Georgia Southwestern State University, Americus, Georgia, management report for fiscal year ended 2021 June 30

GEORGIA SOUTHWESTERN STATE UNIVERSITY
AMERICUS, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2021
A Member Institution of the University System of Georgia

GEORGIA SOUTHWESTERN STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I
FINANCIAL
LETTER OF TRANSMITTAL
SELECTED FINANCIAL INFORMATION
EXHIBITS
A STATEMENT OF NET POSITION - (GAAP BASIS) B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION -
(GAAP BASIS) C STATEMENT OF CASH FLOWS - (GAAP BASIS) D STATEMENT OF FIDUCIARY NET POSITION - (GAAP BASIS) E STATEMENT OF CHANGES IN FIDUCIARY NET POSITION - (GAAP BASIS) F SELECTED FINANCIAL NOTES
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET
BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
3 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND

Page
2 3 4 6 7 8
30 31 33

SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 4-101 Atlanta, Georgia 30334-8400

The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of Regents of the University System of Georgia
and Dr. Neal Weaver, President Georgia Southwestern State University
Ladies and Gentlemen:
This Management Report contains information pertinent to the Georgia Southwestern State University's compliance with the requirements of the Southern Association of Colleges and Schools Commission on Colleges (COC) Standard 13.2 (Financial resources) as of and for the year ended June 30, 2021. Included in this report is a section on findings and other items for any matters that came to our attention during our engagement. The other information contained in this report is the representation of management. Accordingly, we do not express an opinion or any form of assurance on it.
Additionally, we have performed certain procedures at Georgia Southwestern State University to support our audit of the basic financial statements of the State of Georgia presented in the State of Georgia Annual Comprehensive Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2021.
This report is intended solely for the information and use of the management of Georgia Southwestern State University, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully,

August 30, 2021

Greg S. Griffin State Auditor

SELECTED FINANCIAL INFORMATION - 1 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2021
ASSETS
Current Assets Cash and Cash Equivalents Cash and Cash Equivalents (Externally Restricted) Short-Term Investments (Externally Restricted) Accounts Receivable, Net Federal Financial Assistance Affiliated Organizations Other Inventories Prepaids
Total Current Assets
Noncurrent Assets Accounts Receivable, Net Due From USO - Capital Liability Reserve Fund Notes Receivable, Net Investments Capital Assets, Net
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Retainage Payable Advances (Including Tuition and Fees) Deposits Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Net Other Post Employment Benefits Liability Net Pension Liability
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources
NET POSITION
Net Investment in Capital Assets Restricted for:
Nonexpendable Expendable Unrestricted (Deficit)
Total Net Position
- 2 -

EXHIBIT "A"

$

9,993,950

684,850

645,299

877,813 65,174
1,252,278 41,609
162,379

13,723,352

267,598 4,957
430,201 78,609,534
79,312,290
93,035,642
12,258,609

2,564,890 199,408 90,299 309,611 168,187
2,134,657 21,560 2,386
1,298,704 672,137
7,461,839
29,732,649 245,706
36,722,710 18,056,369
84,757,434
92,219,273
5,394,735

46,125,750
645,299 368,019 (39,458,825)

$

7,680,243

GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2021

EXHIBIT "B"

OPERATING REVENUES
Student Tuition and Fees (Net of Scholarship Allowance) Grants and Contracts
Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises (Net of Scholarship Allowance) Residence Halls Bookstore Food Services Parking /Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Faculty Salaries Staff Salaries Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets)
Net Nonoperating Revenues
Loss Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Other
Total Other Revenues, Expenses, Gains or Losses
Change in Net Position
Net Position - Beginning of Year

$

11,180,893

54,456 246,015 3,465,907 346,970
4,000

3,414,792 226,597
2,255,887 55,166
284,681 910,969 474,147 288,224

23,208,704

10,124,200 9,388,110
10,317,112 132,691 43,108
3,946,794 1,528,146 10,021,240 3,443,272
48,944,673
(25,735,969)

14,367,699
8,677,609 614,098 210,704
(1,307,971)
22,562,139
(3,173,830)
4,014,817 273,132
4,287,949
1,114,119
6,566,124

Net Position - End of Year

$

7,680,243

- 3 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES Payments from Customers Grants and Contracts (Exchange) Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students Other Payments
Net Cash Used by Operating Activities
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State Appropriations Gifts and Grants Received for Other than Capital Purposes
Net Cash Flows Provided by Non-Capital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Used by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Investment Income Purchase of Investments
Net Cash Provided by Investing Activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

EXHIBIT "C"

$

21,824,636

3,506,077

(19,211,306)

(19,781,191)

(4,055,271)

4,813

2,158

(17,710,084)

14,367,699 9,402,375
23,770,074

3,715,613 (4,160,656) (1,241,781) (1,372,727)
(3,059,551)

13,055 (13,062)
(7) 3,000,432 7,678,368

$

10,678,800

- 4 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2021
RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Loss Adjustments to Reconcile Operating Loss to Net Cash
Used by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Salaries Payable Benefits Payable Retainage Payable Deposits Advances (Including Tuition and Fees) Funds Held for Others Compensated Absences Net Pension Liability Other Post-Employment Benefit Liability Change in Deferred Inflows/Outflows of Resources: Deferred Inflows of Resources Deferred Outflows of Resources
Net Cash Used by Operating Activities
NONCASH INVESTING, NON-CAPITAL FINANCING, AND CAPITAL AND RELATED FINANCING TRANSACTIONS
Current Year Accruals Related to Non-operating Non-capital Grants and Gifts Accrual of Capital Asset Related Payables Amortization of Deferred Gain of Capital Debt Refunded Unrealized Loss on Investments

EXHIBIT "C"

$

(25,735,969)

3,443,272
375,607 399,759 (146,038)
4,813 1,655,810
(175,761) (1,620)
(30,103) (5,485)
(37,334) 2,158
(50,012) 1,777,276 5,277,392
(746,093) (3,717,756)

$

(17,710,084)

$

779,003

$

283,202

$

64,756

$

197,649

- 5 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF FIDUCIARY NET POSITION - (GAAP BASIS)
JUNE 30, 2021
ASSETS Accounts Receivable, Net
Other LIABILITIES
Cash Overdraft Accounts Payable Deposits Held for Other Organizations
Total Liabilities NET POSITION Restricted for: Individuals, Organizations, and Other Governments

EXHIBIT "D"

CUSTODIAL FUNDS

$

2,987,180

2,941,790 7,050 6,797
2,955,637

$

31,543

- 6 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF CHANGES IN FIDUCIARY NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2021
ADDITIONS Federal Financial Aid State Financial Aid Other Financial Aid Clubs and Other Organizations Fund Raising Total Additions
DEDUCTIONS Scholarships and Other Student Support Student Organizations Support Total Deductions Change in Net Position
Net Position - Beginning
Net Position - Ending

EXHIBIT "E"

CUSTODIAL FUNDS

$

13,384,594

3,901,778

632,732

278,345

18,197,449

17,920,110 278,478
18,198,588
(1,139)
32,682

$

31,543

- 7 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
The Georgia Southwestern State University (Institution) serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge and by disseminating knowledge to the people of Georgia, the nation, and throughout the world.
REPORTING ENTITY
As defined by Official Code of Georgia Annotated (O.C.G.A) 20-3-50, the Institution is part of the University System of Georgia (USG), an organizational unit of the State of Georgia (the State) under the governance of the Board of Regents (Board). The Board has constitutional authority to govern, control and manage the USG. The Board is composed of 19 members, one member from each congressional district in the State and five additional members from the state-at-large, appointed by the Governor and confirmed by the Senate. Members of the Board serve a seven year term and members may be reappointed to subsequent terms by a sitting governor.
The Institution does not have the right to sue/be sued without recourse to the State. The Institution's property is the property of the State and subject to all the limitations and restrictions imposed upon other property of the State by the Constitution and laws of the State. In addition, the Institution is not legally separate from the State. Accordingly, the Institution is included within the State's basic financial statements as part of the primary government as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The accompanying basic financial statements are intended to supplement the State's Annual Comprehensive Financial Report (ACFR) by presenting the financial position and changes in financial position and cash flows of only that portion of the business-type activities and fiduciary fund of the State that is attributable to the transactions of the Institution. These financial statements do not purport to, and do not, present fairly the financial position of the State as of June 30, 2021, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying basic financial statements should be read in conjunction with the State's ACFR. The most recent State of Georgia ACFR can be obtained through the State Accounting Office, 200 Piedmont Avenue, Suite 1604 (West Tower), Atlanta, Georgia 30334 or online at sao.georgia.gov/comprehensive-annual-financial-reports.
BASIS OF PREPARATION
The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the Institution's assets, deferred outflows, liabilities, deferred inflows, net position, revenues, expenses, changes in net position and cash flows.
The Institution's business-type activities and fiduciary fund financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. Grants and similar items are recognized as revenues in the fiscal year in which eligibility requirements imposed by the provider have been met. All significant intra-fund transactions have been eliminated.
- 8 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

The Institution reports the following fiduciary fund:
Custodial funds Accounts for activities resulting from the Institution acting as an agent or fiduciary for various governments, companies, clubs or individuals.
NEW ACCOUNTING PRONOUNCEMENTS
For fiscal year 2021, the Institution adopted GASB Statement No. 90, Majority Equity Interests, an amendment of GASB Statements No. 14 and No. 61, It defines a majority equity interest and specifies that majority equity interest in a legal separate organization should be reported as an investment. A majority equity interest that meets the definition of an investment should be measured using the equity method, unless it is held by a special-purpose government engaged only in fiduciary activities, a fiduciary fund, or an endowment (including permanent and term endowments) or permanent fund. Those governments and funds should measure the majority equity interest at fair value. The adoption of this statement does not have an impact on the Institution's financial statements.
NET POSITION
The Institution's net position is classified as follows:
Net investment in capital assets represents the Institution's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. The term "debt obligations" as used in this definition does not include debt of the GSFIC.
Restricted - nonexpendable net position includes endowments and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. For institution-controlled, donorrestricted endowments, the by-laws of the Board of Regents of the University System of Georgia permits each individual institution to use prudent judgment in the spending of current realized and unrealized endowment appreciation. Donor-restricted endowment appreciation is periodically transferred to restricted - expendable accounts for expenditure as specified by the purpose of the endowment. Each institution maintains pertinent information related to each endowment fund including donor; amount and date of donation; restrictions by the source of limitations; limitations on investments, etc.
Restricted - expendable net position includes resources in which the Institution is legally or contractually obligated to spend resources in accordance with restrictions by external third parties.
Unrestricted net position represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the Institution, and may be used at the discretion of the governing board or management to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Office of the State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

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GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

When an expense is incurred that can be paid using either restricted or unrestricted resources, the Institution's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

NOTE 2: DEPOSITS AND INVESTMENTS
Cash and cash equivalents and investments as of June 30, 2021 are classified in the accompanying statement of net position as follows:

Statement of Net Position Current Cash and Cash Equivalents Cash and Cash Equivalents (Externally Restricted) Short-Term Investments (Externally Restricted) Noncurrent Noncurrent Investments

$

7,052,160

684,850

645,299

430,201

Cash on hand, deposits and investments as of June 30, 2021 consist of the following:
Cash on Hand Deposits with Financial Institutions Investments

$

8,812,510

$

4,480

3,453,328

5,354,702

DEPOSITS WITH FINANCIAL INSTITUTIONS

$

8,812,510

Deposits include certificates of deposits and demand deposit accounts, including certain interest bearing demand deposit accounts. The custodial credit risk for deposits is the risk that in the event of a bank failure, the Institution's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Institution) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated (O.C.G.A.) 50-17-59:

1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.

