NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
YEARS ENDED JUNE 30, 2019 AND 2018 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
YEARS ENDED JUNE 30, 2019 AND 2018
CONTENTS
Page
Independent auditors’ report 1-3
Consolidated financial statements:
Statements of financial position 4-5 Statements of activities 6-7 Statements of functional expenses 8 Statements of cash flows 9-11 Notes to financial statements 12-43
Supplemental financial schedules:
Consolidating schedules of financial position 44-47 Consolidating schedules of activities 48-51 Schedules of activities – Summer of a Lifetime, A Noble Network Program 52 Schedule of PCTC tuition 53
Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 54-55
Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance 56-57
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
YEARS ENDED JUNE 30, 2019 AND 2018
CONTENTS (CONTINUED)
Page
Single Audit schedules:
Schedule of expenditures of federal awards 58 Notes to schedule of expenditures of federal awards 59 Schedule of findings and questioned costs 60 Schedule of prior year findings and questioned costs 61-62
Independent Accountants’ Report on Compliance with Requirements of Applicable Laws and Regulations Prescribed by Administering Agency 63-65
Schedule of current year findings 66
Schedule of prior year findings 67
Independent Auditors’ Report
Board of Directors Noble Network of Charter Schools
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Noble Network of Charter Schools, Subsidiaries and Affiliate (collectively referred to as the School), which comprise the consolidated statements of financial position as of June 30, 2019 and 2018, and the related consolidated statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Noble Network of Charter Schools, Subsidiaries and Affiliate as of June 30, 2019 and 2018, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 2 to the financial statements, the School has adopted the following guidance: ASU 2014-09, Revenue from Contracts with Customers (Topic 606), ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities (Topic 958), ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, and ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. Our opinion is not modified with respect to these matters.
Other Matters
Other Information
Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating information on pages 44 through 51 is presented for additional analysis of the consolidated financial statements rather than to present the financial position, changes in net assets, and cash flows of the individual companies, and it is not a required part of the consolidated financial statements. The supplemental financial schedules on pages 52 and 53 are presented for the purpose of additional analysis and are also not a required part of the consolidated financial statements. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is also not a required part of the consolidated financial statements. Such information is the responsibility of management and except for the portion marked “unaudited,” was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole. The information marked “unaudited” on page 53 has not been subjected to the audit procedures applied in the audit of the consolidated financial statements and, accordingly, we do not express an opinion or provide any assurance on it.
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Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 25, 2019, on our consideration of the School’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School’s internal control over financial reporting and compliance.
October 25, 2019
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NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
June 30, 2019 2018
ASSETS
Current assets: Cash $ 41,799,216 $ 32,091,376 Cash designated by Board 15,000,000 15,000,000 Investments 30,589,599 29,850,000 Accounts receivable 5,068,400 4,184,284 Contributions receivable 740,364 781,857 Prepaid expenses 2,494,490 2,660,725 Cash - restricted by NMTC 2,504,804 Cash equivalents - restricted by bond indenture 1,177,765 1,157,770
Total current assets 96,869,834 88,230,816
Property and equipment, net 106,132,703 108,200,133
Other assets: Contributions receivable, net of current portion 50,000 150,000 Investments - restricted for student scholarships 2,155,856 2,576,864 Leverage loan notes receivable - NMTC 24,918,422 24,918,422 Deposits 775,076 775,076
Total other assets 27,899,354 28,420,362
Total assets $ 230,901,891 $ 224,851,311
See notes to consolidated financial statements. 4
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)
June 30, 2019 2018
LIABILITIES AND NET ASSETS
Current liabilities: Accounts payable and accrued expenses $ 16,050,703 $ 15,926,107 Bonds payable 849,139 819,139 Notes payable 1,625,000 500,000 Deferred lease incentive 199,046 199,046 Deferred revenue 2,599,120 2,194,758
Total current liabilities 21,323,008 19,639,050
Long-term liabilities: Bonds payable, net of unamortized bond issuance costs and current maturities 35,071,398 35,916,792 Notes payable, net of unamortized debt issuance costs and current maturities 34,280,251 35,573,189 Deferred lease incentive, net of current portion 1,725,062 1,924,108 Deferred rent 2,631,924 2,665,628
Total long-term liabilities 73,708,635 76,079,717
Total liabilities 95,031,643 95,718,767
Net assets: Without donor restrictions: Board-designated 15,000,000 15,000,000 Undesignated 117,915,523 110,153,628
Total without donor restrictions 132,915,523 125,153,628
With donor restrictions 2,954,725 3,978,916
Total net assets 135,870,248 129,132,544
Total liabilities and net assets $ 230,901,891 $ 224,851,311
See notes to consolidated financial statements. 5
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF ACTIVITIES
Years ended June 30, 2019 2018 Without Without donor With donor donor With donor restrictions restrictions Total restrictions restrictions Total
Revenue: PCTC tuition $ 136,939,505 $ 136,939,505 $ 133,630,574 $ 133,630,574 Supplemental SPED 6,228,372 6,228,372 5,255,054 5,255,054 Other CPS funding 336,551 336,551 301,601 $ 358,717 660,318 Federal Titles I, II, III, IV, NSLP, MCJROTC, and E-Rate 16,248,329 16,248,329 16,660,589 16,660,589 Federal DOE Charter Schools Program grant $ 1,093,292 1,093,292 1,283,295 1,283,295 Campus revenues 4,006,784 4,006,784 4,457,667 4,457,667 Tuition - Noble Day Care 748,069 748,069 793,843 793,843 Contributed goods and services 4,646,319 4,646,319 4,208,446 4,208,446 Contributions and grants 1,493,031 3,913,517 5,406,548 2,198,912 4,475,313 6,674,225 Summer of a Lifetime, a Noble Network Program 528,588 435,083 963,671 475,060 484,287 959,347 Investment income, net 2,072,323 2,072,323 674,432 674,432 Other revenues 1,138,867 1,138,867 224,261 224,261 Net assets released from restrictions 6,466,083 (6,466,083) 14,735,630 (14,735,630)
Total revenue 180,852,821 (1,024,191) 179,828,630 183,616,069 (8,134,018) 175,482,051
See notes to consolidated financial statements. 6
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF ACTIVITIES (CONTINUED)
Years ended June 30, 2019 2018 Without Without donor With donor donor With donor restrictions restrictions Total restrictions restrictions Total
Expenses: Program services $ 153,818,756 $ 153,818,756 $ 147,108,955 $ 147,108,955 Supporting services: Management and general 17,542,763 17,542,763 16,413,436 16,413,436 Fundraising 1,729,407 1,729,407 1,277,164 1,277,164
Total expenses 173,090,926 173,090,926 164,799,555 164,799,555
Change in net assets before other income 7,761,895 $ (1,024,191) 6,737,704 18,816,514 $ (8,134,018) 10,682,496
Other income: Forgiveness of debt from NMTC unwind 3,568,458 3,568,458
Change in net assets 7,761,895 (1,024,191) 6,737,704 22,384,972 (8,134,018) 14,250,954
Net assets: Beginning of year 125,153,628 3,978,916 129,132,544 102,768,656 12,112,934 114,881,590
End of year $ 132,915,523 $ 2,954,725 $ 135,870,248 $ 125,153,628 $ 3,978,916 $ 129,132,544
See notes to consolidated financial statements. 7
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES
Years ended June 30, 2019 2018 Supporting Services Supporting Services Program Management Program Management services and general Fundraising Total services and general Fundraising Total
Salaries $ 79,217,914 $ 7,783,705 $ 468,752 $ 87,470,371 $ 75,730,531 $ 6,998,492 $ 427,635 $ 83,156,658 Employee benefits and payroll taxes 20,529,022 1,430,967 95,180 22,055,169 19,220,704 1,232,503 75,149 20,528,356 Contracted services and consulting 2,861,252 2,775,246 1,004,989 6,641,487 3,099,275 1,701,406 586,887 5,387,568 Professional development and staff recruitment 1,305,837 610,017 25,083 1,940,937 1,194,020 573,653 28,253 1,795,926 Food 5,573,750 5,573,750 5,912,728 5,912,728 Educational materials, technology and instruction equipment 7,703,429 160,001 14,006 7,877,436 6,774,902 83,768 27,151 6,885,821 Other direct student expenses 7,227,719 123,494 7,351,213 6,715,189 194,292 6,909,481 Scholarships 3,091,622 3,091,622 2,525,234 2,525,234 Summer of a Lifetime, a Noble Network Program 1,325,387 1,325,387 1,305,366 1,305,366 Office 653,629 396,527 1,128 1,051,284 763,935 204,866 3,790 972,591 Occupancy 15,698,789 500,519 4,944 16,204,252 15,043,901 468,092 7,470 15,519,463 CPS administrative fee 3,634,113 3,634,113 3,567,593 3,567,593 Interest 2,635,651 16,563 2,652,214 2,893,578 247,427 3,141,005 Depreciation and amortization 5,967,765 68,739 6,036,504 5,905,745 79,838 5,985,583 Other expenses 26,990 42,872 115,325 185,187 23,847 51,506 120,829 196,182 Uncollectible pledges 1,010,000 1,010,000
Total expenses $ 153,818,756 $ 17,542,763 $ 1,729,407 $ 173,090,926 $ 147,108,955 $ 16,413,436 $ 1,277,164 $ 164,799,555
See notes to consolidated financial statements. 8
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 2019 2018 (As restated)
Cash flows from operating activities: Change in net assets $ 6,737,704 $ 14,250,954 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 6,036,504 5,985,583 Amortization of lease incentive (199,046) (199,046) Deferred rent (33,704) 59,735 Amortization of debt issuance costs 111,668 180,900 Debt forgiveness (250,000) (3,818,458) Uncollectible pledges 1,010,000 Net realized and unrealized gain on investments (783,387) (7,565) (Increase) decrease in operating assets: Accounts receivable (884,116) 5,105,067 Contributions receivable 141,493 6,681,816 Prepaid expenses 166,235 (663,785) Deposits 25,000 Accrued interest on leverage loan notes receivable - NMTC (206,351) Increase (decrease) in operating liabilities: Accounts payable and accrued expenses (623,517) 123,064 Deferred revenue 404,362 (157,810)
Net cash provided by operating activities 10,824,196 28,369,104
See notes to consolidated financial statements. 9
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Years ended June 30, 2019 2018 (As restated)
Cash flows from investing activities: Purchase of investments $ (29,999,485) $ (29,808,608) Proceeds from sale of investments 30,000,000 Purchase of investments - restricted for student scholarships (56,167) (39,603) Sales of investments - restricted for student scholarships 520,448 Proceeds from redemption of investments - restricted for lease security deposit 362,145 Purchase of investments - restricted for lease security deposit (813) Purchase of property and equipment (3,220,961) (5,661,553)
Net cash used in investing activities (2,756,165) (35,148,432)
Cash flows from financing activities: Proceeds from termination of interest rate swap 42,101 Payments on bonds payable (845,000) (11,845,000) Payments on notes payable (5,113,489)
Net cash used in financing activities (845,000) (16,916,388)
Net change in cash, restricted cash and restricted cash equivalents 7,223,031 (23,695,716) Cash, restricted cash and restricted cash equivalents, beginning of year 50,753,950 74,449,666
Cash, restricted cash and restricted cash equivalents, end of year $ 57,976,981 $ 50,753,950
See notes to consolidated financial statements.
