AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION JUNE 30, 2014
AUDITED FINANCIAL STATEMENTS JUNE 30, 2014 TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR S REPORT 1-2 FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION 3 STATEMENT OF ACTIVITIES 4 STATEMENT OF CASH FLOWS 5 STATEMENT OF FUNCTIONAL EXPENSES 6-7 NOTES TO FINANCIAL STATEMENTS 8 16 SUPPLEMENTAL INFORMATION INDEPENDENT AUDITOR S REPORT ON SUPPLEMENTAL INFORMATION 17 SCHEDULE OF STATE EARNINGS 18 SCHEDULE OF BED DAY AVAILABILITY PAYMENTS 19 SCHEDULE OF RELATED PARTY TRANSACTION ADJUSTMENTS 20 SCHEDULE OF PROGRAM/COST CENTER ACTUAL EXPENSES AND REVENUES 21-24 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 25 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 26 OTHER AUDITOR S REPORTS INDEPENDENT AUDITOR S 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 27-28 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM 29 30 AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 31 32
STATEMENT OF FINANCIAL POSITION JUNE 30, 2014 (With summarized financial information as of June 30, 2013) Summarized 2014 2013 ASSETS Current Assets Cash and cash equivalents $ 499,710 $ 1,115,480 Accounts receivable, net 2,516,730 2,058,901 Inventories 89,889 89,889 Prepaid expenses 284,870 266,371 Total Current Assets 3,391,199 3,530,641 Property, plant and equipment, net 4,542,060 4,938,119 Other assets Deposits 11,606 11,606 Other assets, net 78,630 53,463 Investment in CRI 601,018 601,018 Total Other Assets 691,254 666,087 TOTAL ASSETS $ 8,624,513 $ 9,134,847 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable $ 990,471 $ 629,319 Accrued liabilities 510,991 1,087,689 Capital leases - current portion 25,276 68,909 Notes payable - current portion 129,897 270,455 Total Current Liabilities 1,656,635 2,056,372 Capital leases - long-term portion - 17,014 Notes payable - long-term portion 3,093,052 2,704,920 Interest rate swap - 588,470 Total Liabilities 4,749,687 5,366,776 Net Assets Unrestricted 3,871,455 3,754,571 Temporarily restricted 3,371 13,500 Total Net Assets 3,874,826 3,768,071 TOTAL LIABILITIES AND NET ASSETS $ 8,624,513 $ 9,134,847 The accompanying notes are an integral part of these financial statements. -3-
STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2014 (With summarized financial information for the year ended June 30, 2013) Summarized 2014 2013 Changes in Unrestricted Net Assets: Public Support and Revenues: Federal and state awards and grants $ 13,194,478 $ 14,000,917 Other county and local awards and grants 1,167,019 1,297,692 Contributions 137,878 474,083 Client fees 227,096 358,394 Other insurance 131,031 351,519 Medicaid 1,023,145 1,283,715 Medicare 58,502 56,960 Interest 342 91 Other 325,292 49,624 Total Public Support and Revenues 16,264,783 17,872,995 Net Assets Released from Restrictions: Satisfaction of Restrictions 13,500 52,593 Total Unrestricted Revenues 16,278,283 17,925,588 Expenses: Program Services: Assessment - 169,487 Case Management 285,992 885,983 Crisis Support 692,768 722,418 Crisis Stabilization 3,182,985 3,005,459 Florida Assertive Community Treatment 4,377,235 4,911,768 In Home/On Site 206,739 308,926 Intervention 98,528 96,944 Outpatient 1,684,219 1,176,183 Outpatient medical 1,707,193 2,267,744 Outreach 244,253 214,624 Prevention 245,989 258,133 Residential level II 1,466,491 1,842,484 Residential level IV 95,385 94,261 Behavioral Health Fee 98,102 196,718 Administration 1,794,790 2,025,471 Other Support Costs 25,000 23,361 Total Expenses 16,205,669 18,199,964 (Decrease) Increase in Unrestricted Net Assets 72,614 (274,376) Changes in Temporarily Restricted Net Assets: Contributions 3,371 25,743 Assets released from restriction (13,500) (52,593) (Decrease) Increase in Temporarily Restricted Net Assets (10,129) (26,850) Change in net assets before swap adjustment 62,485 (301,226) Change in fair value of interest rate swap 44,270 223,108 Net Assets at beginning of year 3,768,071 3,846,189 Net Assets at End of Year $ 3,874,826 $ 3,768,071 The accompanying notes are an integral part of these financial statements. -4-