2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.

3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.

4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.

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GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.
6. Letters of credit issued by a Federal Home Loan Bank.
7. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
The Institution participates in the State's Secure Deposit Program (SDP), a multi-bank pledging pool. The SDP requires participating banks that accept public deposits in Georgia to operate under the policy and procedures of the program. The Georgia Office of State Treasurer (OST) sets the collateral requirements and pledging level for each covered depository. There are four tiers of collateralization levels specifying percentages of eligible securities to secure covered Deposits: 25%, 50%, 75%, and 110%. The SDP also provides for collateral levels to be increased to amount of up to 125% if economic or financial conditions warrants. The program lists the type of eligible collateral. The OST approves authorized custodians.

In accordance with the SDP, if a covered depository defaults, losses to public depositors are first satisfied with any applicable insurance, followed by demands of payment under any letters of credit or sale of the covered depository's collateral. If necessary, any remaining losses are to be satisfied by assessments made against the other participating covered depositories. Therefore, for disclosure purposes, all deposits of the SDP are considered to be fully collateralized.
At June 30, 2021, the bank balances of the Institution's deposits totaled $3,702,816. This balance includes deposits in fiduciary funds as these balances are not separable from the holdings of the USG. None of these deposits were exposed to custodial credit risk.

INVESTMENTS
The Institution maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility it has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy and applicable federal and state laws.
The following table summarizes the valuation of the Institution's investments measured at fair value on a recurring basis as of June 30, 2021.

Debt Securities Mutual Bond Funds Equity Mutal Funds - Domestic Equity Mutal Funds - International
Investments Pools Board of Regents Short-Term Fund Office of the State Treasurer Georgia Fund 1

Fair Value

$

402,830

621,546

58,703

1,689,814 2,581,809

Total Investments

$
- 11 -

5,354,702

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

The Institution holds positions in the Georgia Fund 1 investment pool managed by the Georgia Office of the State Treasurer. The unit of account is each share held, and the value of the position would be the fair value of the pool's share price multiplied by the number of shares held. The Institution does not "look through" the pool to report a pro rata share of the pool's investments, receivables, and payables.
Board of Regents Pooled Investment Program The USG serves as fiscal agent for various units of the University System of Georgia and affiliated organizations. The USG pools the monies of these organizations with the USG's monies for investment purposes. The investment pool is not registered with the U.S. Securities and Exchange Commission as an investment company. The fair value of the investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each pooled investment fund balance at fair value along with a pro rata share of the pooled fund's investment returns.
The USG maintains investment policy guidelines for each pooled investment fund that is offered to qualified University System participants. These policies are intended to foster the sound and prudent responsibility each institution has to the citizens of Georgia and which conforms to the Board of Regents investment policy. All investments must be consistent with donor intent, Board of Regents policy, and applicable Federal and state laws. Units of the University System of Georgia and their affiliated organizations may participate in the pooled investment fund program. The overall character of the pooled fund portfolio should be one of above average quality, possessing at most an average degree of investment risk.
The Institution's position in the pooled investment fund options are described below.
1. Short-Term Fund The Short-Term Fund is available to both University System of Georgia institutions and their affiliated organizations. The Fund provides a current return and stability of principal while affording a means of the overnight liquidity for projected cash needs. Investments are in securities allowed under O.C.G.A. 50-17-59 and 50-17-63. The average maturities of investments in this fund will typically range between daily and three years, and the fund will typically have an overall average duration of - 1 year. The overall character of the portfolio is of Agency quality, possessing a minimal degree of financial risk. The market value of the Institution's position in the Short-Term Fund at June 30, 2021 was $1,689,814, of which 100% is invested in debt securities. The Effective Duration of the Fund is 0.89 years.
Office of the State Treasurer Investment Pool The Georgia Fund 1 Investment Pool, managed by the Office of the State Treasurer, is not registered with the U.S. Securities and Exchange Commission as an investment company, and the State does not consider Georgia Fund 1 to be a 2a7-like pool. This investment is valued at the pool's share price, $1 per share. The Georgia Fund 1 Investment Pool is an AAAf rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 36 days.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Institution's policy for managing interest rate risk is contained in the investment policy guidelines for the various pooled funds, and attempts to match investments with expected cash requirements.

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GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

NOTE 3: ACCOUNTS RECEIVABLE Accounts receivable consisted of the following at June 30, 2021:

Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia Student Financing Commission Georgia State Financing and Investment Commission Due from Afflilated Organizations Due from Other USG Institutions Other
Less Allowance for Doubtful Accounts
Net Accounts Receivable

Business-Type Activities

Fiduciary Fund

$

567,955 $

-

66,507

-

877,813

2,660,576

-

326,540

779,002

-

65,174

-

319,598

-

38,192

64

2,714,241

2,987,180

251,378

-

$

2,462,863 $

2,987,180

NOTE 4: CAPITAL ASSETS

Following are the changes in capital assets for the year ended June 30, 2021:

Capital Assets, Not Being Depreciated: Land Construction Work-In-Progress

Balance July 1, 2020

Additions

Reductions

Balance June 30, 2021

$

1,084,007 $

2,418,111

- $ 4,560,716

- $ 5,226,795

1,084,007 1,752,032

Total Capital Assets, Not Being Depreciated
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections
Total Capital Assets Being Depreciated/Amortized
Less: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections
Total Accumulated Depreciation

3,502,118
125,430,253 1,787,402 4,025,246 8,101,008 75,000
139,418,909
53,205,970 1,324,078 3,346,966 7,421,627 13,438
65,312,079

4,560,716
5,032,198 -
63,654 14,085
-
5,109,937
3,089,004 29,308
186,445 136,640
1,875
3,443,272

5,226,795
34,986 52,570 -
87,556
34,986 52,570 -
87,556

2,836,039
130,462,451 1,787,402 4,053,914 8,062,523 75,000
144,441,290
56,294,974 1,353,386 3,498,425 7,505,697 15,313
68,667,795

Total Capital Assets, Being Depreciated, Net Capital Assets, Net

74,106,830 $ 77,608,948 $

1,666,665 6,227,381 $

5,226,795 $

75,773,495 78,609,534

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GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

A comparison of depreciation expense for the last three fiscal years is as follows:

Fiscal Year
2021 2020 2019

Depreciation Expense

$

3,443,272

$

3,412,786

$

3,435,311

NOTE 5: ADVANCES (INCLUDING TUITION AND FEES) Advances, including tuitions and fees consisted of the following at June 30, 2021:

Current Liabilities

Prepaid Tuition and Fees

$

1,528,816

Research

110,667

Other - Advances

495,174

Total Advances

$

2,134,657

NOTE 6: LONG-TERM LIABILITIES

Changes in long-term liability for the year ended June 30, 2021 was as follows:

Leases Lease Obligations

Balance July 1, 2020

Additions

Reductions

Balance June 30, 2021

Current Portion

$ 32,273,134 $

- $ 1,241,781 $ 31,031,353 $ 1,298,704

Other Liabilities Compensated Absences

967,854

658,876

708,887

917,843

672,137

Total Long-Term Obligations

$ 33,240,988 $ 658,876 $ 1,950,668 $ 31,949,196 $ 1,970,841

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GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

NOTE 7: DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES
Deferred outflows and inflows of resources reported on the Statement of Net Position as of June 30, 2021 and June 30, 2020 consisted of the following:

Deferred Outflows of Resources Deferred Loss on Debt Refunding Deferred Loss on Defined Benefit Pension Plans (See Note 11) Deferred Loss on OPEB Plan (See Note 14)

Fiscal Year 2021

Fiscal Year 2020

$

555,927 $

586,812

5,543,153

5,395,757

6,159,529

2,589,169

Total Deferred Outflows of Resources

$ 12,258,609 $

8,571,738

Deferred Inflows of Resources Deferred Gain on Debt Refunding Deferred Gain on Defined Benefit Pension Plans (See Note 11) Deferred Gain on OPEB Plan (See Note 14)

$

1,530,260 $

1,625,901

231,197

545,022

3,633,278

4,065,546

Total Deferred Inflows of Resources

$

5,394,735 $

6,236,469

NOTE 8: NET POSITION The breakdown of business-type activity net position for the Institution at June 30, 2021 is as follows:

Net Investment in Capital Assets

$ 46,125,750

Restricted for Nonexpendable Permanent Endowment

645,299

Expendable Sponsored and Other Organized Activities Institutional Loans

146,243 221,776

Sub-Total

368,019

Unrestricted Auxiliary Operations Reserve for Encumbrances Reserve for Inventory Capital Liability Reserve Fund Other Unrestricted (Deficit)

7,768,692 2,897,265
10,094 267,598 (50,402,474)

Sub-Total

(39,458,825)

Total Net Position (Deficit)

$

7,680,243

- 15 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

Changes in Net Position for the year ended June 30, 2021 are as follows:

Balance July 1, 2020

Additions

Reductions

Balance June 30, 2021

Net Investment in Capital Assets

$ 44,104,029 $

5,685,639 $

3,663,918 $ 46,125,750

Restricted Net Position

927,779

16,731,936

16,646,397

1,013,318

Unrestricted Net Position

(38,465,684)

34,634,827

35,627,968

(39,458,825)

Total Net Position
NOTE 9: ENDOWMENTS

$

6,566,124 $

DONOR RESTRICTED ENDOWMENTS

57,052,402 $

55,938,283 $

7,680,243

Investments of the Institution's endowment funds are pooled, unless required to be separately invested by the donor. For Institution controlled, donor-restricted endowments, where the donor has not provided specific instructions, the Board of Regents permits Institutions to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determined to be prudent. Realized and unrealized appreciation in excess of the amount budgeted for current spending is retained by the endowments. Current year net appreciation on endowment investments available for authorization for expenditure was $110,793 and is reflected as expendable restricted net position.
For endowment funds where the donor has not provided specific instructions, investment return of the Institution's endowment funds is predicated on the total return concept. Annual payouts from the Institution's endowment funds are based on a spending policy which limits spending between 3.0% and 6.0% of endowment principal market value. To the extent that the total return for the current year exceeds the payout, the excess is added to principal. If current year earnings do not meet the payout requirements, the Institution uses accumulated income and appreciation from restricted expendable net asset endowment balances to make up the difference.
For endowment funds where the donor has not provided specific instructions and the USG member institution has determined not to utilize the total return concept, investment return of the Institution's endowment funds is predicated under classical trust doctrines. Unless the donor has stipulated otherwise, capital gains and losses are accounted for as part of the endowment principal and are not available for expenditure.
For the current year, the Institution did not incur investment losses that exceeded the related endowment's available accumulated income and net appreciation.

- 16 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

NOTE 10: LEASES
The Institution is obligated under various capital and operating leases for the use of real property and equipment.
CAPITAL LEASES

The Institution acquires certain real property and equipment through multi-year capital leases with varying terms and options. In accordance with O.C.G.A. 50-5-64, these agreements shall terminate absolutely and without further obligation at the close of the fiscal year in which it was executed and at the close of each succeeding fiscal year for which it may be renewed. These agreements may be renewed only by a positive action taken by the Institution. In addition, these agreements shall terminate if the State does not provide adequate funding, but that is considered a remote possibility. The Institution's principal and interest payments related to capital leases for fiscal year 2021 were $1,241,781 and $1,372,727, respectively.

