STATE TECHNICAL COLLEGE OF MISSOURI Linn, Missouri INDEPENDENT AUDITORS REPORT y ;ÿ* I 2 * c c
INDEPENDENT AUDITORS REPORT. TABLE OF CONTENTS MANAGEMENT S DISCUSSION AND ANALYSIS. PAGE 1-3 4-12 BASIC FINANCIAL STATEMENTS: Statements of Net Position Statements of Revenues, Expenses, and Changes in Net Position Statements of Cash Flows Discretely Presented Component Unit Statements of Financial Position Statements of Activities Statements of Cash Flows (Indirect Method). Notes to the Financial Statements. REQUIRED SUPPLEMENTARY INFORMATION. 13 14 15-16 17 18 19 20-47 48-51 SUPPLEMENTARY INFORMATION: Schedule of Financial Position by Division - 2018. Schedule of Financial Position by Division - 2017. Schedule of Activity by Division - 2018 Schedule of Activity by Division - 2017 Auxiliary Schedule by Activity - 2018 Auxiliary Schedule by Activity - 2017 52 53 54 55 56 57 FEDERAL COMPLIANCE SECTION: Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards 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 Program And On Internal Control Over Compliance Required by The Uniform Guidance Schedule of Findings and Questioned Costs 58 59 60-61 62-64 65-66
IEvers & Company, CPA's, L.L.C. Certified Public Accountants and Consultants The Board of Regents of State Technical College of Missouri Linn, Missouri Report on the Financial Statements INDEPENDENT AUDITORS REPORT Richard E. Elliott Dale A. Siebeneck Jo L. Moore Wendy M. Renner Eldon H. Becker Bruce A. Vanderveld Jessica L. Bridges Bobbie J. Redmon-Murray Elmer L. Evers, Emeritus Jerome L. Kauffman, Emeritus Keith L. Taylor, Emeritus We have audited the accompanying financial statements of State Technical College of Missouri (the College), a component unit of the State of Missouri, and its discretely presented component unit, The Foundation for State Technical College of Missouri, Inc. (the Foundation), as of and for the years ended June 30, 2018 and 2017, and the related notes to the financial statements, which collectively comprise the College s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audits. 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 Foundation for State Technical College of Missouri, Inc. were not audited in accordance with Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1 520 Dix Road, Suite A Jefferson City, Missouri 65109 * 573/635-0227 FAX 573/634-3764 5886 Osage Beach Parkway, Ste. A Osage Beach, Missouri 65065 573/348-4141 FAX 573/348-0989
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of State Technical College of Missouri and its discretely presented component unit, The Foundation for State Technical College of Missouri, Inc: as of June 30, 2018 and 2017, and the respective changes in financial position and cash flows, thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters RequiredSupplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, OPEB schedules, schedule of the College s proportionate share of the net pension liability, and schedule of College s contributions, on pages 4 through 12 and 48 through 51 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Government 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 opinions on the financial statements that collectively comprise the State Technical College of Missouri 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 is 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 Requirementsfor Federal Awards, and is also not a required part of the basic financial statements. The schedule of expenditures of federal awards is the responsibility of management and is derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. 2
The financial information listed in the table of contents as supplementary information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 7, 2018, on our consideration of the State Technical College of Missouri 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 solely to describe the scope of our testing of internal control oyer financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the State Technical College of Missouri s internal control over financial reporting and compliance. EVERS & COMPANY, CPA s, L.L.C. Jefferson City, Missouri December 7, 2018 3
MANAGEMENT S DISCUSSION AND ANALYSIS _ (unaudited) _ Introduction The following discussion provides an overview of the financial position of State Technical College of Missouri for the years ended June 30, 2018 and June 30, 2017 and includes an analysis of the College s financial statements. These financial statements are prepared in accordance with Government Accounting Standards Board (GASB) pronouncements. Effective July 1, 2001, the College adopted GASB Statement No. 14, The Financial Reporting Entity, as amended by GASB 39; Determining Whether Certain Organizations are Component Units and GASB 61, The Financial Reporting Entity: Omnibus an Amendment of GASBStatements No. 14 and No. 34. The Foundation for State Technical College of Missouri, Inc. (Foundation) is a legally separate, tax exempt, entity which meets the criteria set forth for component units under GASB Statement No. 39. The Foundation provides financial support for the objectives, purposes, and programs of the College. Although the College does not control the timing, purpose, or amount of receipts from the Foundation, the resources (and income thereon) which the Foundation holds and invests are restricted to the activities of the College. Because these resources held by the Foundation can only be used by, or for the benefit of the College, the Foundation is considered a component unit of the College and is discretely presented in the College s financial statements. The Foundation is a private nonprofit organization that reports under Financial Accounting Standards Board (FASB) standards. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. No modifications for these differences have been made to the Foundation s audited financial information as it is presented in the College s financial reporting entity. Complete financial statements for the Foundation may be obtained by mailing a request to The Foundation for State Technical College of Missouri, Inc. Treasurer, One Technology Drive, Linn, MO 65051. The discussion and analysis (which excludes the Foundation) has been prepared by management along with the financial statements and related footnote disclosures and should be read in conjunction with and is qualified in its entirety by the financial statements and footnotes. Financial Overview and Highlights This discussion and analysis of State Technical College of Missouri s financial statements provides an overview of the College s financial performance during the years ended June 30, 2018 and June 30, 2017. Since Management s Discussion and Analysis is designed to focus on current activities, resulting changes and current known facts, it should be read in conjunction with the College s basic financial statements and the footnotes. There are three financial statements presented: the Statement of Net Position, the Statement of Revenues, Expenses, and Changes in Net Position, and the Statement of Cash Flows. The emphasis of the discussion and analysis of the financial statements is a comparative analysis of College wide data. The College s significant accounting policies are summarized in Note 1 to the financial statements of this report, including further information on the financial reporting entity. Statement of Net Position The Statement of Net Position presents the financial position of the College at the end of the fiscal year and includes all assets and liabilities of the College. The Net Position presents the current financial condition of the College. Assets and liabilities are generally measured using current values, with certain exceptions, such as capital assets, which are stated at cost less accumulated depreciation, and accounts receivable reported net of estimated uncollectible accounts. 4
I MANAGEMENT S DISCUSSION AND ANALYSIS _ (unaudited) _ The assets and liabilities are categorized between current and noncurrent. The difference is current assets and liabilities mature or become payable within the normal 12 month accounting cycle versus noncurrent which mature or become payable after 12 months. At June 30, 2018 and 2017, the College s current assets consist primarily of cash and accounts receivables, while noncurrent assets consist primarily of capital assets. Capital assets are the property, plant, and equipment owned by the College, net of any related depreciation. Net Position is presented in three major categories. The first is net investment in capital assets, which represents the College s equity in property, plant, and equipment, net of any related debt and accumulated depreciation. The remaining two categories are restricted and unrestricted. Restricted net position is funds that are limited in terms of the purpose and time for which the funds can be spent. Restricted net position is further categorized between expendable and non-expendable. Restricted expendable net position is available to be spent by the College after externally imposed stipulations have been fulfilled or after the passage of time. Restricted non-expendable net position is endowments for which only the interest portion can be spent. Unrestricted net position is not subject to externally imposed stipulations, however these resources may be designated for specific purposes by the College s management or Board of Regents. Unrestricted net position not designated is available for the College s instructional and public service missions and its general operations. The table below is a condensed summary of the College s Net Position at June 30, 2018, 2017, and 2016 respectively (in millions). _ Condensed Summary of _ Net Position June 30, 2018, 2017, and 2016 (in millions) 2018 2017 2016 Current Assets Noncurrent Assets Total Assets $9.7 $10.5 $ 12.5 48.5 49.3 42.6 58.2 59.8 55.1 Deferred Outflows of Resources 8.1 8.0 2.7 Current Liabilities Noncurrent Liabilities Total Liabilities 2.3 2.5 2.5 34.6 33.0 21.0 36.9 35.5 23.5 Deferred Inflows of Resources.6.2.3 Net Investment in Capital Assets Restricted Expendable Unrestricted, (deficit) Total Nei Position 37.0 37.3 35.4 (8.2) (5.3) (1.4) $28.8 $32.0 $34.0 5
