mcneese state university...

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FINANCIAL STATEMENTS

MCNEESE STATE UNIVERSITY FOUNDATION (A Non-Profit Corporation)

Years Ended June 30, 2009 and 2008 With Independent Auditors' Report

Under provisions of state law, this report is a public document. Acopy ofthe report has been submitted to the entity and other appropriate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropriate, at the office of the parish clerl< of court.

Release Date l \ \ U l J ) ^

TABLE OF CONTENTS

PAGE

INDEPENDENT AUDITORS' REPORT 3

STATEMENTS OF FINANCIAL POSITION 4

STATEMENTS OF ACTIVITIES 5

STATEMENTS OF CASH FLOWS 7

NOTES TO FINANCIAL STATEMENTS 9

SUPPLEMENTAL INFORMATION

SCHEDULE OF REVENUE AND EXPENSES MADE ON BEHALF OF THE UNIVERSITY'S INTERCOLLEGIATE ATHLETICS PROGRAMS 21

f Ii i l '6

Langley, Williams & Company, LX.C,

.^^

LESTE l̂ LANGLEY. JR.

DANrJY L WILLIAIAS

WfCHAEL F. CAILOURA

PHILLIP D.ABSHiPE. JR.

DAPHNE B. CLARK

CERTIFIED PUBUC ACCOUNTA^r^S P.O. SOX -JBJO

LAKE ChAPLSS. LOUSiANA 71KC5^590 205 W, COLLEGE STREET

LAKE CHAP.LES. LO'JISIANATMCS-ISaS ; 3 3 M 477-2S27 1{30C; 713-8432

=AX;337)-i73-64'3

MEMBERS OF-

4MEBICAN LNSTITUTE CF CEflTIFlED P'JSLIC ACCOUNTANTS

SCCIETY OF LOUISIANA CERTIRED PfSLIC ACCOUNTANTS

TEXAS STATE BOARD OF Pu'SUC ACCOUNTANCY

PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD

CENTER FOR PJBLIC COiWPANYAUDIT FIRMS

INDEPENDENT AUDITORS' REPORT

Board of Directors McNeese State University Foundation Lake Charles, Louisiana

We have audited the accompanying statements of financial position ofthe McNeese State University Foundation, a non-profit corporation, as of June 30, 2009 and 2008, and the related statements of activities and cash flows for the years then ended. These statements are the responsibility ofthe management ofthe McNeese State University Foundation. Our responsibility is to express an opinion on these statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estunates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the fmancial statements referred to in the first paragraph present fairly, in all material respects, the financial position ofthe McNeese State University Foundation, at June 30,2009 and 2008, and the results of its activities and cash flows for the years then ended in confonnity with generally accepted accounting principles ofthe United States of America.

Our audit was conducted for the purpose of forming opinions on the basic financial statements that collectively comprise the Foundation's basic financial statements. The supplemental infonnation on page 21 is presented to meet the requirement from the University of Louisiana Systems and is not a required part ofthe basic fmancial statements ofthe McNeese State University Foundation. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation lo the basic fmancial statements taken as a whdle. -̂ . " ^ I ̂

September 11̂ , 2009 Lake Charles, LA

MCNEESE STATE UNIVERSITY FOUNDATION

STATEMENTS OF FINANCIAL POSITION

June 30, 2009 and 2008

ASSETS

CURRENT ASSETS Cash and cash equivalents Unconditional promises lo give Stale matching receivable

Total current assets

NONCURRENT ASSETS Investments Donated property Property held for resale

Total noncunent assets

Total assets

2009

$ 5,701.126

155,607

160,000

6,016,733

35,442,925

879,025

963,361

37,285,311

$ 43,302,044

S

$

2008

3,677,050

230,214

480,000

4.387,264

45,508,189

879,025

373,685

46,760,899

5L148.163

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES Accounts payable 41,878 69,707

NONCURRENT LIABILITIES Funds held in custody 4,008,883 4,588,096

Total liabilities 4,050.761 4.657.803

NET ASSETS Unrestricted Temporarily restricted Permanently restricted

Total net assets

3,871,847 6,601,102

28,778,334 39,251,283

4,602,030 13,394,544 28.493,786 46,490,360

Total liabilities and net assets 43,302.044 51,148,163

The accompanying notes are an integral part of these statements.


