State of Georgia
Table of Contents For the Fiscal Year Ended June 30, 2020
INTRODUCTORY SECTION
Letter of Transmittal................................................................................................................................................................ i Organizational Chart............................................................................................................................................................... v Principal State Officials........................................................................................................................................................... vii Certificate of Achievement...................................................................................................................................................... ix Acknowledgements................................................................................................................................................................. xi
FINANCIAL SECTION
Independent Auditor's Report.................................................................................................................................................. 1 Management's Discussion and Analysis................................................................................................................................. 7
Basic Financial Statements Government-wide Financial Statements Statement of Net Position................................................................................................................................................. 30 Statement of Activities..................................................................................................................................................... 32 Fund Financial Statements Governmental Funds Balance Sheet............................................................................................................................................................... 34 Reconciliation of Fund Balances to the Statement of Net Position.............................................................................. 35 Statement of Revenues, Expenditures, and Changes in Fund Balances....................................................................... 36 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds to the Statement of Activities......................................................................... 37 Proprietary Funds Statement of Net Position............................................................................................................................................. 38 Statement of Revenues, Expenses, and Changes in Fund Net Position........................................................................ 41 Statement of Cash Flows.............................................................................................................................................. 42 Fiduciary Funds Statement of Fiduciary Net Position............................................................................................................................. 44 Statement of Changes in Fiduciary Net Position.......................................................................................................... 45 Component Units Statement of Net Position............................................................................................................................................. 46 Statement of Activities................................................................................................................................................. 50 Notes to the Financial Statements Index.............................................................................................................................. 53 Notes to the Financial Statements........................................................................................................................................ 54
Required Supplementary Information Budgetary Comparison Schedule....................................................................................................................................... 226 Budget to GAAP Reconciliation........................................................................................................................................ 228 Notes to Required Supplementary Information - Budgetary Comparison......................................................................... 230 Public Entity Risk Pool....................................................................................................................................................... 232
Required Supplementary Information - Pensions.............................................................................................................. Schedules of Employers' and Nonemployers' Contributions - Defined Benefit Pension Plans........................................ 236 Schedules of Employers' and Nonemployers' Net Pension Liability - Defined Benefit Pension Plans............................ 238 Schedules of Changes in Employers' and Nonemployers' Net Pension Liability - Defined Benefit Pension Plans......... 242 Schedule of Investment Returns - Defined Benefit Pension Plans..................................................................................... 248 Notes to Required Supplementary Information - Defined Benefit Pension Plans - Methods and Assumptions................ 249 Schedules of State's Contributions - As Employer - Defined Benefit Pension Plans........................................................ 254 Schedules of State's Contributions - As Nonemployer Contributing Entity - Defined Benefit Pension Plans.................. 256 Schedules of State's Proportionate Share of the Net Pension Liability - As Employer..................................................... 258 Schedules of State's Proportionate Share of the Net Pension Liability - As Nonemployer Contributing Entity Defined Benefit Pension Plans........................................................................................................................................... 262 Notes to Required Supplementary Information - Defined Benefit Pension Plans - Methods and Assumptions................ 264

State of Georgia
Table of Contents
For the Fiscal Year Ended June 30, 2020
Required Supplementary Information - Other Postemployment Benefits Schedule of Employers' Contributions - Multi-Employer and Single-Employer OPEB Plans......................................... 270 Schedule of Employers' Net OPEB Liability - Multi-Employer and Single-Employer OPEB Plans................................ 272 Schedule of Changes in Employers' Net OPEB Liability - Multi-Employer and Single-Employer OPEB Plans............. 274 Schedule of Investment Returns - Multi-Employer and Single-Employer OPEB Plans.................................................... 276 Notes to Required Supplementary Information - Methods and Assumptions - Multi-Employer and Single-Employer OPEB Plans........................................................................................................................................................................ 277 Schedules of State's Contributions - As Employer - Multi-Employer OPEB Plans........................................................... 280 Schedules of State's Proportionate Share of the Net OPEB Liability - As Employer........................................................ 281 Schedule of Net OPEB Liability - As Employer - Single-Employer OPEB Plans............................................................ 281 Schedule of Changes in Net OPEB Liability - As Employer - Single-Employer OPEB Plans.......................................... 284 Notes to Required Supplementary Information - Methods and Assumption - Multi-Employer and Single-Employer OPEB Plans........................................................................................................................................................................ 285
Supplementary Information - Combining and Individual Fund Statements Nonmajor Governmental Funds Description of Nonmajor Governmental Funds............................................................................................................... 293 Combining Balance Sheet................................................................................................................................................ 294 Combining Statement of Revenues, Expenditures and Changes in Fund Balances......................................................... 295 Nonmajor Enterprise Fund Description of Nonmajor Enterprise Funds..................................................................................................................... 299 Combining Statement of Net Position.............................................................................................................................. 300 Combining Statement of Revenues, Expenses and Changes in Fund Net Position......................................................... 301 Combining Statement of Cash Flows............................................................................................................................... 302 Internal Service Funds Description of Internal Service Funds.............................................................................................................................. 305 Combining Statement of Net Position.............................................................................................................................. 306 Combining Statement of Revenues, Expenses and Changes in Fund Net Position......................................................... 308 Combining Statement of Cash Flows............................................................................................................................... 310 Risk Management Combining Statement of Net Position...................................................................................................................... 314 Combining Statement of Revenues, Expenses and Changes in Fund Net Position.................................................. 316 Combining Statement of Cash Flows........................................................................................................................ 318 Fiduciary Funds Description of Fiduciary Funds........................................................................................................................................ 323
Combining Statement of Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds.......................... 328
Combining Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds....... 330 Combining Statement of Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds - Defined
Benefit Pension Plans................................................................................................................................................... 332
Combining Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds Defined Benefit Pension Plans..................................................................................................................................... 334
Combining Statement of Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds - Defined Benefit Pension Plans - Other Defined Benefit Pension Plans..................................................................................... 336
Combining Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds Defined Benefit Pension Plans - Other Defined Benefit Pension Plans....................................................................... 338
Combining Statement of Fiduciary Net Position - Investment Trust Funds.................................................................... 340 Combining Statement of Changes in Fiduciary Net Position - Investment Trust Funds................................................. 341 Combining Statement of Fiduciary Net Position - Private Purpose Trust Funds............................................................. 342 Combining Statement of Changes in Fiduciary Net Position - Private Purpose Trust Funds.......................................... 343 Combining Statement of Fiduciary Net Position - Custodial Funds................................................................................ 344 Combining Statement of Changes in Fiduciary Net Position - Custodial Funds............................................................. 346

State of Georgia
Table of Contents For the Fiscal Year Ended June 30, 2020
Nonmajor Component Units Description of Nonmajor Component Units.................................................................................................................... 351 Combining Statement of Net Position.............................................................................................................................. 354 Combining Statement of Activities.................................................................................................................................. 358

STATISTICAL SECTION

Index to Statistical Section...................................................................................................................................................... 363

Schedule 1

Net Position by Component................................................................................................................... 364

Schedule 2

Changes in Net Position......................................................................................................................... 366

Schedule 3

Fund Balances of Governmental Funds................................................................................................. 370

Schedule 4

Changes in Fund Balances of Governmental Funds.............................................................................. 372

Schedule 5

Revenue Base - Personal Income by Industry....................................................................................... 376

Schedule 6

Individual Income Tax Rates by Filing Status and Income Level......................................................... 378

Schedule 7

Individual Income Tax Filers and Liability by Income Level............................................................... 379

Schedule 8

Ratios of Outstanding Debt by Type..................................................................................................... 380

Schedule 9

Ratios of General Bonded Debt Outstanding........................................................................................ 382

Schedule 10

Computation of Legal Debt Margin....................................................................................................... 384

Schedule 11

Population/Demographics...................................................................................................................... 386

Schedule 12

Principal Private Sector Employers....................................................................................................... 387

Schedule 13

State Government Employment by Function......................................................................................... 388

Schedule 14

Operating Indicators and Capital Assets by Function........................................................................... 390

March 19, 2021 The Honorable Brian P. Kemp, Governor of Georgia The Honorable Members of the General Assembly Citizens of the State of Georgia

Brian P. Kemp Governor
Kris W. Martins State Accounting Officer

It is my privilege to present the Comprehensive Annual Financial Report on the operations of the State of Georgia (State) for the fiscal year ended June 30, 2020, in accordance with the Official Code of Georgia Annotated (OCGA), 50-5B-3(a)(7). The objective of this report is to provide a clear picture of our government as a single comprehensive reporting entity.
This report consists of management's representations concerning the State's finances and management assumes full responsibility for the completeness and reliability of the information presented. This report reflects my commitment to you, the citizens of the State, and to the financial community to maintain our financial statements in accordance with Generally Accepted Accounting Principles (GAAP) applicable to governments as prescribed by the Governmental Accounting Standards Board (GASB). Information presented in this report is believed to be accurate in all material respects, and all disclosures have been included that are necessary to enable the reader to obtain a thorough understanding of the State's financial activities.
Internal Controls

The State's management is responsible for the establishment and maintenance of internal accounting controls which are designed to provide reasonable, but not absolute, assurance that assets are safeguarded, financial transactions are properly recorded and adequately documented, and to ensure the reliability of financial records for preparing financial statements. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived from such control and that the evaluation of those costs and benefits requires estimates and judgments by the State's management.
Independent Audit
The financial statements of significant organizations comprising the State reporting entity have been separately audited and reported on by either the State Auditor or independent certified public accountants. The State Auditor and other independent auditors have performed an examination of the accompanying financial statements for the State and have issued a disclaimer of opinion on Business-Type Activities and the Unemployment Compensation Fund and an unmodified opinions on the remainder of the State's basic financial statements included in this report.
Federal regulations also require the State to undergo an annual Single Audit in conformance with the Single Audit Act Amendments of 1996 and the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (contained in Title 2 U.S. Code of Federal Regulations Part 200). Information related to the Single Audit, including the schedule of expenditures of federal awards, audit findings and recommendations, summary of prior audit findings, and the Independent Auditor's reports, is issued in a separate report and will be available at a later date.

Management's Discussion and Analysis (MD&A)
GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of MD&A. This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The State's MD&A can be found immediately following the independent auditor's report.
PROFILE OF THE STATE OF GEORGIA
The State, founded on February 12, 1733, was the last of the original 13 colonies and became the fourth state by ratifying the U.S. Constitution on January 2, 1788. The State is an economic hub of the southeast. Atlanta, the state capital, is the major economic and population center of the State with major regional economic and population centers in Augusta, Savannah, and Macon. The State's economic base is diverse with major port facilities on the coast, agricultural resources throughout the State, manufacturing and service industries, and is a major transportation center with one of the busiest airports in the nation. The State is the eighth largest state with an estimated population of 10.6 million people.
Reporting Entity
The Constitution of the State of Georgia (Constitution) provides the basic framework for the State's government, which is divided into three separate branches: legislative, executive, and judicial, as shown on the organizational chart on page vi. The duties of each branch are outlined in the Constitution and in the OCGA.
For financial reporting purposes, the State's reporting entity consists of (1) the primary government, (2) component unit organizations for which the primary government is financially accountable, and (3) other component unit organizations for which the nature and significance of their relationship with the primary government is such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. Further information about the State's reporting entity can be found in Note 1 - Summary of Significant Accounting PoliciesSection B in the Notes to the Financial Statements.
The State and its component units provide a full range of services to its citizens, including education, health and welfare, transportation, public safety, economic development and assistance, culture and recreation, conservation, and general government services. The financial statements present information on the financial position and operations of state government associated with these services as a single comprehensive reporting entity. Accordingly, the various agencies, departments, boards, commissions, authorities, foundations, funds, and accounts of the State that have been identified as part of the primary government or a component unit have been included in this report.
Budgetary Control
The Constitution requires that budgeted expenditures not exceed the estimated revenues and other funding sources, including beginning fund balances. The State's legal level of budgetary control is funding source within program. Annually, the Governor submits a balanced budget by program to the Legislature. In addition to the internal controls previously discussed, the State maintains budgetary controls to ensure compliance with the legal provisions of the State's Appropriation Act, which reflects the Georgia General Assembly's approval of the annual budget. Budgetary control is maintained through a formal appropriation and allotment process.
The State's annual budget is prepared on a statutory basis which is principally the modified accrual basis utilizing encumbrance accounting. The State monitors spending activity to ensure that expenditures do not exceed appropriated amounts by agency at the legal level of control as provided for by the Constitution. Information regarding the State's budgetary process can be found in the Notes to Required Supplementary Information within this report.
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The statutory basis of accounting required by state law differs materially from the basis used to report revenues and expenditures in accordance with GAAP. Detailed information on the statutory basis of accounting and the results of operations on that basis for fiscal year 2020 can be found in the separately issued Budgetary Compliance Report (BCR) dated December 11, 2020.
Budget Stabilization
The State maintains the Revenue Shortfall Reserve (RSR) which provides for the sound management of excess revenue collections in any given fiscal year. By statute, all surplus state funds existing at the end of each fiscal year shall be reserved and added to the RSR. Funds in the RSR carry forward from fiscal year to fiscal year without reverting to the revenue collections fund within the General Fund at the end of a fiscal year. Additional information about the State's RSR balances can be found in MD&A.
Long-term Financial Planning - Debt Management
Each year, the Georgia State Financing and Investment Commission (Commission) issues its debt management plan (Plan) which provides a five-year projection of the State's general obligation and guaranteed revenue bond issuances and the debt service requirements for all outstanding debt and projected new debt issuances. The Plan covers the current fiscal year and the four succeeding fiscal years. The resulting projected annual debt service requirements are compared to the actual treasury receipts of the State for the immediately preceding fiscal year and projected future treasury receipts of the State to determine the ratio of debt service requirements to the prior year's State treasury receipts. This ratio, which is established by the Constitution at a maximum of 10%, but the Plan is limited to a maximum of 7% by Commission policy, along with several other ratios discussed in the Plan, serves as a guide for the Governor and the General Assembly in their consideration of the authorization of new State debt during the budget preparation, review, and adoption process. Projected issuances of new debt may be increased or decreased depending on the capital needs of the State and projections of estimated treasury receipts in future years.
Fiscal Year Budget Overview
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus disease (COVID-19) pandemic. COVID-19 has had widespread, rapidly evolving and unpredicted impacts to the economics at a local, national and global level. The State had the following responses to addressing COVID-19:
February 28, 2020: Governor Kemp established a Coronavirus Task Force to assess Georgia's preparations and procedures for preventing, identifying, and addressing cases of COVID-19. Since February, the Task Force coordinated efforts between multiple State agencies along with federal and local partners to quickly identify and mitigate spread within State and private institutions, including nursing homes, established alternate or surge medical facility capacity, and rapidly expanded community testing.
March 14, 2020: Governor Brian Kemp issued Executive Order No. 03.14.20.01, declaring that a "Public Health State of Emergency" existed in the State due to the spread of COVID19. On March 16, 2020, the State's General Assembly concurred with Governor Kemp's Executive Order by joint resolution of both the State House and State Senate.
Since his initial Executive Order establishing the Public Health State of Emergency, Governor Kemp signed additional Executive Orders relating to COVID19 which have, among other effects: (i) limited large gatherings statewide, ordered "shelter in place" for specific populations, and closed bars and nightclubs in the State; (ii) closed public elementary, secondary, and postsecondary schools throughout the State for the remainder of the 20192020 school year; (iii) authorized the State Board of Education to waive certain state rules, regulations, policies, procedures, and provisions to assist in the State's response to COVID19; (iv) reduced regulations to facilitate the State's response to limit and reduce the spread of COVID19.
In response to the financial pressures brought on by the pandemic, the Federal Government and other providers have provided additional resources to the State.
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During fiscal year 2020 State General Fund receipts deposited with the Office of the State Treasurer were $25.5 billion, which was 1.0% less than the final amended revenue estimate of $25.7 billion and 0.4% less than prior year 2019. The impact of the COVID-19 pandemic to State General Fund receipts was minimized by withholding on unemployment compensation payments, limited mandatory Statewide lockdowns and consumer spending in areas such as home improvement. The State also employed various fiscal management techniques to adjust expenditures, such as cancelling of purchase orders and the use of Covid Relief Funds funds in lieu of using State funds, primarily for public safety. As a result, the balance of the RSR as of June 30, 2020 was only a decrease of $103.5 million (3.4%) from the prior year.
By statute, up to 1% of fiscal year 2020 net revenue collections ($254.8 million) may be appropriated from the RSR in fiscal year 2021 for K-12 needs. As of the date of this report, the $3.0 billion RSR balance has not been adjusted for this potential appropriation. In addition, the Governor may release, for appropriation in a subsequent year, funds in excess of 4% of current year (fiscal year 2020) revenue collections.
ECONOMIC FACTORS AND OUTLOOK
The State continues to experience the impacts the COVID-19 pandemic. Some of these indicators include higher unemployment than in previous years, lower State General Fund receipts and a 10% across the board reduction in fiscal year 2021 budget appropriations. The extent of the impact of the outbreak on the State's operational and financial performance will depend on certain developments, including the duration and spread of the outbreak and future federal assistance. The full extent of the economic uncertainty caused by COVID-19 on the State's consolidated financial statements in future periods is not yet determinable. Additional information on the economic outlook for the State can be located in the State's MD&A which can be found immediately following the independent auditor's report.
AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association (GFOA) awarded the Certificate of Achievement for Excellence in Financial Reporting to the State of Georgia for its comprehensive annual financial report for the fiscal year ended June 30, 2019. This was the eighth consecutive year that the State has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. We are committed to this effort, and we intend to maintain a highly qualified and professional staff to make this certification possible.
The preparation of this report would not have been possible without the dedicated and efficient service of the entire staff of the State Accounting Office. We also express our appreciation to the fiscal officers throughout state government for their dedicated efforts in assisting us in the preparation of this report.
Respectfully submitted,
Kris W. Martins State Accounting Officer
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State of Georgia
Principal State Officials June 30, 2020
Executive: Brian P. Kemp................................................................................................................................................................. Governor Brad Raffensperger............................................................................................................................................ Secretary of State Chris Carr........................................................................................................................................................... Attorney General Mark Butler.............................................................................................................................................. Commissioner of Labor Richard Woods .......................................................................................................................... State Superintendent of Schools John F. King.................................................................................................................................... Commissioner of Insurance Gary W. Black................................................................................................................................. Commissioner of Agriculture Chuck Eaton.................................................................................................................................... Public Service Commissioner Tim Echols (Vice Chairman).......................................................................................................... Public Service Commissioner Lauren "Bubba" McDonald, Jr (Chairman).................................................................................... Public Service Commissioner Tricia Pridemore.............................................................................................................................. Public Service Commissioner Jason Shaw...................................................................................................................................... Public Service Commissioner Legislative: Geoff Duncan.......................................................................................................... Lieutenant Governor/President of the Senate David Ralston................................................................................................................ Speaker of the House of Representatives Judicial: Harold D. Melton................................................................................................................... Chief Justice of the Supreme Court
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ACKNOWLEDGEMENTS

The Georgia Comprehensive Annual Financial Report for the fiscal year ending June 30, 2020 was prepared by:
STATE ACCOUNTING OFFICE
Kris Martins, Interim State Accounting Officer, Financial Reporting

STATEWIDE ACCOUNTING AND REPORTING

Nivia Allister Tanya Astin Aderia Beavers Chelsea Bennett Kevin Bryant Dylan Cleveland Renita Coleman Bobbie R. Davis Zeina Diallo Kristi Fuss

Tessica Harvey Metsehet Ketsela Rachael Krizanek Dan Lawson Kim Le Vesna Mesihovic Phyllis Raines Anna Read Amanda Weary Donna G. Winn

SPECIAL APPRECIATION
The State Accounting Office would like to extend special appreciation to all fiscal and accounting personnel throughout the State who contributed the financial information for their agencies. Additionally, the Division of Statewide Accounting and Reporting would like to acknowledge the efforts given by all of the functional and support personnel of the State Accounting Office.

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GREG S. GRIFFIN
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
Independent Auditor's Report

The Honorable Brian P. Kemp, Governor of Georgia and
Members of the General Assembly of the State of Georgia

Report on the Financial Statements

We were engaged to audit the accompanying financial statements of the governmental activities, the businesstype activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the State of Georgia (State), as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the State's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. Because of the matter described in the Basis for Disclaimer of Opinions paragraph, however, we were unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the Unemployment Compensation Fund and on Business-Type Activities.
We did not audit the financial statements of the following entities:

AU Health System, Inc. Augusta University Foundation, Inc. and Subsidiaries Augusta University Research Institute, Inc. Employees' Retirement System of Georgia Georgia Advanced Technology Ventures, Inc.
and Subsidiaries

Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Foundation, Inc. Georgia Tech Research Corporation Kennesaw State University Foundation, Inc. Medical College of Georgia Foundation, Inc.

Georgia College & State University Foundation, Inc. Middle Georgia State University Real Estate

and Subsidiaries

Foundation, Inc. and Subsidiaries

Georgia Environmental Finance Authority

Teachers Retirement System of Georgia

Georgia Gwinnett College Foundation, Inc.

The University of Georgia Foundation

Georgia Health Sciences Foundation, Inc.

University of Georgia Athletic Association, Inc.

Georgia Housing and Finance Authority

University of Georgia Research Foundation, Inc.

Georgia Lottery Corporation

and Subsidiaries

Georgia Ports Authority

University of North Georgia Real Estate

Georgia Southern University Housing Foundation, Inc. Foundation, Inc. and Subsidiaries

and Subsidiaries

UWG Real Estate Foundation, Inc.

Georgia State Financing and Investment Commission University System of Georgia Foundation, Inc.

Georgia State University Athletic Association, Inc.

and Affiliates

Georgia State University Foundation, Inc

VSU Auxiliary Services Real Estate Foundation, Inc.

Georgia State University Research Foundation, Inc.

Those financial statements represent part or all of the total assets, net position or fund balances, and revenues or additions of the governmental activities, the business-type activities, the aggregate discretely presented component units, the major governmental fund-General Obligation Bond Projects fund, and the aggregate remaining fund information as reported in the following table:

Opinion Unit Governmental Activities Business-type Activities Aggregate Discretely Presented Component Units Governmental Fund General Obligation Bond Projects Fund Aggregate Remaining Fund Information

Percent of Total Assets 3% 2% 86% 100% 83%

Percent of Net
Position/ Fund
Balance
6%
8%
81%
100%
85%

Percent of Total
Revenues/ Additions
2% 0%
94% 100% 33%

Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinions, insofar as they relate to the amounts included for the above mentioned entities, are based solely on the reports of the other auditors.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The following financial statements were not audited in accordance with Government Auditing Standards:

Georgia Advanced Technology Ventures, Inc. and Subsidiaries
Georgia College & State University Foundation, Inc. and Subsidiaries
Georgia Gwinnett College Foundation, Inc.

Georgia Lottery Corporation Georgia Southern University Housing Foundation, Inc.
and Subsidiaries Georgia State University Athletic Association, Inc Georgia State University Foundation, Inc

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Georgia Health Sciences Foundation, Inc. Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Foundation, Inc. Kennesaw State University Foundation, Inc. Medical College of Georgia Foundation, Inc. Middle Georgia State University Real Estate
Foundation, Inc. and Subsidiaries

Georgia State University Research Foundation, Inc. The University of Georgia Foundation University of Georgia Athletic Association, Inc. University of North Georgia Real Estate
Foundation, Inc. and Subsidiaries UWG Real Estate Foundation, Inc. VSU Auxiliary Services Real Estate Foundation, Inc.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the State's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the State's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Georgia statutes, in addition to audit responsibilities, entrust other responsibilities to the Department of Audits and Accounts. Those responsibilities include service by the State Auditor on the governing boards of various agencies, authorities, commissions, and component units of the State. The Department of Audits and Accounts elected not to provide audit services for the organizational units of the State of Georgia associated with these boards.

Except for the matter described in the Basis for Disclaimer of Opinions paragraph, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Summary of Opinions

Opinion Unit Governmental Activities Business-Type Activities Aggregate Discretely Presented Component Units Governmental General Fund Governmental General Obligation Bond Projects Fund Enterprise Higher Education Fund Enterprise State Employees' Health Benefit Fund Enterprise Unemployment Compensation Fund Aggregate Remaining Fund Information

Type of Opinion Unmodified Disclaimer Unmodified Unmodified Unmodified Unmodified Unmodified Disclaimer Unmodified

Basis for Disclaimer of Opinions on Business-Type Activities and Unemployment Compensation Fund

As of the date of our audit report, the State was unable to provide complete and accurate information associated with their determination of potential non-fraud and fraudulent overpayments within the CARES Act Unemployment Insurance (UI) program. The State's records do not permit us, nor is it practical to extend other auditing procedures, to obtain sufficient appropriate audit evidence to conclude that the receivable and payable balances and other related activity in the Business-Type Activities and Unemployment Compensation Fund were free of material misstatement. As a result of this matter, we were unable to determine whether further audit adjustments may have been necessary.

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Disclaimer of Opinions
Because of the significance of the matter described in the "Basis For Disclaimer of Opinion on Business-Type Activities and Unemployment Compensation Fund" paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for audit opinions on the financial statements for the BusinessType Activities and Unemployment Compensation Fund of the State. Accordingly, we do not express an opinion on these financial statements.
Unmodified Opinions
In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund except the Unemployment Compensation Fund, and the aggregate remaining fund information of the State, as of June 30, 2020, and the respective changes in financial position and, where applicable, cash flows thereof for the year ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matters
The State of Georgia's basic financial statements for the year ended June 30, 2020, reflect the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 84, Fiduciary Activities. The State early implemented the requirements of GASB Statement No. 84. See Notes 2 and 3 to the financial statements, for the impact of the standard's implementation. Our opinions are not modified with respect to this matter.
As discussed in Notes 2 and 3 to the financial statements, the fiscal year 2019 governmental activities, the General Fund, business-type activities and Higher Education Fund financial statements have been restated to correct misstatements. Our opinions are not modified with respect to this matter.
As discussed in Note 2, management has changed the method for estimating balances for the State Road and Tollway Authority (SRTA). The financial statements include estimates of SRTA's financial activity and balances based on SRTA's financial information for the fiscal year ended June 30, 2018, adjusted for certain intergovernmental activity within the financial reporting entity, in the absence of more timely and complete financial information. Our opinions are not modified with respect to this matter.
As discussed in Note 22 to the financial statements, subsequent to June 30, 2020 the state borrowed $1.1 billion from the federal government to fund the Unemployment Compensation Fund, a major fund, which was paid off in full by March 19, 2021. Our opinions are not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such 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. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of
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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 evidence to express an opinion or provide any assurance.
Supplementary and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the State's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the reports of the other auditors, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we will also issue our report dated March 19, 2021 on our consideration of State'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. That report will be issued under separate cover. 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 State'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 State's internal control over financial reporting and compliance.
Respectfully submitted,

March 19, 2021

Greg S. Griffin State Auditor
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MANAGEMENT'S DISCUSSION AND ANALYSIS

State of Georgia
Management's Discussion and Analysis (Unaudited)
INTRODUCTION
The Management's Discussion and Analysis (MD&A) of the State of Georgia's Comprehensive Annual Financial Report presents an overview and analysis of the financial activities of the State for the fiscal year ended June 30, 2020. It should be read in conjunction with the letter of transmittal, located in the Introductory Section of this report, and the State's financial statements, including the notes to the financial statements, which are an integral part of the statements that follow this narrative.
FINANCIAL HIGHLIGHTS PRIMARY GOVERNMENT
Government-wide
Net Position - Total assets and deferred outflows of resources of the State exceeded liabilities and deferred inflows of resources by $24.2 billion. Contributing to this amount, a deficit of $10.6 billion was reported as unrestricted net position.
Changes in Net Position - The State's total net position decreased by $354.3 million in fiscal year 2020 compared to the balances reported in the prior year. More specifically, net position of governmental activities increased by $1.2 billion while net position of business-type activities decreased by $1.5 billion.
Excess of Revenues over Expenses Governmental Activities - The State's total revenues for governmental activities, which totaled $47.1 billion were $5.1 billion more than total expenses (excluding transfers). General revenues, which are primarily comprised of tax collections, totaled $26.3 billion, and program revenues, which primarily come from operating grants and contributions, totaled $20.8 billion.
Fund Level
Governmental Funds Fund Balances - The governmental funds reported combined ending fund balances of $10.3 billion. This amount represents an increase of $0.3 billion (2.7%) (as restated), when compared with the prior year. Of this total fund balance, $56.3 million (0.5%) represents nonspendable fund balance; $7.2 billion (70.4%) represents restricted fund balance; $17.4 million (0.2%) represents committed fund balance; $549.5 million (5.4%) represents assigned fund balance; and $2.4 billion (23.5%) represents unassigned fund balance.
General Fund Fund Balances - The General Fund ended the fiscal year with a total fund balance of $8.4 billion, of which $2.4 billion was classified as unassigned fund balance. Total revenues increased by $1.7 billion (3.7%) over the prior year.
Enterprise Funds Net position - The Enterprise Funds ended the fiscal year with a total net position of $4.2 billion. More specifically, the major funds areas with significant net positions were the Higher Education Fund of $2.3 billion, the Unemployment Compensation Fund of $1.0 billion, and the State Health Benefit Plan of $725.0 million.
Long-term Debt
The long-term bond debt of the primary government, prior to restatements, decreased $8.7 million (0.1%) during the fiscal year. The decrease represents the net difference between new issuances and maturing principal payments. The amount owed for general obligation bonds decreased by $1.0 million (less than 0.1%) for the primary government, while the amount owed for revenue bonds decreased $7.8 million (0.9%) for the primary government.
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State of Georgia
Management's Discussion and Analysis (Unaudited)
The State issued new bonded debt during the year in the amount of $1.3 billion for the primary government. The State continues to balance the need to issue debt for capital improvements against State management's desire to maintain a conservative approach to debt management.
OVERVIEW OF THE FINANCIAL STATEMENTS
The financial section of this report includes four parts: (1) management's discussion and analysis, (2) basic financial statements, (3) required supplementary information, and (4) other supplementary information. The Basic Financial Statements consist of three components: government-wide financial statements, fund financial statements, and notes to the financial statements.
Government-wide Financial Statements Reporting the State as a Whole
The Statement of Net Position and the Statement of Activities together comprise the government-wide financial statements and provide a broad overview of the State's financial activities as a whole. These statements are prepared with a long-term focus using the full-accrual basis of accounting, similar to private-sector businesses. This means all revenues and expenses associated with the fiscal year are recognized regardless of when cash is spent or received, and all assets, deferred outflows of resources, liabilities and deferred inflows of resources, including capital assets and long-term debt, are reported at the entity level.
The government-wide statements report the State's net position, which is the difference between total assets and deferred outflows of resources and total liabilities and deferred inflows of resources. These statements also include how these items have changed from the prior year. Over time, increases and decreases in net position measure whether the State's overall financial condition is improving or declining. In evaluating the State's overall condition, however, additional non-financial information should be considered, such as the State's economic outlook, changes in demographics, and the condition of its capital assets and infrastructure. The government-wide statements report three activities:
Governmental Activities - The majority of the State's basic services fall under this activity, including services related to general government, education, health and welfare, transportation, public safety, economic development and assistance, culture and recreation, and conservation. Taxes and intergovernmental revenues are the major funding sources for these programs.
Business-Type Activities - The State operates certain activities similar to private-sector businesses by charging fees to customers to recover all or a significant portion of their costs of providing goods and services. The Unemployment Compensation Fund, the self-insured State Health Benefit Plan (SHBP), and the Higher Education Fund are some examples of business-type activities. The Higher Education Fund consists of the University System of Georgia and the Technical College System of Georgia.
Component Units - Certain organizations are legally separate from the State; however, the State remains financially accountable for them. The Georgia Environmental Finance Authority, Georgia Housing and Finance Authority, and Georgia Lottery Corporation are examples of component units.
9

State of Georgia
Management's Discussion and Analysis (Unaudited)
Fund Financial Statements Reporting the State's Most Significant Funds
The fund financial statements provide detailed information about individual major funds, not the State as a whole, and are located in the Basic Financial Statements Fund Financial Statements section. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The State, like other state and local governments, uses funds to ensure and demonstrate compliance with finance-related and legal requirements. All of the State funds are divided into three types, each of which use a different accounting approach and should be interpreted differently:
Governmental Funds - Most of the basic services provided by the State are financed through governmental funds and are essentially the same functions reported as governmental activities in the government-wide financial statements. Governmental funds use the modified accrual basis of accounting, and focus on short-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. These statements provide a detailed short-term view of the State's finances that assist in determining whether there will be adequate financial resources available to meet the current needs of the State.
Proprietary Funds - The Proprietary funds, which include enterprise funds and internal service funds, account for state activities that are similar to private-sector businesses. Like government-wide statements, proprietary fund statements are presented using the full-accrual basis of accounting. Activities whose customers are mostly outside of state government are accounted for in enterprise funds and are the same functions reported as business-type activities. The enterprise fund financial statements provide more detail and additional information than in the government-wide statements, such as cash flows. Activities whose customers are mostly other state organizations are accounted for in internal service funds. The internal service fund activities are allocated proportionately between the governmental activities (predominately) and the business-type activities in the government-wide statements based on the benefit of the services provided to those activities.
Fiduciary Funds - These funds are used to account for resources held for the benefit of parties outside the state government. The State is responsible for ensuring these assets are used for their intended purposes. Fiduciary funds use full-accrual accounting but are not reflected in the government-wide financial statements because the resources from these funds are not available to support the State's own programs.
Reconciliation between Government-wide and Fund Statements
This report also includes two schedules that reconcile and explain the differences between the amounts reported for the governmental activities on the government-wide statements (full-accrual accounting, long-term focus) with the amounts reported on the governmental fund statements (modified accrual accounting, short-term focus). The schedules are located in the Basic Financial Statements Fund Financial Statements Governmental Funds section. The following explanations represent some of the reporting differences between the two statements:
Capital outlays result in capital assets on the government-wide statements but are reported as expenditures in the governmental fund financial statements.
Bond proceeds are recorded as long-term debt on the government-wide statements but are listed as current financial resources on the governmental fund statements.
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State of Georgia
Management's Discussion and Analysis (Unaudited)
Net pension and other postemployment (OPEB) assets/liabilities are reported on the government-wide statements but are not reported on the governmental fund statements.
Notes to the Financial Statements
The notes to the financial statements located at the end of the basic financial statements section provide additional information essential to a complete understanding of the financial statements. The notes are applicable to both the government-wide financial statements and the fund financial statements.
Required and Other Supplementary Information
In addition to this MD&A, the basic financial statements are followed by a section containing other required supplementary information which further explains and supports the information in the financial statements. This section of the report includes: (1) a budgetary comparison schedule of the General Fund (Budget Fund), including reconciliations of revenues and expenditures on the statutory and GAAP basis for the fiscal year, (2) information on the State's public entity risk pool, (3) information on the State's defined benefit pension plans and (4) information on the State's OPEB plans. Other supplementary information includes combined financial statements for the State's nonmajor governmental funds, nonmajor enterprise funds, internal service funds, fiduciary funds and non-major component units. The total columns of these combined financial statements carry forward to the applicable fund financial statements.
FINANCIAL ANALYSIS OF THE STATE AS A WHOLE
Net Position
Governmental entities are required by Generally Accepted Accounting Principles (GAAP) to report on their net position. The Statement of Net Position presents the value of all of the State's assets and deferred outflows of resources, as well as all liabilities and deferred inflows of resources, with the difference reported as net position.
As shown in Table 1 on the following page, the State reported a total net position of $24.2 billion, which is comprised of $26.6 billion in net investment in capital assets, $8.2 billion in restricted net position, and an unrestricted portion of net position deficit of $10.6 billion.
Based on this measurement, no funds were available for discretionary purposes. However, a significant contributing factor is that governments recognize long-term liabilities on the government-wide statement of net position as soon as a liability has been incurred. Accordingly, the State recognizes long-term liabilities (such as general obligation debt, net pension and OPEB liabilities) on the statement of net position. While financing and budgeting functions focus on when such liabilities will be paid, this statement focuses on when a liability has been incurred. The following table was derived from the current and prior year government-wide Statement of Net Position.
(Table on next page)
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State of Georgia
Management's Discussion and Analysis (Unaudited)

Assets Non-Capital Assets Net Capital Assets
Total Assets Deferred Outflows of Resources Liabilities Noncurrent Liabilities Current Liabilities
Total Liabilities Deferred Inflows of Resources Net Position
Net Investment in Capital Assets Restricted Unrestricted Total Net Position Percent Change in Total: Net Position from Prior Year Percent Change after Restatements

Table 1 - Net Position

As of June 30, 2020 and 2019 (in thousands)

Governmental Activities

Business-type Activities

2020

2019

2020

2019

Total Primary Government

2020

2019

$ 23,045,158 25,279,036 48,324,194 1,440,862

$ 18,926,472 $ 7,395,216

23,695,200 11,637,688

42,621,672 19,032,904

1,919,380

1,592,242

$ 6,827,176 $ 30,440,374

11,592,071 36,916,724

18,419,247 67,357,098

1,432,993

3,033,104

$ 25,753,648 35,287,271 61,040,919 3,352,373

16,659,093 11,172,896 27,831,989 1,791,614

17,764,845 6,345,445 24,110,290 1,454,518

12,098,034 2,968,570 15,066,604 1,500,732

11,698,551 1,110,481 12,809,032 1,465,855

28,757,127 14,141,466 42,898,593 3,292,346

29,463,396 7,455,926 36,919,322 2,920,373

21,408,838

20,361,680

8,529,759

8,429,136 26,614,216

25,566,212

6,342,472

6,275,129

1,872,318

3,349,557

8,214,790

9,624,686

(7,609,857)

(7,660,565) (6,344,267)

(6,201,340) (10,629,743)

(10,637,301)

$ 20,141,453 $ 18,976,244 $ 4,057,810 $ 5,577,353 $ 24,199,263 $ 24,553,597

6.1 % 11.4 %

(27.2)% (28.0)%

(1.4)% 2.1 %

Note: Prior year adjustments recorded in the current year have not been reflected in the prior year column in the table above.

Net position for governmental activities as originally reported increased by $1.2 billion (6.1%), and also increased by $2.1 billion (11.4%), when adjusted for restatements. The deficit unrestricted balance of $7.6 billion is primarily the result of the following three types of transactions:
The State continues to issue general obligation debt for the purposes of capital acquisition and construction on behalf of county and independent school systems. Since the issuance of this debt does not result in capital assets acquisitions for governmental activities, the debt of $5.6 billion is not reflected in the net position category, net investment in capital assets, but rather in the unrestricted net position category.
GASB Statement No. 68 (GASB 68), as related to pensions, required the State to recognize its proportional share of the net pension liability of the pension plans applicable to said standard. As of June 30, 2020, this liability resulted in a $3.3 billion impact to unrestricted net position.
GASB Statement No. 75 (GASB 75), as related to OPEB, required the State to recognize its proportional share of the net OPEB liability of the OPEB plans applicable to said standard. As of June 30, 2020, this liability resulted in a $2.1 billion impact to unrestricted net position.
Net position for business-type activities as originally reported decreased by $1.5 billion (27.2%), and also decreased by $1.6 billion (28.0%), when adjusted for restatements. The deficit unrestricted balance of $6.3 billion is primarily due to the recognition of net pension and OPEB liabilities.

12

State of Georgia
Management's Discussion and Analysis (Unaudited)
GASB 68, as related to pensions, required the State to recognize its proportional share of the net pension liability of the pension plans applicable to said standard. As of June 30, 2020, this liability resulted in a $2.9 billion impact to unrestricted net position.
GASB 75, as related to OPEB, required the State to recognize its proportional share of the net OPEB liability of the OPEB plans applicable to said standard. As of June 30, 2020, this liability resulted in a $4.9 billion impact to unrestricted net position.
Changes in Net Position The revenue and expense information, as shown in Table 2 on the following page, was derived from the government-wide Statement of Activities and summarizes the State's total revenues, expenses and changes in net position for fiscal year 2020. Consistent with the prior year, the State received a majority of its $66.0 billion in revenues from taxes and operating grants and contributions. Expenses of the primary government during fiscal year 2020 were $65.5 billion with the increase over the prior year driven largely by education and health and welfare. As a result of the excess revenues over expenses, the total net position of the primary government increased by $489.5 million, before contributions to permanent endowments and transfers.
(Table on next page)
13

State of Georgia
Management's Discussion and Analysis (Unaudited)

Table 2 - Changes in Net Position

For the Years Ended June 30, 2020 and 2019 (in thousands)

Governmental Activities

Business-type Activities

Total Primary Government

2020

2019

2020

2019

2020

2019

Revenues:

Program Revenues:

Sales and Charges for Services

$ 1,292,156 $ 1,300,343 $ 7,083,834 $ 6,887,111 $ 8,375,990 $ 8,187,454

Operating Grants/Contributions

17,728,046 16,236,248 11,723,271

3,354,730 29,451,317 19,590,978

Capital Grants/Contributions

1,730,727

1,614,685

103,004

109,838

1,833,731

1,724,523

General Revenues:

Taxes

23,940,845 23,783,820

--

-- 23,940,845 23,783,820

Lottery for Education - Lottery Proceeds

1,237,345

1,207,369

--

--

1,237,345

1,207,369

Nursing Home and Hospital Provider Fees

513,666

488,218

--

--

513,666

488,218

Tobacco Settlement Funds

157,009

163,851

--

--

157,009

163,851

Unrestricted Investment Income

148,822

205,072

--

--

148,822

205,072

Unclaimed Property

141,925

144,841

--

--

141,925

144,841

Other

185,350

221,221

--

--

185,350

221,221

Total Revenues

47,075,891 45,365,668 18,910,109 10,351,679 65,986,000 55,717,347

Expenses:

General Government

1,580,323

1,262,837

--

--

1,580,323

1,262,837

Education

14,744,905 13,892,451

--

-- 14,744,905 13,892,451

Health and Welfare

19,182,338 18,015,041

--

-- 19,182,338 18,015,041

Transportation

2,831,753

2,668,539

--

--

2,831,753

2,668,539

Public Safety

2,557,268

2,605,402

--

--

2,557,268

2,605,402

Economic Development and Assistance

414,177

465,465

--

--

414,177

465,465

Culture and Recreation

291,934

309,863

--

--

291,934

309,863

Conservation

59,402

54,758

--

--

59,402

54,758

Interest and Other Charges on Long-Term Debt

309,200

381,895

--

--

309,200

381,895

Higher Education Fund

--

-- 10,355,168

9,739,025 10,355,168

9,739,025

State Health Benefit Plan

--

--

2,735,542

2,613,192

2,735,542

2,613,192

Unemployment Compensation Fund

--

-- 10,229,884

319,367 10,229,884

319,367

Nonmajor Enterprise Funds

--

--

204,559

205,638

204,559

205,638

Total Expenses

41,971,300 39,656,251 23,525,153 12,877,222 65,496,453 52,533,473

Increase (Decrease) in Net Position Before Contributions and Transfers

5,104,591

5,709,417 (4,615,044) (2,525,543)

489,547

3,183,874

Contributions to Permanent Endowments

--

--

964

1,300

964

1,300

Transfers

(3,035,910) (3,485,850) 3,035,910

3,485,850

--

--

Total Percentage
Change 2019 to 2020
2.3% 50.3% 6.3%
0.7% 2.5% 5.2% (4.2%) (27.4%) (2.0%) (16.2%) 18.4%
25.1% 6.1% 6.5% 6.1% (1.8%) (11.0%) (5.8%) 8.5% (19.0%) 6.3% 4.7% 3,103.2% (0.5%) 24.7%

Change in Net Position

2,068,681

2,223,567 (1,578,170)

961,607

490,511

3,185,174

Net Position July 1 - Restated

18,072,772 16,752,677

5,635,980

4,615,746 23,708,752 21,368,423

Net Position June 30

$ 20,141,453 $ 18,976,244 $ 4,057,810 $ 5,577,353 $ 24,199,263 $ 24,553,597

(1.4)%

Note: Prior year adjustments recorded in the current year have not been reflected in the prior year column in the table above.
(Charts on next page)

14

State of Georgia
Management's Discussion and Analysis (Unaudited)
15

State of Georgia
Management's Discussion and Analysis (Unaudited)

Governmental Activities

The State's total revenues for governmental activities from all sources increased by $1.7 billion (3.8%). The primary driver of this change was an increase in operating grants and contributions of $1.5 billion (9.2%) which is a result of additional federal dollars, primarily in support of COVID-19 expenses and an increase in tax revenue totaling $157.0 million primarily due to additional tax withholding on increased unemployment insurance payments. Governmental Activities expenses increased by $2.3 billion as a result of expenses related to the COVID-19 pandemic, increased funding in education for enrollment growth and teacher training and experience, and increases in Pension and OPEB expense.

The following table shows to what extent program revenues (charges for services and grants) covered program expenses. During fiscal year 2020, program revenues covered $20.8 billion (49.4%) of the $42.0 billion in total program expenses. For the remaining $21.2 billion (50.6%) of the total program expenses, the State relied on taxes and other general revenues.

Table 3 Net Program Revenue
For the Year Ended June 30, 2020 (in billions)
$18

$16

$14

$12

$10

$8

$6

$4

$2

$0 General
Government

Education

Health and Welfare
Expenses

Transportation

Public Safety

Revenue

Other

Business-type Activities
Net position of business-type activities (as restated) decreased by $1.6 billion (28.0%) during the fiscal year. This decrease is primarily due to the COVID-19 pandemic and increased unemployment and the corresponding unemployment payments made in excess of premiums and operating grant revenues. As a result of these increased payments, total revenues and expenses for the State's business-type activities increased by $8.6 billion (82.7%) and $10.6 billion (82.7%) from the prior year, respectively.

16

State of Georgia
Management's Discussion and Analysis (Unaudited)
The State's total revenues for business-type activities from all sources increased by $8.6 billion (82.7%). The primary driver of this change was an increase in additional federal dollars associated with additional unemployment insurance payments. Accordingly, expenses increased by $10.6 billion (82.7%) for the same reason.
In fiscal year 2020, business-type activities expenses were funded 80.4% from program revenues compared to 80.4% in the prior year. The remaining expenses were funded by $3.0 billion in transfers from governmental activities, of which the majority went to the Higher Education Fund. The amount of transfers decreased by $449.9 million over the prior year due to one-time asset transfers made in fiscal year 2019.
FINANCIAL ANALYSIS OF THE STATE'S GOVERNMENTAL FUNDS
Fund Balances
At June 30, 2020, the State's governmental funds reported a combined ending fund balance of $10.3 billion. Of this amount $7.2 billion (70.4%) is restricted for specific programs by constitutional provisions, external constraints, or contractual obligations and $2.4 billion (23.5%) of fund balance is unassigned.
General Fund
The General Fund is the chief operating fund of the State and had a total fund balance of $8.4 billion as of fiscal year end. The net change in fund balance during the fiscal year was a decrease of $417.2 million (4.7%). The following major revenues, expenditures and other sources/uses contributed to the change in fund balance:
Revenues - Revenues of the General Fund totaled $46.5 billion in the fiscal year, for an increase of $1.7 billion (3.7%) over the prior year. The primary increase in revenues is a result of additional federal dollars, primarily in support of COVID-19 expenses.
Expenditures - Expenditures of the General Fund totaled $41.8 billion in the fiscal year, an increase of $2.0 billion over the prior year.
Education expenses increased $834.6 million consistent with additional funds allocated in the fiscal year 2020 budget for K-12 education to fund enrollment growth and teacher training and experience.
Health and welfare increased by $1.0 billion. as a result of the COVID-19 pandemic and increased enrollment in various Department of Community Health programs as a result of eliminating the waiting period.
Transportation expenses increased $144.5 million, which is consistent with continued long-term investment in infrastructure.
Capital Project Fund - General Obligation Bond Projects Fund
Fund balance in the General Obligation Bond Projects Fund decreased by $202.1 million (13.6%) from the prior year. This was primarily the result of capital expenditures and transfers out exceeding general revenues, debt issuances and transfers. Capital outlay expenditures increased by $69.2 million from the prior year.
17

State of Georgia
Management's Discussion and Analysis (Unaudited)
FINANCIAL ANALYSIS OF THE STATE'S PROPRIETARY FUNDS
Higher Education Fund
The total net position of the Higher Education Fund (as restated) decreased $123.3 million (5.1%) primarily due to an increase in pension and OPEB expense.
Operating revenues of the Higher Education Fund decreased by $8.4 million (0.1%). Nonoperating revenues (net of expenses) increased $212.0 million primarily due to grants and contributions. In addition, the Higher Education Fund received an increase of $33.7 million (1.2%) of transfers in, primarily from the General Fund and from Governmental Activities compared to the prior year.
Operating expenses increased $623.8 million (6.6%), compared to the prior year. This amount is primarily attributable to increases in pension and OPEB expense.
State Health Benefit Plan
Operating revenues for SHBP increased by $303.6 million and operating expenses increased by $122.1 million, which resulted in a corresponding increase in operating income of $181.5 million. The increase in operating revenues and expenses is primarily due to a contribution made to the Fiduciary OPEB funds in fiscal year 2019 that were not made in the current fiscal year due to the unknown financial impact the COVID-19 pandemic could have on SHBP expenses.
Unemployment Compensation Fund
Georgia's unemployment rate at June 30, 2020 increased from 3.5% to 7.6% in fiscal year 2020. As a result of the COVID-19 pandemic, unemployment claims were significantly higher and increased $9.9 billion (3,279.5%) this year as compared to the prior year. In addition, the corresponding federal revenue and unemployment tax revenue increased by $8.1 billion (1,350.0%). In fiscal year 2020 ending net position decreased by $1.5 billion as a result of benefit payments exceeding employer taxes and other revenues.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The State's capital assets increased by a net $1.6 billion (4.6%) during the year. The change consisted of a net increase in infrastructure of $505.1 million, as well as net increases in machinery and equipment, land, and buildings of $157.3 million, $262.0 million and $50.8 million, respectively and a decrease in software of $18.2 million. Additionally, construction in progress increased by $642.5 million.
At June 30, 2020, the State had General Fund commitments of $2.9 billion and Capital Project Fund commitments of $500.2 million for highway infrastructure and bridge construction. The State Road and Tollway Authority had $465.2 million of commitments, which is primarily due to $343.9 million for the I-285/GA 400 Interchange, $109.4 million for the I-85 Widening Project and $5.5 million for the Northwest Corridor Express Lane Project. Additionally, the Board of Regents had $34.4 million for various construction and renovation contracts.
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State of Georgia
Management's Discussion and Analysis (Unaudited)

Additional information on the State's capital assets can be found in Note 9 Capital Assets of the Notes to the Financial Statements section of this report.

Table 4 - Capital Assets, Net of Accumulated Depreciation

Buildings/Building Improvements Improvements Other Than Buildings Infrastructure Intangibles - Other Than Software Land Library Collections Machinery and Equipment Software Works of Art and Collections Construction in Progress
Total

As of June 30, 2020 and 2019 (in thousands)

Governmental Activities

Business-type Activities

Total Primary Government

2020

2019

2020

2019

2020

2019

$ 2,310,619 $ 2,232,297 $ 9,463,020 $ 9,490,556 $ 11,773,639 $ 11,722,853

120,844

111,379

201,754

188,454

322,598

299,833

13,389,282

12,872,483

244,104

255,850

13,633,386

13,128,333

133,119

125,568

--

--

133,119

125,568

4,650,971

4,389,041

520,684

520,658

5,171,655

4,909,699

--

--

169,119

169,985

169,119

169,985

411,912

278,222

587,702

564,063

999,614

842,285

250,155

283,852

124,135

108,651

374,290

392,503

1,400

1,400

60,592

60,018

61,992

61,418

4,010,734

3,400,958

266,578

233,836

4,277,312

3,634,794

$ 25,279,036 $ 23,695,200 $ 11,637,688 $ 11,592,071 $ 36,916,724 $ 35,287,271

Note: Prior year adjustments recorded in the current year have not been reflected in the prior year column in the table above.

Debt Administration
The Constitution authorizes issuing general obligation debt only as approved by the legislature and prohibits the issuance of general obligation bonds for operating purposes. The Constitution requires the State to maintain a reserve sufficient to pay annual debt service requirements on all general obligation debt. If for any reason the reserve balance is insufficient to make all debt service payments when due, the first revenues received thereafter in the General Fund will be set aside for such use. The Constitution also stipulates that no debt may be incurred when the highest aggregate annual debt service requirements for any year for outstanding general obligation debt and guaranteed revenue debt, including proposed debt, exceed 10% of the total revenue receipts, less refunds in the state treasury, in the fiscal year immediately preceding the year in which any such debt is to be incurred. At June 30, 2020, the State was $822.7 million below the annual debt service limit established by the Constitution.

Table 5 - Net Outstanding Bond Debt
As of June 30, 2020 and 2019 (in thousands)

Governmental Activities

Business-type Activities

Total Primary Government

2020

2019

2020

2019

2020

2019

General Obligation Bonds $10,351,636 $10,352,603 $ -- $

-- $10,351,636 $10,352,603

GARVEE Revenue Bonds 397,825

397,825

--

--

397,825

397,825

Revenue Bonds

215,945

215,945 234,234 242,003

450,179

457,948

$10,965,406 $10,966,373 $234,234 $ 242,003 $11,199,640 $11,208,376

Note: Prior year adjustments recorded in the current year have not been reflected in the prior year column in the table above.

19

State of Georgia
Management's Discussion and Analysis (Unaudited)
At the end of the fiscal year, the State had $11.2 billion in total outstanding bonded debt. Of this amount $10.6 billion (net of premiums and discounts) (94.4%), is secured by the full faith and credit of the government for general obligation bonds and guaranteed revenue bonds; $234.2 million (2.1%), is secured primarily by lease arrangements with the Board of Regents or applicable security deed and related assignment of contract documents; and $397.8 million (3.6%) in State Road and Tollway Authority GARVEE debt is secured by Federal Highway Administration grant funds and state motor fuel funds.
Total general obligation bonds and revenue bonds payable, net of premiums and discounts, decreased $1.0 million (0.0%) and decreased $7.8 million (0.9%) respectively, prior to restatements. During the fiscal year, the State issued $950.6 million of general obligation bonds, excluding premiums, discounts, and refunding issues. Of the general obligation bonds issued, $368.5 million was issued for higher education facilities, $150.0 million for election voting systems, $117.1 million for K-12 school facilities, $101.9 million for public safety, $85.6 million for economic development, a $36.0 million refunding bond issuance, $35.0 million for rail rehabilitation, $9.5 million for water and sewer loans to local governments, and $47.0 million for various state agency facilities.
The State maintains a triple-A bond rating on its general obligation debt from all three national rating agencies. These ratings, the highest available, help the State achieve the lowest possible interest rates. Additional information regarding the State's outstanding debt can be found in Note 10 Long-Term Liabilities of the notes to the financial statements section.
BUDGETARY HIGHLIGHTS
Fiscal Year 2020 Budget Highlights
The Amended Fiscal Year 2020 (AFY 2020) appropriations bill was signed by the Governor on March 17, 2020 as passed by the General Assembly with no vetoes. The revenue adjustments were based on resetting growth expectations against fiscal year 2019 actual amounts given previously enacted tax adjustments and broader international economic concerns.
Revenues
The AFY 2020 budget was built on a 0.66% increase in general fund revenue collections over fiscal year 2019 actual amounts.
$404 million reduction in general fund revenues over original fiscal year 2020 revenue estimate, primarily driven by lowered individual income tax estimates
Does not include HB 918 "Phase III" income tax reduction Structurally balanced, no reliance on one-time sources of funding
Expenditures
$216 million savings from a 4% operational budget reduction to state agencies $136 million for K-12 enrollment growth ($110 million QBE and $25 million State Charter Schools) $39 million for Disproportionate Share Hospitals and Medicare Part B and D requirements offset by $43
million in savings in Medicaid expense growth $25 million for Forestland Protection grants to meet projected need $100 million in Revenue Shortfall Reserve funds for COVID-19 response efforts
20

State of Georgia
Management's Discussion and Analysis (Unaudited)
The longest expansion in American history ended in February 2020 when government-mandated shutdowns to slow the spread of COVID-19 pushed the national economy into a recession. Growth in the first quarter of 2020 was slightly negative with positive conditions in the first half of the quarter outweighed by forced business closures in the second half. Economists expect second quarter U.S. GDP to be 7 to 9 percent below the first quarter's number. With state's allowing reopening of their businesses on different schedules, economic growth should resume in the third and fourth quarters of 2020 with a sharp rebound toward normality. However, the economy is not expected to regain full strength until either a vaccine or successful treatment regimen for COVID-19 is found and widely available.
The current economic outlook is more uncertain than normal, with many publicly traded companies suspending forward guidance and government actions to control the spread of the pandemic forcing businesses to close or change operations on a moment's notice. Whether the unemployment engendered by the economic shutdowns becomes lengthy versus temporary layoffs depends on how many businesses can remain solvent with reduced revenues and higher operating costs until the pandemic ends.
Unemployment went from a record low of 3.5% to a post-World War II record high in the mid-teens (with exact figures complicated by admitted misclassifications of some laid off workers in the government's survey). Georgia's unemployment rate peaked at 12.6% in April but had declined to 7.6% as of June 30, 2020, below the national average. The Georgia labor market is expected to continue to recover faster than the national trend due to higher business formation reported in Census Bureau Business Formation Statistics (http://census.gov/econ/bfs/index/html) and an earlier economic reopening.
Consumer spending has held up quite well in the face of rising unemployment, helped by federal largesse and consumers having lower debt burdens relative to disposable income than at the start of the previous recession in 2007 (source: Household Debt Service as Percent of Disposable Income, U.S. Federal Reserve Board). This has helped to support retail sales and thus sales tax collections and is expected to continue.
Prior to the pandemic Georgia's employment was well diversified across sectors and regions of the state. Georgia has significant, but not overly outsized presence in information and technology, manufacturing, finance, real estate, professional services, healthcare, hospitality, transportation, and agriculture. This diverse economy will serve to cushion the economic blow from this recession. In addition, on December 27, 2020, the federal government enacted an additional coronavirus stimulus package that will provide further direct financial assistance states and individuals while the Federal Reserve clearly stands ready to provide liquidity and low interest rates for at least as long as they are needed to support the economy. Taken together, while precise economic outlook is impossible at such an unprecedented time, spring 2020 was almost surely the economic bottom and the most likely course going forward is an uneven, but fairly rapid recovery supported by medical science, consumers with reasonable balance sheets, and the combination of monetary and fiscal policy with few if any limits.
(Table on next page)
21

State of Georgia
Management's Discussion and Analysis (Unaudited)
Fiscal Year 2020 Year End Strategy Georgia took proactive measures to constrain spending early on in the fiscal year due to a softening economic forecast, driven largely by increasing uncertainty in international markets. The Governor issued 4% budget reduction instructions to agencies in early August which OPB then began implementing in October by exercising the Governor's authority to withhold allotments. This helped to ensure agencies were on target to meet reduction needs. As a result of those actions early in the fiscal year, the state did not need to take additional reduction measures in May or June to end the year. The following actions were also taken:
Georgia received $3.5 billion directly through the Coronavirus Relief Fund (CRF), enabling the state to return the $100 million to RSR previously appropriated for COVID-19 response.
Georgia implemented a strategy to utilize $105.7 million of CRF for payroll offsets for public health and public safety employees "substantially dedicated" to COVID-19 response or those employees whose performing duties are "substantially different" from what was appropriated.
Did not mandate across the board furloughs or allotment withholds from state agencies to mitigate further economic harm or reduced state services.
The Office of Planning and Budgeting (OPB) worked closely with state agencies to maximize surplus, including deobligating prior year funds for lapse netting a $533.0 million return of appropriated funds to Treasury.
Accrued more than $950.0 million in income tax payments impacted by the July 15 tax deadline deferral retroactively to fiscal year 2020. This will avoid overstating actual revenue performance in fiscal year 2021 to provide better comparability.
Sales Tax and Marketplace Facilitator June US retail sales were +2.2% from June 2019. Georgia's July sales tax (June sales) was -1.2% from June 2019. This suggests the marketplace facilitator law is giving us a 3-5% boost, which would translate into $200-350 million annual boost in tax revenue.
22

State of Georgia
Management's Discussion and Analysis (Unaudited)
Revenue Shortfall Reserve (RSR) The RSR provides for the sound management of excess revenue collections in any given fiscal year. By statute, all surplus State funds existing at the end of each fiscal year shall be reserved and added to the RSR. Each fiscal year, the General Assembly may appropriate from the RSR an amount up to 1% of the net revenue collections of the preceding fiscal year for funding increased K-12 education needs. Also, the Governor may release for appropriation by the General Assembly a stated amount of reserve funds in the RSR that are in excess of 4% of the net revenue collections of the preceding fiscal year. The RSR cannot exceed 15% of the previous fiscal year's net revenue collections. By statute, 1% of fiscal year 2020 state general fund receipts/net revenue collections ($254.8 million) is available from the RSR for the mid-year K-12 education appropriation adjustment in the amended fiscal year 2021 budget. This amount had not been appropriated as of the date of this report, however, it has been included in the chart below. The ending balance in the Revenue Shortfall Reserve (RSR), or "rainy day" fund, is a critical tool in helping to address budget shortfalls. As a result of the pandemic, the State focused on maintaining the RSR, and limiting the impact of COVID-19. After adjusting for the mid-year adjustment for education, the RSR balance as of June 30, 2020 is $2.7 billion. Prior to mid-year adjustment for education, this is a decline of $103.5 million (3.4%) from fiscal year 2019, and after the mid-year adjustment for education the is a decline of $102.6 million (3.7%) from fiscal year 2019. As a result of the anticipated economic impact of the COVID-19 pandemic, on June 22, 2020 Governor Kemp revised his revenue estimate for fiscal year 2021. To offset anticipated tax revenue declines, Governor Kemp included a transfer of $250.0 million from the RSR in his revised revenue estimate for State fiscal year 2020-2021 (H.B. 793), which was adopted by the General Assembly on June 26, 2020. This transfer, if necessary, along with the annual appropriation of one percent (1%) of prior year net revenues for the mid-term adjustment for K-12 enrollment, anticipated to be included in the fiscal year 2021 Amended Appropriations Act in January 2021, will impact subsequent ending balances of the RSR.
(Graph on next page)
23

State of Georgia
Management's Discussion and Analysis (Unaudited)
The decrease to the RSR is a result of the fiscal year 2020 budget appropriating State general fund receipts of $25.7 billion. However, actual fiscal year 2020 State general fund receipts collected were only $25.5 billion, which included leveraging COVID-19 related federal funds in lieu of State funds for expenses. This difference was funded from RSR.
24

State of Georgia
Management's Discussion and Analysis (Unaudited)
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
Economic Outlook The COVID-19 pandemic continues to have an impact on state and local economies, with unknown additional federal government stimulus. However we do have the following economic outlook expectations:
The unemployment rate dropped from 7.6% at June 30, 2020 to 5.6% at December 31, 2020 and is expected to continue to decline.
Sales tax revenue is recovering quickly and should only be 2-4% below fiscal year 2020. Corporate tax collections will be the slowest to recover. The State is using 2008-2015 to guide forecast
here. Business formation in Georgia is actually running ahead of year ago pace, so the State expects consolidation
in 2020 and robust growth to return in 2021 and beyond.
Fiscal Year 2021 Budget Highlights The fiscal year 2021 budget had only passed out of the House of Representatives when the General Assembly suspended the 2020 Spring Legislative Session on March 13, 2020 as a result of the COVID-19 outbreak. During the recess, the Office of Planning and Budget worked closely with the House and Senate Appropriations Committees to monitor ongoing changes in the economic climate and its impact on the fiscal year 2021 outlook.
On May 1, 2020, the General Assembly and OPB jointly requested state agencies submit plans for up to a 14 percent budget reduction in anticipation of revenue declines for fiscal year 2021.
25

State of Georgia
Management's Discussion and Analysis (Unaudited)
On June 3, 2020, OPB notified the General Assembly it was revising the reduction guideline from 14 percent to 11 percent based on updated revenue performance.
On June 22, 2020, Governor Kemp formally reduced the initial January 2020 State General Fund revenue estimate for Fiscal Year 2021 by $2.48 billion, a 9% reduction in general funds over the initial estimate. In addition, Governor Kemp authorized the use of $250 million from the RSR to mitigate the impact of the anticipated revenue decline on the operations of the State and local education entities. The revenue estimate also leverages $50 million in tobacco settlement fund reserves for Medicaid expense. The revenue estimate does not include any one-time "windfall" from tax deadline deferral due to retroactive accrual to fiscal year 2020.
The General Assembly adopted H.B. 793, the Fiscal Year 2021 Appropriations Act on June 26, 2020, and Governor Kemp signed it into law as passed on June 30, 2020 with no vetoes.
Limited use of reserves to maintain structural balance and mitigate outyear budget "holes". 10% operational budget reductions to all State agencies, the Quality Basic Education K-12 public education
funding formula, and the funding formulas for institutions of higher education. Approximately $500 million in operational reductions to state agencies.
Education $879 million reduction to the Quality Basic Education funding formula. $230 million reduction to the Teaching formula within the University System of Georgia. $33 million reduction to the Technical Education program within the Technical College System of Georgia. $192 million in employer contributions savings for the Teachers Retirement System. $205 million to fully fund new K-12 growth, including: $141 million for enrollment growth and training and experience, $32 million for the State Commission Charter Schools supplement, and $32 million for Quality Basic Education Equalization grants for low wealth schools.
Human Services $430 million to fully fund anticipated needs for Medicaid programs and only assumes $165 million in savings from one quarter of enhanced FMAP rate based on current dates for federal public health emergency. Includes $268 million for baseline expense growth, $19 million for six months of postpartum Medicaid coverage, $80 million to offset a reduction in the federal financial participation rate, and $63 million for Medicare Part B premiums, Medicare Part D Clawback payments, and the Health Insurer Provider Fee. $1.129 billion debt package emphasizing funding MRR to maintain state facilities and infrastructure.
Other No use of one-time CARES Act funding in base budget, but Georgia will continue to maximize opportunities for payroll offset for public health and public safety employees. OPB is working with state agencies to develop initial planning estimates for the Amended fiscal year 2021 budget and the fiscal year 2022 budget for the Governor's consideration. Budget instructions for the Amended fiscal year 2021 and the fiscal year 2022 budgets were issued in early August 2020.
26

State of Georgia
Management's Discussion and Analysis (Unaudited)
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the State's finances for all of the State's citizens, taxpayers, customers, and investors and creditors. This financial report seeks to demonstrate the State's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to: State Accounting Office, 200 Piedmont Avenue, Suite 1604 West Tower, and Atlanta, Georgia 30334-9010.
27

BASIC FINANCIAL STATEMENTS

State of Georgia
Statement of Net Position June 30, 2020
(dollars in thousands)

Governmental Activities

Primary Government
Business-type Activities

Assets

Cash and Cash Equivalents

$

Pooled Investments with State Treasury

Investments

Receivables (Net)

Due from Primary Government

Due from Component Units

Internal Balances

Inventories

Prepaid Items

Other Assets

Restricted Assets

Cash and Cash Equivalents

Pooled Investments with State Treasury

Investments

Receivables (Net)

Net Pension Asset

Net OPEB Asset

Capital Assets

Nondepreciable

Depreciable (Net of Accumulated Depreciation)

Total Assets

1,760,320 $ 11,596,494 1,112,799 7,080,682
-- 175,557 440,808 46,218 89,515 96,309
-- 289,658
-- -- 115,550 241,248
8,796,015 16,483,021 48,324,194

1,332,527 $ 1,273,737
434,921 2,654,656
-- 472,239 (440,808) 30,296 77,435
2,068
1,050,817 196,047 298,567 -- -- 12,714
843,080 10,794,608 19,032,904

Total

Component Units

3,092,847 $ 12,870,231 1,547,720 9,735,338
-- 647,796
-- 76,514 166,950 98,377

853,023 1,770,650 1,233,367 5,589,471
31,819 -- --
37,216 49,794 186,838

1,050,817 485,705 298,567 -- 115,550 253,962

407,775 149,752 3,687,994 1,571,777
-- 3,238

9,639,095 27,277,629 67,357,098

876,034 3,706,364 20,155,112

Deferred Outflows of Resources

1,440,862

1,592,242

3,033,104

187,414

Liabilities Accounts Payable and Accrued Liabilities Local Education Agencies Payable Due to Primary Government Due to Component Units Benefits Payable Accrued Interest Payable Contracts Payable Funds Held for Others Unearned Revenue Claims and Judgments Payable Other Liabilities Noncurrent Liabilities: Due within one year Due in more than one year Net Pension Liability Net OPEB Liability Other Noncurrent Liabilities
Total Liabilities

2,504,620 1,227,853
-- 21,696 1,839,745 247,313 55,497 174,059 3,738,373 1,039,787 323,953
1,232,648
4,021,809 1,014,071 10,390,565 27,831,989

272,089 -- --
10,123 2,138,134
2,385 19,645 16,178 401,449 2,382 106,185
347,118
3,874,980 4,610,352 3,265,584 15,066,604

2,776,709 1,227,853
-- 31,819 3,977,879 249,698 75,142 190,237 4,139,822 1,042,169 430,138
1,579,766
7,896,789 5,624,423 13,656,149 42,898,593

325,922 --
647,796 -- --
45,696 30,071 57,202 227,980
250 1,149,495
316,893
243,373 144,232 5,158,662 8,347,572

Deferred Inflows of Resources

1,791,614

1,500,732

3,292,346

72,749
(continued)

The notes to the financial statements are an integral part of this statement.

30

State of Georgia
Statement of Net Position June 30, 2020
(dollars in thousands)

Governmental Activities

Primary Government
Business-type Activities

Total

Component Units

Net Position Net Investment in Capital Assets (1)

Restricted for:

Bond Covenants/Debt Service

Capital Projects

Guaranteed Revenue Debt Common Reserve Fund

Loan and Grant Programs

Lottery for Education

Motor Fuel Tax Funds

Nonexpendable:

Permanent Trust

Other Programs

Other Benefits

Other Purposes

Permanent Trust Expendable

Unemployment Compensation Benefits Unrestricted (1)

Total Net Position

$

21,408,838
64,016 --
53,774 --
1,423,113 3,533,343
-- -- -- 1,268,226 -- -- (7,609,857) 20,141,453 $

8,529,759

26,614,216

-- 12,440
-- -- -- --

64,016 12,440 53,774
-- 1,423,113 3,533,343

184,012 --
319,340 318,012
-- 1,038,514 (6,344,267) 4,057,810 $

184,012 --
319,340 1,586,238
-- 1,038,514 (10,629,743) 24,199,263 $

3,650,041
13,168 244,734
-- 1,922,788
-- --
2,423,241 48,350 -- 417,819 789,859 --
2,412,205 11,922,205

(1) Refer to Note 4 for additional details

The notes to the financial statements are an integral part of this statement.

31

State of Georgia
Statement of Activities For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Functions/Programs Primary Government
Governmental Activities: General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Interest and Other Charges on Long-Term Debt Total Governmental Activities
Business-type Activities: Higher Education State Health Benefit Plan Unemployment Compensation Other Business-type Activities Total Business-type Activities
Total Primary Government
Component Units Georgia Environmental Finance Authority Geo. L. Smith II Georgia World Congress Center Authority Georgia Housing and Finance Authority Georgia Lottery Corporation Georgia Ports Authority Georgia Tech Foundation, Incorporated Nonmajor Component Units
Total Component Units
General Revenues: Taxes Income Taxes - Individual Sales and Use Taxes - General Motor Fuel Taxes Motor Vehicle License and Title Ad Valorem Taxes Corporate Taxes Other Taxes Lottery for Education - Lottery Proceeds Nursing Home and Hospital Provider Fees Tobacco Settlement Funds Unrestricted Investment Income/(Loss) Unclaimed Property Other Payments from the Primary Government
Contributions to Permanent Endowments Transfers Total General Revenues, Contributions to Permanent
Endowments and Transfers Change in Net Position
Net Position, July 1 - Restated (Note 3) Net Position, June 30

Expenses

Sales and Charges for
Services

Program Revenues Operating Grants and
Contributions

Capital Grants and Contributions

$ 1,580,323 $ 14,744,905 19,182,338 2,831,753 2,557,268 414,177 291,934 59,402 309,200 41,971,300

759,685 $ 10,486 70,209 52,208 166,570 53,123 174,848 5,027
-- 1,292,156

441,338 $ 2,431,934 13,781,041
174,450 541,051 262,194 83,026 13,012
-- 17,728,046

16,343 --
1,297 1,699,327
4,077 --
8,398 1,285
-- 1,730,727

10,355,168 2,735,542 10,229,884
204,559 23,525,153
$ 65,496,453 $

3,583,317 2,827,312
633,361 39,844 7,083,834
8,375,990 $

3,593,695 10,889
8,099,181 19,506
11,723,271
29,451,317 $

18,597 -- --
84,407 103,004
1,833,731

$

40,076 $

29,855 $

96,325 $

172,684

45,267

8,341

197,819

97,156

126,301

4,750,229

4,762,754

--

383,357

481,728

32,473

110,387

32,520

62,003

3,453,511

1,574,946

1,763,176

$ 9,108,063 $ 7,024,226 $ 2,088,619 $

-- 4,014
-- -- 5,774 -- 52,527 62,315

The notes to the financial statements are an integral part of this statement.

32

Governmental Activities

Net (Expense) Revenue and

Changes in Net Position

Primary Government

Business-Type

Activities

Total

Component Units

$

(362,957)

(12,302,485)

(5,329,791)

(905,768)

(1,845,570)

(98,860)

(25,662)

(40,078)

(309,200)

(21,220,371)

$

(362,957)

(12,302,485)

(5,329,791)

(905,768)

(1,845,570)

(98,860)

(25,662)

(40,078)

(309,200)

(21,220,371)

$ (21,220,371)

(3,159,559) 102,659
(1,497,342) (60,802)
(4,615,044)
(4,615,044)

(3,159,559) 102,659
(1,497,342) (60,802)
(4,615,044)
(25,835,415)

$

86,104 (115,062)
25,638 12,525 136,618 (15,864) (62,862) 67,097

12,529,857 6,212,812 1,872,628 1,041,107 1,214,809 1,069,632 1,237,345
513,666 157,009 148,822 141,925 185,350
-- -- (3,035,910)

-- -- -- -- -- -- -- -- -- -- -- -- -- 964 3,035,910

12,529,857 6,212,812 1,872,628 1,041,107 1,214,809 1,069,632 1,237,345
513,666 157,009 148,822 141,925 185,350
-- 964 --

-- -- -- -- -- 10,067 -- -- -- 38,018 -- -- 80,975 80,942 --

23,289,052

3,036,874

26,325,926

210,002

2,068,681

(1,578,170)

490,511

277,099

18,072,772

5,635,980

23,708,752

11,645,106

$ 20,141,453 $ 4,057,810 $ 24,199,263 $ 11,922,205

33

State of Georgia
Balance Sheet Governmental Funds June 30, 2020
(dollars in thousands)
Assets Cash and Cash Equivalents Pooled Investments with State Treasury Investments Receivables (Net) Due from Other Funds Due from Component Units Inventories Restricted Assets
Pooled Investments with State Treasury Other Assets
Total Assets

General Fund

General Obligation Bond Projects
Fund

Nonmajor Funds

$

856,016 $

11,437,875

113,129

6,936,287

16,072

175,519

23,549

516,726 $ --
906,135 -- -- -- --

368,471 $ 13,802 60,554 40,306 25,654
-- --

72,189 185,379

--

217,468

--

190

$

19,816,015 $

1,422,861 $

726,445 $

Total
1,741,213 11,451,677
1,079,818 6,976,593
41,726 175,519 23,549
289,657 185,569
21,965,321

Liabilities, Deferred Inflows of Resources and Fund Balances

Liabilities:

Accounts Payable and Other Accruals

$

Due to Other Funds

Due to Component Units

Benefits Payable

Contracts Payable

Undistributed Local Government Sales Tax

Funds Held for Others

Unearned Revenue

Other Liabilities

Total Liabilities

Deferred Inflows of Resources

Fund Balances: Nonspendable Restricted Unrestricted Committed Assigned Unassigned

Total Fund Balances

Total Liabilities, Deferred Inflows of Resources and Fund

Balances

$

2,834,638 $ 1,451,802
21,697 1,839,745
16,232 2,500 173,407 3,737,760 96,609
10,174,390
1,234,734
39,561 5,440,832
17,372 494,586 2,414,540
8,406,891
19,816,015 $

57,965 $ 27,757
-- -- 16,470 -- -- 510 38,954
141,656
--
-- 1,269,646
-- 11,559
--
1,281,205
1,422,861 $

8,593 $ 15,324
-- -- 22,795 -- -- -- 107,359
154,071
--

2,901,196 1,494,883
21,697 1,839,745
55,497 2,500 173,407 3,738,270 242,922
10,470,117
1,234,734

16,770 512,214
-- 43,390
--
572,374
726,445 $

56,331 7,222,692
17,372 549,535 2,414,540
10,260,470
21,965,321

The notes to the financial statements are an integral part of this statement.

