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SACS
 

Core Requirement 2.11

The institution has a sound financial base and demonstrated financial stability, and adequate physical resources to support the mission of the institution and the scope of its programs and services.

The member institution provides the following financial statements: (a) an institutional audit (or Standard Review Report issued in accordance with Statements on Standards for Accounting and Review Services issued by the AICPA for those institutions audited as part of a system wide or statewide audit) and written institutional management letter for the most recent fiscal year prepared by an independent certified public accountant and/or an appropriate governmental auditing agency employing the appropriate audit (or Standard Review Report) guide; (b) a statement of financial position of unrestricted net assets, exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets attributable to operations for the most recent year; and, (c) an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board.

Audit requirements for applicant institutions may be found in the Commission policy entitled “Accreditation Procedures for Applicant Institutions. (Resources)

compliance

Summary

Cape Fear Community College (CFCC) complies with this core requirement. The North Carolina Office of the State Auditor audits the College annually and the audit reports issued include no issues of non-compliance or internal control weaknesses for the past eleven years. The financial audit for fiscal year 2005 occurred after the compliance document was written. Cape Fear Community College demonstrates financial stability and has a sound financial base due to its continual growth in enrollment and in revenues to support the growth while maintaining its financial integrity due to its audit history. The College also has adequate financial liquidity in the event of an economic downturn.

The College has a sound budgeting process that is tied to the institutional effectiveness plan. The budgeting process includes all areas participating in an annual budget hearing, annual equipment hearing, establishing a budget reserve, and the ability to transfer funds. The College Board of Trustees adopts the budget and is provided financial reports for discussion at its bimonthly meetings. Budget reports are distributed to budget managers monthly.

The College has adequate physical resources. CFCC received over $97 million in bond funds from the State of North Carolina and New Hanover County since 1993. These funds were used for campus expansion, including new buildings, renovations to existing buildings, and property acquisitions including establishing the North Campus.

Narrative

Cape Fear Community College has a sound financial base, is financially stable, and has adequate physical resources to support the mission, and scope of its programs and services. Senior management carefully analyzes available funds and prioritizes the allocation of these funds along with its physical resources to meet the college’s mission.

The majority of the College’s funding is appropriated by the State of North Carolina and distributed by the North Carolina Community College System as directed by the State Board of Community Colleges. The appropriations are based on student full-time equivalency (FTE). The state budget FTE for CFCC has increased from 4,099 in 1999-00 to 6,415 in 2005-06, which is a 56.51% increase (State Budget FTE Summary). The growth in FTE resulted in a growth in appropriations from 1999-00 to 2005-06 as $12.3 million or 68.47% (Summary of State Budget Allocations) (NCCCS College Allotments).

Cape Fear Community College’s service area consists of New Hanover and Pender counties. The College receives funding from both counties to operate and maintain facilities within their boundaries. The growth in county funding from 1999-00 to 2005-06 is 88.74% or $2.7 million (County Budget Allocations).

New Hanover County voters have supported CFCC with two bond referenda. The first referendum was passed in 1993 for $13.9 million and the second one in 1997 for $38.3. Also, the State of North Carolina supported two bond referenda. CFCC’s allocation in 1994 was $8.2 million and was increased to $36.6 million by 2000. These represent a large influx of capital funds for campus expansion, including new buildings and property acquisitions, and renovations. The investment in land and buildings has increased 819% since 1994. A portion of these funds was used to establish the North Campus, which includes 140 acres of land and two buildings with a combined square footage of 235,023.

There are a variety of methods to analyze an entity’s financial condition. The source for the ratios used in this document is from a NACUBO publication titled Presentation and Analysis of Financial Management Information, 2nd edition. The data used in the ratio calculations came from the College’s Statement of Net Assets and Statement of Revenues, Expenses, and Changes in Net Assets for fiscal years ended 2004 and 2003 (Financial Ratios) (Statement of Net Assets) (Statement of Revenues, Expenses, and Changes in Net Assets) (Financial Statement Audit Report as of June 30, 2004) (Financial Statement Audit Report as of June 30, 2003) (Financial Statement Audit Report as of June 30, 2002). The overall results show the College is financially healthy and stable. Since the College is a publicly funded institution, the state appropriation income is shown under nonoperating revenues (state aid) instead of operating revenues on the Statement of Revenues, Expenses, and Changes in Net Assets as specified by GASB guidelines. This format results in a net operating loss shown on the statement.

