2023 ANNUAL REPORT
In the 2023 fiscal year, NSU made noteworthy achievements, demonstrating our commitment to preeminence. Fins up!” —George L. Hanbury II, Ph.D. President and CEO “
Nova Southeastern University’s Vision 2025 is on the horizon, and in fiscal year 2023, the university made great strides toward fulfilling its goals. With Vision 2025, NSU aspires to be recognized nationally as a preeminent, professionaldominant, doctoral-research university dedicated to providing competitive career advantages to its students and producing alumni driven by integrity. During fiscal year 2023, and as we forge ahead, our commitment to being educational game changers and making yours a healthier world is not just evident—it’s flourishing. A mere snapshot along NSU’s journey captures a plethora of accomplishments, and each is a critical piece in the tapestry of our preeminence. ACADEMIC DEGREE Programs 150+ FOR A PRIVATE RESEARCH UNIVERSITY IN FLORIDA LARGEST STUDENT BODY NSU Advances Vision 2025 REFLECTING ON A YEAR OF ACHIEVEMENTS i
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INTERNATIONAL RESEARCH HUB SHARK SPECIES TAGGED BY NSU Researchers 17 SAVING SEA TURTLES for 30+ Years with the Broward County Sea Turtle Conservation Program and Coral Nursery Focused on Saving Endangered Corals Protecting Diverse Marine Life and Healthy Oceans Highlights include the following: • Researchers sequenced the genomes of endangered shark species, which could aid in conservation efforts. • Researchers and students continued to protect Broward County’s sea turtle nesting population, and, this year, helped a stuck mother leatherback turtle return to the sea. WORKING TO PRESERVE OUR ECOSYSTEMS iii
Highlights include the following: • The Drs. Kiran and Pallavi Patel International Dental Program at the Tampa Bay Regional Campus expanded, with the creation of a state-of-the-art digital facility. • The newly named Barry and Judy Silverman College of Pharmacy reflects an endowment gift to support scholarships and educational sustainability. RESEARCH INSTITUTES 3 Focused on CANCER PREVENTION and Novel Cancer Therapies NSU Is Creating a Model for the Future of Health Care Universities in the U.S. with M.D. and D.O. Colleges 1 of 4 NSU’S HEALTH PROFESSIONS • Dental Medicine • Health Care Sciences • Medicine (D.O. and M.D.) • Nursing • Optometry • Pharmacy • Psychology TOMORROW’S HEALTH CARE TECHNOLOGY TODAY iv
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NCAA DIVISION II NATIONAL CHAMPIONSHIPS Highlights include the following: • Men’s Basketball earned its first national championship, and posted two consecutive undefeated regular seasons. • Women’s Swimming was crowned a national championship team for the first time. • Men’s Golf took its third national championship. 11 NSU Sharks Bring Home Three NCAA Division II National Championships NATIONAL CHAMPIONS? YES, WE HAVE THOSE. vii
NSU researchers are studying how bacteria can make infections more difficult to treat. The research could lead to new methods for lessening the severity of infections. viii
RESEARCH Projects at NSU 250+ ADDRESSING CRITICAL AREAS SUCH AS • Anticancer Therapies • Neuro-Immune Disorders • Coral Reef Restoration • Pharmacological Innovations • Among Many More for excellence in RESEARCH and COMMUNITY ENGAGEMENT Recognized by the CARNEGIE FOUNDATION Highlights include the following: • The Dr. Kiran C. Patel College of Allopathic Medicine received full accreditation for its M.D. program from the Liaison Committee on Medical Education (LCME). • The H. Wayne Huizenga College of Business and Entrepreneurship received accreditation from AACSB International—The Association to Advance Collegiate Schools of Business (AACSB), the highest standard of achievement for business education. • Undergraduate and graduate students gain invaluable experience working with principal investigators on a wide range of research projects. Achievements in Academics and Research SHARKS AT THE LEADING EDGE ix
#1 largest, private, not-for-profit institution in the U.S. that meets the U.S. Dept. of Education criteria as a Hispanic-serving institution #9 in the U.S. for the largest number of minority degree recipients among graduate degrees awarded Highlights include the following: • The Belonging, Equity, Diversity, and Inclusion (BEDI) Advisory Council developed the university’s first strategic diversity plan. • The BEDI Council hosted its inaugural university-wide diversity summit, featuring - two days of programming, including 60 sessions in person and on Zoom. - nearly 800 registrants across all NSU campuses. Driven Through a Sense of Belonging, Diversity Is One of NSU’s Eight Core Values #1 in the U.S. for professional/doctoral degrees awarded to minority students WE SEE YOUACHIEVEMENTS #13 in campus ETHNIC DIVERSITY among national universities ranked by U.S. News &World Report x
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Credit: Installation view of History in the Making: Andy Warhol’s Mao Prints and William Gropper’s Watergate Series, 2022 at NSU Art Museum Fort Lauderdale. Photo by Steven Brooke xii
ARTS ACROSS NSU Housed at the NSU Art Museum Fort Lauderdale PERMANENT WORKS 8,000+ • Alvin Sherman Library • Don Taft University Center • NSU University School • Rose and Alfred Miniaci Performing Arts Center NSU Is Rich with Arts Opportunities Highlights include the following: • The Halmos College of Arts and Sciences boasts academic programs in the arts and regularly scheduled student performances in music and dance, plus art exhibits. • NSU theatre students assisted with designing, constructing, and painting of sets for an educational program production of Beetlejuice, Jr. • The NSU Art Museum Fort Lauderdale is located at the heart of the downtown arts community and curates thoughtful exhibits that examine many themes. BRINGING ART TO LIFE xiii
