NORTHEAST WISCONSIN TECHNICAL COLLEGE ANNUAL FINANCIAL REPORT JUNE 30, 2017

Transcription

1 ANNUAL FINANCIAL REPORT JUNE 30, 2017

2 Green Bay, Wisconsin June 30, 2017 Table of Contents Page No. INDEPENDENT AUDITORS' REPORT MANAGEMENT DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS Statements of Net Position 12 Statements of Revenues, Expenses, and Changes in Net Position 13 Statements of Cash Flows Notes to Basic Financial Statements REQUIRED SUPPLEMENTARY INFORMATION OPES Schedule of Funding Progress 42 Schedule of Proportionate Share of the Net Pension Liability (Asset) - Wisconsin Retirement System 43 Schedule of Contributions - Wisconsin Retirement System 43 Notes to Required Supplementary Information 43 SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis)- General Fund 44 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis)- Special Revenue Aidable Fund 45 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis)- Special Revenue Non-Aidable Fund 46 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis) - Capital Projects Fund 47 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis)- Debt Service Fund 48 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis) - Enterprise Funds 49 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis) - Internal Service Funds 50 Schedule to Reconcile the Combined Balance Sheet - All Fund Types to the Statement of Net Position 51 Schedule to Reconcile the Budget (Non-GAAP) Basis Financial Statements to the Statements of Revenues, Expenses and Changes in Net Position 52 Notes to Budgetary Comparison Schedules 53-55

3 Green Bay, Wisconsin June 30, 2017 Table of Contents Page No. FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors' Report on Compliance For Each Major Federal and State Program and on Internal Control Over Compliance in Accordance with Uniform Guidance and the State Single Audit Guidelines Schedule of Expenditures of Federal Awards Schedule of Expenditures of State Awards Notes to Schedules of Expenditures of Federal and State Awards Schedule of Findings and Questioned Costs Schedule of Prior Year Audit Findings and Corrective Action Plan

4 Schenck ADVISORY TAX ASSURANCE INDEPENDENT AUDITORS' REPORT To the Board of Trustees Northeast Wisconsin Technical College District Green Bay, Wisconsin Report on the Financial Statements We have audited the accompanying financial statements of Northeast Technical College District, (the "District") as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit 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 Northeast Wisconsin Technical College Educational Foundation, Inc., a discretely presented component unit of the District, were not audited in accordance with Government Auditing Standards. Those standards req uire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 auditors consider internal control relevant to the District'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 pu rpose of expressing an opinion on the effectiveness of the District'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 wel l as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the District as of June 30, 2017, and the respective changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. schencksc.com Schenck SC

5 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 4 through 11 and the budgetary comparison information and the schedules relating to pensions and other postemployment benefits on pages 42 and 43 be presented to supplement the basic financial statements. Such information, although not 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 District's basic financial statements. The financial information listed in the table of contents as supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. The schedule of expenditures of federal awards and schedule of state financial assistance are presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and the State Single Audit Guidelines issued by the Wisconsin Department of Administration and are also not a required part of the basic financial statements. The supplementary information and schedules of expenditures of federal awards and state financial assistance are the responsibility of management and were derived from and relate 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 supplementary information, the schedule of expenditures of federal awards and the schedule of state financial assistance are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Report on Summarized Financial Information We have previously audited the District's 2016 financial statements, and our report dated December 14, 2016, expressed an unmodified opinion on those respective financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2016, is consistent, in all material respects, with the audited financial statements from which it has been derived. 2

6 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 6, 2017, on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control over financial reporting and compliance. _,/~.s:--c Certified Public Accountants Green Bay, Wisconsin December 6,

7 MANAGEMENT DISCUSSION AND ANALYSIS

8 Northeast Wisconsin Technical College Management's Discussion and Analysis The purpose of Management's Discussion and Analysis (MD&A) is to provide users of the basic financial statements with a narrative introduction, overview, and analysis of those statements. The MD&A provides summary level financial information; therefore, it should be read in conjunction with the accompanying financial statements. The Northeast Wisconsin Technical College Educational Foundation, Inc. is included as a component unit in the basic financial statements; however, the MD&A below includes only the activities of Northeast Wisconsin Technical College ("the District"). Basic Financial Statements This discussion and analysis is intended to serve as an introduction to District's basic financial statements. The statements are comprised of two components: government-wide financial statements and notes to financial statements. Government-wide financial statements are designed to provide readers with a broad overview of the District's finances, in a manner similar to a private sector business. The statement of net position presents information on all of the District's assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. This statement is prepared under the accrual basis of accounting whereby revenues and assets are recognized when the service is provided and expenses and liabilities are recognized when others provide the service, regardless of when cash is exchanged. The statement of revenues, expenses and changes in net position presents the revenues earned and expenses incurred during the year. Activities are reported as either operating or nonoperating. As the District receives the majority of its revenues from the taxpayers and other government entities, the District will report an operating deficit or loss. Revenues received from taxpayers (tax levies) and from the state (state appropriations) are considered non-operating revenue, and reduce the operating deficit or loss. The utilization of capital assets is reflected in the financial statements as depreciation, which amortizes the cost of an asset over its expected useful life. The statement of cash flows presents information related to cash inflows and outflows summarized by operating, noncapital, capital, and investing activities. This statement is important in evaluating the District's ability to meet financial obligations as they mature. The notes to financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide financial statements. The notes to basic financial statements are located after the government-wide financial statements in this report. 4

9 The following summary shows a condensed version of the Statement of Net Position (dollars in thousands) lncrease/(decrease) Increase/( Decrease} $ % $ % Assets: Cash and cash equivalents $ 36,679 $ 47,238 $ (10,559) -22.4% $ $18, % Current and other assets , % 20,274 (2,793) -13.8% Net pension asset 0 0.0% 9,232 (9,232) % Capital assets , % % Total assets , % % Deferred Outflows of Resources (10.612) -33.3% % Total Assets and Deferred Outflows of Resources $ 196,815 $187,197 $ 9, % $ 150,661 $ 36, % Liabilities: Current liabilities 34,024 23, , % 26,546 (3,422) -12.9% Noncurrent liabilities ,594 8, % 27,964 23, % Net pension liability (3.050} -50.3% % Total liabilities % % Deferred Inflows of Resources (3.302) -25.8% % Net position: Net investment in capital assets 46,738 53,388 (6,650) -12.5% 53,674 (286) -0.5% Restricted 8,847 4,012 4, % 12,045 (8,033) -66.7% Unrestricted (1.807} -5.0% % Total net position (3.622} -3.9% (2.492} -2.6% Total Liabilities, Deferred Inflows of Resources a nd Net Position $ 196,815 $187,197 $ 9, % $ 150,661 $ 36, % Fiscal Year 2017 Compared to 2016 Total assets increased by $20.2 million, or 13.0%, for the fiscal year: Cash and cash equivalents decreased by $10.6 million, or 22.4%, due to planned capital project expenditures related to the District's referendum. Current and other assets, which includes various receivables, inventories, and prepaid expenses increased by $.6 million, or 3.3%. This is primarily due to an increase in property tax receivable. Payment on the balance of property tax receivable is typically received by the end of August for that year. Net capital assets increased by $30.2 million, or 33.3%, primarily related to the referendum. Major referendum projects completed or started in fiscal year 2017 included the Business & Technology Center, the Marinette Campus, the Sturgeon Bay Campus, the Transportation Center, the Great Lakes Energy Education Center, the Public Safety Burn Tower, the Universal Driving Facility, and the purchase of four new properties. 5

10 Deferred outflows of resources decreased by $10.6 million, or 33.3%, primarily due to the net difference between projected and actual earnings on the pension plan investments. Total liabilities increased $16.5 million, or 20.5% for the fiscal year: Annual note issuance proceeds of $26.4 million exceeded principal payments of $12. 7 million for the year. This $13. 7 million increase can be further broken down between the current portion of long-term obligations, $5 million, and the general obligation notes payable, $8. 7 million. Current liabilities increased by $10.9 million, or 47.1 %. In addition to the $5 million increase in current portion of long-term obligations there was a $5.0 million increase in accounts payable balances primarily due to year-end accruals for construction invoices. Noncurrent liabilities increased by $8. 7 million, or 16.8%, mainly due to the increase in general obligation notes payable. Net pension liability decreased by $3.1 million, or 50.3%, primarily due to the net difference between projected and actual earnings on the pension plan investments. Deferred inflows of resources decreased by $3.3 million, or 25.8%, primarily due to the differences between expected and actual experiences with the pension plan. Net position decreased by $3.6 million, or 3.9%, for the fiscal year: Net investment in capital assets decreased by $6. 7 million, or 12.5%.This was a result of the change in capital assets, the impact of accumulated depreciation on those assets, and the debt still outstanding to pay for those assets as well as any proceeds remaining from debt that was previously borrowed. Restricted for debt service increased by $4.8 million, or 120.5%. Premiums received on debt issues are included in the debt service fund and accrued interest is excluded from the reserve balance. Unrestricted net position decreased by $1.8 million, or 5.0%. The following is a graphical illustration of the District's net position for the current fiscal year: Net Investment in Capital Assets, 52% 6

11 Fiscal Year 2016 Compared to 2015 Total assets increased by $12.3 million, or 8.6%, for the fiscal year: Cash and cash equivalents increased by $18.5 million, or 64.5%. The increase was primarily due to $34.1 million of general obligation debt issued by the District to finance capital asset additions that were part of the referendum approved April 2015 offset by $14.6 million retired through property taxes levied for debt service. Current and other assets, which includes various receivables, inventories, and prepaid expenses decreased by $2.8 million, or 13.8%. The majority of the decrease was due to a reduction in grant receivables from a grant that expired in the middle of fiscal Net pension asset decreased from $9.2 million to $0 as the District reported a $6.1 million pension liability for its proportionate share of the Wisconsin Retirement System (WRS) net pension liability. The significant change in pension was primarily due to the return on the plan investments being much lower than WRS's long-term expected return on plan assets. Net capital assets increased by $5.8 million, or 6.8%. During fiscal year 2016, the District acquired space at the Shawano ThedaCare location, and started the addition and remodeling of the Business & Technology Center and the Marinette Campus (referendum projects). Deferred outflows of resources increased by $24.3 million, or 319.4%, primarily due to the net difference between projected and actual earnings on the pension plan investments. Total liabilities increased $26.3 million, or 48.2% for the fiscal year: Annual note issuance proceeds of $34.1 million exceeded principal payments of $14.6 million for the year. This $19.5 million can be further broken down between a decrease in the current portion of long-term obligations of $3.2 million, and an increase in general obligation notes payable, $22. 7 million. Current liabilities are primarily made up of accounts payable, accrued wages and related payroll taxes, unearned revenue, and the current portion of long-term obligations. Current liabilities decreased by $3.4 million, or 12.9%, primarily due to the $3.2 million decrease in the current portion of long-term obligations. Noncurrent liabilities increased by $23.6 million or 84.5%, mainly due to the $22. 7 million increase in general obligation notes payable. Net pension liability increased from $0 to $6.1 million. As mentioned earlier, in fiscal 2015 the District recognized a $9.2 million asset. The shift to a liability in 2016 was mainly caused by the return on plan investments being less than anticipated. Deferred inflows of resources increased by $12.8 million, or %, primarily due to the differences between expected and actual experiences with the pension plan. Net position decreased by $2.5 million, or 2.6%, for the fiscal year: Net investment in capital assets decreased by $.3 million, or 0.5%. Restricted for debt service increased by $1.2 million, or 42.6%. Premiums received on debt issues are included in the debt service fund and accrued interest is excluded from the reserve balance. Restricted for pension benefits decreased by $9.2 million, or 100.0%, due to the decrease in the net pension asset. Unrestricted net position increased by $5.8 million, or 19.2%, primarily due to the pension net asset decrease. 7

12 The following is a summary of the Statements of Revenues, Expenses and Changes in Net Position (dollars in thousands): Operating Revenues: Increase I (Decrease) Increase I (Decrease) $ % $ % Tuition & fees $ 19,143 $20,473 s (1.330) -6.5% $20,604 $ (131) -0.6% Federal and state grants 16,315 19,460 (3, 145) -16.2% 25,968 (6,508) -25.1% Contract revenues 3,662 4,344 (682) -15.7% (480) -10.0% Auxiliary enterprise revenues 7,691 7,880 (189) -2.4% 8,071 (191) -2.4% Miscellaneous 2,351 1, % {974} -33.6% Operating revenues 49, (4.922} -9.1% 62,368 {8,284} -13.3% Non-operating Revenues Property taxes 31,847 28,939 2, % 28, % State operating appropriations 40,829 41,630 (801) -1.9% 39, % Investment income % % Non-operating revenues 72,947 70,711 2, % , % Total Revenues ,795 (2.686) -2.2% 130,678 {5,883) -4.5% Operating Expenses Instruction 65,726 68,159 (2,433) -3.6% 66,425 1, % Instructional resources 1,564 1,573 (9) -0.6% 2,271 (698) -30.7% Student services 14,599 13, % 17,304 (3,342) -19.3% General institutional , 141 (4,737) -39.0% (1,689) -12.2% Physical plant 14,145 9,145 5, % 8, % Auxiliary enterprise services 6,269 7,711 (1,442) -18.7% 9,789 (2,078) -21.2% Depreciation 4,691 5,077 (386) -7.6% 5,458 (381) -7.0% Student aid 7, {933} -10.5% (1.321} -13.0% Operating expense {4,303} -3.4% 134,070 {7.446} -5.6% Non-operating Expenses: Loss on sale of capital assets 2, , % 725 (480) -66.2% Interest expense % 586 (123) -21.0% Bond issuance costs {70} -25.1% % Non-operating Expenses: 3, , % 1,311 {324} -24.7% Total Expenses 125, (1,788} -1.4% 135,381 (7.770} -5.7% Change in net position before capital contributions (3,714) (2,816) (898) 31.9% (4,703) 1, % Capital contributions {232} -71.6% 651 {327} -50.2% Change in net position after capital contributions (3,622) (2,492) {1.1 30} 45.3% (4,052) 1, % Net position - beginning of year 93,595 96,087 83,556 Cumulative effect of change in accounting principle Net position - end of year $89, ,595 $

