DAKOTA STATE UNIVERSITY FINANCIAL REPORT...DAKOTA STATE UNIVERSITY FINANCIAL REPORT FOR THE YEAR...

Dakota State University

Financial Report 2013

DAKOTA STATE UNIVERSITY

FINANCIAL REPORT

FOR THE YEAR ENDED JUNE 30, 2013

BOARD OF REGENTS

Dean Krogman, President Brookings

Randy Schaefer, Vice President Madison

Randall K. Morris Spearfish

Terry Baloun Seneca

Harvey C. Jewett Aberdeen

Kathryn Johnson Hill City

Carole Pagones Sioux Falls

Bob Sutton Pierre

Joseph Schartz Humboldt

OFFICE OF THE EXECUTIVE DIRECTOR

Dr. Jack R. Warner, Executive Director and CEO Pierre

Monte Kramer, Vice President of Finance and

Administration Pierre


Dr. Douglas Knowlton, President

Dr. Cecelia Wittmayer, Vice President of Academic Affairs

Stacy Krusemark, Vice President for Business and Administrative Services

Amy Dockendorf, Comptroller

March 14, 2014

Dr. Jack Warner

Executive Director

South Dakota Board of Regents

306 East Capitol Ave, Suite 200

Pierre, SD 57501

Dear Dr. Warner:

The financial report of Dakota State University for the fiscal year 2013 is presented in the following

pages. This report covers all phases of the financial transactions of the University for the twelve-month

period ending June 30, 2013.

Sincerely,

Dr. David Borofsky

President


Dakota State University • 820 North Washington Ave. • Madison, SD 57042-1799

March 14, 2014

Dr. David Borofsky

President


Dear Dr. Borofsky:

The financial report of Dakota State University for the year ending June 30, 2013 is presented in the

following pages.

The accounts of Dakota State University are maintained and its reports presented in accordance with the

standards issued by the Governmental Accounting Standards Board (GASB). The format provides a

comprehensive view of the financial operations of the University as a whole.

The Dakota State University Foundation is a legally separate non-for-profit organization dedicated to

maximizing other resources for University programs. The Foundation’s financial statements, audited by an

independent certified public accountant, are included in the report as it has been determined to be a component

unit of the University based on the provision of GASB Statement No. 39, Determining Whether Certain

Organizations are Component Units.

All state fund expenditures are under the continuous pre-audit control of the State Auditor, and all

accounts are under the post-audit control of the Auditor General. This report is intended to form a

comprehensive and permanent record of the finances of Dakota State University for the fiscal year ending June

30, 2013.

Sincerely,

Stacy Krusemark

Vice President for Business and Administrative Services

Dakota State University • 820 North Washington Ave. • Madison, SD 57042-1799


FINANCIAL REPORT

FOR THE YEAR ENDING JUNE 30, 2013

TABLE OF CONTENTS

Management’s Discussion and Analysis 1-6

Statement of Net Position 7

Statement of Financial Position (DSU Foundation) 8

Statement of Revenues, Expenses, and Changes in Net Assets 9

Statement of Activities and Changes in Net Assets (DSU Foundation) 10-11

Statement of Cash Flows 12

Statement of Cash Flows (DSU Foundation) 13

Notes to Financial Statements 14-20

Notes to Financial Statements (DSU Foundation) 21-31


Financial Statements

Management’s Discussion and Analysis

This section of Dakota State University’s annual financial report presents management’s

discussion and analysis of the University’s financial operations during the fiscal year ended

June 30, 2013. The discussion and analysis should be read in conjunction with the

accompanying financial statements and footnotes. The accuracy of the financial statements,

footnote disclosures and discussion are the responsibility of University management.

Reporting Entity

Dakota State University is one of six public universities under the control of the South

Dakota Board of Regents. The public universities are considered a component unit of the

State of South Dakota and are reported as such in the State’s comprehensive annual financial

report.

The financial operations of Dakota State University are audited as a part of the State of South

Dakota. An audit opinion is not issued on the individual statements of the University, but

rather on the audited Comprehensive Annual Financial Report of the State of South Dakota.

Using the Annual Report

The accompanying statements have been prepared in accordance with Governmental

Accounting Standards Board (GASB) Statement No. 35, Basic Financial Statements – and

Management’s Discussion and Analysis – for Public Colleges and Universities.

