century.edu Annual Financial Report 11...Salaries payable totaled $5 million at June 30, 2011, representing a 10 percent increase over the prior fiscal year. Included within the salaries

Annual Financial Report

century.edu

A M E M B E R O F T H E M I N N E S O TA S TAT E C O L L E G E S A N D U N I V E R S I T I E S S Y S T E M

F O R T H E Y E A R S E N D E D

June 30, 2011 and 2010

1110

CENTURY COLLEGE

A MEMBER OF THE MINNESOTA STATE COLLEGES AND UNIVERSITIES SYSTEM

ANNUAL FINANCIAL REPORT

FOR THE YEARS ENDED JUNE 30, 2011 and 2010

Prepared by: Century College 3300 Century Avenue South White Bear Lake, MN 55110

Upon request, this publication is available in alternate formats by calling one of the following: General number (651) 201-1800 Toll free: 1-888-667-2848 For TTY communication, contact Minnesota Relay Service at 7-1-1 or 1-800-627-3529.

CENTURY COLLEGE

ANNUAL FINANCIAL REPORT FOR THE YEARS ENDED JUNE 30, 2011 and 2010

TABLE OF CONTENTS

INTRODUCTION

Page

Transmittal Letter ...................................................................................................................................5

Organization Chart .................................................................................................................................9

FINANCIAL SECTION

Independent Auditors’ Report .............................................................................................................. 12

Management’s Discussion and Analysis .............................................................................................. 14

Basic Financial Statements

Statements of Net Assets ............................................................................................................... 18

Century College Foundation – Statements of Financial Position ................................................. 19

Statements of Revenues, Expenses, and Changes in Net Assets ................................................... 20

Century College Foundation – Statements of Activities ............................................................... 21

Statements of Cash Flows ............................................................................................................. 22

Notes to the Financial Statements ................................................................................................. 24

REQUIRED SUPPLEMENTARY INFORMATION SECTION

Schedule of Funding for Net Other Postemployment Benefits ........................................................... 47

SUPPLEMENTARY SECTION

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .................................................................. 50

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INTRODUCTION

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The financial activity of Century College is included in this report. The College is one of 32 colleges and universities included in the Minnesota State Colleges and Universities Annual Financial Report which is issued separately. The College’s portion of the Revenue Fund is also included in this report. The Revenue Fund activity is included both in the Minnesota State Colleges and Universities Annual Financial Report and in a separately issued Revenue Fund Annual Financial Report. All financial activity of Minnesota State Colleges and Universities is included in the state of Minnesota Comprehensive Annual Financial Report.

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FINANCIAL SECTION

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MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) INTRODUCTION The following discussion and analysis provides an overview of the financial position and activities of Century College, a member of Minnesota State Colleges and Universities, for the fiscal years ended June 30, 2011, 2010 and 2009. This discussion has been prepared by management and should be read in conjunction with the financial statements and accompanying notes, which follow this section. The College is one of 32 colleges and universities comprising Minnesota State Colleges and Universities. The Minnesota State Colleges and Universities system is governed by a 15 member Board of Trustees appointed by the governor. Twelve trustees serve six-year terms, with at least one from each of Minnesota’s eight congressional districts. Three student trustees, one from a state university, one from a community college and one from a technical college, serve two-year terms. The Board of Trustees selects the Chancellor and has broad policy responsibility for system planning, academic programs, fiscal management, personnel, admissions requirements, tuition and fees, and policies and procedures. The College is a two year comprehensive public institution of higher learning with approximately 15,200 students. Approximately 700 faculty and staff members are employed by the College. The College’s mission is to inspire, prepare, and empower students to succeed in a changing world. The College fulfills that mission through its offering of the first two years of a liberal arts education and more than 40 occupational programs in nearly 60 areas of study. FINANCIAL HIGHLIGHTS The College’s financial position improved during fiscal year 2011. Total assets increased 3.4 percent to $87.3 million, compared to $84.6 million in fiscal year 2010 and $71.6 million in fiscal year 2009. Total liabilities rose to $30.9 million in fiscal year 2011, up from $30.4 million in fiscal year 2010 and $28.3 million in fiscal year 2009. Total net assets, which represent the residual interest in the College’s assets after liabilities are deducted, increased by 4.2 percent to $56.4 million in fiscal year 2011, up from $54.2 million in fiscal year 2010. USING THE FINANCIAL STATEMENTS The College’s financial report includes three financial statements: the statements of net assets, the statements of revenues, expenses and changes in net assets, and the statements of cash flows. These financial statements are prepared in accordance with applicable generally accepted accounting principles (GAAP) as established by the Governmental Accounting Standards Board (GASB) through authoritative pronouncements. These GASB statements establish standards for external financial reporting for public colleges and universities and require that financial statements be presented on a consolidated basis to focus on the College as a whole, with resources classified for accounting and reporting purposes into three net asset categories. STATEMENTS OF NET ASSETS The statements of net assets present the financial position of the College at the end of the fiscal year and include all assets and liabilities of the College as measured using the accrual basis of accounting. The difference between total assets and total liabilities (net assets) is one indicator of the current financial condition of the College, while the change in net assets is an indicator of whether the overall financial condition has improved or worsened during the year. Capital assets are stated at historical cost less an allowance for depreciation, with current year depreciation reflected as a period expense on the statements of revenues, expenses and changes in net assets.

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A summary of the College’s assets, liabilities and net assets as of June 30, 2011, 2010 and 2009, respectively, is as follows:

(In Thousands) 2011 2010 2009

Current assets $ 31,180 $ 31,048 $ 27,752 Noncurrent assets 56,195 53,483 43,814 Total assets 87,375 84,531 71,566 Current liabilities 10,215 9,603 8,619 Noncurrent liabilities 20,717 20,768 19,651 Total liabilities 30,932 30,371 28,270 Invested in capital assets, net of related debt 40,881 37,767 32,286 Restricted 1,916 1,711 1,010 Unrestricted 13,646 14,682 10,000 Total net assets $ 56,443 $ 54,160 $ 43,296

Current assets consist primarily of cash, cash equivalents and accounts receivable, net of allowance. These three items totaled $28.3 million at June 30, 2011, up from the prior fiscal year total of $27.5 million. This represents an increase of 2.8 percent. The increase from fiscal year 2009 to 2010 was $2.5 million or 10 percent. Current liabilities consist primarily of accounts payable and salaries payable. Accounts payable totaled $1.8 million at June 30, 2011, as compared to $1.6 million at June 30, 2010, and $1.7 million at June 30, 2009. Salaries payable totaled $5 million at June 30, 2011, representing a 10 percent increase over the prior fiscal year. Included within the salaries payable accrual is approximately two months of earned salary for faculty who have elected to receive salaries over twelve months on a September 1 – August 31 academic year. Net assets represent the residual interest in the College’s assets after liabilities are deducted. The College’s total net assets as of June 30, 2011 were $56.4 million, which represents an increase of 4.2 percent over the prior fiscal year’s total net assets of $54.2 million. The increase from June 30, 2009 to June 30, 2010 was $10.9 million. This significant increase in the College’s net assets is primarily attributable to increased investments in capital assets net of related debt. CAPITAL AND DEBT ACTIVITIES One of the critical factors in continuing the quality of the College’s academic programs is the development and renewal of its capital assets. The College continues to implement its long range plan to modernize its complement of older facilities, balanced with new construction. Capital assets as of June 30, 2011 totaled $56.2 million, which is net of accumulated depreciation of $34 million. This represents an increase in capital assets of 5 percent over fiscal year 2010. Bonds payable totaled $15.7 million on June 30, 2011, which is a decrease of $0.5 million or 3 percent from fiscal year 2010. Additional information on capital and debt activities can be found in the notes to the financial statements.

