GETTYSBURG COLLEGE
Consolidated Financial Statements
May 31, 2016 and 2015
(With Independent Auditors’ Report Thereon)
GETTYSBURG COLLEGE
Table of Contents
Page(s)
Independent Auditors’ Report
1–2
Consolidated Statements of Financial Position, May 31, 2016 and 2015
3
Consolidated Statement of Activities, Year ended May 31, 2016
4
Consolidated Statement of Activities, Year ended May 31, 2015
5
Consolidated Statements of Cash Flows, Years ended May 31, 2016 and 2015
6
Notes to Consolidated Financial Statements
Schedule of Assets, Liabilities, and Net Assets
7–26
27
KPMG LLP
Suite 1000
30 North Third Street
PO Box 1190
Harrisburg, PA 17108-1190
Independent Auditors’ Report
The Board of Trustees
Gettysburg College:
We have audited the accompanying consolidated financial statements of Gettysburg College, which comprise
the consolidated statements of financial position as of May 31, 2016 and 2015, and the related consolidated
statements of activities and cash flows for the years then ended, and the related notes to the consolidated
financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with U.S. generally accepted accounting principles; 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.
Auditors’ Responsibility
Our responsibility is to express an opinion on these 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 the auditors’ 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, the auditor considers internal control relevant to the entity’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 entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the 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 consolidated financial position of Gettysburg College as of May 31, 2016 and 2015, and the changes in
its net assets and its cash flows for the years then ended in accordance with U.S. generally accepted
accounting principles.
KPMG LLP, is a Delaware limited liability partnership,
the U.S. member firm of KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Other Matter
Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as
a whole. The accompanying Schedule of Assets, Liabilities, and Net Assets is presented for purposes of
additional analysis and is not a required part of the consolidated financial statements. Such information is
the responsibility of management and was derived from and relates directly to the underlying accounting and
other records used to prepare the consolidated financial statements. The information has been subjected to
the auditing procedures applied in the audit of the consolidated financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and
other records used to prepare the consolidated financial statements or to the consolidated financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in the
United States of America. In our opinion, the information is fairly stated in all material respects in relation
to the consolidated financial statements as a whole.
Harrisburg, Pennsylvania
September 15, 2016
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GETTYSBURG COLLEGE
Consolidated Statements of Financial Position
May 31, 2016 and 2015
Assets
2016
Cash and cash equivalents
Accounts and other receivable, net
Contributions receivable, net
Student loans receivable, net
Prepaid expenses and other assets
Investments
Funds held in trust by others
Property, plant, and equipment, net
Total assets
2015
$
51,594,797 953,519 5,242,739 5,646,855 3,696,946 241,560,230 34,462,764 162,218,919 43,674,799 1,006,539 5,253,777 5,992,915 3,886,111 253,596,175 35,414,673 164,342,309 $
505,376,769 513,167,298 $
16,495,448 2,293,867 795,225 7,155,649 2,048,278 15,144,309 1,544,349 77,483,773 15,810,206 2,512,905 782,789 6,869,407 2,047,553 16,350,947 1,821,846 80,723,870 122,960,898 126,919,523 179,527,094 45,357,103 157,531,674 180,999,262 55,066,471 150,182,042 382,415,871 386,247,775 505,376,769 513,167,298 Liabilities and Net Assets
Liabilities:
Accounts payable and accrued expenses
Students’ advance payments and deposits
Deposits held in custody for others
Annuities payable
Advances from federal government
Accrued postretirement benefit cost
Bonds premium
Long-term debt
Total liabilities
Net assets:
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets
Total liabilities and net assets
$
See accompanying notes to consolidated financial statements.
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GETTYSBURG COLLEGE
Consolidated Statement of Activities
Year ended May 31, 2016
(with comparative totals for the year ended May 31, 2015)
2016
Temporarily
restricted
Unrestricted
Operating revenues and gains:
Tuition and fees
Student aid
$
126,602,263 (49,095,641) Permanently
restricted
2015
Total
Total
— — — — 126,602,263 (49,095,641) 123,219,454 (47,342,659) 77,506,622 — — 77,506,622 75,876,795 4,890,939 4,218,594 1,247,943 2,949,691 34,007,881 5,977,164 2,541,451 — 7,037 — — — — — — 10,868,103 6,760,045 1,247,943 2,956,728 34,007,881 10,164,111 5,772,536 1,194,322 2,927,647 32,907,522 Total operating revenues and gains
124,821,670 8,525,652 — 133,347,322 128,842,933 Net assets released from restrictions – operations
8,299,785 (8,299,785) — — — Total operating revenues and gains
and other support
133,121,455 225,867 — 133,347,322 128,842,933 47,348,992 1,100,286 2,741,335 17,157,727 21,531,785 19,988,694 19,019,952 — — — — — — — — — — — — — — 47,348,992 1,100,286 2,741,335 17,157,727 21,531,785 19,988,694 19,019,952 46,912,774 863,959 2,738,981 17,197,698 21,732,697 20,920,518 19,294,669 128,888,771 — — 128,888,771 129,661,296 4,232,684 225,867 — 4,458,551 (818,363) (11,043,985) (729,903) (11,269,957) (98,488) (1,158,723) (258,340) (23,472,665) (1,086,731) 2,440,423 (717,482) 1,718,160 3,501,540 — 7,137,596 (6,730,217) 441,957 — 1,875,167 — — — (441,957) — 8,651,530 100,000 15,165 — — 1,718,160 14,028,237 100,000 7,152,761 (6,730,217) — (1,754,345) 7,452,625 200,000 6,935,261 (6,778,108) — (5,704,852) (9,935,235) 7,349,632 (8,290,455) 7,778,374 Net tuition and fees
Investment income
Private gifts and grants
Government grants
Other income
Auxiliary services
Operating expenses:
Education and general:
Instruction
Research
Public service
Academic support
Student services
Institutional support
Auxiliary services
Total operating expenses
Change in net assets from operating
activities
Nonoperating activities:
Investment (loss) income, net of endowment
spending
Change in value of split-interest agreements
Postretirement-related charges other than net
periodic benefit costs
Private gifts
Government grants
Other nonoperating revenue
Other nonoperating expenses
Net assets released from restrictions – capital
Change in net assets from
nonoperating activities
Change in net assets
Net assets, beginning of year
Net assets, end of year
$
(1,472,168) (9,709,368) 7,349,632 (3,831,904) 6,960,011 180,999,262 55,066,471 150,182,042 386,247,775 379,287,764 179,527,094 45,357,103 157,531,674 382,415,871 386,247,775 See accompanying notes to consolidated financial statements.