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NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Years ended June 30, 2019 2018 (As restated)
Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 2,554,878 $ 3,106,446
Supplemental disclosures of non-cash investing and financing activities: Forgiveness of notes payable included in contributions and grants revenue $ 250,000 $ 250,000 Net gain on forgiveness of debt from NMTC unwind $ 3,568,458 Purchase of property and equipment included in accounts payable and accrued expenses $ 780,753 $ 32,640
Reconciliation of cash, restricted cash and restricted cash equivalents reported within the consolidated statements of financial position that sum to the total of the same such accounts shown in the consolidated statements of cash flows: Cash $ 41,799,216 $ 32,091,376 Cash designated by Board 15,000,000 15,000,000 Cash - restricted by NMTC 2,504,804 Cash equivalents - restricted by bond indenture 1,177,765 1,157,770
Total cash, restricted cash and restricted cash equivalents shown in the consolidated statements of cash flows $ 57,976,981 $ 50,753,950
See notes to consolidated financial statements. 11 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and purpose
Noble Network of Charter Schools (the School) was formed to provide educational and community opportunities for youths. During the years ended June 30, 2019 and 2018, the School served the following students:
Opened in August Years ended June 30, 2019 2018
1999 Noble Street College Prep 664 645 2006 Rauner College Prep 620 627 2006 Pritzker College Prep 969 972 2007 Rowe Clark College Prep 405 454 2007 Golder College Prep 658 653 2008* Gary Comer College Prep 1176 1,086 2008 UIC College Prep 922 920 2009 Muchin College Prep 965 950 2009 Chicago Bulls College Prep 1121 1,121 2010 Johnson College Prep 750 805 2012 Hansberry College Prep 557 613 2012 DRW College Prep 349 497 2013 Baker College Prep 232 358 2013 Butler College Prep 667 639 2014 ITW David Speer Academy 1059 1,007 2014 The Noble Academy 439 483 2016 Mansueto High School 786 515
12,339 12,345
*Includes Gary Comer Middle School which opened in August 2011.
12 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. Organization and purpose (continued)
The School is supported through per-capita tuition payments from Chicago Public Schools, grants from state and federal agencies, various community and corporate foundations and the general public. During each of the years ended June 30, 2019 and 2018, the School received approximately 76% of its support from PCTC and related funding from Chicago Public Schools.
The School is subject to a Charter Agreement with the Chicago School Reform Board of Trustees (Chicago Public Schools or CPS). The agreement was for an original term of five years which has been routinely renewed for the same term since the School’s inception. The current agreement expired on June 30, 2019 and Chicago Public Schools has agreed to renew it through June 30, 2024. In addition, the School has been certified as a charter school by the Illinois State Board of Education (ISBE).
The School is governed by a Board of Directors that is comprised of at least five and no more than twenty-five members, who serve one-year terms until their successors shall have been selected and qualified. Directors are elected annually.
Under state law, Chicago Public Schools has oversight responsibility to verify that the School complies with and meets the expectation of a public educational system. The School is expected to satisfy regulations and compliance requirements defined by Chicago Public Schools.
Through the Summer of a Lifetime Program, low-income, minority scholars of the School are provided funding and support to participate in summer academic enrichment programs on college campuses nationwide. The program is funded by philanthropic support.
13 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies
Basis of accounting:
The School’s consolidated financial statements are prepared in accordance with generally accepted accounting principles (GAAP).
Recent accounting pronouncements:
Effective July 1, 2018, the School adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance requires that the School recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the School expects to be entitled in exchange for those goods or services. The guidance uses a principles-based approach for determining revenue recognition, eliminates the transaction and industry-specific guidance, and establishes a five step approach for the recognition of revenue. As disclosed in Note 11, the School implemented this standard during the year ended June 30, 2019 using the modified retrospective method. The adoption of this standard did not materially impact the consolidated financial statements of the School.
Effective July 1, 2018, the School adopted ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. This guidance provides a more robust framework for determining whether a transaction should be accounted for as a contribution or as an exchange transaction. The guidance also helps determine whether a contribution is conditional and better distinguishes a donor-imposed condition from a donor-imposed restriction. The adoption of this standard did not materially impact the consolidated financial statements of the School.
Effective July 1, 2018, the School adopted ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities (Topic 958). This guidance provides for additional disclosure requirements and modifies net asset reporting. The standard requires the School to reclassify its net assets (i.e., unrestricted, temporarily restricted, and permanently restricted) into two categories: net assets without donor restrictions and net assets with donor restrictions. It also adds information about liquidity and availability of resources and requires the reporting of expense by nature and function. The School has included the changes within the consolidated financial statements and related disclosures. The ASU has been applied retrospectively to all periods presented.
14 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Recent accounting pronouncements: (continued)
Effective July 1, 2018, the School adopted ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. This guidance addresses the classification of certain cash receipts and payments in the consolidated statements of cash flows. In addition, effective July 1, 2018, the School adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This guidance requires a statement of cash flows to explain the change during the period in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents and any internal transfers between cash, cash equivalents, restricted cash, and restricted cash equivalents are no longer presented in the consolidated statements of cash flows. The ASUs have been applied retrospectively to all periods presented. The School has adjusted and restated the presentation in the consolidated statements of cash flows accordingly.
Principles of consolidation:
The accompanying consolidated financial statements include the accounts of Noble Day Care, L3C (Noble Day Care) and Mansueto High School, LLC, of which the Noble Network of Charter Schools (the Network) is the sole member and manager, and the Noble Network Education Foundation (the Foundation) collectively referred to as “the School.” The Network and the Foundation have common control since the Network appoints two of the five Foundation Directors (Appointed Directors) with the remaining three elected Directors selected from a slate of nominees approved by the Appointed Directors. All significant inter-organization transactions and balances have been eliminated in consolidation.
Reclassification:
The consolidated statements of activities and functional expenses have been reclassified in order to conform to the current year’s presentation. In addition, the School updated its functional expense allocations, which resulted in a reclassification of $3,400,000 from program expenses to supporting services in the consolidated statements of activities and functional expenses for the year ended June 30, 2018. The reclassifications had no effect on net assets or change in net assets as previously reported.
15 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Net assets:
Net assets, revenues, gains and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows:
Net assets without donor restrictions - Net assets available for use in general operations and not subject to donor or grantor restrictions. The governing board has designated, from net assets without donor restrictions, net assets for specified purposes. The School’s Board-designated net assets as of June 30, 2019 and 2018 consist of funds designated for instructional and educational expenses to be used at the discretion of campus administration, upon approval of the CEO, as well as amounts to be used for future maintenance and repair costs of campus buildings.
Net assets with donor restrictions - Net assets subject to donor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature, where the donor stipulates that resources be maintained in perpetuity. See Note 19 for a description of net assets with donor restrictions at June 30, 2019 and 2018.
Cash equivalents:
The School considers all highly liquid investments with maturities of three months or less, when purchased, to be cash equivalents.
Accounts receivable:
Accounts receivable consist of grants and other amounts due from Chicago Public Schools and other governmental agencies as well as student fees net of an allowance for doubtful accounts. The School estimates the allowance based on an analysis of specific account history and experience. It is the School’s policy to charge off uncollectible accounts receivable when management determines the receivable will not be collected. An allowance for doubtful accounts is considered unnecessary and is not provided as of June 30, 2019 and 2018.
16 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Contributions receivable:
Contributions receivable include unconditional promises to give net of an allowance for doubtful accounts. The School estimates the allowance based on an analysis of specific donor history and experience. Pledges due in more than one year are discounted using a risk-adjusted rate of return to reflect the present value of the receivables.
June 30, 2019 2018
Receivable due in less than one year $ 740,364 $ 781,857 Receivable due in one to five years 50,000 150,000
Unconditional promises to give $ 790,364 $ 931,857
An allowance for doubtful accounts is considered unnecessary and is not provided as of June 30, 2019 and 2018.
Bond and NMTC issuance costs:
Debt issuance costs are recorded on the consolidated statements of financial position as a direct deduction from the face amount of debt. Amortization of the debt issuance costs is reflected as interest expense on the consolidated statements of functional expenses.
Property and equipment:
Property and equipment are stated at cost or, if donated, at the approximate fair value at date of donation. Amortization of leasehold improvements is provided ratably over the lesser of the term of the lease or the estimated life of the improvements. Depreciation is provided over the estimated useful life of the assets using the straight-line method ranging from three to thirty-nine years. Major additions over $5,000 are capitalized while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed as incurred.
The School reviews the carrying values of property and equipment for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. An impairment loss is recognized to the extent carrying value exceeds the fair value of the asset. There were no indicators of asset impairment during the years ended June 30, 2019 and 2018.
17 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Deferred lease incentive:
The School amortizes lease incentives against rent expense over the lease term.
Deferred revenue:
Deferred revenue results from the School receiving cash for conditional contributions and grants of which the conditions have not yet been met. Accordingly, revenue for contributions and grants received are deferred until the conditions are met.
Deferred rent:
The School records rent expense on a straight-line basis over the life of the related leases. The difference between rent expense recorded and the amount paid is charged to deferred rent in the consolidated statements of financial position.
Revenue and revenue recognition:
Revenue is recognized when earned. The School has the following types of revenue.
PCTC tuition, supplemental SPED, other CPS funding, and federal revenue (including Title funding, National School Lunch Program, MCJROTC, and E-Rate)
The School receives a student allocation from Chicago Public Schools as well as other state and local and federal entitlement funding to cover the cost of educational expenses. PCTC tuition is calculated by ISBE as defined by statute, and varies year-to-year as the following fluctuate: CPS’ expenditures, expenditure composition, categorical revenue, and student attendance. PCTC tuition includes an allotment for instruction and operations, facility costs (for schools operating in independent facilities), and Special Education. The revenue is recognized ratably over the school year. Other state and local entitlements, supplemental SPED, and other CPS funding are allocated by CPS and recognized as revenue ratably over the school year. Federal entitlements such as Title funding are also allocated by CPS and are recognized as revenue as allowable costs are incurred. National School Lunch Program revenue is recognized as revenue when meals are served to qualifying students. MCJROTC revenue is recognized as allowable costs are incurred. E-Rate revenue is recognized when eligible program expenses are incurred and approved. All of these revenue categories are accounted for as nonexchange transactions as the benefit to the resource provider is incidental to the public benefit received by the students served by the School.
18 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Revenue and revenue recognition: (continued)
Federal DOE Charter Schools Program grant
The School recognizes government grant revenue when qualifying expenditures are incurred. These amounts are accounted for as nonexchange transactions as the benefit to the resource provider is incidental to the public benefit received by the students served by the School.
Campus revenues
Campus revenues include school fees, such as annual school fees, sports fees, graduation and prom fees, lunch, and textbook fees, as well as summer school fees, night school fees, and uniform fees. Campus revenues are considered to be exchange transactions and accounted for as revenue from contracts with customers.
Tuition – Noble Day Care
Tuition revenue for Noble Day Care is considered to be an exchange transaction and accounted for as revenue from contracts with customers.
Contributions and grants and Summer of a Lifetime, a Noble Network Program
The School recognizes contributions and grants when cash, securities or other assets, or an unconditional promise to give (pledge) is received. Conditional promises to give are not recognized until the conditions on which they depend have been substantially met.
Contributions received are recorded as without or with donor restrictions depending on the existence and/or nature of any donor restrictions.
Donor-restricted support is reported as an increase in net assets with restrictions depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose of restriction is accomplished), net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the consolidated statements of activities as net assets released from restrictions.
19 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Revenue and revenue recognition: (continued)
Contributed goods and services
Contributed goods are reflected as contributions at their fair value at date of donation and are reported as contributions without donor restrictions unless explicit donor stipulations specify how donated assets must be used. The School recognizes the fair value of contributed services received if such services a) create or enhance nonfinancial assets or b) require specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not contributed. The School receives services from a large number of volunteers who give significant amounts of their time to the School but these services do not meet the criteria for financial statement recognition.