34

State of Georgia
Reconciliation of Fund Balances To the Statement of Net Position June 30, 2020
(dollars in thousands)

Total Fund Balances - Governmental Funds (from previous page)

Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital Assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. These assets consist of:

Land

$

Buildings and Building Improvements

Improvements Other Than Buildings

Machinery and Equipment

Infrastructure

Construction in Progress

Works of Art

Intangibles - Other Than Software

Software

Accumulated Depreciation

Deferred inflows of resources are not reported in the governmental funds:
Revenues are not available soon enough after year end to pay for current period's expenditures Amount on refunding of bonded debt Related to OPEB Related to pensions

Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position.
Deferred outflows of resources are not reported in the governmental funds: Amount on refunding of bonded debt Related to OPEB Related to pensions
Other assets not available in the current period and therefore are not reported in the governmental funds: Net OPEB Asset Net Pension Asset Other Assets
Certain long-term liabilities and related accrued interest are not due and payable in the current period and, therefore, are not reported in the funds. General Obligation Bonds Premiums Accrued Interest Payable Revenue Bonds Premiums Accrued Interest Payable Capital Leases Compensated Absences Long-Term Notes Net OPEB Liability Net Pension Liability Other
Total Net Position - Governmental Activities

$
4,628,598 3,894,328
163,426 1,238,155 33,922,020 3,994,345
126 134,554 548,532 (23,636,827)
1,209,649 (854)
(1,422,935) (320,380)
93,781 353,701 976,908
237,119 115,550
100
(9,439,470) (912,166) (242,914) (570,480) (43,290) (4,399) (187,096) (377,657) (53,701)
(1,000,058) (3,970,619)
(80,580) $

10,260,470
24,887,257 (534,520) 633,517 1,424,390 352,769
(16,882,430) 20,141,453

The notes to the financial statements are an integral part of this statement.

35

State of Georgia
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Revenues: Taxes Licenses and Permits Intergovernmental - Federal Intergovernmental - Other Sales and Services Fines and Forfeits Interest and Other Investment Income Unclaimed Property Lottery Proceeds Nursing Home Provider Fees Hospital Provider Payments Other
Total Revenues
Expenditures: Current: General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Capital Outlay Debt Service Principal Interest Accrued Interest on Bonds Retired in Advance Discount on Bonds Retired in Advance Other Debt Service Expenditures Intergovernmental
Total Expenditures
Excess (Deficiency) of Revenues Over (Under) Expenditures
Other Financing Sources (Uses): Debt Issuance - General Obligation Bonds Debt Issuance - Refunding Bonds Debt Issuance - GARVEE Bonds Debt Issuance - General Obligation Bonds - Premium Debt Issuance - Refunding Bonds - Premium Debt Issuance - GARVEE Bonds - Premium Payment to Refunded Bond Escrow Agent Capital Leases Transfers In Transfers Out
Net Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances, July 1
Fund Balances, June 30

General Fund

General Obligation Bond Projects
Fund

Nonmajor Funds

$

24,030,236 $

411,368

18,262,964

414,935

444,255

482,952

156,770

141,925

1,237,345

168,453

345,213

379,857

46,476,273

-- $ -- 17,886 32,487 -- -- 42,436 -- -- -- -- 650
93,459

-- $ -- -- 171,175 139 -- 9,153 -- -- -- -- --
180,467

1,192,510 14,693,652 19,231,330 3,289,092 2,597,921
414,221 292,628 58,921
--
-- 176 -- -- -- --
41,770,451
4,705,822

7,149 -- -- -- -- -- -- --
959,817
-- -- -- -- 20,623 276,081
1,263,670
(1,170,211)

1,006 -- --
160,955 -- -- -- -- --
1,056,725 439,910 87 453 1,513 --
1,660,649
(1,480,182)

-- -- -- -- -- -- -- 13,300 150,931 (4,537,912)
(4,373,681)

332,141

8,074,750

$

8,406,891 $

914,675 -- --
85,090 -- -- -- --
1,527 (33,188)
968,104
(202,107)
1,483,312
1,281,205 $

-- 321,835 63,850
-- 29,772 11,455 (351,591)
-- 1,606,378
(59,678)
1,622,021
141,839
430,535
572,374 $

Total
24,030,236 411,368
18,280,850 618,597 444,394 482,952 208,359 141,925
1,237,345 168,453 345,213 380,507
46,750,199
1,200,665 14,693,652 19,231,330 3,450,047 2,597,921
414,221 292,628 58,921 959,817
1,056,725 440,086 87 453 22,136 276,081
44,694,770
2,055,429
914,675 321,835 63,850 85,090 29,772 11,455 (351,591) 13,300 1,758,836 (4,630,778)
(1,783,556)
271,873
9,988,597
10,260,470

The notes to the financial statements are an integral part of this statement.

36

State of Georgia
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2020 (dollars in thousands)

Net Change in Fund Balances - Governmental Funds (from previous page)

$

Amounts reported for governmental activities in the Statement of Activities are different because:

Capital outlays are reported as expenditures in governmental funds. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.
Capital outlay (net of losses), net of transfers to Business-Type Activities, Component Units and outside organizations
Depreciation expense

$

2,407,803

(1,171,722)

Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenue in the governmental funds.

Bond proceeds (net of payments to refunding escrow) and notes provide current financial resources to governmental funds; however, issuing debt increases long-term liabilities in the Statement of Net Position. Revenue Bonds Issued Premiums on Revenue Bonds Issued General Obligation Bonds Issued Premiums on General Obligation Bonds Issued Refunding Bonds Issued Payments to escrow agent for refunding

(349,765) (38,614) (914,675) (87,703) (35,920) 351,591

Some capital additions were financed through capital leases. In governmental funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Position, the lease obligation is reported as a liability.

Repayment of long-term debt is reported as an expenditure in governmental funds, but the repayment reduces the long-term liabilities in the Statement of Net Position. Payments were made on the following long-term liabilities:
General Obligation Bonds
Revenue Bonds
Notes
Capital Leases
Internal service funds are used by management to charge the costs of certain activities to individual funds. The incorporation of the external activities of these funds, and the elimination of profit/loss generated by primary government customers results in net revenue (expense) for Governmental Activities.

861,520 195,205
3,008 4,766

Some items reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. This adjustment combines the net changes in the following balances: Compensated Absences Accrued Interest on Bonds Payable Amortization of Deferred Amount on Refunding Bond Premiums OPEB costs, net Pension costs, net Other
Change in Net Position - Governmental Activities

4,274 6,635 (7,945) 151,092 470,127 (186,538) (15,837)
$

271,873
1,236,081 119,845
(1,075,086) (13,300)
1,064,499 42,961
421,808 2,068,681

The notes to the financial statements are an integral part of this statement.

37

State of Georgia
Statement of Net Position Proprietary Funds June 30, 2020
(dollars in thousands)

Assets Current Assets: Cash and Cash Equivalents Pooled Investments with State Treasury Investments Accounts Receivable (Net) Due from Other Funds Due from Component Units Inventories Other Assets Restricted Assets:
Cash and Cash Equivalents Restricted Pooled Investments with State
Treasury Investments
Total Current Assets
Noncurrent Assets: Investments Other Receivables Notes Receivable Restricted Assets: Cash and Cash Equivalents Investments Net OPEB Asset Non-Depreciable Capital Assets Depreciable Capital Assets, net
Total Noncurrent Assets Total Assets
Deferred Outflows of Resources

Higher Education
Fund

Business-type Activities - Enterprise Funds

State Health Benefits
Plan

Unemployment Compensation
Fund

Nonmajor Funds

Total

Governmental Activities -
Internal Service Funds

$ 1,312,304 $ 348,887 14,093 326,180 27,757 289,949 30,170 79,478
263,100
-- 755 2,692,673

20,016 $ 899,775
-- 79,269
-- -- -- --

-- $ -- -- 2,209,325 -- -- -- --

--
-- -- 999,060

777,524
-- -- 2,986,849

207 $ 25,075 319,146 10,065
69 182,290
126 30

1,332,527 $ 1,273,737
333,239 2,624,839
27,826 472,239 30,296 79,508

19,107 144,817
8,663 104,087 927,572
38 22,669
155

7,652
196,047 --
740,707

1,048,276
196,047 755
7,419,289

--
-- -- 1,227,108

101,682 990
28,757
2,541 297,812 12,008 801,015 10,737,100 11,981,905 14,674,578
1,569,836

-- -- --
-- -- 304 -- -- 304 999,364
1,805

-- -- --
-- -- -- -- -- -- 2,986,849
--

-- -- --
-- -- 402 42,065 57,508 99,975 840,682
20,601

101,682 990
28,757
2,541 297,812 12,714 843,080 10,794,608 12,082,184 19,501,473
1,592,242

24,319 -- --
-- -- 4,129 40,035 351,743 420,226 1,647,334
16,473 (continued)

The notes to the financial statements are an integral part of this statement.

38

State of Georgia
Statement of Net Position Proprietary Funds June 30, 2020
(dollars in thousands)

Business-type Activities - Enterprise Funds

Governmental Activities -

Liabilities Current Liabilities:
Accounts Payable and Other Accruals Due to Other Funds Due to Component Units Benefits Payable Unearned Revenue Notes and Loans Payable Claims and Judgments Payable Compensated Absences Payable Capital Leases/Installment Purchases Payable
Component Units Other Revenue Bonds Payable Other Current Liabilities Current Liabilities Payable from Restricted Assets Total Current Liabilities

Higher Education
Fund

State Health Benefits
Plan

Unemployment Compensation
Fund

227,609 258,571 10,123 46,895 270,711
1,699 2,382 181,887
100,352 21,725
-- 52,333
-- 1,174,287

4,028 3,015
-- 230,899 26,819
-- -- 255
-- -- -- --
-- 265,016

16,246 -- --
1,860,340 68,119 -- -- --
-- -- -- 3,630
-- 1,948,335

Noncurrent Liabilities: Compensated Absences Payable Capital Leases/Installment Purchases Payable Component Units Other Claims and Judgments Payable Revenue Bonds Payable Notes and Loans Payable Net OPEB Liability Net Pension Liability Other Noncurrent Liabilities Total Noncurrent Liabilities Total Liabilities

116,271
2,210,201 478,388 1,103 -- 8,843
4,602,231 3,859,160
6,130 11,282,327 12,456,614

272
-- -- -- -- -- 1,311 7,183 -- 8,766 273,782

--
-- -- -- -- -- -- -- -- -- 1,948,335

Deferred Inflows of Resources

1,497,051

2,356

--

Net Position Net Investment in Capital Assets Restricted for: Capital Projects Other Purpose Nonexpendable:
Permanent Trust Other Benefits Unemployment Compensation Benefits Unrestricted

8,440,767
12,440 275,144
184,012 -- --
(6,621,614)

--
-- 286
-- -- -- 724,745

--
-- --
-- -- 1,038,514 --

Total Net Position

$ 2,290,749 $

725,031 $ 1,038,514

Adjustment to reflect the consolidation of Internal Service Fund activities related to Enterprise Funds.

Net Position of Business-type Activities

Nonmajor Funds

21,195 25,654
-- -- -- 35,000 -- 179
-- -- 5,730 87,617
29,671 205,046

559
-- -- -- 228,504 221,698 6,810 8,637 849 467,057 672,103
1,325

88,992

-- 42,582

-- 319,340
-- (263,059)

$

187,855

$

Total

Internal Service Funds

269,078 287,240 10,123 2,138,134 365,649 36,699
2,382 182,321
100,352 21,725 5,730 143,580
29,671 3,592,684

45,923 794 -- -- 104
3,942 1,039,787
2,160
-- 5,061
-- 776
-- 1,098,547

117,102
2,210,201 478,388 1,103 228,504 230,541
4,610,352 3,874,980
6,979 11,758,150 15,350,834
1,500,732

2,918
-- 20,550
-- -- 4,721 14,015 51,191 -- 93,395 1,191,942
22,687

8,529,759
12,440 318,012
184,012 319,340 1,038,514 (6,159,928)
4,242,149 $
(184,339)
4,057,810

363,476
-- 3,421
-- -- -- 82,281
449,178

The notes to the financial statements are an integral part of this statement.

39

State of Georgia
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Business-type Activities - Enterprise Funds

Governmental Activities -

Operating Revenues: Operating Contributions/Premiums Operating Grants Rents and Royalties Sales and Services Tuition and Fees Less: Scholarship Allowances Other

Higher Education
Fund

State Health Benefits
Plan

Unemployment Compensation
Fund

Nonmajor Funds

Total

Internal Service Funds

$

153,772 $ 2,827,312 $

633,361 $

2,154,897

--

8,041,063

11,332

--

--

1,016,485

--

--

3,097,238

--

--

(729,331)

--

--

33,820

--

--

547 -- -- 39,298 -- -- --

$ 3,614,992 $ 10,195,960 11,332 1,055,783 3,097,238 (729,331) 33,820

281,087 --
43,875 320,675
-- -- 1,613

Total Operating Revenues

5,738,213

2,827,312

8,674,424

39,845

17,279,794

647,250

Operating Expenses: Personal Services Services and Supplies Scholarships and Fellowships Benefits Expense Claims and Judgments Interest Expense Depreciation Amortization Other
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses): Grants and Contributions Interest and Other Investment Income Interest Expense Other
Net Nonoperating Revenues (Expenses)

6,044,056 2,357,684
643,546 423,784
-- -- 593,579 -- --
10,062,649
(4,324,436)
1,374,800 59,473
(133,738) (140,225)
1,160,310

5,634 114,954
-- 2,614,741
-- -- -- -- --
2,735,329
91,983
-- 10,889
(213) --
10,676

-- -- -- 10,229,884 -- -- -- -- --
10,229,884
(1,555,460)
-- 58,118
-- --
58,118

10,012 34,843
-- 3,588
-- 7,960 11,685 (844)
667
67,911
(28,066)
-- 19,156 (10,014) (126,283)
(117,141)

6,059,702 2,507,481
643,546 13,271,997
-- 7,960 605,264 (844)
667
23,095,773
(5,815,979)
1,374,800 147,636 (143,965) (266,508)
1,111,963

49,343 326,692
-- -- 272,098 -- 21,495 -- --
669,628
(22,378)
3,063 3,472
-- (3,694)
2,841

Income (Loss) Before Contributions and transfers

(3,164,126)

102,659

(1,497,342)

(145,207)

(4,704,016)

(19,537)

Contributions to Permanent Endowments Capital Grants and Contributions

964

--

--

--

964

--

176,487

--

--

84,407

260,894

51,993

Total Contributions

177,451

--

--

84,407

261,858

51,993

Transfers: Transfers In Transfers Out

2,938,289

--

--

(74,929)

--

--

Net Transfers

2,863,360

--

--

Change in Net Position

(123,315)

102,659

(1,497,342)

Net Position, July 1 - Restated (Note 3)

2,414,064

622,372

2,535,856

Net Position, June 30

$ 2,290,749 $

725,031 $ 1,038,514 $

Adjustment to reflect the consolidation of Internal Service Fund activities related to Enterprise Funds.

Change in Net Position of business-type activities

14,660 --

2,952,949 (74,929)

14,660

2,878,020

(46,140)

(1,564,138)

233,995

187,855

$

(14,032)

$ (1,578,170)

5,757 (9,291) (3,534) 28,922 420,256 449,178

The notes to the financial statements are an integral part of this statement.

41

State of Georgia
Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Cash Flows from Operating Activities: Cash Received from Customers Cash Received from Other Funds (Internal Activity) Cash Received from Grants and Required Contributions/
Premiums
Cash Received from Tuition and Fees Cash Paid to Vendors Cash Paid to Employees Cash Paid for Benefits Cash Paid for Claims and Judgments Cash Paid to Other Funds (Internal Activity) Cash Paid for Scholarships, Fellowships and Loans Other Operating Receipts Other Operating Payments Net Cash Provided by (Used in) Operating Activities

Higher Education
Fund

$

49,405

--

2,156,939 3,533,499 (3,995,461) (4,475,969)
-- -- -- (657,943) 9,898 (979) (3,380,611)

Business-type Activities - Enterprise Funds

State Health Benefits
Plan

Unemployment Compensation
Fund

Nonmajor Funds

$

-- $

-- $

--

--

2,891,303 --
(114,928) (5,945)
(2,579,198) -- -- -- -- --
191,232

6,597,543 -- -- --
(8,377,517) -- -- --
3,630 --
(1,776,344)

32,362 1,223
-- -- (29,509) (11,271) -- -- (1,223) -- 84,963 -- 76,545

Total

$

81,767

1,223

11,645,785 3,533,499 (4,139,898) (4,493,185) (10,956,715)
-- (1,223) (657,943) 98,491
(979) (4,889,178)

Governmental Activities -
Internal Service Funds

$

99,783

459,455

-- -- (336,430) (56,938) -- (149,298) -- -- 150 (287) 16,435

Cash Flows from Noncapital Financing Activities: Proceeds from Debt

--

--

Bond Issuance Costs

--

--

Refunding Deposit with Escrow Agent

--

--

Interest Paid on Debt

--

--

Transfers from Other Funds

2,932,361

--

Transfers to Other Funds

(74,929)

--

Payments on Noncapital Financing Debt

--

--

Other Noncapital Receipts

1,249,196

--

Other Noncapital Payments

(39,735)

--

Net Cash Provided by (Used in) Noncapital Financing

Activities

4,066,893

--

--

57,032

57,032

--

(667)

(667)

--

(56,365)

(56,365)

--

(7,999)

(7,999)

--

8,060

2,940,421

--

--

(74,929)

--

(3,970)

(3,970)

--

--

1,249,196

--

--

(39,735)

--

(3,909)

4,062,984

-- -- -- -- 5,757 (3,362) -- 8,702 (7,191)
3,906

Cash Flows from Capital and Related

Financing Activities:

Capital Contributions

--

--

Capital Grants and Gifts Received

100,505

--

Grant Disbursements

--

--

Proceeds from Sale of Capital Assets

22,160

--

Intergovernmental Grant

--

--

Proceeds from Capital Debt

--

--

Acquisition and Construction of Capital Assets

(525,699)

--

Principal Paid on Capital Debt

(112,322)

--

Interest Paid on Capital Debt

(136,154)

--

Net Cash Used in Capital and Related Financing Activities

(651,510)

--

--

--

--

12,367

--

--

100,505

--

--

(96,315)

(96,315)

--

--

--

22,160

39

--

39,343

39,343

--

--

2,459

2,459

--

--

(28,737)

(554,436)

(17,541)

--

--

(112,322)

(15,080)

--

--

(136,154)

--

--

(83,250)

(734,760)

(20,215)

Cash Flows from Investing Activities: Proceeds from Sales of Investments Purchase of Investments Interest and Dividends Received Other Investing Activities Net Cash Provided by (Used in) Investing Activities

1,176,591 (1,123,996)
57,915 --
110,510

439,656 (221,082)
10,678 --
229,252

-- -- 58,118 -- 58,118

-- (13,351) 19,089 11,970 17,708

1,616,247 (1,358,429)
145,800 11,970 415,588

41,603 (30,810)
1,302 --
12,095

Net Increase (Decrease) in Cash and Cash Equivalents

145,282

420,484

(1,718,226)

7,094

(1,145,366)

12,221

Cash and Cash Equivalents, July 1 - Restated (Note 3)

1,781,550

499,307

2,495,750

221,887

4,998,494

151,704

Cash and Cash Equivalents, June 30

$ 1,926,832 $

919,791 $

777,524 $

228,981 $

3,853,128 $

163,925

(continued)

The notes to the financial statements are an integral part of this statement.

42

State of Georgia
Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Business-type Activities - Enterprise Funds

Governmental Activities -

Higher Education
Fund

State Health Benefits
Plan

Unemployment Compensation
Fund

Nonmajor Funds

Total

Internal Service Funds

Reconciliation of Operating Income (Loss) to Net Cash provided by (Used in) Operating Activities

Operating Income (Loss)

$ (4,324,436) $

Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities:

91,983 $ (1,555,460) $

(28,066) $ (5,815,979) $

(22,378)

Depreciation/Amortization Expense Other Reconciling Items Changes in Assets, Deferred Outflows of Resources,
Liabilities, and Deferred Inflows of Resources: Accounts Receivable Due from Other Funds Due from Component Units Notes Receivable Net OPEB Asset Other Assets Deferred Outflows of Resources Accounts Payable and Other Accruals Due to Other Funds Benefits Payable Unearned Revenue Claims and Judgments Payable Compensated Absences Payable Net OPEB Liability Net Pension Liability Other Liabilities Deferred Inflows of Resources

593,579 3,890
20,267 -- --
4,736 (300) (24,452) (155,239) (40,580)
-- -- 487 -- 34,070 (81,929) 504,320 14,160 70,816

--

--

--

--

48,492 (4,762)
-- -- (12) -- 653 153 3,015 35,543 17,119 -- 122 (1,538) (32) (10) 506

(2,088,340) -- -- -- -- -- --
5,991 --
1,852,367 5,468 -- -- -- -- 3,630 --

12,061 (553)

605,640 3,337

216 3 -- --
(402) 74 170
92,564 -- --
(7,300) -- (82)
(434) (1,851) 8,899 1,246

(2,019,365) (4,759) -- 4,736 (714) (24,378)
(154,416) 58,128 3,015
1,887,910 15,774 -- 34,110 (83,901) 502,437 26,679 72,568

21,495 --
5,070 (93,090)
13 -- (255) (7,038) 3,079 (2,498) (186) -- (4) 122,801 139 (14,685) 1,218 (154) 2,908

Net Cash Provided by (Used in) Operating Activities $ (3,380,611) $

191,232 $ (1,776,344) $

76,545 $ (4,889,178) $

16,435

Noncash Investing, Capital, and Financing Activities: Gift Reducing Proceeds of Gifts & Grants Recv'd

From other than Capital Purposes

$

Gifts other than Capital Assets Reducing Proceeds of

Grants and Gifts for Other than Capital Assets

Donation of Capital Assets Change in Receivable from Grantor Agency

Affecting Proceeds of Capital Debt Change in Accrued Interest Payable

Affecting Interest Paid Capital Assets Acquired by Incurring

Capital Lease Obligations

Change in Fair Value of Investments

Special Item - Equipment-Capital Asset Transfer

Gain (Loss) of Debt Refunding Claims and Judgments Reducing Other Noncap Fin

Pmts & Proceeds frm Cap Debt Loss on Disposal of Capital Assets Reducing

Proceeds from Sale of Capital Assets

Other

Total Noncash Investing, Capital and

Financing Activities

$

(18,848) $
3,770 65,465
5,561
227
76,531 1,559 11,091 (6,183)
--
(24,627) 50,600
165,146 $

-- $
-- --
--
--
-- -- -- --
--
-- --
-- $

-- $
-- --
--
--
-- -- -- --
--
-- --
-- $

-- $
-- --
--
--
-- -- 37,942 --
--
-- 9,947

(18,848) $
3,770 65,465
5,561
227
76,531 1,559 49,033 (6,183)
--
(24,627) 60,547

47,889 $

213,035 $

--
-- 39,627
--
--
-- 2,289
-- --
39,627
-- --
81,543

The notes to the financial statements are an integral part of this statement.

43

State of Georgia
Statement of Fiduciary Net Position Fiduciary Funds June 30, 2020
(dollars in thousands)

Assets Cash and Cash Equivalents Pooled Investments with State Treasury Restricted Pooled Investments with State Treasury Receivables, Net
Interest and Dividends Due from Brokers for Securities Sold Other Due from Other Funds Investments, at Fair Value Certificates of Deposit Pooled Investments Exchange Traded Funds Mutual Funds Government Obligations Corporate Bonds/Notes/Debentures Stocks Asset-backed Securities Mortgage Investments Real Estate Investment Trusts Capital Assets Land Buildings Software Machinery and Equipment Works of Art Accumulated Depreciation Net OPEB Asset Other Assets
Total Assets
Deferred Outflows of Resources
Liabilities Accounts Payable and Other Accruals Cash Overdraft Due to Other Funds Due to Brokers for Securities Purchased Due to Local Governments Salaries/Withholdings Payable Benefits Payable Unearned Revenue Compensated Absences Payable Net OPEB Liability Net Pension Liability Other Liabilities
Total Liabilities
Deferred Inflows of Resources
Net Position Restricted for:
Pension Benefits Other Postemployment Benefits Pool Participants Individuals, Organizations, and Other Governments Other Purposes
Total Net Position

Pension and Other Employee Benefits Trust

Investment Trust

Private Purpose Trust

Custodial Funds

Custodial

External Investment Pool

$

1,755,374 $

-- $

1,624,146

11,054,973

581

--

-- $ 358,376
--

90,526 $ 75,099
--

1,660 -- --

216,208

160

--

--

--

23,364

--

--

--

--

336,210

--

32,298

95,341

--

3,464

--

--

782,849

--

--

--

--

1,252

--

15,980,922

--

--

167,581

--

21,663

--

--

--

--

2,376,272

--

--

7,459

50,215

17,432,144

--

--

15,895

--

6,322,229

--

--

--

--

57,995,160

--

--

--

14,253

35,439

--

--

--

--

99,532

--

--

8,464

--

72,433

--

--

--

--

8,883 7,793 30,663 5,601
114 (36,629)
3,227 55
104,314,848
9,635

-- -- -- -- -- -- -- --
11,055,133
--

-- 826 -- 94 -- (754) 126 10
390,976
314

-- -- -- -- -- -- -- 4
1,244,470
--

-- -- -- -- -- -- -- --
66,128
--

42,349

--

--

8,556

--

--

--

19,851

--

--

520

--

--

--

--

41,285

--

--

--

--

--

--

--

843,137

--

--

--

--

29

--

41,959

--

--

--

--

545

--

--

3,653

--

85

--

68

--

--

11,217

--

305

--

--

28,862

--

1,156

--

--

--

--

332

470

--

166,822

--

21,712

855,845

16,121

--

602

--

--

100,446,306 3,695,234 -- -- --

-- -- 11,055,133 -- --

$ 104,141,540 $ 11,055,133 $

-- -- -- -- 368,976
368,976 $

-- -- -- 388,625 --
388,625 $

-- -- 66,128 -- --
66,128

The notes to the financial statements are an integral part of this statement.

44

State of Georgia
Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Additions: Contributions/Assessments Child Support Recovery Program Collections for Local Governments Detainees' Accounts Employer Fees Insurance Premiums NonEmployer Plan Members/Participants Pool Participant Deposits Student Financial Aid Student Support Miscellaneous Interest and Other Investment Income Dividends and Interest Net Appreciation (Depreciation) in Investments Reported at Fair Value Less: Investment Expense Transfers from Other Funds

Pension and Other Employee Benefits Trust

Investment Trust

Private Purpose Trust

Custodial Funds

Custodial

External Investment Pool

$

-- $

-- $

--

--

--

--

4,026,287

--

443

--

3,088

--

112,115

--

1,017,216

--

--

15,158,806

--

--

--

--

1,000

--

2,185,304

153,778

3,070,103 (82,346) 2,786

59 (5,220)
--

-- $ -- -- -- -- -- -- 78,846 -- -- -- --

898,830 $ 7,522,191
153,647 -- -- -- --
157,159 --
2,331,419 78,462 82,426

5,018

9,634

--

4

--

(43)

--

--

-- -- -- -- -- -- -- -- 7,595 -- -- --
1,331
(821) (83) --

Total Additions

10,335,996

15,307,423

Deductions: Distributions Benefits Child Support Recovery Program Detainees' Accounts Distributions to Local Governments General and Administrative Expenses Pool Participant Withdrawals Refunds Student Financial Aid Student Support Miscellaneous
Transfers to Other Funds

7,657,446 -- -- --
46,209 2,286 96,340
-- -- -- --

-- -- -- -- -- 13,549,547 -- -- -- -- --

Total Deductions

7,802,281

13,549,547

Net Increase (Decrease) in Fiduciary Net Position

2,533,715

1,757,876

Net Position, July 1

101,607,825

9,297,257

Net Position, June 30

$ 104,141,540 $ 11,055,133 $

83,864

11,233,729

22,139 -- -- --
1,573 -- 62 -- -- -- 3

150,916 866,704 146,792 7,522,191
-- -- -- 2,334,095 85,902 87,039 5,327

23,777

11,198,966

60,087

34,763

308,889

353,862

368,976 $

388,625 $

8,022
-- -- -- -- -- 2,965 -- -- -- -- --
2,965
5,057
61,071
66,128

The notes to the financial statements are an integral part of this statement.

45

State of Georgia
Statement of Net Position Component Units June 30, 2020
(dollars in thousands)
Assets Current Assets:
Cash and Cash Equivalents Pooled Investments with State Treasury Investments Receivables
Accounts (Net) Capital Leases from Primary Government Interest and Dividends Intergovernmental Receivables Notes and Loans (Net) Taxes Due from Primary Government Due from Component Units Inventory Other Current Assets Restricted for: Cash and Cash Equivalents Pooled Investments with State Treasury Investments Other Receivables (Net)
Total Current Assets
Noncurrent Assets: Investments Receivables Capital Leases from Primary Government Notes and Loans (Net) Other (Net) Restricted Assets Cash and Cash Equivalents Investments Net OPEB Asset Receivables Notes and Loans (Net) Interest and Dividends Other (Net) Non-depreciable Capital Assets Depreciable Capital Assets (Net) Other Noncurrent Assets Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources

Georgia Environmental
Finance Authority

Geo. L. Smith II Georgia World Congress Center
Authority

Georgia Housing and
Finance Authority

Georgia Lottery Corporation

$

7,804 $

1,113,902

--

3,656 --
2,088 2,306
-- -- -- -- -- 3

-- -- -- -- 1,129,759

4,944 $ 55,120
--
5,295 -- -- -- -- 429 -- -- 437 101
-- -- -- 54,789 121,115

88,866 $ 102,428 110,280
-- -- 864 -- -- -- -- -- -- 97,855
-- 149,752
-- -- 550,045

41,682 -- --
221,582 -- -- -- -- -- -- -- --
7,197
-- -- -- -- 270,461

--
-- 1,483,339
--
-- -- 310
-- -- -- -- 133 -- 1,483,782
2,613,541
1,026

--
-- -- --
16,277 --
1,466
-- -- -- 80,776 1,397,339 -- 1,495,858
1,616,973
17,169

214,341
-- 607,076
--
43,103 65,813
--
1,329,629 8,733 -- 800 2,656 --
2,272,151
2,822,196
--

--
-- -- --
19,166 197,256
--
-- -- -- -- 9,407 -- 225,829
496,290
46

The notes to the financial statements are an integral part of this statement.

46

Georgia Ports Authority

Georgia Tech Foundation, Incorporated

Nonmajor Component
Units

Total

$

64,924 $

306,574

18,685

17,655 $ -- --

627,148 $ 192,626 131,458

853,023 1,770,650
260,423

54,289 -- -- -- -- -- 599 --
5,977 2,474

21,229 7,793
-- -- 918 -- 3,331 -- -- 1,646

355,863 92,559 3,914 20,606 180,205
468 27,889 24,394 30,802 40,999

661,914 100,352
6,866 22,912 181,123
897 31,819 24,394 37,216 150,275

-- -- -- -- 453,522

11,792 -- --
36,324 100,688

98,085 --
215,971 53,395 2,096,382

109,877 149,752 215,971 144,508 4,721,972

--
-- -- --
-- -- --
-- -- -- 433,034 1,027,745 4,347 1,465,126
1,918,648
53,264

282,125
95,064 --
6,954
-- 1,501,569
--
-- -- 29,347 71,876 76,366 32,812 2,096,113
2,196,801
--

476,478
2,115,137 179,440 128,397
219,352 1,707,385
1,462
15 -- 59,545 289,548 1,192,718 49,198 6,418,675
8,515,057
115,909

972,944
2,210,201 2,269,855
135,351
297,898 3,472,023
3,238
1,329,644 8,733 88,892
876,034 3,706,364
86,357 15,457,534
20,179,506
187,414 (continued)

47

State of Georgia
Statement of Net Position Component Units June 30, 2020
(dollars in thousands)
Liabilities Current Liabilities:
Accounts Payable and Other Accruals Due to Primary Government Due to Component Units Funds Held for Others Unearned Revenue Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Current Liabilities Current Liabilities Payable from Restricted Assets:
Other Total Current Liabilities
Noncurrent Liabilities: Unearned Revenue Notes and Loans Payable Revenue/Mortgage Bonds Payable Grand Prizes Payable Derivative Instrument Payable Net OPEB Liability Net Pension Liability Other Noncurrent Liabilities Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows
Net Position Net Investment in Capital Assets Restricted for:
Bond Covenants/Debt Service Capital Projects Permanent Trust Expendable Other Purposes Nonexpendable:
Permanent Trust Other Purposes Loan and Grant Programs Unrestricted
Total Net Position

Georgia Environmental
Finance Authority

Geo. L. Smith II Georgia World Congress Center
Authority

Georgia Housing and
Finance Authority

Georgia Lottery Corporation

5,136 -- -- -- -- -- -- 116

73 26,405
-- -- 3,336 410 -- 5,647

8,036 2,186
-- -- 3,014 -- 42,170 348,748

-- 5,252

9,249 45,120

-- 404,154

-- -- -- -- -- 942 4,123 348 5,413
10,665

-- 44,716
-- -- -- 32,898 28,446 47,441 153,501
198,621

-- -- 1,561,586 -- -- -- -- 608,261 2,169,847
2,574,001

2,136

6,046

--

133

1,478,115

--

--

--

--

--

17,791

-- -- 1,922,788 678,845

-- -- -- (66,431)

$

2,601,766 $

1,429,475 $

3,456
-- --
--
-- -- -- 244,739
248,195 $

121,205 146,316
-- -- -- -- -- 5,193
18,880 291,594
-- -- -- 168,189 -- -- 226 4,094 172,509
464,103
6,294
9,407
-- --
--
-- -- -- 16,532
25,939

The notes to the financial statements are an integral part of this statement.

48

Georgia Ports Authority

Georgia Tech Foundation, Incorporated

Nonmajor Component
Units

Total

36,995 642 -- -- -- -- --
3,942

5,550 8,791
-- -- 15,844 19,048 13,165 2,958

192,697 463,456 24,394 57,202 189,916 18,636 172,869 56,991

369,692 647,796 24,394 57,202 212,110 38,094 228,204 423,595

-- 41,579

-- 65,356

3,868 1,180,029

31,997 2,033,084

1,883 -- -- -- --
11,297 61,666 20,097 94,943
136,522

-- 69,487 243,728
-- -- -- -- 30,941 344,156
409,512

13,987 139,144 2,778,979
-- 43,945 99,095 148,912 174,451 3,398,513
4,578,542

15,870 253,347 4,584,293 168,189 43,945 144,232 243,373 885,633 6,338,882
8,371,966

2,605

--

55,668

72,749

1,460,779

(9,748)

707,899

3,650,041

--

--

13,168

13,168

--

20,521

224,213

244,734

--

184,968

604,891

789,859

--

--

400,028

417,819

-- -- -- 372,006

1,393,639 -- --
197,909

1,029,602 48,350 -- 968,605

2,423,241 48,350
1,922,788 2,412,205

$

1,832,785 $

1,787,289 $

3,996,756 $

11,922,205

49

State of Georgia
Statement of Activities Component Units For the Fiscal Year Ended June 30, 2020
(dollars in thousands)
Georgia Environmental
Finance Authority

Geo. L. Smith II Georgia World Congress Center
Authority

Georgia Housing and
Finance Authority

Georgia Lottery Corporation

Expenses

$

40,076 $

172,684 $

197,819 $

4,750,229

Program Revenues: Sales and Charges for Services Operating Grants and Contributions Capital Grants and Contributions

29,855 96,325
--

45,267 8,341 4,014

97,156 126,301
--

4,762,754 -- --

Total Program Revenues

126,180

57,622

223,457

4,762,754

Net (Expenses) Revenue

86,104

(115,062)

25,638

12,525

General Revenues: Taxes
Unrestricted Investment Income/(Loss) Payments from the Primary Government
Contributions to Permanent Endowments

--

4,581

--

--

--

--

--

--

--

--

--

--

--

--

--

--

Total General Revenues

--

4,581

--

--

Change in Net Position

86,104

(110,481)

25,638

12,525

Net Position, July 1 - Restated (Note 3) Net Position, June 30

2,515,662

1,539,956

$

2,601,766 $

1,429,475 $

222,557 248,195 $

13,414 25,939

The notes to the financial statements are an integral part of this statement.

50

Georgia Ports Authority

Georgia Tech Foundation, Incorporated

Nonmajor Component
Units

Total

$

383,357 $

110,387 $

3,453,511 $

9,108,063

481,728 32,473 5,774
519,975
136,618

32,520 62,003
--
94,523
(15,864)

1,574,946 1,763,176
52,527
3,390,649
(62,862)

7,024,226 2,088,619
62,315
9,175,160
67,097

-- -- -- --
--
136,618

-- 6,260
-- 31,382
37,642
21,778

5,486 31,758 80,975 49,560
167,779
104,917

10,067 38,018 80,975 80,942
210,002
277,099

1,696,167

1,765,511

3,891,839

11,645,106

$

1,832,785 $

1,787,289 $

3,996,756 $

11,922,205

51

State of Georgia
Notes to the Financial Statements Index
Page Note 1 Summary of Significant Accounting Policies................................................................................................... 54 Note 2 Changes in Financial Accounting and Reporting............................................................................................. 72 Note 3 Fund Equity Reclassifications and Restatements............................................................................................. 75 Note 4 Fund Balance and Net Position ........................................................................................................................ 76 Note 5 Deposits and Investments................................................................................................................................. 78 Note 6 Derivative Instruments...................................................................................................................................... 107 Note 7 Receivables....................................................................................................................................................... 113 Note 8 Interfund Balances and Transfers..................................................................................................................... 114 Note 9 Capital Assets.................................................................................................................................................... 116 Note 10 Long-Term Liabilities....................................................................................................................................... 121 Note 11 Leases................................................................................................................................................................ 133 Note 12 Endowments...................................................................................................................................................... 138 Note 13 Service Concession Arrangements................................................................................................................... 139 Note 14 Deferred Inflows and Outflows........................................................................................................................ 142 Note 15 Retirement Systems.......................................................................................................................................... 144 Note 16 Postemployment Benefits - Multi-employer Plans........................................................................................... 177 Note 17 Postemployment Benefits - Single-employer Plans.......................................................................................... 197 Note 18 Risk Management............................................................................................................................................. 211 Note 19 Tax Abatement.................................................................................................................................................. 214 Note 20 Litigation, Contingencies, and Commitments.................................................................................................. 215 Note 21 Segment Information........................................................................................................................................ 220 Note 22 Subsequent Events............................................................................................................................................ 222
53

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation
The accompanying financial statements of the State have been prepared in conformity with U.S. Generally Accepted Accounting Principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). Preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
The fiscal year end for the primary government and component units is June 30, except for, VSU Auxiliary Service Real Estate Foundation, Inc. (component unit) and the Stone Mountain Memorial Association (component unit) which have a fiscal year end of December 31.
B. Financial Reporting Entity
For financial reporting purposes, the State reporting entity includes the primary government and its component units. The primary government consists of all the organizations that compose the legal entity of the State. All agencies, departments, authorities, commissions, courts, councils, boards, universities, colleges, foundations, retirement funds, associations and other organizations that are not legally separate are, for financial reporting purposes, considered part of the primary government. Component units are legally separate organizations for which the State's elected officials are financially accountable.
Financial accountability is the ability of the State to appoint a voting majority of an organization's governing board and to impose its will upon the organization or when there exists the potential for the organization to provide specific financial benefits or impose specific financial burdens on the primary government. When the State does not appoint a voting majority of an organization's governing body, GASB standards require inclusion in the financial reporting entity if: (1) an organization is fiscally dependent upon the State because its resources are held for the direct benefit of the State or can be accessed by the State and (2) the potential exists for the organization to provide specific financial benefits to, or impose specific financial burdens on the State. In addition, component units can be other organizations for which the nature and significance of their relationships with the primary government are such that exclusion would cause the financial statements to be misleading.
Where noted below, the State's component units issue their own separate audited financial statements which may be obtained from their respective administrative offices. The most recent financial statements for component unit organizations with "AUD" at the end of their descriptions below may be obtained from the Department of Audits and Accounts (DOAA) online at www.audits.ga.gov. Certain component units (with "NSR" at the end of their descriptions below) are not required to prepare or issue separate financial statements beyond the financial information included in this report. The financial statements for discretely presented higher education foundations and similar organizations can be obtained from their respective administrative offices or from the Board of Regents.
During the 2019 session, the Georgia General Assembly passed and the Governor signed new legislation which dissolved the Georgia International and Maritime Trade Center Authority and created the Savannah-Georgia Convention Center Authority, a state Authority, effective July 1, 2019. The management of the business and affairs of the Authority is vested in a Board of Directors. The new Board of Directors consists of 11 members: six members appointed by the Governor; three members appointed by the members of the Georgia General Assembly representing Chatham County; the President of the Savannah Area Convention and Visitors' Bureau; and the President of the Savannah Economic Development Authority. The Authority is considered a component unit of the State for financial reporting purposes because of the significance of its legal, operational and financial relationships
54

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) with the State. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
Blended Component Units
Blended component units have governing bodies substantively the same as the State, provide services entirely or almost entirely to the primary government or have total debt outstanding, including leases, that is expected to be paid entirely, or almost entirely, with resources of the State. As such, although they are legally separate entities, they are, in substance, part of the government's operations. GASB standards require this type of component unit to be reported as part of the primary government and blended into the appropriate funds.
The State's blended component units, as described in the Nonmajor Governmental Funds and Internal Service Funds portions of the Supplementary Information Combining and Individual Fund Statements category of the Financial Section, are as follows:
Special Revenue Funds
The following component units provide services entirely or almost entirely to the primary government and are therefore considered blended component units:
The Georgia Aviation Authority was created to provide oversight and efficient operation of state aircrafts and aviation operations, and ensure the safety of state air travelers and aviation property. (NSR)
The State Road and Tollway Authority (SRTA) is a legally separate public corporation created to finance transportation projects and operate toll facilities in the State of Georgia. SRTA's total debt outstanding is expected to be paid with resources of the Primary Government and therefore is considered a blended component unit. (AUD)
Debt Service Fund
The State Road and Tollway Authority uses a debt service fund for the payment of principal and interest on the debt of SRTA's governmental funds. SRTA issues bonded debt which finances State transportation infrastructure construction. (AUD)
Enterprise Funds
The following component units provide services entirely or almost entirely to the primary government and are therefore considered blended component units:
The Georgia Higher Education Facilities Authority is a legally separate public corporation created for the purpose of financing eligible construction, renovation, improvement, and rehabilitation or restoration projects for the University System of Georgia. The Authority issues debt and enters into lease agreements principally with the University System of Georgia Foundation, Inc. (discretely presented component unit). The costs of the Authority's debt are recovered through lease payments from the Foundation. The Authority provides services entirely or almost entirely to the Primary Government and is therefore considered a blended component unit. (AUD)
55

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The State Employees' Assurance Department - Active (SEAD-Active) is used to account for the accumulation of resources for the purpose of providing survivors' benefits for eligible members of the Employees', Judicial, and Legislative Retirement Systems. SEAD-Active is a cost-sharing multiple employer life insurance plan created in 2007 by the Georgia General Assembly to amend Title 47 of the Official Code of Georgia Annotated, relating to retirement, so as to establish a fund for the provision of term life insurance to active members of ERS, LRS, and GJRS. (AUD)
The State Road and Tollway Authority uses an enterprise fund to account for tolling and transit activities, including the Xpress Commuter Bus Service, the I-75 South Metro Express Lanes, and all other facilities of the tolling system (i.e. the I-85 Express Lanes and six toll facilities under planning and/or construction). (AUD)
Internal Service Funds
The following component units all provide services entirely or almost entirely to the Primary Government and are therefore considered blended component units:
The Georgia Building Authority is responsible for all services associated with the management of State office buildings, maintaining the grounds within the State Capitol complex, maintaining the Governor's Mansion and operating parking facilities. (AUD)
The Georgia Correctional Industries Administration utilizes the inmate work force to manufacture products and provide services for the penal system, other units of state government and local governments. (NSR)
The Georgia Technology Authority was created to provide technology enterprise management and technology portfolio management to state and local governments. (NSR)
Discretely Presented Component Units
Discrete presentation entails reporting component unit financial data in a separate column and/or rows in each of the government-wide statements to emphasize that these component units are legally separate from the State. Except for Georgia Military College, the other component units are included in the reporting entity because, under the criteria established by GASB, the State has the ability to impose its will on these organizations.
The determination of major component units is based on any of the following factors: (a) the services provided by the component unit to the citizenry are such that separate reporting as a major component unit is considered essential to financial statement users, (b) there are significant transactions with the primary government, or (c) there is a significant financial benefit or burden relationship with the primary government.
The State's major discretely presented component units are described below:
The Georgia Environmental Finance Authority (GEFA) is a body corporate and politic. GEFA provides funding to eligible municipalities, counties, water and sewer authorities in the State for construction and expansion of public water, sewer, and solid waste facilities. The State periodically provides general obligation bond proceeds to GEFA to fund various loan programs for water and sewerage facilities. GEFA is governed by a board of directors consisting of three officials designated by statute and eight members appointed by the Governor. (AUD)
56

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Geo. L. Smith II Georgia World Congress Center Authority is a body corporate and politic and an instrumentality and public corporation of the State. The Authority is responsible for operating and maintaining a comprehensive international trade and convention center consisting of a complex of facilities suitable for multipurpose use. The Authority is governed by a board of directors composed of 15 members appointed by the Governor. (AUD)
The Georgia Housing and Finance Authority (GHFA) is a body corporate and politic. GHFA is responsible for facilitating housing, housing finance and financing for health facilities and health care services throughout the State. The powers of GHFA are vested in 18 members who also comprise the board of the Department of Community Affairs (DCA). Board members are appointed by the Governor and are composed of one member from each U.S. Congressional District in the State, plus four additional members from the State at large, and include elected officials of counties or municipalities, individuals with an interest or expertise in community or economic development, environmental issues, housing development or finance or citizens who in the judgment and discretion of the Governor would enhance the DCA board. (AUD)
The Georgia Lottery Corporation (GLC) is a public body, corporate and politic. GLC operates lottery games to provide continuing entertainment to the public and maximize revenues, the net proceeds of which are utilized to support improvements and enhancements for educational purposes. Net proceeds are remitted to the State's General Fund and are appropriated to certain educational agencies through the State's budget process. GLC is governed by a board of directors composed of seven members, all of which are appointed by the Governor. The State is legally entitled to residual resources of GLC. (AUD)
The Georgia Ports Authority (GPA) is a body corporate and politic. The purpose of the Authority is to develop and improve the harbors or seaports of the State for the handling of waterborne commerce and to acquire, construct, equip, maintain, develop and improve said harbors, seaports and their facilities. The State has provided general obligation bond proceeds to GPA to finance projects and facilities. The Board consists of 13 members, all of which are appointed by the Governor. (AUD)
The Georgia Tech Foundation, Incorporated is a nonprofit organization established to promote, in various ways, the cause of higher education in the State, to raise and receive funds for the support and enhancement of the Georgia Institute of Technology (GIT), and to aid the GIT in its development as a leading educational institution. The individual financial statements may be obtained from the foundation at the following address: 760 Spring St. NW, Atlanta, GA 30308.
The State's nonmajor discretely presented component units are as follows:
Economic Development Organizations
The Economic Development organizations cultivate business for the State. These organizations are described below:
The Georgia Development Authority is a body corporate and politic. The Authority was created to assist agricultural and industrial interests by providing credit and servicing functions to better enable farmers and businessmen to obtain needed capital funds. The Authority is governed by a board of directors composed of seven members; four are appointed by the Governor and three are State Agency heads. (AUD)
57

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The OneGeorgia Authority is a body corporate and politic and an instrumentality and public corporation of the State. The purpose of the Authority is to promote the health, welfare, safety and economic society of the rural citizens of the State through the development and retention of employment opportunities in rural areas and the enhancement of the infrastructures that accomplish that goal. The six members of the Authority are State officials designated by statute. (NSR)
The Savannah Georgia Convention Center Authority a state Authority, effective July 1, 2019, formally Georgia International and Maritime Trade Center Authority is a body corporate and politic. The Authority was created to develop and promote the growth of the State's import and export markets through its ports and other transportation modes, and to construct, operate and maintain the Savannah International Trade and Convention Center. The Authority is governed by a board of directors composed of 11 members: six members appointed by the Governor; three members appointed by the members of the Georgia General Assembly representing Chatham County; the President of the Savannah Area Convention and Visitors' Bureau; and the President of the Savannah Economic Development Authority. (AUD)
The Georgia Higher Education Assistance Corporation is a nonprofit public authority, body corporate and politic. The Corporation was created to improve the higher educational opportunities of eligible students by guaranteeing educational loan credit to students and to parents of students. The Corporation is governed by the Board of Commissioners of the Georgia Student Finance Commission. (AUD)
The Georgia Military College (GMC) is a body corporate and politic, and is an instrumentality and a public corporation of the State. GMC is dedicated to providing a high-quality military education to the youth of the State. The Board of Trustees consists of the mayor of the City of Milledgeville and six additional members, one of which is elected from each of the six municipal voting districts of the City, as required by statute. The government, control, and management of GMC are vested in the Board of Trustees. GMC receives any designated funds appropriated by the General Assembly through the Board of Regents of the University System of Georgia. Although GMC does not meet the fiscal dependency or financial benefit/burden criteria, due to the nature and significance to the State and the potential assumption that GMC is the same as other colleges reported within the state reporting entity, management has determined that it would be misleading to exclude GMC from the state reporting entity. (NSR)
The Georgia Public Telecommunications Commission is a body corporate and politic. The Commission is a public charitable organization created for the purpose of providing educational, instructional and public broadcasting services to citizens of Georgia. The budget of the Commission must be approved by the State. (AUD)
The Georgia Regional Transportation Authority is a body corporate and politic. Within its jurisdiction, the purpose of the Authority is to manage land transportation and air quality, review all Developments of Regional Impact (DRI), and approve the allocation of state and federal transportation resources in metro Atlanta via the Atlanta Transportation Improvement Program (TIP). The Authority also serves in an advisory capacity to the State Road and Tollway Authority related to the management and operations of the Xpress Commuter Bus Service. The Governor appoints all 15 Board Members of the Authority. (NSR)
The Georgia Student Finance Authority is a body corporate and politic. The Authority was created for the purpose of improving higher educational opportunities by providing educational scholarship, grant and loan assistance. A substantial amount of funding is provided to the Authority by the State. (AUD)
The REACH Georgia Foundation is a nonprofit organization that was formed to ensure that Georgia's academically promising students have the academic, social and financial support needed to graduate from high
58

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
school, access college and achieve postsecondary success. The REACH Georgia Program is the State of Georgia's first needs-based mentorship and college scholarship program and the Foundation's mission is to raise and invest funds. (AUD)
The Regional Educational Service Agencies were established to provide shared services to improve the effectiveness of educational programs and services of local school systems and to provide direct instructional programs to selected public school students. The State has 16 of these agencies. (NSR)
The Superior Court Clerks' Cooperative Authority is a body corporate and politic and an instrumentality and public corporation of the State created to provide a cooperative for the development, acquisition and distribution of record management systems, information, services, supplies and materials for superior court clerks of the State. (AUD)
Tourism / State Attractions
These organizations promote State interests or encourage visitation to the State through the operation and maintenance of various attractions. Organizations involved in such activities are described below:
The Georgia Agricultural Exposition Authority is a body corporate and politic. The Authority is responsible for provision of a facility for the agricultural community, for public events, exhibits and other activities and for promotion and staging of a statewide fair. (NSR)
The Jekyll Island State Park Authority is a body corporate and politic and an instrumentality and public corporation of the State. The Authority was created to operate and manage resort recreational facilities on Jekyll Island. The Authority includes its component unit, Jekyll Island Foundation, Inc. (NSR)
The Lake Lanier Islands Development Authority is a body corporate and politic and an instrumentality and public corporation of the State. The purpose of the Authority is to manage, preserve and protect projects on Lake Lanier Islands. (NSR)
The North Georgia Mountains Authority is a body corporate and politic and an instrumentality and public corporation of the State responsible for the construction and management of recreation, accommodation and tourist facilities and services. (NSR)
The Stone Mountain Memorial Association is a body corporate and politic and an instrumentality and public corporation of the State. The Authority is responsible for maintenance and operation of Stone Mountain as a Confederate memorial and public recreational area. (AUD)
The Higher Education Foundations and Similar Organizations are nonprofit organizations established to secure and manage support for various projects including acquisitions and improvements of properties and facilities for units of the University System of Georgia. The following are the organizations included in the Higher Education Foundations:
Georgia Advanced Technology Ventures, Inc. and Subsidiaries AU Health System, Inc. Augusta University Foundation, Inc. and Subsidiaries Augusta University Research Institute, Inc. Georgia College & State University Foundation, Inc. and Subsidiaries
59

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Georgia Gwinnett College Foundation, Inc. Georgia Health Sciences Foundation, Inc. Georgia Southern University Housing Foundation, Inc. and Subsidiaries Georgia State University Athletic Association, Inc. Georgia State University Foundation, Inc. Georgia State University Research Foundation, Inc. Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Research Corporation Kennesaw State University Foundation, Inc. Medical College of Georgia Foundation, Inc. Middle Georgia State University Real Estate Foundation, Inc. and Subsidiaries University of Georgia Athletic Association, Inc. University of Georgia Foundation University of Georgia Research Foundation, Inc. and Subsidiaries University of North Georgia Real Estate Foundation, Inc. and Subsidiaries UWG Real Estate Foundation, Inc. University System of Georgia Foundation, Inc. and Affiliates VSU Auxiliary Services Real Estate Foundation, Inc.
Fiduciary Component Units
GAAP requires fiduciary component units to be reported as fiduciary funds of the primary government rather than as discrete component units. In accordance with GAAP, fiduciary funds and component units that are fiduciary in nature are excluded from the government-wide financial statements. The State's two most significant fiduciary component units are the Employees' Retirement System of Georgia (ERS) and the Teachers Retirement System of Georgia (TRS). Fiduciary component units are detailed in the Fiduciary Funds portion of the Supplementary Information Combining and Individual Fund Statements category of the Financial Section.
C. Government-wide and Fund Financial Statements
Government-wide Financial Statements
The Statement of Net Position and Statement of Activities display information about the primary government and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. Governmental activities, which normally are financed through taxes, intergovernmental revenues, and other nonexchange revenues, are reported separately from business-type activities, which are financed in whole or in part by fees charged to external parties for goods or services. Likewise, the primary government is reported separately from its discretely presented component units.
The Statement of Net Position presents the State's non-fiduciary assets, liabilities and deferred outflows/inflows of resources, with the difference reported as net position. Net position is reported in three categories:
Net Investment In Capital Assets consists of capital assets, net of accumulated amortization/depreciation and reduced by outstanding balances for bonds, notes and other debt that are attributed to the acquisition, construction or improvement of those assets. In addition, deferred outflows/ inflows of resources that are attributable to the acquisition, construction or improvement of capital assets or related debt are included in
60

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Net Investment in Capital Assets. If there are significant unspent related debt proceeds or deferred inflows of resources at the end of the reporting period, the portion of the debt or deferred inflows of resources attributable to the unspent amount are not included.
Restricted net position results when constraints placed on net position use are either externally imposed by creditors, grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation.
Unrestricted net position consists of net position that does not meet the definition of the two preceding categories. Unrestricted net position often is designated, indicating it is not available for general operations. Such designations have internally imposed constraints on resources, but can be removed or modified.
When both restricted and unrestricted resources are available for use, generally it is the State's policy to use restricted resources first. Other funds not otherwise remitted to the State Treasury, which may be available from restricted or unrestricted net position should be utilized next, prior to the use of State funds.
The Statement of Activities demonstrates the degree to which the direct expense of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable within a specific function. Program revenues include (a) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not meeting the definition of program revenues are instead reported as general revenues.
Fund Financial Statements
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide statements. Major individual governmental funds and major individual proprietary funds are reported as separate columns in the fund financial statements. All remaining governmental and proprietary funds are aggregated and reported as nonmajor funds. Internal service funds are also aggregated and reported in a separate column on the proprietary funds financial statements.
D. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to timing of the measurements made, regardless of the measurements focus applied.
The government-wide financial statements and the proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the "accrual basis of accounting". Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of cash flows. Grants and similar items are recognized as revenues in the fiscal year in which eligibility requirements imposed by the provider have been met. Unearned revenue is recorded when cash or other assets are received prior to being earned. Additionally, long-term assets and liabilities, such as capital assets and long-term debt, are included on the financial statements.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they become both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible
61

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the State generally considers taxes and other revenues to be available if the revenues are collected within 30 days after fiscal year-end. An exception to this policy is federal grant revenues, which generally are considered to be available if collection is expected within 12 months after year-end. All unearned revenue reported represents transactions for which assets have been received, but for which not all earning criteria have been met. Capital purchases are recorded as expenditures and neither capital assets nor long-term liabilities, such as long-term debt, are reflected on the balance sheet.
Expenditures generally are recorded when the related fund liability is incurred, as under the accrual basis of accounting. However, debt service expenditures, as well as expenditures related to compensated absences, claims and judgments, and other long-term liabilities, are recorded only when payment is due or (for debt service expenditures), when amounts have been accumulated in the debt service fund for payments to be made early in the subsequent fiscal year.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
The State's proprietary funds and discretely presented component units, other than certain higher education foundations and similar organizations, follow all GASB pronouncements, (including all National Council on Governmental Accounting (NCGA) Statements and Interpretations currently in effect). Certain higher education foundations and similar organizations report under the Financial Accounting Standards Board (FASB) standards; including FASB Codification Topic 958, Not-for-Profit Entities. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. The FASB reports were reclassified or reformatted, as applicable, to GASB presentation in these financial statements.
GAAP requires that revenues and expenses relating to summer school activities, the dates of which cross the State's fiscal year, are allocated between fiscal years rather than reported in a single fiscal year with the exception of teachers' salaries which are recorded in the fiscal year earned.
The State reports the following major funds:
Major Governmental Funds
General Fund The principal operating fund of the State which accounts for all financial resources of the general government, except those required to be accounted for in another fund.
General Obligation Bond Projects Fund Accounts for the financial resources to be used for the acquisition and construction of major capital facilities (other than those financed by proprietary funds) financed with general obligation bond proceeds, including educational facilities for county and independent school systems.
Major Enterprise Funds
Higher Education Fund Accounts for the operations of State colleges and universities and State technical colleges.
62

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
State Health Benefit Plan (SHBP) Administers self-insured program of health benefits for the employees of units of government of the State, units of county government and local education agencies located within the State.
Unemployment Compensation Fund Accounts for the collection of employers' unemployment insurance tax and the payment of unemployment insurance benefits.
Additionally, the State reports the following fund types:
Governmental Funds
Special Revenue Funds Account for specific revenue sources that are legally restricted to expenditures for specific purposes. The State's special revenue funds represent the blended component units that conduct general governmental functions and activities related to the Transportation Investment Act.
Debt Service Funds Account for the payment of principal and interest on general long-term debt. The General Obligation Debt Sinking Fund, which is a legally mandated fund responsible for fulfilling annual debt service requirements on all general obligation debt, is included in this fund type, as is the SRTA Debt Service Fund.
Proprietary Funds
Enterprise Funds Account for those activities for which fees are charged to external users for goods or services. These funds are also used when the activity is financed with debt that is secured by a pledge of the net revenues from fees and charges.
The State's nonmajor enterprise funds are Georgia Higher Education Facilities Authority, State Employees' Assurance Department and State Road and Tollway Authority.
Internal Service Funds Account for the financing of goods or services provided by one department or agency to other State departments or agencies, or to other governmental entities, on a cost-reimbursement basis. The predominant participant in internal service fund activity is the primary government. The activities accounted for in the State's internal service funds include risk management, prison industries, property management, technology, and personnel administration.
Fiduciary Funds
Pension and Other Employee Benefit Trust Funds Account for the retirement systems and plans administered by the System , TRS, and for pension plans administered on behalf of a variety of local government officials and employees. These funds also include those used to report the accumulation of resources for, and payment of other postemployment benefits.
Investment Trust Funds Account for the external portions of government-sponsored investment pools, including Georgia Fund 1 and Georgia Fund 1 Plus.
Private Purpose Trust Funds Report resources of all other trust arrangements in which principal and income benefit individuals, private organizations, or other governments. Auctioneers Education Research and Recovery Fund, Real Estate Education, Research, and Recovery Fund and the Subsequent Injury Trust Fund are reported in this category.
63

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Custodial Funds formally agency funds. Custodial funds reports fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria.
E. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position/Fund Balances
Cash and Cash Equivalents
Cash and cash equivalents include currency on hand and demand deposits with banks and other financial institutions and short-term, highly liquid investments with maturity dates within three months of the date acquired, such as certificates of deposit, money market certificates and repurchase agreements. Cash and cash equivalents also include the holdings of the Board of Regents short-term fund.
Investments
Investments include financial instruments with terms in excess of three months from the date of purchase, certain other securities held for the production of revenue, and land and other real estate held as investments by endowments. Investments are presented at fair value. Changes in the fair value of land and other real estate held as investments by endowments are reported as investment income.
Pooled Investments with State Treasury
The Office of the State Treasurer (OST) manages the Local Government Investment Pool (LGIP) Trust. The LGIP Trust consists of four pools: Georgia Fund 1 ("GF1"), Georgia Fund 1 Plus ("GF1 Plus"), Georgia Extended Asset Pool ("GEAP") and Georgia Extended Asset Pool Plus ("GEAP Plus") and the LGIP Trust Reserve. For cash flow purposes, amounts reported in the Pooled Investments with State Treasury are considered cash equivalents.
The State's External Investment Pools (described below) generally value investments as follows:
All investments except repurchase agreements, non-negotiable certificates of deposit ("CD"), direct-issued commercial paper, and other such nonparticipating investments are priced at fair value.
Repurchase agreements, non-negotiable CD's, direct-issued commercial paper, and other such nonparticipating investments are carried at cost because they are nonparticipating contracts that do not capture interest rate changes in their value.
Security transactions are accounted for on a trade date basis which means that the purchases and sales of securities are recorded on the day the trade takes place with a corresponding payable or receivable.
External Investment Pools
The State Depository Board may permit any department, board, bureau or other agency to invest funds collected directly by such organization in short-term time deposit agreements, provided that the interest income of those funds is remitted to the State Treasurer as revenues of the State. As a matter of general practice, however, demand funds of any department, board, bureau or other agency in excess of current operating expenses are required to be deposited with the State Treasurer for the purpose of pooled investment per Official Code of Georgia (OCGA) 501763. Such cash is managed primarily in pooled investment funds to maximize interest earnings. The pooled
64

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
investment funds "Georgia Fund 1, and "Georgia Fund 1 Plus" are also available on a voluntary basis to organizations outside of the State reporting entity. The funds in the local government investment pool may be consolidated with State funds under control of the State Treasurer for investment purposes, per OCGA 36-83-8.
Georgia Fund 1 The (GF1 or the Primary Liquidity Portfolio's) primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal. It is managed as a stable Net Asset Value (NAV) pool. The Pool operates and reports to participants on an amortized cost basis. The income, gains and losses, net of administration fees of the pool are allocated to participants monthly on the ratio of the participant's share of the total funds in the pool based on the participant's average daily balance. This method differs from the fair value method used to value investments in these financial statements because the amortized cost method is not designed to distribute to participants all unrealized gains and losses in the fair values of the pool's investments. Per the Governmental Accounting Standards Board ("GASB") 79, to qualify for the use of amortized cost accounting for financial reporting purposes, an investment pool must meet all the criteria listed in GASB 79. GFI is managed as a stable NAV pool but does not comply with all the requirements listed in GASB 79; therefore, the investments of the pool are reported at fair value at fiscal year end.
Georgia Fund 1 Plus (GF1 Plus) was established on July 1, 2016, and initially funded through redemptions in GF1. It is managed to maintain a stable Net Asset Value (NAV) of $1.00. For financial reporting purposes, the pool is reported at fair value. GF1 Plus was established as an additional LGIP investment option for the state, state agencies, and eligible municipalities looking to benefit from higher yields available by adding credit exposure.
Georgia Extended Asset Pool Plus (GEAP Plus) was established on July 1, 2018 as an investment for the OPEB Trust funds. GEAP Plus was initially funded with OPEB Trust funds and received another contribution of OPEB funds in January 2019. In accordance with the OPEB Trust Policy, funds from each Target Maturity Portfolio (TMP) as they matured were partly distributed for reinvestment in equity investments managed by the Division of Investment Services of the Teachers Retirement System of Georgia with the remainder principal and interest reinvested in GEAP and GEAP Plus TMPs. For financial reporting purposes, investments of the pool are reported at fair value at fiscal year end.
Georgia Extended Asset Pool (GEAP) was established on July 1, 2019 as an investment for the OPEB Trust Funds and initially funded with the July maturity of GEAP plus. It was comprised of a series of individual Target Maturity Portfolios (TMP). Funds from each TMP, as they matured, were partly distributed for reinvestment in equity investments managed by the Division of Investment Services of the Teachers Retirement System of Georgia with the remainder principal and interest reinvested in additional TMPs.
Other Investments
The State's Unemployment Compensation Fund monies are required by the Social Security Act to be invested in the U.S. Department of Treasury, Bureau of Public Debt Unemployment Trust Fund (BPDUTF), which is not registered with the Securities and Exchange Commission. The fair value of the position in the BPDUTF is the same as the value of the BPDUTF shares.
Receivables
Receivables in the State's governmental funds pertain primarily to the accrual of taxes, as well as to federal grants and to revenues related to charges for services. Receivables in all other funds have arisen in the ordinary course of
65

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
business. Receivables are recorded, net of an allowance for uncollectible accounts, when either the asset or revenue recognition criteria (See Note 1-D) have been met. Receivables from the federal government are reasonably assured; an allowance for uncollectible accounts is not typically established for federal receivables. In the governmental fund financial statements, the portion considered "available" is recorded as revenue; the remainder is recorded as a deferred inflow of resources-unavailable.
Inventories and Prepaid Items
Inventories of supplies and materials are determined by physical count and/or perpetual inventory records and are valued at cost, weighted average cost, moving average cost, or lower of weighted average cost or market, using the first-in/first-out (FIFO) method, depending on the individual organization's preference. The costs of governmental fund inventories are recorded as expenditures when consumed rather than when purchased for larger agencies and agencies with material inventories. Other agencies may use either the purchase or consumption method.
Prepaid items include payments made to vendors and local government organizations for services that will benefit periods beyond the fiscal year-end. Also, the employer's portion of health insurance benefits applicable to coverage effective after the fiscal year-end is recorded as a prepaid item.
The fund balance of governmental funds is reported as nonspendable for inventories and prepaid items to indicate that these amounts do not represent expendable available financial resources.
Restricted Assets
Certain cash and cash equivalents, investments, and other assets are classified as restricted assets on the Balance Sheet and/or Statement of Net Position because their use is limited by applicable bond covenants, escrow arrangements or other regulations.
Capital Assets
Capital assets of governmental funds are recorded as expenditures at the time of purchase and capitalized in the governmental activities column of the government-wide Statement of Net Position. Capital assets of the State's proprietary funds and component units are capitalized in the fund in which they are utilized. Capital assets are stated at historical cost or, in some instances, estimated historical cost. Estimation methods include using historical sources to determine the cost of similar assets at the time of acquisition and indexing where the historical cost of an asset is estimated by taking the current cost of a similar asset and dividing it by an index figure which adjusts for inflation. Donated capital assets are stated at acquisition value at the time of donation and disposals are removed at recorded cost. Infrastructure and intangible assets, as defined by the State's policy, acquired after June 30, 1980, are reported.
All acquisitions in the following asset categories are capitalized regardless of cost:
Land and non-depreciable land improvements Bridges and roadways included in the State highway system Works of art and collections, acquired or donated (unless held for financial gain)
Amounts for other asset categories are capitalized when the cost or value equals or exceeds the following thresholds. Items acquired through capital leases or donations are subject to these capitalization thresholds, using the classifications most closely related to the leased or donated assets.
66

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Asset Category Infrastructure other than bridges and roadways in State highway system Software Intangible assets, other than software Buildings and building improvements Improvements other than buildings Library collections capitalize all if collection equals or exceeds Machinery and equipment

Threshold $ 1,000,000 $ 1,000,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 5,000

The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives is not capitalized. The State holds certain assets such as works of art, historical documents, and artifacts that have not been capitalized or depreciated because either they are held for financial gain or they are protected and preserved for exhibition, education, or research and are considered to have inexhaustible useful lives. Major outlays for construction of bridges and roadways in the State highway system are capitalized as projects are constructed. All other major construction projects are capitalized when projects are completed. Interest incurred during construction is not capitalized in governmental funds. Interest incurred during the construction of proprietary fund assets is included in the capitalized value of the asset.
Capital assets are depreciated over their useful lives using the straight-line depreciation method. The governmentwide, proprietary fund and component unit financial statements report depreciation expense.
Capital assets without indefinite or inexhaustible useful lives are generally amortized or depreciated on the straightline basis over the following useful lives:

Infrastructure Buildings and building improvements Improvements other than buildings Machinery and equipment Software Intangible assets, other than software Library collections Works of art and collections

10-100 years 5-60 years 15-50 years 3-20 years 3-10 years 20 years 10 years 5-40 years

Deferred Outflows of Resources
In addition to assets, the government-wide and fund financial statements will sometimes report a separate section of deferred outflows of resources. This separate financial statement element represents a consumption of net position or fund balance that applies to future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then.
Compensated Absences
The compensated absences liability is accrued for the estimated value of leave payments (e.g., for vacation, holiday deferrals, FLSA compensatory time, etc.) using pay rates in effect at the balance sheet date.