The following is a summary of the carrying values of assets held under capital lease at June 30, 2021:

Description Buildings and Building Improvements

Gross Amount (+)
$ 38,176,156 $

Net Assets Held Under

Outstanding Balances

Accumulated

Capital Lease at

per Lease Schedules at

Depreciation

June 30, 2021

June 30, 2021

(-)

(=)

15,720,935 $

22,455,221 $

31,031,353

The following schedule lists the pertinent information for each of the Institution's capital leases:

Description GSW Oaks l & ll, and Pines Hall
GSW Magnolia l & ll
Total Leases

Lessor USG Real Estate Foundation VIII, LLC USG Real Estate Foundation VIII, LLC

Original Principle

$

21,312,173

13,411,536

$

34,723,709

Lease Term 19 years 21 years

Begin Month/Year
6/2018
6/2018

End Month/Year

Outstanding Principle (1)

5/2037 $ 18,955,211

5/2039

12,076,142

$ 31,031,353

(1) These capital leases are related party transactions

Certain capital leases provided for renewal and/or purchase options. Generally, purchase options are bargain prices of one dollar exercisable at the expiration of the lease terms.
OPERATING LEASES

The Institution office and computer equipment, and other assets. Some of these leases are considered for accounting purposes to be operating leases. Although lease terms vary, many leases are subject to appropriations from the General Assembly to continue the obligation. Other leases generally contain provisions that, at the expiration date of the original term of the lease, the Institution has the option of renewing the lease on a year-to-year basis. Leases renewed yearly for a specified time period, i.e. lease expires at 12 months and must be renewed for the next year, may not meet the qualification as an operating lease. The Institution's operating lease expense for fiscal year 2021 was $54,983.

- 17 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

FUTURE COMMITMENTS

Future commitments for capital leases and for non-cancellable operating leases having remaining terms in excess of one year as of June 30, 2021, are as follows:

Year Ending June 30:

Capital Leases

Operating Leases

2022 2023 2024 2025 2026 2027 - 2031 2032 - 2036 2037 - 2039

$

2,617,359 $

2,617,006

2,618,682

2,616,980

2,617,236

13,100,995

13,119,286

4,534,079

54,730 54,729 31,188
-

Total Minimum Lease Payments

$ 43,841,623 $

140,647

Less: Interest

12,810,270

Principal Outstanding

$ 31,031,353

NOTE 11: RETIREMENT PLANS
The significant retirement plans that the Institution participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
A. Teachers Retirement System of Georgia and Employees' Retirement System of Georgia
General Information about the Teachers Retirement System
Plan Description All teachers of the Institution as defined in O.C.G.A. 47-3-60 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at trsga.com/publications.
Benefits Provided TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
- 18 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

Contributions Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6% of their annual pay during fiscal year 2021. The Institution's contractually required contribution rate for the year ended June 30, 2021 was 19.06% of the Institution's annual payroll. The Institution's contributions to TRS totaled $1,810,938 for the year ended June 30, 2021.
General Information about the Employees' Retirement System
Plan Description ERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at ers.ga.gov/financials.
Benefits provided The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS.
Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Contributions Member contributions under the old plan are 4% of annual compensation, up to $4,200, plus 6% of annual compensation in excess of $4,200. Under the old plan, the State pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these State contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The required contribution rate for the year ended June 30, 2021 was 24.66% of annual covered payroll for old and new plan members and 21.57% for GSEPS members. The Institution's contributions to ERS totaled $67,823 for the year ended June 30, 2021. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
- 19 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2021, the Institution reported a liability for its proportionate share of the net pension liability for TRS and ERS. The net pension liability was measured as of June 30, 2020. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2019. An expected total pension liability as of June 30, 2020 was determined using standard roll-forward techniques. The Institution's proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2020. At June 30, 2020, the Institution's TRS proportion was 0.072797%, which was a decrease of 0.001397% from its proportion measured as of June 30, 2019. At June 30, 2020, the Institution's ERS proportion was 0.010014%, which was an increase of 0.002129% from its proportion measured as of June 30, 2019.
For the year ended June 30, 2021, the Institution recognized pension expense of $3,071,218 for TRS and $123,598 for ERS. At June 30, 2021, the Institution reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actual experience
Changes of assumptions
Net difference between projected and actual earnings on pension plan investments
Changes in proportion and differences between contributions and proportionate share of contributions
Contributions subsequent to the measurement date
Total

TRS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

ERS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

$

767,979 $

- $

5,141 $

-

1,816,351

-

-

-

424,725

-

5,962

-

580,848

231,197

63,386

-

1,810,938

-

67,823

-

$ 5,400,841 $ 231,197 $ 142,312 $

-

The Institution's contributions subsequent to the measurement date are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

ERS

2022 2023 2024 2025

$

824,762 $

$ 1,109,721 $

$ 1,057,857 $

$

366,366 $

41,937 20,419
6,919 5,214

- 20 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

Actuarial assumptions: The total pension liability as of June 30, 2020 was determined by an actuarial valuation as of June 30, 2019 using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:

Inflation Salary increases Investment rate of return
Post-retirement benefit increases

2.50% 3.00 8.75%, average, including inflation 7.25%, net of pension plan investment expense, including inflation 1.50% semi-annually

Post-retirement mortality rates were based on the Pub-2010 Teachers Headcount Weighted Below Median Healthy Retiree mortality table (ages set forward one year and adjusted 106%) with the MP-2019 Projection scale applied generationally. The rates of improvement were reduced by 20% for all years prior to the ultimate rate. Post-retirement mortality rates for disability retirements were based on the Pub-2010 Teachers Mortality Table for Disabled Retirees (ages set forward one year and adjusted 106%) with the MP-2019 Projection scale applied generationally. The rates of improvement were reduced by 20% for all years prior to the ultimate rate. The Pub-2010 Teachers Headcount Weighted Below Median Employee mortality table with ages set forward one year and adjusted 106% as used for death prior to retirement. Future improved in mortality rates was assumed using the MP-2019 projection scale generationally. These rates of improvement were reduced by 20% for all years prior to the ultimate rate.