NSU University School (Pre-K–12) Students 2,000 100% COLLEGE ACCEPTANCE RATE Highlights include the following: • The Lower, Middle, and Upper School robotics teams all closed out their most recent seasons as champions at the VEX Robotics South Florida State Championship and competed in the World Championship. • Ten seniors were named 2023 National Merit Scholarship Semifinalists (out of a pool of 16,000 students) and Commended Students (out of a pool of 34,000 students). • Upper School musicians participated in the All-State Honor Bands. NSU University School Competes Nationally EDUCATING TOMORROW’S LEADERS Approximately xiv
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MISSION STATEMENT The mission of NSU—a selective, doctoral-research university—is to deliver innovative academic programs in a dynamic, lifelong learning and research environment fostering integrity, academic excellence, leadership, and community service through engaged students, faculty, and staff. VISION 2025 STATEMENT By 2025, NSU will be recognized as a preeminent, professional-dominant, doctoral-research university that provides competitive career advantages to its students and produces alumni who serve and lead with integrity. INTEGRITY ACADEMIC EXCELLENCE COMMUNITY DIVERSITY INNOVATION OPPORTUNITY RESEARCH/SCHOLARSHIP STUDENT CENTERED xvii The Vision 2025 Statement, Mission Statement, and Core Values were adopted by the NSU Board of Trustees on March 29, 2021.
Consolidated Financial Statements 2023 Table of Contents Management’s Discussion and Analysis (unaudited) . . . . . . . . . . . . . . 1 Audited Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . 9 Management’s Responsibility for Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Consolidated Statements of Financial Position . . . . . . . . . . . . . . . . . . 13 Consolidated Statements of Activities . . . . . . . . . . . . . . . . . . . . . . . . 14 Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . 15 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . 16 Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Financial Responsibility Supplemental Schedule . . . . . . . . . . . . 49 Notes to Financial Responsibility Supplemental Schedule . . . . . 50
Ma n a g eme n t ’ s D i s c u s s i o n a n d A n a l y s i s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 - 100 200 300 400 500 600 700 800 900 1,000 $ 1 , 100 $ $ 1,200 $ $ $ $ $ $ $ $ $ $ FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 NET ASSETS Total Dollar Amount in Millions Without Donor Restrictions With Donor Restrictions Overview For the fiscal year ended June 30, 2023 (fiscal 2023), Nova Southeastern University (NSU, or the university) experienced growth in its fiscal strength based on continued strong operations and improved financial market conditions, resulting in total net assets increasing 7.0 percent from the prior year. As demonstrated in the following chart, total net assets have grown by 83.0 percent over the past decade, from $609.4 million as of June 30, 2013, to $1.1 billion as of June 30, 2023. Factors contributing to the sustained growth include the university’s diverse academic program offerings and student base, coupled with strong philanthropic support, as well as its ability to respond and adapt to the challenges and changes inherent in higher education. Operational Highlights NSU continued to advance strategic priorities in striving toward preeminence with Vision 2025. The strategic business plan contains goals centered around students; philanthropic resources; scholarship and research; community service; and belonging, equity, diversity, and inclusion. NSU’s strategic emphasis drove operating results and noteworthy milestones during fiscal 2023, including n Sustained strong overall university enrollment (20,948 fall 2022), with a record-high undergraduate population and professional-level growth associated with continued expansion in academically highdemand and industry-relevant programs n Significant academic accomplishments, including two momentous accreditations n Strong philanthropic support and research advances ExpandingUndergraduate andHealth Professions Programs In fall 2022, NSU welcomed its largest undergraduate class with 1,978 first-time-in-college freshmen, an increase of 17 percent from its prior record of 1,689 in fall 2020. In line with NSU’s strategic expansion of undergraduates, overall undergraduate enrollment has increased for the sixth year in a row, standing at 6,971 in fall 2022. The distinctive Dual Admission Program, offering prospective undergraduate students a reserved spot in selective graduate/professional programs, has continued 1
Ma n a g eme n t ’ s D i s c u s s i o n a n d A n a l y s i s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 to attract academically highly qualified students, supporting strategic goals for enhanced student quality, experience, and outcomes. Increased professional-level enrollment during fiscal 2023 was driven by strategic health professions expansion, with continued growth at the Tampa Bay Regional Campus. NSU’s Dr. Kiran C. Patel College of Osteopathic Medicine (KPCOM) expanded its D.O. program to Tampa Bay beginning fall 2019, upon opening of the new facility, as described in prior reports. In fall 2022 (fiscal 2023), KPCOM admitted its fourth class of 164 D.O. students in Tampa Bay, for a total Tampa Bay D.O. enrollment of 626. Beginning May 2022, the College of Dental Medicine expanded its D.M.D. program to the Tampa Bay Regional Campus. It admitted its second cohort in May 2023, for a total of 72 international dental students enrolled in Tampa Bay as of June 30, 2023. Approximately 19,000 square feet of the campus was outfitted to house a student clinic, simulation lab, and supporting offices and classrooms. Construction on the state-of-the art clinic was completed during fiscal 2023, with the first