Loyola University of Chicago Consolidated Financial Statements as of and for the Years Ended June 30, 2019 and 2018, Supplemental Schedule of Expenditures of Federal Awards for the Year Ended June 30, 2019, and Independent Auditors’ Reports LOYOLA UNIVERSITY OF CHICAGO TABLE OF CONTENTS YEAR ENDED JUNE 30, 2019 Page PART I INDEPENDENT AUDITORS’ REPORT 1–2 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 3 CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS 4 CONSOLIDATED STATEMENTS OF CASH FLOWS 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6–36 PART II 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 38–39 PART III REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE AS REQUIRED BY THE UNIFORM GUIDANCE FOR FEDERAL AWARDS 41–42 PART IV SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 44–50 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 51–52 PART V SCHEDULE OF FINDINGS AND QUESTIONED COSTS: Section I—Summary of Auditors’ Results 54 Section II—Financial Statement Findings 55 Section III—Federal Award Findings and Questioned Costs 56 Section IV—Summary Schedule and Resolution of Prior-Year Audit Findings and Questioned Costs 57 PART I INDEPENDENT AUDITORS’ REPORT INDEPENDENT AUDITORS’ REPORT To the Board of Trustees of Loyola University of Chicago Chicago, Illinois We have audited the accompanying consolidated financial statements of Loyola University of Chicago (“LUC”), which comprise the consolidated statements of financial position as of June 30, 2019 and 2018, and the related consolidated statements of activities and changes in net assets 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 LUC’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 LUC’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. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of LUC as of June 30, 2019 and 2018, and results of their activities and changes in net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 3 to the consolidated financial statements, LUC adopted Accounting Standards Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, during the year ended June 30, 2019. Our opinion is not modified with respect to this matter. Other Matters Other Information Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting an 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 19, 2019, on our consideration of LUC'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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of LUC's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering LUC's internal control over financial reporting and compliance. September 19, 2019 2 LOYOLA UNIVERSITY CHICAGO CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As of June 30, 2019 and 2018 (In thousands of dollars) 2019 2018 ASSETS Cash and cash equivalents $ 70,754 $ 70,615 Short-term investments 193,824 197,244 Notes and accounts receivable, net 72,680 73,847 Other assets 7,986 14,516 Endowment and other long-term investments 800,316 730,955 Assets held in trust by others 2,682 1,547 Interest held in perpetual trust 14,102 13,312 Land, buildings and equipment, net 1,080,060 1,082,023 TOTAL ASSETS $ 2,242,404 $ 2,184,059 LIABILITIES AND NET ASSETS LIABILITIES: Accounts payable and accrued expenses $ 54,784 $ 58,115 Deferred revenue 35,320 38,009 Unexpended grants 9,880 11,347 Refundable U.S. government student loan funds 17,647 17,266 Indebtedness 388,739 404,447 Pension and other postretirement plan liabilities 63,495 61,161 Other liabilities 4,701 4,587 TOTAL LIABILITIES 574,566 594,932 NET ASSETS: Without donor restrictions 1,248,740 1,189,251 With donor restrictions 419,098 399,876 TOTAL NET ASSETS 1,667,838 1,589,127 TOTAL LIABILITIES AND NET ASSETS $ 2,242,404 $ 2,184,059 See notes to the consolidated financial statements. 3 LOYOLA UNIVERSITY CHICAGO CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS For the years ended June 30, 2019 and 2018 2019 2018 Without donor With donor Total Without donor With donor Total (In thousands of dollars) restrictions restrictions 2019 restrictions restrictions 2018 OPERATING REVENUES: Tuition and fees, net of scholarships $226,257 (2019) and $207,033 (2018) $ 403,284 $ $ 403,284 $ 386,553 $ $ 386,553 Auxiliary services 72,566 72,566 71,829 71,829 Academic support 24,417 24,417 23,910 23,910 Other 30,222 30,222 35,308 35,308 Grants and contracts for sponsored projects 45,540 45,540 44,793 44,793 Gifts 3,012 3,012 1,547 1,547 Return on short-term investments and interest income 7,673 7,673 2,747 2,747 Investment income designated for operations 7,607 7,607 8,610 8,610 Net assets utilized or released from restrictions for operations 17,390 17,390 19,488 19,488 Net assets released - board designated 2,444 2,444 - TOTAL OPERATING REVENUES 614,155 614,155 594,785 594,785 OPERATING EXPENSES: Salaries and wages 264,442 264,442 257,114 257,114 Fringe benefits 70,298 70,298 70,670 70,670 Non-salary operating expenses 138,283 138,283 135,130 135,130 Depreciation and amortization 61,421 61,421 60,277 60,277 Insurance and utilities 15,103 15,103 14,263 14,263 Interest 13,962 13,962 14,619 14,619 TOTAL OPERATING EXPENSES 563,509 563,509 552,073 552,073 RESULTS OF OPERATIONS 50,646 50,646 42,712 42,712 NON-OPERATING ACTIVITIES: