Clarion Masthead

PSC Audited Financial Statement

August 31, 2019 and 2018

PROFESSIONAL STAFF CONGRESS OF THE
CITY UNIVERSITY OF NEW YORK

FINANCIAL STATEMENTS WITH SUPPLEMENTAL INFORMATION
AUGUST 31, 2019 AND 2018

CONTENTS

Independent Auditor’s Report
Statements of Financial Position
Statements of Activities
Statements of Functional Expenses
Statements of Cash Flows
Notes to Financial Statements
Supplemental Information
Schedules of Expenses by Category


INDEPENDENT AUDITOR’S REPORT

To the Executive Board of Professional Staff Congress of the City University of New York

We have audited the accompanying financial statements of the Professional Staff Congress of the City University of New York (PSC/CUNY), which comprise the statements of financial position as of August 31, 2019 and 2018, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these 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 financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the PSC/CUNY’s preparation and fair presentation of the 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 PSC/CUNY’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 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 financial statements referred to above present fairly, in all material respects, the financial position of the Professional Staff Congress of the City University of New York as of August 31, 2019 and 2018, and the changes in its net assets and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 12 to the financial statements, PSC/CUNY adopted new accounting guidance, ASU 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. Our opinion is not modified with respect to this matter.

Report on Supplemental Information

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The supplemental Schedules of Expenses by Category are presented for purposes of additional analysis and are not a required part of the financial statements. Supplemental information is the responsibility of the PSC/CUNY’s 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 audits 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 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 financial statements as a whole.

NOVAK FRANCELLA, LLC
New York, New York February 19, 2020


Professional Staff Congress of the
City University of New York

Statements of Financial Position
August 31, 2019 and 2018
2019 2018
Assets
Cash and cash equivalents 711,649 2,667,313
Investments - at fair value
Mutual funds 10,849,343 9,071,114
Investments - other
Certificates of deposit 992,000 992,000
Total investments 11,841,343 10,063,114
Receivables
Dues 125,000 357,000
Due from related entities 617,400 338,000
Due from other 90,000 -
Total receivables 832,400 695,000
Property and equipment
Equipment 702,649 684,544
Leasehold improvements 531,860 529,641
Furniture and fixtures 341,405 340,407
1,575,914 1,554,592
Less: accumulated depreciation (1,416,898) (1,366,771)
Net property and equipment 159,016 187,821
Total assets 13,544,408 13,613,248
Liabilities and Net Assets
Current liabilities
Accrued expenses 273,379 321,803
Accrued compensated balances 697,814 602,033
Due to related entities 1,620,215 2,140,517
Total current liabilities 2,591,408 3,064,353
2019 2018
Long-term liabilities
Deferred rent 567,227 696,220
Unfunded projected pension benefit obligation 4,071,885 3,103,465
Total long-term liabilities 4,639,112 3,799,685
Total liabilities 7,230,520 6,864,038
Net assets without donor restrictions 6,313,888 6,749,210
Total liabilities and net assets 13,544,408 13,613,248

Statements of Activities
Years Ended August 31, 2019 and 2018
2019 2018
Revenue
Membership dues 15,109,810 16,257,484
Organizing assistance 3,546,488 4,035,091
Investment income, net 802,753 241,411
Rental income 260,616 238,914
Total revenue 19,719,667 20,772,900
Expenses
Affiliation fees 9,934,737 11,036,031
Salaries, employee benefits, and payroll taxes 5,519,277 5,477,311
Representational and governance 146,542 192,898
Public relations 154,877 167,447
Building expenses 1,401,783 1,404,396
Administrative, office and general 420,801 430,749
Professional fees 461,140 610,768
Contract & budget campaigns 759,168 112,855
Stipends and reassigned time 505,851 511,272
Depreciation expense 50,127 69,670
Membership campaign 31,707 106,302
Total expenses 19,386,010 20,119,699
Net increase in net assets 333,657 653,201
Net assets without donor restrictions
Beginning of year 6,749,210 5,824,266
Adjustment to pension liability funded status (768,979) 271,743
End of year 6,313,888 6,749,210