patients welcomed in May. In fiscal 2023, NSU continued developing its multiphased plan for strategic capital investments anticipated to play a major role in further advancing NSU’s health and medical education, research, and patient care on the main campus in Fort Lauderdale/Davie. College Achievements Two significant academic program recognitions occurred in fiscal 2023, each many years in the making and representing a great stride toward fulfilling Vision 2025. The H. Wayne Huizenga College of Business and Entrepreneurship received accreditation from AACSB International—The Association to Advance Collegiate Schools of Business (AACSB), the highest standard of achievement for business education. The Dr. Kiran C. Patel College of Allopathic Medicine (KPCAM) received full accreditation for its M.D. program from the Liaison Committee on Medical Education (LCME). This achievement was the result of a process that began with preliminary accreditation in 2017, followed by provisional accreditation in 2021. The full accreditation milestone followed the May 2022 graduation of the college’s inaugural M.D. class, which was admitted in fall 2018. NSU is one of only four universities in the United States to offer both a D.O. and M.D. program, and the first and only university in the state of Florida to grant both degrees. During fiscal 2023, NSU graduated 424 physicians (D.O. and M.D. graduates combined), helping to alleviate the local and national physician shortage. Overall, fall 2022 enrollment in KPCAM and KPCOM (undergraduate, graduate, and professional programs) totaled 2,911, increasing a combined 11 percent from the prior year (fall 2021) and 68 percent over a fouryear period (from fall 2018, when the first M.D. class was admitted, to fall 2022). KPCOM’s growth is largely attributable to the expansion at the Tampa Bay Regional Campus, beginning fall 2019 as previously described. Growing Philanthropy and Advancing Research As part of the university’s Campaign to Preeminence, NSU recognized several generous gifts and advanced its research initiatives with noteworthy grant awards during fiscal 2023. In honor of a transformational endowment gift in support of student scholarships, the pharmacy college was named the Barry and Judy Silverman College of Pharmacy. Additionally, a gift providing for the creation of the Jerry Taylor and Nancy Bryant Trading Floor and for continued programming and support for the H. Wayne Huizenga College of Business and Entrepreneurship was recognized. The business trading floor will give students hands-on experience in conducting research and managing a range of investments. NSU researchers conducted ongoing studies addressing topics of national significance and attained various new, multiyear grant awards. For example, the Halmos College of Arts and Sciences was collectively awarded approximately $3.3 million from the Florida 2
Ma n a g eme n t ’ s D i s c u s s i o n a n d A n a l y s i s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 Department of Environmental Protection for various coral reef research and mitigation efforts promoting the restoration, resilience, and diversity of coral species impacted by disease. KPCAM was awarded $2.3 million to establish a research program for nanomedicine, novel drug discovery, and cancer research. The Barry and Judy Silverman College of Pharmacy was awarded $1.5 million from the National Institutes of Health to enhance research training for underrepresented undergraduate students and to foster successful completion of biomedical graduate programs. The College of Computing and Engineering was awarded $2.5 million to build research and education infrastructure in highperformance computing and develop a high-skilled cybersecurity workforce. Also of note and in line with NSU’s core value of innovation, the Alan B. Levan | NSU Broward Center of Innovation was awarded nearly $4.0 million in grants from the United States Department of Education to build artificial intelligence and spatial computing infrastructure to broaden access and meet workforce demands in South Florida’s emerging technology sector. Financial Performance Total revenues were $823.1 million in fiscal 2023, up 22.1 percent from $674.1 million in the prior year. The increase was primarily attributable to improved investment market conditions, with $24.4 million of unrealized gains in fiscal 2023, compared to $78.5 million of unrealized losses in fiscal 2022. When excluding net realized and unrealized investment gains and losses, total revenues increased $52.4 million or 7.0 percent to $799.9 million in fiscal 2023 from $747.5 million in fiscal 2022. Total expenses increased by 9.3 percent to $749.8 million in fiscal 2023 from $686.0 million in fiscal 2022. The resulting increase in total net assets was $73.2 million or 7.0 percent. FY 2023 COMPOSITION OF REVENUES Investment Income and Gains/Losses—5.1% Net Tuition and Fees—75.2% Contributions and Private Grants—3.8% Government Grants and Contracts—4.5% Auxiliary Operations—6.9% Other Revenues—4.5% Revenues Net Tuition and Fees Fiscal 2023 total tuition and fees (reported net of scholarships and discounts) approximated $619.2 million, increasing $34.9 million or 6.0 percent from fiscal 2022. Diversification Within Tuition Revenue NSU’s academic programs are as diverse as its student body; accordingly, there are several components of enrollment and resulting tuition revenue. n 15 different colleges and schools n over 150 academic degree programs with varying tuition rates n 67 percent graduate and first-professional students; 33 percent undergraduate students 3