4
GETTYSBURG COLLEGE
Consolidated Statement of Activities
Year ended May 31, 2015
2015
Unrestricted
Operating revenues and gains:
Tuition and fees
Student aid
$
Temporarily
restricted
Permanently
restricted
Total
123,219,454 (47,342,659) — — — — 123,219,454 (47,342,659) 75,876,795 — — 75,876,795 4,630,983 3,966,241 1,194,322 2,921,858 32,907,522 5,533,128 1,806,295 — 5,789 — — — — — — 10,164,111 5,772,536 1,194,322 2,927,647 32,907,522 Total operating revenues and gains
121,497,721 7,345,212 — 128,842,933 Net assets released from restrictions – operations
7,857,570 (7,857,570) — — Total operating revenues and gains
and other support
129,355,291 (512,358) — 128,842,933 46,912,774 863,959 2,738,981 17,197,698 21,732,697 20,920,518 19,294,669 — — — — — — — — — — — — — — 46,912,774 863,959 2,738,981 17,197,698 21,732,697 20,920,518 19,294,669 129,661,296 — — 129,661,296 (306,005) (512,358) — (818,363) 646,205 (411,235) 1,680,009 (15,821) 114,209 (290,426) 2,440,423 (717,482) (1,754,345) 251,475 — 6,930,353 (6,778,108) 712,556 — 1,305,948 — — — (712,556) — 5,895,202 200,000 4,908 — — (1,754,345) 7,452,625 200,000 6,935,261 (6,778,108) — Change in net assets from
nonoperating activities
(403,099) 2,257,580 5,923,893 7,778,374 Change in net assets
(709,104) 1,745,222 5,923,893 6,960,011 181,708,366 53,321,249 144,258,149 379,287,764 180,999,262 55,066,471 150,182,042 386,247,775 Net tuition and fees
Investment income
Private gifts and grants
Government grants
Other income
Auxiliary services
Operating expenses:
Education and general:
Instruction
Research
Public service
Academic support
Student services
Institutional support
Auxiliary services
Total operating expenses
Change in net assets from
operating activities
Nonoperating activities:
Investment income, net of endowment
spending
Change in value of split-interest agreements
Postretirement-related charges other than net
periodic benefit costs
Private gifts
Government grants
Other nonoperating revenue
Other nonoperating expenses
Net assets released from restrictions – capital
Net assets, beginning of year
Net assets, end of year
$
See accompanying notes to consolidated financial statements.
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GETTYSBURG COLLEGE
Consolidated Statements of Cash Flows
Years ended May 31, 2016 and 2015
2016
Cash flows from operating activities:
Change in net assets
Adjustments to reconcile change in net assets to net cash provided
by operating activities:
Depreciation
Net realized and unrealized losses (gains) on investments and funds held in
trust by others
Loss on disposition of equipment
Receipt of contributed securities and property, plant, and equipment
Private gifts and grants restricted for long-term investment
Changes in assets and liabilities:
Accounts and other receivable
Prepaid expenses and other assets
Accounts payable and accrued expenses
Students’ advance payments and deposits
Deposits held in custody for others
Accrued postretirement benefit cost
Bond premium
$
2015
(3,831,904) 6,960,011 11,462,318 11,392,466 16,013,678 3,693 (3,938,361) (10,626,697) (9,311,594) 148,840 (2,404,240) (7,401,150) 53,020 189,165 685,242 (219,038) 12,436 (1,206,638) (277,497) 37,049 253,115 (105,512) (193,733) 108,877 1,839,405 (295,125) 8,319,417 1,028,409 (6,182,920) 7,300 30,455,214 (31,689,299) 1,258,237 (999,491) 87,314 (7,586,687) — 49,566,314 (49,712,469) 1,141,742 (993,641) 64,701 (7,063,645) (7,520,040) 286,242 — — (3,240,097) 725 — 9,617,356 20,082 8,500,000 (6,163,168) (3,076,130) (21,486) 403,479 7,622,792 Net cash provided by financing activities
6,664,226 7,285,569 Net increase in cash and cash equivalents
7,919,998 793,938 43,674,799 42,880,861 Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property, plant, and equipment
Proceeds from sale of equipment
Proceeds from sales of investments
Purchases of investments
Student loans collected
Student loans issued
Increase in provision for uncollectible loans
Net cash used in investing activities
Cash flows from financing activities:
Change in annuities payable
Proceeds from issuance on long-term debt
Payments on long-term debt – refinancing
Payments on long-term debt – principal payments
Change in advances from federal government for student loans
Distribution of termination of funds held in trust by others
Proceeds received from private gifts and grants restricted for long-term investment
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
$
51,594,797 43,674,799 Supplemental disclosures:
Cash paid for interest
$
3,555,749 3,726,999 $
1,020,379 3,938,361 — 2,515,927 Schedule of noncash investing/financing activities:
Gifts of funds held in trust by others
Gifts of securities and property, plant, and equipment
See accompanying notes to consolidated financial statements.
6
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
(1)
Summary of Significant Accounting Policies
Gettysburg College (the College) is a private, not-for-profit institution of higher education in Gettysburg,
Pennsylvania. The College provides education services at the undergraduate level.
The College’s significant accounting policies are described as follows to enhance the usefulness of the
consolidated financial statements to the reader:
(a)
Reporting Entity
The accompanying consolidated financial statements include the accounts of the College, its pooled
life income funds, and its wholly owned subsidiaries, which include:
Gettysburg Great Productions, LLC (GGP) – GGP was organized as a film production company
to develop a feature length film that further raises the national visibility of the College.
Capitalized film development and production costs are reported within prepaid expenses and
other assets. Amortization of capitalized film costs began in fiscal year 2014 upon the film’s
distribution and is based upon the ratio of the current period’s revenues to total revenues.
Majestic Concessions Corporation (MCC) – MCC was organized to operate the food and
beverage service for The Majestic Theater at the David and Jennifer LeVan Performing Arts
Center.
Gettysburg Hotel – The College is sole investor in Gettysburg Hotel Investors, LP, which was
organized to own, renovate, and operate commercial real estate located at Lincoln Square in
Gettysburg, PA. Bullet Land, Inc. and Gettysburg Hotel Management, LLC were formed to
serve as general partner and limited partner of Gettysburg Hotel Investors, LP. Gettysburg Hotel,
Inc., a subsidiary of Bullet Land, Inc., was created to manage and operate the Gettysburg Hotel.
