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SECRETARY-TREASURER | INDEPENDENT AUDITORS

PRESENTED TO THE REPRESENTATIVE ASSEMBLYJULY 2016

FINANCIAL REPORTS

1201 16th Street, N.W.Washington, DC 20036

GREAT PUBLIC SCHOOLS FOR EVERY STUDENTGREAT PUBLIC SCHOOLS FOR EVERY STUDENT

19611 0616 hlsThis document has been printed by Organized Staff Union Labor at the National Education Association

National Education Association

The National Education Association is the nation’s largest professional employee organization, representing 3 million elementary and secondary teachers, higher education faculty, education support professionals, school administrators, retired educators, and students preparing to become teachers.

NEA Executive Officers

Lily Eskelsen García, PresidentRebecca S. Pringle, Vice PresidentPrincess R. Moss, Secretary-Treasurer

John C. Stocks, Executive Director

Reproduction: No part of this report may be reproduced in any form without written permission from NEA, except by NEA affiliated associations and members. Address inquiries to NEA Executive Office, 1201 16th St., N.W., Washington, DC 20036-3290; (202) 822-7000.

Published June 2016

Copyright © June 2016 by the National Education AssociationAll Rights Reserved

CONTENTS

A Report from NEA Secretary-Treasurer Princess R. Moss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4

Audit Report:

Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6

Consolidated Financial Statements:

Consolidated Statements of Financial Position as of August 31, 2015 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Consolidated Statements of Activities and Changes in Net Assets for the Years Ended August 31, 2015 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Consolidated Statements of Cash Flows for the Years Ended August 31, 2015 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-31

Supplemental Schedules:

Supplemental Schedule of Financial Position by Fund Information as of August 31, 2015 (with comparative totals as of August 31, 2014) . . . . . . . . . . . . . . . . . . . . . 32

Supplemental Schedule of Financial Position by Special Purpose Fund Information as of August 31, 2015 (with comparative totals as of August 31, 2014) . . . . . . . . . . . . . . . . . . . . . 33

General Operating Fund – Supplemental Schedule of Activities and Changes in Net Assets for the Year Ended August 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-35

General Operating Fund – Supplemental Schedules of Expenses by Type for the Years Ended August 31, 2015 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Special Purpose Funds – Supplemental Schedules of Activities and Changes in Net Assets for the Years Ended August 31, 2015 and 2014 . . . . . . . . . . . . . . . . . . . . . 37

Interim Financial Statements:

General Operating and Capital Improvement Funds – Statements of Financial Position (unaudited) as of April 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

General Operating Fund – Statement of Activities and Changes in Net Assets (unaudited) for the eight months ended April 30, 2016 and Projections for the remaining four months ending August 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . 42-43

General Operating Fund – Contingency Fund Expenditures as of May 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Membership Comparison by State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46-47

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A REPORT FROMNEA SECRETARY-TREASURER

PRINCESS R. MOSS

As NEA Secretary-Treasurer, I am pleased to present the financial reports of the National Education Association for the fiscal year ended August 31, 2015; as well as the interim financial statements through April 30, 2016 with projections to our August 31, 2016 fiscal year end .

When we first built the 2014–2016 strategic plan and budget, we conducted a rigorous examination of our internal assets and challenges as well as our external circumstances . Based on that analysis and our current reality, as we approach 2016–2018 we know that:

• Publiceducationandrightstopubliceducationemployeesareunderattackinthecourtsandstatelegislaturesand public school opponents are steadily working to weaken the rights of working people and erode the strength of our union .

• Wecannotcountonpoliticalsupporterstoprotectourschoolsfromtheforcesofprofiteeringandprivatization.

• Educationemploymenthasstillnotreachedpre-recessionlevels.Asaresult,ourdetractorsareleveragingthepublic’s attention on the economic troubles to continue the assaults on unions .

• Theincomegapbetweenthewealthyandeveryoneelsecontinuestogrow,andwhatweknowbyeverymajorstatistical measure is that a child’s achievement varies widely depending on a parent’s education and income .

Certainly, there are opportunities that exist in the midst of these challenges . We must reexamine our long-standing way of operating and ask ourselves if our traditional success models can endure, and if they cannot endure, what course corrections must be made .

Aswemoveforward,organizingaroundissuesthatourmemberscareabout,suchasourfiscalhealth,willplayanimportant role in ensuring our future success .

The2016–2018StrategicGoalsaddresstwoimmediatechallengestoensurestudentsuccess:(1)EnsureStrongAffiliatesare capable of setting the stage for Educator Voice and Empowerment; and (2) Ensure that our educators have what they needtobeabletoleadthetransformationofteachingandlearningtoassurestudentsuccess.TheCoreFunctionsaddresskey,ongoingprogramsandservicesessentialtoNEAandourwork.Theyare:(1)Researchpolicyandpracticetoprovideaqualityeducation forall students; (2)Partneringwithstateaffiliates toprovideprograms that increaseorganizingand the capacity for membership growth, retention, and engagement; (3) Advocacy for public policy, social justice and pro-public education candidates, member advocacy support, and outreach and partnership development particularly in ethnic minority communities; 4) Communication strategies to engage members and the public; (5) Business operations

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thatensureanefficientandeffectiveinfrastructure;and(6)Effectiveleadershipanddecisionmakingtoadvancetheorganization’smissionandvision.

ThesereportsaredesignedtoprovideyouwiththeinformationneededtofullyunderstandthefiscalconditionoftheNEA.Theyincludethreesections(1)theauditreportfor2014–2015;(2)thefinancialstatementsdetailingourcurrentyear expenditures through April 30, 2016, together with projections to the end of the 2015–2016 fiscal year, and a schedule of governance allocations from the Contingency Fund; and (3) a summary of our membership by state and membership category .

THE AUDIT REPORT FOR 2014–2015

On pages 5-37 you will find a complete audit report as prepared by our certified public accounting firm, Calibre CPA Group, PLLC . NEA is required to present consolidated financial statements, which report the financial activity in all of our various funds as well as our subsidiaries Member Benefits Corporation, NEA Properties, Inc ., and NEA360 LLC . Theauditreportisdividedintofourparts:

1. Theauditor’sopinionletter;

2. Theactualfinancialstatementsonwhichtheauditisbased;

3 . Footnotes to the financial statements which help explain some of the individual items; and

4 . Supplemental schedules showing additional detail by fund .

The auditor’s opinion letter states that their work was conducted in accordance with generally accepted auditingstandards, and that the consolidated financial statements and the supplemental schedules present fairly the financial position and results of operations . It is an unmodified opinion, or a ‘clean opinion’, meaning it was issued without any qualifying comments . An unmodified opinion is the highest level of opinion given by an independent auditor .

TheConsolidatedStatementsofFinancialPositionpresenttheAssociation’sassets,liabilities,andnetassetsasofAugust31,2015and2014.Oneimportantindicatorofanorganization’sfinancialstrengthisitsnetassets(thedifferencebetweentotalassetsandtotalliabilities).Netassetsshouldbeapositivebalance,sufficienttosupportfuturegrowth,andstabilizeanorganizationintroubledtimes.NEA’sconsolidatednetassetscarryapositivebalanceandareatanacceptablelevel,enabling the Association to weather the current economic environment . In addition, NEA has a healthy current ratio, which means that we are in a solid position to meet our current obligations as they become due .

Theaccompanyingfootnotesprovidesupplementalinformationthatgivesamoredetailedexplanationofaspectsofthefinancial statements presented, and I encourage you to read them .

Thesupplemental schedules reflect adetailedbreakdownof thegeneraloperationsand specialpurpose funds that,taken together, represent the consolidated statements .

TheGeneralOperatingFundSupplementalStatementofActivitiesandChangesinNetAssetsreflectstotalrevenueandexpenses by strategic goals and core function areas .

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Financial statements contained within the audit include:

1. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION as of August 31, 2015 and 2014 (p.7).Thisstatement shows total current assets of $242,029,971 and total current liabilities of $38,990,421 resulting in a healthycurrentratioof6:1.NEA’sconsolidatedUnrestrictedNetAssets,whichrepresentsthedifferencebetweenwhat it owns (total assets of $364,373,541) and what it owes (total liabilities of $65,022,289), are a positive $299,351,252 .

2 . CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS for the years ended August31,2015and2014(p.8).Thisstatementshowsthatthetotalrevenuesforthefiscalyear2014–2015were$417,727,195 and the total expenses, including the Change in Pension Obligation OtherThanNet PeriodicPensionCostandOtherCharges,were$400,634,315.Theexcessoftotalrevenueovertotalexpensesresultedina surplus of $17,092,880 .

3. CONSOLIDATEDSTATEMENTSOFCASHFLOWSfortheyearsendedAugust31,2015and2014(p.9).Thesestatementsreflectthesourcesandusesofcashforthetwofiscalyears,andaredesignedtoanalyzetheperiod-to-periodfluctuationsinkeyelementsintheConsolidatedStatementsofFinancialPosition.

4.NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS(pp.10-31).Thenotestothefinancialstatementsdiscuss the significant accounting policies of the Association as well as provide explanatory information on elements of the financial statements .

5. SUPPLEMENTALSCHEDULES(pp.32-37).ThesupplementalschedulesprovideadditionaldetailsfortheNEAGeneral Operating Fund and Special Purpose Funds .

INTERIM FINANCIAL STATEMENTS FOR 2015–2016

On pages 41-43 you will find the General Operating and Capital Improvement Funds Statements of Financial Position (unaudited) as of April 30, 2016 and the General Operating Fund – Statement of Activities and Changes in Net Assets (unaudited) for the eight months ended April 30, 2016, which includes a projection of revenue and expenses for the remaining four months of our current fiscal year .

TheGeneral Operating Fund – Statement of Activities and Changes in Net Assets (unaudited) indicates that weanticipate exceeding our budgeted revenue for 2015–2016 . While we experienced membership losses this year, the extent of those losses to date has not been as great as anticipated when the budget was created and approved . Accordingly, we are projecting additional revenue of approximately $4 .5 million . As required by our bylaws, we will also have higher UniServandSpecialDuescoststotalingapproximately$1.3millionduetothehighermembershipcounts.Thenetofthese changes along with other budget savings and spending variances is expected to result in an increase to Net Assets of approximately $3 .6 million for the fiscal year ending August 31, 2016 .

Onpage44youwillfindascheduleindicatingtheoriginalamountapprovedandauthorizedforthefiscalyear2015-2016 Contingency Fund adopted at last year’s Representative Assembly . It also identifies the dates, level of governance approval, and purposes for which allocations from the fund were made .

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MEMBERSHIP COMPARISON BY STATE

Pages46-47containadetailedschedulearrangedbystateandmembershipcategoryreflectingadecreaseinmembershipof 8,917 from fiscal year 2014 to 2015. Membership is the lifeblood of our organization. Efforts to maintain ourmembership base and expand it are essential to our fiscal health .

I hope the information in this report will be informative, and provide you with a glimpse of the complex financial network in place to meet the varied needs of our 3 million members, and advance our vision of A Great Public School for Every Student.

Respectfully submitted,

Princess R . MossNEA Secretary-Treasurer

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Report of Independent Auditors

To the Executive Committee and Members of the National Education Association of the United States

We have audited the accompanying consolidated financial statements of the National Education Association of the United States and its subsidiaries (NEA), which comprise the consolidated statements of financial position as of August 31, 2015 and 2014, and the related consolidated statements of activities and changes in net assets, andcashflowsfortheyearsthenended,andthe related notes to the consolidated financial statements .

