Rochester Institute of
Technology
Consolidated Financial Statements
June 30, 2015 and 2014
Rochester Institute of Technology
Index
June 30, 2015 and 2014
Page(s)
Independent Auditor’s Report..................................................................................................................................1
Consolidated Financial Statements
Balance Sheets…………………..................................................................................................................................2
Statements of Activities...........................................................................................................................................3–4
Statements of Cash Flows..........................................................................................................................................5
Notes to Consolidated Financial Statements........................................................................................................6–23
Independent Auditor's Report
To The Board of Trustees
Rochester Institute of Technology
We have audited the accompanying consolidated financial statements of the Rochester Institute of Technology (the
University), which comprise the consolidated balance sheets as of June 30, 2015 and June 30, 2014, and the related
consolidated statements of activities and consolidated statements of cash flows for the years then ended.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted
our audits in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments,
we consider internal control relevant to the University’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the University's internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Rochester Institute of Technology at June 30, 2015 and June 30, 2014, and its changes in net assets and
cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of
America.
November 13, 2015
PricewaterhouseCoopers LLP, 1100 Bausch & Lomb Place, Rochester, NY 14604-2705
T: (585) 232 4000, F: (585) 454 6594, www.pwc.com/us
1
Rochester Institute of Technology
Consolidated Balance Sheets
June 30, 2015 and 2014
(in thousands)
2015
Assets
Cash and cash equivalents
Cash and cash equivalents, held with trustees
Accounts receivable, net
Inventories and other assets
Contributions receivable, net
Student loans receivable, net
Investments, at fair value
Property, plant and equipment, net
Total assets
$
Liabilities
Accounts payable and accrued expenses
Deferred revenues and other liabilities
Accrued postretirement benefits
Federal Perkins Loan Program advances
Long-term debt, net
Total liabilities
Net assets
Expendable resources
Net investment in plant
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets
Total liabilities and net assets
38,191
13,948
32,206
9,717
16,313
45,785
919,412
647,463
$ 1,723,035
66,824
11,904
28,987
10,178
14,946
45,309
893,415
636,894
$ 1,708,457
$
$
40,788
50,831
163,958
22,064
282,869
560,510
$
47,121
52,774
151,602
21,931
290,994
564,422
380,211
378,542
758,753
253,455
150,317
1,162,525
360,269
375,602
735,871
262,392
145,772
1,144,035
$ 1,723,035
$ 1,708,457
The accompanying notes are an integral part of these Consolidated Financial Statements.
2
2014
Rochester Institute of Technology
Consolidated Statements of Activities
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
Temporarily Permanently
Unrestricted Restricted Restricted
Operating revenues
Tuition and fees, net of scholarships of $164,494
and $153,855, respectively
Sales and services of auxiliaries
Government grants and contracts
Private grants and contracts
Private contributions
Investment return
Other sources
Net assets released from restrictions
Total operating revenues
Operating expenses
Salaries and wages
Benefits
Postretirement benefits
Purchased services
Materials and supplies
Depreciation
Interest
Utilities, taxes and insurance
Travel for scholarship, professional
development and recruitment
Other
Total operating expenses
Net operating activities
Nonoperating activities
Investment return, net
Net assets released from restrictions
Contributions for long-term assets
Government grants and contracts for long-term
assets
Postretirement benefits
Beneficiary payments and change in value of
deferred giving arrangements
Other
Net nonoperating activities
$
$
Increase (decrease) in net assets
Net assets at beginning of year
Net assets at end of year
$
281,599
81,562
97,801
5,694
2,611
14,217
19,788
19,975
523,247
$
5,779
14,854
(19,975)
658
$
-
$
2015
2014
Total
Total
281,599
81,562
97,801
5,694
8,390
29,071
19,788
523,905
$
269,785
79,130
92,413
5,784
9,408
31,114
18,436
506,070
261,698
79,354
5,094
36,499
42,142
38,425
7,961
12,706
-
-
261,698
79,354
5,094
36,499
42,142
38,425
7,961
12,706
255,659
78,021
4,856
35,494
40,978
37,185
9,199
13,525
8,706
10,019
502,604
20,643
658
-
8,706
10,019
502,604
21,301
8,146
9,102
492,165
13,905
(3,674)
7,282
4,514
$
(6,081)
(7,282)
4,062
3,214
(6,365)
-
(2,732)
2,239
$
87
4,784
$
(9,668)
13,360
$
80,221
14,400
85
-
3,299
(6,365)
458
(6,272)
(320)
26
(9,595)
(378)
(33)
4,545
(698)
(2,739)
(2,811)
(508)
(15,931)
72,368
22,882
(8,937)
4,545
18,490
86,273
735,871
262,392
145,772
1,144,035
1,057,762
758,753
$ 253,455
$ 150,317
$ 1,162,525
$ 1,144,035
The accompanying notes are an integral part of these Consolidated Financial Statements.
3
Rochester Institute of Technology
Consolidated Statement of Activities
For the fiscal year ended June 30, 2014
(in thousands)
2014
Temporarily Permanently
Unrestricted Restricted Restricted
Operating revenues
Tuition and fees, net of scholarships of $153,855
Sales and services of auxiliaries
Government grants and contracts
Private grants and contracts
Private contributions
Investment return
Other sources
Net assets released from restrictions
Total operating revenues
Operating expenses
Salaries and wages
Benefits
Postretirement benefits
Purchased services
Materials and supplies
Depreciation
Interest
Utilities, taxes and insurance
Travel for scholarship, professional
development and recruitment
Other
Total operating expenses
Net operating activities
Nonoperating activities
Investment return, net
Net assets released from restrictions
Contributions for long-term assets
Government grants and contracts for long-term
assets
Postretirement benefits
Beneficiary payments and change in value of
deferred giving arrangements
Other
Net nonoperating activities
$
269,785
79,130
92,413
5,784
2,869
16,873
18,436
19,234
504,524
$
$
-
$
269,785
79,130
92,413
5,784
9,408
31,114
18,436
506,070
-
-
255,659
78,021
4,856
35,494
40,978
37,185
9,199
13,525
8,146
9,102
492,165
12,359
1,546
-
8,146
9,102
492,165
13,905
41,822
1,770
5,290
$ 36,932
(1,770)
2,472
$
1,467
6,638
$
80,221
14,400
281
(6,272)
-
177
-
458
(6,272)
(18,760)
24,131
12
2,900
40,546
(520)
(71)
7,691
(508)
(15,931)
72,368
36,490
42,092
7,691
86,273
699,381
220,300
138,081
1,057,762
735,871
$ 262,392
$ 145,772
$ 1,144,035
Increase in net assets
Net assets at end of year
6,539
14,241
(19,234)
1,546
255,659
78,021
4,856
35,494
40,978
37,185
9,199
13,525
$
Net assets at beginning of year
$
Total
The accompanying notes are an integral part of these Consolidated Financial Statements.
