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 20. Related Parties The university has business transactions with organizations whose owners are members of NSU’s Board of Trustees. During the years ended June 30, 2023 and 2022, the university paid these organizations $7.9 million and $7.8 million, respectively, primarily attributed to an ongoing operating lease for instructional space that extends through fiscal 2029 with optional renewals thereafter. Contribution revenues from related parties, including NSU’s Board of Trustees and their related business affiliates, amounted to approximately $6.1 million and $1.1 million for the years ended June 30, 2023 and 2022, respectively. As of June 30, 2023 and 2022, pledges receivable from these parties totaled $36.0 million and $35.8 million, net of discount, respectively. Additionally, receivables from employees totaled approximately $387,000 and $349,000 as of June 30, 2023 and 2022, respectively, of which $387,000 and $334,000, respectively, represents pledges receivable, net of discount. 21. Litigation and Contingencies The following two paragraphs discuss legal matters that could result in one or more class actions. A number of colleges and universities around the United States, including in the State of Florida, have been faced with lawsuits filed by parents and students seeking refunds for tuition, fees, and other charges, related to the change to online remote learning as a result of the COVID-19 pandemic (see Note 22), and many seek class action status. The university was previously named in two putative class action lawsuits of this nature. Court rulings dismissing the majority of the claims have occurred, with only one of the lawsuits still pending. That suit is currently on appeal by the plaintiffs from the lower court’s dismissal. The university is unable to determine the probability of whether the lower court’s decision will be reversed and, if so, whether a class will ultimately be certified, and whether the university will ultimately be held liable, and if liable, the amount of damages, if any, that may be awarded, as well as the extent of insurance coverage that may be available. The university will vigorously defend itself in this matter. In June 2022, the university was named in a putative class action lawsuit in its status as an Employee Retirement Income Security Act fiduciary of the NSU 401(k) plan (see Note 18). The complaint alleges that the university breached certain fiduciary duties related to plan fees and expenses, investment options, recordkeeping costs, and monitoring performance of other fiduciaries. The plaintiffs claim that the university is liable to restore to the plan all losses caused by, or profits (if any) resulting from, such breaches. In August 2022, the court stayed the case to permit the parties to exhaust internal plan administrative remedies pursuant to the plan’s claim review procedure. That administrative process is now complete, resulting in the denial of the plaintiffs claims, and the university has filed a motion for summary judgment, on all of the plaintiffs claims based upon the outcome of that administrative process. That motion for summary judgment is currently pending. Although the university maintains certain insurance coverage for claims of this nature, the university is unable to determine the probability of whether a class will be certified, whether the university will ultimately be held liable, and if liable, the amount of damages, if any, that may be awarded. The university will vigorously defend itself in this matter. In its normal operations, NSU is a defendant in various other legal actions. Additionally, NSU has contracts and grants with various grantors subject to audit, which could result in disallowance of certain costs. Management is of the opinion that, based on currently known facts and circumstances, the outcome of these matters will not have a material effect on NSU’s consolidated financial position or consolidated operating results. 22. COVID-19 A disease caused by a new strain of coronavirus (COVID-19), was declared a pandemic by the World Health Organization on March 11, 2020. The spread of COVID-19 has negatively impacted global financial markets, 43
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