain higher education faculty, instructors and administrators which was established pursuant to P.L.1969, c. 242 (N.J.S.A. 52:18A-107 et seq., specifically, 18A:66-192). The ABP is an agency fund overseen by the State of New Jersey Division of Pensions and Benefits. Defined Contribution Retirement Program - The Defined Contribution Retirement Program is a multiple-employer defined contribution pension fund established on July 1, 2007 under the provisions of Chapter 92, P.L. 2007, and Chapter 103, P.L (N.J.S.A. 43:15C-1 et. seq.). The DCRP is a tax-qualified defined contribution money purchase pension plan under Internal Revenue Code (IRC) 401(a) et seq., and is a governmental plan within the meaning of IRC 414(d). The DCRP provides retirement benefits for eligible employees and their beneficiaries. Individuals covered under DCRP are employees enrolled in TPAF or PERS on or after July 1, 2007, who earn salary in excess of established maximum compensation limits; employees enrolled in SPRS or PFRS May 21, 2010, who earn salary in excess of established maximum compensation limits; employees otherwise eligible to enroll in TPAF or PERS on or after November 2, 2008, who do not earn the minimum annual salary for tier 3 enrollment but who earn salary of at least $5, annually; and employees otherwise eligible to enroll in TPAF or PERS after May 21, 2010 who do not work the minimum number of hours per week required for tiers 4 or 5 enrollment, but who earn salary of at least $5, annually. Page 40

45 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) General Information About the Pension Plans (Continued) Vesting and Benefits Provisions Public Employees Retirement System - The vesting and benefit provisions are set by N.J.S.A. 43:15A and 43:3B. The PERS provides retirement, death and disability benefits. All benefits vest after ten years of service, except for medical benefits, which vest after 25 years of service or under the disability provisions of the PERS. The following represents the PERS membership tiers: Tier Definition 1 Members who were enrolled prior to July 1, Members who were eligible to enroll on or after July 1, 2007 and prior to November 2, Members who were eligible to enroll on or after November 2, 2008 and prior to May 21, Members who were eligible to enroll after May 21, 2010 and prior to June 28, Members who were eligible to enroll on or after June 28, 2011 Service retirement benefits of 1/55th of final average salary for each year of service credit is available to tiers 1 and 2 members upon reaching age 60 and to tier 3 members upon reaching age 62. Service retirement benefits of 1/60th of final average salary for each year of service credit is available to tier 4 members upon reaching age 62 and tier 5 members upon reaching age 65. Early retirement benefits are available to tiers 1 and 2 members before reaching age 60, tiers 3 and 4 before age 62 with 25 or more years of service credit and tier 5 with 30 or more years of service credit before age 65. Benefits are reduced by a fraction of a percent for each month that a member retires prior to the age at which a member can receive full early retirement benefits in accordance with their respective tier. Tier 1 members can receive an unreduced benefit from age 55 to age 60 if they have at least 25 years of service. Deferred retirement is available to members who have at least 10 years of service credit and have not reached the service retirement age for the respective tier. Deferred retirement is available to members who have at least 10 years of service credit and have not reached the service retirement age for the respective tier. Alternate Benefit Program - ABP provides retirement benefits, life insurance and disability coverage to qualified members. Benefits are determined by the amount of individual accumulations and the retirement income option selected. All benefits vest after the completion of one year of service. Defined Contribution Retirement Program - Eligible members are provided with a defined contribution retirement plan intended to qualify for favorable Federal income tax treatment under IRC Section 401(a), a noncontributory group life insurance plan and a noncontributory group disability benefit plan. A participant's interest in that portion of his or her defined contribution retirement plan account attributable to employee contributions shall immediately become and shall at all times remain fully vested and nonforfeitable. A participant's interest in that portion of his or her defined contribution retirement plan account attributable to employer contributions shall be vested and nonforfeitable on the date the participant commences the second year of employment or upon his or her attainment of age 65, while employed by an employer, whichever occurs first. Page 41

46 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) General Information About the Pension Plans (Continued) Contributions Public Employees Retirement System - The contribution policy is set by N.J.S.A. 43:15A and requires contributions by active members and contributing employers. Members contribute at a uniform rate. Pursuant to the provisions of Chapter 78, P.L. 2011, the active member contribution rate increased from 5.5% of annual compensation to 6.5% plus an additional 1% phased-in over 7 years beginning in July The member contribution rate was 7.20% and 7.06% in fiscal years 2017 and 2016 respectively. The phase-in of the additional incremental member contribution rate takes place in July of each subsequent fiscal year. The rate for members who are eligible for the Prosecutors Part of PERS (Chapter 366, P.L. 2001) increased from 8.5% of base salary to 10%. Employers' contribution amounts are based on an actuarially determined rate. The College s contribution amounts are based on an actuarially determined rate which includes the normal cost and unfunded accrued liability. The College s contractually required contribution rates were 13.77% and 13.15% of the College s covered payroll for the fiscal years ended June 30, 2017 and 2016, respectively. These amounts were actuarially determined as the amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year, including an additional amount to finance any unfunded accrued liability. Based on the most recent PERS measurement date of June 30, 2016, the College s contractually required contribution to the pension plan for the fiscal year ended June 30, 2017 was $1,294,723, and was paid by April 1, College employee contributions to the pension plan during the fiscal year ended June 30, 2017 were $692,022. Based on the PERS measurement date of June 30, 2015, the College s contractually required contribution to the pension plan for the fiscal year ended June 30, 2016 was $1,259,836, and was paid by April 1, College employee contributions to the pension plan during the fiscal year ended June 30, 2017 were $700,173. Alternate Benefit Program - The contributions requirements of plan members are determined by State statute. In accordance with N.J.S.A. 18A:66-173, required contributions, calculated on the employee s base pay, are 5% for plan members, and 8% for employers. Plan members may make additional voluntary contributions subject to section 403(b) of the internal revenue code. Under N.J.S.A 18A:66-174, most employer contributions are made by the State of New Jersey onbehalf of the College. The College is responsible for the employer contributions for non-academic employees. Plan members direct the investment of contributions to insurance companies and mutual fund companies selected by the New Jersey Division of Pensions' Pension Provider Selector Board. These companies administer plan funds based on alternate benefit contracts with the New Jersey Division of Pensions. Page 42

47 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) General Information About the Pension Plans (Continued) Contributions (Continued) Alternate Benefit Program (Continued) Amounts deferred under the plan are not available to employees until termination, retirement, death or unforeseeable emergency. The plan carriers are as follows: MetLife (Travelers/Citi Street) AXA Financial (Equitable) MassMutual Retirement Services (The Hartford) Voya Financial Services Prudential Retirement Services Teacher s Insurance and Annuity Association/College Retirement Equities Fund (TIAA/CREF) The Variable Annuity Life Insurance Company (VALIC) During the fiscal year end June 30, 2017, the College s share of the employer contributions for participants not eligible for State reimbursement was $146,041, employee contributions to the plan were $453,270, and the State of New Jersey made on-behalf payments for the College contributions of $577,873. During the fiscal year end June 30, 2016, the College s share of the employer contributions for participants not eligible for State reimbursement was $131,053, employee contributions to the plan were $472,721 and the State of New Jersey made on-behalf payments for the College contributions of $624,119. Defined Contribution Retirement Program - The contribution policy is set by N.J.S.A. 43:15C-3 and requires contributions by active members and contributing employers. In accordance with Chapter 92, P.L and Chapter 103, P.L. 2007, plan members are required to contribute 5.5% of their annual covered salary. In addition to the employee contributions, the College contributes 3% of the employees' base salary, for each pay period, to Prudential Financial not later than the fifth business day after the date on which the employee is paid for that pay period. For the fiscal year ended June 30, 2017, employee contributions totaled $11,709, and the College recognized pension expense of $6,387. There were no forfeitures during this fiscal year. For the fiscal year ended June 30, 2016, employee contributions totaled $14,379, and the College recognized pension expense of $7,843. There were no forfeitures during this fiscal year. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions The following information relates only to the Public Employees' Retirement System ( PERS ), which is a cost-sharing multiple-employer defined benefit pension plan. The College reported a liability of $43,163,663 and $32,894,902 for its proportionate share of the net pension liability for the fiscal years ended June 30, 2017 and 2016, respectively. The net pension liability reported at June 30, 2017 was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, The total pension liability was calculated through the use of updated procedures to roll forward from the actuarial valuation date to the measurement date of June 30, The College s proportion of the net pension liability was based on a projection of the College s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, Page 43

48 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) actuarially determined. For the June 30, 2016 measurement date, the College s proportion was %, which was a decrease of % from its proportion measured as of June 30, The net pension liability reported at June 30, 2016 was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, The total pension liability was calculated through the use of updated procedures to roll forward from the actuarial valuation date to the measurement date of June 30, The College s proportion of the net pension liability was based on a projection of the College s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. For the June 30, 2015 measurement date, the College s proportion was %, which was a decrease of % from its proportion measured as of June 30, The College recognized $3,484,051 and $1,549,505, in its financial statements for pension expense for PERS, for the fiscal years ended June 30, 2017 and 2016, respectively. These amounts were based on the plans June 30, 2016 and 2015 measurement dates, respectively. At June 30, 2017 and 2016, the College reported deferred outflows of resources and deferred inflows of resources related to PERS from the following sources: Measurement Date Measurement Dae Date June , 2016 June 30, 2015 Deferred Deferred Deferred Deferred Outflows Inflows OUtflo>M Inflows of Resources of Resources of Resources of Resources Differences between ~ected and Actual E>q:>erience $ 802,713 $ - $ 784,757 $ - Changes of Assumptions 8,941,205-3,532,650 - Net Difference between Projected and Actual Earnings on Pension Plan I lllestments 1,645, ,887 Changes in Proportion and Differences between College Contrirutions and Proi:ortionate Share of Contrirutions - 2,299, ,551 CoDege ContribUtions SUbsequent to the Measurement Ocie s s s s Page 44

49 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) $1,313,107 and $1,294,723 included in deferred outflows of resources, for the June 30, 2016 and 2015 measurement dates, respectively, will be included as a reduction of the net pension liability in fiscal year ending June 30, 2018 and 2017, respectively. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending June 30, $ 1,927,154 1,927,154 2,333,725 2,125, ,008 $ 9,090, The amortization of the above other deferred outflows of resources and deferred inflows of resources related to pensions will be over the following number of years: Deferred Deferred Outflows Inflows of Resources of Resources Differences between Expected and Actual Experience Year of Pension Plan Deferral: June 30, June 30, June 30, Changes of Assumptions Year of Pension Plan Deferral: June 30, June 30, June 30, Net Difference between Projected and Actual Earnings on Pension Plan Investments Year of Pension Plan Deferral: June 30, June 30, June 30, Changes in Proportion and Differences between School District Contributions and Proportionate Share of Contributions Year of Pension Plan Deferral: June 30, June 30, June 30, Page 45

50 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) Actuarial Assumptions The net pension liability at June 30, 2017 was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, The total pension liability was calculated through the use of updated procedures to roll forward from the actuarial valuation date to the measurement date of June 30, The net pension liability at June 30, 2016 was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, The total pension liability was calculated through the use of updated procedures to roll forward from the actuarial valuation date to the measurement date of June 30, These actuarial valuations used the following actuarial assumptions, applied to all periods included in the measurement: Measurement Date June 30, 2016 Measurement Date June 30, 2015 Inflation 3.08% 3.04% Salary Increases: Through 2026 Thereafter 1.65% % Based on Age 2.65% % Based on Age 2.15% % Based on Age 3.15% % Based on Age Investment Rate of Return 7.65% 7.90% Mortality Rate Table RP-2000 RP-2000 Period of Actuarial Experience Study upon which Actuarial Assumptions were Based July 1, June 30, 2014 July 1, June 30, 2011 For the June 30, 2016 measurement date, pre-retirement mortality rates were based on the RP-2000 Employee Preretirement Mortality Table for male and female active participants. Mortality tables are set back 2 years for males and 7 years for females. In addition, the tables provide for future improvements in mortality from the base year of 2013 using a generational approach based on the plan actuary s modified MP-2014 projection scale. Post-retirement mortality rates were based on the RP Combined Healthy Male and Female Mortality Tables (set back 1 year for males and females) for service retirements and beneficiaries of former members and a one-year static projection based on mortality improvement Scale AA. In addition, the tables for service retirements and beneficiaries of former members provide for future improvements in mortality from the base year of 2013 using a generational approach based on the plan actuary s modified MP-2014 projection scale. Disability retirement rates used to value disabled retirees were based on the RP-2000 Disabled Mortality Table (set back 3 years for males and set forward 1 year for females). Page 46

51 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) Actuarial Assumptions (Continued) For the June 30, 2015 measurement date, Mortality rates were based on the RP-2000 Combined Healthy Male and Female Mortality Tables (setback 1 year for males and females) for service retirement and beneficiaries of former members with adjustments for mortality improvements from the base year of 2012 based on Projection Scale AA. The RP-2000 Disabled Mortality Tables (setback 3 years for males and setback 1 year for females) are used to value disabled retirees. In accordance with State statute, the long-term expected rate of return on plan investments (7.65% at the June 30, 2016 measurement date and 7.90% at the 2015 measurement date) is determined by the State Treasurer, after consultation with the Directors of the Division of Investments and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic rates of return for each major asset class included in target asset allocation are summarized in the following tables: Measurement Date Measurement Date June 30, 2016 June 30, 2015 Long-Term Long-Term Target Expected Real Target Expected Real Asset Class Allocation Rate of Return Allocation Rate of Return Cash 5.00% 0.87% 5.00% 1.04% U.S. Treasuries 1.50% 1.74% 1.75% 1.64% Investment Grade Credit 8.00% 1.79% 10.00% 1.79% Mortgages 2.00% 1.67% 2.10% 1.62% High Yield Bonds 2.00% 4.56% 2.00% 4.03% Inflation-Indexed Bonds 1.50% 3.44% 1.50% 3.25% Broad U.S. Equities 26.00% 8.53% 27.25% 8.52% Developed Foreign Equities 13.25% 6.83% 12.00% 6.88% Emerging Market Equities 6.50% 9.95% 6.40% 10.00% Private Equity 9.00% 12.40% 9.25% 12.41% Hedge Funds / Absolute Return 12.50% 4.68% 12.00% 4.72% Real Estate (Property) 2.00% 6.91% 2.00% 6.83% Commodities 0.50% 5.45% 1.00% 5.32% Global Debt ex U.S. 5.00% -0.25% 3.50% -0.40% REIT 5.25% 5.63% 4.25% 5.12% Discount Rate June 30, 2016 Measurement Date - The discount rate used to measure the total pension liability at the June 30, 2016 measurement date was 3.98%. The respective single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.65%, and a municipal bond rate of 2.85%, based on the Bond Buyer Go 20-Bond Municipal Bond Page 47

52 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) Actuarial Assumptions (Continued) Index which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made based on the contribution rate in the most recent fiscal year. Based on those assumptions, the plan s fiduciary net position was projected to be available to make projected future benefit payments of current plan members through Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2034, and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability. Discount Rate June 30, 2015 Measurement Date - The discount rate used to measure the total pension liability was 4.90% as of the June 30, 2015 measurement date. The single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.90%, and a municipal bond rate of 3.80%, based on the Bond Buyer Go 20-Bond Municipal Bond Index which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made based on the average of the last five years of contributions made in relation to the last five years of actuarially determined contributions. Based on those assumptions, the plan s fiduciary net position was projected to be available to make projected future benefit payments of current plan members through Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2033, and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability. Sensitivity of College s Proportionate Share of Net Pension Liability to Changes in the Discount Rate The following presents the College s proportionate share of the net pension liability at the June 30, 2016 and 2015 measurement dates, respectively. These amounts were calculated using a discount rate of 3.98% for June 30, 2016 and 4.90% for June 30, 2015, as well as what the College s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rates used: June 30, 2016 Measurement Date 1% Decrease (2.98%) Current Discount Rate (3.98%) 1% Increase (4.98%) College's Proportionate Share of the Net Pension Liability $52,892,031 $43,163,663 $35,132,052 June 30, 2015 Measurement Date 1% Decrease (3.90%) Current Discount Rate (4.90%) 1% Increase (5.90%) College's Proportionate Share of the Net Pension Liability $40,884,339 $32,894,902 $26,196,617 Page 48

53 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 14: PENSION PLANS (CONTINUED) Pension Plan Fiduciary Net Position For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the respective fiduciary net position of the PERS and additions to/deductions from PERS respective fiduciary net position have been determined on the same basis as they are reported by PERS. Accordingly, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. For additional information about PERS, please refer to the plan s Comprehensive Annual Financial Report (CAFR), which can be found at NOTE 15: CAPITAL IMPROVEMENT PROGRAM At June 30, 2017, the status of bond related capital improvement projects was: Budget Expended FY16 Chapter 12 Atlantic County $ 3,000,000 $ 1,062,746 FY15 Chapter 12 Atlantic County 3,200, ,475 FY14 Chapter 12 Atlantic County 4,200,000 3,630,040 FY13 Chapter 12 Atlantic County 1,500, ,789 FY12 Chapter 12 Atlantic County 8,500,000 6,148,384 FY10 Chapter 12 Atlantic County 2,352,750 2,067,442 FY08 Chapter 12 Atlantic County 9,009,000 8,020,884 FY07 Chapter 12 Atlantic County 6,244,000 6,141,693 The bond related capital improvement project expenditures have been reflected in the accompanying financial statements. Reimbursements from the County and the State occur as capital expenditures are incurred and are recorded by the College in accordance with the terms of the agreements. Page 49

54 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 16: CAPITAL ASSET ACTIVITY The fiscal year 2017 and 2016 activity in capital assets and accumulated depreciation was as follows: June 30, 2016 June 30, 2017 Balance Additions Retirements Balance Non-depreciable assets: Land $2,370,097 $ - $ - $2,370,097 Construction in Progress 1,656,439 7,202,887 (968,854) 7,890,472 4,026,536 7,202,887 (968,854) 10,260,569 Depreciable assets: Land Improvements 2,391, ,391,004 Infrastructure 224, , ,933 Buildings and Improvements 96,391,722 2,533,973-98,925,695 Furniture and Equipment 12,890, ,844 (311,868) 12,873,590 Library Collection 1,359,467 13,557 (120,703) 1,252,321 Other Improvements 9, ,600 Leasehold Improvements 121, ,295 Other Assets 3,120,132 64,996-3,185, ,508,681 3,394,456 (432,571) 119,470,566 Less accumulated depreciation and amortization: Land Improvements 1,314, ,400-1,473,849 Infrastructure 28,957 11,710-40,667 Buildings and Improvements 38,287,882 3,565,151-41,853,033 Furniture and Equipment 7,364,756 1,040,869 (302,744) 8,102,881 Library Collection 1,273,346 32,218 (120,703) 1,184,861 Other Improvements 3, ,032 Leasehold Improvements 121, ,295 Other Assets 1,442, ,786-1,661,157 49,836,704 5,028,518 (423,447) 54,441,775 Net Depreciable Assets 66,671,977 (1,634,062) (9,124) 65,028,791 Net Capital Assets $70,698,513 $5,568,825 $(977,978) $75,289,360 Depreciation and amortization expense for the year ended June 30, 2017 was $5,028,518. Projects were completed during the year resulting in $968,854 being reclassified from Construction in Progress. Page 50

55 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 16: CAPITAL ASSET ACTIVITY (CONTINUED) June 30, 2015 June 30, 2016 Balance Additions Retirements Balance Non-depreciable assets: Land $2,370,097 $ - $ - $2,370,097 Construction in Progress 1,618,228 1,107,665 (1,069,454) 1,656,439 3,988,325 1,107,665 (1,069,454) 4,026,536 Depreciable assets: Land Improvements 2,383,401 7,603-2,391,004 Infrastructure 224, ,847 Buildings and Improvements 89,947,849 6,443,873-96,391,722 Furniture and Equipment 12,089,310 1,598,980 (797,676) 12,890,614 Library Collection 1,340,031 19,436-1,359,467 Other Improvements 9, ,600 Leasehold Improvements 121, ,295 Other Assets 3,054,228 65,904-3,120, ,170,561 8,135,796 (797,676) 116,508,681 Less accumulated depreciation and amortization: Land Improvements 1,155, ,147-1,314,449 Infrastructure 23,336 5,621-28,957 Buildings and Improvements 35,009,497 3,278,385-38,287,882 Furniture and Equipment 7,197, ,958 (790,066) 7,364,756 Library Collection 1,230,691 42,655-1,273,346 Other Improvements 3, ,648 Leasehold Improvements 121, ,295 Other Assets 1,223, ,224-1,442,371 45,964,396 4,662,374 (790,066) 49,836,704 Net Depreciable Assets 63,206,165 3,473,422 (7,610) 66,671,977 Net Capital Assets $67,194,490 $4,581,087 $(1,077,064) $70,698,513 Depreciation expense for the year ended June 30, 2016 was $4,662,374. Projects were completed during the year resulting in $1,069,454 being reclassified from Construction in Progress. Page 51

56 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 17: COMMITMENTS AND CONTINGENCIES Operating Leases The College leases copiers, and facilities under long-term operating leases. Rental expenditures in fiscal years 2017 and 2016 under these leases amounted to $34,361 and $54,245, respectively. Aggregate approximate future minimum rental payments under non-cancelable operating leases are as follows: Year Ending June Rental Payment $ 48,490 31,634 26,701 25,740 17,535 Capital Leases There are no future minimum lease payments under capital leases. Lease Purchase The College has entered into a lease agreement with the New Jersey Educational Facilities Authority for the lease-purchase of equipment approved by the State Board of Higher Education. The total approved project amount is $803,542. The College will pay to the Authority 25% of the principal and interest on the bonds to be issued to finance equipment purchases. Lease payments to the Authority for the fiscal years ended June 30, 2017 and 2016 totaled $25,005 and $25,003, respectively. The title to the equipment will pass to the College upon final payment of the lease obligation. Approximate future minimum lease payments are: June 30 Payment 2018 $ 25, , , , ,989 Solar Site Lease and Power Purchase Agreement The College entered into a solar site lease agreement and power purchase agreement with Energenic, LLC, on February 26, The College has no capital investment, but will be assured of a predictable cost of energy over the 15 year term of the lease. Solar arrays were substantially complete in October, 2013 on the Mays Landing and Cape May County campuses. Page 52

57 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 17: COMMITMENTS AND CONTINGENCIES (CONTINUED) Rutgers University Ground Lease The College has entered into a 50 year ground lease with Rutgers University. Rutgers completed construction of an academic building on the College s Mays Landing campus which opened for classes in September, The tenant shall pay the college an annual student use fee, adjusted annually. The student use fees for the fiscal years ended June 30, 2017 and 2016 were $24,538 and $22,509, respectively. Encumbrances The College has encumbrances representing outstanding purchase orders and other commitments with various vendors for materials and services not received as of June 30, 2017 and 2016 as follows: Current unrestricted $ 89,878 $ 212,683 Not included in the above schedule are commitments of $96,856 and $317,637 for June 30, 2017 and 2016 to be offset with current restricted funds, and capital projects commitments of $5,018,841 and $13,427,711 for June 30, 2017 and 2016 to be offset with state Chapter 12 and Building our Future Bond Act and facilities fees accounted for in the plant fund. Except as reported as allocated fund balances on the balance sheet, these commitments are not reflected on the accompanying financial statements. Assignment To FY18 Current Operating Budget The Board of Trustees of the College has assigned a $1,093,216 fund balance transfer into its FY18 Current Operating Budget - Education and General Revenues. Restricted Maintenance Reserve The Jobs Education and Competitiveness Grant (JEC) which provided funding for the Cape May County Campus requires the college to retain a maintenance reserve of $971,300. When used, the reserve must be replenished over a five year period. In FY17, the College replenished $19,826 of $99,130 used in FY16 for a boiler replacement project at the Cape May County Campus. Grantor Agencies Amounts received or receivable from grantor agencies could be subject to audit and adjustment by grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time, although the College expects such amount, if any, to be immaterial. Page 53

58 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 18: RISK MANAGEMENT The College is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The College is self-insured for unemployment benefits compensation and participates in a self-insurance pool for workers compensation. Property and Liability Insurance Comprehensive commercial business insurance is purchased through a cooperative pool. Liability coverage limits are as follows: Property $151,672,457 General Liability 1,000,000 Automobile Liability 1,000,000 Crime / Employee Bond 1,000,000 Board of Ed Liability 5,000,000 Board of Ed Excess Liability/ Products 15,000,000 Umbrella, Auto and General 15,000,000 Workers Compensation Statutory Environmental 1,000,000/3,000,000 Flood & Earthquake 10,000,000 Boiler & Machinery 50,000,000 Data Security 1,000,000 Owned UAV and Non-owned Aircraft 2,000,000 Builder s Risk 10,800,000 New Jersey Unemployment Compensation Insurance The College has elected to fund its New Jersey Unemployment Compensation Insurance under the "Benefit Reimbursement Method". Under this plan, the College is required to reimburse the New Jersey Unemployment Trust fund for benefits paid to its former employees and charged to its account with the State. The College is billed quarterly for amounts due to the State. The following is a summary of College contributions, reimbursements to the State for benefits paid and the ending balance of the College's restricted net assets for the current and previous four fiscal years: Fiscal Year Ended June 30, College Contributions Employee Contributions Amount Reimbursed Ending Balance $71,777 46,084 67,925 82, ,376 $44,821 46,268 46,970 45,398 46,743 ($116,598) (92,352) (114,895) (102,701) (189,119) $775, , , , ,000 Page 54

59 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 18: RISK MANAGEMENT (CONTINUED) Workers Compensation Insurance Pool The College is a member of the New Jersey Community College Insurance Pool, a non-profit selfinsurance pool created pursuant to the provisions of the New Jersey State Government Regulations Act, Chapter 204, P.L. 1985, to provide workers compensation insurance to its members. Membership in the insurance pool is limited to New Jersey community colleges. As of June 30, 2017, fourteen colleges participated in the insurance pool. Contributions to the Pool are payable in an annual premium and are based on actuarial assumptions determined by the Pool's actuary. Contributions to the Pool for the fiscal years ended June 30, 2017 and 2016 were $259,444 and $237,212, respectively. NOTE 19: LITIGATION The College is a defendant in several legal proceedings that are in various stages of litigation. It is believed that the outcome, or exposure to the College, from such litigation is either unknown or potential losses, if any, would not be material to the financial statements. NOTE 20: SCHOOL EMPLOYEES HEALTH BENEFITS PROGRAM P.L. 1987, c.384 of P.L. 1990, c.6 required Teachers Pensions and Annuity Fund ( TPAF ) and the Public Employees Retirement System ( PERS ), respectively, to fund post-retirement medical benefits for those State employees who retire after accumulating 25 years of credited service or on a disability retirement. P.L. 2007, c.103 amended the law to eliminate the funding of postemployment medical benefits through the TPAF and PERS. It created separate funds outside of the pension plans for the funding and payment of postemployment medical benefits for retired State employees and retired educational employees. As of June 30, 2016, there were 110,512 retirees receiving postemployment medical benefits, and the State contributed $1.37 billion on their behalf. The cost of these benefits is funded through contributions by the State in accordance with P.L. 1994, c.62. Funding of postretirement medical premiums changed from a pre-funding basis to a pay-as-you-go basis beginning in fiscal year The State is also responsible for the cost attributable to P.L c.126, which provides free health benefits to members of PERS and the Alternate Benefit Program who retire from a board of education or county college with 25 years of service. The State paid $231.2 million toward Chapter 126 benefits for 20,045 eligible retired members in fiscal year The School Employees Health Benefits Program ( SEHBP ) Act is found in New Jersey Statutes Annotated, Title 52, Article et. Seq. Rules governing the operation and administration of the program are found in Title 17, Chapter 9 of the New Jersey Administrative Code. The State of New Jersey Division of Pensions and Benefits issues a publicly available financial report that includes financial statements and required supplementary information for the SEHBP. That report may be obtained from the Treasury website at: Page 55