67

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Full-time employees earn annual leave ranging from 10 to 14 hours each month depending upon the employee's length of continuous State service with a maximum accumulation of 360 hours. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. Funds are provided in the appropriation of funds each fiscal year to cover the cost of annual leave of terminated or retired employees.
Employees earn 10 hours of sick leave each month with a maximum accumulation of 720 hours. Sick leave does not vest with the employee. There is no liability for accumulated sick leave because the State has no obligation to pay sick leave upon termination or retirement of employment. Unused accumulated sick leave is forfeited upon retirement or termination of employment. However, certain employees who retire with 120 days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System. No liability is recorded for rights to receive sick pay benefits.
Overtime for non-exempt employees is governed by the provisions of the Fair Labor Standards Act (FLSA). Overtime worked by non-exempt employees will normally be credited as FLSA compensatory time at a rate of one and one-half hours of compensatory time for each hour of overtime worked. Employees receive pay for overtime in lieu of FLSA compensatory time as provided in statewide policy or upon exceeding the accumulation limits of FLSA compensatory time and upon separation from employment.
Long-term Obligations
Long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities column or business-type activities column on the government-wide Statement of Net Position and on the proprietary fund Statement of Net Position in the fund financial statements. Bond discounts and premiums are deferred and amortized over the life of the bonds using a method that approximates the effective interest method or the straightline method. Bonds payable are reported net of the unamortized bond premium or discount. Bond issuance costs are recognized during the current period.
In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
Principal and interest payments on long-term debt usually should be reported as expenditures under the modified accrual basis of accounting when due. When notes and loans payables become due and payable the liabilities are recorded in the fund from which payment will be made. When bonds or notes are a direct obligation and/or expected to be repaid from proprietary resources, they are recorded as a liability of the proprietary fund at face value.
The Tax Reform Act of 1986 requires governmental organizations issuing tax-exempt bonds to refund to the U.S. Treasury, interest earnings on bond proceeds in excess of the yield on those bonds. Governmental organizations must comply with arbitrage rebate requirements in order for their bonds to maintain tax-exempt status. Organizations are required to remit arbitrage rebate payments for non-purpose interest to the federal government at least once every five years over the life of the bonds. Arbitrage liability is treated as an expense in the governmentwide statements when the liability is recognized. In the fund financial statements, governmental funds report arbitrage (other debt service) expenditures when the liability is due.
68

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Pollution remediation obligations are recorded when the State knows that a site is polluted and one or more obligating events have occurred. The amount recorded is an estimate of the current value of potential outlays for the cleanup, calculated using the "expected cash flows" measurement technique.
Lease obligation that transfers substantially all the benefits and risks inherent to ownership of the property or equipment is accounted for as a capital lease by the lessee. The recording of a capital lease reflects the acquisition of a capital asset and the incurrence of a long-term liability. All other leases are classified as operating leases.
Governmental funds recognize periodic payments on capital and operating leases as expenditures in the period incurred. State organizations reported as governmental funds are also recording other financing sources and capital outlay expenditures for the net present value of the minimum lease payments. This applies in the initial year of the lease term only. Principal amounts of lease payments due within 12 months are recorded as a current liability.
Proprietary funds, fiduciary funds, component units using the accrual basis, and the government-wide financial statements are reporting capital assets as well as long and short-term payables on the statement of net position. Therefore, for capital leases, a capital asset and lease obligation are recorded at inception of the lease and periodic lease payments are recorded as interest expense and a reduction to the capital lease obligation. Additionally, depreciation expense related to the leased capital asset are recorded.
Deferred Inflows of Resources
In addition to liabilities, the government-wide and fund financial statements will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position or fund balance that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.
Net Position
The difference between assets, deferred outflows of resources, liabilities and deferred inflows of resources is "Net Position" on the government-wide, proprietary fund and fiduciary fund financial statements.
Net position is reported as net investment in capital assets, restricted or unrestricted. "Net Investment in Capital Assets" consists of capital assets, net of accumulated amortization/depreciation and reduced by outstanding balances for bonds, notes and other debt that are attributed to the acquisition, construction or improvement of those assets. In addition, deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction or improvement of capital assets or related debt are included in Net Investment in Capital Assets. If there are significant unspent related debt proceeds or deferred inflows of resources at the end of the reporting period, the portion of the debt or deferred inflows of resources attributable to the unspent amount are not included.
Restricted net position results when constraints placed on net position use are either externally imposed by creditors, grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation.
Unrestricted net position consists of net position that does not meet the definition of the two preceding categories may be designated, indicating it is not available for general operations. Such designations have internally imposed constraints on resources, but can be removed or modified.
When both restricted and unrestricted net position are available for use, it is the State's policy to first utilize federal funds available from restricted net position. Other funds not otherwise remitted to the State Treasury, which may be available from restricted or unrestricted net position should be utilized next, prior to the use of State funds.
69

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fund Balances
Generally, fund balance represents the difference between the assets, deferred outflows of resources, liabilities and deferred inflows of resources under the current financial resources measurement focus of accounting. In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows:
Nonspendable Fund balances are reported as nonspendable when amounts cannot be spent because they are either (a) not in spendable form (i.e., items that are not expected to be converted into cash) or (b) legally or contractually required to be maintained intact, such as inventory, prepaid items, and the principal in a permanent fund.
Restricted Fund balances are reported as restricted when there are limitations imposed on their use either through constitutional provisions or enabling legislation adopted by the State or through the external restrictions imposed by creditors, grantors or laws or regulations of other governments.
Committed Fund balances are reported as committed when they can be used only for specific purposes pursuant to constraints imposed by formal actions of both the Governor and the General Assembly. The Georgia Legislature and Governor represent the State's highest level of decision-making authority. Formal action consists of legislation passed by both the House and Senate and signed by the Governor and is required to establish, modify or rescind a limitation.
Assigned Fund balances are reported as assigned when amounts are constrained by the State's intent that they be used for specific purposes, but they are neither restricted nor committed. Assignments may be made under statutory authority of management of the reporting organizations in the State.
Unassigned The residual amount of fund balance is reported as unassigned for balances that do not meet the above constraints. The government reports positive unassigned fund balance only in the general fund. Negative unassigned fund balances may be reported in all funds.
As with net position, when both restricted and unrestricted (committed, assigned, unassigned) fund balances are available for use, it is the State's policy to first utilize federal funds available from restricted fund balance. Other funds not otherwise remitted to the State Treasury, which may be available from restricted, committed or assigned fund balance should be utilized next, prior to the use of State funds when expenditures are incurred for purposes for which amounts in any of those funding sources could be used. Within unrestricted fund balance, after the above consideration of funding source, the State's policy is that committed amounts generally should be reduced first, followed by assigned amounts and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used.
Interfund Activity and Balances
Equally offsetting asset and liability accounts (due from/to other funds) are used to account for amounts owed to a particular fund by another fund for obligations on goods sold or services rendered.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements with the exception of activities between governmental activities and business-type activities. In the fund financial statements, transfers represent flows of assets without equivalent flows of assets in return or requirements for repayment.
70

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In addition, transfers are recorded when a fund receiving revenue provides it to the fund which expends the resources. Transfers of balances between funds are made to accomplish various provisions of law. Interfund payables and receivables have been eliminated from the Statement of Net Position except for amounts due between governmental and business-type activities. These amounts are reported as internal balances on the Statement of Net Position.
71

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 2 - CHANGES IN FINANCIAL ACCOUNTING AND REPORTING
A. Implementation of New Accounting Standards
In fiscal year 2020, the State implemented the following GASB Statements:
GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance, the primary objective of this Statement is to provide temporary relief to governments and other stakeholders in light of the COVID-19 pandemic. That objective is accomplished by postponing the effective dates of certain provisions in Statements and Implementation Guides that first became effective or are scheduled to become effective for periods beginning after June 15, 2018, and later. The effective dates of certain provisions contained in the following pronouncements are postponed by one year:
Statement No. 83, Certain Asset Retirement Obligations Statement No. 84, Fiduciary Activities Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct
Placements Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction
Period Statement No. 90, Majority Equity Interests Statement No. 91, Conduit Debt Obligations Statement No. 92, Omnibus 2020 Statement No. 93, Replacement of Interbank Offered Rates Implementation Guide No. 2017-3, Accounting and Financial Reporting for Postemployment
Benefits Other Than Pensions (and Certain Issues Related to OPEB Plan Reporting) Implementation Guide No. 2018-1, Implementation Guidance Update--2018 Implementation Guide No. 2019-1, Implementation Guidance Update--2019 Implementation Guide No. 2019-2, Fiduciary Activities
The effective dates of the following pronouncements are postponed by 18 months:
Statement No. 87, Leases Implementation Guide No. 2019-3, Leases
Earlier application of the provisions addressed in this Statement is encouraged and is permitted to the extent specified in each pronouncement as originally issued. In compliance with GASB Statement No. 95, the two standards listed below were early implemented in fiscal year 2020.
GASB Statement No. 84, Fiduciary Activities, improves guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. Governments with activities meeting the criteria should present a statement of fiduciary net position and a statement of changes in fiduciary net position. An exception to that requirement is provided for a businesstype activity that normally expects to hold custodial assets for three months or less. This Statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria. A fiduciary component unit, when reported in the fiduciary fund
72

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 2 - CHANGES IN FINANCIAL ACCOUNTING AND REPORTING (continued)
financial statements of a primary government, should combine its information with its component units that are fiduciary component units and aggregate that combined information with the primary government's fiduciary funds. This Statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an event has occurred that compels the government to disburse fiduciary resources. Events that compel a government to disburse fiduciary resources occur when a demand for the resources has been made or when no further action, approval, or condition is required to be taken or met by the beneficiary to release the assets.
Adoption of this standard caused an increase to net position of $14.3 million and $418.7 million to Governmental Activities and Fiduciary funds, respectively in fiscal year 2020.
GASB Statement No. 90, Majority Equity Interests, improves the consistency and comparability of reporting a government's majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. It defines a majority equity interest and specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government's holding of the equity interest meets the definition of 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. For all other holdings of a majority equity interest in a legally separate organization, a government should report the legally separate organization as a component unit, and the government or fund that holds the equity interest should report an asset related to the majority equity interest using the equity method. This Statement establishes that ownership of a majority equity interest in a legally separate organization results in the government being financially accountable for the legally separate organization and, therefore, the government should report that organization as a component unit. This Statement also requires that a component unit in which a government has a 100 percent equity interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of resources at acquisition value at the date the government acquired a 100 percent equity interest in the component unit. Transactions presented in flows statements of the component unit in that circumstance should include only transactions that occurred subsequent to the acquisition. Adoption of this Statement did not have a significant impact on the financial statements.
B. Change in Accounting Principles
Primary Government
Management has changed the method for estimating balances for the State Road and Tollway Authority's financial position and activities. This change resulted in a decrease to net position of $14.5 million.
C. Correction of Prior Year Errors
Primary Government
Department of Revenue (DOR) recognized net receivables in the general fund in prior years of $551.6 million which were due to local governments. Of this amount $522.6 million results in overstated revenues in the general fund, and $29.0 million of overstated revenues in Governmental Activities in prior years.
DOR periodically performs audits of sales tax distributions to local governments. The results of these audits are typically not material. However, during fiscal year 2020, DOR identified $241.1 million of sales tax owed to local governments related to prior years.
73

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020 NOTE 2 - CHANGES IN FINANCIAL ACCOUNTING AND REPORTING (continued)
During the fiscal year, it was determined that capital assets were overstated at the Department of Human Services by $51.1 million in fiscal year 2019, resulting in an overstatement of net position in the governmental activities. An adjustment was made in fiscal year 2020 to decrease net position to reflect correction to the prior year amounts. An adjustment was made to Higher Education Fund, an Enterprise Fund, for misstated balances reported at June 30, 2019. Beginning net position has been decreased by $0.9 million to reflect correction of prior year amounts. Component Units During the fiscal year, adjustments were made to Component Units for misstated capital asset balances reported between asset classes at June 30, 2019. The adjustments between classes had no effect on beginning net position.
74

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 3 - FUND EQUITY RECLASSIFICATIONS AND RESTATEMENTS Reclassifications and Restatements consisted of the following (amount in thousands):

Governmental Funds and Activities Major Funds: General Fund General Obligation Bond Projects Fund Nonmajor Funds: Special Revenue Funds Debt Service Fund Total Governmental Funds
Government-wide Adjustments Capital Assets, net of depreciation Other Noncurrent Assets and Liabilities Deferred Inflows/Outflows of Resources Long-Term Liabilities Related to Debt OPEB Assets/Liabilities Pension Assets/Liabilities Inclusion of Internal Service Funds in Governmental Activities
Total Governmental Funds and Activities
Proprietary Funds and Business-type Activities Major Funds: Higher Education Fund State Health Benefit Plan Unemployment Compensation Fund Nonmajor Funds: Enterprise Funds Internal Service Funds Internal Service Funds Look-Back Adjustments
Removal of Internal Service Funds Relating to Governmental Activities
Total Proprietary Funds and Business-type Activities
Fiduciary Funds Pension and Other Employee Benefit Trust Funds Investment Trust Funds Private Purpose Trust Funds Custodial Funds Custodial External Investment Pool
Total Fiduciary Funds
Discretely Presented Component Units
Total Reporting Entity

6/30/2019 As Previously
Reported

Change in Accounting Principles

Correction of Prior Year Errors

6/30/2019 (Restated)

$ 8,824,118 $ 1,483,312
458,816 64,016 10,830,262

14,273 $ --

(763,641) $ --

(28,551) (63,746) (78,024)

-- -- (763,641)

8,074,750 1,483,312
430,265 270
9,988,597

23,327,093 (695,951) 1,339,931
(11,100,870) (2,296,049) (3,018,736)

9,235 144,093
(3,871) (131,583)
(213) 692

(51,140) --
(29,020) -- -- --

23,285,188 (551,858) 1,307,040
(11,232,453) (2,296,262) (3,018,044)

590,564 $ 18,976,244 $

-- (59,671) $

-- (843,801) $

590,564 18,072,772

$ 2,414,925 $ 622,372
2,535,856
174,508 420,256

-- $ -- --
59,487 --

(861) $ -- --
-- --

2,414,064 622,372
2,535,856
233,995 420,256

(590,564) $ 5,577,353 $

-- 59,487 $

-- (861) $

(590,564) 5,635,979

$ 101,607,825 $ 9,297,257 305,075

-- $ -- 3,814

-- $ -- --

101,607,825 9,297,257 308,889

-- -- $ 111,210,157 $ $ 11,645,106 $ $ 147,408,860 $

61,071 353,862 418,747 $
-- $ 418,563 $

-- -- -- $ -- $ (844,662) $

61,071 353,862 111,628,904 11,645,106 146,982,761

75

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 4 - FUND BALANCE AND NET POSITION A. Fund Balances
The specific purposes of the governmental funds fund balances, classified as other than unassigned, at June 30, 2020 are as follows (amount in thousands):

Nonspendable Fund Balance Inventories and Prepaid Amounts
Restricted Fund Balance Capital Projects Guaranteed Revenue Debt Common Reserve Fund Emission Regulation Healthcare Facility Regulation Health Care Access and Improvement Indigent Care Trust Fund LOGO Program Lottery For Education Roads and Bridges (Motor Fuel Tax Funds) Disaster Grants - Public Assistance Roadside Enhancement and Beautification Fund Unclaimed Property Underground Storage Tank Trust Fund Unissued Debt/Debt Service Utility Location, Planning and Coordination of Transportation Projects Food Stamp Recoveries Brain & Spinal Injury Trust Fund Help America Vote Act Victims of Violent Crime Emergency Fund Health and Welfare Behavioral Health Community Health Human Services Public Health Transportation Public Safety Economic Development and Assistance Culture and Recreation Other
Total Restricted Fund Balance
Committed Fund Balance Armory Facility Maintenance Billeting Funding Rebate and Commissions Other
Total Committed Fund Balance

General Fund

General Obligation Bond Projects
Fund

Nonmajor Governmental
Funds

Total

$

39,561 $

-- $

16,770 $

56,331

$

-- $

1,189,608 $

53,774

--

6,186

--

24,398

--

19,899

--

4,515

--

17,574

--

1,423,113

--

3,439,325

--

25770

--

4348

--

31,169

--

87,017

--

67,699

--

28,083

--

15,859

--

2,943

--

20,758

--

26,848

--

2,583 7,664 20,816 6,377 2,081 13,676 9,113 51,489 27,755

-- -- -- -- -- -- -- -- 80,038

$

5,440,832 $

1,269,646 $

-- $
-- -- -- -- -- -- -- 94,017 -- -- -- -- 64,016
-- -- -- -- --
-- -- -- -- 354,181 -- -- -- --
512,214 $

1,189,608
53,774 6,186 24,398 19,899 4,515 17,574 1,423,113 3,533,342 25,770 4,348 31,169 87,017 131,715
28,083 15,859 2,943 20,758 26,848
2,583 7,664 20,816 6,377 356,262 13,676 9,113 51,489 107,793
7,222,692

$

1,402 $

1,382

13,695

893

$

17,372 $

-- $ -- -- --
-- $

-- $ -- -- --

1,402 1,382 13,695
893

-- $

17,372 (continued)

76

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 4 - NET POSITION AND FUND BALANCES (continued)

Assigned Fund Balance General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation
Total Assigned Fund Balance

General Fund

General Obligation Bond Projects
Fund

Nonmajor Governmental
Funds

$

146,095 $

14,664

172,505

67,039

58,011

9,483

24,243

2,546

11,559 $ -- -- -- -- -- -- --

2,029 $ -- --
41,361 -- -- -- --

$

494,586 $

11,559 $

43,390 $

Total
159,683 14,664 172,505 108,400 58,011 9,483 24,243 2,546
549,535

B. Restricted Net Position
The State's net position restricted by enabling legislation represents resources which a party external to a government, such as citizens, public interest groups, or the judiciary, can compel the government to use only for the purpose specified by the legislation. The government-wide Statement of Net Position reports $8.2 billion of restricted net position.
C. Deficit Net Position
The governmental activities of the State ended the year with an unrestricted net position deficit of $7.6 billion. The deficit is a result of pension and Other Postemployment Benefit (OPEB) liabilities and the continued practice of incurring debt for the purposes of capital acquisition and construction on behalf of county and independent school systems, business-type activities and State schools. As of June 30, 2020, outstanding general obligation bonds applicable to these projects was $5.6 billion. Since the occurrence of this debt does not result in capital asset acquisitions for governmental activities, the debt is not reflected in the net position category, Net Investment in Capital Assets, but rather in the unrestricted net position category. The unrestricted deficit balance of the primary government however has been adjusted for the governmental activities outstanding debt balances related to capital assets reported in business-type activities in the amount of $3.3 billion. GASB 68, as related to pensions required the State to recognize its proportional share of the net pension liability of the pension plans applicable to said standard. As of June 30, 2020, the liability resulted in a $3.3 billion impact to unrestricted net position. GASB 75, as related to OPEB required the State to recognize its proportional share of the net OPEB liability of the OPEB plans applicable to said standard. As of June 30, 2020, the liability resulted in a $2.1 billion impact to unrestricted net position.
The business-type activities of the State ended the year with an unrestricted net position deficit of $6.3 billion, which is primarily due to the recognition of net pension and OPEB liabilities. The higher education fund has deficit balances due to pension and OPEB. GASB 68, as related to pensions, required the State to recognize its proportional share of the net pension liability of the pension plans applicable to said standard. As of June 30, 2020, the liability resulted in a $2.9 billion impact to unrestricted net position. GASB 75, as related to OPEB, required the State to recognize its proportional share of the net OPEB liability of the OPEB plans applicable to said standard. As of June 30, 2020, the liability resulted in a $4.9 billion impact to unrestricted net position. The State Road and Tollway Authority's deficit of $263.7 million in unrestricted net position of business-type activities is primarily a result of $256.7 million in outstanding balances for the TIFIA and Design Building finance loans related to the I-75 Northwest Corridor project and $34.1 million in outstanding balances for the transportation revenue bonds related to the I-75S express Lanes project.

77

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS
Cash and cash equivalents and investments as of June 30, 2020 are classified in the accompanying financial statements as follows (amount in thousands):

Primary Government Cash and Cash Equivalents Pooled Investments with State Treasury Investments Restricted Assets Cash and Cash Equivalents Pooled Investments with State Treasury Investments
Fiduciary Funds Cash and Cash Equivalents Pooled Investments with State Treasury Investments
Pooled Investments with State Treasury
Total Cash and Investments

Primary Government and Fiduciary
Funds

Component Units

Total

$ 3,092,847 $ 12,870,231 1,547,720
1,050,817 485,705 298,567
1,827,709 13,112,594 100,600,913
581
$ 134,887,684 $

853,023 $ 1,770,650 1,233,367

3,945,870 14,640,881 2,781,087

407,775 149,752 3,687,994

1,458,592 635,457
3,986,561

--

1,827,709

--

13,112,594

--

100,600,913

--

581

8,102,561 $ 142,990,245

Cash on hand, deposits and investments as of June 30, 2020 consist of the following (amount in thousands):

Cash on Hand Deposits with Financial Institutions (Note 5A) Investments (Note 5B) Pooled Investments with State Treasury (Note 5D) Unemployment Compensation Funds with U.S. Treasury Assets Held at the Board of Regents
on Behalf of Other Organizations

Primary

Government

and Fiduciary Component

Funds

Units

Total

$

1,792 $

69 $

1,861

3,563,832

1,085,897

4,649,729

104,195,513

4,976,105 109,171,618

26,469,112

1,920,401

28,389,513

777,524

--

777,524

(120,089)

120,089

--

Total Cash and Investments

$ 134,887,684 $ 8,102,561 $ 142,990,245

A. Deposits
Deposits include certificates of deposit and demand deposit accounts. The State Depository Board (Board) has authority to determine collateral requirements for State demand deposit accounts. Beginning in October 2008, in response to the U.S. financial crisis, the Board required all uninsured State deposits to be fully collateralized until September 2012. Its investment policy was amended to permit the Office of the State Treasurer (OST) to diversify its portfolio to include investments in deposit agreements that are with highly rated U.S. banks classified to be low or very low risk, as measured by the OST counterparty risk assessment model.

78

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
The Board permits OST to invest in deposit agreements in approved banks as an alternative to purchasing commercial paper and corporate notes issued by highly rated U.S. banks because of the clear preference of all depositor claims, insured and uninsured, over general creditors. OST has been advised that there is a clear and significant difference in favor of deposits over commercial paper in the event of insolvency or liquidation of a U.S. bank thus, OST gives preference to interest-bearing demand deposits due to both a preference in safety of capital and daily liquidity. For any single financial institution, investments deposit agreements, in approved banks that are not collateralized or secured as described below, together with purchases of commercial paper, cannot exceed 5% of total portfolio assets invested by OST.
Other than the deposit agreements referenced above, State demand deposits, time deposits and other certificates of deposit must be secured by eligible collateral, a Federal Home Loan Bank letter of credit, or a surety bond approved by the Board. There are currently no issuers of surety bonds that have been approved by the Board. Eligible collateral includes any one or more of the following securities as enumerated in OCGA 50-17-59:
1) Bonds, bills, certificates of indebtedness, notes or other direct obligations of the United States or of the State.
2) Bonds, bills, certificates of indebtedness, notes or other obligations of the counties or municipalities of the State.
3) Bonds of any public authority created by the laws of the State, providing that the statute that created the authority authorized the use of the bonds for this purpose, the bonds have been duly validated and they are not in default.
4) Industrial revenue bonds and bonds of development authorities created by the laws of the State, for which bonds have been duly validated and they are not in default.
5) Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the U.S. Government, which are fully guaranteed, both as to principal and interest and debt obligations issued, or securities guaranteed 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 Corporation and the Federal National Mortgage Association.
The Board is authorized in OCGA 50-17-58 to allow agencies of the State the option of exempting demand deposits from the collateral requirements. Currently, the Board has only authorized OST to waive collateral on special accounts approved by the Board, as referenced above, in accordance with its investment policy. The Board requires all other State demand deposits, time deposits and certificates of deposits to be collateralized in an amount equal to and not less than 110% of any deposit not insured by the FDIC. In addition, the Board instituted a requirement to limit total State deposits at any State depository to not exceed 100% of the depository's equity capital. The Board may temporarily increase the total State deposit limit at any State depository to 125% of equity capital to allow for fluctuation in demand deposit balances. Credit unions are not authorized to serve as State depositories.
79

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
Custodial Credit Risk Deposits
The custodial credit risk for deposits is the risk that, in the event of a bank failure, the State's deposits may not be recovered. The OST Investment Policy specifies safety of capital as the first priority in investing funds and liquidity as the second priority, followed by investment return and diversification. In adherence to these objectives, OST maintains balances in deposit agreements in approved banks for investment unless commercial paper issued by those financial institutions offers a risk-adjusted advantage. OST closely monitors the credit of U.S. banks having deposit agreements.
Beginning in 2018, the Board implemented the 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 State Treasurer 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 State Treasurer 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 participants in the SDP are considered to be fully insured.
At June 30, 2020, bank balances of the primary government and its component units' deposits not included in the SDP totaled $3.3 billion. It includes balances reported in fiduciary funds other than Pension and Other Employee Benefit Trust Funds as these balances are not separable from the holdings of the primary government. Of these bank balances, $363.2 million were exposed to custodial credit risk as follows (amount in thousands):

Uninsured and uncollateralized Uninsured and collateralized with securities
held by the pledging financial institutions Uninsured and collateralized with securities held
by the pledging institutions' trust departments or agents, but not in the State's name Total deposits exposed to custodial credit risk

Primary

Government and Component

Fiduciary Funds

Units

$

21,714 $

187,662 $

2,220

17,319

62,280

72,018

$

86,214 $

276,999 $

Total 209,376 19,539
134,298 363,213

The carrying amounts of deposits of certain higher education foundations which utilize FASB standards were $414.6 million. These deposits are not included in the balances reflected above. Total SDP balance for the primary government and its component units' is $1.1 billion.

80

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
B. Investments
Investment Policies
Primary Government
The predominant portions of the primary government's investments are managed by OST and the University System of Georgia (USG). OST's and USG's investment policies are therefore presented as the investment policies of the primary government.
The State Depository Board has adopted two investment policies to govern State investments:
1) The Investment Policy for the Office of the State Treasurer (OST Investment Policy) dictates investment of assets managed by OST.
2) The Investment Policy for Approved State Investment Accounts (Investment Policy for Approved Agency Accounts) governs investments managed by organizations other than OST.
OST Investment Policy
OST is the only organization approved by the Board to invest funds pursuant to the OST Investment policy. The State Treasurer shall invest all funds with the degree of judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment. OST is to invest all funds prudently, considering first, the probable safety of capital and then probable income, while meeting daily cash flow requirements and conforming to all statutes governing the investment of public funds.
OST is authorized to invest in securities and other investments as permitted in OCGA 36-83-2, 50-5A-7, 50-17-2, 50-17-27 and 50-17-63. Authorized investments are subject to certain restrictions pursuant to the OST Investment Policy and specific guidelines for the individual portfolios managed by OST. Authorized investments and related restrictions and guidelines are described below:
a) Repurchase agreements Repurchase agreements and reverse repurchase agreements may be transacted with authorized institutions that are rated investment grade by one or more nationally recognized rating agency or are determined by the Treasurer to have adequate capital and liquidity, with maximum exposure per institution determined by the Treasurer and adjusted as needed due to the financial condition of such institutions, the size of the OST investment portfolios, and in accordance with the OST counterparty risk assessment model. Repurchase agreements must be collateralized by obligations of the United States and its subsidiary corporations and instrumentalities or entities sanctioned or authorized by the United States government or other securities authorized for investment by the Treasurer in subsection (b) of Code of Section 50-17-63. Collateral comprised of obligations of the United States and its subsidiary corporations and instrumentalities or entities sanctioned or authorized by the United States government must have a market value of at least 102% of the investment and other eligible collateral must have a market value of 105% of the investment. Collateral must be held by a third party custodian approved by the Treasurer and marked-to-market daily. Exceptions to the requirements for third party custody of collateral or collateral requirements may be approved by the Treasurer for authorized institutions if necessary on occasion. All counterparties, and exceptions to
81

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
custody and collateral requirements shall be reported by the Treasurer to the State Depository Board. All reverse repurchase agreements shall be approved in advance by the Treasurer.
b) Certificates of deposit (CD's) The maximum term of CD's shall not exceed five years. OST shall not place funds in non-negotiable CD's at any depository if such placement of funds will result in total state deposits at such depository in excess of 100% of total equity capital. Provided, however, that the Treasurer may authorize placement of funds in CD's at a depository if such placement of funds will result in total state deposits not to exceed 125% of total equity capital on an as needed basis to allow for fluctuations in demand deposit balances. All CD's must be fully insured by the FDIC or secured by collateral permitted by statute. Surety bonds acceptable as security for CD's shall require approval by the State Depository Board with such credit constraints or limitations it determines. Pledged securities shall be held by a third party custodian approved by OST. Pledged securities shall be marked-to-market at least monthly with depositories required to initially pledge to OST, and thereafter maintain upon notification or any shortfall, collateral having a market value equal to 110% of CD's or be secured through the Georgia multibank pledging pool program (Secure Deposit Program) with "Required Collateral" as defined therein.
c) Commercial paper (CP) CP issued by domestic corporations carrying ratings no lower than P-1 by Moody's Investors Service and A-1 by Standard & Poor's Corporation, in an amount, including the balance of any bank deposit held for investment purposes described in (d) (4), below, that does not exceed 5% of portfolio assets for any single issuer.
d) Bank deposits held for investment purposes (formerly referred to as negotiated investment deposit agreements). Deposit agreements with banks that are (1) secured by collateral permitted by statute, held by a third party custodian, marked-to-market daily, and having a market value equal to or exceeding 110% of the deposit; (2) secured through the Georgia multibank pledging pool program (Secure Deposit Program) with "Required Collateral" as defined therein; (3) fully secured by a letter-ofcredit issued by a Federal Home Loan Bank; (4) fully secured by a surety bond issued by a financial institution approved by the State Depository Board; (5) fully insured by the FDIC; or, (6) subject to funds being available upon demand, with U.S. banks carrying ratings no lower than P-2 by Moody's Investors Service or A-2 by Standard & Poor's Corporation, are determined by the Treasurer to have adequate capital, with maximum exposure per institution determined by the Treasurer and adjusted as needed due to the financial condition of such institutions, the size of the OST investment portfolios, and in accordance with the OST counterparty risk assessment model in an amount, including any CP issued by the respective financial institution held for investment by OST, that does not exceed 5% of portfolio assets for any single institution.
e) Prime bankers acceptances Bankers acceptances must carry the highest rating assigned to such investments by a nationally recognized rating agency.
f) Obligations issued by this state or its agencies or other political subdivisions of this state. Such investments, if meeting statutory investment requirements, may be approved for investment by the Treasurer with the requirement that they are of high credit quality and are reported to the State Depository Board.
g) Obligations of corporations Obligations of domestic corporations including notes, bonds, negotiable CD's, and other marketable securities must be rated investment grade or higher by a nationally recognized rating agency.
82

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
h) Obligations issued by the government of any foreign country Direct obligations of the government of any foreign country must be rated A or higher by a nationally recognized rating agency.
i) International Bank for Reconstruction and Development or the International Financial Corporation Obligations issued, assumed, or guaranteed by the International Bank for Reconstruction and Development or the International Financial Corporation must be rated A or higher by nationally recognized rating agency.
j) Georgia Fund 1 (GF1), Georgia Fund 1 Plus, Georgia Extended Asset Pool (GEAP), Georgia Extended Asset Pool Plus (GEAP Plus), and any other funds comprising the local government investment pool in amounts necessary for prudent diversification, liquidity, and investment income.
k) Asset-backed securities Pursuant to OCGA 50-5A-7(b), asset-backed securities rated AAA, having broad liquidity reflecting at least $350 million of outstanding issuance and issued by an underlying credit rated A3/A or higher by Standard and Poor's Corporation or Moody's Investor Service.
l) Commercial mortgage-backed securities Pursuant to OCGA 50-5A-7(b), commercial mortgagebacked securities rated AAA by Standard and Poor's Corporation or Moody's Investors Service.
m) Such other limitations as determined by the Treasurer to be necessary for the preservation of principal, liquidity, or marketability of any of the portfolios, including allowing investment in any single issuer of CP as described in (c) above or bank deposits held for investment purposes as described in (d) above to temporarily exceed 5% for a period not to exceed 10 business days to allow for efficient investment of accounts experiencing significant fluctuation of balances.
Investment Policy for Approved Agency Accounts
The OST Investment Policy does not authorize organizations other than OST to invest funds. OCGA 50-17-63(a) requires all demand funds held by any State organization to be deposited in accounts at State depositories approved by the Board. In the alternative, with prior approval of the Board, a state entity may be permitted to invest in time deposits, other permitted investments and any interest income from the invested funds must be remitted to the Treasurer as revenues of the State unless specific statutes provide otherwise. Therefore, the Board adopted the Investment Policy for Approved State Agency Investment Accounts to govern investment activity in accounts approved by the Board other than investments managed or overseen by OST or "excluded entities". These "excluded entities" include, but are not limited to, the Georgia Higher Education Savings Plan, USG, the Employees' Retirement System (ERS), Teachers Retirement System (TRS), and the Georgia Lottery Corporation. Only organizations that are approved by the Board to establish and maintain investment accounts may rely on the Investment Policy for Approved Agency Accounts to invest funds. As of June 30, 2020, no State organizations had received Board approval to establish investment accounts governed by the Investment Policy for Approved Agencies.
Board of Regents Investment Policies
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 SEC 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.
83

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
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 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 Board of Regents' 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 overnight liquidity for projected cash needs. Investments are in securities allowed under OCGA 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 9 months to 1 year. The overall character of the portfolio is of Agency quality, possessing a minimal degree of financial risk. The market value of the Short Term Fund at June 30, 2020 was $685.8 million.
2. Legal Fund - The Legal Fund is available to both University System of Georgia institutions and their affiliated organizations. The Fund provides an opportunity for greater return and modest principal growth to the extent possible with the securities allowed under OCGA 50-17-59 and 50-17-63. The average maturities of investments in this fund will typically range between three and five years, with a maximum of 30 years for any individual investment. The overall character of the portfolio is Agency quality, possessing a minimal degree of financial risk. The market value of the Legal Fund at June 30, 2020 was $18.7 million.
3. Balanced Income Fund - The Balanced Income Fund is available to both University System of Georgia institutions and their affiliated organizations. The Fund is designed to be a vehicle to invest funds that are not subject to the state regulations concerning investing in equities. This pool is appropriate for investing longer term funds that require a more conservative investment strategy. Permitted investments in the fund are domestic US equities, domestic investment grade fixed income, and cash equivalents. The equity allocation shall range between 20% and 40%, with a target of 30% of the total portfolio. The fixed income (bond) portion of the portfolio shall range between 60% and 80%, with a target of 70% of the total portfolio. Cash reserves and excess income are invested at all times in the highest quality par stable (A1, P1) institutional money market mutual funds, or other high quality short term instruments. The market value of the Balanced Income Fund at June 30, 2020 was $175.3 million.
4. Total Return Fund - The Total Return Fund is available to both University System of Georgia institutions and their affiliated organizations. The Fund is another pool designed to be a vehicle to invest funds that are not subject to state regulations concerning investing in equities. This pool offers greater overall equity exposure and is appropriate for investing longer term funds such as endowments. Permitted investments in the fund are domestic US equities, domestic investment grade fixed income, and cash equivalents. The equity allocation shall range between 60% and 80%, with a target of 70% of the total portfolio. The fixed income (bond) portion of the portfolio shall range between 20% and 40%, with a target of 30% of the total portfolio. Cash reserves and excess income are invested at all times in the highest quality par stable (A1, P1) institutional money market mutual funds, or other high quality short term instruments. The market value of the Total Return Fund at June 30, 2020 was $15.5 million.
84

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
5. Diversified Fund - The Diversified Fund is available to both University System of Georgia institutions and their affiliated organizations. The Fund is designed to provide improved return characteristics with reduced volatility through greater diversification. This pool is appropriate for investing longer term funds such as endowments. Permitted investments in the fund may include domestic, international and emerging market equities, domestic fixed income and global fixed income. The equity allocation shall range between 60% and 80% of the portfolio, with a target of 70% of the total portfolio. The fixed income (bond) portion of the portfolio shall range between 20% and 40%, with a target of 30% of the total portfolio. Cash reserves and excess income are invested at all times in the highest quality par stable (A1, P1) institutional money market mutual funds, or other high quality short term instruments. The market value of the Diversified Fund at June 30, 2020 was $216.8 million.
6. Diversified Fund for Foundations - The Diversified Fund for Foundations is available only to University System of Georgia affiliated organizations. Like the Diversified Fund, the fund is designed to provide improved return characteristics with reduced volatility through greater diversification and is appropriate for investing longer term funds such as endowments. Investments in the fund may include domestic, international and emerging market equities, domestic and global investment grade and non-investment grade fixed income and liquid alternative investments. The equity allocation shall range between 40% and 75% of the portfolio, with a target of 65% of the total portfolio. The fixed income (bond) portion of the portfolio shall range between 10% and 40% of the portfolio, with a target of 20% of the total portfolio. The alternatives portion of the portfolio shall range between 0% and 30% of the portfolio, with a target of 15% of the total portfolio. Cash reserves and invested income are invested at all times in the highest quality par stable (A1, P1) institutional money market funds, or other high quality short term instruments. The market value of the Diversified Fund for Foundations at June 30, 2020 was $72.6 million.
Fiduciary Funds Pension and Other Employee Benefit Trust Funds
In accordance with OCGA 47-20-83, Public Retirement Systems may invest in the following:
1) U.S. or Canadian corporations or their obligations with limits as to the corporations' size and credit rating.
2) Repurchase and reverse repurchase agreements for direct obligations of the U.S. Government and for obligations unconditionally guaranteed by agencies.
3) FDIC insured cash assets or deposits.
4) Bonds, notes, warrants, loans or other debt issued or guaranteed by the U.S. Government.
5) Taxable bonds, notes, warrants or other securities issued and guaranteed by any state, the District of Columbia, Canada or any province in Canada.
6) Bonds, debentures or other securities issued or insured or guaranteed by an agency, authority, unit, or corporate body created by the U.S. Government.
7) Investment grade collateralized mortgage obligations.
8) Obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development or the International Financial Corporation.
85

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
9) Bonds, debentures, notes and other evidence of indebtedness issued, assumed, or guaranteed by any solvent institution existing under the laws of the U.S. or of Canada, or any state or province thereof, which are not in default and are secured to a certain level.
10) Secured and unsecured obligations issued by any solvent institution existing under the laws of the U.S. or of Canada, or any state or province thereof, bearing interest at a fixed rate, with mandatory principal and interest due at a specified time with additional limits.
11) Equipment trust obligations or interests in transportation equipment, wholly or in part within the U.S., and the right to receive determinate portions or related income.
12) Loans that are secured by pledge or securities eligible for investment.
13) Purchase money mortgages or like securities received upon the sale or exchange of real property acquired.
14) Secured mortgages or mortgage participation, pass-through, conventional pass-through, trust certificate, or other similar securities with restrictions.
15) Land and buildings on such land used or acquired for use as a fund's office for the convenient transaction of its own business with restrictions.
16) Real property and equipment acquired under various circumstances.
17) Shares of mutual funds registered with Securities and Exchange Commission.
18) Commingled funds and collective investment funds maintained by state chartered banks or trust companies.
In addition, large retirement systems have restrictions as to the concentration of investments in corporations and equities and additional stipulations exist related to decreases in a fund's asset value. The retirement systems have additional restrictions on the acquisition of securities of companies with activities in the Iran petroleum energy sector. A list of scrutinized companies with activities in the Iran petroleum energy sector has been compiled and is annually updated. This list is utilized to identify and potentially divest the retirement systems of such holdings.
In accordance with OCGA 47-20-87, certain eligible large retirement systems (excluding the Teachers Retirement System) are authorized to invest in alternative investments such as privately placed investment pools that include investments such as leveraged buyout funds, mezzanine funds, workout funds, debt funds, venture capital funds, merchant banking funds, funds of funds and secondary funds. In addition, these retirement systems are authorized to invest in private placements and other private investments such as leveraged buyouts, venture capital investment, equity investments such as preferred and common stock, warrants, options, private investments in public securities, recapitalizations, privatizations, mezzanine debt investments, distressed debt and equity investments, convertible securities, receivables, debt and equity derivative instruments, etc. The amount invested by an eligible large retirement system in alternative investments may not in the aggregate exceed 5% of the eligible large retirement system's assets at any time.
Other Postemployment Benefits (OPEB)
In May of 2018, the State created an investment policy for state and school OPEB trust funds. The policy requires at least 25% of funds to be invested at State Treasury and be subject to OST policy. The remaining funds are invested by ERS in publicly traded equities permitted in accordance with OCGA 47-20-84.
86

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
Component Units
Component units follow applicable investing criteria as specifically authorized by statute or by the component unit's governing authority. Certain higher education foundations utilize FASB standards. Balances for those component units as of June 30, 2020, are as follows (amount in thousands):

Bond Securities Certificates of Deposit Corporate Bonds Equity Securities- Domestic Equity Securities- International Equity Mutual Funds - Domestic Equity Mutual Funds - International
Government and Agency Securities General Obligations Bonds Money Market Accounts Mutual Bond Funds Real Estate Investment Trusts Real Estate Held for Investment Purposes Repurchase Agreements U.S. Treasuries Other
Total Investments

Fair

Value

$

168,327

1,000

23,751

360,835

395,997

196,556

348,707

3,593 18,429 133,157 100,433 78,384 69,803 1,179

83,574

1,862,086

$

3,845,811

The component unit disclosures that follow do not include these balances, with the exception of the fair value measurement tables.
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.
Primary Government
OST's policy for management of interest rate risk attempts to match investments with expected cash requirements. However, certificates of deposit may not have a term exceeding five years. The State Treasurer may establish duration or maturity limitations for other investments.
USG's policy for managing interest rate risk is attempts to match investments with expected cash requirements.

87

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
The following table provides information about the primary government's exposure to interest rate risk. It includes balances reported in fiduciary funds other than Pension and Other Employee Benefit Trust Funds as these balances are not separable from the holdings of the primary government (amount in thousands):

Asset-Backed Securities Domestic
Bank Deposits Held for Investment Purposes Bond Securities Corporate Debt
Domestic Money Market Mutual Funds Mortgage-Backed Securities
Commercial Municipal Bonds Mutual Funds - Debt* Repurchase Agreements U.S. Agency Obligations U.S. Treasury Obligations

Total Fair Value

Less than 3 Months

Maturity Period 4 - 12 Months 1 - 5 Years 6 - 10 Years

More than 10 Years

$

418 $

-- $

299,279

299,279

20

--

-- $

418 $

-- $

--

--

--

--

--

--

--

--

20

194,831

33,390

77,653

83,459

329

--

745,068

744,456

--

612

--

--

10,064 1,102 93,308 249,852 922,959 447,924

4,466 10
2,775 249,852 37,279 202,850

3,998 201 -- --
142,234 194,597

-- 218 17,106 -- 668,734 48,641

-- 637 36,759 -- 20,716 1,836

1,600 36
36,668 --
53,996 --

Total Debt Securities

2,964,825 $ 1,574,357 $ 418,683 $ 819,188 $ 60,277 $ 92,320

Equity Mutual Funds Domestic International Equity Securities Domestic International Real Estate Held for Investments Real Estate Investment Trust Other

152,320 704
139,462 356
6,353 300 174

Total Investments

$ 3,264,494

*Maturity Period is weighted average maturity.

88

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
Fiduciary Funds Pension and Other Employee Benefit Trust Funds Administered by the Employees' and Teachers Retirement Systems
The Boards of the Employees' and Teachers Retirement Systems have elected to manage interest rate risk of these pension and other employee benefit trust funds using the effective duration method. This method is widely used in the management of fixed income portfolios and quantifies to a much greater degree the sensitivity to interest rate changes when analyzing a bond portfolio with call options, prepayment provisions, and any other cash flows. Effective duration makes assumptions regarding the most likely timing and amounts of variable cash flows and is best utilized to gauge the effect of a change in interest rates on the fair value of a portfolio. It is believed that the reporting of effective duration found in the table below quantifies to the fullest extent possible the interest rate risk of the funds' fixed income assets (amount in thousands):

Corporate and Other Bonds International Obligations:
Corporate U.S. Treasury Obligations Total Debt Securities Common Stock
Domestic International Mutual Funds - Equity Private Equity Commingled Funds Total Investments

Total

Fair Value

$

6,407,543

1,060,595 20,709,463 28,177,601

52,061,301 15,415,173
7,498 365,458 1,885,848 $ 97,912,879

Effective Duration (Years)
4
5.3 6.7

89

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
Fiduciary Funds Pension and Other Employee Benefit Trust Funds Administered by Other than the Employees' and Teachers Retirement Systems
The Public Retirement System Investment Authority Law does not address specific policies for managing interest rate risk. The following table provides information about interest rate risks associated with these pension and other employee benefit trust funds' investments (amount in thousands):

Asset-backed Securities Domestic
Corporate Debt Domestic International
Exchange Traded Funds Guaranteed Investment Contracts International Government Obligations Money Market Mutual Funds Mortgage-backed Securities Municipal Bonds Mutual Funds - Debt* U.S. Agency Obligations U.S. Treasury Obligations
Total Debt Securities
Commingled Funds Equity Mutual Funds
Domestic Equity Securities
Domestic International Short-term Investment Funds Private Equity Real Estate Investment Trust Pending Purchases Other
Total Investments
*Maturity period is weighted average maturity.

Total Fair Value

Less than 3 Months

Maturity Period 4 - 12 Months 1 - 5 Years 6 - 10 Years

More than 10 Years

$

46,496 $

-- $

-- $ 22,302 $ 5,533 $ 18,661

220,832 7,606 23,895 131 458
108,721 124,432
6,657 148,412 90,882 64,920

2,027 -- -- -- --
108,721 -- --
23,724 402
3,130

843,442 $ 138,004 $

108,899

18,174 215 -- -- -- -- -- 76 --
1,619 5,448
25,532 $

69,176 4,093 16,164
-- 96 -- 519 786 16,379 4,392 27,562

66,448 2,221 5,499
-- 362 -- 1,935 2,922 56,711 2,043 10,918

161,469 $ 154,592 $

65,007 1,077 2,232
131 -- -- 121,978 2,873 51,598 82,426 17,862
363,845

190,035
1,615,890 138,952 65,543 55,072 -- 216 91
$ 3,018,140

90

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS (continued) Component Units
The component units follow the applicable investing criteria specifically authorized by statute or by the component unit's governing authority.
The component units' exposure to interest rate risk is presented below (amount in thousands):

Asset-Backed Securities Domestic
Corporate Debt Domestic
Certificates of Deposits Insurance Contracts International Government
Obligations Investment Agreements Money Market Mutual Funds Mortgage-Backed Securities Municipal Bonds Mutual Funds - Debt* Non-purpose investments Repurchase Agreements Strategic Income Opportunities Funds U.S. Agency Obligations U.S. Treasury Obligations
Total Debt Securities

Total Fair Value

Less than 3 Months

Maturity Period 4 - 12 Months 1 - 5 Years 6 - 10 Years

More than 10 Years

$

595 $

-- $

-- $

595 $

-- $

--

127,484 6,838 18,685

4,845 982 --

9,468 250 --

83,206 5,606
--

18,703 -- --

11,262 --
18,685

5,943 11,829 71,324 96,761 11,990 29,782 97,242 59,129 25,535 225,459 243,664

-- -- 71,324 -- 3,765 -- -- 53,364 -- -- 11,156

1,032,260 $ 145,436 $

628 -- -- -- -- -- 97,242 -- -- 1,435 17,881
126,904 $

3,242 2,660
-- 2,722 7,703 17,576
-- -- 25,535 57,373 128,392
334,610 $

2,009 3,357
-- 3,768
403 -- -- -- -- 159,012 54,946
242,198 $

64 5,812
-- 90,271
119 12,206
-- 5,765
-- 7,639 31,289
183,112

Equity Mutual Funds Domestic International
Equity Securities Domestic International
Exchange Traded Funds Other Investments Total Investments
* Maturity Period is weighted average maturity.

38,494 12,542
25,509 10,179 7,142 4,165 $ 1,130,291

91

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued) Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations to the holder of the investment. The credit risk tables presented on the following pages have been prepared using Standard and Poor's Corporation ratings scales. Primary Government OST utilizes a counterparty risk assessment model to assess credit risk of financial institutions that have been approved to serve as counterparties and major depositories. OST has assigned credit limits to each financial institution based upon its counterparty risk assessment model which incorporates market indicators, default probabilities, issuer research and issuer ratings to determine maximum credit exposure per institution, term of investment for respective counterparties and collateralization requirements in accordance with the OST Investment Policy. The University System of Georgia's policy for managing credit risk is contained in the investment policy guidelines for the various pooled investment funds:
1) In the Short-Term Fund and Legal Fund, all debt issues must be eligible investments under OCGA 50-17-59 and 50-17-63. Other investment portfolios of debt securities funds also must meet the eligible investment criteria under the same code section.
2) In the Balanced Income Fund, Total Return Fund, and Diversified Fund, total fixed income portfolios should have an average credit quality rating of at least A. Overnight investments shall be limited to high quality institutional money market mutual funds rated A1, P1 or other high quality short-term debt instruments rated at least AA+.
3) In the Diversified Fund for Foundations, fixed income investments include investment grade and high yield domestic bonds, dollar-and non-dollar denominated global bonds, and emerging market bonds. Overnight investments shall be limited to high quality institutional money market mutual funds rated A1, P1 or other high quality short-term debt instruments rated at least AA+.
92

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued) The exposure of the primary government's debt securities to credit risk is indicated below (amount in thousands):

Asset-Backed Securities Domestic
Bond Securities Corporate Debt
Domestic Money Market Mutual Funds Mortgage-Backed Securities
Commercial Municipal Bonds Mutual Funds - Debt Repurchase Agreements U.S. Agency Obligations
Total Credit Risk-Investments

Total

Fair Value

AAA

AA

Not

A

BBB

B

Rated

$

418 $

418 $

-- $

-- $

--$ --$ --

20

--

--

--

20

--

--

194,831

2,369

2,142

190,004

304

--

12

745,069

16,616

263,347

--

--

-- 465,106

10,064

10,064

--

--

1,103

246

630

211

93,308

418

33

--

249,849

--

--

--

736,512

302,760

433,752

--

2,031,174 $ 332,891 $ 699,904 $ 190,215 $

-- -- 33 -- --
357 $

--

--

--

16

17 92,807

-- 249,849

--

--

17 $ 807,790

Bank Deposit Held for Investment Purposes
U.S. Agency Obligations Explicitly Guaranteed
U.S. Treasury Obligations
Total Debt Securities

299,279
186,448 447,924 $ 2,964,825

93

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
Fiduciary Funds Pension and Other Employee Benefit Trust Funds
The credit risk of pension and other employee benefit trust funds is managed by restricting investments to those authorized by the Public Retirement System Investment Authority Law as previously described. The Boards of individual funds may elect to implement more restrictive policies. The pension and other employee benefit trust funds' debt securities exposure to credit risk is indicated below (amount in thousands):

Total

Asset-backed Securities

Fair Value

Domestic

$ 46,498

Corporate Debt

Domestic

6,628,373

International

1,068,200

Exchange Traded Funds

23,896

Guaranteed Investment

Contracts

131

International

Government

Obligations

458

Money Market Mutual Funds

108,721

Mortgage-backed Securities

124,431

Municipal Bonds

6,658

Mutual Funds - Debt

148,411

U.S. Agency Obligations

86,423

Total Credit Risk -

Investments

8,242,200

AAA

AA

A

$ 28,330 $ 6,213 $ 2,639

933,485 2,340,419 2,672,649 -- 848,681 213,368

--

--

--

--

--

--

--
13,090
51,030 -- --
3,373

--
--
16,712 2,017
--
496

362
--
8,652 3,089
--
--

$1,029,308 $3,214,538 $2,900,759

BBB
$ 2,706
666,723 5,099 -- --
96 -- 8,602 1,552 -- --
$ 684,778

BB
$ 97
7,178 982 -- --
-- -- 632 -- -- --
$8,889

B
$ 421
-- -- -- --
-- -- 629 -- -- --
$1,050

CCC
$ 1,249
-- -- -- --
-- -- 207 -- -- --
$ 1,456

CC
$ 248
-- -- -- --
-- -- 179 -- -- --
$ 427

D
$ 464
-- -- -- --
-- -- 66 -- -- --
$ 530

Not Rated
$ 4,131
7,919 70
23,896 131
-- 95,631 37,722
-- 148,411 82,554
$400,465

U.S. Agency Obligations
Explicitly Guaranteed

4,459

U.S. Treasury Obligations

20,774,384

$ 29,021,043

94

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
Component Units
The component units follow the applicable investing criteria specifically authorized by statute or by the component unit's governing authority. The exposure of the component units' debt securities to credit risk is indicated below (amount in thousands):

Asset-Backed Securities Domestic
Corporate Debt Domestic International
Insurance Contracts International Government
Obligations Investment Agreements Money Market Mutual Funds Mortgage-Backed Securities Municipal Bonds Mutual Funds - Debt Non-purpose investments Strategic Income
Opportunities Funds Repurchase Agreements U.S. Agency Obligations

Total

Fair Value

AAA

AA

Not

A

BBB

BB CCC

Rated

$

595 $

403 $

-- $

-- $

--$ --$ --$

192

127,483

31,786

30,850

37,094

27,683

46

24

--

6,839

--

999

1,261

767

250

--

3,562

18,685

--

--

--

--

--

--

18,685

5,943 11,829 71,324 96,760 11,990 29,782 97,242

29 5,268 61,881 8,535 4,383
-- --

36 -- -- 87,373 4,719 -- --

2,703 6,561
-- 334 2,888 -- --

3,170

5

--

--

--

--

--

--

--

--

--

9,443

43

--

--

475

--

--

--

--

--

--

--

29,782

--

--

--

97,242

25,535

--

--

--

--

--

--

25,535

59,129

5,765

--

--

--

--

--

53,364

223,328

171,027

52,301

--

--

--

--

--

Total Credit Risk Investments

786,464 $ 289,077 $ 176,278 $ 50,841 $ 31,663 $ 301 $ 24 $ 238,280

U.S. Treasury Obligations U.S. Agency Obligations
Explicitly Guaranteed
Total Debt Securities

243,665
2,131 $ 1,032,260

Custodial Credit Risk - Investments Custodial credit risk for investments is the risk that, in the event of the failure of a counterparty to a transaction, the value of the investment or collateral securities in possession of a third party custodian may not be fully recovered by the State. Primary Government OST's policy for managing custodial credit risk for investments is:
1) OST has appointed a federally regulated banking institution, State Street, as its custodian. State Street performs its duties to the standards of a professional custodian.
2) All securities transactions are settled on a delivery versus payment basis through an approved depository institution such as the Federal Reserve or the Depository Trust Company.
95

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
3) Repurchase agreements are collateralized by obligations of the United States and its subsidiary corporations and instrumentalities or entities sanctioned or authorized by the United States government or other securities authorized by the Treasurer in subsection (b) of Code Section 50-17-63 in accordance with the State Depository Board policy.
4) OST has retained an independent firm to serve as its liquidation agent in the event of a counterparty default.
The University System of Georgia's policy for managing custodial credit risk for investment is:
1) The University System has appointed a federally regulated banking institution as custodian. The custodian performs its duties to the standards of a professional custodian and is liable to the University System of Georgia for claims, losses, liabilities and expenses arising from its failure to exercise ordinary care, its willful misconduct, or its failure to otherwise act in accordance with the contract.
2) All securities transactions are to be settled on a delivery vs. payment basis through an approved depository institution such as the Depository Trust Company or the Federal Reserve.
3) Repurchase agreements are to be collateralized by United States Treasury securities at 102% of the market value of the investment at all times. At June 30, 2020, $6.2 million was uninsured and held by the investment's counterparty's trust department or agent, but not in the USG's name.
Fiduciary Funds Pension and Other Employee Benefit Trust Funds
The custodial credit risk of pension and other employee benefit trust funds is managed by restricting investments to those authorized by the Public Retirement System Investment Authority Law described above. At June 30, 2020, $20.7 million of the pension and other employee benefit trust funds' investments were uninsured, unregistered and held by the counterparty or the counterparty's trust department, but not in the State's name.
Component Units
The component units follow the applicable investing criteria specifically authorized by statute or by the component unit's governing authority.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of the State's investment in a single issuer.
Primary Government
To manage concentration risk, the OST Investment Policy requires diversification of investments to reduce overall portfolio risks while maintaining market rates of return. Investments in each portfolio shall be diversified to mitigate risk of loss from an over-concentration in a specific issuer, counterparty or depository. The State Treasurer establishes Investment Guidelines for each investment portfolio to assure that prudent diversification and adequate liquidity is maintained. OST utilizes a counterparty risk assessment model to determine maximum exposure to each approved financial institution.
The University System's policy for managing concentration requires diversification of investments to reduce overall portfolio risk while maintaining market rates of return.
96

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
At June 30, 2020, approximately 10.47%, 9.30%, 8.99%, 6.03% and 5.24% of business-type activity and fiduciary fund investments were investments in U.S. Treasuries, Government National Mortgage Assn. notes and pools, Federal National Mortgage Assoc. notes and pools, Federal Home Loan Corp Pool, and the Vanguard Institutional Index Fund, respectively.
Approximately 27.24%, 12.03%, 11.72, 7.61%, 7.51%, 7.39% and 5.17% of Deferred Compensation Fiduciary Fund investments were invested in Fidelity Contrafund Fund, Fidelity U.S. Bond Index Fund, Fidelity Strategic Income Fund, Vanguard Institutional Target Retirement 2025 Fund, Fidelity Institutional Money Market Government Institutional Portfolio, Fidelity Low Priced Stock Fund, and Vanguard Total Bond Market Index Fund Institutional Shares.
Approximately 16.85%, 16.55%, and 5.13% of Investment Pool Custodial Fund investments were invested in iShares Russell 3000 ETF, Vanguard Institutional Index Fund, and Ishares Core Total U.S. Aggregate Bond ETF, respectively.
At June 30, 2020, approximately 24.84% of the primary government's total investments were investments in securities of U.S. agencies not explicitly guaranteed by the U.S. Government. Approximately 25.08%, and 6.57% of the primary government's total investments were invested in Money Market Mutual Funds and Corporate Debt, respectively.
Fiduciary Funds Pension and Other Employee Benefit Trust Funds
The concentration of credit risk policy of pension limits investments to no more than 5% of total net investments in any one issuer of corporate bonds. Investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments are excluded from this requirement. At June 30, 2020, no more than 5% of the pension's total investments were investments in any single issuer other than the U.S. Government or its agencies.
Information related to Other Postemployment Benefit trust funds (OPEB) disclosures is included in the LGIP Trust Fund Financial Statement report issued by OST. For concentration of credit risk, refer to the report published on OST's website ost.georgia.gov. For the remaining funds invested by ERS, concentration of credit risk policy of OPEB limits investments to no more than 5% of total net investments in any one issuer of corporate bonds.
Component Units
The component units follow the applicable investing criteria specifically authorized by statute or by the component unit's governing authority. At June 30, 2020, 19.80% of the component units' total investments were investments in securities of U.S. agencies not explicitly guaranteed by the U.S. Government. At June 30, 2020, no more than 5% of the component units total investments were investments in any single issuer other than the U.S. Government or its agencies.
C. Fair Value Measurements
In accordance with GASB Statement No. 72 (GASB 72), some investments are measured using inputs divided into three fair value hierarchies:
Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets that a government can access at the measurement date.
97

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued) Level 2: Inputs, other than quoted prices included within Level 1 that are observable for an asset or liability, either directly or indirectly. Level 3: Unobservable inputs for an asset or liability.
Fixed-income securities use price evaluations; other investments are exempt from GASB 72's disclosure requirement because they are not reported at fair value, but instead valued using cost based measures. In general, investments were valued using the following techniques:
Equity securities classified in Level 1 are valued using prices quoted in active markets for those securities. Equity securities classified in Level 2 are valued using prices quoted for similar instruments in active markets. Equity securities classified in Level 3 are valued using third party valuations not currently observable in the market.
Debt securities classified in Level 1 are valued using prices quoted in active market. Debt securities classified in Level 2 are valued using either a bid evaluation or a matrix pricing technique. Bid evaluations may include market quotations, yields, maturities, call features and ratings. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices. These securities have nonproprietary information that are readily available to market participants, from multiple independent sources, which are known to be actively involved in the market. Debt securities classified in Level 3 are not currently observable in the market.
Mutual funds and commingled funds classified in Level 1 are valued using prices quoted in active markets for those investments types. Mutual funds and commingled funds classified in Level 2 are valued using prices quoted for similar instruments in active markets.
Investments classified in Level 3 include real estate funds that invest primarily in U.S. commercial real estate. The fair values of the investment in this category have been estimated using the net asset value of the University System of Georgia's (USG) ownership interest in partners' capital. Real estate investments are less liquid and, generally, cannot be redeemed with the funds through normal redemption procedures. Distributions from real estate investment funds will be received as the underlying investments of a fund are liquidated. Guaranteed investment contracts are valued by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the credit worthiness of the issuer.
98

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued) Primary Government
The following table provides information about the primary government's investments in regards to GASB 72 (amount in thousands):

Investments by fair value levels
Asset-backed Securities Bond Securities Corporate Debt Equity Mutual Fund Domestic International Equity Securities Domestic International Money Market Mutual Funds Municipal Bonds Mutual Funds - Debt Mortgage Backed Securities Real Estate Investment Trusts Real Estate Held for Investment Purposes U.S. Agencies U.S. Treasuries Other
Reconciling Items: Bank Deposits Held for Investment Purposes Repurchase Agreements

Total

Level 1

Level 2

Level 3

$

418 $

-- $

418 $

--

20

20

--

--

194,831

12

194,819

--

152,320 704

152,320 704

--

--

--

--

139,462

139,462

356

119

745,068

745,068

1,102

1,102

93,308

93,308

10,064

8,464

300

300

6,353

--

922,959

435,031

447,924

447,924

174

174

2,715,363 $ 2,024,008 $

-- 237 -- -- -- 1,600 -- -- 487,928 -- -- 685,002 $

--
-- -- -- -- -- 6,353 -- -- -- 6,353

299,279 249,852 $ 3,264,494

99

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS (continued) Fiduciary Funds
The following table provides information about the fiduciary investments in regards to GASB 72 (amount in thousands):

Investments by fair value levels
Asset-backed Securities Domestic
Commingled Funds Corporate Debt
Domestic International Equity Securities Domestic International Exchange Traded Funds Guaranteed Investment Contracts International Government Obligations Money Market Mutual Funds Mortgage Backed Securities Municipal bonds Mutual Funds-Debt Mutual Fund Equities Domestic International Private Equities Real Estate Investment Trust U.S. Agencies Obligations U.S. Treasuries Obligations Other

Total

Level 1

Level 2

Level 3 Net Asset Value

$

46,496 $

-- $

46,496 $

-- $

--

1,994,746

70,297

1,924,449

--

--

6,628,376 1,068,201

--

6,628,376

--

1,068,201

53,677,191 15,554,123
23,896 131 458
108,721 124,432
6,658 148,411

53,677,191 15,431,419
23,896 -- --
19,738 21,139
-- 148,411

-- 122,704
-- -- 458 88,983 103,293 6,658 --

197,533 --
431,001 55,072 90,882 20,774,384
91

195,967 -- --
54,472 574
20,711,812 91

1,566 -- -- 600
90,308 62,572
--

100,930,803 $ 90,355,007 $ 10,144,664 $

-- --
-- -- -- 131 -- -- -- -- --
-- -- -- -- -- -- --
131 $

-- --
-- -- -- -- -- -- -- -- --
-- -- 431,001 -- -- -- --
431,001

Reconciling Items: Pending Purchases
Total Investments

216 $ 100,931,019

100

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
Component Units
The following table provides information about the component unit investments in regards to GASB 72 (amount in thousands):

Investments by fair value levels Asset-backed Securities Bond Securities Certificate of Deposits Corporate Debt Equity Mutual Funds- Domestic Equity Mutual Funds- International Equity Securities- Domestic Equity Securities- International Exchange Traded Funds General Obligations Bonds Insurance Contracts International Government Obligations Investment Agreements Money Market Mutual Funds Municipal Obligations Mutual Bond Funds Mortgage Backed Securities Non Purpose Investments Real Estate Held for Investment Purposes Real Estate Investment Trusts Strategic Income Opportunity fund US Agencies US Treasuries Other
Repurchase Agreements

Total

$

595

168,327

7,839

151,235

235,051

361,250

386,344

406,176

7,142

18,429

18,685

5,943

11,830

204,481

11,991

130,215

96,760

97,242

69,803

78,384

25,535

229,052

327,240

1,866,245

4,915,794

60,308 $ 4,976,102

Level 1

Level 2

$

-- $

595

145,367

21,924

7,839

--

68,172

83,063

234,489

562

314,226

7,582

385,980

--

389,921

--

7,142

--

18,429

--

--

--

5,943

--

--

--

188,242

127

--

11,991

75,238

41,288

96,760

--

--

97,242

--

--

34,565

--

25,535

--

212,598

16,454

97,602

229,638

(895)

13,244

$ 2,307,153 $ 523,710

Level 3

$

--

--

--

--

--

--

--

--

--

--

--

--

11,830

--

--

13,689

--

--

69,803

--

--

--

--

16,940

$ 112,262

Net Asset Value

$

--

1,036

--

--

--

39,442

364

16,255

--

--

18,685

--

--

16,112

--

--

--

--

--

43,819

--

--

--

1,836,956

$ 1,972,669

101

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued) Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely impact the fair value of an investment. Fiduciary Funds Pension and Other Employee Benefit Trust Funds The State's currency risk exposures, or exchange rate risks, primarily reside within the retirement system's international equity investment holdings. The retirement systems' 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. As of June 30, 2020, the State's exposure to foreign currency risk in U.S. Dollars are highlighted in the tables below (amount in thousands):
(Table on next page)
102

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS (continued)

International Investment Securities at Fair Value as of June 30, 2020

Employees' Retirement System of Georgia

Teachers Retirement System of Georgia

Currency Australian Dollar Brazilian Real British Pound Canadian Dollar Chilean Peso Columbian Peso Czech Krone Danish Krone Euro Hong Kong Dollar Indian Rupee Indonesian Rupiah Israeli Sheke Japanese Yen Malaysian Ringgit Mexican Peso New Taiwan Dollar New Zealand Dollar Norwegian Krone Philippine Peso Polish Zloty Qatari Riyal Singapore Dollar South African Rand South Korean Won Swedish Krona Swiss Franc Thailand Baht UAE Dirham

Cash & Cash
Equivalents

$

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

Equities $ 40,080
20,461 78,488 32,609 1,892
698 1,133 18,708 302,113 107,113 51,555 4,184 1,847 219,848 9,178 9,218 35,284 2112 1,989 3,662 3,387 2,644 16,481 22,607 67,365 39,606 27,143 20,763 3,976

Fixed Income

$

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

Total $ 40,080
20,461 78,488 32,609 1,892
698 1,133 18,708 302,113 107,113 51,555 4,184 1,847 219,848 9,178 9,218 35,284 2,112 1,989 3,662 3,387 2,644 16,481 22,607 67,365 39,606 27,143 20,763 3,976

Cash & Cash Equivalents

Equities

$

-- $ 196,847

--

101,345

--

381,413

--

163,762

--

9,468

--

3,490

--

5,672

--

89,223

--

1,466,280

--

518,930

--

251,325

--

20,937

--

9,260

--

1,068,583

--

46,013

--

44,038

--

177,165

--

10,564

--

10,049

--

18,313

--

16,951

--

13,235

--

77,626

--

111,643

--

332,033

--

189,100

--

133,514

--

101,899

--

19,899

Fixed Income

$

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--
--

--

--

--

--

--

--

--

--

--

--

--

Total $ 196,847
101,345 381,413 163,762
9,468 3,490 5,672 89,223 1,466,280 518,930 251,325 20,937 9,260 1,068,583 46,013 44,038 177,165 10,564 10,049 18,313 16,951 13,235 77,626 111,643 332,033 189,100 133,514 101,899 19,899

Total Holdings subject to

Foreign Currency Risk

--

1,146,144 -- -- 1,146,144

--

5,588,577

--

5,588,577

Investment Securities payable in U.S. Dollars

--

1,488,052 212,119 1,700,171

--

7,190,479 848,476

8,038,955

Total International

Investment Securities -

at Fair Value

$

-- $ 2,634,196 $ 212,119 $ 2,846,315 $

-- $ 12,779,056 $ 848,476 $ 13,627,532

103

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 5 - DEPOSITS AND INVESTMENTS (continued)

Currency Australian Dollar British Pound Canadian Dollar Euro Japanese Yen Norwegian Krone Swedish Krona Swiss Franc

Other Pension and Employee Benefit Trust Funds

Cash & Cash Equivalents

Equities

Fixed Income

$

-- $

1,379 $

-- $

46

10,240

--

--

1,086

--

41

3,649

--

--

175

--

--

984

--

--

1,291

--

--

146

Total 1,379 10,286 1,086 3,690 175 984 1,291 146

Total Holdings subject to Foreign Currency Risk

Investment Securities payable in U.S. Dollars

Total International

Investment Securities -

at Fair Value

$

87

18,950

--

16,318

-- 1,403

19,037 17,721

87 $

35,268 $

1,403 $

36,758

D. Pooled Investments with State Treasury
As of the end of the year, the state operates four local government investment pools managed by OST and is comprised of Georgia Fund 1, Georgia Fund 1 Plus, Georgia Extended Asset Pool (GEAP) and Georgia Extended Asset Pool Plus (GEAP Plus). GEAP Plus was established on July 1, 2018 and GEAP was established on July 1, 2019 as investments for the OPEB Trust Fund. GEAP was initially funded with with approximately $163.0 million of OPEB Trust Funds. Both GEAP Plus and GEAP are managed by a subadvisor overseen by OST. The pools invest funds of the State and funds of other governmental entities. The local government investment pools jointly maintain a reserve consisting of members' administrative fees. This reserve can be used to stabilize the investment pools and to fund the administrative expenses for managing the pools. Separate reports on the State's investment pools are issued. Refer to the OST website ost.georgia.gov for additional information on the Georgia Fund 1, Georgia Fund 1 Plus, GEAP Plus and GEAP pools.
E. Securities Lending Program
The State is presently involved in securities lending programs with major brokerage firms. The State lends equity and fixed income securities for varying terms and receives a fee based on the loaned securities' value. During a loan, the State continues to receive dividends and interest as the owner of the loaned securities.

104

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued)
Fiduciary Funds Pension and Other Employee Benefit Trust Funds
In the pension and other employee benefit trust funds' securities lending agreements, the brokerage firms pledge collateral securities consisting of U.S. Government and agency securities, mortgage-backed securities issued by a U.S. Government agency, and U.S. corporate bonds. The collateral value must be equal to at least 102% to 109% of the loaned securities value, depending on the type of collateral security.
Securities loaned totaled $18.8 billion at June 30, 2020, and the collateral value was equal to 105.0%. The loaned securities are in the accompanying note disclosures based on the custodial arrangements for the collateral securities. Loaned securities are included in the accompanying Statement of Net Position because the State maintains ownership. The related collateral securities are not recorded as assets on the Statement of Fiduciary Net Position, and a corresponding liability is not recorded, since the State does not pledge or trade the collateral securities. In accordance with the criteria set forth in GASB Statement No. 28, Accounting and Financial Reporting for Securities Lending Transactions, the State is deemed not to have the ability to pledge or sell collateral securities, since the State's lending contracts do not address whether the lender can pledge or sell the collateral securities without a borrower default. The State has not previously demonstrated that ability, and there are no indications of the State's ability to pledge or sell collateral securities.
F. Other Investments
The State's Unemployment Compensation Fund monies are required by the Social Security Act to be invested in the U.S. Department of Treasury, Bureau of Public Debt Unemployment Trust Fund (BPDUTF), which is not registered with the SEC. The fair value of the position in the BPDUTF is the same as the value of the BPDUTF shares.
The Commissioner of the Department of Agriculture is directed by statute to require dealers in certain agricultural products and livestock to make and deliver to the Department a surety or cash bond to secure the faithful accounting for and payment to producers of the proceeds of agricultural products or livestock handled or sold by the dealer. Cash bonds are required to designate the Department as trustee of the funds and may take the form of certificates of deposit, letters of credit, money orders or cashiers' checks. At June 30, 2020, the Department held surety bonds in the amount of $59.5 million, and cash bonds in the amount of $15.9 million. These bonds are not recorded on the Statement of Net Position.
Securities are held by the Commissioner of Insurance pursuant to statutes that require licensed insurance companies to deposit securities prior to issuance of a certificate of authority to transact insurance. These securities remain in the name of the licensed insurance company as long as the company has a pending claim in the State or until a proper order of a court of competent jurisdiction has been issued to the receiver, conservator, rehabilitation, or liquidator of the insurer or to any other properly designated official or officials who succeed to the management and control of the insurer's assets. The purchase and redemption of such securities are allowed as long as the required levels of deposits are maintained. At June 30, 2020, securities valued at $185.4 million were held by the Department of Insurance. These securities are not recorded on the Balance Sheet.
Statutes require that surety bonds be provided for State public works contracts. The Department of Transportation holds surety bonds in the amount of $664.0 million for construction performance to ensure proper completion and complete performance of construction contracts, and $730.4 million for construction payment to ensure that payments are made by the general contractor to all subcontractors. These bonds are not recorded on the Statement of Net Position.
The Georgia State Financing and Investment Commission (GSFIC) State Construction Manual policies require that surety bonds be provided for payment and performance of all State projects of $0.1 million or more. The
105

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 5 - DEPOSITS AND INVESTMENTS (continued) Department of Corrections holds surety bonds in the amount of $37.4 million for construction performance to ensure proper completion and complete performance of construction contracts. These bonds are not recorded on the Statement of Net Position. For any organization that elects to assume the liability for unemployment compensation payments in lieu of making contributions to the Unemployment Compensation Fund, the Commissioner of the Department of Labor is authorized by statute to require such organization to execute and file with the Commissioner a cash deposit or surety bond. Cash deposits are held on behalf of such organizations in the Department's name, and are reported as custodial funds. At June 30, 2020, the Department held surety bonds in the amount of $81.4 million, and cash bonds in the amount of $3.0 million. These bonds are not recorded on the Statement of Net Position. Department of Defense Surety Bonds are required of all freight carriers in order to transport military freight. They are mandated by a wing of the military called the Surface Deployment and Distribution Command (SDDC). The bond amount is based on the size of the company and how many states they serve. Department of Defense holds surety bonds in the amount of $14.5 million for freight carriers transporting military freight.
106

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 6 - DERIVATIVE INSTRUMENTS
Derivative Instruments are utilized by some of the higher education foundations (reported as component units) and consist primarily of interest rate swap agreements. Certain foundations (component units) have elected to apply FASB provisions and therefore the disclosure information for these foundations is presented separately. Details of the long term liabilities associated with the interest rate swap derivatives are within Note 10 Long-term Liabilities.
Component Units GASB Organizations
The fair value balances and notional amounts of hedging derivative investments outstanding as reported in the fiscal year 2020 and 2019 financial statements for higher education foundations reported as component units reporting under GASB provisions are as follows (amount in thousands):

Component unit activities - GASB Cash flow hedges:
AU Health System Inc.
2014A&B - Interest Rate Swap University of Georgia Athletic Association, Inc.
2005B - Interest Rate Swap

Change in Fair Value

Fair Value at 06/30/20

Classification

Amount Classification Amount

Notional

Investment Revenue

$ (8,096)

Debt

$ (28,181) $ 102,120

Deferred outflow of resources

(1,328)

Debt

(5,065)

$ (33,246)

19,775

Component unit activities - GASB Cash flow hedges:
AU Health System Inc.
2014A&B - Interest Rate Swap University of Georgia Athletic Association, Inc.
2005B - Interest Rate Swap

Change in Fair Value

Fair Value at 06/30/19

Classification

Amount Classification Amount

Notional

Investment Revenue

$ (5,267)

Debt

Deferred outflow of resources

(953)

Debt

$ (20,084) $ 106,340

(3,738) $ (23,822)

20,685

Interest Rate Swap Derivatives
AU Health System, Inc.
AU Health System, Inc. (The Health System) entered into a variable-to-fixed interest rate swap (the swap) to convert Health Systems's variable interest rate concurrent with the 2008 bond issuance to a synthetic fixed rate of 3.302%.
The swap matures on July 1, 2037. The notional amount of the swap at June 30, 2020 and 2019, was $102.1 and $106.3 million, respectively. The notional amount decreased from the initial notional amount of $135.0 million. The notional value of the swap declines in conjunction with payments of bond principal such that the outstanding balance of the 2014A and 2014B Bonds approximate the notional amount of the swap at all times. Under the swap,

107

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 6 - DERIVATIVE INSTRUMENTS (continued)
the Health System pays the counterparty interest at a fixed rate of 3.302% and receives interest payments at a variable rate computed as 68% of London Interbank Offered Rate (LIBOR).
The fair value of the swap is recorded as an asset or liability, depending on whether the termination of the swap would result in amounts due to the Health System or the swap counterparty. At June 30, 2020 and 2019, the fair value of the swap represented a liability to the Health System in the amount of $28.2 and $20.1 million, respectively. The Health System or the swap counterparty is required to post collateral with the other party in the event that the fair value of the swap exceeds certain thresholds, as defined. At June 30, 2020 and 2019, the Health System had $28.2 and $20.2 million posted cash and investment collateral with the swap counterparty, respectively, which is included in other assets in the accompanying statements of net position.
As of June 30, 2020 and 2019, the Health System was exposed to credit risk in the amount of the fair value of the swap. The Health System has two swap counterparties. As of June 30, 2020 and 2019, the swap counterparties were rated A+ and A by Fitch Ratings, A1 and A2 by Moody's Investors Services and A+ and A by Standard & Poor's. To mitigate the potential for credit risk, various levels of collateralization by the counterparty may be required should the counterparty's credit rating be downgraded and the fair value of the swap be in a liability position at a level above certain thresholds specified in the swap agreement.
The Health System or the counterparty may terminate the swap if the other party fails to perform under the terms of the agreement. If the swap is terminated, the variable rate bonds would no longer carry a synthetic fixed interest rate. Also, if at the time of termination, the swap has a negative fair value (unfavorable to the Health System), the Health System would be liable to the counterparty for a payment equal to the swap's fair value.
University of Georgia Athletic Association, Inc. (UGAA)
For derivative transactions, unless otherwise specified, Bank of America Merrill Lynch ("BOAML") furnishes a single value for each transaction, even if comprised of multiple legs. Unless otherwise specified, valuations for derivative instruments represent, or are derived from, mid-market values. For some derivative instruments, midmarket prices and inputs may not be observable. Instead, valuations may be derived from proprietary or other pricing models based on certain assumptions regarding past, present, and future market conditions. Some inputs may be theoretical, not empirical, and require BOAML to make subjective assumptions and judgments in light of its experience. For example, in valuing over the counter equity options where there is no listed option with a corresponding expiration date, BOAML must estimate the future share price volatility based on realized volatility of the underlying shares over periods deemed relevant, implied volatilities of the longest dated listed options available on the underlying shares or major indices and other relevant factors. Valuations of securities with embedded derivatives may be based on assumptions as to the volatility of the underlying security, basket or index, interest rates, exchange rates, dividend yields, correlations between these or other factors, the impact of these factors upon the value of the security (including the embedded options), as well as issuer funding rates and credit spreads (actual or approximated) or additional relevant factors. While BOAML believes that the methodology and data it uses to value derivatives and securities with embedded derivatives are reasonable and appropriate, other dealers might use different methodology or data and may arrive at different valuations.
Objective and Terms - As a means of interest rate management, the Association entered into an interest rate swap transactions with Bank of America, N.A. (the "Counterparty") relating to its variable rate tax-exempt Series 2005B Bonds. Pursuant to an ISDA Master Agreement and Schedule to ISDA Master Agreement, each dated as of January 27, 2005, between the Association and the Counterparty and the Confirmation, the Association has agreed to pay to the Counterparty a fixed rate of interest in an amount equal to 3.48% per annum multiplied by the notional amount that is equal to the principal amount of the Series 2005B Bonds until August 2033. In return, the Counterparty has
108

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 6 - DERIVATIVE INSTRUMENTS (continued)
agreed to pay to the Association a floating rate of interest in an amount equal to 67% of LIBOR multiplied by the notional amount that is equal to the principal amount of the Series 2005B Bonds until July 2035.
Fair Value - The Association will be exposed to variable rates if the Counterparty to a swap defaults or if a swap is terminated. A termination of the swap agreement may also result in the Association's making or receiving a termination payment.
As of June 30, 2020, the fair value of the interest rate swap agreements was $5.1 million, indicating the amount that the Association would be required to pay the Counterparty to terminate the swap agreements.
Swap Payments and Associated Debt - As rates vary, variable rate bond interest payments and net swap payments will vary. As of June 30, 2020, debt service requirements of the variable rate debt and net swap payments, assuming current interest rates remain the same for their term, were as follows (amount in thousands):

Variable Rate Bonds

Interest Rate

Principal

Interest

Swaps, Net

Years ending:

2021

$

945 $

655 $

21 $

2022

980

621

20

2023

1,010

586

19

2024

1,045

550

17

2025

1,080

512

16

2026-2030

6,005

1,948

62

2031-2036

8,710

788

25

Total

$

19,775 $

5,660 $

180 $

Total
1,621 1,621 1,615 1,612 1,608 8,015 9,523 25,615

Credit Risk - As of June 30, 2020, the fair value of the swaps represents the Association's exposure to the Counterparty. Should the Counterparty fail to perform in accordance with the terms of the swap agreement and variable interest rates remain at the current level, the Association could see a possible loss equivalent to $0.2 million less the cumulative fair value of $5.1 million.
As of June 30, 2020 the Counterparty was rated as follows by Moody's and S&P:

Moody's

S&P

Bank of America, N.A.

Aa2

A+

Basis Risk - The swaps expose the Association to basis risk. The interest rate on the Series 2005B Bonds is a taxexempt interest rate, while the LIBOR basis on the variable rate receipt on the interest rate swap agreements is taxable. Tax-exempt interest rates can change without a corresponding change in the 30-day LIBOR rate due to factors affecting the tax-exempt market that do not have a similar effect on the taxable market. The Association will be exposed to basis risk under the swaps to the extent that the interest rates on the tax-exempt bonds trade at greater than 67% of LIBOR for extended periods of time. The Association would also be exposed to tax risk stemming
109

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 6 - DERIVATIVE INSTRUMENTS (continued)
from changes in the marginal income tax rates or those caused by a reduction or elimination in the benefits of tax exemption for municipal bonds.
Termination Risk - The interest rate swap agreement uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy. The Association or the Counterparty may terminate the swap if the other party fails to perform under the terms of the contract. If the swap is terminated, the variable rate bonds would no longer carry a synthetically fixed interest rate. Also, if at the time of termination, the swap has a negative fair value, then the Association would be liable to the Counterparty for a payment equal to the swap's fair value.
Component Units FASB Organizations Interest Rate Swaps
The fair value balances and notional amounts of hedging derivative investments outstanding as reported in the fiscal year 2020 and 2019 financial statements for higher education foundations reported as component units reporting under FASB provisions are as follows (amount in thousands):

Component unit activities - FASB Cash flow hedges: Georgia College & State University Foundation, Inc.
University of Georgia Foundation

Change in Fair Value

Classification

Amount

Fair Value at 06/30/20

Classification Amount

Notional

Investment Revenue $

58

Debt

$ (1,161) $ 20,600

Investment Revenue

(283)

Debt

(5,554)

69,820

Investment Revenue Investment Revenue

(534)

Debt

(1,124)

Debt

(2,052) (1,932)
$ (10,699)

4,063 10,545

Component unit activities - FASB Cash flow hedges: Georgia College & State University Foundation, Inc.

Change in Fair Value

Classification

Amount

Fair Value at 06/30/19

Classification Amount

Notional

Investment Revenue $

(36)

Debt

$ (1,219) $ 20,600

Investment Revenue

(974)

Debt

(5,271)

69,820

University of Georgia Foundation

Investment Revenue Investment Revenue

(334)

Debt

(722)

Debt

VSU Auxiliary Services Real Estate Foundation no longer has derivative.

(1,518) (808)
$ (8,816)

4,192 10,925

110

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 6 - DERIVATIVE INSTRUMENTS (continued) Georgia College & State University Foundation, Inc. (GCSUF)

GCSUF maintains an interest rate risk management strategy that uses interest rate swap derivative instruments to minimize significant, unanticipated earnings fluctuations caused by interest rate volatility. GCSUF's specific goal is to lower (where possible) the cost of its borrowed funds.

In connection with the 2007 Series bonds, GCSUF entered into an interest rate swap transaction to convert its variable-rate bond obligations to fixed rates. This swap is utilized to manage interest rate exposures over the period of the interest rate swap. The differential to be paid or received on all swap agreements is accrued as interest rates change and is recognized in interest expense over the life of the agreement. The swap agreements expire at various dates and have a fixed rate of 4.065%. The interest rate swap contains no credit-risk-related contingent features and is cross collateralized by certain assets of GCSUF.