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2014 (With summarized financial information for the year ended June 30, 2013) Summarized 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets before swap adjustment $ 62,485 $ (301,226) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 421,999 479,900 Noncash contributions - (462,000) (Increase) Decrease in assets: Accounts receivable (457,829) (121,830) Inventories - (4,097) Prepaid expenses (18,499) (18,043) Other current assets (25,167) - Increase (Decrease) in liabilities: Accounts payable 361,152 (40,562) Accrued liabilities (576,698) 308,369 Net cash used by operating activities (232,557) (159,489) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (25,941) (11,278) Net cash used by investing activities (25,941) (11,278) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on long-term debt and swap (296,626) (250,906) Payments on capital lease obligations (60,646) (59,858) Net cash used by financing activities (357,272) (310,764) Net change in cash and cash equivalents (615,770) (481,531) Cash and cash equivalents at beginning of year 1,115,480 1,597,011 Cash and cash equivalents at end of year $ 499,710 $ 1,115,480 SUPPLEMENTAL CASH FLOW DISCLOSURES Interest paid $ 203,406 $ 267,170 Non-cash financing transactions: During 2013, the Organization refinanced long term debt. The total amount of the new debt was $3,240,000. The accompanying notes are an integral part of these financial statements. -5-
STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2014 (With summarized financial information for the year ended June 30, 2013) Program Services Case Crisis Case Management Support Stabilization FACT PERSONNEL SERVICES: Salaries and wages $ 156,773 $ 453,892 $ 1,779,138 $ 2,186,056 Fringes 46,757 117,402 359,930 457,633 Total personnel services 203,530 571,294 2,139,068 2,643,689 OTHER EXPENSES: Building occupancy 23,927 20,354 131,679 220,871 Professional services 2,613 7,144 338,296 130,195 Travel 1,273 95 563 5,895 Equipment costs 7,821 17,713 86,728 196,965 Food service 9 2 59,885 193 Medical and pharmacy 115 201 89,714 2,005 Subcontracted services 3,405 7,961 43,410 46,005 Insurance 1,824 23,616 61,417 85,333 Interest 2,146 6,438 31,960 37,011 Operating supplies and expenses 37,209 13,383 81,271 935,825 Depreciation 2,120 24,567 118,994 73,248 Total other expenses 82,462 121,474 1,043,917 1,733,546 TOTAL $ 285,992 $ 692,768 $ 3,182,985 $ 4,377,235
Outpatient IHOS Intervention Outpatient Medical Outreach Prevention $ 117,673 $ 54,306 $ 939,684 $ 944,918 $ 157,634 $ 157,473 25,035 17,579 227,377 159,661 31,283 37,813 142,708 71,885 1,167,061 1,104,579 188,917 195,286 21,479 7,144 80,468 31,826 11,292 19,482 1,902 905 42,826 106,215 2,243 2,257 6,604 3,138 11,758 16,314 1,655 1,251 5,092 2,328 55,983 43,246 10,315 6,207 34 22 108 43 90 27 5,281 38 81,877 107,380 276 43 3,607 3,977 22,458 155,056 739 2,574 7,663 3,637 59,370 18,689 3,543 6,642 1,562 743 16,620 16,756 1,842 1,854 6,825 2,803 102,021 78,759 20,784 6,577 3,982 1,908 43,669 28,330 2,557 3,789 64,031 26,643 517,158 602,614 55,336 50,703 $ 206,739 $ 98,528 $ 1,684,219 $ 1,707,193 $ 244,253 $ 245,989 The accompanying notes are an integral part of these financial statements. -6-
STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2014 (With summarized financial information for the year ended June 30, 2013) Program Services Residential Residential Behavioral Health Level II Level IV Fee PERSONNEL SERVICES: Salaries and wages $ 717,400 $ 2,072 $ - Fringes 171,556 501 - Total personnel services 888,956 2,573 - OTHER EXPENSES: Building occupancy 112,743 24,496 - Professional services 20,969 870 - Travel 1,080 13 - Equipment costs 52,428 4,870 - Food service 82,482 - - Medical and pharmacy 1,777 12 - Subcontracted services 5,641 286 - Insurance 52,976 52 - Interest 76,936 20,939 - Operating supplies and expenses 67,632 25,310 98,102 Depreciation 102,871 15,964 - Total other expenses 577,535 92,812 98,102 TOTAL $ 1,466,491 $ 95,385 $ 98,102
Summarized Financial Information Support Services 2014 2013 Total Other Total Total Program Support Costs Administration Agency Agency $ 7,667,019 $ - $ 1,411,080 $ 9,078,099 $ 10,243,074 1,652,527-206,626 1,859,153 2,129,041 9,319,546-1,617,706 10,937,252 12,372,115 705,761-7 705,768 601,310 656,435 25,000 50,936 732,371 1,298,575 49,639-6,170 55,809 92,002 489,696-16,591 506,287 420,149 142,895-4 142,899 170,190 288,719-1,181 289,900 287,815 295,119 - - 295,119 106,653 324,762 - (1,153) 323,609 238,045 214,807-58,268 273,075 256,936 1,476,501-45,080 1,521,581 1,882,215 421,999 - - 421,999 473,959 5,066,333 25,000 177,084 5,268,417 5,827,849 $ 14,385,879 $ 25,000 $ 1,794,790 $ 16,205,669 $ 18,199,964 The accompanying notes are an integral part of these financial statements. -7-
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND PURPOSE Coastal Behavioral Healthcare, Inc. ( the Organization ), is a not-for-profit Organization that provides comprehensive mental health and substance abuse services to the community of Sarasota and neighboring counties. The Organization has offices in Sarasota, North Port, North Fort Myers, Punta Gorda, and Arcadia, Florida. BASIS OF ACCOUNTING The financial statements of the Organization have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables and other liabilities. The Organization follows standards of accounting and financial reporting prescribed for voluntary health and welfare agencies. Federal, State, local government and other public grants are recorded as