THE STATEN ISLAND MUSEUM

FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2016

(WITH COMPARATIVE TOTALS FOR 2015)

THE STATEN ISLAND MUSEUM INDEX TO FINANCIAL STATEMENTS

JUNE 30, 2016 (WITH COMPARATIVE TOTALS FOR 2015)

Independent Auditor's Report

Financial Statements

Statement of Financial Position

Statement of Activities

Statement of Functional Expenses

Statement of Cash Flows

Notes to Financial Statements

Page(s)

1-2

3

4

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7-17

-· Potter & LaMarca LLP "-..__, CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Trustees The Staten Island Museum Staten Island, NY

INDEPENDENT AUDITOR'S REPORT

101 Tyrellan Avenue, Suite 400

Staten Island, New York 10309

Phone: 718-227-8000

Fax: 718-227-2175

Website: p lcpa.net

We have audited the accompanying financial statements of The Staten Island Institute of Arts and Sciences, d/b/a The Staten Island Museum (the "Museum") which comprise the statement of financial position as ofJune 30, 2016, and the related statements of activities, functional expenses, and cash flows for the year ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the Untied States of America Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Staten Island Museum, as of June 30, 2016, and changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Report on Summarized Comparative Information

We have previously audited the Staten Island Institute of Art and Science, d/b/a The Staten Island Museum (the "Museum") 2015 financial statements, and we expressed an unmodified audit opinion on those financial statements in our report dated November 10, 2015. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived.

f'odtOi "t <!' M Q.N.e_ L L/' Staten Island, NY November 1, 2016

2

Assets: Cash Investments

THE STATEN ISLAND MUSEUM STATEMENT OF FINANCIAL POSITION

JUNE 30, 2016 (WITH COMPARATIVE TOTALS FOR 2015)

ASSETS

2016

$ 232,776 1,704,044

Accounts and pledges recei vable (net) 292,271 Inventory 25,765 Prepaid expenses 12,480 Property and Equipment (net) 1,753,782

TOT AL ASSETS $ 4,021 ,118

COLLECTIONS

LIABILITIES AND NET ASSETS

Liabilities: Accounts payable and accrued expenses $ 270,223 Deferred revenue 13,725 Notes payable 500,000

Total Liabilities 783,948

Net Assets:

Unrestricted 1,290,411 Temporarily restricted 1,512,792 Permanently restricted 433,967

Total Net Assets 3,237, 170

TOT AL LIABILITIES AND NET ASSETS $ 4,021 ,11 8

2015

$ 614,671 1,352,937

679,023 23,352 85,580

1,285,598

$ 4,041 ,161

$ 361,299 13,619

286,991

661,909

1,036,138 1,909,147

433,967

3,379,252

$ 4,041,161

The accompanying notes are an integral part of these financial statements.

3

THE STATEN ISLAND MUSEUM STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2016 (WITH COMPARATIVE TOTALS FOR 2015)

Temporarily Permanently 2016 Unrestricted Restricted Restricted Total

Operating Support and Revenue Support

Government grants $ 1,103,043 $ 158,463 $ - $ 1,261 ,506 Individual contributions 230,807 65,243 296,050 Corporations and Foundations 161,980 53,500 215,480 Donated materials and services 138,134 138,134

Total Support 1,633,964 277,206 1,911,170

Revenue Program income 104,554 104,554 Fundraising events 187,086 187,086 Museum gift shop 18,069 18,069 Membership dues 33,993 33,993 Admissions 32,438 32,438 Other income 14,051 14,051 Net assets released from restrictions 669,582 (669,582)

Total Revenue 1,059,773 (669,582) 390,191

Total Operating Support and Revenue 2,693,737 (392,376) 2,301,361

Operating Expenses Programs

Collections and exhibitions 845,390 845,390 Visitor services and membership 536,430 536,430 Public programs and education 384,827 384,827

Total Programs 1,766,646 1,766,646 Management and support services 303,618 303,618 Fundraising and development 368,583 368,583

Total Operating Expenses 2,438,847 2,438,847

Net Operating Income (Loss) 254,890 (392,376) (137,486)

Net Investment (Depreciation) Appreciation (617) (3,979) (4,596)

increase (Decrease) in Net Assets 254,273 (396,355) (142,082)

Net Assets-Beginning of Year 1,036,138 1,909,147 433,967 3,379,252

Net Assets-End ofYear $ 1,290,411 $ 1,512,792 $ 433,967 $ 3,237,170

The accompanying notes are an integral part of these financial statements. 4

2015 Total

$ 1,182,969 210,402 657,000

47,687 2,098,058

90,696 163,466

10,492 35,023 19,388 40,159

359,224

2,457,282

783,908 416,713 260,185

1,460,806 370,805 278,649

2,110,260

347,022

2,534

349,556

3,029,696

$ 3,379,252

Collections and Exhibitions

Salaries and Wages $ 327,731 Payroll Taxes 24, 136 Fringe Benefits 68,830 Pension 31 ,529 Advertising and Marketing 3,300 Consultants/Programs 23,422 Interest and Bank Charges -Collections Management 38,319 Museum Store -Depreciation 49,8 15 Dues, Subscriptions, & Organization fees 1,525 Equipment Purchase/Lease 40,542 Fundraising Cost of Direct Benefits to Donors Special Programs and Promotions -Insurance Expense 15,450 Office Expense/Software/Technology 9,272 Postage and Shipping 8,277 Printing and Publications 18,565 Photography/Framing/Production Costs 15,354 Staff Development 378 Professional Fees/Contracted Services/Legal 34,759 Supplies 2,863 Telephone and Internet 3,714 Occupancy 44,186 Hospitality/Travel/Entertainment 1,064 Utilities 78,520 Automobile Expense/Bus Rental 3,839 Bad Debt Miscellaneous Expense -

Total Expenses in 2016 $ 845,390

Total Expenses in 2015 $ 783 ,908

THE STATEN ISLAND MUSEUM STATEMENT OF FUNCTIONAL EXPENSES

FOR THE YEAR ENDED J UNE 30, 2016 (WITH COMPARATIVE TOTALS FOR2015)

PROGRAMS Visitor Services, Public Affairs Public Programs Management Membership and Education Total and General

$ 243,573 $ 216,009 $ 787,313 $ 141,940 17,714 15,553 57,403 9,995 59,250 39,800 167,880 56,262 20,719 11 ,933 64,181 18,088

106,379 535 110,214 235 - 1,521 24,943 -

- 10,922 38,319

8,564 - 8,564 -9,929 7,495 67,239 10,580 1,275 360 3,160 3,140

12,207 13,049 65,797 9,336

5,092 5,295 25,837 2,544 5,601 5,975 20,848 3,583 1,471 1,281 11 ,029 3,029 5,770 2,955 27,290 1,562

440 15,794 -3,750 602 4,730 65 8,3 15 13,943 57,0 17 25 ,674 3,87 1 14,259 20,993 877 2,308 2,8 12 8,834 2,372 2,669 3,190 50,045 511

124 1,977 3,165 2,484 16,826 16,826 112,172

583 9,160 13,582 419

297 297

$ 536,430 $ 384,827 $ 1,766,646 $ 303,618

$ 416,713 $ 260,185 $ 1,460,806 $ 370,805

The accompanying notes are an integral part of these financial statements.

5

Development Total Total and Fundraising 201 6 2015 -

$ 150, 115 $ 1,079,368 $ 965 ,598 ll ,082 78,480 71 ,664 16,643 240,785 230,374 13,350 95,619 87,345

590 111,039 78,452 24,943 83,63 1 10,922 9,896

- 38.3 19 9,313 8,564 5,073

6,140 83,959 66,453 2,891 9,191 7,027 5,9 10 81,043 50,191

88,647 88,647 42,702 40,197 40,197 16,735

2,544 30,925 26,474 3,412 27,843 19,605

345 14,403 11 ,190 3,587 32,439 26,156 1,086 16,880 16,865

200 4,995 2,765 911 83,602 54,480

1,781 23,65 1 29,241 1,660 12,866 14,413

122 50,678 35,462 16,157 21 ,806 9,485

112, 172 133,039 1,213 15,214 5,866

- - 550 - 297 215

$ 368,583 $ 2,438,847

$ 278,649 $ 2,110,260

THE STATEN ISLAND MUSEUM STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JUNE 30, 2016 (WITH COMPARATIVE TOTALS FOR 2015)

2016 Cash Flows from Operating Activities

(Decrease) Increase in Net Assets $ (142,082) Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities:

Depreciation 83,959 Unrealized loss on investments 15,592 Realized loss (gain) on sale of investments 46,395

(Increase) Decrease in Operating Assets : Accounts receivable 386,752 Inventory (2,413) Prepaid expenses 73,100

Increase (Decrease) in Operating Liabilities: Accounts payable and accrued expenses (91 ,076) Deferred revenue 106

Total Cash Flows Provided by Operating Activities 370,333

Cash Flows from Investing Activities: Purchases of investments (926,947) Proceeds from sale of marketable securities 513,853 Purchases of property and equipment (552,143)

Total Cash Flows (Used in) Provided by Investing Activities (965 ,237)

Cash Flows from Financing Activities: Borrowings on loans 370,000 Repayments on loans (156,991)

Total Cash Flows Provided by (Used in) Financing Activities 213,009

(Decrease) Increase in Cash and Cash Equivalents (381 ,895)

Cash and Cash Equivalents-Beginning of Year 614,671

Cash and Cash Equivalents-End of Year $ 232,776

Supplementary Disclosure Interest paid $ 4,548

Income tax paid $

$

$

$

$

The accompanying notes are an integral part of these financial statements.

6

2015

349,556

66,453 82,730

(12,906)

(379,509) 563

11 ,840

165,987 4,014

288,728

(53,019) 549,752

(377,242) 119,491

286,991 (350,883)

(63,892)

344,327

270,344

614,67 1

6,465

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL STATEMENTS

Note A-The Oreanization

The Staten Island Institute of Arts and Sciences d/b/a The Staten Island Museum (the "Museum") is a non-profit organization. Its mission is to identify, collect, preserve, research, exhibit, and interpret works of artistic, historical, and scientific value, with emphasis on the Staten Island community. The mission includes specific work in the academic areas of cultural history, natural sciences, and art.

The Museum's buildings are located on land owned by the City of New York, at 75 Stuyvesant Place, Staten Island, and at Snug Harbor, 1000 Richmond Terrace, Staten Island, and assigned without cost to the Museum in perpetuity as long as the facility is utilized for museum purposes. The City currently does not charge common area charges for the maintenance of these facilities, but reserved the right to do so at Snug Harbor.

Major funding for the operation of the Museum is through government grants mostly from the City of New York.

Note B-Summary of Significant Accounting Policies

Basis o[Accounting

The financial statements of the Museum have been prepared on the accrual basis.

Financial Statement Presentation

The Museum is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. In addition, the Museum is required to present a statement of cash flows.

Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. In addition, the Museum has received contributions with donor-imposed restrictions that result in temporarily and permanently restricted net assets.

All donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or a 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.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Museum considers all highly liquid debt instruments with maturity of three months or less to be cash equivalents.

7

Investments

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL STATEMENTS

The Museum's investments in marketable securities are classified as available for sale. These investments are recorded at fair value in the statements of financial position.

The Museum maintains an investment account for its permanently restricted, temporarily restricted, and board designated funds that can be invested without affecting the short term cash flows of the Museum. The Museum's finance committee monitors investment performance. Investments are diversified among various asset classes. It is anticipated that earnings on such investments are adequate to meet donor requirements. The investment account is maintained at a brokerage firm with the oversight of the Board.

Endowments

The Museum has received endowments from various donors over the years. The funds from these endowments have been held as part of the investment account. The investments generate income that is restricted by the purpose of the endowments. The Board reviews the income that is generated and releases the funds as they determine in keeping with the stated restrictions.

Accounts Receivable

Accounts receivable are recorded at net realizable value consisting of the carrying amount less the allowance for uncollectible accounts, as needed. The Museum uses the allowance method to account for uncollectible trade receivable balances. Under the allowance method, if needed, an estimate of uncollectible balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include credit quality and whether the balance is significant. Accounts are considered past due once the unpaid balance is 90 days or more outstanding. When an account balance is past due, and attempts have been made to collect the receivable through legal and other means, the amount may be deemed uncollectible and written off

Inventory

The Museum maintains inventory in its museum gift shops. Inventory is recorded at the lower of cost or market. Cost is determined under the specific identification method.

Property and Equipment

The Museum's building is located on land owned by the City of New York and assigned without cost to the Museum in perpetuity as long as the facility is utilized for museum purposes. The Museum is also involved in a capital improvement project to renovate and restore buildings located at Snug Harbor Cultural Center in Staten Island, New York, where its administrative offices are currently located (see Note N).

8

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL ST A TEMENTS

The Museum's policy is to capitalize all fixed assets with a cost in excess of $2,500. Fixed asset additions are capitalized as assets at cost if purchased, or at their fair market value if donated, and depreciated under the straight-line method over their estimated useful lives as follows:

Collections

Building Improvements Programmatic Equipment Office Equipment Intangible Assets

39 Years 5 Years 5 Years 5 Years

The Museum' s Collection is in three broad categories. The Science Collection includes many "type specimens," which are individual specimens used as the basis for determining the characteristics of a species. The Entomology Collection includes 60,000 cicadas representing 450 species, which is North America's largest cicada collection. In addition, the Science Collection includes the Herbarium, Zoology, Ornithology, Conchology, Marine Invertebrate, Geology, Archeology, and Wet Collections. The History Archives and Library contains important collections of historical photographs, documents, and other material relating to the people and history of Staten Island. The Art Collection includes the 19th and 20th century portraits of prominent Staten Islanders as well as landscapes by Staten Islanders. European and American artwork is present, including a portion of the Kress Collection of the Italian Renaissance. In addition, the collection includes African, Asian, and Native American Art from antiquity to the present.

In conformity with accounting policies generally followed by museums, collections acquired by purchases or donations are excluded from the statement of financial position and expensed in the statement of activities. Collection acquisition and maintenance costs amounted to $3 8,319 and $9,313 for the years ended June 30, 2016 and 2015, respectively.

Federal Income Tax

The Museum is exempt from federal income taxes under Section 50l(c)(3) of the Internal Revenue Code. In addition, the Museum has been determined not to be a private foundation within the meaning of Section 509(a) of said Code.

The Museum regularly reviews and evaluates its tax positions taken on current and previously filed tax returns and as reflected in its financial statements, with regard to issues affecting its not­for-profit status. The Museum believes that in the event of an examination by taxing authorities, the Museum's position would prevail based on technical merits.

Contributions and Unconditional Promises to Give

Contributions are recognized when the donor makes a promise to give to the Museum that is in substance, unconditional . Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are

9

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL STATEMENTS

recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets.

Use o[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 these estimates.

Donated Materials and Services

The contributions of services are recognized in the financial statements if the services received: (a) create or enhance non-financial assets or (b) require specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. In addition, contributions of materials and assets are received from various sources.

Donated materials and services are recorded based upon the estimated fair market value of the item contributed. The Museum recorded $138,134 and $47,688 of contributed services and donated materials forthe years ended June 30, 2016 and 2015, respectively.

By arrangement with the Power Authority of the State of New York, the City of New York provides electricity to the Museum This contribution, which was $112,171 and $133,039 for the years ended June 30, 2016 and 2015, respectively, is recorded as both government support and expense in the accompanying financial statements.

Comparative Financial Information

The financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Museum's financial statements for the year ended June 30, 2015, from which the summarized information was derived. In addition, certain prior year amounts have been reclassified to conform to the current year presentation.

Note C-Investments

The fair value of investments in marketable equity and debt securities is based on quoted market pnces.

10

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL ST A TEMENTS

Investment balances for the years ended June 30, 2016 and 2015 are as follows:

Stocks Fixed Income Exchange Traded Products Mutual Funds, REITs, & UT

Total

$

$

258,457 197,093 301,263 947 231

1704044

$

$

62,039 203,874

1087024 1 352 937

Investment income for the years ended June 30, 2016 and 2015 is comprised of the following:

Interest and dividends Realized (loss) gain Unrealized (loss) gain Investment expense

Total (loss) gain

Note D-Endowments

$

$

70,389 (46,395) (15,592) (12.998) (4 596)

$

$

84,778 12,906

(82,730) (12.420)

2 534

Endowments have been donated to be maintained in perpetuity, and the income the endowments generate are spendable for purposes that have been restricted by donors. The endowment funds and the associated spendable portion are as follows :

Balance on July 1, 2015 Interest and Dividends Additions Realized (loss) Unrealized (loss) Investment expense Expenditures Reclassification Balance on June 30, 2016

Note E-Fair Value Measurements

Permanently Restricted Spendable Portion

$ 433,967

$ 433.967

$

$

191,278 23,438

158,463 (15,447)

1,686 (4,576)

(14,000) 304

341 146

Generally accepted accounting principles define fair value, establish a framework for measuring fair value, and establish a fair value hierarchy that prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value

11

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL STATEMENTS

measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market income or cost approach are used to measure fair value.

The fair value accounting literature establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy consists of three broad levels:

• Level 1 - Quoted prices in active markets for identical assets or liabilities.

•Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables set forth by level, within the fair value hierarchy, the Museum's assets at fair value for the years ended June 30, 2016 and 2015:

Stocks $ Fixed Income Exchange Traded Products Mutual Funds & REITs

Total ~

Quoted Price in Active Markets for Identical Assets

Fair Value (Level 1)

June 30, 2016 258,457 197,093 301,263 947 231

1,704,044

$ 258,457 197,093 301 ,263 947 231

~ 1,704,044

Quoted Price in Active Markets for Identical Assets

Fair Value (Level 1)

June 30, 2015 Stocks $ 62,039 $ 62,039

203,874 1087024

Fixed Income 203,874 Mutual Funds & Unit Trusts --~1~0~8~7~0~2~4

Total $ 1 352 937 $ 1 352 937

12

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL STATEMENTS

Note F-Public Suppo11 Appropriation from the City of New York

For the years ended June 30, 2016 and 2015, the City of New York, Department of Cultural Affairs made the following appropriations to the Museum that are included in unrestricted public support:

Operational Support Energy Appropriations Pension Plan Appropriations Program Support

Total

Note G-Prope11y and Equipment

$

$

717,040 112, 171

86,085 28 000

943 296

$ 809,527 133,039

73,935

$ 1016501

Property and equipment for the years ended June 30, 2016 and 2015 consisted of the following:

2016 2015

Snug Harbor- Capital Project $ 1,772,663 $ 1,308,978 Building Improvements 158,366 158,366 Office Equipment 227,949 227,949 Website and Software 54,315 38,255 Program Equipment ] 57,505 85,105 Vehicles 9,069 9,069 Furniture and Fixtures 61 63] 61 631

Subtotal $ 2,441 ,498 $ 1,889,353 Less: Accumulated Depreciation (687,714) (603,755) Property and Equipment (Net) $ l 753 784 $ 1 285 528

Depreciation expense for the years ended June 30, 2016 and 2015 was $83,959 and $66,453, respectively.

Note H-Pledges Receivable

For the years ended June 30, 2016 and 2015, accounts receivable consisted of grants and other miscellaneous receivables and had balances in the amounts of $235,966 and $621 ,881 respectively. Pledges receivable were $79,662 and $81 , 154, for the years ended June 30, 2016 and 2015, respectively. As ofJune 30, 2016 and 2015, allowance for uncollectible accounts was stated at $23,357 and $24,012, respectively. Pledges are intended to be paid over the course of several years. The following is the schedule of anticipated receipts:

13

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL STATEMENTS

June 30, 2017 2018 2019 2020 2021

Total Net Pledges

Note I-Notes Payable

$

$

55,498 11 ,764 6,700 5,200

500

79 662

The Museum maintained a line of credit agreement with a financial institution in order to provide funding during the periods when the Museum is awaiting funds from its grantors. The maximum credit on this line is $100,000, which matures on November 17, 2016 with a variable rate of interest (5% at June 30, 2016), and such a line is collateralized with the Museum's assets through a general security agreement. As of June 30, 2016, there were no amounts outstanding on the line of credit.

The Museum also has established with Fidelity a margin account that has a revolving line of credit that can provide for the cash flow needs of the Museum during the construction of Building A at Snug Harbor Cultural Center, Inc. and other capital projects after the completion of Building A The note is secured by the investment account of the Museum Interest on the loan is the federal fund rate plus 1 %. At present, Fidelity is charging the Museum 1.50%. Fidelity has made 50% of the value of the investments held in their portfolio available for loans. As of June 30, 2016, the outstanding loan on this line of credit was $500,000.

Note J-Deferred Revenue

Deferred revenue represents monies received in the current fiscal year for activities taking place in the subsequent fiscal year. However, deferred revenue only pertains to monies received by individuals and groups for membership fees and program activities such as education classes, workshops, and Summer Earth Camp. Deferred revenue for the years ended June 30, 2016 and 2015, was $13,725 and $13,619, respectively.

Note K-Functional Allocation of Expenses

The costs of providing the various programs and supporting services have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services in reasonable ratios determined by management.