STATEMENTS OF ACTIVITIES

Year Ended June 30,2009

REVENUE AND SUPPORT Contributions Investinent loss, net of fees of

$158,872 for 2009 and $176,000 for 2008 Rent Fund raising Donated equipment Donated property Other Net assets released from restrictions:

Satisfection of program expenses

Total Revenue and Support

EXPENSES Grants paid to benefit McNeese State

University for Projects specified by donors Dedicated scholarships Freshman awards Professorship and endowed scholars Named honor awards Excellence awards Graduate scholarships In kind equipment distributions Other distributions

Total grants paid

Supporting services: Management and general Fund raising

Total support services

Total Expenses

CHANGE IN NET ASSETS

Net assets at beginning of period

NET ASSETS AT END OF PERIOD

Unrestricted

$ 537.420

(U099,757) 44,006

-i,630

-10,675

3,248,433

2,742,407

2,639,421 437,525

35,030 104,406

8,500 12,850 5,500 1,875 3,326

3.248,433

138,792 85,365

224,157

3,472,590

(730,183)

4,602,030

$ 3,871,847

Temporarily Restricted

S 2,235,751

(5,780,760) -----

(3,248,433)

(6,793,442)

---------

-

--

_

_

(6,793,442)

13,394,544

$ 6,601,102

Permanently Restricted

$ 1.476,931 ;

(1,192,383) -----

284,548

---------

-

--

_

_

284,548

28,493,786

$ 28,778,334

Total

B 4.250,102

(8,072.900) 44.006

-1,630

-10,675

-

(3,766,487)

2,639,421 437,525

35.030 104,406

8,500 12,850 5.500 1,875 3,326

3,248,433

138,792 85,365

224,157

3,472,590

(7,239,077)

46,490,360

S 39,251^83


Year Ended June 30, 2008

Unrestricted

$ 270,360

(313,005) 23,800

LOOO

10,204

4,424,391

4,416,750

Temporarily Restricted

$ 2,738,196

(975,657)

358,500

(4,424,391)

(2^03^52)

Permanently Restricted

$ 1,774,482

377,193

-

-

2,151,675

S

$

Total

4,783,038

(911.469) 23,800

LOOO

358,500 10,204

-

4^65,073

3,897,916 - - 3,897,916 374,028 - - 374,028 35,000 - " 35,000 81,703 - - 81,703 10,408 - - 10,408 17,930 - - 17,930

885 - - 885 4.950 - - 4,950 L571 - ' - L571

4,424,391 - - 4,424,391

128,487 94.804

223,291

4,647,682

(230,932)

4,832,962

$ 4,602,030 : —

-

-

_

_

(2,303,352)

15,697,896

S 13,394,544

-

-

.

_

2,151,675

26,342,111

S 28,493,786

128,487 94,804

223,291

4,647,682

(382,609)

46,872,969

$ 46,490360


STATEMENTS OF CASH FLOWS

Years Ended June 30, 2009 and 2008

•009 2008

CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile changes in net

assets to net cash provided by (used in) operating activities:

Net depreciation in fair value of investments Net realized (gains) losses on sales of investments Contributions restricted for investment

in endowment Investment eamings restricted for investment

rn endowment Change in unconditional promises to give Change in accounts payable

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVES'I FNG ACTIVITIES Purchase of investments Purchase of property held for resale Proceeds from sale of investments

Net cash (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES Contributions restricted for investment in endowment Investment eamings attributable to funds held in custody Investment earnings attributable to endowed funds State matching funds received

Net cash provided by financing activities

NET CHANGE IN CASH

CASH AT BEGINNING OF PERIOD

CASH AT END OF PERIOD

$ (7,239,077) (382,609)

5,180,235 4,965,842

(1,476,931)

1,192,383 74,607

(27.829)

2,669,230

(13,612,134) (589.676)

13,320,346

(881,464)

1,476,931 (528,238)

(1.192,383) 480,000

236310

2,024,076

3,677,050

S 5,701,126 S

2,864,109 (2,096,367)

(1.774,482)

(377J93) 127,748 (13,989)

(1,652,783)

(25,512,686) (373,685)

24,201,219

(1,685,152)

L774,482 (226.036) 377,193 520,000

2,445,639

(892,296)

4,569,346

i 3,677,050



STATEMENTS OF CASH FLOWS- (CONTINUED)

Years Ended June 30, 2009 and 2008

2009 2008

Supplemental cash flow disclosures: Non-cash transactions:

State match receivable credited to funds held in custody

Appreciation in fair value of investments attributable to funds held in custody

Donated properly

160.000 $

210,975

$

$

_s__^

480,000

231,167

358,500


McNeese State University Foundation

N01>:S TO FINANCIAL STA ITiMENTS

1. NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Activities

The McNeese State University Foundation (the Foundation) is a not-for-profit organization which was formed to promote the educational and cultural welfare of McNeese State University by accepting gifts for the purpose of providing scholarships for students, professorships for educational research, or such other designated projects for the benefit ofthe University. The principal sources of support are from alumni of McNeese State University as well as businesses and individuals located in southwest Louisiana.

