Georgia Firefighters' Pension Fund Financial Statements Fiscal Year Ended June 30, 2022 (With Independent Auditors' Report Thereon) GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) - TABLE OF CONTENTS - SECTION I - FINANCIAL Independent Auditor's Report Basic Financial Statements Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Notes to Financial Statements Required Supplementary Information (Unaudited) Schedule of Employers' and Nonemployers' Net Pension Liability Schedule of Changes in Employers' and Nonemployers' Net Pension Liability Schedule of Employer and Nonemployer Contributions Schedule of Investment Returns Notes to Required Supplementary Information SECTION II - REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Page 1 5 6 7 21 22 23 24 25 28 Greg S. Griffin State Auditor INDEPENDENT AUDITOR'S REPORT The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Board of Trustees of the Georgia Firefighters' Pension Fund and Mr. C. Morgan Wurst, Executive Director Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of the Georgia Firefighters' Pension Fund (Fund), a component unit of the State of Georgia, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the Fund's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the fiduciary net position of the Fund as of June 30, 2022, and the changes in fiduciary net position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Fund and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone (404) 656-2180 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Fund's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Fund's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Required Supplementary Information Management has omitted the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Accounting principles generally accepted in the United States of America require that the required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient appropriate evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 9, 2023 on our consideration of the Fund's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Fund's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Fund's internal control over financial reporting and compliance. A copy of this report has been filed as a permanent record and made available to the press of the State, as provided for by Official Code of Georgia Annotated section 50-6-24. Respectfully submitted, Greg S. Griffin State Auditor June 9, 2023 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Statement of Fiduciary Net Position June 30, 2022 Assets: Cash and cash equivalents Receivables: Interest and dividends Due from brokers for securities sold Total receivables Investments - at fair value: Obligations: Municipal bond U.S. Treasury obligations U.S. Agency obligations: U. S. Government Explicitly Guaranteed U. S. Government Implicitly Guaranteed Corporate bonds/notes/debentures: Domestic Other International Debt Commingled funds - fixed income Asset-backed securities Domestic Mortgage investments Domestic Equities: Commingled funds - equity Stocks: Domestic International Real estate investment trusts Private Equity Total investments Capital assets, net Other assets Total assets Liabilities: Accounts payable and other accruals Due to brokers for securities purchased Compensated absences payable Total liabilities Net position restricted for pensions See accompanying notes to financial statements. $ 2,041,728 673,020 1,388,939 31,899,264 1,213,579 18,506,880 94,246,787 406,502 33,057,145 6,444,559 88,842,484 248,263,650 329,730,544 15,143,171 52,678,051 85,755,851 $ 54,064,190 2,714,748 276,006,139 731,571,267 1,007,577,406 868,829 113,972 1,065,339,145 3,125,832 6,417,010 81,670 9,624,512 $ 1,055,714,633 5 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Statement of Changes in Fiduciary Net Position Year ended June 30, 2022 Additions: Contributions: Nonemployer Members Other fees Net investment income: Net decrease in fair value of investments Interest, dividends, and other Miscellaneous Investment Income Less investment expense Total additions Deductions: Benefit payments Refunds of member contributions Administrative expenses, net Total deductions Net change in net position Net position restricted for pensions: Beginning of year End of year $ 46,258,719 4,154,253 496,529 $ (143,781,183) 16,090,184 (161,309) (5,143,564) (132,995,872) (82,086,371) 61,358,353 1,147,902 1,956,226 64,462,481 (146,548,852) 1,202,263,485 $ 1,055,714,633 See accompanying notes to financial statements. 6 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 (1) Plan Description The Georgia Firefighters' Pension Fund (the Pension Fund) was created in 1955 by an act of the Georgia Legislature (the Act) for the purpose of paying retirement benefits to firefighters of the State of Georgia who qualify under the Act. The Pension Fund administers a cost-sharing, multiple-employer defined benefit pension plan as defined in Governmental Accounting Standards Board (GASB) Statement No. 67, Financial Reporting for Pension Plans an amendment of GASB Statement No. 25. The Board of Trustees of the Pension Fund is comprised of five members and consists of the Governor or his designee, the Commissioner of Insurance or his designee, two active members of the Pension Fund appointed by the Governor and one retired beneficiary of the Pension Fund appointed by the Governor. The Board of Trustees is ultimately responsible for the administration of the Pension Fund. (a) Eligibility and Membership Any person employed as a firefighter or enrolled as a volunteer firefighter within the State of Georgia or any regular employee of the Pension Fund is eligible for membership. As of June 30, 2022, participation in the Pension Fund is as follows: Retired members and beneficiaries currently receiving benefits including members receiving disability benefits Terminated members not yet receiving benefits, vested Inactive members, non-vested Active plan members Total 6,728 410 2,953 13,484 23,575 (b) Participating Employers and Other Contributing Entities At June 30, 2022, the active members of the Pension Fund were employed by 433 employers. The Pension Fund had one nonemployer contributing entity, the State of Georgia. (c) Retirement Benefits The Pension Fund provides retirement as well as disability and death benefits. Benefit provisions and vesting requirements are established by statute and may be amended only by the General Assembly of Georgia. A member is eligible to receive retirement benefits at age 55 provided the member has 25 years of service. A member is eligible to receive a pro rata share of benefits, at the latter of age 55 or at the member's termination as a firefighter or volunteer firefighter, after at least 15 years of service (amount received to be the maximum benefit amount times a ratio of years of service to 25 years). At age 50, a member may elect to receive a percentage of benefits to which the member would have been eligible to receive at age 55. Members may not receive benefits while they are still an employee of a fire department or of the Pension Fund. Members may receive benefits and continue service as a volunteer firefighter as long as they receive no form of compensation for their volunteer department activity. 7 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 The maximum retirement benefit at June 30, 2022 is $977 per month for the life of the member. The Board of Trustees is authorized to provide for ad hoc cost-of-living adjustments (COLAs) effective as of January 1 and July 1 of each year up to 1% of the maximum retirement benefit then in effect. Members retiring after July 1, 1984 with service in excess of 25 years are entitled to an additional 1% of the maximum benefit in effect at the time of retirement for each additional full year of service. Members retiring after July 1, 2002 with service in excess of 25 years are entitled to an additional 2% of the maximum benefit in effect at the time of retirement for each additional full year of service. Members may elect, as an alternate to the benefit described above, to receive either: x the joint and survivor option, which is an actuarially reduced benefit payable during the joint lifetime of the member and the member's spouse, continuing after the death of the member through the lifetime of the spouse, or x the ten years' certain and life option, which is a reduced benefit during the member's lifetime. In the event of the members' death within 10 years of retirement, the same monthly benefits continue to be paid to the member's selected beneficiary for the balance of the 10 year period. (d) Disability Benefits Subject to the approval of the Board of Trustees, any firefighter or volunteer firefighter, who was an active member, and became totally and permanently disabled, applied for disability benefits, and was awarded such benefits prior to July 1, 1993 is entitled to a monthly disability benefit. The disability would need to have resulted from injuries suffered while performing duties of the position to which he was regularly assigned or was rendered, by heart disease or respiratory disease, totally and permanently disabled and as a result of such physical disability, was separated from his work as a firefighter or appointment as a volunteer firefighter. (e) Death Benefits x In the event of the death of an active member of the Pension Fund who has not commenced receiving any benefits, the designated beneficiary of such deceased member is entitled to be paid the amount of $10,000. x In the event of the death of an active member of the Pension Fund who has commenced receiving benefits, but who has not received total benefits in the amount of $10,000; the designated beneficiary of such deceased member is entitled to receive the difference between $10,000 and the amount of benefits received by such deceased member. x In the event of the death of a member with 15 years of service, prior to commencing benefits, the spouse or beneficiary of the member is entitled to the retirement benefit elected to have been received by the member in accordance with the terms above. (f) Termination In the event a member terminates prior to receiving retirement benefits, 95% of the member's contribution will be returned. No interest is paid upon amounts so withdrawn. (g) Contributions The Pension Fund is funded by member and nonemployer contributing entity (Nonemployer) contributions. Contribution provisions are established by statute and may be amended only by the General Assembly of Georgia. 8 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 Member Contributions: Member contribution requirements are set forth in O.C.G.A. 47-7-60 and are not actuarially determined. Each member must contribute $25 per month, to be paid no later than the tenth day of each month. Nonemployer Contributions: In accordance with O.C.G.A 47-7-61, the State of Georgia has imposed an insurance premium tax of 1% on the gross premiums for fire, lightning, or extended coverage, inland marine or allied lines, and windstorm insurance policies covering property within Georgia. Insurance companies remit the insurance premium taxes due directly to the Pension Fund. These insurance premium taxes are considered to be made by the State of Georgia as the nonemployer contributing entity. In accordance with O.C.G.A. 47-20-10, the insurance premiums tax is considered employer contributions for the purpose of determining whether the Pension Fund has met minimum funding requirements. This