These entities are collectively referred to as the Gettysburg Hotel.
Subsidiary operations are presented within other nonoperating revenues and other nonoperating
expenses. All significant intercompany accounts and transactions have been eliminated in
consolidation.
(b)
Basis of Presentation
The College follows not-for-profit reporting standards, which require the reporting of total assets,
liabilities, and net assets in a consolidated statement of financial position; reporting the change in net
assets in a consolidated statement of activities; and reporting the sources and uses of cash and cash
equivalents in a consolidated statement of cash flows. Net assets and revenues, gains, expenses, and
losses are classified as unrestricted, temporarily restricted, or permanently restricted based on the
existence or absence of donor-imposed restrictions as follows:
Permanently restricted – Net assets subject to donor-imposed stipulations that they be
maintained permanently by the College. Generally, the donors of these assets permit the College
to use all or part of the income earned on these assets. These net assets primarily include the
College’s permanent endowment funds.
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GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Temporarily restricted – Net assets whose use by the College is subject to donor-imposed
stipulations that can be fulfilled by actions of the College pursuant to those stipulations or that
expire by the passage of time.
Unrestricted – Net assets that are not subject to donor-imposed stipulations. Unrestricted net
assets may be designated for specific purposes by action of the board of trustees or may
otherwise be limited by contractual agreements with outside parties.
Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited
by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Expiration
of donor-imposed stipulations that simultaneously increase one class of net assets and decrease another
are reported as reclassifications between the applicable classes of net assets.
Nonoperating activities reflect transactions affecting net assets associated with endowment and capital
contributions, gains or losses on investments (net of endowment spending), change in value of
split-interest agreements, subsidiary operations, and other activities of a nonoperating nature.
(c)
Cash and Cash Equivalents
Cash and cash equivalents are recorded at fair value and include institutional money market funds and
similar short-term investments with original maturities of three months or less.
(d)
Contributions
Contributions, including unconditional promises to give, are recognized as revenues in the period
received. Conditional promises to give are not recognized until they become unconditional, that is,
when the conditions on which they depend are substantially met. Contributions of assets other than
cash are recorded at their estimated fair value. Contributions to be received after one year are
discounted at an appropriate discount rate commensurate with the risks involved. Amortization of
discounts is recorded as additional contribution revenue in accordance with donor-imposed
restrictions, if any, on the contributions. An allowance for uncollectible contributions receivable is
provided based upon management’s judgment, including such factors as prior collection history, type
of contribution, and nature of the fundraising activity.
Contributions and endowment income with donor-imposed restrictions, including those met in the
same year as received or earned, are reported as temporarily restricted revenues and are reclassified to
unrestricted net assets when an expense is incurred that satisfies the donor-imposed restriction.
Contributions restricted for the acquisition of plant and equipment are reported as temporarily
restricted revenues.
(e)
Investments
Investments are reported at fair value. Whenever available, quotations from organized securities
exchanges are used as the basis of fair value. For investments not traded on organized exchanges, their
net asset value (NAV) per share or equivalent have been used as a practical expedient for determining
fair value and are subject to additional uncertainty. Therefore, values realized upon disposition may
vary significantly from currently reported values.
8
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Investments are exposed to various risks, such as interest rate, market, and credit risks. The College
attempts to manage these risks through diversification and monitoring of economic conditions. In
addition, the College employs procedures to ensure appropriate oversight of its investments including
ongoing monitoring of investment managers and periodic review of fair value and other information
received from managers. Due to the level of risk associated with certain investment securities, it is at
least reasonably possible that changes in the values of investment securities will occur in the near term
and such changes could materially affect the amounts reported in the consolidated statements of
financial position.
(f)
Funds Held in Trust by Others
Funds held in trust by others represent the College’s beneficial interest in various irrevocable trusts.
The terms of these perpetual trusts provide that the College is to receive annually a certain percentage
of the income earned by the funds. Distributions from the trusts are recorded as operating investment
income, and the carrying value of the assets is adjusted for changes in fair value of the trusts.
These funds are neither in the possession nor under the control of the College. Because of its permanent
right to the earnings of the trusts, the College reports its share of these trusts on its consolidated
financial statements as funds held in trust by others. The trusts are recorded at fair value based on
market prices provided by the financial institutions that administer the trust funds.
(g)
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost on date of acquisition or at fair value on the date of
donation, less accumulated depreciation. Annual depreciation is calculated on a straight-line basis over
useful lives ranging from 15 to 40 years for building and improvements, 5 to 15 years for equipment
and vehicles, and 5 to 39 years for hotel equipment and buildings. The College capitalizes interest on
borrowed funds during construction periods. Capitalized interest is charged to construction in progress
or buildings and, upon completion of project, amortized over the useful lives of the asset.
(h)
Split-Interest Agreements and Annuities Payable
The College’s split-interest agreements with donors consist primarily of charitable remainder trust and
annuity agreements for which the College serves as trustee. Assets held in these trusts are included in
investments and reported at fair value. Annuity funds represent funds received on the condition that
the College pays stipulated amounts for a specified term to individuals designated in the split-interest
agreement. Contribution revenues are recognized at the date the trusts are established after recording
liabilities for the present value of the estimated future payments to be made to the donors and/or other
beneficiaries. The College uses the applicable federal rate at the time of gift as the basis for determining
the discount rate for recording annuity obligations at net present value. Discount rates range from 1.2%
to 11% for the years ended May 31, 2016 and 2015, respectively. Adjustments to annuities payable
are included in nonoperating activities on the consolidated statements of activities.
(i)
Advances from Federal Government
Funds provided by the U.S. government under the Federal Perkins Loan Program are loaned to
qualified students and may be reloaned after collections. These funds are ultimately refundable to the
government and are reported as a liability.
9
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GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
(j)
Bond Issuance Costs
Costs associated with issuing bonds payable have been capitalized and are amortized over the term of
the bonds and are reported in other assets on the consolidated statement of financial position.
(k)
Income Taxes
The College is recognized by the Internal Revenue Service as a not-for-profit educational institution
and, therefore, qualifies under Section 501(c)(3) of the Internal Revenue Code for exemption from
federal income tax on activities related to its exempt purpose. Management annually reviews its tax
positions and has determined that there are no material uncertain tax positions that require recognition
in the financial statements.
Bullet Land, Inc., Gettysburg Hotel, Inc., and MCC are for-profit corporations subject to federal
income taxes and are included in nonoperating activities. Gettysburg Hotel Management, LLC and
GGP are single member limited liability companies and, as such, they are disregarded for federal
income tax purposes. Gettysburg Hotel Investors, L.P. is a limited partnership.