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated financial statements based on our audits . We conducted our audits in accordance with auditing standards generally accepted intheUnitedStatesofAmerica.Thosestandardsrequirethatweplanandperformtheauditstoobtain reasonable assurance about whether the consolidated financial statements are free from material misstatement .

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresintheconsolidatedfinancialstatements.Theproceduresselecteddependonthe auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error . In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated 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 effectivenessoftheentity’sinternalcontrol.Accordingly,weexpressnosuchopinion.Anauditalso 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 consolidated financial statements .

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasis for our audit opinion .

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Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the National Education Association of the United States and its subsidiaries as of August 31, 2015 and 2014, and the changes in its net assets and its cashflowsfortheyearsthenendedinaccordancewithaccountingprinciplesgenerallyacceptedin the United States of America .

Other Matter

Our audits were conducted for the purpose of forming an opinion on the consolidated financial statementsasawhole.Theaccompanyinginformationincludedonpages32through37ispresented 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 consolidated financial statements.Theinformation,exceptforthebudgetedamounts(whichisunaudited),hasbeensubjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole .

Bethesda, MD December 3, 2015

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NATIONAL EDUCATION ASSOCIATION OF THE UNITED STATES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAUGUST 31, 2015 AND 2014

2015 2014

ASSETS

CURRENT ASSETS Cash and cash equivalents $ 195,396,489 $ 176,214,555 Membership dues receivable – net 31,893,138 31,377,081 Amount due from affiliates and other organizations – net 1,577,473 1,839,429 Accounts receivable 4,675,827 7,565,475 Notes receivable 1,000,000 1,000,000 Prepaid expenses 6,828,713 2,977,756 Deferred income taxes 374,383 234,992 Other current assets 283,948 277,815

Total current assets 242,029,971 221,487,103

LONG-TERM ASSETS Notes receivable – net 5,374,320 6,374,320 Deferred rent assets 368,503 – Deferred leasing commission 183,725 253,421 Investments 45,585,498 45,532,964 Pension asset 11,588,285 18,406,152 Property and equipment – net 59,243,239 57,133,798

Total long-term assets 122,343,570 127,700,655

Total assets $ 364,373,541 $ 349,187,758

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES Accounts payable $ 14,785,126 $ 13,553,610 Accrued liabilities 14,212,580 14,179,153 Deferred income 2,194,962 1,825,230 Accrued annual leave 6,627,010 6,490,191 Amount held for affiliates and other organizations 1,170,743 1,051,672

Total current liabilities 38,990,421 37,099,856

LONG-TERM LIABILITIES Grant commitment 500,000 600,000 Accrued severance payable 5,922,654 5,972,811 Deferred income 16,263,897 16,576,748 Deferred income taxes 3,345,317 6,679,971

Total long-term liabilities 26,031,868 29,829,530

Total liabilities 65,022,289 66,929,386

UNRESTRICTED NET ASSETS Undesignated net assets 167,173,328 161,182,908 Designated net assets 132,177,924 121,075,464

Total unrestricted net assets 299,351,252 282,258,372

Total liabilities and net assets $ 364,373,541 $ 349,187,758

See accompanying notes to the financial statements.

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CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETSFOR THE YEARS ENDED AUGUST 31, 2015 AND 2014

2015 2014

OPERATING ACTIVITIES

UNRESTRICTED REVENUES NEA Programs: Dues $ 359,483,089 $ 358,470,103 Other 4,150,557 9,001,528

Total NEA programs 363,633,646 367,471,631

Member Benefits Programs: Program revenues - suppliers 51,479,593 55,020,903 Other 481,653 261,625

Total Member Benefits programs 51,961,246 55,282,528

NEA Properties: Rental income 2,022,676 1,893,018 Other 109,627 97,511

Total NEA Properties 2,132,303 1,990,529

Total unrestricted revenues 417,727,195 424,744,688

EXPENSES Program Services: NEA programs 284,819,044 266,376,742 Member Benefits programs 42,286,841 43,103,166 NEA Properties 1,616,521 1,368,523

Total program services 328,722,406 310,848,431

Support Services: NEA programs 58,170,369 58,066,786 Member Benefits programs 8,200,009 7,844,280 NEA Properties 210,349 236,482

Total support services 66,580,727 66,147,548

Total expenses 395,303,133 376,995,979

CHANGE IN NET ASSETS FROM OPERATIONS 22,424,062 47,748,709

NON-OPERATING ACTIVITIES

CHANGE IN PENSION OBLIGATION OTHER THAN NET PERIODIC PENSION COST AND OTHER CHARGE (5,331,182) (1,438,971)

CHANGE IN NET ASSETS 17,092,880 46,309,738

NET ASSETS

Beginning of year 282,258,372 235,948,634

End of year $ 299,351,252 $ 282,258,372


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CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED AUGUST 31, 2015 AND 2014

2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES Changes in net assets $ 17,092,880 $ 46,309,738 Adjustments to reconcile changes in net assets to net cash provided by operating activities Depreciation and amortization 5,255,747 6,078,482 Bad debt expense 125,930 1,536,290 Net realized gain on investments (431,126) (2,090,439) Net unrealized loss(gain) on investments 2,220,946 (1,157,042) Write-off of furniture and equipment 13,479 6,864 Deferred income taxes (3,474,045) 1,819,403 Changes in assets and liabilities: Increase in membership dues receivable (641,987) (872,146) Decrease (increase) in amount due from affiliates and other organizations 261,956 (663,048) Decrease (increase) in accounts receivable 2,889,648 (559,482) Increase in prepaid expenses (3,850,957) (1,057,548) (Increase) decrease in other current assets (6,133) 67,861 Increase in deferred rent assets (368,503) – Decrease (increase) in deferred leasing commission 69,696 (8,824) Decrease (increase) in prepaid pension asset 6,817,867 (4,493,797) Increase (decrease) in accounts payable 1,231,516 (1,940,664) Increase in accrued liabilities 33,427 801,313 Increase in accrued annual leave 136,819 100,337 Increase in amount held for affiliates and other organizations 119,071 146,745 Decrease in grant commitment (100,000) (100,000) (Decrease) increase in accrued severance payable (50,157) 121,722 Increase in deferred income 56,881 1,200,019

Net cash provided by operating activities 27,402,955 45,245,784

CASH FLOWS FROM INVESTING ACTIVITIES Issuance of notes receivable (100,939) (144,016) Repayment of notes receivable 1,100,939 1,500,000 Purchases of investments (12,304,065) (14,410,181) Proceeds on sale of investments 10,461,711 9,998,032 Purchases of property and equipment (7,378,667) (4,939,281)

Net cash used in investing activities (8,221,021) (7,995,446)

NET CHANGE IN CASH AND CASH EQUIVALENTS 19,181,934 37,250,338

CASH AND CASH EQUIVALENTS Beginning of year 176,214,555 138,964,217

End of year $ 195,396,489 $ 176,214,555

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION – CASH PAID DURING THE YEAR:

Interest $ 5,204 $ 18,832

Income taxes $ 680,243 $ 1,349,314


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSAS OF AND FOR THE YEARS ENDED AUGUST 31, 2015 AND 2014

NOTE 1. ORGANIZATION

TheNational EducationAssociation of theUnited States (NEA) is a not-for-profit organization incorporatedunder an Act of the United States Congress . Its mission statement reads: “our mission is to advocate for education professionals and to unite our members and the nation to fulfill the promise of public education to prepare every student to succeed in a diverse and interdependent world .”

Tohelprealizethismission,theNEAadoptedavisionof“agreatpublicschoolforeverystudent.”ThisvisionguidedNEA’sstrategicplanandbudget,whichisorganizedaroundtwoStrategicGoalsandsixCoreFunctionAreas .

TheStrategicGoalsaddresstwokeychallenges:

• Strong Affiliates for Great Public Schools–Inpartnershipwithstateandlocalaffiliates,NEAwillaggressivelyadvance anorganizing culturedesigned tobuild capacity to growmembership, increasemember activism,improvefiscalhealth,enhancepubliceducation,andassistaffiliatesinfendingoffattackstomemberrightsandunion strength .

• Uniting the Nation for Great Public Schools–Inpartnershipwithstateandlocalaffiliates,NEAwillempowereducators to collaborate with school and community stakeholders to co-create solutions designed to shape the future of education, improve student learning, achieve educational equity, enhance professional practice and the quality of professionals, and advance successful solutions that drive national, state, and district level policies .

TheCoreFunctionareasaddressregular,ongoingprogramsandservices:

• Research, Policy, and Practice for Great Public Schools – Track and identify practices that have been successful in encouragingstudentlearningorinshapingthefutureoflearning.Inpartnershipwithorganizationssupportiveof educator-led transformation of public education, use key learnings and research to develop, identify, and implement national, state, and district policies that facilitate these practices .

• Organizing–Inpartnershipwithstateandlocalaffiliates,NEAwillaggressivelyadvanceanAssociation-wide‘cultureoforganizing’andengagemembersasacollectivebysupportingaffiliatestoactivateourvastnetworkin pursuit of the vision .

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NOTE 1. ORGANIZATION (CONTINUED)

• Advocacy and Outreach – In partnershipwith state and local affiliates and other organizations supportiveof educator-led transformation of public education, advocate educators’ positions to national, state and district policymakers, education stakeholders, and the public (with priority focus on parents, ethnic minority communities,andlaborpartners)inordertoinfluencepolicydevelopmentanddebatestoachieveequityofopportunity, access, and quality in public education; advance our members’ views and expertise about policy for great public schools for every student; promote social justice; and advance and preserve members’ voices, rights, and optimal conditions for teaching and learning .

• Communications–Utilizethebestcommunicationstrategiestoengageaffiliates,members,partners,parentsand communities .

• Business Operations – Administer the business operations in a manner that supports the changing needs andprioritiesoftheorganizationandensuresefficientandeffectiveinfrastructurethatsupportsgoodfiscalmanagement, uses technology for innovation and strengthens NEA’s human capital .

• Governance – In partnership with leadership, develop professional development and decision making processes thatclearlyadvancetheorganization’smissionandvision.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation–TheconsolidatedfinancialstatementsincludetheaccountsofNEAanditswhollyowned subsidiaries: NEA Properties, Inc . (NEAPI), NEA’s Member Benefits Corporation (MBC), and MBC’s wholly-ownedsubsidiary,theNEAProfessionalServicesCorporation,NEA360LLC(NEA360),andanaffiliatedentity, National Education Employees Assistance Fund, Inc ., (NEEAF) . NEAPI’s primary purpose is to hold title to and manage certain commercial real property in Indiana, collect income from that property and periodically surrender the net proceeds derived to NEA . MBC serves as a contractor for NEA’s member benefits functions . NEA360 is an entity that was established to finance and implement a new state-of-the-art membership management system (the NEA360 System) in furtherance of NEA’s mission of advancing public education and MBC’s mission to develop and promote member benefits . NEEAF is combined with the accounts of NEA due to common control and an economic interest . All intercompany accounts and transactions have been eliminated in consolidation .

Measure of Operations – NEA includes in its measure of operations all revenue and expenses that are integral to its continuing core program services with the key objective being predictability of indicated results . Non-operating incomeandexpensesincludeunrealizedappreciation(depreciation)anddefinedbenefitpensionchargesincludedin the change in pension obligation other than net periodic pension cost and other charges .

