Council of Trustees Quarterly Business Meeting Friday, December 16, 2016 2:00 p.m. Crawford Center Conference Room AGENDA • Roll Call • Public Comment Period • Old Business Action Minutes – Meeting held on November 9, 2016 • Welcome Appointed - EU Student Trustee Savannah F. Anderton • President H. Fred Walker – President’s Report to the Council of Trustees • New Business Executive – Action Resolution Posthumous Honor of the Contributions of EU Trustee Ronald A. Steele Academic Affairs (Dr. Michael Hannan, Provost and Vice President for Academic Affairs) Information – Academic Affairs Academic Affairs Report Individuals Granted Emeritus Status Program Revisions Bachelor of Arts in Communication Studies Bachelor of Arts in Political Science – International Affairs concentration Minor in Special Education -2AGENDA – Council of Trustees Edinboro University of Pennsylvania December 16, 2016 Enrollment Management (Dr. William Edmonds, Vice President for Enrollment Management) Information – Enrollment Management Enrollment Management Report Finance and Administration (Mr. Guilbert Brown, Vice President for Finance and Administration) Action – Finance and Administration President Walker recommends approval of Contracts and Purchases as reviewed by the Council of Trustees for the period October 1-31 and November 1-30, 2016. Resolution – Certification of Compliance with Board of Governors’ Policy 1985-04-A: University External Financial Support Edinboro University Alumni Association Edinboro University Foundation, Inc. Edinboro University Services, Inc. Edinboro University Student Government Association Resolution – Demolition of Chicken Coop at Porreco College (Erie campus) Information – Finance and Administration Finance and Administration Report EU Financial Statements and Supplementary Information for Years Ended June 30, 2016 and 2015 Personnel transactions since October 24, 2016 Student Affairs (Dr. Mary Beth Mercatoris, Interim Dean of Students and Campus Life) Information - Student Affairs Student Affairs Report University Advancement (Ms. Marilyn Goellner, Assistant Vice President for Advancement) Information – Advancement Advancement Report Gifts-in-Kind received since October 24, 2016 Executive Committee/Representative Reports Information – Advancement PACT Executive Committee Report (Trustee Harold Shields)  Summary of December 6 conference call - PACT Executive Board and Council of Trustees Chairs  2017 PACT Spring Conference – April 19-20, 2017 Dixon University Center Accommodations: Harrisburg Hilton & Towers NEXT Meeting of the EU Council of Trustees – date changed to March 22, 2017 Council of Trustees Friday, December 16, 2016 Public Meeting 2:00 p.m. Crawford Center Conference Room AGENDA • Old Business Action Minutes – Meeting held on November 9, 2016 Council of Trustees Friday, December 16, 2016 Public Meeting 2:00 p.m. Crawford Center Conference Room AGENDA • New Business Executive Action Executive – Action Resolution – Posthumous Honor of the Contributions of EU Trustee Ronald A. Steele Council of Trustees Friday, December 16, 2016 Public Meeting 2:00 p.m. Crawford Center Conference Room AGENDA • New Business Academic Affairs (Dr. Michael Hannan, Provost) Information – Academic Affairs Academic Affairs Report Individuals Granted Emeritus Status Program Revisions Bachelor of Arts in Communication Studies Bachelor of Arts in Political Science – International Affairs concentration Minor in Special Education Academic Affairs - Report Edinboro University Council of Trustees December 16, 2016 Accreditations and Recognitions • During its September 20-22, 2016 meeting, the Commission on Collegiate Nursing Education (CCNE) Board of Commissioners acted to grant accreditation to the baccalaureate degree program in nursing at Edinboro University for 10 years effective February 22, 2016. The next on-site evaluation will occur in the Spring of 2026. • The Accreditation Board for Engineering and Technology (ABET) accreditation campus visit took place on October 2-4. Positive feedback was received from the evaluation team. • Edinboro University was named one of the Best Online Colleges in Pennsylvania for 2016-17 by Affordable Colleges Online. • Edinboro University was recognized for the 7th year in a row as “Military Friendly” by Victory Media. The honor is awarded to institutions that are doing the most to embrace military students and dedicate resources to ensure their success in the classroom and after graduation. University Outreach and Campus Programs • The Center for Faculty Excellence and Information Technology Services hosted a Professors Integrating Technology (PIT) event in Ross Hall on October 26, 2016, for faculty members to learn about technology and receive tips for integrating technology in the classroom. Topics that were covered included: YouSeeU, Adobe Spark Video, Starfish, SMART Technology, Quality Matters and Dropbox. • Edinboro University hosted its first Fall Internship Fair on November 1st in the Frank G. Pogue Student Center Multipurpose Room. More than 60 employers participated in the event that was offered to all students of all majors. • Edinboro University hosted a Graduation Fair on November 15-16 in Frank G. Pogue Student Center for students who are graduating in December. The fair is a one-stop-shop for pending graduates to pick-up commencement tickets, cap and gown, tape an introduction video and complete an exit interview with financial aid staff. • Eight student teachers from Edinboro University traveled to Dublin, Ireland, November 19 – December 14 as part of a study abroad program led by Slippery Rock University faculty member, Dr. Robert Snyder. • The 10th annual College Bowl competition was held on November 10th in the Frank G. Pogue Student Center. Winning teams were as follows: Undergraduate Competition: First place: Middle and Secondary Education and Educational Leadership Second place: Criminal Justice, Anthropology, and Forensic Studies Third place: Math and Computer Science Fourth place: Geosciences Graduate Competition: First place: Speech, Language and Hearing Second place: Social Sciences Third place: Communication Studies Faculty Recognition • Professor Suzanne Proulx, Art Department, was commissioned by Febreze Air Purifiers to make sculptures out of 40 pounds of dust – the average amount collected in a year in the average American home. With the help of family, friends and students, Professor Proulx was able to create dust bunnies -2Academic Affairs - Report Edinboro University Council of Trustees December 16, 2016 that look like actual bunnies. The finished sculptures are being displayed behind glass at Febreze headquarters in Marlborough, Massachusetts. • • • • • Dr. Mary Elizabeth Meier, professor in the Art Department, was named Art Educator of the Year by the Pennsylvania Art Education Association. Dr. Meier was honored during the association’s annual conference on October 8. Professor Umeme Sababu, Department Chair in the History, Politics, Languages and Cultures Department, was invited to serve on the National Governing Board of the National Social Science Association (NSSA). The NSSA is one of the largest interdisciplinary educational associations in the United States, providing training for social scientists through publications, conferences and seminars. On October 28, Dr. Mary Jo Melvin traveled with 40 Edinboro University students majoring in Education to the Elk Valley Elementary School in Girard, PA, to provide high-quality literacy lessons to approximately 658 students. The principal of Elk Valley sent a letter to President Walker, recognizing Dr. Melvin’s work with the school over the past several years and complimented her commitment to nurturing the joy of teaching and learning. On November 10, Dr. Donald Sheehy and Dr. Robert Hass of the English and Philosophy Department joined other scholars of the poetry of Robert Frost in a panel discussion at the Jefferson Educational Society in Erie as part of their Global Summit VIII. The granddaughter of the late Robert Frost was also a participant in the panel discussion. A play about the life of Frost entitled “This Verse Business” was held in the Louis C. Cole Auditorium-Memorial Hall on November 12. On November 29 Dr. Baher Ghosheh (Geosciences Department) and Dr. Andrew Smith (Communication Studies Department), participated in a panel discussion about the daunting challenges our new president faces in steering U.S. policies throughout the Middle East. The event, held in Compton Hall, was presented by the North-Africa/West Asia Studies Committee (NAWA) of Edinboro University. Dr. Jim Wertz (Journalism and Public Relations Department) served as moderator. Student Recognition • This past May, Edinboro University Honors students, Savannah Anderton and Stephanie Stevenson, traveled to Spain as part of the annual PASSHE Summer Honors Program. The students hiked a 190mile section of the historic Camino de Santiago, the pilgrimage to the Cathedral at Santiago, where -3Academic Affairs - Report Edinboro University Council of Trustees December 16, 2016 • • legend has it the remains of an apostle of Jesus, St. James, lie. Along the route, students participated in classes centered around analyzing classic Spanish texts that pertained directly to the Camino. Three Edinboro University Honors students presented at the 50th annual National Collegiate Honors Council (NCHC) meeting in Seattle, Washington, on October 12-16. Letitia Cawley presented “The Elements of Self-Portraiture”; Logan Erdner presented “Principles of Animation Driving Fine Art”; and Megan Kunst presented on two traditional methods to construct a pair of 3D forensic facial reconstructions on 3D printed human skulls. Several Honors Scholars had the opportunity to contract a non-Honors course: ° ° ° ° ° • Mackenzie Bracken completed a story as a written work and is now converting it into a graphic novel under the guidance of Professor Robert Hass. Morgan Calahan is working with Professor Henry Lawrence on a series of scientific illustrations, diagrams, and models on different physical elements of the ecosystem. Erika Krasneski is working with Professor Terri White to manage and plan a “Disability Carnival,” where students would be given various chances to experience disability. Kathlyn Longtine is collaborating with Professor John Repp to write a full-length story in addition to analyzing Nabakov’s Bend Sinister. Emma Sullivan is working with Dr. Katherine Robbins-Hunt to coordinate a program to mentor struggling student athletes and to collect and analyze data to evaluate the program’s effectiveness. Graduate student Stephanie Lambing presented her work entitled “Art Therapy Curriculum for Older Adult Veterans with Mental Health and Neurological Diagnosis,” in an online seminar on December 3, 2016. Ms. Lambing discussed research supporting the curriculum, the approach, client artwork and the group utilizing the curriculum at NAMI (The National Alliance on Mental Illness) Southwest Washington. Miscellaneous • Laugh/Riot performances of “Night of the Living Dead” took place during the month of October in the Diebold Center for the Performing Arts. • Edinboro University’s Music Department hosted a Vocal Fall Concert on October 23 in the Louis C. Cole Auditorium-Memorial Hall. Performers included the Edinboro University Singers, University Chorale, selected soloists and Men’s Barbershop group. • On October 24, Beth Zewe, Director of Continuing Education and Workforce Development. and Ombudsperson, gave a presentation at the Erie Regional Manufacturing Partnership quarterly meeting on the Workforce and Economic Development Network (WEDnet) and provided information about Edinboro’s Quality Assurance Certificate program. • The Edinboro University Clay Club hosted clay workshops October 26-27 in East Hall. Guest artist, Joanna Powell, delivered an artist talk during an evening event. • On November 11, Edinboro University ROTC and Veterans Success Center observed Veterans Day with a 21-Gun Salute and Flag-Folding Ceremony. Guest speaker Sergeant 1st Class Nathaniel Wilson, a Veteran student, spoke about the importance of family in the military and as a veteran. • Edinboro University’s chapter of the Public Relations Student Society of America (PRSSA) won a Silver Award in the 2016 Niagara Awards competition sponsored by the Public Relations Society of America’s Northwestern Pennsylvania chapter. The Edinboro PRSSA chapter won in the category of -4Academic Affairs - Report Edinboro University Council of Trustees December 16, 2016 “Special Events and Observances” for its sponsorship of PRSA Student Day on April 6 where students and public relations professionals are brought together for a day of speakers, panels and networking. • Edinboro University hosted an artist workshop and lecture by Russian-born ceramic artist Sergei Isupov on December 1 in connection with an opening of an Erie Art Museum exhibition of the artist’s work. Academic Affairs – Information Edinboro University Council of Trustees December 16, 2016 Emeritus Status Awarded – December 2016 EM ERI TUS NAM E Mrs. Rachael Burke Dr. Dorothy Carlson Dr. Tadesse Kidane-Mariam Dr. Joseph Laythe - posthumous Mr. Bruce Skolnick Mr. Franz Spohn DEPARTM ENT Art Nursing Geosciences History, Politics, Languages and Cultures Academic Success Art Academic Affairs - INFORMATION Edinboro University Council of Trustees Friday, December 16, 2016 Program Revisions Name of Program Code Description of Revisions/Reasons N=new R=Revision M=Moratorium 1 2 Bachelor of Arts in Communication Studies (UWCC approved 11-2-16; Pending Senate approval 12-5-16) Bachelor of Arts in Political Science – International Affairs Concentration R The “C” or better requirement in English Skills courses will be dropped and “D” grade courses will not count in the major but can be used as general education electives and free electives. R This program is being revised to reflect the evolving nature of course offerings at Edinboro University. MATH 260 (Elements of Statistics) changes to its new course prefix/number, STAT 260; name of Section III in program requirements changes from “Thematic Courses” to “International Relations”; changing name of Section IV from “Regional Studies” to “Comparative and Thematic Studies”; GEOG 332 (Political Geography) is moved from Section III of program requirements to Section IV; in Section IV the list of available course options is expanded. The revision for this minor replaces SPED 350 (Language and Literacy Skills for Students with Disabilities) with SPED 335 (Positive Behavior Supports in Secondary Settings). SPED 335 addresses classroom approaches for managing behaviors in inclusive and special education settings. The additional preparation for students pursuing this minor will better prepare them, as future teachers, to meet the academic, behavioral, and social needs of students with exceptionalities. (UWCC approved 11/30/16; Pending Senate approval 12-5-16) 3 Minor in Special Education (UWCC approved 11/30/16; Pending Senate approval 12-5-16) c: R Office of Admissions Office of Financial Aid Office of Institutional Research Office of the Registrar 1 Council of Trustees Friday, December 16, 2016 Public Meeting 2:00 p.m. Crawford Center Conference Room AGENDA Enrollment Management (Dr. William Edmonds, Vice President for Enrollment Management) Information – Enrollment Management Enrollment Management Report Enrollment Management – Report Edinboro University Council of Trustees December 16, 2016 ADMISSIONS • Promoting EU by sending an e-card (e-mail) to inquiry pool, applicants, and student search names, the message was have a Happy Thanksgiving. We also, provided links for calls to action, as well as providing links for additional information. • Publications Quantity List – Created a document for the number of print publications needed for this year and to make adjustments as needed for next year. • Porreco - Assistant Director of Admissions will be on the Porreco campus two mornings each week, Monday and Tuesday from 8:00 AM to 12:00 noon to cover in the absence of the Admissions and Financial Aid staff member. • Spring 2017 Tartan Transfer Days 10:00 a.m. – 12:00 Noon and 1:00 – 3:00 p.m. O Friday, January 27, 2017, Monday, February 13, 2017, Tuesday, March 21, 2017, Thursday, April 13, 2017, and Thursday, May 4, 2017 • Tartan Transfer Days – Working with Marketing to have the dates and times placed on the website and registration form active. • Implemented and fully utilizing the approved admission criteria. FINANCIAL AID EVENTS FOR FALL 2016 • Good News o PHEAA Audit – On November 15-16, a representative from PHEAA was on campus to perform an audit of 2015/16 state programs. There were no audit findings. o Held on November 8 a FAFSA information session on the Porreco campus for the Trade Act students. Nine (9) students were in attendance. The session helped alleviate the stress of students needing to complete the FAFSA and clear any misunderstandings of what is needed for the income adjustments paperwork. o November 15 - Financial Aid Director spoke to GRAD students who are getting ready to graduate or just needed extra information on loan repayments and exit counseling. Approximately 20 students were in attendance. • Initiatives o Awarding for 2017/18 will begin mid-late January. Working with ITS to set up Banner and get ready for the new awarding year. If we do not encounter any challenges with set up, awarding for new students will begin in January and returning students shortly after that in March or sooner. • Ongoing projects o Office efficiency and improvements to processes. o Streamlining lender list on website- working with Great Lakes to compile a streamlined list of lenders that provide private loans to our students. The purpose is to have a comprehensive database of lenders we work with and the services provided by each. This will alleviate the frustration of students searching the internet for private loan lenders who meet their funding needs. • Terms and Conditions o Terms and Conditions will be placed in Banner for students to read and accept. We received an approved template from PASSHE to be used for this purpose. The terms and conditions describe financial terms, financial aid terms, and billing agreements. The form is “housed” in the financial aid module, but will contain the information relating to payments as well. The purpose is the inform our students of things regarding to bill payments and financial aid to help them be more successful at EU and to alleviate some stress of students -2Enrollment Management – Report Edinboro University Council of Trustees December 16, 2016 who feel they have not been informed of the billing, payment, and financial aid processes. Students will view this information through their Scots account and will check a box stating they have read the information. A process will be run to load the information into Banner. o Porreco - a representative from the financial aid office will be on the Porreco campus two afternoons each week, Wednesday and Thursdays from 1-4:30 p.m. to cover in the absence of the financial aid representative. MARKETING AND PRINT PUBLICATIONS • Launched new email blasts for Graduate Studies, promoting Art Therapy and various Education programs. • Created Happy Thanksgiving email to large student database to stay in contact and drive awareness. • Conducted research on EU website Search Engine Optimization in an effort to select a program and implement before the end of 2016. • Based on results, revised movie theater digital retargeting plan to include all video ads, and no banner ads. • Expanded Transfer Student campaign with social media and geofencing. Email blast is also in the works once the new CRM is in place. • Created large EU ad in Erie Times News Thanksgiving edition to capture one of largest readership days of the year. • Finalized renewed sponsorship with Erie Bayhawks, giving EU higher ed exclusivity on arena scoreboard with rotating digital messages. • Pushed forward on production of Porreco College View Book. • Began creating images and captions for new CRM that highlight individual programs and areas of interest. • Continued Winter Session promotion to encourage class registration. • Worked with Dr. Edmonds to continue the process of selecting an external firm to conduct EU marketing audit. • Tracked web analytics as they relate to events in the marketing calendar. • Assisted various departments with their design, marketing and publication needs, either through our workflow ticket system or direct contact: o Athletics football postcard o Leadership Institute logo (in production) o Learning/Living Communities logo (in production) o Softball helmet designs (in production) o MACS brochure/mailer (in production) o EU non-emergency texting icon (in production) o Honors Department letterhead (in production) o EU holiday card (in production) o Athletics winter sports posters (in production) WEBSITE • Met with Art Department to discuss expanded department pages. • Created new landing page for Graduate Studies. • Created concept layouts for individual program pages. • Continued to field many tickets requesting updates, etc. -3Enrollment Management – Report Edinboro University Council of Trustees December 16, 2016 VETERANS SUCCESS CENTER • Veterans Day attracted 30 Veterans and numerous members of the Edinboro community to campus for the annual flag ceremony and three volley salute. This was a significant increase over the previous year. • Pets and Vets had over 100 attendees consisting of students, Veterans, community members, and potential students. The Student Veterans Association was able to donate $80 and 88 items to the ANNA Shelter