(l)
Functional Expenses
Costs related to the operation, maintenance, and financing of the physical plant, including depreciation
of plant assets and interest on long-term debt, are allocated to program and supporting activities based
upon the primary use of the facilities.
(m)
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted
accounting principles (GAAP) requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent asset and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results may differ from those estimates.
10
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
(2)
Investment Income
A summary of the College’s total investment (loss) income as reported in the consolidated statements of
activities is presented as follows:
2016
Interest and dividends
Net realized/unrealized (losses) gains on investments
and funds held in trust by others
Total investment (loss) income
Distributable endowment income
Other investment income, principally related to trusts
$
3,409,116 3,292,940 (16,013,678) 9,311,594 $
(12,604,562) 12,604,534 $
9,557,000 1,311,103 8,873,000 1,291,111 10,868,103 10,164,111 (23,472,665) 2,440,423 (12,604,562) 12,604,534 Operating investment income
Nonoperating investment income
Total investment (loss) income
(3)
2015
$
Fair Value of Financial Instruments
(a)
Fair Value Measurements
Fair value refers to the price the College would receive upon selling an asset or the price paid to transfer
a liability (an exit price) in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants at the reporting date.
A three-tier hierarchical framework has been established that classifies valuation inputs based on the
extent to which the inputs are observable in the marketplace. Inputs may be observable or unobservable
and refer broadly to the assumptions that market participants, in the context of an orderly market,
would use in pricing the asset or liability. Valuation techniques used to measure fair value must
maximize the use of observable inputs and minimize the use of unobservable inputs, and are
summarized as follows:
Level 1
Valuations are based on observable inputs that reflect quoted prices in active markets for
identical assets or liabilities.
Level 2
Valuations are based on observable inputs that reflect quoted prices for similar assets or
liabilities in markets that are less active; or other significant market-based inputs, which
are observable, either directly or indirectly.
Level 3
Valuations are based on significant unobservable inputs that may be supported by little or
no market activity for the assets or liabilities.
In certain cases, the inputs used to measure valuations may fall into different levels of the fair value
hierarchy. Accordingly, the fair value level is determined based on the lowest level of input that is
11
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
significant to the valuation of the specific investment. These classifications are intended to reflect the
observability of the inputs used in valuation and are not necessarily an indication of risk or liquidity.
(b)
Investments
The following tables summarize the College’s investments for which fair value is measured on a
recurring basis by level within the fair value hierarchy. The tables also summarize investments for
which fair value is measured using the net asset value per share (or its equivalent) as a practical
expedient. These investments have not been categorized within the fair value hierarchy.
Fair value measurement
Level 3
Net asset
value
48,323,780 — 4,465,552 — — 27,803,159 4,271,308 — — — — 1,000,000 — — 62,648,646 41,257,374 13,608,060 9,093,360 — — — 110,972,426 41,257,374 18,073,612 9,093,360 1,000,000 27,803,159 4,271,308 84,863,799 1,000,000 126,607,440 212,471,239 1,026,046 579,041 461,197 — — — 2,446,457 1,000,103 — 3,472,503 1,579,144 461,197 2,066,284 — 3,446,560 5,512,844 — 22,876,147 700,000 — — — 700,000 22,876,147 22,876,147 700,000 — 23,576,147 $ 109,806,230 1,700,000 130,054,000 241,560,230 May 31, 2016
Long-term pooled endowment:
Global public equities
Hedge funds
Real assets
Private equity
Private common stock
Fixed income securities
Cash and cash equivalents
Trust and split interest
investments:
Global public equities
Fixed income securities
Cash and cash equivalents
Nonpooled investments:
Private preferred stock
Cash and cash equivalents
Total investments
Level 1
$
12
Total
fair value
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Fair value measurement
Level 3
Net asset
value
50,416,383 — 4,283,686 — — 27,590,843 3,362,784 — — — — 1,000,000 — — 65,436,789 46,459,510 15,795,072 10,352,385 — — — 115,853,172 46,459,510 20,078,758 10,352,385 1,000,000 27,590,843 3,362,784 85,653,696 1,000,000 138,043,756 224,697,452 1,106,390 630,462 509,740 — — — 2,552,082 1,081,483 — 3,658,472 1,711,945 509,740 2,246,592 — 3,633,565 5,880,157 — 22,318,566 700,000 — — — 700,000 22,318,566 22,318,566 700,000 — 23,018,566 $ 110,218,854 1,700,000 141,677,321 253,596,175 May 31, 2015
Long-term pooled endowment:
Global public equities
Hedge funds
Real assets
Private equity
Private common stock
Fixed income securities
Cash and cash equivalents
Trust and split interest
investments:
Global public equities
Fixed income securities
Cash and cash equivalents
Nonpooled investments:
Private preferred stock
Cash and cash equivalents
Total investments
Level 1
$
Total
fair value
Investments Measured under the Fair Value Hierarchy
For those investments that are measured under the fair value hierarchy, the investments have been
assigned a level based upon the observability of the inputs that are significant to the overall valuation,
which is summarized as follows:
Level 1
Investments include publicly traded equity and fixed income securities held in separate
accounts and institutional commingled mutual and money market funds that have daily
quoted prices in organized securities exchanges. These investments allow daily
redemptions with one-day notice.
Level 2
At May 31 2016 and 2015, there were no Level 2 investments.
Level 3
Investments include common and preferred stock in a private company. Since quoted
prices are not readily available, fair value is estimated using valuation techniques based
on a dividend discount model and restricted stock transactions disclosed in the private
company’s audited financial statements.
13
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Investments Measured Using the NAV Practical Expedient
For those investments for which fair value is measured using the NAV practical expedient, the College
uses the reported capital account or NAV per share to determine the fair value of investments that
(a) do not have a readily determinable fair value due to a lack of market activity or transparency into
the underlying investments of the fund and (b) either have the attributes of an investment company or
prepare their audited financial statements consistent with the measurement principles of an investment
company. Valuations of underlying assets that comprise the capital account or NAV per share are
provided by the general partner or fund manager, and consider variables such as comparable sales,
income streams discounted for risk levels, and other pertinent information.
Investments measured using the NAV practical expedient include equity common trust funds, hedge
funds utilizing absolute return and long/short equity strategies, private equity, and real assets
(including buyout, energy, real estate, and natural resources).
