NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
YEARS ENDED JUNE 30, 2018 AND 2017
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
YEARS ENDED JUNE 30, 2018 AND 2017
CONTENTS
Page
Independent auditors’ report 1-2
Consolidated financial statements:
Statements of financial position 3-4 Statements of activities 5-6 Statements of functional expenses 7 Statements of cash flows 8-10 Notes to financial statements 11-36
Supplemental financial schedules:
Consolidating schedules of financial position 37-40 Consolidating schedules of activities 41-44 Consolidating schedules of functional expenses 45-46 Schedules of functional expenses: Noble Network Support Team (NNST) 47 Noble Street College Prep 48 Rauner College Prep 49 Pritzker College Prep 50 Rowe Clark College Prep 51 Golder College Prep 52 Gary Comer College Prep 53 UIC College Prep 54 Muchin College Prep 55 Chicago Bulls College Prep 56 Johnson College Prep 57 Hansberry College Prep 58 DRW College Prep 59 Baker College Prep 60 Butler College Prep 61 ITW David Speer Academy 62 The Noble Academy 63
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
YEARS ENDED JUNE 30, 2018 AND 2017
CONTENTS (CONTINUED)
Page
Supplemental financial schedules: (continued)
Schedules of functional expenses: (continued) Mansueto High School 64 Noble Day Care 65 Noble Network Education Foundation 66 Schedules of Activities – Summer of a Lifetime, A Noble Network Program 67 Schedule of PCTC tuition 68
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 69-70
Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance 71-73
Single Audit schedules:
Schedule of expenditures of federal awards 74 Notes to schedule of expenditures of federal awards 75 Schedule of findings and questioned costs 76-77 Schedule of prior year findings and questioned costs 78
Independent Accountants’ Report on Compliance with Requirements of Applicable Laws and Regulations Prescribed by Administering Agency 79-80
Schedule of current year findings and prior year findings 81
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, 2018 and 2017, 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 1
NBC Tower, Suite 1500 | 455 N. Cityfront Plaza Drive | Chicago, IL 60611-5313 | O 312.670.7444 | F 312.670.8301 | ORBA.COM Independent Member of BKR International
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, 2018 and 2017, 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.
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 37 through 66 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 67 and 68 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 68 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 9, 2018, 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 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 9, 2018
2
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
June 30, 2018 2017
ASSETS
Current assets: Cash $ 47,091,376 $ 51,647,306 Investments 29,850,000 Accounts receivable 4,184,284 9,289,351 Contributions receivable 781,857 7,613,673 Prepaid expenses 2,660,725 1,996,940 Cash - restricted by NMTC 2,504,804 10,399,174 Cash and investments - restricted by bond indenture 1,157,770 12,403,186 Investments - restricted for lease security deposit 361,332 Leverage loan notes receivable - NMTC 9,187,788
Total current assets 88,230,816 102,898,750
Property and equipment, net 108,200,133 108,491,523
Other assets: Contributions receivable, net of current portion 150,000 1,010,000 Investments - restricted for student scholarships 2,576,864 2,589,641 Leverage loan notes receivable - NMTC, net of current portion 24,918,422 24,878,829 Deposits 775,076 800,076
Total other assets 28,420,362 29,278,546
Total assets $ 224,851,311 $ 240,668,819
See notes to consolidated financial statements. 3
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)
June 30, 2018 2017
LIABILITIES AND NET ASSETS
Current liabilities: Accounts payable and accrued expenses $ 15,926,107 $ 15,770,403 Bonds payable, net 819,139 11,819,140 Notes payable, net 417,938 15,730,424 Deferred lease incentive 199,046 199,046 Deferred revenue 2,194,758 2,352,568
Total current liabilities 19,556,988 45,871,581
Long-term liabilities: Bonds payable, net, net of current portion 35,916,792 36,732,186 Notes payable, net, net of current portion 35,655,251 38,454,378 Obligation under interest rate swap agreement 37 Deferred lease incentive, net of current portion 1,924,108 2,123,154 Deferred rent 2,665,628 2,605,893
Total long-term liabilities 76,161,779 79,915,648
Total liabilities 95,718,767 125,787,229
Net assets: Unrestricted: Board-designated 15,000,000 15,000,000 Undesignated 110,153,628 87,768,656
Total unrestricted 125,153,628 102,768,656
Temporarily restricted 3,978,916 12,112,934
Total net assets 129,132,544 114,881,590
Total liabilities and net assets $ 224,851,311 $ 240,668,819
See notes to consolidated financial statements. 4
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF ACTIVITIES
Years ended June 30, 2018 2017 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total
Revenue: PCTC tuition $ 133,630,574 $ 133,630,574 Per-capita tuition and related funding $ 122,204,162 $ 122,204,162 Supplemental SPED 5,255,054 5,255,054 Other CPS funding 296,601 $ 358,717 655,318 180,583 $ 407,016 587,599 Federal Titles I, II, III, IV, National School Lunch Program, MCJROTC, and E-Rate 16,660,589 16,660,589 17,551,390 17,551,390 Federal DOE Charter Schools Program grant 1,283,295 1,283,295 938,645 938,645 Campus revenues 4,457,667 4,457,667 4,228,555 4,228,555 Registration and tuition - Noble Day Care 793,843 793,843 762,152 762,152 Contributed goods and services 4,208,446 4,208,446 5,921,776 5,921,776 Contributions and grants 2,203,912 4,475,313 6,679,225 2,912,285 5,836,229 8,748,514 Summer of a Lifetime, a Noble Network Program 475,060 484,287 959,347 729,831 518,996 1,248,827 Investment income 617,087 617,087 575,304 575,304 Net realized and unrealized gain (loss) on investments and interest rate swap 57,345 57,345 (18,416) (18,416) Other revenues 224,261 224,261 231,724 231,724 Net assets released from restrictions: Satisfaction of purpose or time restrictions 14,735,630 (14,735,630) 12,238,672 (12,238,672)
Total revenue 183,616,069 (8,134,018) 175,482,051 167,518,018 (4,537,786) 162,980,232
See notes to consolidated financial statements. 5
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF ACTIVITIES (CONTINUED)
Years ended June 30, 2018 2017 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total
Expenses: Program services $ 150,505,505 $ 150,505,505 $ 140,391,290 $ 140,391,290 Supporting services: Management and general 13,017,134 13,017,134 11,094,108 11,094,108 Fundraising 1,276,916 1,276,916 2,099,565 2,099,565
Total expenses 164,799,555 164,799,555 153,584,963 153,584,963
Change in net assets before other income 18,816,514 $ (8,134,018) 10,682,496 13,933,055 $ (4,537,786) 9,395,269
Other income: Forgiveness of debt from NMTC unwind 3,568,458 3,568,458
Change in net assets 22,384,972 (8,134,018) 14,250,954 13,933,055 (4,537,786) 9,395,269 Net assets: Beginning of year 102,768,656 12,112,934 114,881,590 88,835,601 16,650,720 105,486,321
End of year $ 125,153,628 $ 3,978,916 $ 129,132,544 $ 102,768,656 $ 12,112,934 $ 114,881,590
See notes to consolidated financial statements. 6
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES
Years ended June 30, 2018 2017 Supporting Services Supporting Services Program Management Program Management services and general Fundraising Total services and general Fundraising Total
Salaries $ 75,606,767 $ 7,122,256 $ 427,635 $ 83,156,658 $ 69,446,504 $ 6,804,742 $ 392,668 $ 76,643,914 Employee benefits and payroll taxes 19,173,429 1,279,778 75,149 20,528,356 16,324,480 1,162,710 70,767 17,557,957 Contracted services and consulting 3,099,275 1,701,406 586,887 5,387,568 2,127,094 1,410,202 441,375 3,978,671 Professional development, staff recruitment 1,194,020 573,653 28,253 1,795,926 1,006,683 511,150 25,969 1,543,802 Food 5,535,568 5,535,568 6,013,014 6,013,014 Educational materials, technology and instruction equipment 6,774,902 83,768 27,151 6,885,821 7,399,506 58,831 22,428 7,480,765 Other direct student expenses 6,715,189 194,292 6,909,481 6,884,684 122,873 7,007,557 Scholarships 2,525,234 2,525,234 1,910,493 1,910,493 Summer of a Lifetime, a Noble Network Program 1,305,366 1,305,366 1,269,746 1,269,746 Office 763,150 204,774 3,542 971,466 720,788 179,110 2,685 902,583 Occupancy 11,212,808 468,092 7,470 11,688,370 11,125,161 456,694 5,665 11,587,520 Contributed food 377,160 377,160 392,306 392,306 Contributed pension 1,015,548 1,015,548 Contributed rents 3,831,093 3,831,093 3,496,081 3,496,081 Contributed services 1,015,300 1,015,300 CPS administrative fee 3,567,593 3,567,593 3,011,448 3,011,448 Interest 2,893,578 247,427 3,141,005 3,247,760 228,874 3,476,634 Depreciation and amortization 5,905,745 79,838 5,985,583 4,939,660 89,680 5,029,340 Other expenses 24,628 51,850 120,829 197,307 60,334 69,242 122,708 252,284 Write-off of uncollectible pledges 1,010,000 1,010,000
Total expenses $ 150,505,505 $ 13,017,134 $ 1,276,916 $ 164,799,555 $ 140,391,290 $ 11,094,108 $ 2,099,565 $ 153,584,963
See notes to consolidated financial statements. 7
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 2018 2017 (As restated)
Cash flows from operating activities: Change in net assets $ 14,250,954 $ 9,395,269 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 5,985,583 5,029,340 Amortization of lease incentive (199,046) (199,045) Amortization of deferred rent 59,735 191,064 Amortization of debt issuance costs 177,156 108,913 Debt forgiveness (3,818,458) (1,250,000) Write-off of uncollectible pledges 1,010,000 Net realized and unrealized (gain) loss on investments and interest rate swap (57,345) 18,416 (Increase) decrease in operating assets: Accounts receivable 5,105,067 (445,106) Contributions receivable 6,681,816 3,503,745 Prepaid expenses (663,785) 268 Deposits 25,000 Accrued interest on leverage loan note receivable - NMTC (206,351) (254,055) Increase (decrease) in operating liabilities: Accounts payable and accrued expenses 123,064 244,345 Deferred revenue (157,810) 395,254
Net cash provided by operating activities 28,315,580 16,738,408
See notes to consolidated financial statements. 8
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Years ended June 30, 2018 2017 (As restated)