Basis of Accounting–Theaccompanyingconsolidatedstatementsarepreparedontheaccrualbasisofaccounting.To ensure observance of its bylaws, the resources of NEA are classified internally for accounting and reporting purposes into funds established according to their nature and purpose.The assets, liabilities, net assets, andchanges in net assets are reported in the following two fund groups:

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NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

• General Operating Fund–ThebylawsofNEAprovidethattheGeneralOperatingFundshallcompriseallincomereceived in the form of dues, interest, dividends, fees, earnings from advertising, sales of NEA publications, payments for services, and funds received by gift, bequest, devise, or transfer to NEA, which are not specifically designated for deposit in the Capital Improvement Fund .

• Special Purpose Funds–TheSpecialPurposeFundsaregroupedforreportingpurposesintoRelatedEntity,Bylaw,andOtherSpecialPurposeFunds.TheRelatedEntitySpecialPurposeFundsareMemberBenefitsCorporation(MBC), NEA Properties, Inc . (NEAPI), NEA360 LLC (NEA360), Advocacy Fund, and the National Education EmployeesAssistanceFund(NEEAF).TheBylawmandatedSpecialPurposeFundsaretheCapitalImprovementFund, Great Public Schools Fund, Special Dues Ballot Fund, Special Dues Media Fund and the UniServ Fund . TheOtherSpecialPurposeFundsaretheCashStabilization,ExternalPartnershipGrants,InfrastructureReserveFund,NationalIssuesAdvancementFund,MembershipOrganizing,andtheNEA-LifeMembershipFund.

Use of Estimates–Thepreparationofconsolidatedfinancialstatementsinconformitywithaccountingprinciplesgenerally accepted in the United States of America requires management to make estimates and assumptions thataffectthereportedamountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedate of the financial statements and the reported amounts of revenues and expenses during the reporting period . Significant items subject to such estimates and assumptions include the deferred revenue, useful life of fixed assets, pension liability, reserve for uncollectible receivables, reserve for contingent liabilities, and deferred tax . Actual resultscoulddiffermaterially,inthenearterm,fromtheamountsreported.

Concentration of Risks – Financial instruments that potentially subject NEA to significant concentrations of credit risk principally consist of cash, accounts receivable, and investments . NEA places its cash in a financial institution that is federally insured under the Federal Depository Insurance Corporation (FDIC) . At August 31, 2015, the cash aggregate balances were in excess of the FDIC insurance limits by approximately $197,320,000 and therefore,bearsomerisk,sincetheywerenotcollateralized.NEAhasnotexperiencedanylossesonitscashtodaterelated to FDIC insurance limits .

MBC had material revenues from two entities representing approximately 34 percent and 43 percent of revenues, respectively, for the year ended August 31, 2015, and approximately 36 percent and 39 percent of revenues, respectively, for the year ended August 31, 2014 . As of August 31, 2015, two entities accounted for approximately 13 percent and 38 percent of MBC’s accounts receivable, respectively . As of August 31, 2014, two entities accounted for approximately 16 percent and 42 percent of MBC’s total accounts receivable, respectively .

Cash and Cash Equivalents – Cash equivalents consist of interest-bearing deposits and securities with original maturity of less than three months when purchased and are recorded at cost, which approximates fair value .

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Investments – Investments consist of mutual funds and exchange traded funds and are recorded at fair value, with anygainsorlossesreflectedintheconsolidatedstatementsofactivitiesandchangesinnetassets.Netrealizedgainsfrom operating activities were $431,126 and $2,090,439 for the years ended August 31, 2015 and 2014, respectively . Thenetunrealizedlossincludedinoperatingactivitieswas$1,866,892andtheunrealizedlossincludedinnon-operatingactivitieswas$354,054,foratotalnetunrealizedlossof$2,220,946fortheyearendedAugust31,2015.Thenetunrealizedgainincludedinoperatingactivitieswas$1,145,673andtheunrealizedgainincludedinnon-operatingactivitieswas$11,369,foratotalnetunrealizedgainof$1,157,042fortheyearendedAugust31,2014.

Property and Equipment – Property and equipment are recorded at cost . Depreciation is provided using the straight-linemethodovertheestimatedusefullivesoftherespectiveassets.Theestimatedusefullivesrangefrom2 to 15 years for furniture, fixtures, and equipment and 25 to 40 years for buildings and leasehold improvements .

NEA capitalizes direct costs incurred during the application development and implementation stages fordevelopingsoftwareforinternaluse.Thesesoftwarecostsaredepreciatedusingthestraight-linemethodovertheestimated useful life of the software, generally three to five years . All costs incurred during the preliminary project stage are expensed as incurred .

Depreciationandamortizationexpensewas$5,255,747and$6,078,482fortheyearsendedAugust31,2015and2014,respectively,andisreflectedinNEA’ssupportservicesexpensesintheconsolidatedstatementsofactivitiesand changes in net assets .

Accrued Severance Payable – NEA has a policy entitling employees with over 10 years of service to severance pay equal to 10 weeks of salary . NEA’s accrued severance pay has been calculated in accordance with Accounting Standards for Compensation-Nonretirement Postemployment Benefits.

NEA-Life Membership Fund (NEA-Life)–NEAofferslifemembershipthroughaSpecialPurposeFundknownas the NEA-Life Membership Fund . NEA-Life dues qualify retired members for certain services provided to active members, as well as services designed specifically for retired persons . NEA-Life dues income is recorded as deferredincomewhenreceivedandamortizedusingthestraight-linemethodovertheestimatedlifeexpectancyof its members .

Membership Dues–Membershipduesarerecognizedasincomeoverthemembershipyear,whichisSeptember1 through August 31 . Dues are assessed to members as provided in the bylaws . An estimated provision for uncollectible receivables,write-offs,andcancellationsischargedagainstmembershipduesrevenues.

In accordance with the bylaws, a percentage of the membership dues is allocated to UniServ grants, which are includedinNEA’sprogramservicesexpenses,wherebyNEAprovidesgrantstostateaffiliatestoassistinfundingtheirstaffrepresentatives,whoseresponsibilitiesaretoimplement, improve,andcoordinateprogramsofNEAandthestateaffiliates.

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Program Revenue – MBC’s program revenues from suppliers represent fees from contracts with various program suppliers.Feesarerecognizedasrevenueintheperiodinwhichtheyareearned.

Rental Revenue–NEAPIrentsofficespacetovarioustenants.Rentalrevenuefromoperatingleasesisrecognizedon a straight-line basis over the term of the lease .

Income Taxes – NEA follows the authoritative guidance relating to accounting for uncertainty in income taxes included in the Accounting Codification Standards (ASC) Topic on Income Taxes. These provisions provideconsistent guidance for the accounting for theuncertainty in income taxes recognized in an entity’s financialstatements and prescribe a threshold of “more likely than not” for recognition and derecognition of tax positions taken or expected to be taken in a tax return . NEA believes that it has appropriate support for any tax positions taken and, as such, does not have any uncertain tax positions that are material to the financial statements . NEA Form 990, Return of Organization Exempt from Income Tax, for the years 2011 through 2013, are subject to examination by the Internal Revenue Service (IRS), generally for three years after they were filed .

Reclassifications – Certain amounts from the prior year have been reclassified to conform with the current year presentation .

NOTE 3. INVESTMENTS

Investments, at fair value, consist of the following at August 31:

2015 2014 Equity securities Mutual funds - common stocks $ 16,079,489 $ 17,185,956

Debt securities Mutual funds - fixed income 21,374,107 20,815,571 Exchange traded funds 8,131,902 7,531,437 Total debt securities 29,506,009 28,347,008

Total investments $ 45,585,498 $ 45,532,964

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NOTE 4. NOTES RECEIVABLE

On May 16, 2009, NEA entered into a long-term promissory note agreement with the Indiana State Teachers Association(ISTA)toprovidesupplementalsupportanddirectloans.ThepromissorynotewasunsecuredandboreinterestatonehalfofonepercentabovetheLondonInterbankOfferedRate(LIBOR)perannum.OnJanuary13,2014,thepromissorynotewasreducedto$15,000,000andispayableinfullonorbeforeJanuary1,2028.Thenewloan bears a fixed interest rate of 2 .5% . ISTA will receive an annual discount equivalent to the annual interest accrued if all payments are received by due dates for the fiscal year . As of August 31, 2015 and 2014, the outstanding note balance is $12,500,000 and $13,500,000, respectively . Due to the unsecure nature of the promissory note, NEArecognizedanuncollectibleallowanceof$6,125,680forfiscalyearsendedAugust31,2015and2014.

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at August 31:

2015 2014 Land NEA headquarters $ 1,753,777 $ 1,753,777 MBC headquarters 837,002 837,002 NEA Properties 1,943,982 1,943,982 Building and improvements NEA headquarters 82,351,581 81,404,694 MBC headquarters 6,510,447 6,508,809 NEA Properties 15,616,118 15,035,654 Furniture, fixtures, and equipment 27,728,691 26,858,270 Software development costs 53,570,369 48,793,802 190,311,967 183,135,990

Less:accumulateddepreciationandamortization (131,068,728) (126,002,192) Total property and equipment $ 59,243,239 $ 57,133,798

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NOTE 6. COMMITMENTS AND CONTINGENCIES

MBC leases office space and personal property under noncancelable operating leases expiring through 2017.Future minimum lease payments under these leases are as follows:

Year Ending August 31,

2016 $ 21,319 2017 5,796

Total future minimum lease payments $ 27,115

Rental expense for all operating leases was approximately $65,000 and $77,000 for the years ended August 31, 2015 and 2014, respectively .

NEA has been named as a party to a legal matter, the outcome of which cannot presently be determined . In the opinion of management, an appropriate provision has been made to account for probable losses and the ultimate resolution of this matter will not have a material impact on NEA’s consolidated financial position or changes in netassetsandcashflows.

TheDepartmentofLaborisconductingareviewofcertainissuessurroundingtheNEAMembersInsurancePlanofwhichNEAisthesponsorandadministrator.Theoutcomeofthisreviewisunknownatthistime.

NOTE 7. RETIREMENT BENEFITS

Employee’s Retirement Plan of the National Education Association of the United States – NEA participates in a multiemployer, defined benefit retirement plan for NEA employees that covers substantially all permanent employees.OnJune1,2009,theplanwasamendedtorequireemployeecontributionsatarateof3.5%foremployeeshiredbyNEAonorafterJune9,2009.NEAemploysapproximately47%oftheemployeescoveredundertheplan;theremaining53%areemployeesofparticipatingstateandlocalaffiliatesofNEA.

NEA contributes to the multiemployer pension plan jointly administered by NEA’s management and union representatives.TheriskofparticipatinginU.S.multiemployerpensionplansisdifferentfromsingleemployerpension plans in the following aspects:

• Assetscontributedtothemultiemployerplanbyoneemployermaybeusedtoprovidebenefitsofemploymentto other participating employers .

• Ifaparticipatingemployerstopscontributingtotheplan,theunfundedobligationsoftheplanmaybeborneby the remaining participating employers .

• IfNEAstopsparticipatinginitsmultiemployerpensionplan,itmayberequiredtopaytheplananamountbased on the underfunded status of the entire plan .