MANAGEMENT S DISCUSSION AND ANALYSIS _ (unaudited) _ Analysis of Fiscal Years During 2018, Total Assets decreased by $1.6 million. Current Asset, cash, decreased by $.8 million due to utilization of reserves in fiscal year 2018. Noncurrent assets, restricted cash decreased by $3.2 million due to the utilization of restricted bond proceeds to construct the Health Science Center completed in May 2018. Noncurrent assets, capital assets net of depreciation increased $2.4 due to the Health Science Center and major equipment capitalizations exceeding related depreciation. Series 2017 revenue bonds in the amount of $5.1 million were issued in May 2017, $.3 million was utilized in fiscal year 2017, $1.6 million remains at June 30, 2018. During 2017, Total Assets increased by $4.7 million. Current Asset, cash decreased by $2 million due to the utilization of reserves to construct the Welding Technology Center completed in February 2017. Noncurrent assets increased by $1.9 million due to $4 million in buildings and equipment being placed in service and a combined net increase in construction in progress of $.6 million during fiscal year 2017 offset by $2.7 million in total depreciation. Deferred Outflows of Resources increased by $.1 million from 2017 to 2018 and $5.3 million from 2016 to 2017. This reflects the increase in the College s proportionate share of net differences between projected and actual investment earnings on pension plan investments recorded based on the information provided by Missouri State Employee s Retirement System (MOSERS) due to the implementation of GASB Statement No. 68, Accounting and Financial Reportingfor Pensions. Total Liabilities increased by( $1.4 million, Current Liabilities decreased by $.2 million from and Noncurrent Liabilities increased $1.6 million from 2017 to 2018. Noncurrent Liabilities related to the College s proportionate share of net pension liability recorded based on information provided by MOSERS due to the implementation of GASB Statement No. 68, Accounting and Financial Reportingfor Pensions increased by $2 million offset by a $.6 million decrease in the principle balance of revenue bonds due to the principal payment made in fiscal year ending June 30, 2018. During fiscal year ended June 30, 2017, Total Liabilities increased by $12 million, Current Liabilities remained unchanged at $2.5 million, and Noncurrent Liabilities increased $12 million total. $4.6 million of the increase was due to the $5.1 million of Series 2017 revenue bonds issued in May 2017 offset by the principal payment of $.3 million made on the Series 2015 revenue bonds less the $.2 million increase in the current portion classified as a current liability. The remaining $7.4 million increase was in the College s proportionate share of net pension liability recorded based on information provided by MOSERS due to the implementation of GASB Statement No. 68, Accounting and Financial Reportingfor Pensions. Deferred Inflows of Resources increased by $.4 million from 2017 to 2018 and decreased by $.1 million from 2016 to 2017. Both changes reflect differences between expected and actual experience and changes in assumptions related to the pension plan recorded based on information provided by MOSERS related to the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions and net changes related to economic/demographic (gains)/losses and assumptions changes or inputs related to OPEB and the implementation of GASB Statement No. 75, Accounting and Financial Reportingfor Postemployment Benefits Other Than Pensions. Total Net Position decreased by $3.2 million during the fiscal year ended June 30, 2018 and $2.0 million during fiscal year ended June 30, 2017. Both decreases are primarily attributable to the increase in buildings and equipment placed in service, the issuance of Series 2017 revenue bonds, the impact of recording information provided by Missouri State Employee s Retirement System (MOSERS) due to the implementation of GASB Statement No. 68, Accounting and Financial Reportingfor Pensions, and the implementation of GASB Statement No. 75, Accounting and Financial Reportingfor Postemployment Benefits Other Than Pensions. 6
MANAGEMENT S DISCUSSION AND ANALYSIS _(unaudited)_ Analysis of Capital Assets (in millions) 2018 2017 2016 Land Construction Progress Land Improvements Infrastructure Buildings Library Books Software Equipment Total Capital Assets Less Accumulated Depreciation Capital Assets $1.2 $1.2 $ 1.2 1.1.5 4.8 4.8 4.7.5.5.5 55.0 49.8 47.2.6.6.6 1.3 1.3 1.3 19.8 18.8 17.8 83.2 78.1 73.8 36.2 33.6 31.2 $47.0 $44.5 $42.6 During the fiscal year ended June 30, 2018, the College capitalized and placed in service $1 million in equipment and $5.2 million in buildings and improvements including the Health Science Center, Eagle Manor, Eagle s Nest and the elevator replacement in the Nilges Technology Center, $1.1 million of which was included in construction in progress at June 30, 2017. During fiscal year ended June 30, 2017, the College capitalized $4.3 million in buildings, equipment, and construction in progress, net of $.2 million in disposals. Capitalizations at June 30, 2017 included the completion of the Welding Technology Center and Airport Hangar and purchase of $1 million in equipment. Construction in Progress includes costs related to buildings and improvements not yet placed in service including the Health Science Center, Eagle Manor, Eagle s Nest, and the elevator replacement in the Nilges Technology Center. The depreciation expense for years ended June 30, 2018, June 30, 2017 and June 30, 2016 was $2.7 million, $2.7 million, and $2.6 million respectively. Statement of Revenues, Expenses, and Changes in Net Position The Statement of Revenues, Expenses, and Changes in Net Position presents the College s financial results of operations for the fiscal year. The statement distinguishes revenues and expenses between operating and nonoperating categories, and provides a view of the College s operating margin. Operating revenues and expenses are those for which the College directly exchanges goods and services. Nonoperating revenues and expenses are those that exclude specific, direct exchanges of goods and services. State appropriations are an example of nonoperating revenues where the state legislature does not directly receive goods and services for the revenue. 7
