Financial Report Year Ended June 30, 2020 Front Cover: Shafer Tower Table of Contents Ball State University Financial Report 2019-2020 To the President and Board of Trustees ii Report of the President iii General Information v Board of Trustees and President of Ball State University vi Independent Auditor’s Report vii Management’s Discussion and Analysis 1 Statement of Net Position 19 BSU Foundation Combined and Consolidated Statements of Financial Position 21 Muncie Community Schools Statement of Net Position 22 Statement of Revenues, Expenses and Changes in Net Position 23 BSU Foundation Combined and Consolidated Statements of Activities 24 Muncie Community Schools Statement of Activities 25 Statement of Cash Flows 26 BSU Foundation Combined and Consolidated Statements of Cash Flows 28 Notes to Financial Statements 29 Required Supplemental Information 66 Notes to Required Supplemental Information 73 Supplemental Information 80 To The President and Board of Trustees Ball State University This financial report presents the financial position of Ball State University at June 30, 2020 and the results of activities for the year then ended. Alan T. Finn Vice President for Business Affairs and Treasurer Ball State University’s Report Date…..…………………..……..………October 23, 2020 Ball State University—2020 Financial Report ii Report of the President It is my privilege to present the Annual Financial Report of Ball State University for the year ended June 30, 2020. The University received an unmodified opinion on the audit letter from the Indiana State Board of Accounts, which is included in this annual report. This report includes financial statements for the year ended June 30, 2020, with comparative information from the previous fiscal year. These statements, along with the Notes to the Financial Statements, Management’s Discussion and Analysis, and Required Supplemental Information, present the financial activity as well as the financial strength and stability of the University. Our management team is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States. More than 100 years ago, our University was founded by the five Ball brothers. They believed that higher education was the foundation of a fulfilling life and that well educated people were vital to building and sustaining a vibrant community. And the Ball brothers had the capacity and the courage to make the investments necessary to achieve that ambitious vision. The seed that the Ball brothers planted and nurtured has matured into a comprehensive, public research university with more than 22,000 students and more than 200,000 living graduates. Today, in our second century, our University remains committed to providing a premier undergraduate experience and select graduate degrees. Symbolized by the statue Beneficence, our enduring values—excellence, innovation, courage, integrity, inclusiveness, social responsibility, and gratitude—guide us toward our bright future. Ball State is designated as a Doctoral University: Higher Research Activity by The Carnegie Classification of Institutions of Higher Education. Our University is nationally recognized for the quality of our academic programs, our state-of-the-art facilities, our community engagement efforts, and our commitment to inclusive excellence. We are also proud to serve as a national model of sustainability. A few examples of how our momentum continues to be driven by our dedicated faculty and staff and by our talented students: • As a result of coordinated and innovative recruitment strategies, Ball State received approximately 28,000 applications for undergraduate admission, setting an institutional record. • We welcomed more than 4,050 young women and men to campus as members of our University’s largest freshman class. The class was also the most diverse, with 23% identifying as underrepresented minorities, as well as the most academically prepared, with a median high school grade point average of 3.53 and 76.4% holding an Academic Honors Diploma. • Our total enrollment for the 2019-20 academic year was a record-setting 22,443 students. During the last few months of the 2019-20 academic year, our University experienced the impact of COVID-19’s arrival on our campus. Despite the challenges presented by the pandemic, our University experienced a good year financially: • Our University’s total net position increased by $52.9 million—approximately 7%—compared to last fiscal year. • Our University’s unrestricted net position increased by $23.4 million—more than 11%—compared to last fiscal year. • For the second year in a row, our alumni and benefactors memorialized more than $30 million in new philanthropic commitments—the first time that we’ve reached this level in consecutive years. • On April 7, 2020, we held our second annual One Ball State Day. Together, our faculty, staff, students, alumni, and friends contributed $530,000. The 24-hour campaign resulted in more than 6,300 gifts from more than 4,300 donors. As a result of the planning, diligence, and hard work of our employees who oversee the design, construction, and supervision of our building projects, our University is experiencing the largest concentrated five-year period of construction in the history of our institution. In this short period of time: • We have built the Health Professions Building, we are constructing the Foundational Sciences Building, and in 2021, we will soon begin the extensive renovation of Cooper Science Complex. By 2023, these three facilities, which represent an extraordinary investment by the State of Indiana, will provide premier spaces and technology for students pursuing careers in science and health. • We are demolishing the outdated LaFollette Complex and replacing it with the North Residential Neighborhood, providing our students with first-rate places to live and learn. • We are also making progress on the new East Mall, a pathway that runs north from The Village to the Gora Student Recreation and Wellness Center on Neely Avenue. A significant step was to build the New York Avenue Parking Structure, demolish the Emens Parking Structure, and replace that space with the Grand Lawn. Just to the west of Ball State University—2020 Financial Report iii the new lawn, we are constructing our new Multicultural Center, which will allow us to expand programming for all of our students. These projects are visible examples of our University’s bright future, as is our strategic plan, Destination 2040: Our Flight Path, which we continue to implement. During the 2019-20 academic year, we created the Strategic Imperative Fund, which allowed our University to award approximately $2.2 million to support proposals that will expedite the implementation of our strategic plan. We also completed our first Strategic Plan Annual Report, which illustrates the progress our University is making in implementing the 2040 goals and 2024 strategic imperatives outlined in our strategic plan. The report provides several examples of how the members of our University community worked collaboratively throughout the 2019-20 academic year to advance progress toward achieving these strategic goals. Some of the highlights include our enhanced enrollment strategies to serve underrepresented students, our launch of several new programs to serve lifetime learners, and the release of our Inclusive Excellence Plan, the first of its kind for our University. We remain proud of the progress we continue to make in our University’s strategic partnership with Muncie Community Schools (MCS). Since the partnership began in 2018, our University has made significant strides to transform our local public schools. Enrollment has stabilized and, for the first time in almost a decade, teachers have received raises in consecutive years. Also, thanks to the generosity of community partners and competitive grants, MCS has received a total of $6.6 million in philanthropic investments and external funding. Our University co-sponsored an innovation summit in September 2019, at which MCS administrators, teachers, and community stakeholders came together with nationally recognized educators to imagine the possibilities of the historic partnership. Outcomes from the summit informed the creation of the MCS Academic Innovation Plan, which describes how the district will collaborate with our University and with other community partners to implement an innovative, community-based education model that guides students from cradle to career. The creation of this plan exemplifies how campus and community members are making a difference for MCS students and their families. These efforts demonstrate how, at Ball State, we are committed to preparing our graduates to have fulfilling careers and to lead meaningful lives, while also enhancing the economic and civic vitality of our community. On behalf of the Board of Trustees of Ball State University and all those who contribute to the stewardship of the resources benefiting our great institution, I respectfully submit this Annual Financial Report of Ball State University for the year ended June 30, 2020. Sincerely, Geoffrey S. Mearns President Ball State University * This report has been prepared in accordance with United States Generally Accepted Accounting Principles (GAAP) for governmental colleges and universities as put forth by the Governmental Accounting Standards Board (GASB). See the accompanying Notes to Financial Statements for a full disclosure