ADDENDUM NO. 1 ISSUE DATE: 3/8/2017 FSCJ ITB NUMBER: 2017C-35 FSCJ BID TITLE: 3rd Party Financing Energy Performance Contracting The above numbered solicitation is amended as follows: Attachment A Clarifications, Questions and Answers Attachment B FSCJ DBOT Approved 2016-17 Capital Outlay & Operating Budgets Attachment C Florida State College at Jacksonville Annual Financial Report FYF June 30, 2016 Attachment D Proposed Energy Savings Performance Contract Project (As of 3/7/17) Attachment E ADDENDUM NO. 1 REVISED BID SUBMISSION The hour and date specified for receipt of bids: X is not extended, remains: 3/16/2017 @ 2:00 p.m. _ is extended until: posting date is extended until: Except as provided herein, all terms and conditions of the solicitation, including changes made by all prior addenda (if any), remain unchanged and in full force and effect. Bidders must acknowledge receipt of this addendum prior to the time set for receipt and opening of bids as specified in the solicitation, or as amended, by one of the following methods: (a) (b) (c) By signing and returning one copy of this addendum. By acknowledging receipt on the copy of the bid submitted. By separate letter, telegram, telephone facsimile (904-632-3087), or email referencing the solicitation and addendum numbers. Email purchasing@fscj.edu FAILURE TO ACKNOWLEDGE RECEIPT OF THIS ADDENDUM PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If, by virtue of this addendum, you desire to change an offer already submitted, such change may be made by telegram or letter, provided such telegram or letter makes reference to the solicitation and this addendum and is received prior to the opening hour and date specified. Randi Brokvist Executive Director of Purchasing (Complete this portion) TO BE RESPONSIVE ALL BIDDERS MUST ACKNOWLEDGE RECEIPT OF ADDENDUM #1 COMPANY: SIGNATURE: TITLE: DATE:
Attachment #A ADDENDUM NO. 1 CLARIFICATIONS 1. The question deadline has expired 2. Bidders are advised to use the Attachment E Addendum 1 REVISED BID SUBMISSION. QUESTIONS AND ANSWERS Question 1: Response 1: Question 2: Response 2: Question 3: Response 3: Question 4: Will bids be accepted for less than 20 year term (i.e. 15 year term + 18 months construction=16.5 years.)? Energy savings from the improvements made are expected to pay the Tax Exempt Municipal Lease being sought. In order to assure that enough savings will be achieved to satisfy the municipal lease payments, a term period up to twenty years is allowable by law in order to achieve neutral or positive cash flow for the project. The only way a shorter term could be accepted would be if the savings generated by the project would be enough for the repayment within a shorter-term period. Currently the project is expected to be able to repay the municipal lease over the course of a twenty-year financing arrangement so a term of less than twenty years would not be acceptable. In respect to Page 8: Phasing - Assuming closure of the $18 Million project in April of 2017 with interest rates and documentation in hand, is it the intent of the College to commit to funding Phase II with the Phase I lender/investor using the same documentation; assuming the lender/investor indexes their interest rate for Phase II closure in 2018, what is the College s position should the 2018 interest rate result in a cash flow negative project? Is it your goal to have the lender provide such an index and forward commitment to finance Phase II? The College s goal is to have the lender forward commit to a rate as the project needs to be cash flow neutral or positive. The forward commitment will allow the College to estimate if there will be adequate savings to pay the resulting municipal lease. It is now the intention of the College to implement a SINGLE PHASE project, value not to be less than $20,000,000 and not to exceed $25,000,000, with a two-year construction period. In respect to Page 8: Construction - To mitigate construction period interest expense, will the College consider phased acceptance of the ECMs during construction and commencement of proportionate repayment? The College prefers bidders assume payments will not begin until 24 months following notice of intent to start a SINGLE PHASE construction project. Whereas the College would consider phased acceptance of ECMs and proportionate repayment based upon ESCO s construction progress draws based on the best interest of the College. In respect to Page 9: Tax Exempt - You have referenced tax-exemption as a component unit of the State of Florida. However, you also state: Response 4: As Phase I is estimated to be $18 Million, please elaborate on the above reference, i.e. what provisions will be complied with re: the apparent cap of $10 Million The reference on page 9 is just to indicate that the College is tax exempt. This solicitation is for a 20-year tax-exempt municipal lease and is not to issue bonds. Firms are to consult their tax adviser regarding the IRS code 265(b)(3)(c) clarification.