Note L-Tempora1ily and Permanently Restricted Net Assets

Temporarily and permanently restricted net assets have been designated by donors to the following funds for the years ended June 30, 2016 and 2015 as follows:

14

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL STATEMENTS

Temporarily Permanently Restricted Restricted

June 30, 2016 Natural Sciences $ 1,076, 143 $ 398,967 Exhibit Development 28,100 Humanities Fund 337,987 35,000 Prograrnming 791 Capital Project Fund 69 771

Total 2016 $ 1 512 792 $ 433 967

Temporarily Permanently Restricted Restricted

June 30. 2015 Natural Sciences $ 1,271,018 $ 398,967 Exhibit Development 240,000 Humanities Fund 319,582 35,000 Programming 15,000 Capital Project Fund 62 947

Total 2015 $ 1.909.147 $ 433 967

Note M-Pension Plan

All salaried employees who are employed a minimum of 21 hours a week are eligible to participate in the pension plan sponsored by the Cultural Institution Retirement System (CIRS) after they have completed three months of service and have reached age twenty-one. CIRS is a multi-employer plan administered by the City of New York. Pension expense for the years ended June 30, 2016, and 2015 was $95,619 and $87,345, respectively, which was financed mostly by an appropriation from the City of New York.

Benefits under the Museum' s pension plan are normally paid upon retirement, death, or termination and are calculated based upon years of creditable service and average salary.

The Museum also maintains a 40l(k) retirement plan which allows employees to defer up to 100% of their salaries on a pre-tax basis up to a maximum of $18,000, or $24,000 for employees age 50 and older. The Museum is required to make an annual matching contribution of 1 %-3% of employee salaries. Employees are 100% invested in their accounts which include their contributions, employer matching contributions, and investment gains, if any. The Museum's contribution to the savings plan during the years ended June 30, 2016, and 2015, totaled $7,850 and $13,411, respectively.

15

THE STATEN ISLAND MUSEUM NOTES TO FINANCIAL STATEMENTS

Note N-Commitments

The Museum has entered into various lease agreements for various equipment. Such leases have been classified as operating leases, and the future minimum rental payments required on these lease agreements are as follows:

June 30, 2017 2018 2019 2020 2021

Total

$

$

54,092 26,628 17,955 10,527 4 410

113 612

Rent for storage is on a month by month basis. The expense for the years ended June 30, 2016 and 2015 was $28,283 and $26,605, respectively.

Note 0-Capital Improvements Funded by the City of New York

The Museum is currently involved in a capital improvement project to renovate and restore buildings at the Snug Harbor Cultural Center in Staten Island, New York in order to relocate and expand its offices, activities, and exhibits. During fiscal year 2005, renovations began to restore these landmark buildings, and the Museum has obtained preliminary funding from various organizations regarding this project.

The funds received for capital improvements are from the City of New York, Department of Cultural Affairs. The improvements made are to property owned by the City of New York with City appropriated funds, and these improvements are not recognized as assets on the Museum's financial statements.

The City of New York has paid $1 ,662,048 and $2,257,517 for capital expenses for renovation in the years 2016 and 2015, respectively. Historically, the City of New York has spent $25,066,785 on capital expenses from 2005 to 2016.

In addition to amounts expended directly by The City of New York, the Museum also expended $536,083 and $377,242 at June 30, 2016 and 2015, respectively, and $2,015,126 since inception related to the Snug Harbor capital improvement project.

Note P-Related Party Transactions

A board member is the president of a bank where the Museum maintains various bank accounts.

16

THE STA TEN ISLAND MUSEUM NOTES TO FINANCIAL STATEMENTS

Note 0-Govemment Grants

Government grants for the years ended June 30, 2016 and 2015, consisted of the following:

Federal New York State New York City

Total

$

$

2016

187,880 122,830 950 796

1 261 506

2015

$ 71 ,658 89,310

1,022,001 $ 1,182969

For the years ended June 30, 2016 and 2015, support from the City of New York was 41.40% and 41.55%, respectively, of total revenue. Total governmental support was 54.93% and 48.09% of total revenue and support for the years ended June 30, 2016 and 2015, respectively.

Note R-Significant Concentration of Funding

The Museum is dependent upon continued funding from the City of New York. Should funding be discontinued from the City of New York, the operations of the Museum would be significantly affected.

Note S-Subseguent Events

Management has evaluated subsequent events through November 1, 2016, the date that these financial statements were available for issue and has determined that there were no additional adjustments and/or disclosures required.

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