Liquidity
Investment liquidity is aggregated below based on redemption provisions and lockup periods as of
May 31, 2016:
Daily
Cash and cash equivalents
Fixed income securities
Global public equities
Hedge funds
Real assets
Private equity
Private stock
Monthly
Quarterly
Annual
27,608,652 29,382,304 61,726,168 —
4,465,552 —
—
—
—
9,066,841 7,418,751 3,932,179 —
—
—
—
43,651,919 13,013,312 —
—
—
—
—
—
20,738,392 —
—
—
—
—
—
86,919 9,675,881 9,093,360 1,700,000 27,608,652 29,382,304 114,444,928 41,257,374 18,073,612 9,093,360 1,700,000 $ 123,182,676 20,417,771 56,665,231 20,738,392 20,556,160 241,560,230 $
>1 year
Total
Investment liquidity is aggregated below based on redemption provisions and lockup periods as of
May 31, 2015:
Monthly
Quarterly
Annual
>1 year
Total
26,191,090 29,302,788 63,761,063 —
4,283,686 —
—
—
—
9,791,708 6,762,842 4,567,100 —
—
—
—
45,958,873 10,611,753 —
—
—
—
—
—
26,369,281 —
—
—
—
—
—
2,715,634 11,227,972 10,352,385 1,700,000 26,191,090 29,302,788 119,511,644 46,459,510 20,078,758 10,352,385 1,700,000 $ 123,538,627 21,121,650 56,570,626 26,369,281 25,995,991 253,596,175 Daily
Cash and cash equivalents
Fixed income securities
Global public equities
Hedge funds
Real assets
Private equity
Private stock
$
Investments in the “>1 year” category include hedge funds that are not eligible for redemption because
of certain illiquid side pocket investments or the manager has restricted the amount of annual
redemptions. The real assets and private equity investments are not available for liquidation and
depend on the fund managers’ decisions about exit timing to provide capital distributions. It is
14
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
estimated that the underlying assets of the funds will be liquidated over the remaining life of the
respective funds that expire over the next 5 to 12 years.
Commitments
Private equity and real asset investments are generally made through private limited partnerships.
Under the terms of the partnership agreements, the College makes a commitment of a specific amount
of capital to a partnership and is obligated to remit committed funding periodically when capital calls
are exercised by the General Partner as the partnership executes on its investment strategy. Private
equity and real asset funds are structured with commitment periods of 3 to 5 years, within which the
funds can make investments as established in the limited partnership agreements. The aggregate
amount of unfunded commitments associated with private limited partnerships as of May 31, 2016 and
2015 was $14,194,000 and $11,076,000, respectively. The timing and amount of future capital calls
expected to be exercised in any particular future year is uncertain.
Reconciliation of Level 3 Opening and Closing Balances
The following tables provide a reconciliation of the beginning and ending balances of investments
classified as Level 3 within the fair value hierarchy:
Private common stock
Private preferred stock
Total
Private common stock
Private preferred stock
Total
(c)
Sales,
redemptions,
and
distributions
Market value
at May 31,
2015
Purchases
and
acquisitions
Unrealized
gains
Transfer in
(out) of
level 3
Market value
at May 31,
2016
$
1,000,000 700,000 —
—
—
—
—
—
—
—
1,000,000 700,000 $
1,700,000 —
—
—
—
1,700,000 Market value
at May 31,
2014
Purchases
and
acquisitions
Unrealized
gains
Transfer in
(out) of
level 3
Market value
at May 31,
2015
$
900,000 700,000 —
—
—
—
100,000 —
—
—
1,000,000 700,000 $
1,600,000 —
—
100,000 —
1,700,000 Sales,
redemptions,
and
distributions
Funds Held in Trust by Others
Perpetual trust assets that include investments in commingled fixed income and equity securities are
reported at fair value based on market prices provided by the trust administrators. Perpetual trust assets
that include investments in hedge funds and real assets are reported at estimated fair values based on
NAV reported by trust administrators.
15
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
The following table presents the fair value hierarchy of funds held in trust by others:
Level 3
2016
Fair value
$
34,462,764 2015
35,414,673 The following table provides a reconciliation of a beginning and ending balances of funds held in trust
by others classified within the fair value hierarchy Level 3:
2016
(d)
2015
Beginning balance
Gifts
Net realized and unrealized loss
Terminations
$
35,414,673 1,020,379 (1,972,288) — 36,047,619 — (229,467) (403,479) Ending balance
$
34,462,764 35,414,673 Other Financial Instruments
The carrying amount of cash and cash equivalents accounts and other receivable, and accounts payable
and accrued expenses approximates fair value because of the short maturity of these financial
instruments.
The carrying value of student loans receivable under the College’s loan program approximates fair
value. A reasonable estimate of the fair value of student loans receivable under government loan
programs with a carrying value of $1,900,045 and $2,284,798 as of May 31, 2016 and 2015,
respectively, could not be made because the loans are not saleable and can only be assigned to the
U.S. government or its designees.
The carrying value and estimated fair value of the College’s contributions receivable, annuities
payable, and long-term debt as of May 31, 2016 and 2015 are summarized as follows:
Contributions receivable
Annuities payable
Long-term debt
May 31, 2016
Carrying
Level 2 –
value
fair value
May 31, 2015
Carrying
Level 2 –
value
fair value
$
5,242,739 7,155,649 77,483,773 5,378,637 8,788,179 85,145,016 5,253,777 6,869,407 80,723,870 5,379,000 8,396,156 86,642,364 $
89,882,161 99,311,832 92,847,054 100,417,520 16
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Contribution Receivable
The fair value estimate is based on the present value of estimated future cash flows, which has been
measured at the balance sheet date using rates indicative of the market and credit risk associated with
the contribution.
Annuities Payable
The fair value estimate is based on the present value of estimated future payments to beneficiaries,
which has been measured using uniform gift annuity discount rates at the balance sheet date.
Long-Term Debt
The fair value estimate is based on quoted prices for bond issues and notes with similar maturities and
credit quality. The market prices utilized reflect the rate the College would have to pay a credit worthy
third party to assume its obligation and do not reflect an additional liability to the College.
(4)
Endowments
(a)
Interpretation of Relevant Law on Classification, Investment, and Appropriation of Endowment
Funds
The Commonwealth of Pennsylvania has not enacted a version of the Uniform Prudent Management
of Institutional Funds Act (UPMIFA), or a version of the Uniform Management of Institutional Funds
Act (UMIFA). Governing law resides in 15 Pa C.S. § 5548 Investment of Trust Funds. The College
has interpreted relevant law as requiring the preservation of the fair value of the original gift as of the
gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary.