60 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 21: NJ COMMUNITY COLLEGE CONSORTIUM FOR WORKFORCE AND ECONOMIC DEVELOPMENT AGREEMENT The College paid a $100,000 fee during fiscal year 2004 to participate in the New Jersey County College Workforce Consortium. The participation agreement allows the College to share in royalties and training revenues as a subcontractor. The effective date of participation begins July 1, 2004, and extended through September 30, The participation fee was amortized over this period. Royalties earned for the fiscal years ended June 30, 2017 and 2016 were $22,573 and $28,216, respectively. There is no future amortization expense related to this cost. NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES Note A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Activities Atlantic Cape Community College Foundation (the Foundation ) was formed in 1978 as an independent nonprofit organization for the purpose of promoting and furthering higher education among the citizens of Atlantic and Cape May Counties, New Jersey and to provide physical facilities and services at Atlantic Cape Community College (the College ). Although the Foundation is a legally separate, non-for-profit organization, because of the significance of its operational and financial relationships with the College it is considered a component unit of the College. Basis of Accounting The financial statements of the Foundation have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables and other liabilities. Financial Statement Presentation The financial statements have been prepared in conformity with the standards promulgated by the Financial Accounting Standards Board applicable to not-for-profit organizations. The Foundation s net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Foundation and changes therein are classified and reported as follows: Unrestricted net assets net assets that are not subject to donor-imposed stipulations. This includes funds that are designated for discretionary use by the Foundation and board designated funds functioning as endowments. Temporarily restricted net assets net assets subject to donor-imposed stipulations that may or will be met either by actions of the Foundation and/or the passage of time. This includes term endowments, the present value of contributions receivable, and earnings on investments. Permanently restricted net assets net assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. This includes the historical dollar amounts of gifts, the present value of contributions receivable, and earnings required to be added to the corpus as stipulated by the donor. Page 56

61 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expirations of temporary restrictions on net assets (i.e. the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as reclassifications between the applicable classes of net assets. Income and realized and unrealized net gains or losses on investments are reported as follows: As increases or decreases in permanently restricted net assets if the terms of the gift require that, they be added to the principal of a permanent endowment fund. As increases or decreases in temporarily restricted net assets if the terms of the gift impose restrictions on the use of the income or by law. As increases or decreases in unrestricted net assets in all other cases. Public Support and Revenue Recognition Contributions are recognized when the donor makes a promise to give to the Foundation that is, in substance, unconditional. Contributions of cash and other assets are reported as temporarily or permanently restricted net assets, depending on the nature of the restriction. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Contributions received with donor-imposed restrictions that are met in the same year in which the contributions are received are classified as unrestricted contributions. Unconditional promises to give are recognized as revenues or gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promises become unconditional. Endowment contributions may be permanently restricted by the donor. Investment earnings available for distribution are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Investment income and gains restricted by donors are reported as increases in unrestricted net assets if the restrictions are met (which happens either when a stipulated time period ends or when a purpose restriction is accomplished) during the reporting period in which the income and gains are recognized. Contributions of donated noncash assets are recorded at their fair values in the period received. Contributions of donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. Page 57

62 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and Cash Equivalents For purposes of the Statements of Cash Flows, the Foundation considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. The Foundation places its cash and cash equivalents on deposit with financial institutions in the United States. The Federal Deposit Insurance Corporation covers $250, for substantially all depository accounts. Money Market funds intended for non-operating purposes are classified as investments. Investments The Foundation reports all investments in marketable securities with readily determinable fair values and all investments in debt securities at fair value in the statement of financial position. Unrealized gains and losses are included in the change in net assets. Investment income and gains restricted by a donor are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or by use) in the reporting period in which the income and gains are recognized. Mutual Funds are valued at the quoted market prices, which represent the net asset value of the shares held by the Foundation at year-end. Fair Value Measurement The Foundation follows an accounting standard that defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and requires expanded disclosures about fair value measurements. Allowance for Doubtful Accounts Pledges and accounts receivable are stated net of an allowance for doubtful accounts. The Foundation estimates the allowance based on an analysis of specific donors, taking into consideration the age of past due amounts and an assessment of the donor s ability to pay. The Foundation has determined that there was no allowance for doubtful accounts required for receivables at June 30, Donated Services The Foundation receives donated services from a variety of personnel who are employed by the College. The value of these services has been reflected in the statement of activities. Income Taxes The Foundation claims exemption from federal and state income taxes under section 501(c) (3) of the Internal Revenue Code and, accordingly, does not record a provision for income taxes on related income. The Foundation is eligible to receive a charitable contribution deduction under Section 170(b)(1)(A) and is classified as an organization other than a private foundation under Section 509(a)(2). The Foundation regularly reviews and evaluates its tax positions taken in previously filed information returns and as reflected in its financial statements, with regard to issues affecting its tax-exempt status, unrelated business income, and related matters. The Foundation believes that in the event of an examination by taxing authorities, the Foundation s positions would prevail based upon the technical merits of such positions. Therefore, the Foundation has concluded that no tax benefits or liabilities are required to be recognized in accordance with the new requirements. Page 58

63 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Functional Allocation of Expenses The cost of providing the various programs and supporting services have been summarized on a functional basis in the Statement of Activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Reclassifications Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements. Subsequent Events The Foundation has evaluated events and transactions through November 14, 2017, the date the financial statements were available to be issued, and determined there were no items requiring recognition or disclosure in the financial statements. New Accounting Pronouncements Presentation of Financial Statements of Not-for-Profit Entities Issued in August 2016, Accounting Standards Update (ASU) No (Topic 958) is intended to improve the presentation of financial statements of not-for-profit (NFP) entities and provide more useful information to donors, grantors, and other users. The ASU eliminates the distinction between resources with permanent restrictions and those with temporary restrictions from the face of NFP financial statements by reducing the current three net asset classes (unrestricted, temporarily restricted, and permanently restricted) to two classes (net assets with donor restrictions and net assets without donor restrictions). The ASU will also require additional information to be disclosed about investment return, expense classifications, liquidity and availability of resources, and presentation of operating cash flows. The standard will take effect for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, Early application will be permitted. The Foundation is assessing the potential impact this guidance will have on its financial statements. On May 28, 2014, the FASB issued ASU No , Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The update will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU No which defers the effective date of ASU No one year making it effective for the Foundation s year ending June 30, Early adoption, subsequent to the Foundation s year ending June 30, 2017, is permitted. The Foundation is currently evaluating the effect implementation of ASU No will have on its financial statements. Page 59

64 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note B - CONCENTRATION OF CREDIT RISK The Foundation maintains cash balances in their banking institutions, which are insured by the Federal Deposit Insurance Corporation (F.D.I.C) up to $250, per institution. At June 30, 2017 and 2016, the Foundation s balance did not exceed the insured limit. Note C - PLEDGES RECEIVABLE Pledges receivable at June 30, 2017 and 2016 were as follows: Due within one year $ 110, $ 53, Due in two to five years 3, , Total Pledges Receivable 113, , Less: unamortized discount - (1,599.00) Net Pledges Receivable $ 113, $ 82, Note D - INVESTMENTS Investments, stated at fair value, are composed of the following as of June 30, 2017 and 2016, respectively: 2017 Unrealized Fair Market Gain Cost Value (Loss) Mutual Funds: Fixed Income Domestic Equities International Equities $ 1,775, ,646, , $ 1,784, ,863, , $ 9, , , Total $ 3,920, $ 4,207, $ 286, Mutual Funds: Fixed Income Domestic Equities International Equities Cost $ 1,810, ,510, , Fair Market Value $ 1,787, ,598, , $ Unrealized Gain (Loss) (23,194.75) 87, (10,232.00) Total $ 3,790, $ 3,844, $ 53, Page 60

65 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note D INVESTMENTS (CONTINUED) The following summarizes the investment returns as of June 30, 2017 and 2016, respectively: 2017 Restricted Unrestricted Temporarily Permanently Total Interest and Dividends Investment Fees Net Interest and Dividends $ 26, (9,376.63) 17, $ 110, $ 10, (23,343.96) (3,640.59) 86, , $ 147, (36,361.18) 111, Realized Gains (Losses) Unrealized Gains (Losses) Total Gains (Losses) (8,852.30) 44, , , , , , , , , , , Total Investment Return $ 52, $ 278, $ 31, $ 363, Restricted Unrestricted Temporarily Permanently Total Interest and Dividends Investment Fees Net Interest and Dividends $ 51, (8,736.00) 43, $ 108, $ 17, (23,745.00) (3,818.00) 84, , $ 177, (36,299.00) 140, Realized Gains (Losses) Unrealized Gains (Losses) Total Gains (Losses) (6,635.00) (45,440.00) (52,075.00) (47,165.00) (97,659.00) (144,824.00) (10,942.00) (17,170.00) (28,112.00) (64,742.00) (160,269.00) (225,011.00) Total Investment Return $ (8,904.00) $ (60,375.00) $ (14,906.00) $ (84,185.00) Page 61

66 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note E - FAIR VALUE MEASUREMENT Financial Accounting Standards Board ( FASB ) Accounting Standards Codification ( ASC ) 820, Fair Value Measurements and Disclosures, established a hierarchy for inputs used in measuring fair value that maximized the use of observable inputs and minimized the use of unobservable inputs, requiring that inputs that are most observable be used when available. Observable inputs are inputs that market participants operating within the same marketplace as the Foundation would use in pricing the Foundation s assets or liability based on independently derived and observable market data. Unobservable inputs are inputs that cannot be sourced from a broad active market in which assets or liabilities identical or similar to those of the Foundation are traded. The Foundation estimates the price of any assets for which there are only unobservable inputs by using assumptions that market participants that have investments in the same or similar assets would use as determined by the money managers for each investment based on best information available in the circumstances. The input hierarchy is broken down into three levels based on the degree to which the exit price is independently observable or determinable as follows: Level 1 Valuation based on quoted market prices in active markets for identical assets or liabilities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Level 2 Valuation based on quoted market prices of investments that are not actively traded or for which certain significant inputs are not observable, either directly or indirectly. Level 3 Valuation based on inputs that are unobservable and reflect management s best estimate of what market participants would use as fair value. The assets fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Any transfer between fair value hierarchy levels is recognized by the Foundation at the end of each reporting period. The following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis. There have been no changes to the methodologies used at June 30, 2017 and Mutual Funds Valued at quoted market prices in active markets on which individual securities are traded. Page 62

67 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note E - FAIR VALUE MEASUREMENT (CONTINUED) Fair Value on a Recurring Basis The following tables below present the fair value of financial instruments as measured on a recurring basis as of June 30, 2017 and Fair Value Mutual Funds: Fixed Income Domestic Equities International Equities Total $1,784, ,863, , Quoted Prices in Active Markets for Identical Assets (Level 1) $ 1,784, ,863, , Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Total $4,207, $ 4,207, $ - $ Fair Value Quoted Prices in Significant Other Significant Other Active Markets for Observable Unobservable Identical Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Mutual Funds: Fixed Income $1,787, $ 1,787, Domestic Equities 1,598, ,598, International Equities 459, , Total $3,844, $ 3,844, $ - $ - Page 63

68 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note F - ENDOWMENT FUNDS The Foundation s endowment consists of approximately 45 individual funds established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the Foundation Board to function as endowments. As required by generally accepted accounting principles, net assets associated with endowment funds, including funds designated by the Foundation Board to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. The Foundation has interpreted state law as requiring the preservation of the value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by state law. The Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) The duration and preservation of the fund (2) The purposes of the Foundation and the donor-restricted endowment fund (3) General economic conditions (4) The possible effect of inflation and deflation (5) The expected total return from income and the appreciation of investments (6) Other resources of the Foundation (7) The investment policies of the Foundation. Endowment Net Asset Composition by Type of Fund as of June 30, 2017 and 2016: June 30, Permanently Permanently Restricted Restricted Donor Restricted: Endowment Funds $ 2,976, $ 2,901, Page 64

69 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note F - ENDOWMENT FUNDS (CONTINUED) The Foundation has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity or for a donor-specified period(s) as well as board-designated funds. Under this policy, as approved by the Foundation Board, the endowment assets are invested in a manner that seeks long-term capital growth, current income and growth of income, consistent with prudent, conservative, and risk-averse investments for its endowment. The endowment investments may be invested in any combination of common stocks, bond funds or mutual funds containing both stocks and bonds. To satisfy its long-term objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset allocation to achieve its long-term objectives within prudent risk constraints. The Foundation has adopted an investment spend policy. Unless otherwise directed by the donor at the time of the donation and agreed to by the Foundation, 80% of annual audited net interest (interest earned less fees paid) shall be distributed from the endowed funds as per donor designation or Foundation Board direction. The remaining 20% shall be reinvested to preserve the purchasing power of the corpus over time. From time-to-time, the fair value of assets associated with an individual donor restricted endowment fund may fall below the level that the donor or State law required the Foundation to retain as a fund of perpetual duration. The Foundation Board's policy is to restore these funds to the original endowed amount by enduring any market losses in their unrestricted funds thus enabling the endowment to remain whole. The following table provides information regarding the change in endowment net assets for the year ended 2017 and 2016: June 30, Endowment Net Assets - Beginning of Year 2017 Permanently Restricted $ 2,901, Permanently Restricted $ 2,877, Investment Income 31, (14,906.00) Contributions 42, , Endowment Net Assets - End of Year $ 2,976, $ 2,901, Page 65

70 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note G- TEMPORARILY RESTRICTED NET ASSETS The Foundation follows the policy of maintaining special funds when grants and gifts are received for specific projects. Such grants and gifts are reported as temporarily restricted net assets until the donorimposed restrictions are satisfied. Investment income derived from permanently restricted net assets, which is restricted by the donor for a specific purpose, is included as temporarily restricted net assets. Temporarily restricted net assets are available for scholarships and college improvements. Donor restrictions are maintained on file by the Foundation. Temporarily restricted net assets include monies raised by the Restaurant Gala, golf events, other fundraisers, and amounts specifically designated by donors, which generally have been restricted for distributions to Atlantic Cape Community College for scholarships. Restaurant Gala monies are awarded to Culinary School students, and Golf Classic monies are awarded on a preferential basis first to Liberal Arts students and then to other college majors. Also included in temporarily restricted net assets is 90% of the income from one endowment to be used for healthcare scholarships and 100% income from other endowments to be awarded for various scholarships. As of June 30, 2017 and 2016, temporarily restricted net assets consisted of the following: Temporarily Restricted: Restaurant Gala Scholarships $ 129, $ 139, Golf Outing Scholarships 18, , Scholarships 442, , Athletics 3, Emergency Fund 7, Culinary Loan Grant 45, , $ 646, $ 463, Note H- PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets consist of investments to be held in perpetuity. One endowment requires that 10% of the income be added to principal and the remainder be used to fund scholarships. According to the new investment policy, 20% of the income earned on endowment funds received after the effective date of May 1, 2010 is added to principal. All other endowments require that all income be used for scholarships. Page 66

