Cerebral Palsy of Westchester, Inc. Financial Statements (Together with Independent Auditors Report)

Transcription

1 Cerebral Palsy of Westchester, Inc. Financial Statements (Together with Independent Auditors Report) Years Ended December 31, 2015 and 2014

2 FINANCIAL STATEMENTS (Together with Independent Auditors Report) YEARS ENDED TABLE OF CONTENTS Page Independent Auditors' Report Financial Statements: Statements of Financial Position... 3 Statements of Activities... 4 Statements of Cash Flows... 5 Notes to Financial Statements Supplementary Information: Schedule of Revenue and Expenses by Program Schedule of Functional Expenses with Allocation of Administration... 18

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5 STATEMENTS OF FINANCIAL POSITION AS OF ASSETS Cash and cash equivalents (Notes 2F and 10) $ 781,230 $ 2,279,872 Accounts receivable - government (Note 2H) 3,402,983 3,068,237 Accounts receivable - other (Notes 2H and 11) 208, ,224 Investments, at fair value (Notes 2G, 5, 12, 13 and 14) 6,832,484 6,934,933 Pledge receivable (Notes 2H, 2I, 4 and 12) - 35,000 Prepaid expenses and other assets 259, ,406 Cash and investments - Dormitory Authority (Notes 6 and 14) 65,585 66,281 Property and equipment, net (Notes 2D, 3, 9 and 11) 8,112,754 7,889,083 Deferred financing costs, net (Note 6) 9,923 12,270 Client funds (Note 2E) 88,985 92,465 TOTAL ASSETS $ 19,761,473 $ 20,716,771 LIABILITIES Accounts payable and accrued expenses $ 1,723,004 $ 1,894,086 Other liabilities (Note 2K) 1,565,901 2,158,904 Deferred revenues / Refundable advances (Note 7) 1,202, ,377 Long-term debt (Note 6) 1,913,955 1,620,990 Client funds (Note 2E) 88,985 92,465 TOTAL LIABILITIES 6,494,405 6,537,822 COMMITMENTS AND CONTINGENCIES (Note 9) NET ASSETS (Note 2B): Unrestricted: Net investment in property and equipment 6,274,307 6,346,644 Undesignated 6,338,954 7,310,203 Total unrestricted net assets 12,613,261 13,656,847 Temporarily restricted (Note 12) 474, ,995 Permanently restricted (Note 13) 179, ,107 TOTAL NET ASSETS 13,267,068 14,178,949 TOTAL LIABILITIES AND NET ASSETS $ 19,761,473 $ 20,716,771 The accompanying notes are an integral part of these financial statements

6 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED REVENUE AND SUPPORT: Year Ended December 31, 2015 Year Ended December 31, 2014 Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Total Unrestricted Restricted Restricted Program Revenue $ 22,638,673 $ 50,000 $ - $ 22,688,673 $ 21,531,306 $ 21,481,306 $ 50,000 $ - Nonprogram Revenue (Notes 2C, 5 and 11) 493,514 81, , , ,871 90,445 - EXPENSES: TOTAL REVENUE AND SUPPORT 23,132, ,705-23,263,892 22,373,622 22,233, ,445 - Program Services: Day Treatment and Day Habilitation 9,184, ,184,931 7,948,380 7,948, Workshop 852, , , , School 2,959, ,959,916 2,741,251 2,741, Pre-school 2,070, ,070,632 1,926,303 1,926, Respite 163, , , , Outreach 839, , , , Residential 6,131, ,131,499 5,824,098 5,824, Total Program Services 22,202, ,202,794 20,227,763 20,227, Supporting Services: Management and general 1,945, ,945,844 1,926,055 1,926, Fund raising 168, , , , Total Supporting Services 2,113, ,113,902 2,081,639 2,081, TOTAL EXPENSES 24,316, ,316,696 22,309,402 22,309, CHANGE IN NET ASSETS BEFORE PRIOR YEAR ACTIVITIES (1,184,509) 131,705 - (1,052,804) 64,220 (76,225) 140,445 - Prior year activities (Note 2K) 140, ,923 (75,500) (75,500) - - CHANGE IN TOTAL NET ASSETS (1,043,586) 131,705 - (911,881) (11,280) (151,725) 140,445 - Net assets - beginning of year 13,656, , ,107 14,178,949 14,190,229 13,808, , ,107 NET ASSETS - END OF YEAR $ 12,613,261 $ 474,700 $ 179,107 $ 13,267,068 $ 14,178,949 $ 13,656,847 $ 342,995 $ 179,107 The accompanying notes are an integral part of these financial statements. -4-

7 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED CASH FLOWS FROM OPERATING ACTIVITIES: Change in total net assets $ (911,881) $ (11,280) Adjustments to reconcile change in net assets to net cash (used in) provided by operating activities: Depreciation and amortization 850, ,703 Amortization of bond premium (539) (539) Amortization of deferred financing costs 2,347 2,348 Realized gain on investments (116,213) (762,339) Unrealized loss on investments 351, ,378 Subtotal 174, ,271 Changes in operating assets and liabilities: (Increase) or decrease in assets: Accounts receivable - government (334,746) (48,364) Accounts receivable - other (41,810) (88,104) Pledge receivable 35,000 - Prepaid expenses and other assets (87,089) (35,495) Increase or (decrease) in liabilities: Accounts payable and accrued expenses (171,082) (384,628) Other liabilities (593,003) 671,731 Deferred revenues / Refundable advances 431, ,512 Net Cash (Used in) Provided by Operating Activities (586,686) 885,923 CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment acquisitions (1,073,676) (1,525,409) Proceeds from sales of investments 2,069,999 4,943,787 Purchases of investments (2,202,479) (4,409,569) Cash and investments - Dormitory Authority ,145 Net Cash Used in Investing Activities (1,205,460) (825,046) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 500,000 - Principal repayments of long-term debt (206,496) (191,280) Net Cash Provided by (Used in) Financing Activities 293,504 (191,280) NET DECREASE IN CASH AND CASH EQUIVALENTS (1,498,642) (130,403) Cash and cash equivalents - beginning of year 2,279,872 2,410,275 CASH AND CASH EQUIVALENTS - END OF YEAR $ 781,230 $ 2,279,872 Supplemental Disclosure of Cash Flow Information: Cash paid during the year for interest $ 83,025 $ 63,941 The accompanying notes are an integral part of these financial statements

8 NOTE 1 ORGANIZATION AND NATURE OF ACTIVITIES The financial statements of Cerebral Palsy of Westchester, Inc. (the Agency ) include the activities of Cerebral Palsy of Westchester, Inc ( CPW ) and the former Unified Creative Programs, Inc. ( Unified ). CPW and Unified are organized under the Not-for-Profit Corporation Law of the State of New York and granted exemption from federal income tax pursuant to Section 501(c)(3) of the Internal Revenue Code. In December 2006, the Board of Directors of CPW and Unified resolved to merge their operations effective January 1, The Agency operates various programs in Westchester County, New York and in Connecticut for persons with developmental, emotional and/or physical disabilities, receiving its support predominately from federal and New York State governmental sources. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Accounting - The Agency prepares its financial statements using the accrual basis of accounting. The Agency adheres to accounting principles generally accepted in the United States of America. B. Basis of Presentation - The Agency maintains its net assets under the following three classes: Unrestricted represents resources available for support of the Agency s operations over which the Board of Directors has discretionary control. Temporarily restricted represents assets that are subject to donor-imposed stipulations and unappropriated earnings on donor-restricted endowment funds. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Permanently restricted represents assets that must remain intact in perpetuity. C. Contributions and Pledges - The Agency reports gifts of cash and other assets as temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. However, if a restriction is fulfilled in the same time period in which the contribution is received, the Agency reports the support as unrestricted. The Agency's permanently restricted net assets remain intact in perpetuity, and the related earnings will be used for scholarships, assistive technology or general purposes. The earnings on permanently restricted net assets are classified as temporarily restricted until appropriated by the Board of Directors. Upon appropriation, such earnings are considered unrestricted. Contributed goods and long-lived assets are recorded at their fair value on the date of receipt. The Agency records as unrestricted support the gifts of long-lived assets (such as property and equipment) or of cash and other assets restricted to the purchase of long-lived assets, for which donors have not expressly stipulated how or how long the long-lived asset must be used by the Agency. D. Property and Equipment - Property and equipment are capitalized by the Agency, provided the cost is $2,500 or more and the useful life is two years or more. Property and equipment purchased using government support are capitalized in accordance with the requirements of the funding source. Depreciation is provided for amounts sufficient to relate the cost of depreciable assets to operations using the straight-line method over the estimated useful lives. Leasehold improvements are amortized over the shorter of the useful life of the asset or remaining term of the lease. E. Client Funds - The Agency has signatory authority over most clients funds in the residential program. These funds are expended at the direction of the consumer for his or her personal needs. F. Cash and Cash Equivalents - The Agency considers all highly liquid investments with maturities of three months or less when acquired, to be cash equivalents. Included in cash and cash equivalents is $275,000 as of December 31, 2014, of advances received from the construction loan (see Note 6) held in an escrow account restricted to cover the cost of construction of the administrative building. The building construction was completed in

