East Central University A Department of the Regional University System of Oklahoma Independent Auditor’s Report and Financial Statements
June 30, 2025
East Central University A Department of the Regional University System of Oklahoma Contents June 30, 2025
Independent Auditor’s Report.......................................................................................................................
1
Management’s Discussion and Analysis .....................................................................................................
4
Financial Statements Statement of Net Position........................................................................................................................ 10 Statement of Revenues, Expenses, and Changes in Net Position ......................................................... 12 Statement of Cash Flows ........................................................................................................................ 13 Notes to Financial Statements ................................................................................................................ 15
Independent Auditor’s Report
Board of Regents Regional University System of Oklahoma East Central University Oklahoma City, Oklahoma
Opinion We have audited the financial statements of the business-type activities and the discretely presented component unit of East Central University (the “University”), a department of the Regional University System of Oklahoma, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the University’s basic financial statements as listed in the table of contents. In our opinion, based on our audit and the report of other auditors, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the businesstype activities and the discretely presented component unit of East Central University, as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of East Central University Foundation, Inc., the discretely presented component unit of the University. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for East Central University Foundation, Inc., is based solely on the report of the other auditors.
Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our report. We are required to be independent of the University, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Reporting Entity As discussed in Note 1, the accompanying financial statements of the University are intended to present the financial position, changes in financial position, and cash flows of only the activities of East Central University. They do not purport to, and do not, present fairly the financial position of the Regional University System of Oklahoma as of June 30, 2025, and the changes in its financial position or its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Forvis Mazars, LLP is an independent member of Forvis Mazars Global Limited
Board of Regents Regional University System of Oklahoma East Central University
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
2
Board of Regents Regional University System of Oklahoma East Central University
Required Supplementary Information Accounting principles generally accepted in the United States of America require that management’s discussion and analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Springfield, Missouri October 30, 2025
3
East Central University A Department of the Regional University System of Oklahoma Management’s Discussion and Analysis June 30, 2025 Overview of Financial Statements and Financial Analysis East Central University (the “University”) presents its financial statements for fiscal year 2025. Presented separately from the University are the financial statements of East Central University Foundation, Inc. (“the Foundation”). The Foundation is a discretely presented component unit of East Central University and has trustees that are independently elected. The Foundation also issues its financial statements in a separate report. Emphasis of discussions concerning these statements will be for the 2025 fiscal year data in comparison with the 2024 fiscal year data. While the 2024 data is not a part of the financial statements, significant fluctuations between the 2025 and 2024 data will be discussed. The Foundation’s statements will not be a part of this discussion and analysis. The three financial statements, prepared in accordance with Governmental Accounting Standards Board (GASB) principles, are the Statement of Net Position; the Statement of Revenues, Expenses, and Changes in Net Position; and the Statement of Cash Flows. Since changes reflected in the Statement of Cash Flows will be discussed in the analysis of the other two statements, the Statement of Cash Flows will not be presented in this discussion and analysis. Dollar amounts presented in table and graph formats are in thousands of dollars, and those presented in the discussion are rounded to thousands. This discussion and analysis of the University’s financial statements is designed to assist the readers in understanding the accompanying financial statements and to summarily quantify the status, sources, and uses of resources. The University will also utilize these statements in conjunction with prior year data to focus on trends and establish benchmark comparisons.
Statement of Net Position The Statement of Net Position presents the Assets (current and non-current), Deferred Outflows of Resources, Liabilities (current and non-current), and Deferred Inflows of Resources and Net Position (assets plus deferred outflows minus liabilities minus deferred inflows) at the end of the fiscal year. The purpose of the Statement of Net Position is to allow readers of the financial statements to determine the assets available to continue the operations of the University. They are also able to determine how much the University owes vendors, investors, and lending institutions. Finally, the Statement of Net Position provides a picture of the net position and their availability for expenditure by the University. The change in net position is an indicator of the overall financial condition of the University. Net position is divided into three major categories. The first category, Net Investment in Capital Assets, provides the institution’s equity in property, plant, and equipment owned by the University and is recorded at historical cost less accumulated depreciation. The next category, Restricted-Expendable Net Position, measured in current value, is available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is Unrestricted Net Position, also measured in current value. Unrestricted assets are available to the institution for any lawful purpose of the institution.
4
East Central University A Department of the Regional University System of Oklahoma Management’s Discussion and Analysis June 30, 2025
2025 2024 (Thousands of Dollars) Assets Current assets Capital, lease, subscription assets, net Other noncurrent assets
$
Total Assets Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources Liabilities Current liabilities Noncurrent liabilities
45,616
$
29,095
86,845 5,076
78,721 4,750
137,537
112,566
459
494
$
137,996
$
113,060
$
11,258 34,288
$
6,109 22,195
45,546
28,304
924
643
Net Position Net investment in capital assets Restricted expendable Unrestricted
66,608 9,181 15,737
54,964 8,142 21,007
Total Net Position
91,526
84,113
Total Liabilities Deferred Inflows of Resources
Total Liabilities, Deferred Inflows of Resources and Net Position
$
137,996
$
113,060
The overall assets of the University increased by approximately $24,971,000 from the prior year. This overall increase is attributable to an increase in current assets of $16,521,000 due largely to increased receivables for bond proceeds ($15,117,000), grants and contracts ($2,576,000), and student/other accounts ($763,000), as well as a decrease in cash and cash equivalents of $1,912,000. Additionally, capital, lease, and subscription assets (net of depreciation and amortization expense) increased approximately $8,123,000. Total current liabilities increased by approximately $5,149,000, which is primarily made up of an increase of accounts and scholarships payable of $5,065,000 due to timing. Total noncurrent liabilities increased by approximately $12,093,000 which is mainly due to an increase in ODFA financing obligations in the approximate amount of $13,140,000, a decrease in OCIA obligations in the approximate amount of $570,000, a reduction in bonds payable totaling $247,000, a decrease in lease, subscription and other noncurrent liabilities of $441,000 and an increase in approved compensated absences of $211,000.
5
East Central University A Department of the Regional University System of Oklahoma Management’s Discussion and Analysis June 30, 2025 Statement of Revenues, Expenses, and Changes in Net Position Another measure of an institution’s fiscal stability is how operating revenues compare to operating expenses. Operating revenues are earned in exchange for providing goods and services, and operating expenses are incurred in the normal operations of the University. While public institutions will not normally have an excess of operating revenues over operating expenses (State Appropriations, some federal and state grants, gifts, and investment income are required to be reported as non-operating Revenues by GASB principles), the excess of operating revenues and non-operating revenues over expenses is normally an indication of the University’s ability to operate within its available resources. 2025 2024 (Thousands of Dollars) Operating Revenues Tuition, fees, housing and food service Grants and contracts Other operating revenues
$
28,379 6,623 1,692
$
25,319 6,373 1,761
Total Operating Revenues
36,694
33,453
Operating Expenses Compensation Contractual services Supplies and materials Depreciation and amortization Other operating expenses
32,010 12,544 3,421 5,574 18,818
31,644 9,235 3,277 5,676 14,363
Total Operating Expenses
72,367
64,195
Operating Loss
(35,673)
(30,742)
6
East Central University A Department of the Regional University System of Oklahoma Management’s Discussion and Analysis June 30, 2025
2025 2024 (Thousands of Dollars) Nonoperating Revenues (Expenses) State appropriations Grants and contracts Other nonoperating revenues Interest expense
$
16,287 21,263 387 (1,361)
$
16,047 12,901 192 (865)
Total Nonoperating Revenues (Expenses)
36,576
28,275
Other Revenues, Expenses, Gains or Losses Capital appropriations Gifts to purchase capital assets OCIA on-behalf state appropriations
5,471 309
1,527 284
730
764
Other Revenues, Expenses, Gains or Losses
6,510
2,575
Increase Net Position
7,413
108
Net Position, Beginning of Year
84,113
84,005
Net Position, End of Year
$
91,526
$
84,113
The University experienced a slight increase in enrollment for the fiscal year 2025 in comparison to fiscal year 2024. Tuition and student fees remained flat for fiscal year 2025, however, increased assessments were made for student housing and dining services. These changes resulted in total operating revenues increasing overall by approximately $3,241,000. Operating expenses increased by approximately $8,172,000, primarily due to increases in compensation and employee benefits ($366,000), contractual services for custodial and maintenance ($3,309,000) and scholarships and fellowships ($4,486,000). Non-operating revenues and expenses increased by approximately $8,301,000 primarily due to an increase in federal grants and contracts in the amount of $7,851,000 and investment income of $194,000. Additionally, other revenues, expenses, gains or losses increased by $3,935,000, primarily due to an increase of capital appropriations from the state. The major sources of revenues and expenditures (operating and non-operating) by the financial statement categories are summarized in the charts on the next page (in thousands of dollars).