On January 31, 2013, GCSUF modified the swap agreement to lower the interest rate from 4.715% to 4.065%. The present value of the interest savings over the life of the modified swap agreement is approximately $6.9 million. The lease agreement with the Board of Regents was not modified as a result of the swap modification; however, 40% of the present value of the interest savings will be paid to the University annually. As of June 30, 2020 and 2019, the refinanced swap savings owed to the University were $1.6 and $1.8 million, respectively.

The University of Georgia Foundation (UGAF)

The Foundation has an outstanding interest rate swap agreement effectively converting the interest rate exposure on the $6.2 million note payable from variable to a 5.95% fixed rate over the term of the note payable. During November 2017, the Foundation modified and extended the agreement which included a fixed rate fee payment of $0.3 million. As of June 30, 2020 and 2019, the total notional amount of the swap was $4.1 and $4.2 million, respectively. As of June 30, 2020 and 2019, the fair value of this interest rate swap was a liability of $2.0 and $1.5 million, respectively. The Foundation recorded a related unrealized loss of $0.5 million and $0.3 million for the years ended June 30, 2020 and 2019, respectively.
The Foundation has an outstanding interest rate swap agreement effectively converting the interest rate exposure on the $12.5 million note payable from variable to a 3.37% fixed rate over the term of the note payable. As of June 30, 2020 and 2019, the total notional amount of the swap was $10.5 and $10.9 million, respectively. As of June 30, 2020 and 2019, the fair value of this interest rate swap was a liability of $1.9 and $0.8 million, respectively. The Foundation recorded a related unrealized loss of $1.1 and $0.7 million for the years ended June 30, 2020 and 2019, respectively.

Component Unit - FASB Organizations Derivative Investments

Component unit activities - FASB Georgia Tech Foundation, Inc.

Change in Fair Value

Fair Value at 06/30/20

Classification

Amount Classification Amount

Notional

Investment Revenue Investment Revenue

$ (753)

Debt

$

(141) $ 101,098

(4,357) Debt

(3,544)

89,818

$ (3,685)

Amounts in the table are in thousands.

111

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 6 - DERIVATIVE INSTRUMENTS (continued)
Georgia Tech Foundation, Inc.
The Foundation directly invests in derivatives associated with market risk. The purpose of these investment derivatives is to gain additional exposure to U.S. and foreign fixed income and equity markets.
Futures and forward contracts obligate the buyer to purchase an asset (and the seller to sell an asset), such as a physical commodity or financial instrument, at a predetermined price.
During 2020, the Foundation recognized net realized/unrealized gains on direct positions in Equity Index Futures derivatives and U.S. Treasury Futures derivatives of $5.8 million and $24.2 million, respectively. As of June 30, 2020, the Foundation held direct positions in derivatives as shown in the following table (amount in thousands):

Investment Equity Index Futures U.S. Treasury Futures

Total

Fair Value at 06/30/20

$

(141)

(3,544)

$

(3,685)

Notional Exposure

$

101,098

89,818

$

190,916

112

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 7 - RECEIVABLES Receivables at June 30, 2020, consisted of the following (amount in thousands):

Governmental Activities General Fund Nonmajor Governmental Funds
Total - Governmental Funds Government-wide adjustments:
Internal Service Funds Total - Governmental Activities
Business-type Activities Higher Education Fund State Health Benefit Plan Unemployment Compensation Fund Georgia Higher Education Facilities Authority State Road and Tollway Authority Government-wide adjustments:
Other Total - Business-type Activities
Component Units Unrestricted:
Georgia Environmental Finance Authority Georgia Geo. L. Smith II
World Congress Center Authority Georgia Housing and Finance Authority Georgia Lottery Corporation Georgia Ports Authority Georgia Tech Foundation, Incorporated Nonmajor Component Units Total - Unrestricted Restricted: Georgia Geo. L. Smith II
World Congress Center Authority Georgia Housing and Finance Authority Georgia Tech Foundation, Incorporated Nonmajor Component Units Total - Restricted
Total - Component Units

Taxes

Notes and Loans

Other

Intergovernmental Receivables

Gross Receivables

Allowance for
Uncollectibles

Total Receivables
(Net)

$ 5,837,928 $ --
5,837,928

-- $ -- --

578,234 $ 40,306 618,540

2,170,639 $ 8,586,801 $

--

40,306

2,170,639

8,627,107

(1,650,514) $ 6,936,287

--

40,306

(1,650,514)

6,976,593

-- $ 5,837,928 $

-- -- $

104,174 722,714 $

644

104,818

(729)

104,089

2,171,283 $ 8,731,925 $ (1,651,243) $ 7,080,682

$

-- $ 31,266 $ 286,336 $ 106,210 $ 423,812 $

(67,885) $ 355,927

--

--

107,978

--

107,978

(28,709)

79,269

--

--

219,975

2,003,566

2,223,541

(14,216)

2,209,325

--

--

332

--

332

--

332

--

--

9,733

--

9,733

--

9,733

--

--

70

--

70

--

70

$

-- $ 31,266 $ 624,424 $ 2,109,776 $ 2,765,466 $ (110,810) $ 2,654,656

$

-- $ 1,483,339 $

5,744 $

2,306 $ 1,491,389 $

-- $ 1,491,389

429

--

5,295

--

611,812

864

--

--

227,022

--

--

60,297

--

918

131,040

468

390,482

2,773,140

897

2,486,551

3,203,402

-- -- -- -- -- 39,622 41,928

5,724 612,676 227,022 60,297 131,958 3,203,712 5,732,778

-- (4,736) (5,440) (6,008)
-- (127,123) (143,307)

5,724 607,940 221,582 54,289 131,958 3,076,589 5,589,471

--

--

--

1,334,129

--

--

--

15

--

1,334,144

92,294 8,733 72,097 125,988 299,112

--

92,294

--

1,342,862

--

72,097

--

126,003

--

1,633,256

(37,505) (4,500) (6,426) (13,048) (61,479)

54,789 1,338,362
65,671 112,955 1,571,777

$

897 $ 3,820,695 $ 3,502,514 $

41,928 $ 7,366,034 $ (204,786) $ 7,161,248

113

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 8 - INTERFUND BALANCES AND TRANSFERS A. Due To/From Other Funds
Due To/From Other Funds at June 30, 2020, consist of the following (amount in thousands):

Due To Other Funds General Fund General Obligation Bond Projects Fund Nonmajor Governmental Funds
Higher Education Fund
State Health Benefit Plan
Nonmajor Enterprise Funds
Internal Service Funds
Fiduciary Funds Total Due From Other Funds

Due From Other Funds

General Fund

Nonmajor Governmental
Fund

Higher Education
Funds

Nonmajor Enterprise
Funds

Internal Service Funds

Fiduciary Funds

Total Due To Other
Funds

$ --$
--
15,289 -- -- -- 783 --
$ 16,072 $

-- $

-- $

--

27,757

--

--

--

--

--

--

25,654

--

--

--

--

--

25,654 $ 27,757 $

-- $ 668,957 $ 782,845 $ 1,451,802

--

--

--

27,757

--

35

-- 258,571

--

--

--

--

--

9

69

--

-- -- 3,015 -- 2 451

15,324 258,571
3,015 25,654
794 520

69 $ 927,572 $ 786,313 $ 1,783,437

Interfund receivables and payables result from billings for goods/services provided between funds.

114

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 8 - INTERFUND BALANCES AND TRANSFERS (continued) B. Interfund Transfers Interfund transfers at June 30, 2020, consist of the following (amount in thousands):

General Fund

Governmental Funds

General

Obligation

Nonmajor

Bond

Governmental

Projects Fund

Funds

Transfers In Proprietary Funds

Higher Education
Fund

Nonmajor Enterprise
Funds

Internal Service Funds

Fiduciary Funds

Total Transfers
Out

Transfers Out:

General Fund
General Obligation Bond Projects Fund

$ --$ 16,012

Nonmajor Governmental Funds
Higher Education Fund
Unemployment Compensation Fund
Nonmajor Enterprise Funds
Internal Service Funds

56,628 74,929
--
--
3,362

1,527 $ 1,589,168 $2,932,360 $ 11,644 $ 427 $ 2,786 $4,537,912

--

17,176

--

--

--

--

33,188

--

34

--

3,016

--

--

59,678

--

--

--

--

--

--

74,929

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

5,929

--

--

--

9,291

Fiduciary Funds

--

--

--

--

-- 5,330

--

5,330

Total Transfers In $150,931 $

1,527 $ 1,606,378 $2,938,289 $ 14,660 $ 5,757 $ 2,786 $4,720,328

Transfers are used to move revenues from the fund that statutes require to collect them to the fund that statutes require to expend them and to move unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations.

115

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 9 - CAPITAL ASSETS A. Primary Government Capital Asset activity for the fiscal year-ended June 30, 2020, was as follows (amount in thousands):

Governmental Activities Capital Assets Not Being Depreciated:
Land Works of Art and Collections Intangibles - Other Than Software Construction in Progress Total Capital Assets, Not Being Depreciated
Capital Assets Being Depreciated: Infrastructure Buildings and Building Improvements Improvements Other Than Buildings Intangibles - Other than Software Machinery and Equipment Software
Total Capital Assets Being Depreciated
Less Accumulated Depreciation For: Infrastructure Buildings and Building Improvements Improvements Other Than Buildings Intangibles - Other Than Software Machinery and Equipment Software
Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net

Balance 7/1/2019 (Restated - Note 3)

Increases

Decreases

Balance 6/30/2020

$

4,389,041 $

288,654 $

(26,724) $

4,650,971

1,400

--

--

1,400

125,125

7,785

--

132,910

3,402,073

3,213,593

(2,604,932)

4,010,734

7,917,639

3,510,032

(2,631,656)

8,796,015

32,464,073 4,388,494
176,803 1,644
1,152,828 580,968
38,764,810

1,498,637 283,407 17,974 -- 212,396 22,643
2,035,057

(40,687) (105,432)
(6,954) --
(53,487) --
(206,560)

33,922,023 4,566,469
187,823 1,644
1,311,737 603,611
40,593,307

19,591,590 2,191,763
65,424 1,201 862,751 316,425 23,029,154
15,735,656

953,296 115,719
4,211 234
82,726 37,031 1,193,217
841,840

(12,145) (51,632) (2,656)
-- (45,652)
-- (112,085)
(94,475)

20,532,741 2,255,850
66,979 1,435 899,825 353,456 24,110,286
16,483,021

Governmental Activities Capital Assets, Net

$

23,653,295 $

4,351,872 $

(2,726,131) $

25,279,036

116

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 9 - CAPITAL ASSETS (continued)

Business-type Activities Capital Assets Not Being Depreciated:
Land Works of Art and Collections Construction in Progress Total Capital Assets, Not Being Depreciated

Balance 7/1/2019 (Restated - Note 3)

Increases

Decreases

Balance 6/30/2020

$

504,109 $

19,793 $

(3,218) $

520,684

55,244

1,013

(439)

55,818

217,674

253,091

(204,187)

266,578

777,027

273,897

(207,844)

843,080

Capital Assets Being Depreciated: Infrastructure Buildings and Building Improvements Improvements Other Than Buildings Machinery and Equipment Software Library Collections Works of Art and Collections
Total Capital Assets Being Depreciated

390,201 14,317,817
380,073 2,226,276
166,145 983,786
6,605 18,470,903

35,388 363,800 34,330 196,169 39,734 32,054
160 701,635

(2,687) (12,516) (6,899) (102,680)
(993) (6,588)
-- (132,363)

422,902 14,669,101
407,504 2,319,765
204,886 1,009,252
6,765 19,040,175

Less Accumulated Depreciation For: Infrastructure Buildings and Building Improvements Improvements Other Than Buildings Machinery and Equipment Software Library Collections Works of Art and Collections
Total Accumulated Depreciation

153,378 4,838,733
191,619 1,655,771
57,494 813,801
1,831 7,712,627

25,420 368,446 14,311 139,284 24,177 33,466
160 605,264

-- (1,098)
(180) (62,992)
(920) (7,134)
-- (72,324)

178,798 5,206,081
205,750 1,732,063
80,751 840,133
1,991 8,245,567

Total Capital Assets, Being Depreciated, Net

10,758,276

96,371

(60,039)

10,794,608

Business-type Activities, Capital Assets, Net

$

11,535,303 $

370,268 $

(267,883) $

11,637,688

117

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 9 - CAPITAL ASSETS (continued)
Current period depreciation expense was charged to functions of the primary government as follows (amount in thousands):

Governmental Activities

General Government

$

Education

Health and Welfare

Transportation

Public Safety

Economic Development

Culture and Recreation

Conservation

Internal Service Funds
(Depreciation on capital assets held by the State's internal service funds are charged to the various functions based on their usage of assets)

Depreciation Expense - Governmental Activities

$

Business-type Activities

33,174 Higher Education Fund

$

2,381 Nonmajor Enterprise Funds

Depreciation Expense -

32,240 Business-type Activities

$

973,776

75,499

27,852

18,398

8,402

593,579 11,685 605,264

21,495 1,193,217

118

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 9 - CAPITAL ASSETS (continued) B. Component Units

Capital Asset activity for the fiscal year-ended June 30, 2020, was as follows (amount in thousands):

Component Units Capital Assets Not Being Depreciated:
Land Works of Art and Collections Construction in Progress Total Capital Assets, Not Being Depreciated
Capital Assets Being Depreciated: Infrastructure Buildings and Building Improvements Improvements Other Than Buildings Machinery and Equipment Patents, Trademarks, and Copyrights Software Library Collections Works of Art and Collections
Total Capital Assets Being Depreciated
Less Accumulated Depreciation For: Infrastructure Buildings and Building Improvements Improvements Other Than Buildings Machinery and Equipment Software Library Collections Works of Art and Collections
Total Accumulated Depreciation
Total Capital Assets, Being Depreciated, Net

Balance July 1, 2019 (Restated - Note 3)

Increases

Decreases

Balance June 30, 2020

$

396,901 $

1,670

129,408

527,979

30,668 $ --
143,620 174,288

(9) $ -- (39,346) (39,355)

427,560 1,670
233,682 662,912

381,174 2,857,461
883,431 1,247,597
-- 37,698 4,619
71 5,412,051

31,156 57,854 81,252 56,169
160 3,719
133 -- 230,443

577 (1,619)
(466) (15,024)
-- -- (2) -- (16,534)

412,907 2,913,696
964,217 1,288,742
160 41,417 4,750
71 5,625,960

179,417 622,927 392,174 705,160 29,662
3,373 22
1,932,735
3,479,316

11,863 126,050 38,698 76,068
1,877 236 3
254,795
(24,352)

-- (1,129)
(27) (5,912)
-- -- -- (7,068)
(9,466)

191,280 747,848 430,845 775,316 31,539
3,609 25
2,180,462
3,445,498

Component Units Capital Assets, Net*

$

4,007,295 $

149,936 $

(48,821) $

4,108,410

*Certain higher education foundations and other similar organizations utilize FASB standards.

119

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 9 - CAPITAL ASSETS (continued) As of June 30, 2020, the capital assets balances of FASB organizations are as follows (amount in thousands):

Capital Assets Not Being Depreciated: Land Works of Art and Collections Construction in Progress
Total Capital Assets, Not Being Depreciated

$

151,200

7,756

54,166

213,122

Capital Assets Being Depreciated Infrastructure Buildings and Building Improvements Improvements Other Than Buildings Machinery and Equipment Software
Total Capital Assets Being Depreciated

4,281 368,330 10,551 30,633
3,357 417,152

Less: Accumulated Depreciation

(156,286)

Total Capital Assets, Being Depreciated, Net

260,866

Capital Assets, Net (FASB presentation)

473,988

Total Capital Assets, Net - All Component Units

$

4,582,398

120

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 10 - LONG-TERM LIABILITIES A. Changes in Long-term Liabilities Primary Government Changes in long-term liabilities for the fiscal year ended June 30, 2020, are as follows (amount in thousands):

Balance 7/1/2019 (Restated - Note 3)

Additions

Reductions

Balance 6/30/2020

Amounts Due Within One Year

Governmental Activities

General Obligation Bonds Payable

$

9,388,795 $

950,595 $

(899,920) $

9,439,470 $

864,371

Revenue Bonds Payable

244,555

--

(41,980)

202,575

44,105

GARVEE Bonds Payable

469,980

349,765

(451,840)

367,905

123,220

Net Unamortized Premiums/(Discounts):

General Obligation Bonds

963,808

87,703

(139,345)

912,166

--

Revenue Bonds

18,883

--

(5,513)

13,370

--

GARVEE Bonds

12,059

38,614

(20,753)

29,920

--

Total Bonds Payable
Notes and Loans Payable - Direct Borrowings

11,098,080 60,350

1,426,677 --

(1,559,351) (3,957)

10,965,406 56,393

1,031,696 4,095

Notes and Loans Payable - Other

8,912

--

(2,941)

5,971

2,971

Capital Lease Obligations

219,259

13,300

(19,850)

212,709

21,426

Compensated Absences Payable

386,869

164,100

(168,235)

382,734

172,460

Total Governmental Activities

$

11,773,470 $

1,604,077 $

(1,754,334) $

11,623,213 $

1,232,648

Business-type Activities

Revenue Bonds Payable

$

Net Unamortized Premiums/(Discounts):

Revenue Bonds

Total Bonds Payable

Notes and Loans Payable

Capital Lease Obligations

Compensated Absences Payable

Other Liabilities

Total Business-type Activities

$

229,491 $
10,297 239,788 259,267 2,856,209 265,000
1,431 3,621,695 $

49,855 $
9,392 59,247 35,045 80,965 214,593
-- 389,850 $

(62,925) $
(1,876) (64,801) (27,072) (126,506) (180,171)
(293) (398,843) $

216,421 $
17,813 234,234 267,240 2,810,668 299,422
1,138 3,612,702 $

5,730
-- 5,730 36,699 122,077 182,321
291 347,118

Other long-term liabilities of Governmental Activities, such as pension, other post-employment benefits (OPEB) and compensated absences, are typically liquidated by the general fund.
Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for these funds are included as part of the above total for governmental activities. The following long-term liabilities of internal service funds were included in the above balance as of June 30, 2020: capital leases of $25.6 million, compensated absences of $5.1 million and notes payable of $8.7 million. Of these amounts, $5.1 million, $2.2 million and $3.9 million, respectively, are due within one year. In general, the capital leases and compensated absences of the governmental activities are liquidated by the general fund.

121

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 10 - LONG-TERM LIABILITIES (continued) Component Units

Changes in long-term liabilities for the fiscal year ended June 30, 2020, are as follows (amount in thousands):

Balance 7/1/2019

Balance

Amounts Due

(Restated - Note 3)

Additions

Reductions

6/30/2020

Within One Year

Component Units

Revenue Bonds Payable

$

2,994,104 $

361,514 $

(314,636) $

3,040,982 $

186,034

Mortgage Bonds Payable

1,436,100

277,840

(121,055)

1,592,885

42,170

Net Unamortized Premiums/(Discounts):

Revenue Bonds

142,549

43,436

(18,226)

167,759

--

Mortgage Bonds

9,342

1,529

--

10,871

--

Total Bonds Payable

4,582,095

684,319

(453,917)

4,812,497

228,204

Notes and Loans Payable

287,929

117,396

(112,070)

293,255

38,094

Net Unamortized Premiums

(1,938)

205

(82)

(1,815)

--

Capital Lease Obligations

83,871

13,765

(11,766)

85,870

8,868

Compensated Absences Payable

34,201

14,559

(9,918)

38,842

30,235

Grand Prizes Payable

178,014

13,156

(18,090)

173,080

4,891

Derivative Instruments Payable

37,493

11,306

(4,855)

43,944

--

Other Liabilities

28,307

7,172

(5,597)

29,882

6,601

Total Component Units

$

5,229,972 $

861,878 $

(616,295) $

5,475,555 $

316,893

B. Bonds and Notes Payable At June 30, 2020, bonds and notes payable currently outstanding are as follows (amount in thousands):

Governmental Activities General Obligation Bonds General Government General Government - Refunding Revenue Bonds Transportation Projects GARVEE Bonds Notes and Loans Payable
Business-type Activities Revenue Bonds Georgia Higher Education Facilities Authority Transportation Projects Notes and Loans Payable
Component Units Revenue Bonds Higher Education Foundations Georgia Tech Foundation Other Revenue Bonds Mortgage Bonds Georgia Housing and Financing Authority Notes and Loans Payable Higher Education Foundations Georgia Tech Foundation Other Notes and Loans Payable

Interest Rates
0.30% - 5.11% 1.50% - 5.00%
4.00% - 5.00% 2.50% - 5.00% 1.00% - 5.92%
2.00% - 6.25% 6.25% - 7.00% 2.00% - 3.79%
1.05% - 5.50% 1.76% - 6.66% 4.16% - 5.28%
0.15% - 5.00%
0.00% - 6.55% 2.94% - 5.04% 1.57% - 4.50%

Maturing Through
Year

Original Issue
Amount

Outstanding Amount

2039 2030
2024 2029 2034

$

11,986,950 $

3,813,290

363,685 949,765 88,390

7,133,375 2,306,095
202,575 367,905 62,364

2041 2049 2031

486,520 26,070 349,064

182,290 34,131 267,240

2052 2049 2028
2050
2042 2029 2046

3,252,720 375,685 15,750
2,201,410
238,584 104,152 68,299

2,787,857 246,810 6,315
1,592,885
149,891 88,887 54,477

122

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 10 - LONG-TERM LIABILITIES (continued)
C. General Obligation Bonds
Primary Government
The State issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities and equipment. On July 18, 2019, the State issued general obligation bonds, (Series 2019A and 2019B), totaling $914.7 million to provide funds for various capital outlay projects of the State, for county and independent school systems through the Department of Education, for county and local libraries through the Board of Regents, and to provide loans through the Georgia Environmental Finance Authority (GEFA) to local governments and local government entities for water and sewerage facilities. General obligation bonds are direct obligations of the State to which the full faith and credit of the State are pledged.
Bonds Authorized but Unissued
Authorized but unissued general obligation bonds as of June 30, 2020, are as follows (amount in thousands):

Purpose K-12 Education

Authorized Unissued Debt

$

337,255

Defeasance and Refunding of General Obligation Bonds
On July 18, 2019, the State issued Series 2019C general obligation refunding bonds totaling $35.9 million to refund a total of $38.4 million from two different series of general obligation bonds with interest rates of 5.00%. The difference between the cash flows required to service the old debt and the cash flows required to service the new debt and complete the two refunded transactions is $2.9 million. This amount is being netted against the new debt and amortized over the remaining life of the refunding debt. In addition, the 2019C refunding transaction produced an economic gain of 2.7 million.
As of June 30, 2020, the State had total outstanding advance refunded bonds of $216.2 million. The debt service for the refunded bonds is paid by a combination of cash and U.S. Treasury securities held irrevocably in escrow accounts. The escrow account assets and the liability for the defeased bonds are not included in the State's financial statements.
Early Retirement of Debt
From funds received from the sale of state property and from interest earnings available for the advance retirement of debt, the State made purchases of various series of State of Georgia General Obligation Bonds in the secondary market with a par value of $16.6 million The early retirements of the bonds will save the State $17.6 million in future principal and interest appropriations. Since July 1, 2000 the early retirement program has saved the State over $1.1 billion in future principal and interest appropriations.

123

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 10 - LONG-TERM LIABILITIES (continued)
D. Revenue Bonds
Governmental Activities
State Road and Tollway Authority (SRTA) has issued Guaranteed Revenue Bonds for the purpose of financing certain road and bridge projects in the State. The guaranteed revenue bonds are secured by a joint resolution between Department of Transportation (DOT) (General Fund) and SRTA (Nonmajor Governmental Fund) whereby DOT has pledged to provide sufficient motor fuel tax funds to pay the principal and interest of the revenue bonds. According to the State Constitution, motor fuel tax funds are imposed and appropriated for all activities incident to maintaining an adequate system of roads and bridges in the State. In fiscal year 2020, the State collected $1.8 billion of motor fuel tax funds, which exceeds the principal and interest due on the revenue bonds of $53.8 million for the same fiscal year. Further, the State has guaranteed the full payment of the bonds and the interest.
SRTA has issued Federal Highway Grant Anticipation Revenue Bonds and Federal Highway Reimbursement Revenue Bonds (GARVEE's) of $349.8 million. These bond proceeds will be used for the purpose of providing funds for an approved land public transportation project. These bonds are pledged and payable solely from grant and reimbursement revenues received from the Federal Highway Administration. These bonds do not constitute a pledge of the faith and credit of SRTA or the State.
Of the SRTA bonds issued, $285.9 million were refunding bonds used to refund a total of $298.6 million in outstanding principal from previous revenue bond issuances. The difference between the cash flows required to service the old debt, the new debt, and complete the refunding transactions is $27.2 million. This amount is being netted against the new debt and amortized over the remaining life of the refunding debt. In addition, the refunding transactions produced an economic gain of $13.7 million.
Business-type Activities
SRTA has issued toll revenue bonds of $26.1 million for the purpose of paying the costs of certain tolling infrastructure relating to the I-75 South Metro Express Lanes Project, financing a debt service reserve and paying the costs of issuance of the bonds. Interest on the bonds will not be paid on a current basis, but will be added to the principal amount of such bonds on each "accretion date," which is each June 1 and December 1, commencing December 1, 2014. Interest on these bonds ranges from 6.25% to 7.00%. As of June 30, 2020, the outstanding principal balance is $34.1 million. These bonds are pledged and payable solely from I-75 South Metro Express Lanes toll revenue.
Georgia Higher Education Facilities Authority (GHEFA) has issued revenue bonds for the purpose of acquiring, constructing and equipping several projects on college campuses throughout the State. The bonds are secured solely by the related security deed and related assignment of contract documents. As of June 30, 2020, the outstanding principal for these revenue bonds is $182.3 million.
Component Units
Higher Education Foundations have issued various revenue bonds to finance the costs of acquiring, renovating, constructing and equipping various facilities located on the campuses of the Board of Regents. The bond issues have interest rates ranging from 1.05% to 5.50% with maturity dates through fiscal year 2052. As of June 30, 2020, the
124

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 10 - LONG-TERM LIABILITIES (continued)
outstanding principal for these revenue bonds was $2.8 billion. These bonds are secured by lease arrangements for these various facilities with the Board of Regents.
Georgia Tech Foundation, Inc. has issued various revenue bonds to finance the costs of acquiring, renovating, constructing and equipping various facilities located on the campus of The Georgia Institute of Technology. The bond issues have interest rates ranging from 1.76% to 6.66% with maturity dates through fiscal year 2049. As of June 30, 2020, the outstanding principal for these revenue bonds was $246.8 million. These bonds are secured by lease arrangements for these various facilities with the Board of Regents.
Other component units had revenue bonds payable outstanding at June 30, 2020, of $6.3 million as detailed below (amount in thousands):

Lake Lanier Islands Development Authority Regional Educational Service Agencies (RESA) Total

Amount

$

5,285

1,030

$

6,315

E. Mortgage Bonds
Component Units
Mortgage bonds outstanding of $1.6 billion at June 30, 2020, were issued by the Georgia Housing and Finance Authority for financing the purchase of single-family mortgage loans for eligible persons and families of low and moderate income within the State. The bonds are secured by certain assets, which include mortgage loans purchased and certain cash and cash equivalents and investment securities in mortgage bond accounts, and any interest earned thereon.

F. Notes and Loans Payable
Governmental Activities
Notes and loans payable for direct borrowings in governmental activities as of June 30, 2020, were $56.4 million. Of this amount, Energy Performance Contracts for the Department of Economic Development, the Department of Corrections and the Department of Natural Resources, attributed $26.4 million, $23.4 million, and $3.9 million, respectively. These contracts contain provisions related to events of default. Significant to these provisions, an event of default occurs when: (a) the Primary Government fails to pay any payment of purchase price or other payment required to be paid when due, (b) the Primary Government has a breach in any material respect of the contract or failure of the Primary Government to observe or perform contract covenants for a period of 30 days after written notice, or (c) initiation by or against the Primary Government of a proceeding under any federal or state bankruptcy or insolvency seeking relief under such laws. Upon the occurrence of any event of default, the seller shall have the right to proceed by court action to enforce performance by the Primary Government of the applicable contract covenants or to recover for the the breach. The Primary Government would be responsible for attorney fees and expenses incurred by seller.
125

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 10 - LONG-TERM LIABILITIES (continued)
Georgia Technology Authority has total notes payable of $2.7 million related to the Cyber Center Audio Visual with interest rates ranging from 3.25% to 5.92%, and matures in 2023. Default occurs when payment is not made, at which point the assets revert back to the seller and additional penalties may be incurred.
Notes and loans payable - Other in governmental activities as of June 30, 2020, were $6.0 million. Georgia Technology Authority has total notes payable $6.0 million related to the Statewide Cost Allocation Plan for the fiscal years 2004 to 2009, and is payable to the U.S. Department of Health and Human Services with a 1.0% interest rate, and matures in 2022.

Business-type Activities Notes and loans payable for business-type activities as of June 30, 2020, were as follows (amount in thousands):

Transportation Projects Georgia Institute of Technology Total

Amount $ 256,698
10,542 $ 267,240

Transportation Projects Notes and Loans
The notes and loans payable balance in Transportation Projects primarily consists of a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan which is related to the I-75 Northwest Corridor Express Lanes Project. In November 2013, SRTA executed a TIFIA loan of up to $275.0 million which proceeds, when drawn upon, will finance a portion of the costs for the project. During construction and for a period of up to five years following substantial completion, interest is compounded and added to the initial TIFIA loan. The TIFIA loan requires mandatory debt service payments at a minimum and scheduled debt service payments to the extent additional funds are available. TIFIA debt service payments are expected to commence in 2023, which is five years after substantial completion. The interest rate of the TIFIA loan is 3.79%. $184.5 million was drawn on the TIFIA loan during fiscal year 2017. An additional $27.3 million was drawn on the TIFIA loan during fiscal year 2018.

126

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 10 - LONG-TERM LIABILITIES (continued) Component Units Notes and loans payable for component units as of June 30, 2020, were as follows (amount in thousands):

Higher Education Foundations

$

Georgia Tech Foundation, Inc.

Lake Lanier Islands Development Authority

Georgia Military College

Georgia Geo. L. Smith II World Congress Center Authority - CU

Total

$

Amount 149,891 88,887 7,209 2,143
45,125 293,255

Higher Education Foundations Notes and Loans
As of June 30, 2020 Georgia Tech Athletic Association has an unsecured notes payable representing the Association's obligation to Georgia Tech Foundation, Inc. with respect to the William C. Wardlaw Center, interest payable semi-annually. Effective interest rate at June 30, 2020 is 4.25%. The outstanding balance at June 30, 2020 is $0.5 million.
As of June 30, 2020 Georgia Tech Athletic Association has an secured notes payable by real property, interest payable quarterly at a variable rate of 30-day LIBOR plus 1.85% per annum (2.02% at June 30, 2020) for $2.7 million outstanding balance and interest payable quarterly at a variable rate of 30-day LIBOR plus 0.70% per annum (0.87% at June 30, 2020) for $10.0 million outstanding balance. Quarterly principal payment of $ 0.9 million beginning July 2014 through July 2028. The outstanding balance at June 30, 2020 is $12.7 million.
In October 2016, the University System of Georgia (USG) Real Estate IV, LLC purchased the Fort Valley State University WildCat Commons Phase I (a student housing dormitory) from the Fort Valley State University Foundation Property, LLC for $40.4 million by issuing a two year interest-only bond anticipation note (BAN) payable. At maturity, the BAN payable will be refinanced with a 30 year low-interest fixed rate U.S. The terms of the BAN payable require the USG Real Estate Foundation IV, LLC to lease the related facilities to the Board of Regents through year-to-year rental agreements that have multi-year renewal options, in amounts necessary to maintain the properties, pay interest on the note, and retire the debt. The BAN payable matured on October 1, 2018, bears interest at a fixed rate of 1.2%, and is payable semiannually on October 1 and April 1. Interest will accrue at the fixed rate until converted to another fixed rate in accordance with the Indenture. At maturity, the BAN payable was fully refinanced with five, individual 19-year low-interest fixed rate USDA notes.
In November 2017, the University System of Georgia (USG) Real Estate V, LLC purchased the four real estate properties from various South Georgia State College (SGSC) LLC entities for $35.6 million by issuing a two year interest-only BAN payable. At maturity, the BAN payable was refinanced with a 22 year low-interest fixed rate USDA loan. The terms of the BAN payable require the USG Real Estate Foundation V, LLC to lease the related facilities to the Board of Regents through year-to-year rental agreements that have multi-year renewal options, in amounts necessary to maintain the properties, pay interest on the note, and retire the debt. The BAN payable matured on December 1, 2019, bears interest at a fixed rate of 1.65% and is payable semiannually on June 1 and December 1. Interest will accrue at the fixed rate until converted to another fixed rate in accordance with the terms

127

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 10 - LONG-TERM LIABILITIES (continued)
of the Indenture. At maturity, the BAN payable was fully refinanced with four, individual 22-year low-interest fixed rate USDA notes.
In September 2018, the University System of Georgia (USG) Real Estate IV, LLC fully refinanced the BAN payable with five individual, 19 year low-interest fixed rate notes payable with the USDA. The real estate on which the facilities are constructed will be leased to USG Real Estate Foundation IV, LLC by the Board of Regents pursuant to a ground lease for minimal rent. The USDA notes payable will all mature on September 20, 2037, with a fixed interest rate of 2.75%, and are payable annually. The outstanding balance at June 30, 2020 is $38.9 million.
In November 2019, the University System of Georgia (USG) Real Estate V, LLC fully refinanced the BAN payable with four individual, 22 year low-interest fixed rate notes payable with the USDA. The real estate on which the facilities are constructed will be leased to USG Real Estate Foundation V, LLC by the Board of Regents pursuant to a ground lease for minimal rent. The USDA notes payable will all mature on November 18, 2041, with a fixed interest rate of 3.00%, and are payable annually. The outstanding balance at June 30, 2020 is $35.6 million.
During fiscal year 2007, the University of Georgia Foundation signed a 10 year $6.2 million promissory loan. During November 2017, the Foundation amended the agreement and made a one-time principal payment of $0.8 million, extending the maturity date of the remaining outstanding balance to November 1, 2032. Interest is charged at the bank's 30-day LIBOR plus 0.33% basis points; such rate was 0.50% at June 30, 2020. Principal and interest are payable monthly. The outstanding balance at June 30, 2020 was $4.1 million.
During October 2014, the University of Georgia Foundation entered into a series of transactions, as follows: (1) The Foundation entered into a tax-exempt financing project with the Washington D.C. District Council for $12.5 million involving tax-exempt bonds, which expire on November 1, 2039 and accrue interest at a per annum rate equal to 75.00% of the sum of one-month LIBOR plus 1.60% payable monthly, (2) the University of Georgia Foundation entered into a loan agreement with a bank in which the Foundation fully repaid its obligation under the newly acquired tax-exempt bonds in exchange for a promissory loan relating to the same principal. The promissory loan agreement expires on November 1, 2039 and includes certain debt covenants and restrictions. Interest on the promissory loan agreement is charged at 75.00% of the sum of one-month LIBOR plus 1.60%; such rate was 1.33% at June 30, 2020. Principal and interest on the promissory loan agreement are payable quarterly. The outstanding balance at June 30, 2020 was $10.4 million.
In November 2018, the University of Georgia Research Foundation, Inc. entered into a $25.0 million revolving credit agreement, for a five-year term to expire on November 30, 2023. Borrowings under the revolving credit agreement bear interest at the bank's one month LIBOR plus 0.48%. At June 30, 2020, the rate applicable to the borrowings was 0.65%. The outstanding balance at June 30, 2020 was $14.0 million.
During June 2013, the Medical College of Georgia Foundation entered into a non-revolving secured draw loan not to exceed $3.0 million with a financial institution to provide financing to obtain land located around Augusta University. The note was modified on May 27, 2020 to lower the interest rate to 3.50%. The outstanding balance at June 30, 2020 was $10.7 million.
In addition to the notes and loans discussed in the previous paragraphs, as of June 30, 2020, an additional $23.0 million in notes was held by various higher education foundations.
128

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 10 - LONG-TERM LIABILITIES (continued) Other Component Units Notes and Loans The Georgia Tech Foundation, Inc. has guaranteed lines of credit in the name of the Georgia Tech Foundation Funding Corporation (GTFFC) totaling $26.0 million. The Georgia Tech Foundation, Inc has one line of credit in the name of the Foundation totaling to $25.0 million. Interest is calculated using the 30-day LIBOR rate. This resulted in an average effective interest rate of 2.96% at June 30, 2020. As of June 30, 2020, the outstanding balance on the note was $18.1 million. In October 2016, the Georgia Tech Foundation, Inc. entered into a loan assumption and substitution agreement with the previous borrower and assumed a $35.7 million note payable from a third party lender under terms of the existing loan agreement. The effective rate of interest at June 30, 2020 was 5.04%. As of June 30, 2020, the outstanding balance on the note was $33.6 million. In May 2017, the Georgia Tech Foundation, Inc. entered into a loan agreement with a bank, borrowing $13.0 million. The effective interest rate at June 30, 2020 was 4.75%. As of June 30, 2020, the outstanding balance on the loan was $12.1 million. In September 2018, the Georgia Tech Foundation, Inc. entered into a loan agreement with a bank, borrowing $25.1 million. The effective interest rate at June 30, 2020 was 4.75%. As of June 30, 2020, the outstanding balance on the loan was $25.1 million.
G. Interest Rate Swaps As a means of interest rate management, various higher education foundations have entered into interest rate swap agreements. For further details on these agreements, please refer to Note 6 - Derivative Instruments.
129

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 10 - LONG-TERM LIABILITIES (continued) H. Pollution Remediation
Pollution remediation obligations reflect estimates that have the potential to change due to such items as price increases or reductions, new technology, or changes in applicable laws or regulations.
Governmental Activities
Department of Natural Resources
Department of Natural Resources has recorded liabilities totaling $80.2 million at June 30, 2020 for pollution remediation primarily related to sites included in the hazardous site inventory, Superfund sites where only operations and maintenance remains, and site containing underground storage tanks that are enrolled for remediation coverage in the Georgia Underground Storage Tank Program. The liabilities were determined by previous experience. Pollution remediation liability activity in fiscal year 2020 was as follows (amount in thousands):

Balance

Balance Amounts Due

7/1/2019 Additions Reductions 6/30/2020 Within One Year

$ 60,506 $ 37,608 $ 17,894 $ 80,220 $

--

130

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 10 - LONG-TERM LIABILITIES (continued) I. Debt Service Requirements
Annual debt service requirements to maturity for general obligation bonds, revenue bonds, GARVEE bonds, mortgage bonds, and notes and loans payable are as follows (amount in thousands):

Primary Government

Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 2041-2045 2046-2050 2051-2055 Total

General Obligation Bonds

Principal

Interest

$ 864,371 $ 385,019

803,249

346,841

759,825

312,434

743,070

279,637

682,970

248,781

2,961,155

828,019

1,921,120

302,324

703,710

47,764

--

--

--

--

--

--

$ 9,439,470 $ 2,750,819

Governmental Activities

Revenue Bonds

Principal

Interest

$

44,105 $

9,665

46,335

7,436

48,675

5,095

21,545

2,634

22,650

1,530

19,265

482

--

--

--

--

--

--

--

--

--

--

$ 202,575 $ 26,842

GARVEE Bonds

Principal

Interest

$ 123,220 $ 18,375

129,385

12,213

68,305

5,744

4,930

2,339

5,170

2,092

36,895

6,706

--

--

--

--

--

--

--

--

--

--

$ 367,905 $ 47,469

Notes and Loans Payable Direct Borrowings

Principal

Interest

$

4,095 $

2,164

4,285

1,996

4,124

1,820

3,571

1,674

3,763

1,539

21,408

5,433

15,147

1,182

--

--

--

--

--

--

--

--

$

56,393 $

15,808

Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 2041-2045 2046-2050 2051-2055 Total

Governmental Activities

Notes and Loans Payable Other

Principal

Interest

$

2,971 $

60

3,000

30

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

$

5,971 $

90

Business-type Activities

Revenue Bonds

Principal *

Interest

$

5,730 $

7,978

6,958

7,692

7,770

7,386

8,443

7,063

9,175

6,724

46,582

38,007

57,452

30,180

62,350

17,887

13,425

8,642

14,175

4,435

3,795

265

$ 235,855 $ 136,259

Notes and Loans Payable

Principal **

Interest

$

36,699 $

239

1,738

201

1,777

162

1,205

123

615

102

3,330

259

178

1

--

--

--

--

--

--

--

--

$

45,542 $

1,087

* Includes accreted interest of $19.4 million that will be recorded in future years to increase bonds payable as the interest accretes.
** A debt service schedule for the TIFIA loan will be provided after the last loan draw.

131

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 10 - LONG-TERM LIABILITIES (continued) Component Units

Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 2041-2045 2046-2050 2051-2055 Total
Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 2041-2045 2046-2050 Total
Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 2041-2045 2046-2050 Total

Higher Education Foundations

Georgia Tech Foundations

Other Component Units

Revenue Bonds

Revenue Bonds

Revenue Bonds

Principal

Interest

Principal

Interest

Principal

Interest

$

171,818 $

127,225 $

13,165 $

10,710 $

1,051 $

226

125,329

123,889

13,980

10,102

1,100

217

100,291

119,104

12,505

9,513

606

208

107,719

114,024

13,130

8,945

639

175

114,767

108,553

13,995

8,334

674

141

657,918

451,660

69,190

31,426

2,245

197

674,195

284,944

33,040

16,191

--

--

543,335

132,415

11,715

12,971

--

--

177,080

38,411

16,395

10,157

--

--

105,655

13,648

49,695

4,897

--

--

9,750

661

--

--

--

--

$

2,787,857 $

1,514,534 $

246,810 $

123,246 $

6,315 $

1,164

Higher Education Foundations

Georgia Tech Foundations

Other Component Units

Notes and Loans Payable

Notes and Loans Payable

Notes and Loans Payable

Principal

Interest

Principal

Interest

Principal

Interest

$

17,296 $

4,583 $

19,048 $

3,461 $

1,750 $

2,247

18,675

4,110

996

3,413

1,835

2,213

6,493

3,695

1,446

3,355

3,414

2,274

19,799

3,264

43,289

2,578

1,802

2,010

6,408

2,958

582

1,133

1,901

1,963

28,934

12,197

23,526

3,393

6,335

9,093

26,946

7,729

--

--

7,753

7,700

21,069

4,185

--

--

11,464

5,598

4,271

1,177

--

--

16,283

2,554

--

--

--

--

1,940

44

$

149,891 $

43,898 $

88,887 $

17,333 $

54,477 $

35,696

Georgia Housing and Finance Authority

Mortgage Bonds

Principal

Interest

$

42,170 $

52,726

44,345

51,507

43,165

50,389

40,945

49,281

41,170

48,204

225,890

223,082

289,915

182,128

337,605

129,202

320,945

69,967

206,735

17,553

$

1,592,885 $

874,039

132

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 11 - LEASES
A. Operating Leases
The State leases land, office facilities, 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 appropriation 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 State has the option of renewing the lease on a year-toyear 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.
Total lease payments for the State's governmental activities, business-type activities, and component units were $13.1 million, $66.7 million, and $35.9 million, respectively, for the year ended June 30, 2020. Future minimum commitments for operating leases as of June 30, 2020, are listed below (amount in thousands).

Fiscal Year Ended June 30 2021 2022 2023 2024 2025
2026-2030 2031-2035 2036-2040 2041-2045 2046-2050 2051-2055 2056-2060 2061-2065 2066-2070 Total Future Minimum Commitments

Primary Government

Governmental Business-type

Activities

Activities

$

15,660 $

62,418

11,275

43,904

8,180

42,148

5,702

36,480

5,433

32,138

21,268

147,524

7,407

64,214

2

3,750

2

822

2

767

2

--

2

--

2

--

289

--

$

75,226 $ 434,165

Component Units

$

35,568

29,145

26,610

20,867

15,715

55,332

32,815

16,886

474

95

--

--

--

--

$ 233,507

133

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 11 - LEASES (continued)
B. Capital Leases
The State acquires certain property and equipment through multi-year capital leases with varying terms and options. In accordance with OCGA 50-5-64, the majority of 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 State. The agreements shall terminate immediately at such time as appropriated and otherwise unobligated funds are no longer available to satisfy the obligations of the State.
The expense resulting from the amortization of assets recorded under capital leases is included in depreciation expense. At June 30, 2020, the historical cost of assets acquired through capital leases was as follows (amount in thousands):

Land Infrastructure Buildings Improvements Other Than Buildings Machinery and Equipment Software Less: Accumulated Depreciation Total Assets Held Under Capital Lease

Primary Government

Governmental Business-type Component

Activities

Activities

Units

$

-- $

55,878 $

--

--

39,705

--

311,940

3,461,534

67,104

--

6,458

--

13,374

33,528

369

1,887

--

--

(178,828) (1,203,419)

(20,261)

$ 148,373 $ 2,393,684 $

47,212

134

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 11 - LEASES (continued) At June 30, 2020, future commitments under capital leases were as follows (amount in thousands):

Fiscal Year Ended June 30 2021 2022 2023 2024 2025
2026-2030 2031-2035 2036-2040 2041-2045 2046-2050 2051-2055 2056-2060 Total Capital Lease Payments Less: Interest Executory Costs Present Value of Capital Lease Payments

Primary Government

Governmental Business-type Component

Activities

Activities

Units

$

57,402 $ 267,977 $

13,294

53,585

272,250

12,619

48,666

265,599

11,435

46,906

264,615

9,943

42,701

263,178

9,098

163,514

1,299,063

35,093

63,539

1,043,437

22,714

4,989

683,186

--

2,472

121,346

--

30

31,180

--

30

1,548

--

24

--

--

483,858

4,513,379

114,196

(267,995) (1,349,468)

(28,323)

(3,154)

(353,243)

(3)

$ 212,709 $ 2,810,668 $

85,870

The future commitments for capital leases of the business-type activities include leases payable to higher education foundations (component units) for various facilities located on the campuses of the University System of Georgia.

135

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 11 - LEASES (continued) C. Leases Receivable
The State leases certain facilities and land for use by others for terms varying from 1 to 60 years. The leases are accounted for as operating leases; revenues for services provided and for use of facilities are recorded when earned.
Total revenues from rental of land and facilities for the State's governmental activities and component units were $8.9 million, and $71.2 million, respectively, for the year ended June 30, 2020. Minimum future revenues and rentals to be received under operating leases as of June 30, 2020, are as follows (amount in thousands):

Fiscal Year Ended June 30 2021 2022 2023 2024 2025
2026-2030 2031-2035 2036-2040 2041-2045 2046-2050 2051-2055 2056-2060 2061-2065 2066-2070 2071-2075 2076-2080 Total Minimum Revenues

Primary Government

Governmental Business-type

Activities

Activities

$

7,832 $

--

7,395

--

7,401

--

7,473

--

7,829

--

12,035

--

651

--

529

--

110

--

49

--

48

--

47

--

30

--

4

--

4

--

4

--

$

51,441 $

--

Component Units

$

59,067

35,025

29,812

28,697

25,965

108,370

92,688

69,421

65,649

50,669

45,099

300,699

18,468

19,022

19,593

20,181

$ 988,425

136

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 11 - LEASES (continued)
Component Units
Foundations related to Higher Education have lease operations consisting of real estate leases to the Board of Regents. Minimum future payments to be received from these capital leases as of June 30, 2020, are as follows (amount in thousands):

Fiscal Year Ended June 30

2021

$

2022

2023

2024

2025

Thereafter

Total Minimum Revenues

Less: Unearned Income

Net Revenue

$

Amount 199,724 206,427 200,542 200,871 201,970
2,705,561 3,715,095 (1,404,542) 2,310,553

D. Related Parties
Primary Government
University System of Georgia Foundations
During fiscal year 2020, various foundations that are not included in the government-wide financial statements have entered into transactions with institutions of the University System of Georgia. The University System of Georgia institutions have capital leases payable to these foundations that are not included as component units in the amount of $329.4 million as of June 30, 2020.

137

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 12 - ENDOWMENTS
The State's donor restricted endowment funds reside primarily within the higher education institutions. The funds are pooled at the individual member institution level, unless required to be separately invested by the donor. There is no state law that governs endowment spending; rather, for University System of Georgia member institution controlled, donor-restricted endowments, where the donor has not provided specific instructions, the Board of Regents permits the individual member institution to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determine to be prudent. Current year net appreciation for the endowment accounts was $3.7 million and is reflected as restricted net position.
Changes in the endowment net position for the year ended June 30, 2020, are as follows (amount in thousands):

Component Units Endowment net position, July 1 (Restated)
Contributions Net realized and unrealized gains Appropriation of endowment assets for expenditure Transfers to comply with donor intent Other Endowment net position, June 30

Without Donor With Donor

Restriction

Restriction

$ 288,354 $ 2,848,458 $

4,616

96,994

3,419

33,966

(8,427)

(111,088)

(168)

(916)

6,978

2,561

$ 294,772 $ 2,869,975 $

Total 3,136,812
101,610 37,385 (119,515) (1,084) 9,539 3,164,747

138

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 13 - SERVICE CONCESSION ARRANGEMENTS
A. Primary Government
University System of Georgia
During fiscal year ended June 30, 2015, the Board of Regents of the University System of Georgia (BOR) entered into a Service Concession Arrangement (SCA) with Corvias Campus Living-USG,LLC (Corvias), whereby Corvias Campus Living-USG,LLC, manages, maintains and operates certain existing student housing resources on the campuses of nine institutions: Abraham Baldwin Agricultural College; Armstrong State University; Augusta University; College of Coastal Georgia; Columbus State University; Dalton State College; East Georgia State College; Georgia State University; and the University of North Georgia.
Pursuant to the contractual stipulations of this SCA, whereby the BOR and Corvias are the "parties" participating in this agreement, as of May 14, 2015, the institutions noted above transferred the housing resources covered by this SCA, along with associated capital lease obligations to the University System Office (USO) in fiscal year 2015 through special item transfer. In accordance with the SCA, in May 2015, Corvias provided $311.6 million which the BOR used to retire the capital lease obligations transferred to the USO.
On February 23, 2018, the SCA contractual agreement with Corvias was amended. While performance measures and the operating agreement remain intact, the term of the agreement has changed. The SCA, which was originally for 65 years (780 months) to end in June 2080, will now end on June 30, 2055. This contract modification accelerates the amortization of the Deferred Inflows.
For the $311.6 million that was originally received from Corvias in fiscal year 2015, $8.0 million was amortized at June 30, 2020, leaving a remaining deferred inflow of resources balance of $279.7 million at year end.
In addition to the existing student housing arrangement, Corvias designs and constructs authorized new housing projects that, once constructed, are similarly managed, maintained and operated on seven of the nine campuses with existing student housing resources. Two of these projects were completed in fiscal year 2016 and their fair market values were capitalized increasing Capital Assets by $23.1 million. In fiscal year 2017, five additional housing projects were completed and their fair market values were capitalized increasing Capital Assets by $154.4 million. A deferred inflow of resources was recorded as the offset to the Capital Asset additions. The deferred inflows associated with these projects are being amortized over the remaining life of the SCA in accordance with the term revision noted above. At June 30, 2020, the USO amortized $4.6 million of deferred inflows related to these seven projects, leaving a remaining deferred inflow of resources balance of $162.3 million at year end.
Also, as part of this SCA, and beginning in fiscal year 2016, the USO receives $8.0 million in Ground Rent and $0.5 million in Supplemental Capital Repair and Replacement funds each year for the next ten years, with each amount escalating by 3% annually. The USO recorded accounts receivable and deferred inflow of resources in the amount of $73.2 million representing the present value of this revenue stream based on the agreement terms and will amortize the deferred inflows over a ten-year period. For the year ended June 30, 2020, the USO amortized $7.4 million and recognized $2.2 million in associated interest income, leaving a deferred inflow balance of $34.6 million as of June 30, 2020.
The USO also receives retained services funds each year as a percentage of gross revenues for that year.
The USO has no reportable future obligation for these services.
139

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 13 - SERVICE CONCESSION ARRANGEMENTS (continued)
Georgia Gwinnett College On May 13, 2014, Georgia Gwinnett College (GGC) entered into an agreement with Aramark Education Services, LLC (Aramark), whereby Aramark will operate food services operations from service participants. The agreement is renewable for each year for ten years.
Aramark is required to operate the food service facilities in accordance with the contractual agreement. The contract includes a period fixed fee ("Annual Fixed Fee") payable to Aramark in the amount of $5.3 million per operating year. In the event that the amount paid to or retained by Aramark is less that the Annual Fixed Fee of $5.3 million, then GGC shall remit the amount equivalent to the difference of the Annual Fixed Fee minus Actual Operating Retainage. In the event that the actual operation year retainage is greater than 199.9% (upper threshold amount) of the Annual Fixed Fee, then Aramark shall remit the difference of the Annual Fixed Fee minus the upper threshold amount to GGC. If the actual operation year retainage is more than the Annual Fixed Fee but less than the 199.9% of the Annual Fixed Fee, then neither party shall owe anything to the other. GGC and Aramark will review the annual Fixed Fee prior to the commencement of each Operating Year and a revised Annual Fixed Fee shall be set forth in a written supplemental contract.
Under the terms of the contract Aramark committed a lump sum upfront payment of $0.4 million. The amortized revenue recorded related to the lump sum payment in fiscal year 2020 was $36.0 thousand and the remaining deferred inflow was $0.1 million.
Under terms of the original agreement Aramark also committed $5.3 million in dining facility renovations. In fiscal year 2017, the contract amendment called for a return of outstanding unamortized amounts of $1.6 million and for a reduction of $0.7 million to deferred inflows for uncollected funds. The amortized revenue recorded in fiscal year 2020 for the remaining construction commitment was $0.3 million leaving deferred inflow balance of $1.3 million.
For Fiscal Year 2020, GGC reported a total remaining deferred inflow of resources of $1.4 million related to the SCA.
Kennesaw State University
At June 30, 2020, Kennesaw State University (KSU) was a participant in four SCAs.
1. In August 2001, KSU entered into an agreement with Kennesaw State University Foundation, Inc. (KSUF) whereby KSUF will operate and collect revenues for housing operations from students. KSUF is required to operate the residence hall ("University Place") in accordance with a contractual agreement between the two parties. Under the terms of the agreement, the University received no funds upfront from KSUF, but will take full ownership of the residence hall at the end of the operating agreement in August 2037.
2. In August 2003, KSU entered into an agreement with KSUF whereby KSUF will operate and collect revenues for housing operations from students. KSUF is required to operate the housing ("University Village") in accordance with a contractual agreement between the parties. Under the terms of the agreement, the University received no funds upfront from KSUF, but will take full ownership of the housing at the end of the operating agreement in July 2036.
3. In August 2007, KSU entered into an agreement with KSUF whereby KSUF will operate and collect revenues for housing operations from students. KSUF is required to operate the housing ("University Suites") in accordance with a contractual agreement between the parties. Under the terms of the agreement, the University received no funds upfront from KSUF, but will take full ownership of the housing at the end of the operating agreement in September 2038.
140

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 13 - SERVICE CONCESSION ARRANGEMENTS (continued) 4. In July 2017, KSU entered into a lease agreement with a food service provider whereby the vendor will operate a restaurant in accordance with a contractual agreement between the two parties. Under the terms of the agreement, the University received no funds upfront, but will take full ownership of the equipment and lease improvements at the end of the operating agreement in June 2027.
For fiscal year 2020, the University increased beginning deferred inflows by $3.5 million related to the reevaluation of SCA with the KSUF. The agreement terms were revised which reduced annual and accumulated amortization. At June 30, 2020, the University reports the three housing residences and one retail space as capital assets with a net carrying value of $57.5 million. For fiscal year 2020, the University reported a remaining deferred inflows of resources of $57.5 million and amortized revenue of $3.6 million.
141

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 14 - DEFERRED INFLOWS AND OUTFLOWS

Deferred Outflows and Inflows of Resources reported on the Statement of Net Position as of June 30, 2020, consisted of the following (amount in thousands):

Primary Government

Deferred Outflows of Resources Accumulated Decrease in Fair Value of Hedging Derivatives

Governmental Business-type

Activities

Activities

Total

Component Units

$

-- $

-- $

-- $

7,928

Deferred Amount on Refundings of Bonded Debt Deferred Outflows Relating to Other Postemployment Benefits:
Difference between expected and actual experience

93,781 1,226

53,943 248,073

147,724 249,299

44,801 920

Change of assumptions Net difference between projected and actual

4,883

249

5,132

13,266

earnings on pension plan investments Change in proportion State contribution subsequent to
the measurement date Deferred Outflows Relating to Pensions:

68,271 161,587
122,300

8,929 9,153
119,894

77,200 170,740
242,194

1,491 11,068
4,787

Difference between expected and actual experience Change of assumptions Net difference between projected and actual earnings on

137,988 114,416
--

210,446 349,504
2,273

348,434 463,920
2,273

15,228 20,578 14,069

pension plan investments Change in proportion State contribution subsequent to the measurement date

69,397 667,013

102,774 487,004

172,171 1,154,017

8,027 45,251

Total Deferred Outflows of Resources

$ 1,440,862 $ 1,592,242 $ 3,033,104 $

187,414

Deferred Inflows of Resources

Deferred Amount on Refundings of Bonded Debt

$

Deferred Service Concession Arrangement Receipts

Deferred Inflows Relating to Other Postemployment Benefits:

Difference between expected and actual experience

Change of assumptions

Net difference between projected and actual

earnings on pension plan investments

Change in proportion

Deferred Inflows Relating to Pensions:

Difference between expected and actual experience

Change of assumptions

Net difference between projected and actual earnings on

pension plan investments

Change in proportion

Unavailable Revenue

854 $ --
350,969 944,904
22,174 125,487
45,746 18,941 160,206
97,574 24,759

70,431 $ 535,491

71,285 $ 535,491

71,279 625,995

422,248 1,570,899

2,366 20,139

24,540 145,626

1,068 --
93,135

46,814 18,941 253,341

70,078 10,750

167,652 35,509

-- --
12,687 17,367
297 4,419
937 1,288 4,772
7,507 23,475

Total Deferred Inflows of Resources

$ 1,791,614 $ 1,500,732 $ 3,292,346 $

72,749

142

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 14 - DEFERRED INFLOWS AND OUTFLOWS (continued) Of the $1.4 billion of deferred outflows of resources reported in the governmental activities, $358.3 million represent deferred outflows related to other postemployment benefits, of which $4.6 million are reported in the internal service funds and $988.8 million represent deferred outflows relating to pensions, of which $11.9 million are reported in the internal service funds. The remaining $93.8 million represent deferred amounts on refundings of bonded debt.
Of the $1.8 billion of deferred inflows of resources reported in the governmental activities, $1.4 billion represent deferred inflows related to other postemployment benefits, of which $20.6 million are reported in the internal service funds and $322.5 million represent deferred inflows relating to pensions, of which $2.1 million are reported in the internal service funds. Additionally, the U.S. Department of Justice settled an agreement with the Volkswagen Corporation in which an Environmental Mitigation Trust was established. The State has $24.8 million in unavailable revenues to fund future eligible mitigation actions. The remaining $0.9 million represent deferred amounts on refundings of bonded debt.
Deferred outflows reported in business-type activities include $1.6 billion which represent $386.3 million relating to other postemployment benefits, $1.2 billion which represent deferred outflows relating to pensions and $53.9 million, which represent deferred amounts on refundings of bonded debt.
Of the $1.5 billion of deferred inflows of resources reported in the business-type activities, $719.8 million represent deferred inflows relating to other postemployment benefits, $164.3 million represent deferred inflows relating to pensions, $535.5 million represent deferred service concession arrangement receipts described in Note 13 - Service Concession Arrangements, $70.4 million represent deferred amounts on refundings of bonded debt and $10.8 million in unavailable revenue represent grant funds received before the period when those resources are permitted to be used.
Of the $187.4 million of deferred outflows of resources reported in the component units, $31.5 million represent deferred outflows relating to other postemployment benefits, $103.2 million represent deferred outflows relating to pensions and $44.8 million represent deferred amounts on refundings of bonded debt. The remaining $7.9 million represent accumulated decrease in fair value of hedging derivatives.
Of the $72.7 million of deferred inflows of resources reported in the component units, $34.8 million represent deferred inflows relating to other postemployment benefits, $14.5 million represent deferred inflows relating to pensions, and $23.5 million in unavailable revenue represent grants funds received before the period when those resources are permitted to be used.
Under the modified accrual basis of accounting, governmental funds reported $1.2 billion in unavailable revenue as deferred inflows of resources, which consisted primarily of taxes and interest received more than 30 days after close of the current fiscal year.
143

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS
The State administers various retirement plans. Two of the major retirement systems are: the Teachers Retirement System (TRS) and the Employees' Retirement System of Georgia (the System) which includes the Employees' Retirement System (ERS), the Public School Employees Retirement System (PSERS), the Georgia Judicial Retirement System (GJRS). The State also administers retirement plans for the State's peace officers and firefighters. Those plans are the Peace Officers' Annuity and Benefit Fund of Georgia (Peace Officers') and the Georgia Firefighters' Pension Fund (Firefighters'). The State is the plan sponsor (Plan) of these plans and in many cases the participating employer (Employer). The notes to the financial statements and required supplementary information that follow are presented from the perspective of the State as Plan sponsor and the State as Employer. In addition, the State is the only entity with a statutory requirement to contribute on behalf of the employer directly to many of these Plans creating a situation defined as a Nonemployer Contributing Entity in a Special Funding Situation (SFS).
Each of these systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained by visiting the following websites:

Employees' Retirement System:

www.ers.ga.gov

Teachers Retirement System:

www.trsga.com

Peace Officers' Annuity and Benefit Fund of Georgia: www.poab.georgia.gov

Georgia Firefighters' Pension Fund:

www.gfpf.org

In addition, the State administers the Regents Retirement Plan, which is an optional retirement plan for certain university employees.
The State's significant retirement plans 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. Basis of Accounting
Retirement plan financial statements are prepared on the accrual basis of accounting, except for the collection of fines and forfeitures which are recognized when collected from the courts and insurance company premium taxes which are recognized annually, upon receipt. Contributions from the employers and members are recognized as additions when due, pursuant to formal commitments, as well as statutory or contractual requirements. Retirement benefits and refund payments are recognized as deductions when due and payable. The retirement plans' fiduciary net positions have been determined on the same basis as they are reported by the various plans.

B. Investments
Investments are reported at fair value and net asset value (NAV) as a practical expedient to fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.

144

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
For the fiscal year ended June 30, 2020, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense for the System, is represented below, along with the TRS, Peace Officers', and Firefighters' plans.

Pension Plans ERS/PSERS/GJRS Teacher's Retirement System Peace Officers' Firefighters'

Net Annual MoneyWeighted Rate (3.60)% 2.91 % 3.77 % (0.20)%

For all plans mentioned above, the money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.
ERS, PSERS, GJRS, TRS, Peace Officers' and Firefighters' have investment policies regarding the allocation of invested assets.
The ERS, PSERS, GJRS, and TRS policies are established on a cost basis in compliance with Georgia Statute. 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 each pension plan.
Peace Officers' maintains an investment policy that may be amended by its Board of Commissioners both upon its own initiative and upon consideration of the advice and recommendations of its investment managers. The fund's policy in regard to the allocation of invested assets is established on a cost basis in compliance with Georgia Statute. 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.
Firefighters' policy in regard to the allocation of invested assets is established and may be amended by the 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.

145

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued) The following table summarizes the adopted asset allocation policy by plan at June 30, 2020:

Asset Class
Fixed Income Equities Alternative Investments Cash and Cash Equivalents Other Total

Target Allocation

ERS

PSERS

GJRS

Peace

TRS

Officers' Firefighters'

25% - 45% 25% - 45% 25% - 45% 25% - 45% 20% - 35% 19.5% - 49.5% 55% - 75% 55% - 75% 55% - 75% 55% - 75% 30% - 90% 25.5% - 75.5%

0% - 5% 0% - 5% 0% - 5%

--

0% - 5%

--

-- -- 100.0 %

-- -- 100.0 %

-- -- 100.0 %

-- -- 100.0 %

0% - 10% --
100.0 %

-- 5% - 25%
100.0 %

C. Defined Benefit Plans Descriptions and Funding Policies
Employees' Retirement System of Georgia (The System)
The System is comprised of individual retirement systems and plans covering substantially all employees of the State except for teachers and other employees covered by TRS, Peace Officers', and Firefighters' funds. The System is administrated by a Board of Trustees that is comprised of active and retired members, ex-officio state employees, and appointees by the Governor.
Employees' Retirement System (ERS)
Plan Description: One of the plans within the System, also titled ERS, is a cost-sharing multiple-employer defined benefit pension plan that was established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract.
Benefits Provided: The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the 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 the modified plan provisions. Effective January 1, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). Members of the GSEPS plan may also participate in the GSEPS 401(k) defined contribution component described below. ERS members hired prior to January 1, 2009, also have the option to irrevocably change their membership to the GSEPS plan.

146

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
Under the old plan, 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 a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 24 consecutive calendar months of salary, the number of years of creditable service, the applicable benefit factor, and the member's age at retirement. Postretirement cost-of-living adjustments may 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 contribution rates are set by law. 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 State is required to contribute at a specified percentage of active member payroll established by the Board of Trustees and determined annually in accordance with an actuarial valuation and minimum funding standards as provided by law. These State contributions are not at any time refundable to the member or his/her beneficiary.
Employer and nonemployer contributions required, as a percentage of covered payroll, for fiscal year 2020 were based on the June 30, 2017 actuarial valuation as follows:

Plan Segment Old Plan* New Plan GSEPS

Contribution Rate 2020 24.66 % 24.66 % 21.64 %

* 4.75% of which was paid by the State on behalf of old plan members.

The State makes contributions to ERS on behalf of certain non-State employers as follows: Pursuant to The Official Code of Georgia Annotated OCGA 47-2-292 (a) the Department of Revenue receives an annual appropriation from the Georgia General Assembly to be used to fund the employer contributions for certain local county tax commissioners and employees. Pursuant to OCGA 47-2-290(a) the Council of State Courts (CSC) and the Prosecuting Attorneys' Council (PAC) receive annual appropriations from the Georgia General Assembly for employer contributions of certain local employees in State Courts.
Members become vested after 10 years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions the member forfeits all rights to retirement benefits.

147

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)
Public School Employees Retirement System (PSERS)
Plan Description: PSERS is also a plan within the System, and is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969, for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS.
Benefits Provided: A member may retire and elect to receive normal monthly retirement benefits after completion of 10 years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of 10 years of service. Upon retirement, the member will receive a monthly benefit of $15.50, multiplied by the number of years of creditable service. Additionally, PSERS may make periodic cost-ofliving adjustments to the monthly benefits. Death and disability benefits are also available through PSERS.
Contributions: Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year.
The State makes contributions to PSERS on behalf of certain non-State employers as follows: Pursuant to OCGA 47-4-29(a) and 60(b), the Georgia General Assembly makes an annual appropriation to cover the employer contribution to PSERS on behalf of local school employees (bus drivers, cafeteria workers, and maintenance staff). The annual employer contribution required by statute is actuarially determined and paid directly to PSERS by the State Treasurer. 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.
Employer contributions required for the year ended June 30, 2020 were $825.03 per active member and were based on the June 30, 2017, actuarial valuation.
Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.
Georgia Judicial Retirement System (GJRS)
Plan Description: Another plan within the System, GJRS, is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1998 for the purpose of providing retirement allowances for judges and solicitors generals of the state courts and juvenile court judges in Georgia, and their survivors and other beneficiaries, superior court judges of the state of Georgia, and district attorneys of the state of Georgia. The ERS Board of Trustees and three additional trustees administer GJRS.
GJRS was also created to serve the members and beneficiaries of the Trial Judges and Solicitors Retirement fund, the Superior Court Judges Retirement System, and the District Attorneys Retirement System (collectively, the Predecessor Retirement Systems). As of June 30, 1998, any person who was an active, inactive, or retired member or beneficiary of the Predecessor Retirement Systems was transferred to GJRS in the same status effective July 1, 1998. All assets of the Predecessor Retirement Systems were transferred to GJRS as of July 1, 1998.
148

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)
Benefits Provided: The normal retirement for GJRS is age 60, with 16 years of creditable service; however, a member may retire at age 60 with a minimum of 10 years of creditable service.
Annual retirement benefits paid to members are computed as 66.67% of State paid salary at retirement for district attorneys and superior court judges and 66.67% of the average over 24 consecutive months for trial judges and solicitors, plus 1% for each year of creditable service over 16 years, not to exceed 24 years. Early retirement benefits paid to members are computed as the pro rata portion of the normal retirement benefit, based on service not to exceed 16 years. Death, disability, and spousal benefits are also available.
Contributions: Members are required to contribute 7.5% of their annual salary. Those who became members prior to July 1, 2012 must also contribute an additional 2.5% of their annual salary if spousal benefit is elected. Employer contributions are actuarially determined and approved and certified by the GJRS Board of Trustees.
The State makes contributions to GJRS on behalf of certain non-State employers as follows: Pursuant to OCGA 47-23-81 the employer contributions for state court judges and solicitors are funded by the State of Georgia on behalf of the local county employers and pursuant to OCGA 47-23-82 the employer contributions for juvenile court judges are funded by the State on behalf of local county employers.
Employer and nonemployer contributions required for year ended June 30, 2020 were 9.13% of compensation and were based on the June 30, 2017 actuarial valuation.
Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contribution, the member forfeits all rights to retirement benefits.
Teachers Retirement System of Georgia (TRS)
Plan Description: TRS is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of two appointees by the Board, two ex-officio State employees, five appointees by the Governor, and one appointee of the Board of Regents is ultimately responsible for the administration of TRS. All teachers in the state public schools, the University System of Georgia (except those professors and principal administrators electing to participate in an optional retirement plan), and certain other designated employees in educational-related work are eligible for membership.
Benefits Provided: TRS provides service retirement, disability retirement, and survivor's benefits. Title 47 of the OCGA assigns the authority to establish and amend the provisions of TRS to the State Legislature. A member 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. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, may be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Options are available for distribution of the member's monthly pension, at a
149

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)
reduced rate, to a designated beneficiary on the member's death. Death, disability, and spousal benefits are also available.
Contributions: TRS is funded by member, employer and nonemployer contributing entity (Nonemployer) contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation.
The State makes contributions to TRS on behalf of certain non-State employers as follows: Pursuant to OCGA 47-3-63, the employer contributions for certain full-time public school support personnel are funded on behalf of the employers by the State of Georgia.
Member contributions as adopted by the Board of Trustees for fiscal year 2020 were 6% of covered payroll. Employer and Nonemployer contributions required for fiscal year 2020 were 21.14% of annual salary as required by the June 30, 2017, actuarial valuation.
Peace Officers' Annuity and Benefit Fund of Georgia (Peace Officers')
Plan Description: Peace Officers' is a cost-sharing multiple-employer defined benefit pension plan established in 1950 by the General Assembly of Georgia for the purpose of paying retirement benefits to peace officers of the State of Georgia. The Board of Commissioners of the Peace Officers' fund is comprised of six members consisting of the Governor or his designee, an appointee of the Governor other than the Attorney General, the Commissioner of Insurance or his designee and three active or retired peace officers appointed by the Governor in accordance with OCGA 47-17-20.
Individuals eligible to apply for membership in the Peace Officers' fund are defined in the OCGA 47-17-1 and generally include: any individual employed by the State of Georgia or any municipality, county, or other political subdivision thereof for the preservation of public order, the protection of life and property or the detection of crime; wardens and correction officers of correctional institutions; full-time parole officers; other individuals employed full-time for the purpose of law enforcement; and full-time employees of the Peace Officers' fund.
Benefits Provided: The Peace Officers' fund provides retirement as well as disability and death benefits. Title 47 of the OCGA assigns the authority to establish and amend the provisions of the Peace Officers' fund to the State Assembly. A member is eligible to receive retirement benefits with 30 years of service, regardless of age. A member is also eligible to receive retirement benefits at age 55 with 10 years of service; however, members joining on or after July 1, 2010, must have 15 years of service to be eligible for benefits. A member must have terminated his or her active employment as a peace officer to receive benefits.
The monthly benefit is a single life annuity payable in monthly payments for the life of the member only. The monthly payment amount at June 30, 2020, was $25.15 per month (plus 1/12 of this amount for each month of any partial year) for each full year of creditable service up to a maximum of 30 years of total service. The Board of Commissioners is authorized to provide for increases effective as of January 1 and July 1 of each year up to 1.5% of the maximum monthly retirement benefit then in effect. Members may elect, as an alternate to the benefit described above, to receive a 100% joint life annuity payable during the life of the member or the member's spouse, or a contingency life annuity with a 50% monthly payment to the surviving spouse. The amount of the benefit for these options is an actuarially reduced portion of the single life annuity benefit described above.
150

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)
At any time before a member begins drawing retirement benefits, the member may request a refund of 95% of all member contributions paid into the Peace Officers' fund during creditable service. No interest is paid on these withdrawals.
Contributions: The Peace Officers' 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. A description of contribution requirements is as follows:
Member Contributions: Member contribution requirements are set forth in OCGA 47-17-44 and are not actuarially determined. Each member must contribute $20 per month, to be paid no later than the tenth day of each month.
Nonemployer Contributions: Pursuant to OCGA 47-14-60, the State makes contributions to the Peace Officers' fund on behalf of non-State employers through the collection of court fines and forfeitures.
The fines and forfeitures are considered employer contributions for the purpose of determining whether the Peace Officers' fund has met minimum funding requirements specified in OCGA 47-20-10. 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, 2020, calculated the minimum employer contribution for the fiscal year ended June 30, 2020, as $13.1 million. The fines and forfeitures revenue of $13.0 million for the fiscal year ended June 30, 2020, did not meet the minimum required fund contribution.
Administrative expenses are generally funded from current member and court fine and forfeiture contributions. Investment earnings may be utilized to fund any expenses in excess of contributions.
Georgia Firefighters' Pension Fund (Firefighters')
Plan Description: Firefighters' is a cost-sharing multiple-employer defined benefit pension plan established in 1955 by the General Assembly of Georgia for the purpose of paying retirement benefits to firefighters of the State of Georgia. 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. 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.
Benefits Provided: The Firefighters' fund provides retirement and death benefits. Disability benefits are provided under certain circumstances, and only as awarded to members prior to July 1, 1993. Benefit provisions and vesting requirements are established by statute and may be amended only by the General Assembly of Georgia. A member shall be eligible to receive retirement benefits at age 55 provided the member has 25 years of service. A member may be 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 receive benefits and continue service as a volunteer firefighter as long as they receive no form of compensation for their volunteer department activity.
The maximum retirement benefit at June 30, 2020 is $940 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 1.5% of the maximum retirement benefit then in effect. Members retiring after July 1, 1984 with
151

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued) 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 an actuarially reduced benefit payable during the joint lifetime of the member and the member's spouse, continuing after the death of the member during the lifetime of the spouse or a 10 years' certain and life option where an actuarially reduced benefit is received during the member's lifetime and, in the event of the member's death within 10 years of retirement, the same monthly benefits shall be payable to the member's selected beneficiary for the balance of the 10 year period.
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.
Contributions: The Firefighters' 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. A description of contribution requirements is as follows:
Member Contributions: Member contributions are set forth in OCGA 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: Pursuant to OCGA 47-7-61, the State makes contributions to the Firefighters' fund on behalf of non-State employers as follows: Nonemployer contributing entity contributions consist of contributions from fire insurance companies, corporations or associations doing business within the State of Georgia. These contributions must be paid to the Firefighters' fund and are comprised of 1% of the gross premiums, written by such insurance companies, corporations, or associations for fire, lightning, or extended coverage, inland marine or allied lines, or windstorm insurance policies covering property within the State of Georgia.
In accordance with OCGA 47-20-10, the insurance premiums tax are 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, 2020, calculated the minimum employer contribution for the fiscal year ended June 30, 2020, as $29.9 million. The insurance premium tax revenue of $40.6 million for the fiscal year ended June 30, 2020, meets the minimum required fund contribution.
Administrative expenses are generally funded from current member and insurance premium tax contributions. Investment earnings may be utilized to fund any expenses in excess of contributions.
152

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued) D. Defined Benefit Plans Membership and Participating Employers The following table summarizes the participating membership and participating employers at June 30, 2020:

Plan Membership
Inactive plan members or beneficiaries currently receiving benefits
Inactive plan members entitled to but not yet receiving benefits
Inactive plan members not entitled to benefits
Active plan members
Total

Participating Membership by Plan June 30, 2020

ERS

PSERS

GJRS

TRS

53,249 19,232

63,495 50,276

-- 57,059 173,803

-- 34,736 104,244

414 135,649

64 13,799

-- 522 1,000

103,349 231,047 483,844

Peace Officers' Firefighters'

6,944
1,595
-- 13,451 21,990

6,153
345
2,429 13,636 22,563

Number of Employers

417

186

92

317

667

431

These counts treat each legal entity in the State reporting entity as one employer.