4
Rochester Institute of Technology
Consolidated Statements of Cash Flows
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
2015
Cash flows from operating activities
Change in net assets
$
18,490
2014
$
86,273
Adjustments to reconcile change in net assets to net cash provided by
operating activities
Depreciation, amortization and accretion expense
Loss on disposal of property, plant and equipment
Realized and unrealized net gains on investments
Contributions and government grants restricted for long-term purposes
Noncash contributions of property, plant, equipment and securities
Asset retirement obligation liquidation and adjustment
37,468
510
(7,478)
(8,159)
(6,001)
(1,735)
36,133
847
(102,659)
(10,508)
(5,264)
1,654
Changes in assets and liabilities:
Accounts receivable
Inventories, prepaids and deferred charges
Contributions receivable
Student loans receivable
Accounts payable and accrued expenses
Deferred revenues and other liabilities
Accrued postretirement benefits
(3,219)
201
(1,367)
361
(4,233)
(1,304)
12,356
5,426
(243)
2,300
416
(886)
4,122
18,641
Net cash provided by operating activities
35,890
36,252
(204,338)
187,306
(6,542)
5,705
(2,044)
(46,894)
(293,306)
314,341
(7,696)
4,672
2,201
(48,612)
(66,807)
(28,400)
7,288
871
(6,008)
133
10,387
121
(5,276)
397
(20)
107
Cash flows from (used in) investing activities
Purchases of investments
Proceeds from the sales and maturities of investments
Loans made to students
Payments received on student loans
(Increase) decrease in cash and cash equivalents held with bond trustees
Acquisition of property, plant and equipment
Net cash used in investing activities
Cash flows from (used in) financing activities
Contributions and government grants restricted for long-term purposes
Proceeds from sale of contributed securities
Payments of long-term debt
Proceeds from the issuance of debt
Bond issuance costs
Increase in refundable government grants for student loans
2,284
5,716
(Decrease) increase in cash and cash equivalents
Net cash provided by financing activities
(28,633)
13,568
Cash and cash equivalents - beginning of year
66,824
53,256
Cash and cash equivalents - end of year
$
38,191
Supplemental disclosures of cash flow information
Interest paid (including capitalized interest of $2,090 and $1,118 in 2015 and 2014, respectively) $
12,044
Contributions of long-term assets
4,513
Contributions of marketable securities
2,728
(Decrease) increase in construction-related payables
(2,100)
Assets exchanged under capital lease
The accompanying notes are an integral part of these Consolidated Financial Statements .
5
$
66,824
$
12,638
5,264
246
2,271
490
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
1.
Summary of Significant Accounting Policies
a. Organization
Rochester Institute of Technology (University, RIT) is a privately endowed, co-educational university comprised of nine
colleges: Applied Science and Technology, Business, Computing and Information Sciences, Engineering, Health
Sciences, Imaging Arts and Sciences, Liberal Arts, National Technical Institute for the Deaf (NTID) and Science.
The University, which occupies 1,300 acres in Rochester, New York, has approximately 18,063 full and part-time
undergraduate and graduate students and 3,321 employees.
The following organizations are consolidated into the financial statements of the University:
 5257 West Henrietta Road, LLC (Inn), doing business as the RIT Inn & Conference Center, is a not-for-profit
single member limited liability company with the University as its sole member. The Inn is a dual-use 305-room
full service hotel with approximately half of the rooms dedicated to student housing during the academic year.
 Magic Spell Studios, LLC (MAGIC Spell) is a not-for-profit single member limited liability company with the
University as its sole member. MAGIC Spell operates a center for research and development of digital media
directly supporting the charitable and educational activities of the University.
 RIT Campus Club, Inc. (Campus Club) is a not-for-profit subsidiary of the University. Campus Club was
established to support certain aspects of the University’s dining operations.
 RIT Global Delivery Corporation, Inc. (GDC) is a wholly owned not-for-profit subsidiary of the University
established to develop and deliver global instruction. RIT Croatia, a subsidiary of GDC, is a not-for-profit entity
that delivers instructional services in Croatia. GDC also operates RIT Dubai in conjunction with the Dubai Silicon
Oasis Authority and the American University in Kosovo in conjunction with the American University in Kosovo
Foundation to deliver instructional services in the United Arab Emirates and Kosovo, respectively.
 RIT Venture Fund I, LLC (Fund I) is a for-profit limited liability company; the University is its investor member
and sole investor. The Fund was formed to make investments in seed, venture and growth-stage companies
that involve RIT students, faculty, technologies or incubator or similar facilities.
b. Basis of Accounting
The Consolidated Financial Statements of the University are prepared on the accrual basis of accounting in conformity
with generally accepted accounting principles in the United States of America. All significant intercompany transactions
and accounts have been eliminated.
c. Classifications of Net Assets
The University reports its net assets and changes therein according to three classifications: unrestricted, temporarily
restricted and permanently restricted based upon the existence or absence of donor-imposed restrictions.
Unrestricted Net Assets
Unrestricted net assets reflect resources that are not subject to externally imposed stipulations. Certain net assets
classified as unrestricted are designated for specific purposes or uses under various internal operating and
administrative arrangements of the University.
Temporarily Restricted Net Assets
Temporarily restricted net assets represent resources subject to externally imposed stipulations that may or will be
met either by actions of the University and/or the passage of time. Temporarily restricted net assets include
amounts subject to legal restrictions such as realized and unrealized gains and losses on the endowment until
appropriated for spending in accordance with New York State law.
6
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
Permanently Restricted Net Assets
Permanently restricted net assets are subject to externally imposed restrictions that the University maintains in
perpetuity. Generally, the donors of these assets permit the University to use all or part of the income earned, and
net appreciation on related investments, for general or specific purposes.
Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donorimposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments
and other assets or liabilities are reported as nonoperating increases or decreases in unrestricted net assets unless their
use is restricted by explicit donor stipulation or by law.
d. Operations
Revenues earned and expenses incurred during the fiscal year are classified on the University’s Consolidated Statements
of Activities as either operating or nonoperating activity. Operating revenues and expenses consist primarily of those
items attributable to the University’s education and training programs, auxiliary enterprises and research activities.