Basis of Accounting

The fmancial statements of the Foundarion have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities.

Basis of Presentation

The Foundation presents its fmancial statements in accordance with Statement of Financial Accounting Standards ("SFAS") No. 117, Financial Statements of Not-for-Profit Organizations. Under SFAS No. 117, net assets. revenues, and expenses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets ofthe Foundation and changes therein are classified and reported as follows:

Unrestricted Net Assets- Net assets that are not subject to donor-imposed stipulations.

Temporarily Restricted Net Assets- Net assets that are subject to donor-imposed stipulations that will be met either by actions ofthe Foundation and/or the passage of time.

Permanently Restricted Net Assets- Net assets that are subject to donor-imposed stipulations that the principal not be expended, but rather^ invested to provide a permanent source of income for the Foundation's programs.

Cash and Cash Ekiuivalcnts

For accounting and reporting purposes, cash and cash equivalents includes cash on hand, cash in bank, and all highly liquid investments with original maturities of three months or less.

Promises To Give

Unconditional promises to give are recognized as revenue in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized when the conditions on which they depend are substantially met.

McNeese State University' Foundation

NOTES TO FINANCIAL STATEMENTS

1 NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Investments

Investments consist of U.S. Govemment securities and obligations, marketable debt and equity securities, mutual funds, and money market funds. The Foundation accounts for its investments in accordance widi SFAS No. 157, Accounting for Certain Investments by Not-for-Profit Organizations. Accordingly, investments in these securities are reported at fair value. Fair value is determined using quoted market price of identical and similar securities. Investments are diversified across many types of securities as well as many different issuers primarily operating across the United States.

Donated investments are recorded at fair market value at date of receipt, wliich is then treated as cost. Realized gains and losses on dispositions are based on the net proceeds and the adjusted cost basis ofthe securities sold, using the specific identification method. Realized gains and losses are recognized in the Foundation's current operations.

Donated Property

Donated property is reflected as a contribution in the accompanying statements at its estimated value at date of, receipt. Donated properties arc not used for Foundation operations.

Funds Held in Custody

The Foundation considers all state matching funds and unexpended income from these funds to be reported as Funds Held in Custody. All Funds Held in Custody are recorded at fair market value.

Contributions

In accordance with SFAS 116, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and nature of any donor restrictions. Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All otiier donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

Income Taxes

The Foundation operated as a public charit>' under Section 501(cX3) of the Internal Revenue Code and, accordingly, is exempt from federal and state income taxes and the excise tax which applies to certain foundations.

10



1. NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Required Transfers

The Foundation has received various matching grants from the State of Louisiana under the Eminent Scholars Endowed Chairs and Endowed Professorships programs, which are only approved after certain levels of private funding have been raised. The Foundation must comply with certain policies, procedures, and regulation regarding the administration of these programs. One of the requirements of the Board of Regents for Higher Education's investment policy relates to increasing each program's endowment balance each year and some transfers to permanently restricted net assets were made to comply with this policy.

Fair Values of Financial Instruments

The Foundation's financial instruments, excluding investments which arc described in Note 4, include cash and cash equivalents and unconditional promises to give. The Foundation estimates that the fair values of all its financial instmments at June 30, 2009 and 2008 differ materially from the aggregate carrying values of its financial instmments recorded in the accompanying statements of financial position.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.

2. CASH AND CASH EQUIVALENTS

The foundation maintains deposit accounts with large, multi-state financial institutions. As of June 30. 2009, the Foundation's collected bank balances exceeded federally-insured limits by approximately $610,502, The Foundation also has money-market holdings as part of its managed investment accounts. Such balances totaled $946,853 and $1,238,322 at June 30, 2009 and 2008, respectively, and are not secured.

Deposits with LAMP totaled $4,388,728 and $2,109,011 at June 30, 2009 and 2008, respectively. Such deposits are secured by an interest in the underlying investment pool, consisting of U.S. Treasury and agency securities, held by LAMP.

LAMP is administered by LAMP, Inc., a non-profit corporation organized under the laws of the State of Louisiana. Only local govemment entities having contracted to participate in LAMP have an investment interest in its pool of assets. The primary objective of LAMP is to provide a safe environment for the placement of public funds in short-term, high quality investments. The LAMP portfolio includes only securities and other obligations in which local govemments in Louisiana are authorized to invest in accordance with LSA - R.S. 33:2955.