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STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS The statements of revenues, expenses and changes in net assets represents the College’s results of operations for the fiscal year. Users should note that GASB requires classification of State appropriations as nonoperating revenue. A summarized statement for the years ended June 30, 2011, 2010, and 2009, respectively, follows:

(In Thousands) 2011 2010 2009

Operating revenue $ 32,155 $ 32,748 $ 30,567 Operating expense (78,617) (72,895) (68,982) Operating loss (46,462) (40,147) (38,415) Nonoperating revenue and expense, net 46,487 44,871 40,087 Income before other revenues and expenses 25 4,724 1,672 Other revenues, expenses, gains, or losses 2,258 6,140 1,677 Change in net assets 2,283 10,864 3,349 Net assets, beginning of year 54,160 43,296 39,947 Net assets, end of year $ 56,443 $ 54,160 $ 43,296

Certain prior year amounts have been reclassified to conform to current year presentation. These classifications had no effect on net assets previously reported. Starting with fiscal year 2011, cost of goods sold is classified as an operating expense rather than offsetting revenue. Prior years have also been adjusted for comparability purposes. The reclassification increases both total operating revenue and operating expense by $4.0 million in fiscal year 2011. Tuition and state appropriations are the primary sources of funding for the College’s academic programs, with tuition becoming relatively more important. Tuition revenue increased by 6 percent primarily due to an increase in enrollment of 3 percent and an increase in the tuition rate of 5 percent. Tuition revenue, net of scholarship allowance decreased by 1 percent over last fiscal year. One of the reasons for the drop in net tuition revenue is that the amount of financial aid disbursements increased by 19 percent. Although the tuition rates approved by the Board increased by 5 percent in fiscal year 2011, the tuition rate students paid increased by only 3 percent. The difference was mitigated through funds from the American Recovery and Reinvestment Act. The College’s appropriation was reduced to $22.5 million in fiscal year 2011, compared to appropriations of $22.6 million in fiscal year 2010 and $25.1 million in fiscal year 2009. COMPONENT UNIT The Century College Foundation is a component unit of Century College. As such, the separately audited financial statements for the Foundation are included, but shown separately from those of the College in compliance with the requirements of GASB Statement No. 39. The value of scholarships and equipment contributed by, or passed through the Foundation was approximately $0.3 million for the fiscal year ended June 30, 2011.

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ECONOMIC FACTORS THAT WILL AFFECT THE FUTURE Looking toward the future, management believes that the College is positioned to continue its strong financial condition and level of excellence. While state appropriation for the past biennium included a significant unallotment, enrollment growth and continued strong financial management allowed the College to serve growing numbers of students without reductions in staffing or services. Management remains concerned about the continued decline in state support and the effect that may have on future tuition increases. In addition, the sluggish economy will continue to put financial burden and pressures on students’ ability to pay for college, which may have a negative effect on enrollment. To respond to these external factors, management has initiated multi-year budget planning spanning two biennia, along with initiatives to increase efficiency and student support, so that the college will be adequately positioned to fulfill its mission and support continued growth. The College has built a solid reserve and sufficient capacity to absorb the debt of its bonding projects, and will continue to expand its capacity to assume future bonding debt in anticipation of much needed future renovations and construction. REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the College finances for all those with an interest in the College’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to: Vice President of Finance and Administration Century College 3300 Century Avenue North White Bear Lake, Minnesota 55110

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STATEMENTS OF NET ASSETSAS OF JUNE 30, 2011 AND 2010(IN THOUSANDS)

Assets 2011 2010

Current AssetsCash and cash equivalents $ 23,564 $ 22,629 Grants receivable 392 1,145 Accounts receivable, net 3,671 3,224 Prepaid expense 1,162 1,109 Inventory 1,263 1,199 Other assets 33 37

Total current assets 30,085 29,343

Current Restricted AssetsCash and cash equivalents 1,095 1,705

Total restricted assets 1,095 1,705

Noncurrent AssetsCapital assets, net 56,195 53,483

Total noncurrent assets 56,195 53,483

Total Assets 87,375 84,531

Liabilities

Current LiabilitiesSalaries and benefits payable 5,000 4,530 Accounts payable 1,601 728 Unearned revenue 1,377 1,692 Payable from restricted assets 245 844 Interest payable 31 33 Funds held for others 9 72 Current portion of long-term debt 1,112 1,076 Other compensation benefits 840 628

Total current liabilities 10,215 9,603

Noncurrent LiabilitiesNoncurrent portion of long-term debt 14,538 14,990 Other compensation benefits 6,179 5,778

Total noncurrent liabilities 20,717 20,768

Total Liabilities 30,932 30,371

Net AssetsInvested in capital assets, net of related debt 40,881 37,767 Restricted expendable, bond covenants 293 132 Restricted expendable, other 1,623 1,579 Unrestricted 13,646 14,682

Total Net Assets $ 56,443 $ 54,160

The notes are an integral part of the financial statements.

CENTURY COLLEGE

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CENTURY COLLEGE FOUNDATIONSTATEMENTS OF FINANCIAL POSITIONAS OF JUNE 30, 2011 AND 2010(IN THOUSANDS)

2011 2010AssetsCurrent Assets

Cash and cash equivalents $ 151 $ 102 Pledges receivable 2 16 Investments 1,751 1,442 Other assets 1 1

Total Assets $ 1,905 $ 1,561

Liabilities and Net AssetsCurrent Liabilities

Accounts payable $ 98 $ 98 Total Liabilities 98 98

Net AssetsUnrestricted (45) (19) Temporarily restricted 754 516 Permanently restricted 1,098 966

Total Net Assets 1,807 1,463

Total Liabilities and Net Assets $ 1,905 $ 1,561


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STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETSFOR THE YEARS ENDED JUNE 30, 2011 AND 2010(IN THOUSANDS)

2011 2010Operating Revenues

Tuition, net $ 23,901 $ 24,047 Fees, net 2,643 2,819 Sales, net 4,358 4,751 Restricted student payments, net 799 599 Other income 454 532

Total operating revenues 32,155 32,748

Operating ExpensesSalaries and benefits 53,555 50,626 Purchased services 6,331 4,471 Supplies 7,693 7,583 Repairs and maintenance 1,088 817 Depreciation 2,704 2,385

Financial aid, net 3,502 3,586 Other expense 3,744 3,427 Total operating expenses 78,617 72,895

Operating loss (46,462) (40,147)

Nonoperating Revenues (Expenses)Appropriations 22,453 22,678 Federal grants 21,770 18,531

State grants 2,433 3,727 Private grants 287 459 Interest income 162 81 Interest expense (618) (605) Total nonoperating revenues (expenses) 46,487 44,871

Income Before Other Revenues, Expenses, Gains, or Losses 25 4,724

Capital appropriations 2,172 6,039 Donated assets and supplies 92 85 Gain (loss) on disposal of capital assets (6) 16

Change in net assets 2,283 10,864

Total Net Assets, Beginning of Year 54,160 43,296

Total Net Assets, End of Year $ 56,443 $ 54,160


CENTURY COLLEGE

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CENTURY COLLEGE FOUNDATIONSTATEMENTS OF ACTIVITIESFOR THE YEARS ENDED JUNE 30, 2011 AND 2010(IN THOUSANDS)

UnrestrictedTemporarily Restricted

Permanently Restricted

2011 Total

2010 Total

Support and RevenueContributions $ 67 $ 424 $ 41 $ 532 $ 472 In-kind contributions 146 - - 146 307 Investment income (loss) 8 9 (3) 14 (2) Realized gain (losses) - 2 39 41 (34) Unrealized gains 6 146 62 214 177 Special events 21 - - 21 12 Reclassification of net assets (6) 13 (7) - - Net assets released from restrictions 356 (356) - - -

Total support and revenue 598 238 132 968 932

Expenses Program services

Scholarships 152 - - 152 192 College activities 298 - - 298 412 Total program services 450 - - 450 604

