REPORT NO. 2011-039 NOVEMBER 2010 BROWARD COLLEGE Financial Audit For the Fiscal Year Ended June 30, 2010_part2 ppt

The majority of the increase was due to an additional $29.3 million in Federal Pell grants received over the prior fiscal year as a result of increased student enrollment and increased f

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Nonoperating Revenues (Expenses): College

(In Thousands)

2009-10 2008-09 State Appropriations $ 67,524 $ 73,968 Gifts and Grants 83,759 47,816 Investment Income 500 1,187 Net Realized and Unrealized Gain (Loss)

on Investments 1,196 (656) Other Nonoperating Revenues 110 128 Interest on Capital Asset-Related Debt (1,108) (1,063)

Net Nonoperating Revenues $ 151,981 $ 121,380

Nonoperating revenues increased by $30.6 million, or 25.2 percent, over the prior fiscal year Nonoperating revenue changes were the result of the following factors:

 Gifts and grants increased by $35.9 million, or 75.2 percent, from the prior fiscal year The majority of the increase was due to an additional $29.3 million in Federal Pell grants received over the prior fiscal year as a result of increased student enrollment and increased financial aid award amounts Additionally, $5.8 million was received from the American Recovery and Reinvestment Act of 2009

 State appropriation revenues decreased by $6.4 million, or 8.7 percent, from the prior fiscal year

Other Revenues, Expenses, Gains, or Losses

This category is mainly composed of capital appropriations and capital grants, contracts, gifts, and fees The following summarizes the College’s other revenues, expenses, gains, or losses for the 2009-10 and 2008-09 fiscal years:

Other Revenues, Expenses, Gains, or Losses: College

(In Thousands)

2009-10 2008-09 Capital Appropriations $ 9,059 $ 18,185 Capital Grants, Contracts, Gifts, and Fees 5,540 5,464 Additions to Permanent Endowment 3 12

Other revenues, expenses, gains, or losses decreased by $9.1 million, or 38.3 percent, when compared to the prior fiscal year This was primarily because capital appropriations decreased by $9.1 million, or 50.2 percent, as compared

to the prior year due to the decrease in Public Education Capital Outlay dollars the College received from the State to fund capital projects

T HE S TATEMENT OF C ASH F LOWS

Another way to assess the financial health of an institution is to look at the statement of cash flows Its primary purpose is to provide relevant information about the cash receipts and cash payments of an entity during a period The statement of cash flows also helps users assess:

 An entity’s ability to generate future net cash flows

 Its ability to meet its obligations as they come due

 Its need for external financing

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A summary of the College’s cash flows for the 2009-10 and 2008-09 fiscal years is presented in the following table:

Condensed Statement of Cash Flows: College

(In Thousands)

2009-10 2008-09 Cash Provided (Used) by:

Operating Activities $ (144,904) $ (119,032) Noncapital Financing Activities 150,968 122,276 Capital and Related Financing Activities 5,519 13,338 Investing Activities 15,384 (24,286)

Net Increase (Decrease) in Cash and Cash Equivalents 26,967 (7,704) Cash and Cash Equivalents, Beginning of Year 49,644 57,348

Cash and Cash Equivalents, End of Year $ 76,611 $ 49,644

Major sources of funds came from State appropriations ($67.5 million), net student tuition and fees ($39.9 million), grants and contracts ($101.3 million), and bookstore receipts ($15.5 million) Major uses of funds were for payments

to employees ($97 million) and to providers of goods and services ($52.9 million)

The College’s overall cash and cash equivalents increased by $27 million, or 54.3 percent, as compared to the prior fiscal year Changes in cash and cash equivalents were the result of the following factors:

 Operating activities used $25.9 million more in cash as compared to the prior year The increase was primarily the result of an increase in payments for scholarships totaling $13.7 million along with an increase in payments for employees and employee benefits of $7.4 million

 Noncapital financing activities gained $28.7 million more in cash as compared to the prior fiscal year The increase was primarily due to $29.3 million in additional Federal Pell grants and an increase in cash received for American Recovery and Reinvestment Act of 2009 stimulus funds of $5.8 million, which offset the

$6.4 million decrease in State appropriations

 Capital and related financing activities decreased by $7.8 million as compared to the prior fiscal year Proceeds from capital debt decreased by $19.2 million as compared to the prior fiscal year because the College did not issue any capital related bonds This decrease in cash was offset by a decrease in spending on purchases of capital assets of $11.5 million

 Cash flow from investing activities was $15.4 million due primarily to the sale of investments

CAPITAL ASSETS AND DEBT ADMINISTRATION

C APITAL A SSETS

At June 30, 2010, the College had $297.8 million in capital assets, less accumulated depreciation of $135 million, for net capital assets of $162.8 million Depreciation charges for the current fiscal year totaled $8.5 million The following table summarizes the College’s capital assets at June 30:

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Capital Assets, Net at June 30: College

(In Thousands)

