MULTNOMAH BIBLE COLLEGE AND SEMINARY INDEPENDENT AUDITOR S REPORT AND FINANCIAL STATEMENTS

Transcription

1 MULTNOMAH BIBLE COLLEGE AND SEMINARY INDEPENDENT AUDITOR S REPORT AND FINANCIAL STATEMENTS JUNE 30, 2007 AND 2006

2 CONTENTS PAGE INDEPENDENT AUDITOR S REPORT 1 FINANCIAL STATEMENTS Statements of financial position 2 3 Statement of activities for the year ended June 30, Statement of activities for the year ended June 30, Statements of cash flows 6 7 Notes to financial statements 8 19

3 INDEPENDENT AUDITOR S REPORT To the Board of Trustees Multnomah Bible College and Seminary We have audited the accompanying statements of financial position of Multnomah Bible College and Seminary (a not-for-profit institution) as of June 30, 2007 and 2006, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the College s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Multnomah Bible College and Seminary as of June 30, 2007 and 2006, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Portland, Oregon November 2,

4 STATEMENTS OF FINANCIAL POSITION ASSETS June 30, Cash and cash equivalents $ 3,135,798 $ 2,339,125 Student accounts and other receivables, net of allowance for doubtful accounts of $10,000 in 2007 and , ,357 Investments 12,111,699 12,134,124 Inventories 75,680 92,768 Prepaid expenses 175, ,417 Real estate held-for-sale 925,444 1,000,000 Beneficial Interest in Perpetual Trust 1,402,819 1,402,819 Assets held in Charitable Remainder Trusts 3,784,316 1,943,508 Land, buildings, and equipment, net 14,046,293 13,859,106 Deferred pension costs - 55,000 TOTAL ASSETS $ 35,768,322 $ 33,200,224 2

5 STATEMENTS OF FINANCIAL POSITION LIABILITIES AND NET ASSETS June 30, LIABILITIES Accounts payable $ 415,342 $ 476,622 Accrued liabilities 437, ,229 Accrued additional benefit liability 175, ,980 Deferred revenues 103, ,376 Deposits 320, ,420 Actuarial liability for annuities payable 3,121,657 3,191,136 Liability under unitrust agreement 2,212, ,087 Long-term contract payable 344, ,000 Long-term debt 2,744,210 2,807,852 Total liabilities 9,874,904 9,037,702 NET ASSETS Unrestricted: Unrestricted 6,382,948 4,835,746 Board-designated 6,813,219 7,003,097 Total unrestricted net assets 13,196,167 11,838,843 Temporarily restricted 5,085,612 4,897,531 Permanently restricted 7,611,639 7,426,148 Total net assets 25,893,418 24,162,522 TOTAL LIABILITIES AND NET ASSETS $ 35,768,322 $ 33,200,224 See accompanying notes. 3

6 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2007 Temporarily Permanently Unrestricted Restricted Restricted Total REVENUES, SUPPORT, AND OTHER Gifts and bequests: Student financial aid $ - $ 509,127 $ - $ 509,127 Other 2,293, , ,491 3,460,847 Student fees, room, and board 10,769, ,769,840 Investment income 1,725, ,735-1,920,240 Gain on Sale of Assets 644, ,816 Other 151,577 60, ,148 15,585,505 1,746, ,491 17,517,018 Present value adjustment to annuities payable (542,887) - - (542,887) Present value adjustment to splitinterest agreements - (295,570) - (295,570) Net assets released from restrictions 1,262,371 (1,262,371) - - Total revenues, support, and other 16,304, , ,491 16,678,561 EXPENSES Education 7,480, ,480,331 Student services 1,864, ,864,317 Student financial aid 1,262, ,262,725 Fund-raising 726, ,546 Management and general 2,752, ,752,211 Depreciation and amortization 795, ,062 Interest 206, ,379 Total expenses 15,087, ,087,571 INCREASE IN NET ASSETS 1,217, , ,491 1,590,990 NET ASSETS, beginning of year 11,838,843 4,897,531 7,426,148 24,162,522 Change in additional benefit liability 139, ,906 NET ASSETS, end of year $ 13,196,167 $ 5,085,612 $ 7,611,639 $ 25,893,418 4 See accompanying notes.