Statements of Functional Expenses
2019 2018
Member

Services
Support

Services
Member

Services
Support

Services
Total Total
Affiliation fees 9,934,737 9,934,737 $- 11,036,031 11,036,031 $-
Salaries, employee benefits and payroll taxes 5,519,277 2,298,823 3,220,454 5,477,311 2,182,086 3,295,225
Representational and governance 146,542 146,542 - 192,898 192,898 -
Public relations 154,877 154,877 - 167,447 167,447 -
Building expenses 1,401,783 583,843 817,940 1,404,396 559,511 844,885
Administrative, office and general 420,801 124,297 296,504 430,749 120,541 310,208
Professional fees 461,140 461,140 - 610,768 610,768 -
Contract and budget campaigns 759,168 759,168 - 112,855 112,855 -
Stipends and reassigned time 505,851 505,851 - 511,272 511,272 -
Depreciation expense 50,127 - 50,127 69,670 - 69,670
Membership campaign 31,707 31,707 - 106,302 106,302 -
Total expenses 19,386,010 15,000,985 4,385,025 20,119,699 15,599,711 4,519,988

Statements of Cash Flows
Years Ended August 31, 2019 and 2018
2019 2018
Cash flows from operating activities
Change in net assets 333,657 653,201
Adjustments to reconcile change in net assets to net cash
provided by operating activities
Depreciation 50,127 69,670
Net realized and unrealized gains (502,569) (27,265)
Pension liability funded status (768,979) 271,743
Decrease (increase) in assets:
Dues receivable 232,000 367,000
Due from related entities (279,400) 189,884
Due from other (90,000) -
Increase (decrease) in liabilities:
Accrued expenses (48,424) (7,187)
Accrued compensated absences 95,781 (29,803)
Due to related entities (520,302) 355,467
Unfunded pension liability 968,420 (60,784)
Deferred rent (128,993) (104,495)
Net cash provided by (used for) operating activities (658,682) 1,677,431
Cash flows from investing activities
Purchase of property and equipment (21,322) (1,516)
Purchase of certificates of deposit (298,000) (198,000)
Liquidation of certificates of deposit 298,000 198,000
Sale of investments 23,699 21,651
Purchase of investments (1,299,359) (1,215,126)
Net cash used for investing activities (1,296,982) (1,194,991)
Net (decrease) increase in cash (1,955,664) 482,440
Cash and cash equivalents
Beginning of year 2,667,313 2,184,873
End of year 711,649 2,667,313

PROFESSIONAL STAFF CONGRESS OF THE
CITY UNIVERSITY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2019 AND 2018

NOTE 1. ORGANIZATION AND TAX STATUS

The Professional Staff Congress of the City University of New York (PSC/CUNY) was created by a merger of the Legislative Conference of The City University of New York and the United Federation of College Teachers. It was created to be the collective bargaining representative of the instructional staff of the City University of New York (CUNY). The Professional Staff Congress of the City University of New York is a Local (Local 2334) of the American Federation of Teachers (AFT). Through the AFT, PSC/CUNY is affiliated with New York State United Teachers (NYSUT) and The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).

The purpose of PSC/CUNY is to advance and secure the professional and economic interest of the instructional staff of the CUNY and other members of the bargaining units of PSC/CUNY. The objectives of PSC/CUNY are to negotiate and administer collective bargaining agreements; to improve the quality of education, research and scholarship at the CUNY; to cooperate with other educational, professional, and labor organizations in order to enhance the quality of education in the nation and to promote the professional and economic interests and the welfare of all workers; to serve as the public representative of the instructional staff of the CUNY and other members of the bargaining units of the Professional Staff Congress; and to cooperate with other CUNY employee and academic organizations and student bodies in order to advance the interests of the faculty, staff and students of the CUNY and the community it serves. The benefits members receive are paid for by contributions from the employer, CUNY, which are negotiated during bargaining as part of members’ compensation. PSC/CUNY and its affiliated organizations have arranged for various special economic benefits for its members.
Supplemental health and welfare benefits are paid from a separate trust fund and are not included in these financial statements.