The School was the recipient of the following contributed goods and services:
Year ended June 30, 2019 Program Management services and general Fundraising Total
Food service - Illinois State Board of Education $ 369,041 $ 369,041 Rent - Chicago Public Schools 4,099,271 4,099,271 Supplies - Chicago Public Schools 178,007 178,007
Total $ 4,646,319 $ 4,646,319
Year ended June 30, 2018 Program Management services and general Fundraising Total
Food service - Illinois State Board of Education $ 377,160 $ 377,160 Rent - Chicago Public Schools 3,831,093 3,831,093 Other 193 193
Total $ 4,208,446 $ 4,208,446
20 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Expense allocation:
The costs of programs and supporting service activities have been summarized on a functional basis in the consolidated statements of activities. The consolidated statements of functional expenses present the natural classification of expenses by function. Accordingly, certain costs have been allocated among the programs and supporting services benefited. The expenses that are allocated include salaries, employee benefits and payroll taxes, rent and depreciation. Salaries and employee benefits and payroll taxes are allocated on the basis of estimates of time and effort. Rent and depreciation are allocated based on square footage utilized for program and supporting services. All other expenses are reported using the direct allocation method. Expenses for program services represented approximately 89% of total expenses for the years ended June 30, 2019 and 2018.
Use of estimates:
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures in the consolidated financial statements. Accordingly, actual results could differ from those estimates.
Subsequent events:
Management has evaluated subsequent events through October 25, 2019, the date that the consolidated financial statements were available to be issued.
21 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Liquidity and availability
The following represents the School’s financial assets at June 30, 2019:
June 30, 2019
Financial assets at year-end: Cash $ 41,799,216 Cash designated by Board 15,000,000 Investments 30,589,599 Accounts receivable 5,068,400 Contributions receivable 790,364 Cash equivalents - restricted by bond indenture 1,177,765 Investments - restricted for student scholarships 2,155,856 Leverage loan notes receivable - NMTC 24,918,422
Total financial assets 121,499,622
Less amounts not available to be used within one year: Cash equivalents - restricted by bond indenture 1,177,765 Investments - restricted for student scholarships 2,155,856 Funds related to a conditional grant for which conditions have not been met 2,000,000 Leverage loan notes receivable - NMTC 24,823,400 Net assets without donor restrictions - Board-designated 15,000,000 Net assets with donor restrictions 2,954,725
Total amounts not available to be used within one year 48,111,746
Financial assets available to meet general expenditures within one year $ 73,387,876
22 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Liquidity and availability (continued)
The School’s goal is generally to maintain financial assets to meet debt covenant requirements and to pay expenditures and liabilities when due. As part of its liquidity plan, excess cash is invested in short-term investments, including money market accounts, fixed income mutual funds and United States Treasury securities. The sources of liquidity available to the School are cash, investments and receivables.
4. Tax status
The School is a tax-exempt organization as described in Section 501(c)(3) of the Internal Revenue Code (the Code) and is exempt from federal income taxes on related income pursuant to Section 501(a) of the Code. In addition, the Internal Revenue Service has determined that the School is not a private foundation within the meaning of Section 509(a) of the Code. The School has adopted the requirements for accounting for uncertain tax positions and management has determined that the School was not required to record a liability related to uncertain tax positions as of June 30, 2019 and 2018.
5. Cash
The School maintains its cash in bank accounts which, at times, exceed federally-insured limits. At June 30, 2019 and 2018, cash in excess of these limits totaled approximately $56,700,000 and $48,900,000, respectively. Management believes that the School is not exposed to any significant credit risk on cash.
23 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Fair value measurements
The three levels of the fair value hierarchy are described as follows:
Level 1 Inputs to valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the School has the ability to access.
Level 2 Inputs to the valuation methodology include:
l quoted prices for similar assets or liabilities in active markets;
l quoted prices for identical or similar assets or liabilities in inactive markets;
l inputs other than quoted prices that are observable for the asset or liability;
l inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
24 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Fair value measurements (continued)
The following table sets forth by level, within the fair value hierarchy, the School’s financial instruments at fair value as of June 30, 2019:
June 30, 2019 Total Level 1 Level 2
Recurring fair value measurements: Assets: Investments: Fixed income mutual funds $ 2,155,856 $ 2,155,856 United States Government treasury bills 30,589,599 30,589,599
Total investments 32,745,455 32,745,455
Total recurring fair value measurements $ 32,745,455 $ 32,745,455
Nonrecurring fair value measurements: Asset: Leverage loan notes receivable - NMTC $ 24,918,422 $ 24,918,422
Liabilities: Bonds payable (35,920,537) (35,920,537) Notes payable (35,905,251) (35,905,251)
Total nonrecurring fair value measurements $ (46,907,366) $ (46,907,366)
25 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Fair value measurements (continued)
The following table sets forth by level, within the fair value hierarchy, the School’s financial instruments at fair value as of June 30, 2018:
June 30, 2018 Total Level 1 Level 2
Recurring fair value measurements: Assets: Investments: Fixed income mutual funds $ 2,576,864 $ 2,576,864 United States Government treasury bills 29,850,000 29,850,000
Total investments 32,426,864 32,426,864
Total recurring fair value measurements $ 32,426,864 $ 32,426,864
Nonrecurring fair value measurements: Asset: Leverage loan notes receivable - NMTC $ 24,918,422 $ 24,918,422
Liabilities: Bonds payable (36,735,931) (36,735,931) Notes payable (36,073,189) (36,073,189)
Total nonrecurring fair value measurements $ (47,890,698) $ (47,890,698)
26 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Fair value measurements (continued)
Following is a description of the valuation methodologies used for assets measured at fair value.
Mutual funds are valued at the Net Asset Value (NAV) of shares held by the School at year-end.
United States Government treasury bills are stated at fair value based on quoted prices in active markets.
The leverage loan notes receivable – NMTC fair value approximates the carrying amount in the accompanying consolidated financial statements. The carrying value of the loans approximates fair value based on current borrowing rates.
Long-term obligations, including bonds payable and notes payable, fair value approximates the carrying amounts in the accompanying consolidated financial statements. The carrying value of the debt approximates fair value based on current borrowing rates.
The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the School believes that its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
27 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Property and equipment
Property and equipment are as follows:
June 30, 2019 2018
Leasehold improvements $ 72,550,498 $ 71,061,592 Buildings 51,009,877 50,696,910 Land 6,423,651 6,423,651 Equipment 11,981,944 9,917,710 Furniture 2,063,020 2,018,741 Software 782,883 700,462 Automobiles 190,561 190,561
145,002,434 141,009,627 Less accumulated depreciation and amortization (39,788,852) (33,749,798)
105,213,582 107,259,829 Construction in progress 919,121 940,304
Property and equipment, net $ 106,132,703 $ 108,200,133
8. Leverage loan notes receivable – NMTC and notes payable – NMTC
2011 New Market Tax Credits:
The School entered into a New Markets Tax Credits (NMTC) transaction to finance and reimburse the School in connection with the renovation and construction of school facilities and to finance the acquisition of related equipment, furniture, textbooks and other items located in Qualified Census Tracts.
State NMTC Investors contributed $1,950,000 in State NMTC equity to Stonehenge Illinois NMTC Investment Fund II, LLC (State Investment Fund). In conjunction with this equity investment, the School then made an $8,050,000 leverage loan (note receivable – 2011 NMTC) to the State Investment Fund.
28 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Leverage loan notes receivable – NMTC and notes payable – NMTC (continued)
2011 New Market Tax Credits: (continued)
In conjunction with the NMTC transaction, the School received a loan in the amount of $13,000,000 from PNBI Subsidiary CDE 3, LLC (NMTC Lender), a Federal Sub-Community Development Entity, financed through equity provided by both state and federal new markets tax credit investors and the leveraging of the Foundation. The loan was comprised of two tranches, $10,000,000 QLICI Note A and $3,000,000 QLICI Note B (collectively referred to as notes payable – 2011 NMTC).
The initial NMTC compliance period ended on May 30, 2018. Effective June 1, 2018, the NMTC unwind began when the state tax credit investors exercised its put option and gave the notes payable – 2011 NMTC to the School for $1,000. In conjunction with this event, the School paid an exit fee of $100,581. As a result of the NMTC unwind, the School was able to gain control of and cancel the $13,000,000 notes payable – 2011 NMTC, which was offset by its forgiveness of the $8,050,000 note receivable – 2011 NMTC and related accrued interest of approximately $1,300,000. The School realized a net gain of $3,568,458 on the forgiveness of debt from the NMTC unwind.
2015 New Market Tax Credits:
The School entered into a NMTC transaction to finance and reimburse the School in connection with the purchase and construction of a new school facility and to finance related equipment and furniture for its ITW David Speer Academy located in a Qualified Census Tract.
In conjunction with the NMTC transaction, the School then made a $5,819,200 leverage loan (note receivable – 2015 NMTC) to Chase NMTC Noble ITW Investment Fund, LLC (the NMTC Investment Fund). The note receivable – 2015 NMTC is payable by the NMTC Investment Fund over 30 years and matures on April 30, 2045. The NMTC Investment Fund will pay interest only at a rate of 1.00% ($58,192 per year) for the initial seven years after which time annual principal and interest payments due from the NMTC Investment Fund will be $283,536.
As collateral for the note, the NMTC Investment Fund has assigned its 99.99% interest in BH New Markets Sub-CDE III, LLC (the ITW NMTC Lender).
Simultaneous with the closing of the NMTC transaction, the School entered into a term loan for $5,700,000 from BMO Harris Bank.
29 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Leverage loan notes receivable – NMTC and notes payable – NMTC (continued)
2015 New Market Tax Credits: (continued)
As part of the NMTC transaction, the School received a loan for $7,920,000 from the ITW NMTC Lender. The loan was comprised of two tranches, $5,819,200 QLICI Note A and $2,100,800 QLICI Note B (collectively referred to as notes payable – 2015 NMTC). The notes payable include a simple interest rate of 1.40401% and interest payments are payable quarterly over the life of the notes. The notes shall mature on the earlier of April 30, 2045 or the date which the unpaid principal balance becomes due and payable by acceleration or otherwise pursuant to the loan documents or the exercise by the ITW NMTC Lender of any right or remedy. Under Note A, the School will pay interest only of $81,702 annually for the initial seven years after which annual principal and interest payments will be $296,496. Under Note B, the School will pay interest only of $29,495 annually for the initial seven years after which annual principal and interest payments will be $107,040. Note A and Note B are pari passu (equal rights) in rights of payment and principal, interest, escrow items, late charges and all other amounts payable. The loan agreement is subordinate to the note below and secured by a second priority mortgage of the ITW David Speer Academy building and assignments of rents. Under terms of the NMTC transaction, the School is also obligated to pay annual loan servicing fees of $20,000.
It is anticipated that the School will be in compliance with all NMTC program requirements for the seven-year NMTC compliance period ending on September 30, 2021. At the end of the seven years, Chase Community Equity, LLC (the NMTC investor) has the right under a put/call option agreement to put 100% of its membership interest in the NMTC Investment Fund to the School for a purchase price of $1,000. If the put right is not exercised by the NMTC investor, the School has the option to purchase 100% of the NMTC investor’s membership interest in the NMTC Investment Fund for its then appraised fair value. At that time, it is anticipated that the School will gain control of the NMTC Investment Fund holding the note payable of $7,920,000 and will forgive the loan, along with the note receivable of $5,819,200, and realize a gain of approximately $2,100,000.
30 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Leverage loan notes receivable – NMTC and notes payable – NMTC (continued)
2017 New Market Tax Credits:
The School entered into a NMTC transaction to finance and reimburse the School for the purchase and construction of a new school facility and to finance related equipment and furniture for its Mansueto High School located in a Qualified Census Tract.
In conjunction with the NMTC transaction, the School received a bridge loan of $12,000,000 from JPMorgan Chase Bank, N.A. to fund a $19,004,200 leverage loan (note receivable – 2017 NMTC) to Chase NMTC Mansueto Investment Fund, LLC (the NMTC Investment Fund). The note receivable – 2017 NMTC is payable by the NMTC Investment Fund over 30 years and matures on March 31, 2047. The NMTC Investment Fund will pay interest only at a rate of 1.00% ($190,042 per year) for the initial seven years after which time annual principal and interest payments due from the NMTC Investment Fund will be $929,036.