Question 5: Response 5: Question 6: Response 6: Question 7: Response 7: Question 8: Response 8: In respect to Page 9: Credit - Thank you for the link to your financial statements. What is the legal name of the College for the purposes of the financing, i.e. as stated in your audit: FLORIDA STATE COLLEGE AT JACKSONVILLE, A COMPONENT UNIT OF THE STATE OF FLORIDA; or, is there another name? In 4.03 you state FLORIDA STATE COLLEGE AT JACKSONVILLE COLLEGE BOARD OF TRUSTEES, hence the question. Do you have a formally adopted budget for the current fiscal year we may review? Florida State College at Jacksonville is the College s legal name. As Budgets are formally adopted, refer to Attachment B for the District Board of Trustees approved 2016-17 Capital Outlay and Operating Budgets. Page 10: Schedule - Can you confirm we are in compliance with your Deadline to submit to FSCJ notice of your [our] intent? The deadline to receive the Notice of Intent document is March 16, 2017 at 3:00 p.m. In respect to Page 10: Section 4.04 - You suggest that the term is all in 20 years, i.e. 20 years TOTAL, i.e. 18.5 Years of repayment + 1.5 Years of Construction. Please confirm. The term of the municipal lease repayment should be 20 years. In respect to Page 11: Section 4.14 - In addition to the covenant to budget, will the lender/investor be permitted a UCC-1 form of security interest in the equipment financed? The College will provide the awarded lender the legally required documentation of a Tax Exempt Municipal Lease. Question 9: In respect to Page 12: 5.01 - Per your request for an interest rate, we have mentioned in this MEMO the opportunity to index the rate for closing in 2018. It is the College s preference to enter into 1 lease w/2 schedules, i.e. Phase I and Phase II with the rate locked now for both transactions? Response 9: Not applicable; see response to Question 2. Question 10: Our firm is unclear about the structure of the 20-year financing. Depending on the cash flows required by ConEd (not available until 4/19/17), the interest rate (weighted average life) can drastically affect the cost of funds to the lender (bids due 3/16/17) and hence the rate to the borrower. Can you advise what cash flows (principal payments) should be assumed? Response 10: Not applicable; see response to Question 2. Question 11: Our firm is unclear about the funding/rate assumptions for the $7mm phase 2. When do you expect this to be funded into escrow? Are you expecting this to be indexed (rate) until April of 2018? Do you expect this $7mm to sit in escrow for 1 year, then the project commences, and payments start 18 months later---meaning no payments on this piece for 30 months? Response 11: Not applicable; see response to Question 2. Question 12: Response 12: Question 13: Response 13: Regarding your financial statements is there anything (interim statement) later than the March of 2016 financial statements which represent 2015? Attached, as Attachment C is an unaudited copy of the College Annual Financial Report. The Audited Statements for the fiscal year ending June 30, 2016 should be released on the Auditor General website by the end of March 2017. Please provide a project cost breakout by ECM, current scope of work, and cost breakout by building and campus, all for the Phase 1 portion of the project. Estimated breakouts are fine. It is now the intention of the College to implement a SINGLE PHASE project. Refer to, Attachment D Proposed Energy Savings Performance Contract Project (As of 3/7/17) Question 14: Please confirm which campus(es) will be involved in the Phase I project. Also, please provide the estimate of which campus(es) will be involved in the Phase II project. Response 14: Not applicable; see response to Question 2.
Question 15: Response 15: Question 16: Response 16: Please provide an estimate of the annual net savings (savings and M&V expense) for the Phase I project. It is now the intention of the College to implement a SINGLE PHASE project. Refer to, Attachment D Proposed Energy Savings Performance Contract Project (As of 3/7/17) Please provide FY16 draft financial results. Unaudited spreadsheets are fine. Attached, as Attachment C, is an unaudited copy of the College Annual Financial Report. The Audited Statements for the fiscal year ending June 30, 2016 should be released on the Auditor General website by the end of March 2017. Question 17: Please provide the FY17 Budget. Response 17: See response to Question 5. Question 18: Response 18: Question 19: Response 19: Question 20: Response 20: Question 21: Response 21: How does management see FTE enrollment evolving over the next few years (i.e. continue declines, stabilizing, growing)? If continued declines persist, how will management respond (i.e. what kind of cuts can be made, would tuition be raised, etc.?). The College is committed to always having a balanced budget so that revenues cover expenditures for operations. The project is designed to provide intelligent building capabilities that enable the College to adjust utility usage match occupancy, a quality that is presently unavailable. In order to successfully manage and increase enrollment growth, a new College wide Strategic Enrollment Management (SEM) plan is a critical part of the College s overall strategic plan. The College believes this focus will significantly improve enrollment numbers going forward. The internal goal is to see a 3% increase each of the next five years. Please provide some background on what has led to FTE enrollment declines. The College believes that the enrollment decline is tapering off, and after 2016-17 the College will begin experiencing small increases due to several factors. As there is an inverse relationship between the state of the economy and college enrollment. The unemployment rate is currently below 5% as reported by the Bureau of Labor Statistics commonly considered full employment as people are working rather than going to school. CIP In terms of capital projects (in addition to the $25MM RFP), does the college expect any additional large projects. If so, how would these be funded (i.e. state aid, additional debt, cash on hand)? The College is hoping to receive some portion of our #1 Priority $11 million STEM Facility project for Downtown Campus. That is dependent upon the State Legislature and the Governor of Florida. The project would be funded by the state as an appropriation to the College and would not require College repayment. Is this considered Bank Qualified? This is a request for a qualified tax-exempt municipal lease instrument, not a bond issuance. Question 22: Will the entire $25mm fund into escrow within 60 days of proposal submittal date of 3/16/17 or 5/16/17? If not how will it differ? Response 22: Yes. The current anticipated approval date of the project is April 11, 2017.
