COMMUNITY COLLEGE OF PHILADELPHIA (A...

COMMUNITY COLLEGE OF PHILADELPHIA (A Component Unit of the City of Philadelphia)

Basic Financial Statements, Management’s Discussion and Analysis and Supplementary Information

June 30, 2009 and 2008

(With Independent Auditors’ Report Thereon)


Table of Contents

Page

Independent Auditors’ Report 1

Management’s Discussion and Analysis (Unaudited) 3

Basic Financial Statements:

Statements of Net Assets 11

Statements of Revenues, Expenses, and Changes in Net Assets 13

Statements of Cash Flows 15

Notes to Financial Statements 17

Supplementary Information

Schedule of Funding Progress 44

Statistical Section 45

Supplemental Schedules:

1. Component Unit Schedule of Net Assets 51

2. Component Unit Schedule of Activities 52

3. Component Unit Schedule of Capital Assets 53

Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 54

Independent Auditors’ Report

Board of Trustees Community College of Philadelphia:

We have audited the accompanying financial statements of the business-type activities and the discretely presented component unit of the Community College of Philadelphia (the College), a component unit of the City of Philadelphia, Pennsylvania, as of and for the year ended June 30, 2009, which collectively comprise the College’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the College’s management. Our responsibility is to express opinions on these financial statements based on our audit. The accompanying financial statements of the College as of and for the year ended June 30, 2008 were audited by other auditors whose report thereon dated September 25, 2008 expressed unqualified opinions on those statements and included an explanatory paragraph that described the adoption of the provisions of Government Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the College’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the discretely presented component unit of the Community College of Philadelphia as of June 30, 2009, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with U.S. generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report dated October 2, 2009, on our consideration of the College’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

2

The management’s discussion and analysis on pages 3 through 10 and the schedule of funding progress on page 4 are not a required part of the basic financial statements but are supplemental information required by U.S. generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the College’s basic financial statements. The statistical section and supplemental schedules on pages 45 to 53 are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The statistical section has not been subjected to the auditing procedures applied in the audit of the basic financial statement and, accordingly, we express no opinion on it.

October 2, 2009


Management’s Discussion and Analysis

June 30, 2009 and 2008

(Unaudited)

3 (Continued)

The Community College of Philadelphia (the College) financial statements are prepared using Governmental Accounting Standards Board (GASB) 34 and 35 standards. The financial results of the Community College of Philadelphia Foundation are reported as a component unit. These statements include the statistical reporting section as required under GASB 44 standards.

This Management’s Discussion and Analysis (MD&A) is based upon facts, decisions, and conditions known as of the date of the audit report. The results for 2009 are compared to those for the 2008 fiscal year.

Overview of Financial Statements

The College’s financial statements focus on the College as a whole, rather than upon individual funds or activities. The GASB reporting model is designed to provide readers with a broad overview of the College’s finances and is comprised of three basic statements:

• The Statement of Net Assets presents information on the College’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets serve as one indicator of how the financial position of the College is changing.

• The Statement of Revenues, Expenses, and Changes in Net Assets presents information showing how the College’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods.

• The Statement of Cash Flows is reported on the direct method. The direct method of cash flow reporting portrays net cash flows from operations, financing, and investing receipts and disbursements.

The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the financial statements. The notes contain details on both the accounting policies and procedures that the College has adopted as well as additional information for certain amounts reported in the financial statements.

Financial Highlights

Campus Development

During fiscal 2009 construction began for two major capital projects: erection of a new building and renovation of significant portions of existing buildings at the main campus; and expansion and redesign of the Northeast Regional Center. In October 2008 twenty year tax exempt financing was completed for both projects. Total borrowing was $74,770,000 at an all-inclusive borrowing rate of 5.81%. Because of the disruptions occurring in the bond insurance industry, the College elected to issue the bonds on an uninsured basis. A Moody’s bond rating of A2 was received at the time the bonds were issued.



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Both of the capital projects are focused on several goals: creating integrated, one-stop enrollment services centers for students, updating and expanding academic program laboratories and classrooms to support current and emerging programmatic needs: expanding resources available to students and faculty outside the classroom for collaborative learning opportunities; providing the required infrastructure for the evolving use of technology in teaching, learning and administrative activities; ensuring that the physical requirements needed for the College’s Business Continuity Plan are in place; and updating and expanding the College’s food service and bookstore operations.

The main campus projects include: the construction of a new 45,000 square feet building, a 7,800 square feet addition to the Bonnell Building, and renovation of 100,000 square feet of existing space in the Bonnell, Mint, and West Buildings. The Northeast Regional Center expansion project includes: the addition of 50,000 square feet to the existing building; redesign of significant portions of the existing 60,000 square feet building; and development of currently unused land into additional parking. This expansion of the Northeast Center will complete the Master Plan for property established when the site was initially acquired by the College in 1994.

Both projects are employing sustainable design principles. The Northeast project is expected to achieve a gold-level LEED certified designation; while the new construction at the Main campus (Pavilion Building) is expected to receive a silver-level LEED certified designation.

Construction bid results for the Northeast project were received in January 2009. Based upon the bid results, the current cost estimate for the Northeast project is $28.9 million or approximately $2.8 million less than budgeted. The lower than anticipated costs reflect both value engineering that was undertaken during the final design phase to control costs and the competitive conditions that existed in the construction industry at the time the projects were bid.

Bids were received for phase one of the Main Campus project, the new Pavilion Building, in June 2009. Again successful value engineering and construction industry conditions resulted in bids that were $2.2 million less than budgeted for the project.

Pending the completion of the bid process for the remainder of the Main Campus project, current estimates for the combined cost of the two projects is approximately $82.4 million. Of this amount approximately $74,000,000 will be provided from the bond proceeds, and the remaining funds will come from the current capital campaign, grants and other College resources.

Enrollments

Credit FTE (full-time equivalent) enrollments in fiscal year 2009 were 14,208. This represented a 266 FTE or 1.9% increase over the prior year’s credit enrollments of 13,942. The 2008 credit FTE enrollments were 372 or 2.7% higher than the 2007 credit enrollments of 13,570.



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Revenues

In July 2005, Act 46 was enacted. This law fundamentally changed the basis upon which Pennsylvania community colleges were funded effective for the 2005-06 year and thereafter. Funding based upon current year enrollments was eliminated and a foundation funding level was established for each community college. This foundation funding provides a base of funding not tied to enrollments which may be adjusted upward annually on a percentage basis via the State budget process. Under the provisions of Act 46 foundation funding may not be reduced. To this amount is added annually a small growth increment based upon enrollment increase changes in the last two audited years. There is no reduction in revenues for enrollment declines.

The other significant operating budget change as a result of Act 46 was the establishment of Economic Development (high priority) Program funding. The State provides supplemental funding for FTEs taught in programs identified to be high priority by State officials. The amount of funding received is based upon a lump-sum statewide dollar allocation and each college’s reported FTE enrollments for the prior year in priority program areas. Funding allocations are proportionate to FTEs taught. In the 2008 fiscal year the College received $3.63 million and in the 2009 fiscal year $3.3 million in Economic Development Program funding. Total operating funding from the State was $31,553,888 in 2008, and in the 2009 fiscal year was $31,495,479.

Act 46 modified state capital funding for the College. A revolving capital pool was created which provides the potential for increased funding for major capital projects and improved predictability in the future as to when major capital project funding will become available. Capital funding from the State was $4,240,898 in the 2008 fiscal year and $6,349,206 in the 2009 fiscal year. Capital funding for fiscal 2009 includes state support for a portion of the bonds issued on October 2008 to support the new capital projects.

Total State funding in the 2008 fiscal year was $35,794,786 an increase of $1,001,256 or 2.9% over the $34,793,530 received in 2007. State funding in the 2009 fiscal year was $37,844,685 an increase of $2,049,899 or 5.7% over the $35,794,786 received in 2008.

The total 2009 City funding, including dollars deferred from the prior year, was $26,615,715 an increase of $2,000,000 or 8.2% from the level of funding received in 2008. Of this funding $7,370,990 were used for capital purchases and debt service payments. The remaining funds, $19,244,725, were used for operating purposes.

Based upon the significant increase in city support for the 2009 fiscal year, the 2009 tuition charge was unchanged from the 2008 tuition of $115 per credit. The technology fee also unchanged at $28 per credit. Total tuition and fee revenue for 2009 was $59,102,290, an increase of $2,664,963 or 4.7% over the 2008 tuition and fee revenues which totaled $56,437,327. The $27,484,158, $26,713,942 and $24,369,921 in ‘scholarship allowance’ for 2009, 2008 and 2007, respectively, represents tuition and fee payments made using public and private grants and scholarships.



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Net investment income was $249,249 in 2009 or $834,542 less than the amount earned in 2008, $1,083,791. This reduction in income reflects unrealized asset depreciation amount of $910,422 in the Common Fund Intermediate and Multi-Strategy Bond Funds. Net investment income was $1,083,791 in 2008 or $695,972 less than the amount earned in 2007, $1,779,763. During the 2009 fiscal year, the broad-based national and international financial disruptions during the fiscal year created reportable unit value depreciation. Because the College has no immediate plans to liquidate these investments, it is a reasonable expectation that most, if not all, of the unrealized unit value losses will be recovered in subsequent fiscal years.

Expenses

Exclusive of Student Aid and Depreciation expenses, the College’s operating expenses totaled $121,586,388 in fiscal 2009 and $117,714,652 in fiscal 2008. During the 2007 fiscal year, five-year contracts were negotiated with the College’s faculty and classified employee unions. These contracts which cover the time period from September 1, 2006 to August 31, 2011 provide for an average employee salary increase of 3.62% in each year of the five year contract.

In fiscal 2008 the College was required to implement the GASB 45 accounting standard. This standard requires that the present value of projected post-retirement benefits other than pensions, paid to retired employees be recorded as an expense in pubic institutions’ financial statements. Using the services of the actuarial firm, Clarity in Numbers, LLC, the initial estimate of the post retirement liability was prepared in May 2008. The College elected to phase-in the reporting of the post-employment benefit liability over a 30 year period and to continue to fund the costs of the benefit out the College’s annual budget revenues. A separate trust has not been established to fund any portion of this liability. Based upon these decisions, the initial estimate for the 2008 year total cost of the post-employment benefit liability was $5,194,673. The estimated value for the accrued post-employment benefit liability in fiscal 2009 was $10,376,219.

Net Asset Change

As a result of several positive financial circumstances which contributed to an operating budget surplus, net assets increased by $9.9 million in the 2009 fiscal year prior to recording the impact of GASB 45. The change in net assets after recording the GASB 45 accrual was $4.7 million. Prior to GASB 45 reporting unrestricted net assets increased by $4.5 from $15.2 million to $19.7 million. The impact of the GASB 45 related accruals decreased unrestricted net assets by $0.6 million resulting in unrestricted net assets of $14.6 million as of the fiscal year 2009 end.

Assets

The College’s cash, long term and short-term investments totaled $41.0 million and were equal to the amount held at the end of 2008. As noted above, unit values reported for long term investments in 2009 were adversely impacted by the disruptions in the fixed income financial market during the fiscal year. ‘Accounts Receivable Net’ increased from $2.5 million to $3.4 million. This change primarily reflects growth in grant and contract receivables. The College’s investment in capital assets as of June 30, 2009 net of accumulated depreciation was $108.0 million. The value of assets acquired for the year was $10.3 million and depreciation expenses were $6.6 million.



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The College’s unit value for recording capital assets is $1,500.