As collateral for the note, the NMTC Investment Fund has assigned its 99.99% interest in (i) BH New Markets Sub-CDE XIII, LLC (the BMO CDE); (ii) SCORE Sub-CDE 9, LLC, (the SCORE CDE), and (iii) CNI Subsidiary CDE 1, LLC (the CNI CDE), together with the BMO CDE and SCORE CDE, the “CDEs” (collectively, the “Mansueto NMTC Lender”).
As part of the NMTC transaction, the School received a loan for $26,700,000 from the Mansueto NMTC Lender. The loan was comprised of two tranches, QLICI Note A and QLICI Note B from each of the CDEs (collectively referred to as notes payable – 2017 NMTC). The notes payable include a simple interest rate of 1.32599% with interest due annually over the life of the notes. The notes shall mature on the earlier of March 31, 2047 or the date which the unpaid principal balance becomes due and payable by acceleration or otherwise pursuant to the loan documents or the exercise by the Mansueto NMTC Lender of any right or remedy. Under Notes A and B, the School will pay interest only annually for the initial seven years of $354,039 after which annual principal and interest payments will be $1,347,296. The loan agreement is collateralized by a first priority mortgage of the Mansueto building and assignments of rents. Under the terms of the NMTC transaction, the School is also obligated to pay annual loan servicing fees of $50,000.
31 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Leverage loan notes receivable – NMTC and notes payable – NMTC (continued)
2017 New Market Tax Credits: (continued)
It is anticipated that the School will be in compliance with all NMTC program requirements for the seven-year NMTC compliance period ending on March 16, 2024. At the end of the seven years, Chase Community Equity, LLC (the NMTC investor) has the right under a put/call option agreement to put 100% of its membership interest in the NMTC Investment Fund to the School for a purchase price of $1,000. If the put right is not exercised by the NMTC investor, the School has the option to purchase 100% of the NMTC investor’s membership interest in the NMTC Investment Fund for its then appraised fair value. At that time, principal payments of $141,890 will be due from the School and it is anticipated that the School will gain control of the NMTC Investment Fund holding the note payable of $26,700,000 and will forgive the loan, along with the note receivable of $19,004,200, and realize a gain of approximately $7,700,000.
Leverage notes receivable – NMTC outstanding at June 30, 2019 and 2018 are summarized below:
Original Accrued note interest Total
2017 NMTC $ 19,004,200 $ 95,022 $ 19,099,222 2015 NMTC 5,819,200 5,819,200
Total leverage notes receivable – NMTC $ 24,823,400 $ 95,022 $ 24,918,422
The applicable Loan Agreements for the NMTC transactions contain various covenants. The School is in compliance with all loan covenants as of June 30, 2019 and 2018.
32 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Leverage loan notes receivable – NMTC and notes payable – NMTC (continued)
2017 New Market Tax Credits: (continued)
Notes payable – NMTC are summarized below:
June 30, 2019 2018
Notes payable – 2017 NMTC $ 26,700,000 $ 26,700,000 Notes payable – 2015 NMTC 7,920,000 7,920,000
Total notes payable – NMTC 34,620,000 34,620,000 Unamortized NMTC – notes payable issuance costs (339,749) (421,811)
Notes payable – NMTC, net $ 34,280,251 $ 34,198,189
See Note 10 for notes payable.
33 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Bonds payable
Bonds payable are summarized as follows:
June 30, 2019 2018
Series 2015 bonds payable with interest only payable semi-annually on March 1 and September 1, at rates ranging from 1.5% to 5%. Principal payments (net of reoffering premiums of $1,272,180 and $1,371,311 for the years ended June 30, 2019 and 2018, respectively) are payable annually on September 1 through maturity in 2032. The bonds are collateralized by various campus facilities. $ 17,878,607 $ 18,834,806
Series 2013 bonds payable with interest only payable semi-annually on March 1 and September 1, at rates ranging from 6% to 6.25%. Principal payments (net of discounts of $74,790 and $78,534 for the years ended June 30, 2019 and 2018, respectively) are payable annually beginning September 1, 2023 through maturity in 2039. The bonds are collateralized by various campus facilities. 19,925,210 19,921,466
Total bonds payable 37,803,817 38,756,272 Unamortized bond issuance costs (1,883,280) (2,020,341)
Bonds payable, net 35,920,537 36,735,931 Less current portion (849,139) (819,139)
Long-term portion, net $ 35,071,398 $ 35,916,792
34 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Bonds payable (continued)
The loan agreements relating to the bonds require the School to comply with certain financial covenants and places restrictions on various activities, such as the transfer of assets and incurrence of additional indebtedness. At June 30, 2019 and 2018, the School was in compliance with all of the financial covenants.
Future minimum principal payments are as follows:
Year ending June 30: Amount*
2020 $ 982,455 2021 1,027,455 2022 1,072,455 2023 1,117,455 2024 1,257,455 Thereafter 32,346,542
Total $ 37,803,817
*Includes $1,423,607 reoffering premium payables and net of $74,790 discount on bonds payable.
35 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. Notes payable
Notes payable are summarized as follows:
June 30, 2019 2018
Charter School Growth Fund note payable with interest accruing at a rate of 1% per annum and matures on June 30, 2020. Principal payments are due annually starting on June 30, 2019 with the final payment and total accrued interest due at maturity. $ 1,250,000 $ 1,500,000
Charter School Growth Fund note payable with interest accruing at a rate of 1% per annum and matures on June 30, 2020. Total principal and accrued interest payable at maturity. 375,000 375,000
Notes payable – NMTC, net (See Note 8) 34,280,251 34,198,189
Total notes payable 35,905,251 36,073,189 Less current portion (1,625,000) (500,000)
Long-term portion, net $ 34,280,251 $ 35,573,189
The above notes payable require the School to comply with certain financial covenants. At June 30, 2019 and 2018, the School as in compliance with all of the financial covenants.
Future minimum principal payments are as follows:
Year ending June 30: Amount
2020 $ 1,625,000 2021 2022 48,723 2023 294,570 2024 298,726 Thereafter 33,977,981
36,245,000 Less unamortized NMTC – notes payable issuance costs (339,749)
Notes payable, net $ 35,905,251
36 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Revenue from contracts with customers
Effective July 1, 2018, the School adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance requires that the School recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the School expects to be entitled in exchange for those goods and services. The guidance uses a principles-based approach for determining revenue recognition, eliminates the transaction and industry-specific guidance, and establishes a five-step approach for the recognition of revenue.
The School has adopted this guidance using the modified retrospective approach, which applies to contracts that have remaining obligations as of July 1, 2018 and new contracts entered into subsequent to July 1, 2018. Under the modified retrospective method, the cumulative effect of the application of Topic 606 is shown as an adjustment to beginning net assets as of the date of application. Based on the School’s evaluation of its contracts with customers, the timing and amount of revenue previously recognized is materially consistent with how revenue is recognized under Topic 606. No changes were required to previously reported revenues and net assets as a result of the adoption.
School fees and Tuition – Noble Day Care:
School fees are derived from education services provided to students served by the School. Noble Day Care tuition fees are derived from day care services provided to families served by Noble Day Care. Revenue from school fees is earned for providing education services during the academic school year which runs from August through June. Students are charged a flat fee at the onset of the school year for education services to be provided for that particular school year. The fees are recognized ratably over the life of the school year using the output method as education services are provided. Similarly, Noble Day Care tuition fees are charged at the beginning of each month and recognized using the output method as day care services are provided during that month. Payment for Noble Day Care tuition is due upon invoicing to the family, which generally occurs in advance of the day care service to be provided. As of June 30, 2019 and 2018, all education and day care services have been completed, and thus, there are no remaining performance obligations outstanding.
School activities:
The School charges fees to students for optional educational activities. These fees are charged and due prior to the performance of the activity and recognized at a point in time upon registration. There is no deferred revenue at June 30, 2019 and 2018 relating to school activities.
37 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Revenue from contracts with customers (continued)
Uniform and meals fees:
Fees for uniforms are recognized at a point in time when the good is transferred to the student. The student is required to pay for the uniform at the point in time when the good is transferred to the student. Fees for meals are recognized at a point in time when the food is consumed by the student. Payment is either received upon consumption of the meal or billed to the student on a monthly basis for the meals consumed during the prior month. If not paid at the point of purchase, the payment is due upon invoicing to the student.
Revenue from contracts with customers disaggregated by category for the years ended June 30, 2019 and 2018 are as follows:
Years ended June 30, 2019 2018
Revenue recognized over time: School fees $ 1,877,556 $ 2,140,746 Tuition - Noble Day Care 748,069 793,843
Total revenue recognized over time 2,625,625 2,934,589
Revenue recognized at a point in time: School activities 1,117,345 1,050,126 Uniforms and meals 1,011,883 1,266,795
Total revenue recognized at a point in time 2,129,228 2,316,921
Total contract revenue $ 4,754,853 $ 5,251,510
38 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Revenue from contracts with customers (continued)
Receivables from contracts with customers:
Receivables from contracts with customers represent amounts billed to students of the School or families at Noble Day Care related to their education or day care experience and for which the School has an unconditional right to receive payment due to the absence of a right of refund. The following table presents receivables from contracts with customers:
Receivables from contract revenue
At July 1, 2017 $ 1,094,615 At June 30, 2018 $ 1,111,192 At June 30, 2019 $ 884,314
Significant judgments:
Significant judgment is required in determining the appropriate approach to applying the revenue recognition criteria. While Topic 606 is generally applied to an individual contract with a customer, as a practical expedient, the School applies this guidance to a portfolio of contracts (or performance obligations) with similar characteristics. The School reasonably expects that the effects of applying this guidance to the portfolio would not differ materially from applying the guidance to the individual contracts (or performance obligations) within the portfolio.
For school fees, school activities, meals and uniform fees, the School has determined that students can be grouped into a single portfolio for each of the performance obligations. Similarly, for Noble Day Care tuition, the School has determined that families can be grouped into a single portfolio for the performance obligations. Based on the School’s experience, students at the School and families at Noble Day Care, have similar characteristics concerning the School’s approach to revenue recognition. Agreements concerning enrollment and student or family financial responsibility each contain terms which clarify the performance obligations and are fundamentally the same. Refunds and fee adjustments issued by the School are treated on a case by case basis and generally infrequent.
Significant judgment is also required to assess collectibility which is assessed at the onset of the contract using the portfolio approach and revenue is recognized at the amount management expects to collect from its customers when performance obligations have been satisfied.
39 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Conditional promises to receive
The School records revenue associated with conditional promises to receive when the conditions have been substantially met. As of June 30, 2019, the School has approximately $22,500,000 of conditional promises associated with expansion and student scholarships that have not yet been recognized as revenue, including $2,000,000 of funds received from a donor in advance of the conditions being met. These advance funds are recorded as deferred revenue and will be recognized as contribution revenue when donor conditions are met.
13. Commitments and contingencies
The School has received funds from state and federal grants in the current year which are subject to audits by the granting agencies. Management believes that any adjustments that might arise from these audits would be insignificant to the School’s operations.
As of June 30, 2019, the School had entered into construction contracts totaling approximately $840,000 to renovate certain campus facilities.
14. Scholarship funds
In recognition of a grant received, the School committed to fund a $10,000 scholarship per year in perpetuity from its operating budget.
In addition, the School has received contributions restricted to fund scholarships. Scholarships are awarded through an application process and based on financial need and merit.
15. School lunch program
For the years ended June 30, 2019 and 2018, the School has contracted with a third party to administer the School’s breakfast, lunch and summer food service program under an annual agreement with optional one-year renewals. Under this agreement, the School collects all fees related to this program and purchases the necessary quantity of meals through the third party.