E. Defined Benefit Plans Net Pension Liability/(Asset) of Participating Employers and Nonemployer Contributing Entities
The following schedule is presented from the perspective of the State as the sponsor of the various Plans and summarizes the components of the Net Pension Liability (NPL)/ Net Pension Asset (NPA) of the participating employers and nonemployer contributing entities, as of June 30, 2020, by Plan (amount in thousands):

Components of the Net Pension Liability/(Asset) ERS

PSERS

GJRS

Peace

TRS

Officers' Firefighters'

Total Pension Liability
Plan Fiduciary Net Position
Employers' and nonemployer contributing entity's net pension liability/(asset)

$17,717,243 $ 1,134,725

13,502,286

958,248

$4,214,957 $ 176,477

$ 455,656 $ 105,385,472

485,930

81,161,558

$ (30,274) $ 24,223,914

$ 841,241 827,420
$ 13,821

$ 1,144,365 924,905
$ 219,460

Plan fiduciary net position as a percentage of the total pension liability

76.21 %

84.45 % 106.64 %

77.01 %

98.36 %

80.82 %

153

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued) F. Defined Benefit Plans Actuarial Methods and Assumptions Actuarial Valuation Date The total pension liability at June 30, 2020 is based upon the June 30, 2019 actuarial valuation for ERS, PSERS, GJRS, TRS, and Peace Officers, and upon the June 30, 2020 actuarial valuations for Firefighters', using generally accepted actuarial procedures/techniques. Actuarial Assumptions The total pension liability, as of June 30, 2020, for each plan was determined by an actuarial valuation date indicated in the table below using the following actuarial assumptions, applied to all periods included in the measurement:
(Table on next page)
154

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)

Cost of

Valuation

Salary

Investment

Living

Plan

date

Inflation increases rate of return1 Adjustment

Mortality

ERS

6/30/2019 2.75%

3.25% -

7.30%

7.00%*

N/A

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 (set forward two years for

both males and females) for service retirements and

dependents beneficiaries. The RP-2000 Disabled Table with

future mortality improvement projected to 2025 with the

Society of Actuaries' projection scale BB (set back seven

years for males and set forward three years for females) was

used for death after disability retirement. Rates of mortality

in active service were based on the RP-2000 Employee

Mortality Table projected to 2025 with projection scale BB.

There is a margin for future mortality improvement in the

tables used by the plan.

PSERS

6/30/2019 2.75%

N/A

7.30%

1.5% semiannually

Post-retirement mortality rates were based on the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward for three years for males and two years for females) for the period after service retirement and dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward five years for both males and females) was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. There is a margin for future mortality improvement in the tables used by the plan.

GJRS

6/30/2019 2.75%

4.50%*

7.30%

N/A

Mortality rates were based in the RP-2000 Combined

Mortality Table projected to 2025 with projection scale BB

(set forward two years for both males and females) for the

period after retirement and for dependent beneficiaries. For

the period after disability retirement, the RP-2000 Disability

Mortality Table projected to 2025 with projection scale BB

(set back seven years for males and set forward three years

for females) is used. Rates for mortality in active service

were based on the RP-2000 Employee Mortality Table

projected to 2025 with projected scale BB.

TRS

6/30/2019 2.50%

3.00% -

7.25%

1.5% semi- Post-retirement mortality rates for service retirements and

8.75%*

annually beneficiaries were based on the Pub-2010 Teachers

Headcount Weighted Below Median Healthy Retiree

mortality table (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 (set forward one year

and adjusted 106%) with the MP-2019 Projected scale

applied generationally. The rates of improvement were

reduced by 20% for all years prior to ultimate rate. The

Pub-2010 Teachers Headcount Weighted Below Median

Employee mortality table (set forward one year and adjusted

106%) was used for death prior to retirement. Future

improvement in mortality rates was assumed using the

MP-2019 projection scale generationally. Rates of

improvement were reduced by 20% for all years prior to the

ultimate rate.

Peace

6/30/2019 2.25%

N/A

Officers'

6.50%

N/A

Mortality rates were based on the RP-2014 Healthy

Mortality Table with blue collar adjustments and

generational mortality projection using the MP-2019 scale

for healthy lives and the RP-2014 Disabled Retiree Mortality

Table with generational mortality projection using the

MP-2019 scale for disabled lives.

Firefighters' 6/30/2020 2.75%

N/A

6.00%

N/A

1Investment rate of return is net of pension plan investment expense, including inflation. *Includes respective inflation assumptions.

Mortality rates for pre-retirement were based on the RP-2000 Employee Mortality Table projected to 2025 with Projection Scale BB. Mortality rates for post-retirement and for dependent beneficiaries were based on the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward one year for males and set forward four years for females). For current disability retirees, mortality rates are based on the RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward five years for males and set forward three years for females), however there are no longer any disability benefits in the plan. 80% of active members are assumed to be married with the male three years older than his spouse.

Actuarial experience
study 7/1/20096/30/2014
7/1/20096/30/2014
7/1/20096/30/2014
7/1/20136/30/2018
6/30/20086/30/2015 7/1/20096/30/2015

155

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued) The actuarial assumptions used in the valuations are based on the results of the most recent actuarial experience studies dates noted in the table, with the exception of the investment rate of return for the ERS, PSERS, GJRS, and TRS plans. The investment rate of return for ERS, PSERS, and GJRS was updated as reported in the June 30, 2017 and June 30, 2018 actuarial valuations, based on funding policy changes. Also, as reported in the June 30, 2018 actuarial valuation for TRS, the assumed investment rate of return was updated based on a funding policy change, and the annual rate of inflation was updated. Long-Term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using either a log-normal distribution analysis, or a building-block method 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. Summarized by plan in the table below are the target asset allocation and best estimates of arithmetic real rates of return for each major asset class for ERS, PSERS, GJRS, TRS, and Firefighters' plans. Peace Officers' plan estimates are represented by the geometric real rates of return:
(Table on next page)
156

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)

Asset Class

ERS

Target allocation

Longterm expected real rate of return*

PSERS

Target allocation

Longterm expected real rate of return*

Target Allocation

GJRS

TRS

Target allocation

Longterm expected real rate of return*

Target allocation

Longterm expected real rate of return*

Peace Officers'

Target allocation

Longterm expected real rate of return*

Firefighters'

Target allocation

Longterm expected real rate of return*

Investment Grade Corporate Credit
Mortgage Backed Securities
Fixed Income
Core Bonds
Domestic large equities
Domestic small equities
Global equities
Small/mid cap equities
International developed market equities
International emerging market equities
International equity funds
Private equity
Real estate
Real Assets (liquid)
Alternatives
Total

--

--

--

--

--

--

--

--

2.0 % 0.5 %

12.0 % 2.1 %

-- 30.0 %
--

-- (0.1%)
--

46.2 % 8.9 %

1.3 % --

13.2 % --

--

--

-- 30.0 %
--

-- (0.1%)
--

46.2 % 8.9 %

1.3 % --

13.2 % --

--

--

-- 30.0 %
--

-- (0.1%)
--

46.2 % 8.9 %

1.3 % --

13.2 % --

--

--

-- 30.0 %
--

-- (0.1%)
--

51.0 % 8.9 %

1.5 % --

13.2 % --

--

--

-- 19.0 %
--
39.0 %
-- 6.0 %
22.0 %

-- 0.5 % --
4.8 %
-- 3.7 %
5.0 %

12.0 % --
10.5 %
15.5 %
-- --
15.5 %

1.1 % -- 1.0 %
5.2 %
-- --
6.2 %

12.4 % 8.9 %

12.4 % 8.9 %

12.4 % 8.9 %

12.4 % 8.9 %

10.0 % 4.8 %

--

--

5.1 % 10.9 %

--

--

--

--

--

--

-- 5.0 % 100.0 %

-- 12.0 %

5.1 % 10.9 %

--

--

--

--

--

--

-- 5.0 % 100.0 %

-- 12.0 %

5.1 % 10.9 %

--

--

--

--

--

--

-- 5.0 % 100.0 %

-- 12.0 %

5.1 % 10.9 %

--

--

--

--

--

--

--

--

--

--

100.0 %

--
-- -- 2.0 %
-- -- 100.0 %

--
-- -- 4.0 %
-- 0.4 %

6.5 % 9.6 %

13.0 % 5.0 % 5.0 %

6.1 % 10.4 % 4.1 %

5.0 % -- 100.0 %

4.1 % --

* Rates shown are net of the 2.75% assumed rate of inflation with the exception of TRS, which assume a 2.50% rate of inflation, and Peace Officers', which assume a 2.25% rate of inflation.

Discount Rate
The discount rate used for ERS, PSERS, and GJRS to measure the total pension liability, as of June 30, 2020, was 7.30%. The discount rate used for TRS to measure the total pension liability was 7.25%. The projection of cash flows used by each plan to determine the discount rate was assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, each 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.
The discount rate used to measure the total pension liability, as of June 30, 2020, for the Peace Officers' plan was 6.50%. The projection of cash flows used to determine the discount rate assumes revenues will remain level. Based on those assumptions, the plan's fiduciary net position was projected to be available to make all projected future

157

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)
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.
The discount rate used to measure the total pension liability, June 30, 2020, for the Firefighters' plan was 6.00% 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 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 Participating Employers and Nonemployer Contributing Entities NPL/(NPA) to Changes in the Discount Rate
The following schedule is presented from the perspective of the State as the sponsor of the various Plans and summarizes the NPL/(NPA) of the employer and nonemployer contributing entities, as of June 30, 2020. The NPL/ (NPA) is calculated using the determined discount rate as well as what the NPL/(NPA) would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate by the Plan (amount in thousands):
Sensitivity of the Plan Participating Employer and Nonemployer Contributing Entities Net Pension Liability (Asset) to Changes in the Discount Rate

ERS's Net Pension Liability PSERS's Net Pension Liability GJRS's Net Pension Liability/(Asset) TRS's Net Pension Liability Peace Officers' Net Pension Liability/(Asset) Firefighters' Net Pension Liability

1% Decrease Current Rate 1% Increase

(6.30%)

(7.30%)

(8.30%)

$ 5,929,704 $ 4,214,957 $ 2,751,621

(6.30%)

(7.30%)

(8.30%)

$

300,027 $

176,477 $

72,356

(6.30%)

(7.30%)

(8.30%)

$

11,449 $

(30,274) $ (66,607)

(6.25%)

(7.25%)

(8.25%)

$ 38,413,345 $ 24,223,914 $ 12,592,649

(5.50%)

(6.50%)

(7.50%)

$

117,527 $

13,821 $ (72,471)

(5.00%)

(6.00%)

(7.00%)

$

370,130 $

219,460 $

94,927

158

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
The following information is from the perspective of the State as the employer.
G. State's Proportionate Share of Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
The State reported a liability as the Employer for its proportionate share of the NPL associated with the plans listed below. In addition, the State reported a liability for its proportionate share of the NPL as a result of its statutory requirement to contribute to certain plans. These contributions were made by the State as the Nonemployer Contributing Entity in a Special Funding Situation.
The following schedule is presented from the perspective of the State as the Employer and/or nonemployer contributing entity and details the proportional share of the pension amounts for each plan as of June 30, 2020 is as follows (amount in thousands):

Aggregate Pension Amounts - All Plans

Primary Government

Component Units

Pension liabilities

$ 7,896,789 $ 243,373

Pension assets

$

115,550 $

--

Deferred outflows of resources related to pensions

$ 2,140,815 $ 103,153

Deferred inflows of resources related to pensions

$

486,748 $

14,504

Pension expense/expenditures

$ 1,546,251 $

53,348

159

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued) The information below includes all significant plans and funds administered by the State of Georgia. The NPL and NPA for each plan was measured as of June 30, 2019. The total pension liability/asset used to calculate the NPL/NPA for each plan was based on an actuarial valuation as of June 30, 2018 for ERS, PSERS, GJRS, TRS, Peace Officers' and as of June 30, 2019 for Firefighters'. Employees' Retirement System State's Proportionate Share of Net Pension Liability and Pension Expense Primary Government: At June 30, 2020, the State reported a liability of $3.7 billion, for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018, with standard rollforward techniques performed to update the total pension liability to June 30, 2019. The State's proportion of the net pension liability was based on contributions to ERS during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion for the ERS plan as Employer was 88.906000% which was an decrease of 0.042204% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized pension expense of $741.7 million. At June 30, 2020, the State reported a liability of $67.4 million, for its proportionate share of the net pension liability, based on contributions to ERS during the fiscal year ended June 30, 2019, for certain Local County Tax Commissioners and the CSC and PAC employees in certain counties. At June 30, 2019, the State's proportion was 1.633579% for certain Local County Tax Commissioners and the CSC and PAC employees in certain counties. For the year ended June 30, 2020, the State recognized expense of $6.9 million. Component Units: At June 30, 2020, the State reported a liability of $60.8 million, for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018, with standard rollforward techniques performed to update the total pension liability to June 30, 2019. The State's proportion of the net pension liability was based on contributions to ERS during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion for the ERS plan as Employer was 1.473466%, which was a increase of 0.103843% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized pension expense of $10.9 million.
160

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)
State's Proportionate Share of Deferred Outflows/Inflows of Resources
At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (amount in thousands):

Differences between expected and actual experience

Primary Government

State as Employer

State as Nonemployer Contributing Entity

Deferred Outflows of Resources

Deferred Inflows of Resources

Deferred Outflows of Resources

Deferred Inflows of Resources

$ 121,928 $

-- $

2,245 $

--

Component Units

State as Employer

Deferred Outflows of Resources

Deferred Inflows of Resources

$

2,025 $

--

Changes of assumptions

64,408

--

1,186

--

1,070

--

Net difference between projected and actual earnings on pension plan investments

--

113,892

--

2,098

--

1,893

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

66,552

63,427

662

3,979

2,745

1,558

State contributions subsequent

to the measurement date

578,020

--

9,840

--

9,324

--

Total

$ 830,908 $ 177,319 $

13,933 $

6,077 $

15,164 $

3,451

Primary Government: State contributions as employer and nonemployer subsequent to the measurement date of $578.0 million and $9.8 million are reported as deferred outflows of resources and will be recognized as a reduction of the NPL in the year ended June 30, 2021.
Component Units: State contributions as employer subsequent to the measurement date of $9.3 million are reported as deferred outflows of resources and will be recognized as a reduction of the NPL in the year ended June 30, 2021.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Primary Government

Component Units

State as Employer

$

(177,178) $

93,338

22,497

(14,226)

--

--

State as Nonemployer Contributing Entity

State as Employer

(424) $

(3,147)

2,272

636

413

373

(277)

(251)

--

--

--

--

161

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
Public School Employees Retirement System
State's Proportionate Share of Net Pension Liability and Pension Expense
Primary Government: At June 30, 2020, the State reported a liability of $165.9 million, for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018, with standard rollforward techniques performed to update the total pension liability to June 30, 2019. The State's proportion of the net pension liability was based on contributions to PSERS during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion as nonemployer contributing entity was 100% for the PSERS plan for certain local school employees (bus drivers, cafeteria workers, and maintenance staff). For the year ended June 30, 2020, the State recognized pension expense of $51.2 million.
State's Proportionate Share of Deferred Outflows/Inflows of Resources
At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (amount in thousands):

Differences between expected and actual experience

Primary Government
State as Nonemployer Contributing Entity

Deferred Outflows Deferred Inflows of

of Resources

Resources

$

-- $

5,269

Changes of assumptions

3,558

--

Net difference between projected and actual earnings on pension plan investments

--

10,044

Changes in proportion and differences between State

contributions and proportionate share of contributions

--

--

State contributions subsequent to the measurement

date

32,496

--

Total

$

36,054 $

15,313

162

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
Primary Government: State contributions as nonemployer subsequent to the measurement date of $32.5 million are reported as deferred outflows of resources and will be recognized as a reduction of the NPL in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Primary Government
State as Nonemployer Contributing Entity

$

(129)

(10,711)

(1,910)

995

--

--

Georgia Judicial Retirement System
State's Proportionate Share of Net Pension Asset and Pension Expense
Primary Government: At June 30, 2020, the State reported an asset of $22.4 million, for its proportionate share of the net pension asset. The net pension asset was measured as of June 30, 2019. The total pension asset used to calculate the net pension asset was based on an actuarial valuation as of June 30, 2018, with standard roll-forward techniques performed to update the total pension asset to June 30, 2019. The State's proportion of the net pension asset was based on contributions to GJRS during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion for the GJRS plan as Employer was 57.017332%, which was a decrease of 0.796727% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized pension expense of $5.2 million.
At June 30, 2020, the State reported an asset of $16.9 million, for its proportionate share of the net pension asset, based on contributions to GJRS during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion was 42.982668% for certain State court judges and solicitors general and for certain juvenile court judges. For the year ended June 30, 2020, the State recognized an expense of $3.8 million.

163

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued) State's Proportionate Share of Deferred Outflows/Inflows of Resources
At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (amount in thousands):

Differences between expected and actual experience

Primary Government

State as Employer

State as Nonemployer Contributing Entity

Deferred Outflows of Resources

Deferred Inflows of Resources

Deferred Outflows of Resources

Deferred Inflows of Resources

$

3,507 $ 2,940 $

2,643 $ 2,216

Changes of assumptions

2,619

636

1,975

480

Net difference between projected and actual earnings on pension plan investments

--

2,910

--

2,193

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

888

365

791

1,314

State contributions subsequent to the measurement date

Total

$

3,270 10,284 $

-- 6,851 $

2,428 7,837 $

-- 6,203

Primary Government: State contributions as employer and nonemployer subsequent to the measurement date of $3.3 million and $2.4 million are reported as deferred outflows of resources and will be recognized as an addition to the net pension asset in the year ended June 30, 2021.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Primary Government

State as Employer

$

905 $

(1,445)

663

94

(54)

--

State as Nonemployer Contributing Entity
445 (1,335)
226 (79) (51) --

164

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued) Teachers Retirement System of Georgia State's Proportionate Share of Net Pension Liability and Pension Expense Primary Government: At June 30, 2020, the State reported a liability of $3.7 billion, for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018, with standard rollforward techniques performed to update the total pension liability to June 30, 2019. The State's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion for the TRS plan as Employer was 17.045266%, which was an increase of 0.033909% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized pension expense of $649.6 million. At June 30, 2020, the State reported a liability of $45.6 million, for its proportionate share of the net pension liability, based on contributions to TRS during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion was 0.212260% for certain full-time public school support personnel. For the year ended June 30, 2020, the State recognized expense of $(2.3) million. Component Units: At June 30, 2020, the State reported a liability of $120.9 million, for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2018, with standard rollforward techniques performed to update the total pension liability to June 30, 2019. The State's proportion of the net pension liability was based on contributions to TRS during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion for the TRS plan as Employer was 0.562276%, which was a increase of 0.003284% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized pension expense of $19.6 million.
165

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)
State's Proportionate Share of Deferred Outflows/Inflows of Resources
At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (amount in thousands):

Differences between expected and actual experience

Primary Government

State as Employer

State as Nonemployer Contributing Entity

Deferred Outflows of Resources

Deferred Inflows of Resources

Deferred Outflows of Resources

Deferred Inflows of Resources

$ 206,576 $

1,087 $

2,573 $

14

Component Units

State as Employer

Deferred Outflows of Resources

Deferred Inflows of Resources

$

6,815 $

36

Changes of assumptions

351,700

--

4,380

--

11,602

--

Net difference between projected and actual earnings on pension plan investments

--

87,274

--

1,087

--

2,879

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

99,651

67,759

3,626

30,808

5,282

5,949

State contributions subsequent

to the measurement date

457,759

--

5,729

--

15,748

--

Total

$ 1,115,686 $ 156,120 $

16,308 $ 31,909 $

39,447 $

8,864

Primary Government: State contributions as employer and nonemployer subsequent to the measurement date of $457.8 million and $5.7 million are reported as deferred outflows of resources and will be recognized as a reduction of the NPL in the year ended June 30, 2021.
Component Units: State contributions as employer subsequent to the measurement date of $15.7 million are reported as deferred outflows of resources and will be recognized as a reduction of the NPL in the year ended June 30, 2021.

166

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Primary Government

Component Units

State as Employer

State as Nonemployer Contributing Entity

State as Employer

$

213,344 $

(7,614) $

6,355

44,115

(9,719)

695

122,212

(4,663)

3,715

122,136

666

4,070

--

--

--

--

--

--

Peace Officers' Annuity and Benefit Fund of Georgia
State's Proportionate Share of Net Pension Asset and Pension Expense
Primary Government: At June 30, 2020, the State reported an asset of $23.5 million, for its proportionate share of the net pension asset. The net pension asset was measured as of June 30, 2019. The total pension asset used to calculate the net pension asset was based on an actuarial valuation as of June 30, 2018, with standard roll-forward techniques performed to update the total pension asset to June 30, 2019. The State's proportion of the net pension asset was based on contributions to Peace Officers' during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion was 100% for the Peace Officers' plan for local government Peace Officers. For the year ended June 30, 2020, the State recognized expense of $21.8 million.

167

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued) State's Proportionate Share of Deferred Outflows/Inflows of Resources
At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (amount in thousands):

Differences between expected and actual experience

Primary Government

State as Employer

Deferred Outflows Deferred Inflows of

of Resources

Resources

$

-- $

19,328

Changes of assumptions

4,451

16,741

Net difference between projected and actual earnings on pension plan investments

--

9,579

Changes in proportion and differences between State

contributions and proportionate share of contributions

--

--

State contributions subsequent to the measurement

date

13,021

--

Total

$

17,472 $

45,648

Primary Government: State contributions subsequent to the measurement date of $13.0 million are reported as deferred outflows of resources and will be recognized as an addition to the NPA in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Primary Government

State as Employer

$

(6,893)

(16,800)

(11,623)

(3,717)

(2,164)

--

168

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
Georgia Firefighters' Pension Fund
State's Proportionate Share of Net Pension Liability and Pension Expense
Primary Government: At June 30, 2020, the State reported a liability of $169.1 million, for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2019. The State's proportion of the net pension liability was based on contributions to Firefighters' during the fiscal year ended June 30, 2019. At June 30, 2019, the State's proportion was 100% for the Firefighters' plan for local government Firefighters. For the year ended June 30, 2020, the State recognized expense of $48.4 million.
State's Proportionate Share of Deferred Outflows/Inflows of Resources
At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (amount in thousands):

Differences between expected and actual experience

Primary Government

State as Employer

Deferred Outflows Deferred Inflows of

of Resources

Resources

$

5,903 $

10,703

Changes of assumptions

23,123

--

Net difference between projected and actual earnings on pension plan investments

--

11,905

Changes in proportion and differences between State

contributions and proportionate share of contributions

--

--

State contributions subsequent to the measurement

date

40,575

--

Total

$

69,601 $

22,608

169

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
Primary Government: State contributions subsequent to the measurement date of $40.6 million are reported as deferred outflows of resources and will be recognized as a reduction of the NPL in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Primary Government

State as Employer

$

3,630

(4,344)

3,517

3,755

318

(458)

170

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued)
H. Actuarial Methods and Assumptions (GASB 68)
The total pension liability, as of June 30, 2019, for each plan was determined by an actuarial valuation date indicated in the table below using the following actuarial assumptions, applied to all periods included in the measurement:

Investment

Cost of

Valuation

Salary

rate of

Living

Plan

date

Inflation

increases

return1

Adjustment

Mortality

ERS

6/30/2018

2.75%

3.25% -

7.30%

N/A

Post-retirement mortality rates were based on the RP-2000 Combined

7.00%*

Mortality Table with future mortality improvement projected to 2025

with the Society of Actuaries' projection scale BB (set forward two

years for both males and females) for service retirements and

dependents beneficiaries. The RP-2000 Disabled Table with future

mortality improvement projected to 2025 with the Society of

Actuaries' projection scale BB (set back seven years for males and set

forward three years for females) was used for death after disability

retirement. Rates of mortality in active service were based on the

RP-2000 Employee Mortality Table projected to 2025 with projection

scale BB. There is a margin for future mortality improvement in the

tables used by the plan.

PSERS

6/30/2018

2.75%

N/A

7.30%

1.5% semiannually

Post-retirement mortality rates were based on the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward for three years for males and two years for females) for the period after service retirement and dependent beneficiaries. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward five years for both males and females) was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. There is a margin for future mortality improvement in the tables used by the plan.

GJRS

6/30/2018

2.75%

4.50%*

7.30%

N/A

Mortality rates were based in the RP-2000 Combined Mortality Table

projected to 2025 with projection scale BB (set forward two years for

both males and females) for the period after retirement and for

dependent beneficiaries. For the period after disability retirement, the

RP-2000 Disability Mortality Table projected to 2025 with projection

scale BB (set back seven years for males and set forward three years

for females) is used. Rates for mortality in active service were based

on the RP-2000 Employee Mortality Table projected to 2025 with

projected scale BB.

TRS

6/30/2018

2.50%

3.00% 8.75%*

7.25%

1.5% semiannually

Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table for future mortality improvement projected to

2025 with the Society of Actuaries' projection scale BB (set forward

one year for males) for service retirements and dependents

beneficiaries. The RP-2000 Disabled Mortality Table with future

mortality improvement projected to 2025 with Society of Actuaries

projection scale BB (set forward two years for males and four years

for females) was used for death after disability retirement. There is a

margin for future mortality improvement in the tables used by the

plan. The numbers of expected future deaths are 8-11% less than the

actual number of deaths that occurred during the study period for

healthy retirees and 9-11% less than expected under the selected table

for disabled retirees. Rates of mortality in active service were based

on the RP-2000 Employee Mortality Table projected to 2025 with

projected scale BB.

Peace Officers' 6/30/2018

1.90%

N/A

6.50%

N/A

Mortality rates were based on the RP 2014 Healthy Mortality Table

with blue collar adjustments and generational mortality projection

using Conduent modified MP-2016 scale for healthy lives and the

RP-2014 Disabled Retiree Mortality Table with generational mortality

projection using the Conduent modified MP-2016 scale for disabled

lives.

Firefighters'

6/30/2019

2.75%

N/A

6.00%

N/A

1Investment rate of return is net of pension plan investment expense, including inflation.

Mortality rates for pre-retirement were based on the RP-2000 Employee Mortality Table projected to 2025 with Projection Scale BB. Mortality rates for post-retirement and for dependent beneficiaries were based on the RP-2000 Blue Collar Mortality Table projected to 2025 with projection scale BB (set forward one year for males and set forward four years for females). For current disability retirees, mortality rates are based on the RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward five years for males and set forward three years for females), however there are no longer any disability benefits in the plan. 80% of active members are assumed to be married with the male three years older than his spouse.

*Includes respective inflation assumptions.

Actuarial experience
study 7/1/20096/30/2014
7/1/20096/30/2014
7/1/20096/30/2014
7/1/20096/30/2014
6/30/20086/30/2015
7/1/20096/30/2015

171

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
Long-Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using either a log-normal distribution analysis, a building-block method or a Monte Carlo simulation 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 longterm 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 asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized by plan in the table below:

Asset Class

ERS

Target allocation

Longterm expected real rate of return*

PSERS

Target allocation

Longterm expected real rate of return*

Target Allocation

GJRS

TRS

Target allocation

Longterm expected real rate of return*

Target allocation

Longterm expected real rate of return*

Peace Officers'

Target allocation

Longterm expected real rate of return*

Firefighters'

Target allocation

Longterm expected real rate of return*

Investment Grade Corporate Credit
Mortgage Backed Securities Fixed Income Fixed Income Domestic Core Bonds
Domestic large equities
Domestic mid equities
Domestic small equities
Small/mid cap equities
International developed market equities
International emerging market equities International equity funds Private equity Real estate
Real Assets (liquid) Alternatives Total

--

--

--

--

--

--

--

--

--

--

12.0 % 3.2 %

-- 30.0 %

-- (0.1%)

--

--

--

--

46.2 % 8.9 %

--

--

1.3 % 13.2 %

--

--

-- 30.0 %

-- (0.1%)

--

--

--

--

46.2 % 8.9 %

--

--

1.3 % 13.2 %

--

--

-- 30.0 %

-- (0.1%)

--

--

--

--

46.2 % 8.9 %

--

--

1.3 % 13.2 %

--

--

-- 30.0 %

-- (0.1%)

--

--

--

--

51.0 % 8.9 %

--

--

1.5 % 13.2 %

--

--

-- 6.6 % 22.6 % -- 31.6 % 13.8 % 11.0 % --

-- 2.9 % 3.9 % -- 8.6 % 9.7 % 9.1 % --

12.0 % -- --
10.5 % 15.5 %
-- -- 15.5 %

1.2 % -- -- 1.7 % 5.8 % -- -- 6.5 %

12.4 % 8.9 %

12.4 % 8.9 %

12.4 % 8.9 %

12.4 % 8.9 %

--

--

--

--

5.1 % 10.9 %

--

--

--

--

--

--

-- 5.0 % 100.0 %

-- 12.0 %

5.1 % 10.9 %

--

--

--

--

--

--

-- 5.0 % 100.0 %

-- 12.0 %

5.1 % 10.9 %

--

--

--

--

--

--

-- 5.0 % 100.0 %

-- 12.0 %

5.1 % 10.9 %

--

--

--

--

--

--

--

--

--

--

100.0 %

--
9.4 % -- 5.0 %
-- -- 100.0 %

--
8.5 % -- 6.8 %
-- --

6.5 % 9.5 %

13.0 % 5.0 % 5.0 %

6.6 % 10.5 % 4.1 %

5.0 % -- 100.0 %

4.7 % --

* Rates shown are net of the 2.75% assumed rate of inflation with the exception of TRS which assume a 2.50%, and and Peace Officers', which includes a 1.90% rate of inflation, respectively.

172

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued) Discount Rate The discount rate used for ERS, PSERS, and GJRS to measure the total pension liability, as of June 30, 2019, was 7.30%. The discount rate used for TRS to measure the total pension liability was 7.25%. The projection of cash flows used by each plan to determine the discount rate was assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, each 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. The discount rate used to measure the total pension liability for the Peace Officers' plan was 6.50%. The projection of cash flows used to determine the discount rate assumes revenues will remain level. Based on those assumptions, the 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. The discount rate used to measure the total pension liability for the Firefighters' plan was 6.00% 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 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.
173

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
The following schedule is presented from the perspective of the State as the employer and nonemployer contributing entity and details the State's proportionate share of the NPL/(NPA), as of June 30, 2019. The NPL/(NPA) is calculated using the discount rate detailed below, as well as what the State's proportionate share of the NPL/(NPA) would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate (amount in thousands):

Sensitivity of the Plan Participating Employer Contributing Entities Net Pension Liability/(Asset) to Changes in the Discount Rate

Primary Government

Component Units

Current

Current

1% Decrease Discount Rate 1% Increase 1% Decrease Discount Rate 1% Increase

ERS's Net Pension Liability
SFS
Total ERS Net Pension Liability

(6.30%)

(7.30%)

(8.30%)

(6.30%)

(7.30%)

(8.30%)

$ 5,213,608 $ 95,796

3,667,433 $ 2,351,754 $

67,410

43,212

86,407 $ --

60,803 $ --

38,976 --

$ 5,309,404 $ 3,734,843 $ 2,394,966 $

86,407 $

60,803 $ 38,976

PSERS's Net Pension Liability

(6.30%)

(7.30%)

(8.50%)

(6.30%)

(7.30%)

(8.30%)

$ 287,322 $

165,908 $ 63,677 $

-- $

-- $

--

(6.30%)

(7.30%)

(8.30%)

(6.30%)

(7.30%)

(8.30%)

GJRS's Net Pension

(Asset)

$

958 $

(22,425) $ (42,780) $

-- $

-- $

--

SFS

722

(16,906)

(32,249)

--

--

--

Total GJRS's Net Pension

(Asset)

$

1,680 $

(39,331) $ (75,029) $

-- $

-- $

--

TRS's Net Pension Liability
SFS
Total TRS's Net Pension Liability

(6.25%) $ 5,949,681 $
74,090 $ 6,023,771 $

(7.25%)

(8.25%)

(6.25%)

3,664,958 $ 1,786,532 $

45,642

22,247

196,263 $ --

3,710,600 $ 1,808,779 $ 196,263 $

(7.25%)

(8.25%)

120,905 $ --

58,933 --

120,905 $ 58,933

(5.50%)

(6.50%)

(7.50%)

(5.50%)

(6.50%)

(7.50%)

Peace Officers' Net Pension Liability/(Asset) $

75,945 $

(23,505) $ (105,897) $

-- $

-- $

--

(5.00%)

(6.00%)

(7.00%)

(5.00%)

(6.00%)

(7.00%)

Firefighters' Net Pension

Liability

$

315,762 $

169,132 $ 48,033 $

-- $

-- $

--

174

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 15 - RETIREMENT SYSTEMS (continued)
I. Defined Contribution Plans
GSEPS 401(k) Component of ERS Plan
In addition to the ERS defined benefit pension described above, GSEPS members may also participate in the Peach State Reserves 401(k) defined contribution plan and receive an employer matching contribution. The 401(k) plan is administered by the System and was established by the Georgia Employee Benefit Plan Council in accordance with State law and Section 401(k) of the IRC. The GSEPS segment of the 401(k) plan was established by State law effective January 1, 2009. Plan provisions and contribution requirements specific to GSEPS can be amended by State law. Other general 401(k) plan provisions can be amended by the ERS Board of Trustees as required by changes in federal tax law or for administrative purposes. The State was not required to make significant contributions to the 401(k) plan prior to GSEPS because most members under other segments of the plan either were not State employees or were not eligible to receive an employer match on their contributions.
The GSEPS plan includes automatic enrollment in the 401(k) plan at a contribution rate of 5% of salary unless the participating member elects otherwise. The member may change such level of participation at any time. In addition, the member may make such additional contributions as he or she desires, subject to limitations imposed by federal law. The State will match 100% of the employee's initial 1% contribution and 50% of contribution percents two through five. Therefore, the State will match 3% of salary when an employee contributes at least 5% to the 401(k) plan. Employee contributions greater than 5% of salary do not receive any matching funds.
GSEPS employer contributions are subject to a vesting schedule, which determines eligibility to receive all or a portion of the employer contribution balance at the time of any distribution from the account after separation from all State service. Vesting is determined based on the table below:

Less than 1 year 1 year 2 years 3 years 4 years 5 or more years

0 % 20% 40% 60% 80% 100%

Employee contributions and earnings thereon are 100% vested at all times. The 401(k) plan also allows participants to roll over amounts from other qualified plans to their respective account in the 401(k) plan on approval of the 401(k) plan administrator. Such rollovers are 100% vested at the time of transfer. Participant contributions are invested according to the participant's investment election. If the participant does not make an election, investments are automatically defaulted to a Lifecycle fund based on the participant's date of birth.
The participants may receive the value of their vested accounts upon attaining age 59.5, qualifying financial hardship, or 30 days after retirement or other termination of service (employer contribution balances are only eligible for distribution upon separation from service). Upon the death of a participant, his or her beneficiary shall be entitled to the vested value of his or her accounts. Employees who die while actively employed and eligible for 401(k) employer matching contributions become fully vested in employer contributions upon death. Distributions are made in installments or in a lump sum.
There were 71,716 plan members and 470 participating employers in the plan at June 30, 2020.
175

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 15 - RETIREMENT SYSTEMS (continued) For the fiscal year ended June 30, 2020, the State's employer and employee GSEPS contributions were $35.2 million and $70.2 million, respectively. Additionally, the State made contributions of $0.1 million on behalf of employers that are not in the reporting entity. Employer contributions may be partially funded from non-vested contributions that were forfeited by employees. Regents Retirement Plan The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established by the Georgia General Assembly in OCGA 47-21-1. It is administered and may be amended by the Board of Regents of the University System of Georgia (Board of Regents). A participant in the plan is an "eligible university system employee" defined as a faculty member or all exempt full and partial benefit eligible employees as designated by the regulations of the Board. Under the 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. The approved vendors have separately issued financial reports that may be obtained through their respective corporate offices. 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. The institutions of the University System of Georgia make monthly employer contributions for the Regents Retirement Plan at rates determined by the Board of Regents in accordance with State statute and as advised by their independent actuary. For the fiscal year ended June 30, 2020, the employer contribution was 9.24% of the participating employee's earned compensation, and employees contributed 6% of their earned compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. For the fiscal year ended June 30, 2020, employer and employee contributions were $137.8 million and $89.7 million, respectively.
176

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS
The State administers various cost sharing multiple-employer other postemployment benefit (OPEB) plans, which include:
Administered by Department of Community Health (DCH): Georgia State Employees Post-employment Health Benefit Fund (State OPEB Fund) Georgia School Personnel Post-employment Health Benefit Fund (School OPEB Fund)
Administered by the Employees' Retirement System (ERS): State Employees' Assurance Department (SEAD-OPEB Plan)
The State is the plan sponsor of these plans and the participating employer (Employer). The notes to the financial statements and required supplementary information that follow are presented from the perspective of the State as the plan sponsor and the State as Employer. The financial statements for the State OPEB Fund and School OPEB Fund are presented in the Fiduciary Funds section of this report. Separate financial reports that include the applicable financial statements and required supplementary information for the plan administered by ERS are publicly available and may be obtained from their website (www.ers.ga.gov).

A. Basis of Accounting
The financial statements of these plans are prepared using the economic resources measurement focus and accrual basis of accounting. Contributions from employers and members are recognized in the period in which they are due. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. The OPEB plan's fiduciary net positions have been determined on the same basis as they are reported by the various plans.

B. Investments

Investments are reported at market value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.

For the fiscal year ended June 30, 2020, the annual money-weighted rate of return on OPEB plan investments, net of OPEB plan investment expense are represented below:

OPEB Plans State OPEB Fund School OPEB Fund SEAD-OPEB Plan

Net Annual MoneyWeighted Rate 3.21 % 3.16 % (3.60%)

For all plans mentioned above the money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. These three plans have investment policies regarding the allocation of invested assets, established on a cost basis in compliance with Georgia Statute. Plan assets are managed on a total return basis with a short-term objective of stability of principal while allowing for liquidity and a long-term objective of achieving and maintaining a fully funded status for the benefits provided through each OPEB plan. During fiscal year 2018, the State and School OPEB funds updated their investment strategy to a more long-term approach.
177

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued) The following table summarizes the adopted asset allocation policy by plan at June 30, 2020:

Asset Class

Target Allocation State OPEB School OPEB SEAD-OPEB

Fixed Income
Equities Alternative Investments
Total

30 % 70 %
-- % 100.0 %

30 % 70 %
-- % 100.0 %

25% - 45% 55% - 75%
0% - 5% 100.0 %

C. Plans Descriptions and Funding Policies
State OPEB Fund and School OPEB Fund
Plan Description: The State OPEB Fund and School OPEB Fund are cost-sharing multiple-employer defined benefit postemployment healthcare plans and are reported as employee benefit trust funds. The Funds are administered by a Board of Community Health (Board) that is comprised of nine members, including two former State of Georgia employees and seven industry professionals. The OCGA 45-18-25 and 20-2-875, for the State and School OPEB funds respectively, assigns the authority to establish and amend the benefit provisions of the group health plans, including benefits for retirees to the Board.
Benefits Provided: The State OPEB Fund provides postemployment health benefits (including benefits to qualified beneficiaries of eligible former employees) due under the group health plan for employees of State organizations (including technical colleges) and other entities authorized by law to contract with DCH for inclusion in the plan. Retiree medical eligibility is attained when an employee retires, and is immediately eligible to draw a retirement annuity from one of the State's retirement plans. If elected, dependent coverage starts on the same day as retiree coverage. It also pays administrative expenses of the fund. By law, no other use of the assets of the State OPEB Fund is permitted. The plan designs offered for the 2020 plan year include various plan options. For Medicareeligible members there are Medicare Advantage plan options (UnitedHealthcare and Blue Cross and Blue Shield of Georgia) Standard and Premium Plans. Alternatively, for non-Medicare eligible members the plan options include Health Reimbursement Arrangement Plan Options (Blue Cross and Blue Shield of Georgia Gold, Silver, Bronze), Health Maintenance Organization Plan Options (Blue Cross and Blue Shield of Georgia, Kaiser Permanente, and UnitedHealthcare), and a High Deductible Health Plan Option (UnitedHealthcare).
The School OPEB Fund provides postemployment health benefits (including benefits for qualified beneficiaries of eligible former employees) due under the group health plan for public school teachers, including librarians, other certified employees of public schools, regional educational service agencies, and non-certified public school employees. Retiree medical eligibility is attained when an employee retires, and is immediately eligible to draw a retirement annuity from one of the State's retirement plans. If elected, dependent coverage starts on the same day as retiree coverage. It also pays administrative expenses of the fund. By law, no other use of the assets of the School OPEB Fund is permitted. The plan designs offered for the 2020 plan year include various plan options, which are the same options offered for the State OPEB fund as described in the previous paragraph.

178

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
Contributions: The State OPEB Fund and School OPEB Fund are currently funded on a pay-as-you-go basis. That is, annual costs of providing benefits will be financed in the same year as claims occur, with historically, no significant assets accumulating, as would occur in an advance funding strategy.
Due to the uncertainty regarding plan revenues and expenditures as a result of the unprecedented actions the State is undertaking in response to COVID-19, the fiscal year 2019 year end OPEB transfer was deferred in fiscal year 2020 to help ensure there would be sufficient resources to maintain cash flow and meet any unanticipated expenses as a result of COVID-19. If any excess amounts are transferred to the OPEB funds in fiscal year 2021, it will be determined after the completion of the State's fiscal year 2020 Comprehensive Annual Financial Report.
The contribution requirements of plan members and participating employers are established by the Board in accordance with the 2020 Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. As of January 1, 2012, for members with fewer than five years of service, contributions also vary based on years of service. As of January 1, 2012, on average, members with five years or more of service pay approximately 25% of the cost of health insurance coverage. In accordance with the Board resolution dated December 8, 2011, for members with fewer than five years of service as of January 1, 2012, the State provides a premium subsidy in retirement that ranges from 0% for fewer than 10 years of service to 75% (but no greater than the subsidy percentage offered to active employees) for 30 or more years of service. The subsidy for eligible dependents ranges from 0% to 55% (but no greater than the subsidy percentage offered to dependents of active employees minus 20%). No subsidy is available to Medicare eligible members not enrolled in a Medicare Advantage Option. The Board sets all member premiums by resolution and in accordance with the law and applicable revenue and expense projections. Any subsidy policy adopted by the Board may be changed at any time by Board resolution and does not constitute a contract or promise of any amount of subsidy.
The combined required employer contribution rates established by the Board for the active and retiree plans for the fiscal years ended June 30, 2020, were as summarized as follows:

Combined Active and State OPEB Fund Contribution Rates as a Percentage of Covered Payroll

State organizations, including technical colleges, and certain other eligible participating employers:

July 2019 - June 2020

29.454%

for August 2019 - July 2020 coverage

Combined Active and School OPEB Fund Contribution Rates per Member per Month

Certificated teachers, librarians, regional educational service agencies, certain other eligible participating employers:

July 2019 - June 2020

$945.00

for August 2019 - July 2020 coverage

Library employees: July 2019 - June 2020

$843.00

for August 2019 - July 2020 coverage

Non-certificated school personnel: July 2019 - June 2020

$945.00 `

for August 2019 - July 2020 coverage

179

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
SEAD-OPEB Plan
Plan Description: The SEAD-OPEB Plan is a cost-sharing multiple-employer defined benefit other postemployment plan created by the 2007 Georgia General Assembly to provide term life insurance to eligible members of the ERS, Georgia Judicial Retirement System (JRS), and Legislative Retirement System (LRS). The SEAD-OPEB Plan provides benefits for retired and vested inactive members. Effective July 1, 2009, no newly hired members of any State public retirement system are eligible for term life insurance under the SEAD-OPEB Plan. The SEAD-OPEB Plan is administered by a Board of Directors that is comprised of six members, the State Auditor, State Treasurer, Department of Administrative Services Commissioner, Labor Commissioner, and two members appointed by the Governor. Pursuant to Title 47 of the OCGA, benefit provisions of the plan was established and can be amended by State statute.
Benefits Provided: The SEAD-OPEB Plan provides postemployment insurance coverage on a monthly, renewable term basis, with no return premiums or cash value available to be earned. The amount of insurance for a retiree with creditable service prior to April 1, 1964, is the full amount of insurance in effect on the date of retirement. The amount of insurance for a service retiree with no creditable service prior to April 1, 1964, is 70% of the amount of insurance in effect at age 60 or at termination, if earlier. Life insurance proceeds are paid in lump sum to the beneficiary upon death of the retiree. The net position represents the excess accumulation of investment income and premiums over benefit payments and expenses and is held as a reserve for payment of death benefits under existing policies. Administrative costs for the plan are determined based on the plan's share of overhead costs to accumulate and invest funds, actuarial services, and to process benefit payments to beneficiaries. Administrative fees are financed from the assets of the plan.
Contributions: Contributions by plan members are established by the Board of Directors, up to the maximum allowed by statute (not to exceed 0.5% of earnable compensation). The Board of Directors establishes employer contribution rates, such rates which, when added to members' contributions, shall not exceed 1% of earnable compensation. There were no employer contributions required for fiscal year ended June 30, 2020. Contributions were based on actuarial valuations, and for fiscal year 2020 were as follows:

Member Rates: ERS Old Plan Less: Offset Paid by Employer Net ERS Old Plan ERS New Plan, JRS, and LRS

SEAD-OPEB Plan
Percentage
0.45 % (0.22%) 0.23 % 0.23 %

Employer Rates/Amounts

0.00 %

180

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued) D. Plan Membership and Participating Employers

The following table summarizes the participating membership and participating employers at June 30, 2020:

Participating Membership by Plan June 30, 2020

Plan Membership
Inactive plan members or beneficiaries currently receiving benefits
Inactive plan members entitled to but not yet receiving benefits
Active plan members
Total

State OPEB

School

SEAD-

Fund

OPEB Fund OPEB Plan

38,447

85,749

44,130

86 50,509 89,042

100 178,437 264,286

1,016 21,020 66,166

Open to New Members (Yes/No) Number of Employers

Yes

Yes

No

200

247

444

These counts treat each legal entity in the State reporting entity as one employer.

E. Net OPEB Liability/(Asset)
For defined benefit OPEB plans that are administered through trusts that meet the specified criteria, GASB 74 requires the net OPEB liability to be measured as the total OPEB liability, less the amount of the OPEB plan's fiduciary net position. The total OPEB liability is actuarially determined. The following schedule is presented from the perspective of the State as the sponsor of the various Plans and summarizes the components of the Net OPEB Liability (NOL)/ Net OPEB Asset (NOA), as of June 30, 2020, by Plan (amount in thousands):

Components of the Net OPEB Liability/ (Asset)
Total OPEB Liability
Plan Fiduciary Net Position

State OPEB Fund
$2,792,919
1,667,521

School OPEB Fund
$15,298,688
611,017

SEADOPEB Plan
$ 972,700
1,256,718

Net OPEB liability/(asset)
Plan fiduciary net position as a percentage of the total OPEB liability

$1,125,398 $14,687,671 $ (284,018)

59.71 %

3.99 % 129.20 %

181

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued) F. Actuarial Methods and Assumptions For the State OPEB fund and School OPEB fund, the impact of the Affordable Care Act (ACA) was addressed in the valuations. Review of the information currently available did not identify any specific provisions of the ACA that are anticipated to significantly impact results other than plan design features and fees currently mandated by the ACA and incorporated in the plan designs, which are included in the current baseline claim costs. Continued monitoring of the ACA's impact on the Plan's liability will be required. Additionally, the impact of the COVID-19 pandemic was considered in this valuation; however, no changes were incorporated at this time due to the level of uncertainty regarding the impact on both plan costs and contribution levels going forward. Continued monitoring of the COVID-19 impact on the Plan's liability will also be required. For the SEAD-OPEB Plan, the annual actuarial valuations providing the measures to assess funding progress will utilize the actuarial methods and assumptions last adopted by the Board based upon the advice and recommendations of the actuary. The Board will periodically have actuarial projections of the valuation results performed to assess the current and expected future progress towards the overall funding goals of the System. Projections of benefits for financial reporting purposes for all plans are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. Actuarial Valuation Date The total OPEB liability at June 30, 2020, is based upon the June 30, 2019 actuarial valuation for State OPEB Fund, School OPEB Fund and the SEAD-OPEB Plan, using generally accepted actuarial procedures/techniques.
182

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued) Actuarial Assumptions

The total OPEB liability, as of June 30, 2020, for each plan was determined by an actuarial valuation date indicated in the table below using the following actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date:

Actuarial Assumptions

State OPEB Fund

School OPEB Fund

SEAD-OPEB Plan

Valuation date

6/30/2019

6/30/2019

6/30/2019

Inflation

2.50%

2.50%

2.75%

Salary increases

3.25% - 7.00%*

3.00% - 8.75%*

3.25% - 7.00%*

Long-term expected rate of return 1

7.30%

7.30%

7.30%

Initial Healthcare Cost Trend

Pre-Medicare Eligible

7.00%

7.00%

N/A

Medicare Eligible

5.25%

5.25%

N/A

Ultimate Trend Rate Pre-Medicare Eligible Medicare Eligible
Year Ultimate Trend is Reached
Pre-Medicare Eligible Medicare Eligible Mortality

4.50% 4.50%
2029 2023
The RP-2000 Combined Mortality Table projected to 2025 with projection scale BB (set forward two years for both males and females) is used for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set back seven years for males and set forward three years for females) is used for the period after disability retirement. There is a margin for future mortality improvement in the tables used by the plan. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

4.50%
4.50%
2029
2023
For Teachers Retirement System (TRS) members: The Pub-2010 Teachers Headcount Weighted Below Median Healthy Retiree Mortality Table projected generationally with the MP-2019 projection scale (set forward one year and adjusted 106%) is used for death after service retirement and beneficiaries. The Pub-2010 Teachers Mortality Table for Disabled Retirees projected generationally with the MP-2019 Projection scale (set forward one year and adjusted 106%) is used for death prior to retirement. For both, rates of improvement were reduced by 20% for all years prior to the ultimate rate. For Public School Employees Retirement System (PSERS) members: The RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward three years for males and two years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward five years for both males and females) is used for the period after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. There is a margin for future mortality improvement in the tables used by the plan.

N/A N/A
N/A N/A
The RP-2000 Combined Mortality Table projected to 2025 with the Society of Actuaries' projection scale BB (set forward two years for both males and females) is used for the period after service retirement and for dependent beneficiaries. There is a margin for future mortality improvement in the tables used by the plan.

Actuarial experience study

7/1/2009 - 6/30/2014

7/1/2013 - 6/30/2018

1 Long-term expected rate of return is net of investment expense, including inflation

7/1/2009 - 6/30/2014

*Includes respective inflation assumption. The State Plan has been lowered from 2.75% to 2.50% in anticipation of the upcoming ERS experience study.

183

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
The actuarial assumptions used in the valuations, for the State and School OPEB funds, are based on the results of the most recent recent actuarial experience studies which covered the five year period ending June 30, 2014, and June 30, 2018, respectively. Various assumptions and methods have been revised to reflect the results of the TRS experience study for the five-year period ending June 30, 2018. The remaining actuarial assumptions (e.g., initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2019 valuation for the State and School OPEB funds were based on a review of recent plan experience done concurrently with the June 30, 2019 valuation.
The actuarial assumptions used in the valuation, for the SEAD-OPEB Plan were based on the results of an actuarial experience study, which covered the five year period ending June 30, 2014, with the exception of the long-term expected rate of return. The assumed investment rate was decreased as reported in the June 30, 2017 and June 30, 2018 actuarial valuations, based on a funding policy change. The assumed investment rate of return remained at 7.30% for the June 30, 2019 actuarial valuations.
Long-Term Expected Rate of Return
For all plans, the long-term expected rate of return on OPEB plan investments were determined using a log-normal distribution analysis, in which 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.
The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized by plan in the table below:

Asset Class
Fixed Income
Domestic large equities
Domestic small equities
International developed market equities
International emerging market equities
Alternatives
Total

State-OPEB Fund

Target allocation

Long-term expected
real rate of return*

30.0 %

0.5%

Target Allocation

School-OPEB Fund

Target allocation

Long-term expected
real rate of return*

30.0 %

0.5%

70.0 %

9.2 %

70.0 %

9.2 %

--

--

--

--

--

--

--

--

--

--

--

--

100.0 %

--

--

--

--

100.0 %

SEAD-OPEB Plan

Target allocation

Long-term expected real
rate of return*

30.0 %

(0.1%)

46.2 %

8.9 %

1.3 %

13.2 %

12.4 %

8.9 %

5.1 % 5.0 % 100.0 %

10.9 % 12.0 %

* Rates shown are net of the respective assumed rates of inflation.

184

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
Discount Rate
In order to measure the total OPEB liability, as of June 30, 2020, for the State OPEB fund, a single equivalent interest rate of 7.06% was used, as compared with last year's discount rate of 7.30%. This is comprised of the yield or index rate for 20 year tax-exempt general obligation bonds with an average rating of AA or higher (2.21% per the Municipal Bond Index Rate) along with other factors. The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2118.
In order to measure the total OPEB liability for the School OPEB, a single equivalent interest rate of 2.22% was used as the discount rate, as compared with last year's rate of 3.58%. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation bonds with an average rating of AA or higher (2.21% per the Municipal Bond Index Rate). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2118.
The discount rate used to measure the total OPEB liability for the SEAD-OPEB Plan was 7.30%, the same as last year's rate. The projection of cash flows used to determine the discount rate assumed that plan member insurance premiums will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the 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 investments was applied to all periods of projected benefit payments to determine the total OPEB liability.
Sensitivity of the Net OPEB Liability/(Asset) to Changes in the Discount Rate
The following schedule summarizes the NOL/(NOA) of the employers, as of June 30, 2020. The NOL/(NOA) is calculated using the determined discount rate as well as what the NOL/(NOA) would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate by the Plan (amount in thousands):

Sensitivity of the Plan Participating Employer Contributing Entities Net OPEB Liability/(Asset) to Changes in the Discount Rate

1% Decrease

Current Rate

1% Increase

State's Net OPEB Liability

(6.06%)

(7.06%)

(8.06%)

$

1,410,587 $

1,125,398 $

882,248

School's Net OPEB Liability

(1.22%)

(2.22%)

(3.22%)

$

17,255,590 $

14,687,671 $

12,634,053

SEAD-OPEB Plan's Net OPEB (Asset) $

(6.30%) (157,545) $

(7.30%) (284,018) $

(8.30%) (388,280)

185

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
Sensitivity of the Net OPEB Liability/(Asset) to Changes in the Healthcare Cost Trends
The following schedule summarizes the NOL/(NOA) of the employers, as of June 30, 2020. The NOL/(NOA) is calculated using the determined healthcare cost trends as well as what the NOL/(NOA) would be if it were calculated using healthcare cost trends that are 1-percentage-point lower or 1-percentage-point higher than the current rate by the Plan (amount in thousands):

Sensitivity of the Plan Participating Employer Contributing Entities Net OPEB Liability/(Asset) to Changes in Healthcare Cost Trends

1% Decrease

Current Rate

1% Increase

State's Net OPEB Liability

$

845,713 $

1,125,398 $

1,456,816

School's Net OPEB Liability

$

12,228,963 $

14,687,671 $

17,870,984

SEAD-OPEB Plan's Net (Asset)

N/A

N/A

N/A

186

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
The following information is from the perspective of the State as the employer.

G. State's Proportionate Share of OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
The State reported a liability as the Employer for its proportionate share of the NOL associated with the plans listed below.
The following schedule is presented from the perspective of the State as the Employer details the proportional share of the OPEB amounts for each plan as of June 30, 2020 is as follows (amount in thousands):

Aggregate OPEB Amounts - All Plans

Primary Government

Component Units

OPEB liabilities

$ 1,152,855 $

82,041

OPEB assets

$

253,962 $

3,237

Deferred outflows of resources related to OPEBs

$

393,763 $

16,832

Deferred inflows of resources related to OPEBs

$ 1,634,292 $

27,528

OPEB expense/expenditures

$ (402,983) $

2,203

187

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued) The information below includes all multi-employer plans and funds administered by the State of Georgia. The NOL/NOA for each plan was measured as of June 30, 2019. The total OPEB liability/asset used to calculate the NOL/NOA for each plan was based on an actuarial valuation as of June 30, 2018 for State, School, and SEAD. State OPEB Fund State's Proportionate Share of Net OPEB Liability and OPEB Expense Primary Government: At June 30, 2020, the State reported a liability of $1.2 billion for it's proportionate share of net OPEB liability. The net OPEB liability was measured as of June 30, 2019. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2018, with standard roll-forward techniques performed to update the total OPEB liability to June 30, 2019. The State's proportion of the net OPEB liability was based on the State's proportion of the prior year contributions received by the OPEB plan relative to the contributions for all participants in the plan. At June 30, 2019, the State's proportion for the State plan as employer was 92.429945%, which was an increase of 0.406988% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized OPEB expense of $(383.6) million. Component Units: At June 30, 2020, the State reported a liability of $2.3 million, for it's proportionate share of net OPEB liability. The net OPEB liability was measured as of June 30, 2019. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2018, with standard roll-forward techniques performed to update the total OPEB liability to June 30, 2019. The State's proportion of the net OPEB liability was based on the State's proportion of the prior year contributions received by the OPEB plan relative to the contributions for all participants in the plan. At June 30, 2019, the State's proportion for the State plan as Employer was 0.197090%, which was a decrease of 0.012879% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized OPEB expense of $(1.1) million. State's Proportionate Share of Deferred Outflows/Inflows of Resources At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources (amount in thousands):
(Table on next page)
188

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)

Primary Government

State as Employer

Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and

actual experience

$

-- $ 396,730

Component Units

State as Employer

Deferred Outflows of Resources

Deferred Inflows of Resources

$

-- $

781

Changes of assumptions

--

1,068,570

--

2,103

Net difference between projected and actual earnings on OPEB plan investments

77,200

--

152

--

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

166,961

141,710

39

716

State contributions subsequent to the measurement date

139,402

--

270

--

Total

$ 383,563 $ 1,607,010 $

461 $ 3,600

Primary Government: State contributions as employer subsequent to the measurement date of $139.4 million are reported as deferred outflows of resources and will be recognized as a reduction of the NOL in the year ended June 30, 2021.
Component Units: State contributions as employer subsequent to the measurement date of $0.3 million are reported as deferred outflows of resources and will be recognized as a reduction of the NOL in the year ended June 30, 2021.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Primary Government

Component Units

State as Employer

State as Employer

$

(532,183) $

(1,450)

(477,472)

(1,233)

(289,362)

(752)

(63,832)

26

--

--

--

--

189

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
School OPEB Fund
State's Proportionate Share of Net OPEB Liability and OPEB Expense
Component Units: At June 30, 2020, the State reported a liability of $79.8 million, for it's proportionate share of net OPEB liability. The net OPEB liability was measured as of June 30, 2019. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2018, with standard roll-forward techniques performed to update the total OPEB liability to June 30, 2019. The State's proportion of the net OPEB liability was based on the State's proportion of the prior year contributions received by the OPEB plan relative to the contributions for all participants in the plan. At June 30, 2019, the State's proportion for the School plan as Employer was 0.650152% which was an increase of 0.024389% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized OPEB expense of $3.4 million.

State's Proportionate Share of Deferred Outflows/Inflows of Resources
At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources (amount in thousands):

Component Units

State as Employer

Deferred Outflows Deferred Inflows of

of Resources

Resources

Differences between expected and actual experience $

Changes of assumptions

Net difference between projected and actual earnings on OPEB plan investments

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

State contributions subsequent to the measurement date

Total

$

-- $ 2,771
174 10,928 2,315 16,188 $

8,680 11,248
-- 3,618
-- 23,546

190

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
Component Units: State contributions as employer subsequent to the measurement date of $2.3 million are reported as deferred outflows of resources and will be recognized as a reduction of the NOL in the year ended June 30, 2021.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Component Units

State as Employer

$

(2,260)

(2,260)

(2,267)

(1,906)

(870)

(110)

State Employees' Assurance Department (SEAD-OPEB Plan)
State's Proportionate Share of Net OPEB Asset and OPEB Expense
Primary Government: At June 30, 2020, the State reported an asset of $254.0 million, for it's proportionate share of net OPEB asset. The net OPEB asset was measured as of June 30, 2019. The total OPEB asset used to calculate the net OPEB asset was based on an actuarial valuation as of June 30, 2018, with standard roll-forward techniques performed to update the total OPEB asset to June 30, 2019. The State's proportion of the net OPEB asset was based on the State's proportion of the prior year payroll of SEAD members. At June 30, 2019, the State's proportion for the SEAD plan as Employer was 89.830175%, which was an increase of 0.016775% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized OPEB expense of $(19.4) million.
Component Units: At June 30, 2020, the State reported an asset of $3.2 million, for it's proportionate share of net OPEB asset. The net OPEB asset was measured as of June 30, 2019. The total OPEB asset used to calculate the net OPEB asset was based on an actuarial valuation as of June 30, 2018, with standard roll-forward techniques performed to update the total OPEB asset to June 30, 2019. The State's proportion of the net OPEB asset was based on the State's proportion of the prior year payroll of SEAD members. At June 30, 2019, the State's proportion for the SEAD plan as Employer was 1.155560%, which was an increase of 0.036224% from its proportion measured as of June 30, 2018. For the year ended June 30, 2020, the State recognized OPEB expense of $(0.2) million.

191

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued) State's Proportionate Share of Deferred Outflows/Inflows of Resources
At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources (amount in thousands):

Differences between expected and actual experience

Primary Government

State as Employer

Deferred Outflows of Resources

Deferred Inflows of Resources

Component Units

State as Employer

Deferred Outflows of Resources

Deferred Inflows of Resources

$

1,288 $

-- $

16 $

--

Changes of assumptions

5,132

--

66

--

Net difference between projected and actual earnings on OPEB plan investments

--

23,366

--

297

Changes in proportion and differences

between State contributions and

proportionate share of contributions

3,780

3,916

101

85

State contributions subsequent to the measurement date

--

--

--

--

Total

$ 10,200 $ 27,282 $

183 $

382

There were no State contributions as employer subsequent to the measurement date.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Primary Government

Component Units

State as Employer

State as Employer

$

(4,928) $

(25)

(11,076)

(160)

(2,213)

(28)

1,135

14

--

--

--

--

192

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
H. Actuarial Methods and Assumptions (GASB 75)
The total OPEB liability for each plan was determined by an actuarial valuation date indicated in the table below using the following actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date:

Actuarial Assumptions

State OPEB Fund

School OPEB Fund

SEAD-OPEB Plan

Valuation date Inflation Salary increases Long-term expected rate of return 1 Initial Healthcare Cost Trend
Pre-Medicare Eligible Medicare Eligible Ultimate Trend Rate Pre-Medicare Eligible Medicare Eligible Year Ultimate Trend is Reached Pre-Medicare Eligible Medicare Eligible Mortality
Actuarial Experience Study

6/30/2018 2.75%
3.25% - 7.00%*
7.30%

6/30/2018 2.50%
3.00% - 8.75%*
7.30%

6/30/2018 2.75%
3.25% - 7.00%*
7.30%

7.25% 5.38%
4.75% 4.75%

7.25%

N/A

5.38%

N/A

4.75%

N/A

4.75%

N/A

2028 2022

2028

N/A

2022

N/A

The RP-2000 Combined Mortality Table projected to 2025 with projection scale BB (set forward two years for both males and females) is used for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set back seven years for males and set forward three years for females) is used for the period after disability retirement.

For Teachers Retirement System (TRS) members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward one year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement. For Public School Employees Retirement System (PSERS) members: The RP-2000 BlueCollar Mortality Table projected to 2025 with projection scale BB (set forward three years for males and two years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality projected to 2025 with projection scale BB (set forward five years for both males and females) is used for the period after disability retirement.

The RP-2000 Combined Mortality Table projected to 2025 with the Society of Actuaries' projection scale BB (set forward two years for both males and females) is used for the period after service retirement and for dependent beneficiaries. There is a margin for future mortality improvement in the tables used by the plan.

7/1/2009 - 6/30/2014

7/1/2009 - 6/30/2014

7/1/2009 - 6/30/2014

1 Long-term expected rate of return is net of investment expense, including inflation *Includes respective inflation assumption.

193

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
The actuarial assumptions used in the valuations are based on the results of the most recent actuarial experience studies, which covered the last five year period ending June 30, 2014, with the exception of the School Plan's annual rate of inflation. It was decreased effective with the June 30,2018 valuation. The remaining actuarial assumptions (e.g. initial per capita costs, health care cost trends, rates of plan participation, rates of plan election, etc.) used in the June 30, 2018 valuation for the State and School OPEB funds were based on a review of the recent plan experience done concurrently with the June 30, 2018 valuation.
The actuarial assumptions used in the valuation for the SEAD-OPEB Plan were based on the results of an actuarial experience study, which covered the five year period ending June 30, 2014, with the exception of the long-term expected rate of return. The long-term expected rate of return was decreased as reported in the June 30, 2017 and June 30, 2018 actuarial valuations, based on a funding policy change.
Long-Term Expected Rate of Return
For all plans, the long-term expected rate of return on OPEB plan investments were determined using a log-normal distribution analysis, in which 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.
The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the table below:

Asset Class Fixed Income Domestic large equities Domestic small equities International developed market equities International emerging market equities Alternatives Total

State-OPEB Fund

Target allocation

Long-term expected real
rate of return*

30.0 %

(0.1%)

46.2 %

8.9 %

1.3 %

13.2 %

Target Allocation School-OPEB Fund

Target allocation

Long-term expected real rate of return*

30.0 %

(0.1%)

46.2 %

8.9 %

1.3 %

13.2 %

SEAD-OPEB Plan

Target allocation

Long-term expected real rate of return*

30.0 %

(0.1%)

46.2 %

8.9 %

1.3 %

13.2 %

12.4 %

8.9 %

12.4 %

8.9 %

12.4 %

8.9 %

5.1 % 5.0 % 100.0 %

10.9 % 12.0 %

5.1 % 5.0 % 100.0 %

10.9 % 12.0 %

5.1 % 5.0 % 100.0 %

10.9 % 12.0 %

* Rates shown are net of the respective assumed rates of inflation.

194

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued) Discount Rate In order to measure the total OPEB liability for the State OPEB, a discount rate of 7.30% was used, as compared with last year's single equivalent rate of 5.22%. Based on those assumptions, the fiduciary net position was projected was projected to be available to make all projected future benefit payment of current plan members. Therefore, the long-term expected rate of return on investments was applied to all periods of projected benefit payments to determine the total OPEB liability. Projected future benefit payments for all current plan members were projected through 2120. In order to measure the total OPEB liability for the School OPEB, a single equivalent interest of 3.58% was used as the discount rate, as compared with the prior measurement period date rate of 3.87%. This is comprised mainly of the yield or index rate for 20 year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.50% per the Municipal Bond Index Rate). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in head count. Projected future benefit payments for all current plan members were projected through 2119. The discount rate used to measure the total OPEB liability for the SEAD-OPEB plan was 7.30%, the same as last year's rate. The projection of cash flow used to determine the discount rate assumed that plan member insurance premiums will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the 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 investments was applied to all periods of projected benefit payments to determine the total OPEB liability.
195

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 16 - POSTEMPLOYMENT BENEFITS - MULTI-EMPLOYER PLANS (continued)
Sensitivity of the State's proportionate share of the NOL/(NOA) to changes in the discount rate
The following schedule is presented from the perspective of the State as the employer details the State's proportionate share of the NOL/(NOA) calculated using the discount rate detailed below, as well as what the State's proportionate share of the NOL/(NOA) would be if it were calculated using a discount rate that is 1-percentagepoint lower or 1-percentage-point higher than the current rate (amount in thousands):

State's Net OPEB Liability School's Net OPEB Liability SEAD Plan's Net OPEB (Asset)

Sensitivity of the Plan Participating Employers' Contributing Entities Net OPEB Liability/(Asset) to Changes in the Discount Rate

Primary Government

Component Units

1% Decrease Current Rate 1% Increase

1% Decrease Current Rate 1% Increase

(6.30%)

(7.30%)

(8.30%)

(6.30%)

(7.30%)

(8.30%)

$ 1,420,431 $ 1,152,855 $ 915,207 $ 3,029 $

2,253 $ 1,952

(2.58%)

(3.58%)

(4.58%)

(2.58%)

(3.58%)

(4.58%)

$

-- $

-- $

-- $ 92,740 $ 79,788 $ 69,252

(6.30%)

(7.30%)

(8.30%)

(6.30%)

(7.30%)

(8.30%)

$ (140,558) $ (253,962) $ (347,239) $ (1,808) $ (3,237) $ (4,467)

Sensitivity of the State's proportionate share of the NOL/(NOA) to changes in the Healthcare Cost Trends
The following schedule is presented from the perspective of the State as the employer details the State's proportionate share of the NOL/(NOA) calculated using the discount rate detailed below, as well as what the State's proportionate share of the NOL/(NOA) would be if it were calculated using a discount rate that is 1-percentagepoint lower or 1-percentage-point higher than the current rate (amount in thousands):

State's Net OPEB Liability School's Net OPEB Liability SEAD Plan's Net OPEB (Asset)

Sensitivity of the Plan Participating Employers' Contributing Entities Net OPEB Liability/(Asset) to Changes in the Healthcare Cost Trends

Primary Government

Component Units

1%

1%

Decrease Current Rate 1% Increase Decrease Current Rate 1% Increase

$ 881,679 $ 1,152,855 $ 1,462,656 $ 1,880 $

2,253 $ 3,119

$

-- $

-- $

-- $ 67,213 $ 79,788 $ 95,759

N/A

N/A

N/A

N/A

N/A

N/A

196

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS
The State administers the following single-employer other postemployment benefit (OPEB) plan:
Administered by the Board of Regents of the University System of Georgia (Board of Regents): Board of Regents Retiree Health Benefit Fund (Regents Plan)
The State is the plan sponsor of this plan and the participating employer (Employer). The notes to the financial statements and required supplementary information that follow are presented from the perspective of the State as the plan sponsor and the State as Employer. A separate financial report that includes the applicable financial statements and required supplementary information for the plan administered by the Board of Regents is also publicly available and may be obtained from their website (www.usg.edu).

A. Basis of Accounting
The financial statements of this plan are prepared using the economic resources measurement focus and accrual basis of accounting. Contributions from the employer are recognized in the period in which they are due. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. The OPEB plan's fiduciary net position has been determined on the same basis as reported by the plan.

B. Investments
Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.
For the fiscal year ended June 30, 2020, the annual money-weighted rate of return on OPEB plan investments, net of OPEB plan investment expense, for the Regents Plan was 5.27%.
The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. The Regents Plan has an investment policy regarding the allocation of invested assets. The assets are invested in the Board of Regents' Balanced Income pooled investment fund, which is not subject to state regulations concerning investments. Plan assets are managed on a total return basis with a short-term objective of achieving the highest quality per stable and a long-term objective of a more conservative investment strategy.
The following table summarizes the adopted asset allocation policy by plan at June 30, 2020:

Asset Class

Target Allocation

Fixed Income Equities Total

70.0 % 30.0 % 100.0 %

197

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) C. Plan Description and Funding Policy
Regents Plan Plan Description: The Regents Plan is a single-employer, defined benefit, postemployment healthcare plan administered by the University System Office, an organizational unit of the University System of Georgia (USG). The Regents Plan was authorized pursuant to OCGA 47-21-21 for the purpose of accumulating funds necessary to meet employer costs of retiree postemployment health insurance benefits. The Plan is administered by the Board of Regents that is comprised of 19 members, all appointed by the Governor (five from state-at-large and one from each of the State's 14 congressional districts). Benefit provisions of the plans were established and can be amended by the Board of Regents.
Benefits Provided: Pursuant to the general powers conferred by 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 2020, the following self-insured health care options were available: Blue Choice HMO plan, Consumer Choice HSA plan (Blue Cross and Blue Shield of Georgia), and the Comprehensive Care plan (Blue Cross and Blue Shield of Georgia). The USG also offers a self-insured 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.
Contributions: The contribution requirements of plan members and the employer are established and may be amended by the Board of Regents. The Regents 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 of Regents designation. Organizational units of the USG pay 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 of Regents for the upcoming plan year. For the 2020 plan year, the employer rate was approximately 84% of the total health insurance cost for eligible retirees, and the retiree rate was approximately 16%. For employees hired on or after January 1, 2013 and retirees after January 1, 2018, the amount the USG contributes is tied to year of service, which ranges from 0% to 100%. 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 ended June 30, 2020, the USG contributed approximately $102.8 million to the plan for current premiums or claims.
198

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) D. Plan Membership and Participating Employers
The following table summarizes the participating membership and participating employers, for the Regents Plan at June 30, 2020:

Plan Membership
Inactive plan members or beneficiaries currently receiving benefits
Inactive plan members entitled to but not yet receiving benefits Active plan members Total

June 30, 2020 June 30, 2019

20,427

19,826

-- 48,739 69,166

-- 48,661 68,487

Open to New Members (Yes/No) Number of Employers

Yes

Yes

1

1

This count treats each legal entity in the State reporting entity as one employer.

E. Net OPEB Liability of Participating Employers
Net OPEB Liability
For defined benefit OPEB plans that are administered through trusts that meet the specified criteria, GASB 74 requires the net OPEB liability to be measured as the total OPEB liability, less the amount of the OPEB plan's fiduciary net position. The total OPEB liability is actuarially determined. The following schedule is presented from the perspective of the State as the sponsor of the Regents Plan and summarizes the components of the Net OPEB Liability (NOL) of the employer, as of June 30, 2020 (amount in thousands):

Components of the Net OPEB Liability Total OPEB Liability Plan Fiduciary Net Position Net OPEB liability

$

5,493,697

159,978

$

5,333,719

Plan fiduciary net position as a percentage of the total OPEB liability

2.91 %

199

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) F. Actuarial Methods and Assumptions The "Further Consolidated Appropriations Act, 2020" signed into law on December 20, 2019 included a permanent repeal of the excise tax on high-cost plans originally imposed by the Affordable Care Act in 2010. The impact of this change was included as a change in assumption which decreased the net OPEB liability by about $173.5 million. Projections of benefits for financial reporting purposes for this Plan is based on the substantive plan (the plan as understood by the employer and plan members) and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. Actuarial Valuation Date The total OPEB liability at June 30, 2020, is based upon May 1, 2020 actuarial valuation for the Regents Plan, using generally accepted actuarial procedures/techniques. Update procedures were used to roll forward the total OPEB liability to June 30, 2020.
200

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) Actuarial Assumptions
The total OPEB liability for the Regents Plan was determined by an actuarial valuation date indicated in the table below using the following actuarial assumptions, applied to all periods included in the measurement and rolled forward to the measurement date:

Valuation date

5/1/2020

Inflation

2.10%

Salary increases Long-term expected rate of return 1

4.00% 3.75%

Initial Healthcare Cost Trend Pre-Medicare Eligible Medicare Eligible

6.70% 4.50%

Ultimate Trend Rate Pre-Medicare Eligible Medicare Eligible
Year Ultimate Trend is Reached Pre-Medicare Eligible Medicare Eligible

4.50% 4.50%
2031 2020

Mortality

Healthy: Pub-2010 for Teachers (as appropriate) headcount weighted projected with scale MP-2019.

Actuarial experience study

Economic and demographic assumptions

7/1/2017 - 6/30/2019

All other assumptions

7/1/2009 - 6/30/2014

1 Long-term expected rate of return is net of investment expense, including inflation

The 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 actuarial assumptions used in the valuation are based on the results of the most recent actuarial experience studies, which covered the five-year period ending June 30, 2014.
Long-Term Expected Rate of Return
For the Regents Plan, the long-term expected rate of return on OPEB plan investments were determined using a building-block method in which 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.

201

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued)
The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the table below:

Asset Class

Target allocation

Long-term expected real rate of return*

Fixed Income Equity Allocation Total

70.0 % 30.0 % 100.0 %

* Rates shown are net of the 2.10% assumed rate inflation.

__ 4.51 %

Discount Rate
In order to measure the total OPEB liability for the Regents Plan, as of June 30, 2020, a yield or index rate of 2.21% was used as the discount rate, as compared with last year's rate of 3.50%. This is comprised mainly of the yield or index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA or higher (2.21% per the Bond Buyers Index). Assumed contributions are based on the contribution policy, and projected total contributions are the pay as you go costs of the plan. The current contribution policy is not designed to pre-fund the plan, and the unfunded liability is not expected to be paid off at any point in the future. Projected future benefit payments for all current plan members were projected through 2117.
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following schedule summarizes the NOL, as of June 30, 2020, of the employer. The NOL is calculated using the determined discount rate as well as what the NOL would be if it were calculated using a discount rate that is 1percentage-point lower or 1-percentage-point higher than the current rate by the Regents Plan (amount in thousands):

Sensitivity of the Plan Participating Employer Contributing Entities Net OPEB Liability to Changes in the Discount Rate

Regents OPEB Liability

1% Decrease Current Rate

1.21%

2.21%

$ 6,502,284 $ 5,333,719

1% Increase

3.21%

$

4,398,498

202

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trends
The following schedule summarizes the NOL of the employer, as of June 30, 2020. The NOL is calculated using the determined healthcare cost trends as well as what the NOL would be if it were calculated using healthcare cost trends that are 1-percentage-point lower or 1-percentage-point higher than the current rate by the Regents Plan (amount in thousands):
Sensitivity of the Plan Participating Employer Contributing Entities Net OPEB Liability to Changes in Healthcare Cost Trends

Regents OPEB Liability

1% Decrease

Current Rate

1% Increase

$

4,422,484 $

5,333,719 $

6,489,162

203

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) The following information is from the perspective of the State as the employer.
G. State's Proportionate Share of OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
The State reported a liability as the Employer for its proportionate share of the NOL associated with the plans listed below.
The following schedule is presented from the perspective of the State as the Employer details the proportional share of the OPEB amounts for each plan as of June 30, 2020 is as follows (amount in thousands):

Aggregate OPEB Amounts - All Plans

Primary Government

Component Units

OPEB liabilities

$ 4,471,568 $

62,191

Deferred outflows of resources related to OPEBs

$

350,802 $

14,699

Deferred inflows of resources related to OPEBs

$

529,022 $

7,244

OPEB expense/expenditures

$

315,573 $

8,737

204

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) The information below includes all significant plans and funds administered by the State of Georgia.