support when performance occurs under the terms of the grant agreement. The costs of providing the various programs and other activities have been detailed in the statement of functional expenses and summarized on a program basis in the Statement of Activities. Salaries and other expenses which are associated with a specific program are charged directly to that program. Salaries and other expenses which benefit more than one program are allocated to the various programs based on the relative benefit provided. Administrative expenses are allocated to the various programs based on the relevant program s costs to the total. FINANCIAL STATEMENT PRESENTATION Financial statement presentation follows the recommendations of the Financial Accounting Standards Board (FASB) in the Accounting Standards Codification (ASC) as it relates to financial statements of not-for-profit organizations. The Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets, as applicable. CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows, the Organization considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. FAIR VALUE MEASUREMENTS - The FASB established 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 measurement) and the lowest priority to unobservable inputs (level 3 measurement). The levels of the fair value hierarchy used to measure fair value 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 Organization has the ability to access. - 8
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED FAIR VALUE MEASUREMENTS CONTINUED 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 Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. ACCOUNTS RECEIVABLE Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a provision based on its assessment of the current status of individual accounts and contracts. Balances that are still outstanding after management has used reasonable collection efforts are written off. PROPERTY AND EQUIPMENT The Organization capitalizes major additions of property and equipment with a value of $500 or greater and which have an estimated useful life of greater than one year. Property and equipment are recognized at cost when purchased. Donations of property and equipment are recorded as support at their estimated fair value on the date of donation. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Organization reclassifies temporarily restricted net assets to unrestricted net assets at that time. Property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets ranging from two (2) to thirty-one (31) years. FINANCING COSTS The costs of obtaining debt is deferred and amortized on a straight line basis over the term of the related debt. Amortization of the financing costs for the year ended June 30, 2014 were $5,940. Future amortization for the next five years is expected to be $5,940 annually. - 9 -
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED CONTRIBUTIONS AND RECOGNITION OF DONOR RESTRICTIONS The Organization accounts for contributions received as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. DONATED SERVICES The Organization receives donated services from time to time. No objective basis is available to measure the value of such services and these hours do not meet the requirements to be recorded as revenue and expenses under accounting principles generally accepted in the United States of America. CHARITY CARE The Organization is paid for services to clients who have no third party coverage on a sliding fee schedule based on federal poverty guidelines. This results in a significant amount of service at reduced or no charges. Because the Organization does not pursue collection of accounts determined to qualify as Charity Care, these amounts are not recorded as revenue. The Organization determines the costs of providing charity care by calculating a ratio of cost to gross charges and then multiplying that ratio by the gross uncompensated charges associated with providing charity care services. During 2014, the costs associated with providing charity care services were $8,379,649. The Organization received $6,189,407 in grant and contractual funding to offset its costs for providing charity care to patients. MEDICARE The Organization is paid for services on an outpatient basis to eligible beneficiaries based on a fee-for-service agreement. Any resulting contractual adjustments in amounts billed are reflected as adjustments to income. MEDICAID The Organization is paid for services to eligible beneficiaries on a fee-for-service or capitated basis. Any resulting contractual adjustments in amounts billed are reflected as adjustments to income. GRANT REVENUE - The Organization receives a substantial amount of its revenue in the form of Federal, State and local grants and contracts. The Organization recognizes revenue either based on the terms of the contract service period or to the extent that expenses have been incurred and the resulting revenue earned. ADVERTISING COSTS - Advertising costs are expensed as incurred. For the year ended June 30, 2014 advertising expense totaled $8,292. - 10