Nonoperating activities consist primarily of realized and unrealized gains and losses on investments and other revenue
and expenses not directly associated with education and training programs, or research activities.
e. Revenue Recognition
Tuition revenue is recognized over the academic term to which it relates. Revenues from auxiliary enterprises are also
generally recognized over the academic term, with the exception of dining debit card balances which are included in
deferred revenue until spent by the cardholder.
Revenues from grants and contracts are generally recognized as earned, that is, as the related costs are incurred under
the grant or contract agreements. Amounts received in advance are reported as deferred revenues until expenditures are
incurred.
f. Classification of Operating Expenses
Operating expenses are reported by natural classification on the Consolidated Statements of Activities, and by function
in Note 13.
g. Cash and Cash Equivalents
Cash and cash equivalents are carried at fair value and include cash on deposit with financial institutions and money
market funds with maturities of three months or less when purchased. Cash and cash equivalents on deposit with bond
trustees include cash, money market funds and U.S. government securities with maturities of three months or less when
purchased. Securities and cash and cash equivalents maintained by the University's investment managers as part of the
intermediate and long-term investment portfolios are included in investments on the Consolidated Balance Sheets.
h. Inventories
The University’s electronics and photo stores’ inventories are valued at cost using the first-in, first-out (FIFO) retail method.
Other inventories are stated at the lower of cost, generally on a FIFO basis, or market value.
i. Contributions
Contributions, including unconditional promises to give, are recognized as revenues in the period received. Conditional
promises to give are not recognized until the conditions on which they depend are substantially met. Contributions to be
received after one year are discounted at a range from 1.7% to 5.1%, to their fair value, based upon the fiscal year in
which the contribution is to be received. Amortization of discount is recorded as additional contribution revenue in
accordance with donor-imposed restrictions, if any, on the contributions. An allowance for potentially uncollectible
contributions receivable is provided based upon management’s judgment and analysis of the creditworthiness of the
donors, past collection experience and other relevant factors.
j. Investments
Investments are recorded at fair value based on quoted market prices where available. The estimated fair value for certain
investments in private equity, real asset, hedge and other externally managed funds are based on valuations provided by
7
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
external investment managers. The valuations necessarily involve estimates, appraisals, assumptions and methods
which are reviewed by the University and external investment management.
To minimize the risk of loss, externally managed hedge fund investments are diversified by strategy, manager and number
of positions. The risk of any derivative exposure associated with such funds is limited to the amount invested with each
manager.
The University’s interest rate risk management strategy provides for maximum flexibility within its debt structure, seeks to
lower its cost of capital, and manages risk on a portfolio basis. The University does not hold or issue derivative financial
instruments for trading purposes; however, the Board of Trustees has authorized investments in derivatives to maintain
asset class ranges, hedge non-U.S. dollar investments and currencies, and provide for defensive portfolio strategies.
Derivative investments are recorded at fair value and valuation gains and losses are included on the Consolidated
Statements of Activities.
k. Life Income, Gift Annuities, and Interest in Perpetual Trusts Held by Others
The University’s split-interest agreements with donors consist primarily of gift annuity agreements and irrevocable
charitable remainder trusts for which the University serves as trustee. Assets held in the trusts are included in investments.
Contribution revenues are recognized when trusts (or annuity agreements) are established, after recording liabilities for
the present value of the estimated future payments to be made to beneficiaries. The liabilities are adjusted annually for
changes in the value of assets, accretion of the discount, and other changes in the estimates of future benefits. The
University is also the beneficiary of certain perpetual trusts held and administered by others. The present value of the
estimated future cash receipts from the trusts is recognized in investments and as contribution revenue. The carrying
value of the investments is adjusted annually for changes in fair value.
l. Property, Plant and Equipment
Land, buildings, capital improvements, equipment, capitalized software, special collections and construction-in-progress
are stated at cost at the time of acquisition or fair value (if contributed). Asset retirement costs are initially recorded at fair
value and are included in buildings and capital improvements.
Special collections include works of art, literary works, historical treasures and artifacts that are maintained in the
University’s libraries and public areas of the campus. These collections are protected and preserved for public exhibition,
education, research and the furtherance of public service.
Contributed property, plant and equipment, including special collections, are recognized as revenue in the period in which
the items are gifted. Property, plant and equipment acquired through federal appropriations, grants and contracts where
the federal government retains a reversionary interest is also capitalized and depreciated. Interest on borrowings to
finance facilities is capitalized during construction.
Depreciation is recognized using the straight-line method with useful lives of 30 to 50 years for buildings, 8 to 30 years
for building improvements, 10 to 30 years for site improvements, 4 to 15 years for automobiles, furniture, fixtures and
equipment, and 3 to 10 years for software. Land, special collections and construction-in-progress are not depreciated.
The cost and accumulated depreciation of property, plant and equipment sold or retired have been eliminated. Costs
incurred for maintenance, repairs and renewals of relatively minor items are expensed as incurred.
m. Income Taxes
The University and its consolidated subsidiaries, except for Fund I, are not-for-profit organizations, and generally exempt
from income taxes on related income under Section 501(c)(3) of the IRC but are subject to unrelated business income
tax on activities not related to their exempt purposes. Fund I, a limited liability company of which RIT is the investor
member, is classified as a disregarded entity for federal income tax purposes. The accounting for income taxes Topic of
the FASB Accounting Standards Codification addresses the determination of whether certain tax positions result in
benefits claimed or expected to be claimed on a tax return and whether they should be recorded in the Consolidated
Financial Statements. For tax-exempt entities, tax positions include the entity’s tax-exempt status and assumptions used
8
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
to determine unrelated business taxable income. The University believes its tax positions meet the more-likely-than-not
recognition threshold referenced in the Topic.
n. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States
of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and changes therein, 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 may differ from estimates.
o. Premium and Discount on Long-Term Debt
Premiums and discounts arising from the original issuance of long-term debt are amortized on either the effective interest
method or the straight-line basis, which approximates the effective interest method, over the life of the debt. The
unamortized portion of these premiums and discounts are included in long-term debt on the Consolidated Balance Sheets.
p. Accounting Pronouncements
There were no changes made to the Consolidated Financial Statements and accompanying notes related to
implementation of new accounting pronouncements.
q. Risks and Uncertainties
The University's investments are exposed to various risks, such as interest rate, market and credit. Due to the level of
risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is
at least possible that changes in risks in the near term would materially affect the amounts reported in the financial
statements.
r. Reclassification
Certain amounts for 2014 have been reclassified for consistency with the current year presentation. These
reclassifications had no effect on the reported results of operations. The University concluded that it was appropriate to
classify its sponsored project grants and contracts receivable and student and other accounts receivable on a single line
in addition to disclosing the student loans receivable separately on the Consolidated Balance Sheets. Previously, student
accounts receivable were combined with student loans receivable as a single line item on the Consolidated Balance
Sheets. Accordingly, the University has reclassified $17,587 from “Student loans receivable, net” to “Accounts receivable,
net” for 2014. Corresponding reclassifications have been made to the Consolidated Statement of Cash Flows for 2014.
