C R A-133, 215.97 10.650 R Nova Southeastern University ... · A UDITED C ONSOLIDATED F INANCIAL S TATEMENTS AND O THER F INANCIAL I NFORMATION AND R EPORTS AND S CHEDULES R ELATED

A U D I T E D C O N S O L I D A T E D F I N A N C I A L

S T A T E M E N T S A N D O T H E R F I N A N C I A L

I N F O R M A T I O N A N D R E P O R T S A N D

S C H E D U L E S R E L A T E D T O O F F I C E O F

M A N A G E M E N T A N D B U D G E T C I R C U L A R A - 1 3 3 , S E C T I O N 2 1 5 . 9 7 F L O R I D A

S T A T U T E S , A N D C H A P T E R 1 0 . 6 5 0 R U L E S O F T H E F L O R I D A A U D I T O R G E N E R A L

Nova Southeastern University, Inc. Year Ended June 30, 2010 Report of Independent Certified Public Accountants

1011-1205602

Nova Southeastern University, Inc.

Audited Consolidated Financial Statements and Other Financial Information and Reports and Schedules Related to Office of

Management and Budget Circular A-133, Section 215.97 Florida Statutes, and Chapter 10.650

Rules of the Florida Auditor General

Year Ended June 30, 2010

Contents

Report of Independent Certified Public Accountants ......................................................................1

Audited Consolidated Financial Statements

Consolidated Statements of Financial Position ................................................................................3 Consolidated Statements of Activities .............................................................................................4 Consolidated Statements of Cash Flows ..........................................................................................5 Notes to Consolidated Financial Statements ....................................................................................6 Supplemental Information

Schedule of Expenditures of Federal Awards and State Financial Assistance ..............................29 Notes to Schedule of Expenditures of Federal Awards and State

Financial Assistance ....................................................................................................................43 Report of Independent Certified Public Accountants on Internal Control Over

Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards .................................................................................................46

Report of Independent Certified Public Accountants on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Federal Program and State Financial Assistance Project and on Internal Control Over Compliance in Accordance with OMB Circular A-133, Section 215.97 Florida Statutes, and Chapter 10.650 Rules of the Florida Auditor General .........................................................48

Schedule of Findings and Questioned Costs ..................................................................................51 Summary Schedule of Prior Year Findings ...................................................................................57 State of Florida Student Financial Assistance Programs – Schedule of

Populations, Samples Tested, and Questioned Costs ..................................................................59 Management Letter ........................................................................................................................60

Ernst & Young LLP Suite 500 5100 Town Center Circle Boca Raton, Florida 33486 Tel: +1 561 955 8000 Fax: +1 561 955 8200 www.ey.com

A member firm of Ernst & Young Global Limited

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Report of Independent Certified Public Accountants

Board of Trustees Nova Southeastern University, Inc.

We have audited the accompanying consolidated statement of financial position of Nova Southeastern University, Inc. (the University) as of June 30, 2010, and the related consolidated statements of activities and cash flows for the year then ended. These financial statements are the responsibility of the University’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the University’s consolidated financial statements for the year ended June 30, 2009, and in our report dated October 14, 2009, we expressed an unqualified opinion on those financial statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the University’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the University as of June 30, 2010, and the consolidated changes in their net assets and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States.

In accordance with Government Auditing Standards, we have also issued our report dated October 14, 2010 on our consideration of the University’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of


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that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

Our audit was performed for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The accompanying schedule of expenditures of federal awards and state financial assistance is presented for purposes of additional analysis as required by US Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, Section 215.97 Florida Statutes, and Chapter 10.650 Rules of the Florida Auditor General, and is not a required part of the consolidated financial statements. Such information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the consolidated financial statements taken as a whole.

ey October 14, 2010

($ in thousands)

ASSETS 2010 2009Current assets:

Cash and cash equivalents $50,865 $73,247Restricted cash 1,498 3,430Investments 60,463 35,326Tuition and other receivables, net 31,747 33,862Pledges receivable, current portion, net 3,690 4,152Bond deposits with trustees, current portion 668 741Prepaid expenses and other current assets 7,472 8,765

Total current assets 156,403 159,523Pledges receivable, net 10,058 9,642Bond deposits with trustees 18,551 30,199Perkins student loans 5,517 6,094Foundation assets 5,436 6,135Contributions receivable from remainder trusts 154 133Scholarship funds held in trust by others 3,272 3,077Designated investments 45,088 32,079Restricted investments 22,101 17,908Restricted cash 3,075 2,765Land, buildings, and equipment, net 693,652 680,449Deferred debt issue costs and other assets 23,795 20,137

Total assets $987,102 $968,141

LIABILITIES AND NET ASSETSCurrent liabilities:

Student deposits $10,434 $10,427Accounts payable and accrued liabilities 51,351 58,670Deferred revenue 65,504 60,048Current portion of long-term debt 8,342 8,504Accrued insurance cost 8,392 8,956Other current liabilities 12,797 12,505

Total current liabilities 156,820 159,110Long-term debt 339,463 347,757Refundable Federal Perkins student loans 4,797 4,800Due to beneficiaries under remainder trusts and annuities 167 166Deferred revenue 17,649 17,707Other liabilities 14,213 13,649

Total liabilities $533,109 $543,189

Net assets:Unrestricted $372,770 $348,710Temporarily restricted 63,756 60,771Permanently restricted 17,467 15,471

Total net assets 453,993 424,952

$987,102 $968,141

Nova Southeastern University Consolidated Statements of Financial PositionJune 30, 2010 and 2009

See accompanying notes to financial statements.

($ in thousands) Temporarily Permanently 2010 2009 Unrestricted Restricted Restricted Total Total

REVENUES, GAINS, AND OTHER SUPPORT: Tuition and fees $471,394 $ - $ - $471,394 $450,665 Contributions 1,536 7,304 1,964 10,804 16,811 Government grants 5,366 21,175 - 26,541 29,145Auxiliary operations 31,652 - - 31,652 32,326 Interest and dividends 1,668 535 1 2,204 3,812Educational activities 537 - - 537 697 Net unrealized gain (loss) on securities 6,180 276 (18) 6,438 (10,413)Net realized (loss) gain on sale of securities (2,369) (26) 49 (2,346) (4,235) Other 11,750 9,032 - 20,782 20,585 Museum of Art acquisition - - - - 13,615 Net assets released from restrictions 35,311 (35,311) - - - 563,025 2,985 1,996 568,006 553,008

EXPENSES AND TRANSFERS: Program expenses 452,814 - - 452,814 453,726 Management and general expenses 82,914 - - 82,914 80,271 Fund-raising 3,178 - - 3,178 3,134 538,906 - - 538,906 537,131

CHANGE IN NET ASSETS BEFORE CHANGES RELATED TO MUSEUM COLLECTION ITEMS NOT CAPITALIzED 24,119 2,985 1,996 29,100 15,877

CHANGE IN NET ASSETS RELATED TO COLLECTION ITEMS NOT CAPITALIzED:

Proceeds from sale of collection items 20 - - 20 1,250 Collection items purchased but not capitalized (79) - - (79) (47)

INCREASE IN NET ASSETS 24,060 2,985 1,996 29,041 17,080

NET ASSETS, BEGINNING OF YEAR 348,710 60,771 15,471 424,952 407,872

NET ASSETS, END OF YEAR $372,770 $63,756 $17,467 $453,993 $424,952

Nova Southeastern University Consolidated Statements of ActivitiesJune 30, 2010 and 2009 (with summarized financial information for the year ended June 30, 2009)


32 Annual Report 2010 Annual Report 2010 33

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($ in thousands)

ASSETS 2010 2009Current assets:

Cash and cash equivalents $50,865 $73,247Restricted cash 1,498 3,430Investments 60,463 35,326Tuition and other receivables, net 31,747 33,862Pledges receivable, current portion, net 3,690 4,152Bond deposits with trustees, current portion 668 741Prepaid expenses and other current assets 7,472 8,765

Total current assets 156,403 159,523Pledges receivable, net 10,058 9,642Bond deposits with trustees 18,551 30,199Perkins student loans 5,517 6,094Foundation assets 5,436 6,135Contributions receivable from remainder trusts 154 133Scholarship funds held in trust by others 3,272 3,077Designated investments 45,088 32,079Restricted investments 22,101 17,908Restricted cash 3,075 2,765Land, buildings, and equipment, net 693,652 680,449Deferred debt issue costs and other assets 23,795 20,137

Total assets $987,102 $968,141

LIABILITIES AND NET ASSETSCurrent liabilities:

Student deposits $10,434 $10,427Accounts payable and accrued liabilities 51,351 58,670Deferred revenue 65,504 60,048Current portion of long-term debt 8,342 8,504Accrued insurance cost 8,392 8,956Other current liabilities 12,797 12,505

Total current liabilities 156,820 159,110Long-term debt 339,463 347,757Refundable Federal Perkins student loans 4,797 4,800Due to beneficiaries under remainder trusts and annuities 167 166Deferred revenue 17,649 17,707Other liabilities 14,213 13,649

Total liabilities $533,109 $543,189

Net assets:Unrestricted $372,770 $348,710Temporarily restricted 63,756 60,771Permanently restricted 17,467 15,471

Total net assets 453,993 424,952

$987,102 $968,141

Nova Southeastern University Consolidated Statements of Financial PositionJune 30, 2010 and 2009


($ in thousands) Temporarily Permanently 2010 2009 Unrestricted Restricted Restricted Total Total

REVENUES, GAINS, AND OTHER SUPPORT: Tuition and fees $471,394 $ - $ - $471,394 $450,665 Contributions 1,536 7,304 1,964 10,804 16,811 Government grants 5,366 21,175 - 26,541 29,145Auxiliary operations 31,652 - - 31,652 32,326 Interest and dividends 1,668 535 1 2,204 3,812Educational activities 537 - - 537 697 Net unrealized gain (loss) on securities 6,180 276 (18) 6,438 (10,413)Net realized (loss) gain on sale of securities (2,369) (26) 49 (2,346) (4,235) Other 11,750 9,032 - 20,782 20,585 Museum of Art acquisition - - - - 13,615 Net assets released from restrictions 35,311 (35,311) - - - 563,025 2,985 1,996 568,006 553,008

EXPENSES AND TRANSFERS: Program expenses 452,814 - - 452,814 453,726 Management and general expenses 82,914 - - 82,914 80,271 Fund-raising 3,178 - - 3,178 3,134 538,906 - - 538,906 537,131

CHANGE IN NET ASSETS BEFORE CHANGES RELATED TO MUSEUM COLLECTION ITEMS NOT CAPITALIzED 24,119 2,985 1,996 29,100 15,877

CHANGE IN NET ASSETS RELATED TO COLLECTION ITEMS NOT CAPITALIzED:

Proceeds from sale of collection items 20 - - 20 1,250 Collection items purchased but not capitalized (79) - - (79) (47)

INCREASE IN NET ASSETS 24,060 2,985 1,996 29,041 17,080

NET ASSETS, BEGINNING OF YEAR 348,710 60,771 15,471 424,952 407,872

NET ASSETS, END OF YEAR $372,770 $63,756 $17,467 $453,993 $424,952

Nova Southeastern University Consolidated Statements of ActivitiesJune 30, 2010 and 2009 (with summarized financial information for the year ended June 30, 2009)



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Nova Southeastern University Consolidated Statements of Cash FlowsJune 30, 2010 and 2009

($ in thousands) 2010 2009

CASH FLOWS FROM OPERATING ACTIVITIES: Increase in net assets $29,041 $17,080Adjustments to reconcile increase in net assets to net cash provided by operating activities:

Depreciation expense 27,377 24,215 Amortization expense 419 425 Provision for doubtful accounts 6,413 8,966 Loss on disposal of equipment and buildings 1,133 898 Net loss on sale of securities and sale of properties 2,346 4,235Net unrealized (gain) loss on securities (6,438) 10,413Contribution from Museum of Art acquisition, net of cash received - (12,632) Contributions for investment and capital purchases (8,213) (15,346)

Decrease (increase) in assets from prior year:Tuition and other receivables (4,297) 670Pledges receivable 46 (4,381)Prepaid expenses and other current assets 1,293 838Perkins student loans 577 (42)Foundation assets 703 1,148Contributions receivable and scholarship funds (21) 29Other Assets (4,700) 915

Increase (decrease) in liabilities from prior year:Accounts payable and accrued liabilities (7,319) 3,028Accrued insurance costs and other current liabilities (272) 2,273Deferred revenue—tuition and other 5,456 (6,545)Deferred revenue—county funding (58) 478Student deposits and other liabilities 571 4,946Due to beneficiaries under remainder trusts and annuities 1 (77) Net cash provided by operating activities 44,058 41,534

CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures (41,713) (139,863)Sales and maturities of investments 145,239 160,157Purchases of investments (183,240) (131,898)Investments in and contributions to University Park Plaza 550 528Decrease in restricted cash 1,622 348 Net cash used in investing activities (77,542) (110,728)

CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt - 120,000Decrease (increase) in bond deposits with trustees 11,276 (11,414)Repayment of debt (8,384) (4,986)Financing costs - (1,434)Increase in refundable Federal Perkins student loans (3) 37Contributions for investment and capital purchases 8,213 15,346 Net cash provided by financing activities 11,102 117,549 Net (decrease) increase in cash and cash equivalents (22,382) 48,355Cash and cash equivalents, beginning of year 73,247 24,892

CASH AND CASH EQUIVALENTS, END OF YEAR $50,865 $73,247

Supplemental information: Interest paid, net of amounts capitalized $11,141 $8,513


1. University OrganizationNova Southeastern University, Inc. (NSU, or the university) is a not-for-profit, independent institution and is exempt from federal income taxes on related income under Section 501 (c)(3) of the Internal Revenue Code as an organization described in Section 501. Founded in 1964, the university offers undergraduate degrees, graduate and professional degrees, and certificate programs to approximately 37,800 full- and part-time students in medicine, health sciences, computer sciences, law, education, psychology, business, and marine biology. Courses are taught at four South Florida campuses, seven student educational centers, and at sites in more than 24 states and Puerto Rico, as well as 15 foreign countries. NSU serves the citizens of its community with health, psychology, and law centers; schools for children with hearing impairments and autism; and programs for retired professionals. NSU’s University School offers innovative alternatives in primary and secondary education to children from preschool through grade 12.

2. Summary of Significant Accounting Policies

Financial Statement PresentationThe accompanying consolidated financial statements include the university and its wholly owned subsidiaries, NSU Guaranty Insurance Company, Ltd.; NSU Grande Oaks, LLC.; and NSU Park Plaza, LLC. All significant intercompany balances and transactions have been eliminated in consolidation. NSU classifies its transactions and balances into three categories of net assets: (1) Transactions and balances without donor-imposed stipulations are unrestricted. Unrestricted assets may be used to achieve any institutional purpose; however, the Board of Trustees may designate unrestricted net assets for a specific purpose. (2) Transactions and balances with donor-imposed stipulations that expire in time, or can be fulfilled by actions of the university, are reflected as temporarily restricted. (3) Transactions and balances with donor-imposed stipulations that neither expire over time, nor can be fulfilled by actions of the university, are categorized as permanently restricted. Permanently restricted assets are not expendable.

Certain amounts contained in the accompanying fiscal 2009 consolidated financial statements have been reclassified to conform to the fiscal 2010 presentation.

The consolidated financial statements include prior-year comparative information summarized in total, but not by net asset class. As this summarized information lacks sufficient detail for presentation in accordance with accounting principles generally accepted in the United States of America, the data should be read in conjunction with the prior year’s consolidated financial statements.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires NSU to make estimates and assumptions about the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Cash and Cash EquivalentsCash equivalents are investments with maturities of 90 days or less when purchased, carried at cost, which approximates fair value.

Restricted CashCurrent restricted cash represents funds advanced to NSU under various loan programs, but not disbursed to students by June 30. Long-term restricted cash represents funds contributed in accordance with the joint-use library facility agreement (see Note 14) by NSU and Broward County for capital repair, replacement, and renewal. In accordance with this agreement, these funds are maintained in an interest-bearing account. These funds are reflected as a long-term asset on the Consolidated Statements of Financial Position since they are restricted for long-term capital expenditures.

NSU has cash balances with banks in excess of FDIC-insured limits, which potentially subject NSU to credit risks. Management believes the risk related to these deposits is minimal.

Nova Southeastern University Notes to Consolidated Financial StatementsJune 30, 2010 and 2009


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Nova Southeastern University Consolidated Statements of Cash FlowsJune 30, 2010 and 2009

($ in thousands) 2010 2009

CASH FLOWS FROM OPERATING ACTIVITIES: Increase in net assets $29,041 $17,080Adjustments to reconcile increase in net assets to net cash provided by operating activities:

Depreciation expense 27,377 24,215 Amortization expense 419 425 Provision for doubtful accounts 6,413 8,966 Loss on disposal of equipment and buildings 1,133 898 Net loss on sale of securities and sale of properties 2,346 4,235Net unrealized (gain) loss on securities (6,438) 10,413Contribution from Museum of Art acquisition, net of cash received - (12,632) Contributions for investment and capital purchases (8,213) (15,346)

Decrease (increase) in assets from prior year:Tuition and other receivables (4,297) 670Pledges receivable 46 (4,381)Prepaid expenses and other current assets 1,293 838Perkins student loans 577 (42)Foundation assets 703 1,148Contributions receivable and scholarship funds (21) 29Other Assets (4,700) 915

Increase (decrease) in liabilities from prior year:Accounts payable and accrued liabilities (7,319) 3,028Accrued insurance costs and other current liabilities (272) 2,273Deferred revenue—tuition and other 5,456 (6,545)Deferred revenue—county funding (58) 478Student deposits and other liabilities 571 4,946Due to beneficiaries under remainder trusts and annuities 1 (77) Net cash provided by operating activities 44,058 41,534

CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures (41,713) (139,863)Sales and maturities of investments 145,239 160,157Purchases of investments (183,240) (131,898)Investments in and contributions to University Park Plaza 550 528Decrease in restricted cash 1,622 348 Net cash used in investing activities (77,542) (110,728)

CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt - 120,000Decrease (increase) in bond deposits with trustees 11,276 (11,414)Repayment of debt (8,384) (4,986)Financing costs - (1,434)Increase in refundable Federal Perkins student loans (3) 37Contributions for investment and capital purchases 8,213 15,346 Net cash provided by financing activities 11,102 117,549 Net (decrease) increase in cash and cash equivalents (22,382) 48,355Cash and cash equivalents, beginning of year 73,247 24,892

CASH AND CASH EQUIVALENTS, END OF YEAR $50,865 $73,247

Supplemental information: Interest paid, net of amounts capitalized $11,141 $8,513


1. University OrganizationNova Southeastern University, Inc. (NSU, or the university) is a not-for-profit, independent institution and is exempt from federal income taxes on related income under Section 501 (c)(3) of the Internal Revenue Code as an organization described in Section 501. Founded in 1964, the university offers undergraduate degrees, graduate and professional degrees, and certificate programs to approximately 37,800 full- and part-time students in medicine, health sciences, computer sciences, law, education, psychology, business, and marine biology. Courses are taught at four South Florida campuses, seven student educational centers, and at sites in more than 24 states and Puerto Rico, as well as 15 foreign countries. NSU serves the citizens of its community with health, psychology, and law centers; schools for children with hearing impairments and autism; and programs for retired professionals. NSU’s University School offers innovative alternatives in primary and secondary education to children from preschool through grade 12.