Effective August 1, 2001, LAMP's investment guidelines were amended to permit the investment in govcmment-only money markets fiinds. In its 2001 Regular Session, the Louisiana Legislature (Senate Bill No. 512. Act 701) enacted LSA - R.S.33:2955(A)(lXh) which allows all municipalifies, parishes, school boards, and any other political subdivisions ofthe State to invest in "investment grade (A-lP-1) commercial paper of domestic United

11



2. CASH AND CASH EQUIVALENTS- (Continued)

States corporations." Effective October 1, 2001, LAMP's Investment Guidelines were amended to allow the limited investment in A-1 or A-i+ commercial paper.

The dollar weighted average portfolio maturity of LAMP assets is restricted to not more than 90 days, and consists of no securities with a maturity in excess of 397 days. LAMP is designed to be highly liquid to give its participants immediate access to their account balances. The investments in LAMP are stated at fair value based on quoted market rates. The fair value is determined on a weekly basis by LAMP and the value ofthe position in the extemal investment pool is the same as the value ofthe pool shares.

L A M P , inc. is subject to the regulatory oversight of the state treasurer and the board of directors. LAMP is not registered with the SEC as an investment company.

3. PROMISES TO GIVE

Unconditional promises to give consist ofthe following:

2009 2008

Unrestricted promises to give $ 1,482 $ 20,899 Restricted to departmental and

scholarship fiinds 154,125 209,315 $ 155,607 $ 230,214

Management considers unconditional promises to give to be fully collectible, therefore, no allowance for doubtful accounts is considered necessary. At such time as management determines an amount to be uncollectible, it is Written off. Unconditional promises to give in the amount of $23,545, as of June 30, 2009, were deemed uncollectible and written off. The total amount of unconditional promises to give at June 30, 2009 is expected to be collected as follows:

2009 2008 Less than one year $ 8,677 $ 75,814 One to five years 146,930 154,400 Total unconditional promises to give $ 155,607 $ 230,214

Certain donors have stipulated in their wills to make donations to the Foundation upon death. The total amount of such conditional promises to give is $1,380,225 and $2,177,108 at June 30, 2009 and 2008, respectively. As the donors have placed a condition on the donation, these amounts have not been recorded in the financial statements.

12



4. INVESTMENTS

At June 30, 2009, the Foundation's investments, carried at fair value, consisted ofthe following: 2009

Corporate stock Mutual funds Hedge Funds REITS Emerging markets

Certificates of deposit Other

Amortized Cost

$ 14,337,077 7,444,910 7,450,082 3,844,806 1,535,962

86,635 19,633

$ 34,719,105

Gross Unrealized

Gain

$ 564,143 1,377,070 2,977,512

47,682

132,379 --

$ 5,098,786

Gross Unrealized

Loss $(3,126,655)

(48,881) (238,143) (715,445) (245,842)

--

$(4,374,966)

Estimated Fair

Value

$ 11,774,565 8,773,099

10,189.451 3,177,043 1,422,499

86,635 19,633

$ 35,442,925

At June 30,2008, the Foundation's investments, carried al fair value, consisted ofthe following: 2008

Corporate stock Mutual funds Hedge Funds REITS Emerging markets Certificates of deposit Other

Amortized Cost

$ 15,585,551 9,443,783 7,964,267

4,422,378 1,838,493

84,674 19,380

$ 39,358,526

Gross Unrealized

Gain •$ 1,725,428

1.353,210 5,596,258

129,300

101,976

--

$ 8,906,172

Gross Unrealized

Loss $(2,021,050)

-

-(443,094) (292,365)

--

$(2,756,509)

Estimated Fair

Value $ 15,289,929

10,796.993 13,560.525 4,108,584

1.648,104 84,674 19,380

$ 45,508,189

Market risk could occur and is dependent on the fijture changes in market prices ofthe various investments held.

Investment eamings included in the statement of activities was comprised of the following for the years ended June 30, 2009 and 2008:

2009 2008 Interest and dividend income

Realized gains (losses) on sales of investments

Unrealized losses on investments

2,073,177 (4,965,842) (5,180,235)

$ (143,727)

2,096,367

(2,864.109) $ (8,072,900) $ (911,469)

13



4. INVESTMENTS- (Continued)

The Board of Directors has been advised by legal counsel that under Ix)ULsiana state law, the gains from sales of securities and increases in market value are to be treated as principal, and must be retained in endowment fund accotmts. However, under the Uniform Management of Institutional Founds Act adopted in Louisiana, such gains and appreciation in value may be expended for the purposes designated by the donors if it is prudent in the judgment of the Board of Dmectors after considering the long and short term needs of the Foundation, its present and anticipated financial requirements, expected total return on investments, price level trends and general economic conditions.

If any donor stipulates that realized and unrealized investment gains should not be spent on the restricted purpose for which a fund was originated, then such gains will be added lo investment principal and will not be expendable in the future. No such stipulafions were present at June 30, 2009.