MANAGEMENT S DISCUSSION AND ANALYSIS _ (unaudited) _ The following is a condensed summary of the College s Revenues, Expenses, and Changes in Net Position for the years ended June 30, 2018, 2017, and 2016, respectively (in millions). Condensed Summary of Revenues, Expenses and Changes in Net Position For the Years Ended June 30, 2018, 2017, and 2016 (in millions) 2018 2017 2016 Operating Revenues Operating Expenses Operating Loss Nonoperating Revenues (Expenses) Other Revenues (Expenses) (Decrease) Increase in Net Position Net Position, Beginning of Year Adjustment Applicable to Prior Years* Net Position, Beginning of the Year Restated Net Position, End of the Year $12.9 $13.5 $ 14.0 (25.3) (24.8) (22.7) (12.4) (11.3) (8.7) 8.3 8.1 8.9.9 1.3 1.2 (3.2) 0.9) 1.4 32.1 34.0 32.6 32.1 (0.1) 33,9 32,6 $28.9 $32,0 $34,0 *The adjustment applicable to Prior Years is due to the implementation of GASB Statement No. 75, Accounting and Financial Reportingfor Postemployment Benefits Other Than Pensions for which there is no comparative activity for the year ended June 30, 2018. Revenues Operating Revenues decreased by $.6 million in fiscal year 2018 and $.5 million in fiscal year 2017. The 2018 change is related to a $.6 million decrease in funding from Missouri Works Job Development and a $.4 million decrease in in-kind donations offset by a $.3 million increase in tuition and fees and a $.1 million increase in federal grant revenue. The 2017 decrease was due to a slight decrease in enrollment as well as the Make it in America and MoManufacturingWins Grants ending offset by the increase in reimbursements from the TechHire and MoStemWins grants. Fiscal year 2018 nonoperating and other revenues decreased by $.2 million primarily due to the decrease in state appropriations. Fiscal year 2017 nonoperating and other revenues decreased by $.7 million. This was the combined impact of an initial $.6 million increase in appropriations, a $.4 million mid year appropriations cut, $1 million decrease in prior year one time funding from Missouri Works Job Development and a $.1 increase in in-kind donations. 8
MANAGEMENT S DISCUSSION AND ANALYSIS _ (unaudited) _ One of the financial strengths of the College is the diverse stream of revenues, which supplement its student tuition and fees. The following is a summary of the College s revenue sources for the years ended June 30, 2018, 2017, and 2016, respectively (in millions). Operating Revenues Student Tuition and Fees Grants and Contracts Auxiliary Activities Other Operating Revenues Total Operating Revenues Nonoperating Revenues State Appropriations Investment Income Gifts & Grants Total Nonoperating Revenues Other Revenues, Gains or Losses Grants and Contracts Total Other Revenues, Gains or Losses 2018 2017 2016 $ 7.3 $ 7.2 $ 7.5 2.7 3.6 3.6 2.5 2.3 2.5.4.4.4 $12,9 $ 13,5 $ 14.0 $ 5.6 $ 5.8 $ 6.6.01.01.01 2.9 2.4 2.5 $8.51 $8.21 $9.11 $.9 $ 1.3 $1.25 $.9 $ 1.3 $ 1.25 Expenses Operating Expenses increased $.5 million in fiscal year 2018 and $2.1 million in fiscal year 2017. The 2018 increase is due to a $.2 increase in salary and benefit expense related to new positions and programs and $.3 million increase in additional benefit expense recorded based on the information provided by Missouri State Employee s Retirement System (MOSERS) due to the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions offset by a $.6 million decrease in contractual services related to the decline in funding from Missouri Works Job Development. The 2017 increase includes a 2% increase to the faculty and staff compensation pool and the costs of related benefits of $.2 million as well as $1.9 million of additional benefit expense recorded based on the information provided by Missouri State Employee s Retirement System (MOSERS) due to the implementation of GASB Statement No. 68, Accounting and Financial Reportingfor Pensions. The following chart shows the total operating expenses for the College by natural classification for the years ended June 30, 2018, 2017, and 2016, respectively (in millions). Operating Expenses Compensation and Employee Benefits Contractual Services Supplies and Materials Utilities Travel Communications Other Operating Expenses Scholarships and Fellowships Depreciation and Amortization Total operating Expenses 2018 2017 2016 $15.4 $ 14.6 $ 12.6 1.3 1.9 2.1 3.1 2.9 2.6.7.6.6.1.1.1.4.3.3.9 1.0 1.0.7.7.8 2.7 2.7 2.6 $25.3 $24,8 $22.7 9
MANAGEMENT S DISCUSSION AND ANALYSIS _ (unaudited) _ Expenses by Functional Classification The following chart shows operating expenses by functional classification for fiscal years ended June 30, 2018, 2017, and 2016, respectively (in millions). Operating Expenses Instruction Public Service Academic Support Student Services Institutional Support Operations and Maintenance of Plant Scholarships and Fellowships Auxiliary Services Depreciation and Amortization Total Operating Expenses '2018' 2017 2016 $11.8 $ 10.6 $9.1 1.7 2.1.9.9.7 2.2 1.9 1.7 2.9 2.4 2.3 1.9 1.7 1.2.7.8.8 2.2 2.1 2.2 2.7 2.7 2.6 $25,3 $24,8 $22.7 Statement of Cash Flows The Statement of Cash Flows provides a view of the sources and uses of the College s cash resources. Cash used in operating activities reflects the continued need for funding from the State of Missouri, as funding received from tuition and fees and related sales and services of auxiliary and educational activities are not sufficient