Cash flows from investing activities: Purchase of investments $ (29,808,608) Release of cash restricted by bond indenture 42,790 $ 242,089 Restriction of cash for NMTC (7,794,612) Release of cash restricted for NMTC 7,894,370 Proceeds from sale of investments - restricted for bond indenture 11,309,531 10,216,000 Purchase of investments - restricted for bond indenture (57,125) Purchase of investments - restricted for student scholarships (39,603) (23,640) Proceeds from redemption of investments - restricted for lease security deposit 362,145 Purchase of investments - restricted for lease security deposit (813) (1,064) Purchase of property and equipment (5,661,553) (18,759,255) Issuance of leverage loan notes receivable - NMTC (19,004,200)
Net cash used in investing activities (15,958,866) (35,124,682)
Cash flows from financing activities: Proceeds from termination of interest rate swap 42,101 Payments on bonds payable (11,841,256) (10,336,257) Proceeds from notes payable 26,700,000 Payments on notes payable (5,113,489) (860,398) Payments for bond and NMTC issuance costs (409,460)
Net cash provided by (used in) financing activities (16,912,644) 15,093,885
Net change in cash (4,555,930) (3,292,389) Cash, beginning of year 51,647,306 54,939,695
Cash, end of year $ 47,091,376 $ 51,647,306
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, 2018 2017 (As restated)
Supplemental disclosure of cash flow information: Cash paid during the year for interest $ 3,106,446 $ 3,470,513
Supplemental disclosures of non-cash financing activities: Forgiveness of notes payable included in contributions and grants revenue $ 250,000 $ 1,250,000 Net gain on forgiveness of debt from NMTC unwind $ 3,568,458 Capital purchases included in accounts payable and accrued expenses $ 32,640 $ 4,786,168
See notes to consolidated financial statements. 10 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, 2018 and 2017, the School served the following students:
Opened in August Years ended June 30, 2018 2017
1999 Noble Street College Prep 645 632 2006 Rauner College Prep 627 634 2006 Pritzker College Prep 972 993 2007 Rowe Clark College Prep 454 538 2007 Golder College Prep 653 651 2008* Gary Comer College Prep 1,086 1,130 2008 UIC College Prep 920 899 2009 Muchin College Prep 950 939 2009 Chicago Bulls College Prep 1,121 1,123 2010 Johnson College Prep 805 857 2012 Hansberry College Prep 613 703 2012 DRW College Prep 497 533 2013 Baker College Prep 358 389 2013 Butler College Prep 639 577 2014 ITW David Speer Academy 1,007 815 2014 The Noble Academy 483 346 2016 Mansueto High School 515 179
12,345 11,938
*Includes Gary Comer Middle School which opened in August 2011.
11 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 the years ended June 30, 2018 and 2017, the School received approximately 76% and 75%, respectively, of its support from PCTC and per-capita tuition and related funding from Chicago Public Schools. PCTC tuition payments are calculated by the Illinois State Board of Education (ISBE) as defined by statute, and varies year-to-year as the following fluctuate: CPS’ expenditures, expenditure composition, categorical revenue, and student attendance. Prior to July 1, 2017, per-capita tuition payments were determined annually by Chicago Public Schools and varied from year-to-year depending upon the amount of appropriations authorized by the Illinois General Assembly and subsequent approval by Chicago Public Schools of its budget on an annual basis.
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 expires on June 30, 2019. In addition, the School has been certified as a charter school by 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 have 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.
Activity for Summer of a Lifetime, a Noble Network Program, is included in the consolidated financial statements. 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.
12 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).
Principles of consolidation:
The accompanying consolidated financial statements include the accounts of Noble Day Care, L3C (Noble Day Care) and Noble Management, 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.” Noble Management, LLC is the sole member and manager of Mansueto High School, LLC. The Network and the Foundation have common control since the Network appointed 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.
Basis of presentation:
The School reports information regarding its financial position and activities in three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets.
Unrestricted - Unrestricted net assets are available to finance the general operations of the School. The only limits on the use of unrestricted net assets are the broad limits resulting from the nature of the School, the environment in which it operates and the purposes specified in its Articles of Incorporation. Voluntary resolutions by the Board of Directors to designate a portion of the School’s unrestricted net assets for specified purposes do not result in restricted funds. Since designations are voluntary and may be reversed by the Board of Directors at any time, designated net assets are included under the caption “unrestricted net assets.”
The School’s Board-designated unrestricted net assets as of June 30, 2018 and 2017 consist of instructional and educational expenses to be used at the discretion of campus administration, upon approval of the Superintendent and CEO, as well as amounts to be used for future maintenance and repair costs of campus buildings.
13 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Basis of presentation: (continued)
Temporarily restricted - Temporarily restricted net assets result (a) from contributions and other inflows of assets, the use of which by the School is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by action of the School pursuant to those stipulations, (b) from other asset enhancements and diminishments subject to the same kinds of stipulations and (c) from reclassifications to (or from) other classes of net assets as a consequence of donor-imposed stipulations, their expiration by passage of time or their fulfillment and removal by actions of the School pursuant to those stipulations. See Note 18 for a description of temporarily restricted net assets at June 30, 2018 and 2017.
Permanently restricted - Permanently restricted net assets (generally referred to as endowment funds) are assets that have donor-imposed restrictions that stipulate that the contributed resources be maintained permanently, but permit the entity to utilize or expend part or all of the income or other economic benefits derived from the donated assets. The School has no permanently restricted net assets.
Unrestricted and restricted revenue and support:
Contributions received are recorded as unrestricted, temporarily restricted or permanently restricted support depending on the existence and/or nature of any donor restrictions.
Donor-restricted support is reported as an increase in temporarily or permanently restricted net assets depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose of restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the consolidated statements of activities as net assets released from restrictions.
Expense allocation:
The costs of providing various programs and other activities have been summarized on a functional basis in the consolidated statements of activities and functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Expenses for program services represented approximately 91% of total expenses for the years ended June 30, 2018 and 2017.
14 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Derivative instruments:
The School made limited use of derivative instruments for the purpose of managing interest rate risks. An interest rate swap agreement was used to convert variable rate debt to a fixed rate (see Note 10). The differentials paid or received on the interest rate swap agreement are accrued and recognized as adjustments to interest rate expense; gains and losses realized upon settlement of this agreement are deferred until the underlying hedge instrument is settled. The interest rate swap agreement was terminated in February 2018.
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, 2018 and 2017.
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, 2018 2017
Receivable due in less than one year $ 781,857 $ 7,613,673 Receivable due in one to five years 150,000 1,010,000
Unconditional promises to give $ 931,857 $ 8,623,673
An allowance for doubtful accounts is considered unnecessary and is not provided as of June 30, 2018 and 2017.
15 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
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.
Deferred lease incentive:
The School amortizes lease incentives against rent expense over the lease term.
Deferred revenue:
Deferred revenue results from the School recognizing textbook, uniform, and other student fees collected as revenue in the period in which the related educational instruction is performed, as well as receiving cash for conditional contributions and grants of which the conditions have not yet been met. Accordingly, revenue for student fees received for the next school term is deferred until the instruction commences and 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.
16 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Contributed goods and services:
Contributed goods are reflected as contributions at their fair value at date of donation and are reported as unrestricted support 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.
For the years ended June 30, 2018 and 2017, the School was the beneficiary of donated rent for the use of Chicago Public Schools’ buildings by various campuses. For the year ended June 30, 2017, the School was the beneficiary of employer pension expense paid on behalf of the School by Chicago Public Schools.
The School recognized $375,487 of contributed shares of stock during the year ended June 30, 2018, which is included in contributions and grants revenue in the consolidated statements of activities. The School recognized $5,430,408 of contributed shares of stock and $1,015,300 of specialized consulting services during the year ended June 30, 2017, which is included in contributions and grants revenue and contributed services revenue in the consolidated statements of activities.
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.
Reclassification:
The consolidated statements of activities and consolidated statements of 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 approximately $3,200,000 from supporting services to program expenses in the consolidated statements of functional expenses for the year ended June 30, 2017. The reclassifications had no effect on net assets or change in net assets as previously reported.