Liabilities

The College’s outstanding long-term debt (including the current year portion and excluding capital lease obligations) decreased from $48.8 million in 2007 to $43.7 million in 2008 and increased from $43.7 million in 2008 to $110.1 million in 2009. The 2009 increase reflects the borrowing for the two new capital projects that were financed during the fiscal year. Additionally, the College has accrued compensated absences and retirement incentive payments in the amounts of $2.9 million, and $1.1 million, respectively. The accrual for compensated absences consists of unused vacation pay for employees on the College’s payroll.

Dollars payable to governmental agencies decreased from $8.4 million in 2007 to $4.4 million in 2008, and to $3.5 million in 2009. These dollars reflect pre-2006 State audit liabilities, unused State and Federal financial aid dollars, and moneys owed to City of Philadelphia (parking proceeds). Capital lease obligations increased from $1.9 million in 2007 to $7.5 million in 2008 and declined to $6.2 million in 2009. The capital lease obligation includes a $5.3 million performance contract with Johnson Controls, Inc. Under the terms of the performance contract the College is utilizing a fifteen year capital lease to amortize the costs of ten separate capital projects which both addressed critical infrastructure renewal needs at the College’s main campus facilities and are reducing operating costs through energy and other facility operating cost savings. The performance contract terms guarantee that the operational costs savings from the ten projects will pay a substantial portion of the capital lease expense.

Net Assets

At June 30, 2009, the College’s assets of $224.5 million exceeded its liabilities of $148.5 million by $76.0 million. These resulting net assets at 2009, 2008 and 2007 are summarized into the following categories:

2009 2008 2007

Invested in capital assets, net of related debt $ 60,946,658 54,230,851 49,503,942 Restricted, nonexpendable — — 12,843 Restricted, expendable 510,873 1,873,914 920,549 Unrestricted 14,553,315 15,158,552 17,902,738

Total net assets $ 76,010,846 71,263,317 68,340,072

The largest portion of the College’s net assets (80.2%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less accumulated depreciation and outstanding debt incurred to acquire those assets. The College uses these capital assets to provide services to students, faculty, and administration; consequently, these assets are not available for future spending. Although the College’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.



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Summary of College Financial Position

The following tables summarize the College’s financial status as of the end of the 2009, 2008 and 2007 fiscal years.

Summary of Net Assets

The tables provide a condensed version of the College’s net assets as of the end of June 30, 2009, 2008 and 2007 and a condensed version of revenues, expenses, and changes in net assets for fiscal years 2009, 2008 and 2007. The College’s current asset to current liability ratios of 1.54 as of June 30, 2009, 1.47 as of June 30, 2008, and 1.57 as of June 30, 2007 indicates the College has adequate liquidity to meet its short term obligations.

Net AssetsJune 30, 2009, 2008 and 2007

2009 2008 2007(In millions)

Assets:Current assets $ 42.2 41.0 41.6Noncurrent assets:

Capital assets net of depreciation 108.0 104.3 98.9Bond proceeds available for campus

construction 67.6 — —Other 6.7 6.9 2.4

Total assets $ 224.5 152.2 142.9

Liabilities:Current liabilities $ 27.4 27.8 26.5Noncurrent liabilities 121.1 53.1 48.1

Total liabilities $ 148.5 80.9 74.6

Net assets:Invested in capital assets, net of related debt $ 60.9 54.2 49.5Unrestricted 14.6 15.2 17.9Restricted:

Nonexpendable — — —Expendable 0.5 1.9 0.9

Total net assets $ 76.0 71.3 68.3



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Schedule of Changes in Net Assets

The change in net assets for fiscal year 2009, 2008 and 2007 was a positive $4.7 million, $2.9 million and $6.5 million, respectively. The following table quantifies the changes:

Revenues, Expenses, and Changes in Net Assets

Years ended June 30, 2009, 2008 and 2007

2009 2008 2007(In millions)

Operating revenues:Tuition and fees $ 31.6 29.7 27.1Auxiliary enterprises and other sources 1.5 1.3 1.3

Total 33.1 31.0 28.4

Operating expenses 132.6 128.4 117.5

Operating loss (99.5) (97.4) (89.1)

Net nonoperating revenues 90.5 92.0 87.9

Change in net assets before otherrevenues (9.0) (5.4) (1.2)

Net capital revenue and changes toendowments 13.7 8.3 7.7

Total change in net assets $ 4.7 2.9 6.5



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Schedule of Fund Balances

The following chart shows fund balances in the four fund groups: Unrestricted, Restricted, Endowment and Plant. The 2008 and 2009 amounts reported for unrestricted operations funds were reduced by the impact of GASB 45 reporting. The impact of GASB 45 in 2008 was $5,194,673 and in 2009 was $5,181,546. The 2008 negative balance of $1,996,205 in the unrestricted plant fund is the results of facility development costs funded by the College for the Main Campus and Northeast Regional Center projects pending the issuance of bonds for the projects. The College was reimbursed for these prefunded expenses at the time the project bonds were issued in October 2008.

2009 2008 2007

Unrestricted fund:Operations $ 3,941,750 6,602,570 6,196,809 Tuition stabilization 8,101,574 8,377,240 8,808,234 Student activities 100,000 100,000 100,000

Total unrestricted 12,143,324 15,079,810 15,105,043

Restricted fund:Unexpended endowment — — 691

Total restricted — — 691

Endowment fund:True and term endowment — — 12,843 Quasi endowment (unrestricted) 2,067,757 2,074,947 1,933,901

Total endowment 2,067,757 2,074,947 1,946,744

Plant fund:Net invested in capital assets 60,946,658 54,230,851 49,503,942 Restricted expendable – capital 510,873 1,873,914 919,858 Unrestricted 342,234 (1,996,205) 863,794

Total plant fund 61,799,765 54,108,560 51,287,594

Total net assets $ 76,010,846 71,263,317 68,340,072

Community College of Philadelphia Foundation

The College Foundation was established in 1985. As a result of lower investment results during the year, net assets were $5.7 million for 2009 as opposed to $6.2 million in fiscal 2008. Total assets for 2009, 2008 and 2007 were $6.1 million, $6.3 million and $6.4 million, respectively. Total unrestricted net assets for 2009, 2008 and 2007 for the Foundation were $1.0 million, $1.1 million and $1.2 million, respectively. The remaining net assets, are restricted based upon donor intent. To support funding for the College current campus development efforts, planning a capital campaign began in fiscal 2009.

COMMUNITY COLLEGE OF PHILADELPHIA(A Component Unit of the City of Philadelphia)

Statements of Net Assets

June 30, 2009 and 2008

Business-type activities Component unitThe Community College The Community College

of Philadelphia of Philadelphia FoundationAssets 2009 2008 2009 2008

Current assets:Cash and cash equivalents $ 10,076,122 1,392,371 31,743 — Short-term investments 26,463,774 34,797,355 1,870,478 1,532,460 Accounts receivable, net 3,370,146 2,542,518 522,285 10,157 Student loans receivable 3,941 11,354 — — Receivable from government agencies 1,347,644 1,253,332 — — Accrued interest receivable 107,343 97,597 — — Unamortized bond issuance costs 68,382 159,972 — — Other assets 734,071 713,287 — —

Total current assets 42,171,423 40,967,786 2,424,506 1,542,617

Noncurrent assets:Endowment investments — — 3,628,531 4,775,159 Student loans receivable 131,594 193,839 — — Bond proceeds available for campus construction 67,612,258 98,354 — — Other long term investments 4,498,133 4,825,471 — — Unamortized bond issuance costs 2,059,252 1,811,112 — — Capital assets, net 108,010,433 104,284,535 — —

Total noncurrent assets 182,311,670 111,213,311 3,628,531 4,775,159 Total $ 224,483,093 152,181,097 6,053,037 6,317,776

See accompanying notes to financial statements.

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Statements of Net Assets

June 30, 2009 and 2008


of Philadelphia of Philadelphia FoundationLiabilities and Net Assets 2009 2008 2009 2008

Current liabilities:Accounts payable and accrued liabilities $ 12,993,439 13,743,991 369,534 129,427 Payable to government agencies 3,099,254 3,880,335 — — Deposits 98,783 75,630 — — Deferred revenue 2,835,547 3,365,450 — — Current portion of capital lease obligation 1,398,604 1,613,918 — — Current portion of long-term debt 6,945,000 5,030,000 — — Unamortized bond premium 48,049 60,548 — —

Total current liabilities 27,418,676 27,769,872 369,534 129,427

Noncurrent liabilities:Accrued liabilities 1,835,853 2,033,456 — — Payable to government agencies 429,484 501,123 — — Annuity payable — — 16,857 17,095 Capital lease obligation 4,811,920 5,933,646 — — Long-term debt 103,200,000 38,685,000 — — Unamortized bond premium 400,095 800,010 — — Other post-employment benefits liability (GASB 45) 10,376,219 5,194,673 — —

Total noncurrent liabilities 121,053,571 53,147,908 16,857 17,095

Total liabilities 148,472,247 80,917,780 386,391 146,522

Net assets:Invested in capital assets, net of related debt 60,946,658 54,230,851 — — Restricted:

Nonexpendable:Scholarships, awards and faculty chair — — 3,619,723 4,783,130 Annuities — — 4,344 14,918

Expendable:Scholarships, awards and faculty chair — — 602,089 263,768 Capital projects 510,873 1,873,914 453,645 10,291

Unrestricted 14,553,315 15,158,552 986,845 1,099,147

Total net assets 76,010,846 71,263,317 5,666,646 6,171,254 Total $ 224,483,093 152,181,097 6,053,037 6,317,776


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Statements of Revenues, Expenses and Changes in Net Assets

Years ended June 30, 2009 and 2008


of Philadelphia of Philadelphia Foundation2009 2008 2009 2008

Operating revenues:Student tuition $ 43,645,104 41,488,710 — — Student fees 15,457,186 14,948,617 — — Less scholarship allowance (27,484,158) (26,713,942) — —

Net student fees 31,618,132 29,723,385 — —

Auxiliary enterprises 1,370,386 1,274,163 — — Gifts — — 1,187,511 779,001 Other sources 95,061 75,458 5,548 23,119

Total operating revenues 33,083,579 31,073,006 1,193,059 802,120

Operating expenses:Educational and general:

Instruction 53,368,015 51,995,567 — — Public service 122,675 93,146 — — Academic support 16,828,372 14,920,296 80,777 67,611 Student services 18,211,913 17,775,724 12,949 41,740 Institutional support 21,385,529 21,295,597 403,627 486,011 Physical plant operations 10,904,750 10,948,879 — — Depreciation 6,587,551 6,374,192 — — Student aid 4,408,611 4,326,248 112,477 57,051

Auxiliary enterprises 765,134 685,443 — —

Total operating expenses 132,582,550 128,415,092 609,830 652,413

Operating (loss) surplus (99,498,971) (97,342,086) 583,229 149,707


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Statements of Revenues, Expenses and Changes in Net Assets



of Philadelphia of Philadelphia Foundation2009 2008 2009 2008

Nonoperating revenues (expenses):State appropriations $ 31,495,479 31,553,888 — — City appropriations 19,244,725 20,243,025 — — Federal grants and contracts 32,551,826 30,667,795 — — State grants and contracts 5,830,977 7,817,800 — — Nongovernmental grants and contracts 2,688,394 1,632,362 — — Net investment income (loss) 249,249 1,083,791 (1,088,124) (277,273) Interest on capital asset-related debt service (1,888,736) (2,272,994) — — Other nonoperating revenues 354,390 1,237,038 285 —

