Annual Financial Report for the Lake Region State College, North Dakota

Transcription

1 December 27, 2012 Annual Financial Report for the Lake Region State College, North Dakota Pursuant to Securities and Exchange Commission Rule 15c2-12 For the Fiscal Year Ended June 30, 2012 Financial and Operating Data Issues Covered: $1,050,000 Housing and Auxiliary Facilities Improvement and Refunding Revenue Bonds, Series 2004 Dated May 1, 2004 The North Dakota University System s audit report will be filed as soon as it is available.

2 STATE BOARD OF HIGHER EDUCATION OF THE STATE OF NORTH DAKOTA The Board, a constitutional body of the State of North Dakota, is responsible for the management of the institutions of higher education of the State, including the College. The ten-member Board exercises jurisdiction over the financial, educational, and other policies of the College, and over its relations with state and federal government agencies. Execution of plans and policies together with the internal government and administration of the College is the responsibility of the President, faculty and other officers of the College. Current Board members are listed in the following table. Table 1 State Board of Higher Education Member Position Term Commenced Term Expires Duaine C. Espegard President Kirsten Diederich Vice President Doug Munski Faculty Rep Janice Hoffarth Sydney Hull Staff Advisor Student Member Grant Shaft Member Kari Reichert Member Terry Hjelmstad Member Kathleen Neset Member Don Morton Member The colleges and universities governed by the Board are collectively known and referred to as the North Dakota University System (the University System ). The eleven institutions under the governance of the Board are the University of North Dakota; North Dakota State University; four state universities at Dickinson, Mayville, Minot and Valley City; Dakota College at Bottineau; North Dakota State College of Science at Wahpeton; Lake Region State College; Williston State College; and Bismarck State College. These entities are among the entities that were created by the North Dakota Constitution and/or North Dakota Century Code. Each entity receives a separate appropriation from the State Legislature as provided by North Dakota Constitutional Article VII, Section 6(6)(e) and state statute. The State Legislature appropriates funds it deems necessary and as required by law for those agencies and institutions authorized to exist by the constitutions and statutes. The Board appoints a Chancellor to serve as the chief executive of the Board and the University System. The financial statements of the University System include separate financial statements for each of the component institutions. The financial statements for the entire University System are also included in the comprehensive annual financial report of the State of North Dakota. (The remainder of this page has been left blank intentionally.) 2

3 General Description and Location LAKE REGION STATE COLLEGE The College is one of eleven campuses which together comprise the University System. The College, founded in 1941, is located in Devils Lake, North Dakota in the Lake Region area in the northeastern quadrant of the state. The immediate market area for Devils Lake contains approximately 17,000 residents while the city of Devils Lake has a population of about 7,200. Devils Lake is located 92 miles west of Grand Forks on U.S. Highway 2 and is home to the State s largest natural body of water. The Lake Region area features many outdoor recreational activities year-round. The College is a two-year, student-centered, open access, comprehensive community college. The College enrolls students each year on its Devils Lake campus and outreach locations at the Grand Forks Air Force Base and also in surrounding communities. Students attend the College full-time, part-time and online. The students enroll in one of 16 vocational-technical degree programs and/or Liberal Arts. Since 1941, the College has served more than 40,000 students. History The College was founded in 1941 as an extension of the public school system in Devils Lake. First known as Devils Lake Junior College and Business School, the College developed over the next 20 years into a junior college offering liberal arts and business programs. In the early 1960s, a dramatic change occurred in the mission and size of the College. The mission changed in response to regional economic needs by introducing a wide variety of vocational, technical and career-oriented programs. At the same time the college preparatory program developed considerably to meet standards acceptable for transfer to baccalaureate degree programs in four-year colleges and universities. In 1960 the College was renamed Lake Region Junior College. Rapid increases in enrollment resulted in a building program and the College moved to its present campus in The campus was designed to accommodate the College s northern climate by connecting the residence halls, library, student union, recreation room, gym and most classrooms. The name of the College was changed from Junior to Community College in In 1984, the College joined the state system of higher education. Administrative supervision was transferred to the North Dakota State College of Science in Wahpeton in The College became affiliated with the University of North Dakota in 1987, operating as a branch campus under the name of University of North Dakota Lake Region. It maintained that affiliation until 1999, when the College attained independent status within the University System as Lake Region State College charged with addressing workforce training needs in the northeast quadrant of North Dakota. This change provided recognition and autonomy on par with other independent colleges within the University System. The College now reports directly to the University System Chancellor and the State Board of Higher Education. Accreditation The College has been an accredited institution of higher learning since LRSC Online is part of the North Dakota University System Online (NDUSO) and is accredited by the Higher Learning Commission and approved by the North Dakota State Board of Higher Education (2004). In 2011, the College was re-accredited for a 10-year period by the North Central Association of Colleges and Schools. A 10-year re-accreditation is the highest level of accreditation awarded by NCA. 3