17 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of significant accounting policies (continued)
Restatement:
The consolidated statements of cash flows for the year ended June 30, 2017 has been restated to reflect a correction of an error. The correction resulted in a decrease of $4,786,168 in the amounts previously reported as the change in accounts payable and accrued expenses and purchases of property and equipment. The restatement had no effect on the net change in cash as previously reported.
Subsequent events:
Management has evaluated subsequent events through October 9, 2018, the date that the consolidated financial statements were issued.
3. 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, 2018 and 2017.
4. Cash
The School maintains its cash in bank accounts which, at times, exceed federally-insured limits. At June 30, 2018 and 2017, cash in excess of these limits totaled approximately $48,900,000 and $61,600,000, respectively. Management believes that the School is not exposed to any significant credit risk on cash.
18 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. 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.
19 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. 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: Cash and investments: Fixed income mutual funds $ 2,565,219 $ 2,565,219 United States Government treasury bills 29,850,000 29,850,000 Cash investments 1,169,415 1,169,415
Total cash and investments 33,584,634 33,584,634
Total recurring fair value measurements $ 33,584,634 $ 33,584,634
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 $ 97,727,542 $ 97,727,542
20 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. 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, 2017:
June 30, 2017 Total Level 1 Level 2
Recurring fair value measurements: Assets: Cash and investments: Certificate of deposit $ 361,332 $ 361,332 Fixed income mutual funds 2,475,165 2,475,165 United States Government treasury bonds 11,267,010 11,267,010 Cash investments 1,250,652 1,250,652
Total cash and investments 15,354,159 15,354,159
Liability: Interest rate swap derivative (37) $ (37)
Total recurring fair value measurements $ 15,354,122 $ 15,354,159 $ (37)
Nonrecurring fair value measurements: Asset: Leverage loan notes receivable - NMTC $ 34,066,617 $ 34,066,617
Liabilities: Bonds payable 48,551,326 48,551,326 Notes payable 54,184,802 54,184,802
Total nonrecurring fair value measurements $ 136,802,745 $ 136,802,745
21 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. 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 and bonds are stated at fair value based on quoted prices in active markets.
Cash investments are stated at cost which approximates fair value.
The interest rate swap derivative was valued using pricing models that use observable outputs.
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.
22 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Property and equipment
Property and equipment are as follows:
June 30, 2018 2017
Leasehold improvements $ 71,061,592 $ 70,010,386 Building 50,696,910 26,710,276 Land 6,423,651 6,423,651 Equipment 9,917,710 8,467,620 Furniture 2,018,741 1,077,275 Software 700,462 476,540 Automobiles 190,561 145,561
141,009,627 113,311,309 Less accumulated depreciation and amortization (33,749,798) (27,764,215)
107,259,829 85,547,094 Construction in progress 940,304 22,944,429
Property and equipment, net $ 108,200,133 $ 108,491,523
7. 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.
23 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. 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 second 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.
24 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. 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 monthly 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.
25 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Leverage loan notes receivable – NMTC and notes payable – NMTC (continued)
2017 New Market Tax Credits:
On March 16, 2017, the School entered into a third 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 terms of the NMTC transaction, the School is also obligated to pay annual loan servicing fees of $50,000.
26 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. 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, 2018 and 2017 are summarized below:
June 30, 2018 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
June 30, 2017 Original Accrued note interest Total
2017 NMTC $ 19,004,200 $ 55,430 $ 19,059,630 2015 NMTC 5,819,200 5,819,200 2011 NMTC 8,050,000 1,137,787 9,187,787
Total leverage notes receivable - NMTC $ 32,873,400 $ 1,193,217 $ 34,066,617
The applicable Loan Agreements for the NMTC transactions contain various covenants. The School is in compliance with all loan covenants as of June 30, 2018 and 2017.
27 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Leverage loan notes receivable – NMTC and notes payable – NMTC (continued)
2017 New Market Tax Credits: (continued)
Notes payable – NMTC are summarized below:
June 30, 2018 2017
Notes payable – 2017 NMTC $ 26,700,000 $ 26,700,000 Notes payable – 2015 NMTC 7,920,000 7,920,000 Notes payable – 2011 NMTC 13,000,000
Total notes payable – NMTC 34,620,000 47,620,000 Unamortized NMTC – notes payable issuance costs (421,811) (573,107)
Notes payable – NMTC, net $ 34,198,189 $ 47,046,893
See Note 9 for notes payable.
28 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Bonds payable
Bonds payable are summarized as follows:
June 30, 2018 2017
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 $1,371,311 and $1,470,442 for the years ended June 30, 2018 and 2017, respectively) are payable annually on September 1 through maturity in 2032. The bonds are collateralized by various campus facilities. $ 18,834,806 $ 19,655,677
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 $78,534 and $82,279 for the years ended June 30, 2018 and 2017, respectively) are payable annually beginning September 1, 2023 through maturity in 2039. The bonds are collateralized by various campus facilities. 19,921,466 19,917,721
Series 2007A bonds payable with interest payable semi-annually on March 1 and September 1, at rates ranging from 4.10% to 5%. Principal payments (net of reoffering premium of $100,330 for the year ended June 30, 2017) were payable annually on September 1. The bonds were defeased with the issuance of the Series 2015 bonds and were redeemed in full on September 1, 2017. 11,135,330
Total bonds payable 38,756,272 50,708,728 Unamortized bond issuance costs (2,020,341) (2,157,402)
Bonds payable, net 36,735,931 48,551,326 Less current portion, net (819,139) (11,819,140)
Long-term portion, net $ 35,916,792 $ 36,732,186
29 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. 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, 2018 and 2017, the School was in compliance with all of the financial covenants.
Future minimum principal payments are as follows:
Year ending June 30: Amount
2019 $ 956,199 2020 986,199 2021 1,031,199 2022 1,076,199 2023 1,121,199 Thereafter 33,585,277
Total $ 38,756,272
30 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Notes payable
Notes payable are summarized as follows:
June 30, 2018 2017
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. $ 1,500,000 $ 1,750,000
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
Charter School Growth Fund note payable with interest accruing at a rate of 1% per annum; final payment made in June 2018. 500,000
IFF note payable in monthly installments of $6,682, which includes interest at 5.84% per annum; final payment made in December 2017. 405,025
IFF note payable in monthly installments of $8,013, which includes interest at 5.68% per annum; final payment made in December 2017. 589,320
BMO Harris Bank note payable in monthly installments of $61,728, which includes interest at LIBOR plus 2.5% per annum; final payment made in February 2018. 3,518,564
Notes payable - NMTC, net (See Note 7) 34,198,189 47,046,893
Total notes payable 36,073,189 54,184,802 Less current portion (417,938) (15,730,424)
Long-term portion, net $ 35,655,251 $ 38,454,378
31 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Notes payable (continued)
The above notes payable require the School to comply with certain financial covenants. At June 30, 2018 and 2017, the School as in compliance with all of the financial covenants.
Future minimum principal payments are as follows:
Year ending June 30: Amount
2019 $ 500,000 2020 1,375,000 2021 2022 48,723 2023 294,570 Thereafter 34,276,707
36,495,000 Less unamortized NMTC - notes payable issuance costs (421,811)
Notes payable, net $ 36,073,189
10. Interest rate swap
The School entered into an ISDA Master (Swap) Agreement with BMO Harris Bank for a notional amount of $5,000,000, with an effective date of July 17, 2015 and an original maturity date of April 15, 2022, in which the School will make interest payments based upon a fixed rate of 1.64% commencing on August 17, 2015 in exchange for BMO Harris Bank to make interest payments to the School based on a floating rate of one-month LIBOR rate through and including the maturity date.
The swap agreement was terminated in February 2018, in conjunction with the payoff of the BMO Harris Bank loan.
32 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. Conditional promises to give
The School records revenue associated with conditional promises to give when the conditions have been substantially met. As of June 30, 2018, the School has approximately $23,100,000 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.
12. 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.
13. 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 to be named the Osborn Family Scholarship program.
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.
14. School lunch program
For the years ended June 30, 2018 and 2017, 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.
15. 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 $4,600,000 in aggregate for 2018. 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 $613,000 and $558,000 as of June 30, 2018 and 2017, respectively, and is included in accounts payable and accrued expenses on the consolidated statements of financial position.
33 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. 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 the Chicago Public Schools and remits those contributions to the Fund for the benefit of applicable Chicago schools.
During the year ended June 30, 2017, Chicago Public Schools withheld the employer contribution related to pensionable salaries other than Special Education instructors from the tuition that was paid to each school. In addition, Chicago Public Schools contributed the employer contribution related to pensionable salaries of Special Education instructors.
During the year ended June 30, 2018, Chicago Public Schools changed their funding model and withheld the employer contribution related to pensionable salaries, including Special Education instructors, from the tuition that was 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, 2018 and 2017:
Years ended June 30, 2018 2017
Total pensionable salaries $ 42,162,685 $ 39,042,307 Employees’ contribution expense picked up by employer 2,951,388 2,732,961
Employer’s contribution expense (11.16%) 4,705,356 4,357,121 Less: CPS contributed pension for SPED teachers (1,015,548) Less: CPS deduction amount for employer’s pension expense (4,093,347) (3,216,806)
Pension true-up amount $ 612,009 $ 124,767
In addition, all employees were eligible to participate in the Noble Network of Charter Schools 401(k) P/S Plan (P/S 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, 2018 and 2017 were $619,976 and $515,301, respectively.