in Erie and the EARS rabbit shelter. Council of Trustees Friday, December 16, 2016 Public Meeting 2:00 p.m. Crawford Center Conference Room AGENDA • New Business Finance and Administration (Mr. Gil Brown, Vice President for Finance and Administration) Action – Finance and Administration President Walker recommends approval of Contracts and Purchases as reviewed by the Council of Trustees for the period October 1-31 and November 1-30, 2016. Resolution – Certification of Compliance with Board of Governors’ Policy 1985-04-A: University External Financial Support Edinboro University Alumni Association Edinboro University Foundation, Inc. Edinboro University Services, Inc. Edinboro University Student Government Association Resolution – Demolition of Chicken Coop at Porreco College (Erie campus) Contracts & Purchases October 2016 Council of Trustees Meeting December 16, 2016 COUNCIL OF TRUSTEES EDINBORO UNIVERSITY - REPORT OF CONTRACTS FROM 10/01/16 TO 10/31/16 Contractor's Name Cost Center Name Description Funding Source Expense Category Amount Allied Fire Protection Systems Inc Various Inspection of Fire Sprinkler Systems Various Contracted Maint Bldgs & Grounds $ 10,500.00 Amark Environmental LLC Library Improvements Remove Asbestos Baron-Forness Library Unrestricted E&G Projects Hazardous Waste Removal $ 464.00 Amark Environmental LLC Deferred Maint McComb Remove Asbestos McComb Fieldhouse Unrestricted E&G Projects Hazardous Waste Removal Anderson Coach & Travel Various Transportation for Tennis Team Self-Supported Funds Athletic Team Travel Anita Szymanski Community Music School Piano Lessons Self-Supported Funds Specialized Services Arizon Company Shops/Plant Repair AC & Inflation Controllers on the Dome General Funds Contracted Maint Bldgs & Grounds 5,346.00 C.W. Beal Inc Deferred Maint Compton Hall Interior Painting in Compton Hall Other E&G Funds Contracted Maint Bldgs & Grounds 17,940.00 Combustion Service & Equipment Food Service Maint & Custodial Repair Boiler in Van Houten Dining Hall Dining Hall Funds Contracted Repairs 5,000.00 James Reinarz Community Music School Violin Lessons Self-Supported Funds Specialized Services 462.00 John Pintea Sports Information Announcer for Women's Volleyball General Funds Game Support Personnel 300.00 Keystone Fitness Equipment Repair University Center Operations Maintenance on Fitness Equipment Student Center Funds Contracted Repairs 812.00 3,967.17 357.00 5,640.00 COUNCIL OF TRUSTEES EDINBORO UNIVERSITY - REPORT OF CONTRACTS FROM 10/01/16 TO 10/31/16 Contractor's Name Cost Center Name Description Funding Source Expense Category Amount Mayer Brothers Construction Co Lot & Road Repaving Parking Lot Repavement Other E&G Funds Contracted Maint Bldgs & Grounds 8,327.06 Perry Construction Group Inc Van Houten Furnishings Overhead Doors at Van Houten Dining Hall Unrestricted Auxiliary Projects Contracted Maint Bldgs & Grounds 18,600.00 Pittsburgh Stage Incorporated Shops/Plant Theatrical Rigging Equipment General Funds Contracted Repairs 3,674.00 Rabe Environmental Systems East Hall New Roof Mounted Exhaust Fan Other E&G Funds Contracted Maint Bldgs & Grounds 4,500.00 Sarah Lee Community Music School Bassoon Lessons Self-Supported Funds Specialized Services Schaal Glass Van Houten Improvements Remove/Replace Insulated Glass Units Dining Hall Funds Contracted Maint Bldgs & Grounds 3,563.00 Stadium Solutions Incorporated Shops/Plant Bleacher Inspection in Various Locations General Funds Contracted Maint Bldgs & Grounds 3,682.00 TOTAL 425.00 $ 93,559.23 COUNCIL OF TRUSTEES EDINBORO UNIVERSITY-REPORT OF PURCHASE ORDERS OVER $10,000 FROM 10/01/16 TO 10/31/16 VENDOR-NAME VENDOR-ADDRESS DESCRIPTION PO NUMBER PO AMOUNT Allen & Shariff Engineering LLC 7061 Deepage Dr Columbia MD 21045 Compton Hall Animal Facility AHU Replacement Design Services 3900008321 $ 16,775.00 Audio Visual Innovations 2350 Eldo Rd Ste B Monroeville PA 15146 Cole Auditorium Media Update Project 4500513323 14,625.00 Cleveland Brothers Equipment Co 3950 Depot Rd Erie Pa 16510 Facilities Loader Rental 4500511646 14,500.00 Edinboro University Foundation Edinboro University of PA Edinboro PA 16444 Facilities Traditional Residence Hall Laundry Machines Reimbursement 4500512268 12,900.00 Elsevier Science Order Fulfillment St Louis MO 63146 Library Annual Science Direct Online Subscription 4500512623 27,563.23 James B Schwab Co 2901 West 22nd St Erie PA 16506 Campus-Wide Annual Copier Maintenance & Repair Services 4500511879 61,548.40 Leader Graphics 1926 Peach St Erie PA 16502 Admissions Vinyl Graphic Applications 4500512249 10,480.00 MSL Direct Inc 4302 Old William Penn Hwy Ste 200 Murrysville PA 15668 Admissions Printing & Mailhouse Services 4500511872 35,889.90 OCLC Inc 6565 Kilgour Pl Dublin OH 43017-3395 Library Subscription Services 4500511542 12,800.00 PA Dept of General Services PO Box 2833 Accts Receivable Harrisburg PA 17101 Finance & Administration Annual Boiler, Machinery and Excess Property Insurances, Employee Performance Bond 4500512866 89,857.00 COUNCIL OF TRUSTEES EDINBORO UNIVERSITY-REPORT OF PURCHASE ORDERS OVER $10,000 FROM 10/01/16 TO 10/31/16 VENDOR-NAME VENDOR-ADDRESS DESCRIPTION PO NUMBER Software Services of Delaware Inc 1024 Justison St Wilmington DE 19801 Information Technology Services Annual Axiom Web Form License Renewal 4500511302 13,120.00 Taser International Inc 17800 North 85th St Scottsdale AZ 85255 Police Department Taser Equipment & 5-Year Assurance Plan 4500512465 34,434.56 Westchester Academic Library 118 North Bedford Rd Ste 302 Mt Kisco NY 10549 Library Subscriptions 4500512887 17,428.11 Yankee Book Peddler Inc 999 Maple St Contoocook NH 03229 Library Books 4500512594 25,000.00 TOTAL PO AMOUNT $ 386,921.20 Contracts & Purchases November 2016 Council of Trustees Meeting December 16, 2016 COUNCIL OF TRUSTEES EDINBORO UNIVERSITY - REPORT OF CONTRACTS FROM 11/01/16 TO 11/30/16 Contractor's Name Cost Center Name Description Funding Source Expense Category $ Amount Al's Awning Shop Incorporated Van Houten Furnishings Installation of Stationary Awning Panels Unrestricted Auxiliary Projects Contracted Maint Bldgs & Grounds 1,560.00 Ash Enterprises Geosciences Maintenance on Spitz Model A3P Projector General Funds Contracted Repairs 3,550.00 Conversion Image Technology Inc Library Administration Annual Maintenance on Minolta Microfilm General Funds Contracted Maint Office Equip 2,535.00 Culligan Water Food ServiceMaint & Custodial Water Softener Services Dining Hall Funds Contracted Maint Bldgs & Grounds 68,838.00 Development Cubed Inc University Commencement Student Commencement Video Services General Funds Specialized Services 4,921.50 Grise Audio Visual Center Open House Events Audio Visual Support for Open House Specialized Services General Funds 1,410.00 Grise Audio Visual Center University Commencement Audio Visual Support for Fall & Spring Commencement General Funds Specialized Services 6,020.00 Heartland Campus Solutions Bursar Federal Tax Document Services General Funds Printing Services Contracted Jason Franz Adaptive Athletic Program Wheelchair Basketball Official General Funds Game Officials 16,000.00 940.00 COUNCIL OF TRUSTEES EDINBORO UNIVERSITY - REPORT OF CONTRACTS FROM 11/01/16 TO 11/30/16 Contractor's Name Cost Center Name Description Funding Source Expense Category Amount John Leisering Sports Information Men's/Women's Basketball Announcer General Funds Game Support Personnel 810.00 Kimberly Joy Morrow Continuing Education Social Work Professionals Workshop Special Programs Professional Services 900.00 Meadville Children's Center PA Pre-K Counts Program 2016-2017 Budget for Pre-K Counts Grant Restricted Grant / Contract - State Subcontract Expense 283,500.00 Nites Lites University Commencement Audio & Lighting for Fall & Spring Commencement General Funds Specialized Services 520.00 Paul Crider Adaptive Athletic Program Wheelchair Basketball Official General Funds Game Officials Professional Service Industries Inc Fire & Safety Industrial Hygiene Services General Funds Contracted Maint Bldgs & Grounds 15,000.00 Raven Rental University Commencement Audio Sound System for Fall & Spring Commencement General Funds Rental / Operating Lease - Radio Equipment 2,400.00 Scott Dow Art Department Carving Demonstration General Funds Speaker Fees 200.00 Sergei Isupov Art: Ceramics "Sculpting Techniques Workshop" General Funds Speaker Fees 1,500.00 1,015.00 COUNCIL OF TRUSTEES EDINBORO UNIVERSITY - REPORT OF CONTRACTS FROM 11/01/16 TO 11/30/16 Contractor's Name Cost Center Name Description Funding Source Expense Category Temple Portable Crushing Inc Lot & Road Repaving Concrete Crushing Other E&G Funds Contracted Maint Bldgs & Grounds Timber Ridge Child Care Center PA Pre-K Counts Program 2016-2017 Budget for Pre-K Counts Grant Restricted Grant / Contract - State Subcontract Expense William R Kutz Adaptive Athletic Program Wheelchair Basketball Official General Funds Game Officials Yardmaster of PA LLC Maintenance Snow Removal for Dome General Funds Contracted Maint Bldgs & Grounds YMCA of Corry PA Pre-K Counts Program 2016-2017 Budget for Pre-K Counts Grant Restricted Grant / Contract - State Subcontract Expense TOTAL Amount 10,000.00 105,300.00 940.00 50,000.00 259,200.00 $ 837,059.50 COUNCIL OF TRUSTEES EDINBORO UNIVERSITY-REPORT OF PURCHASE ORDERS OVER $10,000 FROM 11/01/16 TO 11/30/16 VENDOR-NAME VENDOR-ADDRESS DESCRIPTION PO NUMBER PO AMOUNT AE Works LTD 6587 Hamilton Ave Pittsburgh PA 15206 McComb Fieldhouse HVAC Systems Assessment & Feasibility Study 3900008360 $ 20,715.69 American Chemical Society PO Box 182977 Columbus OH 43218-2426 Library Annual Web Editions/ebooks 4500515857 19,165.00 Dell Marketing LP One Dell Way Round Rock TX 78682 Information Technology Services PowerEdge Servers 4500514394 59,124.52 Educational Solutions Enterprises PO Box 700 Effort PA 18330 Physics Equipment 4500515199 14,060.00 Gaumard Scientific Company 14700 Southwest 136 St Miami FL 33196 Nursing Department Birthing Simulator 4500514385 104,885.00 Hepner Air Filter Service 3011 Henninger Rd Cleveland OH 44109 Facilities Air Filters 4500516053 12,500.00 HHSDR Architects Engineers 40 Shenango Ave Sharon PA 16416 Highlands Residence Halls Stair Towers Design Services 3900008359 133,100.00 Keystone Fitness Equipment Repair PO Box 71 Edinboro PA 16412 Athletics Fitness Equipment 4500515105 17,894.85 Plyler Overhead Door Company 8850 Fry Rd McKean PA 16426-1533 Van Houten Dining Hall Overhead Door Replacement 4500513801 12,783.00 COUNCIL OF TRUSTEES EDINBORO UNIVERSITY-REPORT OF PURCHASE ORDERS OVER $10,000 FROM 11/01/16 TO 11/30/16 VENDOR-NAME VENDOR-ADDRESS DESCRIPTION PO NUMBER TargetX 1000 River Rd Conshohocken PA 19428 Admissions Mass Email Software Subscription 4500513851 12,000.00 Whitlock Corporation 9048 William Penn Hwy Huntingdon PA 16652 Frank G Pogue Theater Upgrade 4500514314 36,994.66 Yardmaster of PA LLC 2305 Manchester Rd Erie PA 16506 Zafirovski Dome Snow Removal 4500514828 18,000.00 TOTAL PO AMOUNT $ 461,222.72 Edinboro University Alumni Association • • • • • • • M emorandum of Understanding (expires June 30, 2019) M emorandum of Understanding/Fighting Scot Plaza Loan Agreement (effective until July 1, 2020) Fiduciary Agreement between EU Foundation and EU Alumni Association (renewable biennially; expires June 30, 2017) Audited Financial Statements, June 30, 2016 Articles of I ncorporation (previously circulated - no changes) ByLaws Board of Directors EDINBORO UNIVERSITY ALUMNI ASSOCIATION BOARD OF DIRECTORS as of September 2, 2016 Dr. Michael Barnes ‘93 Vice President 17230 Corban Drive Chagrin Falls, OH 44023 (H) 216-264-4510 mbarnes@mayfieldschools.org Susan Crandall ’72, M’94 Secretary 10942 Tracy Drive Meadville, PA 16335 (H) 814-807-0173 slcrandallart5@gmail.com Scott Irlbacher ’04, M’06 President 1005 Norwood Avenue Pittsburgh, PA 15202 (C) 412-951-5542 scottirlbacher@gmail.com James Alexander ‘73 93 Metcalf Avenue Jamestown, NY 14701 (H) 716-484-7459 (C) 716-485-6041 jim.alexander@dominionvoting.com Adam Avenali ‘06 419 Calibre Lake Pkwy SE Smyrna, GA 30082 (C) 814-594-0759 adamavenali@yahoo.com Paul Belosh ‘69 108 Sunset Drive Edinboro, PA 16412 (C) 814-450-9899 pmbelosh@yahoo.com Allison Bressler ’03, M’05 2101 Northway Road Apt 1206 Williamsport, PA 17701 (C) 814-758-3441 aabressler@gmail.com Mark Eisert ‘98 124 Harrison Drive Edinboro, PA 16412 (H) 814-734-6785 (C) 814-397-0087 markeisert@gmail.com Gregory Harris ’07, M’12 4065 Ellison Road South Euclid, OH 44121 (C) 440-813-1615 gjharris8@yahoo.com Michael Joseph ‘75 1007 Lakeside Drive Edinboro, PA 16412 (C) 713-842-0043 mjoseph810@gmail.com Mitchell Kallay ‘90 471 Barrington Ridge Road Painesville, OH 44077 (H) 440-354-5787 (C) 440-479-1195 abelcet5mg@yahoo.com Beth Lustig ‘01 200 N. Skytop Road Edinboro, PA 16412 (C) 610-608-0074 thelustigs2005@gmail.com Joseph Mineo ’73, M’78 Lifetime Member 4503 Basswood Drive Erie, PA 16506 (H) 814-838-9949 (C) 814-450-6097 j.mineo@verizon.net David Niemira ‘08 Treasurer 5254 West Lake Road Edinboro, PA 16412 (C) 814-440-1313 davidaniemira@gmail.com Eric Pope ’03, M’05 65 Sunflower Drive Rochester, NY 14621 (C) 412-818-2726 emp15133@yahoo.com Tony Ratcliff ‘14 1021 East 37th Street Erie, PA 16503 (H) 814-881-4847 tr74511@gmail.com Jaime Russell ’00, M’02 1521-1 Swordfish Lane Carolina Beach, NC 28428 (C) 814-602-9352 russelljl1030@gmail.com David Sheneman ‘64 Lifetime Member 661 West Corydon Street Bradford, PA 16701 (H) 814-368-7895 (C) 814-558-8389 dsheneman@atlanticbb.net James R. Stevens ‘85 106 Southfield Court Pittsburgh, PA 15237 (H) 412-548-3012 (C) 412-818-0026 jstevens163@verizon.net Mary Timashenka ’80, M’97 Immediate Past President 3034 Patio Drive Erie, PA 16506 (C) 814-392-4556 mtimashenka@wjettv.com Shaquan Walker ‘16 5 S Jardin Street Apt 3 Shenandoah, PA 17976 724-815-7127 edinborotrustee@gmail.com Daniel J. Walsh ‘08 2913 Highland Road Erie, PA 16506 (C) 724-456-4787 walsh@fnb-corp.com M. Quinn Zahorchak ‘87 305 Kerry Court Cranberry Township, PA 16066 (C) 412-523-0412 quinn.zahorchak@rmsmortgage.com VACANT ALUMNI ASSOCIATION BOARD OF DIRECTORS as of September 2, 2016 Page 2 EDINBORO UNIVERSITY ALUMNI ASSOCIATION NON-VOTING LIAISONS Antoinette Jackson Non-Voting SGA Liaison 405 Scotland Drive (W) 814-732-1476 president@edinborosga.com Leta Jeffers ‘11 Non-Voting University Liaison Director of Alumni Relations & Annual Giving (W) 732-1713 ljeffers@edinboro.edu Daniel Higham ‘70 Non-Voting Council of Trustees Liaison Susan Black-Keim 12538 Leslie Road Non-Voting University Liaison Meadville, PA 16335 Interim VP of University Advancement (H) 814-724-7520 (W) 732-1732 (W) 814-337-4234x225 sblack@edinboro.edu dhigham@usbfmi.com VACANT Non-Voting Foundation Liaison Edinboro University Foundation, I nc. • • • • • • • M emorandum of Understanding (EXPI RED June 30, 2016); DRAFT M OU Fiduciary Agreement between Edinboro University and EU Foundation (expires June 30, 2017) Fiduciary Agreement between EU Foundation and EU Alumni Association (renewable biennially; expires June 30, 2017) Financial Statements and Supplementary I nformation, June 30, 2016 and 2015 Articles of I ncorporation (previously circulated - no changes) ByLaws Board of Directors Edinboro University Foundation Financial Statements and Supplementary Information June 30, 2016 and 2015 Edinboro University Foundation Table of Contents June 30, 2016 and 2015 Page Independent Auditors’ Report 1 Financial Statements Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 6 Notes to Financial Statements 7 Supplementary Information Schedule of Functional Expenses - Management and General Expenses and Program Services 28 Schedule of Rental Income and Expenses - Student Housing Facility 29 Schedule of Debt Service Coverage Ratio - Student Housing Facility 30 Baker Tilly Virchow Krause, LLP 20 Stanwix St, Ste 800 Pittsburgh, PA 15222-4808 tel 412 697 6400 tel 800 267 9405 fax 888 264 9617 bakertilly.com Independent Auditors’ Report Board of Directors Edinboro University Foundation Report on the Financial Statements We have audited the accompanying financial statements of Edinboro University Foundation, which comprise the statement of financial position, as of June 30, 2016 and 2015, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these 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 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 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 audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 1 An Affirmative Action Equal Opportunity Employer Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Edinboro University Foundation as of June 30, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Report on Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information on pages 28-30 is presented for purposes of additional analysis and is not a required part of the 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 financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 financial statements as a whole. Pittsburgh, Pennsylvania September 6, 2016 2 Edinboro University Foundation Statement of Financial Position June 30, 2016 and 2015 2016 2015 Assets Current Assets Cash and cash equivalents Trustee held funds Due from affiliated entities Other current assets $ Total current assets 1,231,984 168,415 82,120 360,807 $ 1,642,613 168,415 86,700 612,650 1,843,326 2,510,378 Investments 22,092,846 21,432,276 Trustee Held Funds 17,728,389 17,274,476 Fixed Assets, Net of Accumulated Depreciation 84,939,672 88,435,671 Deferred Financing Costs 681,745 714,091 Beneficial Interest in Remainder Trust 299,383 299,383 Other Assets 719,542 293,484 $ 128,304,903 $ 130,959,759 $ $ Total assets Current Liabilities Accounts payable and accrued liabilities Due to affiliated entities Accrued interest payable Construction contracts and retainage payable Current portion of long-term debt Total current liabilities Endowments Held on Behalf of Others Funds under investment management for: Edinboro University of Pennsylvania Edinboro University Alumni Association Total endowments held on behalf of others Long-Term Debt Total liabilities Net Assets Unrestricted net assets, board designated Unrestricted, undesignated Accumulated losses on donor-restricted endowments Total unrestricted net assets Temporarily restricted net assets Permanently restricted net assets Total net assets Total liabilities and net assets 141,623 183,100 3,307,495 168,415 1,615,000 5,415,633 5,337,288 13,689,521 1,680,448 13,342,947 1,765,683 15,369,969 15,108,630 110,823,319 112,398,913 131,608,921 132,844,831 (11,813,883) (84,889) 82,500 (10,155,684) (36,391) (11,898,772) (10,109,575) 2,028,117 6,566,637 2,143,765 6,080,738 (3,304,018) (1,885,072) $ 128,304,903 See notes to financial statements 3 164,400 261,899 3,337,574 168,415 1,405,000 $ 130,959,759 Edinboro University Foundation Statement of Activities Year Ended June 30, 2016 Temporarily Restricted Unrestricted Public Support and Revenues Rental income Unrealized gains (losses) on investments Contributions Interest and dividend income, net of investment expense Portfolio management fee income Realized gains on investments Adjustment to cash surrender value of life insurance Other Income Net assets released from restrictions: Satisfaction of purpose restrictions $ Total public support and revenues Expenses Program services Management and general expenses Fundraising expenses Total expenses $ (232,578) 1,109,549 119,831 195,535 - 42,093 9,462 10,426 - $ 490,663 $ - 12,859,440 (157,815) 1,603,297 161,924 195,535 9,462 (4,764) - (4,764) 10,426 (1,044,174) - - 14,307,254 (115,648) 485,899 14,677,505 15,668,139 391,340 36,972 - - 15,668,139 391,340 36,972 16,096,451 - - 16,096,451 (115,648) (10,109,575) Net Assets, Beginning $ Total 1,044,174 (1,789,197) Increase (Decrease) in Net Assets Net Assets, Ending 12,859,440 74,763 3,085 Permanently Restricted (11,898,772) 2,143,765 $ See notes to financial statements 4 2,028,117 $ 485,899 (1,418,946) 6,080,738 (1,885,072) 6,566,637 $ (3,304,018) Edinboro University Foundation Statement of Activities Year Ended June 30, 2015 Temporarily Restricted Unrestricted Public Support and Revenues Rental income Unrealized gains (losses) on investments Contributions Interest and dividend income, net of investment expense Portfolio management fee income Realized gains on investments Change in value of split-interest agreement Adjustment to cash surrender value of life insurance Other Income Net assets released from restrictions: Satisfaction of purpose restrictions Transfers and other adjustments Total public support and revenues Expenses Program services Management and general expenses Fundraising expenses Total expenses $ 12,433,265 12,742 287,128 (148,523) 723,047 $ Total 93,486 $ 12,433,265 (135,781) 1,103,661 33,112 212,535 - 28,504 228,756 - 34,020 61,616 212,535 228,756 34,020 503,391 - 12,858 - 12,858 503,391 1,061,596 58,363 (1,061,596) 217,232 (275,595) - 14,602,132 (12,580) (135,231) 14,454,321 16,217,253 414,076 4,853 - - 16,217,253 414,076 4,853 16,636,182 - - 16,636,182 Decrease in Net Assets (2,034,050) Net Assets, Beginning (8,075,525) Net Assets, Ending $ Permanently Restricted $ (10,109,575) (12,580) 2,156,345 $ 2,143,765 See notes to financial statements 5 (135,231) (2,181,861) 6,215,969 $ 6,080,738 296,789 $ (1,885,072) Edinboro University Foundation Statement of Cash Flows Years Ended June 30, 2016 and 2015 2016 Cash Flows from Operating Activities Decrease in net assets Adjustments to reconcile decrease in net assets to net cash provided by operating activities: Depreciation and amortization expense Unrealized investment losses Change in value of split interest agreement Adjustment to cash surrender value of life insurance Realized investment gains, net (Increase) decrease in: Other assets Due from affiliated entities Increase (decrease) in: Accounts payable and accrued liabilities Due to affiliated entities Accrued interest payable Pledge payable $ Net cash provided by operating activities (1,418,946) 2015 $ 3,572,363 157,815 4,764 (9,462) 3,603,092 135,781 (34,020) (12,858) (228,756) (178,979) 4,580 (482,732) 68,079 (22,777) (78,799) (30,079) - 51,427 40,760 (24,550) (5,000) 2,000,480 Cash Flows from Investing Activities Payments for fixed assets (Increase) decrease in trustee held funds Purchase of investments Proceeds from sale of investments Increase in agency endowment liability 929,362 (4,612) (453,913) (5,956,341) 5,147,418 261,339 Net cash provided by (used in) investing activities (33,723) 273,704 (6,594,912) 6,428,330 347,260 (1,006,109) Cash Flows from Financing Activities Principal payments related to long-term debt 420,659 (1,405,000) Net change in cash and cash equivalents (1,120,000) (410,629) 230,021 1,642,613 Cash and Cash Equivalents, Beginning (2,181,861) 1,412,592 Cash and Cash Equivalents, Ending $ 1,231,984 $ 1,642,613 Supplemental Disclosures of Non-cash Investing and Financing Activities Fixed assets included in construction contracts and retainage payable $ 168,415 $ 168,415 Supplemental Disclosure of Other Cash Flow Information Interest paid $ 6,645,867 $ 6,699,697 See notes to financial statements 6 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 1. Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Edinboro University Foundation (the "Foundation"), a not-for-profit organization, was formed in 1998 for the benefit of the students, faculty, and staff of Edinboro University of Pennsylvania of the State System of Higher Education (the “University”). Dedicating its time and resources to developing private sources of financial support for the University's mission, the Foundation strives to build permanent endowments that will support the University's students, faculty, and staff in perpetuity. The Foundation also owns and operates student housing facilities on the campus of the University. The Foundation administers numerous individual charitable funds, each established with an instrument of gift describing either the general or specific purposes for which grants are to be made, usually from income only, but in some cases, from principal. The Foundation has evaluated all subsequent events through September 6, 2016, which is the date these financial statements were issued. See Note 15. As evidenced by the accompanying financial statements, the Foundation had deficit unrestricted net assets of approximately $11,899,000 and $10,110,000 as of June 30, 2016 and 2015, respectively, and recognized decreases in net assets of approximately $1,400,000 and $2,200,000 for the years then ended. On August 25, 2016, the University committed to a refinancing of the Foundation’s existing bonds and to assume both of the bonds and related student housing property by which the bonds are secured. The Foundation has represented that this proposed subsequent release of its bond obligations will lead to improvements in its overall financial condition. The advanced refunding closing is scheduled to occur on September 7, 2016. See Note 15. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates used in preparing these financial statements include depreciation of property and equipment, the allowance for uncollectible accounts, and the fair value of investments and financial instruments. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include certain investments in highly liquid debt instruments purchased with original maturities of three months or less, excluding trustee held funds and certain short-term instruments classified as investments. 7 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Unconditional Promises to Give Unconditional promises to give that are expected to be collected in future years are recorded at the present value of estimated future cash flows. The discounts on those amounts are computed using a risk-free interest rate applicable to the year in which the pledge is made (this approach does not differ materially from the use of a risk-adjusted rate). Amortization of the discount is included in contribution revenue. Conditional promises to give are promises for which donor-imposed conditions specify future and uncertain events whose occurrence or failure to occur release the donors from the obligation to transfer the assets in the future. If and when such conditions have been substantially met, these promises cease to be conditional, and revenues are recorded, as appropriate. Investments Equity securities with readily determinable fair values and debt securities are valued at fair value, based on quoted market prices as reported by the Foundation’s investment custodians. Adjustments to reflect increases or decreases in market value, referred to as unrealized gains and losses, are reported in the statement of activities. The cost of investments received as gifts represents fair value as determined upon receipt. The cost of investments sold is determined by use of the specific identification method. All realized and unrealized gains and losses arising from the sale or appreciation (depreciation) in the fair value of investments, and all ordinary income from investments, are reported as changes in unrestricted net assets unless their use is temporarily restricted by explicit donor imposed stipulations or by law. Investments are comprised of a variety of financial instruments and are managed by investment advisors. The fair values reported in the statement of financial position are subject to various risks including changes in the equity markets, the interest rate environment and general economic conditions. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the fair value of investment securities, it is reasonably possible that the amounts reported in the accompanying financial statements could change materially in the near term. Trustee Held Funds Trustee held funds include cash equivalents held by a bank trustee under the terms of a loan agreement with the Pennsylvania Higher Educational Facilities Authority (“PHEFA”). 8 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Fixed Assets Fixed assets are stated at cost less accumulated depreciation, computed on a straight-line basis over the lesser of the lease term or the estimated useful lives of the assets. The estimated useful lives are as follows: Assets Life Buildings and improvements Furniture and fixtures Equipment Land improvements Vehicles and heavy equipment 10-40 years 10 years 3-5 years 20 years 5 years Expenditures for repair and maintenance costs which extend the useful lives of assets are capitalized and routine maintenance and repair costs are expensed as incurred. Deferred Financing Costs Costs incurred in connection with the issuance of long-term debt have been deferred and are being amortized over the term of the underlying loan agreement using the straight-line method, which does not materially differ from the effective interest method. Amortization was $32,346 for both of the years ended June 30, 2016 and 2015. Beneficial Interest in Remainder Trust The Foundation is a beneficiary under a charitable remainder unitrust, an arrangement in which a donor establishes and funds a trust with specified distributions to be made to a designated beneficiary over the trust’s term. Upon termination of this trust, the Foundation will receive the assets remaining in the trust for endowment purposes. Endowments Held on Behalf of Others The Foundation holds and manages transferred assets for other governmental and not-forprofit organizations (namely, the University and the Edinboro University Alumni Association). Such assets, which are included in investments in the accompanying statement of financial position, are reported as endowments held on behalf of others (i.e. agency funds). The University and the Edinboro University Alumni Association establish investment and spending policies which govern these assets; the Foundation manages these assets within such parameters. The Foundation recognizes the fair value of the assets transferred as an increase in its investments and a corresponding liability attributable to the participating governmental and not-for-profit organizations, with the related investment activity being reported as an increase or decrease in the corresponding liability, as appropriate. Endowment Investment Return Total endowment investment return is composed of investment income, net realized gains and losses on endowment investments, and net unrealized gains and losses on endowment investments reported at fair value net of investment fees. 9 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Endowment Spending Policy Commonwealth of Pennsylvania Act 141 permits the Foundation to allocate to income each year a portion of endowment return. The law allows not-for-profit organizations to spend a percentage of the market value of their endowment funds, including realized and unrealized gains. The percentage, which by law must be between 2% and 7%, is elected annually by the Board of Directors. The endowment market value is determined based on an average spanning three years. The Foundation’s spending policy allowed for a payout of up to 4% for fiscal years 2016 and 2015, of the rolling three-year average balances, which is based on market value. Unrestricted, Temporarily and Permanently Restricted Net Assets Unrestricted net assets are those whose use by the Foundation is not subject to donorimposed restrictions. Temporarily restricted net assets are those whose use by the Foundation has been limited by donors to a specific time period or purpose. Permanently restricted net assets have been restricted by donors to be maintained in perpetuity. Board Designated Net Assets The Foundation's Board of Directors has voluntarily approved segregations of unrestricted net assets to be utilized for specific programs, projects and operational expenses. Such items are reported as board designated net assets within the unrestricted net asset category. Rental Revenue Recognition Rental revenue is recognized on a monthly basis as it is due under the terms of short-term, operating lease agreements for student housing at the University. All revenue is recorded net of estimated allowances for uncollectible receivables. Rental revenue is based on units rented, which is dependent on student residency populations, by semester. See Note 15. Donor Restricted Gifts All contributions are considered to be available for unrestricted purposes unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted support that increases that net asset class. When a donor restriction expires (i.e., when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified as unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Endowments and certain other investments are permanently restricted based on the donor's specifications. Investment earnings available for distribution are recorded in unrestricted net assets. Investment earnings with donor restrictions are recorded in temporarily or permanently restricted net assets based on the nature of the restrictions. 10 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 In-Kind Gifts Contributions of donated non-cash assets are recorded at their fair values in the period received. Contributions of donated services that create or enhance non-financial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. Management believes that such contributions were not material to the financial statements during the years ended June 30, 2016 and 2015. Legacies and Bequests The Foundation is a beneficiary under various wills, the total realizable value of which is not presently determinable. Such amounts are recorded as contributions when clear title is established and the proceeds are clearly measurable. Income Taxes The Foundation qualifies as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (the “Code”). Accordingly no provision for income taxes has been recorded in the accompanying financial statements. In addition, the Foundation has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509(a) of the Code. The Foundation accounts for uncertainty in income taxes using a recognition threshold of more-likely-than-not to be sustained upon examination by the appropriate taxing authority. Measurement of the tax uncertainty occurs if the recognition threshold has been met. Management determined that there were no tax uncertainties that met the recognition threshold in fiscal years 2016 and 2015. The Foundation’s policy is to recognize interest related to unrecognized tax benefits in interest expense and penalties in management and general expense. New Accounting Pronouncements During May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. During August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09. ASU 2014-09 is effective for fiscal years beginning after December 15, 2018. The Foundation may elect to apply the guidance earlier, but no earlier than fiscal years beginning after December 15, 2016. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The Foundation is currently assessing the effect that ASU 2014-09 and 2015-14 will have on its results from operations, financial position and cash flows. 11 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 During April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in balance sheet as a direct deduction from the carrying amount of that debt liability instead of an asset. The recognition and measurement guidance for debt issuance costs are not affected by this update. ASU 2015-03 is effective for annual periods beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted. The Foundation does not believe that the adoption of ASU 2015-03 will have a material effect on its results of operations, financial position and cash flows. During May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or its Equivalent). This ASU was issued to address the diversity in practice relating to how certain investments measured at net asset value are categorized in the fair value hierarchy. The amendments in this update remove the requirement to categorize, within the fair value hierarchy, all investments for which fair value is measured using the net asset value per share practical expedient. ASU 2015-07 also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. ASU 2015-07 is effective for the Foundation’s fiscal year beginning July 1, 2016; early adoption is permitted. The Foundation is assessing the impact that this update will have on its results of operations, financial position and cash flows. During January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This new guidance is intended to improve the recognition and measurement of financial instruments and eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for institutions that are not public business entities. For non-public business entities, ASU 2016-01 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted for fiscal years beginning after December 15, 2017. However, the new guidance permits entities that are not public business entities to adopt upon issuance the provision that eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost. The Foundation elected to adopt this provision in fiscal 2016. ASU 2016-01 is to be applied by means of a cumulative-effect adjustment to the statement of financial position as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of ASU 2016-01. The Foundation is assessing the impact that the remainder of this standard will have on its results of operations, financial position and cash flows. During February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 establishes principles that require a lessee create a lease asset and a lease liability for those leases classified as operating leases under previous accounting principles generally accepted in the United States of America. ASU 2016-02 is effective for annual periods beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Foundation is currently assessing the effect that ASU 2016-02 will have on its results of operations, financial position and cash flows. 12 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 During August 2016, the FASB issued ASU No. 2016-14, Not-For Profit Entities (Topic 958) Presentation of Financial Statements of Not-for-Profit Entities. The new guidance is intended to improve and simplify the current net asset classification requirements and information presented in financial statements and notes that is useful in assessing a not-for-profit’s liquidity, financial performance and cash flows. ASU 2016-14 is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. ASU 2016-14 is to be applied retroactively with transition provisions. The Foundation is currently assessing the impact this standard will have on its financial statements. 2. Investments The carrying values of the Foundation’s investments consist of the following at June 30: 2016 Mutual funds/Common Funds Common stocks Money market funds Total 2015 $ 19,318,142 2,153,608 621,096 $ 18,512,122 2,725,169 194,985 $ 22,092,846 $ 21,432,276 3. Fair Value Measurements The Foundation measures its investments and charitable remainder trust at fair value on a recurring basis in accordance with accounting principles generally accepted in the United States of America. Fair value is defined as the price that would be received to sell an asset or the price that would be paid to dispose of a liability in an orderly transaction between market participants at the measurement date. The framework that the authoritative guidance establishes for measuring fair value includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs used in determining valuations into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows: Level 1 - Fair value is based on unadjusted quoted prices in active markets that are accessible to the Foundation for identical assets. These generally provide the most reliable evidence and are used to measure fair value whenever available. Level 2 - Fair value is based on significant inputs, other than Level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices for similar assets, quoted market prices in markets that are not active for identical or similar assets, and other observable inputs. Level 3 - Fair value is based on significant unobservable inputs. Examples of valuation methodologies that would result in Level 3 classification include option pricing models, discounted cash flows, and other similar techniques. 