Net nonoperating revenues (losses) 90,526,304 91,962,705 (1,087,839) (277,273)

Loss before other revenues, expenses, gains or losses (8,972,667) (5,379,381) (504,610) (127,566)

Capital appropriations 13,720,196 8,316,281 — — Transfers — (13,655) — 13,655

Increase (decrease) in net assets 4,747,529 2,923,245 (504,610) (113,911)

Net assets, beginning 71,263,317 68,340,072 6,171,254 6,285,165 Net assets, ending $ 76,010,846 71,263,317 5,666,644 6,171,254


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(Business-Type Activities – College only)

Statements of Cash Flows


2009 2008

Cash flows from operating activities:Tuition and fees $ 31,010,990 31,779,784 Grants and contracts (493,026) 855,356 Payments to suppliers (20,931,506) (17,052,727) Payments to employees (69,459,450) (69,103,746) Payments for employee benefits (27,413,154) (24,166,500) Payments for student aid (4,408,611) (4,326,248) Collection of loans and interest from students 13,634 2,041 Auxiliary enterprises 1,370,386 1,274,163 Other cash receipts 95,061 75,458

Net cash used in operating activities (90,215,676) (80,662,419)

Cash flows from noncapital financing activities:State appropriations 30,559,156 30,973,944 City appropriations 19,195,864 20,285,200 Gifts and grants 41,259,685 36,667,384 Other nonoperating 377,543 1,249,513

Net cash provided by noncapital financing activities 91,392,248 89,176,041

Cash flows from capital and related financing activities:State capital appropriations 6,317,345 4,396,509 City capital appropriations 7,370,990 4,075,383 Decrease in bond proceeds available for campus construction (67,513,904) 11,789 Proceeds from capital debt 74,770,000 — Purchases of capital assets (6,832,518) (4,417,107) Principal on capital debt (9,834,308) (6,715,887) Interest on capital debt (5,670,849) (2,123,520)

Net cash used in capital and related financing activities (1,393,244) (4,772,833)

Cash flows from investing activities:Proceeds from sales and maturities of investments 101,469,742 123,784,116 Purchases of investments (92,808,822) (131,230,464) Interest on investments 239,503 1,074,876

Net cash provided by (used in) investing activities 8,900,423 (6,371,472)

Increase (decrease) in cash 8,683,751 (2,630,683)

Cash, beginning 1,392,371 4,023,054 Cash, ending $ 10,076,122 1,392,371


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(Business-Type Activities – College only)

Statements of Cash Flows


2009 2008

Reconciliation of net operating loss to net cash used in operating activities:Operating loss $ (99,498,971) (97,342,086) Adjustments to reconcile net operating loss to net cash used in

operating activities:Depreciation 6,587,551 6,374,192 Changes in assets and liabilities:

Accounts receivable (861,279) 988,009 Prepaid and other assets (20,784) (239,764) Loans to students and employees (47,027) (46,918) Accounts payable and accrued liabilities (1,195,821) 2,594,902 Deferred revenues (360,891) 1,814,573 Other post employment benefits 5,181,546 5,194,673

Net cash used in operating activities $ (90,215,676) (80,662,419)

Supplemental disclosure of noncash capital financing activity:Capital assets acquired via capital lease $ 546,907 7,324,535


16


Notes to Financial Statements

June 30, 2009 and 2008

17 (Continued)

(1) Summary of Significant Accounting Policies

(a) Organization

The Community College of Philadelphia (the College) operates in accordance with the provisions of Commonwealth of Pennsylvania (the Commonwealth) legislation and through the sponsorship of the City of Philadelphia (the City). For financial reporting purposes, the College has been determined to be a component unit of the City, and as such has adopted the applicable provisions of the Government Accounting Standards Board (GASB).

Component Unit

The Community College of Philadelphia Foundation (the Foundation), was established as a corporation operating under Section 501(c)(3). On July 15, 2007, the IRS determined the Foundation is also classified as a public charity under Sections 509(a)(1) and 170 (b)(1)(A)(vi) of the Internal Revenue Code to serve as an organization responsible for College fund-raising activities.

The by-laws of the Foundation give the College’s board of trustees’ approval authority over all decisions made by the Foundation board of trustees, and the College has the authority to amend the by-laws of the Foundation at any time. Therefore, the Foundation is considered to be a discretely presented component unit of the College and all financial transactions are reported within the financial statements of the College.

(b) Measurement Focus, Basis of Accounting, and Basis of Presentation

The accompanying financial statements have been prepared using the economic resources measurement focus and the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America, as prescribed by the Governmental Accounting Standards Board (GASB). Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met.

The College has determined that it functions as a Business Type Activity, as defined by GASB. The effect of interfund activity has been eliminated from these financial statements.

The College’s policy is to define operating activities in the statement of revenues, expenses, and changes in net assets as those that generally result from exchange transactions such as the payment received for services and payment made for the purchase of goods and services. Certain other transactions are reported as nonoperating activities in accordance with GASB Statement No. 35. These nonoperating activities include the College’s operating and capital appropriations from the Commonwealth of Pennsylvania and City of Philadelphia; federal, state, and private grants; net investment income; gifts; interest expense; and disposals of capital assets.

The College has elected not to adopt the pronouncements issued by the Financial Accounting Standards Board (FASB) after November 30, 1989.



June 30, 2009 and 2008

18 (Continued)

(c) Government Appropriations

Revenue from the Commonwealth of Pennsylvania and City of Philadelphia is recognized in the fiscal year during which the funds are appropriated to the College. The College is fiscally dependent upon these appropriations. Specific accounting policies with regard to government appropriations are as follows:

Commonwealth of Pennsylvania

General state legislation establishing community colleges provides for the reimbursement of certain college expenses from Commonwealth funds appropriated for this purpose. Act 46 enacted in July 2005 changed the original basis of allocating operating funds to Commonwealth community colleges from a formula approach based upon full-time equivalents (FTE)’s taught in the current fiscal year to a state-wide community college appropriation. The state-wide operating budget appropriation for community colleges is distributed among each of the fourteen colleges in three parts: base funding, growth funding and high priority (economic development) program funding. The provisions of Act 46 ensure that base operating funding for each college will at least equal the amount of funds received in the prior year. Initial base funding for each college was established using 2005-06 operating funding as a foundation. A four percent increase was added for the 2007 fiscal year, three percent for the 2008 and 2009 fiscal years. Twenty-five percent of the annual increase in the community college allocation is to be distributed based upon enrollment growth in the last two audited years. The growth amount received is based upon each college’s relative share of the increase in total state FTE enrollments. Colleges without an increase in the two years used in the computation do not participate in the growth funding but do not lose any funding. For the 2009 fiscal year, enrollments in fiscal years 2006 and 2007 were used to establish each college’s share of the growth funding. The third component of operating funding is based upon prior year enrollments in program areas defined by the State as high priority. Using FTE enrollments in targeted programs as the allocation mechanism, each college receives a proportionate share of the available funds allocated to high priority programs.

Under Act 46 a separate revolving pool was established for community college capital funding. Capital funding which may include major equipment and furniture purchases, capital improvements to buildings and grounds, debt service on major capital projects, and net rental costs for eligible capital leases is reimbursed at the rate of 50%. Capital requests not previously approved for annual funding are subject to a competitive application process with the allocation of available funds made by the Pennsylvania Department of Education using state-wide criteria.

Any excesses or deficiencies between provisional payments and the final annual reimbursement calculation in annual Commonwealth funding are reflected as a payable or receivable from the Commonwealth.

City of Philadelphia

Under general state legislation, the City shall appropriate or provide to the College an amount at least equal to the College’s annual operating costs less the student tuition and Commonwealth payments. Student tuition is set by the board of trustees and should not exceed one-third of operating expenses,



June 30, 2009 and 2008

19 (Continued)

as defined by Commonwealth law. To monitor compliance, the College maintains a category of unrestricted net assets that is credited with tuition received in excess of the student’s share of operating costs, and the reserve is charged for any deficiencies.

(d) Net Assets

The College classifies its net assets into the following four net asset categories:

Invested in capital assets, net of related debt: Capital assets, net of accumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction, repair, or improvement of those assets.

Restricted – nonexpendable: Net assets subject to externally imposed conditions that the College must maintain them in perpetuity.

Restricted – expendable: Net assets whose use is subject to externally imposed conditions that can be fulfilled by the actions of the College or by the passage of time.

Unrestricted: All other categories of net assets. Unrestricted net assets may be designated by actions of the College’s board of trustees.

The College has adopted a policy of generally utilizing restricted – expendable funds, when available, prior to unrestricted funds.

(e) Cash and Cash Equivalents

The College considers all petty cash accounts and demand deposits with financial banking institutions to be cash. The College considers all short term investments (primarily certificates of deposits) with a maturity of 90 days or less to be cash equivalents.

(f) Investments

Investments in marketable securities are stated at fair value. Valuations for marketable securities are provided by external investment managers or on audited financial statements when available.

Dividends, interest, and net gains or losses on investments of endowments and similar funds are reported in the statement of revenues, expenses, and changes in net assets. Any net earnings not expended are included in net asset categories as follows:

(i) as increases in restricted – nonexpendable net assets if the terms of the gift require that they be added to the principal of a permanent endowment fund;

(ii) as increases in restricted – expendable net assets if the terms of the gift or the College’s interpretation of relevant state law impose restrictions on the current use of the income or net gains; and

(iii) as increases in unrestricted net assets in all other cases.



June 30, 2009 and 2008

20 (Continued)

The College policy permits investments in obligations of the U.S. Treasury; certificates of deposit; commercial paper rated A-1 by Standard and Poor’s Corporation or P-1 by Moody’s Commercial Paper Record; bankers’ acceptances; repurchase agreements; the Common Fund’s Short-term Investment Fund, Intermediate Term Fund, Multi-Strategy Bond Fund, and Equity Fund, (for endowment funds only) and specifically approved fixed income securities. The investment practice of the Foundation includes the use of the Common Fund Short-term, Intermediate, Multi-Strategy and International Equity Funds, Multi-Strategy and Global Bond Funds, Real Estate funds, and specifically approved fixed income securities.

(g) Capital Assets

Real estate assets, including improvements, are generally stated at cost. Furnishings and equipment are stated at cost at date of acquisition or, in the case of gifts, at fair value at date of donation. In accordance with the College’s capitalization policy, only those items with a unit cost of more than $1,500 are capitalized. Interest costs on debt related to capital assets are capitalized during the construction period.

Assets are depreciated using the straight-line method. The range of estimated useful lives by asset categories is summarized as follows:

Asset category Years

Buildings 15 to 50Furniture and equipment 3 to 10Library books 10 Microforms 5 Computer desktop software 3 Computer system software 10

The costs of normal maintenance and repairs that do not increase the value of the asset or materially extend assets lives are not capitalized.

(h) Compensated Absences

Employees earn the right to be compensated during absences for vacation leave and sick leave. Accrued vacation is the amount earned by all eligible employees through June 30, 2009. Upon retirement, these employees are entitled to receive payment for this accrued balance as defined in college policy and collective bargaining agreements.

(i) Students’ Deposits and Unearned Revenue

Deposits and advance payments received for tuition and fees related to certain summer programs and tuition received for the following academic year are deferred and are recorded as revenues when instruction is provided.