7
East Central University A Department of the Regional University System of Oklahoma Management’s Discussion and Analysis June 30, 2025 REVENUES
$2,810 $28,379
Grants and contract revenues
$27,886
State appropriations
Tuition, fees, housing, food service
Other revenues
$22,067
EXPENSES
$20,179
Compensation $32,010
Contractual services Depreciation and Amortization Supplies and Materials
$3,421
Other expense, including scholarships
$5,574 $12,544
8
East Central University A Department of the Regional University System of Oklahoma Management’s Discussion and Analysis June 30, 2025 Statement of Cash Flows The Statement of Cash Flows provides information about the University’s financial results by reporting the major sources and uses of cash and cash equivalents. Cash flows from operating activities show the net cash used by the operating activities of the University. Cash flows from noncapital financing activities consist primarily of revenue sources that fund operations but are considered non-operating activities by definition. Cash flows from capital activities include capital asset and related long-term debt activities. Cash flows from investing activities show the proceeds and uses of cash related to purchasing or selling investments and related investment earnings thereon. The University’s Statement of Cash Flows is presented on pages 12 and 13 of the financial statements.
Economic Outlook The economic stability of the University is directly related to the state’s economic stability. The State’s economy continues to show positive signs and is evidenced by the increase in state capital appropriations in fiscal year 2025. The University continues to work to meet the demands and needs of attending students and is preparing for anticipated growth moving forward. State appropriations were approximately 21.8% of total revenues for fiscal year 2025. State appropriations to the University are expected to remain relatively flat in the future. Revenue from students for tuition, fees, housing and dining services were approximately 38.0% of total revenues for fiscal year 2025. The University anticipates this revenue stream to increase as enrollment is projected to grow.
9
East Central University A Department of the Regional University System of Oklahoma Statement of Net Position June 30, 2025
University ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Current Assets Cash and cash equivalents Accounts receivable, net Pledges receivable, net Grants and contracts receivable Interest receivable ODFA receivable Other receivable Current portion of lease receivable
$
23,623,936 1,941,757 4,651,976 24,840 15,117,442 248,053 8,310
Foundation
$
10,591,252 4,705,814 -
Total Current Assets
45,616,314
15,297,066
Noncurrent Assets Restricted cash and cash equivalents Investments Receivable from OSRHE Endowment Trust Fund Accounts receivable, net Other receivable Leases receivable, net Lease assets, net Subscription assets, net Capital assets, net
4,427,549 405,598 243,211 42,722 337,312 86,464,615
52,510,915 8,868,355 26,503 12,500
Total Noncurrent Assets
91,921,007
61,418,273
Total Assets
137,537,321
76,715,339
459,317
-
Deferred Outflows of Resources Deferred outflows on ODFA financing restructure Total Assets and Deferred Outflows of Resources
See Notes to Financial Statements
$
137,996,638
$
76,715,339
10
East Central University A Department of the Regional University System of Oklahoma Statement of Net Position June 30, 2025
(Continued)
University LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION Current Liabilities Accounts and scholarships payable Accrued payroll Unearned revenue Current portion of noncurrent liabilities
$
Foundation
6,216,535 836,546 1,458,879 2,746,294
$
2,539 150,000 -
Total Current Liabilities
11,258,254
152,539
Noncurrent Liabilities Accrued compensated absences Lease liabilities Subscription liabilities Bonds payable ODFA other financing arrangements OCIA other financing arrangements
1,053,080 14,654 122,750 2,431,840 28,092,170 2,573,106
-
Total Noncurrent Liabilities
34,287,600
-
Total Liabilities
45,545,854
152,539
Deferred Inflows of Resources Deferred inflows for leases Deferred inflows on OCIA financing restructure
237,249 687,252
-
Total Deferred Inflows of Resources
924,501
-
66,608,484
-
Net Position Net investment in capital assets Restricted – nonexpendable Grants, bequests and contributions Restricted – expendable Scholarships, instruction and other Loans Capital projects Debt service Unrestricted
-
74,294,148
4,752,906 25,000 4,151,132 251,417 15,737,344
2,268,652
Total Net Position
91,526,283
76,562,800
Total Liabilities, Deferred Inflows of Resources, and Net Position
See Notes to Financial Statements
$
137,996,638
$
76,715,339
11
East Central University A Department of the Regional University System of Oklahoma Statement of Revenues, Expenses, and Changes in Net Position Year Ended June 30, 2025
University Operating Revenues Student tuition and fees, net of scholarship discounts and allowances of $11,902,763 Federal grants and contracts State and local grants and contracts Bookstore operations Housing and food service net of scholarship discounts and allowances of $291,702 Investment income Contributions Other operating revenues
$
22,188,532 5,995,891 627,548 90,000
Foundation
$
-
6,190,017 1,601,959
5,924,060 13,307,981 3,750
Total Operating Revenues
36,693,947
19,235,791
Operating Expenses Compensation and employee benefits Contractual services Supplies and materials Depreciation and amortization Utilities Communication expense Scholarships and fellowships Other operating expenses
32,009,642 12,543,736 3,421,063 5,574,298 1,057,194 75,502 14,100,057 3,585,316
437,533 60,529 3,839 3,859,729
Total Operating Expenses
72,366,808
4,361,630
Operating Income (Loss)
(35,672,861)
14,874,161
Nonoperating Revenues (Expenses) State appropriations Federal grants and contracts State grants and contracts Investment income Loss on assets Interest expense
16,287,444 15,438,834 5,823,784 386,759 (1,360,759)
(239,236) -
Total Nonoperating Revenues (Expenses)
36,576,062
(239,236)
Income Before Other Revenues, Expenses, Gains, or Losses
903,201
14,634,925
Other Revenues, Expenses, Gains, or Losses State appropriations restricted for capital purposes On-behalf state appropriations restricted for debt service Capital contributions
5,471,264 729,760 309,467
-
Total Other Revenues, Expenses, Gains, or Losses
6,510,491
-
Increase in Net Position
7,413,692
14,634,925
Net Position, Beginning of Year
84,112,591
61,927,875
Net Position, End of Year
See Notes to Financial Statements
$
91,526,283
$
76,562,800
12
East Central University A Department of the Regional University System of Oklahoma Statement of Cash Flows Year Ended June 30, 2025
Operating Activities Tuition and fees Federal, state, and local grants and contracts Payments to suppliers Payments to employees Payments for scholarships Auxiliary enterprise charges Other receipts
$
21,954,192 4,047,236 (18,933,603) (32,146,143) (14,100,057) 6,280,017 1,584,654
Net Cash Used in Operating Activities
(31,313,704)
Noncapital Financing Activities State appropriations Federal grants and contracts State grants and contracts
16,287,444 15,438,834 5,823,784
Net Cash Provided by Noncapital Financing Activities
37,550,062
Capital and Related Financing Activities Purchase of capital assets Proceeds from ODFA receivable Gifts and grants received for capital purposes Proceeds from/refunding on capital debt and other financing arrangements Principal paid/refunding on bonds and other financing arrangements Principal paid on lease liabilities Principal paid on subscription liabilities Principal received on lease receivables Interest paid on bonds and other financing arrangements Interest paid on lease liabilities Interest paid on subscription liabilities Interest received on lease receivables
(10,665,179) 2,557 5,471,264 2,811,260 (4,670,947) (43,042) (215,636) 13,829 (981,416) (1,332) (10,297) 4,172
Net Cash Used in Capital and Related Financing Activities
(8,284,767)
Investing Activities Interest on investments
400,722
Net Cash Provided by Investing Activities
400,722
Decrease in Cash and Cash Equivalents
(1,647,687)
Cash and Cash Equivalents, Beginning of Year
29,699,172
Cash and Cash Equivalents, End of Year
See Notes to Financial Statements
$
28,051,485
13
East Central University A Department of the Regional University System of Oklahoma Statement of Cash Flows Year Ended June 30, 2025
Reconciliation of Cash and Cash Equivalents to the Statement of Net Position Cash and cash equivalents Restricted cash and cash equivalents Total Cash and Cash Equivalents Reconciliation of Operating Loss to Net Cash Used in Operating Activities Operating loss Adjustments to reconcile operating loss to net cash used in operating activities Depreciation and amortization expense Impairment on capital assets Changes in operating assets and liabilities Accounts receivable Receivables from state agencies Grants and contracts receivable Accounts payable and accrued expenses Accrued compensated absences Unearned revenue Deferred inflows of resources for leases Net Cash Used in Operating Activities Supplemental Cash Information Noncash Investing, Capital, and Financing Activities Accounts payable incurred for purchase of capital assets Contributed assets earned Contributed capital asset receivable from component unit Principal and interest paid by other state agencies Subscription liabilities incurred for subscription assets Receivable recognized for ODFA debt
See Notes to Financial Statements
(Continued)
$
23,623,936 4,427,549
$
28,051,485
$
(35,672,861)
5,574,298 354,899 (517,879) (70,534) (2,576,203) 1,784,945 (65,630) (107,434) (17,305) $
(31,313,704)
$
3,314,012 61,414 248,053 729,760 107,954 15,117,442
14
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025
Note 1.