13 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 The Foundation, using available market information and appropriate valuation methodologies, has determined the estimated fair value of its financial instruments. However, considerable judgment is required in interpreting data to develop the estimates of fair value. Fair values of assets measured on a recurring basis are as follows at June 30, 2016: Fair Value Common stocks: Consumer discretionary Consumer staples Energy Financial Healthcare Industrials Materials Technologies Telecommunications Utilities $ Total common stocks Debt-based mutual funds: United States treasuries Investment grade securities Other debt-based securities Government National Mortgage Association Equity-based mutual funds: Mid cap International Small cap Unclassified Commonfund: Multi-Strategy Equity Multi-Strategy Bond International Equity Total mutual funds Money market funds Total investments Beneficial interest in remainder trust Total $ 263,346 240,373 151,301 337,336 320,267 214,820 56,717 427,760 64,098 77,590 Level 1 $ Level 2 263,346 240,373 151,301 337,336 320,267 214,820 56,717 427,760 64,098 77,590 $ Level 3 - $ - 2,153,608 2,153,608 - - 313,371 474,109 2,499,565 313,371 474,109 2,499,565 - - 185,306 185,306 - - 1,133,948 1,233,729 345,160 3,268,607 1,133,948 1,233,729 345,160 3,268,607 - - 5,970,637 2,918,083 975,627 - 5,970,637 2,918,083 975,627 - 19,318,142 9,453,795 9,864,347 - 621,096 621,096 - - 22,092,846 12,228,499 9,864,347 - 299,383 - - 299,383 22,392,229 $ 14 12,228,499 $ 9,864,347 $ 299,383 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Fair values of assets measured on a recurring basis are as follows at June 30, 2015: Fair Value Common stocks: Consumer discretionary Consumer staples Energy Financial Healthcare Industrials Materials Technologies Telecommunications Utilities $ Total common stocks Debt-based mutual funds: United States treasuries Investment grade securities Other debt-based securities Government National Mortgage Association Equity-based mutual funds: Mid cap International Small cap Unclassified Commonfund: Multi-Strategy Equity Multi-Strategy Bond International Equity Total mutual funds Money market funds Total investments Beneficial interest in remainder trust Total $ 332,025 241,253 219,076 455,519 420,699 268,025 98,673 537,361 71,882 80,656 Level 1 $ Level 2 332,025 241,253 219,076 455,519 420,699 268,025 98,673 537,361 71,882 80,656 $ Level 3 - $ - 2,725,169 2,725,169 - - 813,449 230,431 1,641,880 813,449 230,431 1,641,880 - - 329,740 329,740 - - 1,226,148 1,737,073 872,166 1,631,551 1,226,148 1,737,073 872,166 1,631,551 - - 6,126,009 2,789,870 1,113,805 - 6,126,009 2,789,870 1,113,805 - 18,512,122 8,482,438 10,029,684 - 194,985 194,985 - - 21,432,276 11,402,592 10,029,684 - 299,383 - - 299,383 21,731,659 $ 15 11,402,592 $ 10,029,684 $ 299,383 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in methodologies used at June 30, 2016 and 2015. Common stocks: Valued at closing price reported on the active market on which the individual securities are traded. Money market funds are valued at quoted market prices for identical securities in the active markets that the Foundation had the ability to access at the measurement date. Commonfund: Valued based upon the unit values (NAV) of the funds held by the Foundation at year end. Unit values are based upon the underlying assets of the funds derived from inputs principally from or corroborated by observable market data, by correlation, or other means. The Foundation invests in the following Commonfund funds: Multi-Strategy Equity - The Multi-Strategy Equity program allocates assets across a broad spectrum of public equity strategies in proportions considered optimal for a fully diversified equity portfolio. The majority of the program's assets generally are invested directly or indirectly in a portfolio of common stocks and securities convertible into common stocks of U.S. companies. The program's allocation to the U.S. equity market includes exposure to companies in the S&P 500 Composite Index, the benchmark for the program, as well as companies not included in the index. The program seeks to diversify its portfolio by allocating assets to common stocks and other equity securities of foreign companies in both developed and emerging markets. In addition, the program expects to invest in marketable alternative strategies that seek opportunities in domestic and foreign markets for equity-type returns with low correlation to the equity markets. The investment is valued at net asset value per share and has no unfunded commitments or significant redemption restrictions. Multi-Strategy Bond - The Multi-Strategy Bond program allocates assets across a broad spectrum of fixed income sectors in proportions considered optimal for a fully diversified fixed income portfolio. The majority of the program's assets generally are invested directly or indirectly in dollar-denominated investment grade bonds and other fixed income securities in an attempt to outperform the broad U.S. bond market. The program seeks to diversify its portfolio by allocating assets to other fixed income securities and strategies, including but not limited to global bonds, inflation-indexed bonds, high yield bonds, emerging markets debt and opportunistic credit strategies. Under normal circumstances, at least 80 percent of the net assets of the program will be invested directly or indirectly in fixed income securities or cash. The benchmark for the program is the Barclays Capital U.S. Aggregate Bond Index. The investment is valued at net asset value per share and has no unfunded commitments or significant redemption restrictions. International Equity Fund - The International Equity Fund invests primarily in common stocks and other equity securities of non-U.S. companies (including common stocks, securities convertible into common stocks and warrants to acquire common stocks). Up to 10 percent of the fund can be invested in equity securities of issuers located in emerging markets. The fund is designed to outperform its benchmark, the Morgan Stanley Capital International World ex-U.S. Index, over a full-market cycle, primarily through active stock selection. Portfolio holdings will typically range from 150 to 300 equity securities. The investment is valued at net asset value per share and has no unfunded commitments or significant redemption restrictions. 16 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Beneficial interest in remainder trust: Valued using the income approach with significant unobservable inputs based on fair value of the underlying investments. The assets are recorded at the estimated present value of the Foundation’s future cash receipts from the trust assets. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future values. Furthermore, although the Foundation believes its valuation methods are appropriate and consistent with other market participants, the use of differing methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following table sets forth a summary of changes in the fair value of Level 3 assets for the years ended June 30: 2015 2016 Balance, beginning of year $ 299,383 Unrealized gains $ - Balance, end of year $ 299,383 265,363 34,020 $ 299,383 The most significant unobservable inputs affecting the fair value of the beneficial interest in remainder trust are the changes in the fair value of the assets comprising the trust, as well as changes in the present value of the estimated future payments to beneficiaries. Significant changes in any of these inputs in isolation could result in a significant change in the fair value measurement. There were no changes in valuation techniques during 2016 and 2015. 4. Trustee Held Funds The composition of trustee held funds is as follows at June 30: 2016 Under trust indenture, held by trustee, cash and cash equivalents $ Less funds allocated toward current construction contracts and retainage payable 17,896,804 2015 $ 168,415 17,442,891 168,415 Non-current portion of funds held by trustee $ 17,728,389 $ 17,274,476 Portion of non-current funds held by trustee reserved for debt service $ 8,566,101 $ 8,481,633 17 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Pursuant to the terms of the trust indentures underlying the Series 2008 and 2010 Bonds (Note 6), the Foundation is required to maintain an amount equivalent to the lesser of: the maximum annual debt service requirements payable on the bonds (other than the last fiscal year during the term of the bonds); 125% of the average annual debt service on the bonds, or; 10% of the original proceeds of the bonds. There was $8,566,101 and $8,481,633 on reserve at June 30, 2016 and 2015, respectively, which the Foundation considers to be a non-current asset. See Note 15. 5. Fixed Assets Fixed assets consist of the following as of June 30: 2016 Buildings and improvements Furniture and fixtures Equipment Land improvements Vehicles and heavy equipment Artwork Construction in progress $ Total Less accumulated depreciation Total fixed assets, net $ 98,864,671 3,400,265 1,630,524 976,956 258,197 138,034 1,222 2015 $ 98,864,671 3,395,653 1,630,524 976,956 258,197 138,034 1,222 105,269,869 105,265,257 20,330,197 16,829,586 84,939,672 $ 88,435,671 Depreciation expense was $3,500,611 and $3,531,342 for the years ended June 30, 2016 and 2015, respectively. The Foundation had undertaken a project consisting of financing, through the issuance of taxexempt bonds through the PHEFA (Note 6), the costs of acquisition, construction, equipping and furnishing student housing on the campus of Edinboro University of Pennsylvania. Phase I consisted of a four-building, 796 bed student housing facility. Phase II consisted of a fourbuilding, 847 bed student housing facility. At June 30, 2013, construction of Phases I and II was substantially complete. Primarily all of the assets noted above relate to the Student Housing Facility. In connection with the Student Housing Facility projects, the Foundation entered into a Ground Lease Agreement with the University (classified as an operating lease) (Note 10), for the lease of certain land upon which the student housing buildings are located. In addition to defining the rentals to be paid for the premises described therein, the Ground Lease Agreement outlines certain mutual covenants and agreements between the Foundation and the University, and also indicates that title to the Student Housing Facility shall, upon the termination or expiration of the lease, vest with the Commonwealth of Pennsylvania (“Commonwealth”), subject to the rights of the University pursuant to an Agreement between the Commonwealth and the University. 18 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 In addition, the Foundation has contracted with the University to manage the Student Housing Facility pursuant to the terms of a Management Agreement. Related to this agreement, the Foundation received from the University $12,859,440 and $12,433,265 during the years ended June 30, 2016 and 2015, respectively, of student housing rental income (which the University billed and collected on the Foundation’s behalf) and paid to the University $4,311,014 and $4,228,489 during the years ended June 30, 2016 and 2015, respectively, of student housing facility operating expenses. At June 30, 2016 and 2015, the Foundation has a net receivable of $235,448 and $120,884, respectively, from the University related to this agreement. See Note 15. 6. Long-Term Debt Long-term debt consists of the following as of June 30: 2016 Note payable (Series 2008 Bonds), Wells Fargo Bank, N. A., as more fully described below, due in varying annual installments through July 1, 2042, interest rates of 4.95% to 5.95%. Note payable (Series 2010 Bonds), Wells Fargo Bank, N. A., as more fully described below, due in varying annual installments through July 1, 2043, interest rates of 3.63% to 6.00%. Long-term debt Less unamortized discount Long-term debt, net of discount Less current portion Long-term debt, non-current portion $ 54,530,000 2015 $ 55,085,000 58,740,000 59,590,000 113,270,000 114,675,000 831,681 871,087 112,438,319 113,803,913 1,615,000 1,405,000 $ 110,823,319 $ 112,398,913 Series 2008 Bonds In February 2008, PHEFA issued its Edinboro University Foundation Student Housing Project At Edinboro University of Pennsylvania Revenue Bonds - Series 2008 (the “Series 2008 Bonds”), the proceeds of which were loaned to the Foundation pursuant to a Loan Agreement between PHEFA and the Foundation dated February 1, 2008 (the “Loan Agreement”). The proceeds of the Series 2008 Bonds were used by the Foundation to provide funds to: finance the cost of acquiring, constructing, furnishing and equipping a fourbuilding, 796-bed student housing facility (“Student Housing Facility”), including the buildings, furniture, fixtures and equipment therein and certain demolition activities related thereto, located on the main campus of the University on land leased by the Foundation from the University; to fund a portion of the interest payments on the Series of 2008 Bonds during construction of the Student Housing Facility and for a period of up to six months thereafter; to fund a Debt Service Reserve Fund for the Series 2008 Bonds, and; to pay the costs of issuing the Series 2008 Bonds. 19 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Following the issuance of the Series 2008 Bonds, PHEFA assigned the Loan Agreement to Wells Fargo Bank, N.A. (“Trustee”), as trustee, under a Trust Indenture dated February 1, 2008, as security for the Series 2008 Bonds. Contemporaneously with the assignment of the Loan Agreement to the Trustee, the Trustee and the Foundation entered into an open-ended leasehold mortgage and security agreement as additional security for the Series 2008 Bonds, granting the Trustee a security interest in the premises, buildings, machinery and equipment, all rents, royalties and income, and the Ground Lease Agreement between the University (as lessor) and the Foundation (as lessee). Under the terms of the Loan Agreement, the Foundation is required to remit interest payments to the Trustee on or before the 25th day of each calendar month in an amount equal to one-sixth of the interest due on the next succeeding interest payment date. Principal payments are due on or before the 25th day of each calendar month in amounts equal to one-twelfth of the principal amount maturing on the next succeeding July 1 (if any) commencing July 1, 2011. Payments required to effect mandatory redemption of principal amounts are due in amounts equal to one-twelfth of the Series 2008 bonds subject to mandatory redemption on the next succeeding July 1 (if any) beginning July 25, 2010. Series 2010 Bonds In May 2010, PHEFA issued its Edinboro University Foundation Student Housing Project At Edinboro University of Pennsylvania Revenue Bonds - Series 2010 (the “Series 2010 Bonds”), the proceeds of which were loaned to the Foundation pursuant to a Loan Agreement between PHEFA and the Foundation dated May 1, 2010 (the “Loan Agreement”). The proceeds of the Series 2010 Bonds were used by the Foundation to provide funds to: finance the cost of acquiring, demolishing, constructing, equipping and furnishing of student housing on the campus of the University consisting of 856 beds (“Student Housing Facility”); to fund a portion of the interest payments on the Series of 2010 Bonds during construction of the Student Housing Facility and for a period of up to six months thereafter; to fund a Debt Service Reserve Fund for the Series 2010 Bonds, and; to pay the costs of issuing the Series 2010 Bonds. Following the issuance of the Series 2010 Bonds, PHEFA assigned the Loan Agreement to Wells Fargo Bank, N.A. (“Trustee”), as trustee, under a Trust Indenture dated May 1, 2010, as security for the Series 2010 Bonds. Contemporaneously with the assignment of the Loan Agreement to the Trustee, the Trustee and the Foundation entered into an open-ended leasehold mortgage and security agreement as additional security for the Series 2010 Bonds, granting the Trustee a security interest in the premises, buildings, machinery and equipment, all rents, royalties and income, and the Ground Lease Agreement between the University (as lessor) and the Foundation (as lessee). 20 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Under the terms of the Loan Agreement, the Foundation is required to remit interest payments to the Trustee on or before the 25th day of each calendar month in an amount equal to one-sixth of the interest due on the next succeeding interest payment date. Principal payments are due on or before the 25th day of each calendar month in amounts equal to one-twelfth of the principal amount maturing on the next succeeding July 1 (if any) commencing July 1, 2013. Payments required to effect mandatory redemption of principal amounts are due in amounts equal to one-twelfth of the Series 2010 bonds subject to mandatory redemption on the next succeeding July 1 (if any) beginning July 25, 2021. Interest incurred on the notes was $6,615,788 and $6,675,147 for the years ended June 30, 2016 and 2015, respectively. The discount on long-term debt is being amortized to expense over the term of the note. This amortization amounted to $39,406 and $39,404 during the years ended June 30, 2016 and 2015, respectively. Scheduled principal payments are as follows: Years ending June 30: 2017 2018 2019 2020 2021 Thereafter $ Total 1,615,000 1,795,000 2,005,000 2,105,000 2,215,000 103,535,000 $ 113,270,000 The loan agreement related to the bond issues contains certain covenants with which the Foundation must comply. During the years ended June 30, 2016 and 2015, the Foundation was not in compliance with the requirement to maintain at least 96% occupancy of the Student Housing Facilities and for the year ended June 30, 2016, the Foundation was not in compliance with the requirement to maintain a debt service coverage ratio of at least 1.2. Under such circumstances, the Foundation must submit a corrective action plan within 30 days of the date of this auditors’ report. See Note 15. 7. Unrestricted Net Assets - Board Designated The Foundation's Board of Directors has designated a portion of unrestricted net assets for the following purposes as of June 30: 2016 Stipend Fund Student Scholarships Allied Health Building Lab at Porreco College Support Total 21 2015 $ - $ 7,500 25,000 50,000 $ - $ 82,500 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 8. Temporarily and Permanently Restricted Net Assets Temporarily restricted net assets are comprised of the following as of June 30: 2016 Various Edinboro University scholarships and related programs $ 2,028,117 2015 $ 2,143,765 Permanently restricted net assets are comprised of the following as of June 30: 2016 Investments to be held in perpetuity by donor stipulations or by Pennsylvania law, the income from which is generally available for scholarships and programs Cash surrender value of donated life insurance policies to benefit scholarship and programs Beneficial interests in remainder trust for endowment purposes Total $ $ 6,182,697 2015 $ 5,692,034 84,557 89,321 299,383 299,383 6,566,637 $ 6,080,738 9. Endowment Funds The Foundation’s endowment consists of approximately 200 individual funds established for a variety of purposes. Its endowment includes both donor-restricted endowment funds and funds designated by the Board of Directors to function as endowments. As required by accounting principles generally accepted in the United States of America, net assets associated with endowment funds, including funds designated by the Board of Directors to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. The Board of Directors of the Foundation has interpreted Pennsylvania 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 Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as either temporarily restricted or unrestricted net assets based on the existence of donor restrictions or by law. 22 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 The Foundation considers the following factors 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 Foundation 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 Foundation (7) The investment policies of the Foundation The Foundation 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. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity or for a donor-specified period(s) as well as board-designated funds. Under this policy, as approved by the Board of Directors, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of various indices such as the S&P 500, Russell 2000, Barclays Capital U.S. Aggregate Bond and EAFE index while assuming a moderate level of investment risk. The Foundation expects its endowment funds, over time, to provide favorable results against these benchmark comparative indexes. Actual returns in any given year may vary from this amount. To satisfy its long-term rate-of-return objectives, the Foundation 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 Foundation targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. Over the long term, the Foundation expects the current spending policy to allow its endowment to continue to grow. This is consistent with the Foundation’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. 23 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Endowment net asset composition by type of fund as of June 30, 2016: Temporarily Restricted Unrestricted Total donor restricted endowments $ (84,889) $ Permanently Restricted 1,459,789 $ Total 6,566,637 $ 7,941,537 Changes in endowment net assets for the year ended June 30, 2016: Temporarily Restricted Unrestricted Endowment net assets, beginning of year $ Investment return Contributions Appropriation of endowment assets for expenditure Other changes: Gifts and transfers to University Change in value of splitinterest agreements Change in cash surrender value of life insurance Other Endowment net assets, end of year (36,391) $ 1,182,907 $ Total 6,080,738 $ 7,227,254 - (183,474) 774,643 490,663 (183,474) 1,265,306 - (576,402) - (576,402) - (4,010) - (4,010) - - (48,498) $ Permanently Restricted (84,889) - 266,124 $ 1,459,788 - (4,764) - $ 6,566,637 (4,764) 217,626 $ 7,941,536 Endowment net asset composition by type of fund as of June 30, 2015: Unrestricted Total donor restricted endowments $ (36,391) Temporarily Restricted $ 24 1,182,907 Permanently Restricted $ 6,080,738 Total $ 7,227,254 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 Changes in endowment net assets for the year ended June 30, 2015: Temporarily Restricted Unrestricted Endowment net assets, beginning of year $ Investment return Contributions Appropriation of endowment assets for expenditure Other changes: Gifts and transfers to University Change in value of splitinterest agreements Change in cash surrender value of life insurance Other Endowment net assets, end of year $ (49,571) $ Permanently Restricted 1,480,820 $ Total 6,215,969 $ - 105,514 990 - (468,241) - (468,241) - (1,174) - (1,174) - - 13,180 64,998 (36,391) $ 1,182,907 93,486 7,647,218 $ 105,514 94,476 34,020 34,020 12,858 (275,595) 12,858 (197,417) 6,080,738 $ 7,227,254 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 law requires the Foundation to retain as a fund of perpetual duration. The Board of Directors utilizes an extended three-year market value average cycle to make this determination. In accordance with accounting principles generally accepted in the United States of America, deficiencies of this nature that are reported in unrestricted net assets were $84,889 and $36,391 as of June 30, 2016 and 2015, respectively. 10. Operating Lease The Foundation has entered into a non-cancelable operating lease for the rental of land from the University ("Lessor"), as related to the Foundation's Student Housing Facilities (the “Ground Lease Agreement”). Rent expense related to this lease was $37,845 and $36,742 for the years ended June 30, 2016 and 2015, respectively. Significant terms of this Ground Lease Agreement include the following:  The termination date of the lease is to be the earlier of July 1, 2054, or the date that all mortgages related to the Student Housing Facility are satisfied beyond July 1, 2044;  Base rent for Phase I Project Facilities is to be $16,000 per year beginning in 2010; base rent for Phase II Project Facilities is to be $16,650 per year beginning in 2012, and the base rent shall be increased 3% per year through lease termination; 25 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015  An additional annual "Percentage Rent" from Net Available Cash Flows (as defined) (only due to the extent available in any one year) is due to Lessor;  An annual "System Fee" equal to 0.5% of gross room rental revenues is due to Lessor;  Throughout the lease term, Lessor has the option to purchase the Student Housing Facility for its fair value;  At the termination or expiration of the lease, all title to and ownership of the Student Housing Facilities shall automatically and immediately vest with the Commonwealth of Pennsylvania (“Commonwealth”), subject to the rights of the University pursuant to an Agreement between the Commonwealth and the University. At June 30, 2016, the future minimum base rental payments under this operating lease are summarized as follows (the additional annual rents and fees noted above are not currently determinable, and are not included in the summary below): Years Ending June 30: 2017 2018 2019 2020 2021 Thereafter Total $ 38,980 40,149 41,354 42,594 43,872 2,488,878 $ 2,695,827 See note 15. 