4 Community Support The College has received support since 1959 from the Community College Foundation, a group of local citizens dedicated to the advancement of the College. Their support includes funds for scholarships, construction and renovations, endowment funds, athletics and staff development programs. In FY 2012, the Community College Foundation provided monetary support totaling $267,332. Programs Table 2 enumerates the programs provided by the College to its students: Table 2 Programs Academic Education: Vocational/Technical Training: Workforce Training: Educational Outreach Opportunities: Life-Long Learning: Academic courses and programs that lead to an Associate in Arts degree, meet the University System General Education Requirements and allow for seamless transfer to baccalaureate-granting institutions. Courses and programs in vocational and technical career training that lead to a certificate of completion, a diploma or an Associate in Applied Science degree preparing students for an immediate career, advancement in specific occupations or transfer to an articulate technical baccalaureate program. Linkages with businesses, industry and organizations to encourage economic development. Educational outreach opportunities for individuals who are time and/or placebound. Opportunities for continuing and life-long learning in the form of cultural, educational, occupational, social, athletic and vocational programs, courses, workshops and institutes. Management The College s present executive officers are: Dr. Larry Michael Bower President (ended June 15, 2012) Mr. Douglas D. Darling VP for Instructional Services/ Interim President Dr. Randall R. Fixen VP for Student Services Ms. Laurel J. Goulding VP for College Advancement Mr. Corry G. Kenner, CPA VP for Administrative Services Dr. Larry Michael Bower, President (ending June 15, 2012) Dr. Bower was appointed president of Lake Region State College and assumed his leadership role on July 1, Dr. Bower resigned his presidency at LRSC effective on June 15, Prior to his selection to the top management position at the College, Dr. Bower had been serving as the Executive Dean to the President for Continuing Education Corporate Services, Branch Campuses, M- TEC and University Center at Mott Community College in Flint, Michigan since Dr. Bower held the position of Campus Administrator for the Chippewa Falls campus of the Chippewa Valley Technical College in Eau Claire, Wisconsin (2001 through 2003) and the positions of Dean of Academics and Training (2000 to 2001) and Associate Dean of Instruction for Technical Programs/Business & Industry (1997 to 2000) at the Columbus campus of Central Community College in Columbus, Nebraska. He earned a Ph.D. in education administration, curriculum, and instruction with an emphasis in educational leadership and higher education at the University of Nebraska-Lincoln in Lincoln, Nebraska in 2006, an M.B.A. in 1992 from Indiana Wesleyan University, a B.S. in Industrial 4

5 Supervision in 1971 from Indiana State University, and an A.A.S. in Automotive Technology in 1969 from Vincennes University. Dr. Douglas D. Darling, Vice President for Instructional Services and Interim President Dr. Darling has been the Vice President for Instructional Services at the College since 1998 and, effective June 18, 2012, will serve in an additional capacity as the interim president. During the period from 1988 to 1995, Dr. Darling served in several positions at the College including Marketing Instructor, Public Information Officer, Interactive Video Network Site Coordinator and Consulting Education Coordinator. Dr. Darling served as the Director of the Lake Area Vocational Technical Center from 1995 until he accepted the top instructional management position at the College. He has a master s degree in education from the University of North Dakota and completed a doctoral degree in education administration from North Dakota State University in Dr. Randall R. Fixen, Vice President for Student Services Dr. Fixen became the Vice President for Student Services at the College in 2011, after serving as the Associate VP in that area in 2009 and During the period from 1992 to 2009, Dr. Fixen served as the Director of Counseling and as the Director of Housing at the College. Dr. Fixen served at the University of North Dakota as the Director for International Student Affairs from 1985 to He has a bachelor s degree in sociology and anthropology, a master s degree in counseling, and earned a doctorate of philosophy degree in educational administration from the University of North Dakota in Ms. Laurel J. Goulding, Vice President for College Advancement Ms. Goulding has been the Vice President for College Advancement since She also serves as the Director of Development and Alumni Relations. She served as Vice President for Student Services from 1995 to From 1989 until she accepted the top student services management position, Ms. Goulding served as the Assistant VP for Instructional Services and Director of Special Projects. Prior to coming to the College, Ms. Goulding worked as a director of various institutions providing education and guidance to disadvantaged youth and adults in Minnesota and North Dakota. Ms. Goulding has a master s degree in education from North Carolina State University. Mr. Corry G. Kenner, CPA, Vice President for Administrative Services Mr. Kenner has been the Vice President for Administrative Services since He worked in the private accounting field prior to assuming the top financial and human resources management position at the College. Mr. Kenner is very active in the community and has served as the president of the Devils Lake Area Chamber of Commerce. Mr. Kenner has a bachelor s degree in accounting from Minnesota State University-Moorhead and is currently working toward a master s degree in educational leadership at the University of North Dakota. Student Enrollment Table 3 below shows the enrollment of the College for the past five academic years. The information is based on Fall semester registrations. Fall Semester Full-time Undergraduate Table 3 Student Enrollment Part-time Undergraduate Total FTE* Non-traditional Headcount ,450 1, ,538 2, ,389 1, ,212 1, ,238 1, Source: College Office of Administrative Services. 5

6 ACT Scores Table 4 below shows the College s mean ACT score for freshmen for the past five academic years. Fall Semester Mean ACT Score (LRSC) Table 4 ACT Scores National Average (all) National Average (2 yr Colleges)

7 Financial Aid The College administers student financial aid in accordance with U.S. Department of Education policies and procedures. The College is authorized to establish tuition rates and grant tuition waivers for the purposes of campus diversity and general recruitment. The College receives strong support from its Foundation in the form of scholarships. College Response to North Dakota Demographics To help offset the decreasing number of North Dakota high school graduates, the 2011 ND Legislature has appropriated $800,000 toward a two-year campus marketing initiative to increase awareness of two-year colleges and technical careers in the state. Although not its primary emphasis, the College recruits out-of-state students and international students and continues its collaboration with foreign recruitment agents. The use of diversity tuition waivers and specific scholarship programs continues to be deployed. Through these efforts, the College has successfully attracted foreign students from several different countries. Strategies for optimum utilization of scholarship offerings to attract resident students are modified annually. The Peace Officer Training (POT) Program continues its expansion into the larger market areas of the state. The College now offers its POT program in Devils Lake, Fargo, Grand Forks and Minot with plans for expansion into Bismarck soon. The College is currently developing training programs in precision agriculture through a nearly three million dollar grant from the U.S. Department of Labor and will incorporate these technologies in a newlyrevised Agriculture Program beginning in In addition, distance education (online courses and programs and dual-credit offerings to several high school districts) has a high priority and is very successful. The College entered the Grand Forks Public School District with dual-credit offerings for the first time in Fall 2010 and continues to expand its reach. The College continues to be the largest provider of dual-credit offerings in the state. Fiscal Year Tuition and Fee Revenues Table 5 below and Table 6 on the next page, show the College s cost per credit hour by residency status for the current and prior five academic years and the total tuition and fee revenue for the past five academic years. North Dakota Resident Minnesota Reciprocity Table 5 Cost Per Credit Hour For Fiscal Years Cost Per Credit by Residency Status Contiguous States and Provinces WUE States Non-Residents Former Resident Spouse and Dependent MHEC States 2013 $ $ $ $ $ $ $ (1) (1) (1) (1) Prior agreement existed between Minnesota and North Dakota that precluded lowering the Minnesota Reciprocity Rate to the North Dakota Resident Rate until Note: Maximum charges are reached at 12 credits for tuition and 16 credits for most fees. 7