Nature of Operations and Summary of Significant Accounting Policies
Nature of Organization East Central University (the “University”) is a regional University operating under the jurisdiction of the Regional University System of Oklahoma (RUSO or the “System”) and the Oklahoma State Regents for Higher Education.
Reporting Entity The University is one of six institutions of higher education in Oklahoma that comprise part of RUSO, which in turn is part of the Higher Education component unit of the State of Oklahoma. The Board of Regents has constitutional authority to govern, control and manage the System, which consist of six institutions and an administrative office. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, acquire and take title to real and personal property in its name, appoint or hire all necessary officers, supervisors, instructors, and employees for member institutions. The University is considered a department of the System for financial reporting purposes and is included in the System’s financial reporting entity. The financial statements of the University present only the financial position and changes in net position and cash flows attributable to the University and do not present the financial position of the System. Major federally funded student financial aid programs in which the University participates include the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work Study and Federal Direct Loan Programs. The University extends unsecured credit to students.
Discretely Presented Component Unit East Central University Foundation, Inc. (the “Foundation”) is a component unit of the University. The Foundation is organized for the benefit of the University, and its faculty, student body, and programs. The purposes for which the Foundation is organized are exclusively scientific, literary, charitable, educational, and artistic for the benefit the University. Additional and selected disclosures for the Foundation are located in this report beginning with Note 14. A complete report of the Foundation’s financial statements and footnotes can be requested from the Foundation’s director. The Foundation is a private nonprofit organization that reports under the Financial Accounting Standards Board (FASB) standards. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. No modifications have been made to the Foundation’s financial information in the University’s financial reporting entity for these differences.
Financial Statement Presentation The financial statements of the University have been prepared on the accrual basis of accounting. Revenues, expenses, gains, losses, assets, liabilities, and deferred inflows and outflows of resources from exchange and exchange-like transactions are recognized when the exchange transaction takes place, while those from government-mandated or voluntary nonexchange transactions (principally federal and state grants and state appropriations) are recognized when all applicable eligibility requirements are met. Internal activity and balances are eliminated in preparation of the financial statements unless they relate to services provided and used internally. Operating revenues and expenses include exchange transactions and program-specific, government-mandated or voluntary nonexchange transactions. Government-mandated or voluntary nonexchange transactions that are not program specific (such as state appropriations), investment income and interest on capital asset-related debt are included in nonoperating revenues and expenses. The University first applies restricted net position when an expense or outlay is incurred for purposes for which both restricted and unrestricted net position are available.
15
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and deferred inflows and outflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basis of Accounting For financial reporting purposes, the University is considered a department of a special-purpose government engaged only in business-type activities. Accordingly, the University’s financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-agency transactions have been eliminated.
Cash Equivalents The University considers all liquid investments with original maturities of three months or less to be cash equivalents. Funds invested through the State Treasurer’s Cash Management Program are considered cash equivalents.
Restricted Cash and Cash Equivalents Cash and cash equivalents that are externally restricted to make debt service payments, maintain sinking or reserve funds, or to purchase capital or other noncurrent assets are classified as restricted assets in the statement of net position.
Accounts and Grants Receivable Accounts receivable consists of tuition and fee charges to students and auxiliary enterprise services provided to students, faculty, and staff. Student accounts receivable are stated at the amount billed to the students less applied scholarships and loan proceeds and an allowance for doubtful accounts of $11,885,924. The University provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Grants receivable include amounts due from the federal government, state, and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University’s grant and contracts.
Capital Assets (Including Intangible Assets) Capital assets are recorded at cost at the date of acquisition, or fair value at the date of donation in the case of gifts. For equipment, the University’s capitalization policy includes all items with a unit cost of $2,500 or more and an estimated useful life of greater than one year. Computer Equipment with a unit cost of $500 or more and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 30 years for infrastructure and land improvements, and five to 10 years for library materials and equipment.
Lease Assets Lease assets are initially recorded at the initial measurement of the lease liability, plus lease payments made at or before the commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease, plus initial direct costs that are ancillary to place the asset into service. Lease assets are amortized on a straight-line basis over the shorter of the lease term or the useful life of the underlying asset.
16
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 Subscription Assets Subscription assets are initially recorded at the initial measurement of the subscription liability, plus subscription payments made at or before the commencement of the subscription-based information technology arrangement (SBITA) term, less any SBITA vendor incentives received from the SBITA vendor at or before the commencement of the SBITA term, plus capitalizable initial implementation costs. Subscription assets are amortized on a straightline basis over the shorter of the SBITA term or the useful life of the underlying IT asset.
Capital, Lease, and Subscription Asset Impairment The University evaluates capital, lease, and subscription assets for impairment whenever events or circumstances indicate a significant, unexpected decline in the service utility of a capital, lease, and subscription asset have occurred. If a capital, lease, or subscription asset is tested for impairment and the magnitude of the decline in service utility is significant and unexpected, an impairment loss is recorded. During the year, the University suffered an impairment from a tornado. Faust Hall had major roof and interior damage and was impaired at year ended June 30, 2025. The value of the impairment was approximately $355,000.
Unearned Revenue Unearned revenue represents unearned student fees and advances on grants and contract awards for which the University has not met all of the applicable eligibility requirements.
Compensated Absences The University’s policies permit most employees to accumulate vacation and sick leave benefits that may be realized as paid time off or, in limited circumstances, as a cash payment. A liability is accrued for compensated absences as the benefits are earned if the leave is more likely than not to be used for time off or settled in cash. Compensated absence liabilities are computed using the regular pay and termination pay rates, as applicable, in effect at statement of net position date plus an additional amount for salary-related payments such as social security and Medicare taxes computed using rates in effect at that date. The estimated compensated absences liability expected to be paid more than one year after the statement of net position date is included in other long-term liabilities.
Noncurrent Liabilities Noncurrent liabilities include (1) principal amounts of revenue bonds payable, notes payable, and other financing obligations with contractual maturities greater than one year; (2) estimated amounts for accrued compensated absences and other liabilities that will not be paid within the next fiscal year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
Deferred Outflows of Resources Deferred outflows are the consumption of net assets by the University that is applicable to a future reporting period. At June 30, 2025, the University’s deferred outflows of resources were comprised of deferred charges on other financing arrangement restructure.