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED SUMMARIZED FINANCIAL INFORMATION - The financial statements include certain prior-year summarized comparative information in the financial statements and notes to the financial statements. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Organization s financial statements and notes for the year ended June 30, 2013, from which the summarized information was derived. INCOME TAXES The Organization is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. The Organization is not a private foundation. Accordingly, no provision has been made for income taxes in the accompanying financial statements. The Organization applies guidance issued by the FASB on accounting for uncertainty in tax positions. Management believes the Organization has no material uncertain tax positions, including any potential loss of its tax exempt status. The Organization has no ongoing federal, state or local tax audits; however, the Organization s tax returns for the past three fiscal years remain open to examination. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following at June 30, 2014: Land $ 276,328 Buildings 7,187,960 Leasehold improvements 1,359,002 Furniture/Fixtures/Equipment 4,339,941 Vehicles 860,505 14,023,736 Less accumulated depreciation (9,481,676) Net Property and Equipment $ 4,542,060 The depreciation expense for the year ended June 30, 2014 was $421,999. The Organization has certain facilities and property used in the course of providing services to the community. Should the Organization cease to occupy or utilize these facilities and/or properties, these facilities and properties would be subject to certain obligations pursuant to grant or contractual agreements. - 11 -
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 NOTE 3 - LONG TERM DEBT Long-term debt at June 30, 2014, consisted of the following: Term loan payable to a bank in monthly installments of principal and interest of $21,422 at a rate of 4.95%, maturing December 2033. $ 3,192,058 Note payable to bank in monthly installments of principal and interest of $3,160 at a rate of 5%, maturing April 2015. This note is collateralized by modular unit recorded in buildings at a carrying value of $123,438. 30,891 Total 3,222,949 Less Current Portion (129,897) Long-Term Debt $ 3,093,052 The future scheduled maturities of long-term debt are as follows: Year ending June 30: 2015 $ 129,897 2016 104,094 2017 109,443 2018 115,067 2019 120,980 Thereafter 2,643,468 $ 3,222,949 In June 2007, the Organization entered into a $4,000,000 term loan agreement. The term loan was used to pay off existing debt. The term loan was set to mature June 24, 2022, and carried a variable rate of interest at the 1-month LIBOR rate plus 1.6%. The Organization entered into an interest rate swap agreement to effectively fix the interest rate on the term loan at 7.45%. The loan was secured by a portion of the Organization s real property assets as defined in the loan agreement. This term loan was refinanced in fiscal year 2014 as described below. During 2013, the Organization and financial institution entered into a forbearance agreement regarding the $4,000,000 term loan agreement. The forbearance agreement outlines terms in which the financial institution may agree to forbear from exercising its rights under the existing loan document due to existing defaults. The forbearance expires the earlier of January 31, 2014 or the occurrence of a default under the loan or forbearance agreement, other than existing defaults. The interest rate on the current outstanding debt will be modified as defined in the note equivalent to the 1 month LIBOR rate plus 4.6%. There were no changes in scheduled principal and interest payments and the terms of the interest rate swap agreement remain in effect. In addition, the forbearance agreement contained other affirmative covenants the Organization is to comply with. - 12