7 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2006 Temporarily Permanently Unrestricted Restricted Restricted Total REVENUES, SUPPORT, AND OTHER Gifts and bequests: Student financial aid $ - $ 3,023,782 $ - $ 3,023,782 Other 2,239,933 1,208,393 1,081,707 4,530,033 Student fees, room, and board 10,268, ,268,583 Investment income 602, , ,257 1,334,272 Other 181,264 5, ,705 13,291,805 4,574,606 1,476,964 19,343,375 Present value adjustment to annuities payable (538,079) - - (538,079) Present value adjustment to splitinterest agreements - (6,455) - (6,455) Net assets released from restrictions 1,280,439 (1,280,439) - - Total revenues, support, and other 14,034,165 3,287,712 1,476,964 18,798,841 EXPENSES Education 6,919, ,919,173 Student services 1,654, ,654,233 Student financial aid 1,390, ,390,591 Fund-raising 595, ,222 Management and general 2,018, ,018,462 Depreciation and amortization 693, ,095 Interest 212, ,251 Total expenses 13,483, ,483,027 INCREASE IN NET ASSETS 551,138 3,287,712 1,476,964 5,315,814 NET ASSETS, beginning of year 11,150,169 1,609,819 5,949,184 18,709,172 Change in additional benefit liability 137, ,536 NET ASSETS, end of year $ 11,838,843 $ 4,897,531 $ 7,426,148 $ 24,162,522 See accompanying notes. 5

8 STATEMENTS OF CASH FLOWS Years Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets $ 1,590,990 $ 5,315,814 Adjustments to reconcile increase (decrease) in net assets to net cash from operating activities: Depreciation and amortization 795, ,095 Write off of deferred pension costs 55,000 - Present value adjustment to annuities payable 542, ,079 Present value adjustment to split-interest agreements 295,570 6,455 Gain on annuities (85,069) (1,515,024) Gain on investments (800,668) (228,769) Proceeds from sale of real estate held-for-sale 1,000,000 - Unrealized gain on investments (385,527) (863,504) Decrease in reserve for uncollectible notes and contracts receivable - 2,500 Contribution of real estate (925,444) (1,160,000) Change in value of beneficial interest in remainder trusts (831,348) - Increase (decrease) in cash due to changes in assets and liabilities: Accounts receivable (4,965) 20,469 Inventories 17,088 (32) Prepaid expenses 92,466 (109,875) Accounts payable (61,280) 189,046 Accrued liabilities (15,385) (38,018) Deferred revenues (103,934) 41,148 Deposits 2,944 63,975 Gifts and bequests restricted: Capital improvements (203,110) (540,694) Endowment (185,491) (74,143) Net cash from operating activities 789,786 2,340,522 6

9 STATEMENTS OF CASH FLOWS Years Ended June 30, CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments 12,445,361 6,428,578 Purchase of investments (11,145,545) (10,335,838) Purchase of property, plant, and equipment (982,249) (2,481,488) Net cash from investing activities 317,567 (6,388,748) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from (payments on) long-term contract payable (25,065) 264,378 Repayment of long-term debt (63,642) (91,240) Payment of annuities payable (679,574) (653,309) Payment of split-interest agreements payable (60,000) (11,831) Proceeds from gifted annuities 129,000 1,070,516 Proceeds from charitable remainder trusts - 1,860,023 Gifts and bequests restricted: Capital improvements 203, ,694 Endowment 185,491 74,143 Net cash from financing activities (310,680) 3,053,374 NET (DECREASE) INCREASE IN CASH FLOWS 796,673 (994,852) CASH AND CASH EQUIVALENTS, beginning of year 2,339,125 3,333,977 CASH AND CASH EQUIVALENTS, end of year $ 3,135,798 $ 2,339,125 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for interest $ 206,379 $ 212,251 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES Gifts of real estate held-for-sale $ 925,444 $ 1,160,000 See accompanying notes. 7

