The institution’s recent financial history demonstrates financial stability.

_X_Compliance                      ___Partial Compliance                       ___Non-Compliance

Narrative

St. Petersburg College is in compliance with this comprehensive standard because its annual audits show a history of financial stability.

Depreciation

The College’s capital assets consist of land; buildings; other structures and improvements; furniture, machinery, and equipment; and construction in progress.  These capital assets are stated at historical cost or estimated fair value at date of acquisition in the case of gifts and surplus property acquired at nominal cost.  The College has a capitalization threshold of $5,000 for tangible personal property and $25,000 for buildings and other structures and improvements.  Depreciation is computed on the straight-line basis.  An Asset Management System is utilized for recording and tracking depreciation in accordance with the Accounting Manual for Florida’s Public Community Colleges.  Capital assets are reported net of accumulated depreciation. Art collections of the College’s component units are stated at cost except for donated property which is stated at fair market value at the date of the donation.  The collections are held for exhibition to the public and for educational purposes, not for financial gain.  The collections are appropriately protected, cared for and preserved in order to maintain their cultural, aesthetic and historical value in perpetuity.  Therefore, collections are not depreciated.

Unrestricted Revenues and Expenditures

St. Petersburg College has not experienced any major changes in unrestricted revenues and expenditures over a period of time.  The College derives income from state appropriations, tuitions and fees, and other sources, such as sales and services, grants, donations, and interest on investments.  Total unrestricted revenue for the current general fund for the College has continued to increase over the past 6 years.

In fiscal year 2004-2005 there was a one-time gain from the sale of the District Office property of $3.2 million; this is included in the miscellaneous revenue.  In fiscal year 2005-2006 sales and services revenue increased $1.0 million, attributable to the use of college facilities by other entities.  The other revenues are comparable to the previous years.  Materials and supplies expenditures increased $6.9 million due to approved objectives to spend-down certain lab fee reserves, and higher than normal volume of repairs, maintenance, remodeling, renovation, site improvements, and non-depreciable equipment purchases made Collegewide during the 2005 – 2006 fiscal year.

The College’s Office of Institutional Research compiled a 2006-2007 Fact Book.  The following two tables, based upon the Annual Financial Reports reflect the breakdown of the Collegewide distribution of revenue for the General Current Fund-Unrestricted and the personnel expenses, current expenses and the capital outlay for 2001-2006.

Excerpt from SPC Fact Book 2006-2007

Excerpt from SPC Fact Book 2006-2007

St. Petersburg College Baccalaureate Program (Funds 12 and 17) activity is not included in the Current Fund – Unrestricted.  In accordance with the State of Florida Accounting Manual, legislatively imposed categorical funds such as the activity in Funds 12 and 17 shall be recorded in Current Fund - Restricted.  A Statement of Revenues and Expenses for the Baccalaureate Program for fiscal years 2003 through 2006 is depicted below.

Statement of Revenues & Expenses – Baccalaureate Program

Special Circumstances Explaining any Unusual Financial Condition

Not applicable. The College does not have any unusual financial conditions.

Institution’s Spending Rate on Endowments

In 2001 the College transferred all non-expendable endowments and earnings to the St. Petersburg College Foundation, Inc., because all eligible contributions received by the College’s Foundation, Inc. are eligible for state matching funds.  Even though the College has three component units which are also direct-support organizations, the Foundation, Inc. is the only organization that has non-expendable endowment funds.  All contributions for the College are steered towards the Foundation, Inc. to take advantage of the state’s matching program; Board of Trustees Rule: 6Hx23-5.0711 Transfer of College Funds to Direct Support Organization.

The Foundation, Inc’s spending rates on endowments are as follows:

• The donor decides the percentage of net income (including unrealized gains) to be spent on awards or scholarships.
• The majority of existing agreements allow 80% or 100% of net income to be used.  Of this, 25% to 30% is held in reserve in each fund, in any given year, to safeguard against potential flat earnings in future years.
• After the reserve has been deducted, the balance of net earnings is made available for scholarships.

The rates of return on the Foundation Inc’s endowments are 2006–10.20%, 2005 -10.36%, 2004 –10.67%, 2003-16.35% and 2002-(4.84) %.