This change in classification does not affect previously reported cash flows from operations or from investing activities in
the Consolidated Statements of Cash Flows.
9
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
2.
Accounts Receivable
Accounts receivable as of June 30 are as follows:
2015
Sponsored project grants and contracts
Government
Private
Total sponsored project grants and contracts
3.
$
17,332
2,912
20,244
2014
$
14,530
2,787
17,317
Student accounts and other
Student accounts
Other
Total student accounts and other
14,145
758
14,903
14,024
588
14,612
Total accounts receivable
Less: allowance for doubtful accounts
Accounts receivable, net
35,147
(2,941)
32,206
31,929
(2,942)
28,987
$
$
Contributions
Contributions receivable, less related allowances for uncollectible receivables and discounts for present value on longterm pledges at June 30, are summarized as follows:
2015
Unconditional promises expected to be collected in:
Less than one year
One year to five years
Over five years
Contributions receivable
Less: allowance and discount
Contributions receivable, net
$
$
7,920
7,539
1,725
17,184
(871)
16,313
2014
$
$
5,913
8,185
1,694
15,792
(846)
14,946
At June 30, 2015, the University has received other conditional promises to give totaling $1,320. These conditional
promises are not recognized as assets.
Contributions to acquire property, plant and equipment are recorded as temporarily restricted net assets and are released
from restrictions at the time the asset is placed in service. As a result, $7,372 and $11,143 of assets contributed to acquire
property, plant and equipment are recorded as temporarily restricted net assets as of June 30, 2015 and 2014,
respectively.
4.
Student Loans Receivable and Credit Disclosures
The University participates in the Federal Perkins Loan Program (Program) and makes uncollateralized loans to students
based on financial need as determined by Program eligibility requirements.
10
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
At June 30, student loans included in the Consolidated Balance Sheets consist of the following:
2015
Federal Perkins Loan Program
Less: allowance for doubtful accounts
Student loans receivable, net
$
$
2014
49,493
(3,708)
45,785
$
$
48,831
(3,522)
45,309
The University’s student loans receivable represents the amounts due from current and former students under the
Program. The availability of funds for loans under the Program is dependent on reimbursements to the pool from
repayments on outstanding loans. Loans disbursed under the Program are assigned to the Federal Government in certain
non-repayment situations. Allowances for doubtful accounts are established when a non-deferred loan is delinquent for
240 days. Outstanding loans cancelled under the Program result in a reduction of the funds available and a decrease in
the liability to the government.
Program advances of $22,064 and $21,931 at June 30, 2015 and 2014, respectively, are ultimately refundable to the U.S.
government and are classified as liabilities on the University’s Consolidated Balance Sheets. In addition to the Federal
matching requirement, the University has advanced $178 and $2,369 for the years ended June 30, 2015 and 2014,
respectively, to provide additional loans to qualified students under the Program.
The student loans receivable aging analysis at June 30 is as follows:
2015
Current
1-60 days past due
61-90 days past due
>91 days past due
Total student loans receivable
5.
$
$
2014
42,046
1,588
501
5,358
49,493
$
$
41,984
1,319
488
5,040
48,831
Investments
Total investments for the fiscal years ended June 30 are as follows:
2015
Cost
2014
Fair Value
Cost
Fair Value
Cash and cash equivalents
Domestic fixed income
Global fixed income
Domestic equity securities
Global equity securities
Hedge funds
Private equity
Real assets
$
50,242
161,852
34,703
122,830
158,472
78,337
102,982
62,240
$
50,242
161,650
34,909
132,617
184,814
163,508
127,256
64,416
$
19,745
154,495
30,470
120,199
158,927
87,056
88,835
66,396
$
19,745
156,196
32,787
124,873
196,716
173,812
111,210
78,076
Total investments
$
771,658
$
919,412
$
726,123
$
893,415
11
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
Assets and liabilities measured and reported at fair value are classified and disclosed within one of the following
categories:
Level 1
Quoted prices (unadjusted) in active markets for identical assets as of the measurement date. An active market is
one in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing
basis. Market price data is generally obtained from exchange or dealer markets. Investments within Level 1 may
include active listed equities and exchange traded funds, option contracts traded in active markets, and certain U.S.
government investments and money market securities.
Level 2
Pricing inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar
assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by
observable market data for substantially the same term of the assets. Inputs are obtained from various sources
including market participants, dealers and brokers. Investments within Level 2 may include investment-grade
corporate bonds, commingled funds, less liquid listed equities, option contracts, certain mortgage products, bank
loans, U.S. government investments and hedge funds.
Level 3
Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment.
Investments within Level 3 primarily consist of the University’s ownership in private equity, real asset and hedge fund
limited partnerships.
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants
use to make valuation decisions, including assumptions about risk. Inputs may include price information, volatility
statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level within the fair
value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Furthermore,
the fair value hierarchy does not correspond to a financial instrument’s relative liquidity in the market or to its level of risk.
The University assumes that any transfers between levels occur at the beginning of any period.