10 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Multnomah Bible College and Seminary (the College) was established in The College, whose educational purpose and curriculum centers around the teaching of the Bible, provides educational programs for approximately 240 graduate and 595 undergraduate students. Primary sources of revenue are tuition and room and board fees from students, and contributions from donors. Basis of accounting The financial statements of the College have been prepared on the accrual basis of accounting. Fund accounting The College maintains its accounts in accordance with the principles and practices of fund accounting. Fund accounting is the procedure by which resources are classified for accounting purposes in accordance with activities or objectives as specified by donors; in accordance with regulations, restrictions, or limitations imposed by sources outside the institution; or in accordance with directions issued by the governing Board. Fund Group Current unrestricted funds Current restricted funds Loan funds: Original donor gifts Gains and losses on investments Endowment funds: Original donor gifts Gains and losses on investments Annuity Life income funds Plant funds Net Asset Class Unrestricted and unrestricted Boarddesignated Temporarily restricted Permanently restricted Unrestricted Permanently restricted Unrestricted Unrestricted Temporarily restricted Unrestricted and temporarily restricted Basis of presentation Net assets and revenues, expenses, and gains and losses are classified based on the existence or absence of donor-imposed restrictions and are reported in three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets, as follows: Unrestricted net assets Net assets not subject to donor-imposed stipulations. 8

11 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Temporarily restricted net assets Net assets subject to donor-imposed stipulations that will be met by actions of the College and/or the passage of time. Permanently restricted net assets Net assets subject to donor-imposed stipulations that they be maintained permanently by the College. Generally, the donors of these assets permit the College to use all or part of the income earned on related investments for general or specific purposes. Revenues are reported as increases in unrestricted net assets unless use of the related asset is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expirations of temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as amounts released from restrictions between the applicable classes of net assets. Gifts and bequests Gifts and bequests received are recorded as unrestricted, temporarily restricted, or permanently restricted depending on the existence and/or nature of any donor restrictions. Gifts and bequests, including unconditional promises to give, are recognized as revenue in the period received. Contributions of assets other than cash are recorded at their estimated fair value. Cash and cash equivalents The College considers unrestricted cash on hand, cash in demand bank accounts, investments in money market funds, and certificates of deposit with a maturity of three months or less when purchased to be cash and cash equivalents. Student accounts and other receivables Student accounts and other receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts for all receivables represents the College s best estimate of the amount of probable credit losses in the College s existing accounts receivables. The College determines the allowance by performing on-going evaluations of its creditors and students, and their ability to make payments. The College determines the adequacy of the allowance based on length of time past due, historical experience, and judgment of economic conditions. Account balances are charged off against the allowance after all means of collection have been exhausted and potential recovery is considered remote. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are recorded at their fair values in the statements of financial position. Unrealized gains and losses are included in the increase (decrease) in net assets. Inventories Inventories are valued at the lower of cost or market using the first-in, first-out method. 9