statute also prohibits any action to grant a benefit increase until such time as the minimum annual contribution requirements meet or exceed legislative requirements. The actuarial valuation as of June 30, 2022, calculated the minimum employer contribution for the fiscal year ended June 30, 2022, as $33,922,653. The insurance premium tax revenue of $46,258,719 for the fiscal year ended June 30, 2022, meets the minimum required fund contribution. (h) Administrative Expenses Administrative expenses are generally paid from current member dues and insurance premium taxes. Investment earnings may be utilized to pay any expenses in excess of contributions. (2) Summary of Significant Accounting Policies and Plan Asset Matters (a) Basis of Accounting The Pension Fund's financial statements are prepared on the accrual basis of accounting, except for nonemployer contributions which are recognized upon receipt. Any accrual of these nonemployer contributions would be immaterial to the Pension Fund's financial statements. Contributions from members are recognized as additions in the period in which the members provide services. Retirement benefit and refund payments are recognized as deductions when due and payable. (b) Reporting Entity The Pension Fund is a component unit of the State of Georgia; however, it is accountable for its own fiscal matters and presentation of its separate financial statements. The Pension Fund has considered potential component units under GASB Statements No. 61, The Financial Reporting Entity's Omnibus an amendment of GASB Statement No. 14 and No. 34, and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, and determined there were no component units of the Pension Fund. (c) Cash and Cash Equivalents Cash and cash equivalents, reported at cost, include cash on hand, cash in banks, cash on deposit with the investment custodian earning a credit to offset fees, and short-term highly liquid financial securities with original maturities of three months or less from the date of acquisition. 9 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 (d) Investments Investments are defined as those financial instruments with terms in excess of three months from the date of purchase and certain other securities held for the production of revenue. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Alternative investments are reported at net asset value, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price. The Pension Fund utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements. The Pension Fund's policy in regard to the allocation of invested assets is established and may be amended by the Pension Fund's Board. Plan assets are managed on a total return basis with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension plan. The Pension Fund's asset allocation policy is shown below in the following table. Asset class Domestic fixed income Domestic equities International equities Private Markets Private Real Estate Other Total Target allocation 19.5% - 49.5% 13.5% - 43.5% 9.5% - 29.5% 0.0% - 10.0% 0.0% - 10.0% 5% - 15% 100% The Pension Fund has no investments in any one organization, other than those issued by the U.S. government, and its instrumentalities, that represent 5% or more of the Pension Fund's net position restricted for pensions. For the year ended June 30, 2022, the annual money-weighted rate of return on pension plan investments, net of all investment management expenses and additional plan investment related expenses, was (10.84)%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. (e) Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of fiduciary net position and changes therein. Actual results could differ from those estimates. 10 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 (f) New Accounting Pronouncements In June 2017, the GASB issued Statement No. 87, Leases effective for fiscal years beginning after December 15, 2019. In May 2020, the GASB issued Statement No. 95 which change the effective date for Statement No. 92 to fiscal years beginning after June 15, 2021. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. The adoption and implementation of GASB Statement No. 87 resulted in the evaluation of the Pension Fund's applicable leases and deemed them immaterial for reporting purposes. (3) Investment Program The Pension Fund maintains sufficient cash to meet its immediate liquidity needs. Cash not immediately needed is invested as directed by the investment policy of the Pension Fund. All investments are held by agent custodial banks in the name of the Pension Fund. State statutes and the Pension Fund's investment policy authorize the Pension Fund to invest in a variety of short-term and long-term securities. (a) Cash and Cash Equivalents The Pension Fund has cash on hand of $300 at June 30, 2022. The carrying amount of the Pension Fund's deposits totaled $524,934 at June 30, 2022, with actual bank balances of $532,714. $250,000 of the Pension Fund's cash balances are insured through the Federal Deposit Insurance Corporation, an independent agency of the U.S. Government with any remaining amount being insured through the Georgia Secured Deposit Program. The carrying amount of the Pension Fund's cash balances maintained within an investment account is negative $60,975, which is also the investment account's balance. This balance includes $3,725 of various foreign currencies that are not collateralized. Short-term highly liquid financial securities are authorized in the investment policy of the Pension Fund in a short-term investment fund. This investment is classified as a cash equivalent on the Pension Fund's Statement of Fiduciary Net Position. At June 30, 2022, the Pension Fund held $53,599,931 in a short-term