The statements required by GASB include the Statement of Net Position, Statement of

Revenues, Expenses and Changes in Net Position, and the Statement of Cash Flows. The

statements are prepared under the accrual basis of accounting where revenues are recognized

when the service is provided and expenses are recognized when a liability is incurred

regardless of when the exchange of cash takes place.

The Statement of Net Position reports the difference in assets and liabilities and is one way of

measuring the University’s financial position. Non-financial measurements such as

enrollment and condition of the facilities serving the students should also be taken into

consideration.

The Statement of Revenues, Expenses and Changes in Net Position presents revenues earned

and expenses incurred during the year. Revenues and expenses are considered operating or

non-operating. In accordance with GASB requirements, state appropriations have been

classified as non-operating revenues resulting in a net operating loss being reported. The

financial statements also include an allowance for depreciation expense, which is the

amortization of the cost of a capital asset over its estimated useful life.

The Statement of Cash Flows presents information related to cash inflows and outflows.

These transactions are classified as operating, non-operating, capital and investing activities.

Financial Highlights

From the prior year, current assets increased $193,000, 2.3%. The main increase is cash

balances as the University makes an effort to increase reserves for fluctuations in enrollment,

special projects or enhanced program offerings. Non-current assets decreased $988,000,

-3.7%. There was a $600,000 increase in capital assets but this was offset by a decrease in

depreciation expense of $1,600,000.

Total liabilities decreased by $440,000, -3.19%, between FY12 and FY13. Current liabilities

decreased by $88,000 and non-current liabilities decreased by $352,000 with the bonds

payable amount being $354,000 of the non-current decrease.

Condensed Statement of Net Position

as of June 30, 2013 and 2012

FY 2013 FY 2012

Assets

Current Assets 8,606,535$ 8,413,067$

Noncurrent Assets 25,549,066$ 26,537,530$

Total Assets 34,155,601$ 34,950,597$

Liabilities

Current Liabilities 3,415,768$ 3,504,192$

Noncurrent Liabilities 9,951,063$ 10,303,084$

Total Liabilities 13,366,831$ 13,807,276$

Net Assets

Invested in Capital, Net of Related Debt 17,170,940$ 17,807,724$

Restricted 829,073$ 819,125$

Unrestricted 2,788,757$ 2,516,472$

Total Net Assets 20,788,770$ 21,143,321$

Investment in capital assets represents the depreciated balance of buildings, land

improvements and infrastructure, and equipment. Assets restricted for loans, grants and debt

service represent assets that the University may only use for allowable activities related to

each of those funds. Unrestricted assets may be used for the general operations of the

University.

Condensed Statement of Revenues, Expenses and Changes in Net Position

as of June 30, 2013 and 2012

FY 2013 FY 2012

Operating Revenues 25,498,398$ 25,883,352$

Operating Expenses 34,794,500$ 34,679,218$

Operating Loss (9,296,102)$ (8,795,865)$

Non-Operating Revenues 9,289,554$ 8,854,312$

Non-Operating Expenses 619,677$ 685,495$

Non-Operating Income 8,669,876$ 8,168,818$

Net Loss/Income (626,225)$ (627,047)$

Capital Contributions 271,674$ 1,628,475$

Increase (Decrease) in Net Assets (354,552)$ 1,001,428$

Net Assets, Beginning of Year 21,143,321$ 20,080,718$

Prior period adjustment -$ 61,176$

Net Assets, End of Year 20,788,770$ 21,143,321$

Operating revenues decreased $385,000, -1.5% in FY13. Operating revenues are those

revenues the university earns through its operation, such as tuition, fees, auxiliary services,

and grants and contracts. Federal grants and contract revenue was down $579,000 and self-

support tuition was down $140,000 due to a reduced rate for general education courses and

the University Center in Sioux Falls.

Non-operating revenues are revenues realized through appropriations or non-operating

activities such as investment income. Non-operating revenues increased by $435,000.

General funds increased by $514,000 and HEFF funds decreased by $88,000.

Operating expenses increased by $115,000. There was a $911,000 increase in personal

services and decreases of $942,000 in contractual services and supplies & materials. The

decreased revenue in federal grants and contracts of $597,000 is reflected in the expense

decrease for the same funds.