Following is a summary of the University’s investments carried at fair value as of June 30, 2015:
Level 1
Cash and cash equivalents
Domestic fixed income
Global fixed income
Domestic equity securities
Global equity securities
Hedge funds
Private equity
Real assets
Total investments at fair value
$
$
12
31,965
98,245
510
33,254
29,703
9,138
202,815
Level 2
$
$
18,277
63,264
34,399
97,658
155,111
84,135
452,844
Level 3
$
$
141
1,705
79,373
127,256
55,278
263,753
Total
$
$
50,242
161,650
34,909
132,617
184,814
163,508
127,256
64,416
919,412
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
Following is a summary of the University’s investments carried at fair value as of June 30, 2014:
Level 1
Cash and cash equivalents
Domestic fixed income
Global fixed income
Domestic equity securities
Global equity securities
Hedge funds
Private equity
Real assets
Total investments at fair value
$
Level 2
16,530
94,914
832
32,207
30,976
12,810
188,269
$
$
3,215
61,153
31,955
90,974
165,740
93,131
446,168
$
Level 3
$
129
1,692
80,681
111,210
65,266
258,978
$
Total
$
19,745
156,196
32,787
124,873
196,716
173,812
111,210
78,076
893,415
$
Following is a reconciliation of beginning and ending balances of Level 3 investments for the years ended June 30:
Level 3
Balance
June 30, 2014
Domestic fixed income
$
Domestic equity securities
Hedge funds
Private equity
Real assets
Total
$
Realized
Gains
129
1,692
80,681
111,210
65,266
258,978
$
$
48
3,466
12,103
8,271
23,888
Unrealized
Gains (Losses)
Purchases
$
$
12
(35)
(2,414)
1,854
(5,826)
(6,409)
$
6,500
35,175
8,912
50,587
$
Sales
$
(8,860)
(33,086)
(21,345)
(63,291)
$
Balance
June 30, 2015
$
141
1,705
79,373
127,256
55,278
263,753
$
Level 3
Balance
Realized
June 30, 2013 Gains
Domestic fixed income
$
Domestic equity securities
Hedge funds
Private equity
Real assets
Total
$
119
1,484
91,435
92,038
54,867
239,943
$
37
1,807
3,410
$ 5,254
Unrealized
Gains
Purchases
$
$
12
171
10,060
12,905
6,977
$ 30,125
$
19,495
9,344
28,839
Sales
$
$
(2)
(302)
(15,035)
(9,332)
(24,671)
Transfers
$
$
(20,512)
(20,512)
Balance
June 30, 2014
$
$
129
1,692
80,681
111,210
65,266
258,978
Transfers out of Level 3 into Level 2 are a result of increased liquidity due to the expiration of redemption lockups on
underlying assets.
The University is permitted as a practical expedient under generally accepted accounting principles to estimate the fair
value of an investment at the measurement date using the reported net asset value (NAV) without further adjustment
unless the entity expects to sell the investment at a value other than NAV or if the NAV is not calculated in accordance
with U.S. GAAP. The University’s investments in commingled funds, hedge funds, and private equity and real asset limited
partnerships are recorded at fair value based on the most recent NAV reported by the investment manager. The NAV of
these investments is determined by the investment manager, and is based on appraisal or other estimates that require
13
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
varying degrees of judgment. If no public market exists for the investment securities, the fair value is determined by the
investment manager, taking into consideration, among other things, the cost of the securities, prices of recent significant
placements of securities of the same issuer, and subsequent developments concerning the companies to which the
securities relate. The University has performed due diligence around these investments to ensure that NAV is an
appropriate measure of fair value as of June 30 and has concluded that these valuations are a reasonable estimate of
fair value as of June 30, 2015 and 2014, but are subject to uncertainty and, therefore, may differ from the value that would
have been used had an active market for all of the investments existed. Investments that can be redeemed at NAV by the
University on the measurement date or in the near term (90 days or less) are classified as Level 2. Investments that
cannot be redeemed on the measurement date or in the near term are classified as Level 3.
The following table provides additional information concerning the University’s investments that are recorded at NAV:
Fair Value
Asset Class
Global fixed income
Domestic equity securities
Global equity securities
Hedge funds
Private equity
Real assets
$
Total
$
1
Unfunded
Commitments
18,038
97,828
155,265
163,508
127,256
55,278
$
617,173
$
78,927
40,635
Redemption
Frequency
(if currently eligible)
Redemption
Notice Period
Monthly
Monthly
Monthly
30 to more than 365 days
1 - 15 days
1 - 15 days
1 - 15 days
35 - 90 days
1
1
NA
1
NA
NA
1
NA
119,562
The University does not have redemption rights in these investments; the remaining lives are between 1 and 10 years.
Total Investment Return
Following is a summary of the total investment return and its classification on the Consolidated Statements of Activities
at June 30:
2015
Total investment return
Interest and dividends
Realized and unrealized gains on investments, net of
investment management fees and other expenses
Total investment return
Consolidated Statements of Activities classification
Allocated for operating activities per spending policy
Interest and dividends
Total operating investment return
Nonoperating investment return
Total investment return
6.
2014
$
15,856
$
12,759
$
3,547
19,403
$
98,576
111,335
$
$
26,415
2,656
29,071
(9,668)
19,403
$
$
28,061
3,053
31,114
80,221
111,335
Endowment
The University’s endowment includes both donor-restricted endowment funds and funds designated by the Board of
Trustees to function as endowments. As required by generally accepted accounting principles, net assets associated with
endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and
reported based on the existence or absence of donor-imposed restrictions.
14
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
The New York Prudent Management of Institutional Funds Act (NYPMIFA) governs the management and investment of
funds held by not-for-profit corporations and other institutions. Absent donor stipulations to the contrary, the statutory
guidelines contained in NYPMIFA relate to the prudent management, investment and expenditure of donor-restricted
endowment funds without regard to the original value of the gifts. However, NYPMIFA contains specific factors that must
be considered prior to making investment decisions or appropriating funds for expenditure.
The Board of Trustees’ interpretation of its fiduciary responsibilities for donor-restricted endowment funds under New York
State’s Not-for-Profit Corporation Law, including NYPMIFA, is to preserve intergenerational equity to the extent possible
by prudently managing, investing, and spending from the endowment funds. This principle holds that future endowment
beneficiaries should receive at least the same level of economic support that the current generation receives. As a result
of this interpretation, the University classifies as permanently restricted net assets the unappropriated portion of (a) the
original value of gifts donated to a true endowment; (b) the original value of subsequent gifts to a true endowment fund;
and, (c) accumulations to a true endowment fund made in accordance with the direction of the applicable donor gift
instrument at the time the accumulation is added to the fund. Unspent appropriations related to donor-restricted
endowment funds are classified as temporarily restricted net assets until the amounts are expended by the University in
a manner consistent with the donor’s intent. The remaining portion of donor-restricted endowment funds not classified as
permanently or temporarily restricted net assets are classified as unrestricted net assets.
The Board of Trustees determines the appropriate amount to withdraw from endowment and similar funds on an annual
basis to provide support for operations with prudent concern for the long-term growth in the underlying assets as well as
the specific factors detailed in NYPMIFA.
To satisfy its long-term rate-of-return objectives, the University relies on a total return strategy in which investment returns
are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The
University targets a diversified asset allocation that places a greater emphasis on equity-based and alternative
investments to achieve its long-term objectives within prudent risk constraints.
The University currently accounts for endowment activity in two investment pools, Pool I and Pool II. Pool I is comprised
of contributions, both donor-restricted and board-designated, made to the University for a variety of purposes, as well as
contributions transferred from Pool II. Pool II is comprised of contributions, both donor-restricted and board-designated,
made to NTID. Each pool has a separate investment and spending policy.