71 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note I- DONATED SERVICES The Foundation receives donated services from a variety of personnel who are employed by Atlantic Cape Community College. The value of these services shown below, has been reflected in the Statements of Activities and Changes in Net Assets Administrative Support $ 112, $ 82, Less: Paid to College (70,000.00) - Administrative Support Donated 42, , Fundraising Support 164, , Total $ 207, $ 222, Note J - CONTRIBUTIONS FROM TRADE DONATIONS Harrah's Atlantic City donated labor, set up and decor worth $32,256; Morey's Pier donated Steel Pier admissions worth $28,608; Longport Media, The Press of AC, and SNJ Today donated online, in print, on-air, and radio promotion worth $10,000, $8,000, and $5,000 respectively; various local restaurants donated food worth $28,428; various other vendors and individuals donated their services and products worth $24, in exchange for advertising and/or tickets for the Restaurant Gala, Golf and Alumni events. The computation of the value of the contribution of these services and products represent the difference between market value of these services or products and the market value of the services given in exchange. For the year ended June 30, 2017, the information is summarized as follows: Value of Services Received $136, Value of Tickets Provided (22,605.00) Net Contribution to the Foundation $113, Page 67

72 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note K - FUNDRAISING Fundraising proceeds for the years ended June 30, 2017 and 2016 consisted of the following: Gross Receipts Restaurant Gala $322, Golf Event $51, Other Events $ 70, In Kind Services $164, Total $609, Direct Benefit to Donors: Room Rental and Setup Catering and Meals Wine and Liquor Entertainment Plates Decor Gifts and Souvenirs 63, , , , , , , , , , , , , , , , , , Total Direct Benefit to Donors 128, , , , Gross Receipt less Direct Benefit to Donors 194, , , , , Expenses: Raffle Prizes 13, , , , Licenses and Fees Supplies Donated Services 164, , Advertising 23, , Printing 5, , Postage and Delivery 1, , Travel , Miscellaneous Total Expenses 45, , , , , Net Proceeds $148, $30, $ 15, $ - 194, Net Proceeds for General Use Net Proceeds for Scholarships (30,651.39) $163, Page 68

73 NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 2017 and 2016 NOTE 22: DISCRETELY PRESENTED COMPONENT UNIT DISCLOSURES (CONTINUED) Note K: FUNDRAISING (CONTINUED) 2016 Restaurant Golf Other In Kind Gala Event Events Services Total Gross Receipts $333, $45, $ 41, $139, $560, Direct Benefit to Donors: Room Rental and Setup 61, , , Catering and Meals 30, , , , Wine and Liquor 9, , Entertainment 6, , , Plates 2, , Photos and Videos 1, , Decor 17, , Gifts and Souvenirs 1, , , , Total Direct Benefit to Donors 131, , , , Gross Receipt less Direct Benefit to Donors 201, , , , , Expenses: Donor Recognition Raffle Prizes Licenses and Fees Supplies Donated Services Advertising Printing Postage and Delivery Travel Miscellaneous 14, , , , , , , , , , , , Total Expenses 46, , , , Net Proceeds $155, $24, $ 8, $ - 188, Net Proceeds for General Use (22,654.00) Net Proceeds for Scholarships $165, NOTE 23: SUBSEQUENT EVENTS Management has reviewed and evaluated all events and transactions that occurred between June 30, 2017 and December 22, 2017, the date that the financial statements were issued for possible disclosure and recognition in the financial statements, and no items have come to the attention of the college that would require disclosure. Page 69

74 REQUIRED SUPPLEMENTARY INFORMATION PART II

75 RSI-1 Required Supplementary Information Schedule of the College's Proportionate Share of the Net Pension Liability Public Employees' Retirement System (PERS) Last Four Plan Years Measurement Date Ending June 30, College's Proportion of the Net Pension Liability % % % % College's Proportionate Share of the Net Pension Liability $ 43,163, $ 32,894, $ 28,947, $ 31,718, College's Covered Payroll (Plan Measurement Period) $ 10,150, $ 10,353, $ 11,023, $ 11,789, College's Proportionate Share of the Net Pension Liability as a Percentage of Covered Payroll % % % % Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 40.14% 47.93% 52.08% 48.72% Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, this presentation will only include information for those years for which information is available. Page 70

76 RSI-2 Required Supplementary Information Schedule of the College's Contributions Public Employees' Retirement System (PERS) Last Four Fiscal Years Fiscal Year Ended June 30, Contractually Required Contribution $ 1,313, $ 1,294, $ 1,259, $ 1,274, Contributions in Relation to the Contractually Required Contribution (1,313,107.00) (1,294,723.00) (1,259,836.00) (1,274,580.00) Contribution Deficiency (Excess) $ - $ - $ - $ - College's Covered Payroll (Fiscal Year) $ 9,536, $ 9,843, $ 9,823, $ 10,102, Contributions as a Percentage of College's Covered Payroll 13.77% 13.15% 12.83% 12.62% Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, this presentation will only include information for those years for which information is available. Page 71

77 Notes to Required Supplementary Information - Part II For the Fiscal Year Ended June 30, 2017 Public Employees' Retirement System (PERS) Changes in Benefit Terms - None Changes in Assumptions - For 2016, the discount rate changed to 3.98%, the long-term expected rate of return changed to 7.65%, demographic assumptions were revised in accordance with the results of the July 1, June 30, 2014 experience study and the mortality improvement scale incorporated the plan actuary's modified MP-2014 projection scale. Further, salary increases were assumed to increase between 1.65% and 4.15% (based on age) through fiscal year 2026 and 2.65% and 5.15% (based on age) for each fiscal year thereafter. For 2015, the discount rate changed to 4.90%. In addition, the social security wage base was set at $118,500 for 2015, increasing 4.00% per annum, compounded annually and the 401(a)(17) pay limit was set at $265,000 for 2015, increasing 3.00% per annum, compounded annually. For 2014, the discount rate was 5.39%. Page 72

78 June 30, 2017 Supplemental Financial Information

79 SUPPLEMENTAL FINANCIAL INFORMATION BALANCE SHEETS JUNE 30, 2017 and ASSETS Current funds: Unrestricted: Cash and cash equivalents Security deposit Restricted cash Interfund balances Accounts receivable: Students, less allowance for uncollectible accounts of $1,061,260 and $1,131,983 respectively Federal, state, county and local Other Inventories, at cost Prepaid expenses Total unrestricted $ 9,380,730 1,309 3,821, , , ,149 50,905 95, ,610 15,869,940 LIABILITIES AND FUND BALANCES Current funds: Unrestricted: $ 13,548,839 Accounts payable and other accruals $ 4,547,468 $ 4,527,999 1,309 Compensated absences 1,877,193 1,893,251 4,009,508 Deferred revenue 1,943,080 2,215,319 - Interfund balances - 1,635,373 Student deposits and other liabilities 175, ,963 8,542,940 10,374, , ,644 Fund balances: 50,328 Allocated for student activities 89,307 90,534 96,414 Allocated for JEC reserve 891, , ,817 Allocated for SUI reserve 775, ,000 Allocated for encumbrances 89, ,682 Unallocated 5,480,818 6,985,404 7,327,000 8,935,790 19,310,695 Total unrestricted 15,869,940 19,310,695 Restricted: Accounts receivable Federal, state, county and local Other assets Prepaid expenses Interfund balances Total restricted 1,161,013 20,150 22, ,183 1,600,896 Restricted: Accounts payable and other accruals 1,030, ,758 1,207,226 Deferred revenue 136,436 77,736 50,100 Interfund balances ,866 1,166, , ,671 Fund balance 433, ,369 1,625,863 Total restricted 1,600,896 1,625,863 Total current funds $ 17,470,836 $ 20,936,558 Total current funds $ 17,470,836 $ 20,936,558 (CONTINUED) Page 73

80 SUPPLEMENTAL FINANCIAL INFORMATION BALANCE SHEETS JUNE 30, 2017 and ASSETS LIABILITIES AND FUND BALANCES Endowment fund: Cash Interfund balances $ - 835,685 $ - 825,765 Endowment fund: Fund balance - true endowment $ 835,685 $ 825,765 Total endowment fund $ 835,685 $ 825,765 Total endowment fund $ 835,685 $ 825,765 Plant funds: Unexpended: Cash Security deposits Accounts receivable Federal, state, county and local Other Interfund balances Total unexpended plant funds $ 105 3,983,710 64,416-4,048,231 $ - 1,000 1,605, ,937 2,079,169 Plant funds: Unexpended: Accounts payable Current portion of long term debt Long term debt Interfund balances Fund balances: Restricted expendable Total unexpended plant funds $ 846,516 25, ,980 2,173, , ,219 4,048,231 $ 1,018,758 25, , , ,421 2,079,169 Investment in plant: Land Construction in progress Land improvements Infrastructure Buildings and improvements Other improvements Furniture and equipment - Library books and audio equipment Other assets 2,370,097 7,890, , ,266 57,072,662 5,568 4,770,709 67,460 1,523,971 2,370,097 1,656,439 1,076, ,890 58,103,840 5,952 5,525,858 86,121 1,677,761 Investment in plant: Fund balance 75,289,360 70,698,513 Total investment in plant 75,289,360 70,698,513 Total investment in plant 75,289,360 70,698,513 Total plant funds $ 79,337,591 $ 72,777,682 Total plant funds $ 79,337,591 $ 72,777,682 Page 74

81 Revenues and other additions: Educational and general revenues SUPPLEMENTAL FINANCIAL INFORMATION STATEMENT OF CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2017 Endowment Current Funds Fund Plant Funds Investment Unrestricted Restricted Unexpended in Plant 37,109,342 Sales and services auxiliary enterprises 127,708 Federal, state and county grants and contracts - restricted $ 16,650,245 Private gifts, grants and contracts - restricted Chargeback minor capital 586,768 $ 9,861 State pension contribution 577,873 Insurance proceeds Investment and other income 95,843 5,037 Restricted appropriations Funds for plant facilities Capital funded by operations Proceeds - sale of assets Total revenues and other additions 37,910,766 17,242,050 9,861 $ $ 346, ,976 9,269,879 9,909,013 $ 3,021, ,397 2,064 3,396,520 Expenditures and other deductions: Educational and general expenditures 39,253,289 17,394,069 Auxiliary enterprises expenditures 128,936 Depreciation and amortization expense 5,028,518 Expansion of plant facilities 57, ,164 3,773,370 Total expenditures and other deductions 39,439,775 17,519,233-3,773,370 5,028,518 Transfers among funds: Non-mandatory: Plant fund (80,000) Endowment fund (59) 59 Restricted fund Other transfers 219 (219) Interfund transfers Construction in progress Net transfers (79,781) (278) 59 80,000 11,188 (6,234,033) (6,142,845) (11,188) 6,234,033 6,222,845 Net increase (decrease) (1,608,790) (277,461) 9,920 (7,202) 4,590,847 Fund balance, beginning of year $ 8,935,790 $ 711,369 $ 825,765 $ 885,421 $ 70,698,513 Fund balance, end of year $ 7,327,000 $ 433,908 $ 835,685 $ 878,219 $ 75,289,360 Page 75

82 SUPPLEMENTAL FINANCIAL INFORMATION STATEMENT OF CURRENT FUND REVENUES, EXPENDITURES AND OTHER CHANGES FOR THE FISCAL YEAR ENDED JUNE 30, 2017 Revenues: Unrestricted Restricted Total Tuition and fees $ 22,566,649 $ 22,566,649 Appropriations: State 5,974,625 5,974,625 Local 8,430,448 8,430,448 Chargebacks 70,427 70,427 Grants and contracts: Federal, state and local 248,232 $ 16,802,264 17,050,496 Private gifts, grants and contracts 586, ,768 Sales and services of educational departments 67,627 67,627 Sales and services auxiliary enterprises 127, ,708 Other sources 722,000 5, ,037 Total current revenues 38,207,716 17,394,069 55,601,785 Expenditures: Educational and general: Instruction 13,363, ,916 13,976,029 Public service 35, , ,581 Academic support 4,151, ,674 4,689,638 Student services 4,829, ,636 5,565,654 Institutional support 9,955,435 70,000 10,025,435 Operation and maintenance of plant 6,918,138 34,938 6,953,076 Scholarship and other student aid 296,950 14,703,945 15,000,895 Total education and general expenditures 39,550,239 17,394,069 56,944,308 Auxiliary enterprises 128, ,936 Total expenditures 39,679,175 17,394,069 57,073,244 Transfers among funds and other additions: Non-mandatory: Plant fund (80,000) (80,000) Endowment fund (59) (59) Restricted fund 219 (219) Expansion of plant facilities (57,550) (125,164) (182,714) Other Excess of expenditures and transfers over restricted revenues (152,019) (152,019) Net transfers (137,331) (277,461) (414,792) Net decrease in fund balances $ (1,608,790) $ (277,461) $ (1,886,251) Page 76

83 SUPPLEMENTAL FINANCIAL INFORMATION BUDGET COMPARISON TO ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2017 Original Adjusted Actual Variance from Budget Revised Budget Activity Original Budget Current Unrestricted Income General Education: Credit Tuition $ 16,875,254 $ 15,756,411 $ 15,624,606 $ (1,250,648) Continuing Education 1,250,000 1,070, ,872 (259,128) Student Fees 5,859,606 5,659,231 5,654,221 (205,385) Government Appropriations: Atlantic County 6,760,246 6,760,246 6,760,246 - Cape May County 1,670,202 1,670,202 1,670,202 - State of New Jersey 5,580,000 5,396,753 5,396,752 (183,248) Chargeback 114,798 72,605 70,427 (44,371) Other Source (includes Investment Income, Bookstore and Vending Commissions, Rents, Conferencing) 765, ,476 1,037, ,858 Total Education and General Income 38,875,106 37,228,924 37,205,184 (1,669,922) ABP Reimbursement 600, , ,873 (22,127) Adjusted Education and General Income 39,475,106 37,798,924 37,783,057 (1,692,049) Current Unrestricted Expenses Instructional 13,540,475 13,492,077 13,363,113 (177,362) Public Service 17,701 35,808 35,621 17,920 Academic Support 4,488,875 4,231,192 4,194,522 (294,353) Student Services 4,922,453 4,839,649 4,829,018 (93,435) Institutional Support 10,300,052 10,043,188 9,970,427 (329,625) Plant Operations and Maintenance 7,330,444 6,943,670 6,918,137 (412,307) Total Education and General Expenditures 40,600,000 39,585,584 39,310,838 (1,289,162) Education and General Operating Margin $ (1,124,894) $ (1,786,660) (1,527,781) $ (402,887) ** Non-Mandatory Transfers From Current Restricted funds for Beacons professor 219 To Plant Fund Board Resolution #7 Content Management System (80,000) Auxiliary Enterprises (1,228) Adjusted Operating Margin $ (1,608,790) **Note: Mandatory and non-mandatory transfers requiring use of funds from the current unrestricted fund balance are recorded as additions or deductions from the current year operations in the above schedule. Page 77