The NOL for the Regents Plan was measured as of June 30, 2019. The total OPEB liability used to calculate the NOL was based on an actuarial valuation as of May 1, 2019.

Regents Plan

State's Proportionate Share of Net OPEB Liability and OPEB Expense

Primary Government: At June 30, 2020, the State reported a net OPEB liability of $4.5 billion, for the Regents Plan. The net OPEB liability was measured as of June 30, 2019. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of May 1, 2019, with standard roll-forward techniques performed to update the total OPEB liability to June 30, 2019. The net OPEB liability was based on contributions during the fiscal year ended June 30, 2019. For the year ended June 30, 2020, the State recognized OPEB expense of $315.6 million.

State's Proportionate Share of Deferred Outflows/Inflows of Resources

At June 30, 2020, the State reported deferred outflows of resources and deferred inflows of resources related to the Regents Plan from the following sources (amount in thousands):

Differences between expected and actual experience
Changes of assumptions
Net difference between projected and actual earnings on OPEB plan investments
State contributions subsequent to the measurement date
Total

Primary Government

State as Employer

Deferred Outflows Deferred Inflows of

of Resources

Resources

$

248,010 $

25,518

--

502,329

--

1,175

102,792

--

$

350,802 $

529,022

Primary Government: State contributions as Employer subsequent to the measurement date of $102.8 million are reported as deferred outflows of resources and will be recognized as a reduction of the NOL in the year ended June 30, 2021.

205

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued)
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows (amount in thousands):

Year ended June 30: 2021 2022 2023 2024 2025
Thereafter

Primary Government

State as Employer

$

(66,788)

(66,788)

(64,937)

(29,344)

(27,610)

(25,545)

Changes in the Net OPEB Liability
For single-employer, defined benefit OPEB plans that are administered through trusts that meet the specified criteria, GASB 75 requires a schedule of the changes in the net OPEB liability, for the current reporting period. The following schedule is presented from the perspective of the State as the Employer of the Regents Plan and summarizes the changes the Net OPEB Liability (NOL) of the employer (amount in thousands):

Total OPEB liability:

Service cost

$

Interest

Benefit changes

Differences between expected and actual experience

Changes of assumptions

Benefit payments/refunds

Net change in total OPEB liability

Total OPEB liability-beginning

Total OPEB liability-ending (a)

Plan fiduciary net position:

Contributions-employer

Net investment income

Benefit payments/refunds

Administrative expense

Net change in plan fiduciary net position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

Net OPEB liability-ending (a)-(b)

$

217,648 180,173 (11,211) (29,667) (129,153) (98,563) 129,227 4,486,796 4,616,023
160,383 7,126
(98,563) (536)
68,410 76,045 144,455 4,471,568

206

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) H. Actuarial Methods and Assumptions (GASB 75) The impact of the Affordable Care Act (ACA) was addressed in the valuations for the Regents Plan. While the impact of certain provisions [such as the excise tax on high-value health insurance plans beginning in 2020 (if applicable), mandated benefits and participation changes due to the individual mandate] should be recognized in the determination of liabilities, overall future plan costs and the resulting liabilities are driven by amounts employers and retirees can afford (i.e., trend). The trend assumption forecasts the anticipated increase to initial per capita costs, taking into account health care cost inflation, increases in benefit utilization, plan changes, government-mandated benefits, and technological advances. Given the uncertainty regarding the ACA's implementation (e.g., the impact of excise tax on high-value health insurance plans, changes in participation resulting from the implementation of state based health insurance exchanges), continued monitoring of the ACA's impact on the Plan's liability will be required. Projections of benefits for financial reporting purposes for this Plan is based on the substantive plan (the plan as understood by the employer and plan members) and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. Actuarial Valuation Date The total OPEB liability at June 30, 2019, is based upon the actuarial valuation for May 1, 2019 for the Regents Plan, using generally accepted actuarial procedures/techniques. Update procedures were used to roll forward the total OPEB liability to June 30, 2019.
207

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) Actuarial Assumptions

The total OPEB liability for the Regents Plan was determined by an actuarial valuation date indicated in the table below using the following actuarial assumptions:

Valuation date
Inflation
Salary increases Long-term expected rate of return 1
Initial Healthcare Cost Trend Pre-Medicare Eligible Medicare Eligible
Ultimate Trend Rate Pre-Medicare Eligible Medicare Eligible
Year Ultimate Trend is Reached Pre-Medicare Eligible Medicare Eligible
Mortality

5/1/2019 2.50% 4.00% 4.50%
6.90% 4.50%
4.50% 4.50%
2031 2020 Healthy: Pub-2010 for Teachers (as appropriate) headcount weighted project with scale MP-2018

Disabled: Pub-2010 Disabled Mortality for Teachers (as appropriate) headcount weighted project with scale MP-2018.

Actuarial experience study

Economic and demographic assumptions

7/1/2017 - 6/30/2019

All other assumptions

7/1/2009 - 6/30/2014

1 Long-term expected rate of return is net of investment expense, including inflation

The 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 Teacher's Retirement System of Georgia, which covered the five year period ending June 30, 2014.
Long-Term Expected Rate of Return
For the Regents Plan, the long-term expected rate of return on OPEB plan investments was determined using a building-block method, in which 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.

208

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the table below:

Asset Class Fixed Income Equity Allocation Total

Target allocation 70% 30%
100.0 %

Long-term expected real expected rate of
return*
1.09 %
4.46 %

* Rates shown are net of the 2.50% assumed rate of inflation.

Discount Rate
In order to measure the total OPEB liability for the Regents Plan, as of June 30, 2019, a yield or index rate of 3.5% was used as the discount rate, as compared with the prior measurement period date rate of 3.87%. This is comprised mainly of the yield or index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.5% per the Bond Buyers Index). Assumed contributions are based on the contribution policy, and projected total contributions are the pay as you go costs of the plan. The current contribution policy is not designed to pre-fund the plan, and the unfunded liability is not expected to be paid off at any point in the future. Projected future benefit payments for all current plan members were projected through 2118.
Sensitivity of the State's proportionate share of the NOL to changes in the Discount Rate

The following schedule is presented from the perspective of the State as the Employer and details the State's proportionate share of the NOL, as of June 30, 2019. The NOL was calculated using the discount rate detailed below, as well as what the State's proportionate share of the NOL would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate (amount in thousands):

Sensitivity of the Employer Net OPEB Liability to Changes in the Discount Rate

1% Decrease

Current Rate

1% Increase

(2.50%)

(3.50%)

(4.50%)

Regents Net OPEB Liability

$

5,293,080 $

4,471,568 $

3,786,697

209

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 17 - POSTEMPLOYMENT BENEFITS - SINGLE-EMPLOYER PLANS (continued) Sensitivity of the State's proportionate share of the NOL to changes in Healthcare Cost Trends

The following schedule is presented from the perspective of the State as the Employer and details the State's proportionate share of the NOL, as of June 30, 2019. The NOL was calculated using the healthcare cost trends detailed below, as well as what the State's proportionate share of the NOL would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current rate (amount in thousands):

Sensitivity of the Employer Net OPEB Liability to Changes in the Health Care Cost Trends

1% Decrease

Current Rate

1% Increase

Regents Net OPEB Liability $

3,749,464 $

4,471,568 $

5,376,308

210

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 18 - RISK MANAGEMENT A. Public Entity Risk Pool The Department of Community Health (DCH) administers the State Health Benefit Plan (SHBP) for the State. Under OCGA 45-18-2, the DCH Board has the authority to establish a health insurance plan; provide rules and regulations; and general provisions of the plan. The plan is comprised of three health insurance plans: (1) a plan primarily for State employees OCGA 45-18-2, (2) a plan for teachers OCGA 20-2-881, and (3) a plan for noncertificated public school employees OCGA 20-2-911. The SHBP acts as the plan administrator for approximately 450 organizations (state, county and local educational agencies) and provides health coverage to more than 0.6 million employees, teachers, retirees and their dependents. All employees become members of the plan unless coverage is rejected or waived. An employee may withdraw from the plan if they become eligible for coverage under the aged program of the Social Security Administration OCGA 45-18-17. SHBP accepts all of the risk of insuring its employees.
SHBP is accounted for on the accrual basis. Claim liabilities are based on estimates for claims that have been incurred, but not reported. Liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Estimates of liabilities for incurred, (both reported and unreported) but unpaid are actuarially determined based on estimates of the ultimate cost of settling claims, using past experience adjusted for current trends and any other factors that would modify past experience. Because actual claim liabilities depend on such factors as inflation, changes in legal doctrines and damage awards, the process used in computing claim liabilities may not result in an exact amount. Claim liabilities are evaluated periodically to take into consideration recently settled claims, the frequency of claims and other economic and social factors.
SHBP's general objectives as required under Georgia Compensation Rules & Regulations OCGA 111-4-1 are to collect enrollment information from covered employer groups, collect health premiums and employer contributions, and provide management and planning of health benefits.
DCH utilizes third party administrators to process Medicaid, PeachCare, and State employee health benefit claims. Agreements between individual administrators and DCH are for the processing of specific claim types. If an administrator was unable to continue processing claims for DCH under such an agreement, the DCH's ability to adjudicate such claims in the short-term could be threatened. The following table provides information about the changes in the reported claims liabilities for the past two years (amount in thousands):
(Table on next page)
211

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 18 - RISK MANAGEMENT (continued)

Unpaid Claims and Claim Adjustments July 1
Incurred claims and claim adjustment expenses: Provision for insured events of the current fiscal year Decrease in provision for insured events of the prior fiscal year Total incurred claims and claim adjustment expenses
Payments: Claims and claim adjustment attributable
to insured events of the current year Claims and claim adjustment attributable
to insured events of the prior year Total Payments
Total Unpaid Claims and Claim Adjustments June 30

Public Entity Risk Pool

Fiscal

Fiscal

Year Ended

Year Ended

6/30/2020

6/30/2019

$

195,355 $

200,292

2,699,185 (84,444)
2,614,741

2,542,632 (47,115)
2,495,517

(2,472,442)

(2,348,115)

(106,756) (2,579,198)

(152,339) (2,500,454)

$

230,898 $

195,355

B. Board of Regents Employee Health Benefits Plan
The University System of Georgia (USG) maintains a program of health benefits for its employees and retirees. This plan is funded jointly through premiums paid by participants covered under the plan and employer contributions paid by the Board of Regents (BOR) and its organizational units. A selfinsured program of professional liability for its employees was established by the BOR of the USG under powers authorized by the OCGA 45-9-1. All units of the USG share the risk of loss for claims of the plan.
The following table represents changes in the balances of claims liabilities for the past two years (amount in thousands):

Unpaid Claims and Claim Adjustments July 1

Board of Regents Employee

Health Benefits Plan

Fiscal Year Ended

Fiscal Year Ended

6/30/2020

6/30/2019

$

45,014 $

33,467

Current Year Claims and Changes in Estimates
Claims Payments Unpaid Claims and Claim Adjustments June 30

423,784

434,268

(421,904)

(422,721)

$

46,894 $

45,014

212

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 18 - RISK MANAGEMENT (continued)

C. Other Risk Management

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' and teachers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks.

The BOR 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.
Charges by the workers' compensation risk management fund and the liability insurance risk management fund to other funds have failed to recover the full cost of claims over a reasonable period of time. Therefore, the unadjusted deficit at June 30, 2020, of $987.4 million both for workers' compensation and liability was charged back to the contributing funds. Expenditures of $641.8 million are reported in the General Fund, and expenses of $256.7 million are reported in the Higher Education Fund (enterprise fund) relating to this charge-back.

The following table represents changes in the balances of claims liabilities for the past two years (amount in thousands):

Unpaid Claims and Claim Adjustments July 1

Risk Management Fund

Fiscal Year Ended

Fiscal Year Ended

6/30/2020

6/30/2019

$

916,988 $

827,166

Current Year Claims and Changes in Estimates Claims Payments Unpaid Claims and Claim Adjustments June 30 $

272,097 (149,298) 1,039,787 $

250,585 (160,763) 916,988

213

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 19 - TAX ABATEMENT As of June 30, 2020, the State had three tax abatement programs, the Mega Project Tax Credit, the Tourism Development Act, and Projects that were designated as a Competitive Project of Regional Significance. However, given the limited number of recipients under each of these programs, the State is legally prohibited from disclosing detailed information relating to the tax abatement programs and amounts abated.
A. Tax Abatement Programs
Mega Project Tax Credit
The Mega Project Tax Credit provides tax abatements to encourage job creation under Official Code of Georgia OCGA 48-7-40.24. This abatement is obtained through application by the business enterprise and certification by a panel composed of the commissioner of Community Affairs, the commissioner of Economic Development, and the director of the Office of Planning and Budget. In order to receive the tax abatements projects must create a certain level of new full-time employee jobs with average wages above a percentage of average wage projects within the county, and meet other requirements. The tax abatement equals $5,250 per new eligible full-time employee job for five years beginning with the year in which such job is created through year five after such creation; provided, however, that where the amount of such credit exceeds a business enterprise's liability for such taxes in a taxable year, the excess may be taken as a credit against such business enterprise's quarterly or monthly tax payment. Additionally, there are various recapture provisions such as forfeiting the right to the claim or a percentage of the credit, with allowances for relief from recapture based on certain major events.
Tourism Development Act
The Tourism Development Act provides tax abatements to encourage the creation of tourism attractions or expansion of existing tourism attractions under OCGA 48-8-270. This abatement is obtained through the discretion of the commissioner of Economic Development and the commissioner of Community Affairs, in consideration of the execution of the agreement and subject to the approved company's compliance with the terms of the agreement. The term of the agreement granting the tax abatement (sales and use tax refund for new projects or an incremental sales and use tax refund for expansions of existing tourism attractions) is ten years, commencing on the date the tourism attraction opens for business and begins to collect sales and use taxes or for an expansion, the date construction is complete. Additionally, there are various recapture provisions if an approved company fails to abide by the terms of the agreement, such as voiding of the agreement and all sales and use tax proceeds that were refunded shall become immediately due and payable back to the State.
Competitive Project of Regional Significance
The Competitive Project of Regional Significance designation provides tax abatements to a business enterprise whose location or expansion of some or all of the operations in this state would have a significant regional impact under OCGA 48-8-3(93)(D). This abatement is obtained in accordance with the regulations promulgated by the commissioner of Economic Development. The tax abatement indicates that sales and use taxes levied by or imposed by the State shall not apply to sales of personal property used for and in the construction of these designated projects.
B. Legal Prohibition
The State is legally prohibited from providing more detailed information relating to the tax abatement programs and amounts abated. The restrictions relating to reporting of confidential income tax information and other tax types are generally covered under OCGA 48-7-60 and 48-2-15, respectively.
214

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 20 - LITIGATION, CONTINGENCIES, AND COMMITMENTS
A. Grants and Contracts
The amounts received or receivable from grantor agencies are subject to audit and review by grantor agencies, including Cares Act funds related to COVID-19 pandemic, principally the federal government. This could result in a request for reimbursement by the grantor agency for any expenditures which are disallowed under grant terms.
B. Litigation and Contingencies
The State is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine governmental operations. The ultimate disposition of these proceedings is not presently determinable. However, it is not believed that the ultimate disposition of these proceedings would have a material adverse effect on the financial condition of the State. The following are significant active litigation, claims and assessments involving the State:
Primary Government
David M Curry, Commissioner, Georgia Department of Revenue v. T-.Mobile South, LLC,-Fulton County Superior Court, September 8, 2020 on appeal from GA. Tax Tribunal (consolidated). TMobile South seeks refunds of sales and use taxes allegedly paid on purchases of certain tangible personal property for tax periods May 30, 2012 through December 31, 2016, which T-Mobile South asserts to be subject to computer equipment related sales and use tax exemptions pursuant to OCGA 48-8-3(68). The total of the sales and use tax refunds claimed by T-Mobile South for such periods is approximately $11.5 million. The Department of Revenue ("DOR") ruled that the cell phone towers and the wireless network equipment purchased by T-Mobile South are "voice data transport technology", which is specifically excluded from the exemption, and therefore do not qualify for the sales tax exemption. T-Mobile South appealed these decisions with the Georgia Tax Tribunal. Following a trial on all issues, on August 6, 2020, the Georgia Tax Tribunal ruled in favor of TMobile South and found that the equipment qualified as computer equipment under OCGA 48-8-3(68) and, therefore, qualified for the sales tax exemption. The Georgia Tax Tribunal reversed DOR's denial of T-Mobile South's refund claims and granted all of T-Mobile South refund claims for a total amount of $11.4 million. DOR filed a petition for judicial review in Fulton County Superior on September 8, 2020. The parties have filed briefs and a hearing is scheduled on May 12, 2021. At this stage of litigation, it is impracticable to render an opinion about whether the likelihood of an unfavorable outcome is either "probable" or "remote"; however the State believes it has meritorious defenses and is vigorously defending this action.
CSX Transportation v. David M. Curry, Commissioner, Georgia Department of Revenue, - CSX has filed multiple appeals of constructive denials of refunds for sales and use tax imposed on diesel fuel starting in 2013. DOR did not act on the refund claims due to the pendency of litigation on a comparable issue in the U.S. Supreme Court against the state of Alabama. The issue is whether the sales and use tax imposed on diesel fuel purchased by rail carriers violates Section 306 of the Railroad Revitalization and Regulatory Reform Act of 1976 (the "4-R Act"), prohibiting discriminatory treatment of rail carriers. CSX contends that the application of a four percent (4%) sales tax rate to its purchase of diesel fuel violates Section 306 of the 4-R Act because motor carriers are subject to state and local taxes but are exempt from the first three percent (3%) of the
215

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 20 - LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued)
four percent (4%) sales tax rate under OCGA 48-8-31, and because interstate water carriers are exempt from sales and use tax under OCGA 48-8-3(17). The total of the sales and use tax refunds claimed by CSX for tax periods October 2010 through June 2015 is approximately $37.5 million.
The Georgia Tax Tribunal cases have been stayed pending the outcome of pending litigation in Alabama in CSX Trans.. Inc. v. Alabama Department of Revenue. The Eleventh Circuit ruled that Alabama's sales and use tax did not discriminate against railroads when compared to motor carriers but did discriminate against railroads when compared to water carriers. Alabama's petition for certiorari to the U.S. Supreme Court was filed on October 8, 2018. CSX also filed a conditional petition for certiorari. The U.S. Supreme Court denied the petitions for certiorari on June 24, 2019. Therefore, the Eleventh Circuit's decision was affirmed and the case was remanded to the District Court to conclude proceedings. We are awaiting a final ruling from the District Court in Alabama. At this stage of litigation, it is impracticable to render an opinion about whether the likelihood of an unfavorable outcome is either "probable" or "remote"; however, the State believes it has meritorious defenses and is vigorously defending this action.
Following an onsite review in 2014 of Georgia's nursing facility funding arrangements by the United States Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS), CMS issued a report in November 2015 to the Department of Community Health (DCH) concluding that certain funding arrangements for the payment of the State's share of upper payment limit payments to certain nursing homes owned by development authorities within the State were in violation of federal law and the State's Medicaid Plan. The report included a demand for the return of such upper payment limit payments for fiscal year 2010 and fiscal year 2011 in an aggregate amount of approximately $76.0 million and the return of any upper payment limit payments made to such nursing homes in subsequent fiscal years, which DCH estimates to be in an aggregate amount of approximately $94.0 million for both fiscal year 2012 and fiscal year 2013. DCH has taken no action to return the funds and appealed the demand. This matter is before the United States Department of Health and Human Services Departmental Board of Appeals for resolution. It is impracticable to predict the outcome of this matter, but DCH expects to vigorously assert its position contesting any unsubstantiated notice of disallowance issued by CMS.
Additionally, CMS informed DCH that as of October 17, 2016, negative Payment Management System (PMS) balances accruing between federal fiscal year 2005 through federal fiscal year 2013 totaling approximately $50 million should be returned by DCH to CMS. According to an executive summary in an HHS-OIG report issued in March 2016, prior to federal fiscal year 2010, States had PMS grant award accounts that combined Medicaid funds from every year resulting in yearly balances that were not distinguishable. CMS used the PMS to record grant award amounts and process the States' withdrawals from the U.S. Department of Treasury. Beginning in federal fiscal year 2010, CMS began annualized grant award accounts with beginning and ending balances to improve Medicaid funding transparency. DCH shared two prepared reports with CMS comparing federal draws to reported expenditures for federal fiscal year 2005 through federal fiscal year 2013; DCH determined that while its analysis does indicate negative PMS balances exist, it has not been able to identify the root cause or options to address the balances due to the rolling grant funding process used prior to federal fiscal year 2010. In CMS's March 2016 report, it was acknowledged by CMS that it had "not issued guidance instructing States on the appropriate extent and timing of Medicaid withdrawals", and "did not publish formal guidance instructing States on how to handle the funds in annualized PMS accounts." This matter remains pending as unresolved between CMS and DCH.
The State is also involved in a number of disputes concerning the operation of U.S. Army Corps of Engineers (Corps) dams and reservoirs in the Apalachicola-Chattahoochee-Flint (ACF) River Basin and the Alabama-CoosaTallapoosa (ACT) River Basin for water supply and other purposes. Buford Dam impounds the Chattahoochee River to form Lake Lanier and is part of the ACF River Basin. Lake Lanier is the primary source of water supply to
216

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 20 - LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued) more than three million people in north Georgia, including a substantial portion of the metropolitan Atlanta region's population. The additional federal reservoirs are downstream of Lake Lanier in the ACF River Basin. The ACF River Basin is shared by Alabama, Florida, and Georgia. Lake Allatoona is in the ACT River Basin, which is shared by Alabama and Georgia. Lake Allatoona also is a major source of water supply to north Georgia. The Special Master appointed by the U.S. Supreme Court issued a Report denying Florida's request for relief and finding for Georgia on all issues that the Supreme Court identified. The U.S. Supreme Court heard oral argument on February 22, 2021. It is not possible at this time to predict the duration or outcome of these disputes.
C. Guarantees and Financial Risk
Component Units
Georgia Housing Finance Authority (GHFA) has uninsured single-family mortgage loans of approximately $50.4 million as of June 30, 2020. The loans are for home mortgages in the State of Georgia. Economic conditions in Georgia have a direct impact on foreclosures and the rate of loss on foreclosed loans. If the economy declines, one impact of these conditions could be a decline in house values and an increase in unemployment and underemployment. GHFA could incur a higher rate of foreclosure and a higher rate of loss on foreclosed loans as a result of the decline in the value of its underlying collateral on uninsured loans. If the economy declines, GHFA could also experience a dramatic increase in foreclosures. It is possible that the combination of such an increase combined with lower housing prices could result in increased losses of loan assets that could have adverse impacts on GHFA's ability to repay its outstanding bonds.
D. Other Significant Commitments
Primary Government
Contractual Commitments
The Georgia Constitution permits State organizations to enter into contractual commitments provided they have funds available (statutory basis) at the time of the execution of the contract. At June 30, 2020, the fund balances of the primary government include encumbrances of $5.3 billion. In addition to this amount, the state has obligated $371.6 million of Coronavirus Relief Funds (CRF) to local governments and $405.9 million CARES Act Elementary and Secondary School Emergency Relief Funds (ESSER) to local education authorities.
The University System of Georgia (Higher Education Fund) had significant, unearned, outstanding construction or renovation contracts executed in the amount of $33.4 million as of June 30, 2020. This amount is not reflected in the financial statements.
As of June 30, 2020, Employees' Retirement System of Georgia committed to fund certain private equity partnerships for a total capital commitment of $647.8 million.
Of this amount, $289.4 million remained unfunded and is not recorded on the Combining Statement of Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds - Defined Benefit Pension Plans.
217

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 20 - LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued) Georgia Technology Authority (GTA) has a significant commitment to AT&T totaling $440.6 million which was effective January 1, 2016 and is a five year contract with three optional years, and has a remaining balance of $162.8 million as of June 30, 2020.
On August 24, 2015, GTA entered into an agreement with Capgemini to provide service integration processes and systems, including billing, service desk, service catalog and request management, risk and security management, among other services. This agreement is a seven year contract with three optional years for a total contract amount of $300.5 million, and a remaining balance of $135.2 million as of June 30, 2020.
On December 1, 2017, GTA entered into an $90.0 million services contract with ATOS. This is a four year contract with five optional years, and has a remaining balance of $53.1 million as of June 30, 2020.
On June 1, 2018, GTA entered into an $84.1 million services contract with Xerox. This is a three year contract with three optional years, and has a remaining balance of $70.5 million.
On January 1, 2019, GTA entered into a $219.0 million services contract with Unisys. This is a three year contract with three optional years, and has a remaining balance of $175.1 million.
State Road and Tollway Authority has contractual commitments on uncompleted contracts of $465.2 million, the majority of which are for the I-285 at SR 400 Interchange Reconstruction Project and the I-85 Widening Project. In addition, $18.1 million of grants and loans were awarded to local governments and community improvements districts.
Component Units
Contractual Commitments
As of June 30, 2020, Georgia Environmental Finance Authority (GEFA) had commitments to fund projects, excluding the undisbursed portion of loans in process, totaling $62.8 million.
As of June 30, 2020, Georgia Ports Authority (GPA) had commitments for construction projects of approximately $118.4 million.
During the fiscal year ended June 30, 2013, the GPA entered into a compromise and settlement agreement with the U.S. Army Corps of Engineers, the State of South Carolina and several nongovernmental environmental organizations relative to the project by the U.S. Army Corps of Engineers to deepen the Savannah River federal navigation channel. The project is commonly referred to as the Savannah Harbor Expansion Project (SHEP).
The respective SHEP agreement, approved by the U.S. Federal District Court for the District of South Carolina, resulted in a commitment by GPA in the amount of $35.5 million, of which GPA had paid $12.1 million through the year ended June 30, 2020, which includes the following provision to be funded by the GPA subject to satisfaction of certain conditions that at this time are based on all known and expected factors, and therefore, considered to be "probable" as defined by respective and authoritative financial
reporting standards (GASB No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements):
218

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 20 - LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued) 1) The GPA will establish a letter of credit or escrow account within six months of the commencement of inner harbor dredging in the amount of $2.0 million to serve as a contingency fund should the operation of the dissolved oxygen injection system not receive funding by the federal government. This letter of credit or escrow account will be maintained at a minimum of $2.0 million for fifty years after completion of the SHEP. 2) The GPA will contribute $3.0 million for water quality monitoring in the Lower Savannah River Basin, $3.0 million for monitoring and research of Shortnose and Atlantic Sturgeon, $15.0 million for conservation, wetlands preservation, acquisitions of easements and/or upland buffers, and creation, restoration or enhancement of wetlands to benefit the Lower Savannah River watershed. 3) The GPA will contribute $12.5 million for environmental and conservation projects in the Savannah River Basin to the Savannah River Restoration Board whose membership is prescribed in the agreement.
219

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 21 - SEGMENT INFORMATION Segments are identifiable activities reported within or as part of an enterprise fund by which some form of revenuesupported debt is outstanding. Furthermore, to qualify as a segment, an activity must meet an external requirement to separately account for a specific revenue stream and the associated expenses, gains, and losses. The State maintains two enterprise funds that qualify as a segment. Financial information for each segment is included within the nonmajor enterprise funds. The following paragraphs describe the State's segments. State Road and Tollway Authority - I-75 Northwest Corridor Express Lane Project, received loan funds from the Transportation Infrastructure Finance and Innovation Act (TIFIA). The TIFIA loan funds used to build various express lanes. State Road and Tollway Authority - I-75 South Metro Express Lane Fund, issued revenue bonds to pay the costs of certain tolling infrastructure, finance a debt service reserve, and pay the costs of issuance of the bonds.
(Table on next page)
220

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020

NOTE 21 - SEGMENT INFORMATION (continued)

Summary financial information for the State's segments for the year ended June 30, 2020 is presented below

(amount in thousands):

I-75 Northwest

I-75 South

Corridor Express Lanes Project

Metro Express Lanes Fund

Condensed Statement of Net Position

Assets

Current Assets

$

23,857 $

13,811

Noncurrent Assets

13

59

Due from Other Funds

--

876

Capital Assets

16,956

9,873

Total Assets

40,826

24,619

Deferred Outflows
Liabilities Current Liabilities Noncurrent Liabilities Due to Other Funds
Total Liabilities

58
30,415 228,615
381 259,411

165
-- 43,776 1,318 45,094

Deferred Inflows

60

173

Net Position Net Investment in Capital Assets Restricted
Unrestricted Total Net Position

Condensed Statement of Revenues, Expenses

and Changes in Net Position

Operating Revenues

Depreciation/Amortization Expense

Other Operating Expenses

Operating Income (Loss)

Nonoperating Revenues (Expenses)

Investment Income

Other Nonoperating Revenues

Interest Expense

Other Nonoperating Expenses

Capital Contributions

Net Transfers

Change in Net Position

Beginning Net Position (restated)

Ending Net Position

$

Condensed Statement of Cash Flows

Net Cash Provided By (Used In):

Operating Activities

$

Noncapital Financing Activities

Activities

Investing Activities

Net Increase (Decrease)

Beginning Cash and Cash Equivalents

Ending Cash and Cash Equivalents

$

16,956 --
(235,543) (218,587)
2,000 --
(2,675) (675)
1,529 5,423 (7,733) (117,800) 10,594
(29) (108,691) (109,896) (218,587) $
(18,614) $ 400
(109,547) 1,529
(126,232) 150,089 23,857 $

(707) 3,507 (23,282) (20,482)
2,453 (2,920) (4,413) (4,880)
256 -- (2,215) -- -- (71) (6,910) (13,572) (20,482)
(12,628) (543)
(2,600) 256
(15,515) 21,376 5,861

221

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 22 - SUBSEQUENT EVENTS A. Primary Government
Long-term Debt Issues
General Obligation Bonds Issued
In August 2020, the State sold General Obligation bonds 2020A and 2020B for $802.6 million and $329.9 million, respectively in the total amount of $1.1 billion, delivered on August 27, 2020. The bonds were sold to provide funds for various capital outlay projects of the State, for county and independent school systems through the Department of Education, to finance projects and facilities for both the Board of Regents of the University System of Georgia (BOR) and the Technical College System of Georgia, and to provide loans through Georgia Environmental Finance Authority (GEFA) to local governments and local government entities for water and sewerage facilities. The true interest cost on the 2020AB bonds was 1.5286% and the average life is 10.414 years.
Defeasance of General Obligation Bonds
Premium proceeds totaling $174.4 million from the issuance of the Series 2020A general obligation bonds were deposited into an escrow fund to defease a total of $171.7 million from ten different series of general obligation bonds with interest rates ranging from 1.00% to 5.00%.
Revenue Bonds
On December 22, 2020, the State Road and Tollway Authority (SRTA) issued $387.4 million in aggregate principal amount of its Federal Highway Grant Anticipation Revenue Bonds, Series 2020 and $96.8 million in aggregate principal amount of its Federal Highway Reimbursement Revenue Bonds, Series 2020 for the purpose of providing funds to finance a portion of the cost of planning, designing, engineering acquisition and construction of the transportation projects and to pay the costs of issuance of the Series 2020 Bonds.
Other Subsequent Events
Coronavirus Relief Fund Spend
During fiscal year 2020 the State received $3.5 billion of Coronavirus Relief Funds (CRF) as part of the federal CARES Act. Of this amount, $315.1 million was expended and an additional $397.4 million was encumbered by state agencies as of June 30, 2020. On June 29, 2020, the Governor committed $371.6 million to local governments for COVID-19 relief. The encumbrance amount and the amount for local governments have been disclosed in Note 20 - Litigation, Contingencies, and Commitments.
Subsequent to June 30, 2020, the Governor allocated $1.5 billion to repay borrowing for the Unemployment Compensation Fund, and another $78.0 million has been designated to nursing homes and long-term care facilities for COVID-19 testing. The remaining balance of $837.9 million has not yet been obligated as of the date of this report.
Subsequent to June 30, 2020, the state borrowed $1.1 billion from the federal government to fund the Unemployment Compensation Fund, which was paid off in full by the issuance date of this report.
222

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 22 - SUBSEQUENT EVENTS (continued)
University System of Georgia
In April 2019, the Board of Regents of the University System of Georgia (BOR) entered into a rental agreement with Georgia Tech Facilities, Inc., a component unit, for the Campus Center at the Georgia Institute of Technology. The Campus Center is a student center complex comprised of a student center, pavilion, exhibition hall, and caf. The existing Fred B. Wenn Student Center will undergo related improvements as part of the Campus Center project. This collection of buildings will be a central point of resources, gathering, entertainment and restoration for the Georgia Tech Community. The lease term is for thirty-one years. Total estimated rental payments will be $204.0 million over the lease period. Semi-annual rental payments will include base rent and a repair and replacement contribution. Rental payments will begin fiscal year 2021. The capital lease liability and capital asset will be recorded on the Institute's books once construction is complete and the certificate of occupancy is issued.
B. Component Units
Other Subsequent Events
Georgia Housing and Finance Authority
The Authority issued 2020 Series B Single-Family Mortgage Bonds. The bond deal closed on October 21, 2020 in the amount of $110.9 million.
On September 10, 2020, the Authority increased its errors and omissions insurance policy amount to $2.4 million.
University System of Georgia
Georgia Southern University Housing Foundation Seven, LLC (GSUHF7) issued Series 2020 bonds in June 2020 to be used for the renovation of a student housing facility, Kennedy Hall. The total estimated cost of the project is $16.5 million. Construction in progress as of June 30, 2020 totaled $0.9 million. It is anticipated that the project will be completed for use in the fall of 2021. In conjunction with the project, GSUHF7 has a rental agreement with the Board of Regents for the student housing facility. The lease will begin upon substantial completion of the renovation and improvement, currently expected to commence July 1, 2021.
In July 2020, the Georgia State Athletic Association entered into a naming rights and sponsorship agreement for the naming of the GSU football stadium. Under the terms of the agreement, the Association will receive approximately $21.0 million over a 15-year period.
On September 1, 2020, Kennesaw State University (KSU) entered into an agreement with Kennesaw State University Foundation, Inc. (KSUF) where KSUF would renovate and improve a student housing facility (Howell Hall). This facility will be leased to KSU for a 30-year period through June 30, 2052 with lease payments totaling $20.5 million. At the end of the lease, the ownership of the student housing facility will transfer to KSU. On September 1, 2020, Kennesaw State University Foundation, Inc. entered into a promissory note agreement to repay $9.6 million Series 2020C bonds issued by the Development Authority of Cobb County. The proceeds of the bonds will be used for the purpose of financing the cost of renovating and improving Howell Hall, a student housing facility located on the Marietta campus of Kennesaw State University, fund capitalized interest for the Series 2020C Bonds and paying all or a portion of the costs of issuing the Series 2020 Bonds.
On December 17, 2020, Kennesaw State University (KSU) entered into an agreement with Kennesaw State University Foundation, Inc. (KSUF) where KSUF would construct and equip a student housing facility. This new facility will be leased to KSU for a 30-year period through June 30, 2052 with lease payments totaling $65.3
223

State of Georgia
Notes to the Financial Statements For the Fiscal Year Ended June 30, 2020
NOTE 22 - SUBSEQUENT EVENTS (continued) million. At the end of the lease, the ownership of the student housing facility will transfer to KSU. On December 17, 2020, Kennesaw State University Foundation, Inc. entered into a promissory note agreement to repay $35.4 million Series 2020 bonds issued by the Development Authority of Cobb County. The proceeds of the bonds will be used for the purpose of (i) financing the cost of acquiring, constructing and equipping a student housing facility consisting of approximately 508 beds to be located on the Kennesaw campus of Kennesaw State University, (ii) fund capitalized interest for the Series 2020 Bonds and (iii) paying all or a portion of the costs of issuing the Series 2020 Bonds. On December 9, 2020, University of Georgia (UGA) entered into an agreement with UGA Real Estate Foundation, Inc. (UGAREF) a component unit of University of Georgia Research Foundation, Inc. where UGAREF would construct and equip a student housing facility. This new facility will be leased to UGA for a 30 year period through June 30, 2052 with lease payments totaling $79.3 million. On December 9, 2020, UGAREF entered into a promissory note agreement to repay $39.0 million Series 2020 bonds issued by the Athens Housing Authority. The proceeds of the bonds will be used for the purpose of (a) financing the cost of the acquisition, construction and equipping of certain buildings, structures, equipment and related real and personal property to be used as a student housing facility consisting of approximately 527 beds and related amenities to be located on the campus of the UGA in Athens-Clarke County, Georgia, (b) pay capitalized interest on the Series 2020 Bonds and certain annual fees during construction of the facility and for approximately six months thereafter and (c) pay the cost of issuing the Series 2020 Bonds.
224

REQUIRED SUPPLEMENTARY INFORMATION

State of Georgia
Required Supplementary Information Budgetary Comparison Schedule Budget Fund For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Funds Available State Appropriation
State General Funds Revenue Shortfall Reserve for K-12 Needs State Motor Fuel Funds Lottery Proceeds Tobacco Settlement Funds Brain and Spinal Injury Trust Fund Nursing Home Provider Fees Hospital Provider Fee State Funds - Prior Year Carry-Over State General Fund Prior Year Brain and Spinal Injury Trust Fund - Prior Year State Motor Fuel Funds - Prior Year Federal Funds CCDF Mandatory & Matching Funds Child Care and Development Block Grant Community Mental Health Services Block Grant Community Services Block Grant Federal Highway Administration - Highway Planning and Construction Foster Care Title IV-E Low-Income Home Energy Assistance Maternal and Child Health Services Block Grant Medical Assistance Program Prevention and Treatment of Substance Abuse Block Grant Preventive Health and Health Services Block Grant Revenue Shortfall Reserve Social Services Block Grant State Children's Insurance Program Temporary Assistance for Needy Families Block Grant TANF Transfer to SSBG Federal Funds Not Itemized Federal Funds-COVID-19 Child Care & Development Block Grant - COVID-19 Community Services Block Grant - COVID-19 Federal Funds Not Itemized COVID-19 Low-Income Home Energy Assistance - COVID-19 American Recovery and Reinvestment Act of 2009 Medical Assistance Program Federal Recovery Funds Not Specifically Identified Other Funds
Total Funds Available
Expenditures Georgia Senate Georgia House of Representatives Georgia General Assembly Joint Offices Audits and Accounts, Department of Appeals, Court of Judicial Council Juvenile Courts Prosecuting Attorneys Superior Courts Supreme Court Accounting Office, State Administrative Services, Department of Agriculture, Department of Banking and Finance, Department of

Original Appropriation

Amended Appropriation

Final Budget

Actual

Variance

$

23,723,308 $

23,335,409 $ 23,421,962 $ 23,361,577 $

60,385

--

255,711

255,711

255,711

--

1,925,866

1,911,700

1,911,700

1,911,700

--

1,248,182

1,231,638

1,231,638

1,231,638

--

150,160

155,882

155,881

155,882

(1)

1,409

1,409

1,409

1,563

(154)

157,326

155,482

168,453

168,453

--

336,599

336,599

345,213

345,213

--

--

--

349,345

376,625

(27,280)

--

--

2,918

2,800

118

--

--

491,355

2,212,901

(1,721,546)

97,618 138,020 14,164 16,329 1,507,117 105,222 56,008 16,977 7,466,286 47,852
2,207 --
53,608 427,871 327,877
1,337 4,037,395

97,618 138,020 14,164 16,282 1,514,708 98,678 56,164 16,977 7,410,223 47,852
2,207 100,000 52,582 488,359 329,891
1,802 4,120,090

83,597 300,559 17,520 21,102 1,552,909 102,341 104,230 19,900 8,586,062 58,612
5,650 13,447 50,924 625,359 350,323 1,977 4,526,258

83,597 298,690 16,756 20,950 1,358,169 103,283 102,315 16,892 8,489,362 56,736
4,586 --
48,814 397,189 317,100
1,977 4,187,849

-- 1,869
764 152 194,740 (942) 1,915 3,008 96,700 1,876 1,064 13,447 2,110 228,170 33,223 -- 338,409

--

--

36,935

36,935

--

--

--

26,896

5,627

21,269

--

--

2,825,563

2,636,121

189,442

--

--

44,685

40,604

4,081

-- 36,134 11,121,212
53,016,084

-- 21,219 11,410,845
53,321,511

-- 38,014 15,778,360
63,506,808

8,807 36,860 15,690,134
63,983,416

(8,807) 1,154 88,226
(476,608)

11,938 19,772 14,137 36,806 22,455 20,895 9,078 86,808 76,047 16,847 29,205 218,459 61,926 13,444

11,541 19,428 14,453 36,691 23,292 20,998 8,920 85,293 75,402 16,749 28,945 225,113 60,883 12,908

11,790 20,102 21,128 36,697 23,423 23,413 9,209 125,706 75,413 17,153 30,741 255,022 95,568 13,271

9,866 18,351 12,520 36,202 23,421 22,184 8,895 116,263 74,622 17,153 30,280 245,121 91,957 12,969

1,924 1,751 8,608
495 2
1,229 314
9,443 791 -- 461
9,901 3,611
302 (continued)

226

Expenditures Behavioral Health & Developmental Disabilities, Department of Community Affairs, Department of Community Health, Department of Community Supervision, Department of Corrections, Department of Defense, Department of Driver Services, Department of Early Care and Learning, Department of Economic Development, Department of Education, Department of Employees' Retirement System of Georgia Forestry Commission, State Governor, Office of the Human Services, Department of Insurance, Department of Investigation, Georgia Bureau of Juvenile Justice, Department of Labor, Department of Law, Department of Natural Resources, Department of Pardons and Paroles, State Board of Properties Commission, State Public Defender Council, Georgia Public Health, Department of Public Safety, Department of Public Service Commission Regents, University System of Georgia Revenue, Department of Secretary of State Student Finance Commission and Authority, Georgia Teachers' Retirement System Technical College System of Georgia Transportation, Department of Veterans' Services, Department of Workers' Compensation, State Board of State of Georgia General Obligation Debt Sinking Fund
Total Expenditures
Excess of Funds Available over Expenditures

Original

Amended

Appropriation Appropriation

Final Budget

Actual

Variance

1,408,569 257,843
15,649,092 186,522
1,224,216 84,865 73,272 847,445 35,318
12,769,228 62,005 54,089 91,628
1,963,882 22,045 287,404 358,836 120,570 73,917 290,429 18,209 2,100 94,060 698,359 270,902 11,391
8,216,107 198,668 30,102
1,018,340 41,023 912,686
3,701,270 41,344 19,496
1,243,035

1,383,104 250,093
15,646,637 179,054
1,166,447 82,938 71,433 832,361 33,622
12,893,560 63,681 53,999 196,950
1,898,466 22,309 285,668 342,259 114,826 73,355 286,456 17,483 2,481 94,051 701,041 258,236 11,235
8,461,402 214,047 29,724
1,002,498 41,811
1,048,998 3,699,181
39,832 19,499 1,162,158

1,456,798 264,674
20,450,404 184,292
1,307,057 109,387 80,605
1,011,452 37,220
13,373,952 63,294 56,681
1,734,096 2,129,342
23,458 370,355 365,752 120,556 101,482 391,157 17,633
2,481 94,417 1,019,234 288,308 11,402 9,441,121 235,364 68,942 999,407 41,886 1,017,650 4,491,145 49,480 19,993 1,317,695

1,446,893 247,453
16,324,573 179,915
1,227,606 80,474 77,287
1,011,452 35,822
13,236,321 61,430 56,390
1,489,036 2,021,511
23,269 323,465 346,368 117,152 98,351 337,979 16,955
2,041 92,878 874,926 253,464 11,402 8,523,609 228,842 48,909 955,644 38,824 877,663 4,053,694 49,152 16,924 1,249,996

9,905 17,221 4,125,831 4,377 79,451 28,913 3,318
-- 1,398 137,631 1,864
291 245,060 107,831
189 46,890 19,384 3,404 3,131 53,178
678 440 1,539 144,308 34,844 -- 917,512 6,522 20,033 43,763 3,062 139,987 437,451 328 3,069 67,699

53,016,084

53,321,511 63,506,808 56,757,474

6,749,334

$

-- $

-- $

-- $ 7,225,942 $ (7,225,942)

227

State of Georgia
Required Supplementary Information Budget to GAAP Reconciliation For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Sources/Inflows of Resources

General Fund

Summary Actual amounts (budgetary basis) "Total Funds Available" from the budgetary comparison schedule

$ 63,983,416

Differences - budget to GAAP Perspective Differences:

Revenues of budgeted funds included in the Budget Fund, but removed from the General Fund for financial reporting purposes.

(10,793,256)

Revenues of nonbudgeted funds included within the State's reporting entity, and shown in the General Fund for financial reporting purposes.

26,624,888

State appropriations revenues are budgetary resources, but are netted with the State's treasury disbursements for GAAP purposes.

(27,431,579)

Basis Differences:

Accrual of taxpayer assessed receivables and revenues.

353,192

Fund balance adjustments are not inflows of budgetary resources, but affect current year revenues for GAAP reporting purposes.

(240,604)

Prior Year Reserves Available for Expenditure are included in Funds Available, but are not revenues for GAAP reporting purposes.

(6,649,172)

Revenues from intrafund transactions are budgetary resources, but are not revenues for GAAP reporting purposes.

(930,729)

Receivables and revenues accrued based on encumbrances reported for goods and services ordered but not received are reported in the year the order is placed for budgetary purposes, but in the year the goods and services are received for GAAP reporting.

(1,327,082)

Transfers from other funds are inflows of budgetary resources, but are not revenues for financial reporting purposes.

(96,639)

Revenue reported for nonbudgetary food stamp program and donated commodities.

2,738,560

Revenue reported for on-behalf payments related to pensions.

61,700

Other net accrued receivables and revenues.

183,578

Total Revenues (General Fund) as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds

$ 46,476,273 (continued)

228

Uses/Outflows of Resources

General Fund

Summary Actual amounts (budgetary basis) "Total Expenditures" from the budgetary comparison schedule

$ 56,757,474

Differences - budget to GAAP Perspective Differences:

Expenditures of Budgeted Funds for organizations not reported in the General Fund.

(13,696,534)

Expenditures of nonbudgeted Funds included within the State's reporting entity, and shown in the General Fund for financial reporting purposes.

191,707

Basis Differences:

Accrual of teacher salaries not included in current budget year.

(72,203)

Capital lease acquisitions are not outflows of budgetary resources, but are recorded as current expenditures and other financing sources for GAAP reporting.

13,300

Change in expenditure accrual for nonbudgetary Medicaid claims.

(54,600)

Encumbrances for goods and services ordered but not received are reported as budgetary expenditures in the year the order is placed, but are reported as GAAP expenditures in the year the goods and services are received.

(1,293,039)

Expenditures from intrafund transactions are budgetary outflows, but are not expenditures for GAAP reporting purposes.

(930,729)

Expenditures reported for nonbudgetary food stamp program and donated commodities.

2,738,560

Expenditures reported for on-behalf payments related to pensions.

61,700

Fund balance adjustments are not outflows of budgetary resources, but affect current year expenditures for GAAP reporting purposes.

(554,042)

Transfers to other funds are outflows of budgetary resources, but are not expenditures for GAAP reporting purposes.

(1,610,312)

Other net accrued liabilities and expenditures.

219,169

Total Expenditures (General Fund) as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds

$ 41,770,451

229

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Budgetary Comparison For the Fiscal Year Ended June 30, 2020
Budgetary Reporting
Budgetary Process
OCGA 45-12-4 sets forth the process for the development and monitoring of an appropriated budget for the State. Not later than September 1 of each year, the head of each executive branch budget unit (e.g. agencies, departments, and commissions) must submit estimates of the financial requirements for the subsequent fiscal year to Office of Planning and Budget (OPB), which operates under the direction of the Governor. Budget estimates relative to the legislative and judicial branches of State government are provided to OPB for the purpose of estimating the total financial needs of the State, but are not subject to revision or review by OPB.
The Governor, through the OPB, examines the estimates and may investigate and revise executive branch submissions as necessary. Upon the completion and revisions of the estimates, the Governor must prepare and submit a budget report to the General Assembly within five days of the date on which the General Assembly convenes. The Governor also possesses the responsibility and authority to establish the revenue estimate for the corresponding fiscal year.
The General Assembly, after adopting such modifications to the Governor's budget report as it deems necessary, enacts the General Appropriations Act for the subsequent fiscal year. Each General Appropriations Act enacted, along with amendments as are adopted, continues in force and effect for the next fiscal year after adoption. In accordance with the Georgia Constitution, Article III, Section IX, Paragraph IV, "The General Assembly shall not appropriate [State] funds for any given fiscal year which, in aggregate, exceed a sum equal to the amount of unappropriated surplus expected to have accrued in the state treasury at the beginning of the fiscal year together with an amount not greater than the total treasury receipts from existing revenue sources anticipated to be collected in the fiscal year, less refunds, as estimated in the budget report and amendments thereto." The Constitution also authorizes the passage of additional Supplementary Appropriation Acts, provided sufficient surplus is available or additional revenue measures have been enacted. Finally, the Governor may withhold allotments of funds to budget units in order to maintain this balance of revenues and expenditures. Compliance with this requirement is demonstrated in the Governor's budget report and the Appropriation Acts for each fiscal year.
To the extent that federal funds received by the State are changed by federal authority or exceed the amounts appropriated by the original or supplementary appropriations acts, such excess, changed or unanticipated funds are "continually appropriated;" that is, they are amended in to departmental budgets when such events are known. Similarly, revenues generated by departments that may be retained for departmental operations ("other funds") are amended in as such funds are collected or anticipated.
Internal transfers within a budget unit are subject to the condition that no funds shall be transferred for the purpose of initiating a new program area which otherwise had received no appropriation of any funding source.
The Governor, through OPB, requires each budget unit, other than those of the legislative and judicial branches, to submit an annual operating budget based on the programs set forth in the Appropriations Act. Budget units submit periodic allotment requests, which must be approved in conjunction with quarterly work programs prior to release of appropriated funds. Further monitoring of budget unit activities is accomplished by review of expenditure reports, which are submitted quarterly to OPB.
230

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Budgetary Comparison For the Fiscal Year Ended June 30, 2020
The appropriated budget covers a majority of the organizations comprising the State's General Fund, and includes appropriations for debt service. The budget also includes certain proprietary funds, the Higher Education Fund, and the administrative costs of operating certain public employee retirement systems.
Budget units of the State are responsible for budgetary control of their respective portion of the total State appropriated budget. The legal level of budgetary control is at the program level by funding source. Due to the complex nature of the State appropriated budget, a separate Budgetary Compliance Report is published each year to report on compliance at the legal level of budgetary control.
Budgetary Basis of Accounting
The annual budget of the State is prepared on the modified accrual basis utilizing encumbrance accounting with the following exceptions: federal and certain other revenues are accrued based on the unexecuted portion of long-term contracts; and intrafund transactions are disclosed as revenues and expenditures. Under encumbrance accounting, encumbrances are used to indicate the intent to purchase goods or services. Liabilities and expenditures are recorded upon issuance of completed purchase orders. Goods or services need not have been received for liabilities and expenditures to be recorded.
The budget represents departmental appropriations recommended by the Governor and adopted by the General Assembly prior to the beginning of the fiscal year. Annual appropriated budgets are adopted at the departmental (budget unit) level by program and funding source. All unencumbered annual appropriations lapse at fiscal year-end unless otherwise specified by constitutional or statutory provisions. Supplementary and amended appropriations may be enacted during the next legislative session by the same process used for original appropriations.
Budgetary Compliance Exceptions
Expenditures of State funds may not exceed the amount appropriated at the legal level of control as provided by the Constitution. For the year ended June 30, 2020, total State funds expenditures did not exceed appropriated amounts.
For more information on budgetary exceptions, please refer to the Budgetary Compliance Report issued under separate cover. This report can be found on website of the State Accounting Office at http://sao.georgia.gov/.
Budgetary Presentation
The accompanying Budgetary Comparison Schedule for the Budget Fund presents comparisons of the legally adopted budget with actual data prepared on the budgetary basis of accounting utilized by the State. The Budget Fund, a compilation of the budget units of the State, differs from the funds presented in the basic financial statements. The Budget-to-GAAP reconciliation immediately following the budgetary comparison schedule identifies the types and amounts of adjustments necessary to reconcile the Budget Fund with the General Fund as reported in accordance with generally accepted accounting principles.
231

State of Georgia
Required Supplementary Information Public Entity Risk Pool For the Fiscal Year Ended June 30, 2020
Claims Development Information The table below illustrates how the State Health Benefit Plan's (SHBP) earned revenues and investment income compare to related costs of loss and other expenses assumed by the SHBP as of the end of the current fiscal year. The rows of the table are defined as follows: (1) This line shows the total of each fiscal year's earned contribution revenues and investment revenues. (2) This line shows each fiscal year's other operating costs of the fund including overhead and claims expense not allocable to individual claims. (3) This line shows the fund's incurred claims and allocated claim adjustment expenses (both paid and accrued) as originally reported at the end of the first year in which the event that triggered coverage under the contract occurred (policy year). (4) This section shows the cumulative net amounts paid as of the end of the policy year. (5) This section shows how current year's net incurred claims increased or decreased as of the end of the year. This annual reestimation results from new information received on known claims, reevaluation of existing information on known claims, as well as emergence of new claims not previously known. (6) This line compares the latest reestimated net incurred claims amount to the amount originally established (line 3) and shows whether this latest estimate of claims cost is greater or less than originally thought. As data for individual policy years mature, the correlation between original estimates and reestimated amounts is commonly used to evaluate the accuracy of net incurred claims currently recognized in less mature policy years.
(Table on next page)
232

State of Georgia
Required Supplementary Information Public Entity Risk Pool For the Fiscal Year Ended June 30, 2020
(dollars in thousands)
Fiscal and Policy Year Ended

2013

2014

2015

2016

2017

2018

2019

2020

(1) Required contribution and investment revenue earned (fiscal year)

$ 2,366,054 $ 2,434,392 $ 2,267,667 $ 2,145,197 $ 2,271,697 $ 2,966,874 $ 2,457,668 $ 2,901,981

(2) Unallocated expenses

100,532 150,939 155,501 144,515 140,450 132,097 118,674 120,873

(3) Estimated claims and expenses, end of policy year, net incurred

2,074,390

1,880,541

1,882,588

2,013,443

2,158,188

2,269,151

2,495,517

2,614,741

(4) Net paid (cumulative) as of:

End of policy year

1,919,597 1,758,032 1,708,902 1,847,202 2,052,213 2,187,695 2,348,115 2,472,442

One year later

2,223,219 1,931,895 1,871,509 1,915,972 2,151,121 2,340,034 2,454,871

Two years later

2,223,219 1,931,895 1,871,509 1,915,972 2,151,121 2,340,034

Three years later

2,223,219 1,931,895 1,871,509 1,915,972 2,151,121

Four years later

2,223,219 1,931,895 1,871,509 1,915,972

Five years later

2,223,219 1,931,895 1,871,509

Six years later

2,223,219 1,931,895

Seven years later (1)

2,223,219

(5) Reestimated net incurred claims and expenses:

End of policy year

2,074,390 1,880,541 1,882,588 2,013,443 2,158,188 2,269,151 2,495,517 2,614,741

One year later

2,068,566 1,879,800 1,871,599 1,915,823 2,150,162 2,340,850 2,458,806

Two years later

2,014,054 1,934,321 1,871,599 1,915,823 2,148,700 2,340,255

Three years later

2,019,869 1,934,321 1,871,599 1,915,846 2,148,678

Four years later

2,019,869 1,934,321 1,871,599 1,915,846

Five years later

2,019,869 1,934,321 1,871,599

Six years later

2,019,869 1,934,321

Seven years later (1)

2,019,869

(6) Increase (decrease) in estimated

net incurred claims and

expenses from the end of

policy year

(54,521) 53,780

(10,989) (97,597)

(9,510)

71,104

(36,711)

--

(1) Data not available prior to fiscal year 2013

233

REQUIRED SUPPLEMENTARY INFORMATION PENSIONS

State of Georgia
Required Supplementary Information Schedules of Employers' and Nonemployers' Contributions Defined Benefit Pension Plans For the Last Ten Fiscal Years
(dollars in thousands)

Year Ended

Actuarially determined contribution
(a)

Contributions in relation to the actuarially determined contribution (b)

Contribution deficiency (excess) (a-b)

Covered payroll
(c)

Contributions as a percentage
of covered payroll (b/c)

Employees' Retirement System

6/30/2011 $ 261,132 $

261,132 $

-- $ 2,486,780

10.50 %

6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020

273,623 358,376 428,982 517,220 595,124 624,623 650,073 649,209 643,857

274,034 358,992 429,752 519,163 595,566 625,281 652,167 649,209 643,857

(411) (616) (770) (943) (442) (658) (2,094)
-- --

2,414,884 2,335,773 2,335,773 2,353,225 2,390,457 2,565,918 2,635,896 2,615,491 2,614,856

11.35 % 15.37 % 18.40 % 22.06 % 24.91 % 24.37 % 24.74 % 24.82 % 24.62 %

Public School Employees Retirement System 1

6/30/2011

7,509

7,509

--

N/A

N/A

6/30/2012

15,884

15,884

--

N/A

N/A

6/30/2013

24,829

24,829

--

N/A

N/A

6/30/2014

27,160

27,160

--

N/A

N/A

6/30/2015

28,461

28,461

--

N/A

N/A

6/30/2016

28,580

28,580

--

N/A

N/A

6/30/2017

26,277

26,277

--

N/A

N/A

6/30/2018

29,276

29,276

--

N/A

N/A

6/30/2019

30,263

30,263

--

N/A

N/A

6/30/2020

32,496

32,496

--

N/A

N/A

Georgia Judicial Retirement System

6/30/2011
6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020

1,932
2,083 2,279 2,375 4,261 7,623 6,684 6,566 5,254 6,464

1,932
2,083 2,279 2,375 4,261 7,623 6,684 6,566 5,254 6,464

--

52,331

--

51,898

--

52,807

--

54,787

--

54,272

--

57,401

--

59,695

--

60,572

--

60,532

--

63,835

3.69 %
4.01 % 4.32 % 4.33 % 7.85 % 13.28 % 11.20 % 10.84 % 8.68 % 10.13 %

This data, except for annual covered payroll, was provided by each plan's actuary. No statistics regarding covered payroll are available. Contributions are not based upon members' salaries, but are simply $4.00 per member, per month, for nine months, each
1 fiscal year if hired prior to July 1, 2012 and $10 per month, per member, per month, for nine months, if hired after July 1, 2012. Schedule includes all significant plans and funds administered by the State of Georgia.

236

Teachers Retirement System of Georgia

Year Ended

Actuarially determined contribution
(a)

Contributions in relation to the actuarially determined contribution (b)

Contribution deficiency (excess) (a-b)

Covered payroll
(c)

Contributions as a percentage
of covered payroll (b/c)

6/30/2011 $ 1,089,912 $

1,089,912 $

-- $10,602,257

10.28 %

6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020

1,082,224 1,180,469 1,270,963 1,406,706 1,580,532 1,654,844 2,018,724 2,566,403 2,738,818

1,082,224 1,180,469 1,270,963 1,406,706 1,580,532 1,654,844 2,018,724 2,566,403 2,738,818

-- 10,527,471 -- 10,345,916 -- 10,349,862 -- 10,697,384 -- 11,075,907 -- 11,596,664 -- 12,009,066 -- 12,279,440 -- 12,955,620

10.28 % 11.41 % 12.28 % 13.15 % 14.27 % 14.27 % 16.81 % 20.90 % 21.14 %

Peace Officers' Annuity and Benefit Fund of Georgia

6/30/2011

19,760

16,185

3,575

N/A

N/A

6/30/2012

19,760

16,256

3,504

N/A

N/A

6/30/2013

22,343

15,472

6,871

N/A

N/A

6/30/2014

22,340

15,342

6,998

N/A

N/A

6/30/2015

17,815

15,341

2,474

N/A

N/A

6/30/2016

18,082

14,713

3,369

N/A

N/A

6/30/2017

12,651

14,005

(1,354)

N/A

N/A

6/30/2018

11,351

13,826

(2,475)

N/A

N/A

6/30/2019

10,430

14,444

(4,014)

N/A

N/A

6/30/2020

13,088

13,021

67

N/A

N/A

Georgia Firefighters' Pension Fund

6/30/2011

36,031

25,966

10,065

N/A

N/A

6/30/2012

29,995

27,073

2,922

N/A

N/A

6/30/2013

29,995

28,442

1,553

N/A

N/A

6/30/2014

28,956

30,034

(1,078)

N/A

N/A

6/30/2015

26,215

31,489

(5,274)

N/A

N/A

6/30/2016

28,030

32,684

(4,654)

N/A

N/A

6/30/2017

28,987

34,152

(5,165)

N/A

N/A

6/30/2018

28,191

35,715

(7,524)

N/A

N/A

6/30/2019

29,732

37,902

(8,170)

N/A

N/A

6/30/2020

29,916

40,575

(10,659)

N/A

N/A

This data, except for annual covered payroll, was provided by each plan's actuary.

Schedule includes all significant plans and funds administered by the State of Georgia.

237

State of Georgia
Required Supplementary Information Schedules of Employers' and Nonemployers' Net Pension Liability Defined Benefit Pension Plans For the Last Seven Fiscal Years
(dollars in thousands)

Employees' Retirement System: Total pension liability Plan fiduciary net position

2020

2019

2018

2017

$ 17,717,243 13,502,286

$ 17,744,003 13,617,472

$ 17,628,219 13,517,186

$ 17,159,634 13,098,299

Employers' and nonemployers' net pension

liability

$ 4,214,957 $ 4,126,531 $ 4,111,033 $ 4,061,335

Plan fiduciary net position as a percentage of the total pension liability
Covered payroll

76.21 %

76.74 %

76.68 %

76.33 %

$ 2,614,856 $ 2,615,491 $ 2,635,896 $ 2,565,918

Employers' and nonemployers' net pension liability as a percentage of covered payroll

161.19 %

157.77 %

155.96 %

158.28 %

Public School Employees Retirement System: Total pension liability Plan fiduciary net position

$ 1,134,725 958,248

$ 1,107,496 941,588

$ 1,072,165 914,138

$ 1,013,163 868,134

Employers' and nonemployers' net pension

liability

$ 176,477 $ 165,908 $ 158,027 $ 145,029

Plan fiduciary net position as a percentage of the total pension liability
Covered payroll

84.45 % N/A

85.02 % N/A

85.26 % N/A

85.69 % N/A

Employers' and nonemployers' net pension liability as a

percentage of covered payroll

N/A

N/A

N/A

N/A

Georgia Judicial Retirement System: Total pension liability Plan fiduciary net position

$ 455,656 $ 440,041 $ 428,624 $ 394,736

485,930

479,372

466,657

441,182

Employers' and nonemployers' net pension

(asset)

$

(30,274) $

(39,331) $

(38,033) $

(46,446)

Plan fiduciary net position as a percentage of the total pension liability

Covered payroll

$

106.64 % 63,835 $

108.94 % 60,532 $

108.87 % 60,572 $

111.77 % 59,695

Employers' and nonemployers' net pension (asset) as a percentage of covered payroll

(47.43%)

(64.98%)

(62.79%)

(77.81%)

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

238

2016

2015

2014

$ 17,103,987 12,373,567

$ 17,019,362 12,967,964

$ 17,042,149 13,291,531

$ 4,730,420 $ 4,051,398 $ 3,750,618

72.34 %

76.20 %

77.99 %

$ 2,390,457 $ 2,353,225 $ 2,335,773

197.89 %

172.16 %

160.57 %

$ 992,292 $ 946,200 $ 930,745

803,775

823,150

821,733

$ 188,517 $ 123,050 $ 109,012

81.00 % N/A

87.00 % N/A

88.29 % N/A

N/A

N/A

N/A

$ 368,669 $ 357,081 $ 350,443

403,011

404,852

400,790

$ (34,342) $ (47,771) $ (50,347)

109.32 %

113.38 %

114.37 %

$ 57,401 $ 54,272 $ 54,787

(59.83%)

(88.02%)

(91.90%) (continued)

239

State of Georgia
Required Supplementary Information Schedules of Employers' and Nonemployers' Net Pension Liability Defined Benefit Pension Plans For the Last Seven Fiscal Years
(dollars in thousands)

2020

2019

2018

2017

Teachers Retirement System: Total pension liability Plan fiduciary net position

$ 105,385,472 81,161,558

$ 100,291,641 78,788,937

$ 94,095,067 75,532,925

$ 89,926,280 71,340,972

Employers' and nonemployers' net pension

liability

$ 24,223,914 $ 21,502,704 $ 18,562,142 $ 18,585,308

Plan fiduciary net position as a percentage of the total pension liability
Covered payroll

77.01 %

78.56 %

80.27 %

79.33 %

$ 12,955,620 $ 12,279,440 $ 12,009,066 $ 11,596,664

Employers' and nonemployers' net pension liability as a percentage of covered payroll

186.98 %

175.11 %

154.57 %

160.26 %

Peace Officers' Annuity and Benefit Fund of Georgia:

Total pension liability

$ 841,241 $ 802,169 $ 781,281 $ 742,609

Plan fiduciary net position

827,420

825,675

795,273

754,615

Employers' and nonemployers' net pension

liability/(asset)

$

13,821 $ (23,506) $ (13,992) $

12,006

Plan fiduciary net position as a percentage of the total pension liability
Covered payroll

98.36 % N/A

102.93 % N/A

101.79 % N/A

101.62 % N/A

Employers' and nonemployers' net pension liability/ (asset) as a percentage of covered payroll

N/A

N/A

N/A

N/A

Georgia Firefighters' Pension Fund: Total pension liability Plan fiduciary net position

$ 1,144,365 924,905

$ 1,103,481 934,352

$ 1,065,923 894,871

$ 1,007,205 843,414

Employers' and nonemployers' net pension

liability

$ 219,460 $ 169,129 $ 171,052 $ 163,791

Plan fiduciary net position as a percentage of the total pension liability
Covered payroll

80.82 % N/A

84.67 % N/A

83.95 % N/A

83.74 % N/A

Employers' and nonemployers' net pension liability as a

percentage of covered payroll

N/A

N/A

N/A

N/A

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

240

2016

2015

2014

$ 86,183,526 65,552,411

$ 82,023,120 66,799,111

$ 79,099,772 66,466,091

$ 20,631,115 $ 15,224,009 $ 12,633,681

76.06 %

81.44 %

84.03 %

$ 11,075,907 $ 10,697,384 $ 10,349,862

186.27 %

142.32 %

122.07 %

$ 747,459 $ 720,213 $ 674,725

689,022

703,536

698,889

$ 58,437 $ 16,677 $ (24,164)

92.18 % N/A

97.68 % N/A

103.58 % N/A

N/A

N/A

N/A

$ 970,157 $ 923,835 $ 848,314

766,678

767,333

761,115

$ 203,479 $ 156,502 $ 87,199

79.03 % N/A

83.06 % N/A

89.72 % N/A

N/A

N/A

N/A

241

State of Georgia
Required Supplementary Information Schedules of Changes in Employers' and Nonemployers' Net Pension Liability Defined Benefit Pension Plans For the Last Seven Fiscal Years
(dollars in thousands)

Employees' Retirement System:

Total pension liability:

Service cost

$

Interest

Benefit changes

Differences between expected and actual experience

Changes of assumptions

Benefit payments

Refunds of contributions

Net change in total pension liability

Total pension liability-beginning

Total pension liability-ending (a)

Plan fiduciary net position:

Contributions-employer

Contributions-nonemployer

Contributions-member

Administrative expense allotment

Net investment income

Benefit payments

Administrative expense

Refunds of contributions

Other*

Net change in plan fiduciary net position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

Net pension liability-ending (a)-(b)

$

Public School Employees Retirement System:

Total pension liability:

Service cost

$

Interest

Benefit changes

Differences between expected and actual experience

Changes of assumptions

Benefit payments

Refunds of 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

Benefit payments

Administrative expense

Refunds of contributions

Net change in plan fiduciary net position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

Net pension liability-ending (a)-(b)

$

2020
132,004 $ 1,240,887
65,702 25,736
-- (1,484,445)
(6,644) (26,760) 17,744,003 17,717,243
634,108 9,749 35,837 10
703,840 (1,484,445)
(7,641) (6,644)
-- (115,186) 13,617,472 13,502,286 4,214,957 $
14,017 $ 78,414 13,680 (12,220)
-- (66,090)
(572) 27,229 1,107,496 1,134,725
32,496 2,338 49,913 (66,090) (1,425) (572) 16,660 941,588 958,248 176,477 $

2019
135,679 $ 1,233,882
42,097 155,573
-- (1,443,756)
(7,691) 115,784 17,628,219 17,744,003
638,989 10,220 36,252
10 873,404 (1,443,756)
(7,142) (7,691)
-- 100,286 13,517,186 13,617,472 4,126,531 $
13,762 $ 75,923 18,050 (8,159)
-- (63,637)
(609) 35,330 1,072,166 1,107,496
30,263 2,256 60,554 (63,636) (1,378) (609) 27,450 914,138 941,588 165,908 $

2018
129,294 $ 1,233,689
31,097 180,655 314,733 (1,413,298)
(7,585) 468,585 17,159,634 17,628,219
639,302 12,865 37,130
10 1,166,013 (1,413.298)
(8,056) (7,585) (7,494) 418,887 13,098,299 13,517,186 4,111,033 $
13,180 $ 73,643 17,289 (3,943) 21,354 (61,820)
(700) 59,003 1,013,163 1,072,166
29,276 2,162 78,417 (61,820) (1,331) (700) 46,004 868,134 914,138 158,028 $

2017
125,910 1,230,175
30,563 72,315
-- (1,394,283)
(9,033) 55,647 17,103,987 17,159,634
613,191 12,080 35,863
10 1,475,626 (1,394,283)
(8,732) (9,033)
10 724,732 12,373,567 13,098,299 4,061,335
12,788 72,157
-- (3,665)
-- (59,378) (1,031) 20,871 992,292 1,013,163
26,277 2,084 97,715 (59,378) (1,308) (1,031) 64,359 803,775 868,134 145,029

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
Schedule includes all significant plans and funds administered by the State of Georgia. *Pursuant to the requirements of GASB Statement 75, the fiscal year 2018 beginning Fiduciary Net Position was restated by $7,494 to reflect the impact of recording the initial Deferred Outflows of Resources and the Net OPEB liabilities and OPEB asset.

242

2016

2015

2014

$

143,043 $

145,045 $

150,075

1,225,650

1,227,846

1,224,380

--

--

--

(238)

(53,950)

--

70,890

--

--

(1,347,633)

(1,334,278)

(1,305,998)

(7,087)

(7,450)

(8,757)

84,625

(22,787)

59,700

17,019,362

17,042,149

16,982,449

17,103,987

17,019,362

17,042,149

583,082

505,668

418,807

12,484

12,495

10,945

31,961

33,713

32,423

10

10

--

141,292

474,147

2,021,748

(1,347,633)

(1,334,278)

(1,305,998)

(8,506)

(7,872)

(7,440)

(7,087)

(7,450)

(8,757)

--

--

--

(594,397)

(323,567)

1,161,728

12,967,964

13,291,531

12,129,803

12,373,567

12,967,964

13,291,531

$

4,730,420 $

4,051,398 $

3,750,618

$

11,952 $

12,089 $

11,049

68,776

67,652

66,143

--

--

--

(9,483)

(6,858)

--

33,215

--

--

(57,903)

(56,972)

(56,189)

(465)

(456)

(514)

46,092

15,455

20,489

946,200

930,745

910,256

992,292

946,200

930,745

28,580

28,461

27,160

1,925

1,800

1,659

9,809

30,129

123,799

(57,903)

(56,972)

(56,189)

(1,321)

(1,545)

(1,450)

(465)

(456)

(514)

(19,375)

1,417

94,465

823,150

821,733

727,268

803,775

823,150

821,733

$

188,517 $

123,050 $

109,012

(continued)

243

State of Georgia
Required Supplementary Information Schedules of Changes in Employers' and Nonemployers' Net Pension Liability Defined Benefit Pension Plans For the Last Seven Fiscal Years
(dollars in thousands)

Georgia Judicial Retirement System:

Total pension liability:

Service cost

$

Interest

Benefit changes

Differences between expected and actual experience

Changes of assumptions

Benefit payments

Refunds of contributions

Net change in total pension liability

Total pension liability-beginning

Total pension liability-ending (a)

Plan fiduciary net position:

Contributions-employer

Contributions-nonemployer

Contributions-member

Net investment income

Benefit payments

Administrative expense

Refunds of contributions

Net change in plan fiduciary net position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

Net pension (asset)-ending (a)-(b)

$

Teachers Retirement System:

Total pension liability:

Service cost

$

Interest

Differences between expected and actual experience

Changes of assumptions

Benefit payments

Refunds of contributions

Net change in total pension liability

Total pension liability-beginning

Total pension liability-ending (a)

Plan fiduciary net position:

Contributions - employer

Contributions-nonemployer

Contributions-member

Net investment income

Benefit payments

Administrative expense

Refunds of contributions

Other**

Net change in plan fiduciary net position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

Net pension liability-ending (a)-(b)

$

2020
13,375 $ 31,047
693 (24) -- (29,263) (213) 15,615 440,041 455,656
4,022 2,442 5,005 25,415 (29,263) (850) (213) 6,558 479,372 485,930 (30,274) $
1,597,714 $ 7,080,133
368,463 1,316,780 (5,192,283)
(76,976) 5,093,831 100,291,641 105,385,472
2,732,925 5,729
800,864 4,119,609 (5,192,283)
(17,411) (76,976)
164 2,372,621 78,788,937 81,161,558 24,223,914 $

2019
13,350 $ 30,267 1,065 (5,250)
-- (27,462)
(553) 11,417 428,624 440,041
3,117 2,137 5,469 30,827 (27,462) (820) (553) 12,715 466,657 479,372 (39,331) $
1,536,336 $ 6,868,617
430,272 2,388,357 (4,950,465)
(76,543) 6,196,574 94,095,067 100,291,641
2,560,810 5,414
759,474 4,972,419 (4,950,465)
(15,276) (76,543)
179 3,256,012 75,532,925 78,788,937 21,502,704 $

2018
13,019 $ 28,666 3,442 6,379 7,466 (24,934)
(150) 33,888 394,736 428,624
4,725 1,841 4,910 39,877 (24,934) (794) (150) 25,475 441,182 466,657 (38,033) $
1,484,705 $ 6,565,372
894,691 --
(4,699,920) (76,061)
4,168,787 89,926,280 94,095,067
2,014,088 4,416
745,574 6,247,155 (4,699,920)
(15,865) (76,061) (27,434) 4,191,953 71,340,972 75,532,925 18,562,142 $

2017
12,514 26,826 3,419 5,258
-- (21,784)
(166) 26,067 368,669 394,736
4,081 2,603 4,906 49,259 (21,784) (728) (166) 38,171 403,011 441,182 (46,446)
1,413,080 6,293,611
573,483 --
(4,461,124) (76,296)
3,742,754 86,183,526 89,926,280
1,648,411 6,175
716,233 7,971,677 (4,461,124)
(16,773) (76,296)
258 5,788,561 65,552,411 71,340,972 18,585,308

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
Schedule includes all significant plans and funds administered by the State of Georgia. **Pursuant to the requirement of GASB 75, the fiscal year 2018 beginning Fiduciary Net Position was restated by $27,654 to reflect the impact of recording the initial Deferred Outflows of Resources and the Net OPEB liabilities and OPEB asset.