2. Summary of Significant Accounting Policies

Financial Statement PresentationThe accompanying consolidated financial statements include the university and its wholly owned subsidiaries, NSU Guaranty Insurance Company, Ltd.; NSU Grande Oaks, LLC.; and NSU Park Plaza, LLC. All significant intercompany balances and transactions have been eliminated in consolidation. NSU classifies its transactions and balances into three categories of net assets: (1) Transactions and balances without donor-imposed stipulations are unrestricted. Unrestricted assets may be used to achieve any institutional purpose; however, the Board of Trustees may designate unrestricted net assets for a specific purpose. (2) Transactions and balances with donor-imposed stipulations that expire in time, or can be fulfilled by actions of the university, are reflected as temporarily restricted. (3) Transactions and balances with donor-imposed stipulations that neither expire over time, nor can be fulfilled by actions of the university, are categorized as permanently restricted. Permanently restricted assets are not expendable.

Certain amounts contained in the accompanying fiscal 2009 consolidated financial statements have been reclassified to conform to the fiscal 2010 presentation.

The consolidated financial statements include prior-year comparative information summarized in total, but not by net asset class. As this summarized information lacks sufficient detail for presentation in accordance with accounting principles generally accepted in the United States of America, the data should be read in conjunction with the prior year’s consolidated financial statements.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires NSU to make estimates and assumptions about the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Cash and Cash EquivalentsCash equivalents are investments with maturities of 90 days or less when purchased, carried at cost, which approximates fair value.

Restricted CashCurrent restricted cash represents funds advanced to NSU under various loan programs, but not disbursed to students by June 30. Long-term restricted cash represents funds contributed in accordance with the joint-use library facility agreement (see Note 14) by NSU and Broward County for capital repair, replacement, and renewal. In accordance with this agreement, these funds are maintained in an interest-bearing account. These funds are reflected as a long-term asset on the Consolidated Statements of Financial Position since they are restricted for long-term capital expenditures.

NSU has cash balances with banks in excess of FDIC-insured limits, which potentially subject NSU to credit risks. Management believes the risk related to these deposits is minimal.



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InvestmentsInvestments in equity securities with readily determinable market values, debt securities, alternative investments, and assets held in trust are stated at fair value. Investments received as gifts are recorded at fair value at the date of donation.

Permanently restricted investments are subject to restrictions requiring that the principal be invested in perpetuity. Income and net realized and unrealized gains or losses from these investments are classified based on donor restrictions, if any.

Short-term investments have a maturity of three months to five years from the purchase date and are bought and held primarily for the purpose of selling in the near future to fund current operations. All short-term investments are recorded at fair value using the specific identification method; unrealized gains and losses are reflected in net unrealized gain or loss on securities.

Long-term investments are subject to market and credit risks customarily associated with debt, equity, and real estate. Investment securities are exposed to various risks, such as interest rate, market, and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term could materially affect investment balances and the amounts reported in the Consolidated Statements of Financial Position and the Consolidated Statements of Activities.

Bond Deposits with TrusteesDeposits consist of amounts in bond service and reserve funds for various bonds outstanding and proceeds from bond issuances restricted for construction. The current portion related to bond service is $.7 million at June 30, 2010 and 2009. Reserve funds, classified as long-term bond deposits with trustees, are $18.6 million at June 30, 2010 and 2009.

At June 30, 2010, approximately $.02 million (approximately $11.7 million at June 30, 2009) of unspent bond proceeds restricted for the construction of the University School and central plant projects has been recorded within long-term bond deposits with trustees.

Deferred Debt Issue CostsCosts related to the issuance of debt ($6.3 million at June 30, 2010, and $6.8 million at June 30, 2009) are being amortized over the term of the related debt instrument. The bonds outstanding method, which approximates the effective interest method, is used to apportion these deferred costs.

Split Interest AgreementsThese agreements with donors consist primarily of charitable remainder annuity trusts, unitrusts, and gift annuities.

Contributions�receivable�from�remainder�trusts:The university is the beneficiary of trusts held and administered by others. The current values of estimated future cash receipts from the trusts are recognized, in accordance with the donor-imposed restrictions, as temporarily restricted assets and contributions when NSU is notified of the establishment of the trust. Changes in the fair values of the trusts are recorded as temporarily restricted other changes within the Consolidated Statements of Activities.

Due�to�beneficiaries�under�remainder�trusts�and�annuities:NSU is a trustee for trust assets, which are included in investments. In accordance with the donor-imposed restrictions, temporarily restricted contributions are recognized when the trusts are established, after recording liabilities for estimated future payments (discounted over the donor’s or other beneficiary’s life expectancy using published mortality tables). These liabilities are adjusted annually for changes in asset values and estimated future benefits.


The university has entered into arrangements whereby assets are transferred from a donor to the university in exchange for a promise by the university to pay fixed amounts for a specified period of time to the donor or to other donor designees. Temporarily restricted contributions are recognized for the difference between the assets received and the estimated future payments (discounted over the specified period of time the payments are to be made).

Changes in split interest agreements, which are reflected as other revenue in the Consolidated Statements of Activities, increased by approximately $27,000 for fiscal 2010 and $26,000 for fiscal 2009.

At June 30, 2010, amounts due to beneficiaries under remainder trusts were approximately $109,000 ($114,000 at June 30, 2009), and amounts due under annuity agreements were approximately $58,000 ($52,000 at June 30, 2009).

Land, Buildings, and EquipmentLand, buildings, and equipment are recorded at acquisition cost or market value at the date of donation and are subsequently carried net of accumulated depreciation. Leased property meeting certain criteria is capitalized, and the current value of the lease payments is recorded as a liability. Depreciation is calculated using the straight-line method over periods from 4 to 50 years. NSU reviews long-lived assets for impairment when events or circumstances indicate the carrying amount will not be fully recoverable, based on estimated future cash flows. Interest on capital projects is capitalized during the construction period.

Insurance ProgramsThe university is partially self-insured for workers’ compensation benefits, wholly owns an off-shore captive insurance company (see Note 16), participates in partially owned insurance entities and benefit associations, and maintains claims-made insurance policies with respect to certain other coverage. Liabilities for these claims are recorded based on actual loss history and actuarial calculations that include provisions for estimated losses incurred, but not reported, and the portion of insurance risk that has not been transferred to insurance carriers. Accrued insurance costs, net of 3 percent discount, approximated $8.4 million at June 30, 2010, and $8.9 million at June 30, 2009. Undiscounted costs at June 30, 2010 and 2009, were $8.6 million and $9.2 million, respectively. Investments in insurance entities and benefit associations are accounted for under the equity method and are included in deferred debt issue costs and other assets and approximated $2.4 million at June 30, 2010, and $2.1 million at June 30, 2009.

Endowment Payout and ValueThe Board of Trustees has directed that up to 5 percent of the market value of NSU’s endowment investment be made available annually for expenditure. This endowment payout is computed quarterly. If endowment income exceeds this payout level, any balance is reinvested according to donor restrictions. If endowment income is less than 5 percent in any quarter, only actual endowment income is distributed.

The fair value of NSU’s endowment at June 30, 2010, including cash, was $54.2 million, which includes donor-restricted and board-designated endowments. At June 30, 2009, the fair value was $46.2 million. Any declines in the fair value of donor-restricted endowments below their respective historical cost value are recorded as reductions in unrestricted net assets or temporarily restricted net assets, if unspent temporarily restricted earnings exist. Subsequent market gains are used to restore the deficiency in unrestricted net assets before any net appreciation above the historical cost value of such funds increases temporarily restricted net assets.

Tuition and FeesTuition and fees are reported net of exchange transactions, such as discounts or scholarship allowances, reducing both student financial aid expenses and tuition revenue. Tuition and fee revenue is recognized on a pro rata daily basis over the term of instruction. Unearned student tuition and fees relating to future instructional periods are recorded as current deferred revenue. Deferred tuition revenue was $64.6 million at June 30, 2010, and $58.7 million at June 30, 2009.



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InvestmentsInvestments in equity securities with readily determinable market values, debt securities, alternative investments, and assets held in trust are stated at fair value. Investments received as gifts are recorded at fair value at the date of donation.

Permanently restricted investments are subject to restrictions requiring that the principal be invested in perpetuity. Income and net realized and unrealized gains or losses from these investments are classified based on donor restrictions, if any.

Short-term investments have a maturity of three months to five years from the purchase date and are bought and held primarily for the purpose of selling in the near future to fund current operations. All short-term investments are recorded at fair value using the specific identification method; unrealized gains and losses are reflected in net unrealized gain or loss on securities.

Long-term investments are subject to market and credit risks customarily associated with debt, equity, and real estate. Investment securities are exposed to various risks, such as interest rate, market, and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term could materially affect investment balances and the amounts reported in the Consolidated Statements of Financial Position and the Consolidated Statements of Activities.

Bond Deposits with TrusteesDeposits consist of amounts in bond service and reserve funds for various bonds outstanding and proceeds from bond issuances restricted for construction. The current portion related to bond service is $.7 million at June 30, 2010 and 2009. Reserve funds, classified as long-term bond deposits with trustees, are $18.6 million at June 30, 2010 and 2009.

At June 30, 2010, approximately $.02 million (approximately $11.7 million at June 30, 2009) of unspent bond proceeds restricted for the construction of the University School and central plant projects has been recorded within long-term bond deposits with trustees.

Deferred Debt Issue CostsCosts related to the issuance of debt ($6.3 million at June 30, 2010, and $6.8 million at June 30, 2009) are being amortized over the term of the related debt instrument. The bonds outstanding method, which approximates the effective interest method, is used to apportion these deferred costs.

Split Interest AgreementsThese agreements with donors consist primarily of charitable remainder annuity trusts, unitrusts, and gift annuities.

Contributions�receivable�from�remainder�trusts:The university is the beneficiary of trusts held and administered by others. The current values of estimated future cash receipts from the trusts are recognized, in accordance with the donor-imposed restrictions, as temporarily restricted assets and contributions when NSU is notified of the establishment of the trust. Changes in the fair values of the trusts are recorded as temporarily restricted other changes within the Consolidated Statements of Activities.

Due�to�beneficiaries�under�remainder�trusts�and�annuities:NSU is a trustee for trust assets, which are included in investments. In accordance with the donor-imposed restrictions, temporarily restricted contributions are recognized when the trusts are established, after recording liabilities for estimated future payments (discounted over the donor’s or other beneficiary’s life expectancy using published mortality tables). These liabilities are adjusted annually for changes in asset values and estimated future benefits.


The university has entered into arrangements whereby assets are transferred from a donor to the university in exchange for a promise by the university to pay fixed amounts for a specified period of time to the donor or to other donor designees. Temporarily restricted contributions are recognized for the difference between the assets received and the estimated future payments (discounted over the specified period of time the payments are to be made).

Changes in split interest agreements, which are reflected as other revenue in the Consolidated Statements of Activities, increased by approximately $27,000 for fiscal 2010 and $26,000 for fiscal 2009.

At June 30, 2010, amounts due to beneficiaries under remainder trusts were approximately $109,000 ($114,000 at June 30, 2009), and amounts due under annuity agreements were approximately $58,000 ($52,000 at June 30, 2009).

Land, Buildings, and EquipmentLand, buildings, and equipment are recorded at acquisition cost or market value at the date of donation and are subsequently carried net of accumulated depreciation. Leased property meeting certain criteria is capitalized, and the current value of the lease payments is recorded as a liability. Depreciation is calculated using the straight-line method over periods from 4 to 50 years. NSU reviews long-lived assets for impairment when events or circumstances indicate the carrying amount will not be fully recoverable, based on estimated future cash flows. Interest on capital projects is capitalized during the construction period.

Insurance ProgramsThe university is partially self-insured for workers’ compensation benefits, wholly owns an off-shore captive insurance company (see Note 16), participates in partially owned insurance entities and benefit associations, and maintains claims-made insurance policies with respect to certain other coverage. Liabilities for these claims are recorded based on actual loss history and actuarial calculations that include provisions for estimated losses incurred, but not reported, and the portion of insurance risk that has not been transferred to insurance carriers. Accrued insurance costs, net of 3 percent discount, approximated $8.4 million at June 30, 2010, and $8.9 million at June 30, 2009. Undiscounted costs at June 30, 2010 and 2009, were $8.6 million and $9.2 million, respectively. Investments in insurance entities and benefit associations are accounted for under the equity method and are included in deferred debt issue costs and other assets and approximated $2.4 million at June 30, 2010, and $2.1 million at June 30, 2009.

Endowment Payout and ValueThe Board of Trustees has directed that up to 5 percent of the market value of NSU’s endowment investment be made available annually for expenditure. This endowment payout is computed quarterly. If endowment income exceeds this payout level, any balance is reinvested according to donor restrictions. If endowment income is less than 5 percent in any quarter, only actual endowment income is distributed.

The fair value of NSU’s endowment at June 30, 2010, including cash, was $54.2 million, which includes donor-restricted and board-designated endowments. At June 30, 2009, the fair value was $46.2 million. Any declines in the fair value of donor-restricted endowments below their respective historical cost value are recorded as reductions in unrestricted net assets or temporarily restricted net assets, if unspent temporarily restricted earnings exist. Subsequent market gains are used to restore the deficiency in unrestricted net assets before any net appreciation above the historical cost value of such funds increases temporarily restricted net assets.

Tuition and FeesTuition and fees are reported net of exchange transactions, such as discounts or scholarship allowances, reducing both student financial aid expenses and tuition revenue. Tuition and fee revenue is recognized on a pro rata daily basis over the term of instruction. Unearned student tuition and fees relating to future instructional periods are recorded as current deferred revenue. Deferred tuition revenue was $64.6 million at June 30, 2010, and $58.7 million at June 30, 2009.



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ContributionsUnconditional contributions are recorded as unrestricted support. Unconditional contributions with donor-imposed stipulations are reported as temporarily restricted and reclassified to unrestricted assets when conditions are satisfied. Contributed assets to be maintained in perpetuity are classified as permanently restricted. Income from permanently restricted assets is classified according to the terms of the contribution. Conditional pledges are not recognized until the conditions are met.

Contributions to be received more than one year in the future are discounted based on the expected date of receipt. Amortization of the discount is recorded as contribution revenue and used in accordance with donor-imposed stipulations, if any. An allowance is made for uncollectible contributions based on management’s judgment, past collection experience, and other relevant factors.

Government GrantsRevenue from grants is recognized as the related expenses are incurred. Grant revenue received and expended within the same fiscal year is included as temporarily restricted revenue and net assets released from restrictions in the accompanying Consolidated Statements of Activities.

Museum of Art | Fort LauderdaleOn July 1, 2008, the university merged with the Museum of Art, Inc. (the Museum), a not-for-profit organization, with NSU as the surviving organization. The merger was accounted for using the purchase method for business combinations. No consideration was paid in this transaction, and the fair value of the Museum’s net assets acquired of $13.6 million was recorded as contribution revenue in the Consolidated Statement of Activities for the year ended June 30, 2009. The results of operations for the Museum have been included with the university’s activities since the date of the merger.

The Museum acquires art for its collection through purchase or by gift. As permitted by the Financial Accounting Standards Board’s Accounting Standards Codification (ASC) 958, Not-for-Profit�Entities, the Museum does not include its collection items as assets in the Consolidated Statement of Financial Position. Accordingly, no value has been assigned to the Museum’s art collection. The collection is insured for $12.0 million. The university’s policy requires any proceeds from sales of collection items to be used to acquire other items for the collection. Proceeds from the sale of collection items and expenditures for collection items purchased are reflected in the accompanying Consolidated Statement of Activities separately from revenues and expenses.

When the Museum receives contributions of works of art with the donor’s stipulation that they will be sold rather than added to the collection, such works of art are recognized as unrestricted revenue and as assets at their fair value.


Fair Value of Financial InstrumentsASC 820, Fair�Value�Measurements and�Disclosures, establishes a framework for measuring fair value, which includes a hierarchy based on the quality of inputs used to measure fair value and provides specific disclosure requirements based on the hierarchy.

Fair�Value�Hierarchy�ASC 820, requires the categorization of financial assets and liabilities, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. The various levels of the ASC 820, fair value hierarchy are described as follows:

Level 1—Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market.

Level 2—Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

Level 3—Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Investments are carried at fair value. The fair value of alternative investments, which contain certain provisions, have been estimated using the Net Asset Value (NAV) as reported by the management of the respective alternative investment fund. Accounting guidance provides for the use of NAV as a practical expedient for estimating fair value of alternative investments, which contain these provisions. Accordingly, NAV reported by each alternative investment fund is used to estimate the fair value of the university’s interest. Their classification within Level 2 or 3 is based on the university’s ability to redeem its interest in the near term. The university considers “near term” to be shorter than a one-year period.

Accounting for Uncertainty in Income TaxesThe university follows the guidance contained in ASC 740,�Income�Taxes. ASC 740 addresses the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a threshold of more-likely-than-not for recognition and de-recognition of tax positions taken or expected to be taken in a tax return. There were no uncertain tax positions recorded in the consolidated financial statements for fiscal years 2010 and 2009.

3. Tuition and Other ReceivablesTuition and other receivables at June 30 consist of the following (in thousands):

2010 2009Student accounts, net of allowance of $4,784 in 2010 and $4,550 in 2009 $ 21,277 $ 25,857Unreimbursed grant and contract expenditures 6,138 4,695Health centers’ patient accounts, net of allowance of $4,218 in 2010 and $4,150 in 2009 857 972Accrued interest 176 230Other 3,299 2,108 Total $ 31,747 $ 33,862


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ContributionsUnconditional contributions are recorded as unrestricted support. Unconditional contributions with donor-imposed stipulations are reported as temporarily restricted and reclassified to unrestricted assets when conditions are satisfied. Contributed assets to be maintained in perpetuity are classified as permanently restricted. Income from permanently restricted assets is classified according to the terms of the contribution. Conditional pledges are not recognized until the conditions are met.

Contributions to be received more than one year in the future are discounted based on the expected date of receipt. Amortization of the discount is recorded as contribution revenue and used in accordance with donor-imposed stipulations, if any. An allowance is made for uncollectible contributions based on management’s judgment, past collection experience, and other relevant factors.

Government GrantsRevenue from grants is recognized as the related expenses are incurred. Grant revenue received and expended within the same fiscal year is included as temporarily restricted revenue and net assets released from restrictions in the accompanying Consolidated Statements of Activities.

Museum of Art | Fort LauderdaleOn July 1, 2008, the university merged with the Museum of Art, Inc. (the Museum), a not-for-profit organization, with NSU as the surviving organization. The merger was accounted for using the purchase method for business combinations. No consideration was paid in this transaction, and the fair value of the Museum’s net assets acquired of $13.6 million was recorded as contribution revenue in the Consolidated Statement of Activities for the year ended June 30, 2009. The results of operations for the Museum have been included with the university’s activities since the date of the merger.

The Museum acquires art for its collection through purchase or by gift. As permitted by the Financial Accounting Standards Board’s Accounting Standards Codification (ASC) 958, Not-for-Profit�Entities, the Museum does not include its collection items as assets in the Consolidated Statement of Financial Position. Accordingly, no value has been assigned to the Museum’s art collection. The collection is insured for $12.0 million. The university’s policy requires any proceeds from sales of collection items to be used to acquire other items for the collection. Proceeds from the sale of collection items and expenditures for collection items purchased are reflected in the accompanying Consolidated Statement of Activities separately from revenues and expenses.

When the Museum receives contributions of works of art with the donor’s stipulation that they will be sold rather than added to the collection, such works of art are recognized as unrestricted revenue and as assets at their fair value.


Fair Value of Financial InstrumentsASC 820, Fair�Value�Measurements and�Disclosures, establishes a framework for measuring fair value, which includes a hierarchy based on the quality of inputs used to measure fair value and provides specific disclosure requirements based on the hierarchy.

Fair�Value�Hierarchy�ASC 820, requires the categorization of financial assets and liabilities, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. The various levels of the ASC 820, fair value hierarchy are described as follows:

Level 1—Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market.