9 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Investments Investments are stated at fair value. Fair value measurements are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy prioritizes observable and unobservable inputs used to measure fair value into three levels as described in Note 14. H. Allowance for Doubtful Accounts As of December 31, 2015 and 2014, the Agency determined that no allowance for doubtful accounts should be provided for accounts receivable government, accounts receivable other and pledge receivable. Such estimate is based on a combination of factors, such as management s assessment of the aged basis of its government funding sources, creditworthiness of customers and donors, current economic conditions and historical experience. The accounts receivable government consists of amounts due from Federal and New York State sources. I. Pledge Receivable Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The discounts on those amounts were computed using risk-adjusted interest rates applicable to the years in which the promises were received. Amortization of the discounts is included in contribution revenue. Conditional promises to give are not included as support until the conditions are substantially met. J. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures at the date of the financial statements. Actual results could differ from those estimates. K. Other Liabilities There are occasions when funding source reimbursements for prior years are adjusted in the current year. Such adjustments may be due to funding source audit findings, additional monies available over and above original contract amounts, rate adjustments, appeal results, or reimbursement of prior year losses, etc. Included as an increase (decrease) of revenue for the years ended December 31, 2015 and 2014 is approximately $141,000 and ($76,000), respectively, applicable to prior years. In addition, the Agency reflects a liability of $46,143 and $111,181 as of December 31, 2015 and 2014, respectively, relating to revenue adjustments for its School programs for the school years. The liability is a result of the City of New York s reconciliation to allowed costs. The Agency has also recorded a liability of approximately $1,028,000 and $1,465,000 as of December 31, 2015 and 2014, respectively, which represents overpayments for the residential programs. Such amounts are included in other liabilities in the accompanying financial statements. Other liabilities also include estimated amounts that could arise from possible future audits and/or contract settlements and potential Medicaid denials of $522,000 and $583,000 as of December 31, 2015 and 2014, respectively. Due to the inherent uncertainties in estimating some of these liabilities, it is at least reasonably possible that such estimates could change materially in the near term. L. Functional Allocation of Expenses The Agency allocates expenses on a functional basis among its various programs and supporting services. Expenses that can be identified as belonging to a specific program and/or supporting services are allocated directly according to their natural expenditure classification. M. Reclassification Certain line items in the December 31, 2014, financial statements have been reclassified to conform to the December 31, 2015, presentation. This reclassification had no impact on the Agency s net assets