As a result of this interpretation, the College classifies as permanently restricted net assets the original
value of the gifts donated to the permanent endowment at the time of the gift.
The remaining portion of the donor-restricted endowment fund that is not classified in permanently
restricted net assets is classified in temporarily restricted net assets until those amounts are
appropriated for expenditure by the College in a manner consistent with the standard of prudence
prescribed by the relevant law. Therefore, the College considers the following factors, among others,
in making a determination to appropriate or accumulate donor-restricted endowment funds:
(1)
The duration and preservation of the fund
(2)
The purposes of the College and the donor-restricted endowment fund
(3)
General economic conditions
(4)
The possible effect of inflation and deflation
(5)
The expected total return from income and the appreciation of investments
(6)
Other resources of the organization
(7)
The investment policies of the College
17
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Commonwealth of Pennsylvania law permits the College to allocate to income each year a portion of
endowment return. The amount that may be allocated under an endowment spending policy is limited
to a minimum of 2% and a maximum of 7% of a three-year moving average of the fair value of the
endowed assets. Since endowment net realized and unrealized gains may eventually be spent by the
College, endowment net realized and unrealized gains are recorded in the consolidated financial
statements as temporarily restricted net assets until transferred to unrestricted net assets. Gains in
excess of the spending policy remain in temporarily restricted net assets.
The College uses the total return concept for endowment funds. Under this concept and for the years
ending May 31, 2016 and 2015, endowment income is determined by applying the board of
trustees-approved spending rate of 5% to the average fair value of the endowment pool over a
20-quarter period. Based on this formula, the total distributable endowment income for the years ended
May 31, 2016 and 2015 amounted to $9,557,000 and $8,873,000, respectively. If distributable
endowment income is less than actual earnings, the excess earnings are retained to support operations
of future years and to offset potential market declines and inflation. If distributable endowment income
exceeds actual earnings of the pooled endowment funds in any one year, the amount needed to fund
such excess will be drawn from accumulated net realized and unrealized capital gains of the
endowment fund, in accordance with Pennsylvania law.
(b)
Endowment Investment Policy
The College’s investment policy establishes guidelines to trustees, staff, and investment managers
charged with the oversight and investment of the College’s endowment. The policy defines the
objectives of the fund, asset allocation guidelines, and the timing and criteria used to monitor and
evaluate performance. The return objectives and total return strategy of the endowment are described
as follows:
Return Objectives
The College has adopted investment and spending policies for endowment assets that attempt to
provide a predictable stream of funding to programs supported by its endowment while seeking to
maintain the purchasing power of the endowment assets over time. Endowment assets include those
assets of donor-restricted funds that the organization must hold in perpetuity or for a donor-specified
period, as well as board-designated funds. Under this policy, as approved by the board of trustees, the
endowment assets are invested in a manner that is intended to generate average annual rates of return
that equal or exceed the spending policy requirements, match inflation, and cover expenses of
managing the assets, while assuming a moderate level of investment risk.
Total Return Strategy
To satisfy its long-term rate-of-return objectives, the College has adopted an investment strategy based
on the total return concept. This concept frees the College from investing only for yield (interest and
dividends) and allows investing for total return (a combination of interest, dividends, gains, and losses
in market value).
18
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
(c)
Endowment Asset Composition
Endowment assets by donor restriction as of May 31, 2016 are as follows:
Unrestricted
Pooled (unitized) investments
Trusts and split-interest
investments (a)
Nonpooled investments
$
Total investments
Funds held in trust by others
Other unitized investments:
Gettysburg Hotel (b)
Total endowment
assets
$
2016
Temporarily
Permanently
restricted
restricted
Total
61,215,217 30,742,145 120,513,877 212,471,239 365,767 18,780,488 1,482,759 4,795,659 3,664,318 — 5,512,844 23,576,147 80,361,472 37,020,563 124,178,195 241,560,230 — 475,495 33,987,269 34,462,764 6,900,000 — — 6,900,000 87,261,472 37,496,058 158,165,464 282,922,994 Changes in endowment assets by donor restriction classification for the year ended May 31, 2016 are
as follows:
Unrestricted
Beginning balance, June 1, 2015
Net investment return
Contributions
Endowment spending draw
Beneficiary payments, transfers,
and other changes
$
Ending balance, May 31, 2016
$
2016
Temporarily
Permanently
restricted
restricted
Total
96,860,319 (5,737,061)
4,692 (3,938,476)
48,747,983 (5,521,395)
183,652 (5,618,524)
150,302,546 (2,027,454)
9,258,514 — 295,910,848 (13,285,910)
9,446,858 (9,557,000)
71,998 (295,658)
631,858 408,198 87,261,472 37,496,058 158,165,464 282,922,994 19
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Endowment assets by donor restriction as of May 31, 2015 are as follows:
Unrestricted
Pooled (unitized) investments
Trusts and split-interest
investments (a)
Nonpooled investments
$
Total investments
Funds held in trust by others
Other unitized investments:
Gettysburg Hotel (b)
Total endowment
assets
$
Temporarily
restricted
2015
Permanently
restricted
Total
71,495,634 41,752,197 111,449,621 224,697,452 364,357 18,100,328 1,655,263 4,918,238 3,860,537 — 5,880,157 23,018,566 89,960,319 48,325,698 115,310,158 253,596,175 — 422,285 34,992,388 35,414,673 6,900,000 — — 6,900,000 96,860,319 48,747,983 150,302,546 295,910,848 Changes in endowment assets by donor restriction classification for the year ended May 31, 2015 are
as follows:
Unrestricted
(d)
Beginning balance, June 1, 2014
Net investment return
Contributions
Endowment spending draw
Beneficiary payments, transfers,
and other changes
$
Ending balance, May 31, 2015
$
2015
Temporarily
Permanently
restricted
restricted
Total
96,458,787 5,410,180 1,165 (3,688,761)
49,179,046 7,072,342 220,000 (5,184,239)
143,661,682 81,114 6,793,120 — 289,299,515 12,563,636 7,014,285 (8,873,000)
(1,321,052)
(2,539,166)
(233,370)
(4,093,588)
96,860,319 48,747,983 150,302,546 295,910,848 (a)
The portion of annuities payable to be funded from trust and split-interest investments was
approximately $3,699,000 and $3,625,000 as of May 31, 2016 and 2015, respectively.
(b)
The Gettysburg Hotel is a wholly owned subsidiary, which is reported in the consolidated
statements of financial position, activities, and cash flows. The endowment fund’s interest in the
Gettysburg Hotel represents the cumulative total value of paid-in capital.
Losses in Excess of Temporarily Restricted Endowment Assets
From time to time, the fair value of assets associated with individual donor-restricted endowment funds
may fall below the level that the donor requires the College to retain as a fund of perpetual duration.
These deficiencies result from unfavorable market fluctuations that occur after the investment of
20
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
permanently restricted contributions. Deficiencies of this nature are funded by unrestricted net assets.
The aggregate amount of deficiencies for all donor-restricted endowment funds for which fair value is
less than the level required by donor stipulation was approximately $1,806,000 and $177,000 as of
May 31, 2016 and 2015, respectively.
(5)
Property, Plant, and Equipment
A summary of the College’s property, plant, and equipment as of May 31 is as follows:
Cost
Land
Hotel land
Land improvements
Building and improvements
Hotel building and improvements
Equipment
Hotel equipment
Construction in progress
$
2016
Accumulated
depreciation
Cost
2015
Accumulated
depreciation
3,632,543 859,385 20,936,211 239,433,203 14,006,585 52,122,925 4,326,701 1,232,419 — — (13,983,050)
(116,857,074)
(4,096,434)
(36,005,662)
(3,388,833)
— 3,632,543 859,385 19,980,060 237,361,646 13,957,721 46,934,103 5,156,133 672,825 — — (13,455,742)
(109,684,624)
(3,556,093)
(33,687,197)
(3,828,451)
— $ 336,549,972 (174,331,053)
328,554,416 (164,212,107)
Depreciation expense for the College for the years ended May 31, 2016 and 2015 was $10,477,914 and
$10,293,273, respectively. Depreciation expense for the Gettysburg Hotel for the years ended May 31, 2016
and 2015 was $984,404 and $1,099,193, respectively.
(6)
Contributions Receivable, Net
Contributions receivable, net as of May 31 is as follows:
2016
Unconditional promises expected to be collected:
One year or less
One year to five years
$
Less:
Allowance for doubtful accounts
Discount of contributions receivable
Total
$
21
2015
2,939,588 3,271,020 2,632,563 3,447,330 6,210,608 6,079,893 (758,171) (209,698) (600,781) (225,335) 5,242,739 5,253,777 (Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Contributions receivable are recorded at estimated fair value on the date the donor’s unconditional promise
to contribute is made using the present value of future cash flows. Contributions receivable are not measured
at fair value subsequent to the initial measurement because the discount rate selected for each contribution
receivable remains constant over time.
Contributions receivable due in excess of one year are discounted at rates ranging 0.7% and 2.1% for the
years ended May 31, 2016 and 2015.
(7)
Long-Term Debt
(a)
Bonds and Note Payable
Bonds and note payable consist of the following at May 31:
Original
principal
Adams County IDA:
Series 2010
Series 2013
$
Principal outstanding at May 31
2016
2015
67,680,000 18,890,000 PNC Note
8,500,000 Total
$
50,510,000 18,890,000 53,530,000 18,890,000 69,400,000 72,420,000 8,083,773 8,303,870 77,483,773 80,723,870 Series 2010 Bonds
In June 2010, the College issued fixed rate bonds through the Adams County Industrial Development
Authority (IDA). The proceeds were used for various tax-exempt purposes including the current
refunding of the Series 1998B and 2008B Bonds as well as the current and advance refunding of the
Series 1998 Bonds and to pay issuance costs. The remaining balance of the Series 1998 Bonds was
defeased with College proceeds. The Series 2010 Bonds were issued at a premium and bear interest
rates of 4.00% to 5.00% depending upon the maturity date, which ranges between 2013 and 2028.
Interest is paid semiannually.
Series 2013 Bonds
In July 2013, the College issued fixed rate bonds through Adams County Industrial Development
Authority in the aggregate principal amount of $18,890,000 at a discount of approximately $305,000.
The proceeds were used for current refunding of the outstanding Series 2008A Bonds and payment of
issuance costs. The Series 2013 Bonds have varying maturities beginning August 2028 through
August 2033 and bear interest rates ranging from 4.00% to 4.25% depending on the maturity date.
Interest is paid semiannually.
PNC Note
In June 2014, the College entered into a term note with PNC Bank, NA with an aggregate principal
amount of $8,500,000. The proceeds were used for the full repayment of a prior note to Wells Fargo
22
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Bank, NA, various improvements and to pay issuance costs. The note bears a fixed interest rate of
3.55%, which will be paid in monthly installments through June 2024.
Approximate aggregate principal maturities for bonds and note payable are as follows:
Bonds payable
Year ending May 31:
2017
2018
2019
2020
2021
Thereafter
(b)
Note payable
Total
$
3,180,000 3,340,000 3,485,000 3,640,000 3,830,000 51,925,000 228,987 237,367 246,053 254,344 264,363 6,852,659 3,408,987 3,577,367 3,731,053 3,894,344 4,094,363 58,777,659 $
69,400,000 8,083,773 77,483,773 Line of Credit
The College has a committed revolving line of credit (the Line) under which it may request advances
in an aggregate outstanding amount up to $5,000,000. The expiration date of the Line is March 31,
2017, or such later date as may be designated by the bank.
Each advance outstanding under the Line will bear interest at a rate or rates per annum as may be
selected by the College from the following interest rate options: (a) prime rate, (b) LIBOR plus 45
basis points, or (c) rate offered by the bank in its sole discretion.
There was no borrowing or balance outstanding as of May 31, 2016 or 2015.
(8)
Retirement and Postemployment Benefits
(a)
Retirement Benefits
Defined-contribution retirement benefits are provided for substantially all employees through the
Teacher’s Insurance and Annuity Associations and College Retirement Equities Fund (TIAA-CREF).
The College’s contribution to the fund during the years ended May 31, 2016 and 2015 was
approximately $4,489,000 and $4,641,000, respectively.
(b)
Health and Welfare Plan
The College offers eligible employees a defined-contribution health and welfare plan (HW Plan)
through Emeriti Retirement Health Solution, a consortium of colleges and universities organized to
address retiree healthcare needs. The HW Plan is intended to assist employees and their families with
medical expenses during their retirement years. Funding for the HW Plan is provided through
Voluntary Employees’ Beneficiary Association trusts (VEBA). The College begins making
contributions to the HW Plan on behalf of eligible employees on the first day of the month following
attainment of age 35 and completion of two years of service. The College’s contribution to the HW
Plan was approximately $297,000 and $304,000, respectively, for the years ended May 31, 2016 and
2015.