34 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. Lease agreements
The School rents various facilities under leases expiring through 2035. Some of the leases contain renewal provisions ranging from 10 to 15 years. Annual rent under the leases ranges from $1 to $2,129,000. Security deposits totaling $775,076 are held by the landlords. In addition, the use of certain facilities are donated to the School.
Total rent expense was $3,820,956, excluding contributed rent of $3,831,093, and $3,986,283, excluding contributed rent of $3,496,081, for the years ended June 30, 2018 and 2017, respectively.
Future minimum building rental commitments are estimated as follows:
Year ending June 30: Amount
2019 $ 3,982,428 2020 4,048,078 2021 3,516,047 2022 3,295,881 2023 3,317,128 Thereafter 25,429,815
Total $ 43,589,377
35 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. Temporarily restricted net assets
Temporarily restricted net assets are available for the following purpose or time restrictions:
June 30, 2018 2017
Restricted for purpose: College readiness program $ 505,271 $ 1,000,411 Extracurricular activities 98,658 33,214 Other programs 15,677 236,946 Scholarships 2,388,215 2,724,322 Startup and growth activities and costs 58,227 6,093,464 Summer of a Lifetime program 434,176 518,996
Total restricted for purpose 3,500,224 10,607,353
Restricted for time 478,692 1,505,581
Total temporarily restricted net assets $ 3,978,916 $ 12,112,934
During the years ended June 30, 2018 and 2017, net assets were released from donor restrictions by incurring expenses satisfying the following purpose or time restrictions:
Years ended June 30, 2018 2017
Restricted for purpose: College readiness program $ 657,540 $ 340,781 Extracurricular activities 72,648 123,231 Other programs 795,280 194,539 Scholarships 3,208,618 2,054,070 Startup and growth activities and costs 7,684,288 7,630,229 Summer of a Lifetime program 569,107 480,822
Total restricted for purpose 12,987,481 10,823,672
Restricted for time 1,748,149 1,415,000
Total net assets released from restrictions $ 14,735,630 $ 12,238,672
36
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FINANCIAL POSITION
June 30, 2018 Noble Management, Noble Network Noble Network LLC - of Noble Education Mansueto High Consolidated Charter Schools Day Care Foundation School, LLC Eliminations Total
ASSETS
Current assets: Cash $ 45,918,728 $ 197,322 $ 975,326 $ 47,091,376 Investments 29,850,000 29,850,000 Accounts receivable 4,156,471 27,813 4,184,284 Contributions receivable 781,857 781,857 Due from Noble Day Care 272,366 $ (272,366) Prepaid expenses 2,660,725 2,660,725 Cash - restricted by NMTC 2,504,804 2,504,804 Cash and investments - restricted by bond indenture 1,157,770 1,157,770
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 Investment - Noble Management, LLC 3,686,675 (3,686,675) Leverage loan notes receivable - NMTC, net of current portion 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
37
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FINANCIAL POSITION (CONTINUED)
June 30, 2018 Noble Management, Noble Network Noble Network LLC - 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, net 819,139 819,139 Notes payable, net 417,938 417,938 Deferred lease incentive 199,046 199,046 Deferred revenue 2,194,758 2,194,758
Total current liabilities 19,556,988 272,366 (272,366) 19,556,988
Long-term liabilities: Bonds payable, net, net of current portion 35,916,792 35,916,792 Notes payable, net, net of current portion 35,655,251 35,655,251 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 76,132,604 29,175 76,161,779
Total liabilities 95,689,592 301,541 (272,366) 95,718,767
Net assets: Unrestricted: Board-designated 15,000,000 15,000,000 Undesignated 84,241,416 18,464 $ (7,029,652) 32,923,400 110,153,628
Total unrestricted 99,241,416 18,464 (7,029,652) 32,923,400 125,153,628
Temporarily restricted 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
38
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FINANCIAL POSITION (CONTINUED)
June 30, 2017 Noble Management, Noble Network Noble Network LLC - of Noble Education Mansueto High Consolidated Charter Schools Day Care Foundation School, LLC Eliminations Total
ASSETS
Current assets: Cash $ 50,840,637 $ 159,010 $ 647,659 $ 51,647,306 Accounts receivable 9,278,115 11,236 9,289,351 Contributions receivable 7,613,673 7,613,673 Due from Noble Day Care 262,505 $ (262,505) Due from Noble Network Education Foundation 380,900 (380,900) Prepaid expenses 1,996,940 1,996,940 Cash - restricted by NMTC 10,399,174 10,399,174 Cash and investments - restricted by bond indenture 12,403,186 12,403,186 Investments - restricted for lease security deposit 361,332 361,332 Leverage loan notes receivable - NMTC 9,187,788 9,187,788
Total current assets 93,536,462 170,246 9,835,447 (643,405) 102,898,750
Property and equipment, net 104,698,723 106,125 $ 3,686,675 108,491,523
Other assets: Contributions receivable, net of current portion 1,010,000 1,010,000 Investments - restricted for student scholarships 2,589,641 2,589,641 Investments - Noble Management, LLC 3,686,675 (3,686,675) Leverage loan notes receivable - NMTC, net of current portion 24,878,829 24,878,829 Deposits 793,576 6,500 800,076
Total other assets 8,079,892 6,500 24,878,829 (3,686,675) 29,278,546
Total assets $ 206,315,077 $ 282,871 $ 34,714,276 $ 3,686,675 $ (4,330,080) $ 240,668,819
39
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FINANCIAL POSITION (CONTINUED)
June 30, 2017 Noble Management, Noble Network Noble Network LLC - 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 $ 15,770,403 $ 15,770,403 Due to Noble Network of Charter Schools $ 262,505 $ 380,900 $ (643,405) Bonds payable, net 11,819,140 11,819,140 Notes payable, net 15,730,424 15,730,424 Deferred lease incentive 199,046 199,046 Deferred revenue 2,352,568 2,352,568
Total current liabilities 45,871,581 262,505 380,900 (643,405) 45,871,581
Long-term liabilities: Bonds payable, net, net of current portion 36,732,186 36,732,186 Notes payable, net, net of current portion 38,454,378 38,454,378 Obligation under interest rate swap agreement 37 37 Deferred lease incentive, net of current portion 2,123,154 2,123,154 Deferred rent 2,576,619 29,274 2,605,893
Total long-term liabilities 79,886,374 29,274 79,915,648
Total liabilities 125,757,955 291,779 380,900 (643,405) 125,787,229
Net assets (deficit): Unrestricted: Board-designated 15,000,000 15,000,000 Other 53,444,188 (8,908) 1,409,976 32,923,400 87,768,656
Total unrestricted 68,444,188 (8,908) 1,409,976 32,923,400 102,768,656
Temporarily restricted 12,112,934 32,923,400 (32,923,400) 12,112,934
Total net assets (deficit) 80,557,122 (8,908) 34,333,376 114,881,590
Member’s equity $ 3,686,675 (3,686,675)
Total liabilities, net assets (deficit) and member’s equity $ 206,315,077 $ 282,871 $ 34,714,276 $ 3,686,675 $ (4,330,080) $ 240,668,819
40
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF ACTIVITIES
Year ended June 30, 2018 Noble Network Support Team Noble Street College Prep Rauner College Prep Pritzker College Prep Temporarily Temporarily Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted 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, National School Lunch Program, 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 Registration and 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 92,056 92,056 300 300 548 548 577 577 Net realized and unrealized gain on investments and interest rate swap 15,848 15,848 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: Satisfaction of purpose or time 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 7,143,935 7,143,935 6,984,225 6,984,225 7,122,980 7,122,980 10,558,754 10,558,754 Supporting services: Management and general 12,904,606 12,904,606 Fundraising 1,276,916 1,276,916
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 College Prep Golder College Prep Gary Comer College Prep UIC College Prep Muchin College Prep Chicago Bulls College Prep Temporarily Temporarily Temporarily Temporarily Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted 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 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 24,043 $ 34,260 58,303 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
6,580,493 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
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
41
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 Temporarily Temporarily Temporarily Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted 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, National School Lunch Program, 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 Registration and 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 938 938 Net realized and unrealized gain on investments and interest rate swap 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: Satisfaction of purpose or time 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 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 Supporting services: Management and general 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 Temporarily Temporarily Temporarily Temporarily Temporarily Consolidated Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Total Unrestricted Restricted Total Unrestricted Restricted 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 12,082 655,318 655,318