investment fund. (b) Investments Fixed income investments are maintained in "pooled investments, U.S. Treasury obligations, obligations issued by agencies of the U.S. Government, obligations issued by municipalities, domestic investment-grade corporate bonds, asset-backed securities, and mortgage-related securities. Equity investments are maintained in "pooled investments", domestic equities, both developed and emerging market international equities, and real estate investment trusts. Equity securities are also authorized by the Public Retirement System Investment Authority Law for investment as a complement to the Pension Fund's fixed income portfolio and as a long-term inflation hedge. By statute, no more than 75% of the total invested assets on a historical cost basis may be placed in equities. The equity portfolio is managed by the Pension Fund in conjunction with independent advisors. Buy/sell decisions are 11 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 based on securities meeting rating criteria established by the investment policy of the Pension Fund. Equity trades are approved and executed by the independent advisors. Common stocks eligible for investment must meet the General Investment Policies and Guidelines of the Pension Fund's investment policy. Alternative investments are authorized (in statute) to provide portfolio diversification and to enhance the riskadjusted rate of return for the retirement fund that benefits the members of the Pension Fund. By statute, the allocation to alternative investments shall not, in the aggregate, exceed 10% of the Pension Fund's plan assets at any time. At June 30, 2022, the Pension Fund held private equity investments of approximately $85.8 million. Fair Value Measurements: The Pension Fund categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the inputs used in valuation and gives the highest priority to unadjusted quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the hierarchy is based on whether the significant inputs into the valuations are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest level, Level 1, is given to unadjusted quoted prices in active markets and the lowest level, Level 3, to unobservable inputs. These guidelines recognize a three-tiered fair value hierarchy, as follows: Level 1: Valuations based on unadjusted quoted prices for identical instruments in active markets; Level 2: Valuations based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable. Level 3: Valuations based on inputs that are unobservable and significant to the overall fair value measurement. In instances where inputs used to measure fair value fall into different levels in the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Pension Fund's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each investment. The following table shows the fair value leveling of the Pension Fund's investments. 12 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 Investments by fair value level Cash and Cash Equivalents: Short Term Investment Fund Total Fair value measures using Quoted prices in Significant active markets other Significant for identical observable unobservable assets inputs inputs (Level 1) (Level 2) (Level 3) $ 53,599,931 - 53,599,931 - Debt Securities: Municipals U.S. Treasury obligations U.S. Agency obligations Corporate debt Domestic Other International Debt Commingled funds Asset-backed securities Domestic Mortgage-backed securities Domestic Total debt securities Equities: Commingled funds Stocks Domestic International Real estate investment trusts Total equity securities 1,388,939 31,899,264 19,720,459 - 1,388,939 - - 31,899,264 - - 19,720,459 - 94,246,787 406,502 33,057,145 - 94,246,787 - - 406,502 - - 33,057,145 - 6,444,559 - 6,444,559 - 88,842,484 276,006,139 - 88,842,484 - - 276,006,139 - 248,263,650 248,263,650 - - 329,730,544 329,730,544 - - 15,143,171 15,143,171 - - 52,678,051 52,678,051 - - 645,815,416 645,815,416 - - Total Investments by fair value level 921,821,555 645,815,416 276,006,139 - Investments measured at NAV Private Equity Fund of Funds 85,755,851 Total Investments $ 1,007,577,406 Equity securities classified in Level 1 are valued using prices quoted in active markets for those securities. Debt securities classified in Level 2 are valued using a third-party pricing evaluation services. Commingled funds classified in Level 1 are valued using prices quoted in active markets for those investment types. Commingled funds classified in Level 2 are valued using observable underlying inputs that are market corroborated. 13 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 The valuation method for investments measured at the net asset value (NAV) per share (or its equivalent) is presented on the following table. Investments Measured at the NAV (or its equivalent) Private Equity Fund of Funds Fair Value Unfunded Commi tments $ 85,755,851 55,753,377 Redepti on Frequency (if Currentl y Illiquid Noti ce Period N/A Private Equity Fund of Funds includes investment in private equity funds that invest in a portfolio of other private equity funds. These investments are considered "alternative investments" and, unlike more traditional investments, generally do not have readily obtainable market values and take the form of limited partnerships. These investments are valued by using the most recently calculated NAV provided by the General Partner, as of March 31 of each fiscal year, adjusted by the Pension Fund for cash flows through June 30. The values of the partnership investments provided from the general partner are reviewed by the Pension Fund to determine if adjustments are necessary. The types of partnership strategies currently held include buyout, growth equity, credit-focused, venture capital and global secondary investments. These investments are considered illiquid since the nature of these investments prohibits redemptions through the duration of the partnership, which ranges between 10 to 15 years. Distributions are received through the liquidation of underlying assets of the funds. The Pension Fund currently has no plans to sell any of the investments prior to their liquidation resulting in these assets being carried at the NAV estimated by the general partner and adjusted quarterly for cash flows by the Pension Fund. Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Pension Fund does not have a formal policy for managing interest rate risk. The following table provides information about the Pension Fund's interest rate risk: Fixed income investment type Total Fair Value Less than 3 Months Maturity Period 4 - 12 Months 1 - 5 Years 6 - 10 Years More than 10 Years Short term investment fund Municipal bonds U. S. Treasury obligations U. S. Agency obligations Corporate Domestic Other International Debt Commingled Funds Fixed Income Asset-backed securities Domestic Mortgage investments Domestic Total fixed income investments $ 53,599,931 1,388,939 31,899,264 19,720,459 94,246,787 406,502 33,057,145 6,444,559 88,842,484 $ 329,606,070 53,599,931 216,479 517,820 - 2,951,888 - - 57,286,118 259,452 21,063 4,953,633 - - 5,234,148 470,375 14,355,695 589,007 50,653,259 235,752 33,057,145 1,559,454 56,025 100,976,712 9,389,166 256,085 702,085 7,377,131 18,854,304 18,930,306 170,750 - 16,757,701 - 839,253 4,045,852 592,066 30,177,626 88,194,393 135,931,466 14 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 Concentration of Credit Risk: Concentration of credit risk is the risk of loss attributed to the magnitude of the Pension Fund's investment in a single issuer. At June 30, 2022, the Pension Fund did not have any debt investments in any one organization, other than those issued or guaranteed by the U.S. Government or its agencies, which represented greater than 5% of plan net position. Foreign Currency Risk: Foreign currency risk is the risk that changes in exchange rates will adversely impact the fair value of an investment. The Pension Fund's currency risk exposures, or exchange rate risks, primarily reside within the Pension Fund's international cash and equity investment holdings. The Pension Fund's Board-adopted foreign exchange risk management policy is to minimize risk and protect the investments from negative impact by hedging foreign currency exposures with foreign exchange instruments when market conditions and circumstances are deemed appropriate. The following table provides information about the Pension Fund's foreign currency risk exposure in U.S. Dollars as of June 30, 2022: International investment securities at fair value as of June 30, 2022 Currency Equities Fixed Income Cash AUD Australian Dollar $ 2,278,355 - - GBP British Pound 1,005,107 - - CAD Canadian Dollar 1,247,230 - - DKK Danish Krone 210,654 - - EUR Euro 5,293,271 - 297 JPY Japanese Yen 168,930 - 2,908 MXN Mexican Peso 318,622 - - NOK Norwegian Krone 2,174,196 - 224 SEK Swedish Krona 2,220,681 - 92 CHF Swiss Franc 226,124 - 204 Total holdings subject to foreign currency risk $ 15,143,170 - 3,725 Total 2,278,355 1,005,107 1,247,230 210,654 5,293,568 171,838 318,622 2,174,420 2,220,773 226,328 15,146,895 Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations to the Pension Fund. State law limits investments to investment grade securities. The Pension Fund's investment policy requires purchases of fixed income securities to be rated BBB or higher at the time of purchase by a nationally recognized rating organization. Obligations of the U.S. Government or obligations explicitly guaranteed by the U.S. Government are not considered to have credit risk and do not require disclosure of credit quality. 15 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 The following table presents the quality ratings of investments in fixed income securities at June 30, 2022, has been prepared using Standard & Poor's Corporation rating scales: Investment type Total Fair Value AAA AA Cash and cash equivalents subject to credit risk: Short term investment fund $ 53,599,931 - - Quality Ratings of Fixed Income Investments Held at June 30, 2022 A BBB BB B CCC CC C - - - - - - - Debt securities subject to credit risk: Municipal bond U. S. Agency obligations - implicitly guaranteed Corporate debt Domestic Other international debt Asset-backed securities Domestic Mortgage investments Domestic 1,388,939 - 216,479 1,172,460 - - - - - - 18,506,880 213,607 - - - - - - - - 94,246,787 599,017 1,332,310 30,475,998 57,874,181 307,950 85,596 - 406,502 - 170,750 235,752 - - - - - - - - 6,444,559 2,449,104 1,032,487 1,806,391 275,744 43,765 120,964 530,194 112,100 - 88,842,484 18,004,020 15,756,426 8,494,362 4,528,930 1,254,124 216,081 83,094 133,177 - Total debt securities subject to credit risk 209,836,151 21,265,748 18,508,452 42,184,963 62,678,855 1,605,839 422,641 613,288 245,277 - Debt securities not subject to credit risk: U.S. Treasury obligations U.S. Agency obligations explicitly guaranteed Commingled Fund 1-20 year TIPS Index Total debt securities 31,899,264 1,213,579 33,057,145 $ 276,006,139 D UNRATED - 53,599,931 - - - 18,293,273 - 3,571,735 - - 73,777 33 62,206 40,310,064 135,983 62,175,105 (4) Securities Lending Program State statutes permit the Pension Fund to lend its securities to broker/dealers with a simultaneous agreement to return the collateral for the same securities in the future. The Pension Fund is presently involved in a securities lending program with major brokerage firms. The Pension Fund lends equity and fixed income securities for varying terms and receives a fee based