23
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
(c)
Postretirement Healthcare Plan
The College provides a postretirement healthcare plan (PH Plan) that covers premiums for medical
insurance of eligible retirees and their spouses. The PH Plan has a measurement date of May 31 and
is not funded.
The following table sets forth the PH Plan’s change in benefit obligations and change in plan assets
for the year ended May 31:
2016
Change in benefit obligations:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial and other loss
Participant contributions
Benefits paid
Gain from curtailment
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Benefits paid
Employer contribution
Participant contributions
Fair value of plan assets at end of year
2015
$
16,350,947 40,610 659,620 211,603 65,510 (758,225) (1,425,756) 14,511,542 30,647 606,659 2,045,749 47,547 (891,197) — $
15,144,309 16,350,947 $
— (758,225) 692,715 65,510 — (891,197) 843,650 47,547 $
— — The gain due to curtailment is the result of the elimination of the faculty retirement program that
offered 3 years of active medical benefits to retired faculty.
Weighted average assumptions used to determine benefit obligations as of May 31 were as follows:
2016
Discount rate, end of year
Initial healthcare cost trend rate
Ultimate healthcare cost trend rate
Year ultimate healthcare cost trend rate is reached
2015
3.86%
5.70
3.80
2082
4.15%
5.80
3.80
2082
The impact of a 1% change in medical cost trend rate is as follows:
2016
Increase one
percentage
Effect on 2016 service and interest cost
Effect on May 31, 2016 benefit obligation
$
24
5,294 106,479 Decrease one
percentage
(5,534) (98,343) (Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
Year ended May 31
2015
2016
Components of net periodic benefit costs:
Service cost – benefits earned during the year
Interest cost on projected benefit obligation
Amortization of net loss
Net periodic benefit cost
$
40,610 659,620 504,007 30,647 606,659 291,404 $
1,204,237 928,710 Weighted average assumptions used to determine net periodic postretirement benefit costs for the years
ended May 31, 2016 and 2015 were as follows:
2016
Discount rate, beginning of year
Initial healthcare cost trend rate
Ultimate healthcare cost trend rate
Year ultimate healthcare cost trend rate is reached
4.15%
5.80
3.80
2082
2015
4.32%
5.90
3.80
2082
Actuarial net loss of $305,419 will be amortized in fiscal year 2017.
(d)
Cash Flows
The College expects to contribute $653,000 to its postretirement healthcare plan in fiscal year 2017.
The benefits expected to be paid from the postretirement healthcare plan in each of the subsequent
fiscal years are as follows:
2017
2018
2019
2020
2021
2022–2026
$
703,000 720,000 712,000 728,000 749,000 3,976,000 The expected benefits are based on the same assumptions used to measure the College’s benefit
obligation at May 31, 2016 and include estimated future employee services.
25
(Continued)
GETTYSBURG COLLEGE
Notes to Consolidated Financial Statements
May 31, 2016 and 2015
(9)
Net Assets
Unrestricted net assets consist principally of College operating, net investment in plant and split-interest
agreement funds.
Temporarily restricted net assets at May 31 are as follows:
2016
Accumulated endowment gains
Contributions receivable
Scholarship and loan funds
Term endowment, trusts, and split-interest agreements
Acquisition of buildings and equipment
Other college activities
Total
2015
$
27,195,390 3,592,769 1,270,925 4,421,231 4,375,235 4,501,553 38,184,441 3,218,625 1,211,344 4,531,873 3,492,670 4,427,518 $
45,357,103 55,066,471 Accumulated endowment gains are temporarily restricted based on the type of expense for which the original
endowment gift was designated, principally for scholarships and instructional expenses.
Permanently restricted net assets consist principally of endowment funds and funds held in trust by others,
for which the earnings are designated primarily for scholarship and instructional expenses.
(10) Fund-Raising Expense
The College expended approximately $4,849,000 and $5,412,000 for the years ended May 31, 2016 and
2015, respectively, for payroll and benefits, informational materials, travel, and special events relating to
fund-raising activities. These costs are all classified as institutional support in the consolidated statements of
activities.
(11) Commitments and Contingencies
The College is involved in various claims and legal actions arising in the ordinary course of business. In the
opinion of management, the ultimate disposition of these matters will not have a material adverse effect on
the College’s consolidated financial position, results of operations, or liquidity.
(12) Subsequent Events
The College has evaluated subsequent events through September 15, 2016, the date the consolidated
financial statements were issued. No disclosures were required as a result of this evaluation.
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Supplemental Schedule
GETTYSBURG COLLEGE
Schedule of Assets, Liabilities, and Net Assets
Year ended May 31, 2016
Gettysburg
College
Assets
Cash and cash equivalents
Accounts and other receivable, net
Contributions receivable, net
Student loans receivable, net
Notes receivable
Prepaid expenses and other assets
Investments
Funds held in trust by others
Property, plant, and equipment, net
Total assets
Subsidiaries of
Gettysburg
College
Eliminating
entries
Consolidated
$
48,873,112 791,184 5,242,739 5,646,855 8,115,007 3,137,953 241,560,230 34,462,764 150,511,515 2,721,685 162,335 — — — 558,993 — — 11,707,404 — — — — (8,115,007) — — — — 51,594,797 953,519 5,242,739 5,646,855 — 3,696,946 241,560,230 34,462,764 162,218,919 $
498,341,359 15,150,417 (8,115,007) 505,376,769 $
15,102,248 2,293,867 791,201 7,155,649 2,048,278 15,144,309 1,544,349 77,483,773 1,393,200 — 4,024 — — — — 8,115,007 — — — — — — — (8,115,007) 16,495,448 2,293,867 795,225 7,155,649 2,048,278 15,144,309 1,544,349 77,483,773 121,563,674 9,512,231 (8,115,007) 122,960,898 173,888,908 45,357,103 157,531,674 5,638,186 — — — — — 179,527,094 45,357,103 157,531,674 376,777,685 5,638,186 — 382,415,871 498,341,359 15,150,417 (8,115,007) 505,376,769 Liabilities and Net Assets
Liabilities:
Accounts payable and accrued expenses
Students’ advance payments and deposits
Deposits held in custody for others
Annuities payable
Advances from federal government
Accrued postretirement benefit cost
Bonds premium
Long-term debt
Total liabilities
Net assets:
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets
Total liabilities and net assets
$
See accompanying independent auditors’ report.
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