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NOTE 7. RETIREMENT BENEFITS (CONTINUED)

NEA’s participation in the above defined benefit plan for the years ended August 31, 2015, 2014 and 2013 is outlined in the following table . All information in the table is as of August 31 of the relevant year unless otherwise noted . ThePensionProtectionAct(PPA)zonestatuscolumnranksthefundedstatusofmultiemployerpensionplansdependinguponaplan’scurrentandprojectedfunding.ThezonestatusisbasedoninformationthattheNEAreceived from the plan . Among other factors, the plan is in the Red Zone (Critical) if it has a current funded percentage of less than 65% . A plan is in the Yellow Zone (Endangered) or Orange Zone (Seriously Endangered) if it has a current funded percentage of less than 80%, or projects a credit balance deficit within seven years . A plan is in the Green Zone (Healthy) if it has a current funded percentage greater than 80% and does not have a projected credit balance deficit within seven years .

ThefollowingtablecontainsinformationaboutNEA’smultiemployerpensionplanfortheyearsendedDecember31,2014 and 2013 .

Pension Protection Act Employee Expiration Date of Pension EIN/Pension Zone Status December 31 Contributions by NEA Contributions (Y/N) Collective-Bargaining Fund Plan Number 2014 2013 8/31/2015 8/31/2014 8/31/2013 2014 2013 Agreement

Employee’s Retirement Plan of the National Education AFSE 6/1/2014 to 5/31/2017; Association of the United IUOE 2/1/2014 to 1/31/2016; States 53-0115260 Green Green $ 19,887,510 $ 19,681,283 $ 21,029,600 Y Y NEASO 6/1/2015 to 5/31/2018

NEA currently has no intention of withdrawing from this multiemployer pension plan .

NEA – 401(k) Retirement Savings Plan – NEA’s employees are also eligible to participate in the 401(k) Retirement Savings Plan of the National Education Association (the “Plan”) in which the employee can make voluntary, tax-deferredcontributionswithinspecifiedlimits.ThePlanwasestablishedundertheprovisionsofInternalRevenueCode Subsection 401(k) and has received a favorable determination as to its tax status . NEA’s contributions to the Plan, based on a set percentage of employee contributions, amounted to $896,000 and $539,248 for the years ended August 31, 2015 and 2014, respectively .

NEA – Postretirement Benefit Plan – In addition to providing pension benefits, NEA provides certain healthcare and life insurance benefits to retirees . Prior to March 1, 2000, NEA provided these benefits under a single employer defined postretirement plan .

EffectiveMarch1,2000,NEAestablishedandadoptedtheNationalEducationAssociationandAffiliateRetireeHealth Plan (the “Plan”) and Trust (the “Trust”) for the purpose of providing certain healthcare and life insurance benefits to eligible and retired employees ofNEA and to participating affiliates.The plan is amultiemployerpostretirementbenefitsplan.TheInternalRevenueServicehasapprovedthePlanandtheTrust.

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As a result of the adoption of the multiemployer plan, the Trust assumed the responsibility for the payment of benefits and all future obligations under the Plan . NEA’s liability under the single employer plan as of March 1, 2000,whichamountedto$29,427,901wasrecognizedasanon-operatingchargeinNEA’sconsolidatedstatementof activities and changes in net assets . As of August 31, 2015 and 2014, none of NEA’s net assets were reserved for postretirement benefit obligation .

Postretirement benefit expense under the multiemployer plan was $15,385,092 and $18,500,000 for the years ended August 31, 2015 and 2014, respectively .

MBC – 401(k) Salary Deferral Plan – NEA’s Member Benefits Corporation (MBC) maintains a Section 401(k) cash or deferred plan in which the employees can make voluntary, tax-deferred contributions within specific limits.ThePlanwasestablishedundertheprovisionof theInternalRevenueCodeSubsection401(k),andhasreceived a favorable determination as to its tax status . MBC’s contributions to the Plan, based upon a set percentage of employee contributions, amounted to $251,643 and $292,727, for the years ended August 31, 2015 and 2014, respectively .

MBC – Defined Contribution Plan – MBC maintains a Defined Contribution Plan and Trust, which is noncon-tributoryforMBC’semployees,andcoverssubstantiallyallmembersoftheNEAStaffOrganization(NEASO)Collective Bargaining Unit . MBC contributes to the Plan a percentage of compensation as set forth in a collective bargaining agreement with NEASO . MBC’s contributions to the Plan during the years ended August 31, 2015 and 2014 were $760,189 and $713,376, respectively .

MBC – Defined Benefit Plan – MBC maintains a noncontributory defined benefit pension plan covering substan-tially all employees not covered by a collective bargaining agreement . MBC has an August 31 measurement date for its pension plan .

Benefit obligations, plan assets, and the funded status of the Plan at August 31 were as follows:

2015 2014 Benefit obligation $ 28,978,747 $ 24,514,664

Fair value of plan investments 40,567,032 42,920,816

Funded status of the plan 11,588,285 18,406,152

Thediscountrateusedinthecalculationofthebenefitobligationremainedat4.25%.

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Contributions to the Plan and benefits paid for the year ended August 31 were as follows:

2015 2014 Employer contributions $ 909,239 $ 6,743,272 Benefits paid 359,531 237,079

AmountsrecognizedintheStatementsofFinancialPositionconsistof:

2015 2014 Noncurrent assets $ 11,588,285 $ 18,406,152

AmountsrecognizedinAccumulatedOtherNon-OperatingIncomeconsistof:

2015 2014 Net actuarial loss $ 11,976,023 $ 3,200,885 Prior service cost 2,977,980 3,672,379 Total(beforetaxeffects) 14,954,003 6,873,264

Taxeffect (5,743,460) (2,639,849) $ 9,210,543 $ 4,233,415

Theaccumulatedbenefitobligationis$26,131,315and$21,933,192atAugust31,2015and2014,respectively.

Net periodic (benefit) cost is ($353,633) and $179,475 for the years ended August 31, 2015 and 2014, respectively .

Other changes inPlan assets andbenefitobligations recognized inOtherNon-Operating Income (before taxeffects)wereasfollows:

2015 2014 Net loss $ 8,775,138 $ 399,318 Prior service cost – 2,420,560 Amortizationofpriorservicecost (694,399) (749,878)Totalrecognizedinothernon-operatingincome $ 8,080,739 $ 2,070,000

Totalrecognizedinnetperiodicbenefitcostandother non-operating income $ 7,727,106 $ 2,249,475

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AmountsexpectedtoberecognizedinNetPeriodicCostinthecomingyearareasfollows:

2016 Prior service cost recognition $ 694,399

Weighted-average assumptions used to determine benefit obligations at August 31 were as follows:

2015 2014 Discount rate 4 .25% 4 .25%Rate of salary increases 4 .00% 4 .00%

Weighted-average assumptions used to determine net periodic benefit cost for the years ended August 31 were as follows: 2015 2014 Discount rate 4 .25% 5 .00%Rate of salary increases 4 .00% 4 .00%Expected long-term rate of return on assets 8 .00% 8 .00%

MBC determines the long-term expected rate of return on plan assets by examining historic capital market returns, correlations between asset classes and the Plan’s normal asset allocation . Current and near-term market factorssuchasinflationandinterestratesarethenevaluatedtoarriveattheexpectedreturnonPlanassets.Peergroup, or benchmarking data are also reviewed to ensure a reasonable and appropriate return assumption .

MBCutilizes a total return investment approach based onmodern portfolio theory.Multiple asset classes areimplementedinordertoobtainthebenefitsofdiversificationandmaximizelong-termtotalreturnforagivenlevelof risk . Risk tolerance is developed by reviewing the funded status of the plan, duration of the plan liabilities, the incomeandliquidityrequirements,legalconstraints,andthefinancialconditionofMBC.Theinvestmentportfoliois comprised of a diversified combination of equities, fixed income securities, alternative investments, and cash equivalents . MBC’s investment policy states that the target allocations for plan assets are 64 percent equity securities, 22percentfixedincomesecurities,10percentalternativeinvestments,and4percentcashequivalents.Theallocationamong equities and fixed income securities is determined by prevailing market conditions and relative valuations between asset classes.The Plan’s financial condition ismonitored on an ongoing basis bymeans of quarterlyinvestment portfolio reviews, an annual independent actuarial valuation, and periodic asset/liability studies .

Pension plan allocations at August 31 were as follows:

2015 2014 Equities 62% 74%Fixed income securities 27% 19%Alernative investments 10% 5%Cash equivalents 1% 2% Total 100% 100%

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ThefairvalueofMBC’spensionplanassetsatAugust31,2015byassetclassareasfollows(LevelsdefinedinNote14):

Fair Value Measurements at Reporting Date Using

Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs InputsAsset Class Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 402,724 $ 402,724 $ – $ – Equity securities U .S . large-cap 14,462,370 14,462,370 – – U .S . mid-cap 2,389,501 2,389,501 – – U .S . small-cap 3,234,374 3,234,374 – – REIT 1,528,663 1,528,663 – – Global equity 814,953 814,953 – – International 1,426,007 1,426,007 – – Emerging markets 1,413,527 1,413,527 – – Other investment funds Equity long/short (a) 2,284,697 2,284,697 – – Fixed income securities U .S . fixed income 6,058,035 6,058,035 – – International fixed income 4,644,349 4,644,349 – – Alternative investments Hedge Funds (b) 1,907,832 – – 1,907,832 $ 40,567,032 $ 38,659,200 $ – $ 1,907,832

(a) Thismutualfundclassincludesfundsthatbyprospectus,hastheabilitytotakebothlongandshortpositionswithintheportfolio.TheprimaryinvestmentvehicleisExchangeTradedFunds(ETFs).Themanagerofthisfundhastheabilitytorotateinvestmentsbetweenvariousequitystyles:value,growthand/orblended,aswellasmultiplemarketcapitalizations:largecap,midcap,andsmallcap.

(b) Thisisaprivate,commingledinvestmentvehiclewhichisnotregisteredasaninvestmentcompany,issuessecuritiesonlytoaccreditedinvestors or qualified purchases under an exemption from registration, and engages primarily in strategic trading of securities and other financial instruments .

A reconciliation of fair value measurements using significant unobservable inputs (Level 3) as of August 31, 2015 was as follows:

Change in Level 3 Category Hedge fund

Beginning balance – 9/1/2014 $ 2,000,000 Netlosses(realized/unrealized) (92,168)Ending balance – 8/31/2015 $ 1,907,832

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ThefairvalueofMBC’spensionplanassetsatAugust31,2014byassetclassareasfollows:


Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs InputsAsset Class Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 669,945 $ 669,945 $ – $ – Equity securities U .S . large-cap 15,715,764 15,715,764 – – U .S . mid-cap 2,359,508 2,359,508 – – U .S . small-cap 2,542,411 2,542,411 – – REIT 1,868,531 1,868,531 – – Global equity 799,810 799,810 – – International 3,527,462 3,527,462 – – Emerging markets 1,361,589 1,361,589 – – Other investment funds Equity long/short (a) 2,359,581 2,359,581 – – Multi-strategy mutual fund (b) 1,613,906 1,613,906 – – Fixed income securities U .S . fixed income 5,587,422 5,587,422 – – International fixed income 2,514,887 2,514,887 – – Alternative investments Hedge Funds (c) 2,000,000 – – 2,000,000 $ 42,920,816 $ 40,920,816 $ – $ 2,000,000

(a) Thismutualfundclassincludesfundsthatbyprospectus,havetheabilitytotakebothlongandshortpositionswithintheportfolio.TheprimaryinvestmentvehicleisExchangeTradedFunds(ETFs).Themanagerofthisfundhastheabilitytorotateinvestmentsbetweenvariousequitystyles:value,growthand/orblended,aswellasmultiplemarketcapitalizations:largecap,midcap,andsmallcap.