Pool I – The University has a policy of appropriating for distribution each year 5% of its endowment fund’s average fair
value over the prior 20 quarters through March of the preceding fiscal year in which the distribution is planned. The total
spending distribution should be at least equal to 3.50% but not greater than 5.25% of the beginning of year portfolio
market value. The distribution excludes those funds with deficiencies due to unfavorable market fluctuations. During
periods when investment return exceeds the distribution, such excess return is added to these investments. Likewise,
when investment return is less than the distribution, such deficit is funded by accumulated return. In establishing the
distribution policy, the University considered the long-term expected return on its endowment. New gifts to existing funds
participate in the spending policy in the quarter that begins subsequent to the date of the gift. New funds participate in the
spending policy in the quarter that begins one year subsequent to the date of the gift. Accordingly, over the long term, the
University expects the current spending policy to allow its endowment to grow at a rate exceeding expected inflation,
consistent with the University’s objective to maintain the purchasing power of the endowment assets held in perpetuity or
for a specified term as well as to provide additional real growth through new gifts and investment return. In 1994, the
University’s Board of Trustees established a quasi-endowment fund within Pool I to finance a portion of the University’s
postretirement medical obligations. Distributions have been reinvested in the fund each year since inception, and,
accordingly, were not available to support the general operations of the University. In November 2013, the University’s
Board of Trustees approved a resolution allowing, with the approval of the chair of the Finance Committee, a portion or
all of a year’s distributions related to the post-retirement quasi-endowment fund to be allocated to support the general
operations of the University. No distributions were made during the year ended June 30, 2015. During the year ended
June 30, 2014, $2,812 was distributed in accordance with this resolution. The market value for this quasi-endowment fund
was $136,988 and $133,987 at June 30, 2015 and 2014, respectively.
15
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
Pool II – The University established a separate investment pool (Pool II) for NTID during 1989 in accordance with the
federal program established by Public Law 99-371 (August 4, 1986) to support NTID. Pool II assets are invested in a
manner intended to produce price and yield results that are at least equal to a blended benchmark of 70% of the S&P 500
Index and 30% of the Barclays Capital Aggregate Bond Index, assuming a moderate level of investment risk. The federal
program stipulates that the investment of annual additions to Pool II is restricted to IRC 501(f) investment organizations.
The federal guidelines authorize a spending distribution from Pool II of not more than 50% of current year’s investment
income (interest and dividends only). After a period of 10 years, the University can elect to invest the funds consistent
with the University’s overall long-term investment strategy (Pool I).
At June 30, 2015, the endowment net asset composition by type of fund consists of the following:
Temporarily
Restricted
Unrestricted
Donor-restricted funds
Board-designated funds
Total funds
$
$
400,757
400,757
$
$
213,031
553
213,584
Permanently
Restricted
$
Total
147,595
147,595
$
$
$
360,626
401,310
761,936
Following are changes in endowment net assets for the year ended June 30:
Temporarily
Restricted
Unrestricted
Endowment net assets, June 30, 2014
$
Investment return:
Investment income
Net appreciation
Total investment return
391,617
$
219,720
Permanently
Restricted
$
Total
142,614
$
753,951
6,767
2,333
9,100
6,040
2,612
8,652
2
2
4
12,809
4,947
17,756
Contributions
Amounts appropriated for expenditure
(11,562)
1,310
(14,788)
4,981
(4)
6,291
(26,354)
Other changes:
Transfers to create board-designated
endowment funds
Endowment net asset reclassification
Total other changes
10,292
1,310
11,602
(1,310)
(1,310)
-
10,292
10,292
Endowment net assets, June 30, 2015 $
400,757
$
213,584
$
147,595
$
761,936
At June 30, 2014, the endowment net asset composition by type of fund consists of the following:
Temporarily
Restricted
Unrestricted
Donor-restricted funds
Board-designated funds
Total funds
$
$
391,617
391,617
16
$
$
219,155
565
219,720
Permanently
Restricted
$
$
142,614
142,614
Total
$
$
361,769
392,182
753,951
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
Following are changes in endowment net assets for the year ended June 30:
Temporarily
Restricted
Unrestricted
Endowment net assets, June 30, 2013
$
349,905
$
Permanently
Restricted
183,322
$
Total
135,905
$
669,132
Investment return:
Investment income
Net appreciation
Total investment return
4,951
49,879
54,830
4,498
46,153
50,651
225
225
9,449
96,257
105,706
Contributions
Amounts appropriated for expenditure
(13,820)
500
(14,237)
6,485
(1)
6,985
(28,058)
Other changes:
Transfers to create board-designated
endowment funds
Endowment net asset reclassification
Total other changes
186
516
702
(516)
(516)
Endowment net assets, June 30, 2014 $
391,617
$
-
219,720
$
186
186
142,614
$
753,951
From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the
level that the donor or the NYPMIFA requires the University to retain as a fund of perpetual duration. Subsequent gains
that restore the fair value of the assets of such endowment funds to the required level are classified as an increase in
unrestricted net assets. There were less than $1 of such deficiencies as of June 30, 2015 and no deficiencies of this
nature as of June 30, 2014.
7.
Property, Plant and Equipment
Property, plant and equipment, less related depreciation on certain asset categories at June 30, is as follows:
2015
Buildings and capital improvements
Equipment and software
Less: accumulated depreciation
Depreciable property, plant and equipment, net
Land
Special collections
Construction-in-progress
Property, plant and equipment, net
$
$
935,789
151,050
(465,631)
621,208
10,758
10,029
5,468
647,463
2014
$
$
869,314
142,149
(433,295)
578,168
10,750
9,446
38,530
636,894
Total depreciation expense for 2015 and 2014 was $38,425 and $37,185, respectively.
8.
Asset Retirement Obligations
The University recalculates its asset retirement obligations annually, adjusting both the liability, included in deferred
revenues and other liabilities, and the associated asset retirement costs, included in property, plant and equipment, on
the Consolidated Balance Sheets.
17
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
The following schedule reflects changes in asset retirement obligations:
2015
Beginning balance
Change in estimate
Abatement liability settled
Accretion expenses
Ending balance
$
$
2014
21,731
(1,174)
(366)
900
21,091
$
$
19,567
1,947
(595)
812
21,731
The change in estimate was made in conjunction with associated changes in asset retirement cost and accumulated
depreciation as follows:
2015
Asset
Retirement Cost
Beginning balance
Change in estimate
$
Depreciation expense
Ending balance
9.