The current ratio is a measurement of financial liquidity by comparing the current assets to current liabilities. As of June 30, 2004 and June 30, 2003, the current ratios are 2.07 and 3.03, respectively. This means the College’s liquidity is adequate to meet its financial obligations in the event of an economic downturn since the ratios are greater than 2.

The viability ratio is another measurement of financial liquidity as it compares the expendable net assets to long-term debt. As of June 30, 2004 and June 30, 2003, the viability ratios are 8.10 and 2.59, respectively. The increase in the ratio shows the College’s debt is decreasing while expendable net assets are increasing meaning its liquidity is more than adequate to meet its financial obligations.

The primary reserve ratio measures the financial strength of the College and its ability to support its current operations utilizing all available resources. It is determined by comparing expendable net assets to total operating expenses. As of June 30, 2004 and June 30, 2003, the primary reserve ratios are 32.57% and 14.48%, respectively. The positive increase in the ratio from fiscal year 2003 to 2004 indicates the College’s strengthening financial position.

The return on net assets ratio shows if the College’s financial position is improving. It is determined by comparing the change in net assets to total net assets. As of June 30, 2004 and June 30, 2003, the net assets ratios are 18.05% and 1.01%, respectively. The increase in the ratio indicates the College’s strengthening financial position.

Physical Resources
With the approval of the College’s President, the Board of Trustees, the State Board of North Carolina Community Colleges, and the North Carolina State Construction Office, an active building and acquisition program began in 1996 at the Wilmington Campus and at the Burgaw Center (Wilmington Campus Master Site Plan). The CFCC Board of Trustees foresaw that continuing rapid enrollment growth of the College would greatly exceed the institution's expanding facilities at the Wilmington Campus, thus an aggressive facilities planning process would need to be undertaken.

This facilities planning process began with a review of curriculum (college credit) headcount and full-time equivalency (FTE) growth on Cape Fear Community College’s New Hanover County and Pender County campuses over the previous decade. The review was then coupled with known and/or projected factors that required consideration for growth of those campuses during the planning period (Strategic Plan 1997-2017), (Strategic Plan 1999-2019), (2004-2023 Facilities Planning), (Square feet of Academic Facilities per FTE), (Facilities Inventory and Utilization Study pg 35). The Facilities Inventory and Utilization Study is designed to summarize changes in space allocations and looks at how each room of every building is being used. The Facilities Inventory and Utilization Study is used along with the College’s Capital Improvement Program to ensure the adequacy of college facilities (Capital Improvement Program). Compared to other North Carolina institutions of higher education, CFCC’s assignable square feet per FTE student was very low.

Thus, approval was granted by the North Carolina State Board of Community Colleges for CFCC to purchase 142-acres of land in the northern part of New Hanover County at a cost of $5,296,758. The expansion of the North Campus began in 1997 (North Campus Master Site Plan), (Strategic Plan 1997-2017), (Strategic Plan 1999-2019).

Two buildings have been completed at the North Campus. The first building, the McKeithan Center, was completed in 2003 at a cost of $21 million dollars, including equipment. The second building, the Applied Technologies Building, was completed in June 2005 at a cost of $17 million dollars, including equipment. These new facilities resulted in the addition of 235,023 gross square feet, at a combined cost of $38,000,000, (Sources of Revenue).

