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3.10.1 Financial Stability PDF Print E-mail
Friday, 04 September 2009 06:52

3.10.1     Financial Stability

The institution's recent financial history demonstrates financial stability.

Responsible Unit: Division of Business and Finance

Compliance Judgment

Compliance

Narrative

The recent financial history of North Carolina Agricultural and Technical State University (A&T) demonstrates the university's financial stability.  Revenues have remained strong, investment in facilities is ongoing, and new gifts are growing the university's endowments. [1] [2][3][4][5][6]

Revenues: Total operating revenues increased from 2004 through 2007, a result of increased enrollment levels in 2004 and 2005; increases in charges for tuition, fees, and services; and increases in sponsored program receipts.  Fiscal year 2008 saw a 1.2 % decline in total operating revenue resulting from a decrease in enrollment while the university maintained student charges for tuition, fees, and services at the 2007 level.  University officials anticipate that enrollment will rebound by 2010.  Income received from federal, state, local, and private contracts, grants, as well as federal appropriations, increased by 15 % from 2004 to 2008, a result of the growth in the university's sponsored programs.

Operating revenues were supplemented by non-operating income from state appropriations, noncapital grants, and investment income.  State appropriations, based on enrollment levels as well as program expansion, covered from 38% to 43 percent% of total operating costs.

 

 

 

2004

2005

2006

2007

2008

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues

 

 

 

 

 

 

 

 

Tuition and Fees

37,404,995

42,084,580

47,929,885

49,424,076

46,965,544

 

 

 

Federal Appropriations

5,858,783

5,918,297

5,023,261

4,479,087

5,648,169

 

 

 

Federal Grants and Contracts

30,985,311

33,140,927

33,940,620

34,118,823

35,433,383

 

 

 

State, Local, and Private

 

 

 

 

 

 

 

 

Grants and Contracts

1,334,354

2,308,426

1,763,435

3,116,768

2,844,579

 

 

 

Sales and Services

20,417,774

21,991,978

24,590,909

24,251,029

22,962,559

 

 

 

Other Operating Revenues

1,193,551

1,410,037

1,519,962

1,693,827

1,853,036

 

 

 

Total Operating Revenues

97,194,768

106,854,245

114,768,072

117,083,610

115,707,270

 

 

 

 

 

 

 

 

 

 

 

Non-operating Revenues

 

 

 

 

 

 

 

 

State Appropriations

66,237,795

75,997,662

80,441,591

89,056,885

99,373,082

 

 

 

Contracts and Grants

9,399,942

9,012,550

11,020,738

9,711,267

8,895,244

 

 

 

Investment Income

1,524,818

1,367,594

2,047,041

3,835,348

1,930,352

 

 

 

Total Non-operating Revenues

77,162,555

86,377,806

93,509,370

102,603,500

110,198,678

 

 

Total operating and

 

 

 

 

 

 

 

 

Non-operating revenues

174,357,323

193,232,051

208,277,442

219,687,110

225,905,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrestricted revenues, included in the table of total revenues above, are composed of state appropriations; student tuition, fees, and services; recovered overhead costs associated with sponsored programs; and other unrestricted receipts.  Unrestricted revenues remain more than sufficient to cover the university's associated unrestricted expenses as illustrated in the table below.

 

 

 

 

 

 

 

 

 

 

2004

2005

2006

2007

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating

 

 

 

 

 

 

 

Revenues

63,279,627.91

71,752,517.04

77,097,508.64

80,004,085.76

75,256,057.91

 

 

Operating

 

 

 

 

 

 

 

Expenses

(125,751,315.84)

(144,812,864.53)

(151,202,475.03)

(161,935,677.08)

(169,866,849.17)

 

 

Other Revenues

 

 

 

 

 

 

 

and Expenses

63,902,985.06

74,995,425.43

83,832,738.94

87,762,788.05

98,714,101.19

 

 

 

 

 

 

 

 

 

 

 

1,431,297.13

1,935,077.94

9,727,772.55

5,831,196.73

4,103,309.93

 

 

 

 

 

 

 

 

 