11. Portfolio Management Fees The Foundation assesses an asset management fee on managed scholarship and other endowment funds to be used to support the programs and mission of its affiliated organizations. This fee, which is calculated based on a percentage of the total fair value of investments and billed to the University and Alumni Association, amounted to $195,535 and $212,535 for the years ended June 30, 2016 and 2015, respectively. 26 Edinboro University Foundation Notes to Financial Statements June 30, 2016 and 2015 12. Related Party Transactions The Foundation manages scholarship assets received from the University and Alumni Association under an endowment custodial relationship (Note 1). These contributing organizations did not grant the Foundation variance power (the ability to redirect the corpus) and retained the ownership of the assets. The Foundation receives and manages contributions from donors of assets intended for the benefit of the University. Direct contributions of these assets are recorded on the Foundation's records as contribution income and held in restricted net assets until the donors' requirements have been satisfied, at which time the assets are released from restrictions and paid to the University for various initiatives, awards, and scholarships. These gifts to the University were $228,060 and $296,147 for the years ended June 30, 2016 and 2015, respectively. During the years ended June 30, 2016 and 2015, the Foundation paid $541,258 and $700,008, respectively, in indirect expenses to the University related to student housing activities. As disclosed in Notes 5 and 10, the Foundation has entered into a ground lease agreement with the University and has also contracted with the University to manage the operation of the student housing facility. See Note 15. 13. Concentration of Credit Risk The Foundation maintains its cash and cash equivalents in bank deposit accounts, which at times, may exceed federally insured limits. The Association has not experienced any losses in such accounts. Management believes the Foundation is not exposed to any significant credit risk related to its cash and cash equivalents. 14. Contingencies The Foundation is currently a party to several actions involving a vendor and one of its subcontractors regarding damages arising from negligent construction of a sprinkler system. Outstanding payments are being withheld by the Foundation until the outcome of this matter has been settled. Claims are currently pending before an arbitrator and the outcome is not expected to materially affect the Foundation. 15. Subsequent Event On August 25, 2016, the University committed to a refinancing of the Foundation’s Series 2008 and 2010 bonds and agreed to assume both the bonds and related student housing property by which the bonds are secured. This advanced refunding of the bonds and transfer of property is currently scheduled to occur on September 7, 2016. The consummation of this agreement would result in the Series 2008 and 2010 bonds, the student housing property and all related activities, and the trustee funds transferring to the University. The Foundation would then no longer own and operate the student housing facilities. 27 Edinboro University Foundation Schedule of Functional Expenses Management and General Expenses and Program Services Years Ended June 30, 2016 and 2015 2016 Management and General Expenses Personnel expenses Board sponsored events Professional fees Investment expenses Miscellaneous Software and maintenance agreements Insurance Office supplies Board meetings and conferences Dues and memberships Depreciation expense Total management and general expenses Program Services Student housing facility expense Scholarship payments Gifts to Edinboro University Projects and special events Gifts to others Advertising Total program services 28 2015 $ 264,700 50,796 30,311 10,881 16,126 8,945 1,259 2,315 5,165 842 $ 216,172 82,548 52,215 29,405 15,336 5,968 1,244 4,446 3,705 2,404 633 $ 391,340 $ 414,076 $ 14,590,614 692,104 228,340 154,961 2,120 - $ 15,300,207 615,149 296,147 5,500 250 $ 15,668,139 $ 16,217,253 Edinboro University Foundation Schedule of Rental Income and Expenses Student Housing Facility Years Ended June 30, 2016 and 2015 2016 Operating Revenues Rental revenue Summer rental revenue Other revenue $ Total operating revenues 12,451,317 379,450 28,673 2015 $ 12,859,440 Operating Expenses Depreciation Maintenance Indirect expenses Utilities Room Salaries and benefits Insurance Professional fees Bad debt (recovery) expense Office supplies Miscellaneous Food supplies Marketing and advertising 11,905,255 499,308 28,702 12,433,265 3,499,769 1,557,365 541,258 655,478 568,866 391,463 302,570 215,112 44,933 15,164 8,631 7,581 2,593 3,530,709 1,960,152 700,008 716,788 517,168 530,267 290,000 141,829 (12,964) 67,842 10,227 7,164 3,752 Total operating expenses 7,810,783 8,462,942 Operating income 5,048,657 3,970,323 (6,615,788) 118,651 74,763 10,256 (71,751) (92,292) (6,675,147) 41,632 12,742 503,391 (71,750) (90,368) (6,576,161) (6,279,500) Nonoperating Revenues and Expenses Interest expense, long-term debt Interest income, trustee held funds Unrealized gains on investments Insurance proceeds Amortization of bond costs Bond fees Nonoperating expenses, net $ Excess of Expenses Over Revenues 29 (1,527,504) $ (2,309,177) Edinboro University Foundation Schedule of Debt Service Coverage Ratio Student Housing Facility Years Ended June 30, 2016 and 2015 2016 $ Excess of Expenses over Revenues Plus Non-Cash and Subordinate Items Interest expense, long-term debt Depreciation Indirect expenses Amortization of bond costs One-time operating expenses* Unrealized gains on investments 2015 (1,527,504) $ 6,615,788 3,499,769 541,258 71,751 500,139 (74,763) (2,309,177) 6,675,147 3,530,709 700,008 71,750 1,076,584 (12,742) Excess of Revenues Available for Debt Service $ 9,626,438 $ 9,732,279 Annual Debt Service 2008 Bonds 2010 Bonds $ 3,877,125 4,353,663 $ 3,764,874 4,315,273 Total Annual Debt Service $ 8,230,788 $ 8,080,147 1.17 Debt Service Coverage Ratio 1.20 * One time operating expenses include repairs, maintenance and legal fees that were incurred due to unexpected circumstances and not budgeted in the current year. 30 BYLAWS OF EDINBORO UNIVERSITY FOUNDATION Revised: February 16, 2015 Edinboro University Foundation BYLAWS Revised and Approved: February 16, 2015 INDEX Article One – Purposes, Offices, Fiscal Year, and Non-Discrimination ----------------- 1 Article Two – Notice, Waivers, and Meetings Generally ----------------------------------- 2 Article Three – Board of Directors -------------------------------------------------------------- 3 Article Four – Officers ----------------------------------------------------------------------------- 8 Article Five – Committees ------------------------------------------------------------------------ 10 Article Six – Indemnification of Directors, Officers, and Other Authorized Representatives -------------------------------------------------------------- 12 Article Seven – Miscellaneous ------------------------------------------------------------------- 16 Article Eight – Donors’ Gifts and Directions ------------------------------------------------ 18 Article Nine – Fund Administration – Powers and Duties -------------------------------- 20 Article Ten – Distributions and Disbursements --------------------------------------------- 21 BYLAWS OF EDINBORO UNIVERSITY FOUNDATION (The "Foundation") ARTICLE ONE PURPOSES, OFFICES, FISCAL YEAR, AND NON-DISCRIMINATION Section 1.01 Purposes (a) Public Charity. The Foundation is incorporated under the Pennsylvania Nonprofit Corporation Law of 1988 (the "Corporation Law") for the following purposes: to raise funds for and to support Edinboro University of Pennsylvania (the "University"); to receive, maintain, and/or borrow funds and to acquire, lease, construct, develop, and/or manage real or personal property, or both, and, subject to the restrictions and limitations set forth in the Articles of Incorporation (the “Articles”), to use and apply the whole or any part of such property and the income from these funds and the principal of these funds for charitable, scientific, or educational purposes, either directly or by contributions to organizations that qualify as exempt organizations under Section 501(c)(3) of the Internal Revenue Code (the “Code”) and its regulations as they now exist or as they may be amended; and to advance the objectives of the University. (b) No Private Inurement. No part of the net earnings of the Foundation shall inure to the benefit of, or be distributable to, any Foundation officer, Director, or employee thereof, except that the Foundation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth herein. No substantial part of the activities of the Foundation shall be the carrying on of propaganda, or otherwise attempting to influence legislation. The Foundation shall not participate in or intervene in (including the publishing or distributing of statements) any political campaign on behalf of any candidate for public office. Section 1.02 Governing Authority. The Foundation shall be governed and operated in accordance with the Corporation Law, the Articles, these Bylaws, and by the Board of Directors (the "Board") with such policies as deemed prudent by the Board. Section 1.03 Registered Office. The registered office of the Foundation in Pennsylvania shall be 210 Meadville Street, Alumni House, Edinboro, Pennsylvania 16412, until otherwise established by an amendment of the Articles or by the Board and a record of such change is filed with the Department of State in the manner provided by law. Section 1.04 Other Offices. The Foundation may also have offices at such other places within or without Pennsylvania as the Board may from time to time appoint or the business of the Foundation may require. Section 1.05 Fiscal Year. The fiscal year of the Foundation shall begin on the first day of July of each year. Section 1.06 Non-Discrimination. The Foundation endorses a non-discriminatory policy as to its operations such that the Foundation shall operate without regard to national origin, sex, color, age, religion, disability, organizational affiliation, or sexual orientation. ARTICLE TWO NOTICE, WAIVERS, AND MEETINGS GENERALLY Section 2.01 Manner of Giving Notice. Whenever written notice is required to be given to any person under the provisions of the Corporation Law or by the Articles or these Bylaws, it may be given to the person either personally or by sending a copy thereof by first class or express mail, postage prepaid, supplied by the Director of the Foundation for the purpose of notice, by facsimile, or by electronic (email) mail. If the notice is sent by mail, it shall be deemed to have been given to the person entitled thereto when deposited in the United States mail or, in the case of facsimile or electronic mail, when received. A notice of the meeting shall specify the place, day, and hour of the meeting and any other information required by any other provision of the Corporation Law, the Articles, or these Bylaws. Section 2.02 Notice Of Meetings of Board. (a) General Rule. Notice of a regular meeting of the Board need not be given. Notice of every special meeting of the Board shall be given to each Director by telephone or in writing at least twenty-four (24) hours (in the case of notice by telephone, facsimile, or electronic mail) or forty-eight (48) hours (in the case of notice by express mail) or five (5) days (in the case of notice by first class mail) before the time at which the meeting is to be held. Every such notice shall state the time and place of the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board need be specified in a notice of the meeting. (b) Notice of Action by Directors on Articles and/or Bylaws. In the case of a meeting of the Board that has as one (1) of its purposes an action on the Foundation's Articles of Incorporation ("Articles") and/or the Foundation's Bylaws (including but not limited to an amendment, adoption, restatement, and/or repeal of the Articles and/or Bylaws), written notice shall be given to each Director at least ten (10) business days before the time at which the meeting is to be held. There shall be included in, or enclosed with the notice, a copy of the proposed amendment and/or a summary of the changes to be effected thereby. Section 2.03 Waiver of Notice. (a) Written Waiver. Whenever any written notice is required to be given under the provisions of the Corporation Law, the Articles, or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to the notice, whether before or after the time -2- stated therein, shall be deemed equivalent to the giving of the notice. Except as otherwise required by this subsection, neither the business to be transacted at, nor the purpose of, a meeting need be specified in the waiver of notice of the meeting. (b) Waiver by Attendance. Attendance of a person at any meeting shall constitute a waiver of notice of the meeting except where a person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting was not lawfully called or convened. Section 2.04 Modification of Proposal Contained in Notice. Whenever the language of a proposed resolution is included in a written notice of a meeting required to be given under the provisions of the Corporation Law or the Articles or these Bylaws, the meeting considering the resolution may without further notice adopt it with such clarifying or other amendments as do not enlarge its original purpose. Section 2.05 Exception to Requirement of Notice. Whenever any notice or communication is required to be given to any person under the provisions of the Corporation Law or by the Articles or these Bylaws or by the terms of any agreement or other instrument or as a condition precedent to taking any corporate action and communication with that person is then unlawful, the giving of the notice or communication to that person shall not be required. Section 2.06 Use of Conference Telephone and Similar Equipment. One or more persons may participate in a meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this section shall constitute presence in person at the meeting. Section 2.07 Parliamentary Procedure. Except to the extent inconsistent with the provisions of these Bylaws or any special rules which may from time to time be adopted by the Board, the rules contained in the then current edition of Roberts Rules of Order shall govern the meetings of the Board in all cases to which they are applicable ARTICLE THREE BOARD OF DIRECTORS Section 3.01 Powers; Personal Liability. (a) General Rule. Unless otherwise provided by statute, all powers vested by law in the Foundation shall be exercised by or under the authority of, and the business and affairs of the Foundation shall be managed under the direction of, the Board. The Foundation shall have no members. -3- (b) Standard of Care: Justifiable Reliance. A Director shall stand in a fiduciary relation to the Foundation and shall perform his or her duties as a Director, including duties as a member of any committee of the Board upon which the Director may serve, in good faith, in a manner the Director reasonably believes to be in the best interests of the Foundation and with such care, including reasonable inquiry, skill, and diligence, as a person of ordinary prudence would use under similar circumstances. In performing his or her duties, a Director shall be entitled to rely in good faith on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by any of the following: (1) One (1) or more officers or employees of the Foundation whom the Director reasonably believes to be reliable and competent in the matters presented. (2) Counsel, public accountants, or other persons as to matters which the Director reasonably believes to be within the professional or expert competence of such person. (3) A committee of the Board upon which the Director does not serve, duly designated in accordance with law, as to matters within its designated authority, which committee the Director reasonably believes to merit confidence. A Director shall not be considered to be acting in good faith if the Director has knowledge concerning the matter in question that would cause his or her reliance to be unwarranted. (c) Consideration of Factors. In discharging the duties of their respective positions, the Board, committees of the Board, and individual Directors may, in considering the best interests of the Foundation, consider the effects of any action upon employees and trainees of the Foundation and upon communities in which offices or other establishments of the Foundation are located, and all other pertinent factors. The consideration of those factors shall not constitute a violation of subsection (b). (d) Presumption. Absent breach of fiduciary duty, lack of good faith, or selfdealing, actions taken as a Director, or any failure to take any action, shall be presumed to be in the best interests of the Foundation. (e) Personal Liability of Directors. (1) A Director shall not be personally liable, as such, for monetary damages for any action taken, or any failure to take any action, unless: (i) the Director has breached or failed to perform the duties of his or her office under this section; and (ii) the breach or failure to perform constitutes self-dealing, willful misconduct, or recklessness. -4- (2) The provisions of paragraph (1) shall not apply to the responsibility or liability of a Director pursuant to any criminal statute, or the liability of a Director for the payment of taxes pursuant to local, state, or federal law. (3) The Foundation will enter into a transaction with an interested person only if at least two-thirds (2/3) of the Directors then serving approve the transaction as being fair to and in the best interests of the Foundation. (f) Notation of Dissent. A Director who is present at a meeting of the Board, or of a committee of the Board, at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his or her dissent is entered in the minutes of the meeting or unless the Director files a written dissent to the action with the secretary of the meeting before the adjournment thereof or transmits the dissent in writing to the Secretary of the Foundation immediately after the adjournment of the meeting. The right to dissent shall not apply to a Director who voted in favor of the action. Nothing in this section shall bar a Director from asserting that minutes of the meeting incorrectly omitted his or her dissent if, promptly upon receipt of a copy of such minutes, the Director notifies the Secretary of the Foundation, in writing, of the asserted omission or inaccuracy. Section 3.02 Election of Directors. The initial Directors shall be elected by the Incorporators. Thereafter, the Directors shall be elected by the current Board at its annual meeting following the presentation of a report by the Governance Committee and nominations for election having been made by current members of the Board. Section 3.03 Number, Term of Office, and Resignation. (a) Number. The Board shall consist of no less than five (5) voting Directors and no more than twenty (20) voting Directors. (b) Qualifications. Each Director of the Foundation shall be a natural person at least eighteen (18) years of age who need not be a resident of Pennsylvania. In addition, at least three (3) members of the Board shall be citizens at large who are not affiliated by reason of employment with either a governmental agency or educational institution. One (1) non-voting Director shall be nominated by the Council of Trustees of the University and one (1) voting Director shall be nominated from a slate of three (3) individuals proposed by the Edinboro University of Pennsylvania Alumni Association, each to serve as liaison between the appointing body and the Foundation. (c) Term of Office. Except as otherwise provided herein, each Director may hold office for a maximum of three (3) sequential three (3) year terms or until his or her earlier death, resignation, or removal; provided, further, that the appointed Directors nominated by the Council of Trustees and the Alumni Association shall not be subject to such limitation but shall serve at the pleasure of the appointing body; and provided, further, that any Director may be invited to rejoin the Board after at least one (1) year’s absence from the Board, and may -5- thereafter hold office again for a maximum of three (3) sequential three (3) year terms; and provided, further, that, by majority vote of the remaining members of the Board, the requirement of one (1) year’s absence may be waived in the case of a Director whose absence would, in the judgment of such remaining members, be detrimental to the interests of the Foundation by reason of such Director’s leadership role in one or more ongoing projects of the Foundation. A decrease in the