Deferred Inflows of Resources Deferred inflows are the acquisition of net assets by the University that is applicable to a future reporting period. At June 30, 2025, the University’s deferred inflows of resources were comprised of deferred gain on other financing arrangement restructure and from lease-related amounts that are recognized at the inception of leases in which the University is the lessor. The lease-related amounts are recorded in an amount equal to the corresponding lease receivable plus certain additional amounts received from the lessee at or before the commencement of the lease term that relate to future periods, less any lease incentives paid to, or on behalf of, the lessee at or before the 17
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 commencement of the lease term. The inflow of resources is recognized in a systematic and rational manner over the term of the lease.
Net Position The University’s net position is classified as follows: Net Investment in Capital Assets: This represents the University’s total investment in capital assets, lease, and subscription assets, net of accumulated depreciation and amortization, reduced by the outstanding debt obligations attributable to the acquisition, construction, or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are also included in this component of net position. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. Restricted Net Position - Nonexpendable: Restricted nonexpendable net position consists of noncapital assets that are required to be maintained in perpetuity as specified by parties external to the University. Restricted Net Position - Expendable: Restricted expendable net position includes resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties or enabling legislation. Unrestricted Net Position: Unrestricted net position represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University and may be used at the discretion of the governing board to meet current expenses for any purpose. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty, and staff.
Classification of Revenues The University has classified its revenues as either operating or nonoperating revenues according to the following criteria: Operating Revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship discounts and allowances; (2) sales and services of auxiliary enterprises, net of scholarship discounts and allowances; and (3) certain grants and contracts. Nonoperating Revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, student aid revenues, and other revenue sources that are defined as nonoperating revenues by GASB No. 9 Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting and GASB No. 34, such as state appropriations, governmental, and other pass through grants and investment income.
Scholarship Discounts and Allowances Student tuition and fee revenues, and certain other revenues from students, are reported net of scholarship discounts and allowances in the statement of revenues, expenses, and changes in net position. Scholarship discounts and allowances are the difference between the stated charge for goods and services provided by the University and the amount that is paid by students and/or third parties making payments on the students’ behalf.
18
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 Certain governmental grants, such as Pell grants, and other federal, state, or nongovernmental programs are recorded as nonoperating revenues in the University’s financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded a scholarship discount and allowance. The scholarship allowances on tuition and fees and housing for the year ended June 30, 2025, were $11,519,412 and $360,314, respectively.
Income Taxes As a state institution of higher education, the income of the University is generally exempt from federal and state income taxes under Section 115(a) of the Internal Revenue Code and a similar provision of state law. However, the University is subject to federal income tax on any unrelated business taxable income.
Note 2.
Deposits and Investments
Deposits Custodial credit risk for deposits is the risk that in the event of a bank failure, the University’s deposits may not be returned, or the University will not be able to recover collateral securities in the possession of an outside party. The University deposits its funds with the Office of the State Treasurer (OST). Oklahoma statutes require OST to ensure that all state funds are either insured by Federal Deposit Insurance, collateralized by securities held by the cognizant Federal Reserve Bank, or invested in U.S. government obligations. The University’s deposits with the State Treasurer are pooled with the funds of other state agencies and then, in accordance with statutory limitations, placed in financial institutions or invested as the Treasurer may determine, in the state’s name. The OST’s responsibilities include receiving and collateralizing the deposit of State funds, investing State funds in compliance with statutory requirements, and maintaining adequate liquidity to meet the cash flow needs of the State and all its funds and agencies. If the University deposits funds directly with financial institutions, those funds must be insured by Federal Deposit Insurance or collateralized by securities held by the cognizant Federal Reserve Bank in the University’s name. There is $28,975,322 in cash and $274,949 in cash equivalents on deposit with the State Treasurer and other financial institutions, respectively, as of June 30, 2025. Of the $28,975,322 on deposit with the State Treasurer, $7,186,699 represents amounts held within OK INVEST, an internal investment pool. State Agencies and funds that are considered to be part of the State’s reporting entity in the State’s Annual Comprehensive Financial Report are allowed to participate in OK INVEST. Oklahoma statutes and the State Treasurer establish the primary objectives and guidelines governing the investment of funds in OK INVEST. Safety, liquidity, and return on investment are the objectives that establish the framework for the day-to-day OK INVEST management of funds with an emphasis on safety of the capital and the probable income to be derived while also meeting the State’s daily cash flow requirements. Guidelines in the State Treasurer’s Investment Policy address credit quality requirements, diversification percentages and the types and maturities of allowable investments. The specifics regarding these policies can be found on the State Treasurer’s website at http://www.ok.gov/treasurer/. An evaluation of the use and purpose of the various State Agencies and funds participation in the internal investment pool has determined that the amount on deposit with OK INVEST are treated as demand accounts and reported as cash equivalents. For financial reporting purposes, deposits with the OST that are invested in OK INVEST are classified as cash equivalents.
19
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 At June 30, 2025, the distribution of deposits in OK INVEST is as follows: Market Value
Cost OK INVEST Portfolio U.S. agency bonds Money market mutual funds Certificates of deposit Mortgage backed securities Foreign bonds U.S. Treasury bonds
$
109,437 756,690 20,780 987,557 58,072 5,254,163
$
108,703 756,690 20,780 889,210 57,995 5,284,009
$
7,186,699
$
7,117,387
Investments Investment credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Generally, the University’s investments are managed by the State Treasurer. In accordance with state statutes, the State Treasurer may only purchase and invest in (a) obligations of the United States government, its agencies, and instrumentalities; (b) prime banker’s acceptances; (c) investment grade obligations of state and local governments; (d) money market funds; (e) collateralized or insured certificates of deposits; (f) negotiable certificates of deposits; (g) prime commercial paper; and (h) repurchase agreements. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Investments that are held for longer periods of time are subject to increased risk of adverse interest changes. Neither the University nor state statutes limit investment maturities as a means of managing exposure to fair value losses arising from increasing interest rates; however, the OST investment policy limits the average maturity on its portfolio to four (4) years, with certain individual securities having more restrictive limits as defined in the policy. Concentration of credit risk is the risk of loss attributed to the magnitude of the University’s investment in a single issuer. Neither the University’s investment policy nor state statutes place limits on amounts that can be invested in any one issuer; however, the OST investment policy states that, with the exception of U.S. Treasury securities, no more than 50% of the State’s total funds may be invested in a single security type or with a single financial institution, with diversification percentages being more restrictive on individual securities. Custodial credit risk for investments is the risk that, in the event of failure of the counterparty, the University will not be able to recover the value of its investments or collateral securities in the possession of an outside party. As of June 30, 2025, none of the University’s investments were subject to custody credit risk.
Bond Fund Cash and Investments Certain non-pooled cash and investments are restricted in purpose by policies incorporated in applicable bond indentures. Credit risk policy generally restricts investing to cash, investments fully insured by the FDIC and U.S. government, and agency securities or mutual funds investing in these types of securities. There may be some variance among the investments authorized by the specific bond indentures of University bond issues. The OST and/or a trustee bank generally provide the management of restricted, non-pooled investments. Custodial credit risk is not addressed by bond indentures. Interest rate risk in bond indentures provide that investments mature in no more than six to sixty months depending on the purpose of the funds and the requirements of the account in which the funds are deposited (i.e., construction, reserve, operations, and maintenance, etc.).
20
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025
Note 3.
Leases Receivable
The University as a lessor, has entered into a lease agreement involving land. The lease has annual installments totaling approximately $12,000 to $16,000, with interest rate of 1.58% and a due date of March 2046. Revenue recognized under the lease contract during the year ended June 30, 2025 was $18,000, which includes both lease revenue and interest.
Note 4.