CFCC’s expansion includes the following:

Elevator Tower Concrete Pier
Health Science Building Science Building
General Administration Building Schwartz Center
Cosmetology/ Maintenance Building Auto Body Shop
Business, Industry & Government Center Neuwirth Building Parking
Office Annex Building Workforce Training Center
Outside Plant Infrastructure Burgaw Expansion
Roof Replacements Miscellaneous Renovations
McKeithan Center Applied Technologies Building
Campus Loop Road Landscape Gardening Building and Storage

The CFCC Board of Trustees’ Planning Committee consists of representatives from New Hanover County Commissioners, Pender County Commissioners, the Wilmington Mayor’s Office, Cape Fear Community College Board of Trustees, Cape Fear Community College Senior Staff and other community organizations (CFCC Board of Trustees' Planning Committee pg 8). The Board of Trustees’ Planning Committee members actively participate in the long range strategic planning to ensure that the college will be in a position to address the regional growth and training needs in Pender County and New Hanover County (Strategic Plan 1997-2017), (Strategic Plan 1999-2019), (2004-2023 Facilities Planning). Further, the Board of Trustees’ Facilities and Equipment Committee meets frequently to evaluate facilities relative to meeting expected outcomes and educational needs (CFCC Board of Trustees' - Facilities and Equipment Committee pg 7). This committee approves and recommends acquisitions or new construction projects to the Board of Trustees for its approval. Following Board approval, the recommendations are submitted to the North Carolina Community College Systems Office for final approval by the North Carolina State Board of Community Colleges.

To ensure that it continues to provide adequate physical facilities for all of its programs, services, and mission-related activities, the College has taken a number of planning and design steps which are included in the strategic and facilities plans, as well as the College Goals (Strategic Plan 1997-2017), (Strategic Plan 1999-2019), (2004-2023 Facilities Planning), (2001-2005 College Goals and 2004-2005 Planning Priorities). All new construction and major renovation projects are approved by the CFCC Board of Trustees and are subject to approval by the North Carolina State Board of Community Colleges as granted by the North Carolina General Assembly through legislative action as cited in the North Carolina Administrative Code (23 NCAC 02D .0602). The Vice-President of Institutional Services assists the President with keeping the CFCC Board of Trustees updated on the status of all pending and completed projects. The Board of Trustees and the Facilities and Equipment Committee review the summary of funding and the project cost/budget and approves it (Annual Calendar for Planning and Budgeting).

Plans for a Public Safety Training center are currently underway. This facility includes financial support from New Hanover County and the City of Wilmington as a joint initiative with a budget of $10,000,000. The College’s Board of Trustees and other constituencies will continue to monitor the adequacy of facilities toward fulfilling the mission of the College.

Financial Statements
(a) The North Carolina Office of the State Auditor (OSA) performs an annual financial audit, including internal controls, for all community colleges in the North Carolina Community College System. In addition to the OSA issuing audit reports to each individual community college, they provide a comprehensive statewide independent audit under the single-audit rule, which meets federal auditing and reporting guideline (Single Audit Report for the Year Ended June 30, 2004). The supervising auditor meets with senior management at the conclusion of the audit to discuss any weaknesses or concerns.

The audit report is distributed to the Cape Fear Community College Board of Trustees, CFCC senior management, and to the executive and legislative branches of North Carolina government (March 24, 2005 Board Minutes pg 4) (Financial Statement Audit Report for the Year Ended June 30, 2004). The report contains an independent auditor’s report, management’s discussion and analysis, financial statements and accompanying footnotes, and internal control standards. Cape Fear Community College has received no issues of non-compliance or internal control weaknesses for the past eleven years (Management Letter for Fiscal Year 2004).

The financial audit for fiscal year 2005 will take place during January and February 2006. The audit results will be made available once the audit report and management letter are distributed to the College.

(b) The College reviewed the changes in unrestricted net assets, excluding plant assets and plant related debt, disclosing a decrease of $76,702.84 from 2003-04 compared to 2002-03. The decrease is comprised of very small variances within unrestricted funds and is an overall decrease of .22%. Table 1 was generated to show the comparative data (Table 1).

(c) The College annually prepares a comprehensive budget as required by state law and is approved by its Board of Trustees (North Carolina General Statutes, Chapter 115D-54; North Carolina General Statutes, Chapter 115D-56). The College prepares and submits to the North Carolina Community College System the DCC 2-1 (Summary of Revenues and Expenditures), and its Budget Resolution (DCC 2-1, Fiscal Year 2005-06) (Budget Resolution, Fiscal Year 2005-06). The Board of Trustees reviews and approves the budget resolution annually (September 23, 2004 Board Minutes pg 4). In addition, regular reports are provided to the Board of Trustees at its bimonthly meetings with prior review by the Finance Committee of the Board (May 26, 2005 Board Minutes pg 6). The budgets are discussed in detail with the Finance Committee who presents the reports to the full Board. Budget reports are also provided monthly to the President, Executive Vice President, Vice Presidents, Deans, Chairs, and other department heads.