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 NOTE 3 - LONG TERM DEBT - CONTINUED On December 23, 2013, the Organization entered into a new loan agreement with a new financial institution. The new loan agreement refinanced the $4,000,000 term note as described above. As a result, the old term note and forbearance agreement described above have been terminated. The refinancing loan also terminated the interest rate swap. The refinanced loan is in the amount of $3,240,000. Interest is fixed at 4.95% per annum for the first five years of the loan. After year five the interest rate will reset and be no less than 4.95% and no greater than 8.25% per annum. The note will mature in ten years and is based on a twenty year amortization. The loan is secured by a portion of the Organization s real property assets as defined in the loan agreement. The note includes certain covenants, including financial covenants: debt service coverage ratio of 1.00 times measured annually; maintain a minimum tangible net assets of $3,000,000; and a maximum liability to tangible net assets ratio not exceeding 2.0. At June 30, 2014, the Organization was in compliance with the covenants. Interest Rate Swap To hedge its interest rate risk, and reduce exposure to adverse fluctuations in interest rates, the Organization entered into an interest rate swap agreement (swap) with Wells Fargo, N.A. on the $4,000,000 term loan. The purpose was to fix the interest rate on the Organization s variable rate loan. The underlying index on the interest rate swap agreement is the USD/LIBOR one month rate and the fixed rate is 7.45%. As noted above, the interest rate swap agreement was terminated in connection with the refinancing agreement. NOTE 4 CAPITAL LEASE OBLIGATIONS The Organization has entered into capital lease arrangements for the purchase of various equipment and furniture. The capital leases are collateralized by equipment and furniture acquired under the agreements. The assets are recorded at cost in the accompanying financial statements, and totaled $113,985 at June 30, 2014. Accumulated depreciation amounted to $12,062. Future minimum lease payments under the capital lease agreements are as follows: Year ending June 30, 2015: Total minimum lease payments $ 25,790 Less amount representing interest (514) Present value of net minimum lease payments 25,276 Less current maturities (25,276) Capital lease obligations, net of current portion $ -0- - 13
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 NOTE 5 - OPERATING LEASES The Organization has operating leases primarily for various facilities and equipment, which expire at various dates through 2016. Rental expense for facilities was $210,226 for 2014. Rental expense for equipment was $182,423 for 2014. The following represents future minimum lease payments under operating leases that have remaining terms in excess of one year as of June 30, 2014 in the aggregate and for each of the remaining fiscal years: Year Ending June 30, Equipment Facilities Total 2015 $ 170,652 $ 163,744 $ 334,396 2016 $ 141,375 $ 67,600 $ 208,975 2017 $ 21,609 $ 67,600 $ 89,209 2018 $ -0- $ 67,600 $ 67,600 2019 $ -0- $ 28,167 $ 28,167 NOTE 6 CONCENTRATION OF CREDIT RISK Cash accounts at banks are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 for the current year. At times throughout the year, the Organization s cash balances may exceed insured limits. At June 30, 2014, cash deposits exceeded FDIC limits by $303,220. Management believes that it is not exposed to any significant credit risk on cash and cash equivalents. The Organization grants credit without collateral to its patients. A significant portion consists of local residents who may be insured under third-party payor agreements. However, receivables have been recorded at the amount management expects to collect. The reserve for uncollectible amounts was $3,137,034 as of June 30, 2014. The reserve is based on historical collections and management s estimate of the amount to be collected based on currently known facts. Due to inherent variability in this area, there is at least a reasonable possibility that recorded estimates will change by a material amount in the near term. The mix of receivables expected to be collected from patients and third-party payers, net of reserves, at June 30, 2014 were as follows: Total Medicare and Medicaid 69% Private Insurance 23% Self Pay 8% NOTE 7 - INVESTMENT - CRI During July 2001, the Organization entered into a joint venture with Renaissance Manor, Inc. ( Renaissance ) and formed Coastal Renaissance Behavioral Health Services, Inc. ( CRI ). The Organization s interest in the joint venture is 50%. The Organization purchased land and buildings jointly with Renaissance which are shown on the statement of financial position as the Organization s Investment in CRI. The debt associated with the land and buildings is included in its net investment in CRI. - 14