12 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Beneficial interest in Perpetual Trust The College is the sole beneficiary of a perpetual trust whereby the investment principal remains part of the trust and is not the property of the College. The trust is managed by a third-party trustee. Each year the College receives distributions from the trust which is to be used for scholarships. The College has no right to the investment principal. The annual fluctuation in the market value of the trust is included in the statement of activities as an increase of decrease in permanently restricted net assets. Assets held in Charitable Remainder Trusts The College serves as the trustee for various charitable trusts. Under the terms of these trust agreements, the College makes distributions to income beneficiaries for a given term or for the life of the beneficiaries. Assets remaining in the trusts will be transferred to the College at the end of the term or upon the death of the beneficiaries. The assets held in these trusts are recorded at their fair market value. The related liability is recorded at the estimated discounted value of the amounts due to the income beneficiaries. Land, buildings, and equipment Land, buildings, residences, furnishings, and equipment are stated at cost at the date of acquisition. Items with a useful life of two years or more and cost greater then $500 are capitalized. Library books are capitalized regardless of cost. Expenditures for minor repairs and maintenance are expensed when incurred. Donations of land, buildings, and equipment are recorded as support at their estimated fair value at the date of donation. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as temporarily restricted support. Absent donor stipulations regarding how long those donated assets must be maintained, the College reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The College reclassifies temporarily restricted net assets to unrestricted net assets at that time. Buildings and equipment are depreciated using the straight-line method over their estimated useful lives as follows: Buildings and improvements Furniture, equipment, and vehicles Films, library books, and materials 7 50 years 5 10 years 10 years Annuities payable Annuities payable have been computed using a discount factor of 8% and estimated life expectancy of annuitants based on applicable mortality tables. Advertising costs Advertising costs are charged to operations when incurred. 10

13 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income tax status The College is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. In addition, the College qualifies for the charitable contribution deduction under Section 170(b)(1)(A) and has been classified as an organization that is not a private foundation under Section 509(a)(2). Therefore, no provision has been made for federal and state income taxes in the accompanying financial statements. Deferred revenues Deferred revenues represents school tuition and housing deposits received in fiscal years 2006 and 2005, but related to fiscal years 2007 and 2006, respectively. Use of estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the 2006 financial statements to conform to current year presentations. NOTE 2 INVESTMENTS Investments received by gift are recorded at fair value at the date of contribution. The fair value of investments in real estate is not readily determinable but is believed to be in excess of book value. Accordingly, for purposes of fair value disclosures, real estate is included at book value. Unrealized gains and losses are included in the increase in net assets in the statements of activities. Investments presented by type at fair value, except for real estate which is at cost, are as follows: Mutual funds $ 1,953,476 $ 1,766,358 Government securities 289, ,439 Equity securities 6,327,644 6,695,715 Corporate debt securities 3,137,621 2,440,084 Real estate 403, ,528 Total investments $ 12,111,699 $ 12,134,124 11

14 NOTE 2 INVESTMENTS (continued) The following schedule summarizes the investment return and its presentation in the statements of activities: Mutual funds $ 1,953,476 $ 1,766,358 Government securities 289, ,439 Equity securities 6,327,644 6,695,715 Corporate debt securities 3,137,621 2,440,084 Real estate 403, ,528 Total investments $ 12,111,699 $ 12,134,124 Dividends and interest $ 734,045 $ 241,999 Net realized gain 800, ,769 Net unrealized gain 385, ,504 Total return on investments $ 1,920,240 $ 1,334,272 NOTE 3 LAND, BUILDINGS, AND EQUIPMENT Land, buildings, and equipment consist of the following: Land and land improvements $ 811,120 $ 690,336 Buildings 18,341,071 17,863,594 Equipment and vehicles 5,533,471 5,251,377 Library books 1,790,839 1,649,828 Total land, buildings, and equipment 26,476,501 25,455,135 Less accumulated depreciation (12,558,421) (11,780,503) 13,918,080 13,674,632 Construction in progress 128, ,474 Land, buildings, and equipment, net $ 14,046,293 $ 13,859,106 12

15 NOTE 4 NET ASSETS RELEASED FROM RESTRICTIONS During 2007 and 2006, net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors. The amounts pertaining to educational programs, and student programs and institutional support come primarily from foundation grants. Restricted purposes accomplished: Student aid general $ 1,094,042 $ 1,122,156 Expired annuities 31,558 19,714 Educational programs 115, ,308 Student programs and institutional support 20,776 7,261 Net assets released from restrictions $ 1,262,371 $ 1,280,439 NOTE 5 TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are restricted for the following purposes: Life income funds $ 1,594,481 $ 1,045,807 Student aid funds 2,909,963 3,430,072 Student scholarship funds 244, ,225 Special books and equipment 13,480 6,750 Student and educational programs 323, ,677 Total temporarily restricted net assets $ 5,085,612 $ 4,897,531 NOTE 6 PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets consist of the following: Endowments $ 7,096,471 $ 6,910,980 Loan fund 515, ,168 Total permanently restricted net assets $ 7,611,639 $ 7,426,148 13