on the loaned securities' value. During a loan the Pension Fund continues to receive dividends and interest as the owner of the loaned securities. The brokerage firms pledge collateral securities consisting of cash (U.S.), securities issued or guaranteed by the United States government or its agencies or instrumentalities, and such other collateral as the parties may agree to in writing from time to time. The collateral value must be equal to at least 102% to 105% of the loaned securities' value, depending on the type of collateral security. Securities loaned totaled $102,464,722 at June 30, 2022. The collateral value was equal to 103.35% of the loaned securities' value at June 30, 2022. The Pension Fund's lending collateral was held in the Pension Fund's name by the custodian. Loaned securities are included in the accompanying statement of fiduciary net position since the Pension Fund maintains ownership. The related collateral securities are not recorded as assets on the Pension Fund's statement of fiduciary net position and a corresponding liability is not recorded, since the Pension Fund is deemed not to have the ability to pledge or trade the collateral securities. The Pension Fund is deemed not to have the ability to pledge or sell the collateral securities, since the Pension Fund's lending contracts do not address whether the lender can pledge or sell the collateral securities without a borrower default, the Pension Fund has not previously demonstrated that ability, and there are no indications of the Pension Fund's ability to pledge or sell the collateral securities. 16 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 (5) Net Pension Liability of Employers and Nonemployers The components of the net pension liability of the participating employers and nonemployers at June 30, 2022, were as follows: Total pension liability Plan fiduciary net position Employers' and nonemployers' net pension liability Plan fiduciary net position as a percentage of the total pension liability $ 1,357,734,521 1,055,714,633 $ 302,019,888 77.76% Actuarial assumptions: The total pension liability was determined based on an actuarial valuation as of June 30, 2022, using the following actuarial assumptions, applied to all periods included in the measurement date of June 30, 2022: Inflation Salary increases Investment rate of return 2.50% N/A 5.75%, net of pension plan investment expense, including inflation Mortality rates, projected generationally with the MP-2021 Scale, are as follows: Participant Type Actives Service Retirements Disability Retirements Beneficiaries Base Mortality Table PubS.H-2010 Employee, Below Median PubS.H-2010 Healthy Retiree, Below Median PubS.H-2010 Disabled Retiree PubS.H-2010 Contingent Survivor, Below Median Eighty percent of active members are assumed to be married with the male three years older than his spouse. The actuarial assumptions used in the June 30, 2022 valuation were based on the results of an actuarial experience study for the six-year period ending June 30, 2021 dated September 7, 2022. The actuarial assumptions used in the June 30, 2022 valuation was based on the current provisions of the Fund and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the Fund. The long-term assumed investment rate of return of 5.75% and the assumed annual rate of inflation of 2.50% were recommended by the actuary and adopted by the Board. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate arithmetic expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These assumptions are converted into nominal assumptions by adding inflation, and then combined by weighting them by the target asset allocation percentages. 17 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Target Allocation Long-term expected real rate of return* Domestic Fixed Income Large cap equities Small/mid cap equities International unhedged equities Emerging international equities Private equity Real estate investment trust Real assets (liquid) Total *Rates shown are net of inflation 34.50 % 1.10 18.00 4.93 10.50 6.12 13.00 5.46 6.50 9.30 7.50 9.75 5.00 5.86 5.00 5.61 100.00 % Discount rate: The discount rate used to measure the total pension liability was 5.75%. 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 nonemployer contributing entity contributions will remain at the level contributed the previous fiscal year. Based on those assumptions, the 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. Projected cash flows: The projection of cash flows used to determine the discount rate assumed that plan member contributions and nonemployer contributing entity contributions will be made at the current contribution rates. These rates are shown in the following table: Calendar Year 2023 and thereafter Monthly Employee Dues $25 Estimated nonemployer contributing entity annual contribution $46.3 million 18 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Financial Statements June 30, 2022 Periods of projected benefit payments: Projected future benefit payments for all current plan members were projected through 2123. Sensitivity analysis: The following table presents the net pension liability of the employers and nonemployers, calculated using the discount rate of 5.75%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (4.75%) or 1-percentage-point higher (6.75%) than the current rate: 1% Current 1% Decrease discount rate Increase (4.75%) (5.75%) (6.75%) Employers' and nonemployers' net pension liability $ 490,281,304 302,019,888 147,889,722 Actuarial valuation date: The total pension liability is based on the actuarial assumptions and methods used in the June 30, 2022 actuarial valuation of the plan. (6) Subsequent Event During the fiscal year under review, the Board of Trustees approved a 1.0% cost-of-living adjustment to the benefit terms effective July 1, 2022. Effective July 1, 2022, the Fund's maximum allowable investments in alternative investments was increased from 10% of total plan assets to 15% of total plan assets. 