3.10.1 Financial Stability

Comprehensive Standard 3.10.1 Financial Stability

The institution’s recent financial history demonstrates financial stability.


USF Sarasota-Manatee Focused Report Response
 

Please find USF Sarasota-Manatee’s audit and management letter for FY2015 at the links below.

USF Sarasota-Manatee Financial Audit FY2015

USF Sarasota-Manatee Management Letter FY2015

Following submission of its Reaffirmation Report, USF Sarasota-Manatee received information on General Revenue Performance Funding. The table below reflects the operating budget sources for FY 2015, including the additional $958,549 in Performance-Based Funding (PBF).

Updated General Fund Operating Budget Sources
FY 2015
State Appropriations
     General Revenue (GR) $13,687,983
     GR Performance Funding $958,549
     Educational Enhancement (Lottery) $1,344,676
Tuition $8,999,637
Total $24,990,845

Below are updated financial tables with the FY 2015 information from the audit included. Financial results have been positive. The operating fund has ended each year with a balanced budget. In financial reporting, however, unrestricted net assets declined due to GASB 68–Accounting and Financial Pensions. The financial statements contain adjustments for compensated absences, OPEB, and the unfunded liabilities of pension plans. Up until now, public universities were only required to report a pension liability to the extent that they were behind on their annual actuarially-determined payments into the pension plan. Under GASB 68 universities now have to report liability for the entire underfunded status of the plan. As a result, we experienced a $5,292,743 increase in Total Liabilities and Deferred Inflows of Resources.  However, except for these adjustments, total unrestricted net assets continue to be positive.

Revised Table 2: Statement of Unrestricted Net Assets Exclusive of Plant and Plant-Related Debt
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Net Assets $43,051,905 $41,873,174 $42,358,551 $41,292,612 $38,158,049
Less Property, Plant, Equipment  and Assets Limited to Plant $30,625,831 $29,141,253 $29,141,253 $27,584,386 $27,203,386
Plant Related Debt $0 $0 $0 $0  $0
URNA Not Including Plant and Debt $12,426,074 $12,731,921 $13,217,298 $13,708,226 $10,954,663

 

Revised Table 3: Net Assets
ASSETS FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Current Assets
Cash and Cash Equivalents $2,151,725 $1,854,611 $2,441,671 $1,685,503 $1,611,735
Investments $13,158,733 $14,703,102 $15,183,659 $17,872,711 $19,343,485
Accounts Receivable, Net $310,157 $358,489 $324,164 $344,209 $495,850
Due from State $1,525,000 $1,215,127 $479,302 $793,183 $984,519
Loans and Notes Receivable, Net $42,988 $38,948 $54,316 $48,704 $47,177
Other Current Assets $0 $1,280 $1,280 $1,280 $1,279
Total Current Assets $17,188,603 $18,171,557 $18,484,392 $20,745,590 $22,484,045
Noncurrent Assets
Restricted Cash and Cash Equivalents $32,923 $5,024 $194,788 $41,018 $25,733
Restricted Investments $201,345 $39,981 $1,212,715 $435,736 $309,357
Loans and Notes Receivable, Net $100,306 $90,878 $92,484 $94,544 $80,329
Capital Assets, Net $29,245,641 $28,505,091 $27,628,149 $26,740,849 $26,182,975
Land and Nondepreciable Capital Assets $1,380,190 $636,162 $576,368 $843,537 $1,020,411
Total Noncurrent Assets $30,960,405 $29,277,136 $29,704,504 $28,155,684 $27,618,805
TOTAL ASSETS $48,149,008 $47,448,694 $48,188,896 $48,901,274 $50,102,850
DEFERRED OUTFLOWS OF RESOURCES  
Deferred Amounts Related to Pensions $0 $0 $0 $0 $1,400,403
   