10 NOTE 3 PROPERTY AND EQUIPMENT CEREBRAL PALSY OF WESTCHESTER, INC. Property and equipment consists of the following as of December 31, 2015 and 2014: Estimated Useful Lives Land $ 1,280,000 $ 1,280,000 - Building and improvements 14,340,504 10,933, years Leasehold improvements 1,717,560 1,717, years Vehicles 1,884,451 1,607,664 4 years Furniture and equipment 1,037, , years Construction in progress (see below) - 2,733,058 Total cost 20,259,657 19,185,981 Less: accumulated depreciation (12,146,903) (11,296,898) Net book value $ 8,112,754 $ 7,889,083 Depreciation and amortization expense amounted to $850,005 and $764,703 for the years ended December 31, 2015 and 2014, respectively. During the year ended December 31, 2014, the Agency wrote off vehicles and building improvements that were no longer used, amounting to $48,417 which resulted in a loss of $0. Construction in progress as of December 31, 2014, consisted of the construction of the Hallenbach Learning Center for the Agency. The construction was completed during 2015 and the building was placed in service. NOTE 4 PLEDGE RECEIVABLE Pledge receivable consists of the following as of December 31, 2015 and 2014: Amount due in less than one year $ - $ 35,000 NOTE 5 INVESTMENTS Investments consist of the following as of December 31, 2015 and 2014: $ - $ 35,000 Equities $ 4,100,168 $ 4,126,729 Mutual funds 115, ,921 U. S. Treasuries 229, ,007 Municipal bonds 528, ,686 Corporate bonds 1,859,231 1,728,590 $ 6,832,484 $ 6,934,933 Investments are subject to market volatility that could substantially change their fair values in the near term

11 NOTE 5 INVESTMENTS (Continued) CEREBRAL PALSY OF WESTCHESTER, INC. Investment income is included in non-program revenue in the statements of activities and consists of the following for the years ended December 31, 2015 and 2014: Dividends and interest $ 169,599 $ 228,888 Realized gain 116, ,339 Unrealized loss (351,142) (531,378) $ (65,330) $ 459,849 Investment fees amounted to $41,600 and $41,572 for the years ended December 31, 2015 and 2014, respectively, and are included under management and general expenses in the accompanying statements of activities. NOTE 6 LONG-TERM DEBT Long-term debt consists of the following as of December 31, 2015 and 2014: Annual Interest Rate Due Date Bonds payable to the Dormitory Authority of New York State including unamortized premium of $2,427 and $2,966 as of December 31, 2015 and 2014, respectively. $ 177,427 $ 207, %-4.75% 2020 Mortgage payable to a bank. Secured by personal property. Monthly payments of $3,475 are applied first to interest and the balance to principal. 231, , % 2023 Mortgage payable to Operation Hope (See Note 11). Secured by the property financed. Monthly payments are $1, , % April 2015 Construction loan payable to a bank, secured by real property. Monthly payments began in July Monthly payments are $5,308. (a) 587, , % 2027 Construction loan payable to a bank, secured by real property. Monthly payments began in July Monthly payments are $4,317. (a) 484, % 2027 Mortgage payable to a bank, secured by certain real property and related improvements. Monthly payments of $4,158 are applied first to interest and the balance to principal. 347, ,625 6% 2025 Note payable to a bank, secured by real property and related improvements, monthly installments of principal and interest, in the amount of $5, , ,632 6% 2017 $ 1,913,955 $ 1,620,

12 NOTE 6 LONG-TERM DEBT (Continued) (a) Pursuant to the loan agreement, the Agency is required to maintain a Fixed Charge Ratio, measured by the ratio of the change in unrestricted net assets less unfunded capital expenditures plus interest expense, depreciation/amortization expense and unrealized losses/gains divided by the current portion of long term debt plus interest expense to be greater than 1.2 for any fiscal year. As of December 31, 2015, the Agency is not in compliance with this covenant and received a waiver from the bank. In 2005, the Agency borrowed $3,002,000 from the Dormitory Authority of the State of New York s ( DASNY ) Cerebral Palsy Affiliates 2005 Pooled Loan Program Insured Revenue Bonds, Series 2005A (tax exempt) and Series 2005B (Federally taxable). The borrowing from Series 2005A amounted to $2,925,000 and Series 2005B amounted to $77,000. The bonds are secured by the Agency s real property and its contents located in Westchester County, New York and a pledge and assignment to a Trustee of the revenues and DASNY s security interest in the pledged revenues (subject to prior pledges) granted by the Agency. The loan agreement required the Agency to deposit to a debt service reserve fund an amount at least equal to 125% of the average of the principal, whether at maturity or on mandatory redemption, and interest becoming due any calendar year on the outstanding Series 2005A bonds. The debt service reserve fund requirement for the Series 2005B bonds pool is set at $35,500 with an allocable portion of 23.67% to the Agency. In addition, the Agency remits monthly payments (to a Trustee) towards the next semiannual installment due on the loan. Withdrawals are made by the Trustee on July 1 and January 1 of each year to pay the bondholders. The bonds were issued at a premium of $69,763, which is amortized on a straight-line basis over the life of the bonds. As of December 31, 2015 and 2014, cash and investments held by DASNY consist of a debt service fund totaling $18,776 and $19,492, respectively, representing monthly principal and interest payments made by the Agency to DASNY for the bonds payable during 2015 and 2014, respectively. In addition, as of December 31, 2015 and 2014, DASNY holds a debt service reserve fund totaling $27,192 and $27,185, respectively. In addition, the funds include $19,617 and $19,604, respectively, of undisbursed construction funds for the years ended December 31, 2015 and All funds include accumulated interest. The bonds payable mature on July 1 in each of the years in the respective amounts and bear interest at the respective rates per annum set forth below: Amount Interest 2016 $ 30, % , % , % , % , % $ 175,000 In connection with the bonds payable, the Agency incurred financing costs in the amount of $219,647, which are being amortized over the life of the bond using the straight-line basis which approximates the effective interest method. Interest and amortization expense net of bond premium amortization amounted to $84,833 and $65,750 for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, deferred financing costs consist of the following: Deferred financing costs bonds payable $ 219,647 $ 219,647 Deferred financing costs note payable 27,171 27,171 Less: accumulated amortization (236,895) (234,548) Deferred financing costs, net - at the end of the year $ 9,923 $ 12,