5,592
587
Accumulated
Depreciation
$
$
6,179
2014
4,216
391
Asset
Retirement Cost
$
120
$
4,727
5,986
(394)
Accumulated
Depreciation
$
$
5,592
4,198
(92)
110
$
4,216
Benefit Plans
a. Retirement Benefit Plan
The Rochester Institute of Technology Retirement Savings Plan (Plan) is a defined contribution plan subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and in accordance with IRC Section 403(b).
The Plan is available to all employees who meet certain eligibility requirements. Plan contributions are invested in one or
more of the funding vehicles made available to participants under the Plan. Contributions may be allocated to annuity
contracts offered by Teachers Insurance Annuity Association-College Retirement Equities Fund (TIAA-CREF) and/or
custodial accounts which are invested in regulated investment companies (mutual funds) offered by Fidelity Investments
(Fidelity). In addition, employees may choose to invest in a self-directed brokerage account through which they can access
additional mutual fund options. TIAA-CREF and Fidelity are recordkeepers of the Plan. It is the University’s policy to
currently fund defined contribution pension costs as they are incurred. Total retirement contribution expense for 2015 and
2014 was $19,215 and $18,706, respectively.
b. Postemployment Benefits
The accrued postemployment benefits of the University were $3,205 and $3,055 at June 30, 2015 and 2014, respectively.
c. Postretirement Benefits
The University sponsors a defined benefit postretirement medical plan that covers substantially all employees. Employees
may retire if they are at least 55 years old (50 if hired prior to July 1996) with at least 10 years of full-time service (5 years
if hired prior to July 1, 1990) and age plus service totals at least 70 at retirement. The plan is contributory and retiree
contributions are assumed to increase at the same rate as active employee contributions. The University's postretirement
medical plan is not funded.
The University offers an employer funded Retirement Medical Account (RMA) for retirees hired on or after January 1,
2004. The funds in the RMAs may be used for Medicare and private medical insurance premiums only. During fiscal year
2008, the RMA contributions for retirees increased and eligibility was extended to all employees under 35 years of age
as of January 1, 2008, irrespective of their adjusted date of hire.
18
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
The Plan’s obligations and applicable discount rates as of June 30 are as follows:
2015
Change in projected benefit obligation
Postretirement benefit obligation at beginning of year
Service cost
Interest cost
Participants' contributions
Actuarial losses
Benefits paid
Postretirement benefit obligation at end of year
$
$
Amounts recognized in unrestricted net assets consist of:
Net prior service credit
Net losses
Accumulated loss in unrestricted net assets
151,602
4,362
6,418
1,174
5,510
(5,108)
163,958
$
$
Discount rates
Net periodic benefit cost
Year-end benefit obligation
(49)
18,630
18,581
2014
$
$
$
$
4.54%
4.61%
132,961
4,242
6,655
820
11,818
(4,894)
151,602
(60)
13,810
13,750
5.09%
4.54%
The components of net periodic postretirement benefit costs are as follows at June 30:
Service cost
Interest cost
Amortization of unrecognized prior service benefit
Amortization of net losses
Net periodic postretirement benefit cost
$
$
4,362
6,418
(10)
689
11,459
$
$
4,242
6,655
(10)
241
11,128
For the fiscal year ending June 30 2015, $5,094 and $6,365 in postretirement benefit expense was allocated to operating
and non-operating activities, respectively, on the University’s Consolidated Statements of Activities.
The University expects to recognize a postretirement benefit amortization loss in fiscal year 2016 of $2,166 relating to
$10 of prior service credits partially offset by $2,176 of net actuarial losses. Amortization of the net gain or loss resulting
from experience different from that assumed and from changes in assumptions (excluding asset gains and losses not yet
reflected in market-related value) is included as a component of Net Periodic Postretirement Benefit Cost/(Income) for a
year. The amortization is the net gain or loss divided by the average remaining service period to full eligibility for
participating employees expected to receive benefits under the Plan.
As of the end of the measurement period, 6.5% was assumed as the annual rate of increase for the per capita cost of
covered medical and prescription drug benefits, respectively, for fiscal year 2016 with a 0.5% decrease each
subsequent year to 5% in 2019 and remaining at that level thereafter.
19
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
The health care cost trend rate assumption has a significant effect on the amounts reported; a 1% point change in the
assumed health care cost trend rates would have the following effects:
1% Point
Increase
Effect on total of service and interest cost components
Effect on postretirement benefit obligation
$
$
1% Point
Decrease
1,381
24,416
$
$
(1,143)
(19,803)
Benefit Payments
At June 30, the University’s aggregated future estimated postretirement benefit payments, which reflect future services,
are as follows:
2016
2017
2018
2019
2020
2021-2025
$
4,980
5,476
5,940
6,334
6,805
42,626
d. Self-insurance Plans
The University is self-insured for medical, prescription drug and dental benefits. Based on estimates provided by its
actuaries, the University’s obligation for health care claims incurred but not reported was $2,331 and $2,357 as of June
30, 2015 and 2014, respectively. The University is also self-insured for workers compensation and has established a
liability for asserted and unasserted claims totaling $3,250 and $3,373 as of June 30, 2015 and 2014, respectively. These
amounts are included in accounts payable and accrued expenses on the Consolidated Balance Sheets.
10.
Long-Term Debt
The University has entered into various agreements for the purpose of financing construction, renovation and
improvement of its facilities and equipment. Long-term debt outstanding for these purposes, net of applicable unamortized
discount or premium as of June 30, is as follows:
Issue
Interest
Rate(s)
Type of
Rate
Maturity
2015
2014
Tax-exempt revenue bonds
Dormitory Authority of the State of New York (DASNY)
Series 2002B
4.00% - 5.00%
Fixed
7/1/2016
990
1,460
Series 2006A
5.00% - 5.25%
Fixed
7/1/2022
35,655
39,235
Series 2008A
4.00% - 5.00%
Fixed
7/1/2019
2,500
3,000
Series 2010
4.00% - 5.00%
Fixed
7/1/2040
74,725
75,510
Series 2012
3.00% - 5.00%
Fixed
7/1/2042
145,540
146,030
Other debt
0.53% -7.87%
Variable
Various
790
973
260,200
266,208
22,669
24,786
Total long-term debt, principal
Bond premium/discount, net
Total long-term debt, net
$
20
282,869
$
290,994
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
The required principal payments for long-term debt for each of the years in the five-year period ending June 30, 2020
and thereafter are presented below. The schedule has been prepared based on the contractual maturities of the debt
outstanding at June 30:
2016
2017
2018
2019
2020
Thereafter
$
$
8,172
8,498
8,853
9,238
9,588
215,851
260,200
The estimated fair value of the University’s tax exempt bonds was $281,131 and $287,799 at June 30, 2015 and 2014,
respectively. Estimated fair value is based on quoted market prices for the same or similar issues. The University is not
required to settle its debt obligations at fair value.