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 6,679,225 6,679,225 959,347 959,347 11,801 11,801 107,954 $ 509,133 $ 509,133 617,087
41,497 41,497 57,345 57,345 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
10,588,201 10,588,201 4,968,923 4,968,923 5,736,137 5,736,137 149,851,362 654,143 654,143 150,505,505
12,904,606 112,328 112,328 63,200 63,200 (63,000) 13,017,134 1,276,916 1,276,916
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
42
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF ACTIVITIES (CONTINUED)
Year ended June 30, 2017 Noble Network Support Team Noble Street College Prep Rauner College Prep Pritzker College Prep Temporarily Temporarily Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total
Revenue: Per-capita tuition and related funding $ 993,680 $ 993,680 $ 6,579,409 $ 6,579,409 $ 6,434,013 $ 6,434,013 $ 10,130,282 $ 10,130,282 Other CPS funding 8,000 8,000 18,017 18,017 32,147 32,147 Federal Titles I, II, III, IV, National School Lunch Program, MCJROTC, and E-Rate 50,563 50,563 824,091 824,091 825,494 825,494 1,547,493 1,547,493 Federal DOE Charter Schools Program grant $ 351,369 351,369 Campus revenues 301,259 301,259 238,209 238,209 458,514 458,514 Registration and tuition - Noble Day Care Contributed goods and services 1,066,073 1,066,073 81,483 81,483 71,774 71,774 82,313 82,313 Contributions and grants 2,640,522 4,211,844 6,852,366 16,464 16,464 15 $ 42,657 42,672 4,744 $ 629,456 634,200 Summer of a Lifetime, a Noble Network Program 729,831 518,996 1,248,827 Investment income 167,101 167,101 21 21 26 26 27 27 Net realized and unrealized gain (loss) on investments and interest rate swap (134,626) (134,626) Other revenues 164,866 164,866 645 645 749 749 Transfer of grant funds from NNST (1,347,520) (1,347,520) 70,428 70,428 71,000 71,000 112,799 112,799 NNST school management fees (expenses) 12,374,043 12,374,043 (654,593) (654,593) (657,185) (657,185) (1,028,795) (1,028,795) Summer of a Lifetime, a Noble Network Program - transfers 322,000 322,000 (20,000) (20,000) (15,000) (15,000) (15,000) (15,000) Net assets released from restrictions: Satisfaction of purpose or time restrictions 4,116,817 (4,116,817) 5,000 $ (5,000) 31,830 (31,830) 67,804 (67,804)
Total revenue 21,143,350 965,392 22,108,742 7,212,207 (5,000) 7,207,207 7,018,193 10,827 7,029,020 11,393,077 561,652 11,954,729
Expenses: Program services 5,998,697 5,998,697 6,846,843 6,846,843 6,738,732 6,738,732 10,240,642 10,240,642 Supporting services: Management and general 10,993,667 10,993,667 Fundraising 2,099,565 2,099,565
Total expenses 19,091,929 19,091,929 6,846,843 6,846,843 6,738,732 6,738,732 10,240,642 10,240,642
Change in net assets $ 2,051,421 $ 965,392 $ 3,016,813 $ 365,364 $ (5,000) $ 360,364 $ 279,461 $ 10,827 $ 290,288 $ 1,152,435 $ 561,652 $ 1,714,087
Rowe Clark College Prep Golder College Prep Gary Comer College Prep UIC College Prep Muchin College Prep Chicago Bulls College Prep Temporarily Temporarily Temporarily Temporarily Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total
$ 6,047,109 $ 6,047,109 $ 6,664,396 $ 6,664,396 $ 11,531,656 $ 11,531,656 $ 8,551,081 $ 8,551,081 $ 9,423,344 $ 9,423,344 $ 10,614,311 $ 10,614,311 12,011 12,011 19,972 19,972 11,857 11,857 43,579 43,579
829,686 829,686 908,293 908,293 1,498,675 1,498,675 1,341,335 1,341,335 1,448,179 1,448,179 1,675,268 1,675,268
181,220 181,220 269,578 269,578 404,842 404,842 334,102 334,102 355,286 355,286 488,243 488,243
105,497 105,497 75,055 75,055 300,916 300,916 700,650 700,650 76,529 76,529 965,108 965,108 8,798 $ 206,272 215,070 1,515 $ 18,000 19,515 3,980 $ 60,000 63,980 13,658 $ 50,000 63,658 11,431 $ 50,000 61,431 12,613 $ (12,000) 613
35 35 47 47
6,582 6,582 14,203 14,203 40,060 40,060 4,889 4,889 3,254 3,254 14,972 14,972 61,839 61,839 74,436 74,436 124,823 124,823 99,630 99,630 101,920 101,920 123,106 123,106 (557,156) (557,156) (674,288) (674,288) (1,170,805) (1,170,805) (931,357) (931,357) (973,338) (973,338) (1,164,067) (1,164,067) (15,000) (15,000) (10,000) (10,000) (30,000) (30,000) (25,000) (25,000) (50,000) (50,000) (25,000) (25,000)
423,443 (423,443) 15,169 (15,169) 30,000 (30,000) 54,000 (54,000) 51,250 (51,250) 3,000 (3,000)
7,104,064 (217,171) 6,886,893 7,358,376 2,831 7,361,207 12,734,147 30,000 12,764,147 10,142,988 (4,000) 10,138,988 10,459,712 (1,250) 10,458,462 12,751,133 (15,000) 12,736,133
7,008,998 7,008,998 7,187,380 7,187,380 12,338,650 12,338,650 9,211,329 9,211,329 10,148,027 10,148,027 11,899,649 11,899,649
7,008,998 7,008,998 7,187,380 7,187,380 12,338,650 12,338,650 9,211,329 9,211,329 10,148,027 10,148,027 11,899,649 11,899,649
$ 95,066 $ (217,171) $ (122,105) $ 170,996 $ 2,831 $ 173,827 $ 395,497 $ 30,000 $ 425,497 $ 931,659 $ (4,000) $ 927,659 $ 311,685 $ (1,250) $ 310,435 $ 851,484 $ (15,000) $ 836,484
43
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF ACTIVITIES (CONTINUED)
Year ended June 30, 2017 Johnson College Prep Hansberry College Prep DRW College Prep Baker College Prep Butler College Prep Temporarily Temporarily Temporarily Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total
Revenue: Per-capita tuition and related funding $ 8,639,912 $ 8,639,912 $ 7,408,987 $ 7,408,987 $ 5,851,051 $ 5,851,051 $ 4,040,182 $ 4,040,182 $ 5,727,639 $ 5,727,639 Other CPS funding $ 167,475 167,475 Federal Titles I, II, III, IV, National School Lunch Program, MCJROTC, and E-Rate 1,414,676 1,414,676 1,051,811 1,051,811 851,686 851,686 568,681 568,681 806,857 806,857 Federal DOE Charter Schools Program grant 172,780 172,780 Campus revenues 158,235 158,235 288,622 288,622 95,931 95,931 106,399 106,399 127,935 127,935 Registration and tuition - Noble Day Care Contributed goods and services 591,328 591,328 95,018 95,018 85,226 85,226 648,865 648,865 485,032 485,032 Contributions and grants 15,600 $ 15,000 30,600 2,000 $ 25,000 27,000 $ 35,000 35,000 23,218 $ 200,000 223,218 26,380 26,380 Summer of a Lifetime, a Noble Network Program Investment income 32 32 Net realized and unrealized gain (loss) on investments and interest rate swap Other revenues 1,040 1,040 10,259 10,259 25,541 25,541 50 50 700 700 Transfer of grant funds from NNST 97,339 97,339 80,162 80,162 60,694 60,694 48,670 48,670 60,694 60,694 NNST school management fees (expenses) (888,340) (888,340) (728,190) (728,190) (553,010) (553,010) (403,744) (403,744) (598,619) (598,619) Summer of a Lifetime, a Noble Network Program - transfers (22,000) (22,000) (25,000) (25,000) (15,000) (15,000) (15,000) (15,000) (20,000) (20,000) Net assets released from restrictions: Satisfaction of purpose or time restrictions 15,000 (15,000) 23,564 (23,564) 39,236 (39,236) 57,500 (57,500) 340,255 (340,255)
Total revenue 10,022,790 10,022,790 8,207,265 1,436 8,208,701 6,441,355 (4,236) 6,437,119 5,074,821 142,500 5,217,321 6,956,873 6,956,873
Expenses: Program services 9,062,566 9,062,566 9,026,706 9,026,706 6,595,709 6,595,709 5,411,536 5,411,536 6,620,278 6,620,278 Supporting services: Management and general Fundraising
Total expenses 9,062,566 9,062,566 9,026,706 9,026,706 6,595,709 6,595,709 5,411,536 5,411,536 6,620,278 6,620,278
Change in net assets $ 960,224 $ - $ 960,224 $ (819,441) $ 1,436 $ (818,005) $ (154,354) $ (4,236) $ (158,590) $ (336,715) $ 142,500 $ (194,215) $ 336,595 $ - $ 336,595
ITW David Speer Academy The Noble Academy Mansueto High School Noble Day Care Noble Network Education Foundation Temporarily Temporarily Temporarily Temporarily Temporarily Consolidated Unrestricted Restricted Total Unrestricted Restricted Total Unrestricted Restricted Total Total Unrestricted Restricted Total Unrestricted Restricted Total Eliminations Total
$ 8,421,503 $ 8,421,503 $ 3,260,578 $ 3,260,578 $ 1,885,029 $ 1,885,029 $ 122,204,162 $ 122,204,162 35,000 $ 137,025 172,025 $ 102,516 102,516 587,599 587,599
1,221,148 1,221,148 493,502 493,502 193,952 193,952 17,551,390 17,551,390 50,207 50,207 $ 364,289 364,289 938,645 938,645 210,767 210,767 130,743 130,743 78,670 78,670 4,228,555 4,228,555 $ 762,152 $ 762,152 762,152 112,234 112,234 357,431 357,431 21,244 21,244 5,921,776 5,921,776 129,089 31,000 160,089 305 70,000 70,305 1,953 204,000 205,953 8,748,514 $ 19,004,200 $ 19,004,200 $ (19,004,200) 8,748,514 1,248,827 1,248,827 15,267 15,267 182,556 $ 392,748 392,748 575,304
116,210 116,210 (18,416) (18,416) 5,578 5,578 25 25 1,311 1,311 294,724 (63,000) 231,724 91,613 91,613 40,883 40,883 27,484 27,484 (845,322) (845,322) (359,171) (359,171) (186,063) (186,063) (15,000) (15,000) (5,000) (5,000)
168,025 (168,025) 197,923 (197,923) 6,598,856 (6,598,856)
9,650,845 9,650,845 4,117,219 24,800 4,142,019 8,637,703 (6,030,567) 2,607,136 161,888,332 762,152 762,152 392,748 19,004,200 19,396,948 (19,067,200) 162,980,232
9,239,193 9,239,193 3,858,019 3,858,019 21,297,928 21,297,928 158,730,882 664,608 664,608 (19,004,200) 140,391,290
10,993,667 100,295 100,295 63,146 63,146 (63,000) 11,094,108 2,099,565 2,099,565