June 30, 2009 and 2008

21 (Continued)

(j) Student Fees

Included in student fees are general college fees of $1,424,164 and $1,394,018 for the years ended June 30, 2009 and 2008, respectively, which have been designated for use by the various student organizations and activities.

(k) Tax Status

The College is exempt from federal or state taxes due to its status as an unincorporated association established by the Pennsylvania Community College Act of 1963 (the Act). Under the Act, community colleges are considered to be activities of the Commonwealth.

The Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code.

On July 15, 2007, the IRS determined the Foundation is also classified as a public charity under Sections 509(a)(1) and 170 (b)(1)(A)(vi) of the Internal Revenue Code to serve as an organization responsible for College fund-raising activities.

(l) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(m) Scholarship Discounts and Allowances

Student tuition and fee revenues, and certain other revenues from students, are reported net of scholarship discounts and allowances in the statement of revenues, expenses and changes in net assets. Scholarship discounts and allowances are the difference between the stated charge for goods and services provided by the College and the amount that is paid by students and/or third parties making payments on students’ behalf. Certain governmental grants are recorded as either operating or nonoperating revenues in the College’s financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the College has recorded a scholarship discount and allowance.

(2) Deposits and Investments

The College invests its funds in accordance with the Board of Trustees’ investment policy, which authorizes the College to invest in cash equivalents which consist of treasury bills, money market funds, commercial paper, banker’s acceptances, repurchase agreement, certificates of deposit, and the Common Fund short-term fund, multi-strategy bond fund, and fixed income securities which consist of U.S. government and agency securities, corporate notes and bonds, asset-backed bonds, floating rate securities, Yankee notes and bonds, and the Common Fund intermediate fund.



June 30, 2009 and 2008

22 (Continued)

Regardless of funds classifications certain general tenets apply. Investments in all classifications seek to maintain significant liquidity and maximize annual income for the College while avoiding excessive risk. Specific objectives include to maintain sufficient liquidity to meet anticipated cash needs and the preservation of principal, the College recognizes that it may be necessary to forego opportunities for potential large gains to achieve a reasonable risk posture. Certain investments are prohibited; this includes investing in equity securities, commodities and futures contracts, private placements, options, limited partnerships, venture capital, tangible personal property, direct real estate, short selling, margin transactions, and certain derivative instruments. Diversification, insofar as it reduces portfolio risk, is required. At least annually the Board of Trustees will review the investment policy and performance to determine any appropriate revisions.

Operating funds may be invested only in securities that are of U.S. dollar denomination and may be invested only in corporate bonds rated at minimum A- by Standard and Poor’s or A3 by Moody’s. Investments in asset-backed and mortgage-backed bonds are limited to those rated AAA/Aaa. Investments in commercial paper must be rated A1/P1 or better. The maximum percentage of investments in any one sector is limited to 100% for U.S. government and agency, 25% for asset-backed bonds, 40% for corporate notes and bonds, and 25% for mortgage-backed bonds.

Deposits are comprised of demand deposit accounts with financial institutions. At June 30, 2009 and 2008 cash on hand was $5,350 and $5,350, respectively. At June 30, 2009 and 2008, the carrying amount of deposits was a balance of $10,070,772 and $1,387,021, respectively, and the bank balance was $10,833,665 and $1,242,052, respectively. The differences were caused primarily by items in transit. Deposits of $1,250,000 and $400,000, respectively, were covered by federal depository insurance of $250,000 and $100,000 for each bank account at June 30, 2009 and 2008, respectively.

Demand deposits include $533,680 and $608,557 in restricted cash at June 30, 2009 and 2008, respectively, which represents unused proceeds of the 2006 Series Community College Revenue Bonds, held in a separate account to be used for specific state approved capital projects.

The College’s investments are subject to various risks. Among these risks are credit risk, concentration of credit risk, and interest rate risk. Each one of these risks is discussed in more detail below.

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The credit risk of a debt instrument is measured by nationally recognized statistical rating agencies such as Moody’s Investors Service, Inc. (Moody’s).



June 30, 2009 and 2008

23 (Continued)

The Commonfund is a mutual fund. As of June 30, 2009, the credit quality of the investments that comprise the Commonfund multi-strategy bond, intermediate and short-term funds is as follows:

Multi-Strategy Bond Intermediate Short-Term

Government 11% 14% -Agency 28% 18% -AAA 13% 29% 45%AA 5% 5% 10%A 11% 17% 28%BBB 8% 5% 6%Below BBB 9% 12% -BB - - 3%B - - 6%CCC - - 2%Non-Rated/Other 15% - -

Total 100% 100% 100%

The Commonfund is a mutual fund. As of June 30, 2008, the credit quality of the investments that comprise the Commonfund multi-strategy bond, intermediate and short-term funds is as follows:

Multi-Strategy Bond Intermediate Short-Term

Government 7% 19% 1%Agency 32% 23% 14%AAA 18% 37% 26%AA 5% 8% 12%A 10% 10% -A1+/P1 - - 22%A1/P1 - - 17%A/Other - - 8%BBB 8% - -Below BBB 8% - -Non-Rated/Other 12% 3% -

Total 100% 100% 100%

Interest rate risks is the risk that changes in interest rates will adversely affect the fair value of an investment.



June 30, 2009 and 2008

24 (Continued)

Custodial credit risk is the risk that in the event of a bank failure, the College’s deposits may not be returned to the College. The College does not have a deposit policy for custodial credit risk. Commonwealth of Pennsylvania Act 72 of 1971, as amended, allows banking institutions to satisfy the collateralization requirement by pooling eligible investments to cover total public funds on deposit in excess of federal insurance. Such pooled collateral is pledged with the financial institutions’ trust departments. At June 30, 2009 and 2008, the College’s bank balance was exposed to custodial credit risk as follows:

2009 2008Uninsured and collateral held by pledging bank’s trust

department not in the College’s name $ 9,583,665 824,052

The following is the carrying value (fair value) of deposits and investments at June 30, 2009:

Fair value Fair valuecollege foundation

Deposits:Demand deposits $ 10,070,772 31,743

Investments:Certificate of deposit 9,076,932 — Fixed income mutual funds 11,817,193 1,509,103 Equity/balanced mutual funds — 2,988,439 Money market mutual funds 10,067,782 1,001,467

Total deposits and investments $ 41,032,679 5,530,752

The following is the carrying value (fair value) of deposits and investments at June 30, 2008:

Fair value Fair valuecollege foundation

Deposits:Demand deposits $ 1,387,021 —

Investments:Certificate of deposit 10,217,748 — Fixed income mutual funds 29,405,078 2,170,990 Equity/balanced mutual funds — 4,136,629

Total deposits and investments $ 41,009,847 6,307,619

All investments listed above are unrated.



June 30, 2009 and 2008

25 (Continued)

Bond proceeds available for campus construction represent restricted funds held by Sovereign Bank, State Public School Building Authority and The Bank of New York, (the trustees), under the terms of various bond indentures. Bond proceeds available for campus construction are carried in the financial statements at fair value and consist of short-term investments and government securities. As of June 30, 2009, and 2008, bond proceeds available for campus construction include the following:

2009 2008

Construction funds $ 67,612,258 25,000 Computer Software/Equipment — 73,354

Total $ 67,612,258 98,354

(3) Accounts Receivable

Accounts receivable include the following at June 30:

2009 2008Component Component

unit unitCollege foundation College foundation

Tuition and fee receivables $ 3,386,737 — 3,456,283 — Grants receivable 273,979 — 12,416 — Other receivables 664,519 — 524,782 — Pledges receivable — 522,285 — 10,157 Receivable from foundation 343,914 — — —

4,669,149 522,285 3,993,481 10,157

Less allowance for doubtfulaccounts (1,299,003) — (1,450,963) —

Total $ 3,370,146 522,285 2,542,518 10,157

The College anticipates that all of its accounts receivable will be collected within one year.

Accounts receivable, tuition and fees and other are reported at net realizable value. Accounts are written off when they are determined to be uncollectible based upon management’s assessment of individual accounts. The allowance for doubtful accounts is estimated based on the College’s historical losses and periodic review of individual accounts. $561,246 of the pledges receivable are expected to be collected subsequent to June 30, 2010.



June 30, 2009 and 2008

26 (Continued)

(4) Loans Receivable

The following is a summary of loan activity for the years ended June 30, 2009 and 2008, for student notes receivable:

Perkins Nursing Total

Balance, July 1, 2007 $ 195,913 25,063 220,976 Loan repayments (12,349) — (12,349) Loan cancellations (967) — (967) Loan acceptances by federal government (2,467) — (2,467)

Balance, June 30, 2008 180,130 25,063 205,193 Loan repayments (6,426) — (6,426) Loan cancellations (840) — (840) Loan acceptances by federal government (62,392) — (62,392)

Balance, June 30, 2009 $ 110,472 25,063 135,535

The following is a summary of the repayment status of the student loans receivable at June 30, 2009:


Loans in repayment status:Current $ 500 — 500 Delinquent 100,067 25,063 125,130

100,567 25,063 125,630

Loans not in repayment status 9,905 — 9,905 $ 110,472 25,063 135,535

The following is a summary of the repayment status of the student loans receivable at June 30, 2008:


Loans in repayment status:Current $ 1,510 — 1,510 Delinquent 164,527 25,063 189,590

166,037 25,063 191,100

Loans not in repayment status 14,093 — 14,093 $ 180,130 25,063 205,193

Loans not in repayment status are those loans to students who are still attending school or otherwise qualify for deferral under the program regulations.



June 30, 2009 and 2008

27 (Continued)

(5) Capital Assets

Capital assets consist of the following at June 30, 2009:

RetirementsBalance and Balance

July 1, 2008 Additions adjustments June 30, 2009

Capital assets not depreciated:Land and improvements $ 20,422,304 1,520,344 — 21,942,648 Construction in progress 2,543,534 6,848,847 — 9,392,381 Works of art 705,208 — — 705,208

23,671,046 8,369,191 — 32,040,237

Capital assets being depreciated:Buildings and improvements 135,134,290 524,389 — 135,658,679 Equipment and furniture 26,926,885 1,096,620 — 28,023,505 Library books 3,950,250 181,759 — 4,132,009 Microforms 1,603,064 24,551 — 1,627,615 Software 3,387,784 — — 3,387,784 System software 6,159,483 116,939 — 6,276,422

Total beforedepreciation 177,161,756 1,944,258 — 179,106,014

$ 200,832,802 10,313,449 — 211,146,251

Accumulated depreciation by asset categories is summarized as follows:

Balance BalanceJuly 1, 2008 Depreciation Retirements June 30, 2009

Buildings and improvements $ 67,852,020 3,313,666 — 71,165,686 Furniture and equipment 17,969,527 2,319,636 — 20,289,163 Library books 3,219,988 163,277 — 3,383,265 Microforms 1,530,404 33,673 — 1,564,077 Software 3,324,574 51,310 — 3,375,884 System software 2,651,754 705,989 — 3,357,743

Total $ 96,548,267 6,587,551 — 103,135,818

Net capital assets $ 108,010,433



June 30, 2009 and 2008

28 (Continued)

Capital assets consist of the following at June 30, 2008:

RetirementsBalance and Balance

July 1, 2007 Additions adjustments June 30, 2008

Capital assets not depreciated:Land and improvements $ 20,232,108 190,196 — 20,422,304 Construction in progress 2,443,756 2,543,534 (2,443,756) 2,543,534 Works of art 705,208 — — 705,208