13 NOTE 6 LONG-TERM DEBT (Continued) The cash and investments - Dormitory Authority consists of the following as of December 31, 2015 and 2014: Cash $ 11,511 $ 6,124 U.S. Treasury Notes 54,074 60,157 $ 65,585 $ 66,281 Dormitory Authority investment income is included in nonprogram revenue in the statements of activities and consists of interest and dividends totaling $4,415 and $6,610 for the years ended December 31, 2015 and 2014, respectively. Future annual principal payments of the Agency s other long-term debt are as follows for the years ended after December 31, 2015: Amount 2016 $ 193, , , , ,425 Thereafter 945,320 $ 1,736,528 NOTE 7 DEFERRED REVENUES / REFUNDABLE ADVANCES Deferred revenues/refundable advances primarily consist of funding received from Medicaid for depreciation of one of the Agency's capital expansion projects. The Agency began amortizing the deferred revenue (recognizing revenue) in 1995 in order to match income with the related building depreciation, which also commenced in The Agency recognizes $17,628 of revenue annually for 25 years. The remaining balance of deferred revenues represents advances received for future services to be rendered by the Agency. Refundable advances include amounts advanced by the funding sources that will be recouped in the future. NOTE 8 PENSION PLAN The Agency sponsors a simplified employee pension plan (a defined contribution plan) covering all eligible employees. The Board of Directors determines the contribution amounts annually. Employer contributions amounted to approximately $265,000 and $219,000, for the years ended December 31, 2015 and 2014, respectively. NOTE 9 COMMITMENTS AND CONTINGENCIES A. The Agency is obligated, pursuant to operating lease agreements, for approximate future minimum annual rent for equipment and real property as follows for the years ended after December 31, 2015: Real Property Equipment Total 2016 $ 309,000 $ 71,000 $ 380, ,000 53, , ,000 53, , ,000 49, ,000 $ 991,000 $ 226,000 $ 1,217,