244

2016

2015

2014

$

12,713 $

7,751 $

7,584

26,058

25,566

24,530

--

--

--

(3,603)

(7,542)

--

(4,308)

--

--

(19,011)

(18,365)

(17,441)

(261)

(772)

(22)

11,588

6,638

14,651

357,081

350,443

335,792

368,669

357,081

350,443

4,754

2,696

1,373

2,869

1,564

1,002

5,507

5,061

4,731

5,055

14,697

60,012

(19,011)

(18,365)

(17,441)

(754)

(819)

(754)

(261)

(772)

(22)

(1,841)

4,062

48,901

404,852

400,790

351,889

403,011

404,852

400,790

$

(34,342) $

(47,771) $

(50,347)

$

1,435,808 $

1,386,498 $

1,374,556

5,990,178

5,779,597

5,557,046

380,526

(165,785)

--

662,047

--

--

(4,228,819)

(3,996,879)

(3,764,452)

(79,334)

(80,083)

(87,095)

4,160,406

2,923,348

3,080,055

82,023,120

79,099,772

76,019,717

86,183,526

82,023,120

79,099,772

1,572,624

1,399,668

1,264,546

7,908

7,038

6,417

685,626

661,835

640,120

810,574

2,384,145

9,826,743

(4,228,819)

(3,996,879)

(3,764,452)

(15,281)

(14,996)

(15,025)

(79,334)

(80,085)

(87,095)

--

(27,706)

--

(1,246,702)

333,020

7,871,254

66,799,113

66,466,091

58,594,837

65,552,411

66,799,113

66,466,091

$

20,631,115 $

15,224,007 $

12,633,681

(continued)

245

State of Georgia
Required Supplementary Information Schedules of Changes in Employers' and Nonemployers' Net Pension Liability Defined Benefit Pension Plans For the Last Seven Fiscal Years
(dollars in thousands)

Peace Officers' Annuity and Benefits Fund of Georgia Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of 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 Benefit payments Miscellaneous Administrative expense Refunds of 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)
Georgia Firefighters' Pension Fund: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of 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 Benefit payments Administrative expense Refunds of contributions Other Net change in plan fiduciary net position Plan fiduciary net position-beginning Plan fiduciary net position-ending (b) Net pension liability-ending (a)-(b)

2020

2019

$

15,137 $

14,015 $

51,838

49,361

--

12,271

14,854

(17,616)

(3,148)

--

(39,268)

(36,684)

(341)

(460)

39,072

20,887

802,169

781,282

841,241

802,169

13,021

14,444

3,641

3,542

25,732

50,633

(39,268)

(36,683)

261

119

(1,301)

(1,193)

(341)

(460)

1,745

30,402

825,675

795,273

827,420

825,675

$

13,821 $

(23,506) $

$

20,560 $

20,381 $

64,565

62,400

11,107

10,795

(550)

(4,165)

--

--

(53,786)

(50,704)

(1,012)

(1,149)

40,884

37,558

1,103,481

1,065,923

1,144,365

1,103,481

40,575

37,902

4,104

4,022

2,155

50,109

(53,786)

(50,704)

(2,200)

(1,509)

(1,012)

(1,149)

717

810

(9,447)

39,481

934,352

894,871

924,905

934,352

$

219,460 $

169,129 $

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

2018
13,771 $ 48,066 11,546
(350) --
(33,890) (470)
38,673 742,609 781,282
13,826 3,460 58,716 (33,890)
92 (1,076)
(470) 40,658 754,616 795,273 (13,992) $
19,713 $ 58,986 20,553 7,676
-- (47,256)
(954) 58,718 1,007,205 1,065,923
35,715 3,960 60,756 (47,256) (1,484) (954)
718 51,455 843,414 894,871 171,054 $

2017
15,049 52,255
-- (6,615) (32,942) (32,216)
(406) (4.875) 747,484 742,609
14,005 3,482 81,611 (32,216)
64 (947) (406) 65,593 689,021 754,615 (12,006)
19,557 56,847 9,980 (3,913)
-- (44,301) (1,121) 37,049 970,156 1,007,205
34,152 3,952 85,059 (44,301) (1,341) (1,121)
337 76,737 766,677 843,414 163,791

246

2016

2015

2014

$

12,826 $

13,085 $

17,890

50,242

47,138

43,877

--

--

--

(4,688)

--

--

--

14,577

--

(30,696)

(28,879)

(27,263)

(413)

(433)

(437)

27,271

45,488

34,067

720,213

674,725

640,658

747,484

720,213

674,725

14,713

15,341

15,342

3,527

3,537

3,532

(837)

15,771

103,600

(30,696)

(28,879)

(27,263)

66

65

90

(874)

(755)

(730)

(413)

(433)

(437)

(14,514)

4,647

94,134

703,535

698,889

604,755

689,021

703,536

698,889

$

58,463 $

16,677 $

(24,164)

$

19,398 $

18,377 $

17,889

54,164

53,833

51,850

14,201

--

--

771

(11,448)

--

--

54,973

--

(41,562)

(39,379)

(37,530)

(650)

(835)

(694)

46,322

75,521

31,515

923,835

848,314

816,799

970,157

923,835

848,314

32,684

31,489

30,034

3,970

3,896

3,836

5,973

12,080

111,715

(41,562)

(39,379)

(37,530)

(1,362)

(1,329)

(1,209)

(651)

(835)

(693)

293

296

332

(655)

6,218

106,485

767,333

761,115

654,630

766,678

767,333

761,115

$

203,479 $

156,502 $

87,199

247

State of Georgia
Required Supplementary Information Schedules of Investment Returns Defined Benefit Pension Plans For the Last Seven Fiscal Years

Pooled Investment Fund (ERS): Employees' Retirement System
Public School Employees Retirement System Georgia Judicial Retirement System
Teachers Retirement System

Annual money-weighted rate of return, net of investment expense

2020

2019

2018

2017

2016

2015

2014

(3.60%) (1.80%) 0.60% 2.90% (7.23%) (5.32%) (5.95%)

2.91% 4.08% 5.05% 7.62% (2.92%) (0.45%) 12.17%

Peace Officers' Annuity and Benefit Fund of Georgia

3.77%

6.14%

7.89% 11.91% 0.08%

2.53% 18.49%

Georgia Firefighters' Pension Fund

(0.20)% 5.11% 7.76% 11.10% 0.96% 1.23% 17.60%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

248

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Defined Benefit Pension Plans Methods and Assumptions For the Fiscal Year Ended June 30, 2020
Actuarial Methods and Assumptions - Plan Perspective:
This note provides information about changes of benefit terms, changes of assumptions, and methods and assumptions used in calculations of actuarially determined contributions.
Employees' Retirement System
Changes of benefit terms: A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2016, and a one-time 3% payment was granted to certain retirees and beneficiaries effective July 2017. Two onetime 2% payments were granted to certain retirees and beneficiaries effective July 2018 and January 2019. Two one-time 3% payments were granted to certain retirees and beneficiaries effective July 2019 and January 2020.
Changes of assumptions: On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, withdrawal, and salary increases. Subsequent to the June 30, 2017 measurement date, the ERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the ERS board's new funding policy the assumed investment rate of return was reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date, and remained unchanged for June 30, 2019.
Public School Employees Retirement System
Changes of benefit terms: The member contribution rate was increased from $4.00 to $10.00 per month for members joining the System on or after July 1, 2012. The monthly benefit accrual rate was increased from $14.75 to $15.00 per year of credible service effective July 1, 2017. The monthly benefit accrual was increased from $15.00 to $15.25 per year of credible service effective July 1, 2018. The monthly benefit accrual was increased from $15.25 to $15.50 per year of credible service effective July 1, 2019. A 2% cost-of-living adjustment (COLA) was granted to certain retirees and beneficiaries effective July 2016, another July 2017, and another July 2018. Two 1.5% COLAs were granted to certain retirees and beneficiaries effective July 2019 and January 2020.
Changes of assumptions: On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, withdrawal, and salary increases. Subsequent to the June 30, 2017 measurement date, the PSERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the PSERS board's new funding policy the assumed investment rate of return was reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date, and remained unchanged for June 30, 2019.
249

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Defined Benefit Pension Plans Methods and Assumptions For the Fiscal Year Ended June 30, 2020
Actuarial Methods and Assumptions - Plan Perspective: Georgia Judicial Retirement System Changes of benefit terms: Spouses benefits were changed for members joining the System on or after July 1, 2012. A 2% COLA was granted to certain retired members and beneficiaries effective July 1, 2016, another 2% COLA was granted effective July 1, 2017. Two one-time 2% payments were granted to certain retired members and beneficiaries effective July 2018 and January 2019. Two one-time 3% payments were granted to certain retirees and beneficiaries effective July 2019 and January 2020. Changes of assumptions: On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, withdrawal, and salary increases. Subsequent to the June 30, 2017 measurement date, the GJRS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for the June 30, 2017 actuarial valuation. In addition, based on the ERS board's new funding policy the assumed investment rate of return was reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date, and remained unchanged for June 30, 2019. Teachers Retirement System Changes of benefit terms: There were no changes in benefits terms that affect the measurement of the total pension liability since the prior measurement date. Changes of assumptions: On November 18, 2015, the Board adopted recommend changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, withdrawal, and salary increases. Based on the funding policy adopted by the Board on May 15, 2019, the investment rate of return assumption was changed to 7.25%. In addition, the assumed rate of inflation was changed to 2.50%. On May 13, 2020, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, disability, and withdrawal.
250

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Defined Benefit Pension Plans Methods and Assumptions For the Fiscal Year Ended June 30, 2020
Peace Officers' Annuity and Benefit Fund of Georgia
Changes of benefit terms: For fiscal year 2019, the Board of Commissioners approved a 1.5% COLA effective January 1, 2018. For fiscal year 2020, the Board of Commissioners approved a 1.5% COLA effective January 1, 2020.
Change in assumptions: For fiscal year 2015, the mortality table was changed to the RP 2014 Healthy Mortality Table with blue collar adjustment and generational mortality projection using Scale MP-2014 for healthy lives and to the RP-2014 Disabled Retiree Mortality Table with generational mortality projection using Scale MP-2014 for disabled lives. For fiscal year 2017, the mortality table for healthy lives was updated to the RP-2014 Healthy Mortality Table with blue collar adjustments and generational mortality projection using with Conduent modified MP-2016 scale and the mortality table for disabled lives was updated to the RP-2014 Disabled Retiree Mortality Table with generational mortality projection using the Conduent modified MP-2016 scale. Also, the active retirement and termination rates were updated based on the results of an experience study covering the period June 30, 2008 through June 30, 2015. In addition, the discount rate was decreased from 7.0% to 6.50%. For fiscal year 2020, the mortality improvement scale was changed from Buck Modified MP-2016 to MP-2019 with no modifications. This change was made to better reflect current mortality improvements expectations.
Georgia Firefighters' Pension Fund
Changes of benefit terms: In 2016, a one-time 1.5% COLA was granted to retired members and beneficiaries and to the benefit rate for future retirees effective as of July 1, 2016. In 2017, a one-time 1% COLA was granted to retired members and beneficiaries and to the benefit rate for future retirees effective as of July 1, 2017. In 2018, a one-time 1% 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. In 2019, a one-time 1% COLA was granted to retired members and beneficiaries and to the benefit rate for future retirees effective as of January 1, 2019. In 2020, a one-time 1% COLA was granted to retired members and beneficiaries and to the benefit rate for future retirees effective as of January 1, 2020.
Change in assumptions: In 2013, a funding policy was adopted which changes the amortization period of the unfunded actuarial accrued liability from 15 to 30 years. Also, in 2015 the following changes were made:
The assumed investment rate of return was lowered from 6.5% to 6.0%. The assumed rate of inflation was lowered from 3.0% to 2.75% Rates of withdrawal and retirement were adjusted to more closely reflect actual experience. Rates of mortality were adjusted during the experience study. Pre-retirement mortality rates were changed
to the RP 2000 employee mortality table projected to 2025 with projection scale BB set forward one year for males and four years for females. Post-retirement mortality rates were changed to the RP 2000 blue collar mortality table projected to 2025 with projection scale BB. Post-disability mortality rates were changed to the RP 2000 disabled mortality table projected to 2025 with projection scale BB set forward five years for males and three 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.
251

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Defined Benefit Pension Plans Methods and Assumptions For the Fiscal Year Ended June 30, 2020
Actuarial Methods and Assumptions - Plan Perspective:

Methods and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedules of employers' and non-employers' contributions are calculated as of June 30, one to three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the most recent contribution rates in those schedules:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases: Investment rate of return
Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return
Cost-of-living adjustment Post-retirement benefit increases:

ERS June 30, 2017 Entry age Level dollar, closed 16.5 years 5-year smoothed fair 2.75% 3.25 - 7.0%
7.50%, net of pension plan investment
expense, including inflation

GJRS June 30, 2017 Entry age Level percent of pay, closed 16.1 years 5-year smoothed fair 2.75% 4.50%
7.50%, net of pension plan investment
expense, including inflation

PSERS June 30, 2017 Entry age Level dollar, closed 21.2 years 5-year smoothed fair 2.75% N/A
7.50%, net of pension plan investment
expense, including inflation 1.50%, semi-annually

TRS June 30, 2017 Entry age Level percent of payroll, closed 27.1 years 5-year smoothed fair 2.75% 3.25 - 9.0%, including inflation 7.50%, net of pension plan investment
expense, including inflation
1.50%, semi-annually

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method
Inflation Salary increases Investment rate of return

Peace Officers' June 30, 2019 Entry age normal Level dollar, open 30 years Actuarial value
2.50% N/A 6.50%, net of pension plan investment
expense, including inflation

Firefighters' June 30, 2019 Entry age normal Level dollar, closed 25.3 years
5-year smoothed market with 15.0%
corridor 2.75% N/A
6.0%, net of pension plan investment
expense, including inflation

Schedule includes all significant plans and funds administered by the State of Georgia.

252

State of Georgia
Required Supplementary Information Schedules of State's Contributions - As Employer Defined Benefit Pension Plans For the Last Six Fiscal Years
(dollars in thousands)

Primary Government Employees' Retirement System:
Statutorily required contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess)
State's covered payroll
Contributions as a percentage of the covered payroll
Georgia Judicial Retirement System:
Statutorily required contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess)
State's covered payroll
Contributions as a percentage of the covered payroll
Teachers Retirement System:
Statutorily required contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess)
State's covered payroll
Contributions as a percentage of the covered payroll
Component Units Employees' Retirement System:
Statutorily required contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess)
State's covered payroll
Contributions as a percentage of the covered payroll
Teachers Retirement System:
Statutorily required contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess)
State's covered payroll
Contributions as a percentage of the covered payroll

2020

2019

2018

2017

$ 578,020 $ 578,876 $ 582,189 $ 554,976

(578,020)

(578,876)

(582,189)

(554,976)

$

-- $

-- $

-- $

--

$ 2,389,515 $ 2,378,687 $ 2,403,879 $ 2,257,282

24.19 %

24.34 %

24.22 %

24.59 %

$

3,270 $

2,741 $

2,507 $

3,701

(3,270)

(2,741)

(2,507)

(3,701)

$

-- $

-- $

-- $

--

$

35,811 $

34,988 $

34,956 $

35,440

9.13 %

7.83 %

7.17 %

10.44 %

$ 457,759 $ 434,861 $ 339,634 $ 276,210

(457,759)

(434,861)

(339,634)

(276,210)

$

-- $

-- $

-- $

--

$ 2,169,964 $ 2,075,231 $ 2,016,415 $ 1,934,055

21.10 %

20.95 %

16.84 %

14.28 %

$

9,324 $

9,369 $

9,184 $

9,576

(9,324)

(9,369)

(9,184)

(9,576)

$

-- $

-- $

-- $

--

$

40,397 $

40,121 $

37,649 $

36,171

23.08 %

23.35 %

24.39 %

26.47 %

$

15,748 $

14,338 $

11,195 $

(15,748)

(14,338)

(11,195)

$

-- $

-- $

-- $

$

74,484 $

68,606 $

66,582 $

21.14 %

20.90 %

16.81 %

9,248
(9,248) --
64,715
14.29 %

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

254

2016

2015

$ 505,411 $ 440,602

(505,411)

(440,602)

$

-- $

--

$ 2,103,422 $ 1,875,953

24.03 %

23.49 %

$

4,134 $

2,209

(4,134)

(2,209)

$

-- $

--

$

33,710 $

31,184

12.26 %

7.08 %

$ 261,758 $ 230,939

(261,758)

(230,939)

$

-- $

--

$ 1,832,311 $ 1,756,586

14.29 %

13.15 %

$

9,425 $

8,304

(9,425)

(8,304)

$

-- $

--

$

39,238 $

35,265

24.02 %

23.55 %

$

8,616 $

8,231

(8,616)

(8,231)

$

-- $

--

$

63,339 $

62,558

13.60 %

13.16 %

255

State of Georgia
Required Supplementary Information Schedules of State's Contributions - As Nonemployer Contributing Entity Defined Benefit Pension Plans For the Last Six Fiscal Years
(dollars in thousands)

Employees' Retirement System:
Statutorily required contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess)

2020

2019

2018

2017

$

9,840 $

10,404 $

10,781 $

11,967

(9,840)

(10,404)

(10,781)

(11,967)

$

-- $

-- $

-- $

--

Public School Employees Retirement System:

Statutorily required contribution

$

Contributions in relation to the statutorily required contribution

Contribution Deficiency (excess)

$

32,496 $
(32,496) -- $

30,263 $
(30,263) -- $

29,276 $
(29,276) -- $

26,277
(26,277) --

Georgia Judicial Retirement System:

Statutorily required contribution

$

Contributions in relation to the statutorily required contribution

Contribution Deficiency (excess)

$

2,428 $
(2,428) -- $

2,065 $
(2,065) -- $

1,838 $
(1,838) -- $

2,575
(2,575) --

Teachers Retirement System:

Statutorily required contribution

$

Contributions in relation to the statutorily required contribution

Contribution Deficiency (excess)

$

5,729 $
(5,729) -- $

5,414 $
(5,414) -- $

4,420 $
(4,420) -- $

6,152
(6,152) --

Peace Officers' Annuity and Benefit Fund of Georgia

Statutorily required contribution

$

Contributions in relation to the statutorily required contribution

Contribution Deficiency (excess)

$

13,021 $
(13,021) -- $

14,444 $
(14,444) -- $

13,826 $
(13,826) -- $

14,005
(14,005) --

Georgia Firefighters' Pension Fund:

Statutorily required contribution

$

Contributions in relation to the statutorily required contribution

Contribution Deficiency (excess)

$

40,575 $
(40,575) -- $

37,902 $
(37,902) -- $

35,715 $
(35,715) -- $

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

34,152
(34,152) --

256

2016

2015

$

12,138 $

11,174

(12,138)

(11,174)

$

-- $

--

$

28,580 $

28,461

(28,580)

(28,461)

$

-- $

--

$

2,902 $

1,558

(2,902)

(1,558)

$

-- $

--

$

7,944 $

7,038

(7,944)

(7,038)

$

-- $

--

$

14,713 $

15,341

(14,713)

(15,341)

$

-- $

--

$

32,684 $

31,489

(32,684)

(31,489)

$

-- $

--

257

State of Georgia
Required Supplementary Information Schedules of State's Proportionate Share of the Net Pension Liability - As Employer Defined Benefit Pension Plans For the Last Six Fiscal Years
(dollars in thousands)

Primary Government
Employees' Retirement System: State's proportion of the net pension liability
State's proportionate share of the net pension liability State's Covered payroll

2020

2019

2018

88.906000 %

88.948204 %

88.415594 %

$

3,667,433 $

3,656,194 $

3,590,854 $

$

2,378,687 $

2,403,879 $

2,257,282 $

State's proportionate share of the net pension liability as a percentage of its covered payroll
Plan fiduciary net position as a percentage of the total pension liability

Georgia Judicial Retirement System: State's proportion of the net pension liability

State's proportionate share of the net pension liability

$

State's Covered payroll

$

State's proportionate share of the net pension liability as a percentage of its covered payroll
Plan fiduciary net position as a percentage of the total pension liability

Teachers Retirement System: State's proportion of the net pension liability

State's proportionate share of the net pension liability

$

State's Covered payroll

$

154.18 % 76.74 %
57.017332 % (22,425) $ 34,988 $
(64.09%) 108.94 %
17.045266 % 3,664,958 $ 2,075,231 $

152.10 % 76.68 %
57.814059 % (21,988) $ 34,956 $
(62.90%) 108.87 %
17.011357 % 3,157,367 $ 2,016,415 $

159.08 % 76.33 %
58.970340 % (27,390) $ 35,440 $
(77.29%) 111.77 %
16.885665 % 3,137,798 $ 1,934,055 $

State's proportionate share of the net pension liability as a percentage of its covered payroll
Plan fiduciary net position as a percentage of the total pension liability

Component Units

Employees' Retirement System: State's proportion of the net pension liability

State's proportionate share of the net pension liability

$

State's Covered payroll

$

State's proportionate share of the net pension liability as a percentage of its covered payroll
Plan fiduciary net position as a percentage of the total pension liability

176.60 % 78.56 %
1.473466 % 60,803 $ 40,121 $ 151.55 % 76.74 %

156.58 % 80.27 %
1.369623 % 56,305 $ 37,649 $ 149.55 % 76.68 %

162.24 % 79.33 %
1.501635 % 60,985 $ 36,171 $ 168.60 % 76.33 %

The amounts presented for each fiscal year were determined as of the prior fiscal year-end.
This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

2017
87.798535 % 4,153,237 2,103,422
197.45 % 72.34 %
58.753912 % (20,177) 33,710 (59.85%) 109.32 %
16.741530 % 3,453,291 1,832,311
188.47 % 76.06 %
1.639295 % 77,545 39,238 197.63 % 72.34 %

258

2016

2015

87.682412 %

87.266834 %

$ 3,552,363 $ 3,273,046 $ 1,875,953 $ 1,615,070

189.36 % 76.20 %

202.66 % 77.99 %

58.635878 %

57.356971 %

$

(28,011) $

(28,878)

$

31,184 $

29,887

(89.82%) 113.38 %

(96.62%) 114.37 %

16.687812 %

16.517474 %

$ 2,540,211 $ 2,086,629 $ 1,756,586 $ 1,683,292

144.61 % 81.44 %

123.96 % 84.03 %

1.557127 %

1.543905 %

$

63,085 $

57,906

$

35,265 $

28,075

178.89 % 76.20 %

206.25 %
77.99 % (continued)

259

State of Georgia
Required Supplementary Information Schedules of State's Proportionate Share of the Net Pension Liability - As Employer Defined Benefit Pension Plans For the Last Six Fiscal Years
(dollars in thousands)

Component Units

2020

2019

2018

Teachers Retirement System: State's proportion of the net pension liability

0.562276 %

0.558992 %

0.564739 %

State's proportionate share of the net pension liability State's Covered payroll

$

120,905 $

103,761 $

104,910 $

$

68,606 $

66,582 $

64,715 $

State's proportionate share of the net pension liability as a percentage of its covered payroll
Plan fiduciary net position as a percentage of the total pension liability

176.23 % 78.56 %

155.84 % 80.27 %

162.11 % 79.33 %

The amounts presented for each fiscal year were determined as of the prior fiscal year-end. This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

2017
0.577541 % 119
63,339 187.83 % 76.06 %

260

2016

2015

0.564109 %

0.590520 %

$

85,798 $

74,604

$

62,558 $

60,180

137.15 % 81.44 %

123.97 % 84.03 %

261

State of Georgia
Required Supplementary Information Schedules of State's Proportionate Share of the Net Pension Liability As Nonemployer Contributing Entity Defined Benefit Pension Plans For the Last Six Fiscal Years
(dollars in thousands)

Employees' Retirement System: State's proportion of the net pension liability (asset)
State's proportionate share of the net pension liability (asset) $ Plan fiduciary net position as a percentage of the total pension
liability

2020
1.633579 % 67,410 $ 76.74 %

2019
1.696518 % 69,744 $ 76.68 %

2018
1.891959 % 76,839 $ 76.33 %

2017
2.111751 % 99,895 72.34 %

Public School Employees Retirement System: State's proportion of the net pension liability (asset)

100.000000 %

100.000000 %

100.000000 %

100.000000 %

State's proportionate share of the net pension liability (asset) $
Plan fiduciary net position as a percentage of the total pension liability

165,908 $ 85.02 %

158,027 $ 85.26 %

145,029 $ 85.69 %

188,517 81.00 %

Georgia Judicial Retirement System: State's proportion of the net pension liability (asset)
State's proportionate share of the net pension liability (asset) $ Plan fiduciary net position as a percentage of the total pension
liability

42.982668 % (16,906) $ 108.94 %

42.185941 % (16,045) $ 108.87 %

41.029660 % (19,057) $ 111.77 %

41.246088 % (14,165) 109.32 %

Teachers Retirement System:
State's proportion of the net pension liability (asset)
State's proportionate share of the net pension liability (asset) $ Plan fiduciary net position as a percentage of the total pension
liability

0.212260 % 45,642 $ 78.56 %

0.220738 % 40,974 $ 80.27 %

0.375432 % 69,775 $ 79.33 %

0.507487 % 104,700
76.06 %

Peace Officers' Annuity and Benefit Fund of Georgia: State's proportion of the net pension liability (asset)

100.000000 %

100.000000 %

100.000000 %

100.000000 %

State's proportionate share of the net pension liability (asset) $
Plan fiduciary net position as a percentage of the total pension liability

(23,505) $ 102.93 %

(13,992) $ 101.79 %

(12,006) $ 101.62 %

58,463 92.18 %

Georgia Firefighters' Pension Fund: State's proportion of the net pension liability (asset)

100.000000 %

100.000000 %

100.000000 %

100.000000 %

State's proportionate share of the net pension liability (asset) $
Plan fiduciary net position as a percentage of the total pension liability

169,132 $ 84.67 %

171,054 $ 83.95 %

163,791 $ 83.74 %

203,479 79.03 %

The amounts presented for each fiscal year were determined as of the prior fiscal year-end. This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

262

2016

2015

2.225584 %

2.410713 %

$

90,167 $

90,417

76.20 %

77.99 %

100.000000 %

100.000000 %

$

123,050 $

109,012

87.00 %

88.29 %

41.364122 %

42.643029 %

$

(19,760) $

(21,469)

113.38 %

114.37 %

0.507036 %

0.504588 %

$

77,191 $

63,748

81.44 %

84.03 %

100.000000 %

100.000000 %

$

16,677 $

(24,164)

97.68 %

103.58 %

100.000000 %

100.000000 %

$

156,502 $

87,199

83.06 %

89.72 %

263

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Defined Benefit Pension Plans Methods and Assumptions For the Fiscal Year Ended June 30, 2020
Actuarial Methods and Assumptions - State as Employer Perspective
This note provides information about changes of benefit terms, changes of assumptions, and methods and assumptions used in calculations of actuarially determined contributions.
Employees' Retirement System
Changes of benefit terms: A new benefit tier was added for members joining the System on and after July 1, 2009. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2016. A one-time 3% payment was granted to certain retirees and beneficiaries effective July 2017. Two one-time 2% payments were granted to certain retirees and beneficiaries effective July 2018 and January 2019.
Changes of assumptions: On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, and withdrawal. Subsequent to the June 30, 2017 measurement date, the ERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the ERS Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of June 30, 2018 measurement date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability.
Public School Employees Retirement System
Changes of benefit terms: The member contribution rate was increased from $4.00 to $10.00 per month for members joining the System on or after July 1, 2012. The monthly benefit accrual rate was increased from $14.75 to $15.00 per year of creditable service effective July 1, 2017. The monthly benefit accrual rate was increased from $15.00 to $15.25 per year of creditable service effective July 1, 2018.
Changes of assumptions: On December 17, 2015, the Board adopted recommend changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement and withdrawal. Subsequent to the June 30, 2017 measurement date, the PSERS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the PSERS Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of June 30, 2018 Measurement Date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability.
Georgia Judicial Retirement System
Changes of benefit terms: Spouses benefits were changed for members joining the System on or after July 1, 2012. A 2% COLA was granted to certain retired members and beneficiaries effective July 1, 2016, another 2% COLA was granted effective July 1, 2017. Two one-time 2% payments were granted to certain retired members and beneficiaries effective July 2018 and January 2019.
Changes of assumptions: On December 17, 2015, the Board adopted recommend changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality,
264

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Defined Benefit Pension Plans Methods and Assumptions For the Fiscal Year Ended June 30, 2020
retirement, withdrawal, and salary increases. Subsequent to the June 30, 2017 measurement date, the GJRS Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of June 30, 2018 Measurement Date. Therefore, an assumption change from 7.50% to 7.30% is reflected in the calculation of the total pension liability. Teachers Retirement System Changes of benefit terms: There were no changes in benefits terms that affect the measurement of the total pension liability since the prior measurement date. Changes of assumptions: In late 2015, the Board adopted recommend changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, withdrawal, and salary increases. Peace Officers' Annuity and Benefit Fund of Georgia Changes of benefit terms: For fiscal year 2019, a 1.5% COLA effective July 1, 2018. For fiscal year 2020, a 1.5% COLA adjustment effective January 1, 2020. Change in assumptions: For fiscal year 2015, the mortality table was changed to the RP 2014 Healthy Mortality Table with blue collar adjustment and generational mortality projection using Scale MP-2014 for healthy lives and to the RP-2014 Disabled Retiree Mortality Table with generational mortality projection using Scale MP-2014 for disabled lives. For fiscal year 2017, the mortality table for healthy lives was updated to the RP-2014 Healthy Mortality Table with blue collar adjustments and generational mortality projection using with Conduent modified MP-2016 scale and the mortality table for disabled lives was updated to the RP-2014 Disabled Retiree Mortality Table with generational mortality projection using the Conduent modified MP-2016 scale. Also, the active retirement and termination rates were updated based on the results of an experience study covering the period June 30, 2008 through June 30, 2015. In addition, the discount rate was decreased from 7.0% to 6.50%.
265

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Defined Benefit Pension Plans Methods and Assumptions For the Fiscal Year Ended June 30, 2020
Georgia Firefighters' Pension Fund Changes of benefit terms: In 2016, a one-time 1.5% COLA was granted to retired members and beneficiaries and to the benefit rate for future retirees effective as of July 1, 2016. In 2017, 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 July 1, 2017. In 2018, a one-time 1% 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. Change in assumptions: In 2013, a funding policy was adopted which changes the amortization period of the unfunded actuarial accrued liability from 15 to 30 years. Also, in 2015 the following changes were made:
The assumed investment rate of return was lowered from 6.5% to 6.0%. The assumed rate of inflation was lowered from 3.0% to 2.75% Rates of withdrawal and retirement were adjusted to more closely reflect actual experience. Rates of mortality were adjusted during the experience study. Pre-retirement mortality rates were changed
to the RP 2000 employee mortality table projected to 2025 with projection scale BB set forward one year for males and four years for females. Post-retirement mortality rates were changed to the RP 2000 blue collar mortality table projected to 2025 with projection scale BB. Post-disability mortality rates were changed to the RP 2000 disabled mortality table projected to 2025 with projection scale BB set forward five years for males and three 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.
266

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Defined Benefit Pension Plans Methods and Assumptions For the Fiscal Year Ended June 30, 2020
Actuarial Methods and Assumptions - State as Employer Perspective

Methods and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedules of employers' and non-employers' contributions are calculated as of June 30, one to three years prior to the end of the fiscal year in which contributions are reported. The following actuarial methods and assumptions were used to determine the most recent contribution rates in those schedules:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases: Investment rate of return
Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return
Post-Retirement Benefit Increases
Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method
Inflation Salary increases Investment rate of return

ERS June 30, 2016 Entry age Level dollar, closed 18.2 years 5-year smoothed market 2.75% 3.25 - 7.00%, including inflation
7.50%, net of pension plan investment
expense, including inflation

GJRS June 30, 2016 Entry age Level percent of pay, closed 17.8 years 5-year smoothed fair 2.75% 4.50%, including inflation
7.50%, net of pension plan investment
expense, including inflation

PSERS June 30, 2016 Entry age Level dollar, closed 21.9 years 5-year smoothed market 2.75% N/A
7.50%, net of pension plan investment
expense, including inflation
1.50% semi-annually

TRS June 30, 2016 Entry age Level percent of payroll, closed 28.0 years 5-year smoothed market 2.75% 3.25 - 9.00%, including inflation
7.50%, net of pension plan investment
expense, including inflation
1.50% semi-annually

Peace Officers' June 30, 2018 Entry age normal Level dollar, open 30 years Actuarial value
1.90% N/A 6.5%, net of pension plan investment
expense, including inflation

Firefighters' June 30, 2018 Entry age normal Level dollar, closed 26.3 years 5-year smoothed market with 15.0%
corridor 2.75% N/A
6.00%, net of pension plan investment
expense, including inflation

Schedule includes all significant plans and funds administered by the State of Georgia

267

REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFITS (OPEB)

State of Georgia
Required Supplementary Information Schedule of Employers' Contributions Multi-Employer and Single-Employer OPEB Plans For the Last Ten Fiscal Years
(dollars in thousands)

State OPEB1 School OPEB1

Year Ended

Actuarially Determined Contribution
(a)

Contributions in Relation to the
Actuarially Determined Contribution
(b)

Contribution Deficiency/
(Excess) (a - b)

Covered Payroll

Contributions as a Percentage
of Covered Payroll (b/c)

6/30/2011 $ 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020

327,053 $ 317,100 338,819 321,456 275,681 259,250 202,092 232,161 218,962 210,034

168,384 $ 181,899 181,504 177,045 267,235 574,015 498,202 501,574 534,673 150,489

158,669 $ 2,542,891 135,201 2,408,000 157,315 2,328,334 144,411 2,293,104
8,446 2,333,060 (314,765) 2,404,901 (296,110) 2,483,060 (269,413) 2,535,722 (315,711) 2,802,815
59,545 2,797,241

6.62 % 7.55 % 7.80 % 7.72 % 11.45 % 23.87 % 20.06 % 19.78 % 19.08 % 5.38 %

6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020

1,050,851 1,054,708
982,120 943,310 873,278 873,736 669,894 824,872 833,291 786,912

339,221 380,859 362,527 408,422 408,538 432,438 521,408 518,290 538,569 338,177

711,630 673,849 619,593 534,888 464,740 441,298 148,486 306,582 294,722 448,735

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

(continued)

1 Refer to the "Notes to the Required Supplementary Information" (Plan Perspective) for additional information regarding OPEB funding.
Schedule includes all significant plans and funds administered by the State of Georgia.

270

Year Ended

Actuarially Determined Contribution
(a)

Contributions in Relation to the
Actuarially Determined Contribution
(b)

Contribution Deficiency/
(Excess) (a - b)

Covered Payroll

Contributions as a Percentage
of Covered Employee
Payroll (b/c)

Regents Plan2,4,5

6/30/2011 $ 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020

411,516 $ 345,298 362,426 403,314 442,359 295,192 349,859 467,338 484,599 417,744

80,262 $ 88,836 83,414 120,926 129,823 111,814 99,584 158,420 160,383 102,792

331,254 256,462 279,012 282,388 312,536 183,378 250,275 308,918 324,216 314,952

$ 2,432,367 2,526,212 2,466,314 2,594,800 2,608,757 3,087,013 3,122,694 3 3,218,771 3,375,246 3,622,124

3.30 % 3.52 % 3.58 % 4.66 % 4.98 % 3.62 % 3.19 % 4.92 % 4.75 % 2.84 %

SEAD-OPEB5

6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017 6/30/2018 6/30/2019 6/30/2020

-- 12,724 5,009
-- -- -- -- -- -- --

-- 12,724 5,009
-- -- -- -- -- -- --

--

N/A

-- 2,085,902

-- 1,855,185

--

N/A

--

N/A

--

N/A

--

N/A

--

N/A

--

N/A

--

N/A

N/A 0.61 % 0.27 %
N/A N/A N/A N/A N/A N/A N/A

2 For purposes of GASB 75, the Regents plans present Covered-Employee Payroll.
3 June 30, 2017 covered employee payroll for the Board of Regents Retiree Health Benefit Plan was restated. 4 Refer to the "Notes to the Required Supplementary Information" (Plan Perspective) for additional information regarding
OPEB funding.
5 This data, except for annual covered payroll, was provided by each plan's actuary. Schedule includes all significant plans and funds administered by the State of Georgia.

271

State of Georgia
Required Supplementary Information Schedule of Employers' Net OPEB Liability Multi-Employer and Single-Employer OPEB Plans For the Last Four Fiscal Years
(dollars in thousands)

State OPEB Fund:
Total OPEB liability
Plan fiduciary net position
Employers' net OPEB liability Plan fiduciary net position as a percentage of the total OPEB liability
Covered payroll Employers' net OPEB liability as a percentage of covered payroll

2020

2019

2018

2017

$ 2,792,919 1,667,521
$ 1,125,398

$ 2,858,521 1,617,207
$ 1,241,314

$ 3,817,453 1,201,865
$ 2,615,588

$ 4,929,142 854,937
$ 4,074,205

59.71 %

56.57 %

31.48 %

17.34 %

$ 2,797,241 $ 2,802,815 $ 2,535,722 $ 2,483,060

40.23 %

44.29 %

103.15 %

164.08 %

School OPEB Fund:
Total OPEB liability
Plan fiduciary net position
Employers' net OPEB liability Plan fiduciary net position as a percentage of the total OPEB liability
Covered payroll Employers' net OPEB liability as a percentage of covered payroll

$ 15,298,688 611,017
$ 14,687,671

$ 12,867,274 595,129
$ 12,272,145

$ 13,092,956 383,263
$ 12,709,693

$ 14,279,644 229,685
$ 14,049,959

3.99 % N/A

4.63 % N/A

2.93 % N/A

1.61 % N/A

N/A

N/A

N/A

N/A

SEAD-OPEB Plan:
Total OPEB liability
Plan fiduciary net position
Employers' net OPEB (asset) Plan fiduciary net position as a percentage of the total OPEB liability
Covered payroll Employers' net OPEB (asset) as a percentage of covered payroll

$ 972,700 1,256,718
$ (284,018)

$ 951,091 1,233,856
$ (282,765)

$ 918,816 1,189,462
$ (270,646)

$ 861,346 1,121,251
$ (259,905)

129.20 %

129.73 %

129.46 %

130.17 %

$ 1,135,433 $ 1,211,274 $ 1,328,485 $ 1,383,860

(25.01%)

(23.34%)

(20.37%)

(18.78%)

Regents Plan:
Total OPEB liability
Plan fiduciary net position
Employers' net OPEB liability Plan fiduciary net position as a percentage of the total OPEB liability
Covered payroll* Employers' net OPEB liability as a percentage of covered payroll

$ 5,493,697 159,978
$ 5,333,719

$ 4,616,023 144,455
$ 4,471,568

$ 4,486,796 76,045
$ 4,410,751

$ 4,227,583 7,857
$ 4,219,726

2.91 %

3.13 %

1.69 %

0.19 %

$ 3,622,124 $ 3,375,246 $ 3,218,771 $ 3,122,694

147.25 %

132.48 %

137.03 %

135.13 %

* June 30, 2017 covered employee payroll for the Board of Regents Retiree Health Benefit Plan was restated. This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

272

State of Georgia
Required Supplementary Information Schedule of Changes in Employers' Net OPEB Liability Multi-Employer and Single-Employer OPEB Plans For the Last Four Fiscal Years
(dollars in thousands)

State OPEB Fund:

Total OPEB liability:

Service cost

$

Interest Differences between expected and actual experience

Changes of assumptions

Benefit payments

Net change in total OPEB liability

Total OPEB liability-beginning

Total OPEB liability-ending (a)

Plan fiduciary net position:

Contributions-employer

Net investment income

Benefit payments

Administrative expense

Net change in plan fiduciary net position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

Net OPEB liability-ending (a)-(b)

$

School OPEB Fund:

Total OPEB liability:

Service cost

$

Interest

Differences between expected and actual experience

Changes of assumptions

Benefit payments

Net change in total OPEB liability

Total OPEB liability-beginning

Total OPEB liability-ending (a)

Plan fiduciary net position:

Contributions-employer

Net investment income

Benefit payments

Administrative expense

Net change in plan fiduciary net position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

Net OPEB liability-ending (a)-(b)

$

2020
39,825 $ 203,201 (185,261) 26,555 (149,922) (65,602) 2,858,521 2,792,919
150,489 51,938 (149,922) (2,191) 50,314 1,617,207 1,667,521 1,125,398 $
458,802 $ 454,637 (619,357) 2,473,164 (335,832) 2,431,414 12,867,274 15,298,688
338,177 18,795 (335,832) (5,252) 15,888 595,129 611,017 14,687,671 $

2019
63,724 $ 194,860 (371,757) (676,765) (168,993) (958,931) 3,817,452 2,858,521
534,673 51,687 (168,993) (2,025) 415,342 1,201,865 1,617,207 1,241,314 $
408,667 $ 500,123 (1,298,677) 503,959 (339,754) (225,682) 13,092,956 12,867,274
538,569 17,468 (339,754) (4,417) 211,866 383,263 595,129 12,272,145 $

2018
112,297 $ 174,427 (267,124) (963,394) (167,896) (1,111,690) 4,929,142 3,817,452
501,574 15,300 (167,896) (2,052) 346,926 854,939 1,201,865 2,615,587 $
521,135 $ 504,681 (341,373) (1,506,313) (364,818) (1,186,688) 14,279,644 13,092,956
518,290 4,563
(364,818) (4,457)
153,578 229,685 383,263 12,709,693 $

2017
119,686 158,096
-- (383,932) (162,145) (268,295) 5,197,437 4,929,142
498,202 4,696
(162,145) (2,077)
338,676 516,261 854,937 4,074,205
557,770 452,024
-- (1,262,291)
(383,556) (636,053) 14,915,697 14,279,644
521,408 1,148
(383,556) (4,727)
134,273 95,412 229,685 14,049,959 (continued)

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia

274

State of Georgia
Required Supplementary Information Schedule of Changes in Employers' Net OPEB Liability Multi-Employer and Single-Employer OPEB Plans For the Last Four Fiscal Years
(dollars in thousands)

SEAD-OPEB Plan:

Total OPEB liability:

Service cost

$

Interest

Differences between expected and actual experience

Changes of assumptions

Benefit payments

Net change in total OPEB liability

Total OPEB liability-beginning

Total OPEB liability-ending (a)

Plan fiduciary net position:

Insurance premiums-member

Net investment income

Benefit payments

Administrative expense

Other

Net change in plan fiduciary net position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

Net OPEB (asset)-ending (a)-(b)

$

Regents Plan:

Total OPEB liability:

Service cost

$

Interest

Benefit changes

Differences between expected and actual experience

Changes of assumptions

Benefit payments

Net change in total OPEB liability

Total OPEB liability-beginning

Total OPEB liability-ending (a)

Plan fiduciary net position:

Contributions-employer

Net investment income

Benefit payments

Administrative expense

Net change in plan fiduciary net position

Plan fiduciary net position-beginning

Plan fiduciary net position-ending (b)

Net OPEB liability-ending (a)-(b)

$

2020
3,237 $ 67,796 (4,670)
-- (44,754) 21,609 951,091 972,700
3,088 65,248 (44,754)
(720) --
22,862 1,233,856 1,256,718 (284,018) $
226,809 $ 167,864 (81,917) 94,948 564,180 (94,211) 877,673 4,616,023 5,493,697
102,792 7,528
(94,211) (586)
15,523 144,455 159,978 5,333,719 $

2019
3,617 $ 65,708
366 -- (37,416) 32,275 918,816 951,091
3,328 79,193 (37,416)
(716) 5
44,394 1,189,462 1,233,856 (282,765) $
217,648 $ 180,173 (11,211) (29,667) (129,153) (98,563) 129,227 4,486,796 4,616,023
160,383 7,126
(98,563) (536)
68,410 76,045 144,455 4,471,568 $

2018
3,695 $ 63,242 4,697 22,085 (36,249) 57,470 861,346 918,816
3,599 101,542 (36,249)
(681) --
68,211 1,121,251 1,189,462 (270,646) $
236,917 $ 158,223
-- 264,729 (310,107) (90,549) 259,213 4,227,583 4,486,796
158,420 802
(90,549) (485)
68,188 7,857 76,045 4,410,751 $

2017
3,959 61,076
-- -- (36,058) 28,977 832,369 861,346
3,793 125,550 (36,058)
(576) 1
92,710 1,028,541 1,121,251 (259,905)
211,513 124,612
-- 123,090 (347,331) (89,653) 22,231 4,205,352 4,227,583
99,584 72
(89,653) (5,045) 4,958 2,899 7,857 4,219,726

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

275

State of Georgia
Required Supplementary Information Schedule of Investment Returns Multi-Employer and Single-Employer OPEB Plans For the Last Four Fiscal Years

State OPEB Fund School OPEB Fund SEAD-OPEB Plan Regents Plan

Annual money-weighted rate of return, net of investment expense

2020

2019

2018

2017

3.21%

3.85%

1.54%

0.74%

3.16%

3.80%

1.57%

0.78%

(3.60%) (1.80%)

0.60%

2.90%

5.27%

7.99%

2.85%

0.99%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.
Schedule includes all significant plans and funds administered by the State of Georgia.

276

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Methods and Assumptions Multi-Employer and Single-Employer OPEB Plans June 30, 2020
Actuarial Methods and Assumptions - Plan Perspective:
This note provides information about changes of benefit terms, changes of assumptions, and methods and assumptions used in calculations of the OPEB liability/asset and required contributions.
State OPEB Fund
Changes of benefit terms: There have been no changes in benefit terms.
Changes of assumptions: June 30, 2019 valuation: The inflation assumption was lowered from 2.75% to 2.5% in anticipation of the upcoming ERS Experience Study. Additionally, decremental assumptions were changed to reflect the TRS experience study. Approximately 6% of State OPEB employees are members of TRS. June 30, 2017 valuation: The participation assumption, tobacco use assumption and morbidity factors were revised. The June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to the State OPEB Fund based on their last employer payroll location; irrespective of retirement system affiliation. Additionally, there were changes the discount rate and an increase in the investment rate of return due to a longer term investment strategy. June 30, 2015 valuation: Decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies. June 30, 2012 valuation: A data audit was performed and data collection procedures and assumptions were changed.
School OPEB Fund
Changes of benefit terms: There have been no changes in benefit terms.
Changes of assumptions: June 30, 2019 valuation: Decremental assumptions were changed to reflect the TRS experience study. June 30, 2018 valuation: The inflation assumption was lowered from 2.75% to 2.5%. June 30, 2017 valuation: The participation assumption, tobacco use assumption and morbidity factors were revised. The June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to the State OPEB Fund based on their last employer payroll location; irrespective of retirement system affiliation. Additionally, there were changes the discount rate and an increase in the investment rate of return due to a longer term investment strategy. June 30, 2015 valuation: Decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies. June 30, 2012 valuation: A data audit was performed and data collection procedures and assumptions were changed.
277

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Methods and Assumptions Multi-Employer and Single-Employer OPEB Plans June 30, 2020
Actuarial Methods and Assumptions - Plan Perspective:
SEAD-OPEB Plan
Changes of benefit terms: There have been no changes in benefit terms.
Changes of assumptions: Subsequent to the June 30, 2017 measurement date, the SEAD Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the SEAD Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date, and remained unchanged for June 30, 2019.
Regents Plan
Changes of benefit terms: HRA cost sharing for employees hired on or after January 1, 2013 and retiring after January 2018 is based on a policy that ties years of service to the amount the University System of Georgia 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. Changes of assumptions:
Expected claims 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 updated from 3.50% as June 30, 2019 to 2.21% as of June 30, 2020. The withdrawal rates were updated to better reflect anticipated future experience, as the result of the
assumption study. The coverage election assumption was updated to better reflect anticipated future experience, as the result
of the assumption study. The spousal coverage election assumption was updated to better reflect anticipated future experience, as the
result of the assumption study. The spousal age difference assumption was updated to better reflect anticipated future experience, as the
result of the assumption study.
278

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Methods and Assumptions Multi-Employer and Single-Employer OPEB Plans June 30, 2020
Actuarial Methods and Assumptions - Plan Perspective:

Methods and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of employers' contributions are calculated as of June 30, three years prior to the

end of the fiscal year in which contributions are reported for State, School, and SEAD-OPEB Plan, and as of June

30, 2019 for the Regents Plan. The following actuarial methods and assumptions were used to determine the most

recent contribution rates in the schedule:

State OPEB

School OPEB

Valuation date

June 30, 2017

June 30, 2017

Actuarial cost method

Projected unit credit

Projected unit credit

Amortization method

Level percent of pay, open

Level percent of pay, open

Remaining amortization period

30 years

30 years

Asset Valuation method

Market Value

Market Value

Inflation

2.75%

2.75%

Healthcare cost trend rate

Pre-Medicare Eligible 7.50%

7.50%

Medicare Eligible 5.50%

5.50%

Ultimate Trend Rate

Pre-Medicare Eligible 4.75%

4.75%

Medicare Eligible 4.75%

4.75%

Year of ultimate trend rate

2028 Pre-Medicare Eligible

2028 Pre-Medicare Eligible

2022 Medicare Eligible

2022 Medicare Eligible

Investment Rate of return*

4.50%

4.50%

Valuation date Actuarial cost method

SEAD-OPEB Plan June 30, 2017 Entry Age

Amortization method

Level percent, open

Remaining amortization period

Infinite

Asset Valuation method

Fair Value

Inflation

2.75%

Salary Increases

3.25 - 7.00%

Healthcare cost trend rate

Pre-Medicare Eligible N/A

Medicare Eligible N/A

Ultimate Trend Rate

Pre-Medicare Eligible N/A

Medicare Eligible N/A

Year of ultimate trend rate

N/A

Investment Rate of return*

7.50%

Regents Plan May 1, 2020 Entry Age Normal Closed amortization period for initial unfunded and subsequent actuarial gains/ losses Fair Value 2.10% 4.00%
6.70% 4.50%
4.50% 4.50% 2031 Pre-Medicare Eligible 2020 Medicare Eligible 3.75%

* Includes respective rates of inflation, net of investment expense.
The State OPEB Fund, School OPEB Fund, and the Regents Plan are funded on a pay-as-you go basis, and not funded based on the actuarially determined contributions. Schedule includes all significant plans and funds administered by the State of Georgia.

279

State of Georgia
Required Supplementary Information Schedules of State's Contributions - As Employer Multi-Employer OPEB Plans For the last Three Fiscal Years
(dollars in thousands)

Primary Government State OPEB Fund: Statutorily required contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess) State's covered payroll* Contributions as a percentage of the covered payroll

2020

2019

2018

$ 139,402 $ 493,986 $ 461,566

(139,402)

(493,986)

(461,566)

$

-- $

-- $

--

$ 2,588,350 $ 2,636,539 $ 2,454,971

5.39 %

18.74 %

18.80 %

SEAD-OPEB Plan: Actuarially determined contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess) State's covered payroll* Contributions as a percentage of the covered payroll

$

-- $

-- $

--

--

--

--

$

-- $

-- $

--

$ 1,068,459 $ 1,145,756 $ 1,247,936

N/A

N/A

N/A

Component Units State OPEB Fund: Statutorily required contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess) State's covered payroll* Contributions as a percentage of the covered payroll

$

270 $

971 $

979

(270)

(971)

(979)

$

-- $

-- $

--

$

12,240 $

12,585 $

13,038

2.21 %

7.72 %

7.51 %

School OPEB Fund: Statutorily required contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess) State's covered-employee payroll* Contributions as a percentage of the covered-employee payroll

$

2,315 $

3,501 $

3,243

(2,315)

(3,501)

(3,243)

$

-- $

-- $

--

$

74,439 $

68,679 $

65,272

3.11 %

5.10 %

4.97 %

SEAD-OPEB Plan: Actuarially determined contribution Contributions in relation to the statutorily required contribution Contribution Deficiency (excess) State's covered payroll* Contributions as a percentage of the covered payroll

$

-- $

-- $

--

--

--

--

$

-- $

-- $

--

$

14,304 $

14,739 $

15,496

N/A

N/A

N/A

* current year amounts are estimates This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

280

State of Georgia
Required Supplementary Information Schedules of State's Proportionate Share of the Net OPEB Liability - As Employer For the last Three Fiscal Years
(dollars in thousands)

Primary Government Multi-Employer Plans
State OPEB Fund: State's proportion of the net OPEB liability

2020

2019

2018

92.429945 % 92.022957 % 91.476285 %

State's proportionate share of the net OPEB liability State's covered payroll

$ 1,152,855 $ 2,409,618 $ 3,726,929 $ 2,636,539 $ 2,454,971 $ 2,305,259

State's proportionate share of the net OPEB liability as a percentage of its covered payroll
Plan fiduciary net position as a percentage of the total OPEB liability
SEAD-OPEB Plan:
State's proportion of the net OPEB liability

43.73 % 56.57 %

98.15 % 31.48 %

161.67 % 17.34 %

89.830175 % 89.813400% 1 89.559271 %

State's proportionate share of the net OPEB liability State's covered payroll

$ (253,962) $ (243,103) $ (232,195) $ 1,145,756 $ 1,247,936 $ 1,247,936

State's proportionate share of the net OPEB liability as a percentage of its covered payroll
Plan fiduciary net position as a percentage of the total OPEB liability
Single-Employer Plan
Regents Plan:
State's proportion of the net OPEB liability

(22.17%) 129.73 %

(19.48%) 129.46 %

(18.61%) 130.17 %

100.000000 % 100.000000 % 100.000000 %

State's proportionate share of the net OPEB liability State's covered-employee payroll

$ 4,471,568 $ 4,410,751 $ 4,219,726 $ 3,375,246 $ 3,218,771 $ 3,122,694

State's proportionate share of the net OPEB liability as a percentage of its covered-employee payroll
Plan fiduciary net position as a percentage of the total OPEB liability

132.48 % 3.13 %

137.03 % 1.69 %

135.13 % 0.19 %

1 Prior year percentage calculation was updated.

281

State of Georgia
Required Supplementary Information Schedules of State's Proportionate Share of the Net OPEB Liability - As Employer For the last Three Fiscal Years
(dollars in thousands)

Component Units Multi-Employer Plans
State OPEB Fund: State's proportion of the net OPEB liability

2020

2019

2018

0.197090 % 0.209969 % 0.213868 %

State's proportionate share of the net OPEB liability State's covered payroll

$ 2,253 $ 5,107 $ 8,097 $ 12,585 $ 13,038 $ 12,526

State's proportionate share of the net OPEB liability as a percentage of its covered payroll
Plan fiduciary net position as a percentage of the total OPEB liability
School OPEB Fund:
State's proportion of the net OPEB liability

17.90 % 56.57 %

39.17 % 31.48 %

64.64 % 17.34 %

0.650152 % 0.625763 % 0.598651 %

State's proportionate share of the net OPEB liability State's covered-employee payroll

$ 79,788 $ 79,533 $ 84,110 $ 68,679 $ 65,272 $ 63,442

State's proportionate share of the net OPEB liability as a percentage of its covered-employee payroll
Plan fiduciary net position as a percentage of the total OPEB liability
SEAD-OPEB Plan:
State's proportion of the net OPEB liability

116.18 % 4.63 %

121.85 % 2.93 %

132.58 % 1.61 %

1.155560 % 1.119336 % 1.245396 %

State's proportionate share of the net OPEB liability State's covered payroll

$ (3,237) $ (3,000) $ (3,195) $ 14,739 $ 15,496 $ 15,496

State's proportionate share of the net OPEB liability as a percentage of its covered payroll
Plan fiduciary net position as a percentage of the total OPEB liability

(21.96%) 129.73 %

(19.36%) 129.46 %

(20.62%) 130.17 %

The amounts presented for each fiscal year were determined as of the prior fiscal year-end. This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. Schedule includes all significant plans and funds administered by the State of Georgia.

282

State of Georgia
Required Supplementary Information Schedules of Employers' Net OPEB Liability - As Employer Single-Employer OPEB Plans For the last Three Fiscal Years
(dollars in thousands)

Regents Plan:
Total OPEB liability
Plan fiduciary net position
Employers' net OPEB liability Plan fiduciary net position as a percentage of the total OPEB liability
Covered-employee payroll Employers' net OPEB liability as a percentage of covered-employee payroll

2020

2019

2018

$ 4,616,023 144,455
$ 4,471,568

$ 4,486,796 76,045
$ 4,410,751

$ 4,227,583 7,857
$ 4,219,726

3.13 %

1.69 %

0.19 %

$ 3,375,246 $ 3,218,771 $ 3,122,694

132.48 %

137.03 %

135.13 %

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

Schedule includes all significant plans and funds administered by the State of Georgia.

283

State of Georgia
Required Supplementary Information Schedule of Changes in Employers' Net OPEB Liability - As Employer Single-Employer OPEB Plans For the Last Three Fiscal Years
(dollars in thousands)

Regents Plan: Total OPEB liability: Service cost Interest Benefit changes

2020

2019

2018

$

217,648 $

236,917 $

211,513

180,173

158,223

124,612

(11,211)

--

--

Differences between expected and actual experience Changes of assumptions Benefit payments/Refunds
Net change in total OPEB liability Total OPEB liability-beginning Total OPEB liability-ending (a) Plan fiduciary net position: Contributions-employer Net investment income Benefit payments/Refunds Administrative expense

(29,667) (129,153) (98,563) 129,227 4,486,796 4,616,023
160,383 7,126
(98,563) (536)

264,729 (310,107) (90,549) 259,213 4,227,583 4,486,796
158,420 802
(90,549) (485)

123,090 (347,331) (89,653)
22,231 4,205,352 4,227,583
99,584 72
(89,653) (5,045)

Net change in plan fiduciary net position Plan fiduciary net position-beginning Plan fiduciary net position-ending (b) Net OPEB liability-ending (a)-(b)

68,410

68,188

4,958

76,045

7,857

2,899

144,455

76,045

7,857

$ 4,471,568 $ 4,410,751 $ 4,219,726

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

Schedule includes all significant plans and funds administered by the State of Georgia.

284

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Methods and Assumptions Multi-Employer and Single-Employer OPEB Plans June 30, 2020
Actuarial Methods and Assumptions - State as Employer Perspective
This note provides information about changes of benefit terms, changes of assumptions, and methods and assumptions used in calculations of the OPEB liability/asset and required contributions.
State OPEB Fund
Changes of benefit terms: There have been no changes in benefit terms.
Changes of assumptions: June 30, 2017 valuation: The participation assumption, tobacco use assumption and morbidity factors were revised. The June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to the State OPEB Fund based on their last employer payroll location; irrespective of retirement system affiliation. Additionally, there were changes the discount rate and an increase in the investment rate of return due to a longer term investment strategy. June 30, 2015 valuation: Decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies. June 30, 2012 valuation: A data audit was performed and data collection procedures and assumptions were changed.
School OPEB Fund
Changes of benefit terms: There have been no changes in benefit terms.
Changes of assumptions: June 30, 2017 valuation: The participation assumption, tobacco use assumption and morbidity factors were revised. The June 30, 2017 actuarial valuation was revised, for various factors, including the methodology used to determine how employees and retirees were assigned to each of the OPEB Funds and anticipated participation percentages. Current and former employees of State organizations (including technical colleges, community service boards and public health departments) are now assigned to the State OPEB Fund based on their last employer payroll location; irrespective of retirement system affiliation. Additionally, there were changes the discount rate and an increase in the investment rate of return due to a longer term investment strategy. June 30, 2015 valuation: Decremental and underlying inflation assumptions were changed to reflect the Retirement Systems' experience studies. June 30, 2012 valuation: A data audit was performed and data collection procedures and assumptions were changed.
285

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Methods and Assumptions Multi-Employer and Single-Employer OPEB Plans June 30, 2020
Actuarial Methods and Assumptions - State as Employer Perspective SEAD-OPEB Plan Changes of benefit terms: There have been no changes in benefit terms. Changes of assumptions:
Subsequent to the June 30, 2017 measurement date, the SEAD Board adopted a new funding policy. Because of this new funding policy, the assumed investment rate of return was reduced from 7.50% to 7.40% for June 30, 2017 actuarial valuation. In addition, based on the SEAD Board's new funding policy, the assumed investment rate of return was further reduced by 0.10% from 7.40% to 7.30% as of the June 30, 2018 measurement date.
On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the Fund. Primary among the changes were the updates to rates of mortality, retirement, withdrawal, and salary increases.
Regents Plan Changes of benefit terms: There have been no changes in benefit terms. Changes of assumptions:
Expected claims costs were updated to reflect actual claims experience. Trend rate schedule was updated to reflect current estimates of the impact of the Excise Tax, due to the
updated claims assumption. Mortality rates were changed from RP-2014 White Collar Mortality Table with Generational Improvements
by Scale MP-2014 to Pub-2010 for Teachers (as appropriate) headcount weighted projected with scale MP-2018. Retirement rates were updated from rates developed for the Teacher's Retirement System to rates based on actual experience. The discount rate was updated from 3.87% as of June 30, 2018 to 3.50% as of June 30, 2019.
286

State of Georgia
Required Supplementary Information Notes to Required Supplementary Information Methods and Assumptions Multi-Employer and Single-Employer OPEB Plans June 30, 2020
Actuarial Methods and Assumptions - State as Employer Perspective
Methods and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedules of employers' contributions are calculated as of June 30, as listed for all plans. The following actuarial methods and assumptions were used to determine the most recent contribution rates in those schedules:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset Valuation method Inflation Healthcare cost trend rate
Pre-Medicare Medicare Eligibile Investment Rate of return*

State OPEB June 30, 2016 Projected Unit Credit Level percent of pay, open 30 years Market Value 2.75%
7.75% 5.75% 4.50%

School OPEB June 30, 2016 Projected Unit Credit Level percent of pay open 30 years Market Value 2.75%
7.75% 5.75% 4.50%

Valuation date Actuarial cost method

SEAD-OPEB Plan June 30, 2016 Entry Age

Amortization method Remaining amortization period Asset valuation method Inflation Healthcare cost trend rate
Pre-Medicare Medicare Eligibile Investment Rate of return*

Level percent, open Infinite Fair value 2.75% N/A
7.50%

* Includes respective rates of inflation, net of investment expense.

Regents Plan May 1, 2019 Entry Age Normal Closed amortization period for initial unfunded and subsequent actuarial gains/losses 30 year closed
2.50%
6.90% 4.50% 4.50%

The State OPEB Fund, School OPEB Fund, and the Regents Plan are funded on a pay-as-you go basis, and not funded based on the actuarially determined contributions.
Schedule includes all significant plans and funds administered by the State of Georgia.

287

COMBINING AND INDIVIDUAL FUND STATEMENTS

NONMAJOR GOVERNMENTAL FUNDS

State of Georgia
Description of Nonmajor Governmental Funds
SPECIAL REVENUE FUNDS Special Revenue Funds account for specific revenue sources that are legally restricted to expenditures for specific purposes. The State's special revenue funds, other than the Transportation Investment Act Fund, include the blended component units that conduct general governmental functions as described below: The Georgia Aviation Authority was created to provide oversight and efficient operation of state aircrafts and aviation operations, and ensure the safety of state air travelers and aviation property. The State Road and Tollway Authority (SRTA) is a legally separate public corporation created to finance transportation projects and operate toll facilities in the State of Georgia. The Transportation Investment Act Fund (TIA) accounts for funds collected by the State and dispensed to the Department of Transportation for TIA projects in the relevant special tax districts.
DEBT SERVICE FUNDS Debt Service Funds account for the accumulation of resources that are restricted, committed or assigned to expenditures for principal and interest. The General Obligation Debt Sinking Fund accounts for the payment of principal and interest on the State's general long-term debt. The State Road and Tollway Authority Debt Service Fund accounts for the payment of principal and interest on the debt of the Authority's governmental funds. The Authority issues bonded debt which finances State transportation infrastructure construction. Debt service payments due on outstanding bonds are paid by the Authority from redirected funds from the U. S. Department of Transportation and/or State motor fuel tax funds.
293

State of Georgia
Combining Balance Sheet Nonmajor Governmental Funds June 30, 2020
(dollars in thousands)

Assets Cash and Cash Equivalents Pooled Investments with State Treasury Investments Accounts Receivable Due From Other Funds Restricted Assets
Pooled Investments with State Treasury Other Assets
Total Assets
Liabilities and Fund Balances Liabilities:
Accounts Payable and Other Accruals Due to Other Funds Contracts Payable Other Liabilities
Total Liabilities
Fund Balances: Nonspendable Restricted Unrestricted Assigned
Total Fund Balances
Total Liabilities and Fund Balances

Georgia Aviation Authority

Special Revenue State
Road and Tollway Authority

Transportation Investment Act Fund

Debt Service

General

State

Obligation

Road and

Debt Sinking

Tollway

Fund

Authority

Total

$

2,050 $

396 $

302,009 $

--

13,802

--

--

--

60,554

12

25,329

14,965

--

25,654

--

--

217,468

--

--

190

--

$

2,062 $

282,839 $

377,528 $

-- $ -- -- -- --
-- --
-- $

64,016 $ -- -- -- --
-- --
64,016 $

368,471 13,802 60,554 40,306 25,654
217,468 190
726,445

$

32 $

502 $

8,059 $

1

35

15,288

--

22,795

--

--

107,359

--

33

130,691

23,347

--

16,770

--

--

94,017

354,181

2,029

41,361

--

2,029

152,148

354,181

$

2,062 $

282,839 $

377,528 $

-- $ -- -- --
--

-- $ -- -- --
--

8,593 15,324 22,795 107,359
154,071

-- -- -- -- -- $

-- 64,016
-- 64,016 64,016 $

16,770 512,214 43,390 572,374 726,445

294

State of Georgia
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Revenues Intergovernmental - Other Sales and Services Interest and Other Investment Income
Total Revenues
Expenditures General Government Transportation Debt Service Principal Interest Accrued Interest on Bonds Retired in Advance Discount on Bonds Retired in Advance Other Debt Service Expenditures
Total Expenditures

Georgia Aviation Authority

Special Revenue State
Road and Tollway Authority

Transportation Investment Act Fund

Debt Service

General

State

Obligation

Road and

Debt Sinking

Tollway

Fund

Authority

Total

$

-- $

4,259 $

166,916 $

139

--

--

--

2,200

5,941

139

6,459

172,857

-- $ -- --
--

-- $ -- 1,012
1,012

171,175 139
9,153
180,467

1,006 --
-- -- -- -- --
1,006

-- 82,884
-- -- -- -- --
82,884

-- 65,820
-- -- -- -- --
65,820

-- --
861,520 405,111
87 453 38
1,267,209

-- 12,251
195,205 34,799
-- -- 1,475
243,730

1,006 160,955
1,056,725 439,910 87 453 1,513
1,660,649

Excess (Deficiency) of Revenues Over (Under) Expenditures

Other Financing Sources (Uses) Debt Issuance - Refunding Bonds Debt Issuance - GARVEE Bonds Debt Issuance - Refunding Bonds - Premium Debt Issuance - GARVEE Bonds - Premium Payment to Refunded Bond Escrow Agent Transfers In Transfers Out
Net Other Financing Sources (Uses)

Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses

Fund Balances, July 1 - Restated (Note 3)

Fund Balances, June 30

$

(867)

(76,425)

107,037

(1,267,209)

(242,718)

(1,480,182)

--

--

--

35,920

285,915

321,835

--

--

--

--

63,850

63,850

--

--

--

2,613

27,159

29,772

--

--

--

--

11,455

11,455

--

--

--

(38,496)

(313,095)

(351,591)

--

107,992

--

1,267,172

231,214

1,606,378

--

(3,016)

(56,628)

--

(34)

(59,678)

--

104,976

(56,628)

1,267,209

306,464

1,622,021

(867) 2,896 2,029 $

28,551 123,597 152,148 $

50,409 303,772 354,181 $

-- -- -- $

63,746 270
64,016 $

141,839 430,535 572,374

295

NONMAJOR ENTERPRISE FUNDS

State of Georgia
Description of Nonmajor Enterprise Funds
The Enterprise Funds account for the business type activities of smaller governmental agencies that are funded by the issuance of debt or fees charged to external customers. The State's Nonmajor Enterprise Funds are described below: The State Employees' Assurance Department - Active is used to account for the accumulation of resources for the purpose of providing survivors' benefits for eligible members of the Employees', Judicial, and Legislative Retirement Systems. SEAD - Active is a cost-sharing multiple employer life insurance plan created in 2007 by the Georgia General Assembly to amend Title 47 of the Official Code of Georgia Annotated, relating to retirement, so as to establish a fund for the provision of term life insurance to active members of ERS, LRS, and GJRS. The Georgia Higher Education Facilities Authority is a legally separate public corporation created for the purpose of financing eligible construction, renovation, improvement, and rehabilitation or restoration projects for the Board of Regents of the University System of Georgia and the Technical College System of the State of Georgia through the issuance of revenue bonds. The Authority issues debt and enters into lease agreements. The current lease agreements outstanding are with an affiliate of the University System of Georgia Foundation, Inc. (nonmajor enterprise fund). The costs of the Authority's debt are recovered through lease payments from the Higher Education Foundations. The State Road and Tollway Authority (SRTA) is a legally separate public corporation created to finance transportation projects and operate toll facilities in the State of Georgia. SRTA uses an enterprise fund to account for tolling and transit activities, including the Xpress Commuter Bus Service, the I-75 South Metro Express Lanes, and all other facilities of the rolling system (i.e. the I-85 Express Lanes and six toll facilities under planning and/or construction).
299

State of Georgia
Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2020
(dollars in thousands)

Assets Current Assets: Cash and Cash Equivalents Pooled Investments with State Treasury Investments Accounts Receivable (Net) Due from Other Funds Due from Component Units Inventories Other Assets Restricted Assets:
Cash and Cash Equivalents Pooled Investments with State Treasury Total Current Assets Noncurrent Assets: Restricted Assets: Net OPEB Asset Nondepreciable Capital Assets Depreciable Capital Assets, net Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources
Liabilities Current Liabilities: Accounts Payable and Other Accruals Due to Other Funds Notes and Loans Payable Compensated Absences Payable Revenue Bonds Payable Other Current Liabilities Current Liabilities Payable from Restricted Assets
Total current Liabilities Noncurrent Liabilities: Compensated Absences Payable Revenue Bonds Payable Notes and Loans Payable Other Noncurrent Liabilities Net OPEB Liability Net Pension Liability
Total Noncurrent Liabilities Total Liabilities
Deferred Inflows of Resources
Net Position Net Investment in Capital Assets Restricted for: Other Benefits Other Purposes Unrestricted
Total Net Position

State Employees' Assurance
Department Active

Georgia Higher Education Facilities Authority

State Road and Tollway Authority

$

172 $

3 $

--

484

319,146

--

--

332

69

--

--

182,290

--

--

--

--

32 $ 24,591
-- 9,733
-- -- 126 30

-- -- 319,387

-- -- 183,109

7,652 196,047 238,211

-- -- -- -- 319,387
--

-- -- -- -- 183,109
17,989

402 42,065 57,508 99,975 338,186
2,612

47

--

21,148

--

--

25,654

--

--

35,000

--

--

179

--

5,730

--

--

333

87,284

--

--

29,671

47

6,063

198,936

--

--

559

--

194,373

34,131

--

--

221,698

--

--

849

--

--

6,810

--

--

8,637

--

194,373

272,684

47

200,436

471,620

--

--

1,325

--

319,340 -- --

$

319,340 $

--
-- -- 662
662 $

88,992
-- 42,582 (263,721)
(132,147) $

Total
207 25,075 319,146 10,065
69 182,290
126 30
7,652 196,047 740,707
402 42,065 57,508 99,975 840,682
20,601
21,195 25,654 35,000
179 5,730 87,617 29,671 205,046
559 228,504 221,698
849 6,810 8,637 467,057 672,103
1,325
88,992
319,340 42,582 (263,059)
187,855

300

State of Georgia
Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Operating Revenues: Contributions/Premiums Sales and Services
Total Operating Revenues
Operating Expenses: Personal Services Services and Supplies Interest Expense Benefits Depreciation Amortization Other
Total Operating Expenses
Operating Income
Nonoperating Revenues (Expenses): Interest and Other Investment Income Interest Expense Other
Total Nonoperating Revenues (Expenses)
Income (Loss) Before Contributions and Transfers
Capital Contributions
Transfers: Transfers In
Change in Net Position
Net Position, July 1 - Restated (Note 3)
Net Position, June 30

State Employees' Assurance DepartmentActive

Georgia Higher Education Facilities Authority

State Road and Tollway Authority

$

547 $

-- $

-- $

--

7,961

31,337

547

7,961

31,337

80 -- -- 3,588 -- -- --
3,668
(3,121)

-- 10 7,960 -- -- (553) 667
8,084
(123)

9,932 34,833
-- -- 11,685 (291) --
56,159
(24,822)

16,651 (67) --
16,584
13,463
--

7 -- --
7
(116)
--

2,498 (9,947) (126,283)
(133,732)
(158,554)
84,407

--

13,463

305,877

$

319,340 $

-- (116) 778 662 $

14,660 (59,487) (72,660) (132,147) $

Total
547 39,298 39,845
10,012 34,843 7,960 3,588 11,685
(844) 667 67,911 (28,066)
19,156 (10,014) (126,283) (117,141) (145,207) 84,407
14,660 (46,140) 233,995 187,855

301

State of Georgia
Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Cash Flows from Operating Activities: Cash Received from Customers Cash Received from Other Funds (Internal Activity) Cash Paid to Vendors Cash Paid to Employees Cash Paid to Other Funds (Internal Activity) Other Operating Receipts
Net Cash Provided by Operating Activities
Cash Flows from Noncapital Financing Activities: Proceeds from Bond Issuance Bond Issuance Costs Refunding Deposit with Escrow Agent Interest Paid on Bonds/Long-Term Debt Transfers from Other Funds Payments on Noncapital Financing Debt
Net Cash Used in Noncapital Financing Activities
Cash Flows from Capital and Related Financing Activities: Grant Disbursements Intergovernmental Grant Proceeds from Capital Debt Acquisition and Construction of Capital Assets
Net Cash Provided by (Used in) Capital and Related Financing Activities
Cash Flows from Investing Activities: Purchase of Investments Interest and Dividends Received Other Investing Activities
Net Cash Provided by (Used in) Investing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, July 1 - Restated (Note 3)
Cash and Cash Equivalents, June 30
Reconciliation of Operating Income to Net Cash Provided by (Used in) Operating Activities:
Operating Income
Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Depreciation/Amortization Expense Other Changes in Assets and Liabilities: Deferred Inflows of Resources: Accounts Receivable Due from Other Funds Other Assets Net OPEB Asset Deferred Outflows of Resources Accounts Payable and Other Accruals Unearned Revenue Compensated Absences Net OPEB Liability Net Pension Liability Other Liabilities Deferrred Inflows of Resources
Net Cash Provided by (Used in) Operating Activities
Noncash Investing, Capital, and Financing Activities: Special Item - Equipment-Capital Asset Transfer Other Total Noncash Investing, Capital and Financing Activities

State Employees' Assurance DepartmentActive

Georgia Higher Education Facilities Authority

State Road and Tollway Authority

$

550 $

--

(3,663)

--

--

--

(3,113)

-- $ -- (9) -- -- --
(9)

31,812 $ 1,223 (25,837) (11,271) (1,223) 84,963
79,667

--

57,032

--

(667)

--

(56,365)

--

(7,999)

--

--

--

(3,970)

--

(11,969)

-- -- -- -- 8,060 --
8,060

--

--

(96,315)

--

--

39,343

--

--

2,459

--

--

(28,737)

--

--

(83,250)

(13,351) 16,584
--
3,233

120

52

$

172 $

-- 7 11,970 11,977
(1) 488 487 $

-- 2,498
-- 2,498
6,975 221,347 228,322 $

$

(3,121) $

-- --

-- 3 -- -- -- 5 -- -- -- -- -- --

$

(3,113) $

$

-- $

--

$

-- $

(123) $
667 (553)
39 -- -- -- -- (39) -- -- -- -- -- -- (9) $
-- $ -- -- $

(24,822) $
11,394 --
177 -- 74 (402) 170 92,598 (7,300) (82) (434) (1,851) 8,899 1,246 79,667 $
37,942 $ 9,947 47,889 $

Total
32,362 1,223 (29,509) (11,271) (1,223) 84,963 76,545
57,032 (667)
(56,365) (7,999) 8,060 (3,970) (3,909)
(96,315) 39,343 2,459 (28,737)
(83,250)
(13,351) 19,089 11,970 17,708
7,094 221,887 228,981
(28,066)
12,061 (553)
216 3 74
(402) 170 92,564 (7,300) (82) (434) (1,851) 8,899 1,246 76,545
37,942 9,947 47,889

302

INTERNAL SERVICE FUNDS

State of Georgia
Description of Internal Service Funds
Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis. The State's internal service funds are described below:
The Department of Administrative Services delivers a variety of supportive services to all state agencies and, upon request, to local governments in Georgia. Among the services provided are purchasing (procurement), surplus property transactions, document services, fleet management, and human resources administration.
The Georgia Building Authority is responsible for all services associated with the management of State office buildings, maintaining the grounds within the State Capitol complex, maintaining the Governor's Mansion and operating parking facilities.
The Georgia Correctional Industries Administration utilizes the inmate work force to manufacture products and provide services for the penal system, other units of state government and local governments.
The Risk Management column is an accumulation of the funds used to account for the State's selfinsurance programs established by individual agreement, statute or administrative action:
The Cyber Insurance Coverage Fund was created for the development of a cyber insurance product for direct loss and out of pocket expenses incurred as a result of damage to data, systems or income defense and liability incurred as a result of employees' actions. Department of Administrative Services (DOAS) engaged with an insurance broker to develop an underwriting submission to present to the commercial insurance underwriters. DOAS Risk Management Services manages the insurance product with assistance from Georgia Technology Authority.
The Liability Insurance Fund is used to account for the accumulation of funds for the purpose of providing liability insurance coverage for employees of the State against personal liability for damages arising out of performance of their duties.
The Property Insurance Fund is used to account for the assessment of premiums against various state agencies for the purpose of providing property, fire and extended coverage, automobile, aircraft and marine insurance.
The State Indemnification Fund is used to account for the accumulation of funds for the purpose of providing indemnification with respect to the death of any law enforcement officer, fireman or prison guard killed in the line of duty.
The Teacher Indemnification Fund is used to account for the accumulation of funds for the purpose of providing indemnification with respect to the death of any public school employees killed or permanently disabled by an act of violence in the line of duty on or after July 1, 2001.
The Unemployment Compensation Fund was created for the purpose of consolidating processing of unemployment compensation claims against state agencies and the payment of sums due to the Department of Labor.
The Workers' Compensation Fund was established to authorize insurance coverage for employees of the State and for the receipt of premiums as prescribed by the Workers' Compensation statutes of the State.
The Georgia Technology Authority was created to provide technology enterprise management and technology portfolio management to state and local governments.
305

State of Georgia
Combining Statement of Net Position Internal Service Funds June 30, 2020
(dollars in thousands)