The actuarial assumptions used in the June 30, 2019 valuation were based on the results of an actuarial experience study for the period July 1, 2013 June 30, 2018 with the exception of the longterm assumed rate of return.

Employees' Retirement System

Inflation Salary increases Investment rate of return

2.75%
3.25 7.00%, including inflation
7.30%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward 2 years for both males and females for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB and set back 7 years for males and set forward 3 years for females was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-12% less than the actual number of deaths that occurred during the study period for service retirements and beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2019 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014 with the exception of the assumed investment rate of return.
- 21 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

The long-term expected rate of return on TRS and ERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class
Fixed income Domestic large equities Domestic small equities International developed market equities International emerging market equities Alternatives
Total
* Rates shown are net of inflation

TRS Target allocation
30.00% 51.00%
1.50% 12.40%
5.10% -
100.00%

ERS Target allocation
30.00% 46.20%
1.30% 12.40%
5.10% 5.00%
100.00%

Long-term expected real rate of return*
(0.10)% 8.90%
13.20% 8.90%
10.90% 12.00%

Discount Rate: The discount rate used to measure the total TRS and ERS pension liability was 7.25% and 7.30%, respectively. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and ERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the Institution's proportionate share of the net pension liability to changes in the discount rate: The following presents the Institution's proportionate share of the net pension liability calculated using the discount rate, as well as what the Institution's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentagepoint higher than the current rate:

Teachers Retirement System:
Proportionate share of the net pension liability

1% Decrease (6.25%)

Current Discount Rate
(7.25%)

1% Increase (8.25%)

$

27,963,763 $

17,634,283 $

9,167,071

Employees' Retirement System:
Proportionate share of the net pension liability

1% Decrease (6.30%)

Current Discount Rate
(7.30%)

1% Increase (8.30%)

$

593,801 $

422,086 $

275,547

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and ERS financial reports which are publicly available at www.trsga.com/publications and www.ers.ga.gov/financials, respectively.

- 22 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

B. Defined Contribution Plan
Regents Retirement Plan Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia (Board). O.C.G.A. 47-368(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or all exempt full and partial benefit eligible employees, as designated by the regulations of the Board. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from three approved vendors (VALIC, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy The institutions of the USG make monthly employer contributions to the Regents Retirement Plan on behalf of participants at rates determined by the Board. The Board reviews the contribution amount every three (3) years. For fiscal year 2021, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6.00% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
The Institution and the covered employees made the required contributions of $705,234 (9.24%) and $457,938 (6.00%), respectively.
VALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
NOTE 12: RISK MANAGEMENT
The USG offers its employees and retirees under the age of 65 access to three self insured healthcare plan options and one fully insured plan option. For the USG's Plan Year 2021, the following selfinsured health care options were available: Blue Choice HMO plan, (Blue Cross and Blue Shield of Georgia) Consumer Choice HSA plan, and the (Blue Cross and Blue Shield of Georgia) Comprehensive Care plan.
The Institution's participating employees and eligible retirees pay premiums into the plan fund to access benefits coverage. All units of the USG share the risk of loss for claims associated with these plans. The plan fund is considered to be a self-sustaining risk fund. The USG has contracted with Blue Cross and Blue Shield of Georgia, a wholly owned subsidiary of Anthem, Inc., to serve as the claims administrator for the self-insured healthcare plan options. In addition to the self-insured healthcare plan options offered to the employees and eligible retirees of the USG, a fully insured HMO healthcare plan option also is offered through Kaiser Permanente. The Comprehensive Care plan has a carvedout prescription drug plan administered through CVS Caremark. Pharmacy drug claims are processed in accordance with guidelines established for the Board of Regents' Prescription Drug Benefit Program. Generally, claims are submitted by participating pharmacies directly to CVS Caremark for verification, processing and payment. CVS Caremark maintains an eligibility file based on information furnished by Blue Cross and Blue Shield of Georgia on behalf of the various organizational units of the University System of Georgia. The self-insured dental plan is administered through Delta Dental.

- 23 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

Retirees age 65 and older participate in a secondary healthcare coverage for Medicare-eligible retirees and dependents provided through a retiree health care exchange option. The USG makes contributions to a health reimbursement account, which can be used by the retiree to pay premiums and out-ofpocket healthcare-related expenses.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks.
The Institution is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the O.C.G.A 45-9-1.
The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 13: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Institution expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the Institution, if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021.
NOTE 14: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Board of Regents Retiree Health Benefit Plan
Plan Description and Funding Policy
The Board of Regents Retiree Health Benefit Plan (Plan) is a single-employer, defined-benefit, healthcare plan administered by the University System Office, an organizational unit of the USG. The Plan was authorized pursuant to OCGA 47-21-21 for the purpose of accumulating funds necessary to meet employer costs of retiree post-employment health insurance benefits.

- 24 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

Pursuant to the general powers conferred by the OCGA 20-3-31, the USG has established group health and life insurance programs for regular employees of the USG. It is the policy of the USG to permit employees of the USG eligible for retirement or who become permanently and totally disabled to continue as members of the group health and life insurance programs. The USG offers its employees and retirees under the age of 65 access to three self-insured healthcare plan options and one fully insured plan option. For the USG's Plan Year 2021, the following self-insured health care options were available: Blue Choice HMO plan, (Blue Cross and Blue Shield of Georgia) Consumer Choice HSA plan, and the (Blue Cross and Blue Shield of Georgia) Comprehensive Care plan. The USG offers a selfinsured dental plan administered by Delta Dental.

Retirees age 65 and older participate in a secondary healthcare coverage for Medicare-eligible retirees and dependents provided through a retiree health care exchange option. The USG makes contributions to the retirees' health reimbursement account, which can be used by the retiree to pay premiums and out-of-pocket healthcare related expenses.