Investment income from interest, dividends and realized gains and losses are allocated to various activities and programs under the Fottndation's investment policy. The portion that pertains to imrestricted and short term donor restricted activities is reported as unreslricted revenue, and the portion that pertains to permanent endowment activities is reported as temporarily restricted revenue, because it could be expended on the restricted purposes ofthe endowments in subsequent periods.

The Foimdation invests in a hedge fund. The investment is a sophisticated, multi-strategy, multi-manager program designed to achieve an optimal balance of upside retum potential and downside protection. The investment offers a diversified strategy protecting and preserving the Foundafion's capital and a hedged equity strategy providing long-term capital growth. Both strategies also work to deliver risk-adjusted returns by capturing the market's retum potential but with much less volatility. The portfolios are constmcted using a time tested, disciplined methodology focused first on risk management. The managers then work to identify strategies within a framework and to develop relationships with investment managers. The derivative instrument is designated as a fair value hedging instrument. The fund's fair market value was $10,189,451 and $13,560,525 at June 30, 2009 and 2008, respectively. The Foundation's objective is to maximize its returns related to this investment. The Foundation does not invest in individual hedge funds, but instead, monitors the activity and returns of the manager. The Foundation's investment committee continuously examines the returns ofthe manager to ensure the Foundation's investment objectives are reached.

The returns fix)m this hedge fiind arc reported and posted quarterly reflecting the fair market value as of the reporting date. The earnings on the hedge fiand are included in imrealized gains (losses) in the Statement of Activities.

14



5. DONATED PROPERTY

The carrying values of donated property consisted ofthe following at June 30, 2009 and 2008:

2009 2008 6S0-acre farm, Lake Charles, Louisiana $ 350,000 $ 350,000 Property at 1608 Sampson Street, Wcstlake, Louisiana 170,525 170,525 96.86 acre farm. Kinder, Louisiana 358,500 358,500

$ 879,025 $ 879,025

The Foundation has agreed that both farms would be used primarily by the Agriculture Department of McNeese State University and would never be sold. The property in Westlake was originally valued at $120,000 and after Hurricane Rita, the Foundation made capital improvements into the propert>' for a total of $50,525.

6. PROPERTY HELD FOR RESALE

Property held for resale consists of land on Sale Street located near the campus that was purchased for $373,685 in February 2008. The University plans on buying the land from the Foundation al a fiiture time. In October 2008, the Foundation purchased land on Common Street for $589,676. There is a purchase agreement with the University as of June 2009 to buy the land from the Foundation for $590,000.

7. FUNDS HELD IN CUSTODY

The Foundation participates in a program with the State of Louisiana (the Eminent Scholars/Endowed Professorships Program sponsored by the Louisiana Board of Regents) whereby the State contributes matching funds which, together with donations received by the Foundation, establishes endowment funds, which are accumulated in accounts segregated from other Foundation fiinds. The state match constitutes 40% ofthe total endowment. The eamings on these funds are to be used for professorships. The Foundation considers donations received from donors into this fund to be permanently restricted net assets and all state matching funds as funds held in custody. The liability "Funds held in custody" represents the lesser of 40% of the fair value of the segregated accounts or the original state match amount plus required increases to cover inflation.

Funds held in custody are the state matching funds totaling $4,008,883 and $4,588,096 as of June 30, 2009 and 2008, respectively. The Foundation has received matching funds of $4,000,000 and $3,520,000 from the State of Louisiana as of June 30, 2009 and 2008, respectively, under the professorship program detailed in Note I. Additionally, there was a state match receivable of $160,000 and $480,000 at June 30, 2009 and 2008, respectively.

15



7. FUNDS HELD IN CUSTODY- (Continued)

Composition of and changes in professorships for donor-restriclcd endowment funds for the year ended June 30. 2009 and 2008 were as follows:

:009 2008

S n.497,043 1.300,000

(5,̂ 122) -

(2,769.413) S 10.022,208

$

$

10,516.998 1,300,000

-(75,000)

(244,955) 11,497.043

Professorships, beginning of year Contributions .Management fees Distributed funds Net depreciation Professorships, end of year

8. TEMPORARILY RESTRICTED NET ASSETS

Net assets were released from donor restrictions by incurring expenses satisfying ihc purpose restrictions specified by donors as follows:

2009

Projects specified by donors Dedicated .scholarships Freshman awards Professorship awards Named honor awards Endowed scholars I:xcelicncc awards Graduate scholarships In kind equipment distributions Endo\^^ncnt dislrihulions

2008 $2,639,421

437.525 35,030

104.406 8.500

-

12.850 5.500 1,875 3,326

$3,248,433

S 3.897.916 374,028

35.000 55,000 10,408 26,703 ! 7,930

885 4.950 1,57!