9,239,193 9,239,193 3,858,019 3,858,019 21,297,928 21,297,928 171,824,114 764,903 764,903 63,146 63,146 (19,067,200) 153,584,963
$ 411,652 $ - $ 411,652 $ 259,200 $ 24,800 $ 284,000 $ (12,660,225) $ (6,030,567) $ (18,690,792) $ (9,935,782) $ (2,751) $ (2,751) $ 329,602 $ 19,004,200 $ 19,333,802 $ - $ 9,395,269
44
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FUNCTIONAL EXPENSES
Year ended June 30, 2018 Noble Network Education Noble Network Charter of Charter Schools Noble Day Care Foundation Supporting Supporting Supporting Services Services Services Program Management Program Management Management Consolidated services and general Fundraising Total services and general Total and general Eliminations Total
Salaries $ 75,217,676 $ 7,037,256 $ 427,635 $ 82,682,567 $ 389,091 $ 85,000 $ 474,091 $ 83,156,658 Employee benefits and payroll taxes 19,093,383 1,262,291 75,149 20,430,823 80,046 17,487 97,533 20,528,356 Contracted services and consulting 3,093,995 1,701,406 586,887 5,382,288 5,280 5,280 $ 63,000 $ (63,000) 5,387,568 Professional development, staff recruitment 1,190,972 573,653 28,253 1,792,878 3,048 3,048 1,795,926 Food 5,514,844 5,514,844 20,724 20,724 5,535,568 Educational materials, technology and instruction equipment 6,771,663 83,768 27,151 6,882,582 3,239 3,239 6,885,821 Other direct student expenses 6,714,174 194,292 6,908,466 1,015 1,015 6,909,481 Scholarships 2,525,234 2,525,234 2,525,234 Summer of a Lifetime, a Noble Network Program 1,305,366 1,305,366 1,305,366 Office 760,170 204,774 3,542 968,486 2,980 2,980 971,466 Occupancy 11,080,068 460,026 7,470 11,547,564 132,740 8,066 140,806 11,688,370 Contributed food 377,160 377,160 377,160 Contributed rents 3,831,093 3,831,093 3,831,093 CPS administrative fee 3,567,593 3,567,593 3,567,593 Interest 2,893,578 247,427 3,141,005 3,141,005 Depreciation and amortization 5,889,765 78,063 5,967,828 15,980 1,775 17,755 5,985,583 Other expenses 24,628 51,650 120,829 197,107 200 197,307 Write-off of uncollectible pledges 1,010,000 1,010,000 1,010,000
Total expenses $ 149,851,362 $ 12,904,606 $ 1,276,916 $ 164,032,884 $ 654,143 $ 112,328 $ 766,471 $ 63,200 $ (63,000) $ 164,799,555
45
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
CONSOLIDATING SCHEDULES OF FUNCTIONAL EXPENSES (CONTINUED)
Year ended June 30, 2017 Noble Network Education Noble Network Charter of Charter Schools Noble Day Care Foundation Supporting Supporting Supporting Services Services Services Program Management Program Management Management Consolidated services and general Fundraising Total services and general Total and general Eliminations Total
Salaries $ 69,077,704 $ 6,732,718 $ 392,668 $ 76,203,090 $ 368,800 $ 72,024 $ 440,824 $ 76,643,914 Employee benefits and payroll taxes 16,230,743 1,144,217 70,767 17,445,727 93,737 18,493 112,230 17,557,957 Contracted services and consulting 2,127,094 1,410,202 441,375 3,978,671 $ 63,000 $ (63,000) 3,978,671 Professional development, staff recruitment 1,003,293 511,150 25,969 1,540,412 3,390 3,390 1,543,802 Food 5,991,304 5,991,304 21,710 21,710 6,013,014 Educational materials, technology and instruction equipment 7,390,984 58,831 22,428 7,472,243 8,522 8,522 7,480,765 Other direct student expenses 6,881,361 122,873 7,004,234 3,323 3,323 7,007,557 Scholarships 1,910,493 1,910,493 1,910,493 Summer of a Lifetime, a Noble Network Program 1,269,746 1,269,746 1,269,746 Office 718,409 179,110 2,685 900,204 2,379 2,379 902,583 Occupancy 10,983,320 448,691 5,665 11,437,676 141,841 8,003 149,844 11,587,520 Contributed food 392,306 392,306 392,306 Contributed pension 1,015,548 1,015,548 1,015,548 Contributed rents 3,496,081 3,496,081 3,496,081 Contributed services 1,015,300 1,015,300 1,015,300 CPS administrative fee 3,011,448 3,011,448 3,011,448 Interest 3,247,760 228,874 3,476,634 3,476,634 Depreciation and amortization 4,923,680 87,905 5,011,585 15,980 1,775 17,755 5,029,340 Other expenses 55,408 69,096 122,708 247,212 4,926 4,926 146 252,284 Charitable contributions 19,004,200 19,004,200 (19,004,200)
Total expenses $ 158,730,882 $ 10,993,667 $ 2,099,565 $ 171,824,114 $ 664,608 $ 100,295 $ 764,903 $ 63,146 $ (19,067,200) $ 153,584,963
46
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – NOBLE NETWORK SUPPORT TEAM (NNST)
Years ended June 30, 2018 2017 Supporting Services Supporting Services Program Management Program Management services and general Fundraising Total services and general Fundraising Total
Salaries $ 2,353,708 $ 7,037,256 $ 427,635 $ 9,818,599 $ 2,029,277 $ 6,732,718 $ 392,668 $ 9,154,663 Employee benefits and payroll taxes 427,317 1,262,291 75,149 1,764,757 331,419 1,144,217 70,767 1,546,403 Contracted services and consulting 558,059 1,701,406 586,887 2,846,352 478,937 1,410,202 441,375 2,330,514 Professional development, staff recruitment 76,906 573,653 28,253 678,812 55,789 511,150 25,969 592,908 Food 1,800 1,800 86 86 Educational materials, technology and instruction equipment 63,490 83,768 27,151 174,409 101,356 58,831 22,428 182,615 Other direct student expenses 149,691 194,292 343,983 51,595 122,873 174,468 Scholarships 2,070,977 2,070,977 1,529,175 1,529,175 Summer of a Lifetime, a Noble Network Program 1,305,366 1,305,366 1,269,746 1,269,746 Office 50,317 204,774 3,542 258,633 50,011 179,110 2,685 231,806 Occupancy 25,622 460,026 7,470 493,118 24,586 448,691 5,665 478,942 Contributed pension 49,880 49,880 Contributed services 1,015,300 1,015,300 CPS administrative fee 41,036 41,036 Interest 247,427 247,427 228,874 228,874 Depreciation and amortization 16,699 78,063 94,762 8,350 87,905 96,255 Other expenses 2,947 51,650 120,829 175,426 18,490 69,096 122,708 210,294 Write-off of uncollectible pledges 1,010,000 1,010,000
Total expenses $ 7,143,935 $ 12,904,606 $ 1,276,916 $ 21,325,457 $ 5,998,697 $ 10,993,667 $ 2,099,565 $ 19,091,929
47
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – NOBLE STREET COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 3,824,608 $ 3,681,313 Employee benefits and payroll taxes 1,152,837 946,906 Contracted services and consulting 114,660 57,282 Professional development, staff recruitment 24,397 24,169 Food 209,811 229,618 Educational materials, technology and instruction equipment 190,797 351,045 Other direct student expenses 251,088 287,375 Office 27,726 33,806 Occupancy 704,555 696,384 Contributed food 26,940 28,022 Contributed pension 53,461 CPS administrative fee 174,772 160,008 Interest 118,104 137,073 Depreciation and amortization 161,039 158,115 Other expenses 2,891 2,266
Total expenses $ 6,984,225 $ 6,846,843
48
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – RAUNER COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 3,939,776 $ 3,609,966 Employee benefits and payroll taxes 1,027,621 917,846 Contracted services and consulting 137,190 45,172 Professional development, staff recruitment 36,719 30,727 Food 209,804 211,511 Educational materials, technology and instruction equipment 298,914 338,276 Other direct student expenses 339,544 370,599 Scholarships 1,280 Office 19,514 16,393 Occupancy 476,939 496,744 Contributed food 26,940 28,022 Contributed pension 43,752 CPS administrative fee 177,630 159,097 Interest 199,277 231,796 Depreciation and amortization 233,112 237,551
Total expenses $ 7,122,980 $ 6,738,732
49
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – PRITZKER COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 5,401,141 $ 5,080,004 Employee benefits and payroll taxes 1,405,044 1,258,072 Contracted services and consulting 202,931 59,723 Professional development, staff recruitment 79,323 83,231 Food 476,545 519,057 Educational materials, technology and instruction equipment 569,321 726,775 Other direct student expenses 627,898 705,196 Scholarships 6,030 908 Office 46,697 39,090 Occupancy 943,472 941,079 Contributed food 26,940 28,022 Contributed pension 54,291 CPS administrative fee 277,780 252,778 Interest 207,789 241,894 Depreciation and amortization 286,398 250,002 Other expenses 1,445 520
Total expenses $ 10,558,754 $ 10,240,642
50
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – ROWE CLARK COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 3,144,248 $ 3,382,542 Employee benefits and payroll taxes 890,394 788,187 Contracted services and consulting 134,022 108,078 Professional development, staff recruitment 19,969 30,269 Food 219,845 265,456 Educational materials, technology and instruction equipment 323,327 416,307 Other direct student expenses 218,037 234,802 Scholarships 244,662 255,786 Office 27,697 29,710 Occupancy 465,576 338,411 Contributed food 26,940 28,022 Contributed pension 77,475 CPS administrative fee 129,378 135,871 Interest 281,970 487,625 Depreciation and amortization 454,333 430,407 Other expenses 95 50
Total expenses $ 6,580,493 $ 7,008,998
51
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – GOLDER COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 3,619,891 $ 3,369,840 Employee benefits and payroll taxes 992,994 843,697 Contracted services and consulting 104,199 71,035 Professional development, staff recruitment 30,701 35,999 Food 164,726 210,507 Educational materials, technology and instruction equipment 371,616 341,254 Other direct student expenses 361,462 307,180 Scholarships 16,337 4,494 Office 14,231 19,445 Occupancy 576,112 642,678 Contributed food 26,940 28,022 Contributed pension 47,033 CPS administrative fee 186,520 164,854 Interest 388,071 671,630 Depreciation and amortization 443,381 429,691 Other expenses 397 21