Capital, Lease and Subscription Assets
Capital assets activity for the year ended June 30, 2025, was: Balance June 30, 2024 Capital assets not being depreciated Land Art Construction in progress
$
5,382,083 170,485 711,752
Additions
$
175,232 11,697,670
Retirements/ Adjustments
Transfers
$
(180,000) (263,924)
$
Balance June 30, 2025
-
$
5,377,315 170,485 12,145,498
Total assets not being depreciated
6,264,320
11,872,902
(443,924)
-
17,693,298
Capital assets being depreciated Non-major infrastructure networks Land improvements Buildings Furniture, fixtures, and equipment Software Library materials
4,634,055 5,434,273 122,421,369 19,102,248 1,044,870 6,664,830
38,295 17,365 414,150 1,568,710 33,081
14,847 429,077 -
(519,005) (28,600)
4,687,197 5,451,638 122,745,591 20,670,958 1,044,870 6,669,311
Total capital assets being depreciated
159,301,645
2,071,601
443,924
(547,605)
161,269,565
Less accumulated depreciation for Non-major infrastructure networks Land improvements Buildings Furniture, fixtures, and equipment Software Library materials
(2,085,612) (3,320,603) (58,006,814) (16,356,937) (1,044,870) (6,578,848)
(531,787) (294,062) (3,248,539) (1,183,730) (39,152)
-
164,106 28,600
(2,617,399) (3,614,665) (61,091,247) (17,540,667) (1,044,870) (6,589,400)
Total accumulated depreciation
(87,393,684)
(5,297,270)
-
192,706
(92,498,248)
Capital assets being depreciated, net
71,907,961
(3,225,669)
443,924
(354,899)
68,771,317
Capital assets, net
$
78,172,281
$
8,647,233
$
-
$
(354,899)
$
86,464,615
21
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 Lease assets activity for the year ended June 30, 2025, was: Balance June 30, 2024 Lease assets Equipment
$
Less accumulated amortization
298,799
Additions $
(212,568) $
Lease assets, net
86,231
-
$
-
(43,509) $
Retirements/ Adjustments
Balance June 30, 2025
$
$
Transfers
(43,509)
-
$
-
$
-
298,799 (256,077)
$
42,722
Subscription assets activity for the year ended June 30, 2025, was: Balance June 30, 2024 Subscription assets Subscription IT asset
$
Less accumulated amortization
$
(478,932)
Subscription assets, net
Note 5.
941,809
Additions
$
462,877
107,954
$
-
(233,519) $
Retirements/ Adjustments
Balance June 30, 2025
$
$
Transfers
(125,565)
-
$
-
$
-
1,049,763 (712,451)
$
337,312
Long-Term Liabilities
Long-term liability activity for the year ended June 30, 2025, was as follows: Balance June 30, 2024 Bonds and other financing arrangements Revenue bonds - Series 2014 Bond premium - 2014 Issue ODFA other financing arrangements Premium on ODFA other financing arrangements OCIA other financing arrangements
$
2,655,000 235,564
Additions
$
Reductions
-
$
(220,000) (8,724)
Balance June 30, 2025
Amounts Due Within One Year
$
$
2,435,000 226,840
230,000 -
15,555,250
14,560,000
(1,887,082)
28,228,168
1,550,750
728,498
850,702
(164,448)
1,414,752
-
3,666,601
-
(523,514)
3,143,087
569,981
Total bonds and other financing arrangements
22,840,913
15,410,702
(2,803,768)
35,447,847
2,350,731
Other liabilities Accrued compensated absences Other noncurrent liabilities Lease liabilities Subscription liabilities
1,286,600 452,387 85,133 430,668
107,954
(65,630) (452,387) (43,042) (215,636)
1,220,970 42,091 322,986
167,890 27,437 200,236
Total other liabilities
2,254,788
107,954
(776,695)
1,586,047
395,563
Total long-term liabilities
$
25,095,701
$
15,518,656
$
(3,580,463)
$
37,033,894
$
2,746,294
22
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 Revenue Bonds Payable Board of Regents of Oklahoma Colleges Student Housing Revenue Bonds During 2015, the University refinanced the Board of Regents of Oklahoma Colleges Student Housing Revenue Bonds, Series 2003 with Oklahoma Development Finance Authority (“ODFA”) 2014 Revenue bonds. The original bond purpose was for construction and renovating certain Student Housing Facilities. The new bonds are due in annual installments varying from $160,000 to $315,000 plus semi-annual interest ranging from 2% to 4.55%, with the final installment being due in the year 2034. The Bonds are secured by the revenues to be derived from the Student Housing and Food Services Department and all monies in funds and accounts held by the trustee bank and available for debt service payments. As of June 30, 2025, $4,362,213 was pledged as security on the ODFA 2014 Revenue bonds. The refinancing resulted in a deferred outflow of resources that will be amortized over a period of twenty years, beginning in fiscal year 2015. As of June 30, 2025, the unamortized cost totaled $250,187. Future aggregate maturities of principal and interest requirements on the bonds payable at June 30, 2025 are as follows: Principal Year Ending June 30, 2026 2027 2028 2029 2030 2031-2034
Interest
Total
$
230,000 240,000 250,000 260,000 265,000 1,190,000
$
92,800 83,400 73,600 63,400 52,900 97,600
$
322,800 323,400 323,600 323,400 317,900 1,287,600
$
2,435,000
$
463,700
$
2,898,700
Other Financing Arrangements Oklahoma Development Finance Authority (ODFA) In 2025, the ODFA refinanced the ODFA Note Payable Series 2014C with a new series ODFA Real Property 2024B. The restructuring was a partial refunding and resulted in a gain of $118,583 between the remaining liability of the 20214C series and the new liability of the 2024B series. The gain on restructuring was recorded as a deferred inflow of resources and is being amortized over a period of ten years. The original bonds were issued to fund capital improvements at several state colleges and universities in Oklahoma. The proceeds from this agreement were used to fund improvements to the education building. The new agreement calls for monthly payments to ODFA in an amount that equals debt service requirements on the portion of the bonds used to finance the agreement with those amounts ranging from $27,768 to $28,426. The final payment on the agreement is due May 15, 2034. At June 30, 2025, the University owed principal of $2,384,833 on the Series 2024B ODFA Real Property. In 2025, ODFA issued the ODFA Real Property, Series 2024A. The 2024A bonds were issued to fund capital improvements at several state colleges and universities in Oklahoma. ODFA allocated the 2024A bond proceeds to colleges and universities in the form of financing agreements. East Central University’s portion of this allocation totaled $14,560,000. The proceeds from this agreement were used to fund the building of the STEAM building. The agreement calls for monthly payments to ODFA in an amount that equals debt service requirements on the portion of the bonds used to finance the agreement with those amounts ranging from $80,774 to $97,429. The final payment on the agreement is due May 15, 2049. At June 30, 2025, the University owed principal of $14,247,500 on the Series 2024A ODFA real property.