40 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. Self-insurance program
The School maintains a self-insurance program for its employees’ health care costs. The School is liable for losses on claims up to $155,000 per covered person and up to approximately $5,000,000 (PPO) and $2,000,000 (HMO) in aggregate for 2019. The School has third-party insurance coverage for any losses in excess of such amounts. Self-insurance costs are accrued based on claims reported as of the date of the consolidated financial statements as well as an estimated liability for claims incurred but not reported. The total accrued liability for self- insurance costs was approximately $606,000 and $613,000 as of June 30, 2019 and 2018, respectively, and is included in accounts payable and accrued expenses on the consolidated statements of financial position.
17. Retirement fund commitments
The School participates in the Public School Teachers’ Pension and Retirement Fund of Chicago (CTPF or the Fund), a defined-benefit plan. Members of the Fund include all active nonannuitants who are employed by a Fund-covered employer and who hold an Illinois State Teacher Certification Board certification. The State of Illinois appropriates public contributions to Chicago Public Schools and remits those contributions to the Fund for the benefit of applicable Chicago schools.
Chicago Public Schools withholds the employer contribution related to pensionable salaries from the tuition that is paid to each school.
On a discretionary basis, the School has elected to pay a portion of its employees’ required contributions to the Fund. The Fund does not maintain separate actuarial records for the School.
CTPF pension amounts are as follows for the years ended June 30, 2019 and 2018:
Years ended June 30, 2019 2018
Total pensionable salaries $ 44,236,326 $ 42,162,685 Employees’ contribution expense picked up by employer 3,096,543 2,951,388
Employer’s contribution expense (11.16%) 4,936,774 4,705,356 Less: CPS deduction amount for employer’s pension expense (4,057,710) (4,093,347)
Pension true-up amount $ 879,064 $ 612,009
41 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. Retirement fund commitments (continued)
In addition, all employees were eligible to participate in the Noble Network of Charter Schools 401(k) P/S Plan (the Plan). Employees can elect to defer their compensation up to the maximum allowed. The School matches eligible employee deferral contributions up to a maximum of 5% of compensation or $2,000 semiannually. Contributions made by the School to the Plan during the years ended June 30, 2019 and 2018 were $778,422 and $619,976, respectively.
18. Lease agreements
The School rents various facilities under leases expiring through 2035. Some of the leases contain renewal provisions ranging from 5 to 15 years. Annual rent under the leases ranges from $1 to $2,129,000. Security deposits totaling $550,398 are held by the landlords. In addition, the use of certain facilities are donated to the School.
Total rent expense was $3,852,420, excluding contributed rent of $4,099,271, and $3,820,956, excluding contributed rent of $3,831,093, for the years ended June 30, 2019 and 2018, respectively.
Future minimum rental payments are as follows:
Year ending June 30: Amount
2020 $ 4,332,321 2021 3,665,510 2022 3,448,061 2023 3,472,025 2024 3,481,926 Thereafter 22,105,505
Total $ 40,505,348
42 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. Net assets with donor restrictions
Net assets with donor restrictions are available for the following purpose or time restrictions:
June 30, 2019 2018
Restricted for purpose: College readiness program $ 167,800 $ 489,079 Extracurricular activities 36,507 98,658 Other programs 321,462 15,677 Scholarships 1,849,166 2,288,215 Startup and growth activities and costs 100,000 100,000 Summer of a Lifetime program 404,790 434,176
Total restricted for purpose 2,879,725 3,425,805
Restricted for time 75,000 553,111
Total net assets with donor restrictions $ 2,954,725 $ 3,978,916
During the years ended June 30, 2019 and 2018, net assets were released from donor restrictions by incurring expenses satisfying the following purpose or time restrictions:
Years ended June 30, 2019 2018
Restricted for purpose: College readiness program $ 582,779 $ 657,540 Extracurricular activities 131,201 72,648 Other programs 191,265 795,280 Scholarships 3,212,186 3,208,618 Startup and growth activities and costs 1,093,292 7,684,288 Summer of a Lifetime program 464,469 569,107
Total restricted for purpose 5,675,192 12,987,481
Restricted for time 790,891 1,748,149
Total net assets released from restrictions $ 6,466,083 $ 14,735,630
43
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FINANCIAL POSITION
June 30, 2019 Noble Network Noble Network of Noble Education Mansueto High Consolidated Charter Schools Day Care Foundation School, LLC Eliminations Total
ASSETS
Current assets: Cash $ 40,543,138 $ 32,593 $ 1,223,485 $ 41,799,216 Cash designated by Board 15,000,000 15,000,000 Investments 30,589,599 30,589,599 Accounts receivable 5,015,786 52,614 5,068,400 Contributions receivable 740,364 740,364 Prepaid expenses 2,494,490 2,494,490 Cash equivalents - restricted by bond indenture 1,177,765 1,177,765 Due from Noble Day Care 172,296 $ (172,296)
Total current assets 95,733,438 85,207 1,223,485 (172,296) 96,869,834
Property and equipment, net 102,376,020 70,008 $ 3,686,675 106,132,703
Other assets: Contributions receivable, net of current portion 50,000 50,000 Investments - restricted for student scholarships 2,155,856 2,155,856 Investments - Mansueto High School, LLC 3,686,675 (3,686,675) Leverage loan notes receivable - NMTC 24,918,422 24,918,422 Deposits 768,576 6,500 775,076
Total other assets 6,661,107 6,500 24,918,422 (3,686,675) 27,899,354
Total assets $ 204,770,565 $ 161,715 $ 26,141,907 $ 3,686,675 $ (3,858,971) $ 230,901,891
44
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FINANCIAL POSITION (CONTINUED)
June 30, 2019 Noble Network Noble Network of Noble Education Mansueto High Consolidated Charter Schools Day Care Foundation School, LLC Eliminations Total
LIABILITIES, NET ASSETS (DEFICIT) AND MEMBER’S EQUITY
Current liabilities: Accounts payable and accrued expenses $ 16,050,703 $ 16,050,703 Due to Noble Network of Charter Schools $ 172,296 $ (172,296) Bonds payable 849,139 849,139 Notes payable 1,625,000 1,625,000 Deferred lease incentive 199,046 199,046 Deferred revenue 2,599,120 2,599,120
Total current liabilities 21,323,008 172,296 (172,296) 21,323,008
Long-term liabilities: Bonds payable, net of unamortized bond issuance costs and current maturities 35,071,398 35,071,398 Notes payable, net of unamortized debt issuance costs and current maturities 34,280,251 34,280,251 Deferred lease incentive, net of current portion 1,725,062 1,725,062 Deferred rent 2,605,241 26,683 2,631,924
Total long-term liabilities 73,681,952 26,683 73,708,635
Total liabilities 95,004,960 198,979 (172,296) 95,031,643
Net assets (deficit): Without donor restrictions: Board-designated 15,000,000 15,000,000 Undesignated 91,810,880 (37,264) $ (6,781,493) 32,923,400 117,915,523
Total without donor restrictions 106,810,880 (37,264) (6,781,493) 32,923,400 132,915,523
With donor restrictions 2,954,725 32,923,400 (32,923,400) 2,954,725
Total net assets (deficit) 109,765,605 (37,264) 26,141,907 135,870,248
Member’s equity $ 3,686,675 (3,686,675)
Total liabilities, net assets (deficit) and member’s equity $ 204,770,565 $ 161,715 $ 26,141,907 $ 3,686,675 $ (3,858,971) $ 230,901,891
45
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FINANCIAL POSITION (CONTINUED)
June 30, 2018 Noble Network Noble Network of Noble Education Mansueto High Consolidated Charter Schools Day Care Foundation School, LLC Eliminations Total
ASSETS
Current assets: Cash $ 30,918,728 $ 197,322 $ 975,326 $ 32,091,376 Cash designated by Board 15,000,000 15,000,000 Investments 29,850,000 29,850,000 Accounts receivable 4,156,471 27,813 4,184,284 Contributions receivable 781,857 781,857 Prepaid expenses 2,660,725 2,660,725 Cash - restricted by NMTC 2,504,804 2,504,804 Cash equivalents - restricted by bond indenture 1,157,770 1,157,770 Due from Noble Day Care 272,366 $ (272,366)
Total current assets 87,302,721 225,135 975,326 (272,366) 88,230,816
Property and equipment, net 104,425,088 88,370 $ 3,686,675 108,200,133
Other assets: Contributions receivable, net of current portion 150,000 150,000 Investments - restricted for student scholarships 2,576,864 2,576,864 Investments - Mansueto High School, LLC 3,686,675 (3,686,675) Leverage loan notes receivable - NMTC 24,918,422 24,918,422 Deposits 768,576 6,500 775,076
Total other assets 7,182,115 6,500 24,918,422 (3,686,675) 28,420,362
Total assets $ 198,909,924 $ 320,005 $ 25,893,748 $ 3,686,675 $ (3,959,041) $ 224,851,311
46
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FINANCIAL POSITION (CONTINUED)
June 30, 2018 Noble Network Noble Network of Noble Education Mansueto High Consolidated Charter Schools Day Care Foundation School, LLC Eliminations Total
LIABILITIES, NET ASSETS AND MEMBER’S EQUITY
Current liabilities: Accounts payable and accrued expenses $ 15,926,107 $ 15,926,107 Due to Noble Network of Charter Schools $ 272,366 $ (272,366) Bonds payable 819,139 819,139 Notes payable 500,000 500,000 Deferred lease incentive 199,046 199,046 Deferred revenue 2,194,758 2,194,758
Total current liabilities 19,639,050 272,366 (272,366) 19,639,050
Long-term liabilities: Bonds payable, net of unamortized bond issuance costs and current maturities 35,916,792 35,916,792 Notes payable, net of unamortized debt issuance costs and current maturities 35,573,189 35,573,189 Deferred lease incentive, net of current portion 1,924,108 1,924,108 Deferred rent 2,636,453 29,175 2,665,628
Total long-term liabilities 76,050,542 29,175 76,079,717
Total liabilities 95,689,592 301,541 (272,366) 95,718,767
Net assets: Without donor restrictions: Board-designated 15,000,000 15,000,000 Undesignated 84,241,416 18,464 $ (7,029,652) 32,923,400 110,153,628
Total without donor restrictions 99,241,416 18,464 (7,029,652) 32,923,400 125,153,628
With donor restrictions 3,978,916 32,923,400 (32,923,400) 3,978,916
Total net assets 103,220,332 18,464 25,893,748 129,132,544
Member’s equity $ 3,686,675 (3,686,675)
Total liabilities, net assets and member’s equity $ 198,909,924 $ 320,005 $ 25,893,748 $ 3,686,675 $ (3,959,041) $ 224,851,311
47
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF ACTIVITIES