$4,424,391

9. PERMANENTLY RESTRICTED NET ASSETS

Net assets were permanently restricted for the following pur|7oscs at June 30, 2009 and 2008;

2009

Eminent Scholars/Endowed Professorships Scholarships H.C. Drew Institute Other Lnivcrsit>- Projects

$ 6,013,325

12,824.354 6.000.000 3,940.655

$28,778,334

2008 S 6,882.143

11.285,720

6.000.000

4.325.923 $28,493,786

16



10. FAIR VALUES OF FINANCIAL INSTRUMENTS

Effective June 30, 2008, the Foundation adopted FAS 157 which provides enhanced guidelines for measuring fair value. The standard requires the Foundation to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on the Foundation's financial performance. The standard does not expand the use of fair value in any new circumstances but provides clarification on acceptable fair valuation methods and applications.

FAS 157 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price obser\'ability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

hivestments measured and reported al fair value are classified and disclosed in otte ofthe following categories:

Level I — Quoted prices are available in active markets for identical investments as ofthe reporting date. The type of investments included in Level I are publicly traded equity securities.

Level II — Pricing inputs are other than quoted prices in active markets, which arc cither directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in this caiegor>' arc over-the-counter derivatives.

Level III — Pricing inputs arc unobservable and include situations where there is little, if any, market activity for the investment. Fair value for these investments is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, cumsnt and projected operating performance, and financing transactions subsequent to the acquisition of the investment. The inputs into the d^ermination of fair value require significant measurement judgment. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.

In certain cases, tiie inputs used to measure fair value may fall into different levels ofthe fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Foundation's assessment of the significance of a particular input to the fair value measuLTcment in its entirety requircs judgment, and considers factors specific to die investment.

The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments.

17



10. FAIR VALUES OF FINANCIAL INSTRUMENTS- (Continued)

The following table summarizes the valuation ofthe Foundation's investments by the above FAS 157 fair value hierarchy levels as of June 30, 2009:

Assets at Fair Value as of June 30, 2009 Level 1 Level 2 Level 3 Total

Corporate stock Mutual funds Hedge Funds Side-pocket funds REITS Emerging markets Certificates of deposit Other

Total assets at fair value

$

$

11,774,565 8,773,099

3,261 -

3,177,043 1,422,499

--

25,150,467

$

$

--

720,081 ---

86,635 19,633

826,349

$

$

-_

9,374,287 9K822

--

-

9,466,109

$

$

11,774,565 8,773,099

10,097,629 91,822

3.177,043 1,422,499

86.635 19,633

35,442,925

The table below includes a roil-forward of the amounts of Level 3 investments in the statement of financial condition for the year ended June 30, 2009 (including the change in fair value).

Level 3 Investments

Transfers into Level 3 $ 12,557,296 Realized loss (671,387) Net sales (750,000) Change in unrealized appreciation or depreciation (1,669,800) Balance at June 30, 2009 $ 9,466.109

In November 2008, the Foundation's investment in Meridian Horizon Fund II, LP (Meridian) (hedge fund) (Level 3), a partnership, which invested in Rye Select Broad Market Fund XL Fund, L.P. ("Rye'"), managed by Tremont Farmers, Inc. was written down to zero. As of November 2008 Meridian's exposure lo Rye was approximately $5,108,200 or approximately 7.2% of partners' capital. The write down was recognized as a realized loss on investment in November 2008. The Foundation's portion of the loss was included the total realized loss of $207,504 on the 2008 K-1.

Equitas Evergreen Fund, L.P. (hedge fund) has identified $91,822 as of June 30. 2009, to be side-pocket funds that are considered illiquid by their investment manager.



11. TRANSACTIONS WITH THE UNIVERSITY

Pursuant to the affiliation agreement between the Foundation and the University, the University provides certain personnel services and usage of office space and equipment for Foundation operations. In return, the Foundation provides, solicits and manages funds for the benefit ofthe University.

A portion ofthe grants, such as scholarships and professorships, is paid directly to McNeese State University to be disbursed to final beneficiaries. Such expenses totaled $600,382 and $523,948 for the years ended June 30, 2009 and 2008.

12. CAPITAL CAMPAIGN

As of November 2006, the Foundation initiated a capital endowment campaign, known as ''Building a Solid Foundation", to raise $15 million by 2010. The Foundation plays a major leadership role in the fundraising efforts for the campaign.