19 Total pension liability Plan fiduciary net position Employers' and nonemployers' net pension liability Plan fiduciary net position as a percentage of the total pension liability Covered payroll Employers' and nonemployers' net pension liability as a percentage of covered payroll GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Required Supplementary Information Schedule of Employers' and Nonemployers' Net Pension Liability For the year ended June 30 (Unaudited) 2022 $ 1,357,734,521 1,055,714,633 $ 302,019,888 77.76% N/A N/A 2021 1,242,368,882 1,202,263,485 40,105,397 96.77% N/A N/A 2020 1,144,364,448 924,905,112 219,459,336 80.82% N/A N/A 2019 1,103,481,927 934,350,220 169,131,707 84.67% N/A N/A 2018 1,065,924,289 894,870,607 171,053,682 83.95% N/A N/A 2017 1,007,204,835 843,413,792 163,791,043 83.74% N/A N/A 2016 970,155,843 766,677,306 203,478,537 79.03% N/A N/A 2015 923,834,927 767,332,949 156,501,978 83.06% N/A N/A 2014 848,313,817 761,114,847 87,198,970 89.72% N/A N/A Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary information. 21 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Required Supplementary Information Schedule of Changes in Employers' and Nonemployers' Net Pension Liability For the year ended June 30 (Unaudited) Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of member contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position: Contributions - nonemployer Contributions - member Net investment income Miscellaneous Benefit payments Administrative expense Refunds of member contributions Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) Net pension liability (asset) - ending (a) - (b) 2022 $ 22,816,747 69,639,156 31,675,866 (6,085,508) 59,825,633 (61,358,353) (1,147,902) 115,365,639 1,242,368,882 1,357,734,521 2021 20,963,485 66,927,299 29,203,495 2,108,798 36,620,279 (56,855,974) (962,948) 98,004,434 1,144,364,448 1,242,368,882 46,258,719 4,649,725 (132,995,872) 1,057 (61,358,353) (1,956,226) (1,147,902) (146,548,852) 43,267,802 4,534,916 288,941,209 1,690 (56,855,974) (1,568,322) (962,948) 277,358,373 1,202,263,485 1,055,714,633 $ 302,019,888 934,350,220 1,202,263,485 40,105,397 2020 20,559,903 64,564,962 11,106,585 (550,480) - (53,786,095) (1,012,354) 40,882,521 1,103,481,927 1,144,364,448 40,575,020 4,507,929 2,488,601 209 (53,786,095) (2,218,418) (1,012,354) (9,445,108) 934,350,220 924,905,112 219,459,336 2019 20,380,511 62,399,872 10,794,592 (4,164,503) (50,704,288) (1,148,546) 37,557,638 1,065,924,289 1,103,481,927 37,901,849 4,453,092 50,486,962 - (50,704,288) (1,509,457) (1,148,546) 39,479,612 894,870,607 934,350,220 169,131,707 2018 19,713,340 58,986,013 20,552,907 7,676,425 - (47,255,725) (953,506) 58,719,454 1,007,204,835 1,065,924,289 35,715,254 4,359,344 61,075,718 - (47,255,725) (1,484,270) (953,506) 51,456,815 843,413,792 894,870,607 171,053,682 2017 19,556,923 56,846,696 9,980,125 (3,912,946) (44,301,102) (1,120,704) 37,048,992 970,155,843 1,007,204,835 34,152,048 4,288,737 85,058,108 40 (44,301,102) (1,340,641) (1,120,704) 76,736,486 766,677,306 843,413,792 163,791,043 2016 19,397,345 54,163,727 14,200,990 771,150 - (41,561,617) (650,679) 46,320,916 923,834,927 970,155,843 32,683,880 4,246,631 5,972,056 16,576 (41,561,617) (1,362,490) (650,679) (655,643) 767,332,949 766,677,306 203,478,537 2015 18,376,925 53,833,446 (11,447,786) 54,972,451 (39,379,163) (834,763) 75,521,110 848,313,817 923,834,927 31,489,129 4,192,647 12,079,550 - (39,379,163) (1,329,298) (834,763) 6,218,102 761,114,847 767,332,949 156,501,978 2014 17,889,112 51,849,649 (37,530,118) (693,549) 31,515,094 816,798,723 848,313,817 30,034,219 3,835,566 111,503,343 544,132 (37,530,118) (1,209,094) (693,549) 106,484,499 654,630,348 761,114,847 87,198,970 Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary information. 22 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Required Supplementary Information Schedule of Employer and Nonemployer Contributions For the year ended June 30 (Unaudited) Actuarially determined employer and nonemployer contribution Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) 2022 $ 33,922,653 46,258,719 $ (12,336,066) Covered payroll N/A Contributions as a percentage of covered payroll N/A See accompanying notes to required supplementary information. 2021 2020 31,677,364 43,267,802 (11,590,438) 29,915,586 40,575,020 (10,659,434) N/A N/A N/A N/A 2019 29,732,350 37,901,849 (8,169,499) N/A N/A 2018 28,190,699 35,715,254 (7,524,555) N/A N/A 2017 28,987,131 34,152,048 (5,164,917) N/A N/A 2016 28,030,287 32,683,880 (4,653,593) N/A N/A 2015 2014 26,215,027 31,489,129 (5,274,102) 28,955,864 30,034,219 (1,078,355) N/A N/A N/A N/A 2013 29,994,798 28,441,739 1,553,059 N/A N/A 23 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Required Supplementary Information Schedule of Investment Returns For the year ended June 30 (Unaudited) Annual money-weighted rate of return, net of investment expense 2022 2021 2020 2019 2018 2017 2016 2015 2014 (10.84)% 32.04% (0.20)% 5.11% 7.76% 11.10% 0.96% 1.23% 17.60% Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary information. 