8 Source: College Office of Administrative Services. Table 6 Total Tuition and Fee Revenues Fiscal Year Total 2012 $5,704, ,397, ,000, ,610, ,474,040 Housing and Room and Board Charges For the academic year, residence hall charges for housing range from $1,916 to $2,524 per student per academic year, with rates varying on the basis of single or double occupancy. Rent for apartment units is $411 per month (all units are one-bedroom units). The charge for board during the academic year is $3,400 for a 17-meal plan including all academic breaks and weekends, $3,130 for a 17-meal plan including weekends, and $2,575 for a 12-meal plan including weekends. Applications, Acceptance and Enrollment The College does not track applications, acceptances and matriculations for all students. Because the College has an Open Enrollment Policy, almost all students who apply for admission are accepted. Each year, generally fewer than 30 applicants who have been accepted fail to enroll for classes. Appropriation by North Dakota Legislature The legislative appropriation for the College is primarily from the General Fund and is appropriated on a biennial basis. The history of the General Fund Appropriations is stated in Table 7 below. Biennium Ending June 30 Salaries Operations and Equipment Table 7 Appropriations Capital Improvements Biennial Total 2013 $9,003,614 $3,631,287 $12,634, ,017, ,469 8,151, ,511, ,604 6,636, ,793, ,537 6,181, ,032,682 47,254 5,079,936 Source: College Office of Administrative Services. 8

9 THE HOUSING AND AUXILIARY FACILITIES SYSTEM The Facilities Housing: The College currently has 3 residence hall facilities with a maximum capacity of 192 students, including 12 family housing apartments. Types or Residence Halls: The residence hall complex is composed of three residence buildings all connected to the main campus structure. Gilliland Hall is for women only, North Hall is for men only, and South Hall is Co- Educational for older than average students and Peace Officer Trainees. Family accommodations are available on a limited basis. The majority of the residence halls rooms are double occupancy. Resident Services: The resident halls offer furnished rooms, food, basic cable TV, internet connections, local telephone service, voice mail system, exercise room, and more amenities. Student Union: The Student Union was built in 1966 and an addition was constructed in The union provides space for the bookstore, food service, conference rooms, storage, recreation room, lounge and office space for the student body. The food service consists of a cafeteria for contract dining and a snack bar. The food service is operated by the College. The residence hall students benefit from a comprehensive and varied food service program. Residents enjoy well prepared meals in their own comfortable dining room. Food service is available on weekends, holidays, and during academic breaks. Kitchenettes are also provided in each hall for student use. The bookstore provides a place for students to purchase textbooks along with other necessary supplies. The bookstore also carries a line of apparel and miscellaneous gift items that are available to the students, faculty, staff, and the general public. Purchases can be made online or in the bookstore. Utilization of the System Table 8 below sets out the number of students and the percentage of utilization for the College s housing facilities for the years 2008 through Table 9 below sets out the projected numbers. The data is for spring semester of the fiscal year shown. All students residing on-campus are required to be on a board plan. Table 8 Historical # % # % # % # % # % Residence Halls % % % % % Family Housing 11 92% % 11 92% 11 92% 11 92% (1) Table 9 Projected 2013 (1) 2014 (1) # % # % Residence Halls % % Family Housing 11 92% 11 92% Projected occupancy assumes a stable enrollment. Source: College Office of Administrative Services. 9