Year ended June 30, 2019 Noble Network Support Team Noble Street College Prep Rauner College Prep Pritzker College Prep Without With Without With Without With Without With donor donor donor donor donor donor donor donor restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total
Revenue: PCTC tuition $ 1,464,213 $ 1,464,213 $ 7,515,051 $ 7,515,051 $ 7,016,803 $ 7,016,803 $ 10,970,035 $ 10,970,035 Supplemental SPED 125,068 125,068 138,238 138,238 Other CPS funding 19,533 19,533 27,258 27,258 44,859 44,859 Federal Titles I, II, III, IV, NSLP, MCJROTC, and E-Rate 48,640 48,640 688,888 688,888 727,395 727,395 1,386,766 1,386,766 Federal DOE Charter Schools Program grant $ 241,178 241,178 Campus revenues 260,759 260,759 225,912 225,912 443,442 443,442 Tuition - Noble Day Care Contributed goods and services 27,255 27,255 25,011 25,011 28,336 28,336 Contributions and grants 956,145 3,400,394 4,356,539 11,566 11,566 6,271 $ 5,000 11,271 8,140 $ 56,000 64,140 Summer of a Lifetime, a Noble Network Program 528,588 435,083 963,671 Investment income, net 1,812,719 1,812,719 820 820 1,492 1,492 1,572 1,572 Other revenues 386,958 386,958 5,761 5,761 13,632 13,632 3,973 3,973 Transfer of grant funds from NNST (572,500) (572,500) 31,144 31,144 28,517 28,517 45,027 45,027 NNST school management fees (expenses) 16,155,637 16,155,637 (872,791) (872,791) (814,955) (814,955) (1,273,696) (1,273,696) Summer of a Lifetime, a Noble Network Program - transfers 400,500 400,500 (15,000) (15,000) (15,000) (15,000) (15,000) (15,000) Net assets released from restrictions 4,481,684 (4,481,684) 5,642 (5,642) 461,180 (461,180)
Total revenue 25,662,584 (405,029) 25,257,555 7,798,054 7,798,054 7,386,216 (642) 7,385,574 12,104,634 (405,180) 11,699,454
Expenses: Program services 9,210,822 9,210,822 6,988,268 6,988,268 6,823,223 6,823,223 10,006,437 10,006,437 Supporting services: Management and general 13,828,491 13,828,491 191,028 191,028 177,908 177,908 280,220 280,220 Fundraising 1,729,407 1,729,407
Total expenses 24,768,720 24,768,720 7,179,296 7,179,296 7,001,131 7,001,131 10,286,657 10,286,657
Change in net assets $ 893,864 $ (405,029) $ 488,835 $ 618,758 $ 618,758 $ 385,085 $ (642) $ 384,443 $ 1,817,977 $ (405,180) $ 1,412,797
Rowe Clark Math & Science Academy Golder College Prep Gary Comer College Prep UIC College Prep Muchin College Prep Chicago Bulls College Prep Without With Without With Without With Without With Without With Without With donor donor donor donor donor donor donor donor donor donor donor donor restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total
$ 4,593,477 $ 4,593,477 $ 7,452,754 $ 7,452,754 $ 13,013,287 $ 13,013,287 $ 9,580,900 $ 9,580,900 $ 10,913,046 $ 10,913,046 $ 11,616,381 $ 11,616,381 538,012 538,012 305,196 305,196 436,162 436,162 186,390 186,390 435,694 435,694 7,080 7,080 26,442 26,442 31,152 31,152 20,390 20,390 46,000 46,000 590,311 590,311 725,619 725,619 1,287,931 1,287,931 1,391,002 1,391,002 1,231,306 1,231,306 1,436,722 1,436,722
94,907 94,907 251,200 251,200 358,787 358,787 305,252 305,252 365,821 365,821 424,242 424,242
37,373 37,373 29,438 29,438 348,475 348,475 758,360 758,360 32,681 32,681 1,069,780 1,069,780 18,451 $ 106,333 124,784 996 $ 8,000 8,996 38,957 $ 1,089 40,046 14,322 14,322 29,663 $ 50,000 79,663 39,327 39,327
2,022 2,022 2,683 2,683 445,988 445,988 11,993 11,993 23,364 23,364 428 428 72,454 72,454 23,938 23,938 18,245 18,245 30,909 30,909 54,408 54,408 42,869 42,869 45,168 45,168 51,969 51,969 (533,007) (533,007) (865,563) (865,563) (1,482,496) (1,482,496) (1,212,575) (1,212,575) (1,267,781) (1,267,781) (1,472,835) (1,472,835) (16,000) (16,000) (20,000) (20,000) (30,000) (30,000) (40,000) (40,000) (50,000) (50,000) (25,000) (25,000) 228,558 (228,558) 5,622 (5,622) 41,287 (41,287) 41,250 $ (41,250) 46,814 (46,814) 4,500 $ (4,500)
6,025,417 (122,225) 5,903,192 7,957,289 2,378 7,959,667 14,090,162 (40,198) 14,049,964 11,099,350 (41,250) 11,058,100 11,439,562 3,186 11,442,748 13,650,718 (4,500) 13,646,218
6,009,270 6,009,270 7,602,045 7,602,045 12,944,803 12,944,803 9,954,214 9,954,214 11,096,335 11,096,335 12,106,544 12,106,544
116,963 116,963 189,598 189,598 334,075 334,075 277,712 277,712 281,112 281,112 337,302 337,302
6,126,233 6,126,233 7,791,643 7,791,643 13,278,878 13,278,878 10,231,926 10,231,926 11,377,447 11,377,447 12,443,846 12,443,846
$ (100,816) $ (122,225) $ (223,041) $ 165,646 $ 2,378 $ 168,024 $ 811,284 $ (40,198) $ 771,086 $ 867,424 $ (41,250) $ 826,174 $ 62,115 $ 3,186 $ 65,301 $ 1,206,872 $ (4,500) $ 1,202,372
48
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF ACTIVITIES (CONTINUED)
Year ended June 30, 2019 Johnson College Prep Hansberry College Prep DRW College Prep Baker College Prep Butler College Prep Without With Without With Without With Without With Without With donor donor donor donor donor donor donor donor donor donor restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total
Revenue: PCTC tuition $ 7,773,719 $ 7,773,719 $ 6,303,177 $ 6,303,177 $ 3,953,293 $ 3,953,293 $ 2,404,461 $ 2,404,461 $ 6,922,056 $ 6,922,056 Supplemental SPED 815,248 815,248 520,650 520,650 617,822 617,822 291,738 291,738 643,546 643,546 Other CPS funding 22,565 22,565 6,100 6,100 Federal Titles I, II, III, IV, NSLP, MCJROTC, and E-Rate 1,262,786 1,262,786 901,857 901,857 591,943 591,943 424,998 424,998 650,052 650,052 Federal DOE Charter Schools Program grant $ 291,204 291,204 Campus revenues 73,318 73,318 164,144 164,144 8,243 8,243 58,336 58,336 199,528 199,528 Tuition - Noble Day Care Contributed goods and services 625,048 625,048 31,286 31,286 41,708 41,708 717,450 717,450 546,377 546,377 Contributions and grants 22,261 22,261 13,041 $ 45,500 58,541 87,469 $ 66,554 154,023 16,679 $ 36,000 52,679 21,066 21,066 Summer of a Lifetime, a Noble Network Program Investment income, net 2,782 2,782 Other revenues 10,576 10,576 22,893 22,893 3,981 3,981 3,377 3,377 28,699 28,699 Transfer of grant funds from NNST 35,130 35,130 25,609 25,609 16,182 16,182 10,319 10,319 30,909 30,909 NNST school management fees (expenses) (986,490) (986,490) (732,145) (732,145) (458,742) (458,742) (304,294) (304,294) (876,077) (876,077) Summer of a Lifetime, a Noble Network Program - transfers (23,000) (23,000) (50,000) (50,000) (500) (500) (20,000) (20,000) Net assets released from restrictions 35,545 (35,545) 18,632 (18,632) 367,405 (367,405)
Total revenue 9,631,161 9,631,161 7,209,394 45,500 7,254,894 4,897,444 31,009 4,928,453 3,641,196 17,368 3,658,564 8,513,561 (76,201) 8,437,360
Expenses: Program services 9,206,271 9,206,271 8,139,001 8,139,001 5,756,312 5,756,312 4,708,201 4,708,201 8,129,761 8,129,761 Supporting services: Management and general 225,353 225,353 161,247 161,247 101,164 101,164 61,723 61,723 181,283 181,283 Fundraising
Total expenses 9,431,624 9,431,624 8,300,248 8,300,248 5,857,476 5,857,476 4,769,924 4,769,924 8,311,044 8,311,044
Change in net assets $ 199,537 $ 199,537 $ (1,090,854) $ 45,500 $ (1,045,354) $ (960,032) $ 31,009 $ (929,023) $ (1,128,728) $ 17,368 $ (1,111,360) $ 202,517 $ (76,201) $ 126,316
ITW David Speer Academy The Noble Academy Mansueto High School Noble Day Care Noble Network Education Foundation Without With Without With Without With Without With Without With donor donor donor donor donor donor donor donor donor donor Consolidated restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total Total restrictions restrictions Total restrictions restrictions Total Eliminations Total
$ 11,990,135 $ 11,990,135 $ 4,554,181 $ 4,554,181 $ 8,902,536 $ 8,902,536 $ 136,939,505 $ 136,939,505 565,376 565,376 210,160 210,160 399,072 399,072 6,228,372 6,228,372 33,260 33,260 10,512 10,512 41,400 41,400 336,551 336,551 1,307,382 1,307,382 599,420 599,420 995,311 995,311 16,248,329 16,248,329 $ 360,910 360,910 $ 200,000 200,000 1,093,292 1,093,292 346,267 346,267 143,241 143,241 283,385 283,385 4,006,784 4,006,784 $ 748,069 $ 748,069 748,069 27,752 27,752 273,459 273,459 26,530 26,530 4,646,319 4,646,319 203,732 $ 38,647 242,379 2,154 100,000 102,154 2,791 2,791 5,406,548 5,406,548 963,671 963,671 1,824,090 $ 248,233 $ 248,233 2,072,323 60,199 60,199 500 500 20,153 20,153 1,138,867 1,138,867 48,873 48,873 20,403 20,403 36,819 36,819 (1,391,996) (1,391,996) (577,041) (577,041) (1,033,153) (1,033,153) (15,000) (15,000) (5,000) (5,000) (61,000) (61,000) 28,647 (28,647) 499,317 (499,317) 200,000 (200,000)
13,204,627 10,000 13,214,627 5,731,306 (38,407) 5,692,899 9,813,844 9,813,844 178,832,328 748,069 748,069 248,233 248,233 179,828,630
10,962,810 10,962,810 5,138,048 5,138,048 8,356,612 8,356,612 153,138,977 679,779 679,779 153,818,756
309,467 309,467 132,123 132,123 231,902 231,902 17,418,671 124,018 124,018 74 74 17,542,763 1,729,407 1,729,407
11,272,277 11,272,277 5,270,171 5,270,171 8,588,514 8,588,514 172,287,055 803,797 803,797 74 74 173,090,926
$ 1,932,350 $ 10,000 $ 1,942,350 $ 461,135 $ (38,407) $ 422,728 $ 1,225,330 $ - $ 1,225,330 $ 6,545,273 $ (55,728) $ (55,728) $ 248,159 $ 248,159 $ 6,737,704
49
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF ACTIVITIES (CONTINUED)
Year ended June 30, 2018 Noble Network Support Team Noble Street College Prep Rauner College Prep Pritzker College Prep Without With Without With Without With Without With donor donor donor donor donor donor donor donor restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total
Revenue: PCTC tuition $ 1,382,156 $ 1,382,156 $ 7,143,522 $ 7,143,522 $ 6,953,765 $ 6,953,765 $ 10,774,900 $ 10,774,900 Supplemental SPED 14,886 14,886 109,330 109,330 Other CPS funding 30,783 30,783 23,957 23,957 45,000 45,000 Federal Titles I, II, III, IV, NSLP, MCJROTC, and E-Rate 48,288 48,288 807,345 807,345 758,864 758,864 1,528,253 1,528,253 Federal DOE Charter Schools Program grant $ 282,413 282,413 Campus revenues 304,008 304,008 259,588 259,588 447,560 447,560 Tuition - Noble Day Care Contributed goods and services 193 193 26,940 26,940 26,940 26,940 26,940 26,940 Contributions and grants 1,889,643 3,344,011 5,233,654 4,242 4,242 8,453 8,453 $ 40,000 40,000 Summer of a Lifetime, a Noble Network Program 475,060 484,287 959,347 Investment income, net 107,904 107,904 300 300 548 548 577 577 Other revenues 139,777 139,777 2,344 2,344 3,766 3,766 1,990 1,990 Transfer of grant funds from NNST (1,169,547) (1,169,547) 57,833 57,833 65,587 65,587 86,974 86,974 NNST school management fees (expenses) 13,694,152 13,694,152 (717,458) (717,458) (697,992) (697,992) (1,081,748) (1,081,748) Summer of a Lifetime, a Noble Network Program - transfers 437,000 437,000 (24,000) (24,000) (15,000) (15,000) (15,000) (15,000) Net assets released from restrictions 6,101,584 (6,101,584) 5,185 $ (5,185) 175,016 (175,016)