LIABILITIES
Current Liabilities
Accounts Payable $262,339 $187,442 $335,968 $404,453 $287,656
Construction Contracts Payable $212,069 $0 $0 $0 $70,316
Salaries and Wages Payable $169,172 $276,570 $278,962 $393,007 $452,102
Deposits Payable $5,691 -$6,286 $5,730 $5,790 $5,964
Deferred Revenue $131,987 $173,970 $74,936 $98,013 $130,893
Compensated Absences Payable $68,048 $70,244 $77,358 $85,360 $94,580
Net Pension Liability $0 $0 $0 $0 $53,572
Total Current Liabilities $849,306 $701,941 $772,954 $986,624 $1,095,083
Noncurrent Liabilities
Federal Advance Payable $0 $0 $72,423 $0 $72,930
Compensated Absences Payable $742,634 $770,673 $813,512 $910,346 $1,001,988
Other Non-Current Liabilities $101,302 $72,051 $0 $73,825 $0
Postemployment Benefits Payable $569,148 $926,306 $1,324,396 $1,803,871 $2,353,386
Net Pension Liability $2,660,799
Total Noncurrent Liabilities $1,413,084 $1,769,030 $2,210,331 $2,788,041 $6,089,103
TOTAL LIABILITIES $2,262,390 $2,470,971 $2,983,285 $3,774,665 $7,184,186
NET ASSETS
Invested in Capital Assets $30,625,831 $29,141,253 $29,141,253 $27,584,386 $27,203,386
Expendable
Loans $46,179 $60,728 $77,758 $72,443 $57,348
Capital Projects $1,546,669 $1,192,175 $1,664,978 $1,264,664 $1,211,320
Other $1,242,165 $1,851,646 $2,041,059 $2,496,889 $2,957,169
Unrestricted $12,426,074 $12,731,921 $13,217,298 $13,708,226 $10,954,663
TOTAL NET ASSETS $45,886,918 $44,977,723 $46,142,346 $45,126,609 $42,383,886
TOTAL LIABILITIES AND NET ASSETS $48,149,308 $47,448,693 $49,125,631 $48,901,274 $49,568,072
Revised Table 4: Revenues, Expenses and Changes in Net Assets  
USF Sarasota-Manatee A Component Unit of the State of Florida
History of Revenues, Expenses and Changes in Net Assets
 
REVENUES 2011 2012 2013 2014 2015
Operating Revenues:
Student Tuition & Fees, Net of Scholarship $6,907,136 $7,791,763 $8,718,800 $8,870,276 $9,241,450
Federal Grants and Contracts $190,981 $160,679 $14,945 $5,629 $123,158
State and Local Grants and Contracts $0 $0 $0 $75 $0
Nongovernmental Grants and Contacts $495,009 $275,979 $253,020 $807,122 $476,651
Sales and Services of Auxiliary Enterprise $480,258 $523,876 $376,999 $464,879 $533,532
Interest on Loans Receivable $2,487 $2,007 $2,890 $1,228 $1,494
Total Operating Revenues $8,075,871 $8,754,304 $9,366,654 $10,149,210 $10,376,285
EXPENSES
Operating Expenses:
Compensation & Employee Benefits $14,518,377 $14,949,201 $15,057,778 $16,524,566 $18,227,037
Service and Supplies $5,543,253 $4,217,176 $5,175,436 $5,636,313 $6,236,337
Utilities and Communications $386,959 $330,309 $319,559 $392,541 $350,920
Scholarships, Fellowships and Waivers $3,282,255 $3,172,308 $2,806,746 $3,075,688 $2,934,642
Depreciations Expense $1,106,367 $998,602 $1,087,615 $1,038,343 $1,109,677
Total Operating Expenses $24,837,211 $23,667,596 $24,447,134 $26,667,451 $28,858,613
OPERATING INCOME (LOSS) -$17,736,607 -$15,713,147 -$15,710,499 -$17,790,243 -$18,482,328
Non-Operating Revenues (Expenses)
State Appropriations $11,975,834 $11,424,679 $10,146,573 $13,276,534 $14,074,110
Federal & State Student Financial Aid $4,350,050 $3,964,547 $3,343,404 $3,519,786 $3,496,191
State Appropriated American Recovery & Reinvestment $971,648 $0 $0 $0 $0
Noncapital Grants and Donations $0 $172,250 $0 $160,679 $162,936
Investment Income $5,419 $71,588 $351,442 $20,407 -$305,648
Unrealized Gains and Losses $254,926 -$128,608 $314,544 $334,131
Other Non-Operating Revenue $42,814 $25,072 $75,201 $115 $208
Other Non-Operating Expenses -$26,760 -$716,696 -$167,866 -$185,471 -$150,684
Net Non-Operating Revenues $17,573,931 $14,812,831 $14,063,298 $17,126,181 $17,277,113
Income (Loss) Before Other Revenues, Expenses, Gains or Losses -$162,676 -$900,316 -$1,647,201 -$664,062 -$1,205,215
Capital Appropriations $375,000 $245,636 $34,314 $553,512 $393,462
Capital Grants, Contracts, and Donations $8,950 $0 $0 $0 $180,000
Transfers to/from Other University Campuses -$18,523 -$1,219,878 $1,210,755 -$1,139,452 $1,352,316
Total Other Revenues (Expenses) $365,427 -$974,242 $1,245,069 -$585,940 $1,925,778
Increase (Decrease) in Net Assets $202,751 -$1,874,558 -$402,132 -$1,250,002 $720,563
Net Assets, Beginning of Year $44,708,900 $45,886,919 $44,977,723 $45,205,610 $45,126,609
Adjustment to Beginning Net Assets $0 $156,507 $0 $0 -$3,463,286
Beginning Net Assets $44,708,900 $46,043,426 $44,977,723 $45,205,610 $41,663,323
Net Assets, End of Year $44,911,651 $44,168,868 $44,575,591 $43,955,609 $42,383,886