The College’s institutional effectiveness plan includes an annual calendar for planning and budgeting (Annual Calendar for Planning and Budgeting). All areas participate in the state budget hearing in the February-March timeframe requesting additional funds for the next fiscal year (State Budget Hearing Memorandum). Department heads receive a budget worksheet, which includes a base budget and forms to use to request increases or decreases by departmental line item (Business Administration Budget Worksheet) (Planning and Budget Request Form). The Planning and Budget Request Form ties the budget increase or decrease to a college goal. Vice presidents, deans, and directors present their budgetary needs during the state budget hearing. The college president makes the final decision on funding new initiatives and supplemental funding based on fund availability, establishes a budget reserve for unexpected expenses and reversions, and meeting the primary goal, which is to provide the best possible instruction and service to its student population. The budget amendment process is described in Comprehensive Standard 3.10.4 (Comprehensive Standard 3.10.4).

Input is solicited from vice presidents, deans, and department heads for inclusion of capital and general maintenance needs in the preparation of county budget proposals. Budget proposals are prepared for New Hanover and Pender counties and are subject to approval by the Board of Trustees before submitting them to the respective county managers (March 24, 2005 Board Minutes pg 4).

The majority of the funds provided for the College’s financial operation are from the State of North Carolina. These funds are appropriated by the North Carolina General Assembly and distributed by the North Carolina Community College System (NCCCS 2005-06 College Allotments). These state dollars pay faculty and staff salaries, provide instructional and office materials, professional development, maintenance and repair of equipment, software and audiovisual materials, library books, and equipment. State funds allocated have increased steadily for several years and adequately provide a sound financial and stable base (NCCCS College Allotments 2000-01 through 2005-06).

Once the state budget is received, an annual equipment hearing is held. Vice presidents and their staff present requests and justification for funds from the college's equipment budget to purchase additional equipment for the current fiscal year. Decisions are made based on critical need and fund availability.

The College’s service areas include New Hanover and Pender Counties. G.S. 115D.32 requires these two counties to provide adequate funds for the operation and maintenance of facilities located in their respective county (North Carolina General Statutes, Chapter 115D-32). County funds pay operational and maintenance staff salaries, legal fees, insurance costs associated with liability, property, and worker’s compensation, utilities, facility repairs, rental of property, renovations, buildings, land, land improvements, and motor vehicles. Both counties have provided adequate funding to maintain and operate College facilities.

The College actively pursues grants to supplement instruction. These grants along with financial support from the CFCC Foundation, bookstore, vending operations, and other miscellaneous funds complement the funding from the State, New Hanover, and Pender Counties.

Additional documents available are:

Financial Statement Audit Report as of June 30, 2001
Financial Statement Audit Report as of June 30, 2000
Management Letter for Fiscal Year 2003
Management Letter for Fiscal Year 2002
Management Letter for Fiscal Year 2001
Management Letter for Fiscal Year 2000
NCCCS 2005-06 College Allotments
NCCCS 2004-05 College Allotments
NCCCS 2003-04 College Allotments
NCCCS 2002-03 College Allotments
NCCCS 2001-02 College Allotments
NCCCS 2000-01 College Allotments
NCCCS 1999-01 College Allotments
New Hanover County (NHC) Allocation Letter, 2005-06
NHC Allocation Letter, 2004-05
NHC Allocation Letter, 2003-04
NHC Allocation Letter, 2002-03
NHC Allocation Letter, 2001-02
NHC Allocation Letter, 2000-01
NHC Allocation Letter, 1999-00
Pender County Allocation Letter, 2005-06
Pender County Allocation Letter, 2004-05
Pender County Allocation Letter, 2003-04
Pender County Allocation Letter, 2002-03
Pender County Allocation Letter, 2001-02
Pender County Allocation Letter, 2000-01
Pender County Allocation Letter, 1999-00

 