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 NOTE 7 - INVESTMENT CRI - CONTINUED The following is a summary of 100% of the total assets, liabilities, and equity in the joint venture (results of operations is not material): Total Assets $ 1,202,036 Total Liabilities -0- Total Net Assets $ 1,202,036 NOTE 8 - SUPPORT FROM THE STATE OF FLORIDA WHICH REQUIRED MATCH During the year ended June 30, 2014, the Organization received support from the State of Florida, Department of Children and Families through Central Florida Behavioral Health Network, Inc. The income from these contracts is earned by providing services to patients. The contracts require a twenty-five percent local match for certain services. The Organization incurred and funded allowable program costs in excess of the required match during 2014. NOTE 9 - RETIREMENT PLANS The Organization has both a contributory and non-contributory defined contribution retirement plan, which covers eligible employees after one year of continuous full time employment. The Organization contributes a discretionary amount as approved by the Board of Directors each year. For 2014, no discretionary contribution was made by the Organization. NOTE 10 - COMMITMENTS AND CONTINGENCIES Insurance The Organization s current windstorm insurance policy contains various deductible clauses for named hurricanes and for other wind damage. The Organization s buildings are insured with a value of $9,067,237. As a result, the Organization s potential exposure for claims for a named hurricane would be $453,361. The Organization purchases professional and general liability insurance to cover medical malpractice claims. There are known claims and incidents that may result in the assertion of additional claims, as well as claims from unknown incidents that may be asserted arising from services provided to patients. Management is not aware of any pending claims in excess of insured amounts. Consequently, no provisions for any uninsured risks have been made. Self-Insured Health Plan The Organization participates in a self-insurance health program which pays claims on behalf of participating employees with stop-loss insurance policy for large claims over $90,000. The Organization has recorded provisions for estimated claims, which are based on the historical experience. - 15 -
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 NOTE 10 - COMMITMENTS AND CONTINGENCIES - CONTINUED The provision for estimated insurance deductibles for medical claims includes estimates of the ultimate costs for both reported claims and claims incurred but not reported. As noted above, the Organization purchased a stop-loss policy (re-insurance) to cover excessive medical claims. There are known claims and incidents that may result in the assertion of additional claims, as well as claims from unknown incidents that may be asserted arising from medical services provided to employees, which have been accrued for. Management is not aware of any pending claims in excess of insured amounts. Consequently, no provisions for any uninsured risks have been made. Public Support The Organization receives a significant amount of its income from public support through grants and contracts, which provide for reimbursement of actual costs incurred. These grants and contracts are subject to year-end adjustment and audit and retroactive adjustment by third-party payors. All known adjustments, affecting such grants and contracts, have been provided for in the financial statements. The ability to continue operating at the current level of service if the grants or contracts were lost or cancelled, is dependent upon the Organization s ability to generate other unrestricted revenue sources. The Organization from time to time is also involved in litigation arising in the course of business. After consultation with legal counsel, management estimates that any such matters will be either resolved without material adverse effect on the Organization s future financial position, or are too early in the process to evaluate the likelihood of an outcome. However, depending on the above and timing of such resolution, an unfavorable outcome of some or all of these matters could materially affect the Organization s future results of operations or cash flows in a particular period. NOTE 11 - TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes at June 30, 2014: Contributions $ 3,371 NOTE 12 - SUBSEQUENT EVENTS The Organization has evaluated subsequent events through December 19, 2014 which is the date the financial statements were available to be issued. - 16 -
SUPPLEMENTAL INFORMATION
SCHEDULE OF STATE EARNINGS FOR THE YEAR ENDED JUNE 30, 2014 Total Expenditures $ 16,205,669 Less other State and Federal funds (470,136) Less non-match SAMH funds (7,846,843) Less unallowable costs per 65-E14, FAC (25,000) Total Allowable Expenditures (Sum of lines 1,2,3, and 4) 7,863,690 Maximum Available Earnings (Line 5 times 75%) 5,897,768 Amount of State Funds Requiring Match 5,758,707 Amount Due to Department (Subtract line 7 from line 6. If negative, the amount of the difference is due the department up to the amount of line 7). $ - -18-