PSC/CUNY is exempt from Federal income taxes under Section 501(c)(5) of the Internal Revenue Code under a blanket exemption of the AFT.

Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by PSC/CUNY and recognize a tax liability if PSC/CUNY has taken an uncertain position that, more likely than not, would not be sustained upon examination by the
U.S. Federal, state, or local taxing authorities. PSC/CUNY is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Typically, tax years will remain open for three years; however, this may differ depending upon the circumstances of PSC/CUNY.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Method of Accounting - The accompanying financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for non-profit organizations. Net assets are classified as net assets without donor restrictions and with donor restrictions. Net assets are generally reported as net assets without donor restrictions unless assets are received from donors with explicit stipulations that limit the use of the asset. PSC/CUNY does not have any net assets with donor restrictions.

Net Assets without Donor Restrictions - Net assets that are not subject to donor-imposed restrictions and may be expended for any purpose in performing the primary objectives of PSC/CUNY. These net assets may be used at the discretion of PSC/CUNYs management and the Board of Directors. Net assets without donor restrictions totaled $6,313,888 and $6,749,210 for the years ended August 31, 2019 and 2018, respectively.

Cash and Cash Equivalents - PSC/CUNY considers all cash and highly liquid investments, including certificates of deposit with initial maturities of three months or less, to be cash equivalents.

Investments - Investments are carried at fair value which generally represents quoted market prices, or the net asset value of the mutual funds, as of the last business day of the fiscal year as provided by the custodian or investment manager. Certificates of deposit held for investment that are not debt securities are classified as Investments - other and are carried at cost.

Property and Equipment - Property and equipment are recorded at cost. Major additions are capitalized while replacements, maintenance and repairs which do not improve or extend the lives of the respective assets are expensed currently. Depreciation is computed over the assets’ estimated useful lives, three to thirty years, by the straight line method. Depreciation expense was $50,127 for the year ended August 31, 2019 and $69,670 for 2018.

Accrued Compensated Balances - Future employee absences that have been earned but not yet taken are accrued within the contract limits. The accrued compensated balances were $697,814 for the year ended August 31, 2019 and $602,033 for 2018.

Membership Dues and Dues Receivable - Membership dues are recognized as revenue over the membership period. Dues come from members through payroll deductions and direct payments. Dues receivable are recorded as revenues are recognized. PSC/CUNY has determined that no allowance for doubtful accounts for receivables is necessary as of August 31, 2019 and 2018.

Deferred Rent - Operating leases are recognized on a straight-line basis over the term of the lease. Deferred rent has been recorded for the difference between the fixed payment and the rent expense. Deferred rent was $567,227 for the year ended August 31, 2019 and $696,220 for 2018.

Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

NOTE 3. CONCENTRATION OF CASH

PSC/CUNY places its cash and certificates of deposit with financial institutions deemed to be creditworthy. The balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Cash balances and certificates of deposits may at times exceed the insured deposit limits. As of August 31, 2019, PSC/CUNY’s cash and certificates of deposit in excess of FDIC coverage totaled $461,650 and $742,000, respectively.

NOTE 4. AVAILABILITY AND LIQUIDITY

The following represents PSC/CUNY’s financial assets available within one year of the statements of financial position date for general expenditure at August 31, 2019 and 2018:

2019 2018
Financial assets available within one year:
Cash and cash equivalents 711,649 2,667,313
Investments 11,841,343 10,063,114
Receivables 832,400 695,000
Total financial assets 13,385,392 13,425,427
Less investments maturing greater than one year (794,000) (793,000)
Financial assets available to meet general expenditures within one year 12,591,392 12,632,427

As part of PSC/CUNY’s liquidity plan, excess cash is maintained in checking and money market accounts, and certificates of deposit.


NOTE 5. FAIR VALUE MEASUREMENTS

The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described as follows:

Basis of Fair Value Measurement:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the PSC/CUNY has the ability to access.

Level 2 - Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; 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 maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model- based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period.

For the years ended August 31, 2019 and 2018, there were no transfers in or out of levels 1, 2, or 3.