The following is an illustration of revenues by source for the year ended June 30, 2013:

Tuition and Fess, 34.6%

Auxiliaries, 9.1%

General Sales & Services, 3.6%

Federal Grants &

Contracts, 17.4%State Grants &

Contracts, 4.0%

Private Grants & Contracts, 3.9%

Other, 0.8%

Capital Related Activities, 0.8%

General Fund, 25.3%

HEFF, 0.5%

Below is a review of the expenses by the National Association of College and University

Business Officers expenditure categories.

NACUBO Expenditure

FY13 FY12

Instruction 12,425,381$ 12,019,940$

Research 1,300,225$ 1,269,593$

Public Service 2,843,751$ 3,183,650$

Academic Support 2,806,642$ 2,911,686$

Student Services 3,760,613$ 3,439,362$

Institutional Support 3,140,966$ 3,257,126$

O&M Plant 3,582,175$ 3,489,349$

Scholarships & Fellowships 1,666,271$ 1,734,506$

Auxiliaries Enterprises 3,268,477$ 3,374,006$

Total 34,794,500$ 34,679,218$

The following is an illustration of expenses for the year ended June 30, 2013:

Instruction35.7%

Research3.7%

Public Service8.2%

Academic Support8.1%

Student Services10.8%

Institutional Support

9.0%

O&M Plant10.3%

Scholarships & Fellow ships

4.8%

Auxiliaries Enterprises

9.4%

Condensed Statement of Cash Flows

For the year ended June 30, 2013

FY2013 FY2012

Cash Provided by (Used in):

Operating Activities (7,619,127)$ (6,879,084)$

Non Capital Financing Activities 9,010,800$ 8,491,716$

Capital and Related Financing Activities (1,356,501)$ (1,367,327)$

Investing Activities 57,316$ 68,025$

Net Increase (Decrease) in Cash 92,488$ 313,330$

Cash and Cash Equivalents, Beginning of the Year 6,742,171$ 6,428,841$

Cash and Cash Equivalents, End of the Year 6,834,659$ 6,742,171$

The Statement of Cash Flows presents information related to cash inflows summarized by

operating, non-capital financing, capital financing and related investing activities. This helps

measure the ability to meet financial obligations as they mature. Major sources of cash

include: 1) funds from students for tuition, fees, auxiliaries, and federal grants, $25 million,

in the operating activities category, and 2) general appropriations, $8.8 million, in the non

capital financing activities. The largest payments were for salaries and benefits, $21 million,

and payments to vendors for contracted services and supplies, $9.6 million.

The following is an illustration of cash balances as of June 30, 2013:

Unrestricted cash on hand as of June 30 each year is used for summer salaries, benefits and

monthly operating expenses. Cash receipts during the summer are relatively low so the

university must maintain a sufficient cash balance to meet obligations until proceeds from

tuition and fees are received in the fall. Restricted cash can only be used in accordance with

the source of the cash and grant funds are typically received on a reimbursement basis. Plant

funds are to be used for long-term maintenance of revenue buildings and not for normal day-

to-day operating expenses.

Enrollment Information

Dakota State University’s Fall headcount and full-time equivalent enrollment increased

slightly by .6% and .7% respectively over the prior year.

($2,000,000)

($1,000,000)

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

2007 2008 2009 2010 2011 2012 2013

Plant

Restricted

Unrestricted

Total

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2007 2008 2009 2010 2011 2012 2013

FTE

Headcount

FY 2013 FY 2012

ASSETS

Current Assets

Cash on Deposit - State Treasurer 6,302,668.43 6,220,052.72

Other Cash and Temporary Investments 49,017.58 49,093.16

Accounts Receivable - Students 393,795.11 377,096.51

Accounts Receivable 190,406.16 135,959.79

Notes Receivable 327,687.99 293,380.89

Interest Receivable 70,440.18 57,313.91

Prepaid Expenses and Deferred Charges 25,824.54 29,075.20

Inventory 242,881.66 223,146.90

Due From Federal Sources 693,933.52 841,007.57

Due From Primary Government 165,461.26 186,940.10

Due From Component Unit 144,418.11 0.00

Total Current Assets 8,606,534.54 8,413,066.75

Non-Current Assets

Restricted Cash on Deposit - State Treasurer (Debt Service) 482,972.57 473,025.18