84 SUPPLEMENTAL FINANCIAL INFORMATION SALARY EXPENDITURES FOR THE FISCAL YEAR ENDED JUNE 30, 2017 Current unrestricted fund: Educational and general: Instruction $9,407,106 Public service 1,036 Academic support 2,670,040 Student services 2,811,329 Institutional support 5,000,052 Operations and maintenance of plant 2,644,018 Total educational and general expenditures 22,533,581 Auxiliary enterprises - Total unrestricted salary expenditures 22,533,581 Restricted funds salary expenditures 1,375,026 Capital projects salary expenditures 74,115 Subtotal 23,982,722 Federal college work study program included in Restricted funds salary expenditures (126,660) Total salary expenditures $23,856,062 * This schedule presents wages only. Fringe benefits are not included. Page 78

85 SINGLE AUDIT SECTION

86 June 30, 2017 The following single audit financial information is provided in accordance with the Title 2 U.S. Code of Federal Regulations Part 200 and New Jersey OMB Circular 15-08

87 REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE AND STATE OF NEW JERSEY CIRCULAR OMB INDEPENDENT AUDITOR S REPORT Board of Trustees Atlantic Cape Community College Mays Landing, New Jersey Report on Compliance for Each Major Federal and State Program We have audited Atlantic Cape Community College s (the College ), compliance with the types of compliance requirements described in the OMB Compliance Supplement and the New Jersey State Grant Compliance Supplement that could have a direct and material effect on each of the College s major federal and state programs for the fiscal year ended June 30, The College s major federal and state programs are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Management s Responsibility Management is responsible for compliance with federal and state statutes, regulations, and the terms and conditions of its federal and state awards applicable to its federal and state programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of the College s major federal and state 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; Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance); and State of New Jersey Circular OMB, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid. Those standards, the Uniform Guidance, and State of New Jersey Circular OMB, 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 or state 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 and state program. However, our audit does not provide a legal determination of the College s compliance. Opinion on Each Major Federal and State Program In our opinion, Atlantic Cape Community 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 and state programs for the fiscal year ended June 30, North Broad Street Suite 201 Woodbury, NJ P F Page 79

88 Report on Internal Control Over Compliance Management of Atlantic Cape Community 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 or state 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 or state program and to test and report on internal control over compliance in accordance with the Uniform Guidance and State of New Jersey Circular OMB, but not for the purpose of expressing an opinion on the effectiveness of 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 or state 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 or state 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 or state 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. 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 requirements of the Uniform Guidance and State of New Jersey Circular OMB. Accordingly, this report is not suitable for any other purpose. Respectfully submitted, BOWMAN & COMPANY LLP Certified Public Accountants & Consultants Woodbury, New Jersey December 22, 2017 Page 80

89 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2017 BALANCE JUNE 30, 2017 AWARD FY17 AMOUNT FY17 FY17 PASS- CUMULATIVE DUE TO CFDA GRANT ID GRANT AUTHOR- CASH RECEIVED RETURN TO GRANT THROUGH TO GRANT ACCOUNTS DEFERRED GRANTOR AT NUMBER NUMBER PERIOD IZATIONS RECEIVED TO DATE GRANTOR EXPENDITURES TRANSFER SUBRECIPIENTS EXPENDITURES RECEIVABLE REVENUE 6/30/2017 U.S. DEPARTMENT OF EDUCATION: (DIRECT FUNDING) Student Financial Aid Cluster: Federal Pell Grant Program- Authorization P063P /1/16-8/31/17 $11,815,901 $ 11,348,136 $ 11,348,136 $ (110,387) $ 11,815,901 $ 11,815,901 $ 578,152 Federal Pell Grant Program- ACA P063Q /1/16-8/31/17 18,450 15,235 15,235 18,450 18,450 3,215 Federal Pell Grant Program- Authorization P063P /1/15-8/31/16 13,207, ,978 13,210,245 (2,852) 12,608 13,207,393 Federal Pell Grant Program- ACA P063Q /1/15-8/31/16 20,170 3,545 20, , Federal Pell Grant Program- Authorization P063P /1/14-8/31/15 14,682,514 14,682,622 (108) 14,682,514 Federal Pell Grant Program- ACA P063Q /1/14-8/31/15 22, ,445 22,445 11,876,924 39,298,698 (113,347) 11,847,114 39,766, ,522 Federal Supplemental Educational Opportunity Grants P007A /1/16-8/31/17 151, , , ,760 $ (20,857) 151,903 41,218 Federal Supplemental Educational Opportunity Grants P007A /1/15-8/31/16 186,959 44, ,959 4, , , , ,760 (16,142) 338,862 41,218 Federal Work-Study Program P033A /1/16-6/30/17 165, , , ,568 7, ,283 32,011 Federal Work-Study Program P033A /1/15-6/30/16 184,105 8, ,105 8, , , , ,568 16, ,388 32,011 Federal Direct Student Loans - Subsidized P268K /1/16-8/31/17 3,022,398 3,022,398 3,022,398 3,022,398 3,022,398 Federal Direct Student Loans - Unsubsidized P268K /1/16-8/31/17 2,354,110 2,354,110 2,354,110 2,354,110 2,354,110 Federal Direct Student Loans - PLUS P268K /1/16-8/31/17 195, , , , ,384 5,571,892 5,571,892 5,571,892 5,571,892 Total Student Financial Aid Cluster 17,729,759 45,469,611 (113,347) 17,733,334 46,011, ,751 Student Support Services P042A /1/16-8/31/17 310, , , , ,877 18,545 Student Support Services P042A /1/15-8/31/16 292,340 66, ,386 50, , , , , ,263 18,545 (PASS THROUGH NEW JERSEY DEPARTMENT OF EDUCATION) Career and Technical Education - Basic Grants to States PSFS /1/16-6/30/17 479, , , , ,388 57,568 Career and Technical Education - Basic Grants to States PSFS /1/15-6/30/16 484, , , , , , , ,932 57,568 Gaining Early Awareness and Readiness for Undergraduate Programs YR /26/16-9/25/17 284, , , , ,210 $ 93,280 Gaining Early Awareness and Readiness for Undergraduate Programs YR /26/15-9/25/16 284,200 66, ,490 (2,422) 90, ,068 Gaining Early Awareness and Readiness for Undergraduate Programs YR /18/16-5/31/17 7,676 7,676 7,676 6,921 6,921 $ 755 Gaining Early Awareness and Readiness for Undergraduate Programs YR /7/14-5/31/15 25,856 12,020 12,020 12, , ,676 (2,422) 271, ,219 93, ,005,344 1,439,040 (2,422) 731,375 1,400,151 57,568 93, (PASS THROUGH NEW JERSEY COUNCIL OF COMMUNITY COLLEGES) College Access Challenge Grant Program A N/A 9/1/16-7/30/17 31,475 18,627 18,627 18,627 College Access Challenge Grant Program A N/A 9/1/16-6/30/17 20,000 16,460 16,460 16,460 College Access Challenge Grant Program A N/A 6/1/15-8/31/16 34,066 16,378 34,066 34,066 16,378 34,066 35,087 69,153 35,087 (PASS THROUGH NJ DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT) Adult Education - Basic Grants to States ABS-FY2017 7/1/16-6/30/17 650, , , ,093 $ 326, , ,257 Adult Education - Basic Grants to States ABS-FY2016 7/1/15-6/30/16 672, , , , ,262 1,144, , ,859 1,277, ,257 Total U.S. Department of Education 19,621,049 48,562,694 (115,769) 19,385, ,859 49,252, ,208 93, (CONTINUED) Page 81

90 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2017 BALANCE JUNE 30, 2017 AWARD FY17 AMOUNT FY17 FY17 PASS- CUMULATIVE DUE TO CFDA GRANT ID GRANT AUTHOR- CASH RECEIVED RETURN TO GRANT THROUGH TO GRANT ACCOUNTS DEFERRED GRANTOR AT NUMBER NUMBER PERIOD IZATIONS RECEIVED TO DATE GRANTOR EXPENDITURES TRANSFER SUBRECIPIENTS EXPENDITURES RECEIVABLE REVENUE 6/30/2017 U.S. DEPARTMENT OF LABOR: (DIRECT FUNDING) Trade Adjustment Assistance TC A34 10/1/13-9/30/17 $ 1,027,886 $ 283, ,418 $ 944, ,812 $ 211, ,239 $ 958, ,157 $ 13,345 13,345 (PASS THROUGH NJ DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT) Workforce Investment Act (WIA) National Emergency Grants Atlantic City Re-employment Project (Literacy) (PASS THROUGH ATLANTIC CAPE MAY WORKFORCE INVESTMENT BOARD) WORK AC N/A N/A 12/15/14-6/30/17 1,216,500 2/1/17-6/30/17 318,143 38,900 15,378 54,278 1,005,000 15,378 1,020, ,200 76, ,159 $ 33,258 33,258 1,084,300 76,959 1,161,259 79,300 61, ,881 (PASS THROUGH ATLANTIC CAPE MAY WORKFORCE INVESTMENT BOARD) WIA Youth Activities Cape May County Out of School Youth K B 12/1/15-6/30/16 90,000 6,374 6,374 10,437 10,437 10,437 10,437 (PASS THROUGH NEW JERSEY COMMUNITY COLLEGE CONSORTIUM) H-1B Job Training Grants N/A 2/1/17-9/30/18 250,000 12,268 12,268 12,268 12,268 12,268 12,268 Total U.S. Department of Labor 344,070 1,975, ,666 33,258 2,142, ,494 NATIONAL AERONAUTICS AND SPACE ADMINISTRATON (NASA): (PASS THROUGH RUTGERS UNIVERSITY) Education -Unmanned Aircraft Systems Science - K-12 STEM Outreach in Atlantic County, NJ Total NASA NNX14AR02A /15/16-8/1/17 19,950 1/15/15-8/12/16 10,000 2,412 2,412 5,520 5,520 18,820 18,820 18,820 5,520 24,340 18,820 18,820 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES: (PASS THROUGH KEAN UNIVERSITY PROFESSIONAL IMPACT NJ) Child Care and Development Block Grant Child Care and Development Block Grant G G /24/16-6/30/17 5/1/15-9/23/16 97, ,064 62,531 62, ,434 62, , ,044 82,600 27, ,487 82, , ,113 20,069 20,069 (PASS THROUGH DISABILITY RIGHTS NJ) ACL Assistive Technology N/A 4/1/17-9/30/17 10,000 4,429 4,429 4,429 4,429 4,429 4,429 Total U.S. Department of Health and Human Services 125, , , ,542 24,498 NATIONAL SCIENCE FOUNDATION (PASS THROUGH FLORENCE-DARLINGTON TECHNICAL COLLEGE) Education and Human Resources Total National Science Foundation /11/17-6/30/17 2,400 2,056 2,056 2,056 2,056 2,056 2,056 2,056 2,056 Total Federal Aid $ 20,095,021 $ 50,717,941 $ (115,769) $ 19,939,987 $ - $ 360,117 $ 51,617,157 $ 1,109,020 $ 93,280 $ 755 The accompanying Notes to the Financial Statements and Notes to Schedules of Expenditures of Federal Awards and State Financial Assistance are an integral part of this schedule. Page 82

91 SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE FOR THE FISCAL YEAR ENDED JUNE 30, 2017 BALANCE JUNE 30, 2017 AWARD FY17 AMOUNT FY17 FY17 PASS- CUMULATIVE DUE TO GRANT AUTHORIZ- CASH RECEIVED RETURN TO GRANT THROUGH TO GRANT ACCOUNTS DEFERRED GRANTOR AT GRANT ID NUMBER PERIOD ATIONS RECEIVED TO DATE GRANTOR EXPENDITURES SUBRECIPIENTS EXPENDITURES RECEIVABLE REVENUE 6/30/2017 STUDENT FINANCIAL AID CLUSTER: NEW JERSEY COMMISSION ON HIGHER EDUCATION: Educational Opportunity Fund (EOF) Article III /1/16-6/30/17 $ 189,148 $ 170,435 $ 170,435 $ (11,741) $ 151,211 $ 151,211 $ 7,483 Educational Opportunity Fund (EOF) Article III - Summer /1/16-6/30/17 31,364 31,364 31,364 31,364 31,364 Educational Opportunity Fund (EOF) Article III - Summer /1/17-6/30/18 34,814 10,000 10,000 $ 10,000 NEW JERSEY HIGHER EDUCATION STUDENT ASSISTANCE AUTHORITY: Tuition Aid Grant (TAG) Tuition Aid Grant (TAG) Tuition Aid Grant (TAG) /1/16-6/30/17 7/1/15-6/30/16 7/1/14-6/30/15 1,558,835 1,668,598 1,911,920 1,656, ,656,456 1,670,663 1,910,206 (78,045) (2,065) (53) 1,558,835 1,558,835 1,668,598 1,910,153 NJ Stars Program /1/16-6/30/17 249, , , , , NJ Stars Program /1/15-6/30/16 262,988 1, , ,988 New Jersey Class Loans N/A 7/1/16-6/30/17 144, , , , ,053 Total Student Financial Aid Cluster 2,264,428 6,106,359 (91,904) 2,134,779 5,976,518 10,000 27,937 NEW JERSEY OFFICE OF THE SECRETARY OF HIGHER EDUCATION: Educational Opportunity Fund (EOF) Article IV /1/16-6/30/17 203, , , , ,507 College Bound /26/16-6/30/17 50,000 50,000 50,000 42,514 42,514 7,486 College Bound /26/15-6/30/16 50,000 50,000 (12,317) 37,683 Building our Future Bond Act /1/14-Completion 2,676, , ,937 1,745,942 1,977,053 $ 1,057,116 Building our Future Bond Act /1/14-Completion 2,984, ,086 2,984,039 2,984,039 Building our Future Bond Act /1/14-Completion 680,062 16, , , , ,755 Building our Future Bond Act /1/14-Completion 500,620 18, , , ,650 4,833,198 1,913,697 6,058,133 1,224,935 1,224,157 5,136,705 (12,317) 2,159,718 6,341,837 1,224,935 7,486 NEW JERSEY DEPARTMENT OF TREASURY HIGHER EDUCATION ADMINISTRATION: Operational Costs - County Colleges /1/16-6/30/17 5,396,752 5,396,752 5,396,752 5,396,752 5,396,752 Employer Contributions - Alternate Benefits Program /1/16-6/30/17 577, , , , , ,555 Employer Contributions - Alternate Benefits Program /1/15-6/30/16 624, , , ,119 P.L. 1971, Chapter 12 Debt Service /1/16-6/30/17 3,372,510 2,612,095 3,372,510 3,372,510 1,216,308 8,588,991 6,434,189 9,347,135 9,971,254 1,380,863 NEW JERSEY DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT: (PASS THROUGH NORTHEAST CARPENTERS APPRENTICE TRAINING) NJ Build N/A 9/1/16-12/30/16 15,125 7,962 7,962 7,962 7,962 7,962 7,962 7,962 7,962 NEW JERSEY DEPARTMENT OF HEALTH AND HUMAN SERVICES: Director's Orientation N/A 2/2/16-12/30/16 18,138 10,181 10,181 (PASS THROUGH ATLANTIC COUNTY WORKFORCE DEVELOPMENT BOARD) TANF/Adult Basic Education Program N/A 7/5/16-6/30/17 76,261 47,339 47,339 59,181 59,181 11,842 TANF/Adult Basic Education Program N/A 10/19/15-6/30/16 52,714 18,168 46,986 46,986 TANF/Front Desk Agent Training N/A 5/1/16-6/30/16 11,433 4,296 4,296 4,296 69,803 98,621 59, ,463 11,842 DEPARTMENT OF COMMUNITY AFFAIRS: Code Official Tution Remission /1/15-6/30/16 10,000 15,660 15,660 15,660 15,660 15,660 15,660 Total State Financial Assistance $ 12,181,182 $ 17,809,677 $ (104,221) $ 13,713,693 $ $ 22,433,875 $ 2,617,640 $ 17,486 $ 27,937 10,181 10,181 4,918 4,918 10,181 10,181 19,576 The accompanying Notes to the Financial Statements and Notes to Schedules of Expenditures of Federal Awards and State Financial Assistance are an integral part of this schedule. Page 83