Level 2—Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

Level 3—Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Investments are carried at fair value. The fair value of alternative investments, which contain certain provisions, have been estimated using the Net Asset Value (NAV) as reported by the management of the respective alternative investment fund. Accounting guidance provides for the use of NAV as a practical expedient for estimating fair value of alternative investments, which contain these provisions. Accordingly, NAV reported by each alternative investment fund is used to estimate the fair value of the university’s interest. Their classification within Level 2 or 3 is based on the university’s ability to redeem its interest in the near term. The university considers “near term” to be shorter than a one-year period.

Accounting for Uncertainty in Income TaxesThe university follows the guidance contained in ASC 740,�Income�Taxes. ASC 740 addresses the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a threshold of more-likely-than-not for recognition and de-recognition of tax positions taken or expected to be taken in a tax return. There were no uncertain tax positions recorded in the consolidated financial statements for fiscal years 2010 and 2009.

3. Tuition and Other ReceivablesTuition and other receivables at June 30 consist of the following (in thousands):

2010 2009Student accounts, net of allowance of $4,784 in 2010 and $4,550 in 2009 $ 21,277 $ 25,857Unreimbursed grant and contract expenditures 6,138 4,695Health centers’ patient accounts, net of allowance of $4,218 in 2010 and $4,150 in 2009 857 972Accrued interest 176 230Other 3,299 2,108 Total $ 31,747 $ 33,862


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5. InvestmentsInvestments at June 30 consist of (in thousands): 2010 2009

Pooled investments: Money market funds $ 367 $ 127Mutual funds 16,735 12,250Equity securities 4,156 5,630Commingled funds 9,888 11,727Fund-of-funds 8,334 4,805Corporate obligations 407 298Government-related obligations 4,941 4,076

Total 44,828 38,913Other investments:

Money market funds - 11Mutual funds 62 33Equity securities 32 22Corporate obligations 6,119 4,741Government-related obligations 76,361 41,143Foreign obligations 150 350Certificate of deposit 100 100

Total 82,824 46,400 Total investments $ 127,652 $ 85,313

Investments at June 30 are classified in the Consolidated Statements of Financial Position as follows (in thousands):

2010 2009

Investments $ 60,463 $ 35,326Designated investments 45,088 32,079Restricted investments 22,101 17,908 $ 127,652 $ 85,313 Investments at June 30, 2010 and 2009, include amounts received under split-interest agreements of approximately $62,000 and $69,000, respectively.


4. Pledges ReceivableUnconditional promises to give to the university are included in the consolidated financial statements as pledges receivable and contribution revenue in the appropriate net asset category. Pledges that existed prior to July 1, 2008, were discounted to current values at the applicable risk-free rate of return (determined as of the date of the pledges and pertaining to the expected term of the pledges) ranging from 2.3 to 5.0 percent. Upon adoption of the guidance contained in ASC 820, the university began applying a present value technique to new pledges made subsequent to July 1, 2008, whereby the estimated future cash flows were discounted based on a risk-adjusted discount rate in order to determine the fair value of the pledge to be recorded as of the date the pledge was made. The risk-adjusted discount rates applied ranged from 3.4 to 7.6 percent.

Pledges were expected to be collected as follows as of June 30 (in thousands):

2010 2009

Current: In one year or less $ 4,867 $ 5,568 Less allowance (1,177) (1,416) 3,690 4,152Future: Between one and five years 9,007 7,740 More than five years 5,263 6,334 Less discount and allowance (4,212) (4,432) 10,058 9,642 Total $ 13,748 $ 13,794

At June 30, pledges receivable had the following donor stipulations (in thousands):

2010 2009

Scholarship endowments $ 3,403 $ 3,250Building construction 10,512 12,402Other endowments 5,222 3,990 Subtotal 19,137 19,642Less discount and allowance (5,389) (5,848) Total $ 13,748 $ 13,794

In February 2009, the university received an unconditional pledge to be used for the University School Capital Campaign. The pledge is payable in annual installments and constitutes approximately 46 percent of the balance of outstanding pledges receivable as of June 30, 2010 (48 percent at June 30, 2009).


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5. InvestmentsInvestments at June 30 consist of (in thousands): 2010 2009

Pooled investments: Money market funds $ 367 $ 127Mutual funds 16,735 12,250Equity securities 4,156 5,630Commingled funds 9,888 11,727Fund-of-funds 8,334 4,805Corporate obligations 407 298Government-related obligations 4,941 4,076

Total 44,828 38,913Other investments:

Money market funds - 11Mutual funds 62 33Equity securities 32 22Corporate obligations 6,119 4,741Government-related obligations 76,361 41,143Foreign obligations 150 350Certificate of deposit 100 100

Total 82,824 46,400 Total investments $ 127,652 $ 85,313

Investments at June 30 are classified in the Consolidated Statements of Financial Position as follows (in thousands):

2010 2009

Investments $ 60,463 $ 35,326Designated investments 45,088 32,079Restricted investments 22,101 17,908 $ 127,652 $ 85,313 Investments at June 30, 2010 and 2009, include amounts received under split-interest agreements of approximately $62,000 and $69,000, respectively.


4. Pledges ReceivableUnconditional promises to give to the university are included in the consolidated financial statements as pledges receivable and contribution revenue in the appropriate net asset category. Pledges that existed prior to July 1, 2008, were discounted to current values at the applicable risk-free rate of return (determined as of the date of the pledges and pertaining to the expected term of the pledges) ranging from 2.3 to 5.0 percent. Upon adoption of the guidance contained in ASC 820, the university began applying a present value technique to new pledges made subsequent to July 1, 2008, whereby the estimated future cash flows were discounted based on a risk-adjusted discount rate in order to determine the fair value of the pledge to be recorded as of the date the pledge was made. The risk-adjusted discount rates applied ranged from 3.4 to 7.6 percent.

Pledges were expected to be collected as follows as of June 30 (in thousands):

2010 2009

Current: In one year or less $ 4,867 $ 5,568 Less allowance (1,177) (1,416) 3,690 4,152Future: Between one and five years 9,007 7,740 More than five years 5,263 6,334 Less discount and allowance (4,212) (4,432) 10,058 9,642 Total $ 13,748 $ 13,794

At June 30, pledges receivable had the following donor stipulations (in thousands):

2010 2009

Scholarship endowments $ 3,403 $ 3,250Building construction 10,512 12,402Other endowments 5,222 3,990 Subtotal 19,137 19,642Less discount and allowance (5,389) (5,848) Total $ 13,748 $ 13,794

In February 2009, the university received an unconditional pledge to be used for the University School Capital Campaign. The pledge is payable in annual installments and constitutes approximately 46 percent of the balance of outstanding pledges receivable as of June 30, 2010 (48 percent at June 30, 2009).


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7. Fair Value MeasurementsFair�Value�on�a�Recurring�Basis�The following tables present the fair value measurement for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2010, grouped by fair value hierarchy (in thousands):

2010 Total Level 1 Level 2 Level 3Cash equivalents Money market funds $ 22,470 $ 22,470 $ - $ - Mutual funds 1,709 1,709 - - Subtotal 24,179 24,179 - - Current investments Equity securities 32 32 - - Corporate obligations 4,512 - 4,512 - Government-related obligations 55,769 - 55,769 - Foreign obligations 150 - 150 - Subtotal 60,463 32 60,431 -

Designated and restricted investments Money market funds 408 408 - - Mutual funds 18,664 18,664 - - Certificate of deposit 100 100 - - Equity securities 4,620 4,620 - - Commingled funds 10,992 - 10,992 - Fund-of-funds 9,264 - 5,864 3,400 Corporate obligations 2,014 - 2,014 - Government-related obligations 25,533 - 25,533 - Subtotal 71,595 23,792 44,403 3,400 Scholarship funds held in trust Money market funds 232 232 - - Mutual funds 45 45 - - Equity securities 629 629 - - Corporate obligations 2,319 - 2,319 - Government-related obligations 47 - 47 - Subtotal 3,272 906 2,366 - Contributions receivable from remainder trusts 154 - - 154 Total $159,663 $ 48,909 $ 107,200 $ 3,554


6. Land, Buildings, and EquipmentLand, buildings, and equipment at June 30 consist of (in thousands):

2010 2009Land and improvements $ 100,380 $ 91,853Buildings 622,292 511,986Equipment 82,365 80,190Library books 72,400 68,221Construction in progress 18,774 106,166

Total 896,211 858,416Less accumulated depreciation (202,559) (177,967)

Net $ 693,652 $ 680,449

For fiscal 2010 and 2009, total depreciation expense was approximately $27.4 million and $24.2 million, respectively.

Included in Land, Buildings, and Equipment at June 30, 2010 and 2009, are facilities at North Miami Beach with a net book value of $9.1 million and $9.4 million, respectively, from which the proceeds of any future sale would be restricted for use to benefit the Health Professions Division. Accordingly, $5.8 million of these amounts are classified as temporarily restricted in the Consolidated Statements of Financial Position.

At June 30, 2010, the university had approximately $8.9 million of unsecured letters of credit relating to construction projects.



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7. Fair Value MeasurementsFair�Value�on�a�Recurring�Basis�The following tables present the fair value measurement for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2010, grouped by fair value hierarchy (in thousands):

2010 Total Level 1 Level 2 Level 3Cash equivalents Money market funds $ 22,470 $ 22,470 $ - $ - Mutual funds 1,709 1,709 - - Subtotal 24,179 24,179 - - Current investments Equity securities 32 32 - - Corporate obligations 4,512 - 4,512 - Government-related obligations 55,769 - 55,769 - Foreign obligations 150 - 150 - Subtotal 60,463 32 60,431 -

Designated and restricted investments Money market funds 408 408 - - Mutual funds 18,664 18,664 - - Certificate of deposit 100 100 - - Equity securities 4,620 4,620 - - Commingled funds 10,992 - 10,992 - Fund-of-funds 9,264 - 5,864 3,400 Corporate obligations 2,014 - 2,014 - Government-related obligations 25,533 - 25,533 - Subtotal 71,595 23,792 44,403 3,400 Scholarship funds held in trust Money market funds 232 232 - - Mutual funds 45 45 - - Equity securities 629 629 - - Corporate obligations 2,319 - 2,319 - Government-related obligations 47 - 47 - Subtotal 3,272 906 2,366 - Contributions receivable from remainder trusts 154 - - 154 Total $159,663 $ 48,909 $ 107,200 $ 3,554


6. Land, Buildings, and EquipmentLand, buildings, and equipment at June 30 consist of (in thousands):

2010 2009Land and improvements $ 100,380 $ 91,853Buildings 622,292 511,986Equipment 82,365 80,190Library books 72,400 68,221Construction in progress 18,774 106,166

Total 896,211 858,416Less accumulated depreciation (202,559) (177,967)

Net $ 693,652 $ 680,449

For fiscal 2010 and 2009, total depreciation expense was approximately $27.4 million and $24.2 million, respectively.

Included in Land, Buildings, and Equipment at June 30, 2010 and 2009, are facilities at North Miami Beach with a net book value of $9.1 million and $9.4 million, respectively, from which the proceeds of any future sale would be restricted for use to benefit the Health Professions Division. Accordingly, $5.8 million of these amounts are classified as temporarily restricted in the Consolidated Statements of Financial Position.

At June 30, 2010, the university had approximately $8.9 million of unsecured letters of credit relating to construction projects.



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The following tables present the fair value measurement for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2009, grouped by fair value hierarchy (in thousands):

2009 Total Level 1 Level 2 Level 3Cash equivalents Money market funds $ 40,568 $40,568 $ - $ - Mutual funds 1,213 1,213 - - Subtotal 41,781 41,781 - - Current investments Equity securities 22 22 - - Corporate obligations 4,147 - 4,147 - Government-related obligations 30,807 - 30,807 - Foreign obligations 350 - 350 - Subtotal 35,326 22 35,304 - Designated and restricted investments Money market funds 153 153 - - Mutual funds 13,728 13,728 - - Certificate of deposit 100 100 - - Equity securities 6,295 6,295 - - Commingled funds 13,111 - 13,111 - Fund-of-funds 5,372 185 5,187 - Corporate obligations 891 - 891 - Government-related obligations 14,412 - 14,412 - Subtotal 54,062 20,461 33,601 - Scholarship funds held in trust Money market funds 190 190 - - Mutual funds 101 101 - - Equity securities 1,572 1,572 - - Commingled funds 30 - 30 - Corporate obligations 469 - 469 - Government-related obligations 310 - 310 - Foreign obligations 405 - 405 - Subtotal 3,077 1,863 1,214 - Contributions receivable from remainder trusts 133 - 133 - Total $134,379 $ 64,127 $ 70,252 $ -

Fair�Value�on�a�Recurring�Basis�Using�Significant�Unobservable�Inputs�(Level�3) The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value (in thousands):

Fund-of-FundsBalance as of July 1, 2009 $ -

Net unrealized gains (loss) (28)Purchases 3,100 Transfers in and/or out of level 3 482

Ending balance, June 30, 2010 $ 3,554

There were no realized gains or losses on Level 3 investments during the fiscal year. All net unrealized gains (losses) in the above table are reflected in the Consolidated Statement of Activities. Net unrealized gains (losses) are determined based on changes in fair value of the instrument related to future expected cash flow associated with investments.

Investments included in Level 3 consist of the university’s ownership in alternative investments (interests in hedge funds, private equity funds, and real estate funds). The fair value of certain alternative investments represents the ownership interest in the net asset value (NAV) of the respective fund. The fair values of the investments held by funds that do not have readily determinable fair values are determined by the investment manager and are based on appraisals or other estimates that require varying degrees of judgment. If no public market exists for the investments, the fair value is determined by the investment manager taking into consideration, among other things, the cost of the investment, prices of recent significant placements of similar investments of the same issuer, and subsequent developments concerning the companies to which the investments relate. The university has performed due diligence regarding these investments and believes that the NAV of its alternative investments is a reasonable estimate of fair value as of June 30, 2010 and 2009.

The following table presents additional information pertaining to alternative investments as of June 30, 2010 (in thousands):

Unfunded Redemption Redemption Fair Value Commitments Frequency Notice Period Commingled funds:

Equity securities (1) $ 8,799 $ - Daily–Monthly 10–30 daysDebt securities (2) 2,193 - Monthly 10 days prior to redemption

Fund-of-funds:Hedge fund (3) 8,864 - Annual–Locked 100 days–NonePrivate equity (4) 400 2,400 Locked None

$ 20,256 $ 2,400

(1) This category includes equity securities in domestic markets. Investments in this category may be redeemed daily to monthly, subject to 10 to 30 days written notice.

(2) This category includes debt obligations and other asset classes, including debt obligations issued or guaranteed by U.S. and foreign governments or corporations. Investments may be redeemed monthly, subject to 10 days written notice.

(3) This category includes several hedge funds that pursue multiple strategies to diversify and reduce volatility. The fair values of investments in this category have been estimated using the net asset value of the investments funds. Approximately $5.9 million of the fair value reported above represents an investment made in 2005 for which the initial lock-up period has expired. As the University did not elect to redeem its shares at the end of the initial lock-up period, it is subject to a new three-year lock-up period. However, after the initial lock-up period has expired, redemptions within a lock-up period are permitted annually at the end of each calendar year, subject to 100-days written notice, and provided that all redemptions in the fund do not exceed 20 percent of the fund’s total market value. The remaining investments in this category cannot be redeemed within the near term, as they are subject to a minimum lock-up period of three years as of June 30, 2010.

(4) This category includes several private equity funds. The fair values of the investments in this category have been estimated using the net asset value of the investment funds. Approximately $100,000 is invested in a private real estate fund-of-funds and can never be redeemed. The underlying investments in the fund are expected to be liquidated over the next 7 to 10 years. The remaining investments in this category are subject to a lock-up period ranging from 3 to 10 years.


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The following tables present the fair value measurement for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2009, grouped by fair value hierarchy (in thousands):

2009 Total Level 1 Level 2 Level 3Cash equivalents Money market funds $ 40,568 $40,568 $ - $ - Mutual funds 1,213 1,213 - - Subtotal 41,781 41,781 - - Current investments Equity securities 22 22 - - Corporate obligations 4,147 - 4,147 - Government-related obligations 30,807 - 30,807 - Foreign obligations 350 - 350 - Subtotal 35,326 22 35,304 - Designated and restricted investments Money market funds 153 153 - - Mutual funds 13,728 13,728 - - Certificate of deposit 100 100 - - Equity securities 6,295 6,295 - - Commingled funds 13,111 - 13,111 - Fund-of-funds 5,372 185 5,187 - Corporate obligations 891 - 891 - Government-related obligations 14,412 - 14,412 - Subtotal 54,062 20,461 33,601 - Scholarship funds held in trust Money market funds 190 190 - - Mutual funds 101 101 - - Equity securities 1,572 1,572 - - Commingled funds 30 - 30 - Corporate obligations 469 - 469 - Government-related obligations 310 - 310 - Foreign obligations 405 - 405 - Subtotal 3,077 1,863 1,214 - Contributions receivable from remainder trusts 133 - 133 - Total $134,379 $ 64,127 $ 70,252 $ -

Fair�Value�on�a�Recurring�Basis�Using�Significant�Unobservable�Inputs�(Level�3) The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value (in thousands):

Fund-of-FundsBalance as of July 1, 2009 $ -

Net unrealized gains (loss) (28)Purchases 3,100 Transfers in and/or out of level 3 482

Ending balance, June 30, 2010 $ 3,554

There were no realized gains or losses on Level 3 investments during the fiscal year. All net unrealized gains (losses) in the above table are reflected in the Consolidated Statement of Activities. Net unrealized gains (losses) are determined based on changes in fair value of the instrument related to future expected cash flow associated with investments.

Investments included in Level 3 consist of the university’s ownership in alternative investments (interests in hedge funds, private equity funds, and real estate funds). The fair value of certain alternative investments represents the ownership interest in the net asset value (NAV) of the respective fund. The fair values of the investments held by funds that do not have readily determinable fair values are determined by the investment manager and are based on appraisals or other estimates that require varying degrees of judgment. If no public market exists for the investments, the fair value is determined by the investment manager taking into consideration, among other things, the cost of the investment, prices of recent significant placements of similar investments of the same issuer, and subsequent developments concerning the companies to which the investments relate. The university has performed due diligence regarding these investments and believes that the NAV of its alternative investments is a reasonable estimate of fair value as of June 30, 2010 and 2009.

The following table presents additional information pertaining to alternative investments as of June 30, 2010 (in thousands):

Unfunded Redemption Redemption Fair Value Commitments Frequency Notice Period Commingled funds:

Equity securities (1) $ 8,799 $ - Daily–Monthly 10–30 daysDebt securities (2) 2,193 - Monthly 10 days prior to redemption

Fund-of-funds:Hedge fund (3) 8,864 - Annual–Locked 100 days–NonePrivate equity (4) 400 2,400 Locked None

$ 20,256 $ 2,400

(1) This category includes equity securities in domestic markets. Investments in this category may be redeemed daily to monthly, subject to 10 to 30 days written notice.

(2) This category includes debt obligations and other asset classes, including debt obligations issued or guaranteed by U.S. and foreign governments or corporations. Investments may be redeemed monthly, subject to 10 days written notice.

(3) This category includes several hedge funds that pursue multiple strategies to diversify and reduce volatility. The fair values of investments in this category have been estimated using the net asset value of the investments funds. Approximately $5.9 million of the fair value reported above represents an investment made in 2005 for which the initial lock-up period has expired. As the University did not elect to redeem its shares at the end of the initial lock-up period, it is subject to a new three-year lock-up period. However, after the initial lock-up period has expired, redemptions within a lock-up period are permitted annually at the end of each calendar year, subject to 100-days written notice, and provided that all redemptions in the fund do not exceed 20 percent of the fund’s total market value. The remaining investments in this category cannot be redeemed within the near term, as they are subject to a minimum lock-up period of three years as of June 30, 2010.