Notes Receivable 1,423,718.00 1,441,500.00

Land 89,820.00 89,820.00

Land Improvements, Net 386,018.80 415,583.15

Infrastructure, Net 2,649,025.11 2,721,508.16

Buildings and Building Improvements, Net 19,289,056.74 20,275,357.67

Equipment and Other Property, Net 1,228,454.83 1,120,736.11

Construction in Progress 0.00 0.00

Total Non-Current Assets 25,549,066.05 26,537,530.27

TOTAL ASSETS 34,155,600.59 34,950,597.02

LIABILITIES

Current Liabilities

Accounts Payable 1,275,389.65 1,436,294.44

Accrued Wages and Benefits 362,941.54 384,927.90

Accrued Interest Payable 27,858.13 29,258.13

Compensated Absences Payable 596,041.53 552,005.84

Bonds Payable, Net of Unamortized Amount 353,845.48 343,845.48

Obligations Under Capital Leases, Non Capital 291,202.72 517,884.46

Deferred Revenue 315,340.00 72,595.45

Due to Primary Government 49,774.20 18,413.05

Due to Other Component Unit 0.00 9,500.00

Student Deposits 64,880.21 60,972.02

Agency Funds - Funds Held for Others 78,494.84 78,494.84

Total Current Liabilities 3,415,768.30 3,504,191.61

Non-Current Liabilities

Compensated Absences Payable 1,471,583.73 1,461,297.00

Bonds Payable, Net of Unamortized Amount 6,117,589.94 6,471,435.42

Obligations Under Capital Leases, Non Capital 143,133.00 151,595.66

Federal Capital Contributions Advance 2,218,756.00 2,218,756.00

Total Non-Current Liabilities 9,951,062.67 10,303,084.08

TOTAL LIABILITIES 13,366,830.97 13,807,275.69

NET ASSETS

Invested in Capital, Net of Related Debt 17,170,940.05 17,807,724.18

Restricted

Nonexpendable

Expendable

Debt service 482,972.57 473,025.18

Other 346,100.00 346,100.00

Unrestricted 2,788,757.00 2,516,471.97

TOTAL NET ASSETS 20,788,769.62 21,143,321.33

TOTAL LIABILITIES AND NET ASSETS 34,155,600.59 34,950,597.02


STATEMENT OF NET POSITION

JUNE 30, 2013

FY 2013 FY 2012

OPERATING REVENUES

Tuition & Fees

State Support 2,603,037.73 3,111,732.42

Self Support 6,304,761.27 6,445,158.85

HEFF & undistributed tuition 649,705.07 0.00

Total Tuition 9,557,504.07 9,556,891.27

Fees 4,914,152.84 5,566,151.39

Total Tuition and Fees 14,471,656.91 15,123,042.66

Student Financial Assistance (2,323,651.58) (2,160,662.71)

Tuition and Fees Net of Student Financial Assistance 12,148,005.33 12,962,379.95

Auxiliaries 3,191,407.89 3,335,490.00

General Sales & Services 1,244,777.44 154,867.46

Contracts & Grants - Federal 6,117,391.30 6,714,396.24

Contracts & Grants - State 1,394,022.69 1,360,995.30

Contracts & Grants - Private 1,373,188.29 1,334,192.27

Student Loan Interest 27,590.41 20,426.56

Other Revenues and Additions 2,014.34 604.64

TOTAL OPERATING REVENUES 25,498,397.69 25,883,352.42

OPERATING EXPENSES

Personal Services 21,040,392.99 20,128,907.66

Travel 731,914.21 640,231.37

Contractual 6,555,913.11 7,117,342.77

Supplies and Materials 2,965,745.05 3,347,282.33

Grants 1,819,287.88 1,784,702.02

Loan Cancellation Expense 64,197.32 72,982.72

Badt Debt 0.00 5,509.98

Depreciation 1,617,048.97 1,582,258.71

TOTAL OPERATING EXPENSES 34,794,499.53 34,679,217.56

TOTAL OPERATING INCOME/(LOSS) (9,296,101.84) (8,795,865.14)