SCHEDULE OF BED-DAY AVAILABILITY PAYMENTS FOR THE YEAR ENDED JUNE 30, 2014 Total Units of service paid for by Total units 3rd party Maximum # Amount of service contracts of units paid for Maximum State provided Local Govt. or eligible for Services $ Value Amount Cost Contracted (# of licensed other State payment by by the of units owed to Program Center Rate Beds X Days) Agencies Department Department in column F Department (G-H or $-0- whichever (D - E) (F x C) is greater) A B C D E F G H I AMH Crisis Stabilization $ 305.09 12,775 3259 9516 $ 2,304,419 $ 2,903,236 $ - -19-
SCHEDULE OF RELATED PARTY TRANSACTION ADJUSTMENTS FOR THE YEAR ENDED JUNE 30, 2014 THERE WERE NO RELATED PARTY TRANSACTIONS DURING THE YEAR ENDED JUNE 30, 2014. -20-
SCHEDULE OF PROGRAM/COST CENTER ACTUAL EXPENSES AND REVENUES FOR THE YEAR ENDED JUNE 30, 2014 Case Crisis Crisis EXPENSE CATEGORIES Management Support Stabilization FACT PERSONNEL EXPENSES Salaries $ 156,773 $ 453,892 $ 1,779,138 $ 2,186,056 Fringe benefits 46,757 117,402 359,930 457,633 Total personnel expenses 203,530 571,294 2,139,068 2,643,689 OTHER EXPENSES Building occupancy 23,927 20,354 131,679 220,871 Professional services 2,613 7,144 338,296 130,195 Travel 1,273 95 563 5,895 Equipment costs 7,821 17,713 86,728 196,965 Food service 9 2 59,885 193 Medical and pharmacy 115 201 89,714 2,005 Subcontracted services 3,405 7,961 43,410 46,005 Insurance 1,824 23,616 61,417 85,333 Interest 2,146 6,438 31,960 37,011 Operating supplies and expenses 37,209 13,383 81,271 935,825 Depreciation 2,120 24,567 118,994 73,248 TOTAL PERSONNEL & OTHER EXPENSES 285,992 692,768 3,182,985 4,377,235 DISTRIBUTED INDIRECT COSTS Administration 24,091 113,214 452,897 545,159 Other support costs 498 1,216 5,559 7,671 TOTAL DISTRIBUTED INDIRECT COSTS 24,589 114,430 458,456 552,830 TOTAL ACTUAL OPERATING EXPENSES 310,581 807,198 3,641,441 4,930,065 UNALLOWABLE COSTS 498 1,216 5,559 7,671 TOTAL ALLOWABLE OPERATING EXPENSES $ 310,083 $ 805,982 $ 3,635,882 $ 4,922,394 CAPITAL EXPENDITURES $ 94 $ 132 $ 8,987 $ 900
Outpatient IHOS Intervention Outpatient Medical Outreach Prevention $ 117,673 $ 54,306 $ 939,684 $ 944,918 $ 157,634 $ 157,473 25,035 17,579 227,377 159,661 31,283 37,813 142,708 71,885 1,167,061 1,104,579 188,917 195,286 21,479 7,144 80,468 31,826 11,292 19,482 1,902 905 42,826 106,215 2,243 2,257 6,604 3,138 11,758 16,314 1,655 1,251 5,092 2,328 55,983 43,246 10,315 6,207 34 22 108 43 90 27 5,281 38 81,877 107,380 276 43 3,607 3,977 22,458 155,056 739 2,574 7,663 3,637 59,370 18,689 3,543 6,642 1,562 743 16,620 16,756 1,842 1,854 6,825 2,803 102,021 78,759 20,784 6,577 3,982 1,908 43,669 28,330 2,557 3,789 206,739 98,528 1,684,219 1,707,193 244,253 245,989 20,097 15,623 212,938 217,142 26,749 26,135 362 172 2,947 2,979 427 430 20,459 15,795 215,885 220,121 27,176 26,565 227,198 114,323 1,900,104 1,927,314 271,429 272,554 362 172 2,947 2,979 427 430 $ 226,836 $ 114,151 $ 1,897,157 $ 1,924,335 $ 271,002 $ 272,124 $ 23 $ 18 $ 2,715 $ 245 $ 30 $ 30-21-
SCHEDULE OF PROGRAM/COST CENTER ACTUAL EXPENSES AND REVENUES FOR THE YEAR ENDED JUNE 30, 2014 Residential Residential Behavioral Health EXPENSE CATEGORIES Level II Level IV Fee PERSONNEL EXPENSES Salaries $ 717,400 $ 2,072 $ - Fringe benefits 171,556 501 - Total personnel expenses 888,956 2,573 - OTHER EXPENSES Building occupancy 112,743 24,496 - Professional services 20,969 870 - Travel 1,080 13 - Equipment costs 52,428 4,870 - Food service 82,482 - - Medical and pharmacy 1,777 12 - Subcontracted services 5,641 286 - Insurance 52,976 52 - Interest 76,936 20,939 - Operating supplies and expenses 67,632 25,310 98,102 Depreciation 102,871 15,964 - TOTAL PERSONNEL & OTHER EXPENSES 1,466,491 95,385 98,102 DISTRIBUTED INDIRECT COSTS Administration 128,395 12,350 - Other support costs 2,572 167 - TOTAL DISTRIBUTED INDIRECT COSTS 130,967 12,517 - TOTAL ACTUAL OPERATING EXPENSES 1,597,458 107,902 98,102 UNALLOWABLE COSTS 2,572 167 - TOTAL ALLOWABLE OPERATING EXPENSES $ 1,594,886 $ 107,735 $ 98,102 CAPITAL EXPENDITURES $ 12,752 $ 16 $ -
Total For All State Designated Other Total Cost Centers Support Costs Administration Agency $ 7,667,019 $ - $ 1,411,080 $ 9,078,099 1,652,527-206,626 1,859,153 9,319,546-1,617,706 10,937,252 705,761-7 705,768 656,435 25,000 50,936 732,371 49,639-6,170 55,809 489,696-16,591 506,287 142,895-4 142,899 288,719-1,181 289,900 295,119 - - 295,119 324,762 - (1,153) 323,609 214,807-58,268 273,075 1,476,501-45,080 1,521,581 421,999 - - 421,999 14,385,879 25,000 1,794,790 16,205,669 1,794,790 - (1,794,790) - 25,000 (25,000) - - 1,819,790 (25,000) (1,794,790) - 16,205,669 - - 16,205,669 25,000 - - 25,000 $ 16,180,669 $ - $ - $ 16,180,669 $ 25,942 $ - $ - $ 25,942-22-