14 NOTE 9 COMMITMENTS AND CONTINGENCIES (Continued) Rent expense amounted to $478,165 and $454,493 for the years ended December 31, 2015 and 2014, respectively. B. The Agency has a revolving line of credit from a bank with a maximum borrowing amount up to $3 million with a maturity date of August 31, The interest rate for the line of credit is equal to the minimum of the Wall Street Journal Prime Rate or 4% and is secured by all personal property owned by the Agency. As of December 31, 2015 and 2014, the Agency had no outstanding borrowings. As of June 1, 2016, the Agency had approximately $850,000 outstanding. C. Pursuant to the Agency's contractual relationships with certain governmental funding sources, governmental agencies have the right to examine the books and records of the Agency involving transactions relating to these contracts. The accompanying financial statements make no provision (except as described in Note 2J) for possible disallowances. Although such possible disallowances could be substantial in amount, in the opinion of management, any actual disallowances would be immaterial. D. The Agency believes it has no uncertain tax positions as of December 31, 2015 and 2014, in accordance with Accounting Standards Codification ( ASC ) Topic 740, which provides standards for establishing and classifying any tax provisions for uncertain tax positions. NOTE 10 CONCENTRATION Cash and cash equivalents that potentially subject the Agency to a concentration of credit risk include cash accounts with banks that exceed the Federal Deposit Insurance Corporation ( FDIC ) insurance limits. Accounts are insured up to $250,000 per depositor. As of December 31, 2015 and 2014, there was approximately $683,000 and $2,137,000, respectively, of cash and cash equivalents held by banks that exceeded FDIC limits. NOTE 11 RELATED - PARTY TRANSACTIONS The Agency is related to Operation Hope, Inc. by virtue of certain board member commonality and certain common management oversight. The Agency received grants (included in nonprogram revenue in the accompanying financial statements) from this related party totaling $50,000 for each of the years ended December 31, 2015 and As of December 31, 2015 and 2014, the Agency was owed $48,124 and $129,193, respectively, from Operation Hope, Inc. included under accounts receivable other in the accompanying statements of financial position. Operation Hope, Inc. extended a mortgage loan to the Agency, secured by the property financed. The balance payable was $6,424 as of December 31, 2014 and this loan was repaid in NOTE 12 TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets consist of the following as of December 31, 2015 and 2014: Assistive technology $ 33,565 $ 33,714 Scholarships 45,430 45,632 Harmony Park 134,018 - Various other programs 142, ,372 Unappropriated endowment earnings 118, ,277 $ 474,700 $ 342,

15 NOTE 13 PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets consist of the following as of December 31, 2015 and 2014: Assistive technology endowment $ 111,250 $ 111,250 Katherine Packard Crispell Bequest fund 62,857 62,857 Bruchner Scholarship fund 5,000 5,000 $ 179,107 $ 179,107 Permanently restricted net assets as of December 31, 2015 and 2014 consist of investments. The Agency recognizes that New York State adopted as law the New York Prudent Management of Institutional Funds Act ( NYPMIFA ) on September 17, NYPMIFA created a rebuttable presumption of imprudence if an organization appropriates more than 7% of a donor-restricted permanent endowment fund s fair value (averaged over a period of not less than the preceding five years) in any year. Any unappropriated earnings that would otherwise be considered unrestricted by the donor will be reflected as temporarily restricted until appropriated. The Agency s policy is that endowment earnings will be appropriated for expenditures in accordance with the donor s stipulations. In the absence of donor stipulations, endowment earnings are classified as temporarily restricted until appropriated for operations by the Board. As of December 31, 2015 and 2014, all accumulated earnings since the inception of the endowment funds are included as temporarily restricted net assets. The Agency s Board has interpreted NYPMIFA as allowing the Agency to appropriate for expenditure or accumulate so much of an endowment fund as the Agency determines is prudent for the uses, benefits, purposes and duration for which the endowment fund was established, subject to the intent of the donor as expressed in the gift instrument. The Agency s endowment investment policy is to invest primarily in equities and fixed income securities based on an asset allocation to satisfy its overall endowment financial and investment objectives such as to preserve the principal, protect against inflation, receive stable returns and achieve long-term growth. The Agency relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). Changes in endowment net assets for the year ended December 31, 2015, are as follows: Temporarily Restricted Permanently Restricted Total Endowment net assets, beginning of year $ 120,277 $ 179,107 $ 299,384 Investment earnings (1,327) - (1,327) Endowment net assets, end of year $ 118,950 $ 179,107 $ 298,