NON-OPERATING REVENUES

General Fund Appropriations 8,864,410.00 8,350,133.00

ARRA Stabilization Appropriation 0.00 0.00

School & Public Lands 173,360.00 173,360.00

HEFF 181,341.78 269,924.53

Investment Income 70,441.89 60,894.66

TOTAL NON-OPERATING REVENUES 9,289,553.67 8,854,312.19

NON-OPERATING EXPENSES

Interest Expense on Bonds 288,186.02 300,645.15

Other (community center payment to BOR) 123,179.67 123,352.87

Loss on disposal of assets 0.00 0.00

Contributed Services 208,311.57 261,496.51

TOTAL NON-OPERATING EXPENSES 619,677.26 685,494.53

TOTAL NON-OPERATING REVENUES/(EXPENSES) 8,669,876.41 8,168,817.66

INCOME BEFORE OTHER REVENUES, EXPENSES, GAINS OR LOSSES (626,225.43) (627,047.48)

CAPITAL

HEFF 125,368.34 0.00

South Dakota Building Authority 146,305.38 1,628,475.09

NET ASSETS:

NET ASSETS - BEGINNING OF THE YEAR 21,143,321.33 20,080,718.00

Prior Period Adjustments 0.00 61,175.72

NET ASSETS - END OF THE YEAR 20,788,769.62 21,143,321.33


STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET ASSETS

JUNE 30, 2013

CASH FLOWS FROM OPERATING ACTIVITIES FY 2013 FY 2012

Tuition, Fees, & Auxiliaries (Net of Scholarship allowance & discounts) 15,339,413.22 16,297,869.95

General Sales & Services 1,023,622.55 286,300.16

Federal Grants & Contracts 6,507,209.90 6,528,645.33

State Grants and Contracts 1,415,501.53 1,289,792.52

Private Grants & Contracts 1,373,188.29 1,260,420.98

Other 2,014.34 604.64

Student Loan Interest 27,590.41 20,426.56

Personal Services (salaries & benefits) (21,008,056.93) (20,047,934.14)

Travel (731,914.21) (640,231.37)

Contractual (6,524,551.96) (7,184,528.05)

Supplies & Materials (3,143,133.94) (2,826,574.56)

Grants (1,819,287.88) (1,784,702.02)

Perkins Loans Colelcted from Students (80,722.42) (79,174.18)

Net cash provided (used) by Operating Activities (7,619,127.10) (6,879,084.18)

CASH FLOWS FROM NONCAPITAL FINANCIAL ACTIVITIES

General Fund Appropriations 8,864,410.00 8,350,133.00

ARRA Stimulus Funds 0.00 0.00

School & Public Lands 173,360.00 173,360.00

HEFF 181,341.78 269,924.53

Direct Loan Receipts 10,642,342.00 10,684,699.00

Direct Loan Disbursements (10,642,342.00) (10,684,699.00)

Payments for Other Expenditures (208,311.57) (301,701.51)

Net Cash Flows Provided by Noncapital Financing Activities 9,010,800.21 8,491,716.02

CASH FLOWS FROM CAPITAL RELATED FINANCING ACTIVITIES

HEFF 125,368.34 0.00

Community Center Payments to Board of Regents (123,179.67) (123,352.87)

Principal Paid on Indebtedness (580,144.40) (678,740.70)

Interest on Indebtedness (288,431.50) (300,655.00)

Purchase of Capital Assets (636,419.36) (1,893,053.96)

South Dakota Building Authority 146,305.38 1,628,475.09

Net Cash Used by Capital and Related Financing Activities (1,356,501.21) (1,367,327.44)

CASH FLOWS FROM INVESTING ACTIVITIES 57,315.62 68,025.49

Net cash Provided (used) 92,487.52 313,329.89

Cash - Beginning of the year 6,742,171.06 6,428,841.17

Cash - End of the year 6,834,658.58 6,742,171.06

RECONCILIATION OF NET OPERATING REVENUES/(EXPENSES) TO

NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES

OPERATING INCOME (LOSS) (9,296,101.84) (8,795,865.14)

Adjustments to reconcile net income (loss) to net cash used by operating activities:

Depreciation, Bad Debt, and Loan Cancellation Expense 1,681,246.29 1,599,575.69

Change in Assets and Liabilities:

Accounts Receivable (124,481.95) (223,921.70)

Inventory (19,734.76) 80,143.95

Accounts Payable 139,945.16 460,983.02

NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES (7,619,127.10) (6,879,084.18)


STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JUNE 30, 2013


NOTES TO THE FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

A. Basis of Presentation:

The financial statements have been prepared and are presented as required by GASB Statement No. 34,

Basic Financial Statements and Management Discussion and Analysis for State and Local Governments

and GASB Statement No. 35, Basic Financial Statements and Management’s Discussion & Analysis for

Public Colleges and Universities. The financial statement presentation required by GASB provides a

comprehensive, entity-wide perspective of the University’s assets, liabilities, net assets, revenues, expenses,

changes in net assets, cash flows, and replaces the fund-group perspective previously required. GASB

Statement No. 39, Determining Whether Certain Organizations Are Component Units, was implemented

for fiscal year 2004. The provisions of this statement determined that the Dakota State University

Foundation should be reported as a component unit of the university and the Foundation Statements have

been presented following the statements of the university.

B. Reporting Entity:

Dakota State University is one of six public institutions of higher education governed by the South

Dakota Board of Regents. The University is a component unit of the State of South Dakota and is

included in the general-purpose financial statements of the State of South Dakota.

C. Basis of Accounting:

The University has adopted the accrual basis of accounting for preparing its annual financial statements as

required by generally accepted accounting principles. Under the accrual basis of accounting, revenue is

recognized when earned and expenditures when an obligation is incurred. For reporting purposes, the

University is considered a special-purpose government engaged only in business-type activities.

D. Fund Accounting:

In order to insure observance of the limitations and restrictions placed on the use of the resources

available to the University, the accounts of the University are maintained according to the principles of

fund accounting. This is the procedure by which resources for various purposes are classified for

accounting and reporting purposes into fund accounts that are maintained in accordance with activities or

objectives specified by donors, governmental appropriations, granting agencies, and other outside sources

or regulations.

Separate accounts are maintained for each fund; however, in the accompanying statements, all funds have

been combined for reporting purposes.

E. Accounts Receivable:

Accounts Receivable consists of funds owed to various University departments from external sources.

Accounts receivable include funds owed from students for tuition & fee charges as well as expenditures

made on grants for which reimbursement has not been received. The University used the direct write-off

method for uncollectible receivables.

F. Notes Receivable:

Notes receivable consist of those receivables in connection with the Perkins Loan program.

G. Investments:

Investments are reported at cost. Market values are not readily determinable for funds on deposit with the

State Treasurer. These funds are pooled by the State Investment Council for investment purposes and

investment earnings are returned to participating funds annually.

H. Inventories:

Inventories of supplies are reported using the FIFO method or estimated value. Inventories are reflected

as current assets on the statement of net assets.

I. Capital Assets:

Capital assets are reported at historical cost. The cost of a capital asset includes capitalized interest and

ancillary charges necessary to place the asset into its intended location and condition for use. Capital

assets includes land, improvements to land, easements, buildings, building improvements, vehicles,

machinery, equipment, infrastructure, and all other tangible or intangible assets that are used in operations

and that have an initial useful lives extending beyond a single reporting period. Capital assets are

depreciated using the straight line method of depreciation over their estimated useful lives and are

reported net of accumulated depreciation in the statement of net assets.

J. Net Assets:

Net assets are classified according to external donor restrictions or availability of assets for satisfaction of

University obligations. Invested in capital assets net of related debt represents the net value of capital

assets (property, plant and equipment) less the debt incurred to acquire or construct the assets.

K. Scholarship allowances and student aid:

Tuition and fee revenues are reported net of any scholarship discounts and allowances on the Statement of

Revenues, Expenses, and Changes in Net Assets.

L. Revenue recognition:

The University uses accrual basis accounting & therefore recognizes revenues when earned.

M. Operating and non-operating revenues:

Operating revenues consist of transactions resulting in the sales of product or service, grants or contracts

related to exchange transactions, program loans, reimbursement of operating transactions, and indirect

cost recovered on grants and contracts related to exchange transactions. Non-operating activities are

generally activities considered non-capital financing, capital and related financing and investing activities

for purposes of the Statement of Cash Flows. General fund appropriations are reported as non-operating

revenues.