(4) This category includes several private equity funds. The fair values of the investments in this category have been estimated using the net asset value of the investment funds. Approximately $100,000 is invested in a private real estate fund-of-funds and can never be redeemed. The underlying investments in the fund are expected to be liquidated over the next 7 to 10 years. The remaining investments in this category are subject to a lock-up period ranging from 3 to 10 years.


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Fair�Value�on�a�Nonrecurring�Basis�As of June 30, 2010, there were no financial assets or liabilities measured at fair value on a nonrecurring basis.

Financial�Instruments�Not�Measured�at�Fair�Value��The carrying amounts of cash, patient receivables, deposits with bond trustees, and student and other re-ceivables approximate fair value because of the short maturity of these financial instruments. Contributions receivable carrying amounts approximate fair value because these instruments are recorded at net present value. The carrying amounts of accounts payable and accrued liabilities approximate fair value because of the short maturity of these financial instruments. The carrying amount of notes and bonds payable with variable interest rates approximates their fair value because the variable rates reflect current market rates for bonds with similar maturities and credit quality. The fair value of notes and bonds payable with fixed inter-est rates is based on rates assumed to be currently available for bond issues with similar terms and average maturities. The estimated fair value and carrying amount of these bonds payable at June 30, 2010, approxi-mated $253.8 million and $240.9 million, respectively. The estimated fair value and carrying amount of these bonds payable at June 30, 2009, approximated $260.3 million and $246.9 million, respectively.

8. Long-Term DebtLong-term debt at June 30 is summarized below (in thousands): 2010 2009

Note payable to bank, interest payable quarterly (fixed rate, 5.15% per annum) $ - $ 1,200

BCEFA tax exempt Series 2000A bonds 8,625 9,155

BCEFA tax exempt Series 2000B bonds, net of $68 discount at June 30, 2010 ($81 in 2009) 13,857 14,720



BCEFA tax exempt Series 2004A bonds, plus $235 premium at June 30, 2010 ($325 in 2009) 11,990 13,980

BCEFA tax exempt Series 2004B bonds, plus $30 premium at June 30, 2010 ($32 in 2009) 20,030 20,032

BCEFA tax exempt Series 2004C bonds 31,200 32,300

BCEFA tax exempt Series 2006 bonds, plus $130 premium at June 30, 2010 ($136 in 2009) 99,920 99,926


Town of Davie tax exempt Series 2009 bonds 58,097 60,000

Museum of Art, 2007A bonds payable 1,828 1,887

Museum of Art, 2007B bonds payable 236 244

347,805 356,261

Current portion (8,342) (8,504)

Long-term debt $ 339,463 $ 347,757

The Broward County Educational Facilities Authority (the “BCEFA”) was established by Ordinance Number 86-15 of the Broward County Commission for the purpose of assisting institutions of higher education in the construction, financing, and refinancing of projects for public purposes. The BCEFA bonds were issued on behalf of the university and are direct obligations of NSU.


The Town of Davie is a municipal corporation duly organized and existing under the laws of the state of Florida and is authorized, pursuant to the charter of the town (the “Charter”) and Florida Statutes, to issue revenue bonds to pay or reimburse the cost of educational facilities to be acquired, constructed, and equipped.

The Town of Davie Series 2009 bonds are due in annual installments of $2,010,950 to $4,256,000 through 2029, bearing a 4.36 percent per annum interest rate. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenues of the university under the loan agreements related to the BCEFA Series 2000B, the Series 2002B, the Series 2004A, the Series 2004B, and the Series 2006 bonds. The university has $6.0 million in an interest-bearing account with a financial institution as a compensating balance for the 2009 Series bonds.

The BCEFA Series 2008A bonds bear interest at a short-term rate determined by SunTrust Equitable Securities Corporation, as remarketing agent, on the basis of daily prevailing financial market conditions (.2 percent at June 30, 2010). The duration of each interest period is determined at the election of the university, subject to certain conditions. The BCEFA Series 2008A bonds are due in annual installments of $500,000 to $11,090,000 through 2038. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenues of the university under the loan agreements related to the Series 2000B, the Series 2002B, the Series 2004A, the Series 2004B, and the Series 2006 bonds. The bonds are backed by an irrevocable, direct-pay unsecured letter of credit issued by Bank of America.

The BCEFA Series 2006 bonds bear interest at rates ranging from 4.5 percent to 5.0 percent per annum, payable semiannually on April 1 and October 1. The BCEFA 2006 bonds are due in annual installments of $900,000 to $14,300,000 from 2021 to 2036. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenue on a parity with the obligations of the university under the loan agreement that relates to the Series 2000B bonds, the Series 2002B bonds, the Series 2004A bonds, the Series 2004B bonds, and the Series 2004C bonds.

The BCEFA Series 2004A bonds bear interest at rates ranging from 2.0 percent to 5.25 percent per annum, payable semiannually on April 1 and October 1. The BCEFA 2004A bonds are due in annual installments of $1,295,000 to $2,250,000 through 2017. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenues on a parity with the obligations of the university under the loan agreement that relates to the Series 2000B, the Series 2002B, the Series 2004B, the Series 2004C, and the Series 2006 bonds.

The BCEFA Series 2004B bonds bear interest at rates ranging from 5.0 percent to 5.65 percent per annum, payable semiannually on April 1 and October 1. The BCEFA 2004B bonds are due in annual installments of $495,000 to $1,515,000 from 2013 to 2034. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenue on a parity with the obligations of the university under the loan agreement that relates to the Series 2000B bonds, the Series 2002B bonds, the Series 2004A bonds, the Series 2004C bonds, and the Series 2006 bonds.

The BCEFA Series 2004C bonds bear interest at a short-term rate determined by SunTrust Equitable Securities Corporation, as remarketing agent, on the basis of daily prevailing financial market conditions (.2 percent at June 30, 2010). The duration of each interest period is determined at the election of the university, subject to certain conditions. The BCEFA Series 2004C bonds are due in annual installments of $1,700,000 to $2,635,000 through 2024. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenues of the university under the loan agreements related to the Series 2000B, the Series 2002B, the Series 2004A, the Series 2004B, and the Series 2006 bonds. The bonds are backed by an irrevocable, direct-pay unsecured letter of credit issued by Bank of America.

The BCEFA Series 2002A bonds bear interest at a short-term rate determined by SunTrust Equitable Securities Corporation, as remarketing agent, on the basis of prevailing financial market conditions (.6 percent at June 30, 2010). The duration of each interest period is determined at the election of the university, subject to certain conditions. The BCEFA Series 2002A bonds are due in annual installments of $345,000 to $585,000 through 2022. The bonds are backed by an irrevocable, direct-pay letter of credit issued by SunTrust Bank, which in turn, is collateralized by a first mortgage on the land and building that house the university’s Center for Psychological Studies.

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Fair�Value�on�a�Nonrecurring�Basis�As of June 30, 2010, there were no financial assets or liabilities measured at fair value on a nonrecurring basis.

Financial�Instruments�Not�Measured�at�Fair�Value��The carrying amounts of cash, patient receivables, deposits with bond trustees, and student and other re-ceivables approximate fair value because of the short maturity of these financial instruments. Contributions receivable carrying amounts approximate fair value because these instruments are recorded at net present value. The carrying amounts of accounts payable and accrued liabilities approximate fair value because of the short maturity of these financial instruments. The carrying amount of notes and bonds payable with variable interest rates approximates their fair value because the variable rates reflect current market rates for bonds with similar maturities and credit quality. The fair value of notes and bonds payable with fixed inter-est rates is based on rates assumed to be currently available for bond issues with similar terms and average maturities. The estimated fair value and carrying amount of these bonds payable at June 30, 2010, approxi-mated $253.8 million and $240.9 million, respectively. The estimated fair value and carrying amount of these bonds payable at June 30, 2009, approximated $260.3 million and $246.9 million, respectively.

8. Long-Term DebtLong-term debt at June 30 is summarized below (in thousands): 2010 2009

Note payable to bank, interest payable quarterly (fixed rate, 5.15% per annum) $ - $ 1,200





BCEFA tax exempt Series 2004A bonds, plus $235 premium at June 30, 2010 ($325 in 2009) 11,990 13,980

BCEFA tax exempt Series 2004B bonds, plus $30 premium at June 30, 2010 ($32 in 2009) 20,030 20,032

BCEFA tax exempt Series 2004C bonds 31,200 32,300

BCEFA tax exempt Series 2006 bonds, plus $130 premium at June 30, 2010 ($136 in 2009) 99,920 99,926


Town of Davie tax exempt Series 2009 bonds 58,097 60,000

Museum of Art, 2007A bonds payable 1,828 1,887

Museum of Art, 2007B bonds payable 236 244

347,805 356,261

Current portion (8,342) (8,504)

Long-term debt $ 339,463 $ 347,757

The Broward County Educational Facilities Authority (the “BCEFA”) was established by Ordinance Number 86-15 of the Broward County Commission for the purpose of assisting institutions of higher education in the construction, financing, and refinancing of projects for public purposes. The BCEFA bonds were issued on behalf of the university and are direct obligations of NSU.


The Town of Davie is a municipal corporation duly organized and existing under the laws of the state of Florida and is authorized, pursuant to the charter of the town (the “Charter”) and Florida Statutes, to issue revenue bonds to pay or reimburse the cost of educational facilities to be acquired, constructed, and equipped.

The Town of Davie Series 2009 bonds are due in annual installments of $2,010,950 to $4,256,000 through 2029, bearing a 4.36 percent per annum interest rate. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenues of the university under the loan agreements related to the BCEFA Series 2000B, the Series 2002B, the Series 2004A, the Series 2004B, and the Series 2006 bonds. The university has $6.0 million in an interest-bearing account with a financial institution as a compensating balance for the 2009 Series bonds.

The BCEFA Series 2008A bonds bear interest at a short-term rate determined by SunTrust Equitable Securities Corporation, as remarketing agent, on the basis of daily prevailing financial market conditions (.2 percent at June 30, 2010). The duration of each interest period is determined at the election of the university, subject to certain conditions. The BCEFA Series 2008A bonds are due in annual installments of $500,000 to $11,090,000 through 2038. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenues of the university under the loan agreements related to the Series 2000B, the Series 2002B, the Series 2004A, the Series 2004B, and the Series 2006 bonds. The bonds are backed by an irrevocable, direct-pay unsecured letter of credit issued by Bank of America.

The BCEFA Series 2006 bonds bear interest at rates ranging from 4.5 percent to 5.0 percent per annum, payable semiannually on April 1 and October 1. The BCEFA 2006 bonds are due in annual installments of $900,000 to $14,300,000 from 2021 to 2036. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenue on a parity with the obligations of the university under the loan agreement that relates to the Series 2000B bonds, the Series 2002B bonds, the Series 2004A bonds, the Series 2004B bonds, and the Series 2004C bonds.

The BCEFA Series 2004A bonds bear interest at rates ranging from 2.0 percent to 5.25 percent per annum, payable semiannually on April 1 and October 1. The BCEFA 2004A bonds are due in annual installments of $1,295,000 to $2,250,000 through 2017. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenues on a parity with the obligations of the university under the loan agreement that relates to the Series 2000B, the Series 2002B, the Series 2004B, the Series 2004C, and the Series 2006 bonds.

The BCEFA Series 2004B bonds bear interest at rates ranging from 5.0 percent to 5.65 percent per annum, payable semiannually on April 1 and October 1. The BCEFA 2004B bonds are due in annual installments of $495,000 to $1,515,000 from 2013 to 2034. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenue on a parity with the obligations of the university under the loan agreement that relates to the Series 2000B bonds, the Series 2002B bonds, the Series 2004A bonds, the Series 2004C bonds, and the Series 2006 bonds.

The BCEFA Series 2004C bonds bear interest at a short-term rate determined by SunTrust Equitable Securities Corporation, as remarketing agent, on the basis of daily prevailing financial market conditions (.2 percent at June 30, 2010). The duration of each interest period is determined at the election of the university, subject to certain conditions. The BCEFA Series 2004C bonds are due in annual installments of $1,700,000 to $2,635,000 through 2024. They are collateralized by a pledge of, and first lien on, tuition and fees and dormitory revenues of the university under the loan agreements related to the Series 2000B, the Series 2002B, the Series 2004A, the Series 2004B, and the Series 2006 bonds. The bonds are backed by an irrevocable, direct-pay unsecured letter of credit issued by Bank of America.

The BCEFA Series 2002A bonds bear interest at a short-term rate determined by SunTrust Equitable Securities Corporation, as remarketing agent, on the basis of prevailing financial market conditions (.6 percent at June 30, 2010). The duration of each interest period is determined at the election of the university, subject to certain conditions. The BCEFA Series 2002A bonds are due in annual installments of $345,000 to $585,000 through 2022. The bonds are backed by an irrevocable, direct-pay letter of credit issued by SunTrust Bank, which in turn, is collateralized by a first mortgage on the land and building that house the university’s Center for Psychological Studies.

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Future maturities of NSU’s long-term debt at June 30, 2010, are as follows (in thousands):

Long-Term Debt

2011 $ 8,342 2012 8,713 2013 8,495 2014 9,366 2015 9,514 Thereafter through 2036 303,375 Total $ 347,805

The university’s debt agreements contain customary conditions, provisions, and covenants. In the opinion of management, the university is in compliance with all such covenants as of June 30, 2010.

The university incurred interest charges for fiscal 2010 and fiscal 2009 of $12.7 million and $11.1 million, respectively. During fiscal 2010 and 2009, the university capitalized interest of $1.2 million and $2.0 million, respectively, to construction in progress.

9. Perkins Student Loans and Refundable Federal Perkins Student Loans NSU participates in the Perkins Student Loan Program, a revolving loan program making loans to qualified students from prior borrowers’ repayments that originated from previous federal and institutional contributions. At June 30, 2010, Perkins student loans were $5.5 million ($6.1 million at June 30, 2009). NSU recorded a liability for the refundable Federal Perkins Student Loans grant of $4.8 million at June 30, 2010 and 2009.


The BCEFA Series 2002B bonds bear interest at rates ranging from 5.25 percent to 5.75 percent per annum, payable semiannually on April 1 and October 1. The BCEFA Series 2002B bonds are due in annual install-ments of $545,000 to $3,860,000 from 2018 to 2032. They are collateralized by a first pledge of, and first lien on, tuition and fees and dormitory revenues on a parity with the obligations of the university under the loan agreements related to the Series 2000B, the Series 2004A, the Series 2004B, the Series 2004C, and the Series 2006 bonds. Under the terms of the BCEFA Series 2002B loan agreement, the university is required to maintain certain financial ratios. The bonds are also secured by a first mortgage on the Carl DeSantis Building.

The BCEFA Series 2000A bonds bear interest at a short-term rate determined by SunTrust Equitable Securities Corporation, as remarketing agent, on the basis of prevailing financial market conditions (.3 percent at June 30, 2010). The duration of each interest period is determined at the election of the university, subject to certain conditions. The BCEFA Series 2000A bonds are due in annual installments of $560,000 to $1,050,000 through 2020. The bonds are backed by an irrevocable, direct-pay unsecured letter of credit issued by Bank of America.

The BCEFA Series 2000B bonds bear interest at rates ranging from 5.3 percent to 6.25 percent per annum, payable semiannually on April 1 and October 1. The BCEFA Series 2000B bonds are due in annual install-ments of $925,000 to $1,655,000 through 2021. They are collateralized by a first pledge of, and first lien on, tuition and fees and dormitory revenues on a parity with the obligations of the university under the loan agreements related to the Series 2002B, the Series 2004A, the Series 2004B, the Series 2004C, and the Series 2006 bonds.

Pursuant to the terms of all BCEFA bonds, the BCEFA, Broward County, and the state of Florida are statutorily exempt from liability for payment.

In December 2002, NSU signed a promissory note with Bank of America for $4.8 million to finance the purchase of land and buildings for property located adjacent to its Davie campus. The note was collateralized by the land and buildings, and matured in full on December 30, 2009. Interest was payable quarterly, bearing a 5.15 percent per annum interest rate. The note was paid in full upon its maturity during fiscal year 2010.

Through the merger agreement with the Museum, the university assumed the following bonds payable:

The MOA 2007A bonds payable to a bank with monthly payments of $11,387, including interest calculated as follows: From September 26, 2007, to, but not including, October 1, 2012, the rate of 4.91 percent. Thereafter, a fixed interest rate equal to no greater than 78.5 percent of the sum of (a) the interest rate payable on a U.S. Treasury Security having a maturity of approximately five years, plus (b) 2.0 percent for five-year periods commencing on, and in each case as determined by the bank two business days before, each of October 1, 2012; October 1, 2017; October 1, 2022; and October 1, 2027. The note matures October 1, 2032, and is secured by land and building.

The MOA 2007B bonds payable to a bank with monthly payments of $1,746, including interest calculated as follows: From September 26, 2007, to, but not including, October 1, 2012, the rate of 6.76 percent. Thereafter, a fixed interest rate equal to no greater than the sum of (a) the weekly average yield on U.S. Treasury Securities (“Treasury Index”) adjusted to a constant maturity equal to five years plus (b) 2.5 percent for five periods commencing on, and in each case as determined by the bank two business days before, each of October 1, 2012; October 1, 2017; October 1, 2022; and October 1, 2027. The note matures October 1, 2032, and is secured by land and building.


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Future maturities of NSU’s long-term debt at June 30, 2010, are as follows (in thousands):

Long-Term Debt

2011 $ 8,342 2012 8,713 2013 8,495 2014 9,366 2015 9,514 Thereafter through 2036 303,375 Total $ 347,805

The university’s debt agreements contain customary conditions, provisions, and covenants. In the opinion of management, the university is in compliance with all such covenants as of June 30, 2010.

The university incurred interest charges for fiscal 2010 and fiscal 2009 of $12.7 million and $11.1 million, respectively. During fiscal 2010 and 2009, the university capitalized interest of $1.2 million and $2.0 million, respectively, to construction in progress.

9. Perkins Student Loans and Refundable Federal Perkins Student Loans NSU participates in the Perkins Student Loan Program, a revolving loan program making loans to qualified students from prior borrowers’ repayments that originated from previous federal and institutional contributions. At June 30, 2010, Perkins student loans were $5.5 million ($6.1 million at June 30, 2009). NSU recorded a liability for the refundable Federal Perkins Student Loans grant of $4.8 million at June 30, 2010 and 2009.


The BCEFA Series 2002B bonds bear interest at rates ranging from 5.25 percent to 5.75 percent per annum, payable semiannually on April 1 and October 1. The BCEFA Series 2002B bonds are due in annual install-ments of $545,000 to $3,860,000 from 2018 to 2032. They are collateralized by a first pledge of, and first lien on, tuition and fees and dormitory revenues on a parity with the obligations of the university under the loan agreements related to the Series 2000B, the Series 2004A, the Series 2004B, the Series 2004C, and the Series 2006 bonds. Under the terms of the BCEFA Series 2002B loan agreement, the university is required to maintain certain financial ratios. The bonds are also secured by a first mortgage on the Carl DeSantis Building.

The BCEFA Series 2000A bonds bear interest at a short-term rate determined by SunTrust Equitable Securities Corporation, as remarketing agent, on the basis of prevailing financial market conditions (.3 percent at June 30, 2010). The duration of each interest period is determined at the election of the university, subject to certain conditions. The BCEFA Series 2000A bonds are due in annual installments of $560,000 to $1,050,000 through 2020. The bonds are backed by an irrevocable, direct-pay unsecured letter of credit issued by Bank of America.

The BCEFA Series 2000B bonds bear interest at rates ranging from 5.3 percent to 6.25 percent per annum, payable semiannually on April 1 and October 1. The BCEFA Series 2000B bonds are due in annual install-ments of $925,000 to $1,655,000 through 2021. They are collateralized by a first pledge of, and first lien on, tuition and fees and dormitory revenues on a parity with the obligations of the university under the loan agreements related to the Series 2002B, the Series 2004A, the Series 2004B, the Series 2004C, and the Series 2006 bonds.