16 NOTE 13 PERMANENTLY RESTRICTED NET ASSETS (Continued) Changes in endowment net assets for the year ended December 31, 2014 are as follows: Temporarily Restricted Permanently Restricted Total Endowment net assets, beginning of year $ 83,120 $ 179,107 $ 262,227 Investment earnings 37,157-37,157 Endowment net assets, end of year $ 120,277 $ 179,107 $ 299,384 NOTE 14 FAIR VALUE MEASUREMENTS The fair value hierarchy defines three levels as follows: Level 1: Valuations based on quoted prices (unadjusted) in an active market that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted price in inactive markets; or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data. Level 3: Valuations based on unobservable inputs are used when little or no market data is available. The fair value hierarchy gives lowest priority to Level 3 inputs. In determining fair value, the Agency utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible in its assessment of fair value. Investments in equities, mutual funds and U.S. Treasuries are valued using market prices in active markets (Level 1). Level 1 instrument valuations are obtained from real-time quotes in active exchange markets involving identical assets. Corporate bonds and municipal bonds are designated as Level 2 instruments and valuations are obtained from readily-available pricing sources for comparable instruments (credit risk/grade, maturities, etc). The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the end of the reporting period. For the years ended December 31, 2015 and 2014, there were no transfers in or out of levels 1 or

17 NOTE 14 FAIR VALUE MEASUREMENTS (Continued) Financial assets carried at fair value at December 31, 2015, are classified as follows: Level 1 Level 2 Total ASSETS CARRIED AT FAIR VALUE: Investments Equities Energy $ 362,360 $ - $ 362,360 Materials 48,573-48,573 Industrials 646, ,114 Consumer discretionary 477, ,833 Consumer staples 548, ,282 Health care 795, ,018 Financials 721, ,848 Information Technology 500, ,140 4,100,168-4,100,168 Mutual funds Global 115, ,984 U. S. Treasuries 229, ,016 Municipal bonds - 528, ,085 Corporate bonds - 1,859,231 1,859,231 4,445,168 2,387,316 6,832,484 Investments Dormitory Authority U. S. Treasury notes 54,074-54,074 TOTAL ASSETS CARRIED AT FAIR VALUE: $ 4,499,242 $ 2,387,316 $ 6,886,558 Financial assets carried at fair value at December 31, 2014, are classified as follows: Level 1 Level 2 Total ASSETS CARRIED AT FAIR VALUE: Investments Equities Energy $ 532,055 $ - $ 532,055 Industrials 650, ,958 Consumer discretionary 407, ,714 Consumer staples 530, ,159 Health care 761, ,253 Financials 768, ,856 Information Technology 475, ,217 Utilities ,126,729-4,126,729 Mutual funds Domestic, Long Term 104, ,828 Mutual funds Global 98,093-98,093 U. S. Treasuries 245, ,007 Municipal bonds - 631, ,686 Corporate bonds - 1,728,590 1,728,590 4,574,657 2,360,276 6,934,933 Investments Dormitory Authority U. S. Treasury notes 60,157-60,157 TOTAL ASSETS CARRIED AT FAIR VALUE: $ 4,634,814 $ 2,360,276 $ 6,995,

18 NOTE 15 SUBSEQUENT EVENTS CEREBRAL PALSY OF WESTCHESTER, INC. Management has evaluated, for potential recognition and disclosure, events subsequent to the date of the statement of financial position through June 1, 2016, the date the financial statements were available to be issued

19 SCHEDULE OF REVENUE AND EXPENSES BY PROGRAM FOR THE YEAR ENDED DECEMBER 31, 2015 (with Comparative Totals for December 31, 2014) Day Treatment Fund Raising and and Other Day Hab Workshop School Pre-School Respite Outreach Residential Support Administration TOTAL TOTAL PROGRAM REVENUE: OPWDD $ 34,851 $ 261,760 $ - $ - $ 429 $ 71,681 $ 74,890 $ - $ - $ 443,611 $ 2,402,407 School tuition - - 2,975,439 2,233, ,208,983 5,079,105 Medicaid 8,512,218 27, ,085,289 6,069, ,695,155 13,004,717 Pre-Voc/LTSE/VESID - 375, (239) , ,996 DSS income ,945 User fees 126, ,513 61,090 14, , , ,554 Workshop sales 54 34, ,606 21,829 Government grants 243,525 2, ,746 7,000-59,732-1, , ,648 Other - 1, ,004-5,109 2,105 Total Program Revenue 8,917, ,118 3,084,283 2,412,922 61,519 1,230,774 6,274,765 4,182-22,688,673 21,531,306 NONPROGRAM REVENUE: Contributions - 1,000-9,015-6, , , ,016 Fundraising 1, , , ,854 Interest , , ,972 United Way Investment activity (234,929) - (234,929) 230,961 Other , ,387 63,747 Total Nonprogram Revenue 1,267 1, ,105-6, , , , ,316 TOTAL REVENUE 8,918, ,118 3,084,622 2,422,027 61,519 1,237,281 6,274, , ,387 23,263,892 22,373,622 EXPENSES (From Page 18) 9,957, ,634 3,229,913 2,249, , ,353 6,674, ,683-24,316,696 22,309,402 Change in Net Assets, Before Prior Year Activities (1,038,861) (223,516) (145,291) 172,222 (116,250) 320,928 (399,536) 240, ,387 (1,052,804) 64,220 Prior year activities (69,727) 30, , ,049 5, ,923 (75,500) Change in Net Assets, by program $ (1,108,588) $ (193,193) $ (5,118) $ 172,222 $ (116,250) $ 355,977 $ (394,431) $ 240,113 $ 137,387 $ (911,881) $ (11,280) See independent auditors' report