Total expenses $ 7,297,578 $ 7,187,380
52
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – GARY COMER COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 6,762,101 $ 6,247,930 Employee benefits and payroll taxes 1,704,531 1,463,233 Contracted services and consulting 428,033 446,012 Professional development, staff recruitment 111,236 111,124 Food 515,827 577,895 Educational materials, technology and instruction equipment 538,842 649,653 Other direct student expenses 542,899 611,099 Office 66,383 79,812 Occupancy 1,468,741 1,471,466 Contributed food 26,940 28,022 Contributed pension 92,742 Contributed rents 272,550 180,152 CPS administrative fee 300,444 283,799 Depreciation and amortization 91,217 89,562 Other expenses 265 6,149
Total expenses $ 12,830,009 $ 12,338,650
53
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – UIC COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 5,153,176 $ 4,892,003 Employee benefits and payroll taxes 1,352,485 1,174,312 Contracted services and consulting 116,423 80,286 Professional development, staff recruitment 129,780 95,412 Food 489,228 494,435 Educational materials, technology and instruction equipment 549,781 469,190 Other direct student expenses 406,856 367,142 Scholarships 56,967 56,656 Office 99,678 64,409 Occupancy 445,538 383,186 Contributed food 26,940 28,022 Contributed pension 66,212 Contributed rents 677,117 606,416 CPS administrative fee 273,467 226,897 Depreciation and amortization 226,055 206,543 Other expenses 58 208
Total expenses $ 10,003,549 $ 9,211,329
54
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – MUCHIN COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 5,025,561 $ 4,540,982 Employee benefits and payroll taxes 1,251,051 1,119,143 Contracted services and consulting 116,121 82,899 Professional development, staff recruitment 98,122 103,976 Food 423,437 492,424 Educational materials, technology and instruction equipment 405,449 433,840 Other direct student expenses 520,114 565,371 Scholarships 70,352 56,944 Office 39,852 39,620 Occupancy 1,684,893 1,635,132 Contributed food 26,940 28,022 Contributed pension 48,507 CPS administrative fee 271,948 244,401 Interest 15,773 31,238 Depreciation and amortization 741,078 725,310 Other expenses 2,825 218
Total expenses $ 10,693,516 $ 10,148,027
55
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – CHICAGO BULLS COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 6,928,150 $ 6,356,130 Employee benefits and payroll taxes 1,696,494 1,510,427 Contracted services and consulting 219,327 48,301 Professional development, staff recruitment 81,862 91,404 Food 552,946 658,007 Educational materials, technology and instruction equipment 502,507 571,633 Other direct student expenses 567,009 680,412 Scholarships 4,250 Office 12,125 40,708 Occupancy 441,326 488,623 Contributed food 26,940 28,022 Contributed pension 65,984 Contributed rents 972,664 871,103 CPS administrative fee 333,200 273,931 Depreciation and amortization 220,871 209,164 Other expenses 200 1,550
Total expenses $ 12,555,621 $ 11,899,649
56
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – JOHNSON COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 4,917,971 $ 4,603,390 Employee benefits and payroll taxes 1,311,168 1,097,144 Contracted services and consulting 174,573 195,869 Professional development, staff recruitment 53,866 45,344 Food 401,571 468,150 Educational materials, technology and instruction equipment 414,981 550,114 Other direct student expenses 376,179 556,104 Scholarships 253 1,000 Office 44,107 50,812 Occupancy 411,197 415,370 Contributed food 26,940 28,022 Contributed pension 90,378 Contributed rents 528,066 472,928 CPS administrative fee 234,408 219,225 Depreciation and amortization 261,047 267,199 Other expenses 2,871 1,517
Total expenses $ 9,159,198 $ 9,062,566
57
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – HANSBERRY COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 3,684,164 $ 4,131,789 Employee benefits and payroll taxes 968,617 968,770 Contracted services and consulting 114,634 116,269 Professional development, staff recruitment 62,236 35,286 Food 338,307 409,994 Educational materials, technology and instruction equipment 366,823 414,773 Other direct student expenses 234,552 273,085 Office 34,659 71,654 Occupancy 499,293 511,740 Contributed food 26,940 28,022 Contributed pension 66,996 CPS administrative fee 176,150 175,959 Interest 1,038,641 1,038,641 Depreciation and amortization 758,049 783,519 Other expenses 209
Total expenses $ 8,303,065 $ 9,026,706
58
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – DRW COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 3,235,516 $ 3,393,799 Employee benefits and payroll taxes 841,473 814,748 Contracted services and consulting 76,698 33,155 Professional development, staff recruitment 28,883 18,474 Food 243,218 267,236 Educational materials, technology and instruction equipment 295,605 320,850 Other direct student expenses 332,858 419,206 Office 28,437 33,427 Occupancy 997,430 907,217 Contributed food 26,940 28,022 Contributed pension 57,204 CPS administrative fee 139,771 134,548 Depreciation and amortization 138,875 166,508 Other expenses 1,315
Total expenses $ 6,385,704 $ 6,595,709
59
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – BAKER COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 2,470,686 $ 2,801,471 Employee benefits and payroll taxes 674,733 625,341 Contracted services and consulting 38,674 31,870 Professional development, staff recruitment 17,228 21,725 Food 164,451 173,902 Educational materials, technology and instruction equipment 172,796 263,711 Other direct student expenses 146,251 274,487 Scholarships 1,497 Office 13,663 15,473 Occupancy 374,680 382,297 Contributed pension 52,690 Contributed rents 663,841 594,525 CPS administrative fee 95,050 96,751 Depreciation and amortization 76,168 77,293 Other expenses 44
Total expenses $ 4,909,762 $ 5,411,536
60
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – BUTLER COLLEGE PREP
Years ended June 30, 2018 2017 Program services
Salaries $ 4,129,096 $ 3,282,640 Employee benefits and payroll taxes 945,501 683,567 Contracted services and consulting 218,805 119,706 Professional development, staff recruitment 99,759 63,838 Food 277,666 276,445 Educational materials, technology and instruction equipment 298,333 343,600 Other direct student expenses 507,897 532,011 Scholarships 58,159 Office 61,026 49,237 Occupancy 685,000 557,171 Contributed pension 48,980 Contributed rents 486,891 436,052 CPS administrative fee 170,644 143,567 Depreciation and amortization 89,805 80,769 Other expenses 1,130 2,695
Total expenses $ 8,029,712 $ 6,620,278
61
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – ITW DAVID SPEER ACADEMY
Years ended June 30, 2018 2017 Program services
Salaries $ 5,741,073 $ 4,553,097 Employee benefits and payroll taxes 1,299,050 1,010,446 Contracted services and consulting 85,162 76,827 Professional development, staff recruitment 124,600 67,608 Food 394,491 510,127 Educational materials, technology and instruction equipment 708,507 675,529 Other direct student expenses 575,089 372,442 Office 66,867 44,113 Occupancy 295,439 548,797 Contributed food 26,940 56,042 Contributed pension 56,193 CPS administrative fee 290,351 205,280 Interest 216,796 299,726 Depreciation and amortization 760,119 742,811 Other expenses 3,717 20,155
Total expenses $ 10,588,201 $ 9,239,193
62
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – THE NOBLE ACADEMY
Years ended June 30, 2018 2017 Program services
Salaries $ 2,525,085 $ 1,956,968 Employee benefits and payroll taxes 639,647 439,099 Contracted services and consulting 95,646 56,296 Professional development, staff recruitment 62,764 52,398 Food 211,729 178,423 Educational materials, technology and instruction equipment 287,801 224,075 Other direct student expenses 323,652 193,093 Office 53,587 23,006 Occupancy 327,954 245,755 Contributed pension 22,526 Contributed rents 229,964 334,905 CPS administrative fee 144,514 89,303 Depreciation and amortization 60,837 42,172 Other expenses 5,743
Total expenses $ 4,968,923 $ 3,858,019
63
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – MANSUETO HIGH SCHOOL
Years ended June 30, 2018 2017 Program services
Salaries $ 2,361,725 $ 1,164,563 Employee benefits and payroll taxes 512,426 238,386 Contracted services and consulting 158,838 19,377 Professional development, staff recruitment 52,621 36,520 Food 219,442 48,031 Educational materials, technology and instruction equipment 412,773 199,003 Other direct student expenses 233,098 80,162 Office 53,604 17,683 Occupancy 256,301 296,684 Contributed food 26,940 Contributed pension 21,244 CPS administrative fee 150,530 45,179 Interest 427,157 108,137 Depreciation and amortization 870,682 18,714 Other expenses 45 Charitable contributions 19,004,200