23
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 In 2015, ODFA issued the ODFA Revenue Bonds, Series 2015A. The 2015A bonds were issued to fund capital improvements at several state colleges and universities in Oklahoma. ODFA allocated the 2015A bond proceeds to colleges and universities in the form of financing agreements. East Central University’s portion of this allocation totaled $6,833,000. The proceeds from this agreement were used to fund improvements to campus buildings. The agreement calls for monthly payments to ODFA in an amount that equals debt service requirements on the portion of the bonds used to finance the agreement with those amounts ranging from $37,676 to $40,835. The final payment on the agreement is due May 15, 2034. At June 30, 2025, the University owed principal of $3,694,584 on the Series 2015A ODFA bonds. In 2016, the University refinanced the Board of Regents of Oklahoma Colleges Fine Arts Center Revenue Bonds, Series 2005 with ODFA Real Property Bonds, Series 2015A. The original purpose was for constructing a Fine Arts Center in the amount of $3,732,000. The debt is due in monthly installments varying from $24,182 to $25,506 plus interest ranging from 3.70% to 4.50%, with the final installment being due in the year 2035. At June 30, 2025, the University owed principal of $2,111,584 on the Series 2015A ODFA bonds. In 2017, ODFA issued the ODFA Revenue Bonds, Series 2016F. The 2016F Bonds were issued to fund capital improvements at several state colleges and universities in Oklahoma. ODFA allocated the 2016F Bond proceeds to colleges and universities in the form of financing agreements. The University’s portion of this allocation totaled $9,194,000. The proceeds from this agreement were used to build a new student dorm. The agreement calls for monthly payments to ODFA in an amount that equals debt service requirements on the portion of the bonds used to finance the agreement with those amounts ranging from $55,552 to $65,160. The final payment on the agreement is due May 15, 2036. At June 30, 2025, the University owed principal of $5,789,667 on the Series 2016F ODFA bonds. Future minimum payments under the University’s obligations to the ODFA are as follows: Principal Year Ending June 30, 2026 2027 2028 2029 2030 2031-2035 2036-2040 2041-2045 2046-2049
Interest
Total
$
1,550,750 1,608,916 1,679,833 1,749,999 1,822,500 9,140,003 3,557,418 3,677,500 3,441,249
$
1,193,530 1,134,692 1,069,158 998,226 924,288 3,394,212 1,899,262 1,167,776 357,122
$
2,744,280 2,743,608 2,748,991 2,748,225 2,746,788 12,534,215 5,456,680 4,845,276 3,798,371
$
28,228,168
$
12,138,266
$
40,366,434
Oklahoma Capital Improvement Authority (OCIA) OCIA periodically issues bonds, which are allocated to the State Regents, to be used for specific projects at Oklahoma higher education institutions. The University has participated in these projects as discussed below. In each of the transactions, OCIA and the University have entered into a financing arrangement. As a result, the University recognizes its share of the liability and the related assets in connection with the projects being constructed or acquired in its financial statements. Annually, the State Legislature appropriates funds to the State Regents to make the monthly principal and interest payments on behalf of the University.
24
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 In 2024, the OCIA restructured the 2014A series bond debt by issuing new 2024A series bonds. The restructured obligation with OCIA secures the OCIA bond indebtedness and any future indebtedness that might be issued to refund earlier bond issues. The University’s aforementioned obligation with OCIA was automatically restructured to secure the new bond issue. The University has recorded a financing arrangement payable to OCIA for the total amount of the allotment, less payments made on the University’s behalf, which was $3,143,087 as of June 30, 2025. During the year ended June 30, 2025, the State Regents made interest and principal payments totaling $729,760 on behalf of the University. These on-behalf payments have been recorded as restricted state appropriations in the statement of revenues, expenses, and changes in net position. As stated above, the on-behalf payments are subject to annual appropriations by the State Legislature. Future minimum payments under the University’s obligation to OCIA are as follows: Principal Year Ending June 30, 2026 2027 2028 2029 2030
Note 6.
Interest
Total
$
569,981 598,564 624,639 656,064 693,839
$
157,154 128,655 98,727 67,495 34,693
$
727,135 727,219 723,366 723,559 728,532
$
3,143,087
$
486,724
$
3,629,811
Lease Liabilities
The University as a lessee, has entered into lease agreements involving equipment with annual installments ranging from $3,000 to $34,436. Imputed interest rates range from 0.49% to 2.36%, with due dates ranging from March 2024 through September 2026. The balance outstanding at June 30, 2025 was $42,091. Some leases require variable payments based on usage of the underlying asset and are not included in the measurement of the lease liability. Those variable payments are recognized as outflows of resources in the periods in which the obligation for those payments is incurred. Future annual lease payments are as follows: Principal Year Ending June 30, 2026 2027
Interest
Total
$
27,437 14,654
$
778 346
$
28,215 15,000
$
42,091
$
1,124
$
43,215
25
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025
Note 7.
Subscription Liabilities
The University has various subscription-based information technology arrangements (SBITAs), the terms of which expire in various years through June 2037. Annual installments total approximately $1,000 to $86,000 with interest rates ranging from 2.06% to 3.16%. Principal Year Ending June 30, 2026 2027 2028 2029 2030 2031-2035 2036-2040
Note 8.
Interest
Total
$
200,236 52,982 12,241 5,953 6,140 34,928 10,506
$
5,290 346 425 1,013 1,676 5,248 499
$
205,526 53,328 12,666 6,966 7,816 40,176 11,005
$
322,986
$
14,497
$
337,483
Retirement Plans
The University’s academic and nonacademic personnel are covered by various retirement plans. The plans available to University personnel include the Oklahoma Teachers’ Retirement System (“OTRS”), which is a State of Oklahoma public employees retirement system, the Supplemental Retirement Annuity (“SRA”), a single employer defined benefit pension plan available to employees hired prior to July 1, 1995, and a defined contribution 403(b) plan. Personnel may also be eligible to participate in the Other Post-Employment Insurance (OPEB) plan, as described further in Note 9. The University does not maintain the accounting records, hold the investments for, or administer these plans. The accounting and financial reporting for OTRS, the SRA, and the OPEB plans are recorded at the reporting entity level in the System’s financial statements. That report may be obtained by writing to the Regional University System of Oklahoma, 305 N.W. 5th Street #407, Oklahoma City, Oklahoma 73102, or by calling (405) 924-8817. All payments made to these plans by the University are accounted for as compensation expense in the accompanying financial statements. The application of GAAP at the departmental level does not include certain liabilities incurred by the system as a whole. Those liabilities relate to the participation of System employees in the Oklahoma Teachers Retirement System, the Supplemental Retirement Plan, and the Postemployment Healthcare Plan. The accounting and reporting of these can be located in the financial statements of RUSO.
Oklahoma Teachers’ Retirement System (OTRS) Plan Description The University contributes to OTRS, a cost-sharing multiple-employer defined benefit pension plan sponsored by the State of Oklahoma. OTRS provides defined retirement benefits based on members’ final compensation, age, and term of service. In addition, the retirement program provides for benefits upon disability and to survivors upon the death of eligible members. The benefit provisions are established and may be amended by the legislature of the
26
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 State of Oklahoma. Title 70 of the Oklahoma Statutes, Sections 17-101 through 116.9, as amended, assigns the authority for management and operations of the Plan to the Board of Trustees of the OTRS. The OTRS does not provide for a cost-of-living adjustment. OTRS issues a publicly available financial report that can be obtained at www.ok.gov/TRS. Funding Policy The University is required by state statute to contribute a fixed percentage of annual compensation on behalf of active members. The employer contribution rate, as determined by state statute, was 8.55% for 2025 and was applied to annual compensation. Employees’ contributions are also determined by state statute. For all employees, the contribution rate was 7% of covered salaries and fringe benefits in 2025. For compensation in excess of $25,000, the employee’s contributions are paid directly by the University to the OTRS. The University’s contributions to the OTRS for the year ended June 30, 2025 was approximately $4,874,000. These contributions included the University’s statutory contribution, and the share of the employees’ contribution paid directly by the University. All payments made to these plans by the University are accounted for as compensation expense in the accompanying financial statements.
Defined Contribution 403(b) Plan The University also has a defined contribution 403(b) plan (“DCP”) available to full-time employees. The DCP is administered by the RUSO System, and the plan provisions are established and may be amended by the Board of Regents. Plan members may make voluntary contributions in accordance with IRS regulations. The University has no contribution requirements, and no contributions were made during the year ended June 30, 2025.
Supplemental Retirement Annuity (SRA) Plan Description The University’s SRA plan is a single employer, defined benefit pension plan administered by the University’s Board of Regents. The SRA was established by the University’s Board of Regents to provide supplemental retirement and death benefits to University employees who were hired prior to July 1, 1995, or to those eligible employees’ beneficiaries. The authority to amend the SRA’s benefit provisions rests with the University’s Board of Regents. The SRA is included in the financial report of the System, and does not issue separate, stand-alone financial statements. Funding Policy The authority to establish and amend eligible employees’ and employer contribution obligations to the SRA rests with the University’s Board of Regents. Eligible employees are not required to make contributions to the SRA. The University is required to contribute to the SRA an actuarially determined amount on an annual basis. The plan currently has adopted a funding policy to achieve a 100% funding level by December 1, 2030. The University’s contributions to the SRA for the year ended June 30, 2025 were $637,986.
27
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025
Note 9.