Total revenue 23,106,210 (1,990,873) 21,115,337 7,650,745 7,650,745 7,502,991 (5,185) 7,497,806 11,990,462 (135,016) 11,855,446
Expenses: Program services 7,273,941 7,273,941 6,809,453 6,809,453 6,945,350 6,945,350 10,280,974 10,280,974 Supporting services: Management and general 12,774,352 12,774,352 174,772 174,772 177,630 177,630 277,780 277,780 Fundraising 1,277,164 1,277,164
Total expenses 21,325,457 21,325,457 6,984,225 6,984,225 7,122,980 7,122,980 10,558,754 10,558,754
Change in net assets before other income (expense) 1,780,753 (1,990,873) (210,120) 666,520 666,520 380,011 (5,185) 374,826 1,431,708 (135,016) 1,296,692
Other income (expense): Forgiveness of debt from NMTC unwind 12,454,019 12,454,019
Change in net assets $ 14,234,772 $ (1,990,873) $ 12,243,899 $ 666,520 $ 666,520 $ 380,011 $ (5,185) $ 374,826 $ 1,431,708 $ (135,016) $ 1,296,692
Rowe Clark Math & Science Academy Golder College Prep Gary Comer College Prep UIC College Prep Muchin College Prep Chicago Bulls College Prep Without With Without With Without With Without With Without With Without With donor donor donor donor donor donor donor donor donor donor donor donor restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total
$ 5,011,468 $ 5,011,468 $ 7,227,259 $ 7,227,259 $ 11,687,785 $ 11,687,785 $ 9,354,070 $ 9,354,070 $ 10,517,333 $ 10,517,333 $ 11,408,658 $ 11,408,658 540,365 540,365 204,733 204,733 453,695 453,695 232,950 232,950 227,361 227,361 8,125 8,125 31,584 31,584 5,000 5,000 24,022 24,022 33,608 33,608 43,501 43,501 688,943 688,943 781,542 781,542 1,351,295 1,351,295 1,413,148 1,413,148 1,339,973 1,339,973 1,553,511 1,553,511
135,269 135,269 252,508 252,508 372,278 372,278 311,195 311,195 399,838 399,838 518,185 518,185
26,940 26,940 26,940 26,940 299,490 299,490 704,057 704,057 26,940 26,940 999,604 999,604 12,797 $ 594,172 606,969 2,259 $ 18,000 20,259 19,043 $ 34,260 53,303 3,397 $ 90,000 93,397 6,447 $ 50,000 56,447 9,965 $ 6,000 15,965
743 743 991 991 5,127 5,127 12,098 12,098 29,593 29,593 1,911 1,911 20,288 20,288 38,556 38,556 58,282 58,282 97,734 97,734 82,939 82,939 85,181 85,181 99,976 99,976 (504,445) (504,445) (726,913) (726,913) (1,170,896) (1,170,896) (1,022,795) (1,022,795) (1,056,721) (1,056,721) (1,246,931) (1,246,931) (24,000) (24,000) (20,000) (20,000) (30,000) (30,000) (40,000) (40,000) (50,000) (50,000) (25,000) (25,000) 560,475 (560,475) 19,685 (19,685) 11,149 (11,149) 44,500 (44,500) 65,000 (65,000) 15,484 (15,484)
6,500,363 33,697 6,534,060 7,870,968 (1,685) 7,869,283 13,126,166 23,111 13,149,277 11,107,483 45,500 11,152,983 11,369,510 (15,000) 11,354,510 13,624,602 (9,484) 13,615,118
6,451,115 6,451,115 7,111,058 7,111,058 12,529,565 12,529,565 9,730,083 9,730,083 10,421,568 10,421,568 12,222,421 12,222,421
129,378 129,378 186,520 186,520 300,444 300,444 273,466 273,466 271,948 271,948 333,200 333,200
6,580,493 6,580,493 7,297,578 7,297,578 12,830,009 12,830,009 10,003,549 10,003,549 10,693,516 10,693,516 12,555,621 12,555,621
(80,130) 33,697 (46,433) 573,390 (1,685) 571,705 296,157 23,111 319,268 1,103,934 45,500 1,149,434 675,994 (15,000) 660,994 1,068,981 (9,484) 1,059,497
$ (80,130) $ 33,697 $ (46,433) $ 573,390 $ (1,685) $ 571,705 $ 296,157 $ 23,111 $ 319,268 $ 1,103,934 $ 45,500 $ 1,149,434 $ 675,994 $ (15,000) $ 660,994 $ 1,068,981 $ (9,484) $ 1,059,497
50
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF ACTIVITIES (CONTINUED)
Year ended June 30, 2018 Johnson College Prep Hansberry College Prep DRW College Prep Baker College Prep Butler College Prep Without With Without With Without With Without With Without With donor donor donor donor donor donor donor donor donor donor restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total
Revenue: PCTC tuition $ 8,113,928 $ 8,113,928 $ 6,723,040 $ 6,723,040 $ 5,448,911 $ 5,448,911 $ 3,600,933 $ 3,600,933 $ 6,466,180 $ 6,466,180 Supplemental SPED 657,369 657,369 590,964 590,964 727,387 727,387 476,726 476,726 493,529 493,529 Other CPS funding 922 922 1,000 1,000 7,400 7,400 1,000 1,000 Federal Titles I, II, III, IV, NSLP, MCJROTC, and E-Rate 1,167,448 1,167,448 857,435 857,435 739,869 739,869 451,810 451,810 707,554 707,554 Federal DOE Charter Schools Program grant $ 239,805 239,805 Campus revenues 160,124 160,124 235,285 235,285 93,410 93,410 100,109 100,109 146,204 146,204 Tuition - Noble Day Care Contributed goods and services 555,006 555,006 26,940 26,940 26,940 26,940 663,841 663,841 486,891 486,891 Contributions and grants 6,271 $ 10,000 16,271 27,304 27,304 568 $ 71,132 71,700 8,153 8,153 16,083 16,083 Summer of a Lifetime, a Noble Network Program Investment income, net 938 938 Other revenues 7,236 7,236 32,292 32,292 9,569 9,569 4,464 4,464 665 665 Transfer of grant funds from NNST 70,835 70,835 53,799 53,799 43,935 43,935 31,651 31,651 116,937 116,937 NNST school management fees (expenses) (895,432) (895,432) (681,863) (681,863) (552,276) (552,276) (397,661) (397,661) (710,784) (710,784) Summer of a Lifetime, a Noble Network Program - transfers (15,000) (15,000) (25,000) (25,000) (15,000) (15,000) (5,000) (5,000) (25,000) (25,000) Net assets released from restrictions 10,000 (10,000) 1,436 $ (1,436) 72,582 (72,582) 50,000 $ (50,000) 297,964 (297,964)
Total revenue 9,838,707 9,838,707 7,843,570 (1,436) 7,842,134 6,603,295 (1,450) 6,601,845 4,985,026 (50,000) 4,935,026 7,997,223 (58,159) 7,939,064
Expenses: Program services 8,924,790 8,924,790 8,126,915 8,126,915 6,245,933 6,245,933 4,814,712 4,814,712 7,859,068 7,859,068 Supporting services: Management and general 234,408 234,408 176,150 176,150 139,771 139,771 95,050 95,050 170,644 170,644 Fundraising
Total expenses 9,159,198 9,159,198 8,303,065 8,303,065 6,385,704 6,385,704 4,909,762 4,909,762 8,029,712 8,029,712
Change in net assets before other income (expense) 679,509 679,509 (459,495) (1,436) (460,931) 217,591 (1,450) 216,141 75,264 (50,000) 25,264 (32,489) (58,159) (90,648)
Other income (expense): Forgiveness of debt from NMTC unwind
Change in net assets $ 679,509 $ - $ 679,509 $ (459,495) $ (1,436) $ (460,931) $ 217,591 $ (1,450) $ 216,141 $ 75,264 $ (50,000) $ 25,264 $ (32,489) $ (58,159) $ (90,648)
ITW David Speer Academy The Noble Academy Mansueto High School Noble Day Care Noble Network Education Foundation Without With Without With Without With Without With Without With donor donor donor donor donor donor donor donor donor donor Consolidated restrictions restrictions Total restrictions restrictions Total restrictions restrictions Total Total restrictions restrictions Total restrictions restrictions Total Eliminations Total
$ 11,202,972 $ 11,202,972 $ 4,889,828 $ 4,889,828 $ 5,723,866 $ 5,723,866 $ 133,630,574 $ 133,630,574 263,618 263,618 123,422 123,422 138,719 138,719 5,255,054 5,255,054 24,492 $ 204,015 228,507 9,125 $ 154,702 163,827 12,082 12,082 660,318 660,318 1,281,471 1,281,471 647,208 647,208 536,632 536,632 16,660,589 16,660,589 200,000 200,000 61,077 61,077 $ 500,000 500,000 1,283,295 1,283,295 344,806 344,806 168,488 168,488 208,812 208,812 4,457,667 4,457,667 $ 793,843 $ 793,843 793,843 26,940 26,940 229,964 229,964 26,940 26,940 4,208,446 4,208,446 132,443 150,699 283,142 47,743 60,000 107,743 4,101 7,039 11,140 6,674,225 6,674,225 959,347 959,347 41,497 41,497 11,801 11,801 165,299 $ 509,133 $ 509,133 674,432 3,020 3,020 400 400 12,721 12,721 287,261 $ (63,000) 224,261 90,112 90,112 43,039 43,039 46,177 46,177 (1,120,680) (1,120,680) (536,703) (536,703) (572,854) (572,854) (69,000) (69,000) (5,000) (5,000) (35,000) (35,000) 554,714 (554,714) 258,579 (258,579) 6,492,277 (6,492,277)
12,776,405 12,776,405 5,876,093 17,200 5,893,293 12,606,274 (5,985,238) 6,621,036 174,242,075 793,843 793,843 509,133 509,133 (63,000) 175,482,051
10,297,850 10,297,850 4,824,409 4,824,409 5,585,607 5,585,607 146,454,812 654,143 654,143 147,108,955
290,351 290,351 144,514 144,514 150,530 150,530 16,300,908 112,328 112,328 63,200 63,200 (63,000) 16,413,436 1,277,164 1,277,164
10,588,201 10,588,201 4,968,923 4,968,923 5,736,137 5,736,137 164,032,884 766,471 766,471 63,200 63,200 (63,000) 164,799,555
2,188,204 2,188,204 907,170 17,200 924,370 6,870,137 (5,985,238) 884,899 10,209,191 27,372 27,372 445,933 445,933 10,682,496
12,454,019 (8,885,561) (8,885,561) 3,568,458
$ 2,188,204 $ - $ 2,188,204 $ 907,170 $ 17,200 $ 924,370 $ 6,870,137 $ (5,985,238) $ 884,899 $ 22,663,210 $ 27,372 $ 27,372 $ (8,439,628) $ (8,439,628) $ - $ 14,250,954
51
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF ACTIVITIES – SUMMER OF A LIFETIME, A NOBLE NETWORK PROGRAM
Years ended June 30, 2019 2018 Without Without donor With donor donor With donor restrictions restrictions Total restrictions restrictions Total
Revenue: Contributions and grants $ 261,513 $ 435,083 $ 696,596 $ 145,449 $ 484,287 $ 629,736 Fundraising events 267,075 267,075 329,611 329,611 Transfer of revenues from campuses 500,500 500,500 437,000 437,000 Net assets released from restrictions 464,469 (464,469) 569,107 (569,107)
Total revenue 1,493,557 (29,386) 1,464,171 1,481,167 (84,820) 1,396,347
Expenses: Administrative expenses 12,357 12,357 11,207 11,207 Other expenses 2,719 2,719 5,128 5,128 Event expenses 91,798 91,798 59,467 59,467 Executive director fees and other salaries 139,848 139,848 137,916 137,916 SOL program support 1,325,387 1,325,387 1,305,366 1,305,366
Total expenses 1,572,109 1,572,109 1,519,084 1,519,084
Change in net assets $ (78,552) $ (29,386) $ (107,938) $ (37,917) $ (84,820) $ (122,737)
52
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF PCTC TUITION
Year ended June 30, 2019
PCTC tuition revenue $ 136,939,505 Other amounts included in PCTC tuition as computed by Chicago Public Schools - unaudited 6,003,121
Total PCTC tuition as computed by Chicago Public Schools - unaudited $ 142,942,626
53
Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Board of Directors Noble Network of Charter Schools
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the consolidated financial statements of Noble Network of Charter Schools, Subsidiaries and Affiliate (collectively referred to as the School), which comprise the consolidated statement of financial position as of June 30, 2019, and the related consolidated statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated October 25, 2019.