13 Below is a graphical illustration of total revenues by source for the fiscal year ended June 30, 2017: TOTAL REVENUES BY SOURCE YEAR ENDED JUNE 30, 2017 Federal and State Grants 14% Contract Reven e~ 2% Auxiliary Enterprise 6% Below is a graphical illustration of total expenses by function for the fiscal year ended June 30, 2017: TOTAL EXPENSES BY FUNCTION YEAR ENDED JUNE 30, Non-Operating Depreciation 2.s% 3. 7% Instructional Resources 1.2% Instruction 52.2% Student Services 11.6% 9

14 Fiscal Year 2017 Compared to 2016 Operating revenues are the charges for services offered by the District. During fiscal year 2017, the District generated $49.2 million in operating revenues, a decrease of $4.9 million, or 9.1 %. Tuition & fees decreased $1.3 million, or 6.5%, due to 6.7% decline in enrollments. Federal and state grants decreased $3.1 million, or 16.2%. The decrease is primarily due to reimbursements for the District's Trade Adjustment Assistance Community College and Career Training {T AACCCT) grant expenditures decreased by $2.0 million, and the reduction of Federal Pell Grant Program by $1.0 million. Operating expenses are costs related to offering the programs of the District. During fiscal year 2017, operating expenses were $122.3 million, a decrease of $4.3 million, or 3.4%. Instruction expenses decreased by $2.4 million, or 3.6%. The decrease is primarily due to reimbursements for the District's Trade Adjustment Assistance Community College and Career Training {T AACCCT) grant expenditures decreased by $2.0 million. General institutional expenses decreased by $4.7 million, or 39.0%, and physical plant expenses increased by $5 million, or 54. 7%. The year-over-year fluctuations are due to purchases related to construction activity on campus. Auxiliary enterprise services expenses decreased by $1.4 million, or 18.7%, primarily due to a decrease in District's self-insurance fund for health and dental insurance. Non-operating revenues are revenues not directly related to providing instruction. During 2017, the District generated $72.9 million of non-operating revenues, an increase of $2.2 million, or 3.2%. Property taxes increased $2.9 million and state appropriations decreased $.8 million. Non-operating expenses are expenses not directly related to providing instruction. During 2017, total non-operating expenses for the District were $3.5 million, an increase of $2.5 million, or 254.8%. During 2017 there was an increase in the amount of capital disposals that were not fully depreciated resulting in an increase in the loss on sale of capital assets. Fiscal Year 2016 Compared to 2015 Operating revenues are the charges for services offered by the District. During fiscal year 2016, the District generated $54.1 million in operating revenues, a decrease of $8.3 million, or 13.3%. Federal and state grants decreased $6.5 million, or 25.1 %. The decrease is primarily due to reimbursements for the District's Trade Adjustment Assistance Community College and Career Training (T AACCCT) grant expenditures decreased by $2.8 million, Federal Pell Grant Program grant expenditures decreased by $1.6 million, and the reduction of the Apprentice-Related Instruction Grants by $. 7 million. Operating expenses are costs related to offering the programs of the District. During fiscal year 2016, operating expenses were $126.6 million, a decrease of $7.4 million, or 5.6%. Instruction expenses increased by $1.7 million, or 2.6%, due to increases in instructor wages and instructional equipment. Student service expenses decreased by $3.3 million, or 19.3%. Fiscal year 2015 included a larger capital expense related to the remodel of the Welcome Center. General institutional expenses decreased by $1. 7 million, or 12.2%, due to fluctuations in capital related purchases. 10

15 Auxiliary enterprise services expenses decreased by $2.1 million, or 21.2%. Fiscal year 2015 included a significant increase in the District's self-insurance fund for health and dental insurance. In fiscal 2016, the experienced costs and claims normalized. Student aid expenses decreased by $1.3 million, or 13.0%, primarily due to decreases in Pell Grant funding and Stafford loans. Non-operating revenues are revenues not directly related to providing instruction. During 2016, the District generated $70.7 million of non-operating revenues, an increase of $2.4 million, or 3.5%. State appropriations and property taxes increased $1. 7 million and $.6 million, respectively. Non-operating expenses are expenses not directly related to providing instruction. During 2016, total non-operating expenses for the District were $1.0 million, a decrease of $.3 million, or 24. 7%. Capital Asset and Debt Administration The District's investment in capital assets as of June 30, 2017 and 2016, net of accumulated depreciation, amounted to $120.8 million and $90.6 million, respectively. This investment in capital assets includes land and land improvements, construction in progress, buildings and improvements, and moveable equipment. Additional information on the District's capital assets can be found in Note 4 of the financial statements. At the end of the current fiscal year, the District had total general obligation debt outstanding of $75.0 million. The balance at the end of June 30, 2016 was $61.3 million. The District's bonds and notes continue to maintain a Moody's Investors Service Aa1 rating, and the District continues to meet all of its debt service requirements. All general obligation debt is repaid over the life of the assets acquired with debt proceeds. The current debt adequately replaces and expands the equipment and facility needs of the District. Additional information on the District's long-term debt can be found in Note 5 of the financial statements. Contacting the District's Financial Management This financial report is designed to provide a general overview of the District's finances for all those with an interest in the District's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Mr. Robert Mathews, Vice President of Business and Finance, 2740 West Mason Street, P.O. Box 19042, Green Bay, Wisconsin

16 BASIC FINANCIAL STATEMENTS

17 Statement of Net Position June 30, 2017 With Comparative Amounts as of June 30, District Foundation District Foundation ASSETS Current Assets Cash and investments $ 26,524,249 $ 307,570 $ 19,094,973 Restricted cash and cash equivalents 10,154,544 28,143,430 $ 120,541 Receivables Property taxes 8,774,448 8,230,310 Accounts 7,438,753 28,936 6,757,525 Unconditional promises to give, net 568, ,092 Inventories 963,019 1,324,704 Prepaid items ,167, Total Current Assets z Noncurrent Assets Investments 4,605,603 4,094,739 Beneficial interest in assets held by Community Foundation 20,859 18,730 Capital assets Non-depreciable 26,637,879 4,963,087 Depreciable 157,625, ,840,381 Accumulated depreciation { } (63, 199,985) Total Noncurrent Assets ,626,462 90, , TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pension 21, , LIABILITIES Current Liabilities Accounts payable 9,148,224 4,131,300 Accrued payroll, payroll taxes, and fringes 4,406,423 1,001 4,774,335 13,700 Accrued interest 371, ,130 Unearned revenue 1,062, ,330 Due to other organizations 2,590,139 1,887,873 Current portion of long-term liabilities 16, ,410, Total Current Liabilities , Long-term Liabilities Bonds and notes payable 58,519,768 49,850,635 Other post employment benefit liability 1,766,408 1,742,732 Net pension liability 3, , Total Long-term Liabilities TOTAL LIABILITIES 97, z DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pension 9, NET POSITION Net investment in capital assets 46,738,293 53,388,292 Restricted for Debt service 8,846,567 4,012,238 Scholarships and other activities 5,355,467 4,241,005 Unrestricted TOTAL NET POSITION $ ~ 51355,467 ~ ~ Q05 The notes to the basic financial statements are an integral part of this statement. 12

18 Statement of Revenues, Expenses and Changes in Net Position For the Year Ended June 30, 2017 With Comparative Amounts for the Year Ended June 30, District Foundation District Foundation Operating Revenues Student program fees, net of scholarship allowances of $4,818, 177 and $4,966,581 for 2017 and 2016 $ 15,930,029 $ $ 17,013,535 $ Student material fees, net of scholarship allowances of $268,890 and $288,210 for 2017 and , ,841 Other student fees, net of scholarship allowances of $702,210 and $723,199 for 2017 and ,325,513 2,470,410 Federal grants 14,000,862 17,042,202 State grants 2,313,840 2,418, 153 Contract revenue 3,647,135 4,321,540 School district contracts 14,904 22,101 Auxiliary enterprise revenues 7,690,995 7,880,463 Miscellaneous 2,351, 117 1,830,847 1,926,658 1,401,229 Total Operating Revenues 49,161,172 1,830,847 54,083,903 1,401,229 Operating Expenses Instruction 65,725,846 68,159,464 Instructional resources 1,563,867 1,572,696 Student services 14,598,868 13,962,457 General institutional 7,404, ,554 12,141, ,614 Physical plant 14,144,668 9,145,400 Auxiliary enterprise services 6,269,277 7,710,860 Depreciation 4,690,617 5,076,770 Student aid 7,922, ,985 8,856, ,091 Total Operating Expenses 122,320,655 1,169, ,625,266 1,232,705 Operating Income (Loss) {73, 159,483} 661,308 {72,541,363} 168,524 Nonoperating Revenues (Expenses) Property taxes 31,846,801 28,938,868 State operating appropriations 40,829, ,630, 127 Loss on sale of capital assets (2,400,643) (244,539) Investment income 270, , ,187 24,630 Interest expense (892,273) (462,706) Bond issuance costs (208,642} (278,851} Total Nonoperating Revenues (Expenses) 69,445, ,154 69,725,086 24,630 Income (Loss) before Capital Contributions (3, 714,245) 1,114,462 (2,816,277) 193,154 Capital Contributions 91, ,854 Change in Net Position (3,622,525) 1,114,462 (2,492,423) 193,154 Net Position - July 1 93,594,988 4,241,005 96,087,411 4,047,851 Net Position - June 30 $ A63 ~ $ ~ The notes to the basic financial statements are an integral part of this statement. 13

19 Statement of Cash Flows For the Year Ended June 30, 2017 With Comparative Amounts for the Year Ended June 30, District Foundation District Foundation Cash Flows from Operating Activities Tuition and fees received $ 19,547,386 $ $ 20,273,659 $ Federal and state grants received 16,314,702 19,460,355 Contract revenue received 3,780,811 7,017,952 Auxiliary enterprise revenues received 7,690,995 7,880,463 Other receipts 2,351,117 1,065,823 1,926, ,443 Payments to employees (72,713,326) (74,516,976) Payments to suppliers ~39,319, 180} (862,153) (44,818,635} ~853,706) Net Cash Provided by (Used in) Operating Activities ~62,347,495} 203,670 ~62, 776,524 l 19,737 Cash Flows from Noncapital Financing Activities Local property taxes received 18,571,794 13,949,537 State appropriations received 40,829,171 41,630,127 Net Cash Provided by Noncapital Financing Activities 59,400,965 55,579,664 Cash Flows from Capital and Related Financing Activities Purchases of capital assets (33,397,509) (9,417,262) Proceeds from disposal of capital assets 70,612 39,646 Property taxes levied to retire debt service 12,730,869 14,865,187 Capital grants received 91, ,854 Proceeds from issuance of capital debt 25,500,000 34,050,000 Premium received on debt issuance 857,148 1,535,375 Debt issuance costs paid (208,642) (278,851) Principal paid on capital debt (12,085,000) (180,000) (14,550,000) (180,000) Interest paid on capital debt (1,443, 102} (999,050} Net Cash Provided by (Used in) Capital and Related Financing Activities (7,883,904} ~180,000) 25,568,899 (180,000) Cash Flows from Investing Activities Purchase of investments (308,368) (375,096) Sale of investments 185, ,000 Contributions restricted for long-term purposes 223, ,526 Investment income received 270,824 63, ,187 56,665 Net Cash Provided by (Used in) Investing Activities 270, , ,187 (905) Change in Cash and Cash Equivalents (10,559,610) 187,029 18,514,226 (161, 168) Cash and Cash Equivalents - July 1 47,238, ,541 28,724, ,709 Cash and Cash Equivalents - June 30 $ ,793 $ 307,570 $ 47, $ 120,541 Reconciliation of Cash and Cash Equivalents to the Statement of Net Position Cash and investments in current assets $ 26,524,249 $ 307,570 $ 19,094,973 $ 120,541 Cash and investments in restricted assets 10,154,544 28,143,430 Cash and Cash Equivalents - June 30 $ $ $ A03 $ (Continued) 14