Ma n a g eme n t ’ s D i s c u s s i o n a n d A n a l y s i s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 Enrollment In fiscal 2023, overall university enrollment increased slightly, with a total of 20,948 students in fall 2022, compared to 20,898 in fall 2021. Similar to prior trends, the graduate level decreased while the undergraduate and professional level increased. As part of the university’s strategic initiatives, it has continued to invest in high-demand and industryrelevant programs with growth potential, such as expansion within the health professions, as previously described. The Health Professions Division (HPD), which houses seven colleges, comprised approximately 53 percent of the university’s total net tuition and fee revenue and 43 percent of its total fall enrollment in fiscal 2023. The expansion of HPD’s medical professional programs (D.O. and M.D.) has contributed to a steady increase in NSU’s overall professional-level enrollment over the past several years. Realizing the anticipated benefits of heightened admission standards and other strategic initiatives that were implemented, the undergraduate population has also steadily increased (up 55 percent over a five-year period, from fall 2017 to fall 2022). This increase, coupled with increasing professional-level enrollments in the HPD, have helped to offset graduate enrollment declines in certain colleges, which are reflective of changes in the economy and educational demands in particular areas. In these areas, the university has implemented specific strategies to right-size resources and program offerings. Strategic action steps have also been taken in recruitment, admission, retention, and marketing efforts through enhanced communication plans, increased personal outreach to students, and increased faculty engagement in recruitment efforts. NSU leveraged and supported its strengths in graduate and professional education while growing the undergraduate population. For example, the university’s unique Dual Admission Program provides highly motivated undergraduate students with the opportunity to reserve a seat in one of NSU’s graduate or professional colleges while earning their bachelor’s degree. Other examples include the Abraham S. Fischler College of Education’s Fischler Academy, an elite teacher preparation program, and the H. Wayne Huizenga College of Business and Entrepreneurship’s Huizenga Business Innovation Academy. These academy programs allow first-time-in-college students to earn both their bachelor’s and master’s degrees in just four years. NSU’s brand campaign, the NSU edge, highlights the university’s strengths, and shows how these strengths provide its students with a competitive advantage in their career, life, and community. This promise is demonstrated in numerous ways across the university, from immersive learning experiences to faculty mentoring to community outreach. Contributions and Private Grants Contributions and private grants revenue increased $12.7 million to $31.3 million in fiscal 2023 compared to $18.5 million in fiscal 2022, thanks to the continued support from NSU’s donor community, including two significant gift commitments as previously described. Government Grants and Contracts Government grants and contracts revenue was $36.5 million in fiscal 2023 compared to $55.9 million in fiscal 2022, with the decrease attributable to Higher Education Emergency Relief Fund (HEERF) revenues recognized in fiscal 2022. Regional Campuses and Other Locations, 18% Fully Online, 26% Main Campus in Fort Lauderdale/Davie, 56% APPROXIMATE FALL 2022 ENROLLMENT COMPOSITION Furthermore, the following depicts the enrollment composition by modality: 4
Ma n a g eme n t ’ s D i s c u s s i o n a n d A n a l y s i s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 Auxiliary Operations Auxiliary operations revenue totaled $57.0 million in fiscal 2023, representing an approximately $6.8 million or 13.4 percent increase from fiscal 2022. The growth was driven by increased campus housing and meal plan revenues, as well as clinical revenues. Other Revenues Other revenues increased $14.3 million to $37.4 million in fiscal 2023 from $23.1 million in fiscal 2022. The increase includes NSU’s proportionate share of a gain recognized on the sale of property by an equity-method investee, along with certain claim-related proceeds received in fiscal 2023. Expenses Financial Position The university has total assets of $2.0 billion, total liabilities of $875.5 million and resulting net assets of $1.1 billion as of June 30, 2023. Total assets increased $36.5 million or 1.9 percent from the prior year. Total cash and investments (including foundation assets) increased $49.4 million or 5.8 percent. Cash and investments that were previously categorized as foundation assets on the consolidated statement of financial position are part of cash and investments as of June 30, 2023, following dissolution of the foundation during fiscal 2023. The increase in total cash and investments, coupled with a $5.0 million collective increase in receivables (pledges, tuition and other), was partially offset by a $17.6 million decrease in right-of-use assets associated with operating leases. The university has continued to strengthen its financial resources with sustained growth in total cash and investments. At $894.0 million at June 30, 2023, the total has more than doubled over the last five years. Contributing to the increase are net proceeds received from bond issuances in fiscal 2020 ($12.9 million) and fiscal 2022 ($148.6 million). Unspent bond proceeds are anticipated to be utilized for future capital projects spanning multiple years. TOTAL CASH AND INVESTMENTS[ ] $838 $416 $447 $530 $679 (in millions) 0 400 600 800 FY 2022 $894 FY 2023 FY 2021 FY 2020 FY 2019 FY 2018 [1]Includes endowment and other restricted funds. Excludes Foundation assets (FY 2018 through FY 2022). Includes net proceeds received from bond issuances in FY 2020 of $12.9 million and FY 2022 of $148.6 million. 1,000 $ $ $ 200 $ $ $ FY 2023 COMPOSITION OF EXPENSES Salaries and Wages—45.1% Depreciation—6.2% Employee Benefits—10.6% Interest—3.2% Supplies and Services—17.4% Other—7.6% Space and Occupancy—9.9% Expenses totaled $749.8 million in fiscal 2023 compared to $686.0 million in fiscal 2022, representing an increase of $63.8 million, or 9.3 percent. Salaries and wages, along with employee benefits, increased from merit and other salary adjustments coupled with new positions in certain programs. Supplies and services grew across various areas as respective revenues increased. Space and occupancy rose from additional leased student housing and increased cleaning, utilities, and maintenance costs. Incremental interest expense was incurred for the 2022 Series bonds, which were issued in the latter part of fiscal 2022. Other expenses reflect a decrease associated with fiscal 2022 student emergency grant expenditures supported by HEERF allocations, partially offset by rising costs in other areas, such as insurance and travel. 5
Ma n a g eme n t ’ s D i s c u s s i o n a n d A n a l y s i s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 Investment performance of the university’s pooled endowment fund was monitored by Crewcial Partners through June 30, 2021, and Prime Buchholz beginning July 1, 2021. The fund produced a return of 9.8 percent in fiscal 2023, compared to a decrease of 16.9 percent in fiscal 2022, based on changes in market conditions. The composite asset mix for the $179.6 million endowment fund as of June 30, 2023, was as follows: 0 50 100 150 FY 2021 FY 2023 FY 2020 FY 2019 FY 2018 FY 2022 200 $ $ $ $ $ POOLED ENDOWMENT FUND $157 $115 $128 $132 $185 $180 (in millions) Equities—28.8% Fixed Income Securities—15.6% International Equities—21.8% Alternative Assets—24.6% Cash—9.2% POOLED ENDOWMENT FUND COMPOSITE ASSET MIX FY 2023 Endowment The university’s endowment is a collection of gift funds and reserves that are set aside and invested primarily for scholarships. The solid investment strategy to preserve real purchasing power, and the university’s goal to maximize long-term total return and predictability of payout allocations, combined with donors’ philanthropic contributions to support the future of NSU students, has resulted in sustained growth for the endowment over time. At June 30, 2023, endowment net assets (including endowment-related pledges receivable) totaled $224.9 million, representing 20.2 percent of the university’s total net assets. The following chart shows the market value of the university’s pooled endowment fund has increased 56.2 percent in the past five years, from approximately $115 million as of June 30, 2018, to approximately $180 million as of June 30, 2023. The long-term investment strategy, supported by a diversified asset mix, is designed to weather periodic market fluctuations as experienced during fiscal 2022. There was $0.1 million and $0.8 million of receipts in transit to the pooled fund as of June 30, 2023 and 2022, respectively. In addition, there was $4.0 million separately invested (pursuant to terms associated with an endowment grant program) as of June 30, 2023, that experienced a return of 6.2 percent in fiscal 2023. Endowment-related pledge receivables outstanding as of June 30, 2023 and 2022, were $41.2 million and $39.2 million, respectively. 6
Ma n a g eme n t ’ s D i s c u s s i o n a n d A n a l y s i s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 Capital Projects The university invested $42.7 million in capital projects during fiscal 2023, bringing gross land, buildings, and equipment before accumulated depreciation to $1.6 billion. During fiscal 2023, the university completed construction of leasehold improvements at the Tampa Bay Regional Campus for the new dental clinic as previously described. Other significant ongoing projects included renovating facilities to provide new locker rooms, improved fields, and other athletic amenities, as well as renewal and expansion of the university’s chiller plants on the main campus in Fort Lauderdale/Davie. Debt and Other Liabilities Total liabilities decreased $36.7 million, or 4.0 percent, to $875.5 million as of June 30, 2023, from $912.2 million as of June 30, 2022. The university’s debt portfolio is comprised of all fixed rate bonds, with no variable-rate debt outstanding. Total debt at par value decreased by $13.5 million to $571.6 million as of June 30, 2023, from $585.1 million as of June 30, 2022, due to regularly scheduled principal payments. Also contributing to the decrease in total liabilities year over year was an $18.5 million or 19.3 percent decrease in operating lease liabilities, which total $77.1 million as of June 30, 2023, compared to $95.5 million as of June 30, 2022. ASSETS AND LIABILITIES FY 2023 COMPOSITION * Includes finance and operating leases (beginning FY 2021 upon adoption of new accounting standard) $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Cash and Investments Plant Assets, Net Lease Assets* All Other Assets Debt Lease Liabilities* All Other Liabilities TOTAL LIABILITIES TOTAL ASSETS 45% 44% 4% 7% 68% 9% 23% LIABILITIES ASSETS (inmillions) 7
Ma n a g eme n t ’ s D i s c u s s i o n a n d A n a l y s i s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 Fiscal Year 2019 2020 2021 2022 2023 Fall Enrollment Undergraduate 4,904 5,666 6,314 6,637 6,971 Graduate 11,868 11,054 10,548 10,073 9,566 Professional 3,663 3,856 4,026 4,188 4,411 Total Enrollment 20,435 20,576 20,888 20,898 20,948 Total Full-Time Equivalent 17,101 17,431 17,973 18,057 18,302 Freshman Admissions Applications 8,946 11,058 11,324 11,749 16,789 Acceptances 7,026 8,857 10,470 10,868 12,726 Enrollments 1,248 1,526 1,689 1,672 1,978 Undergraduate Tuition $ 29,940 $ 31,150 $ 32,370 $ 33,510 $ 34,500 Financial (in thousands) Total Assets $ 1,549,998 $ 1,604,464 $ 1,816,842 $ 1,954,327 $ 1,990,848 Total Liabilities $ 658,238 $ 676,705 $ 762,756 $ 912,175 $ 875,455 Total Net Assets $ 891,760 $ 927,759 $ 1,054,086 $ 1,042,152 $ 1,115,393 Total Revenues $ 660,697 $ 691,006 $ 758,403 $ 674,106 $ 823,066 Total Expenses $ 625,498 $ 655,007 $ 632,076 $ 686,040 $ 749,825 Endowment Net Assets $ 170,727 $ 174,151 $ 226,994 $ 200,766 $ 224,941 Plant Assets, Net $ 944,258 $ 939,450 $ 916,240 $ 893,841 $ 889,752 Financial and Statistical Highlights 8
