State Tech assets increase by $5.5 million, net position up over 2019

By Neal A. Johnson, UD Editor
Posted 2/3/21

State Technical College of Missouri Regents at their Jan. 22 meeting learned during a review of an audit by Evers and Company, CPAs that there were no issues, and that all financial statements were …

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State Tech assets increase by $5.5 million, net position up over 2019

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State Technical College of Missouri Regents at their Jan. 22 meeting learned during a review of an audit by Evers and Company, CPAs that there were no issues, and that all financial statements were fairly presented.

"That's as good as it gets from an auditor's standpoint," said CPA Jo Moore, who is a partner with the Evers and Company.

The coronavirus did not affect the firm’s ability to do the audit in person. “We like to see the whites of their eyes, their facial expressions and we like to see body language because sometimes that tells us a lot,” said Moore. “It was good to be able to do it on-site.”

In 2020, total assets increased by $5.5 million. Current Assets, cash, and accounts receivable increased by $1.6 million due to actual enrollment growth and tuition revenue exceeding budgeted expectations. Non-current assets, capital assets net of depreciation increased by $3.9 million due to significant assets placed in service in the current year offset by depreciation expense and $3.6 million in construction and projects in progress capitalized.

For the year ending June 30, 2020, the college finished with a net position, including all assets (at cost or depreciated cost) less liabilities, of $28,935,900, up from the previous year's net position of $26,924,451.

The school had operating revenues of $18,293,930, non-operating revenues of $14,267,222 and other revenues of $6,870,344 million, and operating expenses of $37,420,047.

According to the audit, operating revenues increased by $2.7 million in both fiscal years 2019 and 2020. Fiscal year 2020 saw a 16% increase in credit-hour production that resulted in $1.8 million more in tuition and fee revenues. The remaining $.9 million increase was the result of increased federal grant revenue related to the State Tech airport and coronavirus relief, along with significant in-kind donations. Fiscal year 2020 non-operating and other revenues increased by $6.5 million. This increase reflects capital appropriations received from the state of Missouri. The college received a MoExcel award, deferred maintenance appropriation, and an appropriation to use in the construction of the Utility Technology Center. In addition, the increase also reflects $.5 million of revenue from the Economic Adjustment Assistance, and 2018 Disaster Supplemental also being used in the construction of the Utility Technology Center.

Operating expenses increased $5.3 million in fiscal year 2020. The 2020 increase is due to $.2 million increased salary expenses, a $1.6 million increase in benefit expenses including the expense recorded based on the information provided by Missouri State Employee's Retirement System (MOSERS) due to the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, $.3 million increase in contractual services, $1.4 million increase in supplies and materials related to assets placed in service that were below the capitalization threshold, $1.7 million increase in state-funded scholarships related to enrollment growth and coronavirus relief, and $.1 million in increased depreciation.

Regents President John A. Klebba said he’s pleased with the clean audit. "From my perspective, in the financial world, a clean opinion is a good opinion," he said. “That makes me very happy.”

Moore praised VP of Finance Jenny Jacobs and her staff for a job well done. "It takes a lot of work to put it all together," she said. "Jenny does the lion’s share of it, but before we put our name on it, we’re going to check it."

In other financial news, Jacobs told Regents that cash on hand from June 30, 2020, through Dec. 31, 2020, totaled $12,621,512, which is up from the same period in 2019 ($11,211,909), while 2017 bond proceeds of $618,392, left over due to lower than expected bids for the Health Science Center, were used to cover construction costs related to the UTC building.

As of Dec. 31, 2020, total assets were $71,872,391, up from $66,808,778 at the same time in 2019.

Liabilities, meanwhile, totaled $43,416,693, up from $40,145,870 at the same time in 2019.

Including tuition and fees of $7,420,707 through the first six months of the fiscal year, the college has total revenues of $22,346,300, and total expenses of $22,826,502.

When the budget was developed for FY 2021, Jacobs said the pandemic appeared to make it likely State Tech would see a drop in enrollment, which led to the anticipation of flat enrollment.

However, the college did not see that. “My prediction is we’ll go from 56,000 in budgeted credit hours to 61,000 credit hours,” said Jacobs. “For the fiscal year, that’s an eight percent increase.”

That would result in an additional $1.1 million in revenues.

“I don’t think we’re completely out of the woods on impact from the pandemic and the effect it could have on our enrollment,” said Jacobs. “We may not have seen the full impact. We’ll see how fall of 2021 enrollment sizes up.”

State Tech budgeted $13,835,815 in tuition and fees revenue, with actual figures through the first six months of the year coming in at $6,841,989, or 49%.

Federal grants are at 31% of the budgeted amount ($362,432 of $1,172,064) while no state grant funding has been reported as the allocations will not be made until the spring.

Based on information she received when preparing the 20/21 budget, Jacobs said state appropriations were expected to be equal to the amount the college had received after cuts as of June 30, 2020. However, the state budgeted for a higher amount then withheld $220,000. That amount has since been released to the college, which has thus far received $2,740,476 of the $5,261,291 budgeted. Total appropriations will be $220,000 more than budgeted due to the funds released.

Jacobs noted she had budgeted $50,000 in revenues for the country club, but through Dec. 31, the college had collected $88,000. In the spring, she anticipates an additional $50,000 to $60,000 as a result of renewed memberships and said the majority of these funds would likely go toward improvement projects at the country club.

Overall, Jacobs estimates a surplus of $1.7 million.

Expenses were budgeted at $25,806,770 and through Dec. 31, the college has spent $12,130,197, or 47%. Instruction costs top the list at $5,283,703, which is 46% of the $11,578,672 anticipated in the budget.

“It’s accurate to say trends are positive right now, though some of that is one-time money from CARES,” said Klebba of the Coronavirus Aid, Relief, and Economic Security Act.

All told, State Tech has been awarded $5,257,538 in CARES funding, with $851,008 spent in FY 2020, and $2,112,940 spent in FY 2021. The college has $2,293,591 left to spend from direct distribution from the US Department of Education.