The ratios in the table below demonstrate solid financial management provided by USF Sarasota-Manatee to improve its position based on available resources. It is important to note that USF Sarasota-Manatee has no long-term, plant-related debt. As the Current Ratio demonstrates, USF Sarasota-Manatee has a very strong capability of meeting our current liabilities as they come due. As noted in the Composite Financial Index (CFI) described in further detail below, between FY 2013-15 USF Sarasota-Manatee has scored from 4.7 to 8.7 with an average of score of 6.99.  On the CFI scale, which ranges from 1 to 10, a score of 3 or above indicates that an institution has sufficient, adequately-managed resources to fulfill its mission objective.

 

USF Sarasota-Manatee Ratios FY 2013 FY 2014 FY 2015
Invested in Capital Assets/Total Net Assets 62.4% 61.1% 65.2%
Restricted Expendable Assets/Total Net Assets 8.4% 8.5% 10.1%
Unrestricted Net Assets/Total Net Assets 29.2% 30.4% 24.6%
Current Assets/Total Net Assets 40.9% 46.0% 53.9%
Current Liabilities/Total Net Assets 1.7% 2.2% 2.5%
Current Ratio – Current Assets/Current Liabilities 23.9 21.0 21.6
Total Operating Revenues/Total Revenues 40.0% 37.0% 37.5%
Total Operating Expenses/Total Revenues 123.0% 98.1% 88.4%
Net Non-Operating Revenues/Total Revenues 40.0% 37.0% 37.5%
Long-term liabilities-current portion/Total Long-term liabilities 0.0% 0.0% 0.0%
Long-term liabilities-non-current portion/Total Long-term liabilities 74.1% 74.5% 88.6%

Composite Financial Index and Principal Ratios

The following four ratios are derived from Strategic Financial Analysis for Higher Education, published by KPMG Prager, Sealy & Co., LLC and ATTAIN.

Primary Reserve Ratio
(Total expendable net assets/total expenses)

(1) The Primary Reserve Ratio measures the financial strength of the institution by comparing expendable net assets to total expenses. This ratio reveals financial strength and flexibility by indicating how long the institution could function using expendable reserves. Over the past 3 years, USF Sarasota-Manatee has consistently maintained a Primary Reserve Ratio above .60. Research suggests that a Primary Reserve Ratio of .40X or better is advisable to ensure resources are sufficient and flexible enough to support the mission. A ratio of .60x implies the institution would have the ability to cover about seven months of expenses (60% of 12 months).