Audited Consolidated Financial Statements
Ma n a g eme n t ’ s R e s p o n s i b i l i t y f o r Co n s o l i d a t e d F i n a n c i a l S t a t eme n t s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 George L. Hanbury II, Ph.D. University President and Chief Executive Officer Harry K. Moon, M.D. Executive Vice President and Chief Operating Officer Alyson K. Silva, M.AC., CPA Vice President for Finance and Chief Financial Officer Nova Southeastern University management is responsible for preparing the consolidated financial statements and related notes as well as for their integrity and objectivity. The consolidated financial statements, which include estimated amounts based on judgments, have been prepared in accordance with accounting principles generally accepted in the United States of America. The university maintains a system of internal controls that it believes provides reasonable assurance that transactions are executed in accordance with management’s authorization and are properly recorded, that assets are safeguarded, and that accountability for assets is maintained. As part of the annual consolidated financial statement audit, independent auditors review certain aspects of this system of controls, but do not provide any assurance thereon. They do provide recommendations for improvement where appropriate. The independent auditors have unrestricted access to the Audit and Compliance Committee (the committee) of the Board of Trustees, and to the Board of Trustees. The independent auditors meet with the committee at least annually to review internal accounting control, auditing, and financial reporting matters. 10
Management and the Board of Trustees of Nova Southeastern University, Inc. Report on the Audit of the Financial Statements Opinion We have audited the consolidated financial statements of Nova Southeastern University, Inc. (the “University”), which comprise the consolidated statement of financial position as of June 30, 2023, and the related consolidated statements of activities, and cash flows for the year then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the University at June 30, 2023, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the University, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the University’s ability to continue as a going concern for one year after the date that the financial statements are issued. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not absolute assurance, and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: n Exercise professional judgment and maintain professional skepticism throughout the audit. n Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. n Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control. Accordingly, no such opinion is expressed. R e p o r t o f I n d e p e n d e n t Au d i t o r s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 11
n Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. n Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the University’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Report on Summarized Comparative Information We have previously audited the University’s 2022 consolidated financial statements, and we expressed an unmodified audit opinion on those audited consolidated financial statements in our report dated September 29, 2022. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2022, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived. Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Financial Responsibility Supplemental Schedule as required by the U.S. Department of Education is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the information is fairly stated, in all material respects, in relation to the 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 29, 2023, on our consideration of the University’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 the University’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University’s internal control over financial reporting and compliance. Boca Raton, FL September 29, 2023 12
Co n s o l i d a t e d S t a t eme n t s o f F i n a n c i a l P o s i t i o n J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 ($ in thousands) ASSETS 2023 2022 Current Assets: Cash and cash equivalents $ 17,587 $ 33,091 Restricted cash 10,155 11,869 Investments 379,683 343,163 Tuition and other receivables, net 44,934 41,632 Pledges receivable, current portion, net 22,079 15,763 Prepaid expenses and other current assets 14,045 12,532 Total current assets 488,483 458,050 Pledges receivable, net 23,253 27,828 Foundation assets - 7,085 Contributions receivable from remainder trusts 225 234 Scholarship funds held in trust by others 3,593 3,448 Designated investments 57,693 51,931 Restricted investments 107,695 94,848 Other investments 293,546 281,206 Restricted cash and cash equivalents 27,652 21,422 Land, buildings, and equipment, net 889,752 893,841 Operating lease right-of-use assets 74,905 92,520 Other assets 24,051 21,914 Total assets $ 1,990,848 $ 1,954,327 LIABILITIES AND NET ASSETS Current liabilities: Accounts payable and accrued liabilities $ 50,165 $ 60,180 Deferred revenue 77,335 74,116 Current portion of long-term debt 13,940 13,460 Operating lease liabilities, current 19.898 22,490 Other current liabilities 29,150 24,121 Total current liabilities 190,488 194,367 Long-term debt 580,036 596,031 Due to beneficiaries under remainder trusts and annuities 99 105 Accrued insurance cost 14,460 12,233 Deferred revenue 10,904 11,809 Operating lease liabilities 57,164 73,051 Other liabilities 22,304 24,579 Total liabilities 875,455 912,175 Net assets: Without donor restrictions $ 906,215 $ 854,452 With donor restrictions 209,178 187,700 Total net assets 1,115,393 1,042,152 Total liabilities and net assets $ 1,990,848 $ 1,954,327 See accompanying notes to consolidated financial statements. 13