Sponsored Programs, Contracts and Grants: A&T has ranked third in sponsored research funding in the UNC System for the last five years behind UNC-Chapel Hill and North Carolina State University.  Major projects include $12.2 million from the Department of Commerce for the National Oceanic Atmospheric Administration Interdisciplinary Scientific Environmental Technology laboratory cooperative and several multi-year million dollar awards from the National Science Foundation (NSF) and from the Office of Naval Research.  A&T also has over $1 million a year in funding from private companies.  In September 2008, A&T announced that the NSF has awarded the university an Engineering Research Center (ERC).  The ERC is considered the "crown jewel" among NSF awards.  In the past twenty-five years, only about thirty ERCs have been funded by the NSF.

Revenues for contracts, grants, and gifts from all sources have increased during the five-year period from 2004 through 2008 as illustrated below:

3.10.1.image3

 

The university also received the following federal grants for the development of research and classroom facilities:

 

 

 

 

 

 

 

 

 

 

 

2004

2005

2006

2007

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Capital Gifts

734,647

463,232

1,030,684

5,090,703

386,106

 

 

 

 

 

 

 

 

 

 

Endowments and Gifts: All gifts and endowments received by the university are processed through the office of the vice chancellor for development.  That office is responsible for determining the nature of the gift and whether the gift is designated for the university or the foundation.

Endowment gifts are managed by the office of the vice chancellor for business & finance under the direction of the Endowment Board Committee, through the university's Board of Trustees.  The committee consists of up to seven members with the chairman of the Board of Trustees also serving as the chairman of the Endowment Board Committee.   The Endowment Board Committee sets investment and spending policies and also approves investment managers for the endowment portfolio.

The spending policy [7] adopted by the Endowment Board Committee was designed to provide a relatively even flow of resources for scholarships and endowed professorships from year to year.  The budget is based on no more than 5% of the three-year average of the portfolio value at December 31.  The university has capped the spending rate at 4.5% over the past several years.  Permanent files are maintained on all endowments in the comptroller's office and are reviewed annually for spending eligibility.

The university's endowment fund has experienced steady growth from 2004 through 2008, including a positive total return through 2007.  Gifts received in 2009 totaled $3.5 million through January, exceeding the 2008 level of gifts by over $1 million.  The market downturn in 2008 resulted in a total net loss on the portfolio of $371,642 by June 30t and that loss increased to $2,569,459 by December 31.  The change is primarily due to the unrealized loss on the endowment investments as a result of the volatile and unstable world-wide financial market.  It is expected that this downward trend will continue into the foreseeable future.  The university's management, along with investment management advisors, plans to continue monitoring the investment portfolio to minimize any significant losses.

 

 

 

 

 

 

 

 

 

 

 

 

2004

2005

2006

2007

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning Balance

 

8,161,052

9,392,473

11,445,217

12,374,746

14,563,738

 

 

Gifts

 

782,602

1,845,500

646,960

1,057,721

2,303,828

 

 

Net Appreciation

 

 

 

 

 

 

 

 

(Depreciation)

 

725,219

551,744

670,369

1,590,371

(371,642)

 

 

Amount provided for Spending

 

(276,400)

(344,500)

(387,800)

(459,100)

(515,600)

 

 

 

 

 

 

 

 

 

 

 

Ending Balance

 

9,392,473

11,445,217

12,374,746

14,563,738

15,980,324

 

 

 

 

 

 

 

 

 

 

 

Net Total Return

 

8.640

5.277

5.579

12.525

(2.331)

 

 

 

 

 

 

 

 

 

 

Expendable Restricted Net Assets and Endowment Net Assets: Expendable restricted net assets consist of contracts and grants, the expendable portion of endowment funds, and funds held for capital improvements.   The cost of construction projects has exerted significant influence on the university's financial statements for the past five years and will continue to do so through 2009.  Since the passage in November 2000 of a $2.5 billion bond package for the improvement and expansion of facilities on the seventeen campuses of the University of North Carolina System, the university has received over $143,822,092.98 in state construction grants financed by the bond proceeds.  All twenty-two of the university's bond-funded projects were under design, in the construction phase or completed at June 30, 2008.  The construction phase of the bond-funded projects has resulted in large variations of the net assets held for capital improvements over the past five years.  The final bond-financed project is expected to be completed by June 30, 2009.