to cover operational needs. The following is a condensed summary of the Statement of Cash Flows for the years ended June 30, 2018, 2017, and 2016, respectively (in millions). Net Cash Provided (Used) by: Operating Activities Noncapital Financing Activities Capital & Related Financing Activities Investing Activities Net Increase (Decrease) in cash Cash, Beginning of Year Cash, End of Year 2018 2017 2016 $(7.5) $ (6.8) $ (5.9) 8.5 8.2 9.1 (5.0) 1.3 (2.9) 1.0 on (3.0) 2.7.2 12.5 9.8 9.6 $9.5 $ 12.5 $9,8 The College s cash decreased by 24% in fiscal year 2018. This decrease is attributable to the utilization of Series 2017 revenue bond monies to construct the Health Science Center placed in service during fiscal year 2018. The College s cash increased by 28% in fiscal year 2017. This was due to the issuance of Series 2017 revenue bonds offset by decreases in state appropriations. 10
MANAGEMENT S DISCUSSION AND ANALYSIS _ (unaudited) _ Debt Administration The College s Statement of Net Position reflects $11,415,000 in revenue bonds payable. These bonds do not constitute general obligations or an indebtedness of the State of Missouri, the College, the governing body of the College or the individual members of the governing body within the meaning of any constitutional or statutory debt limitation or restriction. Auxiliary revenue is pledged up to 120% of the amount of annual debt requirements for the Series 2015 outstanding revenue bonds in the amount of $6,505,000. Series 2017 revenue bonds in the amount of $5,100,000 were issued on May 10, 2017 for the purpose of constructing, furnishing and equipping the Health Science Center to house educational programs offered by the College and to make other capital improvements to educational facilities on the Linn campus. Debt (in millions) Beginning of Yr. Balance Amount Repaid Amount Issued Amount Refinanced End of Yr. Balance Due Within One Year 2018 2017 2016 $ 11.94 $7.17 $8.31 (.53) (.33) (8.7' 5.10 7.1 $ 11.41 $ 11.94 $7.1 $.55 $.53 Economic Outlook It is imperative that the State Technical College of Missouri maintain a healthy financial position so it can successfully maintain and grow enrollment through recruiting and retaining graduates. The College s retention and graduation rate of 82% and 80% respectively, are the highest among all Missouri public two year colleges and among the highest when compared to select peer groups. Strategic enrollment management initiatives continue to be reviewed and improved to maximize enrollment. Fall 2017 enrollment increased slightly over fall 2016 enrollment, and the College projects 2019 enrollment to continue to grow based on its heightened marketing and recruiting efforts. The College is a labor intensive organization. As such, the College must compete with industry to attract and retain quality faculty and staff. This ability to be competitive is vital to the College s success. In addition to securing quality faculty and staff, the College will consistently pursue increased enrollment while maintaining its retention, graduation, and placement rates and offering exceptional educational opportunities through highly specialized and advanced technical education and training in both emerging and traditional technologies. While it is not possible to predict the ultimate results, management believes that by focusing on these objectives, the College will remain strong and withstand economic uncertainties. Management will continue to maintain a close watch over its resources and expenses to ensure its ability to plan and react to future internal and external issues. 11
MANAGEMENT S DISCUSSION AND ANALYSIS _ (unaudited) _ Requests for Information Additional information or questions concerning any of the information provided can be requested from the Vice President of Finance at State Technical College of Missouri, One Technology Drive, Linn, MO 65051 or Jennv.Jacobs@statetechmo.edu. 12
BASIC FINANCIAL STATEMENTS
STATEMENTS OF NET POSITION JUNE 30, 2018 AND 2017 Assets Current Assets Cash Certificate of Deposit Accounts Receivable (Net) Related Party Accounts Receivable Accrued Interest Receivable Prepaid Expenses Inventory Total Current Assets Noncurrent Assets Restricted Assets Cash Capital Assets Depreciable, Net of Accumulated Depreciation Non-Depreciable Total Noncurrent Assets 2018 2017 $ 7,972,090 $ 7.751,410 997,483 345,029 1,000,000 887,301 483,097 370 57,068 364,400 66,753 287,573 $ 9,736,070 $ 10,476,504 1,581,356 4,773,923 45,711,059 42,168,404 1,189,489 2,332,798 $ 48,481,904 $ 49,275,125 Total Assets $ 58,217,974 $ 59,751,629 Deferred Outflows of Resources Deferred Outflows Related to Pensions Deferred Charge on Refunding Total Deferred Outflows of Resources Liabilities Current Liabilities Accounts Payable Related Party Accounts Payable Deposits Unearned Revenues Other Payables Retainage Payable Contracts Payable Deposits Held for Others Long-Term Liabilities - Current Portion Current Liabilities Payable from Restricted Assets Accrued Interest Payable Retainage Payable Total Current Liabilities 8,106,668 7,966,987 45,847 53,488 $ 8,152,515 $ 8,020,475 359,676 3,769 69,700 849,452 97,141 313,172 39,842 550,000 610,549 6,767 67,125 710,219 90,385 5,740 358,601 34,397 525,000 24,600 33,490 J 2,307,352 J 15,908 2,458,181 Noncurrent Liabilities Accrued Compensated Absences Revenue Bonds Total OPEB Liability Net Pension Liability Total Noncurrent Liabilities Total Liabilities 414,189 10,865,000 637,556 22,728,373 $ 34,645,118 $ 36,952,470 394,547 11,415,000 644,128 20,705,167 $ 33,158,842 $ 35,617,023 Deferred Inflows of Resources Deferred Inflows Related to OPEB Deferred Inflows Related to Pensions Total Deferred Inflows of Resources 17,276 649,978 184,948 $ 667,254 $ 184,948 Net Position Net Investment in Capital Assets Restricted Expendable Debt Service Unrestricted, (deficit) Total Net Position 37,021,505 31,847 (8,302,587) $ 28,750,765 37,270,633 28,594 (5,329,094) $ 31,970,133 See accompanying notes to financial statements. 13