number of Directors shall not have the effect of shortening the term of any incumbent Director. (d) Resignation. Any Director may resign at any time upon written notice to the Foundation. The resignation shall be effective upon receipt thereof by the Foundation or at such subsequent time as shall be specified in the notice of resignation. (e) Leaves of Absence. Any Director may request a leave of absence. At the discretion of the other Directors of the Board, the Board may grant the leave and permit the Director to return to Board service if the leave of absence expires before completion of his or her term on the Board. If the leave will extend beyond the expiration date of the Director’s term, the Board may treat the Director’s position as vacant and replace the Director pursuant to Section 3.04. The Board may consider the Director for a subsequent term in accordance with Section 3.03(c) above. Section 3.04 Vacancies. (a) General Rule. Vacancies in the Board, including vacancies resulting from an increase in the number of Directors, may be filled by a majority vote of the remaining members of the Board though less than a quorum, or by a sole remaining Director, and each person so selected shall be a Director to serve for the balance of the unexpired term, and until a successor has been selected and qualified or until his or her earlier death, resignation, or removal. (b) Action by Resigned Directors. When one (1) or more Directors resign from the Board effective at a future date, the Directors then in office, including those who have so resigned, shall have power by the applicable vote to fill the vacancies, the vote thereon to take effect when the resignations become effective. Section 3.05 Removal of Directors. Any Director may be removed with or without cause by the affirmative vote of three-quarters (3/4) of the Directors then in office. Such vote shall be taken at a meeting called for such purpose. All Directors shall be given written notice of the time and place of the meeting at which the removal vote will be taken at least ten (10) days before such meeting, and the Director whose removal has been proposed shall be given an opportunity to present information to the Board before or at such meeting. Section 3.06 Place of Meetings. Meetings of the Board may be held at such place within or without Pennsylvania as the Board may from time to time appoint or as may be designated in the notice of the meeting. -6- Section 3.07 Organization of Meetings. At every meeting of the Board, the Chair, or, in the case of a vacancy in the office or absence of the Chair, the Vice Chair, or, in the case of a vacancy in the office or absence of both the Chair and the Vice Chair, the Secretary, shall act as Chair of the meeting. Section 3.08 Regular Meetings. At least four (4) regular meetings of the Board shall be held at such time during each fiscal year and at such place as shall be designated from time to time by resolution of the Board. One (1) of such regular meetings shall be designated by resolution of the Board as the Foundation's annual meeting. Section 3.09 Special Meetings. Special meetings of the Board shall be held whenever called by the Chair or by two (2) or more of the Directors. Section 3.10 Quorum of and Action by Directors. (a) General Rule. A majority of the voting Directors in office of the Foundation shall be necessary to constitute a quorum for the transaction of business, and the acts of a majority of the Directors present and voting at a meeting at which a quorum is present shall be the acts of the Board. (b) Action by Written Consent. Any action required or permitted to be taken at a meeting of the Directors may be taken without a meeting if, prior or subsequent to the action, consent or consents thereto by all of the Directors in office is filed with the Secretary of the Foundation. Section 3.11 Compensation. The Board shall serve as Directors without compensation, although a Director may be reimbursed for expenses, which have been approved by the Board. In addition, a Director may be a salaried officer of the Foundation. Section 3.12 Attendance. Prior to a meeting of the Board, a Director shall notify the Chair, or his or her designee, if he or she is unable to attend. Failure to notify the Chair of his or her absence a reasonable time prior to a meeting will be an unreported absence for purposes of this Section 3.12. If a Director has two (2) unreported absences of a regularly scheduled meeting of the Board during the span of the fiscal year, he or she shall be deemed to have resigned from the Board and shall be so notified in writing, unless the Board in its sole and absolute discretion determines this Section 3.12 should not apply. -7- ARTICLE FOUR OFFICERS Section 4.01 Officers Generally. (a) Number, Qualifications, and Designation. The officers of the Foundation shall be a Chair, Vice Chair, Secretary, Treasurer, and such other officers as may be elected in accordance with the provisions of Section 4.03. The Chair, Vice Chair, Secretary, and Treasurer shall be voting Directors of the Foundation. Any number of offices may be held by the same person. Employees of the University may not violate the Commonwealth of Pennsylvania Adverse Interest Laws and, therefore, may not serve as a voting Director and may not execute/sign checks or legal contracts on behalf of the Foundation and its Board. (b) Resignations. Any officer may resign at any time upon written notice to the Foundation. The resignation shall be effective upon receipt thereof by the Foundation or at such subsequent time as may be specified in the notice of resignation. (c) Bonding. The Foundation may secure the fidelity of any or all of its officers by bond or otherwise. (d) Standard of Care. Except as otherwise provided in the Articles, an officer shall perform his or her duties as an officer in good faith in a manner he or she reasonably believes to be in the best interests of the Foundation and with such care, including reasonable inquiry, skill, and diligence, as a person of ordinary prudence would use under similar circumstances. A person who so performs his or her duties shall not be liable by reason of having been an officer of the Foundation. Section 4.02 Election and Term of Office. The officers of the Foundation, except the Chair and those elected by delegated authority pursuant to Section 4.03, shall be elected every other year by the Board, and each such officer shall hold office for a term of two (2) years and until a successor has been elected and qualified or until his or her earlier death, resignation, or removal. Section 4.03 Subordinate Officers, Committees, and Agents. The Board may from time to time elect such other officers and appoint such committees, employees, or other agents as the business of the Foundation may require, including one or more assistant secretaries and one or more assistant treasurers, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the Board may from time to time determine. The Board may delegate to any officer or committee the power to elect subordinate officers and to retain or appoint employees or other agents or committees thereof and to prescribe the authority and duties of such subordinate officers, committees, employees, or other agents. -8- Section 4.04 Removal of Officers and Agents. Any officer or agent of the Foundation may be removed by the Board with or without cause. The removal shall be without prejudice to the contract rights, if any, of any person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. Section 4.05 Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or any other cause shall be filled by the Board or by the officer or committee to which the power to fill such office has been delegated pursuant to Section 4.03, as the case may be, and if the office is one for which these Bylaws prescribe a term shall be filled for the unexpired portion of the term. Section 4.06 Authority. All officers of the Foundation, as between themselves and the Foundation, shall have such authority and perform such duties in the management of the Foundation as may be provided by or pursuant to resolutions or orders of the Board or in the absence of controlling provisions in the resolutions or orders of the Board, as may be determined by or pursuant to these Bylaws. Section 4.07 The Chair. The Chair of the Board shall preside at all meetings of the Board, serve as Chair of the Executive Committee, and perform such other duties as may from time to time be requested by the Board. Section 4.08 The Vice Chair. The Vice Chair also shall be the Chair-Elect. The Vice Chair shall assume the office of the Chair of the Board at the expiration of the term of the incumbent Chair. In addition, in the absence of the Chair, the Vice Chair shall preside at all meetings of the Board, serve as Chair of the Executive Committee, and perform such other duties as may from time to time be requested by the Board. Section 4.09 The Secretary. The Secretary or an Assistant Secretary shall record (i) all the votes of the Directors; (ii) the minutes of the meetings of the Board; and (iii) the minutes generated by the committees of the Board, in a book or books to be kept for that purpose. The Secretary shall see that notices are given and records and reports properly kept and filed by the Foundation as required by law. Further, the Secretary shall perform all duties incident to the Office of Secretary and such other duties as may from time to time be assigned by the Board. Section 4.10 The Treasurer. The Treasurer or an Assistant Treasurer shall have or provide for the custody of the funds or other property of the Foundation; shall collect and receive or provide for the collection and receipt of moneys earned by or in any manner due to or received by the Foundation; shall deposit or provide for the deposit of all funds in his or her custody as Treasurer in such banks or other places of deposit as the Board may from time to time designate; shall, whenever so required by the Board, render an account showing all transactions as Treasurer and the financial condition of the Foundation; and, in general, shall discharge such other duties as may from time to time be assigned by the Board. -9- ARTICLE FIVE COMMITTEES Section 5.01 Committees Generally. (a) Establishment and Powers. The Board may, by resolution adopted by a majority of the Directors in office, establish one (1) or more committees to consist of one (1) or more Directors of the Foundation. Each committee may include non-Directors as voting committee members who may be appointed by the Foundation Chair, the Board, and/or by the committee Chair. Any committee, to the extent provided in the resolution of the Board, shall have and may exercise all of the powers and authority of the Board, except that a committee shall not have any power or authority as to the following: (1) The creation or filling vacancies in the Board. (2) The adoption, amendment, or repeal of these Bylaws. (3) The amendment or repeal of any resolution of the Board that by its terms is amendable or repealable only by the Board. (4) Action on matters committed by a resolution of the Board to another committee of the Board. (b) Alternate Committee Members. The Board Chair may designate one (1) or more persons as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee for the purposes of any written action by the committee. In the absence or disqualification of a member and alternate member or members of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another person to act at the meeting in the place of the absent or disqualified member. Board. (c) Term. Each committee of the Board shall serve at the pleasure of the (d) Committee Procedures. The term "Board of Directors" or "Board” when used in any provision of these Bylaws relating to the organization or procedures of or the manner of taking action by the Board shall be construed to include and refer to the Executive Committee or any other committee of the Board. (e) Appointment of Committee Chairs and Committee Members. Except for the Executive Committee, the Board Chair shall appoint committee Chairs and, in consultation with the committee Chair, the members of each committee. Committee Chairs must be Directors of the Foundation. Committee Chairs and members shall serve concurrent terms with Board officers. - 10 - (f) Minutes. Each committee of the Board shall generate its own minutes and records and deliver them to the Secretary or Assistant Secretary. Section 5.02 Executive Committee. The Foundation shall have an Executive Committee consisting of the following persons: Chair, Vice Chair, Secretary, Treasurer, Chairs of all standing committees, and the prior Board Chair. The Executive Committee shall supervise and annually review the performance of the Foundation's Executive Director, and shall make recommendations to the Board concerning salary. The Executive Committee shall have the power to act for the Board on matters arising in the regular course of business and between regular meetings of the Board, in accordance with these Bylaws; provided, however, that such authority shall not extend to those matters described in Section 5.01(a). At least four (4) regular meetings of the Executive Committee shall be held at such time during each fiscal year and at such place as shall be designated from time to time by the Executive Committee. Section 5.03 Finance Committee. The Foundation shall have a Finance Committee consisting of a Treasurer and other persons having experience in financial, budgeting, and/or audit functions. The Finance Committee shall function as the fact-finding committee to advise the Board on the Foundation's finances and expenditures. The Finance Committee shall present financial reports to the Board and shall be responsible for the initial preparation of the Foundation's annual budget for presentation to the Board for consideration. The Finance Committee shall also arrange for an annual audit of the Foundation's books and accounts by an independent accountant. Section 5.04 Investment Committee. The Foundation shall have an Investment Committee consisting of persons having experience in investment matters. The Investment Committee shall oversee the management of the Foundation’s investment portfolio and shall make recommendations to the Board concerning the spending rate on the Foundation’s invested funds. Section 5.05 Development Committee. The Foundation shall have a Development Committee consisting of persons interested in establishing positive relationships with donors and friends of the Foundation and University. The Committee shall: (i) assist the University in making contribution and grant proposals; (ii) identify prospective donors and friends of the Foundation and University; (iii) develop endowment building and planned gifting strategies for the Foundation; and (iv) increase community awareness of the Foundation and University. Section 5.06 Housing Committee. The Foundation shall have a Housing Committee consisting of individuals interested and knowledgeable in the oversight of real property and improvements that may be owned, developed, and/or managed by the Foundation. Such property includes, but is not limited to, student housing (dormitories), office space, storage space, commercial and non-commercial real estate, and the tangible personal property devoted to real estate-related assets. The Housing Committee shall oversee the management of such property interests and shall make recommendations to the Board concerning the properties. - 11 - Section 5.07 Governance Committee. The Foundation shall have a Governance Committee which shall be responsible for the following: (a) The Governance Committee shall cultivate, recruit and orient new Board members and evaluate the operations of the Board to ensure that the Board is operating in an effective manner and fulfilling its fiduciary responsibility. The Governance Committee shall research prospective new Directors and Officers, and make recommendations to the Board of a slate of Officers and/or Directors whenever vacancies may occur. (b) The Governance Committee shall be responsible for the review of the Foundation's Articles and/or Bylaws. In accordance with the notification provisions of Section 2.2(b) of Article Two, the Governance Committee shall make recommendations to the Board for any proposed amendment to the Foundation's Article and/or Bylaws. The Committee shall also review and respond to any questions and suggested changes to the Articles and/or Bylaws made by the Board or by any of the Foundation's other committees. Section 5.08 Other Committees. The Chair may from time to time appoint such other committees of the Board as the Chair deems appropriate. Such committees shall be strictly advisory in nature and shall have no power or authority to act on behalf of the Foundation, except to the extent that such powers and authority have been specifically delegated to the committee by resolution of the Board. ARTICLE SIX INDEMNIFICATION OF DIRECTORS, OFFICERS, AND OTHER AUTHORIZED REPRESENTATIVES Section 6.01 Scope of Indemnification. (a) General Rule. The Foundation shall indemnify an indemnified representative against any liability incurred in connection with any proceeding in which the indemnified representative may be involved as a party or otherwise by reason of the fact that such person is or was serving in an indemnified capacity, including without limitation, liabilities resulting from any actual or alleged breach or neglect of duty, error, misstatement or misleading statement, negligence, gross negligence, or act giving rise to strict liability or products liability, except: law; (1) where such indemnification is expressly prohibited by applicable (2) where the conduct of the indemnified representative has been finally determined by a court: meaning (i) of 15 to constitute willful misconduct or recklessness within the Pa. C.S. Sections 13(b) and 1746(b) and 42 Pa. - 12 - C.S. Section 8365(b) or any superseding provision of law sufficient in the circumstances to bar indemnification against liabilities arising from the conduct; or (ii) to be based upon or attributable to the receipt by the indemnified representative from the Foundation of a personal benefit to which the indemnified representative is not legally entitled; or (3) to the extent such indemnification has been finally determined in a final adjudication to be otherwise unlawful. (b) Partial Payment. If an indemnified representative is entitled to indemnification in respect of a portion, but not all, of any liabilities to which such person may be subject, the Foundation shall indemnify such indemnified representative to the maximum extent for such portion of the liabilities. (c) Presumption. The termination of a proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendere shall not of itself create a presumption that the indemnified representative is not entitled to indemnification. (d) Definitions. For purposes of this Article: (1) "indemnified capacity" means any and all past, present, and future service by an indemnified representative in one or more capacities as a Director, officer, employee, or agent of the Foundation, or, at the request of the Foundation, as a Director, officer, employee, agent, fiduciary, or trustee of another corporation, partnership, joint venture, trust, employee benefit plan, or other entity or enterprise; (2) "indemnified representative" means any and all Directors and officers of the Foundation and any other person designated as an indemnified representative by the Board (which may, but need not, include any person serving at the request of the Foundation as a Director, officer, employee, agent, fiduciary, or trustee of another corporation, partnership, joint venture, trust, employee benefit plan, or other entity or enterprise); (3) "liability" means any damage, judgment, amount paid in settlement, fine, penalty, punitive damages, excise tax assessed with respect to an employee benefit plan, or cost or expense of any nature (including, without limitation, attorney fees and disbursements); and (4) "proceeding" means any threatened, pending or completed action, suit, appeal, or other proceeding of any nature, whether civil, criminal, administrative, or investigative, whether formal or informal, and whether brought by or in the right of the Foundation, a class of its security holders, or otherwise. - 13 - Section 6.02 Power to Purchase Insurance. The Foundation shall have the power to purchase and maintain insurance on behalf of any person who is or was a representative of the corporation against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him against that liability. Section 6.03 Proceedings Initiated by Indemnified Representatives. Notwithstanding any other provision of this Article, the Foundation shall not indemnify under this Article an indemnified representative for any liability incurred in a proceeding initiated (which shall not be deemed to include counter-claims or affirmative defenses) or participated in as an intervener or amicus curiae by the person seeking indemnification unless such initiation of or participation in the proceeding is authorized, either before or after its commencement, by the affirmative vote of a majority of the Directors in office. This section does not apply to reimbursement of expenses incurred in successfully prosecuting or defending the rights of an indemnified representative granted by or pursuant to this Article. Section 6.04 Advancing Expenses. The Foundation shall pay the expenses (including attorney fees and disbursements; subject, however, to Section 6.06) incurred in good faith by an indemnified representative in advance of the