16 NOTE 7 PENSION PLANS Prior to June 30, 2003, the College maintained a noncontributory retirement plan covering all full-time employees, age 21 or older, who had completed one year of service. Effective June 30, 2003, the College s Board of Trustees elected to freeze the plan. Then, effective March 31, 2007, the Board of Trustees elected to terminate the plan. Under the plan termination, all current qualifying employees were given the option of rolling their calculated benefit into a qualified individual retirement plan provided by the College. Those former employees who were not retired were provided with the same options. Former employees who were retired and taking retirement benefits from the plan were transferred to a qualified insurance company without interruption of any retirement benefits. As of June 30, 2007, a liability remained under the plan for those participants who had not yet been paid or transferred. Summary information for the defined benefit plan derived from the most recent actuarial valuation, based on the measurement date of June 30, is as follows: Projected benefit obligation for service rendered to date $ (527,663) $ (1,138,045) Plan assets at fair value 258, ,518 Unfunded status $ (269,616) $ (280,527) Amounts recognized in the statements of financial position consist of: Accrued benefit costs included in prepaids (accounts payable) $ (94,542) $ 34,453 Accrued additional benefit liability (175,074) (314,980) $ (269,616) $ (280,527) The weighted average assumptions used in determining the plan s projected pension cost funded status are as follows: Discount rate 6.00% 5.75% Expected long-term rate of return on assets 7.25% 7.25% 14

17 NOTE 7 PENSION PLANS (continued) The net periodic pension cost included the following components: Service cost benefits earned during the period $ 5,000 $ 5,000 Interest cost on projected benefit obligation 66,021 70,979 Expected return on plan assets (63,116) (58,507) Recognized actuarial loss 23,557 38,104 Net periodic pension cost 31,462 55,576 Settlement loss recognized Net pension cost $ 31,462 $ 55,576 Contributions $ 153,570 $ 119,077 Benefits paid $ 812,087 $ 107,456 The College s pension plan weighted average asset allocations at June 30 by asset category are as follows: Asset Category Equity securities 0% 58% Debt securities 0% 32% Other 100% 10% 100% 100% Plan assets are managed by several money managers who are monitored by Wachovia, to ensure diversification of risk within the portfolio. Plan assets are stated at the fair market value, which approximates liquidation value, as determined by quoted market prices. During 2007, all assets remaining with the plan were transferred to a money market account managed by US Bank. This action was performed to ensure that the assets are liquid enough to make the payments necessary to close out the plan. 15

18 NOTE 7 PENSION PLANS (continued) The expected long-term rate return reflects, in part, the expected asset allocation under the College s investment policy. The expected returns on the various asset classes are based on the historical and expected returns of representative indices. The history of plan asset returns in relation to the past performance of the indices was also factored into the long-term rate assumption. The expected contributions for the year ending June 30, 2008, are $269,616. The following benefit payments, which reflect expected future service, as appropriate, expected to be paid are: Year ended June 30, 2008 $ 527, $ $ $ $ $ - Effective October 1992, the College adopted an elective Tax Deferred Annuity Retirement Plan available to all employees who work 20 or more hours per week and are over age 21 with at least one year of employment. Employees electing to participate contribute a minimum of 2% of total annual employee compensation per year to the plan, with the College matching their contribution to the extent of 100% of the employees contributions, up to a maximum College contribution of 6% of total annual employee compensation. The College makes monthly contributions to the plan. Expenses related to this plan were $245,157 and $199,903 for the years ended June 30, 2007 and 2006, respectively. NOTE 8 NOTE PAYABLE LINE OF CREDIT The College has a line of credit agreement with US Bank. The line of credit agreement grants borrowings up to $1,000,000. No balance was outstanding on the line of credit at June 30, 2007 and Interest (currently at 6.75%) is payable monthly at one percent below the bank s prime lending rate. The line of credit agreement is secured by contracts, accounts receivable, investments, and equipment not subject to prior liens, and expires on December 31,