10 DEBT STRUCTURE Indebtedness The indebtedness of the System, as of December 31, 2012, payable from the Pledged Revenues consists solely of the Bonds. Table 10 presents the College s debt which is payable from other sources of funds. (1) Table 10 Indebtedness Current Amount Outstanding (as of December 31, 2012) Final Maturity Banc of America Public Capital Note (1) $ 4,881, A Banc of America Public Capital Corp/Bank of America note was issued in June 2012 as part of a funding package to construct a wind tower and turbine to provide energy to the College, to provide an energy-efficient boiler, and to refund the remaining balance of a prior Energy Performance Contract note. The 2012 note is payable from savings derived through an Energy Performance Contract with Honeywell International and excess electrical power sales to Otter Tail Power Company under a Power Purchase Agreement. Future Financing No additional financing obligations are currently being proposed. The wind tower and turbine project will not impact the Pledged Revenues utilized toward payment of the Series 2004 Revenue Bonds. Short-Term Debt The College has no anticipation warrants or notes outstanding. History of Debt Administration The College has never issued any obligations to avoid default nor has the College ever defaulted in the payment of any of its obligations. (The remainder of this page has been left blank intentionally.) 10

11 Debt Repayment Schedule Table 11 below sets out the debt service schedule for the Bonds, as of December 31, Table 11 Debt Maturity Schedule Fiscal Year Ending June 30 Principal Interest (1)(2) Total Cumulative Percent Retired 2013 $80,000 $8,739 $88, % ,000 15,577 95, % ,000 11,605 96, % ,000 7,284 97, % ,000 2,611 97, % ,000 (104,906) (3) (4,906) % Total $ 530,000 $(59,089) $ 470,911 (1) (2) (3) Net of earnings on the Reserve Fund estimated at 4.70% Based on a true interest cost of 5.02% Net of contribution of Reserve Fund equal to $105,000 (The remainder of this page has been left blank intentionally.) 11

12 FINANCIAL INFORMATION Financial information regarding the College is contained in the Audited Financial Statements of the University System for the year ended June 30, 2012 of which the College is a component unit. Table 12 below sets out the historical results of operations from the System for the past five fiscal years ended June 30 and pro forma debt service coverage on the Bonds. Table 12 Results of Operations Net Revenues of the System (1)(2) $36,627 $160,818 $115,003 $166,564 $32,732 Pro Forma Net Revenues derived from Project 5,000 5,000 5,000 5,000 5,000 Total Pro Forma Net Revenues of the System $41,627 $165,818 $120,003 $171,564 $37,732 Pledged Fees Facilities Usage Fees $66,977 $65,677 $70,148 $68,645 $65,156 Parking Fees $19,429 20,119 20,822 20,617 19,100 Total Pledged Fees $86,406 $85,796 $90,970 $89,262 $84,256 Debt Service Grant (3) $23,170 $23,170 $23,170 $23,170 $23,170 Total Pro Forma Pledged Revenues Available for Debt Service $151,203 $274,784 $234,143 $283,996 $145,158 Pro Forma Maximum Annual Debt Service (4)(5) $99,475 $99,475 $99,475 $99,475 $99,475 Pro Forma Debt Service Coverage (1) The System was created in conjunction with the issuance of the $1,050,000 Housing and Auxiliary Facilities Improvement and Refunding Revenue Bonds, Series 2004, therefore the figures presented above are not available from the previous audits of the College but were compiled from detailed College records. (2) The occasional swings in Net Revenues of the System from one year to the next are generally the result of a decrease in occupancy in certain years as well as general facility repair and replacement cycles for items that are paid from, and charged to, current operations. Salary and fringe benefit costs also continue to rise. Occupancy levels, and corresponding revenues, in fiscal year 2012 are lower because of the elimination of one on-campus peace officer training term. (3) The College expects to receive the Debt Service Grant through FY The Bonds mature in FY (4) (5) Debt service is net of earnings on the Debt Service Reserve Account estimated at 4.70%. Based on a true interest cost of 5.02%. Source: College Office of Administrative Services (The remainder of this page has been left blank intentionally.) 12