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR THE YEARS ENDED JUNE 30, 2018 and 2017 Revenues Operating Revenues Student Tuition and Fees (Net of Scholarship Allowance of $2,467,065 and $1,985,514; and Bad Debt Expenses of $ 73,532 and $34,626) Government Grants and Contracts Federal State Nongovernmental Grants and Contracts Sales and Services of Educational Departments Auxiliary Activities (Net of Scholarship Allowance of $24,896 and $21,768) Pledged as Security for Revenue Bonds Other Operating Revenues Total Operating Revenues Expenses Operating Expenses Compensation and Employee Benefits Contractual Services Supplies and Materials Utilities Travel Communications Other Operating Expenses Scholarships arid Fellowships Depreciation and Amortization Total Operating Expenses 2018 2017 $ 7,354,891 $ 7,161,469 692,542 1,740,949 295,307 137,867. 2,458,584 253,571 $ 12,933,711 554,732 2,340,818 692,664 132,330 2,346,194 229,251 $ 13,457,458 15,420,170 1,251,184 3,133,376 678,999 134,241 380,342 934,816 720,291 2,720,168 14,558,543 1,903,844 2,887,580 619,995 136,168 269,883 976,121 734,492 2,714,466 $ 25,373,587 $ 24,801,092 Operating (Loss) $ (12,439,876) $ (11,343,634) Nonoperating Revenues (Expenses) State Appropriations Federal Grants State Grants Investment Income Interest Expense Total Nonoperating Revenues (Expenses) 5,594,194 2,575,244 314,254 86,305 (200,867) 5,833,132 2,056,065 367,873 21,983 (186,204) $ 8,369,130 $ 8,092,849 Gain (Loss) Before Other Revenues, Expenses Gains or Losses Other Revenues, Expenses, Gains or Losses Government Grants and Contracts Federal State Nongovernmental Grants and Contracts (Loss) on Disposal of Plant Assets Total Other Revenue, Expenses, Gains or Losses Increase (Decrease) in Net Position Net Position - Beginning of Year Adjustment Applicable to Prior Years Net Position - Beginning of Year, Restated Net Position - End of Year $ (4,070,746) 334,095 480,461 69,566 (32,744) $ 851,378 (3,219,368) 31,970,133 31,970,133 $ 28,750,765 $ (3,250,785) 584,201 533,894 215,985 (31,722) $ 1,302,358 (1,948,427) 33,998,688 (80,128) 33,918,560 $ 31,970,133 See accompanying notes to financial statements. 14
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2018 and 2017 2018 2017 Cash Flows from Operating Activities Student Tuition and Fees Government Grants and Contracts Auxiliary Activities Sales and Services of Educational Departments Other Operating Revenues Payments to Suppliers for Goods and Services Payments to Employees Payments for Scholarships and Fellowships Other Operating Expenses Amounts Provided to Students-Govemmental Student Loan Program Amounts Provided from Lenders Net Cash (Used) by Operating Activities Cash Flows from Noncapital Financing Activities State Appropriations State and Federal Grants, Gifts arid Contracts - Nonoperating Net Cash Provided by Noncapital Financing Activities Cash Flows from Capital and Related Financing Activities Government Grants and Contracts Nongovernmental Grants and Contracts Purchases of Capital Assets Proceeds from Capital Debt Principal Paid on Capital Debt Interest Paid on Capital Debt Net Cash Provided (Used) by Capital and Related Financing Activities Cash Flows from Investing Activities Proceeds from Maturity of Certificate of Deposit Interest on Investments Net Cash Provided (Used) by Investing Activities $ 7,490,855 2,593,574 2,492,315 137,867 253,571 (5,751,730) (13,086,698) (720,291) (934,816) (2,868,239) 2,868,239 $ 7,380,443 3,167,817 2,337,764 132,330 229,251 (5,793,707) (12,578,185) (734,492) (976,121) (2,401,615) 2,401,615 (7,525,353) (6,834,900) 5,594,194 5,833,132 2,889,498 2,423,938 8,483,692 8,257,070 814,556 47,066 (5,151,407) 1,118,095 43,485 (4,482,716) 5,100,000 (330,000) (160,011) (525,000) (202,116) (5,016,901) 1,288,853 1,000,000 86,675 21,860 1,086,675 21,860 Net Increase in Cash (2,971,887) 2,732,883 Cash Beginning of Year 12,525,333 9,792,450 Cash - End of Year $ 9,553,446 $ 12,525,333 See accompanying notes to financial statements. 15
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2018 and 2017 Reconciliation of Net Operating Revenues (Expenses) to Net Cash (Used) by Operating Activities Operating (Loss) Adjustments to Reconcile Operating (Loss) to Net Cash (Used) by Operating Activities Depreciation Expense and Amortization 2018 2017 $ (12,439,876) $ (11,343,634) 2,720,168 2,714,466 Changes in Assets and Liabilities Accounts Receivables (Net) Inventory Prepaid Expenses Deferred Outflows Related to Pensions Accounts Payable Deposits Unearned Revenues Accrued Compensated Absences Other Payables Deferred Inflows Related to Pensions Deferred Inflows Related to OPEB Net Pension Liability Contracts Payable Deposits Held for Others Total OPEB Liability Net Cash (Used) by Operating Activities $ 27,886 (76,827) 9,685 (139,681) (253,871) 2,575 139,234 19,642 6,756 465,030 17,276 2,023,206 (45,429) 5,445 (6,572) 194,354 (90,982) (39,975) (5,367,563) (196,704) 3,425. 12,765 24,828 (69,408) (78,320) 7,394,381 (12,968) 435 20,000 (7,525,353) $ (6,834,900) Noncash Transactions Noncash Capital Gifts Noncash Operating Gifts $ 22,500 $ 135,224 172,500 420,397 See accompanying notes to financial statements. 16