23,381,072 2,733,730 (2,443,756) 23,671,046

Capital assets being depreciated:Buildings and improvements 132,078,016 732,188 2,324,086 135,134,290 Equipment and furniture 19,091,944 7,913,752 (78,811) 26,926,885 Library books 3,784,142 166,108 — 3,950,250 Microforms 1,567,596 35,468 — 1,603,064 Software 3,352,080 35,704 — 3,387,784 System software 6,034,791 124,692 — 6,159,483

Total beforedepreciation 165,908,569 9,007,912 2,245,275 177,161,756

$ 189,289,641 11,741,642 (198,481) 200,832,802

Accumulated depreciation by asset categories is summarized as follows:

Balance BalanceJuly 1, 2007 Depreciation Retirements June 30, 2008

Buildings and improvements $ 64,644,118 3,270,985 (63,083) 67,852,020 Furniture and equipment 15,846,881 2,177,175 (54,529) 17,969,527 Library books 3,061,406 158,582 — 3,219,988 Microforms 1,493,405 36,999 — 1,530,404 Software 3,271,977 52,597 — 3,324,574 System software 1,973,900 677,854 — 2,651,754

Total $ 90,291,687 6,374,192 (117,612) 96,548,267

Net capital assets $ 104,284,535



June 30, 2009 and 2008

29 (Continued)

(6) Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following at June 30:



Category:Vendors and others $ 3,980,043 25,620 5,030,909 129,427 Accrued salaries 4,577,875 — 4,282,894 — Accrued benefits 1,631,101 — 1,577,929 — Compensated absences 2,925,529 — 2,720,666 — Retirement incentive

payments 1,144,188 — 1,694,303 — Payroll withholding taxes 570,556 — 470,746 — Gift annuity payable — 16,857 — 17,095 Payable to college — 343,914 — —

Total $ 14,829,292 386,391 15,777,447 146,522

Retirement incentive payments are described in note 11.

Long-term liability activity for the year ended June 30, 2009 was as follows:

TotalBeginning ending Current

balance Additions Deductions balance portion

Noncurrent liabilities:Accrued liabilities $ 15,777,447 652,826 (1,600,981) 14,829,292 12,993,439 Payable to government

agencies 4,381,458 204,168 (1,056,888) 3,528,738 3,099,254 Capital lease obligation 7,547,564 546,907 (1,883,947) 6,210,524 1,398,604 Long-term debt 43,715,000 74,770,000 (8,340,000) 110,145,000 6,945,000 Unamortized bond premium 860,558 — (412,414) 448,144 48,049 Other post-retirement

benefits 5,194,673 5,181,546 — 10,376,219 —

$ 77,476,700 81,355,447 (13,294,230) 145,537,917 24,484,346

2009



June 30, 2009 and 2008

30 (Continued)

Long-term liability activity for the year ended June 30, 2008 was as follows:

TotalBeginning ending Current

balance Additions Deductions balance portion

Noncurrent liabilities:Accrued liabilities $ 13,333,979 3,260,733 (817,265) 15,777,447 13,743,991 Payable to government

agencies 8,383,542 42,175 (4,044,259) 4,381,458 3,880,335 Capital lease obligation 1,883,390 7,324,535 (1,660,361) 7,547,564 1,613,918 Long-term debt 48,770,527 — (5,055,527) 43,715,000 5,030,000 Unamortized bond premium 919,578 — (59,020) 860,558 60,548 Other post-retirement

benefits — 5,194,673 — 5,194,673 —

$ 73,291,016 15,822,116 (11,636,432) 77,476,700 24,328,792

2008

(7) Debt

The College’s debt financing is primarily provided through Community College Revenue Bonds issued by the Hospitals and Higher Education Facilities Authority and the State Public School Building Authority.

Debt consisted of the following at June 30, 2009:

Balance Principal Balance CurrentJuly 1, 2008 Additions payments June 30, 2009 portion

1994 Series (a) $ 1,455,000 — (1,455,000) — — 1999 Series (b) 6,945,000 — (1,035,000) 5 ,910,000 1,075,000 2003 Series (c) 3,705,000 — (680,000) 3 ,025,000 715,000 2006 Series (e) 2,630,000 — (260,000) 2 ,370,000 270,000 2007 Series (f) 28,980,000 — (1,600,000) 27,380,000 1,670,000 2008 Series (g) — 74,770,000 (3,310,000) 71,460,000 3,215,000

$ 43,715,000 74,770,000 (8,340,000) 110,145,000 6,945,000

Debt consisted of the following at June 30, 2008:

Balance Principal Balance CurrentJuly 1, 2007 Additions payments June 30, 2008 portion

1994 Series (a) $ 2,825,000 — (1,370,000) 1 ,455,000 1,455,000 1999 Series (b) 7,935,000 — (990,000) 6 ,945,000 1,035,000 2003 Series (c) 4,350,000 — (645,000) 3 ,705,000 680,000 2003 General obligation note (d) 255,527 — (255,527) — — 2006 Series (e) 2,880,000 — (250,000) 2 ,630,000 260,000 2007 Series (f) 30,525,000 — (1,545,000) 28,980,000 1,600,000

$ 48,770,527 — (5,055,527) 43,715,000 5,030,000



June 30, 2009 and 2008

31 (Continued)

Future annual principal and interest payments at June 30, 2009 are as follows:

Principal Interest TotalJune 30:

2010 $ 6,945,000 5,571,633 12,516,633 2011 7,200,000 5,311,802 12,511,802 2012 7,480,000 5,024,902 12,504,902 2013 7,795,000 4,716,127 12,511,127 2014 7,355,000 4,322,434 11,677,434 2015 5,070,000 3,978,781 9,048,781 2016 5,310,000 3,737,569 9,047,569 2017 5,385,000 3,479,209 8,864,209 2018 5,495,000 3,178,421 8,673,421 2019 5,020,000 2,900,561 7,920,561 2020 5,265,000 2,654,798 7,919,798 2021 5,520,000 2,390,801 7,910,801 2022 5,815,000 2,105,850 7,920,850 2023 6,130,000 1,792,410 7,922,410 2024 4,320,000 1,461,600 5,781,600 2025 4,580,000 1,202,400 5,782,400 2026 4,855,000 927,600 5,782,600 2027 5,150,000 636,300 5,786,300 2028 5,455,000 327,300 5,782,300

$ 110,145,000 55,720,498 165,865,498

(a) 1994 Series

Under a loan agreement dated June 1, 1994 with the Hospitals and Higher Education Facilities Authority the College borrowed $30,605,000 of 1994 Series A and B Community College Revenue Bonds. Of the total obligation, $14,855,000 (net of bond issuance costs of $142,000) of proceeds was used to refinance the 1989 Series A Bond debt. The 1989 Series A Bonds are considered defeased and the remaining liability of $13,970,000 has been removed. This portion of the obligation is payable over 15 years at interest rates that range from 6.3% to 6.5% with an average annual debt service payment of $1,549,575. Of the remaining proceeds, $12,595,000 was for the Northeast Regional Center and $3,155,000 was for certain capital improvements and renovations at the College’s main campus. The remaining balance of the 1994A Bonds was re-financed on May 18, 1999 and the remaining payments for the bonds were scheduled through June 30, 2009.



June 30, 2009 and 2008

32 (Continued)

(b) 1999 Series

Under a loan agreement, dated May 18, 1999, with the Hospitals and Higher Education Facilities Authority the College borrowed $9,555,000 of 1999 Community College Revenue Bonds. Of the total obligation, $9,060,419 (net of bond discount and issuance cost of $233,817) was used to purchase U.S. government securities, which were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the 1994 Series A Bonds. As a result, that portion of the 1994 Series A Bonds is considered to be defeased and the related liability $(8,380,000) has been removed from the statement of net assets. The 1999 Series Bonds are payable over 15 years at rates from 4.2% to 4.85% with an average annual debt service payment of $1,355,346.

Principal payments required by the loan agreement are as follows:

2009 – 2010 $ 1,075,000 2010 – 2011 1,130,000 2011 – 2012 1,180,000 2012 – 2013 1,235,000 2013 – 2014 1,290,000

$ 5,910,000

(c) 2003 Series

Under a loan agreement dated December 4, 2003, with the State Public School Building Authority, the College borrowed $6,935,000 of Series A of 2003 Community College Revenue Bonds. The total obligation is to be used for the purpose of financing: (i) the acquisition and installation of an integrated computer system for Finance, Human Resources, and student use; (ii) upgrade to the existing computer network infrastructure to accommodate the new integrated computer system; (iii) the cost of software acquisition and training modules to implement the new integrated computer system; and (iv) the costs and expenses of issues the 2003 bonds. In addition to the bond proceeds, the authority contributed $50,000 to the project. The funds from the authority were used to offset some of the issuance cost. The Bonds are scheduled to be repaid of a ten-year period through May 1, 2013 at interest rates that vary from 3.75% to 5.00%, with an average annual debt service payment of $829,163.

Remaining principal payments required by the loan agreement are as follows:

2009 – 2010 $ 715,000 2010 – 2011 740,000 2011 – 2012 770,000 2012 – 2013 800,000

$ 3,025,000



June 30, 2009 and 2008

33 (Continued)

(d) 2003 General Obligation Note

Under a loan agreement dated March 1, 2003 with the State Public School Building Authority, the College issued a $1,300,000 general obligation note to outfit the College’s new Center for Business and Industry Building and other projects. This five year note has been repaid as of March 1, 2008.

(e) 2006 Series

Under a loan agreement dated September 15, 2006 with the State Public School Building Authority, the College borrowed $3,000,000 of 2006 Series Community College Revenue Bonds. Of the total obligation, $3,000,000 went towards deferred maintenance including roof repairs (Bonnell, West, Gymnasium, Winnet Building, and West Philadelphia Regional Center); exterior brick repairs (Winnet Building and Gymnasium) and 16th Street sidewalk replacement. The College also received $50,000 from the Authority that was applied to issuance cost. The Bonds are scheduled to be repaid over a 10-year period through June 20, 2016 at the interest rate of 4.5%, with an average annual debt service payment of $357,143.


2009 – 2010 $ 270,000 2010 – 2011 285,000 2011 – 2012 295,000 2012 – 2013 315,000 2013 – 2014 325,000 2014 – 2017 880,000

$ 2,370,000

(f) 2007 Series

Under a loan agreement dated February 21, 2007 with the State Public School Building Authority, the College borrowed $30,525,000 of 2007 Community College Refunding Revenue Bonds. Of the total obligation, $30,525,000 (including bond premium net of bond discount and issuance cost of $449,782) was used to purchase U.S. government securities, which were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the 1998 Series Bonds and 2001 Series Bonds. As a result, that portion of the 1998 Series Bond and 2001 Series Bonds is considered to be defeased, and the related liability ($6,730,000 and $23,970,000, respectively) has been removed from the statement of net assets. The outstanding principal of the defeased bonds is $26,365,000 at June 30, 2009. The market value of the amount held in escrow with the trustee of the defeased bonds is $21,457,002 at June 30, 2009. The 2007 Series Bonds are payable over 16 ½ years at rates from 4.00% to 5.00% with an average annual debt service payment of $2,641,716.