Tax-Exempt Bonds
The University’s tax-exempt bonds are issued through DASNY, a New York State agency serving as a conduit issuer of
tax-exempt debt.
Deposits with bond trustees consist of debt service funds and the unexpended proceeds of certain debt. These funds will
be used for construction of, or payment of, debt service on certain facilities. Deposits with bond trustees totaling $13,948
and $29,703 are included in cash and cash equivalents held with bond trustees and investments on the Consolidated
Balance Sheets as of June 30, 2015 and 2014, respectively.
Proceeds from tax-exempt revenue bonds were used as follows:
DASNY 2002B Series
Insured revenue bonds were issued to construct and renovate various buildings on campus. During fiscal year
2013, the University advance refunded a portion of 2002B Series bonds which were outstanding in the principal
amount of $10,850 (see DASNY 2012 Series). A portion of the proceeds from the 2012 Series bonds was used to
purchase U.S. government securities which were deposited in an irrevocable trust solely for the purpose of making
debt service payments on the 2002B Series bonds. Accordingly, the refunded 2002B Series bonds were legally
extinguished and neither the indebtedness nor the assets of the irrevocable trust are included on the Consolidated
Balance Sheets as of June 30, 2015 or 2014.
DASNY 2006A Series
Insured revenue bonds were issued to advance refund a substantial portion of the outstanding aggregate principal
amount of the University’s 1997 Series bonds which had been issued to refund the remaining obligation of general
and unconditional obligation Series E revenue bonds. Proceeds were also used to renovate on-campus housing
facilities and improve the technological infrastructure of the University.
DASNY 2008A Series
Unsecured bonds were issued to construct a new mixed-use residential on-campus housing and retail complex;
the renewal, replacement and expansion of existing heating and cooling infrastructure and energy management;
and the renovation of academic and administrative buildings. During fiscal year 2013, the University advance
refunded a portion of 2008A Series bonds which were outstanding in the principal amount of $76,100 (see DASNY
2012 Series). A portion of the proceeds from the 2012 Series bonds was used to purchase U.S. government
securities which were deposited in an irrevocable trust solely for the purpose of making debt service payments on
the 2008A Series bonds. Accordingly, the refunded 2008A Series bonds were legally extinguished and neither the
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Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
indebtedness nor the assets of the irrevocable trust are included on the Consolidated Balance Sheets as of June
30, 2015 or 2014.
DASNY 2010 Series
Secured revenue bonds were issued for the construction of a new academic building, the construction of a green
data center, the expansion of athletic facilities, various other campus-wide improvements and the advance
refunding of DASNY 2002A Series bonds.
DASNY 2012 Series
Secured revenue bonds were issued to advance refund a portion of DASNY 2002B Series bonds (see DASNY
2002B Series) and a portion of 2008A Series bonds (see DASNY 2008A Series) and for the construction of a new
athletic and multi-purpose facility, renovations and improvements to academic facilities, replacement of electrical
infrastructure and the acquisition of on-campus residential housing (University Commons Project II).
Other Debt
Other debt consists of amounts borrowed from the Power Authority of the State of New York to fund improvements to the
University’s energy systems and amounts associated with agreements the University has entered into with respect to
capital leases of equipment and furniture.
11.
Student Aid
Student tuition and fees are presented on the Consolidated Statements of Activities net of scholarships funded as follows:
2015
Institutional support
1
Sponsored support 2
Total student aid
12.
$
153,968
$
10,526
164,494
2014
$
143,832
$
10,023
153,855
1
Institutional support includes financial aid and merit scholarships awarded to students from unrestricted operating resources.
2
Sponsored support includes financial aid and scholarships funded from restricted and University designated resources and
external sources, including federal, state or private grants and/or contributions.
National Technical Institute for the Deaf
Under an agreement with the U.S. Department of Education (Department), the University established NTID in 1968 to
provide post-secondary education and technical training for deaf and hard of hearing persons. NTID is the world’s first
and largest technical college for deaf students with approximately 1,387 students from the United States and other
countries. The federal appropriation covers approximately 74% of NTID’s total operating costs and provides matching
funds for the University’s Federal Endowment Fund. Funding is applied for annually and is subject to the federal
government’s continued support of the program.
Operating Revenues
The federal appropriation partially covers direct operating expenses and reimbursement to the University for tuition, fees,
room and board and indirect costs for NTID students using RIT facilities. These revenues are included in government
grants and contracts on the Consolidated Statements of Activities and totaled $65,767 and $62,928 at June 30, 2015 and
2014, respectively. The remaining operating expenses are funded by tuition and fees collected from NTID students and
other revenues.
22
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2015 and 2014
(in thousands)
Nonoperating Activities
The appropriation may also be used to match qualifying contributions received from donors for the NTID’s Federal
Endowment Fund. Included in permanently restricted nonoperating government grants and contracts for long-term assets
on the Consolidated Statements of Activities are Federal matching funds totaling $85 and $177 at June 30, 2015 and
2014, respectively.
In addition to the federal appropriation, the University received incremental revenue from the Department to support
approved NTID construction and renovation projects totaling $634 and $3 at June 30, 2015 and 2014, respectively. These
revenues are included in unrestricted government grants and contracts for long-term assets on the Consolidated
Statements of Activities.
13.
Consolidated Statements of Activities – Operating Expenses by Function
2015
Instruction
Research
Public service
Academic support
Student services
Institutional support 1
Auxiliary enterprises
Independent organizations
Operating expenses by function
1
14.
$
$
237,095
34,085
11,573
51,564
43,956
40,926
83,071
334
502,604
2014
$
$
228,118
33,141
11,268
49,212
40,108
48,291
81,808
219
492,165
Includes fundraising expenses of $8,997 and $8,924 in 2015 and 2014, respectively.
Commitments and Contingencies
The University is involved in legal actions arising in the normal course of activities and is subject to periodic audits and
inquiries by various regulatory agencies. Although the ultimate outcome of such matters is not determinable at this time,
management, after taking into consideration advice of legal counsel, believes that the resolution of pending matters will
not have a materially adverse effect, individually or in the aggregate, upon the University's financial statements.
The University is committed under several construction contracts amounting to approximately $5,756 and $27,939 at June
30, 2015 and 2014, respectively. These contracts relate to the renovation and construction of various on-campus facilities
including projects totaling $1,416 funded by federal and state grants and $776 funded by private donors.
15.
Subsequent Events
Subsequent events have been evaluated through November 13, 2015, the date the Consolidated Financial Statements
were issued.
23