The St. Petersburg College Foundation, Inc. started a new capital campaign – “75 Years and Growing” – began in March 2004 with a target of at least $7.5 million in private contributions earmarked for scholarships, Faculty development, capital projects and academic programs.  The campaign name marked completion of the College’s first three-quarters of a century, a milestone reached in September 2002.  The first year of fundraising was so successful; the campaign extended its goal to $12.5 million in the spring of 2005.  It is projected to run until 2009.  The 75 Years and Growing Campaign Committee reported at the March 1, 2006  Foundation, Inc. Board of Directors meeting, that with state matches the contributions  total over $16.5-million to date.

The total contributions that the Foundation, Inc. received for the academic years 2005-2006, 2004-2005, 2003-2004 (fiscal year changed from June to March), 2002-2003 and 2001-2002 are $4.4 million, $7.8 million, $11.4 million, $3.5 million, and $1.5 million respectively.  The Foundation, Inc. has provided many scholarships to students over the years as well as greatly benefiting the College’s Academic Programs and Facilities as depicted below.

The Foundation, Inc - Summary of Scholarships and Grants

Description		Fiscal Year March 31, 2006	Fiscal Year March 31, 2005	Fiscal Year March 31, 2004 (9 months)	Fiscal Year June 30, 2003
Expenditures:	Grants to SPC Academic Programs & Facilities	$4,418,424	$1,491,986	$9,006,798	$    68,017
Expenditures:	Scholarships to Students	$  619,061         1,078                 Students	$  620,226  1,375 Students	$  290,857  431 Students	$  315,388

Additionally, the Foundation, Inc’s total assets have continued to grow as depicted in the following chart.

                                   The Foundation, Inc’s Asset Growth

Notes: 

(1) 2004 dropped as the fiscal year changed from 6/30/2003 to 3/31/2004 – only a 9 month period; 

(2) As of 3/31/06 there is an additional $27,000,000 in donated artwork and microfilm which is not reflected in the above figures.  This brings the total assets of the Foundation, Inc. to $53,652,011.

The Foundation, Inc’s permanently restricted net assets consist of donor-restricted assets (endowments) of which only the income can be spent by the Foundation, Inc.  The income from these endowments is sometimes restricted for a specific purpose by the donor. Realized and unrealized gains (losses) on endowments are recorded as unrestricted, temporarily or permanently restricted income, consistent with the interest and dividend income treatment, unless otherwise specified by the donor.  The table below exhibits the Foundation, Inc’s 2005-2006 (GASB 34), 2004-2005, 2003-2004 (short year-9 months), 2002-2003 unrestricted, temporarily restricted and permanently restricted net assets.

                         Summary of the Foundation. Inc’s Net Assets

Description of Net Assets	2005-2006 (GASB 34)	2004-2005	2003-2004 (9 months)	2002-2003
Unrestricted	$      144,896	$        29,152	$       46,002	$        13,888
Temporarily Restricted	11,340,594	10,817,787	6,993,023	5,521,866
Permanently Restricted	15,120,681	13,064,819	11,335,256	9,970,156
Total Net Assets	$ 26,652,012	$ 23,911,758	$ 18,374,281	$ 15,505,910

Administrative Competencies

St. Petersburg College employs qualified staff to manage and sustain the College’s financial stability.  All Administrative and Academic Officers of the College either meet or exceed the minimum qualifications for the position they hold.  They are supported by the following professional staff (Summary of Financial Staff Qualifications).

In addition, each Administrator is required to participate in a formal professional development program as part of the annual performance evaluation process.  The College is responsible for determining that individuals employed by the College have achieved a level of professional growth that justifies their appointment to positions of academic and professional trust.  This responsibility emanates from several sources, including both state rules and SACS criteria.  As a condition of continued employment, the College will require individuals to continue their professional development through a variety of professional opportunities that support the goals and needs of the College, the department, and the individual.

Endowment Management Policies

As noted above under Institution’s Endowment Spending Rate, the College itself does not own non-expendable endowments; therefore, the College does not currently have any written non-expendable endowment policies.  The College has quasi-endowment funds (Fund 40) for funding of short term loans, student financial aid and Planetarium.  The College does adhere to the following rules and regulations: Florida Statutes Section 1004.70; State Board of Education Administrative Rules: 6A-14.075; Board of Trustee Rules and Procedures for Direct Support Organizations- Rule 6Hx23-1.33 and Procedure P6Hx23-1.33; and the Foundation, Inc’s by-laws.