June 30, 2009 and 2008

34 (Continued)

Principal payments required by the loan agreement are as follows:

2009 – 2010 $ 1,670,000 2010 – 2011 1,730,000 2011 – 2012 1,795,000 2012 – 2013 1,870,000 2013 – 2014 1,965,000 2014 – 2019 10,620,000 2019 – 2023 7,730,000

$ 27,380,000

(g) 2008 Series

Under a loan agreement dated October 9, 2008 with the State Public School Building Authority, the College borrowed $74,770,000 of 2008 Series Community College Revenue Bonds. The bonds are being issued for the benefit of the College to finance a project consisting of: (a) the construction, equipping and furnishing of an approximately 45,000 square foot building for instructional facilities and student meeting spaces on the main campus of the college, and other capital projects related thereto; (b) the renovation and expansion of administrative buildings for the provision of student services on the main campus of the College; (c) the expansion of the campus facilities comprising the Northeast Regional Center of the College in Northeast Philadelphia; and (d) the payment of costs and expenses incident to the issuance of the bonds. The College also received $50,000 from the State Public School Building Authority that was applied to issuance cost. The bonds are scheduled to be repaid over a 20-year period through June 15, 2028 at the interest rate of 3.0% to 6.25%, with an average annual debt service payment of $6,116,751. $2,934,024 of interest was capitalized during the year ending June 30, 2009 related to the campus construction.


2009 – 2010 $ 3,215,000 2010 – 2011 3,315,000 2011 – 2012 3,440,000 2012 – 2013 3,575,000 2013 – 2014 3,775,000 2014 – 2019 14,780,000 2019 – 2024 19,320,000 2024 – 2028 20,040,000

$ 71,460,000

(h) Operating Leases

The College leases certain equipment and property under operating lease arrangements that expire in 2023. Rental expense for operating leases was $203,520 and $197,752 for the years ended June 30, 2009 and 2008, respectively.



June 30, 2009 and 2008

35 (Continued)

Future minimum lease payments required under operating leases are as follows:

2010 $ 195,615 2011 199,646 2012 202,242 2013 207,708 2014 213,174 2015 – 2023 218,640

$ 1,237,025

(i) Capital Leases

The College leases certain equipment under capital lease arrangements that expire in 2022. These leases are recorded at the lower of cost or present value and amounted to $6,210,524 and $7,547,564 at June 30, 2009 and 2008, respectively. Amortization charges of capital leases were $1,883,947 and $1,660,360 for the years ending June 30, 2009 and 2008, respectively.

Future minimum lease payments under capital leases are as follows:

Principal Interest Total

June 30:2010 $ 1,060,990 337,780 1,398,770 2011 843,305 291,262 1,134,567 2012 576,566 252,913 829,479 2013 295,998 299,340 595,338 2014 394,808 200,529 595,337 2015 – 2019 2,580,273 692,740 3,273,013 2020 – 2023 1,115,059 63,961 1,179,020

Total $ 6,866,999 2,138,525 9,005,524



June 30, 2009 and 2008

36 (Continued)

(8) (Payable to) Receivable from Government Agencies

(Payable to) receivable from government agencies includes the following at June 30:

2009 2008Payable Receivable Payable Receivable

Commonwealth of Pennsylvania:Provision for potential audit

findings andreimbursement calculation $ 2,025,720 — 2,962,043 —

Additional 08-09 operatingallocation — — — 11,670

Grants and special projects 1,820 456,349 11,310 378,325 PHEAA for grants and

Stafford loans 748,641 591 544,473 1,600 PHEAA for Perkins and

nursing loans 42,642 — 48,832 —

2,818,823 456,940 3,566,658 391,595

City of Philadelphia – Parkinggarage proceeds and grantsreceivable 152,625 — 201,486 10,487

Federal:Perkins and nursing loans

refundable 383,773 — 439,488 — Financial aid programs 173,517 271,256 173,826 372,558 Grants and special projects — 619,448 — 478,692

557,290 890,704 613,314 851,250 Total $ 3,528,738 1,347,644 4,381,458 1,253,332

The College participates in the Federal Perkins Loan and Nursing Loan programs. These programs are funded through a combination of federal and state resources and are ultimately refundable back to the U.S. government $(383,773) at June 30, 2009 and $(439,488) at June 30, 2008 and Pennsylvania Higher Education Assistance Agency $(42,642) at June 30, 2009 and $(48,832) at June 30, 2008 upon the termination of the College’s participation in the programs.



June 30, 2009 and 2008

37 (Continued)

(9) Restricted Net Assets

The College is the recipient of funds that are subject to various external constraints upon their use, either as to purpose or time. These funds are comprised of the following at June 30:



Restricted – nonexpendable:Endowment funds $ — 3,619,723 — 4,783,130 Gift annuity — 4,344 — 14,918

— 3,624,067 — 4,798,048

Restricted – expendable:Scholarships and awards — 602,089 — 263,768 Capital program 510,873 453,645 1,873,914 10,291

510,873 1,055,734 1,873,914 274,059 Total $ 510,873 4,679,801 1,873,914 5,072,107

(10) Unrestricted Net Assets

The College’s board of trustees has designated certain unrestricted net assets for the following purposes of $8,101,574 and $8,377,240 in tuition stabilization at June 30, 2009 and 2008, respectively:

2009 2008

Designated for tuition stabilization $ 8,101,574 8,377,240 Undesignated 6,451,741 6,781,312

$ 14,553,315 15,158,552

(11) Employee Benefits

Retirement benefits are provided for substantially all employees through payments to one of the board-authorized retirement programs. The authorized pension plans at June 30, 2009 are the Teachers’ Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF) and Fidelity Investments. Although the College no longer offers participation in the State Employees Retirement System (SERS) or the Pennsylvania Public School Employees Retirement System (PSERS), it has grandfathered continued participation for those employees currently enrolled. The College has 5 employees participating in the SERS and 15 employees in the PSERS. The collective bargaining agreements with the full-time faculty and classified employees made a provision for early retirement for those 55 to 59 years old whose age and years of service add up to 70 or more. This option expires on August 31, 2011 and notice to use the option has been provided by eligible employees by November 15, 2007.



June 30, 2009 and 2008

38 (Continued)

Additionally, a retirement incentive option is available to employees 62 or older, who have completed at least 15 years of full-time service, and whose combined age and years of service equal at least 80. At June 30, 2009, there were 46 people who accepted the early retirement and incentive options, the present value of future payments of $1,144,188 and $1,694,303 has been accrued at June 30, 2009 and 2008, respectively. Future payments in the next four fiscal years are expected to be $391,090, $470,496, $179,687, and $45,080, respectively.

TIAA-CREF and Fidelity Investments are defined contribution plans, and as such, benefits depend solely on amounts contributed to the plan plus investment earnings. Full-time faculty and administrative employees are eligible to participate from the date of employment, and clerical employees have a one-year waiting period. Participation is mandatory for full-time faculty and administrative employees upon reaching the age of 30 or after two years of employment, whichever is the later date. Participation is mandatory for full-time classified and confidential employees upon reaching the age of 30 or after four years of employment, whichever is the later date. Part-time faculty may participate after earning four seniority units, as defined in the collective bargaining agreement. College policy and collective bargaining agreements require that both the employee and the College contribute amounts, as set forth below, based on the employee’s earnings.

The College’s contributions for each employee (and interest allocated to the employee’s accounts) are fully vested. Death benefits in the amount of the full present value of accumulation are provided to the beneficiary of a participant who dies prior to retirement. Various payment options are available. The College has 1,148 employees participating in this program.

The PSERS and SERS are defined benefit plans and are administered by the Commonwealth as established under legislative authority. Contributions are made by employees, the College, and the Commonwealth according to the schedule below. Death benefits are available to employee beneficiaries according to various options at time of death. The financial statements for PSERS and SERS can be obtained from the following: Commonwealth of Pennsylvania, Public School Employees’ Retirement System, 5 North Fifth Street, P.O. Box 125, Harrisburg, PA 17108-0125; and Commonwealth of Pennsylvania, State Employees’ Retirement System, 30 North Third Street, P.O. Box 1147, Harrisburg, PA 17108-1147.



June 30, 2009 and 2008

39 (Continued)

The payroll for employees covered by the four plans was $57,481,561; the College’s total payroll is $69,693,770. Contributions made by the College during fiscal 2008 and 2009 totaled $4,667,323 and $4,928,106, respectively, representing 7.72% and 8.57%, respectively, of covered payroll. College employees contributed $3,981,705 and $4,181,133, respectively. A summary of retirement benefits follows:

TIAA-CREF andType of employee Fidelity Investments PSERS SERS

College contribution:Full-time faculty 10% of base contract 2.38% of all earnings 3.15% of all earningsVisiting lecturers 5% of base contract N/A N/APart-time faculty 5% of all earnings N/A N/AAdministrators and

other staff 10% of base contract 3.57% of all earnings 3.15% of all earningsOthers 10% of annual salary 3.57% of all earnings 3.15% of all earningsEmployee contribution 5% of base salary Members prior to 6.25% of all earnings

July 22, 1983:6.5% of all earnings

Members afterJuly 22, 1983:

7.5% of all earnings

Plan Description

The Community College of Philadelphia’s Retirement Benefits Plan, is a single-employer plan which offers board-authorized post-employment benefits, other than pension, to eligible retirees. The plan provides post-retirement medical, prescription drug, dental, and life insurance benefits. The plan is unfunded and no financial report is prepared. These benefits are accounted for in accordance with GASB Statement No. 45, Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions.

Funding Policy

The contribution requirements of plan members and the College are established and may be amended by the College’s Board of Trustees. The plan is funded on a pay-as-you-go basis, i.e. premiums are paid to fund the health care benefits provided to current retirees. The College paid premiums of $1,336,675 and $1,237,254 for the fiscal years ending June 30, 2009 and 2008, respectively. Total retiree contributions made by plan members were $376,476 and $296,294 for the fiscal years ending June 30, 2009 and 2008, respectively.



June 30, 2009 and 2008

40 (Continued)

Annual OPEB Cost and Net OPEB Obligation

The College’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following show the components of the Community College of Philadelphia’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Community College of Philadelphia’s net OPEB obligation:

2009 2008

Annual required contribution $ 7,463,367 7,257,715

Annual OPEB cost (expense) 7,463,367 7,257,715

Contributions made (2,281,821) (2,063,042)

Increase in net OPEB obligation 5,181,546 5,194,673

Net OPEB obligation at July 1 5,194,673 —

Net OPEB obligation at June 30 $ 10,376,219 5,194,673

The College’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for June 30, 2009 were as follows:

Percentageof annual

Annual OPEB OPEB cost Net OPEBcost contributed obligation

Fiscal year ended:June 30, 2009 $ 7,463,367 30.6% $ 5,181,546

Funded Status and Funding Progress

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the health care cost trend. Actuarial amounts determined regarding the funded status of the plan and the annual required contributions of the college are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.



June 30, 2009 and 2008

41 (Continued)

Actuarial Methods and Assumptions

The calculations are based on the types of benefits provided under the terms of the College’s Retirement Benefits plan at the time of the valuation. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations in the future. The actuarial methods and assumptions used include techniques that are designed to reduce the efforts of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

(12) Commitments and Contingencies

Commonwealth funding is subject to re-determination based on the filing of reports and audits of those reports. Adjustments resulting from audits by the Commonwealth are recognized in the year in which the results can be estimated. At June 30, 2009, audits by the Commonwealth have been completed through fiscal year 2006. The state audit process placed increased emphasis on attendance requirements for noncredit classes. The College has provided for audit findings through 2006. Based upon the provisions of Act 46 enacted in 2005 and effective with the June 2007 fiscal year, the Commonwealth no longer audits the funding received. In lieu of the state audit, an enrollment verification and capital expenditure audit is completed by the College’s independent auditor.