Supporting servicesManagement and general 157 - - 157 112 Fundraising 17 - - 17 23 Total supporting services 174 - - 174 135 Total expenses 624 - - 624 739

Change in Net Assets (26) 238 132 344 193

Net Assets, Beginning of Year (19) 516 966 1,463 1,270

Net Assets, End of Year $ (45) $ 754 $ 1,098 $ 1,807 $ 1,463


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CENTURY COLLEGESTATEMENTS OF CASH FLOWSFOR THE YEARS ENDED JUNE 30, 2011 AND 2010(IN THOUSANDS)

2011 2010

Cash Flows from Operating ActivitiesCash received from customers $ 31,363 $ 32,415 Cash payments for employees (52,558) (50,066) Cash paid to suppliers for goods or services (17,982) (16,786) Financial aid disbursements (3,502) (3,615)

Net cash flows used in operating activities (42,679) (38,052)

Cash Flows from Noncapital Financing ActivitiesAppropriations 22,453 22,678 Agency activity (62) (4) Federal grants 22,553 17,921 State grants 2,433 3,727 Private grants 287 459

Net cash flows from noncapital financing activities 47,664 44,781

Cash Flows from Capital and Related Financing ActivitiesCapital appropriation 2,172 6,039 Proceeds from borrowing 604 1,796 Proceeds from sale of capital assets - 47 Proceeds from bond premium 130 82 Investment in capital assets (5,903) (11,629) Repayment of bond principal (1,107) (719) Interest paid (645) (598)

Net cash flows used in capital and related financing activities (4,749) (4,982)

Cash Flows from Investing ActivitiesInvestment earnings 89 18

Net cash flows from investing activities 89 18

Net Increase in Cash and Cash Equivalents 325 1,765

Cash and Cash Equivalents, Beginning of Year 24,334 22,569

Cash and Cash Equivalents, End of Year $ 24,659 $ 24,334


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CENTURY COLLEGESTATEMENTS OF CASH FLOWSFOR THE YEARS ENDED JUNE 30, 2011 AND 2010(IN THOUSANDS)

2011 2010

Operating Loss $ (46,462) $ (40,147)

Adjustment to Reconcile Operating Income toNet Cash Flows used in Operating Activities

Depreciation 2,704 2,385 Donated supplies 92 85 Change in assets and liabilities

Inventory (64) (19) Accounts receivable (447) (824) Accounts payable 758 (548) Salaries and benefits payable 470 141 Other compensation benefits 613 450 Unearned revenues (345) 492 Other 2 (67) Net reconciling items to be added to operating income 3,783 2,095

Net cash flow used in operating activities $ (42,679) $ (38,052)

Non-Cash Investing, Capital, and Financing ActivitiesCapital projects on account $ 396 $ 880

Amortization of bond premium 73 63

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CENTURY COLLEGE NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2011 AND 2010 1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Basis of Presentation — The reporting policies of Century College, a member of Minnesota State Colleges and Universities system, conform to generally accepted accounting principles (GAAP) in the United States, as prescribed by the Governmental Accounting Standards Board (GASB). The statements of net assets; statements of revenues, expenses, and changes in net assets; and the statements of cash flows include the financial activities of the College. Financial Reporting Entity — Minnesota State Colleges and Universities is an agency of the state of Minnesota and receives appropriations from the state legislature, substantially all of which are used to fund general operations. The College receives a portion of Minnesota State Colleges and Universities’ appropriation. The operations of most student organizations are included in the reporting entity because the Board of Trustees has certain fiduciary responsibilities for these resources. Discretely presented component units are legally separate organizations that raise and hold economic resources for the direct benefit of a college or university in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. The Century College Foundation is considered significant to the College and is included as a discretely presented component unit and separately identified in Note 17. Complete financial statements may be obtained from Century College Foundation, 3300 Century Avenue North, White Bear Lake, MN 55110-1842. Basis of Accounting — The basis of accounting refers to when revenues and expenses are recognized and reported in the financial statements. The accompanying financial statements have been prepared as a special purpose government entity engaged in business type activities. Business type activities are those that are financed in whole or in part by fees charged to external parties for goods or services. Accordingly, these financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized as they are incurred. Eliminations have been made to minimize the double counting of internal activities. Interfund receivables and payables have been eliminated in the statements of net assets. Minnesota State Colleges and Universities applies all applicable Financial Accounting Standards Board statements issued prior to November 30, 1989, and GASB statements issued since that date. Budgetary Accounting — Budgetary accounting, which is the basis for annual budgets and the allocation of state appropriations, differs from GAAP. Budgetary accounting includes all receipts and expenses up to the close of the books in August for the budget fiscal year. Revenues not yet received by the close of the books are not included. The criterion for recognizing expenses is the actual disbursement, not when the goods or services are received. The state of Minnesota operates on a two year (biennial) budget cycle ending on June 30 of odd numbered years. Minnesota State Colleges and Universities is governed by a 15 member board of trustees appointed by the Governor with the advice and consent of the state senate. The Board approves the College’s biennial budget request and allocation as part of Minnesota State Colleges and Universities’ total budget. Budgetary control is maintained at the College. The College’s President has the authority and responsibility to administer the budget and can transfer money between programs within the College without Board approval. The budget of the College can be legally amended by the authority of the Vice Chancellor/Chief Financial Officer of Minnesota State Colleges and Universities.

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State appropriations do not lapse at year end. Any unexpended appropriation from the first year of a biennium is available for the second year. Any unexpended balance may also carry over into future bienniums. Capital Appropriation Revenue — Minnesota State Colleges and Universities is responsible for paying one third of the debt service for certain general obligation bonds sold for capital projects, as specified in the authorizing legislation. The portion of general obligation bond debt service that is payable by the state of Minnesota is recognized by Minnesota State Colleges and Universities as capital appropriation revenue when the related expenses are incurred. Individual colleges and universities are allocated cash, capital appropriation revenue, and debt based on capital project expenses. Cash and Cash Equivalents — The cash balance represents cash in the state treasury and demand deposits in local bank accounts as well as cash equivalents. Cash equivalents are short term, highly liquid investments having original maturities (remaining time to maturity at acquisition) of three months or less. Cash and cash equivalents include amounts in demand deposits, savings accounts, cash management pools, repurchase agreements, and money market funds. Restricted cash is cash held for capital projects and cash in the Revenue Fund for capital projects and debt service. The Revenue Fund is used to account for the revenues, expenses and net assets of revenue producing facilities which are supported through usage. It has the authority to sell revenue bonds for the construction and maintenance of revenue producing facilities. All balances related to the state appropriation, tuition revenues, and most fees are in the state treasury. The College also has two accounts in a local bank. The activities handled through their local bank include financial aid, student payroll, auxiliary, and student activities. Investments — The Minnesota State Board of Investment invests the College’s balances in the state treasury as part of a state investment pool. This asset is reported as a cash equivalent. Interest income earned on pooled investments is allocated to the colleges and universities. Receivables — Receivables are shown net of an allowance for uncollectible accounts. Inventories — Inventories are valued at cost using the retail cost method. Prepaid Expense — Prepaid expense consists primarily of deposits in the state of Minnesota Debt Service Fund for future general obligation bond payments. Capital Assets — Capital assets are recorded at cost or, for donated assets, at fair value at the date of acquisition. Estimated historical cost has been used when actual cost is not available. Such assets are depreciated or amortized on a straight line basis over the useful life of the assets. The estimated useful lives are as follows:

Asset Type Life Buildings 35 years Building improvements 20 years Equipment 3-20 years Library collections 7 years

Equipment includes all items with an original cost of $10,000 and over for items purchased since July 1, 2008; $5,000 and over for items purchased between July 1, 2003 and June 30, 2008; and $2,000 and over for items purchased prior to July 1, 2003. Buildings, building improvements, and internally developed software include all projects with a cost of $250,000 and over for projects started since July 1, 2008, and $100,000 and over for projects started prior to July 1, 2008. All land and library collection purchases are capitalized regardless of amount spent.