20 Statement of Cash Flows (Continued) For the Year Ended June 30, 2017 With Comparative Amounts for the Year Ended June 30, District Foundation District Foundation Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities Operating income (loss) $ (73, 159,483) $ 661,308 $ (72,541,363) $ 168,524 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities Depreciation 4,690,617 5,076,770 Contributions restricted for long-term purposes (223,198) (167,526) Change in pension related assets (liability) and deferred outflows and inflows of resources 4,260,377 3,777,806 Changes in assets and liabilities Receivables Accounts 118,772 (28,936) 2,674,311 Unconditional promises to give (198,276) 11,252 Inventories 361,685 (246,246) Prepaid items 284,400 5, ,795 7,655 Accounts payable 333,040 (792,323) (3,036) Accrued liabilities (367,912) (12,699) 166, 102 2,868 Unearned student fees 405,067 (199, 127) Due to other organizations 702,266 (1, 189,743) Accrued retiree health insurance 23,676 7,494 Net Cash Provided by (Used in) Operating Activities $ (621347A95} $ ( } $ 19i137 The notes to the basic financial statements are an integral part of this statement. 15

21 Notes to Basic Financial Statements June 30, 2017 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Introduction Northeast Wisconsin Technical College (the "District") is a public two-year college providing education in new, traditional, and emerging technologies to over 40,000 people per year. The District is organized under state legislation enacted in 1911 establishing schools for vocational, technical, and adult education. The District's goal is to deliver lifelong learning opportunities that customers want, in ways that meet their needs, to enhance their careers and quality of life. The District offers associate degree and technical diploma programs, plus apprenticeships, advanced technical programs, certificates, basic skills education, and other adult continuing education. For employers, the District offers customized workforce training, professional development seminars, and technical assistance. The accounting policies of the District conform to accounting principles generally accepted in the United States (GAAP) as applicable to public colleges and universities as well as those prescribed by the Wisconsin Technical College System (WTCS). The District's reports are based on all applicable Governmental Accounting Standards Board (GASB) pronouncements. The significant accounting principles and policies utilized by the District are described below: Reporting Entity The District includes all or part of nine counties in northeast Wisconsin: Florence, Marinette, Oconto, Brown, Kewaunee, Door, Shawano, Manitowoc, and Outagamie. The District offers education and services through three campuses (in Green Bay, Marinette, and Sturgeon Bay), six Regional Learning Centers, workplace contracts with area employers, and a growing variety of online classes. The District is governed by a nine-member District Board. Members are appointed to staggered three-year terms by a committee of nine county board chairpersons (one from each county served by the District). The District Board membership includes two employers, two employees, three additional members, one school district administrator, and one elected official who holds a state or local office. Its powers, established under provisions of Chapter 38 of the Wisconsin Statutes, include: Authority to borrow money and levy taxes; Budgetary authority; and Authority over other fiscal and general management of the District which includes, but is not limited to, the authority to execute contracts, to exercise control over facilities and properties, to determine the outcome or disposition of matters affecting the recipients of the services being provided, and to approve the hiring or retention of key management personnel who implement Board policy and directives. The accompanying financial statements present the activities of the District. Accounting principles generally accepted in the United States require that these financial statements include the primary government and its component units. Component units are separate organizations that are included in the District's reporting entity because of the significance of their operational or financial relationships with the District. All significant activities and organizations with which the District exercises oversight responsibility have been considered for inclusion in the financial statements. In addition, GASB Statement No. 61, The Financial Reporting Entity: Omnibus, requires reporting, as a component unit, an organization that raises and holds economic resources for the direct benefit of a governmental unit. The District has identified the following component unit: Northeast Wisconsin Technical College Educational Foundation. Inc. The District is affiliated with Northeast Wisconsin Technical College Educational Foundation, Inc. (the "Foundation"), a not-for-profit corporation whose purpose is to solicit, hold, manage, invest and expend endowment funds and other gifts, grants, and bequests exclusively for the maintenance and benefit of the District and its students. The Foundation is managed by an independent board of directors, and is not financially accountable to the District. The Foundation has been reported as a discretely presented component unit in the District's financial statements. The Foundation's financial statements can be obtained through Northeast Wisconsin College Educational Foundation, Inc., 2740 W. Mason St., P. 0. Box 19042, Green Bay, WI

22 Notes to Basic Financial Statements June 30, 2017 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus, Basis of Accounting. and Financial Statement Presentation For financial reporting purposes, the District is considered a special purpose government engaged only in business-type activities. The District's basic financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. As a general rule the effect of interfund activity has been eliminated from the district-wide financial statements. Use of Estimates In preparing basic financial statements in conformity with accounting principles generally accepted in the United States, the District is required to make estimates and assumptions that affect the reported amounts of assets, deferred outflows, liabilities, deferred inflows and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash, Cash Equivalents. and Investments Cash and cash equivalents consist of cash deposits and investments. Cash deposits consist of demand and time deposits with financial institutions and are carried at cost. For purposes of the statements of cash flows, all cash deposits and highly liquid investments (including restricted assets) with a maturity of three months or less from the date of acquisition are considered to be cash equivalents. Investments are stated at fair value. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Investment income includes changes in fair value of investments, interest, and realized gains and losses. Property Taxes and Taxes Receivable The aggregate District tax levy is apportioned and certified by October 31 of the current fiscal year for collection to municipalities located within the District based on the immediate past January 1 full or "equalized" taxable property values. As permitted by a collecting municipality's ordinance, taxes may be paid in full or in two or more installments. On or before January 15 and February 20, the District is paid by the collecting municipalities its proportionate share of tax collections received through the last day of the preceding month. On or before August 20, the County Treasurer makes full settlement to the District for any remaining balance. The District communicates its property tax levy to city, village, and town treasurers or clerks in October of the fiscal year for which the taxes are levied. The following dates are pertinent to the District's tax calendar: Levy date Assessment date Lien date Due dates: Taxes paid in one installment Taxes paid in two installments Settlement with County Treasurers October 31, or within ten days of receipt of equalized valuation, whichever is later January 1 August 31 January 31 January 31 and July 31 August20 The District recognizes its total levy as revenue in the fiscal year for which taxes are levied. 17

23 Notes to Basic Financial Statements June 30, 2017 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property Taxes and Taxes Receivable (continued) Under Section of the Wisconsin Statutes, the District Board may levy a tax not to exceed a rate of $1.50 per $1,000 of the full equalized value of taxable property within the area served by the District for the purposes of making capital improvements, acquiring equipment, and operating and maintaining schools. The mill rate limitation is not applicable to taxes levied for the purposes of paying principal and interest on general obligation debt issued by the District that is used for capital improvements and equipment acquisitions. For the year ended June 30, 2017, the District levied taxes at the following mill rate: Operating purposes Debt sence requirements Totals $ $ Student Receivables. Fees and Tuition Tuition and fees are recognized as revenue in the period in which the related activity or instruction takes place. Tuition and fees attributable to the District's summer school program are prorated on the basis of student class days occurring before and after June 30. The District's student fees receivable is stated at amounts due from students, net of an allowance for doubtful accounts of $2, 796,065 as of June 30, Amounts outstanding longer than the agreed upon payment terms are considered past due. The District determines its allowance for doubtful accounts by considering a number of factors including length of time amounts are past due, the District's previous loss history, and the student's ability to pay his or her obligation. The District writes off receivables when they become uncollectible. Inventories Inventories are recorded at cost, which approximates market, using primarily the first-in, first-out method. Inventories consist of supplies and other expendable supplies held for resale or consumption. The cost is recorded as an expense at the time individual inventory items are consumed rather than when purchased. Instructional and administrative inventories are accounted for as expenses when purchased. Prepaid Items Payments made to vendors that will benefit periods beyond the end of the current fiscal year are recorded as prepaid items, and are accounted for on the consumption method. Capital Assets Capital assets include land, land improvements, buildings, and equipment. The District defines capital assets as assets with an estimated useful life in excess of two years. Equipment assets having a cost of $5,000 or more per unit and capital projects having a cost of $15,000 or more are capitalized. Assets are recorded at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are recorded at estimated fair acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital projects are defined as the following: New construction: Adding additional square footage to an existing building or constructing a new building. Land purchases: Purchase of additional land. Site improvements: Improvements made to the land (i.e. roads, sidewalks and underground piping) to extend the useful life of the assets. Building improvements: This consists of the following:./ Infrastructure: Improvements made to a building to extend the useful life (i.e. roof replacement) of that building../ Retrofitting: Changing the configuration of a room or building to extend the useful life of the asset and to meet the changing needs of NWTC and its students. 18

24 Notes to Basic Financial Statements June 30, 2017 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Capital Assets (continued) Depreciation on land improvements, buildings, and equipment is provided in amounts sufficient to charge the cost of the depreciable assets to operations on the straight-line method over the following estimated useful lives: Assets Autos Building Building Improvement Equipment Site Improvement Intangibles and Software Useful Lives 4-20 years 50 years years 5-30 years 20 years 4-5 years Capital assets are reviewed for impairment when events or changes in circumstances suggest that the service utility of the capital asset may have significantly and unexpectedly declined. Capital assets are considered impaired if both the decline in service utility of the capital asset is large in magnitude and the event or change in circumstance is outside the normal life cycle of the capital asset. Such events or changes in circumstances that may be indicative of impairment include evidence of physical damage, enactment or approval of laws or regulations or other changes in environmental factors, technological changes or evidence of obsolescence, changes in the manner or duration of use of a capital asset, and construction stoppage. The determination of the impairment loss is dependent upon the event or circumstance in which the impairment occurred. Impairment losses, if any, are recorded in the statements of revenues, expenses, and changes in net position. There were no impairment losses recorded in the year ended June 30, Compensated Absences The District's policy allows employees to earn varying amounts of sick pay and vacation pay for each year employed in accordance with the Employee Handbook and District policy. Pensions For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Wisconsin Retirement System (WRS) and additions to/deductions from WRS' fiduciary net position have been determined on the same basis as they are reported by WRS. 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. Unearned Revenue Unearned revenue includes amounts received for tuition, fees, or other activities prior to the end of the fiscal year but related to the subsequent fiscal year. Unearned revenue also includes amounts received from grant and contract sponsors that have not yet been earned. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until then. The District has one item that qualify for this category and it is related to the District's proportionate share of the Wisconsin Retirement System pension plan and is deferred and amortized over the expected remaining service lives of the pension plan participants. 19

25 Notes to Basic Financial Statements June 30, 2017 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred Outflows/Inflows of Resources (continued) In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The District has one item that qualifies for this category and it is related to the District's proportionate share of the Wisconsin Retirement System pension plan and is deferred and amortized over the expected remaining service lives of the pension plan participants. Net Position Net position is classified according to restrictions on availability of assets for satisfaction of District obligations. Net investment in capital assets: This represents the net value of capital assets (land, buildings and equipment) net of capital related deferred outflows of resources less the debt incurred to acquire or construct the assets and any capital related deferred inflows of resources plus the borrowed resources not yet expended, but restricted for capital purchases. Restricted net position: Restricted net position includes resources in which the District is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties. Unrestricted net position: Unrestricted net position represents resources derived from student tuition and fees, state appropriations, and sales and services provided by educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the District and may be used at the discretion of the governing board to meet current expenses for any purpose. When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first, then unrestricted resources, as they are needed. State and Federal Revenues State general and categorical aids are recognized as revenues in the entitlement year. Federal and state aids for reimbursable programs are recognized as revenues in the year related program expenditures are incurred or eligibility requirements are met. Aids received prior to meeting revenue recognition criteria are recorded as unearned revenue. Tuition and Fees Student tuition and fees are recorded, net of scholarships, as revenues in the period in which the related activity or instruction takes place. Tuition and fees for the summer semester are prorated on the basis of student class days occurring before and after June 30. Scholarship Allowances and Student Financial Aid Financial aid to students is reported in the basic financial statements under the alternative method, as prescribed by the National Association of College and University Business Officers (NACUBO). Certain aid (loans, funds provided to students as awarded by third parties and Federal Direct Lending) is accounted for as third party payments (credited to the student's account as if the student made the payment). All other aid is reflected in the basic financial statements as operating expenses or scholarship allowances, which reduce revenues. The amount reported as operating expenses represents the portion of aid that was provided to the student in the form of cash. Scholarship allowances represent the portion of aid provided to the student in the form of reduced tuition. Under the alternative method, these amounts are computed on a total District basis by allocating the cash payments to students, excluding payments for services, on the ratio of all aid to the aid not considered to be third party aid. 20