Internal Control Over Financial Reporting
In planning and performing our audit of the consolidated financial statements, we considered the School’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School’s internal control. Accordingly, we do not express an opinion on the effectiveness of the School’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of the internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
54
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the School’s consolidated financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the School’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the School’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Chicago, IL October 25, 2019
55
Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance
Board of Directors Noble Network of Charter Schools
Report on Compliance for Each Major Federal Program
We have audited Noble Network of Charter Schools’ (the School) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the School’s major federal programs for the year ended June 30, 2019. The School’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations and the terms and conditions of its federal awards applicable to its federal programs.
Auditors’ Responsibility
Our responsibility is to express an opinion on compliance for each of the School’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the School’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the School’s compliance.
56
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Opinion on Each Major Federal Program
In our opinion, the School complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2019.
Report on Internal Control Over Compliance
Management of the School is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the School’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the School’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Chicago, IL October 25, 2019
57
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2019
Pass-through Federal Entity CFDA Identifying Federal Grantor/Pass-through Grantor/Program or Cluster Title Number Number Project Year Total
U.S. Department of Education: Charter Schools 84.282 October 1, 2017 - September 30, 2018 $ 345,770 October 1, 2018 - September 30, 2019 747,522 Total Charter Schools 1,093,292
Pass-through programs from Illinois State Board of Education: Pass-through programs from Chicago Public Schools: Title I Grants to Local Educational Agencies 84.010 150162990AF July 1, 2017 - August 31, 2018 222,288 Title I Grants to Local Educational Agencies 84.010 150162990AF July 1, 2018 - August 31, 2019 7,940,391 Title I Grants to Local Educational Agencies 84.010 150162990AF July 1, 2018 - August 31, 2019 7,780 Total Title I Grants to Local Educational Agencies* 8,170,459
Supporting Effective Instruction State Grants (Title II) 84.367 150162990AF July 1, 2018 - June 30, 2019 318,729
English Language Acquisition State Grants (Title III) 84.365 150162990AF July 1, 2018 - June 30, 2019 33,396
Student Support and Academic Enrichment Program (Title IV) 84.424 150162990AF July 1, 2018 - June 30, 2019 150,979
Food and Nutrition Service, Department of Agriculture: Pass-through programs from Illinois State Board of Education: School Breakfast Program 10.553 150162990AF October 1, 2017 - September 30, 2018 146,896 School Breakfast Program 10.553 150162990AF October 1, 2018 - September 30, 2019 989,349 National School Lunch Program 10.555 150162990AF October 1, 2017 - September 30, 2018 598,975 National School Lunch Program 10.555 150162990AF October 1, 2018 - September 30, 2019 3,159,821 National School Lunch Program (Food Distrbution Program - Non-Cash USDA Foods) 10.555 150162990AF July 1, 2018 - June 30, 2019 1,013 National School Lunch Program (Food Distrbution Program - Non-Cash DoD Fruits & Vegetables) 10.555 150162990AF July 1, 2018 - June 30, 2019 368,028 Summer Food Service Program For Children 10.559 150162990AF October 1, 2017 - September 30, 2018 60,846 Summer Food Service Program For Children 10.559 150162990AF October 1, 2018 - September 30, 2019 18,127 Total Child Nutrition Cluster 5,343,055
Child and Adult Care Food Program 10.558 150162990AF October 1, 2017 - September 30, 2018 262,896 Child and Adult Care Food Program 10.558 150162990AF October 1, 2018 - September 30, 2019 1,551,955 Total Child and Adult Care Food Program 1,814,851
Department of Defense: Pass-through program from the United States Navy: ROTC Language and Culture Training Grants 12.357 241,298
Total expenditures of federal awards $ 17,166,059
*Denotes a major program. See notes to schedule of expenditures of federal awards. 58
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2019
1. Basis of presentation
The accompanying schedule of expenditures of federal awards (schedule) includes the federal grant activity of the School and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of the School, it is not intended to and does not present the financial position, changes in net assets or cash flows of the School.
2. Insurance, loans, or loan guarantees
There were no insurance, loans, or loan guarantees outstanding as of and for the year ended June 30, 2019.
3. Subrecipients
There were no amounts provided for subrecipients from any federal program during the year ended June 30, 2019.
4. Federal awards for endowment funds
There were no federal awards for endowment funds that are federally restricted at year-end.
5. Value of non-cash commodities
The value of non-cash commodities provided by the Illinois State Board of Education under the National School Lunch Program is $1,013. The value of non-cash commodities supplied by the U.S. Department of Defense under the National School Lunch Program is $368,028.
6. Indirect cost rate
The School has elected not to use the 10 percent de minimus indirect cost rate under the Uniform Guidance.
59 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019
Section I - Summary of Auditors’ Results
1. The auditors’ report expresses an unmodified opinion on the consolidated financial statements of Noble Network of Charter Schools, Subsidiaries and Affiliate.
2. There were no significant deficiencies or material weaknesses disclosed during the audit of the consolidated financial statements.
3. There were no instances of noncompliance material to the consolidated financial statements of Noble Network of Charter Schools, Subsidiaries and Affiliate, which would be required to be reported in accordance with Government Auditing Standards.
4. There were no significant deficiencies or material weaknesses in internal control over major federal award programs disclosed during the audit.
5. The auditors’ report on compliance for the major federal award programs for Noble Network of Charter Schools expresses an unmodified opinion on all major federal programs.
6. There were no audit findings that are required to be reported in accordance with the Uniform Guidance.
7. The programs tested as a major program were: Title I Grants to Local Educational Agencies 84.010
8. The threshold used for distinguishing between Type A and B programs was $750,000.
9. Noble Network of Charter Schools qualified as a low-risk auditee.
Section II - Financial Statement Findings
None
Section III - Major Federal Award Programs Findings and Questioned Costs
None
60
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2019
Financial Statement Findings
None
Major Federal Award Programs Findings and Questioned Costs
Finding 2018-001: Student File Documentation
Federal Program: Child Nutrition Cluster Program
CFDA: 10.553, 10.555, 10.559
Criteria
To properly authorize and document a student’s eligibility for the Free/Reduced Lunch and Breakfast programs that are part of the U.S. Department of Agriculture Child Nutrition Cluster programs, the School is to have all applications for the program include the signature authorization from a determining officer.
Condition
Documentation of verification from a determining officer could not be located for two selected student files.
Context
There were two exceptions of this nature noted out of the forty student files selected for testing.
Questioned Costs
None
Cause and effect
These exceptions appear to be caused by staff oversight. The School has controls in place to capture this information in each student file. By not obtaining the determining officer’s signature, there was no evidence that the staff had properly authorized the student’s eligibility to receive free, reduced, or paid meals in accordance with eligibility requirements.
61
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (CONTINUED)
YEAR ENDED JUNE 30, 2019
Major Federal Award Programs Findings and Questioned Costs (continued)
Finding 2018-001: Student File Documentation (continued)
Federal Program: Child Nutrition Cluster Program (continued)
CFDA: 10.553, 10.555, 10.559 (continued)
Recommendation
We recommend that management continue to monitor the process in which they authorize applications and have the staff periodically review completed applications to ensure completeness of all student files to be in accordance with eligibility requirements.
Status
The School has reinforced processes and continued training in this area during the year ended June 30, 2019. This is no longer a finding.
62
Independent Accountants’ Report on Compliance with Requirements of Applicable Laws and Regulations Prescribed by Administering Agency
Board of Directors Noble Network of Charter Schools
We have examined Noble Network of Charter Schools’ (the School) compliance with compliance requirements listed in Attachment A provided by its administering agency, the Chicago Public Schools, during the year ended June 30, 2019. Management of the School is responsible for the School’s compliance with the specified requirements. Our responsibility is to express an opinion on the School’s compliance with the specified requirements based on our examination.
Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the School complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the School complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.
Our examination does not provide a legal determination on the School’s compliance with specified requirements.
Our examination disclosed material noncompliance applicable to the School during the year ended June 30, 2019. See page 66.
In our opinion, except for the material noncompliance disclosed on page 66, the School complied, in all material respects, with the specified requirements referred to in Attachment A during the year ended June 30, 2019.
The School’s response to the finding identified in our examination is noted on page 66. We express no opinion on the School’s response.
63
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This report is intended solely for the information and use of the Board of Directors and management of Noble Network of Charter Schools and Chicago Public Schools and is not intended to be, and should not be, used by anyone other than the specified parties.
Chicago, IL October 25, 2019
64
Attachment A
Chicago Public Schools provided the specified requirements in a memorandum dated June 14, 2019 and a Charter School Agreement dated July 1, 2014.
Open Meetings Act (5 ILCS 120/1.01 et seq.) Fingerprint-based Criminal Background Investigations and Checks of the Statewide Sex Offender Database and Statewide Child Murderer and Violent Offender Against Youth Database (105 ILCS 5/10-21.9 and 105 ILCS 5/34-18.5) Illinois School Student Records Act (105 ILCS 10/1 et seq.) Administering Medication (105 ILCS 5/10-22.21b) Hazardous Materials Training (105 ILCS 5/10-20.17a) School Safety Drill Act (105 ILCS 128/1 et seq.) Abused and Neglected Child Reporting Act (325 ILCS 5/1 et seq.) Eye Protection in School Act (105 ILCS 115/0.01 et seq.) Toxic Art Supplies in Schools Act (105 ILCS 135/1 et seq.) Infectious Disease Policies and Rules (105 ILCS 5/10-21.11) Physical Fitness Facility Medical Emergency Preparedness Act (210 ILCS 74/1 et seq.) Open Enrollment Process and Lottery (105 ILCS 5/27A-4(d), (h)) Conformance with the following sections of the Charter School Agreement: o Section 4: Governance and Operation o Section 5: Maintenance of Corporate Status and Good Standing o Section 5: Facility o Section 6: Pension Payments o Section 6: Management and Financial Controls o Section 6: Attendance o Section 8: Insurance
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NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF CURRENT YEAR FINDINGS
YEAR ENDED JUNE 30, 2019
Finding 2019-001 Illinois School Student Records Act
Criteria/Requirement
The School is required to maintain a log of information added to a student’s records which should include the name, signature and position of the person who has added such information and the date of its entry into the record.
Condition
Of the 170 student files we tested across all 17 campuses, 10 student files did not include a log of additions made to those files. All instances of noncompliance were observed at Gary Comer College Prep.
Effect
The School is not in compliance with this compliance requirement.
Recommendation
We recommend that the School implement a universal school-wide policy for all campuses and create a log template that each campus can use for additions to student records. The log should include the name, signature and position of the person who has added such information to the student’s record and the date of its entry into the record.
Management Response
The School will review its policy regarding adding information to student records and will implement a universal school-wide policy for all campuses to create a log template that each campus can use for additions to student records that will include all required information.
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NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF PRIOR YEAR FINDINGS
YEAR ENDED JUNE 30, 2019
There were no findings during the year ended June 30, 2018.
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