final disposition of a proceeding described in Section 6.01 or the initiation of or participation in which is authorized pursuant to Section 6.02 upon receipt of an undertaking by or on behalf of the indemnified representative to repay the amount if it is ultimately determined by a court that such person is not entitled to be indemnified by the Foundation pursuant to this Article. The financial ability of an indemnified representative to repay an advance shall not be a prerequisite to the making of such advance. Section 6.05 Payment of Indemnification. An indemnified representative shall be entitled to indemnification within thirty (30) days after a written request for indemnification has been delivered to the Secretary of the Foundation; subject, however, to Section 6.06. Section 6.06 Procedure. As soon as practicable after receipt by an indemnified representative of notice of the commencement of any action, suit, or proceeding specified in this Article, the indemnified representative shall, if a claim with respect thereto may be made against the Foundation under this Article, notify the Foundation in writing of the commencement or threat thereof; however, the omission so to notify the Foundation shall not relieve the Foundation from any liability under this Article unless the Foundation shall have been prejudiced thereby or from any other liability which it may have to the indemnified representative other than under this Article. With respect to any such action as to which the indemnified representative notifies the Foundation of the commencement or threat thereof, the Foundation may participate therein at its own expense and, except as otherwise provided below, to the extent that it desires, the Foundation, jointly with any other indemnifying party similarly notified, shall be entitled to assume the defense thereof with counsel selected by the Foundation to the reasonable satisfaction of the indemnified representative. After notice from the Foundation to the indemnified representative of its election to assume the defense thereof, the Foundation shall not be liable to the indemnified representative under this Article for any legal or other expenses subsequently - 14 - incurred by the indemnified representative in connection with the defense thereof other than as otherwise provided below. The indemnified representative shall have the right to employ his or her own counsel in such action, but the fees and expenses of such counsel incurred after notice from the Foundation of its assumption of the defense thereof shall be at the expense of the indemnified representative unless: (i) the employment of counsel by the indemnified representative shall have been authorized by the Foundation; (ii) the indemnified representative shall have reasonably concluded that there may be a conflict of interest between the Foundation and the indemnified representative in the conduct of the defense of such proceeding; or (iii) the Foundation shall not in fact have employed counsel to assume the defense of such action. The Foundation shall not be entitled to assume the defense of any proceeding brought by or on behalf of the Foundation or as to which the indemnified representative shall have reasonably concluded that there may be a conflict of interest. Section 6.07 Contribution. If the indemnification provided for in this Article or otherwise is unavailable for any reason in respect of any liability or portion thereof, the Foundation shall contribute to the liabilities to which the indemnified representative may be subject in such proportion as is appropriate to reflect the intent of this Article or otherwise. Section 6.08 Mandatory Indemnification of Directors, Officers, etc. To the extent that an authorized representative of the Foundation has been successful on the merits or otherwise in defense of any action or proceeding referred to in 15 Pa. C.S. Sections 1741 or 1742 or in defense of any claim, issue, or matter therein, such person shall be indemnified against expenses (including attorney fees and disbursements) actually and reasonably incurred by such person in connection therewith. Section 6.09 Contract Rights; Amendment or Repeal. All rights under this Article shall be deemed a contract between the Foundation and the indemnified representative pursuant to which the Foundation and each indemnified representative intend to be legally bound. Any repeal, amendment, or modification hereof shall be prospective only and shall not affect any rights or obligations then existing. Section 6.10 Scope of Article. The rights granted by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification, contribution, or advancement of expenses may be entitled under any statute, agreement, vote of shareholders or disinterested Directors or otherwise both as to action in an indemnified capacity and as to action in any other capacity. The indemnification, contribution, and advancement of expenses provided by or granted pursuant to this Article shall continue as to a person who has ceased to be an indemnified representative in respect of matters arising prior to such time, and shall inure to the benefit of the heirs, executors, administrators, and personal representatives of such a person. Section 6.11 Reliance on Provisions. Each person who shall act as an indemnified representative of the Foundation shall be deemed to be doing so in reliance upon the rights provided by this Article. - 15 - Section 6.12 Interpretation. The provisions of this Article are intended to constitute bylaws authorized by 15 Pa. C.S. Sections 513 and 1746 and 42 Pa. C.S. Section 8365. ARTICLE SEVEN MISCELLANEOUS Section 7.01 Checks. All checks, notes, bills of exchange, or other orders in writing shall be signed by such person or persons as the Board may from time to time designate. Section 7.02 Contracts. (a) General Rule. The Board may authorize the delivery of any instrument on behalf of the Foundation, and such authority may be general or confined to specific instances. (b) Statutory Form of Execution of Instruments. Any note, mortgage, evidence of indebtedness, contract or other document, or any assignment or endorsement thereof, executed or entered into between the Foundation and any other person, when signed by one or more officers or agents having actual or apparent authority to sign it, or by the Chair or Vice Chair and Secretary or Treasurer of the Foundation, shall be held to have been properly executed for and on behalf of the Foundation, without prejudice to the rights of the Foundation against any person who shall have executed the instrument in excess of his or her actual authority. Section 7.03 Interested Party Transactions. The Foundation recognizes that the skills, talents, and relationships of its officers and members of its Board are among its richest assets. The Foundation also is aware that acquiring goods or services from, or engaging in transactions with, its officers, Directors, members of their families or entities in which they have a financial interest or with which they are affiliated (such persons and entities are referred to collectively as “Interested Parties”) may create an appearance of impropriety. In order to protect the Foundation against any improper appearance, the Foundation will restrict its business dealings with Interested Parties as follows: (a) The Foundation may acquire goods or services from, or otherwise transact business with, an Interested Party if the Board determines in its judgment that the goods or services provided to the Foundation are, or the transaction is, on terms no less advantageous to the Foundation than the terms that are available to the Foundation from third parties. Moreover, the Foundation anticipates that any such acquisition may be on terms that are more advantageous to the Foundation than those generally extended by third parties. If an Interested Party offers terms which are as advantageous to the Foundation as terms offered by another vendor, the Foundation may, but shall not be required to, consider other benefits derived by it from the Interested Party (e.g., past or anticipated services rendered or financial support) in selecting between otherwise equally desirable vendors. - 16 - (b) Whenever the Foundation is considering acquiring goods or services from, or entering into a transaction with, an Interested Party, the details that create the Interested Party relationship shall be disclosed to the Foundation in writing to the Board. (c) The Foundation shall enter into a transaction with an Interested Party (an “Interested Party Transaction”) only if the Board is made aware of the information referred to in Subsection 7.03 (b) and the majority of the Directors then serving approve the transaction as being fair to and in the best interests of the Foundation. Additionally, the Executive Committee shall have the authority to act for the Board in granting the approval contemplated by this paragraph. For purposes of the preceding two sentences, any Director or Executive Committee member who is (or has an interest in or is related to) the Interested Party that is a party to a proposed transaction shall not be considered a Director or Executive Committee member then serving (including, without limitation, for the purpose of determining a quorum), shall not participate in the vote on the transaction, and shall not attend any meeting while approval of the transaction is considered. Notwithstanding the foregoing, however, prior approval by the Board shall not be required if (a) emergency circumstances make such approval impractical (in which event the transaction shall be reported to the Board promptly after the fact), or (b) if the transaction falls below a de minimis threshold established by the Board. (d) The Board (or a committee established by the Board) may: (1) Develop procedures and guidelines (collectively called “Policies”) regarding Interested Party Transactions; (2) Monitor transactions with Interested Parties; and (3) Establish such criteria as it may deem appropriate for de minimis transactions that need not be approved hereunder. Section 7.04 Deposits. All funds of the Foundation shall be deposited from time to time to the credit of the Foundation in such banks, trust companies, or other depositories as the Board may approve or designate, and all such funds shall be withdrawn only upon checks signed by such one or more officers or employees as the Board shall from time to time determine. Section 7.05 Corporate Records. The Foundation shall keep complete and accurate books and records of account and minutes of the proceedings of the Directors. Any books, minutes, or other records may be in written form or any other form capable of being converted into written form within a reasonable time. Section 7.06 Financial Reports. The Foundation shall prepare annual financial statements, which may be consolidated, including at least a balance sheet as of the end of each fiscal year and a statement of income and expenses for the fiscal year. The financial statements shall be prepared on the basis of generally accepted accounting principles, shall be audited by a public accountant, and shall be accompanied by the report of the accountant. - 17 - Section 7.07 Incidental Profits. Whenever the lawful activities of the Foundation involve among other things the charging of fees or prices for its services or products, it shall have the right to receive such income, and, in so doing, may make in incidental profit. All such incidental profits shall be applied to the maintenance and operation of the lawful activities of the Foundation, and in no case shall be divided or distributed in any manner whatsoever among the Directors or Officers of the Foundation, except as otherwise permitted by law. Section 7.08 Amendment of Bylaws. These Bylaws may be amended or repealed, or new Bylaws may be adopted, by vote of a majority of the Board at any duly organized annual or special meeting of the Board called in accordance with the notification requirements as set forth in Section 2.02(b) of these Bylaws. Any change to the Foundation's Bylaws shall take effect when adopted unless otherwise provided in the resolution effecting the change. Section 7.09 Dissolution. Upon dissolution of the Foundation or the winding up of its affairs, the assets of the Foundation shall be distributed exclusively to the University unless the University has been closed. If the University is closed, then Foundation assets shall be distributed to charitable, religious, scientific, testing for public safety, literary, or educational organizations which would then qualify under the provisions of Section 501(c)(3) of the Internal Revenue Code and its regulations as they now exist or may be amended. ARTICLE EIGHT DONORS' GIFTS AND DIRECTIONS Section 8.01 General Rule. Donors may make gifts to or for the use of the Foundation by naming or otherwise identifying the Foundation as a recipient or as trustee. The Board may, as necessary, designate one or more financial institutions to hold and administer all donor gifts. The Board shall also establish the appropriate gift acceptance policies and coordination with University policies. Section 8.02 Governing Instruments. Each donor, by making a gift to or for the use of the Foundation, accepts and agrees to all the terms of these Bylaws and Articles of Incorporation and provides that the gift shall be subject to the provisions for presumption of donors' intent, for variance from donors' direction and for amendments and termination, and to all other terms of the Articles of Incorporation and Bylaws. Section 8.03 Remainder Interests. If a gift is made to the Foundation in trust to make income or other payments for a period of a life or lives or other period to any individuals or for non-charitable purposes, followed by payments to or for the use of the Foundation, or in trust to make income or other payments to or for the use of the Foundation, followed by payments to any individuals or for non-charitable purposes, only the payments to or for the use of the Foundation shall be regarded as Foundation funds subject to these Bylaws and only when the Foundation becomes entitled to their use, but the Board may take such actions as it from time to time deems necessary to protect the Foundation's rights to receive such payments. - 18 - Section 8.04 Donor Direction. Any donor may, with respect to any gift of Ten Thousand Dollars ($10,000) or more, give directions to: (a) particular purposes of the University to be supported, (b) manner of distribution including amounts, times, and conditions of payments and whether from principal or income, (e) a name as a memorial or otherwise for a fund given, or addition to a fund previously held, or anonymity for the gift, and (d) reasonable limits on or additions to investment or administrative powers of the Foundation. All such directions by donors shall be followed except as may be contrary to these Bylaws, Board policies, and the charitable purposes of the Foundation. Section 8.05 Commingle Funds Memorials. No gift shall be required to be separately invested or held unless it is necessary in order to follow any other direction by the donor as to purpose, investment, or administration, or in order to prevent tax disqualification, or is required by law. Directions for naming a fund as a memorial or otherwise may be satisfied by keeping under such name accounts reflecting appropriately the interest of such fund in each common investment. Section 8.06 Rejection of Gifts. Each fund of the Foundation shall be presumed to be intended: (a) to be used only for charitable purposes, (b) to be productive of a reasonable return of net income which is to be distributed at least annually or if accumulated is to be accumulated only in a reasonable amount and for a reasonable period for a charitable purpose or purposes, and (c) to be used only for such of those purposes and in such manner as not to disqualify the gift from deduction as a charitable contribution, gift, or bequest in computing any federal income, gift, or estate tax of the donor or the donor's estate and not to disqualify the Foundation from exemption from federal income tax as a qualified charitable organization and shall not be otherwise applied. If a direction by the donor, however expressed, would, if followed, result in use contrary to the intent so presumed, or if the Board is advised by counsel that there is a substantial risk of such result, the direction shall not be followed, but shall be varied by the Board so far as necessary to avoid such result, except that if the donor has clearly stated that compliance with the direction is a condition of such gift, then the gift shall not be accepted in case of such advice unless an appropriate judicial or administrative body first determines that the condition and direction need not be followed. Reasonable charges and expenses of counsel for such advice and proceedings shall be proper expenses of the Foundation. Section 8.07 Changed Circumstances. Whenever the Board decides that conditions or circumstances are such or have so changed since a direction by the donor as to purpose, or as to manner of distribution or use, that literal compliance with the direction is unnecessary, undesirable, impractical, or impossible, or the direction is not consistent with the Foundation primarily serving effectively the needs of the University, it may, by affirmative vote of at least two-thirds (2/3) of its Directors order such variance from the direction and such application of the whole or any part of the principal or income of the fund to other charitable purposes as in its judgment will then more effectively serve such needs (subject to such approvals, if any, as may be required under law). Whenever the Board decides that a donor's direction as to investment or administration has, because of changed circumstances or conditions or experience, proved impractical or unreasonably onerous and impedes effectual serving of such needs, the Board may - 19 - order variance from such direction to such extent as in its judgment is necessary, subject to such approval, if any, as may be required under law. ARTICLE NINE FUND ADMINISTRATION - POWERS AND DUTIES Section 9.01 General Rule. Gifts to or for the use of the Foundation shall, upon acceptance and receipt, vest in the Foundation. The investment, reinvestment, and disposition of such gifts shall be subject to the direction and control of the Board as set forth in these Bylaws and the Foundation’s policies as same may be amended from time to time. Section 9.02 Validity of Gift. The Foundation shall not be responsible for the validity of any gift received. If a donor's direction would, if followed, result in use contrary to the intent presumed by these Bylaws, or if the Foundation is advised by counsel that there is a substantial risk of such result, the Foundation may decline to accept the gift until a determination is obtained as provided in these Bylaws or the direction is varied as provided herein. Section 9.03 Powers. Solely for the purpose of carrying out the charitable purposes of the Foundation, the Foundation and the Board shall have, in addition to all nonprofit corporate powers under the Corporation Law and other powers granted by the Articles or these Bylaws or by donors' directions, but subject to limitations expressly provided by donors' directions and provisions or other provisions hereof, the following discretionary powers with respect to property received and/or each fund held or established by or for the Foundation: (a) Investment and Reinvestment. To retain property in the form and condition in which it is received, to invest and reinvest from time to time in any securities, obligations, or other property of any kind it may deem advisable, including any common fund, trust, or account(s) maintained by it; (b) Disposition of Property. To sell, lease for any period, convey, transfer, exchange, deliver, and dispose of all or any part of the assets of any fund, and make contracts concerning any such assets, all at such prices, for such terms as to credit and otherwise, and whether by public auction or private negotiation, as it deems best; (c) Voting. To vote or refrain from voting any corporate or other securities; to give proxies; to exercise or sell subscription rights and pay security assessments; to consent to extension or renewal or refunding of obligations and liens or security therefore; to hold property in its name or the name of a nominee without disclosing the interest of the Foundation except in its accounting; to participate in reorganizations, mergers, consolidations, foreclosures, and liquidations, and to join with other security holders in delegating authority to, depositing securities with, and acting through committees, depositories, voting trustees, and the like and receive and hold securities or property thereby received; and to settle, compromise, contest, prosecute, or abandon claims in favor of or against any Foundation assets, all as it deems best; - 20 - (d) Allocation. To allocate receipts and disbursements to principal or income in accordance with reasonable accounting principles; (e) Management. To execute and deliver receipts, bills of sale, conveyances, assignments, transfers, powers of attorney, contracts, releases, deeds of trust, mortgages, and other instruments incident to any transaction; and (f) Selection of Agents. To employ attorneys and agents and special assistance as needed, and retain and pay reasonable compensation for services and expenses thereof, and to pay such compensation as is fair, reasonable, and customary at the time, and as may be established from time to time by advance written agreements with