92 Notes to Schedules of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended June 30, 2017 Note 1: BASIS OF PRESENTATION The accompanying schedules of expenditures of federal awards and state financial assistance ( the schedules ) include federal and state award activity of Atlantic Cape Community College (hereafter referred to as the College ). The College is defined in note 1 to the College's basic financial statements. The information in these schedules is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and State of New Jersey Circular OMB, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid. All federal and state awards received directly from federal and state agencies, as well as federal awards and state financial assistance passed through other government agencies, are included on the schedules. Because these schedules present only a selected portion of the operations of the College, it is not intended to and does not present the financial position and changes in operations of the College. Accordingly, some amounts presented in the respective schedules may differ from amounts presented in, or used in the preparation of, the College s June 30, 2017 financial statements. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying schedules are presented using the accrual basis of accounting as described in note 2 to the College's basic financial statements. Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and State of New Jersey Circular OMB, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid, wherein certain types of expenditures are not allowed or are limited as to reimbursement. Note 3: INDIRECT COST RATE The College has elected not to use the 10-percent de minimis indirect cost rate allowed under Uniform Guidance. Note 4: OTHER STUDENT LOAN PROGRAMS The College is responsible only for the performance of certain administrative duties with respect to Federal Direct Student Loans and New Jersey Class Loans; accordingly, these loans balances are not included in the College s basic financial statements. It is not practical to determine the balance of loans outstanding to students of the College under these programs as of June 30, Note 5: MAJOR PROGRAMS Major programs are identified in the Summary of Auditor's Results section of the Schedule of Findings and Questioned Costs. Page 84

93 Schedule of Findings and Questioned Costs For the Fiscal Year Ended June 30, 2017 Section 1- Summary of Auditor's Results Financial Statements Type of auditor's report issued Unmodified Internal control over financial reporting: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Noncompliance material to financial statements noted? yes X no... Federal Awards Internal control over major programs: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported.. Type of auditor's report issued on compliance for major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 516 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)?. yes X no Identification of major programs: CFDA Number(s) Name of Federal Program or Cluster Student Financial Aid Cluster: Federal PELL Grant Program Federal Supplemental Educational Opportunities Grants Federal Work-Study Program Federal Direct Student Loans Student Support Services Dollar threshold used to determine Type A programs $ 750,000 Auditee qualified as low-risk auditee? X yes no. Page 85

94 Schedule of Findings and Questioned Costs For the Fiscal Year Ended June 30, 2017 Section 1- Summary of Auditor's Results (Cont'd) State Financial Assistance Internal control over major programs: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported.. Type of auditor's report issued on compliance for major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with New Jersey Circular OMB?. yes X no Identification of major programs: GMIS Number(s) Name of State Program P.L. 1971, Chapter 12 Debt Service Dollar threshold used to determine Type A programs $ 750,000 Auditee qualified as low-risk auditee? X yes no. Page 86

95 Schedule of Findings and Questioned Costs For the Fiscal Year Ended June 30, 2017 Section 2- Schedule of Financial Statement Findings This section identifies the significant deficiencies, material weaknesses, and instances of noncompliance related to the financial statements that are required to be reported in accordance with Government Auditing Standards. No Current Year Findings Section 3- Schedule of Federal Award Findings and Questioned Costs This section identifies the significant deficiencies, material weaknesses, and instances of noncompliance, including questioned costs, related to the audit of major Federal programs, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). No Current Year Findings Section 4- Schedule of State Financial Assistance Findings and Questioned Costs This section identifies the significant deficiencies, material weaknesses, and instances of noncompliance, including questioned costs, related to the audit of major State programs, as required by State of New Jersey Circular OMB. No Current Year Findings Page 87

96 Summary Schedule of Prior Year Audit Findings and Questioned Costs as Prepared by Management This section identifies the status of prior year findings related to the financial statements and federal awards and state financial assistance that are required to be reported in accordance with Government Auditing Standards, Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and State of New Jersey Circular OMB. FINANCIAL STATEMENT FINDINGS No Prior Year Findings FEDERAL AWARDS No Prior Year Findings STATE FINANCIAL ASSISTANCE PROGRAMS No Prior Year Findings Page 88

97 STATISTICAL SECTION (UNAUDITED)

98 Financial Trends Information Financial trends information is intended to assist the user in understanding and assessing how the College s financial position has changed over time. Please refer to the following schedules for a historical view of the College s financial performance.

99 NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (UNAUDITED) For the Year Ended June 30, Investment in Capital Assets Restricted - expendable Restricted - nonexpendable Unrestricted (Deficit) $ 75,289,360 3,158, ,685 (27,279,336) $ 70,698,513 3,547, ,765 (23,603,807) $ 67,194,490 3,680, ,160 (22,816,930) $ 61,456,749 4,057, ,479 7,212,590 $ 47,644,622 5,182, ,954 5,494,227 $ 47,296,098 5,874, ,704 4,635,171 $ 48,252,911 5,754, ,699 4,351,237 $ 47,149,289 5,288, ,605 5,426,741 $ 46,140,245 6,898, ,218 3,561,662 $ 44,186,457 5,439, ,273 7,082,888 Total Net Position $ 52,004,018 $ 51,467,648 $ 48,875,043 $ 73,533,823 $ 59,113,770 $ 58,596,064 $ 59,137,441 $ 58,626,898 $ 57,347,608 $ 57,438,983 Note: GASB Statement No. 68 was implemented for June 30, 2015 year end. Source: Comprehensive Annual Financial Reports of the College Page 89

100 CAPITAL ASSET INFORMATION LAST TEN FISCAL YEARS (UNAUDITED) For the Year Ended June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, Academic Space Net assignable square feet 167, , , , , , , , , ,214 Mays Landing 93,879 93,879 93,879 65,964 65,964 65,964 65,964 65,964 65,964 65,964 Worthington Atlantic City 53,182 53,182 53,182 30,682 30,682 30,682 30,682 30,682 30,682 30,682 Cape May County 20,568 20,568 20,568 20,568 20,568 20,568 20,568 20,568 20,568 20,568 Libraries Number of volumes 67,352 76,315 75,927 75,574 74,999 74,657 79,516 80,538 80,538 80,237 Mays Landing 55,001 64,122 63,856 63,570 63,152 63,614 69,067 70,089 70,089 71,575 Worthington Atlantic City 4,272 4,192 4,130 4,090 4,012 3,378 2,878 2,878 2,878 1,646 Cape May County 8,079 8,001 7,941 7,914 7,835 7,665 7,571 7,571 7,571 7,016 Administrative and support buildings Net assignable square feet 181, , , , , , , , , ,959 Mays Landing 134, , , , , , , , , ,846 Worthington Atlantic City 22,662 22,662 22,662 22,662 22,662 22,662 22,662 22,662 22,662 22,662 Cape May County 24,451 24,451 24,451 24,451 24,451 24,451 24,451 24,451 24,451 24,451 Athletic facilities Practice and intramural fields Gymnasiums Transportation Vehicles Parking capacity 1,882 1,882 1,882 1,892 1,897 1,897 1,897 1,897 1,897 1,897 Mays Landing 1,308 1,308 1,308 1,318 1,358 1,358 1,358 1,358 1,358 1,358 Worthington Atlantic City Cape May County Source: College records Page 90

101 Capital gifts and grants Millions REVENUES BY SOURCE LAST TEN FISCAL YEARS (UNAUDITED) $70 Auxillary enterprises: Student activities Auxillary enterprises: Student activities $60 Auxillary enterprises: Student activities Auxillary enterprises: Student activities Auxillary enterprises: Student activities Auxillary enterprises: Student activities $50 $40 $30 $20 $10 $0 Auxillary enterprises: Student activities Auxillary enterprises: Student activities Other revenues Auxillary enterprises: Student activities Other revenues Capital appropriations Other revenues Other nonoperating revenues Investment Income Capital appropriations Gifts Capital appropriations Investment Income Gifts Other nonoperating revenues Gifts Investment Income Gifts Investment Income Capital appropriations Capital appropriations Capital appropriations Capital appropriations Capital appropriations Investment Income Gifts Other nonoperating revenues Gifts Auxillary enterprises: Student activities Investment Income Gifts Capital appropriations Investment Income Auxillary enterprises: Student activities Gifts Gifts Capital appropriations County Appropriations State Appropriations County Appropriations State Appropriations Other operating revenues Other operating revenues Sales and services of educational departments Sales and services of educational departments State and local grants and contracts State and local grants and contracts Other operating revenues Nongovernmental grants and contracts State and local grants and contracts County Appropriations State Appropriations County Appropriations State Appropriations Other operating revenues Sales and services of educational departments County Appropriations State Appropriations FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 County Appropriations State Appropriations County Appropriations State Appropriations Investment Income Gifts Federal appropriations Other operating revenues Other operating revenues Sales and services of educational departments Sales and services of educational departments Other operating revenues Sales and services of educational departments Other operating revenues Sales and services of educational departments State and local grants and contracts State and local grants and contracts State and local grants and contracts State and local grants and contracts Federal grants and contacts Federal grants and contacts Federal grants and contacts Federal grants and contacts Federal grants and contacts Federal grants and contacts Federal grants and contacts Federal grants and contacts Student Tuition and Fees Student Tuition and Fees Student Tuition and Fees Student Tuition and Fees Student Tuition and Fees Student Tuition and Fees Student Tuition and Fees Student Tuition and Fees County Appropriations State Appropriations State and local grants and contracts Other operating revenues Sales and services of educational departments County Appropriations State Appropriations State and local grants and contracts Student Tuition and Fees Federal grants and contacts County Appropriations State Appropriations Other operating revenues Sales and services of educational departments Nongovernmental grants and contracts State and local grants and contracts Student Tuition and Fees Federal grants and contacts Other revenues Capital gifts and grants Capital appropriations Other nonoperating revenues Investment income Gifts County appropriations State appropriations Federal appropriations Other operating revenues Sales and services of educational departments Nongovernmental grants and contracts State and local grants and contracts Federal grants and contracts Student Tuition and Fees Page 91