2. Cash and cash equivalents:

For reporting purposes, cash includes cash on hand, cash in local banks, and cash in the State Treasury.

Cash equivalents are reported at fair value. Cash equivalents include short-term investments with original

maturities of three months or less.

3. Retirement Plan

The South Dakota Retirement System (SDRS) is a cost-sharing, multiple employer public employee

retirement system (PERS) established to provide retirement benefits for employees of the state and local

governments. The SDRS is considered part of the State of South Dakota financial reporting entity and is

included in the state's financial report as a pension trust fund.

Covered employees are required by state statute to contribute 6 percent of their salary to the plan, while

public safety and judicial employees contribute at 8 percent and 9 percent, respectively. State statue also

requires the employer to contribute and amount equal to the employee’s contributions.

4. State Appropriations

The State General Fund appropriation for fiscal year 2013 was $8,864,410.

5. Tuition and Fees

The University collects and remits tuition and selected fees to the Board of Regents Tuition and Fee pool.

Only the amount returned to the University as a tuition allocation from the fund is reported as revenue.

6. Endowment and Similar Funds

The assets of the Endowment and similar funds administered by the Department of School and Public

Lands have not been included in the financial statements because the University does not actively

participate in the administration of the funds.

7. Related parties:

The financial statements do not include the assets, liabilities or fund balances of affiliated organizations,

whose financial statements are separately audited.

8. Funds held for others:

Funds held for others consist of federal loan program balances and funds held for student organizations.

Assets of the federal loan program are student loans receivable and the funds held for student

organizations are principally cash.

9. Capital Asset Activity including construction in progress for the year ended June 30, 2013 was as

follows:

Beginning Ending

Balance Additions Retirements Balance

Land 89,820 89,820

Land Improvements 1,054,404 1,054,404

Infrastructure 3,228,538 61,777 3,290,316

Buildings 36,255,035 209,896 36,464,931

Furniture, fixtures, and equip. 2,332,843 266,892 2,599,735

Library materials 4,016,445 97,853 (107,394) 4,006,904

Total 46,977,085 636,419 (107,394) 47,506,110

Less accumulated depreciation:

Land Improvements 638,820 29,564 668,385

Infrastructure 507,030 134,260 641,291

Buildings 15,979,677 1,196,197 17,175,875

Furniture, fixtures, and equip. 1,729,980 139,997 1,869,976

Library materials 3,498,572 117,030 (107,394) 3,508,208

Total 22,354,080 1,617,049 (107,394) 23,863,735

Capital Assets, net 24,623,005 (980,630) 0 23,642,375

10. Long-term liability activity for the year ended June 30, 2013 was as follows:

Compensated Absences Payable:

Compensated absences include accrued annual leave, sick leave and compensatory time earned as of June

30, 2013. Annual leave is earned by State of South Dakota employees. Upon termination, employees are

eligible to receive compensation for their accrued annual leave balance. Employees who have been

continuously employed by the State of South Dakota for at least seven years prior to the date of their

retirement, voluntary resignation or death will receive payment for one-fourth of their accumulated sick

leave balance, such payment not to exceed the sum of twelve weeks of employee's annual compensation.

Capital Lease Payable:

DSU entered into a capital lease to purchase tablet PCs. These tablets are individually under the

capitalization threshold but because of the $1 buyout option at the end of the lease, they are to be

considered capital leases rather than operating leases.

The schedule of capital leases remaining to be paid as of June 30, 2013 are as follows:

Tablet PC

Balance 7/1/12 669,480.12

Additions 418,908.00

Payments (654,052.40)

Balance 6/30/13 434,335.72

Due FY14 principal 291,202.71

Due FY15 principal 143,133.00

Total Principal 434,335.71

Due FY14 interest 11,368.10

Due FY15 interest 1,943.22

Total Interest 13,311.32

Long-Term Liabilities:

In November 2004, the South Dakota Board of Regents Housing and Auxiliary Facilities System Revenue

Bonds, Series 2004 were issued in the amount of $12,965,000. Of this amount, $3,260,000 was

Dakota State University’s share. This issue was a refinancing of the previously held series 1974 and 1995

bonds.