Primary Reserve Ratio

Net Income Ratio
(Change in unrestricted net assets/total unrestricted income)

2) The Net Income Ratio indicates whether total unrestricted activities result in a surplus or a deficit. This ratio is a primary indicator, measuring if an institution is living within its available resources. The determination of net income includes depreciation expense as a component, indicating that a positive return in this area would suggest the institution lived within its means. The 2013-14 negative ratio was a result of a $1,139,452 transfer to the USF campus in Tampa. This transfer resulted in a negative change in net assets from the beginning of the year to the end. A transfer back to USF Sarasota-Manatee in the amount of $1,352,316 as noted in the in FY 2015 financial statement compensates for the negative transfer in FY 2014.

Net Income Ratio

 The Return on Net Assets Ratio
(Change in net assets/Total net assets: beginning of the year)

(3) The Return on Net Assets Ratio measures asset performance. It determines whether an institution is financially better off than in the previous year by measuring economic return. Items that impact this ratio can include those that impact the net operating revenues ratio along with capital appropriations, capital gifts and grants and endowment gifts. Because of changes in market performance can significantly impact the numerator of this ratio from year to year, each institution should set its own goal for the Return on Net Assets Ratio. The 2013-14 year decrease is again attributed to the decrease in net assets because of large transfer between USF campuses. As explained above, a transfer back to USF Sarasota-Manatee in the amount of $1,352,316 as noted in the in FY 2015 financial statement compensates for the negative transfer in FY 2014.

Return on Net Assets

The Viability Ratio
(Expendable net assets/long-term debt)

(4) The Viability Ratio measures expendable resources that are available to cover debt obligations and generally regarded as governing an institution’s ability to assume new debt. A ratio of 1.25 or greater generally indicates that there are sufficient resources to satisfy debt obligations. Under GASB 68 – Accounting and Financial Pensions, the USF Sarasota-Manatee financial statement changed in 2014-15 to include the entire underfunded status of compensated absences, other post-employment benefits (OPEB), and unfunded liabilities of pension plans. In the previous fiscal years, public universities were required to report liability only to the extent that they were behind on their annual actuarially-determined payments into the pension plan. Regardless of this change in reporting, USF Sarasota-Manatee still reported a ratio of expendable net assets to long-term debt well above the acceptable threshold of 1.25.

Viability Ratio

When combined, the four ratios generate the Composite Financial Index (CFI) which provides a view of USF Sarasota-Manatee’s overall financial health. The measures blended into a single number provide a more balanced view of the state of USF Sarasota-Manatee’s finances because weakness in one measure can be offset by the strength of another measure. With a current CFI Score of 4.7, USF Sarasota-Manatee is positioned to focus toward directing resources to compete.

CFI Scoring Guide

Off-Site Committee Report – Non-Compliance

USF S-M has not yet received its FY2015 financial audit.  Also, a written institutional management letter has not been provided by the Florida Auditor General of the State of Florida.

The institution provided three to four years of numbers but no ratios of any kind.

USF Sarasota-Manatee’s original submission narrative is shown below. 

Compliance Partial Compliance Non-compliance

NARRATIVE

At the time of submission of the University of South Florida (USF) Sarasota-Manatee’s Compliance Certification, the State of Florida Auditor General, had not yet completed the financial statement audit ending June 30, 2015, and the statement of unrestricted net assets. The Auditor General provides these reports annually between November and January while the Reaffirmation submission date was September 11, 2015. Please see the 2014-15 Fiscal Year Engagement Letter for USF Sarasota-Manatee for additional information.

The University of South Florida (USF) Sarasota-Manatee  has a demonstrated history of financial stability. The Auditor General of the State of Florida audits the USF System annually in accordance with Florida Statute 11.45(2)(c). Recent financial audits (FY 2014 Audit, FY 2013 Audit, FY 2012 Audit,  and FY 2011 Audit ) of the USF System demonstrate that it complied with government auditing standards and that there were no material weaknesses in matters of internal control and operation. USF Sarasota-Manatee is included as a part of the USF System audits, receiving a separate audit only during the year of a required reaffirmation of accreditation by the Southern Association of Colleges and Schools Commission on Colleges. The State of Florida Auditor General will provide the USF Sarasota-Manatee Financial Audit sometime between November 2015 and January of 2016 as noted in the 2014-15 Fiscal Year Engagement Letter for USF Sarasota-Manatee

Although the economic downturn created reduced state appropriations in FY 2013, FY 2014, and 2015, USF Sarasota-Manatee received additional appropriations associated with the support of new STEM programming and Performance Based Funding. Additional tuition authority was appropriated to support enrollment growth. Over the past six (6) years, the overall General Operating Budget has increased by $3,937,966 or 20%.