Co n s o l i d a t e d S t a t eme n t s o f A c t i v i t i e s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 (with summarized financial information for the year ended June 30, 2022) ($ in thousands) Without Donor Restrictions With Donor Restrictions 2023 Total 2022 Total REVENUES AND RELEASES Net tuition and fees $ 619,170 $ - $ 619,170 $ 584,260 Contributions and private grants 1,700 29,562 31,262 18,522 Government grants and contracts - 36,500 36,500 55,902 Auxiliary operations 56,997 - 56,997 50,247 Interest and dividends 16,657 1,907 18,564 15,485 Net unrealized gain (loss) on investments 17,459 6,898 24,357 (78,487) Net realized (loss) gain on sale of investments (2,824) 1,651 (1,173) 5,105 Other revenues 31,265 6,124 37,389 23,072 Net assets released from restrictions 61,164 (61,164) - - Total revenues and releases 801,588 21,478 823,066 674,106 EXPENSES Salaries and wages 338,077 - 338,077 303,963 Employee benefits 79,678 - 79,678 74,291 Supplies and services 130,449 - 130,449 111,913 Space and occupancy 74,490 - 74,490 66,810 Depreciation and amortization 46,237 - 46,237 48,231 Interest 23,874 - 23,874 19,475 Other 57,020 - 57,020 61,357 Total expenses 749,825 - 749,825 686,040 CHANGE IN NET ASSETS 51,763 21,478 73,241 (11,934) Net assets, beginning of year 854,452 187,700 1 ,042, 152 1,054,086 NET ASSETS, END OF YEAR $ 906,215 $ 209,178 $ 1 , 1 15 , 393 $ 1 ,042, 152 See accompanying notes to consolidated financial statements. 14
Co n s o l i d a t e d S t a t eme n t s o f C a s h F l ows J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 ($ in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: 2023 2022 Change in net assets $ 73,241 $ (11,934) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation expense and amortization of finance lease right-of-use assets 46,237 48,231 Amortization of premiums and issuance costs related to bonds payable (2,055) (2,106) Noncash lease expense 21,815 17,082 Provision for doubtful accounts 6,547 2,868 Loss on disposal of equipment and buildings 507 717 Net realized loss (gain) on sale of securities 1,173 (5,105) Net unrealized (gain) loss on securities (24,357) 78,487 Contributions for investment and capital purchases (12,384) (4,270) Decrease (increase) in assets from prior year: Tuition and other receivables (8,603) (10,005) Pledges receivable (2,987) 8,492 Prepaid expenses and other current assets (1,513) (579) Foundation assets 7,085 1,757 Contributions receivable from remainder trust and scholarship funds held in trust by others 9 59 Other assets (2,137) 3,002 Increase (decrease) in liabilities from prior year: Accounts payable and accrued liabilities (9,932) (3,167) Accrued insurance costs and other current liabilities 7,122 5,059 Deferred revenue 2,314 5,870 Operating lease liabilities (22,679) (17,552) Other liabilities (1,527) 744 Due to beneficiaries under remainder trusts and annuities (6) (6) Net cash provided by operating activities 77,870 117,644 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (42,007) (25,945) Sales and maturities of investments 512,587 251,122 Purchases of investments (557,003) (500,101) Net cash used in investing activities (86,423) (274,924) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt - 150,000 Repayment of debt (13,460) (13,525) Decrease in bond deposits with trustees (13) 1,374 Lease payments (1,346) (1,257) Financing costs - (1,389) Contributions for investment and capital purchases 12,384 4,270 Net cash (used in) provided by financing activities (2,435) 139,473 Net (decrease) in cash, cash equivalents, and restricted cash (10,988) (17,807) Cash, cash equivalents, and restricted cash, beginning of year 66,382 84,189 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF YEAR $55,394 $66,382 Supplemental information: Interest paid, net of amounts capitalized $ 26,345 $ 19,587 Accrued capital expenditures $ 3,335 $ 3,418 See accompanying notes to consolidated financial statements. 15
No t e s t o Co n s o l i d a t e d F i n a n c i a l S t a t eme n t s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 1. University Organization Nova Southeastern University, Inc. (NSU, or the university) is a not-for-profit, private institution and is exempt from federal income taxes on related income under Section 501(a) of the Internal Revenue Code as an organization described in Section 501(c)(3). Founded in 1964, the university offers undergraduate degrees, graduate and firstprofessional degrees, and certificate programs to more than 20,000 full-time and part-time students in a wide range of fields, including the humanities, biological and environmental sciences, business, counseling, computer and information sciences, conflict resolution, education, couple and family therapy, medicine, dentistry, various other health professions, law, marine science, performing and visual arts, psychology, and other social sciences. Courses are taught at 4 South Florida campuses; 8 regional campus locations, including Puerto Rico; and at sites in 3 states, as well as 3 foreign countries. NSU serves the residents of its community with health, psychology, and law centers; services for children with hearing impairments and autism; and programs for retired professionals. NSU University School offers innovative alternatives in primary and secondary education to children from preschool through grade 12. 