THE FOUNDATION FOR, INC. (A Nonprofit Component Unit of State Technical College of Missouri) STATEMENTS OF FINANCIAL POSITION JUNE 30, 2018 AND 2017 2018 Assets Cash and Cash Equivalents Certificate of Deposit Accounts Receivable Pledges Receivable Interest Receivable Prepaid Expenses Investments Total Assets Liabilities Accounts Payable Deferred Grant Revenue Total Liabilities Unrestricted Temporarily Restricted Permanently Restricted Total $ 39,879 83,051 $ 328,451 $ 8,403 $ 376,733 83,051 52,996 5,250 52,628 5,250 105,624 79 79 1,346 1,346 324,753 177,021 93,597 595,371 $ 500,758 $ 564,696 $ 102,000 $ 1,167,454 $ 329 $ 5,176 $ $ 5,505 25,000 25,000 25,329 5,176 30,505 Net Assets Total Net Assets Total Liabilities and Net Assets 475,429 559,520 102,000 1,136,949 475,429 559,520 102,000 1,136,949 $ 500,758 $ 564,696 $ 102,000 $ 1,167,454 2017 Assets Cash and Cash Equivalents Certificate of Deposit Pledges Receivable Interest Receivable Investments Property and Equipment, net Total Assets Unrestricted $ (6,626) 82,782 105,424 67 245,817 4,099 Temporarily Restricted $ 431,563 $ 423,453 Permanently Restricted Total $ 179,200 83,147 $ 5,526 $ 178,100 82,782 188,571 67 161,106 96,474 503,397 4,099 $ 102,000 $ 957,016 Liabilities Accounts Payable Deferred Grant Revenue Total Liabilities $ 2,209 $ 1,620 45,000 47,209 1,620 $ $ 3,829 45,000 48,829 Net Assets Total Net Assets Total Liabilities and Net Assets 384,354 421,833 384,354 421,833 $ 431,563 $ 423,453 102,000 908,187 102,000 908,187 $ 102,000 $ 957,016 See accompanying notes to financial statements. 17
THE FOUNDATION FOR, INC. (A Nonprofit Component Unit of State Technical College of Missouri) STATEMENTS OF ACTIVITIES 2018 Revenues, Gains, and Other Support Grants and Contributions Investment Income Net Assets Released from Restriction Total Revenues, Gains, and Other Support Unrestricted $ 351,824 13,776 120,439 Temporarily Restricted $ 246,454 $ 11,672 (120,439) _ Permanently Restricted Total $ 598,278 25,448 486,039 137,687 623,726 Expenses Program Services College Support Student Support Supporting Services Management and General Fundraising Services Total Expenses 257,289 55,550 46,879 35,246 394,964 257,289 55,550 46,879 35,246 394,964 Change in Net Assets 91,075 137,687 228,762 Net Assets, Beginning of Year 384,354 421,833 102,000 908,187 Net Assets, End of Year $ 475,429 $ 559,520 $ 102,000 $ 1,136,949 2017 Revenues, Gains, and Other Support Grants and Contributions Investment Income Net Assets Released from Restriction Total Revenues, Gains, and Other Support Unrestricted $ 736,505 16,195 220,218 972,918 Temporarily Restricted $ 94,411 $ 26,356 (220,218) _ (99,451) _ Permanently Restricted Total $ 830,916 42,551 873,467 Expenses Program Services College Support Student Support Supporting Services Management and General Fundraising Services Total Expenses 812,133 57,967 33,110 35,665 938,875 812,133 57,967 33,110 35,665 938,875 Change in Net Assets 34,043 (99,451) (65,408) Net Assets, Beginning of Year 350,311 521,284 102,000 973,595 Net Assets, End of Year $ 384,354 $ 421,833 $ 102,000 $ 908,187 See accompanying notes to financial statements. 18
THE FOUNDATION FOR, INC (A Nonprofit Component Unit of State Technical College of Missouri) STATEMENTS OF CASH FLOWS (INDIRECT METHOD) 2018 2017 Cash Flows from Operating Activities Increase (Decrease) in Net Assets $ 228,762 $ (65,408) Adjustments to Reconcile Change in Net Assets to Net Cash Provided (Used) by Operating Activities Depreciation (Gain)/Loss on Sale of Investments Decrease (Increase) in Accounts Receivable Pledges Receivable Interest Receivable Prepaid Expenses Accounts Payable Deferred Grant Revenue Total Adjustments 4,099 4,098 (14,237) (36,960) (5,250) 38,400 82,947 132,955 (12) (1,346) 1,676 3,211 (20,000) 20,000 47,877 161,704 Net Cash Provided (Used) by Operating Activities 276,639 96,296 Cash Flows From Investing Activities Purchase of Investments Purchase of Certificates of Deposit Proceeds from Sale of Investments (133,405) (269) 55,668 (338,983) (248) 296,976 Net Cash Provided (Used) by Investing Activities (78,006) (42,255) Net (Decrease) Increase in Cash and Cash Equivalents 198,633 54,041 Cash and Cash Equivalents - Beginning of Year 178,100 124,059 Cash and Cash Equivalents - End of Year $ 376,733 $ 178,100 Supplemental Disclosures of Cash Flows Information Cash paid during the year ended June 30, 2018 and 2017: Interest $ -0- Taxes $ -0- Noncash investing and financing transactions: During the years ended June 30, 2018 and 2017, the Foundation received donations of equipment valued at $157,724 and $592,897. The Foundation subsequently donated the equipment to State Technical College of Missouri. The Foundation also received donated services valued at $80,759 and $83,419 for the years ended June 30, 2018 and 2017. See accompanying notes to financial statements. 19