(b) Thismutualfundclassinvestsinmultiplestrategies,acrossmultipleassetclasses,includingbutnotlimitedto:globalequities,globalfixedincome,REITS,andcommodities,inanefforttodiversifyrisksandreducevolatility.

(c) Thisisaprivate,commingledinvestmentvehiclewhichisnotregisteredasaninvestmentcompany,issuessecuritiesonlytoaccreditedinvestors or qualified purchases under an exemption from registration, and engages primarily in strategic trading of securities and other financial instruments .

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A reconciliation of fair value measurements using significant unobservable inputs (Level 3) as of August 31, 2014 was as follows:

Changes in Level 3 Category Hedge fund

Beginning balance – 9/1/2013 $ – Purchases 2,000,000 Ending balance – 8/31/2014 $ 2,000,000

Thefollowingestimatesandassumptionswereusedtodeterminethefairvalueofeachclassoffinancialinstrumentslisted above .

• Cash equivalents – Cash equivalents include cash deposits in investment funds, money market funds, and short-term U .S . Treasury securities, which are actively traded . Cash equivalents are priced using independent market prices in the primary trading market, and are classified as Level l based on the availability of quotes for identical assets .

• Equity securities–Equityinvestmentsincludestocks,separatelyheldaccounts,andmutualfunds.Thesesecuritiesarevalueddailybasedonthequotedmarketpriceattheendofthebusinessday.Theseassets,whicharegroupedby investment objective, consist of publicly traded securities, diversified globally, and are classified as Level 1 .

• Fixed income securities –These assets includemutual fundswithfixed incomeportfolios.These assets arevalued using market prices, such as broker quotes, for the same instruments; as these securities typically traded inactivemarkets,theyarecategorizedasLevell.

• Alternative investments – Valued based on information provided by Fund manager .

For fiscal year 2016, MBC expects to contribute the maximum deductible amount to its pension plan as determined bytheJanuary1,2015actuarialvaluation.

Benefit payments expected to be paid over the next five years and accumulated over the five years thereafter are as follows as of August 31:

2016 $ 595,790 2017 769,365 2018 927,167 2019 1,066,870 2020 1,190,388 2021–2025 7,657,487

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NOTE 8. NATIONAL EDUCATION EMPLOYEES ASSISTANCE FUND, INC.

TheNationalEducationEmployeesAssistance Fund, Inc. (NEEAF) is a nonprofit corporation established forthepurposeofprovidingfinancialandotherassistancetomemberorganizationsandtheirindividualmembersinvolved in disputes over terms and conditions of employment . In this capacity, NEEAF, from time to time, has guaranteed loansmade by lending institutions tomemberswhowere involved in such disputes.These loansarecollateralizedbylettersofcreditfromthosestateaffiliatesthataremembersofNEEAF.NEAcommitstheunrestricted resources of the General Operating Fund to fulfill its obligation . NEA’s commitment and the state affiliate’slineofcreditisapproximately$6,653,490.Intheeventofdefaultonaloan,thebylawsofNEEAFprovidethatthebankshallfirstdrawupontheletterofcreditofthestateaffiliatefromwhichthefundsweretransmittedand, thereafter, proportionately from all other letters of credit and/or lines of credit .

NOTE 9. THE NEA FOUNDATION FOR THE IMPROVEMENT OF EDUCATION

TheNEAFoundationfor theImprovementofEducation(NFIE)wascreated in1969byNEAasa tax-exemptpubliccharityto improvethequalityofpubliceducationintheUnitedStates.TheNFIEhasaseparateBoardof Directors and operates independently of NEA . Accordingly, the accompanying financial statements do not include the activities of NFIE .

TheNFIEempowerspubliceducationemployeestoinnovate,takerisks,andbecomeagentsforchangetoimproveteaching and learning in our society .

During the years ended August 31, 2015 and 2014, payments totaling $1,886,423 and $1,890,642, respectively, were made to NFIE for an endowment that will help fund programs to meet critical needs of students and educationemployeesinyearstocome.Suchamountsarereflectedasreductionsin“NEAPrograms—Dues”inthe consolidated statements of activities and changes in net assets for the years ended August 31, 2015 and 2014 .

NOTE 10. NEA HEALTHY FUTURES

NEAHealthyFutures,alegallyseparate501(c)(3)not-for-profitorganization,wascreatedin1987(asNEAHealthInformation Network) to provide a link between the education and health professions to assure that public school employees and their students have the knowledge and skills necessary to make decisions that enhance the quality of their lives, improve the environment in which they work and learn, and build relationships within the communities they serve .

NEA Healthy Futures manages and implements programs that provide health and wellness solutions, advocacy tools, and funding and resource opportunities for NEA members and the education community at large . NEA Healthy Futures secures funds from public and private sources to implement these programs .

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NOTE 10. NEA HEALTHY FUTURES (CONTINUED)

NEA Healthy Futures establishes collaborative partnerships with other public and private entities to enhance the content and scope of its activities and to bring the education employee/student perspective into the planning and development process of relevant health initiatives at the national, state, and local levels .

NEA’s appropriations for NEA Healthy Futures for both years ended August 31, 2015 and 2014 were $550,000 .

NOTE 11. NEA MEMBERS INSURANCE TRUST

TheNational EducationAssociationMembers InsuranceTrust (NEA-MIT)was organized to provide certainemployee welfare benefits to NEA members and their dependents, pursuant to the NEA Members Insurance Plan .

NEA is the sponsor and administrator of the welfare plans that NEA-MIT provides . NEA may appoint and remove the trustees of NEA-MIT . NEA-MIT maintains an agreement with MBC to provide administrative and promotional services for the programs .

NEA and NEA-MIT have an agreement whereby NEA provided systems administration, maintenance, software development and facilities management in the amount of $598,872 and $527,862 for the years ended August 31, 2015 and 2014, respectively .

NOTE 12. INCOME TAXES

Under provisions of Section 501(c) of the Internal Revenue Code and the applicable income tax regulations of the District of Columbia, NEA is exempt from taxes on income, other than taxes on unrelated business income .

MBC follows the liability method of accounting for income taxes as required by the FASB Accounting Standards Income Taxes. Income tax expense is recognized based on the amount of income taxes currently payable orrefundableplusthenetchangeduringtheyearinthedeferredtaxliabilityorasset.Thecurrentordeferredtaxconsequencesofalleventsthathavebeenrecognizedintheconsolidatedfinancialstatementsaremeasuredbasedon provisions of enacted tax law .

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NOTE 12. INCOME TAXES (CONTINUED)

TheprovisionforFederalandStateincometaxesisincludedinMBC’ssupportserviceexpensesontheconsolidatedstatements of activities and changes in net assets and consists of the following:

2015 2014 Current Provision Federal $ 961,835 $ (540,140) State 119,815 (59,040) 1,081,650 (599,180)Deferred Provision Federal (326,199) 2,716,291 State (44,236) (277,227) (370,435) 2,439,064 Total $ 711,215 $ 1,839,884

A reconciliation of income taxes at the statutory rate to the provision for income taxes in the financial statements is as follows:

2015 2014 Federal income tax provision at the statutory rate $ 532,658 $ 2,099,488 State income tax expense, net of federal benefit 45,573 179,729 Permanentdifferences 128,675 (37,668) Temporarydifferences 4,309 (401,665) Total $ 711,215 $ 1,839,884

AtAugust 31, 2015 and 2014, the deferred tax assets and liabilities represent the tax effects of the followingtemporarydifferences:

2015 2014 Assets Deferred income $ 867,986 $ – Accrued vacation 277,357 259,387 Bad debt – 20,517 State taxes 353,816 368,856 Other 26,539 17,583

Gross deferred tax assets 1,525,698 666,343

Liabilities Pension costs (4,450,771) (7,069,344) Other (45,861) (41,978)

Gross deferred tax liabilities (4,496,632) (7,111,322) Total $ (2,970,934) $ (6,444,979)

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NOTE 12. INCOME TAXES (CONTINUED)

AmountsrecognizedintheconsolidatedstatementsoffinancialpositionsatAugust31:

2015 2014 Current Deferred tax asset $ 420,244 $ 276,970 Deferred tax liability (45,861) (41,978) 374,383 234,992

Non-current Deferred tax asset 1,105,454 389,373 Deferred tax liability (4,450,771) (7,069,344) (3,345,317) (6,679,971) Total $ (2,970,934) $ (6,444,979)

NOTE 13. CHANGE IN PENSION OBLIGATION OTHER THAN NET PERIODIC PENSION COST

Thetaxeffectsallocatedtoeachcomponentofthechangeinactuarialgain(loss)fromtheMBCdefinedbenefitplan and other charge for the year ended August 31, 2015 and 2014 are:

2015 Tax Before-Tax (Expense) Net-tax Amount or Benefit Amount Defined Benefit Pension Plan:

Net gain/(loss) arising during period $ (8,775,138) $ 3,370,312 $ (5,404,826)

Less:amortizationofpriorservicecost included in net periodic pension cost 694,399 (266,701) 427,698

Total pension related other non-operating expense $ (8,080,739) $ 3,103,611 $ (4,977,128)

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NOTE 13. CHANGE IN PENSION OBLIGATION OTHER THAN NET PERIODIC PENSION COST (CONTINUED)

2014 Tax Before-Tax (Expense) Net-tax Amount or Benefit Amount Defined Benefit Pension Plan:

Net gain/(loss) arising during period $ (399,318) $ 119,537 $ (279,781)

Amendments/prior Service cost (2,420,560) 724,601 (1,695,959)

Less:amortizationofpriorservicecost included in net periodic pension cost 749,878 (224,478) 525,400

Total pension related other non-operating expense $ (2,070,000) $ 619,660 $ (1,450,340)

NOTE 14. FAIR VALUE MEASUREMENTS

Accounting standards for fair value measurements defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements . Accounting standards for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetweenmarketparticipantsatthemeasurementdate.Thatframeworkprovidesafairvaluehierarchythatprioritizestheinputstothevaluationtechniquesusedtomeasurefairvalue.Thehierarchygivesthehighestpriority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowestprioritytomeasurementsinvolvingsignificantunobservableinputs(Level3inputs).Thethreelevelsofthehierarchy are as follows:

• Level1 – Observable inputs such as quoted prices for identical assets or liabilities in active markets;

• Level2 – Inputs other than the quoted prices in active markets that are observable, either directly or indirectly such as 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 or inputs that are derived principally from or corroborated by observable market data by correlation or other means; and

• Level3 – Unobservable inputs in which there is little or no market data, which requires management to develop its own assumptions .

Theasset’sorliability’scategorizationwithinthevaluationhierarchyisbaseduponthelowestlevelofinputthatissignificanttotheirfairvaluemeasurement.Valuationtechniquesusedneedtomaximizetheuseofobservableinputsandminimizetheuseofunobservableinputs.