102 REVENUES BY SOURCE LAST TEN FISCAL YEARS (UNAUDITED) FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL Student Tuition and Fees Allowances Student tuition and fees, net Federal grants and contracts State and local grants and contracts Nongovernmental grants and contracts Sales and services of educational departments Other operating revenues Operating Revenues $ 23,657,536 (11,193,510) 12,464,026 14,368,475 2,402, ,445 67, ,157 30,056,287 $ 24,820,999 (11,810,732) 13,010,267 16,721,372 2,896, ,422 75, ,552 33,329,359 $ 25,635,567 $ 26,239,396 $ 25,869,285 (12,905,396) (12,415,667) (12,043,355) 12,730,171 13,823,729 13,825,930 17,596,061 17,477,807 17,295,837 2,818,259 3,703,562 3,293,112 54,304 74,410 75,248 82, , , , , ,313 33,848,617 35,735,320 35,293,849 $ 25,819,320 (11,518,502) 14,300,818 17,539,247 3,334,461 76, , ,503 36,153,949 $ 26,559,492 (12,476,637) 14,082,855 18,520,866 3,948,980 82, , ,688 37,502,556 $ 26,510,080 (11,815,125) 14,694,955 16,776,653 5,302,411 25, , ,726 37,748,545 $ 22,338,957 (8,735,556) 13,603,401 10,575,236 4,842,530 10, , ,451 29,979,019 $ 20,840,756 (10,842,990) 9,997,766 9,152,202 3,696, , ,108 1,034,751 24,532,844 Federal appropriations State appropriations County appropriations Gifts Investment income Other nonoperating revenues Nonoperating revenues 0 5,974,625 8,431, , ,880 15,093, ,126,540 8,408, ,750 81,144 15,018, ,194,910 8,409, ,384 77,724 55,200 15,087, ,208,042 8,574, ,823 68, ,210 15,347, ,240,332 8,559, ,413 74, ,347, ,376,982 8,872, , ,768 4,547 15,718, ,240,731 8,699, , ,716 67,378 15,451, ,435 6,393,479 8,752, , , ,016, ,930,883 8,347, , , ,956, ,505,206 8,348, , , ,885,393 Capital appropriations Capital gifts and grants Other revenues 9,269, ,040 7,254, ,988 8,502, ,115 15,476, ,825 2,686, ,830 1,457, ,931 2,045, , ,956, ,667 1,695, ,222,746 22,340 0 Auxillary enterprises: Student activities 127, , , , , , , , , ,165 $ 54,841,506 $ 55,755,544 $ 57,609,018 $ 66,737,625 $ 53,693,831 $ 53,535,632 $ 55,495,275 $ 55,927,266 $ 47,750,370 $ 44,778,488 FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL Student Tuition and Fees 43.14% 44.52% 44.50% 39.32% 48.18% 48.23% 47.86% 47.40% 46.78% 46.54% Allowances % % % % % % % % % % Student tuition and fees, net 22.73% 23.33% 22.10% 20.71% 25.75% 26.71% 25.38% 26.28% 28.49% 22.33% Federal grants and contracts 26.20% 29.99% 30.54% 26.19% 32.21% 32.76% 33.37% 30.00% 22.15% 20.44% State and local grants and contracts 4.38% 5.20% 4.89% 5.55% 6.13% 6.23% 7.12% 9.48% 10.14% 8.26% Nongovernmental grants and contracts 0.23% 0.22% 0.09% 0.11% 0.14% 0.14% 0.15% 0.05% 0.02% 1.13% Sales and services of educational departments 0.12% 0.14% 0.14% 0.17% 0.23% 0.21% 0.24% 0.24% 0.28% 0.33% Other operating revenues 1.14% 0.90% 0.99% 0.81% 1.27% 1.48% 1.33% 1.46% 1.70% 2.31% Operating Revenues 54.81% 59.78% 58.76% 53.55% 65.73% 67.53% 67.58% 67.50% 62.78% 54.79% Federal appropriations 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.59% 0.00% 0.00% State appropriations 10.89% 10.99% 10.75% 9.30% 11.62% 11.91% 11.25% 11.43% 14.51% 16.76% County appropriations 15.37% 15.08% 14.60% 12.85% 15.94% 16.57% 15.68% 15.65% 17.48% 18.64% Gifts 1.07% 0.72% 0.61% 0.54% 0.88% 0.67% 0.54% 0.54% 0.68% 0.64% Investment income 0.18% 0.15% 0.13% 0.10% 0.14% 0.19% 0.26% 0.43% 0.74% 1.66% Other nonoperating revenues 0.00% 0.00% 0.10% 0.20% 0.00% 0.01% 0.12% 0.00% 0.00% 0.00% Nonoperating revenues 27.52% 26.94% 26.19% 23.00% 28.58% 29.36% 27.84% 28.64% 33.42% 37.71% Capital appropriations 16.90% 13.01% 14.76% 23.19% 5.00% 2.72% 3.69% 3.50% 3.55% 7.20% Capital gifts and grants 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.63% 0.00% 0.00% 0.05% Other revenues 0.54% 0.02% 0.04% 0.04% 0.39% 0.10% 0.00% 0.01% 0.00% 0.00% Auxillary enterprises: Student activities 0.23% 0.25% 0.26% 0.23% 0.29% 0.28% 0.26% 0.36% 0.25% 0.26% (Excludes Additions to Permanent Endowments) Source: Statement of Revenues, Expenses, and Changes in Net Position by Year Page 92

103 Millions $45 ATLANTIC REVENUES CAPE COMMUNITY BY SOURCE COLLEGE CURRENT UNRESTRICTED REVENUE BY SOURCE OPERATING FUND CURRENT LAST UNRESTRICTED TEN FISCAL OPERATING YEARS FUND (UNAUDITED) LAST TEN FISCAL YEARS Federal Support Other Sources $40 $35 $30 $25 Other Sources Investment Income Chargebacks State Support County Support Other Sources Investment Income Chargebacks State Support County Support Other Sources Investment Income Chargebacks State Support County Support Other Sources Investment Income Chargebacks State Support County Support Other Sources Investment Income Chargebacks State Support County Support Other Sources Investment Income Chargebacks State Support County Support Other Sources Investment Income Chargebacks State Support County Support State Support County Support Investment Income Chargebacks Other Sources Investment Income Chargebacks State Support County Support Other Sources Investment Income Chargebacks State Support County Support Federal Support Other sources Investment Income Chargebacks County Support $20 State Support Tuition and Fees $15 $10 $5 Tuition and Fees Tuition and Fees Tuition and Fees Tuition and Fees Tuition and Fees Tuition and Fees Tuition and Fees Tuition and Fees Tuition and Fees Tuition and Fees $0 FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 Page 93

104 REVENUES BY SOURCE CURRENT UNRESTRICTED OPERATING FUND LAST TEN FISCAL YEARS (UNAUDITED) FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL Source: Credit Tuition and fees $ 21,278,827 $ 22,290,697 $ 22,695,549 $ 23,806,989 $ 23,655,952 $ 23,583,454 $ 24,094,514 $ 24,114,811 $ 20,552,466 $ 18,882,710 Non-Credit Programs 990,872 1,066,620 1,093, , ,167 1,425,012 1,396,913 1,730,355 1,282,048 1,556,349 Tuition and Fees 22,269,699 23,357,317 23,788,815 24,718,559 24,637,119 25,008,466 25,491,427 25,845,166 21,834,514 20,439,059 Federal Support 327,435 State Support 5,974,625 6,126,540 6,194,910 6,208,042 6,240,332 6,376,982 6,240,731 6,386,507 6,923,600 7,495,903 County Support 8,430,448 8,407,171 8,407,171 8,572,942 8,556,807 8,869,741 8,695,901 8,749,715 8,344,984 8,344,985 Chargebacks 70,427 94, , , , , , , , ,496 Investment Income 95,842 78,122 75,505 65,979 71,941 99, , , , ,450 Other sources 942,016 1,257,862 1,054, , ,336 1,076,101 1,087,969 1,173,380 1,194,459 1,443,870 TOTAL $ 37,783,057 $ 39,321,399 $ 39,642,072 $ 40,605,546 $ 40,583,696 $ 41,599,356 $ 41,828,893 $ 42,884,232 $ 38,791,288 $ 38,613,763 FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL Source: Tuition and Fees 58.94% 59.40% 60.01% 60.87% 60.71% 60.12% 60.94% 60.27% 56.29% 52.93% Federal Support 0.76% State Support 15.81% 15.58% 15.63% 15.29% 15.38% 15.33% 14.92% 14.89% 17.85% 19.41% County Support 22.31% 21.38% 21.21% 21.11% 21.08% 21.32% 20.79% 20.40% 21.51% 21.61% Chargebacks 0.19% 0.24% 0.31% 0.29% 0.31% 0.41% 0.42% 0.38% 0.40% 0.52% Investment Income 0.25% 0.20% 0.19% 0.16% 0.18% 0.24% 0.32% 0.56% 0.87% 1.78% Other sources 2.50% 3.20% 2.66% 2.27% 2.34% 2.59% 2.60% 2.74% 3.08% 3.74% TOTAL Source: Schedules of Budget Comparison To Actual Page 94

105 Millions EXPENDITURES BY NATURAL CLASSIFICATION LAST TEN FISCAL YEARS (UNAUDITED) $60 $50 $40 $30 $20 $10 Student activities Student activities Student activities Student activities Student activities Student activities Scholarship and student aid Student activities Scholarship and student aid Student activities Scholarship and student aid Scholarship and student aid Scholarship and student aid Travel Scholarship and student aid Scholarship and student aid Scholarship and student aid Depreciation and amortization Repairs and Maintenance Insurance Utilities and telephone Supplies and other Travel Depreciation and amortization Travel Travel Depreciation and amortization Depreciation and amortization Repairs and Maintenance Insurance Repairs and Maintenance Repairs and Maintenance Utilities and telephone Insurance Insurance Supplies and other Utilities and telephone Utilities and telephone Supplies and other Supplies and other Fringe Benefits Fringe Benefits Fringe Benefits Fringe Benefits Student activities Travel Travel Travel Depreciation and amortization Travel Depreciation and amortization Depreciation and amortization Scholarship and student aid Student activities Depreciation and amortization Repairs and Maintenance Repairs and Maintenance Travel Repairs and Maintenance Insurance Insurance Scholarship and student aid Repairs and Maintenance Depreciation and amortization Insurance Utilities and telephone Utilities and telephone Insurance Utilities and telephone Utilities and telephone Repairs and Maintenance Travel Insurance Depreciation and amortization Supplies and other Supplies and other Supplies and other Utilities and telephone Repairs and Maintenance Supplies and other Insurance Utilities and telephone Supplies and other Fringe Benefits Fringe Benefits Fringe Benefits Fringe Benefits Fringe Benefits Salaries and Wages Salaries and Wages Salaries and Wages Salaries and Wages Salaries and Wages Salaries and Wages Salaries and Wages Salaries and Wages Salaries and Wages Salaries and Wages Supplies and other Fringe Benefits Student activities Scholarship and student aid Travel Depreciation and amortization Rent Repairs and Maintenance Insurance Utilities and telephone Supplies and other Fringe Benefits Salaries and Wages $ FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 Page 95

106 EXPENDITURES BY NATURAL CLASSIFICATION LAST TEN FISCAL YEARS (UNAUDITED) Compensation Salaries and Wages Fringe Benefits Total Compensation Other Expenditures Supplies and other Utilities and telephone Insurance Repairs and Maintenance Rent Depreciation and amortization Travel FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL $ 23,856,062 11,987,261 35,843,323 5,843,985 1,566, , ,213 21,299 5,028, ,708 13,529,036 49,372,359 $ 24,805,205 9,877,457 34,682,662 5,539,948 1,633, , ,320 7,284 4,662, ,147 12,953,995 47,636,657 $ 24,392,423 $ 24,363,547 $ 25,182,142 $ 25,932,657 9,238,260 9,220,697 9,396,685 9,444,598 33,630,683 33,584,244 34,578,827 35,377,255 5,002,350 5,259,621 4,727,285 4,551,334 1,633,998 1,562,308 1,512,753 1,631, , , , , ,468 83, , ,892 7,083 7,617 5,969 1,400 3,946,402 3,401,444 3,344,763 3,230, , , , ,869 11,737,610 11,173,207 10,571,301 10,585,204 45,368,293 44,757,451 45,150,128 45,962,459 $ 26,042,735 9,251,407 35,294,142 5,260,160 1,715, , ,257 3,598 3,100, ,161 11,201,492 46,495,634 $ 25,748,467 9,185,974 34,934,441 5,812,193 1,562, , , ,969, ,928 11,605,139 46,539,580 $ 24,043,673 8,178,840 32,222,513 5,082,017 1,652, , , ,682, ,562 10,822,394 43,044,907 $ 22,546,608 7,415,550 29,962,158 4,929,781 1,687, , , ,524, ,231 10,214,314 40,176,472 Scholarship and student aid 4,481,558 5,262,088 6,210,634 7,290,880 7,578,634 8,257,089 8,405,427 8,049,883 4,732,931 4,104,374 Auxilliary enterprises Student activities 128, , , , , , , , , ,285 $ 53,982,853 $ 53,061,643 $ 51,727,500 $ 52,194,555 $ 52,891,237 $ 54,354,518 $ 55,030,060 $ 54,710,532 $ 47,899,838 $ 44,399,131 FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL Expenditures by Natural Classification Compensation Salaries and Wages 48.3% 52.1% 53.8% 54.4% 55.8% 56.4% 56.0% 55.3% 55.9% 56.1% Fringe Benefits 24.3% 20.7% 20.4% 20.6% 20.8% 20.5% 19.9% 19.7% 19.0% 18.5% Total Compensation 72.6% 72.8% 74.1% 75.0% 76.6% 77.0% 75.9% 75.1% 74.9% 74.6% Other Expenditures Supplies and other 11.8% 11.6% 11.0% 11.8% 10.5% 9.9% 11.3% 12.5% 11.8% 12.3% Utilities and telephone 3.2% 3.4% 3.6% 3.5% 3.4% 3.5% 3.7% 3.4% 3.8% 4.2% Insurance 1.5% 1.5% 1.6% 1.5% 1.4% 1.1% 1.0% 1.0% 0.9% 1.0% Repairs and Maintenance 0.3% 0.3% 0.5% 0.2% 0.4% 1.1% 1.1% 1.3% 1.8% 1.1% Rent 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Depreciation and amortization 10.2% 9.8% 8.7% 7.6% 7.4% 7.0% 6.7% 6.4% 6.2% 6.3% Travel 0.4% 0.5% 0.5% 0.4% 0.4% 0.3% 0.4% 0.4% 0.5% 0.5% 27.4% 27.2% 25.9% 25.0% 23.4% 23.0% 24.1% 24.9% 25.1% 25.4% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Statement of Revenues, Expenses, and Changes in Net Position by Year Page 96

107 Millions EXPENDITURES BY FUNCTION CURRENT UNRESTRICTED OPERATING FUND LAST TEN FISCAL YEARS $45 Transfers out to other funds Transfers out to other funds $40 $35 $30 $25 $20 $15 $10 $5 $0 FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 Transfers out to other funds Public Service Operation and maintenance of plant Institutional support Student services Academic support Instruction Instruction Instruction Instruction Instruction Instruction Instruction Instruction Instruction Instruction Instruction Academic support Student services Institutional support Academic support Student services Institutional support Academic support Student services Institutional support Academic support Student services Institutional support Academic support Student services Institutional support Academic support Student services Institutional support Academic support Student services Institutional support Academic support Student services Institutional support Operation and maintenance of plant Academic support Institutional support Student services Student services Academic support Institutional support Operation and maintenance of plant Operation and maintenance of plant Operation and maintenance of plant Operation and maintenance of plant Operation and maintenance of plant Operation and maintenance of plant Operation and maintenance of plant Operation and maintenance of plant Operation and maintenance of plant Transfers out to other funds Transfers out to other funds Public Service Transfers out to other funds Public Service Public Service Public Service Public Service Public Service Public Service Transfers out to other funds Public Service Transfers out to other funds Public Service Transfers out to other funds Public Service Page 97