The St. Petersburg College Foundation, Inc. does have an investment policy statement which the Committee reviews annually.  The Foundation, Inc’s philosophy is that all investments for the Foundation, Inc. should be made with the care, skill and diligence that a prudent investor would exercise.  The investment objectives call for a disciplined, consistent, management philosophy that accommodates the occurrence of all those events that might be considered reasonable and probable while avoiding extreme positions or opportunistic styles.  The Committee shall seek to achieve the following objectives in the following order of priority: (1) Preserve the assets of the Foundation, Inc.; (2) Generate income from Foundation, Inc. assets at a rate greater than the rate of inflation; (3) Increase the capital value of Foundation, Inc. assets.  The Foundation, Inc. objectives are long-term in nature.  Additions will be made to invested assets as cash funds become available.  As a general rule, new cash will be used to re-allocate the total assets according to the equity/fixed-income allocation ration.  There are no foreseeable circumstances that would necessitate the immediate liquidation of over 20% of this portfolio.  The target asset allocation for the Foundation, Inc. is as follows:  Equities 70%; Fixed Income 30%.  Investments are to be made in several asset classes.

Changes in Tuition Revenues, State Appropriations and Debt Services

St. Petersburg College’s economic position is closely tied to that of the State of Florida and, to a lesser degree, to Federal grants such as those for Homeland Security, the Department of Defense, and other similar grant programs.  The College’s current outlook for State revenues for the 2007-2008 fiscal year is favorable; with State support to the College increasing in the range of 5 to 6 percent over 2006-2007.  This is based on: a) Chancellor Armstrong’s June 1, 2006 Florida Community College Operating Budget Request of 9.47 percent for 2007-2008; b) That there will be no major terrorism attacks on U.S. soil, and no recession in the national or international economies that would severely impact tourism revenue in Florida.  Despite some uncertainty on the horizon for the 2007 -2008 fiscal year, the infusion of additional financial resources from State funding, an increase in tuition rates, expanded private fundraising and donation campaigns, and cost containment/reduction measures will enable the College to maintain its present level of services and financial health.

St. Petersburg College’s recent financial history demonstrates financial stability.  One of the most important questions asked about College finances is whether the College as a whole is better off or worse off as a result of each year’s activities.  The key to understanding this question is a review of the Statement of Net Assets, Statement of Revenues, Expenses and Changes in Net Assets, and the Statement of Cash Flows.  These are a series of annual reports plus supplemental schedules submitted to the State of Florida’s Department of Education and independently audited on an annual basis by Florida’s Office of the Auditor General.

Student tuition and fees remained stable as evidenced by a combination of factors in 2004-2005: enrollment increased by 1.3 percent, tuition rates increased by 5 percent, out-of-state participation decreased, and student scholarship aid, an offset to student fees (i.e. scholarship allowances) increased 10 percent over the 2003-2004 year^.  In fiscal year 2003-2004, the College saw a decrease of $.39 million in student tuition and fees (net of scholarship allowances).  This was partly due to student scholarship aid (i.e. scholarship allowance) increasing at a faster rate ($7.5 million in 2003 vs. $11.5 million in 2004) than regular student tuition and fees, despite a 7.5 percent rate increase and approximately 8 percent enrollment growth.

Over time, increases or decreases in the institution’s net assets are one indicator of whether financial health is improving or deteriorating.  There are 28 Community Colleges in the Florida Community College System.  An analysis based upon the 2001-2004 audited annual financial reports (AFRs) of these 28 Community Colleges places St. Petersburg College 3^rd in the net assets rank with $159.2 million for this three year average.  College revenues and other support exceeded expenses, creating an increase in the College’s total net assets. Fiscal years 2005-2006, 2004-2005, 2003-2004 and 2003-2002 resulted in increases in total net assets of $14.0 million, $20.3 million, $14.2 million, and $26.3 respectively.