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Funds Held for Others — Funds held for others are primarily assets held for student organizations. Long Term Liabilities — The state of Minnesota appropriates for and sells general obligation bonds to support construction and renovation of Minnesota State Colleges and Universities’ facilities as approved through the state’s capital budget process. The College is responsible for a portion of the debt service on the bonds sold for some College projects. Other long term liabilities include compensated absences, net other postemployment benefits, workers’ compensation, and early termination benefits. Minnesota State Colleges and Universities may finance the construction, renovation and acquisition of facilities for student residences and student unions through the sale of revenue bonds. These activities are accounted for and reported in the Revenue Fund included herein. Details on the Revenue Fund bonds are available in the separately audited and issued Revenue Fund financial report. Copies are available from the Financial Reporting Director, Minnesota State Colleges and Universities, 30 7th St. E., Suite 350, St. Paul, MN 55101-7804. Unearned Revenue — Unearned revenue consists primarily of tuition received, but not yet earned, for summer session. It also includes amounts received from grant programs which have not yet been earned under the terms of the agreement. Operating Activities — Operating activities as reported in the statements of revenues, expenses, and changes in net assets are generally the result from exchange transactions such as payments received for providing services and payments made for services or goods received. Nearly all of the College’s expenses are from exchange transactions. Certain significant revenue streams relied upon for operations are recorded as nonoperating revenues including state appropriations, federal, state and private grants. Tuition, Fees, and Sales, Net — Tuition, fees, and sales are reported net of scholarship allowances. See Note 11 for additional information. Restricted Student Payments – Restricted student payments consist of parking fees restricted for payment of revenue bonds. See Note 11 for additional information. Federal Grants — The College participates in several federal grant programs. The largest programs include Pell, TRIO, Carl D. Perkins, Federal Work Study, National Science Foundation, and Supplemental Educational Opportunity Grant. Federal Grant revenue is recognized as nonoperating revenue in accordance with GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions. During fiscal years 2011 and 2010, $1,190,740 and $1,541,243 of federal aid was recognized as revenue related to the American Recovery and Reinvestment Act of 2009, respectively. Of these amounts, $587,538 and $595,821, respectively, was used to mitigate tuition increases that would have otherwise been necessary. Expenditures under government contracts are subject to review by the granting authority. To the extent, if any, that such a review reduces expenditures allowable under these contracts, the College will record such disallowance at the time the determination is made. Reclassifications — Certain prior year amounts have been reclassified to conform to current year presentation. These reclassifications had no effect on net assets previously reported. Cost of goods sold in the amount of $3,970,475, reported in fiscal year 2010 as a reduction to sales revenue, was reclassified to an operating expense. Capital appropriation revenue in the amount of $106,532 was reclassified as state appropriation revenue. These reclassifications had no effect on total operating loss. Additionally, fiscal year 2010 restricted expendable net assets restriction in the amount of $334,787 was reclassified to invested in capital assets, net of related debt net assets. Use of Estimates — To prepare the basic financial statements in conformity with generally accepted accounting principles, management must make estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant areas that require the use of management’s estimates relate to allowances for uncollectible accounts, scholarship allowances, workers’ compensation claims, and compensated absences.

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Net Assets — The difference between assets and liabilities is net assets. Net assets are further classified for accounting and reporting purposes into the following three net asset categories:

• Invested in capital assets, net of related debt: Capital assets, net of accumulated depreciation, and outstanding principal balances of debt attributable to the acquisition, construction, or improvement of those assets.

• Restricted expendable: Net assets subject to externally imposed stipulations. Net asset restrictions for the College are as follows:

Restricted for bond covenants— revenue bond restrictions Restricted for other — includes restrictions for the following:

Debt service — legally restricted for bond debt repayments. Capital projects — restricted for completion of capital projects. Faculty contract obligations — faculty development and travel required by contracts.

Net Assets Restricted for Other (In Thousands)

2011 2010 Debt service $ 1,613 $ 1,545 Faculty contract obligations 10 34 Total $ 1,623 $ 1,579

• Unrestricted: Net assets that are not subject to externally imposed stipulations. Unrestricted net assets may be designated for specific purposes by action of management, the System Office, or the Board of Trustees.

2. CASH AND CASH EQUIVALENTS

Cash and Cash Equivalents — All balances related to the appropriation, tuition, and most fees are in the state treasury. In addition, the College has two accounts in a local bank. The activities handled through local banks include financial aid, student payroll, and student activities. Minnesota Statutes, Section 118A.03, requires that deposits be secured by depository insurance or a combination of depository insurance and collateral securities held in the state’s name by an agent of the state. This statute further requires that such insurance and collateral shall be at least ten percent greater than the amount on deposit.

The following table summarizes cash and cash equivalents:

Year Ended June 30

(In Thousands)

Carrying Amount 2011 2010 Cash, in bank $ 2,054 $ 1,666 Cash, trustee account (US Bank) 335 339 Total local cash and cash equivalents 2,389 2,005 Total treasury cash accounts 22,270 22,329 Grand Total $ 24,659 $ 24,334

At June 30, 2011 and 2010, the College’s bank checking balance was $3,095,882 and $2,152,658, respectively. These balances were adjusted by items in transit to arrive at the College’s bank cash balance. The College’s balance in the state treasury, except for the Revenue Fund, is invested by the Minnesota State Board of Investment as part of the state investment pool. This asset is reported as a cash equivalent.

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The College’s balance in the state treasury, except for the Revenue Fund, is invested by the Minnesota State Board of Investment as part of the state investment pool. This asset is reported as a cash equivalent.

Investments — The Minnesota State Board of Investment manages the majority of the state’s investments. All investments managed by the State Board of Investment are governed by Minnesota Statutes, Chapters 11A and 356A. Minnesota Statutes, Section 11A.24, broadly restricts investments to obligations and stocks of United States and Canadian governments, their agencies and registered corporations, other international securities, short term obligations of specified high quality, restricted participation as a limited partner in venture capital, real estate, or resource equity investments, and the restricted participation in registered mutual funds. Generally, when applicable, the statutes limit investments to those rated within the top four quality rating categories of a nationally recognized rating agency. The statutes further prescribe the maximum percentage of fund assets that may be invested in various asset classes and contain specific restrictions to ensure the quality of the investments.

Within statutory parameters, Minnesota State Board of Investment has established investment guidelines and benchmarks for all funds under its management. These investment guidelines and benchmarks are tailored to the particular needs of each fund and specify investment objectives, risk tolerance, asset allocation, investment management structure, and specific performance standards.

Custodial Credit Risk — Custodial credit risk for investments is the risk that in the event of a failure of the counterparty, the College will not be able to recover the value of the investments that are in the possession of an outside party. Board procedure 7.5.1 requires compliance with Minnesota Statutes, Section 118A.03 and further excludes the use of FDIC insurance when meeting collateral requirements. Credit Risk — Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The College’s policy for reducing its exposure to credit risk is to comply with Minnesota Statutes, Section 118A.04. This statute limits investments to the top quality rating categories of a nationally recognized rating agency. Concentration of Credit Risk — Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The College’s policy for reducing this risk of loss is to comply with Board procedure 7.5.1which recommends investments be diversified by type and issuer. Interest Rate Risk — Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The College complies with Board procedure 7.5.1 that recommends considering fluctuating interest rates and cash flow needs when purchasing short term and long term debt investments.

3. ACCOUNTS RECEIVABLE The accounts receivable balances are made up primarily of receivables from individuals. At June 30, 2011 and 2010, the total accounts receivable balances for the College were $5,270,152 and $4,500,106, respectively, less an allowance for uncollectible accounts of $1,599,085 and $1,276,059, respectively.