Other Post-Employment Insurance Benefits
Postemployment Healthcare Plan Plan Description The University’s postemployment healthcare plan is a single employer defined benefit plan administered by the System’s Board of Regents. The plan provides medical and life insurance benefits to eligible retired employees until age 65. A retiring employee must have been employed full-time in the system for not less than ten years immediately preceding the date of retirement; been a member of the OTRS during that time; and elected to receive a vested benefit under the provision of the Oklahoma Teachers’ Retirement System. The retirement insurance program was adopted by the Board of Regents in 1985. In March of 2008, the Retiree Medical Trust for Regional University System of Oklahoma was established to hold assets and pay benefits on behalf of the University’s postemployment healthcare plan, and was administered by The Bank Oklahoma, N.A. Prior to the establishment of the trust, the insurance benefits were accounted for on a pay-as-you-go basis so that premiums were made from current operating funds. The plan is included in the financial report of the System. That report may be obtained by writing to the Regional University System of Oklahoma, 305 N.W. 5th Street #407, Oklahoma City, Oklahoma 73102, or by calling (405) 924-8817. Funding Policy The contribution requirements of the System are established and may be amended by the Regional University System of Oklahoma Board of Regents. The University is required to contribute the actuarially determined employer contribution, in an amount actuarially determined by an actuary. The ADEC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. In 2025, an updated valuation was not performed for 2025 for funding purposes.
Note 10. Funds Held in Trust by Others Beneficial Interest in State School Land Funds The University has a beneficial interest in the Section Thirteen Fund State Educational Institutions and the New College Fund administered by the Commissioners of the Land Office as trustees for the various educational institutions entitled thereto. The University has the right to receive annually 3.7% of the distributions of income produced by Section Thirteen Fund State Educational Institutions assets and 100% of the distributions of income produced by East Central University’s New College Fund. The University received approximately $1,382,000 during the year ended June 30, 2025, which is restricted to the construction or acquisition of buildings, equipment, or other capital items. This amount is recorded as state appropriations restricted for capital purposes in the statement of revenues, expenses, and changes in net position. State law prohibits the distribution of any corpus of these funds to the beneficiaries. The cost basis of the total trust reserve for the University, held in trust by the Commissioners of Land Office, was approximately $22,779,000 at June 30, 2025.
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East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 Oklahoma State Regents Endowment Trust Fund In connection with the Oklahoma State Regents’ Endowment Program (the “Endowment Program”), the State of Oklahoma has matched contributions received under the program. The state match amounts, plus any retained accumulated earnings, totaled approximately $5,479,000 at June 30, 2025, and is invested by the Oklahoma State Regents on behalf of the University. The University is entitled to receive an annual distribution of 4.5% of the threeyear average of the June 30th market values on these funds. As legal title of the State Regents matching endowment funds is retained by the Oklahoma State Regents, only the funds available for distribution, or approximately $406,000 at June 30, 2025, has been reflected as assets in the statement of net position.
Note 11. Commitments and Contingencies The University conducts certain programs pursuant to various grants and contracts that are subject to audit by federal and state agencies from various sources of the University. Costs questioned as a result of these audits, if any, may result in refunds to these governmental agencies from various sources of the University. The University participates in the Federal Direct Student Loan Program (“Direct Lending Program”). The Direct Lending Program requires the University to draw down cash from the U.S. Department of Education, as well as perform certain administrative functions under the Direct Lending Program. For the year ended June 30, 2025, approximately $11,567,00 of Direct Lending Program loans was provided to University students. During the ordinary course of business, the University may be subjected to various lawsuits and civil action claims. Management believes that resolution of any such matters pending at June 30, 2025, will not have material adverse impact to the University.
Note 12. Risk Management The University is exposed to various risks of loss from torts; theft of, damage to, and destruction of assets; errors and omissions; employee injuries and illnesses; natural disasters; and employee health, life, and accident benefits. Commercial insurance coverage is purchased for claims arising from such matters other than torts, property, and workers’ compensation. Settled claims have not exceeded this commercial coverage in any of the three preceding years. The University, along with other state agencies and political subdivisions, participates in the State of Oklahoma Risk Management Program and the State Insurance Fund (“Pools”), public entity risk pools, currently operating as a common risk management and insurance program for its members. The University pays annual premiums to the Pools for tort, property, and liability insurance coverage. The Pool’s governing agreement specifies that the Pool will be self-sustaining through member premiums and will reinsure through commercial carriers for claims in excess of specified stop-loss amounts. The University also participates in the College Association of Liability Management (“CALM”) Workers’ Compensation Plan for its workers’ compensation coverage. CALM is an Interlocal Cooperative Act Agency that was organized to provide workers’ compensation insurance coverage for participating colleges and universities through the State Insurance Fund. CALM is a political subdivision of the State of Oklahoma and is governed by a Board of Trustees elected from members of the participating Colleges and Universities.
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East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 The University also participates in the Oklahoma Higher Education Employee Interlocal Group Health Insurance Pool (“OKHEEI”). University employees are provided health insurance coverage through OKHEEI. OKHEEI is an Interlocal Cooperative Act Agency organized as a public entity risk pool health insurance program for participating Colleges and Universities in the State. The University pays monthly health insurance premiums to OKHEEI for employee health insurance coverage based on the health coverage elected by the employee and the maximum benefit provided by the University for health coverage. Amounts of premiums exceeding benefits are payable by the employee. The governing agreement for OKHEEI specifies that the pool will be self-sustaining through premiums received and with additional stop-loss coverages obtained. If health care claims exceed reserves and reinsurance coverages, additional assessments may be made to participating Colleges and Universities. As of June 30, 2025, additional assessments did not occur.
Note 13. Related Party Transactions The Foundation is a not-for-profit corporation organized for the purpose of receiving and administering gifts for the benefit of the University. Distributions of amounts held by the Foundation are subject to the approval of the Foundation’s Board of Trustees. The Foundation’s primary function is to provide assistance to students of the University in the form of scholarships and awards, and during 2025, the Foundation provided approximately $1,191,000 in scholarships to students. Additionally, the Foundation provides financial assistance to the faculty and staff of the University, as well as the University’s programs and projects, and during 2025, the Foundation provided approximately $2,508,000 in aid to programs, faculty, and staff. Many of the contributions received by the Foundation are designated by the donors to be used for specific purposes or by specific departments. In these instances, the Foundation serves essentially as a conduit. Contributions that are not designated are used where the need is considered the greatest, as determined by the Foundation. The East Central University Gas Authority was created in 1963 to operate the natural gas pipeline system on campus. The authority is inactive and the University handles the gas lines as needed.
Note 14. East Central University Foundation, Inc. Nature of the Entity General The East Central University Foundation, Inc. (the “Foundation”) is a nonprofit corporation. The purposes for which the Foundation is organized are exclusively scientific, literary, charitable, educational, and artistic for the benefit of the University, Ada, Oklahoma; its faculty; its student body; and its programs. The Foundation may also serve as trustee of charitable lead trusts, charitable remainder trusts, and other private trusts of which the Foundation and/or University are beneficiaries, notwithstanding the facts that the donors of such trusts retain a beneficial interest therein or that other charitable organizations are designated as beneficiaries of such trusts. As gifts are received by the Foundation, they are placed into new or existing funds, as appropriate, in accordance with the stipulations of the donors. Distributions of amounts held by the Foundation are subject to the approval of the Board of Trustees (the “Board”). The purposes for which the Foundation is organized are exclusively for the benefit of the University, its faculty, its student body, and its programs. As such, the University and the Foundation are considered financially interrelated as defined by generally accepted accounting principles.
Financial Statements The financial statements of the Foundation are presented in accordance with the provisions of the FASB ASC. The FASB ASC requires the Foundation to distinguish between contributions that increase net assets with donor restrictions net assets without donor restrictions. It also requires recognition of contributions, including contributed services meeting certain criteria, at fair values. The FASB ASC establishes standards for external financial 30
East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 statements of not-for-profit organizations and requires a statement of financial position, a statement of activities and a statement of cash flows. As permitted by GASB Statement No. 34, the University has elected not to present a statement of cash flows for the Foundation in the basic financial statements of the University’s reporting entity.