The premium amount on the bond issuance of $129,081.30 along with the issuance cost of $91,987.38

and the unamortized deferred amount $60,568.13 are being amortized through the life of the bond which

ends June 30, 2025.

The series 2004 bonds are funded from pledged revenues of the residence halls less operational costs,

pledged revenues from auxiliary operations including the Bookstore, Food Service, and Trojan Center

less operational costs and a portion of the General Activity Fee.

The South Dakota Board of Regents issued bonds in 2009 of which $5,160,000 was DSU’s portion for the

housing program.

The annual requirements to amortize all Revenue Bond debt outstanding are as follows:

Year Ending

June 30, Principal Interest Debt Service

2014 355,000.00 274,877.50 629,877.50

2015 370,000.00 260,929.50 630,929.50

2016 380,000.00 244,893.50 624,893.50

2017 400,000.00 228,413.50 628,413.50

2018 425,000.00 210,948.50 635,948.50

2019-2023 2,380,000.00 763,896.50 3,143,896.50

2024-2028 2,150,000.00 237,316.00 2,387,316.00

2029 25,000.00 485.00 25,485.00

Total 6,485,000.00 2,221,760.00 8,706,760.00

TOTAL

11. Operating Leases:

The University has entered into the following leases:

Parking lot lease agreement with the DSU Foundation which requires the University to pay the

Foundation $21,500 annually effective July 2010 to June 2015. The agreement is contingent upon the

Legislature of South Dakota making the necessary appropriations for such expenditures on an annual

basis.

Student housing in the amount of $103,680 annually. This agreement is with the Madison Housing &

Redevelopment Commission and is for a period of three years, expiring in 2014.

The schedule of operating leases remaining to be paid as of June 30, 2013 are as follows:

Housing Parking Lot

Year Lease Lease Total

2014 103,680.00 21,500.00 125,180.00

2015 0.00 21,500.00 21,500.00

2016 0.00 0.00 0.00

Total 103,680.00 43,000.00 146,680.00

Balance 7/1/12 207,360.00 64,500.00 271,860.00

Additions 0.00 0.00 0.00

Reductions (103,680.00) (21,500.00) (125,180.00)

Balance 6/30/13 103,680.00 43,000.00 146,680.00

12. Joint Ventures:

Dakota State University and the City of Madison are in joint venture of the Madison Community Center.

The operations of the Madison Community Center are funded through memberships. Bonds are paid by

Dakota State University from a portion of the general activity fee.

13. Functional Classification of Expenses and Depreciation:

Personal

Services Travel Contractual

Supplies &

non-

capitalized

equipment

Grants &

Subsidies Other Depr. Total

Instruction $ 10,530,063 $ 92,478 $ 940,497 $ 862,342 $ - $ - $ - $ 12,425,381

Research $ 632,009 $ 117,516 $ 77,778 $ 66,892 $ 406,029 $ - $ - $ 1,300,225

Public Service $ 1,653,408 $ 97,751 $ 932,138 $ 179,147 $ (18,694) $ - $ - $ 2,843,751

Academic Support $ 1,926,619 $ 74,404 $ 357,133 $ 448,486 $ - $ - $ - $ 2,806,642

Student Services $ 2,406,605 $ 280,573 $ 748,816 $ 295,190 $ 29,430 $ - $ - $ 3,760,613

Institutional Support $ 2,130,276 $ 56,422 $ 880,327 $ 73,941 $ - $ - $ - $ 3,140,966

O & M of Plant $ 972,952 $ 1,256 $ 488,525 $ 502,393 $ - $ - $ 1,617,049 $ 3,582,175

Scholarships &

Fellow ships $ 199,550 $ - $ - $ - $ 1,402,523 $ 64,197 $ - $ 1,666,271

Auxiliary Enterprises $ 588,912 $ 11,514 $ 2,130,698 $ 537,354 $ - $ - $ - $ 3,268,477

TOTAL 21,040,393$ 731,914$ 6,555,913$ 2,965,745$ 1,819,288$ 64,197$ 1,617,049$ 34,794,500$

DAKOTA STATE UNIVERSITY FINANCIAL REPORT...DAKOTA STATE UNIVERSITY FINANCIAL REPORT FOR THE YEAR...

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