Summary of Accounts Receivable at June 30 (In Thousands)

2011 2010 Tuition $ 3,047 $ 2,499 Fees 719 547 Sales and service 309 275 Third party obligations 415 358 Other 780 821 Total accounts receivable 5,270 4,500 Allowance for doubtful accounts (1,599) (1,276) Total net accounts receivable $ 3,671 $ 3,224

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The allowance for uncollectible accounts has been computed based on the following aging schedule:

Age Allowance Percentage

Less than 1 year 15 1 to 3 years 45 3 to 5 years 70 Over 5 years 95

4. PREPAID EXPENSE

Prepaid expense consists of funds which have been deposited in the state’s Debt Fund Service for future general obligation bond payments in the amounts of $1,099,321 and $1,046,733 for fiscal years 2011 and 2010, respectively. Minnesota Statutes, Section 16A.641, requires all state agencies to have on hand on December 1, of each year, an amount sufficient to pay all general obligation bond principal and interest due, and to become due, through July 1 of the second fiscal year. Also, included in prepaid expense for fiscal years 2011 and 2010 is $62,618 and $62,428, respectively, stemming from prepaid software maintenance agreements and prepaid contractual support.

5. CAPITAL ASSETS Summaries of changes in capital assets for fiscal years 2011 and 2010 follow.

Year Ended June 30, 2011 (In Thousands)

Description Beginning Balance

Increases

Decreases

Completed Construction

Ending Balance

Capital assets, not depreciated: Land $ 1,012 $ — $ — $ — $ 1,012 Construction in progress 6,865 4,660 — (8,823) 2,702 Total capital assets, not depreciated 7,877 4,660 — (8,823) 3,714

Capital assets, depreciated: Buildings and improvements 71,160 — — 8,823 79,983 Equipment 4,637 539 93 — 5,083 Library collections 1,401 239 203 — 1,437 Total capital assets, depreciated 77,198 778 296 8,823 86,503 Less accumulated depreciation: Buildings and improvements 27,820 2,156 — — 29,976 Equipment 2,999 343 71 — 3,271 Library collections 773 205 203 — 775 Total accumulated depreciation 31,592 2,704 274 — 34,022

Total capital assets, depreciated, net 45,606 (1,926) 22 8,823 52,481 Total capital assets, net of depreciation $ 53,483 $ 2,734 $ 22 $ — $ 56,195

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Description Beginning Balance

Increases

Decreases

Completed Construction

Ending Balance

Capital assets, not depreciated: Land $ 1,012 $ — $ — $ — $ 1,012 Construction in progress 2,522 11,491 — (7,148) 6,865 Total capital assets, not depreciated 3,534 11,491 — (7,148) 7,877

Capital assets, depreciated: Buildings and improvements 64,012 — — 7,148 71,160 Equipment 4,953 372 688 — 4,637 Library collections 1,364 225 188 — 1,401 Total capital assets, depreciated 70,329 597 876 7,148 77,198 Less accumulated depreciation: Buildings and improvements 25,960 1,860 — — 27,820 Equipment 3,329 325 655 — 2,999 Library collections 760 200 187 — 773 Total accumulated depreciation 30,049 2,385 842 — 31,592

Total capital assets, depreciated, net 40,280 (1,788) 34 7,148 45,606 Total capital assets, net of depreciation $ 43,814 $ 9,703 $ 34 $ — $ 53,483

6. ACCOUNTS PAYABLE

Accounts payable represent amounts due for goods and services received prior to the end of the fiscal year.

Summary of Accounts Payable at June 30 (In Thousands)

2011 2010 Capital expenditures $ 151 $ 36 Purchased services 561 319 Supplies 506 218 Inventory 4 5 Employee reimbursements 130 86 Repairs and maintenance 61 21 Other 188 43 Total $ 1,601 $ 728

In addition, as of June 30, 2011 and 2010, the College had payables from restricted assets in the amounts of $244,940 and $773,392, which were related to capital projects financed by general obligation bonds. Additionally, as of June 30, 2010, the College had payables from restricted assets in the amount of $70,667 related to capital projects in the Revenue Fund. There were no payables from restricted assets as of June 30, 2011.

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7. LONG TERM OBLIGATIONS Summaries of amounts due within one year are reported in the current liability section of the statements of net assets.

The changes in long term debt for fiscal years 2011 and 2010 follow:


Beginning Balance Increases Decreases

Ending Balance

Current Portion

Liabilities for: Bond premium $ 589 $ 130 $ 73 $ 646 $ — General obligation bonds 11,147 604 692 11,059 722 Revenue bonds 4,330 — 385 3,945 390 Total long term debt $ 16,066 $ 734 $ 1,150 $ 15,650 $ 1,112

Year Ended June 30, 2010

(In Thousands)


Ending Balance

Current Portion

Liabilities for: Bond premium $ 570 $ 82 $ 63 $ 589 $ — General obligation bonds 10,013 1,796 662 11,147 691 Revenue bonds 4,330 — — 4,330 385 Total long term debt $ 14,913 $ 1,878 $ 725 $ 16,066 $ 1,076

The changes in other compensation benefits for fiscal years 2011 and 2010 follow:



Ending Balance

Current Portion

Liabilities for: Compensated absences $ 5,512 $ 678 $ 524 $ 5,666 $ 623 Early termination benefits — 86 — 86 86 Net other postemployment benefits 646 477 153 970 — Workers’ compensation 248 284 235 297 131 Total other compensation benefits $ 6,406 $ 1,525 $ 912 $ 7,019 $ 840

Year Ended June 30, 2010

(In Thousands)


Ending Balance

Current Portion

Liabilities for: Compensated absences $ 5,350 $ 368 $ 206 $ 5,512 $ 524 Early termination benefits 1 — 1 — — Net other postemployment benefits 482 364 200 646 — Workers’ compensation 123 203 78 248 104 Total other compensation benefits $ 5,956 $ 935 $ 485 $ 6,406 $ 628

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Bond Premium — In fiscal years 2011 and 2010, bonds were issued resulting in premiums of $129,704 and $81,852, respectively. Amortization is calculated using the straight line method and amortized over the remaining life of the bonds.

General Obligation Bonds — The state of Minnesota sells general obligation bonds to finance most capital projects. The interest rate on these bonds ranges from 2.0 to 5.5 percent. Minnesota State Colleges and Universities is responsible for paying one third of the debt service for certain general obligation bonds sold for those capital projects, as specified in the authorizing legislation. This debt obligation is allocated to the colleges and universities based upon the specific projects funded. The general obligation bond liability included in these financial statements represents the College’s share.

Revenue Bonds — The Revenue Fund is authorized by Minnesota Statutes, Section 136F.98, to issue revenue bonds whose aggregate principal shall not exceed $300,000,000 at any time. The proceeds of these bonds are used to finance the acquisition, construction, and remodeling of buildings for dormitory, residence hall, food service, student union, and other revenue-producing and related facilities at the state colleges and universities. Revenue bonds currently outstanding have interest rates between 2 percent to 4 percent.

The revenue bonds are payable solely from, and collateralized by, an irrevocable pledge of revenues to be derived from the operation of the financed parking lot and from student fees. These revenue bonds are payable through fiscal year 2020. Annual principal and interest payments on the bonds are expected to require less than 64.07 percent of net reserves. The total principal and interest remaining to be paid on the bonds is $4,603,338. Principal and interest paid for the current year and total customer net revenues were $511,850 and $798,942 respectively. Compensated Absences — College employees accrue vacation leave, sick leave, and compensatory leave at various rates within limits specified in the collective bargaining agreements. The liability for compensated absences is payable as severance pay under specific conditions. This leave is liquidated only at the time of termination from state employment. Early Termination Benefits — Early termination benefits are benefits received for discontinuing service earlier than planned.