The Institution's membership in the Plan consisted of the following at June 30, 2021:

Active Employees

282

Retirees or Beneficiaries Receiving Benefits

167

Retirees Receiving Life Insurance Only

24

Total

473

The contribution requirements of plan members and the employer are established and may be amended by the Board. The Plan is substantially funded on a "pay-as-you-go" basis; however, amounts above the pay-as-you-go basis may be contributed annually, either by specific appropriation or by Board designation.

The Institution pays the employer portion for group insurance for eligible retirees. The employer portion of health insurance for its eligible retirees is based on rates that are established annually by the Board for the upcoming plan year. For the 2021 plan year, the employer rate was approximately 90% of the total health insurance cost for eligible retirees and the retiree rate was approximately 10%. For employees hired on or after January 1, 2013 and retirees after January 1, 2018, the amount the USG contributes is tied to years of service, which ranges from 0% to 100%. With regard to life insurance, the employer covers the total premium cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the retiree.

For fiscal year 2021, the Institution contributed $814,627 to the plan for current premiums or claims.

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

At June 30, 2021, the Institution reported a liability for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2020. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of May 1, 2020. An expected total OPEB liability as of June 30, 2020 was determined using standard roll-forward techniques. The Institution's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2020. At June 30, 2020, the Institution's proportion was 0.688501%, which was a decrease of 0.014727% from its proportion measured as of June 30, 2019.

- 25 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

For the year ended June 30, 2021, the Institution recognized OPEB expense of $2,089.391. At June 30, 2021 the Institution reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience

$ 1,864,833 $ 147,124

Changes of assumptions
Net difference between projected and actual earnings on OPEB plan investments

3,371,258

2,618,739

-

11,430

Changes in proportion and differences between contributions and proportionate share of contributions

108,810

855,985

Contributions subsequent to the measurement date

814,627

-

Total

$ 6,159,528 $ 3,633,278

The Institution's contributions subsequent to the measurement date of $814,627 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30: 2022 2023 2024 2025 2026
Thereafter

$ (22,260)

$

(5,610)

$ 313,644

$ 320,157

$ 335,407

$ 770,285

- 26 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

Actuarial assumptions The total OPEB liability as of June 30, 2020 was determined by an actuarial valuation as of May 1, 2020 using the following actuarial assumptions, applied to all periods included in the measurement:

Cost Method Amortization Method
Asset Method Interest Discounting and Salary Growth
Mortality Rates Initial Healthcare Cost Trend
Pre-Medicare Eligible Medicare Eligible Ultimate Trend Rate Pre-Medicare Eligible Medicare Eligible Year Ultimate Trend is Reached
Experience Study

Entry Age Normal
Closed amortization period for initial unfunded and subsequent actuarial gains/losses.
Fair Value
Interest Rate as of 6/30/2020 2.21% from Bond Buyer GO 20 Bond Municipal Bond Index Interest Rate as of 6/30/2019 3.50% from Bond Buyer GO 20 Bond Municipal Bond Index Long-term Rate of Return 3.75% General Inflation 2.10% Salary Growth 4.00%
Pub-2010 for Teachers (headcount weighted) projected with Scale MP-2019
6.7% 4.5%
4.5% 4.5%
Fiscal Year 2031 for Pre-Medicare Eligible, Fiscal Year 2020 for Medicare Eligible
Economic and demographic assumptions are based on the results of the most recent actuarial experience study over the Plan, which covered a three-year period ending June 30, 2019. All other assumptions are based on the results of the most recent actuarial experience study of the Teachers Retirement System of Georgia, which cover the five year period ending June 30, 2014.

Changes in Assumptions Since Prior Valuation
Expected claims costs were updated to reflect actual claims experience. Trend rate schedule was updated to remove excise tax adjustments. Mortality improvement scale was updated from MP-2018 to MP-2019. The discount rate was update from 3.50% as of June 30, 2019 to 2.21% as of June 30, 2020. The withdrawal rates were updated to better reflect the anticipated future experience as the result of an assumption study. The coverage election assumption was updated to better reflect anticipated future experience as the result of an assumption study. The spousal coverage assumption and the spousal age difference assumption were updated to better reflect anticipated future experience as the result of an assumption study.

Plan Changes HRA cost sharing for employees hired on or after January 1, 2013 and retiring after January 1, 2018 is based on a policy that ties years of service to the amount the USG contributes based on 22-tiers ranging from 100% for employees retiring with 30 years of service to 21% for employees retiring with 10 years of service.

- 27 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2021

EXHIBIT "F"

The long-term expected rate of return on OPEB plan investments was determined using a buildingblock method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of geometric real rates of return for each major asset class included in the target asset allocation as of June 30, 2020 are summarized in the following table:

Asset Class
Fixed Income Equity Allocation

Long-term Expected Real Rate of Return,
Net of Inflation
- % 4.51%

Target Allocation
70% 30%

Discount Rate The Plan's projected fiduciary net position at the end of 2023 is $0, based on the valuation completed for the fiscal year ending June 30, 2020. As such, the Plan's fiduciary net position was not projected to be available to make all projected future benefit payments for current Plan members. The projected "depletion date" when projected benefits are not covered by projected assets is 2023. Therefore, the long-term expected rate of return on Plan investments of 3.75% per annum was not applied to all periods of projected benefit payments to determine the total OPEB liability as of June 30, 2020. Instead, a yield or index rate for a 20 year, tax-exempt general obligation municipal bond with an average rating of AA or higher was used. This rate was determined to be 2.21% from the Bond Buyers GO 20-Bond Municipal Bond Index.