The use of grant monies received is subject to compliance audits by the disbursing governmental agency. The College believes it is in compliance with all significant grant requirements.

The nature of the educational industry is such that, from time to time, the College is exposed to various risks of loss related to torts; alleged negligence; acts of discrimination; breach of contract; labor disputes; disagreements arising from the interpretation of laws or regulations; theft of, damage to and destruction of assets; errors and omissions; injuries to employees and natural disasters. While some of these claims may be for substantial amounts, they are not unusual in the ordinary course of providing educational services. The College addresses these risks by purchasing commercial insurance. The College’s retention of risk is limited to the deductibles on its insurance policies which range from $0 to $100,000 per claim depending on the nature of the claim.

There have been no significant reductions in insurance coverage from the prior year. There have been no instances where a settlement amount exceeded the insurance coverage for each of the last three years. It is not expected that the resolution of any outstanding claims and litigation will have a material adverse effect on the accompanying financial statements.



June 30, 2009 and 2008

42 (Continued)

(13) Operating Expenses

The College’s operating expenses, on a natural classification basis, were comprised of the following:



Salaries $ 69,693,770 116,828 68,333,470 102,172 Benefits 27,121,074 23,904 25,210,480 26,646 Contracted services 5,213,655 2,148 4,868,502 651 Supplies 2,106,796 15,279 2,415,522 12,122 Depreciation 6,587,551 — 6,374,192 — Student aid 4,408,611 112,477 4,326,248 57,051 Other post retirement benefits 5,181,546 — 5,194,673 — Other 12,269,547 339,194 11,692,005 453,771

Total $ 132,582,550 609,830 128,415,092 652,413

(14) City and State Appropriations

Appropriations from the Commonwealth and the City for the years ended June 30, 2009 and 2008 are as follows:

2009 2008Operations Capital Operations Capital

Commonwealth of Pennsylvania $ 31,495,479 6,349,206 31,553,888 4,240,898 City of Philadelphia 19,244,725 7,370,990 20,243,025 4,075,383

Totalappropriations $ 50,740,204 13,720,196 51,796,913 8,316,281

(15) Pass-Through Grants

The College distributed $27,230,083 in 2009 and $26,085,754 in 2008 for student loans through the U.S. Department of Education Federal Family Education Loan Program. These distributions and related funding sources are not included as expenses and revenues nor as cash disbursements and cash receipts in the accompanying financial statements.

(16) Transfer from College to Foundation

The College transferred endowment funds of $0 in 2009 and $13,655 in 2008 to the Foundation with the permission of the donor.



June 30, 2009 and 2008

43

(17) New Accounting Pronouncements

In June 2007, GASB issued Statement No. 51, Accounting and Financial Reporting for Intangible Assets. The Statement requires that all intangible assets not specifically excluded by its scope provisions be classified as capital assets. Accordingly, existing authoritative guidance related to the accounting and financial reporting for capital assets should be applied to these intangible assets as applicable. Statement No. 51 also provides authoritative guidance that specifically addresses the nature of these intangible assets. Such guidance should be applied in addition to the existing authoritative guidance for capital assets.

College management is in the process of evaluating but has not yet determined how the adoption of GASB Statement No. 51 will impact the College’s financial statements. The College is required to adopt the provisions of GASB Statement No. 51 for the year ending June 30, 2010 financial statements.

In June 2007, GASB issued Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. This statement requires governments to measure certain derivative instruments at fair value in their financial statements.

College management is in the process of evaluating but has not yet determined how the adoption of GASB Statement No. 53 will impact the College’s financial statements. The College is required to adopt the provisions of GASB Statement No. 53 for the year ending June 30, 2010 financial statements.

(18) Subsequent Event

On July 2, 2009, the Community College of Philadelphia Board of Trustees approved the College’s participation in a self-insurance medical plan through Independence Blue Cross, which became effective September 1, 2009. The originally proposed 2009-10 Medical insurance cost for the college would have totaled $14,772,088 based upon employee enrollments at the time of the proposal. Under our self insurance plan, the cost for the year will be $12,612,061, giving the College a projected savings of $2,160,027.


Schedule of Funding Progress

Year ended June 30, 2009

44

Postemployment benefits


Schedule of funding progressActuarial UAAL (OAAL

Actuarial accrued percentagevalue of liability Unfunded Covered of coveredassets (AAL) AAL Funded ratio payroll payroll

Valuation date (a) (b) (b-a) (a/b) (c) ([a-b]/c)

July 1, 2007 — $ 72,351,392 $ 72,351,392 — $ 64,747,493 111.74%

Schedule of contributions from the CollegeAnnual

required PercentageFiscal year contribution Contribution contributed

June 30, 2008 $ 7,257,715 $ 2,063,042 28.43%June 30, 2009 7,463,367 2,281,821 30.57

The information presented above was determined as part of the actuarial valuation at the dateindicated.

Actuarial cost method Projected Unit CreditAsset valuation method N/ARemaining amortization period 28

Actuarial assumptions:Investment rate of return 5%Ultimate rate of medical inflation 5%


Statistical Section

Years ended June 30, 2003 through June 30, 2009

Table of Contents

Page

Schedule of Revenues by Source 45

Schedule of Expenses by Use 46

Schedule of Expenses by Function 47

Schedule of Net Assets and Changes in Net Assets 48

Fiscal Year Enrollment and Degree Statistics 48

Undergraduate Average Annual Tuition and Fees 49

Faculty and Staff Statistics 49

Gross Square Feet of College Buildings 50

Demographic Statistics 50


Statistical Section


45 (Continued)

Schedule of Revenue by SourceYear ended June 30

(Amounts expressed in thousands)

2009 2008 2007 2006 2005 2004 2003Revenues:

Student tuition and fees (net of scholarshipallowances) $ 31,618 29,723 27,146 26,258 26,604 24,638 22,564

State grants and contracts — — — — 81 65 38 Nongovernmental grants and contracts — — 75 50 69 127 90 Sales of auxiliary enterprises 1,371 1,274 1,132 1,075 1,113 1,058 969 Other operating revenues 95 76 73 65 91 124 113

Total operating revenues 33,084 31,073 28,426 27,448 27,958 26,012 23,774

City appropriations 19,245 20,243 19,644 18,958 18,947 18,536 19,301 State appropriations 31,496 31,554 30,855 29,564 26,924 28,555 29,166 Federal grants and contracts 32,552 30,668 27,391 28,823 32,173 29,501 27,760 State grants and contracts 5,831 7,818 8,570 8,662 6,151 5,512 5,037 Nongovernmental grants and contracts 2,688 1,632 1,332 785 1,245 475 600 Private gifts — — — 1 20 13 10 Net investment income 249 1,084 1,780 1,148 709 343 732 Other nonoperating revenue 354 1,237 321 151 412 208 37

Total nonoperating revenues 92,415 94,236 89,893 88,092 86,581 83,143 82,643 Total revenues $ 125,499 125,309 118,319 115,540 114,539 109,155 106,417

Schedule of Revenue by SourceYear ended June 30

(Amounts expressed in percentages)

2009 2008 2007 2006 2005 2004 2003Revenues:

Student tuition and fees (net of scholarship allowances) 25.19% 23.72% 22.94% 22.73% 23.23% 22.57% 21.20%

State grants and contracts — — — — 0.07 0.06 0.04Nongovernmental grants and contracts — — 0.06 0.04 0.06 0.12 0.08Sales of auxiliary enterprises 1.09 1.02 0.96 0.93 0.97 0.97 0.91Other operating revenues 0.08 0.06 0.06 0.06 0.08 0.11 0.11

Total operating revenues 26.36% 24.80% 24.02% 23.76% 24.41% 23.83% 22.34%

City appropriations 15.33% 16.15% 16.60% 16.41% 16.54% 16.98% 18.14%State appropriations 25.10 25.18 26.08 25.59 23.51 26.16 27.41Federal grants and contracts 25.94 24.47 23.15 24.95 28.09 27.03 26.09State grants and contracts 4.65 6.24 7.24 7.50 5.37 5.05 4.73Nongovernmental grants and contracts 2.14 1.30 1.13 0.68 1.09 0.44 0.56Private gifts — — — — 0.02 0.01 0.01Net investment income 0.20 0.87 1.50 0.99 0.62 0.31 0.69Other nonoperating revenue 0.28 0.99 0.28 0.12 0.35 0.19 0.03

Total nonoperating revenues 73.64% 75.20% 75.98% 76.24% 75.59% 76.17% 77.66%

Source: Audited financial statements

See accompanying independent auditors’ report.


Statistical Section


46 (Continued)

Schedule of Expenses by UseYear ended June 30


2009 2008 2007 2006 2005 2004 2003

Expenses:Salaries $ 69,694 68,333 64,747 63,350 64,503 62,570 60,316 Benefits 27,121 25,210 25,309 23,980 22,595 20,931 19,917 Contracted services 5,214 4,869 4,089 4,212 4,089 3,990 3,612 Supplies 2,107 2,416 1,996 2,183 1,917 1,801 2,458 Depreciation 6,588 6,374 5,947 6,086 5,675 6,662 5,890 Student aid 4,409 4,326 4,342 6,975 8,512 8,587 8,916 Other 12,269 11,692 11,109 11,383 11,129 11,055 11,211 GASB 45 (Other post-employment benefits)

accrual 5,181 5,195 — — — — —

Total operating expenses 132,583 128,415 117,539 118,169 118,420 115,596 112,320

Interest on capital asset-related debt service 1,889 2,273 1,993 2,603 2,852 2,902 2,465

Total nonoperating expenses 1,889 2,273 1,993 2,603 2,852 2,902 2,465 Total expenses $ 134,472 130,688 119,532 120,772 121,272 118,498 114,785

Schedule of Expenses by Use

Year ended June 30

(Amounts expressed in percentages)

2009 2008 2007 2006 2005 2004 2003

Expenses:Salaries 51.83% 52.29% 54.17% 52.45% 53.19% 52.80% 52.55%Benefits 20.17 19.29 21.17 19.86 18.63 17.66 17.35Contracted services 3.88 3.72 3.42 3.49 3.37 3.37 3.15Supplies 1.57 1.85 1.67 1.81 1.58 1.52 2.14Depreciation 4.90 4.88 4.98 5.04 4.68 5.62 5.13Student aid 3.28 3.31 3.63 5.78 7.02 7.25 7.77Other 9.12 8.95 9.29 9.41 9.18 9.33 9.76GASB 45 (Other post-employment benefits)

accrual 3.85 3.97 — — — — —

Total operating expenses 98.60 98.26 98.33 97.84 97.65 97.55 97.85

Interest on capital asset-related debt service 1.40 1.74 1.67 2.16 2.35 2.45 2.15

Total nonoperating 1.40 1.74 1.67 2.16 2.35 2.45 2.15Total expenses 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Source: Audited financial statements.