Pursuant to the terms of all BCEFA bonds, the BCEFA, Broward County, and the state of Florida are statutorily exempt from liability for payment.

In December 2002, NSU signed a promissory note with Bank of America for $4.8 million to finance the purchase of land and buildings for property located adjacent to its Davie campus. The note was collateralized by the land and buildings, and matured in full on December 30, 2009. Interest was payable quarterly, bearing a 5.15 percent per annum interest rate. The note was paid in full upon its maturity during fiscal year 2010.

Through the merger agreement with the Museum, the university assumed the following bonds payable:

The MOA 2007A bonds payable to a bank with monthly payments of $11,387, including interest calculated as follows: From September 26, 2007, to, but not including, October 1, 2012, the rate of 4.91 percent. Thereafter, a fixed interest rate equal to no greater than 78.5 percent of the sum of (a) the interest rate payable on a U.S. Treasury Security having a maturity of approximately five years, plus (b) 2.0 percent for five-year periods commencing on, and in each case as determined by the bank two business days before, each of October 1, 2012; October 1, 2017; October 1, 2022; and October 1, 2027. The note matures October 1, 2032, and is secured by land and building.

The MOA 2007B bonds payable to a bank with monthly payments of $1,746, including interest calculated as follows: From September 26, 2007, to, but not including, October 1, 2012, the rate of 6.76 percent. Thereafter, a fixed interest rate equal to no greater than the sum of (a) the weekly average yield on U.S. Treasury Securities (“Treasury Index”) adjusted to a constant maturity equal to five years plus (b) 2.5 percent for five periods commencing on, and in each case as determined by the bank two business days before, each of October 1, 2012; October 1, 2017; October 1, 2022; and October 1, 2027. The note matures October 1, 2032, and is secured by land and building.


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Endowment Net AssetsASC 958, Not-for-Profit�Entities, provides guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) and additional disclosures about an organization’s endowment funds. The university is only subject to the enhanced disclosure requirements under ASC 958, as the state of Florida has not adopted UPMIFA.

The university’s endowment consists of approximately 220 individual endowments established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the Board of Trustees. Net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

The Board of Trustees of the university has interpreted the Florida Uniform Management of Institutional Funds Act (FUMIFA) 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 university 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 of the gift. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the organization in a manner consistent with the standard of prudence prescribed by FUMIFA. In accordance with FUMIFA, the university considers the following factors in making a determination to appropriate or accumulate donor-restricted funds:

a) the purposes of the institutionb) the intent of the donors of the endowment fundc) the terms of the applicable instrumentd) the long-term and short-term needs of the institution in carrying out its purposese) the general economic conditionsf) the possible effect of inflation or deflationg) the other resources of the institutionh) perpetuation of the endowment

The university 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 purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the university must hold in perpetuity or for a donor-specified period, as well as board-designated funds. Under this policy, as approved by the Board of Trustees, the endowment assets are invested in a manner that is intended to produce a real return, net of inflation and investment management costs. Actual returns in any given year may vary.

To satisfy its long-term rate-of-return objectives, the university relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The university targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term objectives within prudent risk constraints.


10. Net AssetsNet assets released from restrictions were satisfied through grant expenditures, capital expenditures, and scholarships.

Net assets at June 30 were available for the following purposes or periods (in thousands):

Unrestricted 2010 2009

Board designated for:Gold Circle scholarships $ 78 $ 112Scholarships 337 271Mailman Segal Institute 311 338Athletic scholarships 1,684 1,716Trustees student scholarships 2,499 2,471Faculty research and development 2,960 2,926Law Center 3,583 3,724Baudhuin Preschool 4,050 3,951Health Professions Division 7,865 5,621Cumulative realized and unrealized net gain 4,827 280Other 880 29,074 2,787 24,197

Held by external trustees 5,835 2,819Due from HPD Foundation 937 463Other unrestricted amounts 159,466 140,708Physical plant equity 120,214 121,115Library physical plant equity 57,244 59,408

Total 372,770 348,710

Temporarily RestrictedGifts restricted by time 3,155 2,025Perkins student loans 1,251 1,255Earnings restricted by purpose 124 129Annuities restricted by time 3,736 3,716Physical plant equity restricted by merger agreement 5,842 5,842Gifts restricted by purpose 39,852 38,003Scholarship funds held by trustees and restricted by purpose 2,897 2,912Other restrictions 2,400 1,217HPD Foundation* 4,499 5,672

Total 63,756 60,771

Permanently Restricted Loan corpus 214 214 Scholarship funds held by trustees and restricted by purpose 243 215Endowments, primarily scholarships 17,010 15,042

Total 17,467 15,471Total net assets $453,993 $424,952 * The Foundation’s net assets (see Note 12) include amounts due from or to NSU primarily for its unrestricted outlays on behalf of the Foundation.


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Endowment Net AssetsASC 958, Not-for-Profit�Entities, provides guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) and additional disclosures about an organization’s endowment funds. The university is only subject to the enhanced disclosure requirements under ASC 958, as the state of Florida has not adopted UPMIFA.

The university’s endowment consists of approximately 220 individual endowments established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the Board of Trustees. Net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

The Board of Trustees of the university has interpreted the Florida Uniform Management of Institutional Funds Act (FUMIFA) 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 university 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 of the gift. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the organization in a manner consistent with the standard of prudence prescribed by FUMIFA. In accordance with FUMIFA, the university considers the following factors in making a determination to appropriate or accumulate donor-restricted funds:

a) the purposes of the institutionb) the intent of the donors of the endowment fundc) the terms of the applicable instrumentd) the long-term and short-term needs of the institution in carrying out its purposese) the general economic conditionsf) the possible effect of inflation or deflationg) the other resources of the institutionh) perpetuation of the endowment

The university 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 purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the university must hold in perpetuity or for a donor-specified period, as well as board-designated funds. Under this policy, as approved by the Board of Trustees, the endowment assets are invested in a manner that is intended to produce a real return, net of inflation and investment management costs. Actual returns in any given year may vary.

To satisfy its long-term rate-of-return objectives, the university relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The university targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term objectives within prudent risk constraints.


10. Net AssetsNet assets released from restrictions were satisfied through grant expenditures, capital expenditures, and scholarships.

Net assets at June 30 were available for the following purposes or periods (in thousands):

Unrestricted 2010 2009

Board designated for:Gold Circle scholarships $ 78 $ 112Scholarships 337 271Mailman Segal Institute 311 338Athletic scholarships 1,684 1,716Trustees student scholarships 2,499 2,471Faculty research and development 2,960 2,926Law Center 3,583 3,724Baudhuin Preschool 4,050 3,951Health Professions Division 7,865 5,621Cumulative realized and unrealized net gain 4,827 280Other 880 29,074 2,787 24,197

Held by external trustees 5,835 2,819Due from HPD Foundation 937 463Other unrestricted amounts 159,466 140,708Physical plant equity 120,214 121,115Library physical plant equity 57,244 59,408

Total 372,770 348,710

Temporarily RestrictedGifts restricted by time 3,155 2,025Perkins student loans 1,251 1,255Earnings restricted by purpose 124 129Annuities restricted by time 3,736 3,716Physical plant equity restricted by merger agreement 5,842 5,842Gifts restricted by purpose 39,852 38,003Scholarship funds held by trustees and restricted by purpose 2,897 2,912Other restrictions 2,400 1,217HPD Foundation* 4,499 5,672

Total 63,756 60,771

Permanently Restricted Loan corpus 214 214 Scholarship funds held by trustees and restricted by purpose 243 215Endowments, primarily scholarships 17,010 15,042

Total 17,467 15,471Total net assets $453,993 $424,952 * The Foundation’s net assets (see Note 12) include amounts due from or to NSU primarily for its unrestricted outlays on behalf of the Foundation.


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Changes in endowment net assets for the fiscal year ended June 30, 2010, consisted of the following (in thousands):

Temporarily Permanently 2010 Unrestricted Restricted Restricted Total

Endowment net assets, beginning of year $24,197 $6,950 $15,042 $46,189Investment return Investment income 236 65 6 307Net appreciation (realized and unrealized) 4,503 - (2) 4,501Total investment return 4,739 65 4 4,808

Contributions 482 1,124 1,964 3,570Appropriation of endowment

assets for expenditure (344) - - (344)Other changes:Transfers - - - -

Endowment net assets, end of year $29,074 $8,139 $17,010 $54,223

Changes in endowment net assets for the fiscal years ended June 30, 2009, consisted of the following (in thousands):


Endowment net assets, beginning of year $38,125 $6,686 $14,267 $59,078Investment return Investment income 324 56 - 380Net depreciation (realized and unrealized) (13,159) - - (13,159)Total investment return (12,835) 56 - (12,779)

Contributions 400 412 775 1,587Appropriation of endowmentassets for expenditure (1,697) - - (1,697)Other changes:Transfers 204 (204) - -


Endowment net asset composition by type of fund as of June 30, 2010, was as follows (in thousands):

Temporarily Permanently 2010 Unrestricted Restricted Restricted TotalDonor-restricted endowment funds $ - $8,139 $17,010 $25,149Board-designated endowment funds 29,074 - - 29,074

Total endowment net assets $29,074 $8,139 $17,010 $54,223




Amounts classified as permanently restricted and temporarily restricted net assets as of June 30, 2010 and 2009, were as follows (in thousands):

2010 2009Permanently Restricted Net Assets

The portion of perpetual endowment funds that is required to be retained permanently by explicit donor stipulation $ 17,010 $ 15,042Total endowment funds classified as permanently restricted net assets $ 17,010 $ 15,042

Temporarily Restricted Net Assets

Term endowment funds subject to a time or purpose restriction $ 8,139 $ 6,950 Total endowment funds classified as temporarily restricted net assets $ 8,139 $ 6,950

From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires the university to retain as a fund of perpetual duration. These deficiencies result from unfavorable market fluctuations that may occur. Accordingly, deficiencies of this nature that are reported in unrestricted net assets were $1.1 million at June 30, 2010. There were $1.5 million in deficiencies as of June 30, 2009.

11. Functional ExpensesExpenses incurred by functional categories for the years ended June 30 were (in thousands):

2010 2009Program expenses:

Instruction $309,280 $308,701 Academic support 73,890 74,004Student aid 2,219 2,710 Student services 15,959 15,913Auxiliary enterprises 32,987 34,189 Educational activities 3,198 3,049Research and public services 15,281 15,160

Total program expenses 452,814 453,726 Management and general expenses:

Operation and maintenance 17,055 17,613Institutional support 65,859 62,658

Total management and general expenses 82,914 80,271Fund-raising 3,178 3,134

Total $538,906 $537,131

Advertising costs are charged to expenses as incurred and totaled approximately $9.0 million for the year ended June 30, 2010 ($9.4 million in 2009), and are included in the respective functional categories above.


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Changes in endowment net assets for the fiscal year ended June 30, 2010, consisted of the following (in thousands):


Endowment net assets, beginning of year $24,197 $6,950 $15,042 $46,189Investment return Investment income 236 65 6 307Net appreciation (realized and unrealized) 4,503 - (2) 4,501Total investment return 4,739 65 4 4,808

Contributions 482 1,124 1,964 3,570Appropriation of endowment

assets for expenditure (344) - - (344)Other changes:Transfers - - - -


Changes in endowment net assets for the fiscal years ended June 30, 2009, consisted of the following (in thousands):


Endowment net assets, beginning of year $38,125 $6,686 $14,267 $59,078Investment return Investment income 324 56 - 380Net depreciation (realized and unrealized) (13,159) - - (13,159)Total investment return (12,835) 56 - (12,779)

Contributions 400 412 775 1,587Appropriation of endowmentassets for expenditure (1,697) - - (1,697)Other changes:Transfers 204 (204) - -








Amounts classified as permanently restricted and temporarily restricted net assets as of June 30, 2010 and 2009, were as follows (in thousands):

2010 2009Permanently Restricted Net Assets

The portion of perpetual endowment funds that is required to be retained permanently by explicit donor stipulation $ 17,010 $ 15,042Total endowment funds classified as permanently restricted net assets $ 17,010 $ 15,042

Temporarily Restricted Net Assets

Term endowment funds subject to a time or purpose restriction $ 8,139 $ 6,950 Total endowment funds classified as temporarily restricted net assets $ 8,139 $ 6,950

From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires the university to retain as a fund of perpetual duration. These deficiencies result from unfavorable market fluctuations that may occur. Accordingly, deficiencies of this nature that are reported in unrestricted net assets were $1.1 million at June 30, 2010. There were $1.5 million in deficiencies as of June 30, 2009.

11. Functional ExpensesExpenses incurred by functional categories for the years ended June 30 were (in thousands):

2010 2009Program expenses:

Instruction $309,280 $308,701 Academic support 73,890 74,004Student aid 2,219 2,710 Student services 15,959 15,913Auxiliary enterprises 32,987 34,189 Educational activities 3,198 3,049Research and public services 15,281 15,160

Total program expenses 452,814 453,726 Management and general expenses:

Operation and maintenance 17,055 17,613Institutional support 65,859 62,658

Total management and general expenses 82,914 80,271Fund-raising 3,178 3,134

Total $538,906 $537,131

Advertising costs are charged to expenses as incurred and totaled approximately $9.0 million for the year ended June 30, 2010 ($9.4 million in 2009), and are included in the respective functional categories above.


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12. FoundationThe 1994 merger of Nova University and Southeastern University of the Health Sciences established a supporting foundation (the “Foundation”) that benefits the Health Professions Division (HPD) of NSU. Annually, 5 percent of the fair value of Foundation assets (excluding amounts classified as other investments, deposits, and accrued investment income) are transferred to NSU for HPD’s future use.

As a supporting organization, the Foundation’s financial information is combined with NSU’s consolidated financial statements. The Foundation’s board members are also members of HPD’s Board of Governors and some are members of the university’s Board of Trustees. The Foundation, exempt from federal income tax under Section 501 (c)(3) of the Internal Revenue Code, had assets at June 30 of (in thousands):

2010 2009Cash and cash equivalents $ 640 $ 568Investments:

Fixed income securities 1,084 969Equity securities 2,700 2,801International securities 853 534Real estate 60 61

Subtotal 4,697 4,365Receivable 32 41Deposits 67 68Land - 1,093

Total $ 5,436 $ 6,135

The real estate is property with a net lease through February 28, 2070. Annual rental income was adjusted in January 2006 and will be adjusted every five years thereafter, based on the consumer price index.

During fiscal year 2010, land that was purchased by the Foundation was transferred to the university. A new Optometry clinic will be built on this land.

Foundation liabilities, which are due to NSU unrestricted funds, were $.9 million at June 30, 2010, and $.5 million at June 30, 2009, and are eliminated in the accompanying Consolidated Statements of Financial Position.

Changes in the Foundation’s net assets resulted from the following activity for the years ended June 30 (in thousands):

2010 2009

Net assets, beginning balance $5,672 $5,740Interest and dividend income 82 76Loss on sale of securities (6) (5)Net unrealized gain on securities 10 5Bal Fantastique proceeds 22 14Gifts 145 366Other (90) (308)Transfers to HPD endowment (243) (216)Transfer of land (1,093) - Net assets, June 30 $4,499 $5,672

13. Broward County AgreementsThe following Broward County grant funds were received and expended during the year ended June 30, 2010 (in thousands):

Funds Received Broward County Agreement # Description and Expended

Broward Cultural Council CTP08D-2009 Cultural Tourism Program $46

Broward Cultural Council CTP07C-2010 Cultural Tourism Program -

Broward Cultural Council ECD11-2009 Education and Community Development 15

Broward Cultural Council ECD14-2010 Education and Community Development -

Broward Cultural Council MCI03-2009 Major Cultural Institution 100


Biological Resources Div. JZ07361 B1 Sea Turtle Conservation 139

Biological Resources Div. RLI#050797-RB Marine Biological Monitoring 243

Human Services Dept. SAHCS-SAMHSA-HIV-02 CRUSHH 16

Human Services Dept. 2010-BARD-CRUSSH-01 CRUSHH -

Human Services Dept. SAHCS-SAMHSA-NOVA-02 COATCH 20

Human Services Dept. 08HCS8228RW Ryan White Part A 1,420

14. Alvin Sherman Library, Research, and Information Technology CenterIn December 2001, the university commenced operations of a library, research, and information technology center and parking garage (collectively the Center). The design, construction, and operation of the Center were provided for under the terms of an agreement entered into with Broward County (the County) in fiscal 2000 (the Agreement). The Agreement stipulated that NSU would be the sole owner and operator of the Center, while County residents would have full access to the Center and full use of its databases and information resources.

Revenue from the County under the Agreement is recognized on a pro rata basis over the term of the agreement (commencing in December 2001 with the opening of the Center). Funds of $13.7 million for the construction of the Center received from the County prior to fiscal year 2002 have been recorded as deferred revenue and are being amortized into income over the term of the Agreement. The County continues to provide funding for the Center. Based on the specified purpose of the funds received, these amounts are either recognized into income upon receipt or recorded as deferred revenue and subsequently amortized into income over the term of the Agreement. At June 30, 2010 and 2009, $18.2 million and $18.6 million were recorded as deferred revenue related to these funds, respectively, of which $.5 million was classified as current at June 30, 2010. During fiscal 2010, $.5 million of revenue was recognized ($.9 million during fiscal year 2009).


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12. FoundationThe 1994 merger of Nova University and Southeastern University of the Health Sciences established a supporting foundation (the “Foundation”) that benefits the Health Professions Division (HPD) of NSU. Annually, 5 percent of the fair value of Foundation assets (excluding amounts classified as other investments, deposits, and accrued investment income) are transferred to NSU for HPD’s future use.

As a supporting organization, the Foundation’s financial information is combined with NSU’s consolidated financial statements. The Foundation’s board members are also members of HPD’s Board of Governors and some are members of the university’s Board of Trustees. The Foundation, exempt from federal income tax under Section 501 (c)(3) of the Internal Revenue Code, had assets at June 30 of (in thousands):

2010 2009Cash and cash equivalents $ 640 $ 568Investments:

Fixed income securities 1,084 969Equity securities 2,700 2,801International securities 853 534Real estate 60 61

Subtotal 4,697 4,365Receivable 32 41Deposits 67 68Land - 1,093

Total $ 5,436 $ 6,135

The real estate is property with a net lease through February 28, 2070. Annual rental income was adjusted in January 2006 and will be adjusted every five years thereafter, based on the consumer price index.

During fiscal year 2010, land that was purchased by the Foundation was transferred to the university. A new Optometry clinic will be built on this land.

Foundation liabilities, which are due to NSU unrestricted funds, were $.9 million at June 30, 2010, and $.5 million at June 30, 2009, and are eliminated in the accompanying Consolidated Statements of Financial Position.