2. Summary of Significant Accounting Policies Financial Statement Presentation The accompanying consolidated financial statements include the university and its wholly owned subsidiaries, NSU Guaranty Insurance Company, Ltd.; NSU Grande Oaks, LLC; NSU Park Plaza, LLC; NSU Health, LLC; and The Pointe Corporate Office Park Property Owners Association, Inc. The latter two legal entities have no financial activity to date. All significant intercompany balances and transactions have been eliminated in consolidation. NSU classifies its transactions and balances into two categories of net assets according to the absence or existence of donor-imposed restrictions: (1) net assets without donor restrictions and (2) net assets with donor restrictions. Net assets without donor restrictions include transactions and balances without donor-imposed stipulations and may be used to achieve any institutional purpose; however, the Board of Trustees may designate net assets without donor restrictions for a specific purpose. Net assets with donor restrictions include transactions and balances with donor-imposed stipulations that normally expire in time, or can be fulfilled by actions of the university. However, certain donor restrictions are perpetual as they neither expire over time, nor can be fulfilled by actions of the university, requiring the related net assets to be permanently retained. Such permanently retained net assets are included within the net assets with donor restrictions category. The consolidated financial statements include prior-year comparative information summarized in total, but not by net asset class. As this summarized information lacks sufficient detail for presentation in accordance with accounting principles generally accepted in the United States of America, the data should be read in conjunction with the prior year’s consolidated financial statements. Certain amounts contained in the accompanying fiscal 2022 consolidated financial statements have been reclassified to conform to the fiscal 2023 presentation. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires NSU to make estimates and assumptions about the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Cash and Cash Equivalents Cash equivalents are investments with maturities of 90 days or less when purchased and are carried at cost, which approximates fair value. Restricted Cash Current restricted cash represents funds related to federal revolving student loan programs (see Note 10) and funds held on behalf of student clubs or organizations in which the university is serving in an agent capacity. 16
No t e s t o Co n s o l i d a t e d F i n a n c i a l S t a t eme n t s J u n e 3 0 , 2 0 2 3 a n d 2 0 2 2 Approximately $2.2 million and $2.9 million of long-term restricted cash at June 30, 2023 and 2022, respectively, represents funds contributed in accordance with the joint-use library facility agreement (see Note 15) by NSU and Broward County for capital repair, replacement, and renewal. In accordance with this agreement, these funds are maintained in an interest-bearing account. These funds are reflected as a long-term asset on the Consolidated Statements of Financial Position since they are restricted for long-term capital expenditures. Additionally, long- term restricted cash at June 30, 2023 and 2022 includes approximately $12.9 million received in fiscal 2020 from bond proceeds that are restricted for projects included in the university’s capital improvement plan (see Note 9), as well as $12.5 million and $5.5 million at June 30, 2023 and 2022, respectively, that is part of the university’s endowment, and therefore, deemed long-term in nature. NSU has cash balances with banks in excess of FDIC-insured limits, which therefore bear risk, including concentration of credit risk with respect to NSU’s primary banking institutions. The university has not experienced any loss due to this risk. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Statements of Financial Position that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows (in thousands). 2023 2022 Cash and cash equivalents $ 17,587 $ 33,091 Restricted cash 10,155 11,869 Long-term restricted cash and cash equivalents 27,652 21,422 Total $ 55,394 $ 66,382 Investments Investments in equity securities with readily determinable market values, debt securities, and assets held in trust are stated at fair value. Investments received as gifts are recorded at fair value at the date of donation. Investments included in current assets have a maturity of three months to five years from the purchase date and are bought and held primarily for the purpose of selling in the near future to fund current operations. Investments are recorded at fair value using the market approach method; unrealized gains and losses are reflected in net unrealized gain or loss on investments. Investments included in long-term assets comprise endowment investments, reported as designated and restricted investments, and other investments. Other investments include those made pursuant to a long-term investment horizon or are intended to support future capital expenditures (including bond proceeds received during fiscal 2022, see Note 9), and therefore, deemed long-term in nature. Investments are subject to market and credit risks customarily associated with debt, equity, and real estate. Investment securities are exposed to various risks, such as interest rate, market, and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term could materially affect investment balances and the amounts reported in the Consolidated Statements of Financial Position. Deferred Debt Issue Costs Costs related to the issuance of debt ($4.3 million at June 30, 2023, and $4.8 million at June 30, 2022) are being amortized over the term of the related debt instrument using the bonds outstanding method, which approximates the effective interest method. In accordance with the Financial Accounting Standards Board’s (FASB’s) Accounting 17
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