The following tables set forth, by level within the fair value hierarchy, the major categories of investments measured at fair value at August 31, 2019 and 2018:

Fair Value Measurements at August 31, 2019
Total Level 1 Level 2 Level 3
Mutual funds 10,849,343 10,849,343 $- $-
Investments at fair value 10,849,343 10,849,343 $- $-
Fair Value Measurements at August 31, 2018
Total Level 1 Level 2 Level 3
Mutual funds 9,071,114 9,071,114 $- $-
Investments at fair value 9,071,114 9,071,114 $- $-

* PSC/CUNY has corrected the presentation of certificates of deposits within its portfolio investment fair value classification disclosure for 2018. The certificates of deposit were previously presented as Level 1 investments and now have been presented as investment- other.

PSC/CUNY contributes to the Professional Staff Congress/CUNY Pension Plan (the Plan), a single employer plan covering professional and management employees who meet age and service requirements. Contributions are actuarially determined.

NOTE 6. SINGLE-EMPLOYER PENSION PLAN

The Professional Staff Congress of the City University of New York Pension Plan is a defined benefit plan paying 2.2% of Final Average Compensation for each year of service, up to 25 years. Final Average Compensation is the average compensation over the last highest 5 consecutive years (or highest 60 months) of service. Plan assets do not include any securities of the employer or related entities. No amount of future annual benefits of plan participants is covered by insurance contracts. There were no significant transactions between the PSC/CUNY or related parties and the Plan during the years ended August 31, 2019 and 2018.

The following are the balances as of or for the years ended August 31, 2019 and 2018 as provided by the Plan’s actuary:

2019 2018
Projected benefit obligation (9,038,340) (7,413,308)
Fair value of plan assets 4,966,455 4,309,843
Funded status (4,071,885) (3,103,465)
Accumulated benefit obligation (1,797,367) (1,597,926)
Amounts recognized in the statement of financial position: Noncurrent liabilities (4,071,885) (3,103,465)
Amounts in net assets not recognized as components of net periodic benefit cost:
Accumulated net gain or (loss) (2,274,518) (1,505,539
Weighted-average assumptions
Discount rate (to discount plan benefit obligations) 2.85% 4.00%
Discount rate (to measure net periodic pension cost) 4.00% 3.60%
Expected return on plan assets 7.00% 7.00%
Rate of compensation increase 4.00% 4.00%
Employer contributions 431,047 388,000
Benefits paid 60,355 112,653
Net periodic pension cost 584,418 550,574

2019 2018
Net periodic pension cost 584,418 550,574
Add: Administrative expenses 46,070 48,385
Less: Employer remittances (431,047) (388,000)
199,441 210,959
Increase (decrease) in unrecognized accumulated net gain or loss 768,979 (271,743)
968,420 (60,784)

In 2019 and 2018, PSC/CUNY has recorded a loss of $768,979 and a gain of $271,743, respectively, to its net assets for the additional change in accrued pension payable beyond the current-year pension expense.

The Plan’s expected long-term rate of return on assets assumption is 7.00%. This assumption represents the rate of return on Plan assets reflecting the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the benefit obligation.
The assumption has been determined by reflecting expectations regarding future rates of return for the investment portfolio, with consideration given to the distribution of investments by asset class and historical rates of return for each individual asset class.

For the years ended August 31, 2019 and 2018, there were no transfers in or out of levels 1, 2 and 3.

The following tables set forth, by level within the fair value hierarchy, the major categories of Plan investments measured at fair value and the allocation of the Plan's net assets available for benefits at August 31, 2019 and 2018:

Fair Value Measurements at August 31, 2019
Total Level 1 Level 2 Level 3
Cash and cash equivalents 3.77% 187,311 187,311 $- $-
Equities 38.83% 1,928,229 1,928,229 - -
U.S Government and Government Agency obligations 35.62% 1,769,203 1,684,280 84,923 -
Mutual funds 21.78% 1,081,712 1,081,712 - -
100.00% 4,966,455 4,881,532 84,923 $-

Fair Value Measurements at August 31, 2018
Total Level 1 Level 2 Level 3
Cash and cash equivalents 5.78% 249,143 249,143 $- $-
Equities 44.71% 1,926,828 1,926,828 - -
U.S Government and Government Agency obligations 27.87% 1,201,126 1,106,839 94,287 -
Mutual funds 21.64% 932,746 932,746 - -
100.00% 4,309,843 4,215,556 94,287 $-

PSC/CUNY’s investment policies are designed to ensure that adequate plan assets are available to provide future payments of pension benefits to eligible participants. Taking into account the expected long-term rate of return on plan assets, PSC/CUNY formulates the investment portfolio composed of the optimal combination of cash and cash equivalents, equities, fixed income and mutual funds.