19

SUPPLEMENTAL INFORMA TION


SCHEDULE OF REVENUE AND EXPENSES MADE ON BEHALF OF THE UNIVERSITY'S fNTERCOLLEGIATE ATHLETICS PROGRAMS

MSU Golf Team Basketball Baseball - Diamond Chapter MSU Girl's Softball Athletic Director MSU Goalie Booster Chapter MSU Track - General

MSU Volleyball Dugout Chapter

MSU Basketball "Tip Off' MSU Tennis Booster Girl's Basketball Booster

MSU Football McNeese Quarterback Chapter Petrochem Athletic Assn McNeese Cowboy Chapter Dowell Fontenot Sports Medicine Intramurals - I/O MSU-Volleyball-General

MSU Athletics - Strength Dept Tennis Camps Fieldhouse Renovations

Sports Info Poster Acct Athletic Mktg Fund Football Field Turf Project MAF Kids Club- Rowdy's Wranglers Cowboy Club General Sch. Fund

June 30̂

Beginning

Balance $ 59,980

11,555 100,168

2,851 28,178 13,049 32,178

716

4,923 84,618

1,373 12,680 60,136

7,350 50,125 6,854 5.017

13 47,714

17,831 5,578

381,961 6,764 4,491

82,200

-100,300

$ 1,128,602

,2009

Revenue

$ 91,477 3,634

164,586 25,450

110,633 35,616 61,287

-17.698 25,394

5.500

15,320 46,615 31,455 74,432

299,611 5,650

-9,125

21,131 1,040

544,263 8,960

61,174 -

1,504 -

$ 1,661,555

Expense $ 98,264

5,350 157,667 20,707

125,375 21,859 66,464

-12,180

31,439 3.206

27,046

55.263 29,098 60,668

294,508 6,942

-50,403 37,055

2,525

-3,055

55,073 82,200 , 180

100,000 $ 1,346,529

Ending Balance

$ 53,193 9,839

107,086 7,594

13,436 26,806 27,000

716 10,441

78,573 3,668

954

51,488 9,707

63,889 11,958 3,725

13 6,436 1,907 4,093

926,224

12,670 10,592

-1,324

300 $ 1.443,629

21

DANNY UW.tUAWS

PMLL>PD.ABSHIRF JR

Langley, Williams & Company, L.L-C-

CERTIRED PUBLIC ACCOUNTANTS " D. BOX J690

LAKE CH-iRLtS, LO',,ISiANA TQ^Ofi--t?'':̂ :>0?> V/ COllSTGr STREH

lAKS CHARLES LOU!S;ANA703»X>- '6^S

TAX Ci:;?) 47*-{*•«IP

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AMEP.iCAN -NSTITUir OF CE^ltlREO ».'BLlCACCUUNrANT&

s o o e r v o f '.ouiSiANa CFRT,FIED»UiniCACCOUNTAN-S

leX^SS'ATE BOARD OF PUSL'C ACCOUNTAKCy

PUPl IC COM PAN V ACCOUNTING CVtRS'flHI BOAPD

CENTER FOfi PUBUC COMPANY AUDT m W S

rNDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES

Board of Directors McNeese State Univcrsit>' Foundation

We have performed the procedures enumerated below, which were agreed to by the Louisiana Board of Regents, solely lo assist you with respect to accounting records of the McNeese Slate University Foundation for the year ended June 30, 2009. McNeese State University Foundation's management is responsible for accounting records. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The suftlciency of these procedures is .solely the responsibility of those parlies specified in the report. Consequently, we make no represenlation regarding the sufficiency ofthe procedures described below, either for the purpose for which this report has bc^n requested or for any other purpose.

Our procedures and findings are as follows:

1) Verified the J-'oundation's endowment for tlie Eminent Scholars endowed Chairs Program and the Endowed Professorship Program have been managed in compliance with provisions set forth in the Board of Regeiits Statement of Investment Policy and Objectives.

Comment: No exceptions noted

2) Verified that the annual financial reports for the Eminent Scholars endowed Chairs Program and the Endowed Professorship Program submitted to the Board of Regents were mathematically accurate and agreed to the accounting records ofthe Foundation.

Comment: Exception noted and client adjusted Board of Regents report lo properly report the correct amount of investments allocated between funds.

3) Verified the proceeds ofthe endowed chairs were used in accordance with the provisions as set forth in the Board of Regents Endowed Chair Program Policy and tiie proceeds ofthe endowed professorships were used in accordance with the provisions as set forth in the Board of Regents Endowed Professorship Program Policy.

Commeni: No exceptions noted

4) Verified the Foundation complied with all provisions ofthe Management Agreement with the University.


5) Verified invcstmcius earnings generated from pooled assets involving endowed chair or professorship money have been properly allocated to the chairs and profcssorsliips in accordance with the Louisiana l^oard of Regents Statement of Investment Policy and Objectives.


6) V^eriiled the value ofthe sliitc funds held by the Foundation as reported in its audited llnancial statements is equal to the amount recorded in the Univcrsitv''s Book.