Changes in the Foundation’s net assets resulted from the following activity for the years ended June 30 (in thousands):

2010 2009

Net assets, beginning balance $5,672 $5,740Interest and dividend income 82 76Loss on sale of securities (6) (5)Net unrealized gain on securities 10 5Bal Fantastique proceeds 22 14Gifts 145 366Other (90) (308)Transfers to HPD endowment (243) (216)Transfer of land (1,093) - Net assets, June 30 $4,499 $5,672

13. Broward County AgreementsThe following Broward County grant funds were received and expended during the year ended June 30, 2010 (in thousands):

Funds Received Broward County Agreement # Description and Expended

Broward Cultural Council CTP08D-2009 Cultural Tourism Program $46

Broward Cultural Council CTP07C-2010 Cultural Tourism Program -

Broward Cultural Council ECD11-2009 Education and Community Development 15

Broward Cultural Council ECD14-2010 Education and Community Development -



Biological Resources Div. JZ07361 B1 Sea Turtle Conservation 139

Biological Resources Div. RLI#050797-RB Marine Biological Monitoring 243

Human Services Dept. SAHCS-SAMHSA-HIV-02 CRUSHH 16

Human Services Dept. 2010-BARD-CRUSSH-01 CRUSHH -

Human Services Dept. SAHCS-SAMHSA-NOVA-02 COATCH 20

Human Services Dept. 08HCS8228RW Ryan White Part A 1,420

14. Alvin Sherman Library, Research, and Information Technology CenterIn December 2001, the university commenced operations of a library, research, and information technology center and parking garage (collectively the Center). The design, construction, and operation of the Center were provided for under the terms of an agreement entered into with Broward County (the County) in fiscal 2000 (the Agreement). The Agreement stipulated that NSU would be the sole owner and operator of the Center, while County residents would have full access to the Center and full use of its databases and information resources.

Revenue from the County under the Agreement is recognized on a pro rata basis over the term of the agreement (commencing in December 2001 with the opening of the Center). Funds of $13.7 million for the construction of the Center received from the County prior to fiscal year 2002 have been recorded as deferred revenue and are being amortized into income over the term of the Agreement. The County continues to provide funding for the Center. Based on the specified purpose of the funds received, these amounts are either recognized into income upon receipt or recorded as deferred revenue and subsequently amortized into income over the term of the Agreement. At June 30, 2010 and 2009, $18.2 million and $18.6 million were recorded as deferred revenue related to these funds, respectively, of which $.5 million was classified as current at June 30, 2010. During fiscal 2010, $.5 million of revenue was recognized ($.9 million during fiscal year 2009).


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Funds received from the County for certain operating expenses of the Center are recognized directly as unrestricted revenue in the period earned and totaled approximately $3.7 million and $3.9 million during fiscal 2010 and 2009, respectively.

15. University Park PlazaIn October 2001, through its wholly owned subsidiary, NSU Park Plaza LLC., the university acquired an interest in a limited partnership that owns and operates the University Park Plaza Shopping Center located in Davie, Florida. The partnership will continue until November 1, 2081, unless it is sooner terminated as expressly provided in the agreement. NSU’s capital contribution was $5.0 million for a 50 percent ownership in the partnership.

The university’s partnership interest is being accounted for under the equity method. Accordingly, NSU’s investment balance, which is reflected in deferred debt issue costs and other assets, was reduced by dividends received of $.6 million during the year ended June 30, 2010 and 2009, and increased by NSU’s 50 percent share of net income in the amount of $.5 million during the year ended June 30, 2010 ($.5 million during the year ended June 30, 2009). The investment balance at June 30, 2010 and 2009, was $5.5 million.

NSU has a noncancelable operating lease for facilities located in the University Park Plaza Shopping Center. During fiscal years 2010 and 2009, rent expense was $1.6 million and $2.4 million, respectively.

16. NSU Guaranty Insurance CompanyNSU formed a wholly owned, off-shore captive insurance company in November 2003, NSU Guaranty Insurance Company, LTD. (the Captive), in the Cayman Islands to fund the deductible portion of claims filed under insurance carried to cover medical malpractice and educators legal liability. The Captive also provides coverage for named windstorm property damage to the university.

The insurance contracts between the captive insurance company and NSU do not transfer significant underwriting risk. The claims liabilities, as determined by independent actuaries, are included in accrued insurance cost in the accompanying Consolidated Statements of Financial Position.

17. Retirement Benefits NSU has two voluntary employee benefit 403(b) plans, the defined contribution retirement plan and the tax deferred annuity plan. Effective January 1, 2010, the plans were merged. The merger of the plans has no effect on the reportable net assets of the 403(b) plan. NSU and plan participants contribute to the Teacher’s Insurance and Annuity Association and College Retirement Equity Fund (TIAA-CREF) and AIG Retirement to purchase fixed and variable annuities represented by individual contracts. The university recorded expenses related to these benefits of $15.2 million during fiscal 2010 ($14.6 million during fiscal year 2009).

18. CommitmentsNSU has various noncancelable operating leases for facilities, equipment, and vehicles through 2019. During fiscal 2010 and 2009, rent expense was $12.8 million and $11.3 million, respectively. Future minimum payments under noncancelable operating leases at June 30, 2010, were (in thousands):

2011 $ 9,219 2012 7,856 2013 7,017 2014 5,383 2015 5,137 Thereafter through 2019 8,553 Total $43,165

As of June 30, 2010, the Museum had received proceeds from the sale of artwork from its collection as follows:

Prior to merger $ 813 2009 1,250 2010 20 Total $ 2,083

These proceeds must be used to purchase new artwork, as the university’s collection policy requires that the proceeds from the sale of collection items be used to acquire other items for the collection.

19. Related PartiesThe university has engaged services of organizations whose owners are members of NSU’s Board of Trustees. During the years ended June 30, 2010 and 2009, the university paid these organizations $1.9 million and $2.0 million, respectively.

20. Litigation and ContingenciesIn its normal operations, NSU is a defendant in various legal actions. Additionally, NSU has contracts and grants with various grantors subject to audit, which could result in disallowance of certain costs. Management is of the opinion that the outcome of these matters will not have a material effect on NSU’s financial position or operating results.

In May 2007, NSU engaged Westchester General Hospital in litigation for claims arising out of breach of contract concerning the operation of a Graduate Dental Residency Program funded by Medicare. Westchester General Hospital countersued for breach of contract and related claims in the amount of $20.0 million. Discovery is significantly complete. In June, the Circuit Judge determined the counterclaims were not ripe and granted the university’s motion to stay the case pending resolution of parallel administrative Medicare appeals. There is not a present indication of when the abatement will be dissolved and when the case will proceed. No estimates have been made for potential liabilities or damages, as it is too early to determine any such probabilities or estimates.

21. Subsequent EventsIn July 2010, the university sold property located in Fort Lauderdale for $.9 million.

Pursuant to ASC 855, Subsequent�Events, the university has reviewed all subsequent events through October 14, 2010, the date financial statements were available to be issued.


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Funds received from the County for certain operating expenses of the Center are recognized directly as unrestricted revenue in the period earned and totaled approximately $3.7 million and $3.9 million during fiscal 2010 and 2009, respectively.

15. University Park PlazaIn October 2001, through its wholly owned subsidiary, NSU Park Plaza LLC., the university acquired an interest in a limited partnership that owns and operates the University Park Plaza Shopping Center located in Davie, Florida. The partnership will continue until November 1, 2081, unless it is sooner terminated as expressly provided in the agreement. NSU’s capital contribution was $5.0 million for a 50 percent ownership in the partnership.

The university’s partnership interest is being accounted for under the equity method. Accordingly, NSU’s investment balance, which is reflected in deferred debt issue costs and other assets, was reduced by dividends received of $.6 million during the year ended June 30, 2010 and 2009, and increased by NSU’s 50 percent share of net income in the amount of $.5 million during the year ended June 30, 2010 ($.5 million during the year ended June 30, 2009). The investment balance at June 30, 2010 and 2009, was $5.5 million.

NSU has a noncancelable operating lease for facilities located in the University Park Plaza Shopping Center. During fiscal years 2010 and 2009, rent expense was $1.6 million and $2.4 million, respectively.

16. NSU Guaranty Insurance CompanyNSU formed a wholly owned, off-shore captive insurance company in November 2003, NSU Guaranty Insurance Company, LTD. (the Captive), in the Cayman Islands to fund the deductible portion of claims filed under insurance carried to cover medical malpractice and educators legal liability. The Captive also provides coverage for named windstorm property damage to the university.

The insurance contracts between the captive insurance company and NSU do not transfer significant underwriting risk. The claims liabilities, as determined by independent actuaries, are included in accrued insurance cost in the accompanying Consolidated Statements of Financial Position.

17. Retirement Benefits NSU has two voluntary employee benefit 403(b) plans, the defined contribution retirement plan and the tax deferred annuity plan. Effective January 1, 2010, the plans were merged. The merger of the plans has no effect on the reportable net assets of the 403(b) plan. NSU and plan participants contribute to the Teacher’s Insurance and Annuity Association and College Retirement Equity Fund (TIAA-CREF) and AIG Retirement to purchase fixed and variable annuities represented by individual contracts. The university recorded expenses related to these benefits of $15.2 million during fiscal 2010 ($14.6 million during fiscal year 2009).

18. CommitmentsNSU has various noncancelable operating leases for facilities, equipment, and vehicles through 2019. During fiscal 2010 and 2009, rent expense was $12.8 million and $11.3 million, respectively. Future minimum payments under noncancelable operating leases at June 30, 2010, were (in thousands):

2011 $ 9,219 2012 7,856 2013 7,017 2014 5,383 2015 5,137 Thereafter through 2019 8,553 Total $43,165

As of June 30, 2010, the Museum had received proceeds from the sale of artwork from its collection as follows:

Prior to merger $ 813 2009 1,250 2010 20 Total $ 2,083

These proceeds must be used to purchase new artwork, as the university’s collection policy requires that the proceeds from the sale of collection items be used to acquire other items for the collection.

19. Related PartiesThe university has engaged services of organizations whose owners are members of NSU’s Board of Trustees. During the years ended June 30, 2010 and 2009, the university paid these organizations $1.9 million and $2.0 million, respectively.

20. Litigation and ContingenciesIn its normal operations, NSU is a defendant in various legal actions. Additionally, NSU has contracts and grants with various grantors subject to audit, which could result in disallowance of certain costs. Management is of the opinion that the outcome of these matters will not have a material effect on NSU’s financial position or operating results.

In May 2007, NSU engaged Westchester General Hospital in litigation for claims arising out of breach of contract concerning the operation of a Graduate Dental Residency Program funded by Medicare. Westchester General Hospital countersued for breach of contract and related claims in the amount of $20.0 million. Discovery is significantly complete. In June, the Circuit Judge determined the counterclaims were not ripe and granted the university’s motion to stay the case pending resolution of parallel administrative Medicare appeals. There is not a present indication of when the abatement will be dissolved and when the case will proceed. No estimates have been made for potential liabilities or damages, as it is too early to determine any such probabilities or estimates.

21. Subsequent EventsIn July 2010, the university sold property located in Fort Lauderdale for $.9 million.

Pursuant to ASC 855, Subsequent�Events, the university has reviewed all subsequent events through October 14, 2010, the date financial statements were available to be issued.


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Total Expenditures/

LoanSummary Exhibit Guarantees

Research and Development – Federal F-I 5,239,683$

Student Financial Aid – Federal F-II 558,832,022

Other Assistance – Federal F-III 8,121,969

Total Federal Awards 572,193,674

Research and Development – State S-I 117,417

Student Financial Aid – State S-II 15,326,535

Other Assistance – State S-III 4,533,409

T l S Fi i l A i 19 977 361


Schedule of Expenditures of Federal Awards and State Financial Assistance


1011-1205602 29

Total State Financial Assistance 19,977,361

Total Federal Awards and State Financial Assistance 592,171,035$

1011-1205602 29

FederalCFDA Pass-Through Entity Federal

Number Identifying Number Expenditures

Research and Development-Cluster:

National Science Foundation:Collaborative Research: ATol: PorTol-The

Porifera Tree of Life Project 47.074 76,656$

Total National Science Foundation 76,656

Department of Commerce:National Coral Reef Institute (NCRI) FY'07 11.426 811,473 National Coral Reef Institute (NCRI)FY'09 11.426 42,982

ProposalNational Coral Reef Institute (NCRI)FY'09 11.426 73,399

Proposal-SupplementsSubtotal for CFDA # 11.426 927,854

South Florida Fish and Invertebrate Monitoring Project 47.UNKNOWN 334,674 Characterization of the Catch by Swordfish Buoy Gear in

Southeast Florida 11.454 10,815 Florida's Deep Water Oases: Exploration and Characterization

of Deep-Reef Ecosystems 11.460 16,629 ARRA-Design and Construction of the Center for Excellence for 11.618 16,159

Coral Reef Ecosystem Science Research Facility at NSUSubtotal Direct Projects 1,306,131

Pass-Through Projects From:

The Nature Conservancy-NOAA-ARRA: Threatened Coral Recoveryin Florida and the U.S. Virgin Islands 11.463 070809 60,510

Florida Department of Environmental Protection-Development of GIS Maps for Southeast Florida Coral Reefs, LBSP Project 8 11.419 RM069 1

University of Central Florida-LAS/BSP Project D- Biomaker Study to Identify & Trace Coral Reef Contaminants 11.419 24037013 6,189

Florida Department of Environmental Protection-Maritime Industry and Coastal Construction Impacts and Fishing, Diving, and Other Uses 11.419 RM094 81,256

Florida Department of Environmental Protection-Land-Based Sources of Pollution Poject 8: AcousticalGround Trusting to Discriminate 11.419 RM098 66,027

Florida Department of Environmental Protection-A Study to Minimize or Eliminate Hard Bottom and Reef Impacts from Anchoring Activities 11.419 RM083 27,562


Year Ended June 30, 2010(Exhibit F-I)


Federal Grantor/Pass-ThroughGrantor/Project or Cluster Title

1011-1205602 30

FederalFederal Grantor/Pass-Through CFDA Pass-Through Entity FederalGrantor/Project or Cluster Title Number Identifying Number Expenditures

Department of Commerce (continued):

Florida Department of Environmental Protection-A Study to Evaluate Reef Recovery Following Injury and Mitigation Structures Offshore 11.419 RM084 43,721

Subtotal for CFDA #11.419 224,756

Earth Resources Technology, Inc. – Pilot Research Project: Evaluate the Effects of Circle Hooks on Catch Rates Within Two Pelagic Longline Time-Area Closures 11.UNKNOWN 8404-S-006 130,862 Florida Atlantic University-Bioluminescence in the Deep-Sea Benthos 11.460 NRH47 2,176 New England Aquarium-Evaluation of Variable Strength Hooks to Reduce Serious Injury Pilot Whale Interactions 11.452 2571 5,429

Subtotal Pass-Through Projects 423,733

Total Department of Commerce 1,729,864

Department of Health and Human Services:

Diabetes Literacy and Self-Efficacy Screening andTraining Project 93.779 143,478

Health Care and Other Facilities 93.887 9,625

National Institutes of Health

Preclinical Effectiveness of Cytotoxicity Assays 93.121 67,183 Thin Film Surface Coatings for Toughened Dental

Ceramics – FY'08 93.121 385,374 Subtotal for CFDA #93.121 452,557

Cardiovascular Risk in Relation to Posttraumatic Stress Disorder in Young Women 93.390 60,886

Young Hispanic Men “Entre Culturas” Navigating Culture, Identity, and HIV Risk 93.361 248,609

The Elderly and OTC Labeling Information 93.226 566 Promoting Self-Change from Alcohol Problems 93.273 91,999 ARRA: An Automated, Tailored Information Application for Medication 93.701 95,928 Health LiteracyARRA: Brain-Specific Non-AT1, Non AT2 Angiotensin Binding site 93.701 58,207 Subtotal for CFDA # 93.701 154,135




(Exhibit F-I continued)

1011-1205602 31






Department of Health and Human Services (continued):

Center for Disease Control

Project POWER: A Health Promotion and HIV RiskReduction Intervention for Black Men 93.941 155,838

Proyecto SOL: A Risk Reduction Intervention for Hispanic MSM 93.941 352,679

Subtotal for CFDA #93.941 508,517 Subtotal Direct Projects 1,670,372


Research Foundation of SUNY – Treatment of Endometriosis with NA vs. GnRH Agonist 93.865 33765 4,333

University of Virginia-How does motivational interviewing work? Mechanisms of Action in Project Choices 93.273 R01AA015930 27,330

River Region Human Services, Inc.-Special Project: Sister Rise 93.243 U79SP015073 4,255

University of Alabama – Leadership Group for Adolescent Medicine Trials Network 93.242 5U01HD040533-08 110,041

University of Alabama – ATN Coordinating Center 93.242 5U01HD040533-08 13,860 American Psychological Association – Cyber Mentors:

A Sustainable Model for Developing Minority HIV Researchers 93.242 R25MH083635 69,144


University of Tennessee Health Science Center-The Biocompatibilty 93.121 R073401081 43,232 Screening of Dental TreatmentsUniversity of Miami-HIV Testing in Dental Care Settings 93.121 66593M 10,343 Subtotal for CFDA # 93.121 53,575

Subtotal Pass-Through Projects 282,538

Total Department of Health and Human Services 1,952,910

Department of Defense:

Facilitating Smoking Cessation and Preventing Relapsein Primary Care: Minimizing Weight Gain by Reducing Alcohol Consumption 12.420 172,743

Total Department of Defense 172,743

1011-1205602 32






Central Intelligence Agency:

Project Styx: Hydrodynamics and RemoteSensing of Far Wakes of Ships, Year 2 13.UNKNOWN 474,907

Total Central Intelligence Agency 474,907

Department of Navy:


TEC, Inc.-Marine Resource Survey Services in Support of 99.UNKNOWN 8806-24803 147,787 EIS/OEIS Relocation of USMC to Guam

TEC, Inc.-Coral Resource Surveys for Apra Harbor 99.UNKNOWN 8845-25575 54,084 and Four Watersheds in SW Guam-Task 3 and 4

TEC, Inc.-Coral Resource Surveys for Apra Harbor 99.UNKNOWN 8845-25575 4,420 and Four Watersheds in SW Guam-Task 5

Total Department of Navy 206,291

Department of the Interior:

The Establishment of the US Geological Survey 15.808 193,612 Developing a South Florida Fish and Invertebrate

Assessment Network 15.808 22,022

Total Department of the Interior 215,634

US Fish and Wildlife Service:


Florida Fish and Wildlife Conservation Commission –National Coral Reef Institute Artificial Reef Construction 15.605 FWC-08623 25,961

Florida Fish and Wildlife Conservation Commission –Characterizing and Determining the Extent of CoralReefs and Associated Resources In Southeast FL 15.634 #08014 70,769

The Nature Conservancy – Coral Bleaching Surveysin the Lower Florida Keys FRRP Sub-Region 15.634 FCO-070908-NOVA 4,000


Total US Fish and Wildlife Service 100,730

1011-1205602 33






US Department Housing & Urban Development

Center for Collaborative Biomedical Research 14.251 224,236

Total Department of Housing & Urban Development 224,236

US Environmental Protection AgencyPass-Through Projects From:

Florida International University-Water Quality Monitoring 66.436 205002527-02 27,149 for the Florida Keys national Marine Sanctuary

Total US Environmental Protection Agency 27,149

US Agency for International Development


The Nature Conservancy-Collection of Data and Mapping Benthic 98.001 8,719 Habitats for Development of Marine Zoning Plan for Islands of St.Kitts

Total US Agency for International Development 8,719

National Security Agency:

DOD Information Assurance Scholarship Program FY09 12.902 17,442 DOD Information Assurance Scholarship Program FY10 12.902 18,090 Subtotal for CFDA #12.902 35,532

Total National Security Agency 35,532

National Aeronatical and Space Administration


Jet Propulsion Laboratory, California Institute of Technology- 99.UNKNOWN 1399067 1,861 HysplRl Sun Glint Sub-Group

Total National Aeronatical and Space Administration 1,861

Office of Naval Research


University of Rhode Island-Advanced Coupled Atmosphere-Wave- 99.UNKNOWN 0002437 12,451 Ocean Modeling for Improving Tropical Cyclone Prediction Models

Total Office of Naval Research 12,451

Total Research and Development 5,239,683$

1011-1205602 34

FederalFederal Grantor/Pass-Through CFDA Pass-Through Entity Federal

Grantor/Project or Cluster Title Number Identifying Number Expenditures

Student Financial Aid-Cluster:

Department of Education:Federal Perkins Loans (Note 2) 84.038 299,572$ ARRA-Federal Work Study 84.033 449,134 Federal Work Study 84.033 1,631,405 Federal Stafford Loan 84.032 467,185,161 Federal Parent Loan for Students 84.032 76,052,167 Federal Pell Grant 84.063 10,715,405 Federal Supplemental Educational 84.007

Opportunity Grant 1,185,993 Academic Competitiveness Grant 84.375 163,489 National Science and Mathematics Access to Retain 84.376

Talent Grant 304,996 Teacher Education Assistance for College and Higher 84.379

Education Grants 614,500

Total Department of Education 558,601,822

Department of Health and Human Services:Financial Assistance for Disadvantaged 93.925 230,200

Total Department of Health and Human Services 230,200

Total Student Financial Aid 558,832,022$


Year Ended June, 30 2010(Exhibit F-II)


1011-1205602 35



Other Assistance:

Department of Education:Rx-Prescription for Reading Excellence 84.359 388,320$ Building Emergent Language & Literacy Skills (BELLS) 84.359 80,238 Subtotal for CFDA #84.359 468,558

Connecting the Dots to Improve Hispanic and Other Underprepared Diverse Student Outcomes 84.031S 561,627

Connecting Increased Student Engagement with Improved Outcomes to Shape Student Success 84.031S 426,818

Subtotal for CFDA #84.031S 988,445

Expanding Postbacalaureate Educational Opportunities and Quality by 84.031M 144,040 Creation Warm Connections with Hispanic 2nd Low-income Graduate

Subtotal Direct Projects 1,601,043

Pass-Through Projects From:Florida Department of Education – Voluntary Public School Choice 84.361 068-2998A-9R001 235,022 Florida Department of Education – Support for Florida's Voluntary

Public School Choice Program and Parent Resource Center 84.361A 068-2998A-OP001 412,613 Subtotal for CFDA#84.361 647,635

School Board of Broward County- Early Reading First 84.359B 161,043

School Board of Broward County-Florida Teacher Quality Grant-Cycle II 84.367B 7,574

ARRA - University of Miami- Center for Audit and Related Disabilities 84.397A 66578L 10,199 ARRA- Florida Department of Education -State Fiscal Stabilization Fund Program - Education Stabilization Fund and Government 84.397 068-5920S-0PZ63 1,675,000 Subtotal for CFDA #84.397 1,685,199

Subtotal Pass-Through Projects 2,501,451

Total Department of Education 4,102,494

Department of Health and Human Services:

Area Health Education Center-Model Program – FY'09 93.107 104,870 Area Health Education Center-Model Program – FY'08 93.107 63,478 Subtotal for CFDA #93.107 168,348


Year Ended June 30, 2010(Exhibit F-III)


1011-1205602 36



Department of Health and Human Services (continued):Geriatric Education Centers 93.969 516,935

Residency Training in General and Pediatric Dentistry FY08 93.884 350,283 Residency Training in General and Pediatric Dentistry FY09

AEGD & Domestic Violence Project 93.884 291,803 Subtotal for CFDA #93.884 642,086

Expansion of Prevention Initiatives Off Campus (EPIC) Project 93.243 64,152

NSU Nurse Education Tuition Assistance 93.888 68,440

Community Based Dental Partnership Program 93.924 285,726

ARRA-Financial Assistance for Disadvantaged 93.407 103,278

Subtotal Direct Projects 1,848,965


Florida Department of Children and Family-Child Care Training Coordination Program 08 93.575 LC808 139,600

School Board of Broward County – ELC3 Quality Improvement Supports 93.588 166,469

Broward County – Ryan White Part A FY10 93.914 08HCS8228RW 409,330 Broward County – Ryan White Part A FY09 93.914 08HCS8228RW 1,047,036 Subtotal for CFDA #93.914 1,456,366

Florida Department of Health – Center for Bioterrorism and All Hazards MRC Core Competencies 93.889 41,037

Broward County-Collaborative Outreach, Assessment and 93.243 1H79T1018185-01 43,973 Treatment for Co-Occurring Homeless Broward County-CRUSHH 93.243 SAHCS-SAMSHA-HIV-0 8,370 Broward County-CRUSHH, Prevention of Substance Abuse, 93.243 2010-BARD-CRUSHH-01 83,187 HIV/AIDs and HepatitisSubtotal for CFDA#93.243 135,530

Florida Developmental Disabilities Council-Dental Information Training 93.630 743HC09 49,712

Subtotal Pass-Through Projects 1,988,714

Total Department of Health and Human Services 3,837,679

(Exhibit F-III continued)




1011-1205602 37



(Exhibit F-III continued)




Department of Defense:Doctor of Science in Occupational Therapy Degree 12.UNKNOWN 2,041

Total Department of Defense 2,041

National Endowment for The HumanitiesSoul of a People: Voices from the Writers' Project – Library

Outreach Programs 45.164 1,477

Total National Endowment for The Humanities 1,477

Department of Veterans Affairs

Yellow Ribbon Scholarships 64.130 178,278

Total Department of Veterans Affairs 178,278

Total Other Assistance 8,121,969$

1011-1205602 38

Contract/GrantState Grantor/Pass-Through State CSFA Identifying StateGrantor/Project or Cluster Title Number Number Expenditures

Research and Development:

Florida Fish and Wildlife Commission:A Practical Guide to the Shallow-Water Marine

Sponges (Porifera) of South Florida 77.002 FWC-07042 11,679

Artificial Reef Monitoring Project 2009-2010 77.007 FWC-09140 16,931

Total Florida Fish and Wildlife Commission 28,610

Florida Department of Environmental Protection:Pass-Through Projects From:

St. Johns River Water Management District –Mapping Macroalgae in the Indian River Lagoon

Water Management Lands Trust Fund 37.022 SK49513 4,007 Ecosystems Management Trust 37.039 SK49513 5,610 District Ad Valorem 37.UNKNOWN SK49513 1,832

Total Department of Environmental Protection 11,449

Florida Department of Highway Safety & Motor Vehicles:Pass-Through Projects From:

Mote Marine Laboratory – Professional Workshop in Support of a Practical Guide to the Shallow Water Marine Sponges of South FL 76.069 POR-2006-35 4,663

Total Department of Highway Safety & Motor Vehicles 4,663


Year Ended June 30, 2010(Exhibit S-I)


1011-1205602 39


Florida Gulf Coast University:Pass-Through Projects From:

Sanibel – Captiva Conservation Foundation-Hydroacoustic/video Surveying and Related Ground – Truthing 99.UNKNOWN 2008-016 46,771

Total Florida Gulf Coast University 46,771

Florida Department of Children and Families:Pass-Through Projects From:

Henderson Mental Health Center, Inc- Freedom Project 60.115 25,924

25,924

Total Research and Development 117,417$

Year Ended June 30, 2010(Exhibit S-I continued)



1011-1205602 40

Contract/Grant

State Grantor/Pass-Through State CSFA Identifying State

Grantor/Project or Cluster Title Number Number Expenditures

Student Financial Aid:

Florida Department of Education:MS in Speech Pathology 48.002 94620 62,995$

Florida Medical Student Capitation 48.042 94690 1,818,259 Florida Optometry Student Capitation 48.042 94690 590,902 Florida Pharmacy Student Capitation 48.042 94690 801,013 Florid Nursing Student Capitation 48.042 94690 154,131 Subtotal for CSFA #48.042 3,364,305

Florida Minority Teacher Scholarship Program 48.049 90460 98,010 Florida Student Assistance Grant 48.054 99970 1,848,073 Florida Bright Futures Scholarship Program 48.059 97040 2,660,140 Florida Resident Access Grant 48.064 93420 7,058,751 Florida Robert Byrd Scholarship 84.185A 1,500 FL DOE Children Disabled Veteran Scholar 48.055 99970 4,662 Florida Work Experience Program 48.054 99970 30,144

Total Florida Department of Education 15,128,580

Florida Department of HealthFL DOH-BSN entry level Scholarship – FY'09 64.UNKNOWN COMS6 7,840

FL DOH-BSN entry level Scholarship-FY '10 64.UNKNOWN COMS6 190,115

Total Florida Department of Health 197,955

Total Student Financial Aid 15,326,535$


Year Ended June 30, 2010(Exhibit S-II)


1011-1205602 41


Other Assistance:

Florida Department of HealthArea Health Education Center Network – FY'10 64.009 COTX3 2,085,083$ Subtotal for CSFA #64.009 2,085,083

State Community Interventions Program – FY'09 64.112 CORBL 282,959 State Community Interventions Program – FY'10 64.112 COTX7 984,907 Subtotal for CSFA #64.112 1,267,866

AHEC Cessation Program – FY'09 64.097 CORBL 188,639 AHEC Cessation Program – FY'10 64.097 COTX7 656,605 Subtotal for CSFA #64.097 845,244

Total Florida Department of Health 4,198,193

Florida Department of Education:

Public Sector, Urban, Rural and Unmet Needs – FY'10 48.042 102,187 Subtotal Direct Project 102,187

Pass-Through Project From:University of Miami – Center for Autism and

Related Disabilities FY'10 48.030 66573H 233,029

Total Florida Department of Education 335,216

Total Other Assistance 4,533,409$


Year Ended June 30, 2010(Exhibit S-III)


1011-1205602 42


Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance

June 30, 2010

1011-1205602 43

1. Basis of Presentation

The accompanying schedule of expenditures of federal awards and state financial assistance (the Schedule) includes the federal and state grant activity of Nova Southeastern University, Inc. (NSU) and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, Section 215.97 Florida Statutes, and Chapter 10.650 Rules of the Florida Auditor General. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the consolidated financial statements. Because the schedule presents only a selected portion of the operations of NSU, it is not intended to and does not present the consolidated financial position, changes in net assets or cash flows of NSU.

2. Loan Programs

During the year ended June 30, 2010, NSU processed $299,572 and $0 of new loans under the Federal Perkins Loan Program (CFDA number 84.038), and the Department of Health and Human Services Loan Program (CFDA number 93.264), respectively, as reported in the accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance. As there are continuing compliance requirements with respect to these programs, the amounts reported for current year loan advances, plus the outstanding loan balances of approximately $5.2 million and $1.6 million, respectively, are considered federal expenditures for the year ended June 30, 2010.

During the year ended June 30, 2010, NSU issued new loans under the Federal Family Education Loan Program (CFDA number 84.032) of $543,237,328 as reported in the accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance. New loans made during the fiscal year are considered federal expenditures, whereas the outstanding loan balances are not.


Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance (continued)

1011-1205602 44

3. Subrecipients

Of the federal and state expenditures presented in the Schedule, NSU provided federal and state awards to subrecipents as follows:

Federal Program Title Federal CFDA

Amount Provided to

Subrecipients Geriatric Education Centers 93.969 $ 66,000 Florida’s Deep Water Oases: Exploration and

Characterization of Deep-Reef Ecosystems 11.460 11,197 National Coral Reef Institute 11.426 129,125 Maritime Industry and Coastal Construction

Impacts and Fishing, Diving and Other Uses 11.419 14,105 Voluntary Public School Choice 84.361 45,250 Support for Florida’s Voluntary Public School Choice

Program and Parent Resource Center 84.361A 117,138 Community Based Dental Partnership Program 93.924 111,649 Collaborative Research: AToL:PorToL-The Porifera Tree

of Life Project 47.074 14,072 Characterizing and Determining the Extent of Coral Reefs

and Associated Resources in Southeast Florida 15.634 44,700 Dental Information Training 93.630 35,411 Facilitating Smoking Cessation and Preventing Relapse in

Primary Care 12.420 7,131 Thin Film Surface Coatings for Toughened Dental

Ceramics FY 08 93.121 223,651 Residency Training in General and Pediatric Dentistry

FY 08 93.884 11,115 Residency Training in General and Pediatric Dentistry

FY 09 93.884 49,128 Diabetes Literacy and Self-Efficacy Screening and

Training Project 93.779 91,354 Project POWER: A Health Promotion & HIV Risk

Reduction for Black Men 93.941 93,202


Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance (continued)

1011-1205602 45

State Program Title Federal CFDA

Amount Provided to

Subrecipients A Practical Guide to the Shallow-Water Marine Sponges

(Prorifera) of South Florida 77.002 $ 7,118 4. Contingency

The grant revenue amounts received are subject to audit and adjustment. If any expenditures are disallowed by the grantor agencies as a result of such an audit, any claim for reimbursement to the grantor agencies would become a liability of NSU. In the opinion of management, all grant expenditures are in compliance with the terms of the respective grant agreements and applicable federal and state laws and regulations.



1011-1205602 46

Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an

Audit of the Financial Statements Performed in Accordance with Government Auditing Standards

Management and the Board of Trustees Nova Southeastern University, Inc.

We have audited the consolidated financial statements of Nova Southeastern University, Inc. (the University) as of and for the year ended June 30, 2010, and have issued our report thereon dated October 14, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal control over financial reporting

In planning and performing our audit, we considered the University’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the University’s internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.


1011-1205602 47

Compliance and other matters

As part of obtaining reasonable assurance about whether the University’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

We noted certain matters that we reported to management of the University in a separate letter dated October 14, 2010.

This report is intended solely for the information and use of management, the Finance and Audit Committee, the Board of Trustees, others within the entity, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

ey October 14, 2010



1011-1205602 48

Report of Independent Certified Public Accountants on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major

Federal Program and State Financial Assistance Project and on Internal Control Over Compliance in Accordance with OMB Circular A-133, Section 215.97 Florida Statutes, and Chapter 10.650 Rules of the Florida Auditor General

Management and the Board of Trustees Nova Southeastern University, Inc.

Compliance

We have audited Nova Southeastern University, Inc.’s (the University’s) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement, and the requirements described in the State of Florida’s State Projects Compliance Supplement, that could have a direct and material effect on each of the University’s major federal programs and major state financial assistance projects for the year ended June 30, 2010. The University’s major federal programs and major state financial assistance projects are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs and major state financial assistance projects is the responsibility of the University’s management. Our responsibility is to express an opinion on the University’s compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, Section 215.97 Florida Statutes, and Chapter 10.650 Rules of the Florida Auditor General. Those standards, OMB Circular A-133, Florida Statues (Section 215.97), and Rules of the Florida Auditor General (Chapter 10.650), require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program or major state financial assistance project occurred. An audit includes examining, on a test basis, evidence about the University’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the University’s compliance with those requirements.


1011-1205602 49

In our opinion, the University complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs and major state financial assistance projects for the year ended June 30, 2010. However, the results of our auditing procedures disclosed an instance of noncompliance with those requirements, which is required to be reported in accordance with OMB Circular A-133, Section 215.97, or Chapter 10.650, and which is described in the accompanying schedule of findings and questioned costs as item 10-1.

Internal control over compliance

The management of the University is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts and grants applicable to federal programs and state financial assistance projects. In planning and performing our audit, we considered the University’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program or major state financial assistance project to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, Section 215.97, or Chapter 10.650, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the University’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program or state financial assistance project on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program or state financial assistance project will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.

The University’s response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the University’s response and, accordingly, we express no opinion on the response.


1011-1205602 50

This report is intended solely for the information and use of management, the Finance and Audit Committee, the Board of Trustees, others within the entity, and federal and state awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

ey November 10, 2010


Schedule of Findings and Questioned Costs

For the Year Ended June 30, 2010

1011-1205602 51

Part I – Summary of Auditor’s Results

Financial Statements Section

Type of auditor’s report issued Unqualified Internal control over financial reporting:

Material weakness(es) identified? Yes X No

Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X None reported

Noncompliance material to financial statements noted? Yes X No

Federal Awards and State Projects Section

Internal control over major programs:

Material weakness(es) identified? Yes X No

Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X None reported

Type of auditor’s report issued on compliance for

major programs: Unqualified Any audit findings disclosed that are required to be

reported in accordance with section .510(a) of OMB Circular A-133 and/or Section 215.97, Florida Statutes? X Yes No


Schedule of Findings and Questioned Costs (continued)

1011-1205602 52

Part I – Summary of Auditor’s Results (continued)

Identification of major federal programs and state projects:

Federal Programs:

CFDA Numbers Name of Federal Program or Cluster

84.038, 84.033, 84.032, 84.063, 84.007, 84.375, 84.376, 84.379, 93.925

Student Financial Assistance Cluster

47.074, 11.426, 47. Unknown, 11.454, 11.460 11.618, 11.463, 11.419, 11. Unknown, 93.779,

93.887, 93.121, 93.390, 93.361, 93.226, 93.273, 93.701, 93.941, 93.865, 93.273, 93.243, 93.242,

93.121, 12.420, 13.Unkown, 99.Unknown, 15.808, 15.605, 15.634, 14.251, 66.436, 98.001, 12.902,

11.452

84.397

Research and Development Cluster ARRA- Florida Department of Education-State Fiscal Stabilization Fund Program- Education Stabilization Fund and Government

93.969

Geriatric Education Centers

93.884

Residency Training in General and Pediatric dentistry

93.407

ARRA-Financial Assistance for the Disadvantaged



1011-1205602 53

Part I – Summary of Auditor’s Results (continued)

State Projects:

CSFA Numbers Name of State Project

48.059 Florida Bright Futures Scholarship Program

48.064

Florida Resident Access Grant

48.054

Florida Student Assistance Grant

Dollar threshold used to distinguish between

Type A and Type B programs:

• Federal Programs $ 400,850

• State Projects $ 599,247

Auditee qualified as low-risk auditee? X Yes No



1011-1205602 54

Part II – Financial Statement Findings Section

This section identifies the significant deficiencies, material weaknesses, fraud, illegal acts, violations of provisions of contracts and grant agreements, and abuse related to the financial statements for which Government Auditing Standards require to be reported.

No matters were identified.

Part III – Federal Awards and State Projects Findings and Questioned Costs Section

This section identifies the audit findings required to be reported by Circular A-133 Section .510(a), Section 215.97 Florida Statutes, and Chapter 10.650 of the Rules of the Florida Auditor General, such as significant deficiencies, material weaknesses, and material instances of noncompliance, including questioned costs as well as any abuse findings involving federal awards or state projects that are material to a major program or major state project.

Federal Awards Findings and Questioned Costs

Finding No. 10-1: Return of Title IV Funds – Federal Family Education Loans (FFEL)

Federal program information:

Federal Family Education Loans - CFDA No. 84.032

Criteria or specific requirement:

The OMB Circular A-133 Part V compliance supplement Part 5-3-27 section h states, "an institution must return to ED, a lender, or a guaranty agency any Title IV funds that it attempts to disburse directlyto a student or parent but they do not receive or negotiate those fundsno later than 240 days from the date of the initial attempt to disbursethe funds.” This rule became effective as of July 1, 2008.

The 2007/2008 Student Financial Aid Handbook Volume 4, Chapter 2states, “the search for the student should end and the refund/return tothe Department (or lender in the case of FFEL funds) should be completed prior to the date the funds would otherwise escheat, but nolater than a few days after a check to the student would cease to benegotiable (usually 180 days).”



1011-1205602 55

Part III – Federal Awards and State Projects Findings and Questioned Costs (continued)

Condition/Context: During our testing of other current liabilities and accounts receivablewe noted $ 1,340,967 of checks issued to students in 2004/2005 that remained unclaimed of which $ 272,412 relates to unclaimed checks issued prior to June 30, 2005 and is thus subject to the Florida escheatlaws. The University is currently in the process of voiding all theunclaimed checks, updating student contact information and reissuingthe checks. In the event that the correct student contact information cannot be obtained, the unclaimed funds will be returned to the lender.

Questioned costs: N/A Cause/Effect: As the University’s checks do not have a specified expiration date,

they are negotiable until they are voided by the University. However, the University did not perform a timely review of all outstanding uncashed checks, therefore checks issued to students in 2004/2005 remained unclaimed and the funds were not properly returned to the lender in a timely manner. As a result of not returning the funds within the timeline specified by federal regulations, the University is not in compliance with the requirement to return unclaimed title IV funds. In addition, the University does not have adequate procedures in place to ensure all unclaimed checks are returned to the lender in a timely manner.



