1. {Central Michigan University} BOARD OF TRUSTEES September 17, 2015

2. Central Michigan University Presentation to Board of Trustees Summary of Presentation to Board of Trustees: Audited Financial Statements  Clean, unmodified opinion – highest level of assurance  Emphasis of Matter for Adoption of GASB 68  Reporting Entity  Blended with the University statements o CMU College of Business Administration Foundation o CMU Foundation  Discretely presented within the University statements o Central Health Advancement Solutions PLANTE MORAN 1

3. Central Michigan University Reporting Entity Relationship Central Michigan University Central Health Advancement Solutions CMU Medical Education Partners Saginaw Cooperative Hospitals, dba previously Synergy Medical Education Association, current dba CMU Medical Education Partners PLANTE MORAN 2

4. Central Michigan University Financial Highlights Summary of Presentation to Board of Trustees: Graphics Presentation with 2015 and 2014 financial highlights  $51.1 million increase in total assets and deferred outflows, primarily due to a $32.6 million increase in net capital assets and an increase of $24.8 million in restricted cash for unspent bond proceeds  $141.2 million increase to total liabilities and deferred inflows, primarily due to an increase of $40.1 million increase long-term debt and an increase of $93.4 million in net pension liability related to the implementation of GASB 68  $20.1 million increase in operating revenue, primarily from increased student tuition revenue and revenue from auxiliary enterprises  $12.8 million increase in operating expenses, primarily from a $6.8 million increase in compensation ($1.7 million was benefit increases) due to added FTE’s and compensation increases  $27.9 million decrease in nonoperating revenue, primarily due to a $34.8 million decrease in investment income mostly due to unrealized losses as a result of unfavorable market conditions offset by a $6.8 million increase in state appropriations  Overall, net position decreased $90.2 million ($91.5 million due to adoption of GASB 68) to a total of $603.8 million PLANTE MORAN 3

5. Central Michigan University Revenues, Expenses and Changes in Net Position (in millions) 4 4

6. PLANTE MORAN Central Michigan University Operating Revenues – Comparative (in millions) 2015 Operating Revenue = $... million 2014 Operating Revenue = $316.0 million 5 5 2015 Operating Revenue = 336.1 million

7. PLANTE MORAN Central Michigan University 2015 Operating Expenses (in millions) Operating expenses were $451.9 million and $439.1 million in 2015 and 2014, respectively with little change in percentage by area or classification. 6

8. PLANTE MORAN Central Michigan University Non-operating and Other Revenues (Expenses) (in millions) Non-operating and other revenues (expenses) totaled $117.1 million and $143.6 million in 2015 and 2014, respectively. 7 7

9. PLANTE MORAN Central Michigan University Assets and Deferred Outflows – Comparative (in millions) Assets and deferred outflows were $998.3 million and $947.2 million in 2015 and 2014, respectively. 8 8 2015 2014

10. PLANTE MORAN Central Michigan University Liabilities and Deferred Inflows – Comparative (in millions) Liabilities and Deferred Inflows were $394.5 million and $253.3 million in 2015 and 2014, respectively. 9 9 20152014 2015

11. PLANTE MORAN Central Michigan University Net Position (formerly known as Net Assets) Net Position totaled $603.8 million and $693.9 million in 2015 and 2014, respectively. 10

12. The scope of our audit was as planned. Complete cooperation was given to us throughout the audit by everyone at the University. Letter Comments:  Upcoming items  GASB issues Statement No. 72, Fair Value Measurement and Application  GASB issues Statement No. 75, Accounting for Postemployment Benefits Audit of the Federal Programs is complete.  Only major (tested) program was the Student Financial Aid Cluster  We noted one finding from our testing that is a common issue around timeliness of return of funds when a student withdraws Central Michigan University Results of Audit PLANTE MORAN 11

13. GASB issues Statement No. 72, Fair Value Measurement and Application  Provides guidance on determining a fair value measurement for financial reporting purposes  Requires enhanced disclosures including a breakout of investments by “level” based on the amount of subjectivity in the fair value measurement  Will be effective for June 30, 2016 Central Michigan University Upcoming Pronouncement PLANTE MORAN 12

14. GASB Issues Statement No. 75, Accounting for Postemployment Benefits Other Than Pensions  Applicable to all governments (not just Michigan)  Postemployment benefits for retiree healthcare  Recording the unfunded OPEB obligation as a liability on University’s Statement of Position  University’s proportionate share of MPSERS liability  Very similar to GASB No. 68 except applicable to OPEB  Will directly reduce unrestricted net position in year of implementation (June 30, 2018) Central Michigan University Upcoming Pronouncement PLANTE MORAN 13

15. {Thank you} We appreciate the opportunity to serve Central Michigan University