Net Other Postemployment Benefit — Other postemployment benefits are health insurance benefits for certain retired employees under a single employer fully insured plan. Under the health benefits program retirees are required to pay 100 percent of the total premium cost. Since the premium is a blended rate determined on the entire active and retiree population, the retirees are receiving an implicit rate subsidy. See Note 9 for further details. Workers’ Compensation — The state of Minnesota Department of Management and Budget manages the self insured workers’ compensation claims activities. The reported liability for workers’ compensation of $297,507 and $247,595 at June 30, 2011 and 2010, respectively, is based on claims filed for injuries to state employees occurring prior to the fiscal year end and is an undiscounted estimate of future payments.

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Principal and interest payment schedules are provided in the following table for general obligation bonds and revenue bonds. There are no payment schedules for bond premium, compensated absences, early termination benefits, other postemployment benefits, or workers’ compensation.

Long Term Debt Repayment Schedule (In Thousands)

Fiscal Years General

Obligation Bonds Revenue Bonds Principal Interest Principal Interest

2012 $ 722 $ 521 $ 390 $ 121 2013 688 488 400 112 2014 688 454 410 102 2015 688 420 420 91 2016 687 386 430 79

2017-2021 3,401 1,427 1,895 153 2022-2026 3,073 625 — — 2027-2031 1,112 72 — —

Total $ 11,059 $ 4,393 $ 3,945 $ 658

8. EARLY TERMINATION BENEFITS

Minnesota State College Faculty (MSCF) contract The MSCF contract allows former Minnesota Community College Association (MCCFA) faculty members who meet certain eligibility and combination of age and years of service requirements to receive an early retirement incentive cash payment based on base salary at time of separation, as well as an amount equal to the employer’s contribution for one year’s health insurance premiums deposited in his/her health care savings plan at time of separation. The cash incentive can be paid either in one or two payments. The number of retired faculty who received this benefit and the amount of future liability for those faculty as of June 30, 2011.

Fiscal Year Number of Faculty Future Liability (In thousands)

2011 3 $ 86

9. NET OTHER POSTEMPLOYMENT BENEFITS The College provides health insurance benefits for certain retired employees under a single employer fully insured plan, as required by Minnesota Statute 471.61 subdivision 2B. Active employees who retire when eligible to receive a retirement benefit from a Minnesota public pension plan and do not participate in any other health benefits program providing coverage similar to that herein described, will be eligible to continue coverage with respect to both themselves and their eligible dependent(s) under the health benefits program. Retirees are required to pay 100 percent of the total premium cost. Since the premium is a blended rate determined on the entire active and retiree population, the retirees are receiving an implicit rate subsidy. As of July 1, 2010, there were approximately 15 retirees receiving health benefits from the health plan. Annual OPEB Cost and Net OPEB Obligation — The annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially

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determined in accordance with the parameters of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits OtherThan Pensions. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the annual OPEB cost for fiscal years 2011 and 2010, the amount actually contributed to the plan, and changes in the net OPEB obligation:

Components of the Annual OPEB Cost (In Thousands)

2011 2010

Annual required contribution (ARC) $ 471 $ 360 Interest on net OPEB obligation 31 23 Adjustment to ARC (25) (19) Annual OPEB cost 477 364 Contributions during the year (153) (200) Increase in net OPEB obligation 324 164 Net OPEB obligation, beginning of year 646 482 Net OPEB obligation, end of year $ 970 $ 646

The College’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for fiscal years 2011 and 2010 were as follows:

For Year Ended June 30 (In Thousands)

2011 2010 Beginning of year net OPEB obligation $ 646 $ 482 Annual OPEB cost 477 364 Employer contribution (153) (200) End of year net OPEB obligation $ 970 $ 646

Percentage contributed 32.08% 54.95% Funding Status — There are currently no assets that have been irrevocably deposited in a trust for future health benefits. Therefore, the actuarial value of assets is zero.

Schedule of Funding Progress (In Thousands)

Actuarial Valuation

Date

Actuarial Value of Assets

ActuarialAccrued Liability

UnfundedActuarial Accrued

LiabilityFundedRatio

Covered Payroll

UAAL as aPercentage of

Covered Payroll

(a) (b) (b - a) (a/b) (c)

((b - a)/c)

July 1, 2010 — $ 4,272 $ 4,272 0.00% $ 39,982 10.68% Actuarial Methods and Assumptions — Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and healthcare cost trends. Amounts determined regarding

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the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Projections of benefits for financial reporting purposes are based on the substantive plan (as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short term volatility in actuarial accrued liabilities, consistent with the long term perspective of the calculations. In the July 1, 2010 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions included a 4.75 percent discount rate, which is based on the estimated long term investment yield on the general assets, using an underlying long term inflation assumption of 3 percent. The annual health care cost trend rate is 6.25 percent initially, reduced incrementally to an ultimate rate of 5 percent after twenty years. The unfunded actuarial accrued liability is being amortized as a level dollar amount over an open 30 year period.

10. LEASE AGREEMENTS

Operating Leases — The College is committed under nine lease agreement types for equipment and rental space. These leases are considered for accounting purposes to be operating leases. Lease expenses for the years ended June 30, 2011 and 2010, totaled approximately $230,455 and $225,011, respectively.

Future minimum lease payments for existing lease agreements follow:

Year Ended June 30 (In Thousands)

Fiscal Year Amount 2012 $ 125 2013 45 2014 30 Total $ 200

11. TUITION, FEES, SALES, AND RESTRICTED STUDENT PAYMENTS The following tables provide information related to tuition, fees, and sales revenue:

For the Year Ended June 30 (In Thousands)

2011 2010 Scholarship Scholarship

Description Gross Allowance Net Gross Allowance Net Tuition $ 37,929 $ (14,028) $ 23,901 $ 35,829 $ (11,782) $ 24,047 Fees 3,985 (1,342) 2,643 3,928 (1,109) 2,819 Sales 5,355 (997) 4,358 5,558 (807) 4,751 Restricted student payments 799 — 799 599 — 599 Total $ 48,068 $ (16,367) $ 31,701 $ 45,914 $ (13,698) $ 32,216

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12. OPERATING EXPENSES BY FUNCTIONAL CLASSIFICATION The following tables provide information related to operating expenses by functional classification:

For the Year Ended June 30, 2011 (In Thousands)

Description Salaries Benefits Other Interest Total Academic support $ 5,489 $ 1,975 $ 3,856 $ 86 $ 11,406 Institutional support 3,981 1,614 4,628 65 10,288 Instruction 23,057 6,774 5,503 344 35,678 Public service 1,232 304 311 18 1,865 Student services 6,453 2,081 2,571 98 11,203 Auxiliary enterprises 442 153 4,691 7 5,293 Scholarships & fellowships — — 3,502 — 3,502 Less interest expense — — — (618) (618) Total operating expenses $ 40,654 $ 12,901 $ 25,062 $ — $ 78,617

For the Year Ended June 30, 2010 (In Thousands)

Description Salaries Benefits Other Interest Total Academic support $ 5,950 $ 2,025 $ 3,132 $ 94 $ 11,201 Institutional support 3,598 1,262 3,404 58 8,322 Instruction 21,253 6,005 4,952 326 32,536 Public service 1,384 500 555 23 2,462 Student services 6,136 1,873 2,261 96 10,366 Auxiliary enterprises 409 231 4,379 8 5,027 Scholarships & fellowships — — 3,586 — 3,586 Less interest expense — — — (605) (605) Total operating expenses $ 38,730 $ 11,896 $ 22,269 $ — $ 72,895