Cash and Cash Equivalents A summary of the cash and cash equivalents at June 30, 2025, is as follows: Cash in bank Money market account held at Vanguard
$
1,985,366 8,605,886
$
10,591,252
Custodial Credit Risks-Deposits The Foundation had the following depository accounts as of June 30, 2025. All deposits are carried at cost. Reported Amount
Depository Account Insured Uninsured and uncollateralized
Bank Balance
$
1,985,366 8,605,886
$
2,052,273 8,605,886
$
10,591,252
$
10,658,159
Custodial credit risk is the risk that in the event of a bank failure, the Foundation’s deposits may not be returned. The uninsured or uncollateralized federal money market fund that invest in short-term securities that are issued or guaranteed by the U.S. government or U.S. government agencies, management believes any possible loss to the Foundation due to credit risk is minimal.
Investments The Foundation primarily uses an investment manager to manage the investments, which includes purchasing and sales. As of June 30, 2025, the investment manager was Vanguard Institutional Advisory Services (“Vanguard”). As of June 30, 2025, the Foundation’s target allocation and allocation range for assets was as follows:
Asset Class
Target Asset Allocation
Cash equivalents Fixed income Equity
1% 44% 55%
Total
100%
Allocation Range 1%-4% 35%-55% 45%-65%
The investment policy also has certain specific prohibitions, such as no more than a 25% concentration of investments in one industry, nor more than a 5% ownership of any one company or more than 5% ownership of securities of a single issuer, other than the U.S. government. The policy requires evaluation and reallocation as needed.
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East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 Investment securities are presented at fair value. The Foundation had the following investments at June 30, 2025:
Cost Non-current: Mutual funds Corporate stock-private
Excess (Deficit) of Market Over Cost
Fair Value
$
43,941,247 140,250
$
52,362,415 148,500
$
8,421,168 8,250
$
44,081,497
$
52,510,915
$
8,429,418
The Foundation recognized $3,834 during 2025 from net losses on the sale of investments. These losses have been combined with unrealized gains and losses and allocated throughout the year through the consolidated investment pool. The following table details information as of June 30, 2025, regarding investments with no maturity:
Type of Investment Mutual funds (no maturity) Corporate stock-private (no maturity)
6 Months or Less
More Than 6 Months to to 1 Year
More Than 1 Year to 3 Years
More Than 3 Years to 5 Years
More Than 5 Years
Total Fair Value
Cost
$
-
$
-
$
-
$
-
$
-
$ 52,362,415 148,500
$ 43,941,247 140,240
$
-
$
-
$
-
$
-
$
-
$ 52,510,915
$ 44,081,487
Credit Risk Credit risk is the risk that an insurer or other counterparty to an investment will not fulfill its obligations. The following table provides information concerning credit risk as of June 30, 2025: Fair Value (FV)
Cost Not rated: Mutual funds Corporate stock-private
FV as a % of Total FV
$
43,941,247 140,250
$
52,362,415 148,500
99.717% 0.283%
$
44,081,497
$
52,510,915
100.000%
Custodial Risk For investments, custodial risk is the risk that in the event of the failure of the counterparty, the Foundation will not be able to recover the value of its investments or collateral securities in the possession of an outside party.
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East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 Endowments The Foundation’s endowments consist of 448 individual donor-restricted funds as of June 30, 2025, established for a variety of scholarships and activities. As required by accounting principles generally accepted in the United States, net assets associated with endowment funds are classified and reported based on donor-imposed restrictions. The endowments represent only those net assets that are under the control of the Foundation.
Spending Policy The Foundation has established a spending policy whereby the total amount available to be disbursed (i.e., the “Distributable Cash Income”) from the Foundation’s endowment fund and operating fund is determined annually. The Distributable Cash Income is determined using the most recent 5-year average return on investments (ROI). The purpose of the spending policy is to establish an overall spending limit for the amount of money that can be disbursed from the Foundation’s endowment fund and operating fund each fiscal year. The spending policy limit is determined by March 31 of each year and is used for budgeting purposes for the following fiscal year that starts on July 1. The primary goal of the spending policy is to position the endowment fund and the unrestricted fund so that there is a balance between long-term growth and accumulation versus annual distributions. The spending policy utilizes the most recent 5-year average ROI percentage, which allows for long-term ROI trends to be built into the spending policy. The spending policy calculation will have an annual floor and ceiling which will enable the Foundation to spend a base amount from the endowment fund in low ROI periods and have extra savings in high ROI periods.
Underwater Endowments The Foundation considers an endowment fund to be underwater if the fair value of the fund is less than the sum of the original value of initial and subsequent gift amounts donated to the fund and any accumulations to the fund that are required to be maintained in perpetuity in accordance with the direction of the applicable donor gift instrument. The Foundation complies with UPMIFA and has interpreted UPMIFA to permit spending from underwater funds in accordance with prudent measures required under law. From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or UPMIFA requires the Foundation to retain as a fund of perpetual duration. Deficiencies resulted from unfavorable market fluctuations that occurred. Deficiencies as of June 30, 2025, were as follows:
Fair value Original donor-restricted gifts and amounts required to be maintained in perpetuity by donor
$
Deficiencies
$
11,198 (12,500) (1,302)
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East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 Endowment Net Asset Composition The endowment net asset composition by type of fund as of June 30, 2025, was as follows: Donor-Restricted Original donor-restricted gift amounts and amounts requirements to be maintained in perpetuity by donor Accumulated investment earnings
$
42,117,481 5,369,424
$
47,486,905
Changes in Endowment Net Assets Changes in the endowment net assets for the year ended June 30, 2025, were as follows: Donor-Restricted in Perpetuity Net assets, beginning of year Contributions and other revenues Investment earnings, net Amounts appropriated for expenditures
$
43,474,672 1,784,874 4,111,197 (1,883,838)
Net assets, end of year
$
47,486,905
Fair Value Measurements The Foundation reports certain assets at fair value in the financial statements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal, or most advantageous, market at the measurement date under current market conditions regardless of whether that price is directly observable or estimated using another valuation technique. Inputs used to determine fair value refer broadly to the assumptions that market participants would use in pricing the asset including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset based on the best information available. A three-tier hierarchy categorizes the inputs as follows: Level 1 - Quoted prices (unadjusted) in active markets for identical assets that the Foundation can access at the measurement date. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly. These include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset, and market-corroborated inputs. Level 3 - Unobservable inputs for the asset. In these situations, the Foundation develops inputs using the best information available in the circumstances.
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East Central University A Department of the Regional University System of Oklahoma Notes to Financial Statements June 30, 2025 In some cases, the inputs used to measure the fair value of an asset might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. Assessing the significance of a particular input to entire measurement requires judgment, taking into account factors specific to the asset. The categorization of an asset within the hierarchy is based upon the pricing transparency of the asset and does not necessarily correspond to the Foundation’s assessment of the quality, risk, or liquidity profile of the asset. The Foundation uses appropriate valuation methods based on the available inputs to measure the fair value of its assets. The following table presents the fair value measurement of assets recognized in the accompanying statements of financial position at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2025:
Assets Measured at Fair Value Mutual funds Corporate stock-private
Fair Value Measurements at Quoted Prices Significant in Active Other Markets for Observable Identical Assets Inputs (Level 1) (Level 2)
Significant Unobservable Inputs (Level 3)
$
52,362,415 148,500
$
52,362,415 -
$
-
$
148,500
$
52,510,915
$
52,362,415
$
-
$
148,500
Note 15. Subsequent Events On August 26, 2025, ODFA refinanced the ODFA Note Payable, Series 2015A with ODFA Real Property Refunding Bonds, Series 2025B. Of this refunding, total principal of $1,910,000 was allocated to the University. The 2025B bonds will have an interest rate of 5.00% and will be paid over the next 10 years with monthly payments ranging from $21,757 to $23,457. Payments to ODFA will begin in September 2025 and the final payment is due in May 2034. Subsequent events have been analyzed through October 30, 2025.
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