We were nol engaged to. and did not. conduct an audit, the objective oC which would be the expression of an opinion on the specified elements, accounts, or items. Accordingly, we do not express such an opinion. Mad wc perfonned additional procedures, other matters might have come to our attention that would have been reported to vou.

This report is intended solely for the information and use ofthe Foundation, the MSU sy.stcm, and the Board of Supervisors, and should not be used by anyone other than those specified parties.

Langley. Williams & Company. L.L.C.

Lake Charles, LA

October 7. 2009

Langley, Williams & Company, LX-C.

CERTIFIED PUBLIC ACCOUNTANTS MEMBERS Of-

' ^ 0 . BOX ilSW .•i.tAfPi.CAH tNSirUTE Of' l j ^ \ t CHA^_ES -O'w'is ANA .•C60e-4f>90 CFRTIFlED POBUC ACCOUNTANTS

20^ W. CClI.EGE STTiEET

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W-CHAFl, F-CALtOJOA

PHfOlP 0. A6a*"«fc JR DAPHH-̂ B CUflK CEKTm FOR PUBLIC

" " COMPANY AUDIT F("MS

INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES

Board of Directors McNeese Stale University Foundation

We have performed the procedures enumerated below, which were agreed to and requested by the University of Louisiana System, solely to assist them in evaluating the accounting records ofthe McNeese State Universit\' Foundation for the year ended June 30, 2009. McNeese Stale Universit}' Foundation's management is responsible for accounting records, fhis agreed-upon procedures engagement was conducted in accordance with ailcstation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in the report. Consequently, we make no representation regarding the suflicicncy ofthe procedures described below, cither for tlic purpose for which this report has been requested or for any other purpose.

Our procedures and findings arc as follows:

L Verify that the Foundation did not make loans to or allocate any net earnings or assets lo tlie benefit of its directors, officers, or other private persons. Any payments made to these persons v̂ -ere for reasonable compensation for services rendered or reimbursement for reasonable travel expenses.


2. Verify that the Foundation made no polhical contributions nor reimbursed any employee for politically-related expenses that would violate IRS guidelines for 501 (c)(3) orgauizaiions. Accordingly, the l-oundation did not provide funds to or on behalf of university employees to endorse political parties or candidates, attend political fundraisers, participate in lobbying activities, etc.


3. Verify that the Foundation preserved, in accordance with donor intent, the principal of any endowments, and disbursements from the expendable portion of those funds were made in compliance with donor intent and to eligible recipients or for eligible purpo.ses.


4. Verify that donations were properly recorded in the accounting records in accordance witii donor intent.


5. Verify that the Foundation did not deposit or hold public funds at any time during July 1, 2008 to June 30. 2009, except for I) Endowed Chair and Lndowed Professorships Program funds held in accordance with a Funds Management Agreement or 2) project funds held in accordance with a cooperative endeavor agreement.

Comment: A>; exceptions noted

Verify that all tlic contracts between the Foundation and any member of its Board of Directors, any member of the UL System of Supervisors, any UL System employee, or any university employee have been individually disclosed in the notes to the financial statements, regardless of the significance of the contract payments to total Affiliate expenses. The applicable Related Parties note includes the names of the parties to the contract, the services provided, the amount paid as ofthe date ofthe financial siatcmenis, and the maximum amount ofthe contact.


Verify thai the funds for suppicmcnial compensation and/or benefits for a UL System or University employee were paid to the System Ofilcc or University for disbursement to the employee: no supplemental payments were made directly to an employee unless specifically approved by the Board Office or University.

Comment: ;Vf) exceptions noted

Verify on a quarterly basis, the Foundation reported to the UL System all single payments of SLOOO or more made to on behalf of any individual university employee.


Verify a sample of disbursements less than Si,000 made to or on behalf of university employees has been reviewed for compliance with the policies contained in the Affiliation Agreement,. "Afilliate Funding and Administration."


10. Verify that the accompanying financial statements include a supplementary schedule of all revenues, expenses and capitalized.expenses made to or behalf of the university's intcrcoilegialc athletics program. Verified that this schedule is fairly stated in relation to the financial statements taken as a whole.

Comment: Report included in the financial statements

We were not engaged to, and did not, conduct an audit, the objecfivc of which would be the expression of an opinion on the specified elements, accounts, or items. Accordingly, wc do not express such an opinion. Had wc performed additional procedures, other matters might have come to our attention that would have been reported to you.

This report is intended solely for the information and use ofthe Foundation, the University of Louisiana Systems, and the Board of Supervisors, and should not be used by anyone other than those specified parties.

Langley, Williams SL Company, L.L.C.

Lake Charles. LA

September 16, 2009

mcneese state university...

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