Capital Assets 2010 2009 Land $ 3,692 $ 3,692 Buildings 243,293 214,358 Other Structures and Improvements 14,499 14,499 Furniture, Machinery, and Equipment 19,209 19,206 Assets Under Capital Leases 12,976 12,976 Construction in Progress 4,123 22,394

Less, Accumulated Depreciation:

Buildings 92,996 86,960 Other Structures and Improvements 13,437 13,260 Furniture, Machinery, and Equipment 17,138 17,047 Assets Under Capital Lease(s) 11,438 10,444

Total Accumulated Depreciation 135,009 127,711

Capital Assets, Net $ 162,783 $ 159,414

The College completed the Building 6 office renovations, the Central Campus parking garage, and Buildings 50 and 51 renovations and capitalized those improvements totaling $28.9 million The College has $19.2 million in construction contract commitments at June 30, 2010, that includes the following:

 Central Campus – Institute of Public Safety remodel

 South Campus – Building 72 renovations

State appropriations together with local funds are expected to finance the construction, renovation, and purchase of land and facilities More information about the College’s capital assets is presented in the notes to financial statements

D EBT A DMINISTRATION

At fiscal year-end, the College had $24.4 million in long-term debt outstanding The following table summarizes outstanding long-term debt by type for the fiscal years ended June 30, 2010, and June 30, 2009:

Long-Term Debt, at June 30: College

(In Thousands)

2010 2009 SBE Capital Outlay Bonds $ 4,090 $ 4,470

17,975 18,650 Capital Leases Payable 2,347 3,359

Capital Improvement Revenue Bonds

During the 2009-10 fiscal year, there were no bond sales and debt repayments totaled $2.1 million Additional information about the College’s long-term debt is presented in the notes to financial statements

ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE

Broward 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, no increase in State funding is anticipated in the coming year The College’s current financial and capital plans indicate that the infusion of additional financial resources from an

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increase in tuition rates will be necessary to maintain its present level of services In response, the Board of Trustees increased the tuition rate eight percent to take effect beginning with the Fall 2010 term In addition, the College instituted a conservative budget for the 2010-11 fiscal year

REQUESTS FOR INFORMATION

Questions concerning information provided in the MD&A, financial statements and notes thereto, other required supplementary information, or requests for additional financial information should be addressed to Jayson Iroff, Vice President for Financial Services, Broward College, 225 East Las Olas Blvd, Fort Lauderdale, Florida 33301

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BASIC FINANCIAL STATEMENTS

College Component

Unit ASSETS

Current Assets:

Cash and Cash Equivalents $ 56,431,636 $ 1,980,222 Restricted Cash and Cash Equivalents 3,333,621

Accounts Receivable, Net 3,365,385 187,200 Notes Receivable, Net 163,509

Due from Other Governmental Agencies 47,609,309 Due from Component Unit 527,707

Prepaid Expenses 56,156 6,175

Total Current Assets 114,253,832 2,173,597 Noncurrent Assets:

Restricted Cash and Cash Equivalents 16,846,184

Restricted Investments 3,465,257 64,705,883 Depreciable Capital Assets, Net 154,967,250

Nondepreciable Capital Assets 7,815,308

Total Noncurrent Assets 192,518,762 64,705,883

TOTAL ASSETS $ 306,772,594 $ 66,879,480

LIABILITIES

Current Liabilities:

Accounts Payable $ 2,725,042 $ 683,239 Salary and Payroll Taxes Payable 1,912,899

Retainage Payable 671,083 Due to Other Governmental Agencies 537,249 Deferred Revenue 655,658 Estimated Insurance Claims Payable 10,019,389 Deposits Held for Others 1,836,682 Long-Term Liabilities - Current Portion:

Capital Leases Payable 1,140,035 Compensated Absences Payable 599,907

Total Current Liabilities 21,197,944 683,239 Noncurrent Liabilities:

Capital Leases Payable 1,207,460 Compensated Absences Payable 8,977,477 Other Postemployment Benefits Payable 3,653,884

Total Noncurrent Liabilities 34,803,821

TOTAL LIABILITIES 56,001,765 683,239

BROWARD COLLEGE

A COMPONENT UNIT OF THE STATE OF FLORIDA

STATEMENT OF NET ASSETS

June 30, 2010

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Unit NET ASSETS

Invested in Capital Assets, Net of Related Debt $141,236,555 $ Restricted:

Nonexpendable:

Expendable:

Scholarships 770,501 24,913,932

Unrestricted 43,493,361 6,181,502

Total Net Assets 66,196,241 250,770,829

TOTAL LIABILITIES AND NET ASSETS $306,772,594 $ 66,879,480

BROWARD COLLEGE

A COMPONENT UNIT OF THE STATE OF FLORIDA STATEMENT OF NET ASSETS (Continued)

June 30, 2010

The accompanying notes to financial statements are an integral part of this statement.

