REPORT NO. 2011-108 FEBRUARY 2011 SEMINOLE STATE COLLEGE OF FLORIDA Financial Audit_part5 pot

SCHEDULE OF STATE REVENUE SOURCES Revenue from State sources for current operations is primarily from the College Program Fund administered by the Florida Department of Education under

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13 LITIGATION

The College is involved in several pending and threatened legal actions The range of potential loss from all such claims and actions, as estimated by the College’s legal counsel and management, should not materially affect the College’s financial position

14 SCHEDULE OF STATE REVENUE SOURCES

Revenue from State sources for current operations is primarily from the College Program Fund administered

by the Florida Department of Education under the provisions of Section 1011.81, Florida Statutes In accordance with Section 1011.84, Florida Statutes, the Legislature determines each college’s apportionment considering the following components: base budget, which includes the State appropriation to the College Program Fund in the current year plus the related student tuition and fees assigned in the current General Appropriations Act; the cost-to-continue allocation, which consists of incremental changes to the base budget, including salaries, price levels, and other related costs; enrollment workload adjustments; operation costs of new facilities adjustments; and new and improved program enhancements, which are determined by the Legislature Student fees in the base budget plus student fee revenues generated by increases in fee rates are deducted from the sum of these components to determine the net annual State apportionment to each college

The State allocates gross receipts taxes, generally known as Public Education Capital Outlay money, to the College on an annual basis The College is authorized to receive and expend these resources only upon applying for and receiving an encumbrance authorization from the Florida Department of Education

The following is a summary of State revenue sources and amounts:

Gross Receipts Tax (Public Education Capital Outlay) 9,178,016

4,071,129

Bright Futures Scholarship Program 2,669,826 Florida Student Assistance Grants 1,087,456 Restricted Contracts and Grants 706,370 Motor Vehicle License Tax (Capital Outlay and Debt Service) 572,800

Education Enhancement Trust Fund (Lottery)

15 FUNCTIONAL DISTRIBUTION OF OPERATING EXPENSES

The functional classification of an operating expense (instruction, academic support, etc.) is assigned to a department based on the nature of the activity, which represents the material portion of the activity attributable to the department For example, activities of an academic department for which the primary departmental function is instruction may include some activities other than direct instruction such as public service However, when the primary mission of the department consists of instructional program elements,

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all expenses of the department are reported under the instruction classification The operating expenses on the statement of revenues, expenses, and changes in net assets are presented by natural classifications The following are those same expenses presented in functional classifications as recommended by NACUBO:

Functional Classification Amount

Academic Support 6,828,299 Student Services 9,262,415 Institutional Support 11,946,301 Operation and Maintenance of Plant 14,271,672 Scholarships and Fellowships 21,847,246 Depreciation 6,647,279 Auxiliary Enterprises 596,868

Total Operating Expenses $ 105,290,020

16 CURRENT UNRESTRICTED FUNDS

The Southern Association of Colleges and Schools, Commission on Colleges, which establishes the accreditation requirements for institutions of higher education, requires a disclosure of the financial position

of unrestricted net assets, exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets To meet this requirement, statements of net assets and revenues, expenses, and changes in net assets for the current unrestricted funds are presented, as follows:

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ASSETS

Current Assets:

Cash and Cash Equivalents $ 10,834,128 Accounts Receivable, Net 3,177,361 Due from Other Governmental Agencies 393,106 Due from Component Unit 49,797

LIABILITIES

Current Liabilities:

Accounts Payable $ 744,067 Salary and Payroll Taxes Payable 1,017,642 Deferred Revenue 7,573 Deposits Held for Others 117,887 Compensated Absences Payable 122,617

Total Current Liabilities 2,009,786 Noncurrent Liabilities:

Compensated Absences Payable 4,912,448 Other Postemployment Benefits Payable 54,351

Total Noncurrent Liabilities 4,966,799

TOTAL LIABILITIES AND NET ASSETS $ 15,178,107

Statement of Current Unrestricted Funds Net Assets

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REVENUES

Operating Revenues:

Student Tuition and Fees, Net of Scholarship Allowances of $15,046,562 $ 17,815,697 Federal Grants and Contracts 105,343 State and Local Grants and Contracts 149,488 Nongovernmental Grants and Contracts 603,762 Sales and Services of Educational Departments 16,507 Auxiliary Enterprises 1,403,808 Other Operating Revenues 151,699