SCHEDULE OF PROGRAM/COST CENTER ACTUAL EXPENSES AND REVENUES FOR THE YEAR ENDED JUNE 30, 2014 Case Crisis Crisis FUNDING SOURCES AND REVENUES Management Support Stabilization FACT TOTAL STATE SAMH FUNDING CFBHN $ 144,074 $ 941,478 $ 2,499,739 $ 4,868,098 Total SAMH Funding 144,074 941,478 2,499,739 4,868,098 OTHER GOVERNMENT FUNDING Other State Agency Funding - - - - Medicaid 63,871-175,276 - Local Government - 80,000 994,350 - Federal Grants and Contracts - - - - Total Other Government Funding 63,871 80,000 1,169,626 - ALL OTHER REVENUES 1st & 2nd Party Payments 2,349-58,232-3rd Party Payments (except Medicare) - - 91,243 - Medicare 60 - - - Contributions and Donations - - - 25 Other - - - - In-kind 6,852 - - 47,108 Total All Other Revenues 9,261-149,475 47,133 TOTAL ACTUAL FUNDING $ 217,206 $ 1,021,478 $ 3,818,840 $ 4,915,231
Outpatient IHOS Intervention Outpatient Medical Outreach Prevention $ 149,333 $ 141,014 $ 1,488,904 $ 899,181 $ 211,605 $ 228,666 149,333 141,014 1,488,904 899,181 211,605 228,666 - - - - - - 15,281-373,923 394,794 - - - - - 92,669 - - - - - 470,136 - - 15,281-373,923 957,599 - - 9,733-26,241 19,200 - - - - 9,324 25,086 - - - - 9,500 48,942 - - - - - 151 22,655 115 - - - - - - 6,852-11,991 5,995 7,666 6,852 16,585-57,056 99,374 30,321 6,967 $ 181,199 $ 141,014 $ 1,919,883 $ 1,956,154 $ 241,926 $ 235,633-23-
SCHEDULE OF PROGRAM/COST CENTER ACTUAL EXPENSES AND REVENUES FOR THE YEAR ENDED JUNE 30, 2014 Residential Residential Behavioral Health FUNDING SOURCES AND REVENUES Level II Level IV Fee TOTAL STATE SAMH FUNDING CFBHN $ 1,152,250 $ - $ - Total SAMH Funding 1,152,250 - - OTHER GOVERNMENT FUNDING Other State Agency Funding - - - Medicaid - - - Local Government - - - Federal Grants and Contracts - - - Total Other Government Funding - - - ALL OTHER REVENUES 1st & 2nd Party Payments - 111,341-3rd Party Payments (except Medicare) 5,378 - - Medicare - - - Contributions and Donations - - - Other - - - In-kind - - - Total All Other Revenues 5,378 111,341 - TOTAL ACTUAL FUNDING $ 1,157,628 $ 111,341 $ -
Total For All State Designated Other Total Cost Centers Support Costs Administration Agency $ 12,724,342 $ - $ - $ 12,724,342 12,724,342 - - 12,724,342 - - - - 1,023,145 - - 1,023,145 1,167,019 - - 1,167,019 470,136 - - 470,136 2,660,300 - - 2,660,300 227,096 - - 227,096 131,031 - - 131,031 58,502 - - 58,502 22,946-24,987 47,933 - - 325,634 325,634 93,316 - - 93,316 532,891-350,621 883,512 $ 15,917,533 $ - $ 350,621 $ 16,268,154-24-
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2014 Federal/State Agency CFDA/ Contract/Entity Federal/ Pass-Through Entity CSFA Identifying State Transfers to Federal Program/State Project Number Number Expenditures Subrecipients U.S. Department of Health and Human Services Direct Program Substance Abuse and Mental Health Services-Projects of Regional and National Significance 93.243 5H79SM059621 $ 470,136 $ - Indirect Programs Passed through Central Florida Behavioral Health Network, Inc. Children's Health Insurance Program 93.767 CF1258-1001 315,160 - Medical Assistance Program 93.778 CF1258-1001 1,056,077 - Block Grants for Community Mental Health Services 93.958 CF1258-1001 963,809 - Block Grants for Prevention and Treatment of Substance Abuse 93.959 CF1258-1001 475,109 - Total U.S. Department of Health and Human Services 3,280,291 - TOTAL EXPENDITURES OF FEDERAL AWARDS 3,280,291 - -25-
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2014 Notes: (1) The Schedule of Expenditures of Federal Awards includes federal and state grant activity presented on the accrual basis of accounting. However, the information in this schedule is in accordance with OMB Circular A-133, Audits of States and Local Governments. Therefore, some amounts presented in this schedule may be different from amounts presented in, or used in the preparation of the basic financial statements. (2) No federal awards were expended in non-cash assistance. -26-
OTHER AUDITOR S REPORT
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2014 SECTION I - SUMMARY OF AUDITOR S RESULTS Financial Statements Type of auditor s report issued: Unmodified Internal Control over financial reporting: Material weakness(es) identified? No Significant deficiency(ies) identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weakness(es) identified? No Significant deficiency(ies) identified that are not considered to be material weakness(es)? None reported Type of auditor s report issued on compliance for major programs: Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A-133? Unmodified No Identification of Major Federal Programs: CFDA Number Children s Health Insurance Program 93.767 Medical Assistance Program 93.778-31
SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2014 SECTION I - SUMMARY OF AUDITOR S RESULTS - CONTINUED Dollar threshold used to distinguish between type A and type B programs: $300,000 Auditee qualified as low-risk auditee? Yes SECTION II FINANCIAL STATEMENT FINDINGS None Reported PRIOR YEAR AUDIT FINDINGS None Reported SECTION III - FINDINGS AND QUESTIONED COSTS FEDERAL PROGRAM None reported. - 32 -