Another indicator of financial strength is the ability of the college to meet financial obligations as they mature.  The Statement of Cash Flows in each of the audited Financial Statements presents the information related to cash inflows and outflows.  The College’s ending cash flows in fiscal years 2005-2006, 2004-2005, 2003-2004 and 2002-2003 were $20.6 million, $23.5 million, $35.1 million and $30.5 million respectively.  An analysis based upon the 2001 -2004 audited annual financial reports of these 28 Community Colleges in Florida places St. Petersburg College 3^rd in the cash flow rank for this three year average.  Cash provided from non-capital financing activities such as state appropriations, grants and gifts increased approximately $20.4 million over 2003-2004.  This is due in part to a $4.3 million increase in State appropriations and a $16.2 million increase in cash flow, primarily from Federal grants and contracts; Federal Grants and Contracts shifted $7.7 million to non-operating revenues for Homeland Security instruction and training for external agencies.

The College controls and accounts for state appropriations along with other resources by using budget controls within its accounting system in accordance with the Florida Statutes Section 1011.30 Budgets for Community Colleges.  Rules of the State Board of Education shall prescribe procedures for effecting budget amendments subsequent to the final approval of a budget for a given year.  Through its strategic planning and budgeting processes St. Petersburg College has become adept at identifying and prioritizing basic needs, reallocating funds internally, and developing external resources.  Development of external strategic partnership relationships provides resources and opportunities that support and compliment instructional and instructional support programs.  External contracts, grants and gifts totaled $65.9 million in 2005-2006, $59.6 million in 2004-2005, $62.0 million in 2003-2004 and $45.0 million in 2002-2003. 

The College has been able to satisfy its obligations without incurring debt to do so.  The College has no debts to external creditors with the exception of State Board of Education Capital Outlay bonds issued by the State Board of Education on behalf of the College.  These bonds mature serially and are secured by a pledge of the College’s portion of the State-assessed motor vehicle license tax and by the State’s full faith and credit.  The total principal bonds payable at June 30, 2006 was $4,035,000: Series 2002-B $965,000; Series 1999-A $3,045,000; Series 1996-B $25,000.  The following schedule reflects the annual requirements to amortize all bonded debt outstanding as of June 30.

                           Bond Repayment Schedule

Fiscal Year Ending	State Board of Education Capital Outlay Bonds
June 30	Principal	Interest	Total
2007	$    265,000	$   185,425	$    450,425
2008	285,000	173,719	458,719
2009	295,000	162,975	457,975
2010	305,000	151,494	456,494
2011	325,000	137,000	462,000
2012-2021	2,560,000	532,896	3,092,896
Total	$ 4,035,000	$ 1,343,509	$ 5,378,509

Changes in Temporary and Permanently Unrestricted Assets

The Southern Association of Colleges and Schools, Commission on Colleges, which establishes the accreditation requirements for institutions of higher education, requires a disclosure of the financial position of unrestricted net assets, exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets.  The College’s total unrestricted net assets for fiscal year 2005-2006, 2004-2005, 2003-2004 and 2002-2003 were $24.2 million, $24.0 million, $19.9 million and $20.0 million respectively.  The changes in unrestricted net assets for fiscal year 2005-2006 increased by $0.2 million over 2004-2005; net assets for fiscal year 2004-2005 increased by $4.1 million over 2003-2004; net assets for fiscal year 2003-2004 decreased by $.16 million over 2002-2003.

Furthermore, non-financial information may also be considered when assessing the financial health of an institution.  Trends of enrollment and FTE are two important indicators.  St. Petersburg College has experienced a continued pattern of growth for the fiscal years 2000-2001 to 2004-2005 with regard to both of these factors.  The following statistics and charts, taken from the St. Petersburg College 2006-2007 Fact Book (table 3) exhibit the Collegewide opening Fall headcount enrollment for Fall 2002-2006.

                               Excerpt from SPC Fact Book 2006-2007

The College’s actual FTE fiscal year 2001-2002 through 2005-2006 statistics provided by the College’s Office of Institutional Research has continued to increase over this same time period, which is reflected in the College FTE charts for lower divisions below.  A slight decrease occurred (-2.2%) in the lower division in fiscal year 2005-2006 over 2005-2004.

                            SPC FTE -Lower Division Chart

The College FTE Charts for upper division, as depicted below, for fiscal year 2002-2003 through 2005-2006 has also continued to increase.

                           SPC FTE - Upper Division Chart

References