13. EMPLOYEE PENSION PLANS The College participates in four retirement plans: the State Employees Retirement Fund, administered by the Minnesota State Retirement System; the Teachers Retirement Fund, administered by the Minnesota Teachers Retirement Association; the Public Employees Retirement Fund, administered by the Public Employees Retirement Association; and the Minnesota State Colleges and Universities Defined Contribution Retirement Plan. State Employees Retirement Fund (SERF) Pension fund information is provided by Minnesota State Retirement System, which prepares and publishes its own stand alone comprehensive annual financial report, including financial statements and required supplementary information. Copies of the report may be obtained directly from Minnesota State Retirement System at 60 Empire Drive, Suite 300, St. Paul, Minnesota 55103-3000. The SERF is a cost sharing, multiple employer defined benefit plan. All classified employees are covered by this plan. A classified employee is one who serves in a civil service position. Normal retirement age is 65. The annuity formula is the greater of a step rate with a flat rate reduction for each month of early retirement, or a

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level rate (the higher step rate) with an actuarial reduction for early retirement. The applicable rates for each year of allowable service are 1.2 percent and 1.7 percent of the members’ average salary, which is defined as the highest salary paid in five successive years of service. Minnesota State Colleges and Universities, as an employer for some participants, is liable for a portion of any unfunded accrued liability of this fund. The statutory authority for SERF is Minnesota Statutes, Chapter 352. For fiscal year 2009 the funding requirement for both employer and employee was 4.5 percent. For fiscal year 2010 the funding requirement was 4.75 percent for both employer and employee. For fiscal year 2011 the funding requirement was 5 percent for both employer and employee. Actual contributions were 100 percent of required contributions.

Required contributions for the College were:

(In Thousands)Fiscal Year Amount

2011 $ 4612010 4202009 398

Teachers Retirement Fund (TRF) Pension fund information is provided by Minnesota Teachers Retirement Association (TRA), which prepares and publishes its own stand alone comprehensive annual financial report, including financial statements and required supplementary information. Copies of the report may be obtained directly from Minnesota Teachers Retirement Association at 60 Empire Drive, Suite 400, St. Paul, Minnesota 55103-3000. The TRF is a cost sharing, multiple employer defined benefit plan. Teachers and other related professionals may participate in TRF. Normal retirement age is 65. Coordinated membership includes participants who are covered by the Social Security Act. The annuity formula is the greater of a step rate with a flat reduction for each month of early retirement, or a level rate (the higher step rate) with an actuarially based reduction for early retirement. The applicable rates for coordinated members are 1.2 percent and 1.7 percent for service rendered before July 1, 2006, and 1.4 percent and 1.9 percent for service rendered on or after July 1, 2006. Minnesota State Colleges and Universities, as an employer for some participants, are liable for a portion of any unfunded accrued liability of this fund. The statutory authority for TRF is Minnesota Statutes, Chapter 354. For fiscal years 2009, 2010 and 2011 the funding requirement was 5.5 percent for both employer and employee coordinated members. Beginning July 1, 2011, both employee and employer contribution rate increases will be phased in with a 0.5 percent increase, occurring every July 1 over four years, until it reaches a contribution rate of 7.5 percent on July 1, 2014. Actual contributions were 100 percent of required contributions. Required contributions for the College were:

(In Thousands)Fiscal Year Amount

2011 $ 4432010 4722009 474

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General Employees Retirement Fund (GERF) Pension fund information is provided by the Public Employees Retirement Association of Minnesota, which prepares and publishes its own stand alone comprehensive annual financial report, including financial statements and required supplementary information. Copies of the report may be obtained directly from Public Employees Retirement Association of Minnesota at 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103. The GERF is a cost sharing multiple employer defined benefit plan. Former employees of various governmental subdivisions including counties, cities, school districts, and related organizations participate in the plan. Normal retirement age is 65. The annuity formula is the greater of a step rate with a flat reduction for each month of early retirement, or a level rate (the higher step rate) with an actuarially based reduction for early retirement. The applicable rates for members are 1.2 percent and 1.7 percent. Minnesota State Colleges and Universities, as an employer for some participants, is liable for a portion of any unfunded accrued liability of this fund. The statutory authority for GERF is Minnesota Statutes, Chapter 353. GERF establishes the employer and employee contribution rates on a calendar year basis rather than on a fiscal year basis. For the period January 1, 2008 through December 31, 2008, employee and employer contribution rates were 6 percent and 6.5 percent, respectively. For the period January 1, 2009 through December 31, 2009, employee and employer contribution rates were 6 percent and 6.75 percent, respectively. For the period January 1, 2010 through December 31, 2010, employee and employer contribution rates were 6 percent and 7 percent, respectively. For the period January 1, 2011 through December 31, 2011, employee and employer contribution rates are 6.25 percent and 7.25 percent, respectively. Actual contributions were 100 percent of required contributions.


(In Thousands)Fiscal Year Employer Employee

2011 $ 32 $ 272010 33 272009 33 29

Minnesota State Colleges and Universities Defined Contribution Retirement Fund General Information — The Minnesota State Colleges and Universities Defined Contribution Retirement Fund includes two plans: an Individual Retirement Account Plan and a Supplemental Retirement Plan. Both plans are mandatory, tax deferred, single employer defined contribution plans authorized by Minnesota Statutes, Chapters 354B and 354C. The plans are designed to provide retirement benefits to Minnesota State Colleges and Universities unclassified employees. An unclassified employee is one who belongs to Minnesota State Colleges and Universities specific bargaining units. The plans cover unclassified teachers, librarians, administrators, and certain other staff. The plans are mandatory for qualified employees and vesting occurs immediately. The administrative agent of the two plans is Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF). Separately issued financial statements can be obtained from TIAA-CREF, Normandale Lake Office Park, 8000 Norman Center Drive, Suite 1100, Bloomington, MN 55437. Individual Retirement Account Plan (IRAP) Participation — Every employee who is in unclassified service is required to participate in TRF or IRAP upon achieving eligibility. An unclassified employee is one who serves in a position deemed unclassified according to Minnesota statutes. This includes presidents, vice presidents, deans, administrative or service faculty, teachers, and other managers and professionals in academic and academic support programs. Eligibility begins

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with the employment contract for the first year of unclassified service in which the employee is hired for more than 25 percent of a full academic year, excluding summer session. An employee remains a participant of the plan, even if employed for less than 25 percent of a full academic year in subsequent years. Contributions — There are two member groups participating in the IRAP, a faculty group and an administrators group. For both faculty and administrators, the employer and employee statutory contribution rates are 6 percent and 4.5 percent, respectively. The contributions are made under the authority of Minnesota Statutes, Chapter 354B. Required contributions for the College were:

(In Thousands) Fiscal Year Employer Employee

2011 $ 1,160 $ 869 2010 1,067 803 2009 1,002 754

Supplemental Retirement Plan (SRP) Participation — Every unclassified employee who has completed two full time years of unclassified service with Minnesota State Colleges and Universities must participate upon achieving eligibility. The eligible employee is enrolled on the first day of the fiscal year following completion of two full time years. Vesting occurs immediately and normal retirement age is 55.

Contributions — Participants contribute 5 percent of eligible compensation up to a defined maximum annual contribution as specified in the following table:

Member Group

Eligible

Compensation

Maximum Annual

ContributionsMinnesota Association of Professional Employees Unclassified $6,000 to $40,000 $ 1,700 Middle Management Association Unclassified 6,000 to 40,000 1,700 Minnesota State College Faculty Association 6,000 to 56,000 2,500 Administrators 6,000 to 60,000 2,700 Other Unclassified Members 6,000 to 40,000 1,700

The College matches amounts equal to the contributions made by participants. The contributions are made under the authority of Minnesota Statutes, Chapter 354C.