the Board, and to charge all such amounts in equitable proportions to the funds held by the Foundation. Section 9.04 Third Party Reliance. No one dealing with the Foundation need inquire concerning the validity of anything the Foundation purports to do, nor see to the application of anything paid or transferred to or upon order of the Foundation and anyone dealing with the Foundation with respect to any asset of any fund may rely without inquiry upon the authority of the Foundation in any action it purports to take, and upon a certificate by any executive officer of the Foundation with respect to any fact pertinent to any fund or funds, asset, or administration. Section 9.05 Board as Fiduciary. The Foundation and its Board shall serve in a fiduciary capacity and shall refrain from exercising any powers in such manner as to disqualify the Foundation from federal income tax exemption as a qualified charitable organization or any gift from deduction as a charitable contribution, gift, or bequest in computing federal income, gift, or estate tax of the donor or an estate. ARTICLE TEN DISTRIBUTIONS AND DISBURSEMENTS Section 10.01 Distribution Determination. The Board shall from time to time, but not less frequently than annually, (a) determine all distributions to be made from net income and principal pursuant to provisions of these Bylaws and donors' directions from time to time applicable, and make, or authorize and direct the payments to organizations or persons to whom payments are to be made, in such amount and at such times and with such accompanying restrictions, if any, it deems necessary to assure use for the charitable purposes and in the manner intended, and (b) determine all disbursements to be made for administrative expenses incurred by the Board and direct the payment thereof and funds to be charged. Section 10.02 Board Vote. All determinations shall be by affirmative vote of a majority of the Board, unless otherwise expressly provided herein or by direction of the donor as a condition of the gift (which is nevertheless subject to variance as provided in these Bylaws). Section 10.03 Principal Distributions. Determinations may be made to distribute capital from funds given without directions as to principal or income as well as pursuant to - 21 - directions expressly permitting use of principal, but the Board shall make such determinations as far in advance as the Board deems practicable so as to adjust its investment policies accordingly, and may, upon investment advice as to how the desired distribution and any necessary liquidation of investments can most economically be accomplished, adjust its directions for distribution so far as it deems practicable accordingly. Section 10.04 University Needs. The Board shall gather and analyze and conduct investigation and research as the Board from time to time deems necessary or desirable in order to determine the most effective agencies and means for meeting the needs of the University through distribution of funds given for charitable purposes, and may direct disbursements for such fact gathering in an analysis, investigation, and research from funds given for such purposes or from funds given without direction as to purpose. Disbursements for administrative expenses incurred by the Board shall be paid first from any funds directed by a donor to be used for such purposes and to the extent such funds do not cover the cost of such administrative expenses, then the difference shall be paid from the Foundation's general funds. CERTIFICATE I, _________________________, certify that the foregoing Bylaws are as last amended and approved by the Board on February 16, 2015. ____________________________ Secretary 1264890v11 - 22 - Edinboro University Foundation Board of Directors February 2016 Board Member Executive Director Christopher J. Cuzzola DECEASED 12/1/16 Campbell, Dr. Mary Jo Home Address Term I nformation Board Office Committee Chair Governance Executive ccuzzola@eupfoundation.org 4334 Prestwick Dr Erie, Pa 16506 maryjocampbell1@verizon.net 5431 Linden Avenue Edinboro, PA 16412 (814) 734-7649 814-881-0962 Frampton, Mr. Dennis * * non-voting drf1248@zoominternet.net Herbe, Mr. David Spouse: Theresa dherbe@skmco.com Howard, Mr. Dennis Spouse: Dianne Employment 246 DeVore Drive Meadville, PA 16335 (814) 333-9771 2933 Madeira Drive Erie, PA 16506 (814) 838-9371 denhoward@aol.com 7634 Francis Road Girard, PA 16417 (814) 734-1456 Retired Edinboro University Professor of Elementary Educatio Appointment Date: June 13' Term Expires: Oct 2016 President C & J Industries 760 Water Street, P. O. Box 499D Meadville, PA 16335 (814) 724-4950 Ext. 7500 Schaffner Knight & Minnaugh 1001 State Street, Suite 1300 Erie, PA 16501 (814) 454-1997 Ext. 217 Council of Trustees Liaison Appointment Date: Sept. 11' Term Expires: Oct 2016 Lord Corporation-Retired Lord Corporation Appointment Date: Dec. 10' Appointment Date: June 13' Housing Treasurer Chair Chair Executive Finance Executive Finance Housing Term Expires: Oct 2016 * 1st full term begins Dec. 2011 Kirk, Mr. James Spouse: Deborah Jean Kirk Rinn, Mr. Steven Spouse: Angie Rinn Santelli, Mr. Patrick Spouse: Patricia Santelli Scalise, Mr. Charles G. kirkj2814@gmail.com 12814 Forrest Drive Edinboro, PA 16412 home: (814) 734-7556 cell: (814) 392-8534 srinn@hbkswealth.com 521 Seminole Drive Erie, PA 16505 psantelli@verizon.net 2913 Swansea Cresent E. Allison Park, PA 15101 home: (412) 487-2338 cell: (412) 780-3680 cscalise@hands-erie.org HANDS 7 E 7th Street Erie, PA 16501 First National Bank- Retired Building 44 of terrace XVII 10390 Washington Palm Way Fort Myers, FL 33966 Appointment Date: June 12 Executive Finance Investment Term Expires: Oct 2016 HBK Wealth Advisors 5121 Zuck Road Erie, PA 16506 work: (814) 490-7102 Term Expires: Oct 2016 Retired Pfizer, Inc. Appointment Date: June 12 Chair Appointment Date: June 13 Chair Executive Finance Investment Governance Vice Chair Executive Finance Investment Term Expires: Oct 2016 President/CEO Appointment Date: Dec 2011 Secretary Chair Housing Executive Term Expires: Oct 2017 C:\Shares\Worddata\COT\affiliated agreements\affiliated organizations pref office file\2016 compliance documents\Foundation\Board of Directors-February 2016.xls Edinboro University Services, I nc. • • • • • M emorandum of Understanding (expires June 17, 2019) Financial Statements and Accompanying I nformation – June 30, 2016 and 2015 Articles of I ncorporation (previously circulated – no changes) ByLaws Board of Directors EDINBORO T]NIYERSITY SERYICES, INC. FINAi\CIAL STATEMENTS AND ACCOMPAI\IYING INFORMATION June 30,2016 and20l5 ---ooOoo--CONTENTS PAGE t-2 lndependent Auditor' s Report Statements of Financial Position a J Statements of Activities and Changes in Net Assets 4 Statements of Cash Flows 5 Notes to Financial Statements Accompanying Information 6-11 : Departmental Schedules of Operations Information ---ooOoo--- t2-13 &H CPAs & Consultants August 2,20T6 Board of Directors Edinboro University Services, Inc. Edinboro, Pennsylvania Independent Auditor' s RePort Report on the Financial Statements We have audited the accompanying financial statements of Edinboro University Services, Inc. (a nonprofit orgarization), which comprise the statements of financial position as of June 30,2016 and-2015, and the related statements of activities and changes in net assets and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these 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 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 these 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 audits to obtain reasonable assurance about uihether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. -1H|LL, BARTH & K|NG LLC | 6603 SUMMIT DRTVE CANFIELD, OHIO 44406 | TEL 330-758-8613 FAX 330-758-0357 | HBKCPA COM Opinion In our opinion, the financial statements referred to above present fairly, in all materiai respects, the financial position of Edinboro University Services, lnc. as of June 30,2016 and2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Report on Accompanying Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying information included on pages 12 md 13 is presented for purposes of additional analysis and is not a required part of the 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 financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 al1 material respects in relation to the financial statements as a whole. ll,:// ts^,A qt",f Certified Public Accountants -2- LLL EDINBORO UNIVERSITY SERYICES, INC. STATEMENTS OF F'INANCIAL POSITION June 30,2016 and 2015 20t6 20t5 ASSETS CURRENT ASSETS equivalents Accounts receivable Commissions and due from vendors Inventories Prepaid expenses Cash and cash 1,493,289 $ 1,771,128 S TOTAL CURRENT 82,549 23,583 644,951 30,954 170,94A 50,777 696,308 35,351 2,724,504 ASSETS 2,275,326 689,312 NET PROPERTY AND EQUIPMENT - NOTE B 2.964.638 $ 722,937 $ 3.447^441 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable and accrued expenses $ 181,287 $ 2,783,351 UNRESTRICTED NET ASSETS 197,043 3,250,398 $ 2.964"638 $ 3,447.447 See accompanying notes a -J- to financial statements EDINBORO UNIVERSITY SERVICES, INC. STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS Years ended June 30,2016 and 2015 2016 201s PERCENT PERCENT OFNET OFNET REVENUES AND OTHER REVENUES AND OTHER AMOUNT SUPPORT AMOLINT SUPPORT UNRESTRICTED NET ASSETS REVENUES AND OTHER SUPPORT Net sales: $ 3,336,098 94.48 $ 3,575,377 155,848 4.41 39,354 1.11 176,942 49,917 100.00 70.72 3,802,230 100.00 2,497,490 2,653,974 69.80 INCREASE IN UNRESTRICTED NET ASSETS BEFORE OPERATING EXPENSES 1,033,810 29.28 1,148,256 30.20 567,297 261,963 16.06 7.42 494,451 13.00 237,400 6.24 (13,360) (0.38) 12,641 42,827 1.21 45,362 0.33 1.19 22,907 0.65 0.56 0.90 31,922 16,545 30,235 0.84 0.44 0.80 47,107 1.33 65,234 4,835 0.14 0.83 30,646 1.72 0.05 0.81 1.17 Books and supplies Copy center Vending TOTAL NET REVENUES AND OTHER SUPPORT 3,531,300 Cost of goods sold 94.04 4.65 1.31 OPERATING EXPENSES Salaries and wages Payroll taxes and benefits Change in accrued benefits Maintenance and repair Supplies Professional services Insurance Depreciation 19,767 31,876 Advertising Credit card discount fees Other expenses TOTAL OPERATING EXPENSES 29,469 57,801 1,072,471 Interest income Gain (loss) on sale of assets (1.08) (12.29) (433,823) 5,095 44,450 1,010,778 137,478 1.64 30.36 (38,661) OTHER INCOME (DEDUCTIONS) Philanthropic activities - NOTig C 1,892 342 (428,386\ 3.61 (10.64) 0.01 (404,569) 5,092 (133) (12.14) (399,610) (10.s 1) 0.14 0.13 0.00 DECREA SE IN LINRESTRICTED NET ASSETS LINRESTRICTED NET ASSETS Beginning of year End ofyear (467,047) _(BnL Q62,132) 3,250,398 _LZ,133sst 3,512,530 $ 3.250.398 See accompanying notes to financial statements -4- (6.90) EDINBORO UNIYERSITY SERVICES, INC. STATEMENTS OF CASH FLOWS Years ended June 30, 2016 and20l5 2016 2015 $ 3,646,885 $ 3,808,215 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers (3,966,375) (3,916,679) Cash paid to suppliers and employees 5,095 lnterest received (264,699) NET CASH USED IN OPERATING ACTIVITIES 5,092 (153,068) CASH FLOWS FROM INVESTING ACTIVITIES 500 342 Proceeds from sale ofassets (13,482) (34,940) NET CASH USED IN INVESTING ACTIVITIES (13,140) (34,440) NET DECREASE INCASHAND CASH EQUIVALENTS (277,839) Purchase of properly and equipment (1 87,508) CASH AND CASH EQUIVALENTS 1,958,636 1,771,128 Begiruring of year End ofyear _s 1,493289_ _$ 1J71,128_ s (467,047) $ (262,132) RECONCILIATION OF DECREASE IN UNRESTRICTED NET ASSETS TO NET CASH USED IN OPERATING ACTIVITIES Decrease in unrestricted net assets Adjustments to reconcile decrease in unrestricted net assets to net cash used in operating activities: 47,107 Depreciation (342) (Gain) loss on sale of assets 65,234 133 Decrease in accounts receivable 88,391 19,631 (Increase) decrease in commissions and due from vendors 27,194 (13,646) Decrease in inventories 51,357 50,164 4,397 (3,046) (t5,756) (9,406) (Increase) decrease in prepaid expenses Decrease in accounts payable and accrued expenses NET CASH USED IN OPERATING ACTIVITIES See accompanying notes -5- $J?S!pe) to financial statements _$_!-s3,o6g)_ EDINBORO UNI\TERSITY SERYICES, INC. NOTES TO FINANCIAL STATEMENTS June 30, 2016 and2015 NOTE A - SUMMARY OF SIGNIF'ICANT ACCOTINTING POLICIES This summary of significant accounting policies is presented to assist in understanding the orga;rization's financial statements. The financial statements and notes are representations of the orgarization's management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. Or ganizati o n Activity : Edinboro University Services, Inc. (the organization) is a corporation organized,under the NonProfit Corporation Law of the Commonwealth of Pennsylvania. The organization renders a variety of services (e.g. text book and supplies sales, vending, and printing services), which supplement services provided by Edinboro University of Pennsylvania (University). Basis of Accounting: The financial statements are presented on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Basis of Presentation: The organizationis required to report information regarding its financial position and activities according to three classes ofnet assets; unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Unrestricted net assets are not subject to donor restrictions. Temporarily restricted net assets result from contributions, grants or other inflows of assets whose use by the organization is limited by donor- or grantor-imposed stipulations that either expire by passage of time or can be fulfrlled and removed by actions of the orgatization prirsuant of those stipulations, from other asset enhancements and diminishments subject to the same kinds ofstipulations and from reclassifications to or from other classes ofnet assets as a consequence of donor- or grantor-imposed'stipulations, their expiration by passage of time, or their fulfillment and removal by actions of the organrzation pursuanl to those stipulations. Permanently restricted net assets result from contributions, grants, and other inflows of assets whose use by the organization is limited to donor- or grantor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the organization, from other asset enhancements and diminishments subject to the same kind of restrictions and from reclassifications from or to other classes ofnet assets as a consequence of donor- or grantor-imposed stipulations. -6- EDINBORO UNIVERSITY SERVICES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30,2016 and 2015 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Presentation (Continued): The organization has no temporarily or permanently restricted net assets at June 30,2016 and 20t5. The organization reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. The organizationdid not solicit contributions during 2016 afi2075, and has no plans to do so in the near term. Revenue Recognition: Revenue is recognized at the point of sale and 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. Gains and losses on other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expirations of restrictions on net assets are reported as net assets released from restrictions between applicable classes of net assets. Cash and Cash Equivalents: Cash and cash equivalents consist of cash. For purposes of the statement of cash flows, the organization considers all instruments with an original maturity at date of purchase of three months or less to be cash equivalents. Concentration of Credit Risk: The organizationmaintained cash and cash equivalents with a financial institution in excess of the amount insured by the Federal Deposit lnsurance Corporation. Accounts Receivable, Commissions and Due From Vendors: Receivables consist of trade receivables, commissions on vending sales and amounts due from certain suppliers. Trade accounts receivable are stated at the amount management expects to collect from balances outstanding at year end. Based on management's assessment of the credit history with customers having outstanding balances and current relationships with them, it has concluded that no allowance for doubtful accounts at June 30,2016 u'd2015 is necessary. The potential risk is limited to the amount recorded in the financial statements. -7- EDINBORO UNIVERSITY SER\TCES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30,2016 and 2015 Inventory: Inventory is reported at the lower of cost (first-in, frst-out) or market determined through the point of sale system. The major classes of inventory are new and used books and supplies. Prepaid Expenses: Prepaid expenses consist primarily of prepaid premiums on various insurance policies and software maintenance contracts. Property and Equipment: Properly and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Accounts Payable and Accrued Expenses: Accounts payable consists of trade payables. Accrued expenses consist principally of payroll tax withholdings, accrued payroll and benefits, and compensated absences. Income Taxes: The organizationhas received a federal income tax exemption under 501(c)(3) of the Internal Revenue Code. As such, no provision for income taxes is reflected in the accompanying financial statements. Impairment of Long-Lived Assets: Long-lived assets held and used by the orgarrtzation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. Advertising: The organizationexpenses the production costs of advertising as incurred. Advertising expense for the years ended Jtme 30, 2016 and2015 totaled $4,835 and $1,892, respectively. -8- EDINBORO UNIVERSITY SERVICES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30,2016 and 2015 NOTE A _ SUMMARY OF' SIGNIF'ICANT ACCOUNTING POLICIES (CONTINUED) Use of Estimates: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts revenue and expenses during the reporting period. Actual results may differ from those estimates. of Subsequent Events: Management evaluated all activity of the orgaruzation through August 2,2016,the date the financial statements were available to be issued, and concluded that no subsequent events have occurred that would require recognition or disclosure in the financial statements or notes. NOTE B - PROPERTY AND EOTIIPMENT Property and equipment are stated at cost and depreciation is calculated on the straight-line method, based on the estimated useful lives of the related property and equipment. Assets with an economic useful life of greater than one year and not acquired for resale are capitalized. Buildings are depreciated over 30 years and equipment and fixtures over 5 years. Properly and equipment is comprised of the following at June 30: 2016 $ 123,000 $ 123,000 931,203 931,203 782,119 771,559 1,936,322 1,925,762 depreciation r,147,010 1,102,925 pROpERTy g 722,937 NET AND EQUIPMENT $ 689,312 Land Buildings Equipment and fixtures. Less accumulated 20ts -9- EDINBORO TINIVERSITY SERYICES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016 and2015 NOTE C _ RELATED PARTY TRANSACTIONS AND PHILANTHROPIC ACTIVITIES The organization makes annual contributions to University related activities, which represents a portion of the organtzation's net income that is retumed to the cErmpus community in the form of contributions to various activities and programs. Amounts contributed by the orgarrization to University related activities were as follows for the years ended June 30: 20t5 2016 University Services, Inc. Academic Achievers Awards General campus contributions (University) Student Hardship Grant (fJniversity) Student Government Association contributions Homecoming donations Porreco Promise endowment Other TOTALS $ 60,000 1 15,010 200,000 17,000 10,000 30,000 1,913 _$__13w3_ $ 60,000 95,900 200,000 17,000 0 30,000 1,769 404,569 The University provides direct support service (utilities, maintenance, etc.) to the facilities owned by both the University and the organization. These costs approximated the amount of philanthropic activities and totaled $233,823 for 2016 and $204,5 69 for 2015. NOTED_RETIREMENTPLAN All permanent employees of the organization are covered under a cost-sharing multiple-employer defined benefit retirement plan operated by the Pennsylvania State Employee's Retirement System (System). Generally, benefits vest after five years of credited service. The System's funding policy, as set by the System's Board, provides for periodic active participant contributions at statutory rates. The System's funding policy also provides for periodic employer contributions at actuarially determined rates, expressed as a percentage of annual covered payroll, such that they, along with employee contributions and an actuarially determined rate of investment return are adequate to accumulate assets to pay benefits when due. The organization recorded $110,124 and $81,401 in retirement plan expenses for the years ended June 30, 2016 and 20I 5, respectively. -10- EDINBORO UNIVERSITY SERVICES, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 2016 and2015 NOTE E , i i - OPERATING LEASES The organizationleases office equipment under operating lease agreements expiring at various dates through 2021. Rental expense charged to operations totaled $30,977 and $24,817 for 2016 and2015,respectively. Following is a sunmary of future minimum lease payments under operating leases that have initial or remaining noncancellable terms in exciss of one year as of lune 30,2016: Year ending , i ' \ 2017 20t8 20lg $ 2o2o 2021 TOTAL: $ 28,474 24,442 24,442 rg,572 963 96S% NOTE F _ CONCENTRATIONS , The organization operates entirely in and around Edinboro, Pennsylvania and is entirely dependent on the students enrolled at the University. 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