29



NOTE 14. FAIR VALUE MEASUREMENTS (CONTINUED)

Thefollowingisadescriptionofthevaluationtechniquesusedforassetsmeasuredatfairvalue:

• Moneymarketfunds – Valued at cost, which approximates fair value . Valuation is from an unadjusted quoted price;

• Exchangetradedfunds – Valued at the closing price reported in an active market in which the securities are traded; and

• Mutualfunds– equity and fixed income securities – Valued at trading value on an exchange and is calculated at the end of each business day .

Themethodsdescribedabovemayproduceafairvaluecalculationthatmaynotbeindicativeofnetrealizablevalueorreflectiveoffuturefairvalues.Furthermore,whileNEAbelievesitsvaluationmethodsareappropriateandconsistentwithothermarketparticipants,theuseofdifferentmethodologiesorassumptionstodeterminethefairvalueofcertainfinancialinstrumentscouldresultinadifferentfairvaluemeasurementatthereportingdate.

The following table presentsNEA’s fair value hierarchy for financial assetsmeasured on a recurring basis at August 31, 2015:


Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total Money market funds $ 896,818 $ – $ – $ 896,818 Exchange traded funds 8,131,902 – – 8,131,902 Mutual funds – equity securities Growth funds 5,492,505 – – 5,492,505 Value funds 9,314,974 – – 9,314,974 Blend fund 1,272,010 – – 1,272,010 Mutual funds – fixed income securities U .S . fixed income fund 21,374,107 – – 21,374,107 $ 46,482,316 $ – $ – $ 46,482,316

30



NOTE 14. FAIR VALUE MEASUREMENTS (CONTINUED)

The following table presentsNEA’s fair value hierarchy for financial assetsmeasured on a recurring basis at August 31, 2014:


Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total Money market funds $ 950,996 $ – $ – $ 950,996 Exchange traded funds 7,531,437 – – 7,531,437 Mutual funds – equity securities Growth funds 6,433,292 – – 6,433,292 Value funds 9,097,003 – – 9,097,003 Blend fund 1,655,661 – – 1,655,661 Mutual funds – fixed income securities U .S . fixed income fund 20,346,264 – – 20,346,264 International fixed income fund 469,307 – – 469,307 $ 46,483,960 $ – $ – $ 46,483,960

NOTE 15. DESIGNATED NET ASSETS

Designated net assets consist of the following at August 31:

2015 2014 Advocacy Fund $ 98,479 $ 8,346,441 National Education Employees Assistance Fund 75,354 125,045 Uniserv Fund 637,733 640,301 Special Dues Ballot Fund 58,555,032 42,928,322 Special Dues Media Fund 40,019,085 34,476,819 Great Public Schools Fund 4,298,917 4,267,300 Capital Improvement Fund 28,493,324 30,304,170 External Partnership Grants – (12,934) $ 132,177,924 $ 121,075,464

31



NOTE 16. RENTAL INCOME

NEAPIleasesofficespacetovarioustenants.Certainleasesallowforreimbursementofoperatingcostsand/orincreaseinrentbasedonincreasesinrealestatetaxesandoperatingexpenses.Thetotalrentalincomefortheyearsended August 31, 2015 and 2014 were $2,022,676 and $1,893,018, respectively .

As of August 31, 2015, the minimum future payments from all non-cancellable leases were as follows:

Year Ending August 31, 2016 $ 1,434,753 2017 1,129,682 2018 866,787 2019 675,086 2020 583,847 Thereafter 616,062 $ 5,306,217

NOTE 17. SUBSEQUENT EVENTS

Management has performed a subsequent event review from September 1, 2015 to December 3, 2015; the date thattheconsolidatedfinancialstatementswereavailabletobeissued.Thisreviewrevealednonewmaterialeventor transaction which would require an additional adjustment or disclosure in the accompanying consolidated financial statements .

32


SUPPLEMENTAL SCHEDULE OF FINANCIAL POSITION BY FUND INFORMATIONAS OF AUGUST 31, 2015 (WITH COMPARATIVE TOTALS AS OF AUGUST 31, 2014)

General Special 2015 2014 Operating Purpose Consolidating Total Total Fund Funds Entries Funds Funds ASSETS

CURRENT ASSETS Cash and cash equivalents $ 75,123,208 $ 120,273,281 $ – $ 195,396,489 $ 176,214,555 Membership dues receivable – net 31,893,138 – – 31,893,138 31,377,081 Amount due from affiliates and other organizations – net 2,554,310 – (976,837) 1,577,473 1,839,429 Accounts receivable – 4,675,827 – 4,675,827 7,565,475 Notes receivable 1,000,000 – – 1,000,000 1,000,000 Prepaid expenses 4,418,167 2,410,546 – 6,828,713 2,977,756 Amount due from other funds 50,425 – (50,425) – – Amount due from general fund – 24,145,447 (24,145,447) – – Deferred income taxes – 374,383 – 374,383 234,992 Other current assets 283,948 – – 283,948 277,815 Total current assets 115,323,196 151,879,484 (25,172,709) 242,029,971 221,487,103

LONG-TERM ASSETS Notes receivable – net 5,374,320 – – 5,374,320 6,374,320 Deferred rent assets – 368,503 – 368,503 – Deferred leasing commission – 183,725 – 183,725 253,421 Investments – 45,585,498 – 45,585,498 45,532,964 Pension asset – 11,588,285 – 11,588,285 18,406,152 Property and equipment – net 6,482,399 52,760,840 – 59,243,239 57,133,798 Total long-term assets 11,856,719 110,486,851 – 122,343,570 127,700,655

TOTAL ASSETS $ 127,179,915 $ 262,366,335 $ (25,172,709) $ 364,373,541 $ 349,187,758


CURRENT LIABILITIES Accounts payable $ 10,119,135 $ 5,608,384 $ (942,393) $ 14,785,126 $ 13,553,610 Accrued liabilities 9,898,090 4,314,490 – 14,212,580 14,179,153 Deferred income – 2,194,962 – 2,194,962 1,825,230 Accrued annual leave 6,627,010 – – 6,627,010 6,490,191 Amount due to other funds 24,145,447 – (24,145,447) – – Amount due to general fund – 84,869 (84,869) – – Amount held for affiliates and other organizations 1,170,743 – – 1,170,743 1,051,672 Total current liabilities 51,960,425 12,202,705 (25,172,709) 38,990,421 37,099,856

LONG-TERM LIABILITIES Grant commitment 500,000 – – 500,000 600,000 Accrued severance payable 5,922,654 – – 5,922,654 5,972,811 Deferred income – 16,263,897 – 16,263,897 16,576,748 Deferred income taxes – 3,345,317 – 3,345,317 6,679,971 Total long-term liabilities 6,422,654 19,609,214 – 26,031,868 29,829,530 Total liabilities 58,383,079 31,811,919 (25,172,709) 65,022,289 66,929,386

UNRESTRICTED NET ASSETS Undesignated net assets 68,796,836 98,376,492 – 167,173,328 161,182,908 Designated net assets – 132,177,924 – 132,177,924 121,075,464 Total unrestricted net assets 68,796,836 230,554,416 – 299,351,252 282,258,372

TOTAL LIABILITIES AND NET ASSETS $ 127,179,915 $ 262,366,335 $ (25,172,709) $ 364,373,541 $ 349,187,758

33


SUPPLEMENTAL SCHEDULE OF FINANCIAL POSITION BY SPECIAL PURPOSE FUND INFORMATIONAS OF AUGUST 31, 2015 (WITH COMPARATIVE TOTALS AS OF AUGUST 31, 2014)

Related Entity Bylaw Other 2015 2014 Special Special Special Total Total Purpose Funds Purpose Funds Purpose Funds Funds Funds ASSETS

CURRENT ASSETS Cash and cash equivalents $ 15,055,265 $ 94,262,877 $ 10,955,139 $ 120,273,281 $ 105,585,171 Accounts receivable 4,663,089 – 12,738 4,675,827 7,565,475 Prepaid expenses 2,410,546 – – 2,410,546 945,813 Amount due from general fund – 12,258,622 11,886,825 24,145,447 24,106,896 Deferred income tax 374,383 – – 374,383 234,992 Total current assets 22,503,283 106,521,499 22,854,702 151,879,484 138,438,347

LONG-TERM ASSETS Deferred rent assets 368,503 – – 368,503 – Deferred leasing commission 183,725 – – 183,725 253,421 Investments 14,719,582 – 30,865,916 45,585,498 45,532,964 Pension asset 11,588,285 – – 11,588,285 18,406,152 Property and equipment – net 24,267,515 28,493,325 – 52,760,840 50,511,132 Total long-term assets 51,127,610 28,493,325 30,865,916 110,486,851 114,703,669

TOTAL ASSETS $ 73,630,893 $ 135,014,824 $ 53,720,618 $ 262,366,335 $ 253,142,016


CURRENT LIABILITIES Accounts payable $ 4,691,106 $ 841,296 $ 75,982 $ 5,608,384 $ 4,608,821 Accrued liabilities 2,072,582 2,169,437 72,471 4,314,490 5,194,676 Deferred income 646,804 – 1,548,158 2,194,962 1,825,230 Amount due to general fund 34,444 – 50,425 84,869 1,625,281 Total current liabilities 7,444,936 3,010,733 1,747,036 12,202,705 13,254,008

LONG-TERM LIABILITIES Deferred income 1,997,029 – 14,266,868 16,263,897 16,576,748 Deferred income taxes 3,345,317 – – 3,345,317 6,679,971 Total long-term liabilities 5,342,346 – 14,266,868 19,609,214 23,256,719 Total liabilities 12,787,282 3,010,733 16,013,904 31,811,919 36,510,727

UNRESTRICTED NET ASSETS Undesignated net assets 60,669,778 – 37,706,714 98,376,492 95,555,825 Designated net assets 173,833 132,004,091 – 132,177,924 121,075,464 Total unrestricted net assets 60,843,611 132,004,091 37,706,714 230,554,416 216,631,289

TOTAL LIABILITIES AND NET ASSETS $ 73,630,893 $ 135,014,824 $ 53,720,618 $ 262,366,335 $ 253,142,016

34

(continued)

NATIONAL EDUCATION ASSOCIATION OF THE UNITED STATES

GENERAL OPERATING FUND – SUPPLEMENTAL SCHEDULE OF ACTIVITIES AND CHANGES IN NET ASSETSFOR THE YEAR ENDED AUGUST 31, 2015

Budget (Unaudited) Actual UNRESTRICTED REVENUES Membership income $ 356,488,500 $ 361,335,667 Other income 340,000 511,729 NFIE endowment allocation (1,890,300) (1,886,423)

TOTAL UNRESTRICTED REVENUES 354,938,200 359,960,973

EXPENSES BY STRATEGIC GOALS AND CORE FUNCTION AREAS Strong Affiliates for Great Public Schools 1. Capacity Building – partner with affiliates to integrate, collect and manage data to identify threats

and opportunities – partner with affiliates to achieve financial stability and sustainable fiscal health – partner with affiliates to conduct political, legislative and issue campaigns – jointly implement strategies to align and manage member interactions across

the Association – develop and provide strategic research for NEA and affiliates to identify threats

and opportunities – develop national communications strategies, resources, and tools to build

capacity in state affiliates 41,997,510 42,437,865 Total strong affiliates for great public schools 41,997,510 42,437,865