Attachment #B
Attachment #B
Attachment #B
Attachment #B
ANNUAL FINANCIAL REPORT FYE June 30, 2016
MANAGEMENT S DISCUSSION AND ANALYSIS The management s discussion and analysis (MD&A) provides an overview of the financial position and activities of the College for the fiscal year ended June 30, 2016, and should be read in conjunction with the financial statements and notes. The MD&A, and financial statements and notes are the responsibility of College management. The MD&A contains financial activity of the College for the fiscal years ended June 30, 2016, and June 30, 2015, and its component unit the Florida State College Jacksonville Foundation, Inc., for the fiscal years ended June 30, 2016, and June 30, 2015. FINANCIAL HIGHLIGHTS The College s assets totaled $288.13 million at June 30, 2016. This balance reflects a $70 thousand, or less than 1 percent decrease as compared to the 2014-15 fiscal year total of $288.2 million. This was caused by an increase of current assets that were up $1.1 million dollars and noncurrent assets that decreased $1.2 million. The increase in current assets was primarily caused by increases in due from other governments and accounts receivable that were mitigated by the decrease in overall cash and investments. While total assets decreased, liabilities increased by a greater amount of $12.8 million, or 22.5 percent, totaling $69.8 million at June 30, 2016, compared to $56.9 million at June 30, 2015, which is largely reflective of an increase in the actuarial valuation of the net pension liability in accordance with GASB 68. Also related to the net pension liability, deferred outflows increased $9.5 million while deferred inflows decreased $3.5 million. As a result, the College s net position decreased by $152 thousand, resulting in a year-end balance of $221.65 million, compared to $221.5 million in the prior year. The College s operating revenues totaled $54 million for the 2015-16 fiscal year, representing a 3.5 percent increase over the 2014-15 fiscal year due mainly to an increase in net tuition and fees and an increase in other revenues of $1.3 million. Operating expenses of $187.8 million for the 2015-16 fiscal year, representing a decrease of 3.4 percent as compared to the 2014-15 fiscal year. Net position represents the residual interest in the College s assets and deferred outflows of resources after deducting liabilities and deferred inflows of resources. The College reported a negative unrestricted fund balance of $16.7 million for the 2015-16 fiscal year as a result of recording long term liabilities that will be paid over time and financed by future appropriations in the current unrestricted fund. The College s comparative total net position by category for the fiscal years ended June 30, 2016, and June 30, 2015, is shown in the following graph:
Net Position (In Thousands) $100,000 $215,106 $216,006 $50,000 $23,210 $22,974 $0 -$16,668 -$17,485 Net Investment in Capital Assets Restricted Unrestricted 2016 2015 The following chart provides a graphical presentation of College revenues by category for the 2015-16 fiscal year: Total Revenues Other Revenues 4% Operating Revenues 29% Nonoperating Revenues 67% OVERVIEW OF FINANCIAL STATEMENTS Pursuant to GASB Statement No. 35, the College s financial report consists of three basic financial statements: the statement of net position; the statement of revenues, expenses, and changes in net position; and the statement of cash flows. These financial statements, and notes provide information on the College as a whole, present a long-term view of the College s finances, and include activities for the following entities:
o o Florida State College Jacksonville (Primary Institution) Most of the programs and services generally associated with a college fall into this category, including instruction, public service, and support services. Florida State College Foundation, Inc. (Component Unit) The Foundation is a direct-support organization of the College with the mission of raising funds to support academic programs and student scholarships. Although legally separate, this component unit is important because the College is financially accountable for it, as the College reports its financial activities to the State of Florida. The Statement of Net Position The statement of net position reflects the assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the College, using the accrual basis of accounting, and presents the financial position of the College at a specified time. Assets, plus deferred outflows of resources, less liabilities, less deferred inflows of resources, equals net position, which is one indicator of the College s current financial condition. The changes in net position that occur over time indicate improvement or deterioration in the College s financial condition. The following summarizes the College s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position at June 30: Condensed Statement of Net Position at June 30 (In Thousands) 2016 2015 Assets Current Assets $ 17,823 $ 16,730 Capital Assets, Net 216,672 218,201 Other Noncurrent Assets 53,632 53,270 Total Assets $ 288,127 $ 288,201 Deferred Outflows of Resources $ 18,849 $ 9,326 Liabilities Current Liabilities $ 10,202 $ 7,325 Noncurrent Liabilities 59,600 49,673 Total Liabilities $ 69,802 $ 56,998 Deferred Inflows of Resources $ 15,526 $ 19,033 Net Position Net Investment in Capital Assets $ 215,106 $ 216,006 Restricted 23,210 22,974 Unrestricted (16,668) (17,484) Total Net Position $ 221,648 $ 221,496 Total assets remained relatively constant with a decrease of $74 thousand or.02 percent. Deferred outflows increased $9,523 thousand while deferred inflows decreased $3,507 thousand. These changes in the deferred inflows and outflows related to changes in the College s net pension liabilities. Likewise,