26 Notes to Basic Financial Statements June 30, 2017 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Classification of Revenues and Expenses NWTC has classified its revenues and expenses as either operating or non-operating according to the following criteria: Operating revenues/expenses: Operating revenues and expenses include activities that have the characteristics of exchange transactions to provide goods or services related to the college's principal ongoing operations. Operating revenues include 1) student tuition and fees, net of scholarship allowances, 2) sales and services of auxiliary enterprises, and 3) most federal, state and local grants and contracts that are essentially the same as contracts tor services that finance programs of the college. Operating expenses include the cost of providing educational services, administrative expenses and depreciation on capital assets. Non-operating revenues/expenses: Non-operating revenues and expenses include activities that have the characteristics of non-exchange transactions. Non-operating revenues are classified as defined by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. These revenues include gifts and contributions and other revenue sources such as state appropriations, the local property tax levy, investment income and any grants and contracts that are not classified as operating revenue or restricted by the granter to be used exclusively for capital programs. Non-operating expenses include interest on long-term obligations and losses on the disposal of capital assets. Comparative Data Comparative total data for the prior year has been presented in the accompanying financial statements in order to provide an understanding of changes in the District's financial position and operations. Certain amounts in the prior year financial statements have been reclassified to conform with the presentation in the current year financial statements with no change in previously reported net position, changes in net position, fund balance or changes in fund balance. NOTE 2 - CASH, CASH EQUIVALENTS, AND INVESTMENTS Cash and investments of the District consist of bank deposits and investments that are restricted by the Wisconsin Statutes to the following: Time deposits; repurchase agreements; securities issued by federal, state and local governmental entities; statutorily authorized commercial paper and corporate securities; and the Wisconsin local government investment pool. The District's cash and cash equivalents balances as of June 30, 2017 were as follows: Cash on deposit with financial institutions carrying amount Petty cash Total cash Wisconsin Local Government Investment Pool Total cash and investments $ 26,942,423 11,757 26,954, 180 9,724,613 $ 36, 678,

27 Notes to Basic Financial Statements June 30, 2017 NOTE 2 - CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) Cash and cash equivalents are classified as follows as of June 30, 2017: Restricted for: Debt sence $ Capital projects Total restricted Unrestricted Total cash and im.estments $ 1,836,090 8,318,454 10,154,544 26,524,249 36,678,793 The portion of cash and cash equivalents restricted is for compliance with legal requirements and cannot be used for general purposes of the District. Fair Value Measurements The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant observable inputs; Level 3 inputs are significant unobservable inputs. The District currently has no investments that are subject to fair value measurement. Deposits and investments of the District are subject to various risks. Presented below is a discussion of the specific risks and the District's policy related to the risk. Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. Wisconsin statutes require repurchase agreements to be fully collateralized by bonds or securities issued or guaranteed by the federal government or its instrumentalities. The District does not have an additional custodial credit risk policy. Deposits with financial institutions within the State of Wisconsin are insured by the Federal Deposit Insurance Corporation (FDIC) in the amount of $250,000 for the combined amount of all time and savings accounts and $250,000 for the combined amount of all interest-bearing and noninterest-bearing demand deposit accounts per official custodian per insured depository institution. Deposits with financial institutions located outside the State of Wisconsin are insured by the FDIC in the amount of $250,000 for the combined amount of deposit accounts per official custodian per depository institution. Also, the State of Wisconsin has a State Guarantee Fund which provides a maximum of $400,000 per public depository above the amount provided by an agency of the U.S. Government. However, due to the relatively small size of the State Guarantee Fund in relation to the Fund's total coverage, total recovery of insured losses may not be available. As of June 30, 2017, $27,220,040 of the District's bank balance of $28,001,964 was exposed to custodial credit risk as uninsured. The District's bank balances are collateralized with securities held by the pledging financial institution and not in the name of the District. 22

28 Notes to Basic Financial Statements June 30, 2017 NOTE 2 - CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued} Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Wisconsin statutes limit investments in securities to the top two ratings assigned by nationally recognized statistical rating organizations. The District does not have an additional policy. The District's investment in the Wisconsin Investment Pool is not rated. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates other than those stated in the state and local statutes and ordinances. State Statute limits the maturity of commercial paper and corporate bonds to not more than seven years. The District participates in a repurchase agreement. The District's agreement with the counterparty is for the counterparty to repurchase the securities the following day. Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuations is provided by the following table that shows the distribution of the District's investments by maturity: Fair Value 2017 Investment Maturities (in Years) Less than More than 7 Wisconsin Investment Pool $ 9,724,613 $ 9,724,613 $ $ ===== $ The District has invested funds in the Wisconsin Local Government Investment Pool {LGIP). The Wisconsin Local Government Investment Pool {LGIP) is part of the State Investment Fund {SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day's notice. At June 30, 2017, the fair value of the District's share of the LGIP's assets was substantially equal to the amount as reported in these statements. NOTE 3 - ACCOUNTS AND OTHER RECEIVABLES Accounts and other receivables consisted of the following as of June 30, 2017: Student receivables $ 5,634,713 Business and industry contract receivables 418,283 Federal and state grant receivables 1,002,580 Other 3, 179,242 10,234,818 Less - Allowance for uncollectible accounts 2,796,065 Total $ 7,438,753 23

29 Notes to Basic Financial Statements June 30, 2017 NOTE 4 - CAPITAL ASSETS Capital asset balances and activity were as follows for the year ended June 30, 2017: Beginning Balance Increases Decreases Capital assets not being depreciated: Land $ 1,229,390 $ 2,152,742 $ Construction in progress 3,733,697 22,925,496 3,403,446 Total capital assets not being depreciated 4,963,087 25,078,238 3,403,446 Capital assets being depreciated: Site improvements 9,645,651 1,830,071 Buildings and building improvements 103,736,845 11,625,412 5,868,829 Furniture and equipment 28,533,795 2,169, ,055 Intangibles 6,924, , ,035 Total capital assets being depreciated 148,840,381 16,457,627 7,672,919 Less accumulated depreciation for: Site improvements 4,827, ,017 Buildings and building improvements 36,464,951 1,440,530 3,298,936 Furniture and equipment 16,455,993 2,460, ,309 Intangibles 5,451, , ,419 Total accumulated depreciation 63,199,985 4,690,617 4,441,664 Net capital assets being depreciated 85,640,396 11,767,010 3,231,255 Net capital assets 90,603,483 $ 36,845,248 $ 6,634,701 Less outstanding debt related to capital assets (37,215,191) Net investment in capital assets $ 53,388,292 Ending Balance $ 3,382,132 23,255,747 26,637,879 11,475, ,493,428 29,715,675 6,940, ,625,089 5,129,158 34,606,545 18,006,544 5,706,691 63,448,938 94,176, ,814,030 (7 4,075,737) $ 46,738,293 NOTE 5 - LONG-TERM OBLIGATIONS Long-term liability activity for the year ended June 30, 2017 was as follows: Balance Balance 7/1/2016 Additions Reductions 6/30/2017 General obligation notes $ 59,065,000 $ 25,500,000 $ 12,085,000 $ 72,480,000 Premium 2, 195, , ,015 2,484,768 Totals $ 61,260,635 $ 26,357,148 $ 12,653,015 $ 74,964,768 Amounts Due Within One Year $ 16,445,000 $ 16,445,000 24

30 Notes to Basic Financial Statements June 30, 2017 NOTE 5- LONG-TERM OBLIGATIONS (Continued) General Obligation Debt General obligation debt is guaranteed by the full faith and credit of the District and will be repaid through the taxing authority of the District. Specific future tax levies have been established by the various debt agreements to provide sufficient annual amounts to retire debt principal and interest when due. Principal and interest payments have been made as required through June 30, General obligation debt is comprised of the following individual issues at June 30, 2017: Buyer 6/30/17 March 3, 2014, promissory note held at Cede & Co. with original amount of $5,000,000 issued to finance capital assets with interest at 2%. Principal due annually on April 1, with a final maturity on April 1, 2018 BMO Capital $ 1,000,000 May 1, 2014, promissory note held at Cede & Co. with original amount of $3,750,000 issued to finance capital assets with interest at 1.5% to 3%. Principal due annually on April 1, with a final maturity on April 1, 2018 July 1, 2014, promissory note held at Cede & Co. with original amount of $5,000,000 issued to finance capital assets with interest at 2%. Principal due annually on October 1, with a final maturity on October 1, 2018 September 3, 2014, promissory note held at Cede & Co. with original amount of $7,000,000 issued to finance capital assets with interest at 1% to 2%. Principal due annually on April 1, with a final maturity on April 1, 2019 January 5, 2015, promissory note held at Cede & Co. with original amount of $7,000,000 issued to finance capital assets with interest at 2% to 3%. Principal due annually on April 1, with a final maturity on April 1, 2018 May 6, 2015, promissory note held at Cede & Co. with original amount of $5,850,000 issued to finance capital assets with interest at 2% to 3%. Principal due annually on October 1, with a final maturity on October 1, 2019 October 1, 2015 promissory note held at Cede & Co. with original amount of $10,000,000 issued to finance capital assets with interest at 2% to 4%. Principal due annually on April 1, with a final maturity on April 1, 2025 May 2, 2016, promissory note held at Cede & Co. with original amount of $7,050,000 issued to finance capital assets with interest at 2% to 3%. Principal due annually on October 1, with a final maturity on October 1, 2021 May 2, 2016, promissory note held at Cede & Co. with original amount of $17,000,000 issued to finance capital assets with interest at 2% to 3%. Principal due annually on October 1, with a final maturity on October 1, 2030 BOSC, Inc. 750,000 Robert W. Baird 2,000,000 BOSC, Inc. 3,635,000 Jefferies 2,380,000 BMO Capital 5,295,000 Robert W. Baird 8,545,000 Morgan Stanley 7,050,000 Morgan Stanley 17,000,000 25

31 Notes to Basic Financial Statements June 30, 2017 NOTE 5- LONG-TERM OBLIGATIONS (Continued) October 3, 2016, promissory note held at Cede & Co. with original amount of $7, 700,000 issued to finance capital assets with interest at 1 % to 3%. Principal due annually on April 1, with a final maturity on April 1, 2022 Buyer 6/30/17 Robert W. Baird 7,700,000 October 3, 2016, promissory note held at Cede & Co. with original amount of $5,000,000 issued to finance capital assets with interest at 1 % to 3%. Principal due annually on April 1, with a final maturity on April 1, 2026 June 1, 2017, promissory note held at Cede & Co. with original amount of $7,800,000 issued to finance capital assets with interest at 2% to 3%. Principal due annually on October 1, with a final maturity on October 1, 2022 June 1, 2017, promissory note held at Cede & Co. with original amount of $5,000,000 issued to finance capital assets with interest at 2% to 3%. Principal due annually on October 1, with a final maturity on October 1, 2026 Total Robert W. Baird UMB Bank UMB Bank 4,325,000 7,800,000 5,000,000 $ 72,480,000 Aggregate cash flow requirements for the retirement of long-term principal and interest on general obligation debt as of June 30, 2017, follows: Year Ended June 30 Principal Interest Totals 2018 $ 16,445,000 $ 1,552,567 $ 17,997, , 185,000 1,285,075 12,470, ,390,000 1,021,200 11,411, ,220, ,250 8,034, ,360, ,525 8,018, ,470,000 1,626,575 16,096, ,410, ,600 5,740,600 Totals $ 72,480,000 $ 7,288,792 $ 79,768,792 Legal Margin for New Indebtedness Wisconsin State Statutes Section 67.03(1) limits general obligation debt of the District to 5% of the equalized value of the taxable property located in the District. As of June 30, 2017, the 5% limitation was $1,950,988, 783 and the District's outstanding general obligation debt (net of resources available to pay principal and interest) was $63,564, 764. Wisconsin State Statutes Section 67.03(9) limits bonded indebtedness of the District to 2% of the equalized value of the taxable property located in the District. As of June 30, 2017, the 2% limitation was $780,395,513 and the District's outstanding indebtedness (net of resources available to pay principal and interest) was $8,084,

32 Notes to Basic Financial Statements June 30, 2017 NOTE 5- LONG-TERM OBLIGATIONS (Continued) As of June 30, 2016, the 5% limitation was $1,913,529,413 and the District's outstanding general obligation debt (net of resources available to pay principal and interest) was $55,008,258. The 2% limitation was $765,411, 765 and the District's outstanding indebtedness (net of resources available to pay principal and interest) was $0. NOTE 6 EMPLOYEE RETIREMENT PLANS General Information about the Pension Plan Plan Description - The WRS is a cost-sharing, multiple-employer, defined benefit pension plan. WRS benefits and other plan provisions are established by Chapter 40 of the Wisconsin Statutes. Benefit terms may only be modified by the legislature. The retirement system is administered by the Wisconsin Department of Employee Trust Funds {ETF). The system provides coverage to all eligible State of Wisconsin, local government and other public employees. All employees, initially employed by a participating WRS employer on or after July 1, 2011, and expected to work at least 1,200 hours a year (880 hours for teachers and school district educational support employees) and expected to be employed for at least one year from employee's date of hire are eligible to participate in the WRS. ETF issues a standalone Comprehensive Annual Financial Report (CAFR), which can be found at Vesting - For employees beginning participation on or after January 1, 1990, and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998, and prior to July 1, 2011, are immediately vested. Participants who initially became WRS eligible on or after July 1, 2011, must have five years of creditable service to be vested. Benefits Provided - Employees who retire at or after age 65 (54 for protective occupation employees, 62 for elected officials and State executive participants) are entitled to receive an unreduced retirement benefit. The factors influencing the benefit are: (1) final average earnings, (2) years of creditable service, and (3) a formula factor. Final average earnings is the average of the participant's three highest years' earnings. Creditable service is the creditable current and prior service expressed in years or decimal equivalents of partial years for which a participant receives earnings and makes contributions as required. The formula factor is a standard percentage based on employment category. Employees may retire at age 55 (50 for protective occupation employees) and receive reduced benefits. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and forfeit all rights to any subsequent benefits. The WRS also provides death and disability benefits for employees. Post-Retirement Adjustments The Employee Trust Funds Board may periodically adjust annuity payments from the retirement system based on annual investment performance in accordance withs , Wis. Stat. An increase (or decrease) in annuity payments may result when investment gains (losses), together with other actuarial experience factors, create a surplus (shortfall) in the reserves, as determined by the system's consulting actuary. Annuity increases are not based on cost of living or other similar factors. For Core annuities, decreases may be applied only to previously granted increases. By law, Core annuities cannot be reduced to an amount below the original, guaranteed amount (the "floor") set at retirement. 27