Uniting the Nation for Great Public Schools 1. Educator-Led Student Success – identify and advance Association-led, student-centered solutions to meet

the needs of the whole child – empower educators to become effective instructional, policy, and Association

leaders – develop strategies that center on achieving educational equity – create locally-based or state-based campaigns to improve teaching and learning

conditions – develop internal and external partnerships to improve the quality of education

for all students – connect the dots of the collected Association efforts of affiliates and members – create mechanisms to enhance internal headquarters and field collaboration 19,768,528 17,470,267 Total uniting the nation for great public schools 19,768,528 17,470,267

Research, policy, and practice 1. Advocate for federal legislation and regulations that enhance student learning

and workforce quality 977,357 1,573,308 2. Provide resources, technical assistance, and training to affiliates 1,913,604 2,176,466 3. Build, maintain, and strengthen partnerships and relationships with external

organizations 497,995 998,397 4. Provide research, information and expertise to affiliates, leaders, members and staff 3,840,892 3,677,978 Total research, policy, and practice 7,229,848 8,426,149

Organizing 1. Membership and Organizing – develop an organizing culture that grows the NEA Membership – develop the necessary skills within our affiliate leaders and staff to thrive as

organizers – assist state and local affiliates to develop their capacity and enhance their

effectiveness 99,612,055 102,318,446 Total organizing 99,612,055 102,318,446

35

(concluded)


GENERAL OPERATING FUND – SUPPLEMENTAL SCHEDULE OF ACTIVITIES AND CHANGES IN NET ASSETSFOR THE YEAR ENDED AUGUST 31, 2015

Budget (Unaudited) Actual Advocacy and outreach 1. Support the Association’s efforts to achieve Great Public Schools through federal legislation $ 1,710,948 $ 4,265,785 2. Provide legal services and insurance programs to support employees, members, students, state affiliates and external partnerships 44,589,978 42,229,471 3. Conduct strategic approach to outreach that leads to meaningful partnerships and organizing opportunities 9,200,478 9,956,438 4. Promote strategies to enhance educator practice and organize, mobilize, and empower educators 4,299,812 2,473,603 5. Support the Association’s efforts to achieve Great Public Schools through federal legislation 1,297,820 475,076 6. Provide technical assistance and support to NEA Leaders to advance policy and practice that supports NEA’s mission, vision, and core values 1,059,367 371,705 Total advocacy and outreach 62,158,403 59,772,078

Communications 1. Design, produce, and distribute communications strategies 328,598 491,881 2. Design and execute strategic communication campaigns that advance Association messaging and strengthens the NEA brand 205,175 36,419 3. Provide resources for state-focused paid media campaigns; design and execute special projects, campaigns, and events that strengthen the NEA brand 4,883,950 5,340,933 4. Provide communication capabilities assessment, strategic planning, personnel training, and support for NEA and affiliate organizing campaigns 439,225 597,341 5. Plan and execute strategic communications initiatives for NEA Projects 27,714,318 26,874,694 Total communications 33,571,266 33,341,268

Business operations 1. Provide financial and legal support to NEA and affiliate to enhance ability to conduct Association business and meet regulatory requirements 14,521,841 14,391,705 2. Provide human resources support to workforce planning and manage human capital operations 10,826,750 6,979,058 3. Provide infrastructure and organization support to lead, direct, and align NEA’s programs and services 12,607,840 18,534,322 4. Provide organization and strategy development by conducting on-going Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis 5,561,681 5,940,404 5. Provide technology support to applications, systems, infrastucture and delivery of technology-related products and services for current and future needs of the Association 17,642,893 20,945,717 6. Provide facility management, operational support, meeting logistics, and print media production 14,220,735 13,544,140 Total business operations 75,381,740 80,335,346

Governance 1. Facilitate and support well-informed decision making by the Executive Officers and Committee, Board of Directors, and Representative Assembly 8,524,481 7,403,042 2. Facilitate and support well-informed deliberations of appointed committees and councils 538,753 403,485 3. Provide strong national and global leadership engagement and influence to strengthen NEA’s alliances with US and international labor unions 2,334,854 2,119,339 4. Develop and deliver competency-based leadership development 2,892,559 2,763,935 Total governance 14,290,647 12,689,801

Total Operating Fund Expenses 354,009,997 356,791,220

CHANGES IN NET ASSETS $ 928,203 3,169,753

NET ASSETS BEGINNING OF YEAR 65,627,083 END OF YEAR $ 68,796,836

36


GENERAL OPERATING FUND – SUPPLEMENTAL SCHEDULES OF EXPENSES BY TYPEFOR THE YEARS ENDED AUGUST 31, 2015 AND 2014

2015 2014

Salaries and benefits $ 117,888,650 $ 113,459,749

Grants to, and joint projects with, state and local associations 109,052,614 112,353,687

Kate Frank/DuShane Unified Legal Services Program 23,335,303 21,658,585

Travel 15,715,209 15,948,287

Publication costs, net of advertising income 1,492,848 1,930,685

Outside services (including Educators Employment Liability Insurance, Media Program, consultants) 39,690,902 37,998,337

Conference and meetings 8,479,657 8,028,989

Machinery rentals, repairs, materials and supplies 6,116,474 6,618,307

Office and Administrative 35,019,563 39,755,826

Total Expenses by Type $ 356,791,220 $ 357,752,452

37


SPECIAL PURPOSE FUNDS – SUPPLEMENTAL SCHEDULES OF ACTIVITIES AND CHANGES IN NET ASSETSFOR THE YEARS ENDED AUGUST 31, 2015 AND 2014

Related Entity Bylaw Other Special Special Special Purpose Funds Purpose Funds Purpose Funds Totals

NET ASSETS September 1, 2013 $ 57,328,651 $ 86,242,361 $ 28,862,348 $ 172,433,360

Revenues NEA Appropriation 9,509,000 109,993,450 7,912,837 127,415,287 MBC Program revenue 55,282,528 – – 55,282,528 Other 1,977,679 8,102 8,647,471 10,633,252

Expenses (58,108,424) (83,627,001) (5,958,742) (147,694,167)

Change in pension obligations other than net periodic pension cost and other charge (1,438,971) – – (1,438,971)

NET ASSETS August 31, 2014 64,550,463 112,616,912 39,463,914 216,631,289

Revenues NEA Appropriation 5,009,000 107,477,738 11,120,616 123,607,354 MBC Program revenue 51,961,246 – – 51,961,246 Other 4,132,486 – 2,673,428 6,805,914

Expenses (69,478,402) (88,090,559) (5,551,244) (163,120,205)

Change in pension obligations other than net periodic pension cost and other charge (5,331,182) – – (5,331,182)

Investment in NEA360 LLC 10,000,000 – (10,000,000) –

NET ASSETS August 31, 2015 $ 60,843,611 $ 132,004,091 $ 37,706,714 $ 230,554,416

38


39

2015–2016INTERIM

FINANCIAL STATEMENTS(UNAUDITED)

40


41


GENERAL OPERATING AND CAPITAL IMPROVEMENT FUNDSSTATEMENTS OF FINANCIAL POSITION (UNAUDITED)AS OF APRIL 30, 2016

General Capital Operating Improvement Fund Fund

ASSETS

CURRENT ASSETS Cash and cash equivalents $ 64,220,478 $ – Cash held for Special Purpose Funds 20,187,779 – Membership dues receivable – net 149,144,534 – Amount due from affiliates and other organizations – net 1,655,915 – Notes receivable 1,000,000 – Prepaid expenses 9,996,785 – Other current assets 351,916 –

Total current assets 246,557,407 –

LONG-TERM ASSETS Notes receivable – net 4,624,320 – Equipment – net 5,019,170 – Land – 1,753,777 Building – net – 25,532,317

Total long-term assets 9,643,490 27,286,094

Total assets $ 256,200,897 $ 27,286,094

LIABILITIES & NET ASSETS

CURRENT LIABILITIES Deferred membership dues $ 121,760,670 $ – Accounts payable 1,836,288 – Accrued liabilities 3,502,776 – Accrued annual leave 6,433,533 – Amount held for affiliates and other organizations 1,198,017 – Amount due to other funds 20,187,779 –

Total current liabilities 154,919,063 –

LONG-TERM LIABILITIES Grant commitment 400,000 – Accrued severance payable 5,912,601 –

Total long-term liabilities 6,312,601 –

Total liabilities 161,231,664 –

UNRESTRICTED NET ASSETS Undesignated net assets 94,969,233 – Designated net assets – 27,286,094

Total net assets 94,969,233 27,286,094

Total liabilities and net assets $ 256,200,897 $ 27,286,094

42


GENERAL OPERATING FUND - STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS (UNAUDITED)FOR THE EIGHT MONTHS ENDED APRIL 30, 2016 AND PROJECTIONS FOR THE REMAININGFOUR MONTHS ENDING AUGUST 31, 2016 Actual Eight Projected Four Projected Months Ended Months Ending Total for Annual 4/30/2016 8/31/2016 Fiscal Year Budget

REVENUES Membership Income $ 243,404,096 $ 120,325,526 $ 363,729,622 $ 359,154,100 Other Income 190,834 95,417 286,251 340,000 NFIE Endowment Allocation (1,256,867) (653,433) (1,910,300) (1,885,300)

TOTAL UNRESTRICTED REVENUES 242,338,063 119,767,510 362,105,573 357,608,800

EXPENSES BY STRATEGIC GOALS AND CORE FUNCTIONS Strong Affiliates for Great Public Schools 1. Capacity Building 28,713,128 18,173,361 46,886,489 41,387,423 - partner with affiliates to integrate, collect, and manage data to identify

threats and opportunities - partner with affiliates to achieve financial stability and sustainable

fiscal health - partner with affiliates to conduct political, legislative, and issue campaigns - jointly implement strategies to align and manage member interactions

across the Association - develop and provide strategic research for NEA and affiliates to identify

threats and opportunities - develop national communications strategies, resources, and tools to build

capacity in state affiliates Total strong affiliates for great public schools 28,713,128 18,173,361 46,886,489 41,387,423

Uniting the Nation for Great Public Schools 1. Educator-Led Student Success 10,245,213 6,982,195 17,227,408 19,725,633 - identify and advance Association-led, student-centered solutions to meet

the needs of the whole child - empower educators to become effective instructional, policy, and

Association leaders - develop strategies that center on achieving educational equity - create locally-based or state-based campaigns to improve teaching and

learning conditions - develop internal and external partnerships to improve the quality of

education for all students - connect the dots of the collected Association efforts of affiliates and members - create mechanisms to enhance internal headquarters and field collaboration Total uniting the nation for great public schools 10,245,213 6,982,195 17,227,408 19,725,633

Research, policy, and practice 1. Advocate for federal legislation and regulations that enhance student learning

and workforce quality 996,401 596,109 1,592,510 981,857 2. Provide resources, technical assistance, and training to affiliates 1,351,233 477,161 1,828,394 1,742,491 3. Build, maintain, and strengthen partnerships and relationships with external

organizations 683,549 393,872 1,077,421 393,577 4. Provide research, information, and expertise to affiliates, leaders, members,

and staff 2,185,975 1,919,401 4,105,376 3,995,749 Total research, policy, and practice 5,217,158 3,386,543 8,603,701 7,113,674

Organizing 1. Membership and Organizing 64,573,940 39,088,659 103,662,599 101,396,119 - develop an organizing culture that grows the NEA membership - develop the necessary skills within our affiliate leaders and staff to thrive

as organizers - assist state and local affiliates to develop their capacity and enhance their

effectiveness Total organizing 64,573,940 39,088,659 103,662,599 101,396,119

(continued)