19 NOTE 9 LONG-TERM CONTRACT PAYABLE During 2004, the College entered into an agreement with ARAMARK Corporation for the financing of up to $330,000 for renovations to the dining room and retail café. Terms of the agreement call for the debt to be amortized over a 12-year period commencing October 1, Interest accrued on the outstanding debt at the prime rate (currently at 7.75%) is to be forgiven upon termination of the agreement on September 30, The outstanding balance on the contract was $344,935 and $370,000 at June 30, 2007 and 2006, respectively. NOTE 10 LONG-TERM DEBT Long-term debt consists of the following: Note payable to Toyota Financial, payable in monthly installments of $368, including interest at 3.90%, secured by vehicle, due 2010 $ 11,478 $ 15,358 Note payable to US Bank, payable in monthly installments of interest only at 7.25%, secured by vehicle, open line of credit renewable on 12/31/ ,486 - Total notes payable 44,964 15,358 Mortgage payable to US Bank, payable in monthly installments of $13,720 including interest at 7.125%, collateralized by real property, due ,404,200 1,460,217 Mortgage payable to US Bank, payable in monthly installments of $10,242 including interest at 7.28%, collateralized by real property, due ,196,035 1,229,319 Mortgage payable to US Bank, payable in monthly installments of $1,064 including interest at 8.59%, collateralized by real property, due July , ,958 Total mortgages payable 2,699,246 2,792,494 Total long-term debt $ 2,744,210 $ 2,807,852 17

20 NOTE 10 LONG-TERM DEBT (continued) The following is a summary of scheduled maturities of the long-term debt, assuming the debt subject to call date is not retired early: Years ending June 30, 2008 $ 140, , ,198, ,291, $ 2,744,210 NOTE 11 CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the College to concentrations of credit risk consist principally of cash and cash equivalents, marketable securities and other investments, accounts receivable, and notes receivable. The College places substantially all of its cash and liquid investments with high-quality financial institutions; however, cash balances may periodically exceed federally insured limits. Marketable securities, consisting of both debt and equity instruments, are generally placed in a variety of managed funds administered by an investment manager. Student notes and receivables are due from a variety of sources. As of June 30, 2007, management considers the College to have no significant concentration of credit risk. NOTE 12 FUNCTIONAL EXPENSES Expenses by functional classification are as follows: 18 Instruction $ 4,300,198 $ 3,966,248 Academic support 1,237,384 1,179,216 Student services 2,332,445 2,102,477 Student aid institutional 1,262,725 1,390,591 Residence halls and food service 2,005,148 1,749,584 Fund-raising 791, ,203 Institutional support 3,158,145 2,434,708 Total functional expenses $ 15,087,571 $ 13,483,027 Depreciation expense, interest expense, and plant operating expense are allocated among the programs and the supporting services benefited.

21 NOTE 13 ANNUITY FUND FINANCIAL INFORMATION The following financial information is required by Oregon Insurance Division Bulletin INS Net assets are included as unrestricted within the College s financial statements: ANNUITY FUND STATEMENTS OF FINANCIAL POSITION June 30, ASSETS Annuity fund: Cash and cash equivalents $ 799,387 $ 1,090,489 Investments 4,226,531 4,013,152 TOTAL ASSETS $ 5,025,918 $ 5,103,641 LIABILITIES AND NET ASSETS Actuarial liability for annuities payable $ 3,121,657 $ 3,191,136 Unrestricted net assets 1,904,261 1,912,505 TOTAL LIABILITIES AND NET ASSETS $ 5,025,918 $ 5,103,641 With the exception of amounts in excess of the College s actuarial liability as of June 30, 2007 and 2006, funds are maintained in segregated accounts of financial institutions and investment companies. 19