33 Notes to Basic Financial Statements June 30, 2017 NOTE 6 - EMPLOYEE RETIREMENT PLANS (Continued) The Core and Variable annuity adjustments granted during recent years are as follows: Core Fund Variable Fund Year Adiustment Adiustment % 10% % 0% 2009 (2.1)% (42)% 2010 (1.3)% 22% 2011 (1.2)% 11% 2012 (7.0)% (7)% 2013 (9.6)% 9% % 25% % 2% % (5)% Contributions Required contributions are determined by an annual actuarial valuation in accordance with Chapter 40 of the Wisconsin Statutes. The employee required contribution is one-half of the actuarially determined contribution rate for general category employees, including teachers, and Executives and Elected Officials. Starting on January 1, 2016, the Executives and Elected Official category was merged into the General Employee Category. Required contributions for protective employees are the same rate as general employees. Employers are required to contribute the remainder of the actuarially determined contribution rate. The employer may not pay the employee required contribution unless provided for by an existing collective bargaining agreement. During the reporting period, the WRS recognized $3,441,362 in contributions from the District. Contribution rates as of June 30, 2017 are: Employee Category General (including teachers) Protective with Social Security Protective without Social Security Employee 6.6% 6.6% 6.6% Employer 6.6% 9.4% 13.2% Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017, the District reported a liability of $3,015,281 for its proportionate share of the net pension liability. The net pension liability was measured as of December 31, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2015 rolled forward to December 31, No material changes in assumptions or benefit terms occurred between the actuarial valuation date and the measurement date. The District's proportion of the net pension liability was based on the District's share of contributions to the pension plan relative to the contributions of all participating employers. At December 31, 2016, the District's proportion was %, which was a decrease of % from its proportion measured as of December 31, For the year ended June 30, 2017, the District recognized pension expense of $7, 793,

34 Notes to Basic Financial Statements June 30, 2017 NOTE 6 - EMPLOYEE RETIREMENT PLANS (Continued) At June 30, 2017, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience Net differences between projected and actual earnings on pension plan investments Changes in assumptions Changes in proportion and differences between employer contributions and proportionate share of contributions Employer contributions subsequent to the measurement date $ 1,149,727 15,009,114 3,152, ,351 1,766, 188 $ 9,482,798 34,642 Total $ $ The $1, 766, 188 reported as deferred outflows related to pension resulting from the WRS Employer's contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability (asset) in the year ended June 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year ended June 30: Deferred Outflows of Resources Deferred Inflows of Resources $ 7,075,019 7,075,019 5,804,407 (464,573) 6,913 $ 3,042,038 3,042,038 3,033, ,237 Total $ 19,496,785 $ 9,517,440 29

35 Notes to Basic Financial Statements June 30, 2017 NOTE 6 - EMPLOYEE RETIREMENT PLANS (Continued) Actuarial Assumptions The total pension liability in the December 31, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Valuation Date: Measurement Date of Net Pension Liability (Asset) Actuarial Cost Method: Asset Valuation Method: Long-Term Expected Rate of Return: Discount Rate: Salary Increases: Inflation Seniority/Merit Mortality: Post-retirement Adjustments* December 31, 2015 December 31, 2016 Entry Age Fair Value 7.2% 7.2% 3.2% 0.2%-5.6% Wisconsin 2012 Mortality Table 2.1% * No post-retirement adjustment is guaranteed. Actual adjustments are based on recognized investment return, actuarial experience and other factors % is the assumed annual adjustment based on the investment return assumption and the post-retirement discount rate. Actuarial assumptions are based upon an experience study conducted in 2015 using experience from The total pension liability for December 31, 2016 is based upon a roll-forward of the liability calculated from the December 31, 2015 actuarial valuation. 30

36 Notes to Basic Financial Statements June 30, 2017 NOTE 6 - EMPLOYEE RETIREMENT PLANS (Continued) Long-term expected Return on Plan Assets. The long-term expected rate of return on pension plan investments 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. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Destination Long-Term Long-Term Current Asset Target Asset Expected Nominal Expected Real Allocation% Allocation% Rate of Return % Rate of Return % Core Fund Asset Class Global Equities 50% 45% 8.3% 5.4% Fixed Income 24.5% 37% 4.2% 1.4% Inflation Sensitiw Assets 15.5% 20% 4.3% 1.5% Real Estate 8% 7% 6.5% 3.6% PriVctte Equity/Debt 8% 7% 9.4% 6.5% Multi-Asset 4% 4% 6.6% 3.7% Total Core Fund 110% 120% 7.4% 4.5% Variable Fund Asset Class U.S. Equities 70% 70% 7.6% 4.7% International Equities 30% 30% 8.5% 5.6% Total Variable Fund 100% 100% 7.9% 5% New England Pension Consultants Long Term US CPI (Inflation) Forecast: 2.75% Asset Allocations are managed within established ranges, target percentages may differ from actual monthly allocations Single Discount Rate A single discount rate of 7.20% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 7.20% and a long term bond rate of 3. 78%. Because of the unique structure of WRS, the 7.20% expected rate of return implies that a dividend of approximately 2.1 % will always be paid. For purposes of the single discount rate, it was assumed that the dividend would always be paid. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments (including expected dividends) of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 31

37 Notes to Basic Financial Statements June 30, 2017 NOTE 6 - EMPLOYEE RETIREMENT PLANS (Continued) Sensitivity of the District's Proportionate Share of the Net Pension Liability (Asset) to changes in the discount rate. The following presents the District's proportionate share of the net pension liability (asset) calculated using the discount rate of 7.20 percent, as well as what the District's proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.20 percent) or 1-percentage-point higher (8.20 percent) than the current rate: 1 o/o Decrease to Discount Rate (6.20%) Current Discount Rate (7.20%) 1 % Increase to Discount Rate (8.20%) District's proportionate share of the net pension liability (asset) $ 39,667,955 $ 3,015,281 -===$ ==c2 5_,2_08_,9_3.,.,,.8) Detailed information about the pension plan's fiduciary net position is available in separately issued financial statements available at Payables to the Pension Plan The District reported payables to WRS of $271,424 as of June 30, 2017 for the District's share. NOTE 7-0THER POST-EMPLOYMENT BENEFITS The District provides a health and dental benefit program for retired faculty, management, and administrative employees. To be eligible, the employee must have 15 years of continuous service, be age 55 as of the effective date of resignation for retirement, and give at least six months advance notice of their intent to retire. A qualifying retiree receives a benefit equal to 50% to 75% of the employee's regular salary during their last contract year and continuation of health and dental insurance premiums up to the first two years. The District's annual other post-employment benefits (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or fund excess) over a period not to exceed 30 years. The following table shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District's net OPEB obligation: Annual required contribution Interest on net OPEB obligation Adjustment of annual required contribution $ 755,626 52,282 (88,915) Annual OPEB cost Contributions made 718,993 (695,317) Increase in net OPEB obligation Net OPEB obligation - beginning of year Net OPEB obligation - end of year $ 23,676 1,742,732 1,766,408 32

38 Notes to Basic Financial Statements June 30, 2017 NOTE 7 - OTHER POST-EMPLOYMENT BENEFITS (Continued) The District's annual OPEB costs, the percentage of annual OPEB costs contributed to the plan, and the net OPEB obligation for June 30, 2017, 2016, and 2015, is as follows: Net Fiscal Annual Percentage of OPEB Year OPEB Annual OPEB Obligation Ended Cost Cost Contributed (Asset) 6/30/2017 $ 718, % $ 1,766,408 6/30/ , % 1,742,732 6/30/2015 1, 111, % 1,735,238 The funded status of the plan as of July 1, 2015, the most recent actuarial valuation date was as follows: Actuarial accrued liability (AAL) Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (Actuarial value of plan assets/aal) Cowred payroll UAAL as a percentage of cowred payroll $ $ $ 9,342,830 9,342,830 0% 33,801, % Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the health care costs trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The retiree healthcare valuation was based on the projected unit credit actuarial cost method. The OPEB valuation uses a discount rate assumption of 3.0% based on the districts projected short-term investment rate of return. The valuation assumed an inflation rate of 2.5% embedded in the discount rate above. The Healthcare trend rate is 4.5% adjusted over time to an ultimate rate of 4.4% after 67 years. The actuarial accrued liability for the benefits is amortized over an open period of 30 years using the level dollar method. The required schedule of funding progress immediately following the notes presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. 33

39 Notes to Basic Financial Statements June 30, 2017 NOTE 8 - RISK MANAGEMENT Districts Mutual Insurance Company (DMI) In July 2004, all 16 WTCS technical colleges created the Districts Mutual Insurance Company (DMI). Districts Mutual Insurance Company is a fully-assessable mutual company authorized under Wisconsin Statute 611 to provide property, casualty, and liability insurance and risk management services to its members. The scope of insurance protection provided by DMI is broad, covering property at $500,225,000 per occurrence; auto physical damage at $250,000,000 per occurrence; general liability, educator's legal liability, counseling services, incidental medical malpractice, and professional liability at $5,000,000 per occurrence; boiler and machinery breakdown at $100,000,000 per campus; campus violent acts at $250,000 per occurrence; cyber risk at $1,000,000 per college; crime/employee dishonesty $750,000 per college; foreign and business travel at $1,000,000 per occurrence; terrorism at $100,000,000 per occurrence; and workers' compensation at the statutorily required limits. At this time, settled claims have not approached the coverage limits as identified above for each of the past three years. The District's exposure in its layer of insurance is limited to $5,000 to $100,000 per occurrence depending on the type of coverage and DMI purchases reinsurance for losses in excess of its retained layer of coverage. DMI operations are governed by a five-member Board of Directors. Member colleges do not exercise any control over the activities of DMI beyond election of the Board of Directors at the annual meeting. The Board has the authority to adopt its own budget, set policy matters, and control the financial affairs of the company. Each member college was assessed an annual premium that included a capitalization component, a premium component, and an operational expense component. Future premiums will be based on relevant rating exposure and loss experience. DMl's ongoing operational expenses, other than loss adjustment expenses, are apportioned pro rata to each participant based premium. The District's capital component is paid in full as of June 30, The DMI financial statements can be obtained through Districts Mutual Insurance, 212 West Pinehurst Trail, Dakota Dunes, SD WTCS Insurance Trust In July 1997, 11 of the 16 WTCS technical colleges formed the WTCS Insurance Trust to jointly purchase commercial insurance to provide coverage for losses from theft and foreign travel. This trust grew to include all 16 WTCS technical colleges. The Trust financial statements can be obtained through Lakeshore Technical College District, 1290 North Avenue, Cleveland, WI Insurance coverages which are not available through DMI are purchased through WTCS Insurance Trust. Settled claims have not approached coverage limits in the past three years. The Trust has purchased coverage for its participating members including: Foreign Travel Liability with various limits and deductibles, covering employee Medical and AD&D, business automotive and liability, and auto medical. Business Travel Accident covering scheduled losses, assistance services, medical evacuation, and repatriation. Crime coverage for employee dishonesty, forgery and alteration, theft, robbery, burglary, disappearance and destruction of money and securities, and investigation expenses. As of June 30, 2017, the District had net assets of $151,809 and $155,356, respectively, which are available for deductibles under the Districts Mutual Insurance Company and WTCS Insurance Trust programs. 34