liabilities increased $12.8 million primarily due to a $11.8 million increase in the College s net pension liabilities. As the changes in the deferred items related to pensions negated the impact of the substantial increase in the net pension liability, the College s ending net position remained very steady with a $152 thousand or.06 percent increase. The Statement of Revenues, Expenses, and Changes in Net Position The statement of revenues, expenses, and changes in net position presents the College s revenue and expense activity, categorized as operating and nonoperating. Revenues and expenses are recognized when earned or incurred, regardless of when cash is received or paid. The following summarizes the College s activity for the 2015-16 and 2014-15 fiscal years: Condensed Statement of Revenues, Expenses, and Changes in Net Position For the Fiscal Years (In Thousands) College 2015-16 2014-15 Operating Revenues $ 54,020 $ 52,170 Less, Operating Expenses 187,809 194,499 Operating Income (Loss) (133,789) (142,329) Net Nonoperating Revenues (Expenses) 125,848 128,884 Income (Loss) Before Other Revenues, Expenses, Gains, or Losses (7,941) (13,445) Other Revenues 8,093 7,237 Net Increase (Decrease) In Net Position 152 (6,208) Net Position, Beginning of Year 221,496 227,704 Net Position, End of Year $ 221,648 $ 221,496 Operating Revenues GASB Statement No. 35 categorizes revenues as either operating or nonoperating. Operating revenues generally result from exchange transactions where each of the parties to the transaction either gives or receives something of equal or similar value. The following summarizes the operating revenues by source that were used to fund operating activities for the 2015-16 and 2014-15 fiscal years:
Operating Revenues For the Fiscal Years (In Thousands) College Component Unit 2015-16 2014-15 2015-16 2014-15 Student Tuition and Fees, Net $ 39,437 $ 37,479 Grants and Contracts 10,645 11,549 Sales and Services of Educational Departments 558 701 Auxiliary Enterprises 1,435 1,791 5,683 4,445 Other 1,945 650 807 1,770 Total Operating Revenues $ 54,020 $ 52,170 $ 6,490 $ 6,215 The following chart presents the College s operating revenues for the 2015-16 and 2014-15 fiscal years: Operating Revenues (In Thousands) Student Tuition and Fees, Net $39,437 $37,479 Grants and Contracts $10,645 $11,549 Sales and Services of Educational Departments Auxiliary Enterprises, Net Other $558 $701 $1,435 $1,790 $1,945 $650 $0 $10,000 $20,000 $30,000 $40,000 2015-16 2014-15 College operating revenue changes were the result of the following factors: Net student tuition and fees increased $1,958 thousand after the scholarship allowance for a 5.2% increase. This increase in the net tuition is misleading as the College collected $537 thousand less in tuition in the current year than the prior year. The increase in the student fees is largely the result of the decrease in the scholarship allowance of $2,495 thousand as depicted in the chart below. Fiscal Year Tuition Charged Scholarship Allowance Net Tuition 2015-16 $ 61,431,889 $ 21,995,141 $ 39,436,748 2014-15 61,969,511 24,490,212 37,479,299 $ (537,622) $ 2,495,071 $ 1,957,449 Other revenues were up $1,295 thousand due to the rental of the College s broadcast rights.
Operating Expenses Expenses are categorized as operating or nonoperating. The majority of the College s expenses are operating expenses as defined by GASB Statement No. 35. GASB gives financial reporting entities the choice of reporting operating expenses in the functional or natural classifications. The College has chosen to report the expenses in their natural classification on the statement of revenues, expenses, and changes in net position and has displayed the functional classification in the notes to financial statements. The following summarizes operating expenses by natural classification for the 2015-16 and 2014-15 fiscal years: Operating Expenses (In Thousands) 2015-16 2014-15 Personnel Services $ 111,225 $ 114,527 Scholarships and Waivers 26,624 29,271 Utilities and Communications 4,768 5,336 Contractual Services 10,615 11,690 Other Services and Expenses 6,060 5,484 Materials and Supplies 18,455 18,111 Depreciation 10,062 10,081 Total Operating Expenses $ 187,809 $ 194,500 The following chart presents the College s operating expenses for the 2015-16 and 2014-15 fiscal years: Operating Expenses (In Thousands) Personnel Services $111,225 $114,527 Scholarships and Waivers $26,624 $29,271 Utilities and Communications Contractual Services Other Services and Expenses Materials and Supplies Depreciation $4,768 $5,336 $10,615 $11,690 $6,060 $5,484 $18,455 $18,111 $10,062 $10,081 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 2015-16 2014-15
College operating expense changes were the result of the following factors: There was an overall decrease to salaries and benefits expenditures of $3,302 thousand. Salary payments decreased $3,869 thousand while benefits payments increased $567 thousand. Lower salary payments are indicative of a smaller continuing workforce and the slight increase in the benefit payments reflect increases in insurance and retirement rates. The increase in the benefits payments is understated as the recording of subsequent payments to the pensions plans decreased benefit expenditures as identified in the chart below. Pension Plan Pension Expense Expenditures Reclassifed to Deferred Outflows Effect of Recording Net Pensions on Benefit Payments FRS $ 1,638,237 $ (3,290,587) $ (1,652,350) HIS 1,496,276 (1,041,043) 455,233 Total $ 3,134,513 $ (4,331,631) $ (1,197,118) Net scholarships and waivers decreased by $2,647 thousand. The amount presented for scholarships and waivers is reduced by the amount of scholarships that paid College charges, aka, the scholarship allowance. As such, the College actually awarded $5,142 thousand less in 2015-16 as compared to the $53,762 thousand in scholarships it awarded in the 2014-15 fiscal year. Lower awarded scholarships and a decreased scholarship allowance of $2,495 thousand resulted in a lower scholarship expense as shown in the chart below. Fiscal Year Scholarships and Waivers Scholarship Allowance Net Scholarship and Waivers 2014-15 $ 53,761,509 $ 24,490,212 $ 29,271,297 2015-16 48,619,171 21,995,141 26,624,030 $ (5,142,338) $ 2,495,071 $ (2,647,267) Contractual services decreased $1,075 thousand as the College utilized lower levels of service to facilitate the College s ERP implementation. Nonoperating Revenues and Expenses Certain revenue sources that the College relies on to provide funding for operations, including State noncapital appropriations, Federal and State student financial aid, certain gifts and grants, and investment income are defined by GASB as nonoperating. Nonoperating expenses include capital financing costs and other costs related to capital assets. The following summarizes the College s nonoperating revenues and expenses for the 2015-16 and 2014-15 fiscal years:
Nonoperating Revenues (Expenses) (In Thousands) 2015-16 2014-15 State Noncapital Appropriations $ 78,591 $ 77,363 Federal and State Student Financial Aid 45,702 50,220 Gifts and Grants - 266 Investment Income (Loss) 331 930 Net gain (Loss) on Investments 1,339 Other Nonoperating Revenues 17 Gain on Disposal of Capital Assets (17) 27 Interest on Capital Asset-Related Debt (116) (94) Other Nonoperating Expenses - 172 Net Nonoperating Revenues $ 125,847 $ 128,884 Nonoperating revenues were most impacted by the decrease in the amount of federal and state student financial aid as it declined $4,518 thousand. Other Revenues, Expenses, Gains, or Losses This category is (mainly) composed of State capital appropriations and capital grants, contracts, gifts, and fees. The following summarizes the College s other revenues, expenses, gains, or losses for the 2015-16 and 2014-15 fiscal years: Other Revenues, Expenses, Gains, or Losses (In Thousands) 2015-16 2014-15 State Capital Appropriations $ 3,257 $ 2,258 Capital Grants, Contracts, Gifts, and Fees 4,836 4,980 Total $ 8,093 $ 7,238 State capital appropriations increased $999 thousand due to the increase of both a Public Education Capital Outlay appropriation of $366 thousand and an increased capital outlay and debt service appropriation of $633 thousand. The Statement of Cash Flows The statement of cash flows provides information about the College s financial results by reporting the major sources and uses of cash and cash equivalents. This statement will assist in evaluating the College s ability to generate net cash flows, its ability to meet its financial obligations as they come due, and its need for external financing. Cash flows from operating activities show the net cash used by the operating activities of the College. Cash flows from capital financing activities include all plant funds and related long-term debt activities. Cash flows from investing activities show the net source and use of
cash related to purchasing or selling investments, and earning income on those investments. Cash flows from noncapital financing activities include those activities not covered in other sections. The following summarizes the College s cash flows for the 2015-16 and 2014-15 fiscal years: Condensed Statement of Cash Flows (In Thousands) 2015-16 2014-15 Cash Provided (Used) by: Operating Activities $ (125,710) $ (138,421) Noncapital Financing Activities 119,672 128,552 Capital and Related Financing Activities 1,187 (3,289) Investing Activities 6,927 (925) Net Increase (Decrease) in Cash and Cash Equivalents 2,076 (14,083) Cash and Cash Equivalents, Beginning of Year 2,354 16,437 Cash and Cash Equivalents, End of Year $ 4,430 $ 2,354 Major sources of funds came from State capital appropriations ($78.6 million); federal and state student aid ($42.9 million), net student tuition and fees ($36.9 million); proceeds from the sales and maturities of investments ($35.8 million), capital grants and gifts ($5.9 million), and grants and contracts ($10.7 million). Major uses of funds were payments for employee salaries and benefits ($113 million), payments to suppliers ($35.2 million), purchase of investments ($30.2 million), payments for scholarships ($26.6 million), payments for loans issued to students ($6.6 million), payments for acquisition of capital assets ($7.2 million) and payments for utilities and communications ($4.8 million). The College s overall cash and cash equivalents increased $2.1 million, or 88 percent, as compared to the prior fiscal year. Changes in cash and cash equivalents were the result of the following factors: Operating activities used $12.7 million less in cash as compared to the prior year. The use of less cash mainly resulted from decreased payments to employees of $7.2 million and an increase of other revenues of $3.3 million. Noncapital financing activities provided $8.9 million less cash as compared to the prior fiscal year. The decrease was primarily the result of reduction in Federal and State student financial aid. Capital and related financing activity provided $1.2 million in cash while it used $3.3 million in the prior year. The decrease in capital spending of $5.6 in the current year was primary cause of this change. Investing activities resulted in an increase of $7 million in cash, which was the result the sale of investments and increased investment income.
CAPITAL ASSETS, CAPITAL EXPENSES AND COMMITMENTS, AND DEBT ADMINISTRATION Capital Assets At June 30, 2016, the College had $386.1 million in capital assets, less accumulated depreciation of $169.5 million, for net capital assets of $216.7 million. Depreciation charges for the current fiscal year totaled $10.1 million. The following table summarizes the College s capital assets, net of accumulated depreciation, at June 30: Capital Assets, Net at June 30 (In Thousands) 2016 2015 Land $ 12,001 $ 12,001 Other Nondepreciable 89 89 Construction in Progress 17,235 11,404 Buildings 182,515 189,788 Other Structures and Improvements 1,568 1,918 Furniture, Machinery, and Equipment 3,263 3,001 Capital Assets, Net $ 216,671 $ 218,201 State appropriations together with local funds are expected to finance the construction, renovation, and purchase of land and facilities. Additional information about the College s capital assets is presented in the notes to the financial statements. Capital Expenses and Commitments Major capital expenses through June 30, 2016, were incurred on the implementation of PeopleSoft ERP through the fiscal yearend. The College s (major) construction commitments at June 30, 2016, are as follows: Amount (In Thousands) Total Committed $ 15,221,432 Completed to Date (11,081,659) Balance Committed $ 4,139,773 Additional information about the College s contractual commitments is presented in the notes to financial statements. Debt Administration As of June 30, 2016, the College had $1.56 million in long-term debt outstanding as compared to the $2.2 million at the end of the prior fiscal year, a decrease of 29 percent. Additional information related to the bonds payable can be found in the notes to the financial statements.
ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE The College s economic condition is closely tied to that of the State of Florida. Because of limited economic growth and increased demand for State resources, only a modest increase in State funding is anticipated in the 2016-17 fiscal year. The College s current financial and capital plans indicate that the infusion of additional financial resources from an increase in tuition rates will be necessary to maintain its present level of services. REQUESTS FOR INFORMATION Questions concerning information provided in the MD&A or other required supplementary information and financial statements and notes thereto, or requests for additional financial information should be addressed to the Assistant Vice President of Finance, Florida State College at Jacksonville, 501 West State Street, Jacksonville, Florida 32202.