20 SCHEDULE OF FUNCTIONAL EXPENSES WITH ALLOCATION OF ADMINISTRATION FOR THE YEAR ENDED DECEMBER 31, 2015 (With Comparative Totals for 2014) Day Treatment and Day Hab Workshop School Pre-School Respite Outreach Residential Fund Raising Administration Total 2015 Total 2014 Personal services $ 4,042,815 $ 409,610 $ 1,911,374 $ 1,251,858 $ 41,158 $ 607,790 $ 3,613,985 $ 62,975 $ 1,094,395 $ 13,035,960 $ 12,039,394 Fringe benefits 1,265, , , ,130 5, ,677 1,119,540 10, ,488 4,056,248 3,734,296 Contracted services 162,945 8, ,906 74, ,099 85,928-10, , ,844 Client wages , ,851 35,490 37,276 Client food and entertainment - 20,231-59, , , ,202 Travel - client 1,765,522 33,168 1, ,750 15, ,831,067 1,580,842 Travel - staff 9,851 3,416 5,528 5,004 3,741 12,507 17, ,571 68,515 62,077 Program supplies 266,674 8,391 51,845 31,263 85,986 14, , , ,044 Household supplies 14,985 4,995 4, , , ,979 Building repairs and maintenance 173,493 46,193 46,193 30,378 19,489 4, ,770-12, , ,407 Equipment repairs and maintenance 6, ,727 1, , ,166 24,190 18,362 Equipment 137,526 11,779 14,606 8, ,083 1,107 22, , ,833 Vehicle operating expenses 154,235 11, ,521 59,846-3, , ,629 Telephone 33,916 2,658 14,682 11,123-2,692 28,173-9, ,073 67,776 Utilities 107,599 34,996 34, , ,764-6, , ,560 Occupancy 260, ,636-12,387 70, , ,493 Insurance 105,933 15,379 14,715 14,015 5,802-48, , , ,266 Depreciation and amortization 526,555 30,416 49,100 2,729 1,358 8, ,482-66, , ,703 Amortization of deferred financing costs ,347 2,347 2,348 Interest 25,332 4,656 6,231 1, ,303-5,645 82,486 63,402 Real estate taxes 5,314 1,771 1, , ,009 10,981 Staff training 85,326 2,007 18,740 4, , ,608 95, , ,700 Recruiting and other employee costs 1,565-2,692 1, ,104 49,085 65,418 60,894 Office and miscellaneous 31,906 2,582 8,978 5, ,093 13,215 24,186 90, , ,519 Audit and legal , , ,704 72,283 Fundraising costs ,626-50,626 59,292 TOTAL EXPENSES BEFORE ALLOCATION 9,184, ,682 2,959,916 2,070, , ,940 6,131, ,058 1,945,844 24,316,696 22,309,402 ALLOCATION OF ADMINISTRATION 772,307 74, , ,173 14,575 76, ,802 15,625 (1,945,844) - - TOTAL EXPENSES AFTER ALLOCATION $ 9,957,238 $ 927,634 $ 3,229,913 $ 2,249,805 $ 177,769 $ 916,353 $ 6,674,301 $ 183,683 $ - $ 24,316,696 $ 22,309,402 See independent auditors' report