Future Cash Flows

The projected contribution for next fiscal year is $420,000.

The following benefit payments, which reflect expected future service, are expected to be paid as follows:

Future Cash Flows
2020 162,179
2021 186,212
2022 183,360
2023 181,066
2024 179,397
2025 - 2029 944,128

NOTE 7. MULTIEMPLOYER DEFINED BENEFIT PENSION PLAN

PSC/CUNY participates in the Office and Professional Employees International Union, Local 153 Pension Fund, a multiemployer defined benefit pension plan, under the terms of a collective bargaining agreement that covers its union-represented employees who meet age and service requirements. The risks of participating in multiemployer defined benefit pension plans are different from single-employer plans in the following aspects:

a. Assets contributed to the multiemployer defined benefit pension plan by one employer may be used to provide benefits to employees of other participating employers.

b. If a participating employer stops contributing to the multiemployer defined benefit pension plan, the unfunded obligations of the multiemployer defined benefit pension plan may be borne by the remaining participating employers.

c. If the Plan chooses to stop participating in the multiemployer defined benefit pension plan, the Plan may be required to pay the multiemployer defined benefit pension plan an amount based on the underfunded status of the multiemployer defined benefit pension plan, referred to as a withdrawal liability.

PSC/CUNY’s participation in the multiemployer defined benefit pension plan for the annual periods ended August 31, 2019 and 2018, is outlined in the table below. The zone status is based on information that PSC/CUNY received from the multiemployer defined benefit pension plan and is certified by the multiemployer defined benefit pension plan's actuary. Among other factors, pension plans in the red zone are generally less than 65 percent funded, pension plans in the yellow zone are less than 80 percent funded, and pension plans in the green zone are at least 80 percent funded.

Pension Protection Act Zone Status
Legal Name of Pension Plan Pension Plan's Employer Identification Number Pension Plan's Plan Number Zone Status Extended Amortization Provisions Used? Zone Status Extended Amortization Provisions Used? Expiration Date of Collective Bargaining Agreement
Local 153 Pension Fund 13-2864289 001 Red as of 01/01/19 No Red as of 01/01/18 No *

* PSC/CUNY participates in the Local 153 Pension Fund through a collective bargaining agreement between PSC/CUNY and the Office & Professional Employees International Union, Local 153AFL-CIO (Local 153). The collective bargaining agreement has a three year term of October 1, 2018 through September 30, 2021.
Contributions paid by the Plan directly to the Pension Plan Contributions to the Pension Plan greater than 5% of total Pension Plan contributions (Plan year ending) Employer Contribution Rate of the Pension Plan Number of Employees Covered by the Pension Plan for which the Plan contributes directly to the Pension Plan
Legal Name of Pension Plan 8/31/2019 8/31/2018 8/31/2019 8/31/2018 8/31/2019 8/31/2018
Local 153 Pension Fund 126,844 128,412 No, Plan year ending 8/31/19. No, Plan year ending 8/31/18. * * 10 10

* The employer contribution rate of the Pension Plan was $267 per week per employee effective June 1, 2019, and $260 effective June 1, 2018.