BASIC FINANCIAL STATEMENTS Florida State College Jacksonville A Component Unit of the State of Florida Statement of Net Position June 30, 2016 College Component Unit(s) ASSETS Current Assets: Cash and Cash Equivalents $ 761,474 $ 992,519 Restricted Cash and Cash Equivalents 3,667,775 - Investments - 2,636,401 Restricted Investments 38,149 Accounts Receivable, Net 5,265,324 - Notes Receivable, Net 226,279 - Due from Other Governmental Agencies 5,779,417 - Due from Component Unit 75,000 151,380 Inventories 82,803 - Prepaid Expenses 1,927,045 8,739 Total Current Assets $ 17,823,266 $ 3,789,039 Noncurrent Assets: Restricted Cash and Cash Equivalents $ - $ - Investments 37,666,865 3,410,758 Restricted Investments 15,965,459 37,814,774 Depreciable Capital Assets, Net 187,346,860 - Nondepreciable Capital Assets 29,324,972 Other Assets 32,030 Total Noncurrent Assets $ 270,304,156 $ 41,257,562 TOTAL ASSETS $ 288,127,422 $ 45,046,601 DEFERRED OUTFLOWS OF RESOURCES Deferred Amounts Related to Pensions $ 18,848,694 $ - TOTAL DEFERRED OUTFLOWS OF RESOURCES $ 18,848,694 $ - LIABILITIES Current Liabilities: Accounts Payable $ 3,015,913 $ - Salary and Payroll Taxes Payable 611,270 - Retirement Plan(s) Payable - - Due to Component Unit 151,380 75,000 Unearned Revenue 231,721 - Estimated Insurance Claims Payable 500,308 Deposits Held for Others 2,247,098 78,752 Long-Term Liabilities - Current Portion: Bonds Payable 678,000 - Compensated Absences Payable 1,943,226 - HIS Net Pension Liability 823,093 - Total Current Liabilities $ 10,202,009 $ 153,752
Florida State College Jacksonville A Component Unit of the State of Florida Statement of Net Position (Continued) June 30, 2016 College Component Unit(s) LIABILITIES (Continued) Noncurrent Liabilities: Bonds Payable $ 888,000 $ - Notes Payable - - Installment Purchase(s) Payable - - Capital Lease(s) Payable - - Special Termination Benefits Payable 51,277 - Compensated Absences Payable 12,028,476 - Other Postemployment Benefits Payable 3,482,397 - Net Pension Liability 43,150,135 - Total Noncurrent Liabilities $ 59,600,285 $ - TOTAL LIABILITIES $ 69,802,294 $ 153,752 DEFERRED INFLOWS OF RESOURCES Deferred Amounts Related to Pensions $ 15,526,192 $ - TOTAL DEFERRED INFLOWS OF RESOURCES $ 15,526,192 $ - NET POSITION Net Investment in Capital Assets $ 215,105,831 $ - Restricted: Nonexpendable: - - Endowment 37,814,774 Expendable: Endowment 5,679,207 3,410,758 Grants and Loans 3,994,064 - Scholarships 1,073 - Capital Projects 13,497,533 - Debt Service 38,149 - Other - - Unrestricted (16,668,228) 3,667,317 TOTAL NET POSITION $ 221,647,629 $ 44,892,849 The accompanying notes to financial statements are an integral part of this statement.
Florida State College Jacksonville A Component Unit of the State of Florida Statement of Revenues, Expenses, and Changes in Net Position For the Fiscal Year Ended June 30, 2016 College Component Unit(s) REVENUES Operating Revenues: Student Tuition and Fees, Net of Scholarship Allowances of $21,995,141 $ 39,436,748 $ - Federal Grants and Contracts 6,962,492 - State and Local Grants and Contracts 2,443,518 - Nongovernmental Grants and Contracts 1,238,785 69,328 Sales and Services of Educational Departments 557,757 - Auxiliary Enterprises 1,435,450 7,131,644 Other Operating Revenues 1,945,600 1,094,923 Total Operating Revenues $ 54,020,350 $ 8,295,895 EXPENSES Operating Expenses: Personnel Services $ 111,225,375 $ 546,142 Scholarships and Waivers 26,624,030 832,228 Utilities and Communications 4,767,944 - Contractual Services 10,614,748 7,025,728 Other Services and Expenses 6,060,154 1,227,282 Materials and Supplies 18,454,715 213,429 Depreciation 10,061,557 - Total Operating Expenses $ 187,808,523 $ 9,844,809 Operating Income (Loss) $ (133,788,173) $ (1,548,914) NONOPERATING REVENUES (EXPENSES) State Noncapital Appropriations $ 78,590,659 $ - Federal and State Student Financial Aid 45,701,975 - Gifts and Grants Received for Other Than Capital or Endowment Purposes - - Investment Income (Loss) 1,670,343 (73,975) Other Nonoperating Revenues 16,534 - Loss on Disposal of Capital Assets (16,616) - Interest on Capital Asset-Related Debt (115,721) - Net Nonoperating Revenues (Expenses) $ 125,847,174 $ (73,975) Income (Loss) Before Other Revenues, Expenses, Gains, or Losses $ (7,940,999) $ (1,622,889) State Capital Appropriations $ 3,257,449 $ - Capital Grants, Contracts, Gifts, and Fees 4,835,541 Additions to Endowments - 192,797 Total Other Revenues, Expenses, Gains, or Losses $ 8,092,990 $ 192,797 Increase (Decrease) in Net Position $ 151,991 $ (1,430,092) Net Position, Beginning of Year $ 221,495,639 $ - Adjustment to Beginning Net Position - - Net Position, Beginning of Year, as Restated $ 221,495,639 $ 46,322,941 Net Position, End of Year $ 221,647,629 $ 44,892,849 The accompanying notes to financial statements are an integral part of this statement.