Documentation

Source Location

State Budget FTE Summary,
CFCC Business Office

statebudget_ftedata.pdf

Summary of State Budget Allocations,
CFCC Business Office

statebudgetdata.pdf

NCCCS College Allotments,
North Carolina Community College System

ncccsallotments.pdf

County Budget Allocations,
CFCC Business Office

countybudgetdata.pdf

Financial Ratios,
CFCC Business Office
ratios.pdf
Statement of Net Assets,
CFCC Business Office
statementnetassets.pdf
Statement of Revenues, Expenses
and Changes in Net Assts,

CFCC Business Office
statementofrevenues.pdf
Financial Statement Audit Report
as of June 30, 2004,

Office of State Auditor
FIN-2004-6810.pdf
Financial Statement Audit Report
as of June 30, 2003,

Office of State Auditor
FIN-2003-6810.pdf
Financial Statement Audit Report
as of June 30, 2002,

Office of State Auditor
FIN-2002-6810.pdf
CFCC Wilmington Campus Master Site Plan wilmingtonmastersiteplan.pdf
Strategic Plan 1997-2017 strategicplan1997_2017.pdf
Strategic Plan 1999-2019 strategicplan1999_2019.pdf
2004-2023 Facilities Planning 2004-2023facilitiesplanning.pdf
Square feet of Academic Facilities per FTE,
2002 CFCC Fact Book
Cape Fear Community College Website
sqftperfte.pdf
Facilities Inventory and Utilization Study,
State of North Carolina Higher Education
Comprehensive Planning Program, 2004 (pg 35)
hefcstudy04.pdf
Capital Improvement Program,
New Hanover County 2005-2006
capitalimprovement2005_06.pdf
North Campus Master Site Plan, 2004-2023 northcampusmastersiteplan.pdf
Strategic Plan 1997-2017 strategicplan1997_2017.pdf
Strategic Plan 1999-2019 strategicplan1999_2019.pdf
Source of Revenue,
CFCC Business Office
sourcesofrevenue.pdf
CFCC Board of Trustees' Planning Committee,
Board of Trustees By-Laws, Article V, Section 3 (F)
bot_bylaws.pdf
See bookmarks
Strategic Plan 1997-2017 strategicplan1997_2017.pdf
Strategic Plan 1999-2019 strategicplan1999_2019.pdf
2004-2023 Facilities Planning 2004-2023facilitiesplanning.pdf
CFCC Board of Trustees'
Facilities and Equipment Committee

Board of Trustees By-Laws, Article V, Section 3 (C)
bot_bylaws.pdf
See bookmarks
Strategic Plan 1997-2017 strategicplan1997_2017.pdf
Strategic Plan 1999-2019 strategicplan1999_2019.pdf
2004-2023 Facilities Planning 2004-2023facilitiesplanning.pdf
2001-2005 College Goals
and 2004-2005 Planning Priorities,

CFCC Institutional Effectiveness Website
goals_planning_priorities.pdf
23 NCAC 02D .0602,
North Carolina Administrative Code,
Title 23, Chapter 2 Subchapter D, Section .0602
ncac23_02d_0602.pdf
Annual Calendar for Planning and Budgeting,
Institutional Effectiveness
Cape Fear Community College Website
planbudgetcalendar.pdf
Single Audit Report for the Year Ended
June 30, 2004,

Office of the State Auditor
FIN-2004-8730.pdf
Board Minutes,
CFCC Board of Trustee Minutes,
March 24, 2005
bot_minutes032405.pdf
See bookmarks
Financial Statement Audit Report
for the Year Ended June 30, 2004
FIN-2004-8730.pdf
Management Letter for Fiscal Year 2004,
Office of the State Auditor
managementltrfy2004.pdf
Table 1,
Schedule of Changes in Unrestricted Net Assets
For the Fiscal Year Ended June 30, 2004
table1.pdf
North Carolina General Statutes, Chapter 115D-54 ncgs115D_54.pdf
North Carolina General Statutes, Chapter 115D-56 ncgs115D_56.pdf
DCC 2-1, Fiscal Year 2005-06 DCC2-1.pdf
Budget Resolution, Fiscal Year 2005-06 05-06budgetresolution.pdf
Board Minutes,
CFCC Board of Trustee Minutes,
September 23, 2004