24 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Required Supplementary Information June 30, 2022 (Unaudited) (1) Schedule of Employers' and Nonemployers' Net Pension Liability The net pension liability is measured as the total pension liability less the amount of the fiduciary net position of the Pension Fund. (2) Schedule of Changes in Employers' and Nonemployers' Net Pension Liability Net pension liability which is measured as the total pension liability less the amount of the fiduciary net position is presented in this schedule. This trend information will be accumulated to display a ten year presentation. (3) Schedule of Employer and Nonemployer Contributions The required employer and nonemployer contributions and percentage of those contributions actually made are presented in the schedule. (4) Schedule of Investment Returns The schedule presents historical trend information about the annual money-weighted rate of return on plan investments, net of plan investment expense. This trend information will be accumulated to display a ten year presentation. (5) Actuarial Methods and Assumptions Changes of benefit terms: x In 2018, a one-time 1% Cost-of-Living Adjustment (COLA) was granted to retired members and beneficiaries and to the benefit rate for future retirees effective as of January 1, 2018 and an additional 1% COLA was granted July 1, 2018. x In 2019, a one-time 1% Cost-of-Living Adjustment (COLA) was granted to retired members and beneficiaries and to the benefit rate for future retirees effective as of January 1, 2019. x In 2020, a one-time 1% Cost-of-Living Adjustment (COLA) was granted to retired members and beneficiaries and to the benefit rate for future retirees effective as of January 1, 2020. x In 2021, one-time 1% Cost-of-Living Adjustment (COLA) was granted to retired members and beneficiaries and to the benefit rate for future retirees effective January 1, 2021 and an additional 1.5% COLA was granted effective July 1, 2021. x In 2022, one-time 1.5% Cost-of-Living Adjustment (COLA) was granted to retired members and beneficiaries and to the benefit rate for future retirees effective January 1, 2022 and an additional 1.0% COLA was granted effective July 1, 2022. Changes of assumptions: On July 1, 2022, the following changes were made: x The assumed rate of inflation was lowered from 2.75% to 2.50%. x Rate of withdrawal and retirement were adjusted to reflect actual experience more closely. 25 GEORGIA FIREFIGHTERS' PENSION FUND (A Component Unit of the State of Georgia) Notes to Required Supplementary Information June 30, 2022 (Unaudited) x Rates of mortality were adjusted during the most recent experience study to use the Pub-2010 Public Safety mortality tables with generational projection of future mortality improvements using scale MP-2021. Changes of assumptions: On July 1, 2021, the following changes were made: x The assumed investment rate of return was lowered from 6.0% to 5.75%. Changes of assumptions and methods: In 2015 the following changes were made: x The assumed investment rate of return was lowered from 6.5% to 6.0%. x The assumed rate of inflation was lowered from 3.0% to 2.75% x Rates of withdrawal and retirement were adjusted to more closely reflect actual experience. x Rates of mortality were adjusted during the most recent experience study. Pre-retirement mortality rates were changed to the RP 2000 employee mortality table projected to 2025 with projection scale BB set forward 1 year for males and 4 years for females. Post-retirement mortality rates were changed to the RP 2000 blue collar mortality table projected to 2025 with projection scale BB set forward 5 years for males and 3 years for females, however there are no longer any disability benefits included in the plan. Post-disability mortality rates were changed to the RP 2000 disabled mortality table projected to 2025 with projection scale BB. In 2022, a funding policy was adopted to reflect changes of methods and assumptions which were made effective July 1, 2022. In 2013, a funding policy was adopted that changes the amortization period of the unfunded actuarial accrued liability from 15 to 30 years. Methods and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the Schedule of Employer and Nonemployer Contributions are calculated as of the June 30th prior to the fiscal year end in which contributions are reported. The following actuarial methods and assumptions were used to determine actuarial contribution rates reported in that schedule: Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return June 30, 2021 Entry age normal Level dollar, closed 23.7 years 5-year smoothed market with 15% corridor 2.75% N/A 5.75%, net of pension plan investment expense, and including inflation 26 Greg S. Griffin State Auditor INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the Board of Trustees of the Georgia Firefighters' Pension Fund and Mr. C. Morgan Wurst, Executive Director We have audited the financial statements of the Georgia Firefighters' Pension Fund (Fund), a component unit of the State of Georgia, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the Fund's basic financial statements, and have issued our report thereon dated June 9, 2023. We conducted our audit in accordance with the auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Fund's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the basic financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control. Accordingly, we do not express an opinion on the effectiveness of the Fund's internal control. 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 a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Fund'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. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. 270 Washington Street, SW, Suite 4-101 Atlanta, Georgia 30334 | Phone (404) 656-2180 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Fund's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Fund's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Fund's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Respectfully submitted, Greg S. Griffin State Auditor June 9, 2023 29