Florida State College Jacksonville A Component Unit of the State of Florida Statement of Cash Flows For the Fiscal Year Ended June 30, 2016 College CASH FLOWS FROM OPERATING ACTIVITIES Student Tuition and Fees, Net $ 36,935,861 Grants and Contracts 10,731,383 Payments to Suppliers (35,189,662) Payments for Utilities and Communications (4,767,944) Payments to Employees (89,615,780) Payments for Employee Benefits (23,393,589) Payments for Scholarships (26,624,030) Loans Issued to Students (6,626,395) Collection on Loans to Students 6,658,235 Auxiliary Enterprises 1,435,450 Sales and Services of Educational Departments 557,757 Other Receipts (Payments) 4,188,576 Net Cash Used by Operating Activities $ (125,710,138) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Noncapital Appropriations $ 78,590,658 Federal and State Student Financial Aid 42,902,283 Federal Direct Loan Program Receipts 52,852,809 Federal Direct Loan Program Disbursements (55,005,294) Gifts and Grants Received for Other Than Capital or Endowment Purposes 331,307 Net Cash Provided (Used) by Noncapital Financing Activities $ 119,671,763 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES State Capital Appropriations $ 3,282,266 Capital Grants and Gifts 5,862,612 Proceeds from Sale of Capital Assets 16,534 Purchases of Capital Assets (7,230,960) Principal Paid on Capital Debt and Leases (628,000) Interest Paid on Capital Debt and Leases (115,721) Net Cash Provided (Used) by Capital and Related Financing Activities $ 1,186,731 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments $ 35,787,247 Purchases of Investments (30,199,219) Investment Income 1,339,036 Net Cash Provided (Used) by Investing Activities $ 6,927,064 Net Increase (Decrease) in Cash and Cash Equivalents $ 2,075,420 Cash and Cash Equivalents, Beginning of Year 2,353,829 Cash and Cash Equivalents, End of Year $ 4,429,249
Florida State College Jacksonville A Component Unit of the State of Florida Statement of Cash Flows (Continued) For the Fiscal Year Ended June 30, 2016 College RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES Operating Loss $ (133,788,173) Adjustments to Reconcile Operating Loss to Net Cash Used by Operating Activities: Depreciation Expense 10,061,557 Changes in Assets, Liabilities, Deferred Outflows of Resources, and Deferred Inflows of Resources: Receivables, Net (974,244) Inventories (4,799) Other Assets (60,862) Accounts Payable 2,851,669 Retirement Plan(s) Payable - Unearned Revenue (1,440,055) Deposits Held for Others (182,408) Special Termination Benefits Payable (53,800) Compensated Absences Payable (947,351) Other Postemployment Benefits Payable 25,445 Net Pension Liability 11,832,977 Deferred Outflows of Resources Related to Pensions (9,523,075) Deferred Inflows of Resources Related to Pensions (3,507,019) NET CASH USED BY OPERATING ACTIVITIES $ (125,710,138) SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND CAPITAL FINANCING ACTIVITIES Unrealized gains on investments were recognized as an increase to investment income on the statement of revenues, expenses, and changes in net position, but are not cash transactions for the statement of cash flows. Losses from the disposal of capital assets were recognized on the statement of revenues, expenses, and changes in net position, but are not cash transactions for the statement of cash flows. $ $ 286,359 (16,616) The accompanying notes to financial statements are an integral part of this statement.