NOTES TO THE FINANCIAL STATEMENTS NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations: State Technical College of Missouri (the College) is a specialized public institution of higher education that offers the diverse population of Missouri associate degree level advanced technical education in both emerging and traditional technologies and supports economic development in the state. The College is located in Linn, Missouri with an additional location in St. Charles, Missouri. The College operates under the jurisdiction of a seven member Board of Regents, appointed by the governor and confirmed by the Senate of the State of Missouri. Major federally funded student financial aid programs in which the College participates include the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal College Work-Study, and Federal Direct Student Loans. The College extends unsecured credit to students. Reporting Entity: As defined by generally accepted accounting principles established by the Governmental Accounting Standards Board (GASB), the financial reporting entity consists of the primary government and its component unit. Component units are legally separate organizations for which the primary government is financially accountable or the nature and significance of their relationships with the primary government are such that exclusion would cause the primary government s financial statements to be misleading or incomplete. The Foundation for State Technical College of Missouri, Inc. (the Foundation) is considered a discretely presented component unit of the College. The Foundation is a legally separate, tax-exempt entity. The Foundation acts primarily as a fund-raising organization to supplement the resources that are available to the College in support of its programs and to provide scholarships to the students attending the College. The Board of the Foundation is self-perpetuating and consists of community members and friends of the College. Although the College does not control the timing, purpose, or amount of, receipts from the Foundation, the resources and income that the Foundation holds and invests, are restricted by the donors to activities of the College or for scholarships for students attending the College. Because these restricted resources held by the Foundation can only be used by, or for the benefit of the College or its students, the Foundation is considered a component unit of the College and is discreetly presented in the College s financial statements. The Foundation is a private nonprofit organization that reports under Financial Accounting Standards Board (FASB) standards. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. No modifications have been made to the Foundation s audited financial information as it is presented. In addition, the Foundation s significant notes are summarized in Note 18. Complete financial statements for the Foundation may be obtained by mailing a request to The Foundation for State Technical College of Missouri, Inc. Treasurer, One Technology Drive, Linn, MO 65051. The College is a component unit of the State of Missouri and is included in the basic financial statements of the State of Missouri. 20
NOTES TO THE FINANCIAL STATEMENTS NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont d.) Financial Statement Presentation: The financial statements of the College have been prepared on the accrual basis of accounting. Revenues are recognized when the exchange takes place, while those from government-mandated non-exchange transactions (principally federal and state grants and state appropriations) are recognized when all applicable eligibility requirements are met. Internal activity and balances are eliminated in preparation of the financial statements. Operating revenues and expenses include exchange transactions and program-specific, government-mandated non-exchange transactions. Government-mandated non-exchange transactions that are not program specific (such as state appropriations), investment income and interest on capital assets-related debt are included in nonoperating revenues and expenses. The College first applies restricted net assets when an expense or outlay is incurred for purposes for which both the restricted and unrestricted net asset are available. Use of Estimates: The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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 and Cash Equivalents: For purposes of the Statements of Cash Flows, the College considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Accounts Receivable: Accounts receivable consists of tuition and fee charges to students and auxiliary enterprise services provided to students, faculty, and staff. Accounts receivable also include amounts due from the Federal Government, state government, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the College s grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts. Inventory: Inventory consists of bookstore merchandise and consumable supplies. Inventories are stated at lower of cost or market. Cost is determined using the first in, first out (FIFO) method. Restricted Noncurrent Cash: Cash that is externally restricted to make debt service payments, maintain sinking or reserve funds, or to purchase or construct capital or other noncurrent assets, are classified as restricted noncurrent assets in the Statements of Net Position. Capital Assets: Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the College s capitalization policy includes all items with a unit cost of $5,000 or more and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense is incurred. Interest incurred on construction in progress is capitalized. The total amount of interest capitalized for the years ended June 30, 2018 and 2017 was $114,616 and $19,240 respectively. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 39 years for buildings, 5 to 39 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. 21