Sensitivity of the net OPEB liability to changes in the discount rate The following presents the Institution's proportionate share of the net OPEB liability, as well as what the Institution's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1% lower (1.21%) or 1% (3.21%) higher than the current discount rate (2.21%):

Proportionate Share of the Net OPEB Liability

1% Decrease 1.21%

Current Rate 2.21%

1% Increase 3.21%

$ 44,768,291 $ 36,722,710 $ 30,283,699

Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates The following presents the Institution's proportionate share of the net OPEB liability, as well as what the Institution's proportionate shares of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% lower or 1% higher than the current healthcare cost trend rates:

Proportionate Share of the Net OPEB Liability

1% Decrease

Current Rate

1% Increase

$

30,448,845 $

36,722,710 $

44,677,948

Pre-Medicare Eligible Medicare Eligible

5.7% decreasing to 3.5% 3.5%

6.7% decreasing to 4.5% 4.5%

7.7% decreasing to 5.5% 5.5%

OPEB plan fiduciary net position: Detailed information about the Plan's fiduciary net position is available in the USG Consolidated Annual Financial Report which is publicly available at www.usg.edu/fiscal_affairs/financial_reporting.
- 28 -

SUPPLEMENTARY INFORMATION - 29 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30, 2021
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories Other Assets
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Unearned Revenue Funds Held for Others
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

4,762,203.92

311,439.24

877,813.04 2,552,160.46
11,455.00 31,458.71 116,600.00

$

8,663,130.37

$

173,920.33

2,897,264.83

1,949,681.07

1,975,051.36

2,385.84

6,998,303.43

301,079.61 46,003.17
540,462.49 138,048.11 216,172.48
32,596.00 383,835.68
6,629.40
1,664,826.94

$

8,663,130.37

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 30 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2021

Teaching State Appropriation State General Funds Federal Coronavirus Relief Funds Other Funds
Total Operating Activity

Original Appropriation

Final Budget

Current Year Revenues

Prior Year Reserve Carry-Over

$

14,134,031.00 $

14,386,876.00 $

14,386,876.00 $

-

3,084,210.00

2,918,659.13

24,322,481.00

30,817,526.00

28,932,675.59

891,629.19

$

38,456,512.00 $

48,288,612.00 $

46,238,210.72 $

891,629.19

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 31 -

SCHEDULE "2"

Funds Available Compared to Budget

Program Transfers

Total

or Adjustments

Funds Available

Variance Negative

Expenditures Compared to Budget

Variance

Actual

Positive

Excess of Funds Available
Over Expenditures

$

- $

14,386,876.00 $

- $

14,386,589.91 $

286.09 $

286.09

-

2,918,659.13

(165,550.87)

2,918,659.13

165,550.87

-

(920,416.53)

28,903,888.25

(1,913,637.75)

27,475,312.19

3,342,213.81

1,428,576.06

$

(920,416.53) $

46,209,423.38 $

(2,079,188.62) $

44,780,561.23 $

3,508,050.77 $

1,428,862.15

- 32 -

GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2021

Teaching State Appropriation State General Funds Federal Coronavirus Relief Funds Other Funds
Total Teaching
Prior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Receivable

Beginning Fund Balance July 1

Fund Balance Carried Over from
Prior Year as Funds Available

Return of Fiscal Year 2020
Surplus

Prior Period Adjustments

$

8,808.77 $

- $

-

-

901,997.85

(891,629.19)

910,806.62

(891,629.19)

(8,808.77) $ -
(10,368.66)
(19,177.43)

4,674.31 -
1,719.02
6,393.33

32,596.00

-

-

-

196,975.46

-

-

-

Budget Unit Totals

$

1,140,378.08 $

(891,629.19) $

(19,177.43) $

6,393.33

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 33 -

SCHEDULE "3"

Other Adjustments

Early Return Fiscal Year 2021
Surplus

Excess of Funds Available
Over Expenditures

Ending Fund Balance June 30

Reserved

Analysis of Ending Fund Balance Surplus

Total

$

- $

-

(19,197.02)

(19,197.02)

- $ -
-

286.09 $ -
1,428,576.06
1,428,862.15

4,960.40 $ -
1,411,098.06
1,416,058.46

- $ 1,409,429.06
1,409,429.06

4,960.40 $ -
1,669.00
6,629.40

4,960.40 -
1,411,098.06
1,416,058.46

-

-

19,197.02

-

-

32,596.00

32,596.00

-

216,172.48

216,172.48

-

32,596.00

-

216,172.48

$

- $

- $

1,428,862.15 $

1,664,826.94 $

Department Sales and Services

$

Indirect Cost Recoveries

Techonology Fees

Restricted/Sponsored Funds

Tuition Carry-Over

Uncollectible Accounts Receivable

Inventories

Surplus

Total Ending Fund Balance - June 30

$

1,658,197.54 $
301,079.61 $ 46,003.17
540,462.49 138,048.11 383,835.68 216,172.48
32,596.00 -
1,658,197.54 $

6,629.40 $
- $ 6,629.40
6,629.40 $

1,664,826.94
301,079.61 46,003.17
540,462.49 138,048.11 383,835.68 216,172.48
32,596.00 6,629.40
1,664,826.94

- 34 -

SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA SOUTHWESTERN STATE UNIVERSTIY ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2021
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported.
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.

SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

GEORGIA SOUTHWESTERN STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2021
COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES
The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were noted.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters noted.
OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)
Reconciliation of Subsidiary Modules
Observation: According to the Board of Regents Business Procedures Manual, subsidiary reconciliations are required to be performed quarterly. The reconciliations could not be provided for the entire year for all subsidiary modules other than payroll and Banner, which were reconciled quarterly. All other modules were either not reconciled, or the reconciliation could not be documented. In addition, payroll reconciliation did not have a preparer, preparer date, reviewer or reviewer date as required by the policy.
Recommendation: The Institution should review procedures in place and implement changes necessary to ensure that subsidiary reconciliations are performed, documented and complete in accordance with Business Procedures Manual Section 1.9. In addition, the Institution should implement a review process to ensure complete documentation of reconciliation efforts and appropriate resolution of reconciling items.