bot_minutes092304.pdf
See bookmarks

Board Minutes,
CFCC Board of Trustees Minutes,
May 26, 2005
bot_minutes052605.pdf
See bookmarks
Annual Calendar for Planning and Budgeting,
Institutional Effectiveness
Cape Fear Community College Website
planbudgetcalendar.pdf
State Budget Hearing Memorandum,
February 16, 2005
statebudgethrgfeb2005memo.pdf
Business Administration Budget Worksheet busadminbudgetwksht.pdf
Planning and Budget Request Form budgetrequestform.pdf
Comprehensive Standard 3.10.4,
CFCC SACS Compliance Documentation
Comprehensive Standard 3.10.4
Board Minutes,
CFCC Board of Trustees
March 24, 2005
bot_minutes032405.pdf
See bookmarks
NCCCS 2005-06 College Allotments ncccs2005_2006allotments.pdf
NCCCS College Allotments
2000-01 through 2005-06
ncccsallotments.pdf
North Carolina General Statutes, Chapter 115D-32 ncgs115D_32.pdf
Financial Statement Audit Report
as of June 30, 2001
FIN-2001-6810.pdf
Financial Statement Audit Report
as of June 30, 2000
FIN-2000-6810.pdf
Management Letter for Fiscal Year 2003 managementltrfy2003.pdf
Management Letter for Fiscal Year 2002 managementltrfy2002.pdf
Management Letter for Fiscal Year 2001 managementltrfy2001.pdf
Management Letter for Fiscal Year 2000 managementltrfy2000.pdf
NCCCS 2005-2006 College Allotments ncccs2005_2006allotments.pdf
NCCCS 2004-2005 College Allotments ncccs2004_2005allotments.pdf
NCCCS 2003-2004 College Allotments ncccs2003_2004allotments.pdf
NCCCS 2002-2003 College Allotments ncccs2002_2003allotments.pdf
NCCCS 2001-2002 College Allotments ncccs2001_2002allotments.pdf
NCCCS 2000-2001 College Allotments ncccs2000_2001allotments.pdf
NCCCS 1999-2000 College Allotments ncccs1999_2000allotments.pdf
New Hanover County (NHC) Allocation Letter, 2005-06,
New Hanover County, County Manager’s Office
nhcaollocationltr2005_06.pdf
NHC Allocation Letter, 2004-05,
New Hanover County, County Manager’s Office
nhcaollocationltr2004_05.pdf
NHC Allocation Letter, 2003-04,
New Hanover County, County Manager’s Office
nhcaollocationltr2003_04.pdf
NHC Allocation Letter, 2002-03,
New Hanover County, County Manager’s Office
nhcaollocationltr2002_03.pdf
NHC Allocation Letter, 2001-02,
New Hanover County, County Manager’s Office
nhcaollocationltr2001_02.pdf
NHC Allocation Letter, 2000-01,
New Hanover County, County Manager’s Office
nhcaollocationltr2000_01.pdf
NHC Allocation Letter, 1999-00,
New Hanover County, County Manager’s Office
nhcaollocationltr1999_00.pdf
Pender County Allocation Letter, 2005-06,
County of Pender, County Manager’s Office
pendercountyallocationltr2005_06.pdf
Pender County Allocation Letter, 2004-05,
County of Pender, County Manager’s Office
pendercountyallocationltr2004_05.pdf
Pender County Allocation Letter, 2003-04,
County of Pender, County Manager’s Office
pendercountyallocationltr2003_04.pdf
Pender County Allocation Letter, 2002-03,
County of Pender, County Manager’s Office
pendercountyallocationltr2002_03.pdf
Pender County Allocation Letter, 2001-02,
County of Pender, County Manager’s Office
pendercountyallocationltr2001_02.pdf
Pender County Allocation Letter, 2000-01,
County of Pender, County Manager’s Office
pendercountyallocationltr2000_01.pdf
Pender County Allocation Letter, 1999-00,
County of Pender, County Manager’s Office
pendercountyallocationltr1999_00.pdf

 

 

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