43


GENERAL OPERATING FUND - STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS (UNAUDITED)FOR THE EIGHT MONTHS ENDED APRIL 30, 2016 AND PROJECTIONS FOR THE REMAININGFOUR MONTHS ENDING AUGUST 31, 2016 Actual Eight Projected Four Projected Months Ended Months Ending Total for Annual 4/30/2016 8/31/2016 Fiscal Year Budget

Advocacy and outreach 1. Support the Association’s efforts to achieve Great Public Schools through

federal legislation $ 1,576,548 $ 1,049,295 $ 2,625,843 $ 1,710,948 2. Provide legal services and insurance programs to support employees,

members, students, state affiliates, and external partnerships 24,152,437 15,605,313 39,757,750 44,589,978 3. Conduct strategic approach to outreach that leads to meaningful partnerships

and organizing opportunities 5,567,414 3,286,109 8,853,523 9,192,843 4. Promote strategies to enhance educator practice and organize, mobilize, and

empower educators 1,752,433 896,375 2,648,808 4,199,812 5. Support the Association’s efforts to achieve Great Public Schools through

federal legislation 292,641 230,575 523,216 1,297,820 6. Provide technical assistance and support to NEA Leaders to advance policy

and practice that supports NEA’s mission, vision, and core values 266,394 826,776 1,093,170 1,349,323 Total advocacy and outreach 33,607,867 21,894,443 55,502,310 62,340,724

Communications 1. Design, produce, and distribute communications strategies 196,026 159,172 355,198 360,973 2. Design and execute strategic communication campaigns that advance

Association messaging and strengthens the NEA brand 2,020 27,245 29,265 207,175 3. Provide resources for state-focused paid media campaigns; design and execute

special projects, campaigns, and events that strengthen the NEA brand 3,305,057 1,895,655 5,200,712 4,980,453 4. Provide communication capabilities assessment, strategic planning, personnel

training, and support for NEA and affiliate organizing campaigns 339,952 337,014 676,966 474,208 5. Plan and execute strategic communications initiatives for NEA projects 17,527,521 9,016,057 26,543,578 27,798,040 Total communications 21,370,576 11,435,143 32,805,719 33,820,849

Business operations 1. Provide financial and legal support to NEA and affiliates to enhance ability to

conduct Association business and meet regulatory requirements 9,104,778 8,516,848 17,621,626 14,665,685 2. Provide human resources support to workforce planning and manage human

capital operations 4,934,913 2,831,101 7,766,014 11,250,355 3. Provide infrastructure and organization support to lead, direct, and align NEA’s

programs and services 9,754,885 6,171,107 15,925,992 12,650,867 4. Provide organization and strategy development by conducting on-going

Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis 3,391,822 2,096,928 5,488,750 5,586,481 5. Provide technology support to applications, systems, infrastructure and

delivery of technology-related products and services for current and future needs of the Association 12,333,925 8,192,806 20,526,731 17,446,393

6. Provide facility management, operational support, meeting logistics and print media production 5,450,464 7,992,129 13,442,593 14,501,791

Total business operations 44,970,787 35,800,919 80,771,706 76,101,572

Governance 1. Facilitate and support well-informed decision making by the Executive Officers

and Committee, Board of Directors, and Representative Assembly 3,901,647 3,679,654 7,581,301 8,456,528 2. Facilitate and support well-informed deliberations of appointed committees

and councils 412,972 179,018 591,990 458,253 3. Provide strong national and global leadership engagement and influence to

strengthen NEA’s alliances with US and international labor unions 998,925 691,531 1,690,456 2,153,097 4. Develop and deliver competency-based leadership development 2,153,453 1,014,156 3,167,609 3,068,350 Total governance 7,466,997 5,564,359 13,031,356 14,136,228

Total Operating Fund Expenses 216,165,666 142,325,622 358,491,288 356,022,222

CHANGES IN NET ASSETS $ 26,172,397 $ (22,558,112) $ 3,614,285 $ 1,586,578

(concluded)

44


GENERAL OPERATING FUND – CONTINGENCY FUND EXPENDITURESAS OF MAY 31, 2016

Amount Governance Approval Purpose

$ 3,000,000 Beginning Balance

(1,413,422) Approved at the October 2015 Board of Directors’ To fund the implementation of 2015 Representative Meeting Assembly New Business Items

$ 1,586,578 Available Balance

45

MEMBERSHIP COMPARISON BY STATE

46

ACTIVEProfessional, ESP and Life Other Memberships* Total Memberships

Increase Increase IncreaseSTATE 2014–2015 2013–2014 (Decrease) 2014–2015 2013–2014 (Decrease) 2014–2015 2013–2014 (Decrease)

ALABAMA 51,720 61,603 (9,883) 26,757 26,640 117 78,477 88,243 (9,766)

ALASKA 11,149 11,235 (86) 1,692 1,677 15 12,841 12,912 (71)

ARIZONA 14,927 14,649 278 2,567 2,483 84 17,494 17,132 362

ARKANSAS 9,567 10,190 (623) 2,452 2,526 (74) 12,019 12,716 (697)

CALIFORNIA 297,304 291,889 5,415 18,027 17,269 758 315,331 309,158 6,173

COLORADO 32,955 33,207 (252) 4,338 4,138 200 37,293 37,345 (52)

CONNECTICUT 37,672 37,524 148 6,151 6,103 48 43,823 43,627 196

DELAWARE 11,584 11,390 194 1,276 1,299 (23) 12,860 12,689 171

DISTRICT OF COLUMBIA 275 295 (20) 2,051 3,109 (1,058) 2,326 3,404 (1,078)

FEDERAL 5,387 5,637 (250) 566 537 29 5,953 6,174 (221)

FLORIDA 123,763 121,540 2,223 4,906 4,899 7 128,669 126,439 2,230

GEORGIA 24,128 25,677 (1,549) 5,117 5,265 (148) 29,245 30,942 (1,697)

HAWAII 12,555 12,344 211 6,167 6,104 63 18,722 18,448 274

IDAHO 8,254 8,320 (66) 1,846 1,850 (4) 10,100 10,170 (70)

ILLINOIS 128,059 127,473 586 11,528 11,327 201 139,587 138,800 787

INDIANA 34,007 35,443 (1,436) 5,727 5,573 154 39,734 41,016 (1,282)

IOWA 34,528 34,219 309 2,578 2,352 226 37,106 36,571 535

KANSAS 21,934 22,035 (101) 3,289 3,217 72 25,223 25,252 (29)

KENTUCKY 28,911 29,169 (258) 13,630 12,609 1,021 42,541 41,778 763

LOUISIANA 9,361 9,835 (474) 1,074 984 90 10,435 10,819 (384)

MAINE 18,106 18,336 (230) 5,412 5,358 54 23,518 23,694 (176)

MARYLAND 67,601 66,611 990 3,407 3,432 (25) 71,008 70,043 965

MASSACHUSETTS 102,486 101,939 547 10,790 10,965 (175) 113,276 112,904 372

MICHIGAN 100,818 108,077 (7,259) 36,042 35,073 969 136,860 143,150 (6,290)

MINNESOTA 76,950 75,455 1,495 12,604 13,116 (512) 89,554 88,571 983

MISSISSIPPI 4,933 4,742 191 2,446 2,556 (110) 7,379 7,298 81

MISSOURI 25,437 25,440 (3) 6,575 6,474 101 32,012 31,914 98

MONTANA 16,415 16,075 340 1,934 1,921 13 18,349 17,996 353

NEBRASKA 21,044 21,193 (149) 7,041 6,797 244 28,085 27,990 95

NEVADA 22,715 22,563 152 1,585 1,499 86 24,300 24,062 238

47

ACTIVEProfessional, ESP and Life Other Memberships* Total Memberships

Increase Increase IncreaseSTATE 2014–2015 2013–2014 (Decrease) 2014–2015 2013–2014 (Decrease) 2014–2015 2013–2014 (Decrease)

NEW HAMPSHIRE 14,727 14,752 (25) 1,790 1,752 38 16,517 16,504 13

NEW JERSEY 172,790 172,295 495 28,400 27,879 521 201,190 200,174 1,016

NEW MEXICO 7,555 7,500 55 1,363 1,360 3 8,918 8,860 58

NEW YORK 387,407 381,788 5,619 7,001 7,087 (86) 394,408 388,875 5,533

NORTH CAROLINA 23,480 25,969 (2,489) 12,518 13,479 (961) 35,998 39,448 (3,450)

NORTH DAKOTA 8,647 8,724 (77) 1,941 1,790 151 10,588 10,514 74

OHIO 110,344 109,708 636 8,853 9,003 (150) 119,197 118,711 486

OKLAHOMA 18,561 18,963 (402) 2,529 2,328 201 21,090 21,291 (201)

OREGON 38,703 38,036 667 2,675 2,601 74 41,378 40,637 741

PENNSYLVANIA 143,131 144,979 (1,848) 34,817 34,468 349 177,948 179,447 (1,499)

RHODE ISLAND 9,430 9,226 204 2,387 2,218 169 11,817 11,444 373

SOUTH CAROLINA 6,464 6,187 277 2,449 2,573 (124) 8,913 8,760 153

SOUTH DAKOTA 4,742 4,732 10 1,496 1,442 54 6,238 6,174 64

TENNESSEE 31,042 33,684 (2,642) 12,545 12,373 172 43,587 46,057 (2,470)

TEXAS 45,127 43,983 1,144 2,906 2,724 182 48,033 46,707 1,326

UTAH 14,981 15,270 (289) 2,008 1,856 152 16,989 17,126 (137)

UTAH-USEA 4,350 4,581 (231) 68 53 15 4,418 4,634 (216)

VERMONT 11,785 10,670 1,115 1,297 1,394 (97) 13,082 12,064 1,018

VIRGINIA 42,746 44,508 (1,762) 6,055 5,993 62 48,801 50,501 (1,700)

WASHINGTON 82,593 80,258 2,335 6,521 6,252 269 89,114 86,510 2,604

WEST VIRGINIA 8,701 8,960 (259) 1,483 1,531 (48) 10,184 10,491 (307)

WISCONSIN 36,074 41,154 (5,080) 12,670 12,829 (159) 48,744 53,983 (5,239)

WYOMING 5,073 5,125 (52) 1,104 1,063 41 6,177 6,188 (11)

DIRECT ** 118 118 0 48 57 (9) 166 175 (9)

TOTALS 2,583,116 2,595,275 (12,159) 364,499 361,257 3,242 2,947,615 2,956,532 (8,917)

* Includes Substitute, Staff, Reserve, Student and Retired Memberships (Pre-Retired excluded)

** In general, this category refers to those members ineligible for state membership such as administrators, private school, etc., who join NEA directly, not through a local affiliate.

National Education Association

The National Education Association is the nation’s largest professional employee organization, representing 3 million elementary and secondary teachers, higher education faculty, education support professionals, school administrators, retired educators, and students preparing to become teachers.

NEA Executive Officers

Lily Eskelsen García, PresidentRebecca S. Pringle, Vice PresidentPrincess R. Moss, Secretary-Treasurer

John C. Stocks, Executive Director

Reproduction: No part of this report may be reproduced in any form without written permission from NEA, except by NEA affiliated associations and members. Address inquiries to NEA Executive Office, 1201 16th St., N.W., Washington, DC 20036-3290; (202) 822-7000.

Published June 2016

Copyright © June 2016 by the National Education AssociationAll Rights Reserved



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