Minimum contributions required in future by CBA, statutory requirements, or other contractual requirements?
Legal Name of Pension Plan Funding Improvement Plan or Rehabilitation Plan Implemented or Pending? Surcharge paid to Pension Plan by the Benefit Funds? No? If yes, description
Local 153 Pension Fund Rehabilitation Plan Implemented Yes No N/A

NOTE 8. MULTIEMPLOYER PLAN THAT PROVIDES POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

PSC/CUNY contributed to one multiemployer defined benefit health and welfare plan during the years ended August 31, 2019 and 2018 that provides postretirement benefits for its full-time support staff employees. PSC/CUNY’s contributions to the welfare plan on behalf of its full- time support staff employees, contribution rates, and number of employees covered were as follows:

Contributions to Plan Employer contribution rates Number of employees covered by Plan
Legal Name of Plan providing postretirement benefits other than pension 8/31/2019 8/31/2018 8/31/2019 8/31/2018 8/31/2019 8/31/2018
Local 153 Health Fund 9,440 10,246 * * 16 17

* Under a collective bargaining agreement between Local 153 and PSC/CUNY, PSC/CUNY established coverage through an insured Preferred Provider Organization Plan to provide medical, dental and prescription benefits. PSC/CUNY contributed $66 per month to Local 153 Health Fund per active employee and $8 per month per retiree under a collective bargaining agreement between Local 153 and PSC/CUNY to provide supplement benefits for life insurance coverage and vision benefits.

NOTE 9. RELATED PARTY TRANSACTIONS

Identification of Related Organizations

PSC/CUNY has the following related entities:

• American Federation of Teachers (AFT)
• New York State United Teachers (NYSUT)
• Professional Staff Congress of the City University of New York Welfare Fund
• The American Association of University Professors (AAUP)

The entities listed above share common trustees, officers or affiliation with PSC/CUNY.

PSC/CUNY is affiliated with New York State United Teachers (NYSUT) and the American Federation of Teachers (AFT) through arrangements whereby PSC/CUNY pays dues to each entity in order for its members to participate in affiliated programs and, in turn, is reimbursed for various expenses, including reimbursements for meetings, organizing, legislative representation, training programs, and arbitration.

Dues paid to NYSUT for the years ended August 31, 2019 and 2018 were $6,463,851 and
$7,177,294, respectively. As of August 31, 2019 and 2018, PSC/CUNY owed NYSUT
$1,069,000 and $1,407,543, respectively for dues. Dues paid to AFT for the years ended August 31, 2019 and 2018 were $3,147,839 and $3,528,480, respectively. As of August 31, 2019 and 2018, PSC/CUNY owed AFT $542,000 and $724,924, respectively for dues.

Reimbursements from NYSUT for the years ended August 31, 2019 and 2018 were $3,282,000 and $3,749,590, respectively. As of August 31, 2019 and 2018, NYSUT owed PSC/CUNY
$521,000 and $303,000, respectively. Reimbursements from AFT for the years ended August 31, 2019 and 2018 were $264,398 and $285,501, respectively. As of August 31, 2019 and 2018, AFT owed PSC/CUNY $88,000 and $35,000, respectively.

PSC/CUNY pays NYSUT a monthly fee for dues processing. Dues processing fees totaled
$72,600 for the years ended August 31, 2019 and 2018. As of August 31, 2019 and 2018, PSC/CUNY owed NYSUT $6,050 for dues processing.

PSC/CUNY reimburses the Welfare Fund for shared computer services. PSC/CUNY’s portion of shared computer expenses totaled $38,978 and $34,575 for the years ended August 31, 2019 and 2018, respectively. As of August 31, 2019 and 2018, PSC/CUNY owed the Welfare Fund
$3,165 and $2,000, respectively for shared computer services. As of August 31, 2019, the Welfare Fund owed PSC/CUNY $5,400 in consulting fees related to office construction.

Office Space Leases

PSC/CUNY leases office space from 61 Broadway Owner, LLC (the Realty Corp). On September 30, 2005, PSC/CUNY entered into a sixteen year lease with the Realty Corp for Suites 1500 and 1615 of the 61 Broadway building. The lease was amended on August 4, 2009 and May 17, 2012 to include Suites 1630 and 1610, respectively. The leases, all which expire on August 31, 2022, are classified as operating leases and provide for minimum annual rentals, plus certain additional expense escalations and utility charges. Per the agreement, PSC/CUNY is also responsible for its portion of real estate taxes.