Sources of Revenue (General Operating Budgets)

  FY 10 FY 11 FY 12 FY 13 FY 14 FY 15
State Appropriations 11,091,336 11,083,526 10,020,152 9,183,185 12,194,135 13,687,983
Lottery 1,005,093 1,052,503 1,209,598 898,292 1,082,399 1,334,676
Federal Stimulus 1,012,126 968,456        
Tuition 6,985,775 7,281,996 8,098,325 8,939,498 8,999,637 8,999,637
TOTAL 20,094,330 20,386,481 19,328,075 19,020,975 22,276,171 24,032,296

Unrestricted Net Assets increased from $12,731,921 to $13,708,226. This represents an 8% increase from FY 12 to FY 14.

Net Assets 

ASSETS FY 12 FY 13 FY 14
Current Assets
Cash and Cash Equivalents 1,854,611 2,444,671 1,685,503
Investments 14,703,102 15,183,659 17,872,711
Accounts Receivable, Net 358,489 324,164 344,209
Loans and Notes Receivable, Net 38,948 54,316 48,704
Due from State 1,215,127 479,302 783,183
Other Current Assets 1,280 1,280 1,280
Total Current Assets 18,171,557 18,484,392 20,745,590
Noncurrent Assets
Restricted Cash and Cash Equivalents 5,024 194,788 41,018
Restricted Investments 39,981 1,212,715 435,736
Loans and Notes Receivable, Net 90,878 92,484 94,544
Other Assets 0 0 0
Depreciable Capital Assets, Net 28,505,091 27,628,149 26,740,849
Nondepreciable Capital Assets 636,162 576,368 843,537
Total Noncurrent Assets 29,277,136 29,704,504 28,155,684
TOTAL ASSETS 47,448,694 48,188,896 48,901,274
LIABILITIES
Current Liabilities
Accounts Payable 187,442 335,869 404,453
Construction Contracts Payable 0 0 0
Salaries and Wages Payable 276,570 278,962 393,007
Deposits Payable -6,286 5,730 5,790
Deferred Revenue 173,970 74,936 98,013
Long-Term Liabilities – Current Portion: 0 0 0
Bonds Payable 0 0 0
Compensated Absences Payable 70,244 77,358 85,360
Total Current Liabilities 701,941 772,954 986,624
Noncurrent Liabilities
Bonds Payable 0 0 0
Federal Advance Payable 0 72,423 0
Compensated Absences Payable 770,673 813,512 910,346
Other Non-Current Liabilities 72,051 0 73,825
Postemployment Health Care Benefits Payable 926,306 1,324,396 1,803,871
Total Noncurrent Liabilities 1,769,030 2,210,331 2,788,041
TOTAL LIABILILTIES 2,470,971 2.983,285 3,774,665
NET ASSETS
Invested in Capital Assets 29,141,253 28,204,517 27,584,386
Restricted for Expendable
Loans 60,728 77,758 72,443
Capital Projects 1,192,175 1,664,978 1,264,664
Other 1,851,646 2,041,059 2,496,889
Unrestricted 12,731,921 13,217,298 13,708,226
TOTAL NET ASSETS 44,977,723 45,205,610 45,126,609
TOTAL LIABILITIES AND NET ASSETS 47,448,693 48,188,895 48,901,274

USF Sarasota-Manatee has maintained consistent enrollment patterns over the past five-years.

Enrollment Growth in Full-Time Equivalent (FTE)* 

2012-13 2011-12 2012-13 2013-14 2014-15
Undergraduate 1427 1452 1455 1419 1478
Graduate 169 148 130 130 123
TOTAL 1596 1600 1585 1549 1601

* From USF INFOCENTER on 3/11/2015.  FTE calculated using federal methodology (30 UG SCH = 1 FTE; 24 GR SCH = 1 FTE).

SUPPORTING DOCUMENTATION AND EVIDENCE

Leave a Reply