EXPENSES

Operating Expenses:

Personnel Services 53,485,496 Scholarships and Waivers 603 Utilities and Communications 2,547,756 Contractual Services 2,035,655 Other Services and Expenses 4,586,125 Materials and Supplies 2,755,436

NONOPERATING REVENUES

State Appropriations 32,927,908

Investment Income 42,411 Other Nonoperating Revenues 21,853

Loss Before Other Revenues,

Transfers from Other Funds 14,462,588

Net Assets, Beginning of Year 3,036,776

Statement of Current Unrestricted Funds Revenues, Expenses, and Changes in Net Assets

17 SUBSEQUENT EVENTS

During the 2010 legislative session, the College received Public Education Capital Outlay funds for the purchase of 25 acres of land adjacent to the existing Altamonte Springs campus This land includes three existing buildings of over 90,000 square feet On July 29, 2010, the College closed on this purchase at a cost

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of $22.5 million with payments of $500,100 made as a deposit, $12,500,000 made at closing, and the

$10 million balance plus interest due by July 29, 2011

On September 29, 2010, the College closed on a 2.58 acre parcel of land adjacent to the south entrance of the Sanford/Lake Mary Campus The purchase price of this property was $600,000 and was funded with

general operating funds

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Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability (AAL) AAL Funded Covered of Covered Valuation Assets (2) (UAAL) Ratio Payroll Payroll Date (1) (a) (b) (b-a) (a/b) (c) [(b-a)/c] 7/1/2007 $ $ 715,854 $ 715,854 0% $ 31,261,578 2.3% 7/1/2009 $ $ 822,003 $ 822,003 0% $ 34,652,305 2.4% Notes: (1)

(2)

The initial OPEB actuarial calculation was performed as of July 1, 2007, for the College as it implemented the provisions of GASB 45.

The College's OPEB actuarial valuation used the projected unit credit actuarial method to estimate the unfunded actuarial liabilities.

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1 SCHEDULE OF FUNDING PROGRESS – OTHER POSTEMPLOYMENT BENEFITS PLAN

The July 1, 2009, unfunded actuarial accrued liability (UAAL) of $822,003 was 14.8 percent higher than the July 1, 2007, UAAL of $715,854 The increase was due to the expected growth of liabilities over time and demographic changes of approximately $133,000 Updated participation and medical trend assumptions accounted for an additional $55,000 increase in the liability These increases were partially offset by a decrease in the UAAL of $82,000 resulting from updated claims costs, contributions, and the revised mortality assumption

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G74 Claude Pepper Building

111 West Madison Street Tallahassee, Florida 32399-1450

The President of the Senate, the Speaker of the

House of Representatives, and the

Legislative Auditing Committee

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

We have audited the financial statements of Seminole State College of Florida, a component unit of the State of Florida, and its discretely presented component unit as of and for the fiscal year ended June 30, 2010, which collectively comprise the College’s basic financial statements, and have issued our report thereon included under the

heading INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS Our report on the

financial statements was modified to include a reference to other auditors We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial

audits contained in Government Auditing Standards issued by the Comptroller General of the United States Other

auditors audited the financial statements of the discretely presented component unit as described in our report on the College’s financial statements This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the College’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the College’s internal control over financial reporting Accordingly, we do not express an opinion on the effectiveness of the College’s internal control over financial reporting

A deficiency in internal control exists when the design or operation of a control does not allow management or employees,

in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a

timely basis A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a

reasonable possibility that a material misstatement of the College’s financial statements will not be prevented, or detected and corrected on a timely basis

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting

D AVID W M ARTIN , CPA

A UDITOR G ENERAL

PHONE: 850-488-5534 FAX: 850-488-6975

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misstatement, we performed tests of its compliance with certain provisions of laws, rules, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion The results of our tests disclosed no instances of

noncompliance or other matters that are required to be reported under Government Auditing Standards

Pursuant to Section 11.45(4), Florida Statutes, this report is a public record and its distribution is not limited Auditing standards generally accepted in the United States of America require us to indicate that this report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties

Respectfully submitted,

David W Martin, CPA February 9, 2011

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