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Unit REVENUES

Operating Revenues:

Student Tuition and Fees, Net of Scholarship

Allowances of $38,704,344 $ 40,445,677 $

Federal Grants and Contracts 7,787,245

State and Local Grants and Contracts 2,067,859

Nongovernmental Grants and Contracts 8,300,991

Sales and Services of Educational Departments 53,532

15,518,695

Other Operating Revenues 1,485,070 2,548,973

Total Operating Revenues 75,659,069 2,548,973

EXPENSES

Operating Expenses:

Scholarships and Waivers 38,293,857

Utilities and Communications 4,372,270

Contractual Services 11,189,348

Other Services and Expenses 8,563,279 7,195,524

Materials and Supplies 33,107,765

Total Operating Expenses 231,714,821 7,195,524

Operating Loss (156,055,752) (4,646,551)

NONOPERATING REVENUES (EXPENSES)

Investment Income 500,130 1,242,174

Net Gain on Investments 1,195,874 10,052,314

Other Nonoperating Revenues 109,645

Interest on Capital Asset-Related Debt (1,108,045)

Net Nonoperating Revenues 151,980,393 11,294,488

Income (Loss) Before Other Revenues,

Expenses, Gains, or Losses (4,075,359) 6,647,937

Capital Appropriations 9,058,805

Capital Grants, Contracts, Gifts, and Fees 5,540,400

Additions to Permanent Endowments 2,646

Total Other Revenues 14,601,851

Increase in Net Assets 10,526,492 6,647,937

Net Assets, Beginning of Year 242,418,454 59,548,304

Adjustment to Beginning Net Assets (2,174,117)

Net Assets, Beginning of Year, as Restated 240,244,337 59,548,304

Net Assets, End of Year $ 250,770,829 $ 66,196,241

BROWARD COLLEGE

A COMPONENT UNIT OF THE STATE OF FLORIDA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS

For the Fiscal Year Ended June 30, 2010

Allowances of $7,025,646

Auxiliary Enterprises, Net of Scholarship

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College CASH FLOWS FROM OPERATING ACTIVITIES

Tuition and Fees, Net $ 39,858,878

Grants and Contracts 18,171,442

Payments to Suppliers (52,866,066)

Payments for Utilities and Communications (4,372,270)

Payments to Employees (97,045,428)

Payments for Employee Benefits (27,436,397)

Payments for Scholarships (38,293,857)

Net Loans Issued to Students (4,723,065)

Collection of Loans to Students 4,736,574

Auxiliary Enterprises, Net 15,527,592

Sales and Service of Educational Departments 53,532

Other Receipts 1,485,070

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

State Appropriations 67,524,151

Gifts and Grants Received for Other Than Capital or Endowment Purposes 83,151,049

Private Gifts for Endowment Purposes 2,646

Other Receipts 290,445

Net Cash Provided by Noncapital Financing Activities 150,968,291

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Capital Appropriations 15,616,455

Capital Grants and Gifts 5,540,400

Purchases of Capital Assets (12,463,335)

Principal Paid on Capital Debt and Leases (2,066,157)

Interest Paid on Capital Debt and Leases (1,108,045)

Net Cash Provided by Capital and Related Financing Activities 5,519,318

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from Sales and Maturities of Investments 14,883,582

Investment Income 500,130

Cash and Cash Equivalents, Beginning of Year 49,644,115

BROWARD COLLEGE

STATEMENT OF CASH FLOWS For the Fiscal Year Ended June 30, 2010

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College RECONCILIATION OF OPERATING LOSS

TO NET CASH USED BY OPERATING ACTIVITIES

Operating Loss $ (156,055,752)

Adjustments to Reconcile Operating Loss

to Net Cash Used by Operating Activities:

Depreciation Expense 8,542,300

Changes in Assets and Liabilities:

Receivables, Net (1,202,770) Due From Other Governmental Agencies (390,057) Inventories 476,379 Prepaid Expenses 363,396 Other Assets 89,482 Accounts Payable 3,240,243 Salaries and Payroll Taxes Payable (384,323) Deferred Revenue 70,199 Deposits Held for Others 220,897 Compensated Absences Payable 820,361 Other Postemployment Benefits Payable (694,350)

BROWARD COLLEGE

A COMPONENT UNIT OF THE STATE OF FLORIDA STATEMENT OF CASH FLOWS (Continued) For the Fiscal Year Ended June 30, 2010

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BROWARD COLLEGE

NOTES TO FINANCIAL STATEMENTS

J UNE 30, 2010

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1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity The governing body of Broward College, a component unit of the State of Florida, is

the District Board of Trustees The Board constitutes a corporation and is composed of five 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 Broward County

Criteria for defining the reporting entity are identified and described in the Governmental Accounting

Standards Board’s 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 or incomplete Based upon the application of these criteria, the College is a component unit of the State of Florida, and its financial balances and activity 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 Broward College 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 financial data reported on the accompanying financial statements was derived from the Foundation’s audited financial statements for the fiscal year ended December 31, 2009

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

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 the Governmental Accounting Standards Board (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

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