Total expenses $ 5,736,137 $ 21,297,928
64
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – NOBLE DAY CARE
Years ended June 30, 2018 2017 Supporting Supporting Services Services Program Management Program Management services and general Total services and general Total
Salaries $ 389,091 $ 85,000 $ 474,091 $ 368,800 $ 72,024 $ 440,824 Employee benefits and payroll taxes 80,046 17,487 97,533 93,737 18,493 112,230 Contracted services and consulting 5,280 5,280 Professional development, staff recruitment 3,048 3,048 3,390 3,390 Food 20,724 20,724 21,710 21,710 Educational materials, technology and instruction equipment 3,239 3,239 8,522 8,522 Other direct student expenses 1,015 1,015 3,323 3,323 Office 2,980 2,980 2,379 2,379 Occupancy 132,740 8,066 140,806 141,841 8,003 149,844 Depreciation and amortization 15,980 1,775 17,755 15,980 1,775 17,755 Other expenses 4,926 4,926
Total expenses $ 654,143 $ 112,328 $ 766,471 $ 664,608 $ 100,295 $ 764,903
65
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF FUNCTIONAL EXPENSES – NOBLE NETWORK EDUCATION FOUNDATION
Years ended June 30, 2018 2017 Supporting Services Management and general
Contractual services and consulting $ 63,000 $ 63,000 Other expenses 200 146
Total expenses $ 63,200 $ 63,146
66
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULES OF ACTIVITIES – SUMMER OF A LIFETIME, A NOBLE NETWORK PROGRAM
Years ended June 30, 2018 2017 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total
Revenue: Contributions and grants $ 145,449 $ 484,287 $ 629,736 $ 549,774 $ 518,996 $ 1,068,770 Fundraising events 329,611 329,611 180,057 180,057 Transfer of revenues from campuses 437,000 437,000 322,000 322,000 Net assets released from restrictions: Satisfaction of purpose or time restrictions 569,107 (569,107) 480,822 (480,822)
Total revenue 1,481,167 (84,820) 1,396,347 1,532,653 38,174 1,570,827
Expenses: Administrative expenses 11,207 11,207 11,944 11,944 Other expenses 5,128 5,128 4,170 4,170 Event expenses 59,467 59,467 80,941 80,941 Executive director fees and other salaries 137,916 137,916 122,418 122,418 SOL program support 1,305,366 1,305,366 1,269,746 1,269,746
Total expenses 1,519,084 1,519,084 1,489,219 1,489,219
Change in net assets $ (37,917) $ (84,820) $ (122,737) $ 43,434 $ 38,174 $ 81,608
67
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF PCTC TUITION
Year ended June 30, 2018
PCTC tuition revenue $ 133,630,574 Other amounts included in PCTC tuition as computed by Chicago Public Schools - unaudited 23,014,112
Total PCTC tuition as computed by Chicago Public Schools - unaudited $ 156,644,686
68
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, 2018, 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 9, 2018.
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.
69
NBC Tower, Suite 1500 | 455 N. Cityfront Plaza Drive | Chicago, IL 60611-5313 | O 312.670.7444 | F 312.670.8301 | ORBA.COM Independent Member of BKR International
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.
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 9, 2018
70
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, 2018. 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.
71
NBC Tower, Suite 1500 | 455 N. Cityfront Plaza Drive | Chicago, IL 60611-5313 | O 312.670.7444 | F 312.670.8301 | ORBA.COM Independent Member of BKR International
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.
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, 2018.
Other Matters
The results of our auditing procedures disclosed an instance of noncompliance, which is required to be reported in accordance with the Uniform Guidance and which is described in the accompanying schedule of findings and questioned costs as Finding 2018-001. Our opinion on each major federal program is not modified with respect to this matter.
The School’s response to the noncompliance finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The School’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
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.
72
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 9, 2018
73
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2018
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, 2016 - September 30, 2017 $ 125,487 Charter Schools 84.282 October 1, 2017 - September 30, 2018 1,157,807 Total Charter Schools 1,283,294 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 - June 30, 2018 8,041,688 Title I Grants to Local Educational Agencies 84.010 150162990AF July 1, 2017 - June 30, 2018 11,267 Total Title I Grants to Local Educational Agencies 8,052,955
Supporting Effective Instruction State Grants (Title II) 84.367 150162990AF July 1, 2017 - June 30, 2018 547,681
English Language Acquisition State Grants (Title III) 84.365 150162990AF July 1, 2017 - June 30, 2018 48,976
Student Support and Academic Enrichment Program (Title IV) 84.424 150162990AF July 1, 2017 - June 30, 2018 102,599
Food and Nutrition Service, Department of Agriculture: Pass-through programs from Illinois State Board of Education: School Breakfast Program* 10.553 150162990AF October 1, 2016 - September 30, 2017 177,409 School Breakfast Program* 10.553 150162990AF October 1, 2017 - September 30, 2018 1,101,921 National School Lunch Program* 10.555 150162990AF October 1, 2016 - September 30, 2017 662,643 National School Lunch Program* 10.555 150162990AF October 1, 2017 - September 30, 2018 3,573,620 National School Lunch Program* (Food Distrbution Program - Non-Cash USDA Foods) 10.555 150162990AF July 1, 2017 - June 30, 2018 45,826 National School Lunch Program* (Food Distrbution Program - Non-Cash DoD Fruits & Vegetables) 10.555 150162990AF July 1, 2017 - June 30, 2018 331,331 Summer Food Service Program For Children* 10.559 150162990AF October 1, 2016 - September 30, 2017 129,592 Summer Food Service Program For Children* 10.559 150162990AF October 1, 2017 - September 30, 2018 24,300 Total Child Nutrition Cluster 6,046,642
Child and Adult Care Food Program* 10.558 150162990AF October 1, 2016 - September 30, 2017 93,913 Child and Adult Care Food Program* 10.558 150162990AF October 1, 2017 - September 30, 2018 969,746 Total Child and Adult Care Food Program 1,063,659
Department of Defense: Pass-through program from the United States Navy: ROTC Language and Culture Training Grants 12.357 238,615
Total expenditures of federal awards $ 17,384,421
*Denotes a major program.
See notes to schedule of expenditures of federal awards.
74
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2018
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, 2018.
3. Subrecipients
There were no amounts provided for subrecipients from any federal program during the year ended June 30, 2018.
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 $45,826. The value of non-cash commodities supplied by the U.S. Department of Defense under the National School Lunch Program is $331,331.
6. Indirect cost rate
The School has elected not to use the 10 percent de minimus indirect cost rate under the Uniform Guidance.
75 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018
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 was one audit finding that is required to be reported in accordance with the Uniform Guidance.
7. The programs tested as a major program were: U.S. Department of Agriculture, Child Nutrition Cluster Programs: School Breakfast Program (10.553) National School Lunch Program (10.555) Summer Food Service Program for Children (10.559) U.S. Department of Agriculture, Child and Adult Care Food Program (10.558)
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
There were no financial statement findings.
76 NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
YEAR ENDED JUNE 30, 2018
Section III - 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.
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.
Views of responsible officials and planned corrective actions: The School agrees with the finding and will reinforce and retrain these procedures with campus staff.
77
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2018
Financial Statement Findings
There were no financial statement findings.
Major Federal Award Programs Findings and Questioned Costs
There were no major federal award programs findings and questioned costs.
78
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, 2018. 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.
In our opinion, the School complied in all material respects, with the specified requirements referred to in Attachment A during the year ended June 30, 2018.
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 9, 2018
79
NBC Tower, Suite 1500 | 455 N. Cityfront Plaza Drive | Chicago, IL 60611-5313 | O 312.670.7444 | F 312.670.8301 | ORBA.COM Independent Member of BKR International
Attachment A
Chicago Public Schools provided the specified requirements in a memorandum dated June 12, 2018 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
80
NOBLE NETWORK OF CHARTER SCHOOLS, SUBSIDIARIES AND AFFILIATE
SCHEDULE OF CURRENT YEAR FINDINGS AND PRIOR YEAR FINDINGS
YEAR ENDED JUNE 30, 2018
There are no findings for the years ended June 30, 2018 and 2017.
81