108 EXPENDITURES BY FUNCTION CURRENT UNRESTRICTED OPERATING FUND LAST TEN FISCAL YEARS (UNAUDITED) FY2017 ACTUAL FY2016 ACTUAL FY2015 ACTUAL FY2014 ACTUAL FY2013 ACTUAL FY2012 ACTUAL FY2011 ACTUAL FY2010 ACTUAL FY2009 ACTUAL FY2008 ACTUAL Functional category: Educational and general: Instruction Credit instruction Non-credit instruction Total Instruction Academic support Student services Institutional support Operation and maintenance of plant Public Service Transfers out to other funds $ 12,830, ,049 13,363,113 4,194,522 4,829,018 9,970,427 6,918,137 35,621 80,000 $ 13,162, ,280 13,709,139 4,420,263 4,646,032 9,986,231 6,736,448 29, ,130 $ 12,948,059 $ 13,469,850 $ 14,274,635 $ 14,203, , , , ,591 13,590,591 13,940,882 14,819,295 15,051,483 4,370,483 4,132,992 3,769,718 3,915,288 4,580,976 4,555,309 4,857,323 5,128,037 9,683,970 9,391,470 9,661,161 9,933,648 6,684,695 6,474,015 6,552,666 6,805,272 79, ,853 53,523 49, ,235 12, ,308 $ 14,200, ,197 15,088,157 4,299,880 5,045,442 9,732,736 6,761,158 45,521 1,685,395 $ 14,222, ,265 15,176,641 3,818,955 4,775,742 9,784,216 6,646,731 34, ,071 $ 13,043, ,271 13,824,767 3,723,954 3,449,210 10,299,263 5,954, ,099 3,550,044 $ 12,694, ,685 13,459,769 2,997,543 3,061,723 10,016,854 5,670, ,379 2,589,169 TOTAL $ 39,390,838 $ 40,127,200 $ 38,990,712 $ 38,925,756 $ 39,726,595 $ 41,037,588 $ 42,658,289 $ 40,755,678 $ 40,955,391 $ 37,948,068 FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 FY2010 FY2009 FY2008 ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL Functional category: Educational and general: Instruction Credit instruction Non-credit instruction Total Instruction Academic support Student services Institutional support Operation and maintenance of plant Public Service Transfers out to other funds TOTAL 32.57% 32.80% 33.21% 34.60% 35.93% 34.61% 33.29% 34.90% 31.85% 33.45% 1.35% 1.36% 1.65% 1.21% 1.37% 2.07% 2.08% 2.34% 1.91% 2.02% 33.92% 34.16% 34.86% 35.81% 37.30% 36.68% 35.37% 37.24% 33.76% 35.47% 10.65% 11.02% 11.21% 10.62% 9.49% 9.54% 10.08% 9.37% 9.09% 7.90% 12.26% 11.58% 11.75% 11.70% 12.23% 12.50% 11.83% 11.72% 8.42% 8.07% 25.31% 24.89% 24.84% 24.13% 24.32% 24.21% 22.82% 24.01% 25.15% 26.40% 17.57% 16.79% 17.14% 16.63% 16.49% 16.58% 15.85% 16.31% 14.54% 14.94% 0.09% 0.07% 0.21% 0.50% 0.13% 0.12% 0.11% 0.08% 0.38% 0.40% 0.20% 1.49% 0.00% 0.60% 0.03% 0.38% 3.95% 1.27% 8.67% 6.82% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Source: Schedules of Budget Comparison To Actual Page 98

109 Revenue Capacity Information Revenue capacity information is intended to assist the user in understanding and assessing the factors affecting the College s ability to generate revenues. Please refer to the following schedules for a historical view of student credit hour enrollments which are the College's most significant revenue source.

110 Student Credit Hours 180,000 CREDIT HOUR ENROLLMENTS BY TUITION TYPE LAST TEN FISCAL YEARS (UNAUDITED) On line Leased Curr General Dual Enrollment Culinary 160, ,000 On-line n-line O On-line On-line On-line On-line O n-line On-line 120,000 -line On Leased Curr 100,000 On-line 80,000 60,000 40,000 al Gener al Gener al Gener al Gener al Gener al Gener al Gener al Gener al Gener al Gener 20,000 0 Dual Enrollment Dual Enrollment Dual Enrollment Dual Enrollment Dual Enrollment Dual Enrollment DualEnrollment Dual Enrollment Dual Enrollment Dual Enrollment Culinary Culinary Culinary Culinary Culinary Culinary Culinary Culinary Culinary Culinary FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08 Fiscal Year Page 99

111 CREDIT HOUR ENROLLMENTS BY COUNTY OF ORIGIN LAST TEN FISCAL YEARS (UNAUDITED) Leased Curriculum Student Credit Hours Other Cape May 180, , , , ,000 Leased Curriculum Other Cape May Leased Curriculum Other Cape May Leased Curriculum Other Cape May Leased Curriculum Other Cape May Leased Curriculum Other ay Cape M Leased Curriculum Other May Cape Leased Curriculum Other pe May Ca Leased Curriculum Other ape May C Atlantic Leased Curriculum Other Cape May Leased Curriculum Other Cape May 80,000 60,000 40,000 20,000 Atlantic Atlantic Atlantic Atlantic Atlantic Atlantic Atlantic Atlantic Atlantic Atlantic - FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08 Fiscal Year Page 100

112 ENROLLMENT DATA LAST TEN FISCAL YEARS (UNAUDITED) CREDIT HOUR ENROLLMENT BY SEMESTER Fiscal Year Ended Summer Fall Spring Total 6/30/ ,637 58,407 52, ,612 6/30/ ,376 63,818 59, ,019 6/30/ ,547 68,932 65, ,753 6/30/ ,365 74,309 69, ,914 6/30/ ,782 75,838 72, ,875 6/30/ ,662 77,357 72, ,657 6/30/ ,582 78,597 76, ,851 6/30/ ,347 77,636 78, ,428 6/30/ ,462 70,833 70, ,941 6/30/ ,246 69,245 65, ,445 *Total student credit-hours not including non-credit equivalent credit hours Source: Annual Enrollment Reports Page 101

113 ENROLLMENT DATA LAST TEN FISCAL YEARS (UNAUDITED) CREDIT HOUR ENROLLMENT COMPARISON BY COUNTY OF ORIGIN Atlantic Cape May Other Dual Enroll/ Leased Curr Total FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08 General Culinary On-line 72, ,320 15, ,579 2, ,168 90,896 2,085 29,067 Dual Enrollment Total 93,534 22,693 5, ,612 General Culinary On-line 80,976 1,094 21,428 18, ,754 3,173 1,361 2, ,848 2,727 30,741 Dual Enrollment Total 103,498 25,725 7, ,019 General Culinary On-line 89,812 1,048 20,291 20, ,365 3,100 1,706 2, ,776 3,087 30,215 Dual Enrollment Total 111,151 28,562 7, ,753 General Culinary On-line 97,309 1,504 20,115 22, ,009 3,361 2,314 2, ,396 4,256 29,665 Dual Enrollment Total 118,928 30,173 8, ,914 General Culinary On-line 100,697 1,816 20,465 23, ,093 2,879 2,507 2, ,228 4,927 30,244 Dual Enrollment Total 122,978 31,349 8, ,875 General Culinary On-line 103,021 2,105 20,859 24, ,035 2,316 2,682 2, ,600 5,367 30,300 Dual Enrollment Total 125,985 31,878 7, ,657 General Culinary On-line 104,821 2,267 21,549 27, ,575 2,623 2,847 2, ,556 5,651 31,234 Dual Enrollment Total 128,637 35,224 7, ,851 General Culinary On-line 104,017 2,311 21,651 28, ,883 2,870 3,006 2, ,154 5,975 31,942 Dual Enrollment Total 127,979 36,808 8, ,428 General Culinary On-line 92,442 1,782 20,236 26, ,054 2,721 2,423 2, ,894 4,754 29,777 Dual Enrollment Total 114,460 34,334 7, ,941 General Culinary On-line Dual Enrollment 90,888 1,592 18,188 23, ,731 3,372 2,783 2, ,050 4,989 26, Leased Curr Total 110,668 30,135 8, ,445 Source: County and Fiscal Year totals agree to audited Full-Time Equivalent Enrollment reports Page 102

114 ENROLLMENT DATA LAST TEN FISCAL YEARS (UNAUDITED) % CREDIT HOUR ENROLLMENT COMPARISON BY COUNTY OF ORIGIN FY17 General Culinary On-line Dual Enrollment Leased Curr Atlantic 77.37% 0.90% 21.72% Cape May 69.87% 1.14% 28.99% Other 45.89% 16.87% 37.24% Dual Enroll/ International % of Total 74.13% 1.70% 23.71% 0.46% FY16 Total General Culinary On-line Dual Enrollment Total 78.24% 1.06% 20.70% 72.69% 1.06% 26.25% 44.73% 19.19% 36.08% 75.06% 1.99% 22.44% 0.51% FY15 General Culinary On-line Dual Enrollment Total 80.80% 0.94% 18.26% 73.05% 1.17% 25.79% 42.09% 23.16% 34.75% 77.00% 2.09% 20.45% 0.46% FY14 General Culinary On-line Dual Enrollment Total 81.82% 1.26% 16.91% 75.32% 1.45% 23.23% 40.91% 28.16% 30.93% 78.14% 2.70% 18.79% 0.38% FY13 General Culinary On-line Dual Enrollment Total 81.88% 1.48% 16.64% 75.45% 1.93% 22.63% 35.67% 31.06% 33.28% 78.11% 3.03% 18.57% 0.29% FY12 General Culinary On-line Dual Enrollment Total 81.77% 1.67% 16.56% 76.11% 1.82% 22.07% 31.28% 36.22% 32.50% 78.23% 3.24% 18.29% 0.24% FY11 General Culinary On-line Dual Enrollment Total 81.49% 1.76% 16.75% 76.97% 1.52% 21.51% 34.60% 37.56% 27.84% 78.30% 3.29% 18.18% 0.24% FY10 General Culinary On-line Dual Enrollment Total 81.28% 1.81% 16.92% 76.80% 1.79% 21.42% 34.65% 36.29% 29.07% 77.93% 3.45% 18.42% 0.21% FY09 General Culinary On-line Dual Enrollment Total 80.76% 1.56% 17.68% 77.86% 1.60% 20.55% 35.66% 31.75% 32.59% 77.67% 3.03% 18.97% 0.33% FY08 General Culinary On-line Dual Enrollment Leased Curr Total 82.13% 1.44% 16.43% 78.94% 2.04% 19.02% 38.10% 31.44% 30.46% 0.00% 78.47% 3.32% 17.69% 0.19% 0.34% Source: County and Fiscal Year totals agree to audited Full-Time Equivalent Enrollment reports Page 103

115 Demographic and Economic Information Demographic and economic information is intended (1) to assist the user in understanding the socioeconomic environment within which the College operates and (2) to provide information that facilitates comparisons of financial statement information over time and among Colleges. Please refer to the following exhibits for a historical view of the demographic and economic statistics and factors prevalent in the location in which the College operates.

116 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS (UNAUDITED) SERVICE AREA SERVICE AREA SERVICE AREA SERVICE AREA SERVICE AREA SECONDARY AND ELEMENTARY SERVICE AREA YEAR POPULATION PERSONAL INCOME ($ths) PER CAPITA INCOME UNEMPLOYMENT % ENROLLMENT HIGH SCHOOL GRADUATES ,421 N/A N/A ,098 3, ,946 $17,031,890 $46, ,610 3, ,553 $16,866,555 $45, ,132 4, ,016 $16,270,022 $43, ,062 4, ,726 $16,629,499 $44, ,361 4, ,939 $15,749,407 $42, ,655 4, ,916 $15,242,347 $40, ,385 4, ,803 $14,834,268 $40, ,047 4, ,519 $15,308,814 $41, ,702 4, ,298 $14,776,390 $40, ,498 4,245 Note: The College's service area is comprised on Atlantic and Cape May Counties, New Jersey Note: Secondary & Elementry Enrollments & High School Graduates are based on fiscal year, i.e., 2016 (07/01/ /30/2016) Source: State of New Jersey Department of Labor and Workforce Development and State of New Jersey Department of Education Page 104

117 PRINCIPAL NON-CASINO PRIVATE EMPLOYERS, 2016 (Estimated) Service Area: Atlantic and Cape May Counties, New Jersey (UNAUDITED) LARGEST EMPLOYERS NUMBER OF COUNTY EMPLOYER TYPE EMPLOYEES ATLANTIC AtlantiCare Health System 4992 PRIVATE ATLANTIC Shore Medical Center 1587 PRIVATE ATLANTIC Shop Rite 1076 PRIVATE ATLANTIC Atlantic City Electric 1000 PRIVATE ATLANTIC Wawa 915 PRIVATE ATLANTIC Walmart 716 PRIVATE ATLANTIC Acme Markets 597 PRIVATE ATLANTIC Bacharach Institute of 525 PRIVATE Rehabilitation ATLANTIC Atlantic City Linen 500 PRIVATE ATLANTIC South Jersey Industries Inc. 455 PRIVATE ATLANTIC Caring Inc. 372 PRIVATE ATLANTIC Atlantic Medical Imaging 350 PRIVATE ATLANTIC Home Depot 330 PRIVATE ATLANTIC Bayada Nurses 305 PRIVATE ATLANTIC Seaview-Richard Stockton 300 PRIVATE College CAPE MAY Cape Regional Medical Center 1050 PRIVATE CAPE MAY Acme Markets 1022 PRIVATE CAPE MAY Wawa 649 PRIVATE CAPE MAY Cold Spring Fish and Supply Co. 500 PRIVATE CAPE MAY Walmart 277 PRIVATE CAPE MAY Cape Counseling Services 253 PRIVATE CAPE MAY Shop Rite 248 PRIVATE CAPE MAY Shores at Wesley Manor 230 PRIVATE CAPE MAY Home Depot 130 PRIVATE CAPE MAY Verizon 125 PRIVATE Source: College Records Page 105

118 FULL-TIME COLLEGE STAFFING LAST TEN FISCAL YEARS (UNAUDITED) CREDIT HOUR ENROLLMENT AND FULL TIME COLLEGE STAFFING Fiscal Year Ended Credit Hour Enrollment (AUDITED)* FTE % Change Faculty Staff TOTAL FULL-TIME % Change 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012 6/30/2011 6/30/2010 6/30/2009 6/30/ , , , , , , , , , ,445 4,087 4,567 4,925 5,264 5,429 5,522 5,728 5,781 5,231 5, % -7.3% -6.4% -3.0% -1.7% -3.6% -0.9% 10.5% 4.3% 3.4% % % % % % % % % % % # of Full-time Employees Staff Faculty Faculty Staff Fiscal Year Ended * - includes Dual Enrollment Credits Source: College records Page 106