 

 

 

 

 

 

 

 

 

 

2004

2005

2006

2007

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expendable Restricted Net Assets

7,309,327

6,562,300

6,992,095

9,148,492

9,509,134

 

 

Capital Projects

521,916

15,096,867

7,419,059

45,800,687

34,071,962

 

 

Total Expendable Restricted

 

 

 

 

 

 

 

Net Assets

7,831,243

21,659,167

14,411,154

54,949,179

43,581,096

 

 

 

 

 

 

 

 

 

Long -Term and Short-Term Debt: The Board of Trustees is responsible for approving the issuance of new debt for the university.  At June 30, 2008, the university had outstanding revenue bonds on its stadium, dining, student union, and parking facilities.  Over the five-year period from 2004 through 2008, the university issued bonds to build a 500-car parking deck and to refund dining system and student union revenue bonds.  Short-term financing of $6,168,000, secured in 2006 to begin construction on the parking deck, was retired when long-term bonds were issued in 2007.  The university's debt balance of $18,420,000 is very low compared to total net capital assets of $283,998,651.  The debt service balances and bond coverage ratios are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

2004

2005

2006

2007

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short Term Debt

 

 

 

 

 

 

 

 

Beginning Balance

 

-

-

-

6,168,000

-

 

 

Issued

 

-

-

6,168,000

-

-

 

 

Repaid

 

-

-

-

6,168,000

-

 

 

Ending Balance

 

-

-

6,168,000

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long Term Debt

 

 

 

 

 

 

 

 

Beginning Balance

 

16,485,000

15,640,000

14,760,000

13,825,000

18,420,000

 

 

 

 

 

 

 

 

 

 

 

Issued

 

-

2,395,000

-

13,490,000

-

 

 

Refunded

 

-

(2,390,000)

-

(7,910,000)

-

 

 

Principal Payments

 

(845,000)

(885,000)

(935,000)

(985,000)

(1,135,000)

 

 

 

 

 

 

 

 

 

 

 

Ending Balance

 

15,640,000

14,760,000

13,825,000

18,420,000

17,285,000

 

 

 

 

 

 

 

 

 

 

 

Bond Coverage

 

2.29

2.64

2.76

2.04

1.10

 

 

 

 

 

 

 

 

 

 

Enrollment: A&T experienced steady total enrollment growth from 2000 through 2005.  Although total enrollment dropped in 2006, 2007, and 2008, the university projects that the enrollment decline will level out in 2009 and return to a trend of growth by 2010.

Enrollment decline was experienced in undergraduate students, but as illustrated in the chart below, graduate student numbers actually increased over the same period.  The number of advanced degrees offered by the university has grown over the years to include doctorates in six disciplines, as well as master's degrees in forty-eight disciplines. [8]

3.10.1.image8

 

Depreciation: Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally ten to fifty years for general infrastructure, ten to fifty years for buildings, and five to fifteen years for equipment.  The university's art collections are capitalized at cost or fair value at the date of acquisition or donation.  These collections are considered inexhaustible and are therefore not depreciated.

The depreciation method and useful lives of assets developed by the university are consistent with the guidelines established by the North Carolina Office of the State Controller at the following link: [9]

Supporting Documents

[1]      Business & Finance, Audited Financial Statements, FY 2008

[2]      Business Finance, AFS, Fiscal Year 2008, Institutional Audit Management Letter

[3]      Business Finance, AFS, Fiscal Year, 2007

[4]      Business Finance, AFS, Fiscal Year, 2006

[5]      Business Finance, AFS, Fiscal Year, 2005

[6]      Business Finance, AFS, Fiscal Year, 2004

[7]      Business Finance, Spending Policy and Guidelines for Investment of the Endowment Portfolio

[8]      Fact Book, Enrollment Data 2001-2008

[9]      NC Office of the State Controller, Depreciation Policy

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Last Updated ( Monday, 12 October 2009 16:15 )

 


Last Updated ( Thursday, 19 November 2009 16:21 )
 

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