NOTES TO FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Reporting Entity. The governing body of Florida State College Jacksonville, a component unit of the State of Florida, is the District Board of Trustees. The Board constitutes a corporation and is composed of nine members appointed by the Governor and confirmed by the Senate. The District Board of Trustees is under the general direction and control of the Florida Department of Education, Division of Florida Colleges, and is governed by law and State Board of Education rules. However, the District Board of Trustees is directly responsible for the day-to-day operations and control of the College within the framework of applicable State laws and State Board of Education rules. Geographic boundaries of the District correspond with those of Duval and Nassau Counties. Criteria for defining the reporting entity are identified and described in the Governmental Accounting Standards Board s (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections 2100 and 2600. These criteria were used to evaluate potential component units for which the District Board of Trustees is financially accountable and other organizations for which the nature and significance of their relationship with the District Board of Trustees are such that exclusion would cause the College s financial statements to be misleading. Based on the application of these criteria, the College is a component unit of the State of Florida, and its financial balances and activities are reported in the State s Comprehensive Annual Financial Report by discrete presentation. Discretely Presented Component Unit. Based on the application of the criteria for determining component units, the Florida State College Jacksonville Foundation, Inc. (Foundation), is included within the College s reporting entity as a discretely presented component unit. The Foundation is audited by other auditors pursuant to Section 1004.70(6), Florida Statutes. The Foundation s audited financial statements are available to the public at the College. The Foundation s financial statements also include the financial activity of its blended component unit, the Florida State College Foundation Real Estate Holding, Inc. (Holding Company). The Holding Company is a subsidiary of the Foundation and was formed exclusively to hold title to certain real property, and to collect and transfer its income to the Foundation in support of the Foundation s mission. The financial data reported on the accompanying financial statements was derived from the Foundation s audited financial statements for the fiscal year ended June 30, 2016. The Foundation is also a direct-support organization, as defined in Section 1004.70, Florida Statutes, and although legally separate from the College, is financially accountable to the College. The Foundation is managed independently, outside the College s budgeting process, and its powers generally are vested in a governing board pursuant to various State statutes. The Foundation receives, holds, invests, and administers property, and makes expenditures to or for the benefit of the College. The Foundation is audited by other auditors pursuant to Section 1004.70(6), Florida Statutes. The Foundation s audited financial statements are available to the public and can be obtained from the Executive Director, Florida State College Jacksonville Foundation, 501 W State Street, Jacksonville,
Florida 32202. The financial data reported on the accompanying financial statements was derived from the Foundation s audited financial statements for the fiscal year ended June 30, 2016. Basis of Presentation. The College s accounting policies conform with accounting principles generally accepted in the United States of America applicable to public colleges and universities as prescribed by GASB. The National Association of College and University Business Officers (NACUBO) also provides the College with recommendations prescribed in accordance with generally accepted accounting principles promulgated by GASB and the Financial Accounting Standards Board (FASB). GASB allows public colleges various reporting options. The College has elected to report as an entity engaged in only business-type activities. This election requires the adoption of the accrual basis of accounting and entitywide reporting including the following components: Management s Discussion and Analysis Basic Financial Statements: o Statement of Net Position o Statement of Revenues, Expenses, and Changes in Net Position o Statement of Cash Flows o Notes to Financial Statements Other Required Supplementary Information Measurement Focus and Basis of Accounting. Basis of accounting refers to when revenues, expenses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources are recognized in the accounts and reported in the financial statements. Specifically, it relates to the timing of the measurements made, regardless of the measurement focus applied. The College s financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from nonexchange activities are generally recognized when all applicable eligibility requirements, including time requirements, are met. The College follows GASB standards of accounting and financial reporting. The College s component unit uses the economic resources measurement focus and accrual basis of accounting whereby revenues are recognized when earned and expenses are recognized when incurred, and follows GASB standards of accounting and financial reporting. Significant interdepartmental sales between auxiliary service departments and other institutional departments have been accounted for as reductions of expenses and not revenues of those departments. The College s principal operating activity is instruction. Operating revenues and expenses generally include all fiscal transactions directly related to instruction as well as administration, academic support, student services, physical plant operations, and depreciation of capital assets. Nonoperating revenues include State noncapital appropriations, Federal and State student financial aid, investment income (net of unrealized gains or losses on investments), and revenues for capital construction projects. Interest on capital asset-related debt is a nonoperating expense.
The statement of net position is presented in a classified format to distinguish between current and noncurrent assets and liabilities. When both restricted and unrestricted resources are available to fund certain programs, it is the College s policy to first apply the restricted resources to such programs followed by the use of the unrestricted resources. The statement of revenues, expenses, and changes in net position is presented by major sources and is reported net of tuition scholarship allowances. Tuition scholarship allowances are the difference between the stated charge for goods and services provided by the College and the amount that is actually paid by the student or the third party making payment on behalf of the student. The College s accounting system identifies the specific amounts paid for tuition and fees from students and third parties (e.g., financial aid, scholarships, etc.). To the extent that third-party resources are used to pay student charges, the College records a scholarship allowance against tuition and fee revenue. The statement of cash flows is presented using the direct method in compliance with GASB Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting. Cash and Cash Equivalents - College. The amount reported as cash and cash equivalents consists of cash on hand, cash in demand accounts, and cash with State Board of Administration (SBA) Florida PRIME. For reporting cash flows, the College considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Under this definition, the College considers amounts invested in the Florida PRIME investment pool to be cash equivalents. College cash deposits are held in banks qualified as public depositories under Florida law. All such deposits are insured by Federal depository insurance, up to specified limits, or collateralized with securities held in Florida s multiple financial institution collateral pool required by Chapter 280, Florida Statutes. Cash and cash equivalents that are externally restricted to make debt service payments, maintain sinking or reserve funds, or to purchase or construct capital or other restricted assets are classified as restricted. At June 30, 2016, the College reported as cash equivalents $78 in the Florida PRIME investment pool administered by the SBA pursuant to Section 218.405, Florida Statutes. The College s investments in the Florida PRIME investment pool, which the SBA indicates is a Securities and Exchange Commission Rule 2a7-like external investment pool, are similar to money market funds in which shares are owned in the fund rather than the underlying investments. The Florida PRIME investment pool carried a credit rating of AAAm by Standard & Poor s and had a weighted-average days to maturity (WAM) of 39 days as of June 30, 2016. A portfolio s WAM reflects the average maturity in days based on final maturity or reset date, in the case of floating-rate instruments. WAM measures the sensitivity of the Florida PRIME investment pool to interest rate changes. The investments in the Florida PRIME investment pool are reported at amortized cost. Chapter 218.409(8)(a), Florida Statutes, states that The principal, and any part thereof, of each account constituting the trust fund is subject to payment at any time from the moneys in the trust fund. However, the Executive Director may, in good faith, on the occurrence of an event that has a material impact on liquidity or operations of the trust fund, for 48 hours limit contributions to or withdrawals from the trust fund to ensure that the Board can invest moneys entrusted to it in exercising its fiduciary responsibility. Such action must be immediately disclosed to all participants, the Trustees,