40 Notes to Basic Financial Statements June 30, 2017 NOTE 8 - RISK MANAGEMENT (Continued) Self-Funded Health and Dental Insurance District employees and employee dependents are eligible for medical and/or dental benefits from a health, dental, and unemployment compensation self-insurance fund. Funding is provided by charges to departments and employees. The program is supplemented by stop loss protection, which limits the District's annual liability. The stop loss coverage provides for reimbursement of 100% of health costs in excess of $200,000 and $185,000 per claimant for the years ending June 30, 2017 and 2016, respectively, with an aggregate maximum reimbursement to be calculated at the end of the plan year in accordance with the terms of the agreement. There were approximately 643 and 708 participants in the health plan at June 30, 2017 and 2016, respecively. There were approximately 668 and 693 participants in the dental plan at June 30, 2017 and 2016, respectively. Fund expenses consist of payments to a third-party administrator for medical and dental claims, stop loss insurance premiums, and administrative fees. On June 30, 2017 and 2016, net assets of $4,988,515 and $3,920,592, respectively, were available for future unreported medical and dental claims. The claims liability of $701, 701 and $1,009, 142 reported in the fund at June 30, 2017 and 2016, respectively, is for estimated claims incurred but not reported as of June 30, 2017 and Accounting principles generally accepted in the United States require that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in the claim's liability related to health and dental self-insurance program for the years ended June 30, 2017, 2016 and 2015follows: Current Year Beginning of Claims Balance Fiscal Year and Changes Claim at Fiscal Liability In Estimates Payments Year-End $ 1,009, 142 $ 7,494,535 $ 7,801,976 $ 701, ,341,205 9,310,575 9,642,638 1,009, ,289,488 11,372,222 11,320,505 1,341,205 Unemployment Compensation The District has established an unemployment compensation program to finance unemployment compensation awards for District employees. On June 30, 2017 and 2016, net position of $50,940 and $69, 791, respectively, were available for future unemployment claims. Insurance settlements have not exceeded insurance coverage in any of the past three years nor has there been any significant reduction in coverage compared to the prior year. 35

41 Notes to Basic Financial Statements June 30, 2017 NOTE 9 EXPENSE CLASSIFICATION Operating expenses by natural classification were as follows for the year ended June 30, 2017: Salaries and wages Fringe benefits Travel, memberships, and subscriptions Supplies, printing, and minor equipment Contracted services Rentals, repairs, and maintenance Credit Enterprise activities Insurance Utilities Depreciation Student aid Total operating expenses $ $ 56,210,521 22,423,566 1,971,693 12,346,435 8,541,127 2,514, ,607 3,200, ,200 1,319,905 4,690,617 7,922, ,320,655 NOTE 10 - COMMITMENTS Operating Leases The District leases classroom space as well as equipment under various terms. These leases are classified as operating leases. The future minimum payments as of June 30, 2017, are as follows: Totals $ $ 167, , ,326 Rent expense under all operating leases for the year ended June 30, 2017 was $284,339. Maintenance Renewal The District has entered into several contracts for maintenance renewal. The future minimum payments as of June 30, 2017, are: $ 764, , , ,448 23,381 Totals $ 2,280,536 36

42 Notes to Basic Financial Statements June 30, 2017 NOTE 10 COMMITMENTS (Continued} Services The District contracts its management of IT and cleaning services. The future minimum payments as of June 30, 2017 are: Totals $ $ 1,786, , ,706 3,724,520 Capital Proiects As of June 30, 2017, the District has construction commitments of approximately $15.5 million related to construction in progress at year-end. It is anticipated the construction will be completed during fiscal year NOTE 11 - CONTINGENT LIABILITY The District participates in a number of federal and state grant programs, which are subject to program compliance audits and possible future adjustments to expenditures reported for federal and state reimbursement. The amount, if any, of expenditures that may be disallowed cannot be determined at this time although the District expects such amounts, if any, to be immaterial. From time to time, the District becomes party to claims and legal proceedings. Although the outcome of such matters cannot be forecast with certainty, it is the opinion of management and legal counsel that the likelihood is remote that any such claims and proceedings will have a material adverse effect on the District's financial position. NOTE 12 COMPONENT UNIT This report contains the Northeast Wisconsin Technical College Educational Foundation, Inc., which is included as a component unit. Financial information is presented as a discrete column in the statement of net position, the statement of revenues, expenses and changes in net position, and the statement of cash flows. In addition to the basic financial statements, the following disclosures are considered necessary for a fair presentation. Cash and Investments The Foundation maintains its bank accounts at two financial institutions in the Green Bay area. The balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per insured depository institution. The Foundation's cash deposits may exceed these federally insured limits at times during the year. The Foundation has not experienced any losses on these accounts. Management believes the Foundation is not exposed to any significant credit risk on cash. 37

43 Notes to Basic Financial Statements June 30, 2017 NOTE 12- COMPONENT UNIT (Continued) Investments at June 30, 2017 consist of the following: Money market funds $ 5,079 Equity mutual funds 3,025, 784 Bond mutual funds 1,574,740 $ 4,605,603 Investment income reported in the statement of revenues, expenses and changes in net position consisted of the following: Interest and dividends Realized gains Unrealized losses Change in beneficial interest in assets held by Community Foundation $ $ 63,529 80, ,918 2, ,194 Beneficial Interest in Assets Held by Community Foundation Beneficial interest in assets held by Community Foundation represents amounts held at the Greater Green Bay Community Foundation. The Community Foundation invests the assets held in the fund. The income can be distributed annually, less investing and administrative expenses. The principal may be distributed upon request of the members of the governing board of the Foundation and authorization of the Community Foundation's board. If distributed, the principal is to be used according to the purposes set forth in the agreement. The agreement governing the assets includes a variance power allowing the Community Foundation to modify the restrictions on distributions from the funds. Unconditional Promises to Give Unconditional promises to give at June 30, 2017 are as follows: Receivable in less than one year Receivable in one to five years Total unconditional promises to give Less discount to net present value Net promises to give $ $ 255, , ,399 7, ,368 Promises to give receivable in more than one year are discounted at 2.25%. A reserve for uncollectible amounts was deemed not necessary by management. Note Payable Note payable totaling $180,000 as of June 30, 2017 consists of a note payable to Nicolet National Bank, with the original terms requiring quarterly interest payments of 2.20% of the outstanding balance and one principal payment of $180,000, due on December 31, 2017, secured by nearly all assets of the Foundation. 38

44 Notes to Basic Financial Statements June 30, 2017 NOTE 12 - COMPONENT UNIT (Continued) Net Position The Foundation is required to report information regarding its net assets and its activities in the following three classes of net assets: Unrestricted net assets - net assets that are neither temporarily nor permanently restricted by donorimposed stipulations. Temporarily restricted net assets - net assets that result from contributions whose use by the Foundation is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the Foundation pursuant to those stipulations. Permanently restricted net assets - net assets resulting from contributions whose use by the Foundation is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the Foundation. A summary of the Foundation's net asset balance as of June 30, 2017 follows: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment funds $ - $ 379,835 $ 1,919,589 $ 2,299,424 Scholarships and grants 2,417,769 2,417,769 Unrestricted 638, ,274 $ ~ ~ ~ The Foundation's endowment funds consist of donor-restricted endowment funds. Net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. The following schedule summarizes the changes in the funds by net asset class for the period ended June 30, 2017: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, beginning of year lnwstment return: lmestment income Contributions Donor reclassifications Appropriations of endowment assets for expenditure Endowment net assets, end of year $ - $ 217,025 $ 1,613,916 $ 1,830, , ,369 23, , , 167 8,071 8,071 (62, 124) (62, 124) $ - ~ ~ 1,919,589 ~ 2.299,424 39

45 Notes to Basic Financial Statements June 30, 2017 NOTE 12- COMPONENT UNIT (Continued) Fair Value Measurements Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC are described as follows: Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Foundation has the ability to access. Level 2 inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets quoted prices for identical or similar assets or liabilities in inactive markets inputs other than quoted prices that are observable for the asset or liability inputs that are derived principally from or corroborated by observable market data by correlation or other means If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability. Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset and liability fair value measurement levels within the fair value hierarchy are 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. Fair Value Measurements Using Fair Value Level 1 Level2 Level3 Promises to give $ 568,368 $ - $ - $ 568,368 Investments 4,605,603 4,605,603 Beneficial interest in assets held by Community Foundation 20,859 20,859 $ 5,194,830 $ 4,605,603 $ - $ 589,227 Assets measured at fair value on a recurring basis using significant unobservable inputs: Promises to give Balance, beginning of year Promises received Payments received Change in present value discount $ 370, ,500 (277,351) (3,873) Balance, end of year $ 568,368 40

46 Notes to Basic Financial Statements June 30, 2017 NOTE 12 COMPONENT UNIT (Continued) Balance, beginning of year Investment income (loss) Balance, end of year $ $ Beneficial interest 18,730 2,129 20,859 NOTE 13 - UPCOMING ACCOUNTING PRONOUNCEMENTS In June 2015, the GASB issued a new standard addressing accounting and financial reporting for postemployment benefits other than pensions (OPES). GASS Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, addresses accounting and reporting by employer governments that provide OPEB benefits to their employees. The District will, after adoption of GASB No. 75, recognize on the face of the financial statements its OPES liability. GASB No. 75 is effective for fiscal years beginning after June 15, The District is currently evaluating the impact this standard will have on the financial statements when adopted. NOTE14-SUBSEQUENTEVENTS On August 1, 2017, the District issued $15,000,000 of general obligation school improvement bonds to finance ongoing capital needs of the District. Principal retirements total $785,000 to $1,865,000 for April 1, 2020 through April 1, 2033, and bear interest rate of 3% to 5%. On November 27, 2017, the District issued $16,000,000 of general obligation promissory notes to finance ongoing capital needs of the District. Principal retirements total $775,000 to $2,230,000 for April 1, 2018 through April 1, 2027, and bear interest rate of 2% to 4%. 41

47 REQUIRED SUPPLEMENTARY INFORMATION

48 OPEB Schedule of Funding Progress June 30, 2017 Actuarial Actuarial Valuation Value of Date Assets July 1, 2015 $0 July 1, 2014 $0 July 1, 2013 $0 July 1, 2011 $0 Actuarial Accrued Liability (AAL) - Unfunded Projected AAL Funded Covered Unit Credit (UAAq Ratio Payroll $9,342,830 $9,342,830 0% $33,801,008 $10,855,677 $10,855,677 0% $46,581,031 $11,568,298 $11,568,298 0% $44,542, 113 $8,111,587 $8,111,587 0% $43,296,488 UAAL as a Percentage of Covered Payroll 27.6% 23.3% 26.0% 18.7% See Notes to Required Supplementary Information. 42

49 Schedule of Proportionate Share of the Net Pension Liability (Asset) Wisconsin Retirement System Last 10 Fiscal Years* Fiscal Year Ending Proportionate Share of the Net Proportionate Pension Liability Proportion of Share of the Covered- (Asset) as a the Net Pension Net Pension Employee Percentage of Liability (Asset) Liability (Asset) Payroll Covered Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability (Asset) 6/30/15 6/30/16 6/30/ % % % $ (9,229, 153) $ 58,054,078 6,065,548 52,678,129 3,015,281 52,142, % 11.51% 5.78% % 98.20% 99.12% Schedule of Contributions Wisconsin Retirement System Last 10 Fiscal Years Fiscal Year Ending Contractually Required Contributions Contributions in Relation to the Contractually Required Contributions Contribution Deficiency (Excess) Covered- Employee Payroll Contributions as a Percentage of Covered-Employee Payroll 6/30/15 6/30/16 6/30/17 $ 3,584,916 3,582,321 3,441,362 $ 3,584,916 $ 3,582,321 3,441,362 $ 51,213,086 52,678,129 52,142, % 6.80% 6.60% NOTES TO REQUIRED SUPPLEMENTARY INFORMATION There were no changes of benefit terms or assumptions for any participating employer in the WRS. The amounts reported for each fiscal year were determined as of the calendar year-end that occurred within the fiscal year. The District is required to present the last ten fiscal years of data; however accounting standards allow the presentation of as many years as are available until ten fiscal years are presented. 43

50 SUPPLEMENTARY FINANCIAL INFORMATION The following supplementary information is provided to document NWTC's compliance with budgetary requirements. To maintain accountability of available resources, NWTC utilizes accounts in accordance with the principles of fund accounting. This accountability is an essential requirement to maintain the public trust. The method of accounting used for budgetary compliance monitoring is substantially different from the method of preparing the basic financial statements of NWTC. At the end of this section is a reconciliation between the two methods. NWTC has also presented certain combining statement and individual schedules to provide additional information to the users of these financial statements.

51 GENERAL FUND The general fund is the primary operating fund of NWTC. It is available for any legally authorized purpose and is therefore used to account for all revenues and expenditures for activities not provided for in other funds.