1011-1205602 56

Part III – Federal Awards and State Projects Findings and Questioned Costs (continued)

Recommendation: Views of Responsible Officials and Planned Corrective Actions:

The University should implement adequate procedures to monitor andreview unclaimed checks, particularly those related to Title IV funds.On a monthly basis the University should identify all outstandinguncashed checks containing SFA funds. Prior to the 240th day (effective for checks issued July 1, 2008 and subsequent) or prior tothe date the funds would otherwise escheat, but no later than a fewdays after a check to the student would cease to be negotiable, theUniversity should void the uncashed checks and restore the funds back to the applicable SFA program. Additionally, the University shouldensure that all unclaimed checks containing Title IV funds issued prior to June 30, 2005 are returned to the lender as soon as possible.

The Bursar’s Office has already scheduled the return of $127,045.79 with the remainder of the unclaimed Title IV property for 2004 and2005 to be returned immediately. Procedures for unclaimed propertywill be modified to ensure compliance with OMB Circular A-133 and Title IV guidelines for checks issued on or after July 1, 2008.

State Financial Assistance Findings and Questioned Costs

There were no findings required to be reported.


Summary Schedule of Prior Year Findings

For the Year Ended June 30, 2010

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I. Summary of Findings for the Year Ended June 30, 2009

Federal Award and State Financial Assistance Findings and Questioned Costs

Finding No. 09-1: Special Tests and Provisions – Student Financial Assistance

Condition/Context: The University is required to report overpayments and student status changes to the ED in a timely manner. During our procedures, we noted that for one of the three students tested for overpayments, the University reported the student’s overpayment of Title IV funds to the ED within 99 days instead of 90 days, as required. We also noted that for one out of the twelve students tested for status changes, the University did not properly update the student’s status and report the change to the Clearinghouse. The University entered the incorrect information into the student status report which caused the report to be rejected by the Clearinghouse. This error remained undetected.

Recommendation: The University should implement adequate procedures to monitor and review student overpayments and status changes to ensure accurate and timely reporting to the ED.

Status: During the 09/10 fiscal year, the Systems Team worked on correcting the defect in the OIT script. It was determined that the defect was related to a registration status that was not considered in the selection criteria which did not pull the last day of attendance. The defect has been resolved and a Policy and Procedure official document has been established that will provide quality assurance in NSU Enrollment reporting.

II. Summary of Findings for the Year Ended June 30, 2008

Federal Award and State Financial Assistance Findings and Questioned Costs

Finding No. 08-1: Schedule of Expenditures of Federal Awards and State Financial Assistance Projects completeness and accuracy

Condition/Context: The Schedule of Expenditures of Federal Awards and State Financial Assistance Projects (Schedule) provides total federal awards and state financial assistance expended for each individual federal and state program. Revisions were required in the 2008 Schedule as a result of audit inquiries in relation to specific grants. In addition, we noted that one loan program in the amount of approximately $14 million was not reported in the 2007 Schedule and the 2007 Data Collection Form.


Summary Schedule of Prior Year Findings (continued)

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Recommendation: The University should implement additional procedures and internal controls to ensure the information used to develop the Schedule is accurate and complete.

Status: The year-end task list for 2009 was updated to obtain a complete list of federal and state student loans and grants from the Financial Aid Department. Financial Operations compared this list with data entered in the general ledger. Financial Operations worked closely with the Office of Grants and Contracts to ensure all active contracts and grants for fiscal year 2009 were properly reported under OMB Circular A-133 and state regulations of the Florida Auditor General.

% of % of % of % ofPopulation Population Sample Sample

Amount Recipients Amount Amount Recipients Recipients Amount Amount Recipients Recipients

Florida Gold Seal Vocational Scholarship 16,720$ 7 7,600$ 45.45% 7 100.00% – – – –Florida Academic Scholarship 488,250$ 136 53,550$ 10.97% 35 25.74% – – – –Florida Medallion Scholarship 2,155,170$ 876 49,495$ 2.30% 50 5.71% – – – –Florida Student Assistance Program 1,848,073$ 1,408 37,500$ 2.03% 50 3.55% – – – –Florida Robert Byrd Scholarship 1,500$ 1 750$ 50.00% 1 100.00% – – – –Florida Work Experience Program 27,404$ 11 4,131$ 15.07% 3 27.27% – – – –


State of Florida Student Financial Assistance Programs –Schedule of Populations, Samples Tested, and Questioned Costs


Award Population Award Sample Questioned Costs

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Management Letter Management and the Board of Trustees Nova Southeastern University, Inc. In planning and performing our audit of the consolidated financial statements of Nova Southeastern University, Inc. (the University or NSU) as of and for the year ended June 30, 2010, in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, we considered the University’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the University’s internal control over financial reporting.

The following suggestions, which resulted from our consideration of internal control, are submitted to assist in improving procedures and controls.

We have also issued our report of independent certified public accountants, dated October 14, 2010, on our consideration of the University’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. Disclosures in that report should be considered in conjunction with this management letter.

This letter is intended solely for the information and use of the Finance and Audit Committee, the Board of Trustees, management and others within the organization, federal and state awarding agencies and pass-through entities, and the Auditor General, State of Florida, and is not intended to be and should not be used by anyone other than these specified parties.

ey October 14, 2010

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A. Current Year Recommendations

Journal entry review

Observation

As part of our testing of controls over the recording of non-tuition related revenue, we obtained the manual journal entry and transmittal form associated with a sample of 25 transactions and verified that the documents were properly approved as evidenced by the supervisor's signature. We noted that proper approval by the respective department-head had been obtained; however, we noted that the journal entry to record the transaction was not reviewed by an accounting department supervisor prior to posting (i.e., not signed by the controller, or any of the associate controllers) for four transactions in our sample.

Recommendation

We recommend that all journal entries and supporting schedules be subject to a documented supervisory review before the related entries are posted in the general ledger.

Management’s Response

We concur with the recommendation. In the future all journal entries processed by the Treasury department will be approved by either the Controller or an Associate Controller.

Completeness of pledges receivable

Observation

During our testing of pledges receivable we noted four instances in which donor commitments made in 2007 were included in the fiscal year 2010 new pledge detail. We were informed that these pledges had not been previously recorded by the University as the information had not been communicated to the Office of Institutional Advancement from the department that received the pledge at the time the pledge was made. As payments had been received on the pledges over the past few years, the payments were recorded as contribution revenue upon receipt as they had not been associated with a pledge. The net effect of the 2007 pledges recorded during fiscal year 2010 was that contribution revenue was overstated in fiscal year 2010 and beginning net assets was understated by $595,000.

Recommendation

We understand that the University’s current process requires the completion of a form to indicate whether a gift payment pertains to a pledge and that the form must accompany any gift payment transmitted to the Office of Institutional Advancement for processing. We recommend that the University review its current process to verify that it is both designed and operating effectively in

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order to provide assurance over the completeness of pledges receivable recorded. The University should perform a review of gift payments to ensure that any payments associated with pledges have been correctly identified and recorded accordingly.


During the past year and a half, the Office of Institutional Advancement has developed a Gift Acceptance Policies and Procedures (GAPP) manual to ensure that all gifts and pledges are processed centrally throughout the Advancement Services unit. The GAPP has been communicated to all business and development officers within the institution to ensure that NSU is in compliance with all generally accepted accounting principles regarding philanthropic gifts. Besides the GAPP document, the office of Institutional Advancement holds regular meetings with NSU Business and Development Officers where the importance of communicating all gifts and commitments to the office of Advancement Services is reiterated.

Furthermore, all documents currently utilized to process gifts (transmittal forms, online giving forms), allow the individual submitting the form to indicate whether the transaction is related to a pledge. The Office of Institutional Advancement also reviews gift payments received periodically to ensure that payments are applied correctly.

Several of the exceptions noted were a result of the conversion of the Museum of Art data. Future merger information, if any, will not be back dated to a prior fiscal year.

Proper categorization of completed capital projects

Observation

The University completed significant capital projects during fiscal year 2010 including the main central plant (chiller plant) project. As capital projects are completed and placed into service, the University transfers the project costs out of construction in progress and into a depreciable asset category (i.e. buildings, equipment). Depreciation is recorded over the estimated useful life of the asset which varies by the assigned asset category.

The chiller plant is a new, energy-efficient heating, ventilating, and air conditioning system used for cooling buildings located in the main campus. We noted that the University had allocated $45 million of costs associated with the chiller plant to the buildings category which has an assigned useful life of 50 years. However, the chiller plant consists of significant equipment components which have a shorter useful life (i.e. 15-25 years). At our request, the University reviewed the cost components of the chiller plant to determine proper classification of costs that pertain to equipment and assign the appropriate useful life. Although the impact on depreciation expense for fiscal year 2010 was deemed immaterial since the asset was placed into service mid-way through the fiscal year, the impact on future years' expense could be significant.

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Recommendation

We recommend that the University reclassify the significant components of the chiller plant into the appropriate equipment category during fiscal year 2011 based on a detailed review of the cost components. We also recommend that the University implement procedures to ensure that in the future, when significant projects are constructed, that costs are accumulated in a manner that will facilitate proper categorization of significant components. When the projects are completed and transferred out of construction in progress, the detailed cost components should be reviewed to verify that such costs are assigned to the appropriate asset category with the appropriate useful life. This will help to ensure that depreciate expense is properly recognized over the estimated useful life of the assets.


During fiscal year 2011, Financial Operations will perform a detailed review of the cost components related to the chiller plant and make an adjustment to record the cost to the appropriate equipment category. Financial Operations is currently working with Facilities Management to create a form that will be utilized for all construction projects. This form will be used throughout the life of the project to keep track of expenses, dates, disposals, and to ensure that appropriate asset categories are assigned.

Review of ARRA Reporting

Observation

The American Recovery and Reinvestment Act of 2009, (“Recovery Act or ARRA”) was signed into law by President Obama on February 17, 2009. As required by Section 1512 of the Recovery Act, recipients are required to submit quarterly reports on the use of Recovery Act funding through a nationwide data collection process and report estimates on the number of jobs created and retained. As a recipient of ARRA funding, the University has properly submitted the quarterly reports in a timely manner. However, during our review of Federal Work Study ARRA reports, we noted that the number of Full-Time Equivalents for the quarter ended September 30, 2009 was miscalculated and reported incorrectly. Upon inquiry, we noted that the ARRA report was reviewed prior to submission; however, the review did not identify the error for correction.

Recommendation

We recommend that management enhance its review process over the Federal Work Study ARRA reporting requirements. Documentation of the related calculations performed and conclusions reached, including any supporting schedules should be subject to the appropriate level of supervisory review to ensure accuracy and completeness of the data. Evidence of this review should be retained.

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We concur with the recommendation and agree that the number of Full Time Equivalents for the quarter ended September 30, 2009 was miscalculated by one, thereby over reporting the number of new jobs created. In the event that NSU receives future ARRA funding for Federal Work Study, ARRA reports will be completed and submitted to the Director of Student Financial Aid Awarding for review. The report will then be submitted to the Manager of Grant Accounting, along with documentation of calculations, including any supporting schedules for final submission. Evidence of such review will be retained.

Debarment/ Suspension Process

Observation

Under the Office of Management and Budget rules, entities are prohibited from contracting with vendors that are suspended or debarred. Entities must verify that the vendor is not suspended or debarred or otherwise excluded by reviewing the Excluded Parties List System (EPLS), collecting a certification from the vendor, or adding a clause or condition to the vendor agreement.

During our testing, we noted that University personnel did not retain adequate documentation of their EPLS search evidencing the verification that each vendor is not suspended or debarred.

Recommendation

We recommend that the University keep a record of their search of the EPLS website as evidence that the verification of suspended or debarred vendors is being performed. Alternatively the University can collect a certification from the vendor, or add a clause or condition to the vendor contract.

Managements Response

Management agrees that historically when searches were conducted of the suspended or debarred vendors, documentation of the search was not retained. In the immediate future, the Purchasing department will add a clause to the purchase order terms and conditions indicating that payment is conditional on the requirement that the vendor is not suspended or debarred. Any future contracts or subcontracts issued through the Office of Grants and Contracts will include a statement that the recipient is not debarred, suspended or proposed for debarment or declared ineligible for the award of subcontracts by any federal agency. Accounts Payable will continue with their existing process of searching vendors to ensure they are not suspended or debarred or otherwise excluded. The Accounts Payable and Purchasing departments are currently in the final stages of selecting third party software that will permit the search of the EPLS website, in addition to more than fifteen other government watch lists. Management will ensure that the software provides a clear audit trail of the searches performed.

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Student Status Changes

Observation

The University is required to supply correct and accurate information on students’ enrollment status to the national clearinghouse in a timely manner for the monitoring of student loans. During our testing of the Federal Family Education Loans (FFEL), we noted that for 2 out of 23 students selected for testing, the students’ enrollment status (part-time, full-time, withdrawal, etc) were incorrectly reported to the national clearinghouse website. In prior periods we also noted other findings with the reporting of information to the national clearinghouse.

Recommendation

Due to the consistency of issues regarding the reporting of students’ enrollment status to the national clearinghouse, we recommend that the University review their procedures to ensure they are sufficient to report student information accurately and timely. The University should consider implementing enhanced controls to monitor and review student accounts prior to submitting such information to the national clearinghouse. In addition, the University should consider implementing controls to review all information that was submitted to ensure it was accurate.


Enrollment and Student Services has documented in their National Student Clearing House System Procedures controls to monitor reported student data and review systemic functions that are used to report student enrollment statuses to the National Student Clearing House (NSC). These controls include a pre-submission verification and a post submission validation. ESS is confident that these controls will ensure the accuracy and timeliness of student enrollment data reported to the NSC.

Ariba Logical Access – Terminated Users

Observation

During our review of terminated user access to Ariba, we noted that there were four terminated users with continued access to Ariba. Having a secure environment is essential to protecting financial data. An insecure environment allows for the possibility of an unauthorized user gaining access to the financial information and making changes.

Recommendation

Management should consider implementing a procedure to remove all inactive and unnecessary accounts from Ariba.

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Currently the termination process for Ariba is a completely manual process. Management is in the process of implementing Ariba 9.R1 which will automate and streamline the termination process. Implementation is currently set for mid-October 2010.

Banner Logical Access – Access to Privileged IT Functions

Observation

During our review of privileged user access to Banner, we noted that there were two users utilizing the same BANSECR User ID to administer access to the application. Unauthorized users could be granted key privileged rights. Also, there could be no way to track which of the security administrators made the access changes, reducing accountability.

Recommendation

Management should consider creating individual accounts for each of the security administrators responsible for administering user access within the Banner application in order to promote increased accountability.


Management is currently looking into the shared use of the BANSECR ID and will consider the recommendation to see if this setting is feasible to implement within Banner.

Solaris (Ariba) – User Access

Observation

The “root” account is the most privileged account within the Solaris operating system. Access to root provides direct access to change/delete data, change/delete processing schedules, and add/remove user accounts, etc. Administrative accounts and system processes must use the root account to perform certain functions from time to time so the root account must remain active. However, Solaris can be configured to lock the root account from direct access and force a user to first log into Solaris under their personal account name and then switch to the root account. This is captured within the “SU log” with a record of who used the root account and when so that there is accountability if an unauthorized system change is made.

During our review of the Solaris operating system, we noted that remote log-in to the root account is enabled and users have direct access to root. Users are not required to perform a SU (switch user) to access the root account as noted by the current setting. Unauthorized users could be granted key privileged rights. Additionally, key financial data/programs could be intentionally or unintentionally modified.

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Recommendation

Management should change the setting so that remote log-in to the root account is disabled. This will require users to perform a switch user to access the root account.


During the time of EY’s audit procedures, management configured this setting appropriately to require all users to perform a switch user before accessing root. Currently, no users have direct access to root. This setting took effect in July 2010.

B. Prior Year Recommendations

During the course of our audit we noted that appropriate action had been taken on certain recommendations and suggested accounting procedures as outlined in the prior year’s Management Letter. Those comments have not been repeated. Prior year comments that were not implemented or were only partially implemented in the current year have been repeated below:

Preparation of the Schedule of Expenditures of Federal Awards and State Financial Assistance

Observation

The Schedule of Expenditures of Federal Awards and State Financial Assistance (the Schedule) provides total federal awards and state financial assistance expended for each individual federal and state program received by the University. The Schedule is prepared under the guidelines set forth in Office of Management and Budget (OMB) Circular A-133 and the Florida Singe Audit Act (FSAA). Federal and state programs are identified by their respective Catalog of Federal Domestic Assistance (CFDA) or Catalog of State Financial Assistance (CSFA) number. Federal programs that share common compliance requirements are clustered together according to CFDA number. Clusters are defined by the OMB and are separately identified in the OMB Circular A-133 compliance supplement. The state guidelines do not provide for clusters and state programs are separately reported by their respective CSFA number.

During our single audit procedures, we discovered the following items which required revisions to the fiscal year 2009 Schedule:

• The University had improperly combined certain CSFA numbers together as single line items on the Schedule.

• A program was included within the Student Financial Aid (SFA) cluster that was not

identified by the OMB as being a part of the SFA cluster.

• The Schedule did not include a state grant that had been received by the Museum of Art which was acquired by Nova at the beginning of fiscal year 2009.

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Additionally, we noted that certain program titles reflected on the Schedule do not conform to the specified titles according to the federal and state resources.

Recommendation

We recommend that the University implement procedures to ensure that all clusters are properly identified and reported, CFDA/CSFA numbers are properly presented, and that all program expenses are reflected on the Schedule.

Current Year Update

We noted a few instances where clusters were not properly reported based on the compliance supplement. Also, certain adjustments were needed to the Schedule in order to properly state the expenditures reported.

Management’s Current Response The Controller’s Office will work collaboratively with the Office of Grants and Contracts at year-end close to ensure all federal and state awards that should be included are properly classified on the Schedule of Federal Awards and State Financial Assistance.

Solaris – Password Configuration

Observation

Security and password configurations are not optimized to prevent unauthorized access. During our review of the Solaris Operating System, we noted that the MAXWEEKS and MAXLIFE settings were not configured, indicating that password expiration is not enforced. Additionally, we noted that the LOCK_AFTER_RETRIES is set to NO. Security and password configurations are not optimized to prevent unauthorized access.

Recommendation

Management should consider configuring the MAXWEEKS setting to 12 weeks or less; or configure the MAXLIFE setting to 90 days or less; forcing passwords to be changed on a regular basis. The LOCK_AFTER_RETRIES setting should also be configured to YES for all accounts except for System Administrator accounts.

Current Year Update

The password MAXWEEKS setting was updated and configured to 26 weeks on the Banner server as indicated in the prior year management response; however, this was not properly configured on the Ariba server at the time of our review. The LOCK_AFTER_RETRIES was set to NO on both Ariba and Banner at the time of our review in June 2010.

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Management’s Current Response

To further increase the UNIX account security on STAR, OIT implemented a 26 MAX WEEKS password expiration setting. This password security setting will force all UNIX user accounts on STAR to change their individual UNIX account passwords at least every 26 weeks from the last time the password was reset. Management has also configured the MAX WEEKS password security setting to 26 on the Ariba Server. In order to help prevent unauthorized access to the users’ operating system account, OIT set the LOCK_AFTER_RETRIES to YES. This setting took effect in July 2010.

Documents

C R A-133, 215.97 10.650 R Nova Southeastern University ... · A UDITED C ONSOLIDATED F INANCIAL S TATEMENTS AND O THER F INANCIAL I NFORMATION AND R EPORTS AND S CHEDULES R ELATED