The minimum annual future rental payments under the three leases are summarized as follows:

Year ending August 31,
2020 1,247,967
2021 1282830
2022 1309149
Total 3,839,946

Rent including utilities and maintenance was $1,189,874 for the year ended August 31, 2019 and
$1,182,644 for 2018.

PSC/CUNY subleases office space to the Professional Staff Congress of the City University of New York Welfare Fund, a related party. The Welfare Fund pays PSC/CUNY a sum equal to 23.90% of the lease of Suite 1500. The sublease expires on August 31, 2022.

The minimum annual future rental income under the sublease with the related party is summarized as follows:

Year ending August 31,
2020 212,300
2021 216,546
2022 220,877
Total 649,723

Total rental income for the years ended August 31, 2019 and 2018 was $260,616 and $238,914, respectively. As of August 31, 2019, the Welfare Fund owed PSC/CUNY $3,000 for rent.

NOTE 10. LITIGATION

Certain claims, suits, and complaints arising in the ordinary course of business have been filed or are pending against PSC/CUNY.

On October 24, 2018, a non-member filed a lawsuit against PSC/CUNY along with several of its affiliates, as a class action suit. The claim arises from PSC/CUNY’s collection of agency fees of which the non-member is seeking an order from the court directing a refund, along with interest, damages, and reasonable attorney fees and costs. The complaint does not specify a dollar amount sought. The plaintiffs filed an amended complaint of April 12, 2019. PSC/CUNY and its affiliates in the suit are parties to a joint defense agreement and moved to dismiss the claim. In an Opinion and Order dated January 3, 2020, the Judge granted the motion to dismiss and issued a judgment dismissing the case on January 10, 2020. The plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Second Circuit on February 5, 2020. The appeal has been assigned docket number 10-460.

NOTE 11. CHANGE IN ACCOUNTING PRINCIPLE

In August 2016, FASB issued ASU 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. The update addresses the complexity and understandability of net asset classification, deficiencies in information about liquidity and availability of resources, and the lack of consistency in the type of information provided about expenses and investment return. PSC/CUNY has adjusted the presentation of these statements accordingly. The ASU has been applied retrospectively.

NOTE 12. SUBSEQUENT EVENTS

PSC/CUNY has evaluated subsequent events through February 19, 2020, the date the financial statements were available to be issued, and they have been evaluated in accordance with relevant accounting standards.

SUPPLEMENTAL INFORMATION

Schedules of Expenses by Category
Years Ended August 31, 2019 and 2018
blank i* 2019 2018
Affiliation fees
New York State United Teachers 6,463,851 7,177,294
American Federation of Teachers 3,147,839 3,528,480
The American Association of University Professors 256,333 260,500
Municipal Labor Committee 36,464 33,220
Other 30,250 36,537
9,934,737 11,036,031
Salaries, employee benefits, and payroll taxes
Salaries 3,512,710 3,586,257
Payroll taxes 264,845 279,832
Health benefit expense 937,222 845,657
Pension benefit expense 757,332 727,371
Other 47,168 38,194
5,519,277 5,477,311
Representational and governance
Conferences and conventions 112,429 105,773
Elections 27,572 82,723
Committees 6,541 4,402
146,542 192,898
Public relations
Mobilization and outreach 123,648 129,589
Community relations 26,851 32,306
Cultural activities 4,378 5,552
154,877 167,447
Building expenses
Rent and services 1,189,874 1,182,644
Real estate taxes 126,794 120,935
Repairs and maintenance 85,115 100,817
1,401,783 1,404,396
2019 2018
Administrative, office and general
Office 262,870 264,331
Postage 30,542 31,498
Insurance 49,769 55,585
Dues processing 72,600 72,600
Other 5,020 6,735
420,801 430,749
Professional fees
Legal 176,065 246,036
Consulting 139,457 237,312
Accounting and auditing 34,600 37,100
Computer 111,018 90,320
461,140 610,768
Contract and budget campaigns 759,168 112,855
Stipends and reassigned time 505,851 511,272
Depreciation expense 50,127 69,670
Membership campaign 31,707 106,302
Total expenses 19,386,010 20,119,699