52 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Adjustment Actual on a Original Amended to Budgetary Budgetary Budget Budget Actual Basis Basis Revenues Local government - tax levy $ 12,003,617 $ 11,639,387 $ 11,593,902 $ $ 11,593,902 Intergovernmental revenue State 39,382,727 39,382,727 39,234,172 39,234,172 Tuition and fees Statutory program fees 22,390,000 22,390,000 20,786,797 20,786,797 Material fees 1,200,000 1,200,000 1,149,519 1,149,519 Other student fees 1,540,000 1,540,000 1,495,838 1,495,838 Institutional 798, , 124 1,136,694 1,136,694 Total Revenues 77,314,605 77,063,238 75,396,922 75,396,922 Expenditures Instruction 48,918,276 48,808,748 47,326,255 99,480 47,425,735 Instructional resources 1,477,225 1,375,710 1,314,012 1,314,012 Student services 9,186,504 8,735,199 8,440,652 2,972 8,443,624 General institutional 13,252,180 14,007,920 13,123,757 (27,009) 13,096,748 Physical plant 5,576,420 5,469,793 5,227,216 9,107 5,236,323 Total Expenditures 78,410,605 78,397,370 75,431,892 84,550 75,516,442 Excess (Deficiency) of Revenues Under Expenditures (1,096,000) (1,334, 132) (34,970) (84,550) (119,520) Variance Positive (Negative) $ (45,485) (148,555) (1,603,203) (50,481) (44, 162) 225,570 (1,666,316) 1,383,013 61, , , ,470 2,880,928 1,214,612 Other Financing Sources (Uses) Transfers in 896,000 1,371,513 1,371,513 1,371,513 Transfers out (237,381) (237,381) (237,381) Total Other Financing Sources (Uses) 896,000 1, 134,132 1,134,132 1,134,132 Net Change in Fund Balance (200,000) (200,000) 1,099,162 (84,550) 1,014,612 1,214,612 Fund Balance - July 1, ,777,006 19,777,006 19,921,779 (144,773) 19,777,006 Fund Balance - June 30, 2017 $ $ ,006 $ 21, $ { } $ 20, $ Fund Balance Reserved for encumbrances $ 229,323 Reserved for prepaid items 848,794 Unreserved fund balance Assigned for post employment benefits 2,879,438 Assigned for operations 17,063,386 $

53 SPECIAL REVENUE FUNDS The special revenue funds are used to account for the proceeds and related financial activity of specific revenue sources that are legally restricted for a specific purpose except for major capital projects and expendable trusts. After the fund is created, it usually continues year after year until discontinued or revised by proper legal action. NWTC has two special revenue funds: Aidable Fund -The operating fund is used to account for the proceeds from specific revenue sources (other than non-aidable funds or major capital projects) that are legally restricted as to expenditures for specific purposes. Non-aidable Fund - The non-aidable fund is used to account for assets held by NWTC in a trustee capacity, primarily for student financial aids and other student activities.

54 Special Revenue Aidable Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Revenues Adjustment Actual on a Original Amended to Budgetary Budgetary Budget Budget Actual Basis Basis Local government - tax levy $ 1,479,778 $ 2,310,632 $ 2,310,632 $ $ 2,310,632 Intergovernmental revenue State 1,505,405 2,069,078 2,089,151 2,089,151 Federal 3,005,943 3,139,508 3,022,598 3,022,598 Tuition and fees Statutory program fees 301, ,000 41,518 41,518 Material fees 94,600 94,600 12,855 12,855 Other student fees 372, , , ,577 Institutional 5,229,381 4,861,974 4,036,817 4,036,817 Total Revenues 11,988,472 13, 149, ,661, ,661,148 $ Variance Positive (Negative) 20,073 (116,910) (259,482) (81,745) (224,788) (825,157) (1,488,009) Expenditures Instruction 9,333,637 10,254,440 8,838, ,838,172 Student services 2,428,855 2,603,095 2,581,800 (8,367) 2,573,433 General institutional 186, , , ,995 Physical plant 24,845 24, ,845 Total Expenditures 11,948,921 13,109,067 11,655,390 (7,945) 11,647,445 1,416,268 29,662 15,692 1,461,622 Net Change in Fund Balance 39,551 40,090 5,758 7,945 13,703 (26,387) Fund Balance - July 1, 2016 (3,465) (3,465) 25,972 (29,437) (3,465) Fund Balance -June 30, 2017 $ $ 36,625 $ 31,730 $ {211492} $ 10,238 $ {26,387} Fund Balance Reserved for encumbrances $ 21,492 Reserved for inventory 25,257 Reserved for prepaid items 15,275 Unreserved fund balance Designated for operations (30,294) $ 31,730 45

55 Special Revenue Non-Aidable Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget ( Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Revenues Adjustment Actual on a Original Amended to Budgetary Budgetary Budget Budget Actual Basis Basis Local government - tax levy $ 210,000 $ 187,059 $ 181,875 $ $ 181,875 Intergovernmental revenue State 2,049,000 2,115,000 1,819,688 1,819,688 Federal 12,265,000 12,253,316 10,978,265 10,978,265 Other student fees 1,329,000 1,374,000 1,392,141 1,392,141 Institutional 861, , , ,045 Total Revenues 16,714,000 16,770,596 15,361,014 15,361,014 Variance Positive (Negative) $ (5, 184) (295,312) ( 1,275,051) 18, ,824 ( 1,409,582) Expenditures Student services 16,583,000 16,393,374 15,112,849 15,112,849 1,280,525 Excess (Deficiency) of Revenues Over Expenditures 131, , , ,165 (129,057) Other Financing Sources (Uses) Transfers in 36,779 36,779 36,779 Transfers out (398,750) (243,500) (243,500) (243,500) Total Other Financing Sources (Uses) (398,750) (206,721) (206,721) (206,721) Net Change in Fund Balance (267,750) 170,501 41,444 41,444 (129,057) Fund Balance - July 1, , , , ,311 Fund Balance - June 30, 2017 $ 495,561 $ 933,812 $ 804,755 $ $ 804,755 $ (129,057} Fund Balance Reserved for prepaid items $ 3,000 Reserved for student organizations 801,755 $ 804,755 46

56 CAPITAL PROJECTS FUND The capital projects fund is used to account for all resources and related financial activity for all capital expenditure projects regarding the acquisition of sites, purchase or construction of buildings (including equipping), lease/purchase of buildings, or remodeling and improvement of buildings.

57 Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Adjustment Actual on a Original Amended to Budgetary Budgetary Budget Budget Actual Basis Basis Revenues Local government - tax levy $ $ 988 $ 988 $ $ 988 Intergovernmental revenue State 58,059 49,280 49,280 Federal 187,847 42,439 42,439 Institutional 4,000 61, , ,701 Total Revenues 4, , , ,408 $ Variance Positive (Negative) (8,779) (145,408) 42,794 (111,393) Expenditures Instruction 36,528,571 30,754,960 29,853, ,651 30,728,517 Instructional resources 323, , ,350 (1,517) 191,833 Student services 2,817,091 2,052,905 2,052,645 (21,980) 2,030,665 General institutional 4,801,920 4,947,005 4,548, ,024 4,835,975 Physical plant 17,322,591 8,367,972 12,163,397 (3,846,454) 8,316,943 Total Expenditures 61,793,500 46,461, ,812,209 (2,708,276) 46,103,933 26, ,522 22, ,030 51, ,264 Excess (Deficiency) of Revenues Over (Under) Expenditures (61,789,500) (46,152,396) (48,614,801) 2,708,276 (45,906,525) 245,871 Other Financing Sources (Uses) Transfers in 153,750 6,000 Transfers out (40,109) (41,610) (41,610) Long-term debt issued 61,000,000 25,500,000 25,500,000 25,500,000 Total Other Financing Sources (Uses) 61,153,750 25,465,891 25,458,390 25,458,390 (6,000) (1,501) (7,501) Net Change in Fund Balance (635,750) (20,686,505) (23, 156,411) 2,708,276 (20,448, 135) 238,370 Fund Balance - July 1, ,807,006 5,807,006 24,045,444 ( 18,238,438) 5,807,006 Fund Balance - June 30, 2017 $ 5,171,256 $ (14,879,499) $ 889,033 $ (15,530,162) $ (14,641,129) $ 238,370 Fund Balance Reserved for encumbrances $ 15,530,162 Unreserved (14,641, 129) $ 889,033 47

58 DEBT SERVICE FUND The debt service fund is used to account for the accumulation of resources for, and the payment of, general longterm debt principal, interest and related costs.

59 Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Revenues Adjustment Actual on a Original Amended to Budgetary Budgetary Budget Budget Actual Basis Basis Local government - tax levy $ 17,759,404 $ 17,759,404 $ 17,759,404 $ $ 17,759,404 Institutional 6,308 6,308 62,734 62,734 Total Revenues 17,765,712 17,765,712 17,822,138 17,822, 138 $ Variance Positive (Negative) 56,426 56,426 Expenditures Physical plant 13,084,270 13,759,270 13,736,745 13,736,745 22,525 Excess (Deficiency) of Revenues Over Expenditures 4,681,442 4,006,442 4,085,393 4,085,393 78,951 Other Financing Sources Debt premium received 1,323, , ,148 (466,020) Net Change in Fund Balance 4,681,442 5,329,610 4,942,541 4,942,541 (387,069) Fund Balance - July 1, ,275,368 4,275,368 4,275,368 4,275,368 Fund Balance - June 30, 2017 $ 8,956,810 $ 9,604,978 $ 9,217,909 $ $ 9,217,909 $ (387,069} Fund Balance Reserved for debt service $ 9,217,909 48

60 ENTERPRISE FUNDS The enterprise funds are used to account for NWTC operations where the cost of providing goods or services to students, district staff, faculty or the general public on a continuing basis is financed or recovered primarily through user charges or where the district board has decided that periodic determination of revenues, expenses or net income is appropriate. The operations of NWTC's bookstore, as well as various other minor services are accounted for in the enterprise funds.

61 Enterprise Funds Schedule of Revenues, Expenditures and Changes in Net Position - Budget (Non-GMP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Adjustment Actual on a Original Amended to Budgetary Budgetary Budget Budget Actual Basis Basis Revenues Local government - tax levy $ 444,671 $ $ $ $ Auxiliary revenue 6,015,857 6,793,435 5,858,899 5,858,899 Total Revenues 6,460,528 6,793,435 5,858,899 5,858,899 $ Variance Positive (Negative) (934,536) (934,536) Expenses Auxiliary services 5,826,204 5,805,316 5,733,824 5,733,824 71,492 Excess (Deficiency) of Revenues Over Expenses 634, , , ,075 (863,044) Other Financing Sources (Uses) Transfers in 237, , ,381 Transfers out (651,000) (1, 123, 182) (1, 123, 182) {1, 123, 182) Total Other Financing Sources (Uses) (651,000) (885,801) (885,801) (885,801) Net Change in Fund Balance (16,676) 102,318 (760,726) (760,726) (863,044) Net Position - July 1, ,634,970 2,634,970 2,634,970 2,634,970 Net Position - June 30, 2017 $ 2,618,294 $ $ 1, $ $ 1,874,244 $ { } Net Position Unrestricted net position $ 1,874,244 49

62 INTERNAL SERVICE FUND The internal service fund is used to account for the financing and related financial activities of goods and services provided by one department of the college to other departments of the college, or to other governmental units on a cost reimbursement basis. NWTC is self-insured for health and dental insurance coverage. As a result, it utilizes an internal service fund to track these activities.

63 Internal Service Funds Schedule of Revenues, Expenditures and Changes in Net Position - Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Revenues Adjustment Actual on a Original Amended to Budgetary Budgetary Budget Budget Actual Basis Basis Institutional $ 31,500 $ 31,500 $ 24,601 $ $ 24,601 Auxiliary revenue 12,843,774 12,843,774 12,232,574 12,232,574 Total Revenues 12,875,274 12,875,274 12,257,175 12,257,175 Variance Positive (Negative) $ (6,899) (611,200) (618,099) Expenditures Auxiliary services 12,904,918 12,904,918 10,860,050 10,860,050 2,044,868 Net Change in Fund Balance (29,644) (29,644) 1,397,125 1,397,125 1,426,769 Net Position - July 1, ,974,978 2,974,978 2,974,978 2,974,978 Net Position - June 30, 2017 $ 2,945,334 $ 2,945,334 $ 4,372,103 $ $ 4,372,103 $ 1, Net Position Unrestricted net position - reserved for self-insurance $ 4,372,103 50

64 Schedule to Reconcile the Combined Balance Sheet All Fund Types to the Statement of Net Position June 30, 2017 Assets Cash and cash equivalents Restricted cash and cash equivalents Receivables: Property taxes Accounts receivable Due from other funds Inventories Prepaid items Capital assets, non-depreciable Capital assets, depreciable Accumulated depreciation Total Assets $ General Fund Special Revenue Aidable Fund 18,234,719 $ 14,138 1,392,629 3,833,932 1,145, ,071 25, ,794 15,275 24,907,145 1,200,399 $ Special Revenue Capital Debt Non-Aidable Projects Service Fund Fund Fund 2,054,661 $ 8,318,454 $ 1,836,090 2,322,979 39,542 3,000 (35,100) 7,381,819 4,380,640 8,322,896 9,217,909 Internal Enterprise Service Reconciling Statement of Funds Fund Total Items Net Position $ 1,053,200 $ 5,167,531 $ 36,678,793 $ (10, 154,544} $ 26,524,249 10, 154,544 10,154,544 8,774,448 8,774,448 72,838 23,733 7,438,753 7,438, ,071 (597,071) 937, , ,019 15, ,769 35, ,869 26,637,879 26,637, , , ,475, ,625,089 {16,996} {16,996} {63,431,942} {63,448,938} 2,212,514 5, 191,264 55,432, ,551,912 Deferred Outflows of Resources 21,262,973 21, Liabilities, Deferred Inflows of Resources and Fund Balance/Net Position Liabilities Accounts payable Accrued payroll, payroll taxes, and fringes Accrued interest Due to other funds Unearned revenue Due to other organizations Current portion of long-term liabilities General obligation debt Other post employment benefit liability Net pension liability Total Liabilities 742, ,538 1,028, , ,071 1,314, ,656 3,086,204 1,168, ,423 7,410,623 29,404 23, ,919 2,590,139 3,575,885 7,433, , ,460 9,148,224 9,148, ,701 1,926,563 2,479,860 4,406, , , ,071 (597,071) 20,623 2,160,055 (1.097,658) 1,062,397 2,590,139 2,590,139 16,445,000 16,445,000 58,519,768 58,519,768 1,766,408 1,766,408 3,015,281 3,015, , ,422,052 80,902,930 97,324,982 Deferred Inflows of Resources 800, , ,440 9,517,440 Fund Balance/Net Position Investment in capital assets Nonspendable Inventories and prepaid expenses Restricted Encumbrances Debt service Assigned Encumbrances Self-Funded insurance Post-employment benefits Enterprise Student organizations Operations Unassigned Total Fund Balance/Net Position 848,794 40, ,492 2, ,063,386 {30,294} 21,020, ,000 (35,100) 801,755 15,530,162 9,217,909 {14,606,029} 804, ,033 9,217, ,226 (857,226} 46,738,293 46,738,293 15, (15,530, 162) 9,217,909 (371,342} 8,846, ,815 (250,815) 4,372, 103 4,372,103 (4, ) 2,879,438 (2,879,438) 1,874,244 1,874,244 (1,874,244) 801,755 (801,755) 17,063,386 (17,063,386) {14,636,323} 49,023, ,603 1,874,244 4,372,103 38,210,715 51,761, ,463 Total Liabilities, Deferred Inflows of Resources and Fund Balance/Net Position ~ ~ $ $ $ g $ $ $ $ $

65 Schedule to Reconcile Budget (Non-GAAP Budgetary) Basis Financial Statements to the Statement of Revenues, Expenses and Changes in Net Position For the Year Ended June 30, 2017 Revenues Local government - tax levy Intergovernmental revenue State Federal Tuition and fees Statutory program fees Material fees Other student fees Institutional Auxiliary revenue Total Revenues General Fund $ 11,593,902 $ 39,234, ,797 1,149,519 1,495,838 1,136,694 75,396,922 Special Special Revenue Revenue Capital Debt Aidable Non-Aidable Projects Service Enterprise Fund Fund Fund Fund Funds 2,310,632 $ 181,875 $ 988 $ 17,759,404 $ 2,089,151 1,819,688 49,280 3,022,598 10,978,265 42,439 41,518 12, , ,141 4,036, , ,701 62,734 5,858,899 11,661,148 15,361, ,408 17,822,138 5, Statement of Revenues, Internal Expenses and Service Reconciling Changes in Fund Total Items Net Position $ $ 31,846,801 $ $ 31,846,801 43,192,291 43,192,291 (1) 14,043,302 14,043,302 (2) 20,828,315 (4,898,286) 15,930,029 1,162,374 (275,597) 886,777 3,035,556 (710,043) 2,325,513 24,601 6,354,592 6,354,592 (3) 12,232,574 18,091,473 {10,400,478} 7,690, , ,554,704 (16.284,404) 122,270,300 Expenditures Instruction Instructional resources Student services General institutional Physical plant Auxiliary services Depreciation Student aid Total Expenditures 47,425,735 1,314,012 8,443,624 13,096,748 5,236,323 75,516,442 8,838,172 30,728, ,833 2,573,433 15,112,849 2,030, ,995 4,835,975 24,845 8,316,943 13,736,745 5,733,824 11,647,445 15,112,849 46, ,736,745 5,733,824 86,992,424 (21,266,578} 65, ,505,845 58,022 1,563,867 28, 160,571 (13,561,703} ,868 18, 143,718 (10,739,195) 7,404,523 27,314,856 (12, ) 15,245,583 (4) 10,860,050 16,593,874 (10,324,597) 6,269,277 4,690,617 4,690, ,989 7,922,989 10,860, ,288 (55,289,718) 123, Excess (Deficiency) of Revenues Over (Under) Expenditures ( ) 13, ,165 (45,906,525) 4, ,075 1,397,125 (40.156,584) 39,005,314 (1.151,270) Other Financing Sources (Uses) Transfers in Transfers out Long-term debt issued Loss on sale of capital assets Debt premium issued Total Other Financing Sources (Uses) 1,371,513 (237,381) 1,134, ,381 (243,500) (41.610) (1, 123, 182) 25,500, ,148 {206,721} 25, ,148!885,801} 1,645,673 (1,645,673) (1,645,673) 1,645,673 25,500,000 (25,500,000) (2,471,255) (2,471,255) !857,148) 26,357,148 {28, }! } Net Change in Fund Balances 1,014,612 13,703 41,444 (20,448, 135) 4,942,541 (760,726) 1,397,125 (13,799,436) 10,176,911 (3, ) Fund Balances/Net Position - July 1, 2016, budgetary basis 19,777,006!3.465} 763,311 5,807,006 4,275, , ,978 36,229,174 57,365,814 93,594,988 Fund Balances/Net Position - June 30, 2017, budgetary basis 20,791,618 10, ,755 (14,641,129) 9,217,909 1,874,244 4,372,103 22,429,738 67,542, ,463 Adjustment for encumbrances 229,323 21,492 15, ,780,977 (15, } Fund Balances/Net Position - June 30, 2017 ~ ~ ~ i i ~ ~ i ,715 ~ 51,761,748 1i 89,972,463 (5) 52

66 Notes to Budgetary Comparison Schedules For Year Ended June 30, 2017 NOTE 1 - BUDGETARY ACCOUNTING The District uses a fund structure for budgetary accounting as compared to the entity-wide presentation of the basic financial statements. Annual budgets are adopted for all funds in accordance with the requirements of the Wisconsin Technical College System Board. The District follows the procedures listed below in adopting its annual budget: Property taxes are levied by the various taxing municipalities. The District records as revenue its share of the local tax when levied, since the District's share becomes available during its fiscal year to finance its operations. Public hearings are conducted on the proposed budget prior to District Board approval. Prior to July 1, the budget is legally enacted through approval by the District Board. Budget amendments during the year are legally authorized. Budget transfers (between funds and functional areas within funds) and changes in budgeted revenue and expenditures (appropriations) require approval by a vote of two-thirds of the entire membership of the Board and require publishing a Class I public notice in the District's official newspaper within 10 days according to Wisconsin Statutes. Management exercises control over budgeted expenditures by fund and function (i.e., instruction, instructional resources, etc.), as presented in the required supplementary information. Expenditures may not exceed funds available or appropriated, unless authorized by a resolution adopted by a vote of twothirds of the Board. Unused appropriations lapse at the end of each fiscal year. Formal budgetary integration is employed as a planning device for all funds. The annual operating budget is prepared primarily on the same basis as fund financial statements, except encumbrances are also included in the adopted budget. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of the formal budgetary process. NOTE 2 - EXPLANATION OF DIFFERENCES BETWEEN REVENUES, EXPENDITURES, AND OTHER FINANCING SOURCES (USES) FOR BUDGETARY FUNDS ON A BUDGETARY BASIS AND THE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION ON A GAAP BASIS State grant revenues are presented on the Statement of Revenues, Expenses, and Changes in Net Position as follows: (1) State grants re\enue is presented on the basic financial statements as follows: Operating Capital contributions Non-operating $ 2,313,840 49,280 40,829,171 $ 43, 192,291 53

67 Notes to Budgetary Comparison Schedules For Year Ended June 30, 2017 NOTE 2 - EXPLANATION OF DIFFERENCES BETWEEN REVENUES, EXPENDITURES, AND OTHER FINANCING SOURCES (USES) FOR BUDGETARY FUNDS ON A BUDGETARY BASIS AND THE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION ON A GAAP BASIS (Continued) Federal grant revenues are presented on the Statement of Revenues, Expenses, and Changes in Net Position as follows: (2) Federal grants revenue is presented on the basic financial statements as follows: Operating Capital contributions $ 14,000,862 42,440 $ 14,043,302 Institutional revenue is reported as four separate line items on the basic financial statements: (3) Institutional revenue is reported as four separate line items on the basic financial statements: Contract revenue School district contracts Miscellaneous revenue Gain (loss) on sale of capital assets Investment income earned $ 3,647, ,904 2,351, , ,824 $ 6,354,592 Interest expense is reported as a component of physical plant on the budgetary statements: (4) Interest expense is reported as a component of physical plant on the budgetary statement Physical plant Interest expense Bond issuance costs $ 14, 144, , ,642 $ 15,245,583 54

68 Notes to Budgetary Comparison Schedules For Year Ended June 30, 2017 NOTE 2 - EXPLANATION OF DIFFERENCES BETWEEN REVENUES, EXPENDITURES, AND OTHER FINANCING SOURCES (USES) FOR BUDGETARY FUNDS ON A BUDGETARY BASIS AND THE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION ON A GAAP BASIS (Continued) Reconciliation of fund equity and net position as presented on the Statement of Revenues, Expenses, and Changes in Net Position is as follows: (5) Reconciliation of budgetary basis fund balance and net position as presented in the basic financial statements: Budgetary basis fund balance Adjustments Long term receivable General capital assets - cost Accumulated depreciation on general capital assets General obligation debt Bond premium Long-term portion of vacation payable Long-term portion of retiree health insurance liability Accrued interest on debt payable Net pension liability Summer school tuition earned Summer school wages paid Deferred outflows related to pension Deferred inflows related to pension Encumbrances outstanding at year end Total Adjustments Net Position per basic financial statements $ 22,429, , , 113,058 (63,431,942) (72,480,000) (2,484,768) (1,422,232) (1, 766,408) (371,342) (3,015,281) 1, 132,758 (1,057,628) 21,262,973 (9,517,440) 15,780,977 67,542,725 $ 89, 972,463 55

69 FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE

70 Schenck ADVISORY TAX ASSURANCE INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Trustees Northeast Wisconsin Technical College District Green Bay, Wisconsin We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Northeast Wisconsin Technical College District, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise Northeast Wisconsin Technical College District's basic financial statements, and have issued our report thereon dated December 6, The financial statements of Northeast Wisconsin Technical College Educational Foundation, Inc. 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 Northeast Wisconsin Technical College District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the pu rpose of expressing an opinion on the effectiveness of Northeast Wisconsin Technical College District's internal control. Accordingly, we do not express an opinion on the effectiveness of Northeast Wisconsin Technical College District'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 District'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. Compliance and Other Matters As part of obtaining reasonable assurance about whether Northeast Wisconsin Technical College District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regu lations, 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. sche ncksc.com 56 Schenck SC

71 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 Northeast Wisconsin Technical College Districfs internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Northeast Wisconsin Technical College District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. _/~rc_ Certified Public Accountants Green Bay, Wisconsin December 6,

72 Schenck ADVISORY TAX ASSURANCE INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL AND STATE PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE AND THE STATE SINGLE AUDIT GUIDELINES To the Board of Trustees Northeast Wisconsin Technical College Report on Compliance for Each Major Federal and State Program We have audited Northeast Wisconsin Technical College's compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement and the State Single Audit Guidelines issued by the Wisconsin Department of Administration that could have a direct and material effect on each of Northeast Wisconsin Technical College's major federal and state programs for the year ended June 30, Northeast Wisconsin Technical College's major federal and state programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal and state statures, regulations, and the term s and conditions of its federal and state awards applicable to its federal and state programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of Northeast Wisconsin Technical 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; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and the State Single Audit Guidelines issued by the Wisconsin Department of Administration. Those standards, Uniform Guidance and the State Single Audit Guidelines 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 Northeast Wisconsin Technical 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 Northeast Wisconsin Technical College's compliance. Opinion on Each Major Federal and State Program In our opinion, Northeast Wisconsin Technical 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 year ended June 30, schencksc.co m Schenck SC 58

73 Other Matter The results of our auditing procedures disclosed an instance of noncompliance which is required to be reported in accordance with the Uniform Guidance and which is described in the accompanying schedule of findings and questioned costs as item Our opinion on each major federal program is not modified with respect to this matter. Northeast Wisconsin Technical College's response to the noncompliance finding identified in our audit is described in the accompanying schedule of prior year audit findings and corrective action plan. Northeast Wisconsin Technical College's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Internal Control Over Compliance Management of Northeast Wisconsin Technical 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 Northeast Wisconsin Technical 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 and state program and to test and report on internal control over compliance in accordance with the Uniform Guidance and the State Single Audit Guidelines, 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 Northeast Wisconsin Technical College's internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over compliance that we consider to be a significant deficiency. 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. We consider the deficiency in internal control over compliance described in the accompanying schedule of findings and questioned costs as item to be a significant deficiency. Northeast Wisconsin Technical College's response to the internal control over compliance finding identified in our audit is described in the accompanying schedule of prior year audit findings and corrective action plan. Northeast Wisconsin Technical College's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. 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 the State Single Audit Guidelines. Accordingly, this report is not suitable for any other purpose. /kd-r~ Certified Public Accountants Green Bay, Wisconsin December 6,