(In Thousands)

Fiscal Year Amount 2011 $ 740 2010 650 2009 606

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14. SEGMENT INFORMATION A segment is an identifiable activity reported as a stand alone entity for which one or more revenue bonds are outstanding. A segment has a specific identifiable revenue stream pledged in support of revenue bonds and has related expenses, gains and losses, assets, and liabilities that are required by an external party to be accounted for separately. Minnesota State Colleges and Universities issued revenue bonds to finance the College’s parking lot.

Century College’s Portion of the Revenue Fund (In Thousands)

2011 2010

CONDENSED STATEMENTS OF NET ASSETS Assets

Current assets $ 341 $ 189 Restricted assets 850 932 Noncurrent assets 3,722 3,929

Total assets 4,913 5,050 Liabilities

Current liabilities 438 509 Noncurrent liabilities 3,611 4,009

Total liabilities 4,049 4,518 Net Assets:

Restricted 807 646 Unrestricted (deficit) 57 (114)

Total net assets $ 864 $ 532

CONDENSED STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS Operating revenues $ 800 $ 803 Operating expenses (386) (223)

Net operating income 414 580 Nonoperating revenues (expenses) (82) (40)

Change in net assets 332 540 Net assets, beginning of year 532 (8) Net assets, end of year $ 864 $ 532

CONDENSED STATEMENTS OF CASH FLOWS Net cash provided (used) by:

Operating activities $ 591 $ 782 Investing activities 29 — Capital and related financing activities (577) (4,094)

Net increase (decrease) 43 (3,312) Cash, beginning of year 1,097 4,409 Cash, end of year $ 1,140 $ 1,097

15. COMMITMENTS

The College has four outstanding projects that total $2.7 million in construction in progress at June 30, 2011. The majority of the outstanding project amounts pertain to a $1.6 million project to build out a mezzanine creating classrooms and faculty offices. The project was completed in August 2011.

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16. RISK MANAGEMENT Minnesota State Colleges and Universities is exposed to various risks of loss related to tort; theft of, damage to, or destruction of assets; error or omissions; and employer obligations. Minnesota State Colleges and Universities manages these types of risks through Minnesota insurance plans including the state of Minnesota Risk Management Fund and other purchased insurance coverage. Automobile liability coverage is required by the state and is provided by the Minnesota Risk Management Fund. Property and casualty coverage is required by Minnesota State Colleges and Universities policy. Property coverage offered by the Minnesota Risk Management Fund are as follows:

Coverage Amount Institution deductible $50,000 Fund responsibility Deductible to $1,000,000 Primary re-insurer coverage $1,000,001 to $25,000,000 Multiple re-insurers’ coverage $25,000,001 to $1,000,000,000 Bodily injury and property damage per person $500,000 Bodily injury and property damage per occurrence $1,500,000 Annual maximum paid by fund, excess by reinsurer $4,000,000 Maintenance deductible for additional claims $25,000

The College retains the risk of loss. The College did not have any settlements in excess of coverage the last three years. Minnesota State Colleges and Universities participates in the State Employee Group Insurance Plan, which provides life insurance and hospital, medical, and dental benefits coverage through provider organizations. Workers’ compensation is covered through state participation in the Workers’ Compensation Reinsurance Association, which pays for catastrophic workers’ compensation claims. Other workers’ compensation risks are covered through self insurance for which Minnesota State Colleges and Universities pays the cost of claims through the state Workers’ Compensation Fund. A Minnesota State Colleges and Universities workers’ compensation payment pool helps institutions manage the volatility of such claims. Annual premiums are assessed by the pool based on salary dollars and claims history. From this pool all workers’ compensation claims are paid to the state Workers’ Compensation Fund.

The following table presents changes in the balances of workers’ compensation liability during the fiscal years ended June 30, 2011 and 2010.

(In Thousands)

Beginning Liability Additions

Payments & Other

Reductions Ending

Liability Fiscal Year Ended 6/30/11 $ 248 $ 284 $ 235 $ 297 Fiscal Year Ended 6/30/10 123 203 78 248

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17. COMPONENT UNITS In accordance with GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units, the following foundation affiliated with the College is a legally separate, tax exempt entity and reported as a component unit. The Century College Foundation is a separate legal entity formed for the purpose of obtaining and disbursing funds for the sole benefit of the College. The College does not appoint any members to the board and the resources held by the Foundation can only be used by, or for, the benefit of the College. The Foundation’s relationship with the institution is such that exclusion of the Foundation’s financial statements would cause the College’s financial statements to be misleading or incomplete. The Foundation is considered a component unit of the College and their statements are discretely presented in the College’s financial statements. The Foundation’s financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles as prescribed by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 958-205, Presentation of Financial Statements. Net assets, which are classified on the existence or absence of donor imposed restrictions, are classified and reported according to the following classes:

Unrestricted Net Assets: Net assets that are not subject to donor imposed stipulations.

Temporarily Restricted Net Assets: Net assets subject to donor imposed restrictions as to how the assets are to be used.

Permanently Restricted Net Assets: Net assets subject to donor imposed stipulations that they be maintained permanently by each foundation. Generally, the donors of these assets permit the foundation to use all or part of the income earned on any related investments for general or specific purposes.

The value of scholarships and equipment contributed by or passed through the Foundation was $298,061 and $411,639 for the fiscal years ended June 30, 2011 and 2010, respectively. Investments — The Foundation’s investments are presented in accordance with FASB ASC 958-320, Investments-Debt, and Equity Securities. Under ASC 958-320, investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statement of financial position.

Schedule of Investments (In Thousands)

Investments 2011 2010 Money market accounts $ 478 $ 466 Fixed income mutual funds 110 98 Equity based mutual funds 730 545 Equity securities 433 333 Total investments $ 1,751 $ 1,442

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Endowment Funds— The Foundation’s endowment includes both donor-restricted funds and funds designated by the Foundation Board of Trustees to function as endowments. As required by generally accepted accounting principles, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. Changes in endowment net assets as of June 30, 2011 are as follows:

Schedule of Endowment Net Assets

As of June 30, 2011 (In Thousands)

Unrestricted $

Temporarily Restricted

$


$

Total Net Endowment

Assets Net assets, beginning of year $ (6) 56 966 1,016 Change in value of trusts 6 154 101 261 Contributions — — 41 41 Investment income — 10 (3) 7 Amounts appropriated for expenditures — (14) — (14) Other transfers — (7) (7) (14) Net assets, end of year $ — $ 199 $ 1,098 $ 1,297

Changes in endowment net assets as of June 30, 2010 are as follows:

Schedule of Endowment Net Assets As of June 30, 2010

(In Thousands)

Unrestricted $

Temporarily Restricted

$


$

Total Net Endowment

Assets Net assets, beginning of year $ (29) 16 794 781 Change in value of trusts 23 13 79 115 Contributions — 3 80 83 Investment income — 24 (5) 19 Other transfers — — 18 18 Net assets, end of year $ (6) $ 56 $ 966 $ 1,016

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REQUIRED SUPPLEMENTARY INFORMATION SECTION

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CENTURY COLLEGE SCHEDULE OF FUNDING PROGRESS FOR NET OTHER POSTEMPLOYMENT BENEFITS

Schedule of Funding Progress (In Thousands)

Actuarial Valuation

Date

Actuarial Value of Assets

ActuarialAccruedLiability

UnfundedActuarial Accrued

LiabilityFundedRatio

CoveredPayroll

UAAL as aPercentage of

Covered Payroll (a) (b) (b - a) (a/b) (c) ((b - a)/c)

July 1, 2006 — $ 3,850 $ 3,850 0.00% $ 33,256 11.58%

July 1, 2008 — 3,718 3,718 0.00 35,214 10.56 July 1, 2010 — 4,272 4,272 0.00 39,982 10.68

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SUPPLEMENTARY SECTION

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Documents

century.edu Annual Financial Report 11...Salaries payable totaled $5 million at June 30, 2011, representing a 10 percent increase over the prior fiscal year. Included within the salaries