Statistical Section


47 (Continued)

Schedule of Expenses by FunctionYear ended June 30


2009 2008 2007 2006 2005 2004 2003

Expenses by function: Instruction $ 53,368 51,996 48,457 47,272 49,010 47,109 46,146 Public services 123 93 30 70 68 141 78 Academic support 16,828 14,920 13,927 12,577 12,233 11,574 11,401 Student services 18,212 17,776 16,315 17,030 16,592 16,122 14,994 Institutional support 21,385 21,296 17,956 17,365 16,299 15,661 15,450 Operation and maintenance of plant 10,905 10,949 9,964 9,632 9,079 9,008 8,793 Depreciation 6,588 6,374 5,947 6,086 5,675 6,662 5,891 Student aid 4,409 4,326 4,342 7,440 8,512 8,587 8,916 Auxiliary enterprises 765 685 601 618 624 704 628 Other — — — 78 328 28 23 Interest on capital debt 1,889 2,273 1,993 2,603 2,852 2,902 2,465

Total expenses by function $ 134,472 130,688 119,532 120,771 121,272 118,498 114,785

Schedule of Expenses by Function

Year ended June 30

(Percent of total expenses)

2009 2008 2007 2006 2005 2004 2003

Expenses by function: Instruction 39.69% 39.79% 40.54% 39.14% 40.41% 39.76% 40.20% Public services 0.09 0.07 0.03 0.06 0.06 0.12 0.07 Academic support 12.51 11.42 11.65 10.41 10.09 9.77 9.93 Student services 13.54 13.60 13.65 14.10 13.68 13.61 13.06 Institutional support 15.90 16.30 15.02 14.38 13.44 13.22 13.46 Operation and maintenance of plant 8.12 8.37 8.33 7.98 7.49 7.59 7.66 Depreciation 4.90 4.88 4.98 5.04 4.68 5.62 5.13 Student aid 3.28 3.31 3.63 6.16 7.02 7.25 7.77 Auxiliary enterprises 0.57 0.52 0.50 0.51 0.51 0.59 0.55 Other — — — 0.06 0.27 0.02 0.02 Interest on capital debt 1.40 1.74 1.67 2.16 2.35 2.45 2.15

Total expenses by function 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Source: Audited financial statements.



Statistical Section


48 (Continued)

Schedule of Net Assets and Changes in Net Assets

Year ended June 30


2009 2008 2007 2006 2005 2004 2003

Total revenues (from schedule of revenues bysource) $ 125,499 125,309 118,318 115,541 114,539 109,155 106,417

Total operating expenses 132,583 128,415 117,539 118,169 118,420 115,596 112,320

Income before other revenuesand expenses (7,084) (3,106) 779 (2,628) (3,881) (6,441) (5,903)

Capital appropriations 13,721 8,316 7,762 7,235 6,525 6,944 5,062 Capital gifts — — — — — — — Capital grants and contracts — — 35 235 638 456 313 Interest on capital asset-related debt service (1,889) (2,273) (1,993) (2,603) (2,852) (2,902) (2,465) Additions (deductions) to permanent endowments — (14) (106) (22) (378) (179) (4)

Total changes in net assets 4,748 2,923 6,477 2,217 52 (2,122) (2,997)

Net assets, beginning 71,263 68,340 61,863 59,646 59,594 61,716 64,713 Net assets, ending $ 76,011 71,263 68,340 61,863 59,646 59,594 61,716

Invested in capital assets, net of related debt $ 60,947 54,231 49,504 49,416 49,372 49,754 48,690 Restricted – nonexpendable — — 13 79 100 441 598 Restricted – expendable 511 1,874 920 145 556 5,986 8,372 Unrestricted 14,553 15,158 17,903 12,222 9,618 3,413 4,056

Total net assets $ 76,011 71,263 68,340 61,862 59,646 59,594 61,716

Source: Audited financial s tatements. Fiscal Year Enrollment and Degree Statistics

2009 2008 2007 2006 2005 2004 2003

Enrollments and student demographics:Credit FTE 14,208 13,942 13,570 13,594 15,294 15,657 14,973 Unduplicated Credit Headcount 26,868 26,212 26,157 26,293 29,269 30,341 30,532

Percentage – Men 33.7% 33.2% 32.8% 32.9% 32.5% 33.2% 34.7%Percentage – Women 66.3 66.8 67.2 67.1 67.5 66.8 65.3

Percentage – Black 48.6% 48.0% 48.3% 47.8% 50.2% 51.2% 49.0%Percentage – White 25.7 25.2 26.0 26.8 26.9 25.6 27.6Percentage – Asian 7.4 7.7 7.6 7.3 6.7 6.3 6.1Percentage – Hispanic 6.8 6.3 5.9 5.6 5.6 5.9 6.0Percentage – American Indian/other 0.4 0.4 0.5 0.5 0.6 0.5 0.5Percentage – Unknown 11.1 12.4 11.7 12.0 10.0 10.5 10.8

Degrees awarded:Associate 1,741 1,592 1,481 1,465 1,507 1,446 1,209 Certificate 259 319 232 170 154 160 133

Source: Department of Institutional Research.



Statistical Section


49 (Continued)

Undergraduate Average Annual Tuition and FeesCommunity College of Philadelphia in Comparison to Other Selected Colleges

(Full-time Academic Year Tuition and Fee Charges)

2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03Community College of Philadelphia $ 3,528 3,528 3,336 3,120 2,856 2,496 2,304 Bucks County Community College 3,096 2,976 2,904 2,784 2,832 2,832 2,712 Delaware County Community College 2,880 2,760 2,616 2,532 2,556 2,268 2,148 Montgomery County Community College 2,520 2,424 2,328 2,256 2,160 2,112 2,088 Temple University 11,448 10,802 10,380 9,640 9,102 8,594 8,062 West Chester University 6,737 6,518 6,293 6,147 6,006 5,748 5,468 Drexel University 30,440 29,085 25,450 24,280 23,180 21,305 20,020

Note: Community College values reflect amounts charged to sponsoring district residents.

Source: College and University Institutional Websites.

Faculty and Staff Statistics

For fall term in year

2008 2007 2006 2005 2004 2003

Faculty:Part-time 684 641 623 787 806 870 Full-time 393 395 399 399 393 398 Percentage tenured 79.6% 78.5% 76.1% 74.1% 74.3% 73.1%

Administrative and support staff:Part-time 23 31 31 28 31 31 Full-time 457 426 429 424 424 417

Total employees:Part-time 717 672 654 815 837 901 Full-time 850 821 828 823 817 815

Students per full-time staff:Number credit students 17,327 17,352 16,871 16,889 19,707 19,718 Faculty 44 44 42 42 50 50 Administrative and support staff 38 41 39 40 46 47

Average annual faculty salary $ 61,859 60,799 57,346 58,473 57,493 56,050

Source: Institutional Human Resource Records.



Statistical Section


50

Gross Square Feet of College Buildings

2009 2008 2007 2006 2005 2004 2003Main Campus – Buildings 852,445 852,445 852,445 852,445 840,877 840,877 840,877 Main Campus – 17 Street Garage 230,360 230,360 230,360 230,360 230,360 230,360 230,360 Main Campus – CBI Garage 73,773 73,773 73,773 73,773 73,773 73,773 73,773 Northeast Regional Center 60,000 60,000 60,000 60,000 60,000 60,000 60,000 West Regional Center 32,090 32,090 32,090 32,090 32,090 32,090 32,090 Northwest Regional Center 90,000 90,000 90,000 90,000 90,000 90,000 90,000

Total gross square feet 1,338,668 1,338,668 1,338,668 1,338,668 1,327,100 1,327,100 1,327,100

Source: Institutional Physical Plant Records.

Demographic Statistics

City of Philadelphia Last Six Calendar Years

Averageannual

Population employmentas of June 30 rate

Year:2003 1,476,953 7.5%2004 1,470,151 7.32005 1,463,281 6.72006 1,448,394 6.32007 1,449,634 6.02008 1,454,382 7.2

Sources: United States Census Bureau and Bureau of Labor Statistics



Supplemental Schedules

Component Unit Schedule of Net Assets 51

Component Unit Schedule of Activities 52

Component Unit Schedule of Capital Assets 53

Schedule 1COMMUNITY COLLEGE OF PHILADELPHIA

Component Unit Schedule of Net Assets

June 30, 2009

(In thousands)

Assets:Cash on deposit and on hand $ 10,108 Equity in pooled cash and investments — Equity in treasurer’s account — Investments 36,461 Internal balances — Amounts held by fiscal agent — Notes receivable 136 Taxes receivable — Accounts receivable 5,191 Allowance for doubtful accounts (1,299) Interest and dividends receivable 107 Due from other governments 1,348 Restricted assets 69,275 Inventories — Other assets 734 Property, plant and equipment 108,010

Total assets $ 230,071

Liabilities:Notes payable $ — Vouchers and accounts payable 8,785 Salaries and wages payable 4,578 Accrued expenses 1,836 Funds held in escrow 99 Due to other governments 3,529 Deferred revenue 2,835 Current portion of long-term obligations 8,343 Noncurrent portion of long-term obligations 118,388

Total liabilities $ 148,393

Net assets:Invested in capital assets, net of related debt $ 60,947 Restricted for:

Capital projects 965 Debt service — Community development projects — Behavioral health programs — Intergovernmental financing — Tuition stabilization and scholarships 4,226 Rate stabilization —

Unrestricted (deficit) 15,540 Total net assets $ 81,678

51


Component Unit Schedule of Activities


(In thousands)

Net expenseand changes

Program revenues in net assetsOperating

Charges for grants and Capital grants and EducationExpenses services contributions contributions activities

Community College Services $ 135,081 32,989 41,071 61,021

General revenues:Taxes — Grants and contributions* 64,460 Interest and investment earnings (839) Miscellaneous 1,643

Special items — Transfers —

Total general revenues,special items and transfers 65,264

Change in net assets 4,243

Net assets – beginning 77,435 Net assets – ending $ 81,678

* Includes Commonwealth appropriations of $37,845 and City of Philadelphia appropriations of $26,615.

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Component Unit Capital Asset Format


Capital asset business-type activity format: Fiscal year 2009

Name of company: Community College of Philadelphia

Beginning Endingbalance Increases Decreases balance

Business-type activities:Capital assets not being depreciated:

Land $ 20,422,304 1,520,344 — 21,942,648 Fine arts 705,208 — — 705,208 Construction in process 2,543,534 6,848,847 — 9,392,381

Total capital assets not being depreciated 23,671,046 8,369,191 — 32,040,237

Capital assets being depreciated:Buildings 134,970,766 524,389 — 135,495,155 Other improvements 30,971,128 870,156 — 31,841,284 Equipment 9,996,287 549,713 — 10,546,000 Furniture 1,060,051 — — 1,060,051 Leasehold improvements 163,524 — — 163,524 Infrastructure — — — —

Total capital assets being depreciated 177,161,756 1,944,258 — 179,106,014

Less accumulated depreciation for:Buildings 67,760,040 3,313,666 — 71,073,706 Other improvements 19,016,404 2,838,196 — 21,854,600 Equipment 8,848,015 435,689 — 9,283,704 Furniture 831,828 — — 831,828 Leasehold improvements 91,980 — — 91,980 Infrastructure — — — —

Total accumulated depreciation 96,548,267 6,587,551 — 103,135,818

Total capital assets being depreciated, net 80,613,489 (4,643,293) — 75,970,196 Business-type activities capital assets, net $ 104,284,535 3,725,898 — 108,010,433

53

54

Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial

Statements Performed in Accordance With Government Auditing Standards

Board of Trustees Community College of Philadelphia:

We have audited the financial statements of the business-type activities and the discretely presented component unit of the Community College of Philadelphia (the College), a component unit of the City of Philadelphia, Pennsylvania as of and for the year ended June 30, 2009, which collectively comprise the College’s basic financial statements and have issued our report thereon dated October 2, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control over Financial Reporting

In planning and performing our audit, we considered the College’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the College’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the College’s internal control over financial reporting.

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the College’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The

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results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

This report is intended solely for the information and use of management, the Board of Trustees, others within the entity, and federal awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties.

October 2, 2009

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