Assets Current Assets:
Cash and Cash Equivalents Pooled Investments with State Treasury Investments Accounts Receivable (Net) Due from Other Funds Due from Component Units Inventories Other Assets
Total Current Assets
Noncurrent Assets: Investments
Restricted Assets: Net OPEB Asset
Capital Assets: Construction in Progress Land Buildings and Building Improvements Improvements Other Than Buildings Machinery and Equipment Software Works of Art and Collections Accumulated Depreciation Total Noncurrent Assets Total Assets
Deferred Outflows of Resources
Liabilities Current Liabilities:
Cash Overdraft Accounts Payable and Other Accruals Due to Other Funds Unearned Revenue Notes and Loans Payable Claims and Judgments Payable Compensated Absences Payable Capital Leases Payable Other Current Liabilities
Total Current Liabilities Noncurrent Liabilities:
Compensated Absences Payable Capital Leases Payable Notes and Loans Payable Net OPEB Liability Net Pension Liability
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources Net Position Net Investment in Capital Assets Restricted for:
Other Purpose Unrestricted
Total Net Position

Department of Administrative
Services

Georgia Building Authority

Georgia Correctional Industries
Administration

$

2,589 $

5,245 $

4,210

560

33,607

1,064

--

--

--

46

489

3,913

3,441

230

2,006

--

--

--

--

606

22,063

--

154

1

6,636

40,331

33,257

--
277
-- -- -- -- -- -- -- -- 277 6,913
1,880

--
780
10,315 22,359 645,988 24,398 10,677
-- 1,274 (339,598) 376,193 416,524
3,083

--
872
6,074 --
12,923 --
30,001 -- --
(35,861) 14,009 47,266
4,332

-- 614 -- -- -- -- -- -- 541 1,155

-- 2,168
791 104 -- -- 781 2,654 -- 6,498

-- 5,552
3 -- -- -- 444 343 -- 6,342

-- -- -- 1,117 4,753 5,870 7,025
1,768
--

-- 17,917
-- 2,985 10,647 31,549 38,047
4,643
354,841

1,189 -- --
3,480 12,235 16,904 23,246
5,411
12,795

--

735

--

21,341

765 9,381

$

-- $

376,917 $

22,941

306

Risk Management (see combining)

Georgia Technology Authority

Total

$

-- $

43,225

8,663

97,842

898,574

--

--

--

1,048,304

24,319
127
-- -- -- -- -- -- -- -- 24,446 1,072,750
719

9,325 $ 66,361
-- 1,797 23,321
38 -- -- 100,842
--
2,073
-- 13 13,230 -- 32,905 55,079 -- (97,999) 5,301 106,143
6,459

21,369 144,817
8,663 104,087 927,572
38 22,669
155 1,229,370
24,319
4,129
16,389 22,372 672,141 24,398 73,583 55,079 1,274 (473,458) 420,226 1,649,596
16,473

2,262 510 -- -- --
1,039,787 -- -- 81
1,042,640

-- -- -- 512 1,798 2,310 1,044,950
779
--

35 27,705

$

27,740 $

-- 37,079
-- -- 3,942 -- 935 2,064 154 44,174
1,729 2,633 4,721 5,921 21,758 36,762 80,936
10,086
(4,160)
1,886 23,854 21,580 $

2,262 45,923
794 104 3,942 1,039,787 2,160 5,061 776 1,100,809
2,918 20,550 4,721 14,015 51,191 93,395 1,194,204
22,687
363,476
3,421 82,281 449,178

307

State of Georgia
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Operating Revenues: Contributions/Premiums Rents and Royalties Sales and Services Other
Total Operating Revenues
Operating Expenses: Personal Services Services and Supplies Claims and Judgments Depreciation
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses): Interest and Other Investment Income Nonoperating Grants & Contributions Other

Department of Administrative
Services

Georgia Building Authority

Georgia Correctional
Industries Administration

$

46 $

-- $

--

--

43,875

--

9,093

2,561

69,286

1,379

165

69

10,518

46,601

69,355

3,576 8,903
-- --
12,479
(1,961)

10,960 19,654
-- 19,091
49,705
(3,104)

13,291 46,020
-- 1,316
60,627
8,728

32

604

17

3,063

--

--

(3,063)

(6,268)

18

Total Nonoperating Revenues (Expenses)

32

(5,664)

35

Income (Loss) Before Contributions and Transfers

Capital Contributions

Transfers: Transfers In Transfers Out

Net Transfers

Change in Net Position

Net Position, July 1

Net Position, June 30

$

(1,929) --
5,327 --
5,327 3,398 (3,398)
-- $

(8,768) 42,581
-- -- -- 33,813 343,104 376,917 $

8,763 --
-- -- -- 8,763 14,178 22,941

308

Risk Management (see combining)

Georgia Technology Authority

Total

$

280,205 $

836 $

281,087

--

--

43,875

232

239,503

320,675

--

--

1,613

280,437

240,339

647,250

1,683 41,907 272,098
--
315,688
(35,251)

19,833 210,208
-- 1,088
231,129
9,210

49,343 326,692 272,098 21,495
669,628
(22,378)

1,974 --
5,621
7,595
(27,656) --

845 -- (2)
843
10,053 9,412

3,472 3,063 (3,694)
2,841
(19,537) 51,993

430 --

430

(27,226)

54,966

$

27,740 $

-- (9,291) (9,291) 10,174 11,406 21,580 $

5,757 (9,291) (3,534) 28,922 420,256 449,178

309

State of Georgia
Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Cash Flows from Operating Activities: Cash Received from Customers Cash Received from Other Funds (Internal Activity) Cash Paid to Vendors Cash Paid to Employees Cash Paid for Claims and Judgments Other Operating Receipts Other Operating Payments
Net Cash Provided by (Used in) Operating Activities
Cash Flows from Noncapital Financing Activities: Transfers from Other Funds Transfers to Other Funds Other Noncapital Receipts Other Noncapital Payments
Net Cash Provided by (Used in) Noncapital Financing Activities
Cash Flows from Capital and Related Financing Activities: Capital Contributions Proceeds from Sale of Capital Assets Acquisition and Construction of Capital Assets Principal Paid on Capital Debt
Net Cash Used in Capital and Related Financing Activities
Cash Flows from Investing Activities: Proceeds from Sales of Investments Purchase of Investments Interest and Dividends Received
Net Cash Provided by Investing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, July 1
Cash and Cash Equivalents, June 30

Department of Administrative
Services

Georgia Building Authority

Georgia Correctional
Industries Administration

$

1,719 $

5,336 $

12,021

6,079

41,793

57,046

(8,757)

(19,283)

(52,511)

(4,693)

(12,124)

(14,825)

--

--

--

--

--

--

(287)

--

--

(5,939)

15,722

1,731

5,327

--

--

--

--

--

3,063

--

18

(3,063)

(237)

--

5,327

(237)

18

--

2,955

--

39

--

(4,983)

--

(13,251)

--

(15,240)

-- -- (6,606) (221)
(6,827)

--

--

--

--

--

--

32

604

17

32

604

17

(580)

849

(5,061)

3,730

38,003

10,335

$

3,150 $

38,852 $

5,274

310

Risk Management (see combining)

Georgia Technology Authority

Total

$

25,174 $

55,533 $

99,783

150,760

203,777

459,455

(42,027)

(213,852)

(336,430)

(2,138)

(23,158)

(56,938)

(149,298)

--

(149,298)

--

150

150

--

--

(287)

(17,529)

22,450

16,435

430 -- 5,621 --
6,051

-- (3,362)
-- (3,891)
(7,253)

5,757 (3,362) 8,702 (7,191)
3,906

--

9,412

12,367

--

--

39

--

(5,952)

(17,541)

--

(1,608)

(15,080)

--

1,852

(20,215)

41,603 (30,810)
(196)

10,597

(881)

41,844

$

40,963 $

-- -- 845
845
17,894
57,792
75,686 $

41,603 (30,810)
1,302
12,095
12,221
151,704
163,925 (continued)

311

State of Georgia
Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Department of Administrative
Services

Georgia Building Authority

Georgia Correctional
Industries Administration

Reconciliation of Operating Income (Loss) to Net Cash provided by (Used in) Operating Activities:

Operating Income (Loss)

$

(1,961) $

(3,104) $

8,728

Reconciliation of Operating Income (Loss) to Net Cash provided by (Used in) Operating Activities: Depreciation Expense
Changes in Assets, Deferred Outflows of Resources, Liabilities, and Deferred Inflows of Resources: Accounts Receivable Due from Other Funds Due from Component Units Other Assets Net OPEB Asset Deferred Outflows of Resources Accounts Payable and Other Accruals Due to Other Funds Unearned Revenue Claims and Judgments Payable Compensated Absences Payable Net OPEB Liability Net Pension Liability Other Liabilities Deferred Inflows of Resources

--
720 (3,441)
-- 35 -- 58 144 -- -- -- -- (1,509) 6 (282) 291

19,091
533 -- -- (31) (170) 996 547 (1) (4) -- 48 (3,158) 208 -- 767

1,316
1,718 (2,006)
-- (120) (6,917) 218 595
-- -- -- (67) (3,400) 634 -- 1,032

Net Cash Provided by (Used in) Operating Activities
Noncash Investing, Capital, and Financing Activities: Donation of Capital Assets Change in Fair Value of Investments
Total Noncash Investing, Capital and Financing Activities:

$

(5,939) $

15,722 $

$

-- $

39,627 $

--

--

$

-- $

39,627 $

1,731
-- -- --

312

Risk Management (see combining)

Georgia Technology Authority

Total

$

(35,251) $

--

(7,722) (96,780)
-- 4
-- (41) (91) (185) -- 122,801 -- (404) (3) (22) 165

$

(17,529) $

$

-- $

2,289

$

2,289 $

9,210 $
1,088
9,821 9,137
13 (143)
49 1,848 (3,693)
-- -- -- 158 (6,214) 373 150 653
22,450 $
-- $ -- -- $

(22,378)
21,495
5,070 (93,090)
13 (255) (7,038) 3,079 (2,498) (186)
(4) 122,801
139 (14,685)
1,218 (154) 2,908
16,435
39,627 2,289 41,916

313

State of Georgia
Combining Statement of Net Position Internal Service Funds Risk Management June 30, 2020
(dollars in thousands)

Assets Current Assets:
Cash and Cash Equivalents Pooled Investments with State Treasury Investments Accounts Receivable (Net) Due From Other Funds
Total Current Assets
Noncurrent Assets: Investments
Restricted Assets: Net OPEB Asset Total Noncurrent Assets Total Assets
Deferred Outflows of Resources
Liabilities Current Liabilities:
Cash Overdraft Accounts Payable and Other Accruals Claims and Judgments Payable Other Current Liabilities
Total Current Liabilities
Noncurrent Liabilities: Net OPEB Liability Net Pension Liability Total Noncurrent Liabilities Total Liabilities

Cyber Liability Insurance Fund

Liability Insurance
Fund

Property Insurance
Fund

$

81 $

447 $

3,063

635

3,507

24,010

134

740

5,032

--

19,042

1,720

--

201,750

--

850

225,486

33,825

376
-- 376 1,226
--

2,076
39 2,115 227,601
235

14,128
34 14,162 47,987
174

--

--

--

196

--

226,563

51

16

51

226,775

--

157

--

660

--

817

51

227,592

-- 38 37,236 5 37,279
136 461 597 37,876

Deferred Inflows of Resources
Net Position Restricted for: Other Purpose Unrestricted Total Net Position

--

--

1,175

$

1,175 $

244
-- -- -- $

206
33 10,046 10,079

314

State Indemnification
Fund

Teacher Indemnification
Fund

Unemployment Compensation
Fund

Workers' Compensation
Fund

Total

$

-- $

207 $

1,450 $

-- $

5,248

2,000

1,710

11,363

--

43,225

--

361

2,396

--

8,663

--

--

173

76,907

97,842

--

--

--

696,824

898,574

2,000

2,278

15,382

773,731

1,053,552

--
1 1 2,001
7

1,012
-- 1,012 3,290
--

6,727
1 6,728 22,110
5

--
52 52 773,783
298

24,319
127 24,446 1,077,998
719

395 -- 1,075 -- 1,470
4 16 20 1,490
6

--

--

7,115

7,510

--

--

276

510

20

9,387

765,506

1,039,787

--

--

9

81

20

9,387

772,906

1,047,888

--

4

211

512

--

14

647

1,798

--

18

858

2,310

20

9,405

773,764

1,050,198

--

6

317

779

1

--

1

511

3,270

12,703

$

512 $

3,270 $

12,704 $

-- -- -- $

35 27,705 27,740

315

State of Georgia
Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds Risk Management For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Operating Revenues: Contributions/Premiums Sales and Services

Cyber Liability Insurance Fund

Liability Insurance
Fund

Property Insurance
Fund

$

2,324 $

86,108 $

19,762

--

--

--

Total Operating Revenues

2,324

86,108

19,762

Operating Expenses: Personal Services Services and Supplies Claims and Judgments

-- 1,869
531

409 5,685 80,151

516 19,915 20,203

Total Operating Expenses

2,400

86,245

40,634

Operating Income (Loss)

(76)

(137)

(20,872)

Nonoperating Revenues (Expenses): Interest and Other Investment Income Other

26

137

1,200

--

--

--

Total Nonoperating Revenues (Expenses)

26

137

1,200

Income (Loss) Before Transfers

(50)

--

(19,672)

Transfers: Transfers In

--

--

--

Net Transfers

--

--

--

Change in Net Position

(50)

--

(19,672)

Net Position, July 1

1,225

--

29,751

Net Position, June 30

$

1,175 $

-- $

10,079

316

State Indemnification
Fund

Teacher Indemnification
Fund

Unemployment Compensation
Fund

Workers' Compensation
Fund

Total

$

-- $

232

232

-- $ --
--

3,908 $ --
3,908

168,103 $ --
168,103

280,205 232
280,437

10 21 1,381
1,412
(1,180)

--

(2)

750

1,683

2

46

14,369

41,907

--

11,172

158,660

272,098

2

11,216

173,779

315,688

(2)

(7,308)

(5,676)

(35,251)

11 --
11
(1,169)

71

474

55

1,974

--

--

5,621

5,621

71

474

5,676

7,595

69

(6,834)

--

(27,656)

430 430 (739) 1,251

-- -- 69 3,201

-- -- (6,834) 19,538

--

430

--

430

--

(27,226)

--

54,966

$

512 $

3,270 $

12,704 $

-- $

27,740

317

State of Georgia
Combining Statement of Cash Flows Internal Service Funds Risk Management For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Cyber Liability Insurance Fund

Cash Flows from Operating Activities: Cash Received from Customers Cash Received from Other Funds (Internal Activity) Cash Paid to Vendors Cash Paid to Employees Cash Paid for Claims and Judgments
Net Cash Provided by (Used in) Operating Activities
Cash Flows from Noncapital Financing Activities: Transfers from Other Funds Other Noncapital Receipts

$

225 $

2,217

(1,821)

--

(531)

90

-- --

Net Cash Provided by (Used in) Noncapital Financing Activities

--

Cash Flows from Investing Activities: Proceeds from Sales and Maturities of Investments Purchase of Investments Interest and Dividends Received

305 (498)
15

Net Cash Provided by (Used in) Investing Activities

(178)

Net Increase (Decrease) in Cash and Cash Equivalents

(88)

Cash and Cash Equivalents, July 1

804

Cash and Cash Equivalents, June 30

$

716 $

Reconciliation of Operating Income (Loss) to Net Cash provided by (Used in) Operating Activities:

Operating Income (Loss)

$

(76) $

Adjustments to Reconcile Operating Income (Loss) to

Net Cash Provided by (Used in) Operating Activities:

Changes in Assets, Deferred Outflows of Resources, Liabilities, and Deferred Inflows of Resources:

Accounts Receivable

117

Due from Other Funds

--

Net OPEB Asset

--

Deferred Outflows of Resources

--

Accounts Payable and Other Accruals

--

Due to Other Funds

--

Claims and Judgments Payable

--

Net OPEB Liability

--

Net Pension Liability

--

Other Liabilities

49

Deferred Inflows of Resources

--

Net Cash Provided by (Used in) Operating Activities

$

90 $

Noncash Investing Activities: Change in Fair Value of Investments

$

11 $

Liability Insurance
Fund
8,342 $ 41,459 (5,715)
(614) (36,247)
7,225
-- -- --
-- (2,756)
77 (2,679) 4,546
(592) 3,954 $
(137) $
4,265 (40,571)
9 14 (32) -- 43,904 (247) (1) 2 19 7,225 $
60 $

Property Insurance
Fund
1,763 17,560 (19,974)
(611) (12,128) (13,390)
-- -- --
29,185 (16,851) (1,109) 11,225 (2,165) 29,238 27,073
(20,872)
(664) 226 -- -- 16 -- 8,076 (146)
(1) (74) 49 (13,390)
2,426

318

State Indemnification
Fund

Teacher Indemnification
Fund

Unemployment Compensation
Fund

Workers' Compensation
Fund

$

21 $

211

(21)

(16)

(1,008)

(813)

-- $ -- (2) -- (15)
(17)

362 $ 3,555
(48) (1) (3,348)
520

14,461 $ 85,758 (14,446)
(896) (96,021)
(11,144)

430

--

--

--

--

--

--

5,621

430

--

--

5,621

--

1,621

10,492

--

--

(1,400)

(9,305)

--

11

99

656

55

11

320

1,843

55

(372)

303

2,363

(5,468)

1,977

1,614

10,450

(1,647)

$

1,605 $

1,917 $

12,813 $

(7,115) $

Total
25,174 150,760 (42,027)
(2,138) (149,298) (17,529)
430 5,621 6,051
41,603 (30,810)
(196) 10,597
(881) 41,844 40,963

$

(1,180) $

(2) $

(7,308) $

(5,676) $

(35,251)

-- -- -- (1) -- -- 374 (6) -- -- --

$

(813) $

$

-- $

-- -- -- -- -- -- (15) -- -- -- -- (17) $
(27) $

9 -- -- -- -- -- 7,823 (5) -- -- 1 520 $
(181) $
319

(11,449) (56,435)
(5) (54) (75) (185) 62,639 -- (1)
1 96 (11,144) $
-- $

(7,722) (96,780)
4 (41) (91) (185) 122,801 (404) (3) (22) 165 (17,529)
2,289

FIDUCIARY FUNDS

State of Georgia
Description of Fiduciary Funds
Fiduciary funds are used to account for assets held by the State in a fiduciary capacity. The State has the following fiduciary funds.
PENSION AND OTHER EMPLOYEE BENEFIT TRUST FUNDS
Pension and Other Employee Benefit Trust Funds are used to account for activities and balances of the public employee retirement systems and other employee benefit plans. The State's pension and other employee benefit trust funds are described below:
Pension Trust Funds
Defined Benefit Pension Plans
The Employees' Retirement System is used to account for the accumulation of resources for the purpose of providing retirement allowances for qualified employees of the State and its political subdivisions.
The Firefighters' Pension Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the firefighters of the State.
The Georgia Judicial Retirement System is used to account for the accumulation of resources for the purpose of providing retirement allowances for trial judges and solicitors of certain courts in Georgia, and their survivors and beneficiaries, superior court judges of the State, and district attorneys of the State.
Other Defined Benefit Plans is comprised of the following smaller plans:
The District Attorneys Retirement Fund (old plan) is used to account for the accumulation of resources for the purpose of paying retirement benefits to the district attorneys of the State.
The Augusta University Early Retirement Pension Plan is a single-employer defined benefit pension plan designed to provide eligible participants additional benefits above the amounts payable through Teachers Retirement System of Georgia (TRS). The plan was designed to allow vested employees aged 55 or employees of any age with 25 years of creditable service to retire without penalties as applied by the TRS for early retirement.
The Judges of the Probate Courts Retirement Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the judges of the Probate Courts of the State.
The Legislative Retirement System is used to account for the accumulation of resources for the purpose of providing retirement allowances and other benefits for all members of the Georgia General Assembly.
The Magistrates Retirement Fund is used to account for the accumulation of resources for the purpose of providing retirement benefits for those serving as duly qualified and commissioned chief magistrates of counties in the State.
The Georgia Military Pension Fund is used to account for the accumulation of resources for the purpose of providing retirement allowances and other benefits to members of the Georgia National Guard.
323

State of Georgia
Description of Fiduciary Funds
The Sheriffs' Retirement Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the sheriffs of the State.
The Superior Court Clerks' Retirement Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the Superior Court clerks of the State.
The Superior Court Judges Retirement Fund (old plan) is used to account for the accumulation of resources for the purpose of paying retirement benefits to the Superior Court judges of the State.
The Peace Officers' Annuity and Benefit Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the peace officers of the State.
The Public School Employees Retirement System is used to account for the accumulation of resources for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System.
The Teachers Retirement System is used to account for the accumulation of resources for the purpose of providing retirement allowances and other benefits for teachers and administrative personnel employed in State public schools and the University System of Georgia (except those professors and principal administrators electing to participate in an optional retirement plan), and for certain other designated employees in educationalrelated work.
Defined Contribution / Deferred Compensation Pension Plans
The Georgia Defined Contribution Plan is used to account for the accumulation of resources for the purpose of providing retirement allowances for State employees who are not members of a public retirement or pension system.
The Deferred Compensation Plans are used to account for the accumulation of resources for the purpose of providing retirement allowances for State and Board of Regents employees and employees of Community Service Boards who elect to defer a portion of their annual salary until future years.
Other Postemployment Benefit Plans
The Board of Regents Retiree Health Benefit Fund is used to account for the accumulation of resources necessary to meet employer costs of retiree post-employment health insurance benefits.
The Georgia State Employees Postemployment Health Benefit Fund (State OPEB Fund) pays postemployment health benefits (including benefits to qualified beneficiaries of eligible former employees) due under the group health plan for employees of State organizations and other entities authorized by law to contract with the Department of Community Health for inclusion in the plan. It also pays administrative expenses for the Fund. By law, no other use of assets of the State OPEB Fund is permitted.
The Georgia School Personnel Postemployment Health Benefit Fund (School OPEB Fund) pays postemployment health benefits (including benefits for qualified beneficiaries of eligible former employees) due under the group health plan for public school teachers including librarians and other certified employees of the public schools and regional educational service agencies, postemployment health benefits due under the group health plan for non-certificated public school employees, and administrative expenses of the Fund. By law, no other use of assets of the School OPEB Fund is permitted.
324

State of Georgia
Description of Fiduciary Funds
The State Employees' Assurance Department (SEAD) - OPEB is used to account for the accumulation of resources for the purpose of providing term life insurance to retired and vested inactive members of Employees', Judicial, and Legislative Retirement Systems.
INVESTMENT TRUST FUNDS
Investment Trust Funds are used to account for the external portion of a government sponsored investment pool. The State's investment trust funds are described below:
The Georgia Fund 1 (GF1) is an investment pool of the LGIP Trust and an investment pool for the State and local governments, including state agencies, colleges and universities, counties, school districts, special districts, or any department, agency, or board of a political subdivision. The primary objectives of the pool is the prudent management of public funds on behalf of the State and local governments seeking income higher than money market rates.
The Georgia Fund 1 Plus (GF1+) is an additional investment option for the State, state agencies, and eligible municipalities looking to benefit from higher yields available by adding credit exposure.
PRIVATE PURPOSE TRUST FUNDS
Private Purpose Trust Funds are used to report resources of all other trust arrangements in which principal and income benefit individuals, private organizations, or other governments. The State's private purpose trust funds are described below:
The Auctioneers Education, Research and Recovery Fund provides for actual or compensatory damages in instances where a person is aggrieved by an act, representation, transaction, or conduct of a person licensed under OCGA 436 (duly licensed auctioneer, apprentice auctioneer, or auction company) who is in violation of state law. Also, the fund is used to help underwrite the cost of education and research programs for the benefit of licensees and the public.
The Real Estate Education, Research and Recovery Fund provides for actual or compensatory damages in instances where a person is aggrieved by an act, representation, transaction, or conduct of a duly licensed broker, associate broker or salesperson who is in violation of state law. Also, the fund is used to help underwrite the cost of developing courses, conducting seminars, conducting research projects on matters affecting real estate brokerage, publishing and distributing educational materials, or other education and research programs for the benefit of licensees and the public.
The Subsequent Injury Trust Fund is a special workers' compensation fund designed to encourage employers to hire workers with pre-existing impairments by insuring against the aggravating impact such impairment could have if the worker were subsequently injured on the job.
The Tuition Guaranty Trust Fund is to protect students against financial loss when a postsecondary educational institution closes without reimbursing its students and without completing its educational obligations to its students. It is funded by postsecondary education institutions who participate in the trust.
CUSTODIAL FUNDS
Custodial Funds are used to report balances and activities for deposits and investments entrusted to the State as an agent for others. The State's significant custodial funds are described below:
325

State of Georgia
Description of Fiduciary Funds
The Child Support Recovery Program accounts for the collection of court ordered child support or child support amounts due as determined in conformity with the Social Security Act. Amounts collected are distributed and deposited in conformity with state law and the standards prescribed in the Social Security Act. The Detainees' Accounts are held for the detainees of statewide probation offices, correctional institutions, diversion centers, detention centers, transitional centers and boot camps for the purpose of paying court-ordered fines, fees and restitutions and for operating recreational activities for detainees. The Flexible Benefits Program accounts for participant payroll deductions for benefits and spending accounts; disbursements are made to insurance companies for premiums and to participants for spending account reimbursements. The Insurance Premium Tax Collections for Local Governments Fund accounts for the pro-rata share of premium taxes collected on the behalf of each participating municipality and county. The participating counties and municipalities may have the distributions deposited directly into their Georgia Fund 1 account through the Office of the State Treasurer. Revenue Tax Collections for Local Governments Fund is used to account for the collection and disbursement of sales taxes at the Georgia Department of Revenue on behalf of county and municipal governments. This fund includes activity for Education Local Option Sales Tax, Homestead Option Sales Tax, Local Option Sales Tax, MARTA Sales Tax, Special Purpose Local Option Sales Tax, Ad Valorem Tax, Railroad Tax, Tennessee Valley Tax, E911 Prepaid Tax, E911 non Prepaid, Fireworks Tax, and the Transportation Investment Act. Survivor Benefit Fund is within the Employees Retirement System (ERS) trust and is solely for maintaining group term life insurance coverage for members of the plan. All assets are limited to the payment of benefits and expenses for such coverage and cannot be used to pay pension benefits and expenses of ERS. The Student Financial Aid and Support Fund are accounts for activities from the state acting as an agent or in a fiduciary capacity for various governments, companies, clubs or individuals for student support and financial aid. Other Custodial Funds include custodial funds not considered significant enough to warrant separate presentation. External Investment Pool account for activities of a pooled investment program held by the Board of Regents for affiliate organizations external to the state reporting unit.
326

State of Georgia
Combining Statement of Fiduciary Net Position Pension and Other Employee Benefit Trust Funds June 30, 2020
(dollars in thousands)

Assets Cash and Cash Equivalents Pooled Investments with State Treasury Restricted Pooled Investments with State Treasury Receivables, Net
Interest and Dividends Due from Brokers for Securities Sold Other Due from Other Funds Investments Pooled Investments Mutual Funds Municipal, U.S. and Foreign Government Obligations Corporate Bonds/Notes/Debentures Stocks Asset-backed Securities Exchange Traded Funds Mortgage Investments Real Estate Investment Trusts Capital Assets Land Buildings Software Machinery and Equipment Works of Art Accumulated Depreciation Net OPEB Asset Other Assets
Total Assets
Deferred Outflows of Resources
Liabilities Accounts Payable and Other Accruals Due to Other Funds Due to Brokers for Securities Purchased Benefits Payable Unearned Revenue Compensated Absences Payable Net OPEB Liability Net Pension Liability
Total Liabilities
Deferred Inflows of Resources
Net Position Restricted for:
Pension Benefits Other Postemployment Benefits
Total Net Position

Defined Benefit Pension Plans (see combining)

Georgia Defined Contribution
Plan

$

1,701,237 $

--

581

210,253 23,363 300,311
--

14,724,520 342,349
17,339,553 6,300,158 57,307,025
35,439 21,663 99,532 72,342

8,883 7,793 30,663 5,601
114 (36,629)
3,227 --

98,497,978

9,635

22,767 -- --
425 -- 740 --
-- -- 92,591 21,940 -- -- -- -- --
-- -- -- -- -- -- -- --
138,463
--

36,321

507

520

--

41,285

--

--

--

9

--

85

--

11,217

--

28,862

--

118,299

507

16,121

--

98,373,193 --

$

98,373,193 $

137,956 --
137,956

Defined Contribution Plans

Deferred Compensation Plans

State of Georgia

State of Georgia

401 (K)

457

Plan

Plan

Regents 457 (F)
Plan

$

16,213 $

--

--

2 -- 4,128 --

-- 1,257,659
-- -- 12,048 -- -- -- --

-- -- -- -- -- -- -- --

1,290,050

--

1,297 $ -- --
5 -- 664 --
-- 635,687
-- -- 8,640 -- -- -- --
-- -- -- -- -- -- -- --
646,293
--

233 -- --
-- -- -- --
-- 2,645
-- 131 -- -- -- -- 91
-- -- -- -- -- -- -- --
3,100
--

2,959

1,327

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

2,959

1,327

--

--

--

--

1,287,091 --

$

1,287,091 $

644,966 --
644,966 $

3,100 --
3,100

328

Board of Regents Retiree Health Benefit Fund

Other Post Employment Benefit Plans

Georgia

Georgia

State Employees

School Personnel

Postemployment

Postemployment

Health Benefit Fund Health Benefit Fund

State Employees' Assurance
Department OPEB

Total

$

12,605 $

551 $

188 $

283 $

1,755,374

--

1,182,120

442,026

--

1,624,146

--

--

--

--

581

--

4,036

1,487

--

216,208

--

1

--

--

23,364

325

7,852

22,190

--

336,210

--

2,145

870

449

3,464

-- 137,932
-- -- 14,982 -- -- -- --

-- -- -- -- 482,033 -- -- -- --

-- -- -- -- 170,432 -- -- -- --

1,256,402 -- -- -- -- -- -- -- --

15,980,922 2,376,272 17,432,144 6,322,229 57,995,160
35,439 21,663 99,532 72,433

--

--

--

--

8,883

--

--

--

--

7,793

--

--

--

--

30,663

--

--

--

--

5,601

--

--

--

--

114

--

--

--

--

(36,629)

--

--

--

--

3,227

55

--

--

--

55

165,899

1,678,738

637,193

1,257,134

104,314,848

--

--

--

--

9,635

-- -- -- 5,921 -- -- -- --
5,921
--

361 -- -- 10,643 213 -- -- --
11,217
--

458 -- --
25,395 323 -- -- --
26,176
--

416

42,349

--

520

--

41,285

--

41,959

--

545

--

85

--

11,217

--

28,862

416

166,822

--

16,121

-- 159,978

-- 1,667,521

-- 611,017

-- 1,256,718

100,446,306 3,695,234

$

159,978 $

1,667,521 $

611,017 $

1,256,718 $ 104,141,540

329

State of Georgia
Combining Statement of Changes in Fiduciary Net Position Pension and Other Employee Benefit Trust Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Defined Benefit Pension Plans (see combining)

Georgia Defined Contribution
Plan

Defined Contribution Plans

Deferred Compensation Plans

State of Georgia

State of Georgia

401 (K)

457

Plan

Plan

Regents 457 (F)
Plan

Additions:

Contributions

Employer

$

3,382,892 $

-- $

51,138 $

-- $

799

Fees

418

--

--

25

--

Insurance Premiums

--

--

--

--

--

NonEmployer

112,115

--

--

--

--

Plan Members

852,703

14,658

129,639

20,216

--

Miscellaneous

574

--

426

--

--

Interest and Other Investment Income

Dividends and Interest

2,100,950

2,823

883

798

181

Net Appreciation (Depreciation) in

Investments Reported at Fair Value

2,930,324

6,323

42,324

25,677

(30)

Less: Investment Expense

(77,362)

(68)

(2,357)

(912)

(2)

Transfers from Other Funds

2,786

--

--

--

--

Total Additions

9,305,400

23,736

222,053

45,804

948

Deductions: Distributions Benefits General and Administrative Expenses Pool Participant Withdrawals Refunds

6,900,298 31,986 -- 85,830

7 913 -- 10,510

92,355 3,816
-- --

40,067 745 -- --

-- -- 2,286 --

Total Deductions
Net Increase (Decrease) in Fiduciary Net Position

7,018,114 2,287,286

11,430 12,306

96,171 125,882

40,812 4,992

2,286 (1,338)

Net Position, July 1

96,085,907

125,650

1,161,209

639,974

4,438

Net Position, June 30

$

98,373,193 $

137,956 $

1,287,091 $

644,966 $

3,100

330

Board of Regents Retiree Health Benefit Fund

Other Post Employment Benefit Plans

Georgia

Georgia

State Employees

School Personnel

Postemployment

Postemployment

Health Benefit Fund Health Benefit Fund

State Employees' Assurance
Department OPEB

Total

$

102,792 $

150,489 $

338,177 $

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

4,810

34,805

12,852

2,915 (197)
--

17,340 (207) --

6,016 (73) --

110,320

202,427

356,972

-- $ -- 3,088 -- -- --
27,202
39,214 (1,168)
--
68,336

4,026,287 443
3,088 112,115 1,017,216
1,000
2,185,304
3,070,103 (82,346) 2,786
10,335,996

94,211 586 -- --
94,797

149,922 2,191 -- --
152,113

335,832 5,252 -- --
341,084

44,754 720 -- --
45,474

7,657,446 46,209 2,286 96,340
7,802,281

15,523

50,314

15,888

22,862

2,533,715

144,455

1,617,207

595,129

1,233,856

101,607,825

$

159,978 $

1,667,521 $

611,017 $

1,256,718 $

104,141,540

331

State of Georgia
Combining Statement of Fiduciary Net Position Pension and Other Employee Benefit Trust Funds Defined Benefit Pension Plans June 30, 2020
(dollars in thousands)

Assets Cash and Cash Equivalents Restricted Pooled Investments with State Treasury Receivables
Interest and Dividends Due from Brokers for Securities Sold Other Investments Pooled Investments Mutual Funds Municipal, U.S. and Foreign Government Obligations Corporate Bonds/Notes/Debentures Stocks Asset-backed Securities Exchange Traded Funds Mortgage Investments Real Estate Investment Trusts Capital Assets Land Buildings Software Machinery and Equipment Works of Art Accumulated Depreciation Net OPEB Asset
Total Assets
Deferred Outflow of Resources
Liabilities Accounts Payable and Other Accruals Due to Other Funds Due to Brokers for Securities Purchased Unearned Revenue Compensated Absences Payable Net OPEB Liability Net Pension Liability
Total Liabilities
Deferred Inflow of Resources
Net Position Restricted for Pension Benefits

Employees' Retirement
System

Firefighters' Pension Fund

Georgia Judicial Retirement System

Other Defined Benefit Plans
(see combining)

$

270,871 $

581

-- -- 32,218

13,216,575 -- -- -- -- -- -- -- --

4,350 2,800 14,345 2,241
-- (17,168)
569

13,527,382 681

55,001 $ --
2,042 1,756
--
-- 254,035 46,922 124,182 299,100 17,984
-- 87,805 42,000
85 1,535
-- 164 114 (817) --
931,908
--

601 $ --
-- -- 465
485,633 -- -- -- -- -- -- -- --
-- -- -- -- -- -- --
486,699
--

15,560 --
827 655 323
63,594 88,314 85,896 19,010 235,636 3,437
-- 649 438
-- -- -- -- -- -- --
514,339
--

19,724 509 -- -- --
2,350 --
22,583
3,194

2,737 --
4,181 -- 85 -- --
7,003
--

759

588

10

1

--

895

--

9

--

--

--

--

--

--

769

1,493

--

--

$

13,502,286 $

924,905 $

485,930 $

512,846

332

Peace Officers' Annuity and Benefit Fund

Public School Employees Retirement System

Teachers Retirement
System

Total

$

30,188 $

--

266 $ --

1,328,750 $ --

1,701,237 581

1,493 1,236
--

--

205,891

210,253

--

19,716

23,363

266

267,039

300,311

-- -- 82,167 63,380 573,559 14,018 21,663 11,078 29,904

958,718 -- -- -- -- -- -- -- --

-- -- 17,124,568 6,093,586 56,198,730 -- -- -- --

14,724,520 342,349
17,339,553 6,300,158 57,307,025
35,439 21,663 99,532 72,342

98 658 1,338 193 -- (481) --

--

4,350

8,883

--

2,800

7,793

--

14,980

30,663

--

3,003

5,601

--

--

114

--

(18,163)

(36,629)

--

2,658

3,227

830,492 --

959,250 --

81,247,908 8,954

98,497,978 9,635

891 -- 2,181 -- -- -- --
3,072
--

1,002 -- -- -- -- -- --
1,002
--

10,620 --
34,028 -- --
8,867 28,862
82,377
12,927

36,321 520
41,285 9 85
11,217 28,862
118,299
16,121

$

827,420 $

958,248 $

81,161,558 $

98,373,193

333

State of Georgia
Combining Statement of Changes in Fiduciary Net Position Pension and Other Employee Benefit Trust Funds Defined Benefit Pension Plans For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Additions: Contributions/Assessments
Employer Fees NonEmployer Plan Members Miscellaneous Interest and Other Investment Income Dividends and Interest Net Appreciation (Depreciation) in
Investments Reported at Fair Value Less: Investment Expense Transfers from Other Funds
Total Additions
Deductions: Distributions
Benefits General and Administrative Expenses Refunds
Total Deductions
Net Increase (Decrease) in Fiduciary Net Position
Net Position, July 1
Net Position, June 30

Employees' Retirement
System

Firefighters' Pension Fund

Georgia Judicial Retirement System

Other Defined Benefit Plans
(see combining)

$

634,108 $

10

9,749

35,837

--

294,448

424,454 (15,062)
--

1,383,544

-- $ 404 40,575 4,104 313
19,741
(13,192) (4,394)
--
47,551

4,022 $ --
2,442 5,005
--
10,579
15,250 (414) --
36,884

11,837 4
8,103 914 --
5,490
24,358 (2,600) 2,622
50,728

1,484,445 7,641 6,644

1,498,730

(115,186)

13,617,472

$

13,502,286 $

53,786 2,200 1,012
56,998
(9,447)
934,352
924,905 $

29,263 850 213
30,326
6,558
479,372
485,930 $

35,163 1,158
72
36,393
14,335
498,511
512,846

334

Peace Officers' Annuity and Benefit Fund

Public School Employees Retirement System

Teachers Retirement
System

Total

$

-- $

-- $

2,732,925 $

3,382,892

--

--

--

418

13,021

32,496

5,729

112,115

3,641

2,338

800,864

852,703

261

--

--

574

18,049

20,785

1,731,858

2,100,950

11,319 (3,636)
--

29,963 (835) --

2,438,172 (50,421) 164

2,930,324 (77,362) 2,786

42,655

84,747

7,659,291

9,305,400

39,268 1,301
341

66,090 1,425
572

5,192,283 17,411 76,976

6,900,298 31,986 85,830

40,910

68,087

5,286,670

7,018,114

1,745

16,660

2,372,621

2,287,286

825,675

941,588

78,788,937

96,085,907

$

827,420 $

958,248 $

81,161,558 $

98,373,193

335

State of Georgia
Combining Statement of Fiduciary Net Position Pension and Other Employee Benefit Trust Funds Defined Benefit Pension Plans Other Defined Benefit Pension Plans June 30, 2020
(dollars in thousands)

District Attorneys Retirement
Fund

Augusta University Early Retirement
Pension Plan

Judges of the Probate Courts
Retirement Fund

Legislative Retirement
System

Magistrates Retirement
Fund

Assets

Cash and Cash Equivalents

$

Receivables, Net

Interest and Dividends

Due from Brokers for Securities Sold

Other

Investments

Pooled Investments

Mutual Funds

Municipal, U.S. and Foreign Government Obligations

Corporate Bonds/Notes/Debentures

Stocks

Asset-backed Securities

Mortgage Investments

Real Estate Investment Trusts

2 $
-- -- --
-- -- -- -- -- -- -- --

5,893 $
-- -- --
-- 64,583
-- -- 34,667 -- -- --

3,398 $
298 598 --
-- -- 11,292 7,707 70,779 3,437 -- --

80 $
-- -- --
34,599 -- -- -- -- -- -- --

935
105 -- --
-- -- 5,528 4,857 19,378 -- 649 438

Total Assets

2

105,143

97,509

34,679

31,890

Liabilities Accounts Payable and Other Accruals Due to Other Funds Due to Brokers for Securities Purchased Unearned Revenue
Total Liabilities
Net Position Restricted for Pension Benefits

--

--

59

110

4

--

--

--

1

--

--

--

801

--

--

--

--

--

--

--

--

--

860

111

4

$

2 $

105,143 $

96,649 $

34,568 $

31,886

336

Georgia Military Pension
Fund

Sheriffs' Retirement
Fund

Superior Court Clerks' Retirement
Fund

Superior Court Judges Retirement
Fund

Total

$

48 $

3,179 $

2,015 $

--

--

424

--

--

57

--

--

323

28,995 -- -- -- -- -- -- --
29,043

-- 23,731 9,328 6,446 52,251
-- -- --
94,935

-- -- 59,748 -- 58,561 -- -- --
121,128

10 $
-- -- --
-- -- -- -- -- -- -- --
10

15,560
827 655 323
63,594 88,314 85,896 19,010 235,636 3,437
649 438
514,339

76

216

119

--

--

--

--

--

94

--

7

2

76

223

215

$

28,967 $

94,712 $

120,913 $

4

588

--

1

--

895

--

9

4

1,493

6 $

512,846

337

State of Georgia
Combining Statement of Changes in Fiduciary Net Position Pension and Other Employee Benefit Trust Funds Defined Benefit Pension Plans Other Defined Benefit Pension Plans For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Additions: Contributions/Assessments Employer Fees NonEmployer Plan Members Interest and Other Investment Income Dividends and Interest Net Appreciation (Depreciation) in Investments Reported at Fair Value Less: Investment Expense Transfers from Other Funds
Total Additions
Deductions: Distributions Benefits General and Administrative Expenses Refunds
Total Deductions
Net Increase (Decrease) in Fiduciary Net Position
Net Position, July 1
Net Position, June 30

District Attorneys Retirement
Fund

Early Retirement Pension Plan -
Augusta University

Judges of the Probate Courts
Retirement Fund

Legislative Retirement
System

Magistrates Retirement
Fund

$

34 $

11,474 $

-- $

-- $

--

2

--

--

--

--

--

--

1,453

--

1,631

--

--

196

325

187

--

546

1,841

760

596

--

2,161

7,376

1,096

2,350

--

(167)

(764)

(32)

(423)

--

--

--

--

--

36

14,014

10,102

2,149

4,341

34

14,247

4,456

1,795

396

2

--

107

305

72

--

--

--

21

33

36

14,247

4,563

2,121

501

--

(233)

5,539

28

3,840

2

105,376

91,110

34,540

28,046

$

2 $

105,143 $

96,649 $

34,568 $

31,886

338

Georgia Military Pension
Fund

Sheriffs' Retirement
Fund

Superior Court Clerks' Retirement
Fund

Superior Court Judges Retirement
Fund

Total

$

(11) $

-- $

-- $

--

--

--

--

1,828

3,191

--

80

126

616

1,131

--

888 (19) 2,622

2,229 (648)
--

8,258 (547)
--

4,096

4,620

11,028

340 $ 2 -- --
--
-- -- --
342

11,837 4
8,103 914
5,490
24,358 (2,600) 2,622
50,728

1,297 249 --

6,426 257 12

6,172 164 6

1,546

6,695

6,342

2,550

(2,075)

4,686

26,417

96,787

116,227

$

28,967 $

94,712 $

120,913 $

340 2 --
342
--
6
6 $

35,163 1,158
72
36,393
14,335
498,511
512,846

339

State of Georgia
Combining Statement of Fiduciary Net Position Investment Trust Funds June 30, 2020
(dollars in thousands)

Assets Pooled Investments with State Treasury Interest Receivable
Total Assets
Liabilities Accounts Payable and Other Accruals
Total Liabilities
Net Position Restricted for Pool Participants

Georgia Fund 1

Georgia Fund 1
Plus

Total

$

11,054,973 $

160

11,055,133

-- $ --
--

11,054,973 160
11,055,133

--

--

--

--

--

--

$

11,055,133 $

-- $

11,055,133

340

State of Georgia
Combining Statement of Changes in Fiduciary Net Position Investment Trust Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Additions: Contributions/Assessments
Pool Participant Deposits Interest and Other Investment Income
Dividends and Interest Net Appreciation (Depreciation) in Investments
Reported at Fair Value Less: Investment Expense
Total Additions
Deductions: Distributions
Pool Participant Withdrawals
Change in Net Position Restricted for Pool Participants
Net Position, July 1
Net Position, June 30

Georgia Fund 1

Georgia Fund 1
Plus

Total

$

15,108,806 $

151,187

-- (5,161)

15,254,832

50,000 $ 2,591
59 (59) 52,591

15,158,806 153,778 59 (5,220)
15,307,423

13,344,444

1,910,388

9,144,745

$

11,055,133 $

205,103 (152,512) 152,512
-- $

13,549,547 1,757,876 9,297,257 11,055,133

341

State of Georgia
Combining Statement of Fiduciary Net Position Private Purpose Trust Funds June 30, 2020
(dollars in thousands)

Auctioneers Education, Research and Recovery Fund

Real Estate Education, Research and Recovery Fund

Subsequent Injury
Trust Fund

Tuition Guaranty Trust Fund

Assets

Cash and Cash Equivalents

$

Pooled Investments with State Treasury

Receivables, Net

Other

Capital Assets

Buildings

Machinery and Equipment

Accumulated Depreciation

Net OPEB Asset

Other Assets

143 $ 576
--
-- -- -- -- --

-- $ 2,344
--
-- -- -- -- 10

-- $ 352,552
32,298
826 94 (754) 126 --

1,439 $ 2,904
--
-- -- -- -- --

Total Assets

719

2,354

385,142

4,343

Deferred Outflows of Resources

--

--

314

--

Liabilities Cash Overdraft Compensated Absences Payable Net OPEB Liability Net Pension Liability Other Liabilities

--

553

20,880

--

--

--

68

--

--

--

305

--

--

--

1,156

--

--

--

332

--

Total Liabilities

--

553

22,741

--

Deferred Inflows of Resources

--

--

602

--

Net Position Restricted for:
Other Purposes

719

1,801

362,113

4,343

Total
1,582 358,376 32,298
826 94 (754) 126 10 392,558 314
21,433 68 305
1,156 332
23,294 602
368,976

Total Net Position

$

719 $

1,801 $

362,113 $

4,343 $

368,976

342

State of Georgia
Combining Statement of Changes in Fiduciary Net Position Private Purpose Trust Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Auctioneers Education, Research and Recovery Fund

Real Estate Education, Research and Recovery Fund

Subsequent Injury
Trust Fund

Tuition Guaranty Trust Fund

Additions:

Contributions/Assessments

Plan Members/Participants

$

Interest and Other Investment Income

Dividends and Interest

8 $ 9

182 $ 35

78,094 $ 4,934

562 $ 40

Total Additions

17

217

83,028

602

Deductions: Distributions
Benefits General and Administrative Expenses Refunds Transfers to Other Funds

--

--

22,139

--

--

68

1,490

15

--

--

--

62

--

3

--

--

Total Deductions

--

71

23,629

77

Net Increase (Decrease) in Fiduciary Net Position

17

146

59,399

525

Net Position, July 1 (restated)

702

1,655

302,714

3,818

Net Position, June 30

$

719 $

1,801 $

362,113 $

4,343 $

Total
78,846 5,018 83,864
22,139 1,573
62 3 23,777 60,087 308,889 368,976

343

State of Georgia
Combining Statement of Fiduciary Net Position Custodial Funds June 30, 2020
(dollars in thousands)

Assets Cash and Cash Equivalents Pooled Investments with State Treasury Accounts Receivable, Net Investments, at Fair Value
Certificates of Deposits Pooled Investments Mutual Funds Municipal, U.S. and Foreign Government Obligations Mortgage Investments Stocks Other Assets Due from Other Funds (Within PG & FID)
Total Assets

Child Support Recovery Program

Detainees' Accounts

Flexible Benefits Program

Insurance Premium Tax
Collections for Local Governments

$

68,485 $

61,503 $

3,097 $

--

--

--

11,551

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

68,485

61,503

14,648

--

Liabilities Accounts Payable and Other Accruals Cash Overdraft Salaries Payable Due to Local Governments Unearned Revenue Other Liabilities
Total Liabilities

25

--

1,263

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

--

25

--

1,263

--

Net Position Restricted for:
Pool Participants Individuals, Organizations, and Other Governments
Total Net Position

--

--

--

--

68,460

61,503

13,385

--

$

68,460 $

61,503 $

13,385 $

--

344

Revenue Tax Collections for Local Governments

Survivor's Benefit Fund

Student Financial Aid and Support

Other Custodial Funds

Total

External Investment
Pool

$

8,135 $

47,164

4,989

86 $ -- --

-- -- -- -- -- -- -- 782,849

-- 167,359
-- -- -- -- -- --

843,137

167,445

-- $ -- 90,201
-- -- -- -- -- -- -- --
90,201

18,351 $ 16,384
151
1,252 222
7,459 15,895 8,464
-- 4 --
68,182

159,657 $ 75,099 95,341
1,252 167,581
7,459 15,895 8,464
-- 4 782,849
1,313,601

1,660 -- --
-- -- 50,215 -- -- 14,253 -- --
66,128

--

--

4,295

2,973

8,556

--

--

--

69,131

--

69,131

--

--

--

--

29

29

--

843,137

--

--

--

843,137

--

--

--

3,653

--

3,653

--

--

--

470

--

470

--

843,137

--

77,549

3,002

924,976

--

--

--

--

167,445

-- 12,652

-- 65,180

-- 388,625

66,128 --

$

-- $

167,445 $

12,652 $

65,180 $

388,625 $

66,128

345

State of Georgia
Combining Statement of Changes in Fiduciary Net Position Custodial Funds For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Additions: Contributions/Assessments
Child Support Recovery Program Collections for Local Governments Detainees' Accounts Plan Members/Participants Pool Participant Deposits Student Financial Aid Student Support Miscellaneous Interest and Other Investment Income Dividends and Interest Net Appreciation (Depreciation) in Investments Reported at Fair Value Less: Investment Expense
Total Additions

Child Support Recovery Program

Detainees' Accounts

Flexible Benefits Program

Insurance Premium Tax
Collections for Local Governments

$

898,830 $

--

--

--

--

--

--

--

--

-- --

898,830

-- $ -- 153,647 -- -- -- -- --
--
-- --
153,647

-- $ -- -- 157,159 -- -- -- --
200
-- --
157,359

-- 699,726
-- -- -- -- -- --
--
-- --
699,726

Deductions: Distributions
Benefits Child Support Recovery Program Detainees' Accounts Distributions to Local Governments Pool Participant Withdrawals Student Financial Aid Student Support Miscellaneous Transfers to Other Funds
Total Deductions
Net Increase (Decrease) in Fiduciary Net Position

-- 866,704
-- -- -- -- -- -- --
866,704
32,126

-- -- 146,792 -- -- -- -- -- --
146,792
6,855

150,916 -- -- -- -- -- -- 1
5,327
156,244
1,115

-- -- -- 699,726 -- -- -- -- --
699,726
--

Net Position, July 1 (restated) Net Position, June 30

36,334

54,648

12,270

--

$

68,460 $

61,503 $

13,385 $

--

346

Revenue Tax Collections for Local Governments

Survivor's Benefit Fund

Student Financial Aid and Support

Other Custodial Funds

Total

External Investment
Pool

$

-- $

6,822,465

--

--

--

--

--

--

--

-- --

6,822,465

-- $ -- -- -- -- -- -- --
8,701
-- --
8,701

-- $ -- -- -- -- 2,331,419 78,462 1,835
2
-- --
2,411,718

-- $ -- -- -- -- -- -- 80,591
731
4 (43)
81,283

898,830 $ 7,522,191
153,647 157,159
-- 2,331,419
78,462 82,426
9,634
4 (43)
11,233,729

-- -- -- -- 7,595 -- -- --
1,331
(821) (83)
8,022

-- -- -- 6,822,465 -- -- -- -- --
6,822,465
--

--

$

-- $

-- -- -- -- -- -- -- -- --
--
8,701

-- -- -- -- -- 2,334,095 85,902 1,148 --
2,421,145
(9,427)

158,744 167,445 $

22,079 12,652 $

-- -- -- -- -- -- -- 85,890 --
85,890
(4,607)

150,916 866,704 146,792 7,522,191
-- 2,334,095
85,902 87,039 5,327
11,198,966
34,763

69,787 65,180 $

353,862 388,625 $

-- -- -- -- 2,965 -- -- -- --
2,965
5,057
61,071
66,128

347

NONMAJOR COMPONENT UNITS

State of Georgia
Description of Nonmajor Component Units
Component units are legally separate organizations for which the State's elected officials are considered to be financially accountable. Nonmajor component units are described below:
Economic Development Organizations The Economic Development organizations cultivate business for the State. These organizations are described below:
The Georgia Development Authority is a body corporate and politic. The Authority was created to assist agricultural and industrial interests by providing credit and servicing functions to better enable farmers and businessmen to obtain needed capital funds. The Board consists of three State officials designated by statute and four members appointed by the Governor.
The OneGeorgia Authority is a body corporate and politic and an instrumentality and public corporation of the State. The purpose of the Authority is to promote the health, welfare, safety and economic society of the rural citizens of the State through the development and retention of employment opportunities in rural areas and the enhancement of the infrastructures that accomplish that goal. The six members of the Authority are State officials designated by statute.
The Savannah Georgia Convention Center Authority a state Authority, effective July 1, 2019, formally Georgia International and Maritime Trade Center Authority is a body corporate and politic. The Authority was created to develop and promote the growth of the State's import and export markets through its ports and other transportation modes, and to construct, operate and maintain the Savannah International Trade and Convention Center. The Authority is governed by a board of directors composed of 11 members; 6 members appointed by the Governor; 3 members appointed by the members of the Georgia General Assembly representing Chatham County; the President of the Savannah Area Convention and Visitors' Bureau; and the President of the Savannah Economic Development Authority.
The Georgia Higher Education Assistance Corporation is a nonprofit public authority, body corporate and politic. The Corporation was created to improve the higher educational opportunities of eligible students by guaranteeing educational loan credit to students and to parents of students. The Corporation is governed by the Board of Commissioners of the Georgia Student Finance Commission. The Board consists of 14 members appointed by the Governor.
The Georgia Military College (GMC) is a public authority, body corporate and politic, and is an instrumentality and a public corporation of the State. GMC is dedicated to providing a high-quality military education to the youth of the State. The Board of Trustees consists of the mayor of the City of Milledgeville and six additional members, one of which is elected from each of the six municipal voting districts of the City, as required by statute. The government, control, and management of GMC are vested in the Board of Trustees. GMC receives any designated funds appropriated by the General Assembly through the Board of Regents of the University System of Georgia.
The Georgia Public Telecommunications Commission is a body corporate and politic. This Commission is a public charitable organization created for the purpose of providing educational, instructional and public broadcasting services to citizens of Georgia. The budget of the Commission must be approved by the State. The Board consists of nine members appointed by the Governor. Financial information presented for the Commission includes its component unit, Foundation for Public Broadcasting in Georgia, Inc.
The Georgia Regional Transportation Authority is a body corporate and politic. Within its jurisdiction, the purpose of the Authority is to manage land transportation and air quality, review all Developments of Regional
351

State of Georgia
Description of Nonmajor Component Units
Impact (DRI), and approve the allocation of state and federal transportation resources in metro Atlanta via the Atlanta Transportation Improvement Program (TIP). The Authority also serves in an advisory capacity to the State Road and Tollway Authority related to the management and operations of the Xpress Commuter Bus Service. The Governor appoints all 15 Board Members of the Authority.
The Georgia Student Finance Authority is a body corporate and politic. This Authority was created for the purpose of improving higher educational opportunities by providing educational scholarship, grant and loan assistance. A substantial amount of funding is provided to the Authority by the State. State officials comprise four of the 14 members of the Board, and the Governor appoints the remaining 10.
The Higher Education Foundations are nonprofit organizations established to secure and manage support for various projects including acquisitions and improvements of properties and facilities for the University System of Georgia.
The REACH Georgia Foundation is a nonprofit organization that was formed to ensure that Georgia's academically promising students have the academic, social and financial support needed to graduate from high school, access college and achieve postsecondary success. The REACH Georgia Program is the State of Georgia's first needs-based mentorship and college scholarship program and the Foundation's mission is to raise and invest funds.
The Regional Educational Service Agencies were established to provide shared services to improve the effectiveness of educational programs and services of local school systems and to provide direct instructional programs to selected public school students. The State has 16 of these agencies.
The Superior Court Clerks' Cooperative Authority is a body corporate and politic and an instrumentality and public corporation of the State created to provide a cooperative for the development, acquisition and distribution of record management systems, information, services, supplies and materials for superior court clerks of the State. Of the 10 members of the Board, the Governor appoints four. The nature of this organization is such that it would be misleading to exclude it from the reporting entity.
Tourism / State Attractions These organizations promote State interests or encourage visitation to the State through the operation and maintenance of various attractions. Organizations involved in such activities are described below:
The Georgia Agricultural Exposition Authority is a body corporate and politic. This Authority is responsible for provision of a facility for the agricultural community, for public events, exhibits and other activities and for promotion and staging of a statewide fair. The Governor appoints the nine Board members.
The Jekyll Island State Park Authority is a body corporate and politic and an instrumentality and public corporation of the State. The Authority was created to operate and manage resort recreational facilities on Jekyll Island. The Board consists of one State official designated by statute and eight members appointed by the Governor. Financial information presented for the Authority includes its component unit, Jekyll Island Foundation, Inc.
The Lake Lanier Islands Development Authority is a body corporate and politic and an instrumentality and public corporation of the State. The purpose of the Authority is to manage, preserve and protect projects on Lake Lanier Islands. The Board consists of one State official designated by statute and eight members appointed by the Governor.
352

State of Georgia
Description of Nonmajor Component Units
The North Georgia Mountains Authority is a body corporate and politic and an instrumentality and public corporation of the State responsible for the construction and management of recreation, accommodation and tourist facilities and services. The Governor appoints the nine members of the Board. The Stone Mountain Memorial Association is a body corporate and politic and an instrumentality and public corporation of the State. The Authority is responsible for the maintaining and operating of Stone Mountain as a Confederate memorial and public recreational area. The Board consists of one State official designated by statute and nine members appointed by the Governor.
353

State of Georgia
Combining Statement of Net Position Nonmajor Component Units June 30, 2020
(dollars in thousands)

Assets Current Assets:
Cash and Cash Equivalents Pooled Investments with State Treasury Investments Receivables
Accounts (Net) Capital Leases from Primary Government Interest and Dividends Notes and Loans (Net) Taxes Due from Primary Government Due from Component Units Intergovernmental Receivables Inventory Other Current Assets Restricted Assets Cash and Cash Equivalents Investments Other Total Current Assets
Noncurrent Assets: Investments Receivables Capital Leases from Primary Government Notes and Loans Other (Net) Restricted Assets Cash and Cash Equivalents Investments Net OPEB Asset Receivables Loans (Net) Other Non-depreciable Capital Assets Depreciable Capital Assets (Net) Other Noncurrent Assets
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources

Economic Development Organizations

Georgia Higher Education
Assistance Corporation

Higher Education Foundations

Georgia Military College

Georgia Public Telecommunications
Commission

$

19,661 $

146,409

--

231 -- 2,670 16,005 468 20,000 -- 20 1,594 101

-- -- -- 207,159

--
-- 179,440
--
11 -- --
-- -- 9,684 2,916 -- 192,051
399,210
--

8,298 $ 15,827
--
-- -- -- -- -- 129 -- 222 -- --
-- -- -- 24,476

495,747 $ 279
79,937
339,590 92,559
-- 2 -- 6,792 -- -- 24,103 38,408
89,306 215,971 53,395 1,436,089

18,168 $ -- --
6,484 -- -- -- -- -- -- --
2,034 6
-- -- -- 26,692

--
-- -- --
-- -- --
-- -- -- -- -- --
24,476
--

476,478
2,115,137 --
128,397
219,341 1,707,385
--
15 59,545 252,720 870,917 49,198 5,879,133
7,315,222
52,731

--
-- -- --
-- -- 39
-- -- 1,352 89,374 -- 90,765
117,457
20,186

2,457 --
14,090
1,727 -- -- -- -- -- -- -- -- --
-- -- -- 18,274
--
-- -- --
-- -- 552
-- -- 1,479 5,083 -- 7,114
25,388
3,871

354

REACH Georgia Foundation

Regional Educational
Service Agencies

Georgia Regional Transportation Authority

Georgia Student Finance Authority

Superior Court Clerks'
Cooperative Authority

Tourism State
Attractions

Total

$

27 $

21,147 $

--

2,403

37,013

418

16 $ 3 --

24,401 $ 20,057
--

11,648 $ -- --

25,578 $ 7,648
--

627,148 192,626 131,458

--

1,558

--

--

1,822

4,451

355,863

--

--

--

--

--

--

92,559

--

--

--

1,244

--

--

3,914

--

--

--

164,198

--

--

180,205

--

--

--

--

--

--

468

--

--

--

968

--

--

27,889

--

--

--

24,394

--

--

24,394

--

9,770

10,594

--

--

--

20,606

--

1,932

--

--

--

1,139

30,802

--

471

--

216

151

1,646

40,999

62 -- -- 37,102

-- -- -- 37,699

-- -- -- 10,613

-- -- -- 235,478

8,717 -- --
22,338

-- -- -- 40,462

98,085 215,971 53,395 2,096,382

--
-- --
-- -- --
-- --
-- -- --
37,102
--

--
-- -- --
-- -- 70
-- -- 497 4,568 -- 5,135
42,834
35,407

--
-- -- --
-- -- --
-- -- -- -- -- --
10,613
--

--
-- -- --
-- -- --
-- -- 586 996 -- 1,582
237,060
--
355

--
-- -- --
-- -- 139
-- -- -- 2,693 -- 2,832
25,170
305

--
-- -- --
-- -- 662
-- -- 23,230 216,171 -- 240,063
280,525
3,409

476,478
2,115,137 179,440 128,397
219,352 1,707,385
1,462
15 59,545 289,548 1,192,718 49,198 6,418,675
8,515,057
115,909 (continued)

State of Georgia
Combining Statement of Net Position Nonmajor Component Units June 30, 2020
(dollars in thousands)

Liabilities Current Liabilities:
Accounts Payable and Other Accruals Due to Primary Government Due to Component Units Funds Held for Others Unearned Revenue Notes and Loans Payable Revenue/Mortgage Bonds Payable Other Current Liabilities Current Liabilities Payable from Restricted
Assets: Other Total Current Liabilities
Noncurrent Liabilities: Unearned Revenue Notes and Loans Payable Revenue/Mortgage Bonds Payable Derivative Instrument Payable Net OPEB Liability Net Pension Liability Other Noncurrent Liabilities
Total Noncurrent Liabilities
Total Liabilities

Economic Development Organizations

Georgia Higher Education
Assistance Corporation

Higher Education Foundations

Georgia Military College

Georgia Public Telecommunications
Commission

10,519 -- -- -- -- -- --
2,351
-- 12,870
-- -- -- -- -- -- 55,388 55,388
68,258

144 -- 136 -- -- -- -- 34
-- 314
-- -- -- -- -- -- 1,492 1,492
1,806

150,635 463,448
-- 57,202 180,783 17,296 171,818 53,017
-- 1,094,199
13,987 131,132 2,773,715 43,945
6,641 --
112,516 3,081,936
4,176,135

3,181 -- -- --
3,877 218 -- 703
-- 7,979
-- 1,925
-- -- 27,649 39,961 -- 69,535
77,514

576 -- -- -- 1,635 -- -- 377
-- 2,588
-- -- -- -- 11,355 12,950 699 25,004
27,592

Deferred Inflows of Resources
Net Position Net Investment in Capital Assets, Restricted for:
Bond Covenants/Debt Service Capital Projects Permanent Trust Expendable Other Purposes Nonexpendable:
Permanent Trust Other Purposes Unrestricted
Total Net Position

--

12,599
-- -- -- 82,040
-- -- 236,313

$

330,952 $

--

17,231

8,324

--
-- -- -- --
-- -- 22,670
22,670 $

357,559
13,168 224,213 604,891 104,937
1,029,602 48,350 791,867
3,174,587 $

88,583
-- -- -- --
-- -- (36,778)
51,805 $

3,369
6,562
-- -- -- --
-- -- (8,264)
(1,702)

356

REACH Georgia Foundation

Regional Educational
Service Agencies

Georgia Regional Transportation Authority

Georgia Student Finance Authority

Superior Court Clerks'
Cooperative Authority

Tourism State
Attractions

Total

-- -- 24,258 -- -- -- -- --
-- 24,258
-- -- -- -- -- -- -- --
24,258
--

8,027 1 -- --
310 -- 505 87
-- 8,930
-- -- 525 -- 52,139 81,197 159 134,020
142,950
24,173

10,594 -- -- -- -- -- -- 1
-- 10,595
-- -- -- -- -- -- -- --
10,595
1

446 -- -- -- 548 -- -- 4
-- 998
-- -- -- -- -- -- 3,425 3,425
4,423
--

5,637 -- -- -- -- -- -- --
3,868 9,505
-- -- -- -- 315 1,192 -- 1,507
11,012
585

2,938 7 -- --
2,763 1,122
546 417
-- 7,793
-- 6,087 4,739
-- 996 13,612 772 26,206
33,999
1,985

192,697 463,456 24,394 57,202 189,916 18,636 172,869 56,991
3,868 1,180,029
13,987 139,144 2,778,979 43,945 99,095 148,912 174,451 3,398,513
4,578,542
55,668

--
-- -- -- 12,817
-- -- 27

4,338
-- -- -- 67
-- -- (93,287)

$

12,844 $

(88,882) $

--
-- -- -- --
-- -- 17
17 $

1,578
-- -- -- 196,199
-- -- 34,860
232,637 $

2,693
-- -- -- --
-- -- 11,185
13,878 $

233,987
-- -- -- 3,968
-- -- 9,995
247,950 $

707,899
13,168 224,213 604,891 400,028
1,029,602 48,350 968,605
3,996,756

357

State of Georgia
Combining Statement of Activities Nonmajor Component Units For the Fiscal Year Ended June 30, 2020
(dollars in thousands)

Expenses
Program Revenues: Sales and Charges for Services Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
Net (Expenses) Revenue
General Revenues: Taxes Unrestricted Investment Income Payments from the Primary Government Contributions to Permanent Endowments
Total General Revenues
Change in Net Position
Net Position, July 1 - Restated (Note 3)
Net Position, June 30

Economic Development Organizations

Georgia Higher Education
Assistance Corporation

Higher Education Foundations

Georgia Military College

Georgia Public Telecommunications
Commission

$

41,646 $

1,550 $

3,014,324 $

85,511 $

36,033

10,387 2,503 6,877
19,767
(21,879)

2,808 237 --
3,045
1,495

1,383,245 1,559,217
21,258
2,963,720
(50,604)

36,772 48,975 14,812
100,559
15,048

6,080 15,309 3,248
24,637
(11,396)

3,373 767
20,000 --

24,140

2,261

328,691

$

330,952 $

-- -- -- --
--
1,495
21,175
22,670 $

-- 30,591 32,501 49,560
112,652
62,048
3,112,539
3,174,587 $

-- -- -- --
--
15,048
36,757
51,805 $

-- -- 14,705 --
14,705
3,309
(5,011)
(1,702)

358

REACH Georgia Foundation

Regional Educational
Service Agencies

Georgia Regional Transportation Authority

Georgia Student Finance Authority

Superior Court Clerks'
Cooperative Authority

Tourism State
Attractions

Total

$

814 $

108,055 $

34,878 $

47,982 $

18,161 $

64,557 $

3,453,511

-- 2,821
--
2,821
2,007

21,957 83,955
--
105,912
(2,143)

-- 22,068
--
22,068
(12,810)

37,825 26,000
--
63,825
15,843

20,616 149 --
20,765
2,604

55,256 1,942 6,332
63,530
(1,027)

1,574,946 1,763,176
52,527
3,390,649
(62,862)

--

--

--

--

--

2,113

5,486

400

--

--

--

--

--

31,758

--

--

12,809

--

--

960

80,975

--

--

--

--

--

--

49,560

400

--

12,809

--

--

3,073

167,779

2,407

(2,143)

(1)

15,843

2,604

2,046

104,917

10,437

(86,739)

18

216,794

11,274

245,904

3,891,839

$

12,844 $

(88,882) $

17 $

232,637 $

13,878 $

247,950 $

3,996,756

359

State of Georgia
Statistical Section

This part of the Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the State's overall financial health.

Index

Page

Financial Trends Information
These schedules contain trend information to help the reader understand how the State's financial performance and well-being have changed over time.

Schedule Schedule Schedule Schedule

1 - Net Position by Component.................................................................................................. 364 2 - Changes in Net Position........................................................................................................ 366 3 - Fund Balances of Governmental Funds................................................................................ 370 4 - Changes in Fund Balances of Governmental Funds............................................................. 372

Revenue Capacity Information
These schedules contain information to help the reader assess the State's most significant revenue source: personal income tax.

Schedule Schedule Schedule

5 - Revenue Base - Personal Income by Industry...................................................................... 376 6 - Individual Income Tax Rates by Filing Status and Income Level........................................ 378 7 - Individual Income Tax Filers and Liability by Income Level.............................................. 379

Debt Capacity Information
These schedules present information to help the reader assess the affordability of the State's current levels of outstanding debt and the State's ability to issue additional debt in the future.

Schedule Schedule Schedule

8 - Ratios of Outstanding Debt by Type.................................................................................... 380 9 - Ratios of General Bonded Debt Outstanding....................................................................... 382 10 - Computation of Legal Debt Margin...................................................................................... 384

Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the State's financial activities take place.

Schedule 11 - Population/Demographics..................................................................................................... 386 Schedule 12 - Principal Private Sector Employers...................................................................................... 387

Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the State's financial report relates to the services the State provides and the activities it performs.

Schedule 13 - State Government Employment by Function........................................................................ 388 Schedule 14 - Operating Indicators and Capital Assets by Function.......................................................... 390

Sources: : Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year.

363

State of Georgia
Schedule 1 Net Position by Component For the Last Ten Fiscal Years
(accrual basis of accounting) (dollars in thousands)

Governmental Activities (1) (3) Net Investment in Capital Assets Restricted Unrestricted
Total Governmental Activities Net Position
Business-type Activities (1) (2) Net Investment in Capital Assets Restricted Unrestricted
Total Business-type Activities Net Position

2020

2019

2018

2017

$

21,408,838 $

20,361,680 $

19,542,361 $

18,575,368

6,342,472

6,275,129

5,792,152

5,013,504

(7,609,857)

(7,660,565)

(8,506,350)

(5,210,957)

$

20,141,453 $

18,976,244 $

16,828,163 $

18,377,915

$

8,529,759 $

8,429,136 $

7,849,961 $

7,773,009

1,872,318

3,349,557

2,955,296

2,639,561

(6,344,267)

(6,201,340)

(6,250,035)

(4,484,701)

$

4,057,810 $

5,577,353 $

4,555,222 $

5,927,869

Total Primary Government (1) (2) (3) Net Investment in Capital Assets Restricted Unrestricted
Total Primary Government Net Position

$

26,614,216 $

25,566,212 $

24,372,160 $

8,214,790

9,624,686

8,747,448

(10,629,743)

(10,637,301)

(11,736,223)

$

24,199,263 $

24,553,597 $

21,383,385 $

23,502,948 7,653,065 (6,850,229)
24,305,784

(1) In fiscal year 2015, the activities of SRTA were re-examined and all activities of this blended component unit were reported as governmental activities. In fiscal year 2017, SRTA was re-examined again and it was determined that the toll facilities and customer service center (previously part of governmental activities) are now reported as part of business-type activities.
(2) Beginning in fiscal year 2013, the activity of the Armstrong Atlantic State University Educational Properties Foundation, Inc., the Georgia State University Foundation, Inc., the Georgia State University Research Foundation, Inc., the Georgia Tech Facilities, Inc., the University System of Georgia Foundation, Inc. and the VSU Auxiliary Services Real Estate Foundation, Inc., component units, are blended with those of the nonmajor enterprise funds (previously discretely presented). Beginning in the fiscal year 2014, the activity of the Georgia Southern University Housing Foundation, Inc., the Middle Georgia State University Real Estate Foundation, Inc., the North Georgia Real Estate Foundation, Inc., and the UWG Real Estate Foundation, Inc. component units, are blended with those of the nonmajor enterprise funds (previously discretely presented). Beginning in fiscal year 2015, the activity of the Georgia State University Foundation, Inc. is discretely presented (previously blended) and the activity of the Armstrong Atlantic State University Educational Properties Foundation, Inc. is removed as it no longer met requirements for inclusion in the financial reporting entity as nonmajor enterprise funds. Beginning in fiscal year 2016, the Georgia Tech Facilities, Inc., the Middle Georgia State University Real Estate Foundation, Inc., the University of North Georgia Real Estate Foundation, Inc., and the University System of Georgia Foundation, Inc. are discreetly presented (previously blended) and the activity of the Georgia State University Research Foundation, Inc. is removed as it no longer met requirements for inclusion in the financial reporting entity as nonmajor enterprise funds. In fiscal year 2017 the Georgia Southern University Housing Foundation, Inc., UWG Real Estate Foundation, Inc. and VSU Auxiliary Services Real Estate Foundation, Inc. are reported as discretely presented component units (previously Higher Education Fund).
(3) Beginning in fiscal year 2015, Governmental Activities classification of outstanding general obligation bonds for the purposes of capital acquisition and construction on behalf of Business Type Activities, previously reported as net investment in capital assets, is presented as unrestricted. For the Primary Government, the presentation of these outstanding general obligation bonds is presented as net investment in capital assets.
Source: Financial Statements included in Current and Prior Years' Comprehensive Annual Financial Reports

364

Fiscal Year

2016

2015

2014

2013

2012

2011

$

17,213,380 $ 16,562,899 $ 13,186,605 $ 13,737,276 $ 13,355,209 $ 12,880,313

4,499,014

3,668,030

3,653,903

3,301,316

3,968,493

4,031,347

(5,745,504)

(6,914,616)

(1,644,265)

(1,781,096)

(2,456,411)

(2,106,699)

$

15,966,890 $ 13,316,313 $ 15,196,243 $ 15,257,496 $ 14,867,291 $ 14,804,961

$

7,529,660 $

7,344,726 $

6,575,166 $

6,502,029 $

6,257,436 $

5,952,035

1,837,521

1,546,723

1,367,598

816,428

457,265

489,736

(3,857,184)

(3,957,761)

(820,616)

(1,063,406)

(1,293,130)

(1,069,413)

$

5,509,997 $

4,933,688 $

7,122,148 $

6,255,051 $

5,421,571 $

5,372,358

$

21,892,080 $ 20,926,469 $ 19,761,771 $ 20,239,305 $ 19,612,645 $ 18,832,348

6,336,535

5,214,753

5,021,501

4,117,744

4,425,758

4,521,083

(6,751,728)

(7,891,221)

(2,464,881)

(2,844,502)

(3,749,541)

(3,176,112)

$

21,476,887 $ 18,250,001 $ 22,318,391 $ 21,512,547 $ 20,288,862 $ 20,177,319

365

State of Georgia
Schedule 2 Changes in Net Position For the Last Ten Fiscal Years
(accrual basis of accounting) (dollars in thousands)

Expenses Governmental Activities General Government Education Health and Welfare Transportation (1) Public Safety Economic Development and Assistance Culture and Recreation Conservation Interest and Other Charges on Long-Term Debt (1) Total Governmental Activities
Business-type Activities Higher Education Fund (2) State Health Benefit Plan Unemployment Compensation Fund Nonmajor Enterprise Funds (1) (2)
Total Business-type Activities Total Primary Government Expenses
Program Revenues Governmental Activities (1) (2) (3) Sales and Charges for Services General Government Health and Welfare Public Safety Other Sales and Charges for Services Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities
Business-type Activities (1) Sales and Charges for Services Higher Education Fund (2) State Health Benefit Plan (4) Unemployment Compensation Fund (4) Nonmajor Enterprise Funds (1) (2) Operating Grants and Contributions Capital Grants and Contributions
Total Business-type Activities Total Primary Government Program Revenues
Net (Expense) Revenue Governmental Activities (1) Business-type Activities (2) (3) (4)
Total Primary Government

2020

2019

2018

2017

$

1,580,323 $

1,262,837 $

1,380,132 $

1,229,891

14,744,905

13,892,451

13,266,545

12,655,824

19,182,338

18,015,041

18,082,536

17,238,499

2,831,753

2,668,539

2,400,875

1,964,380

2,557,268

2,605,402

2,525,521

2,628,645

414,177

465,465

524,516

645,604

291,934

309,863

308,917

279,375

59,402

54,758

72,135

60,603

309,200 41,971,300

381,895 39,656,251

379,211 38,940,388

394,388 37,097,209

10,355,168

9,739,025

9,300,291

9,063,716

2,735,542

2,613,192

2,882,954

2,296,062

10,229,884

319,367

325,523

328,266

204,559

205,638

207,054

194,402

23,525,153

12,877,222

12,715,822

11,882,446

$ 65,496,453 $ 52,533,473 $ 51,656,210 $ 48,979,655

$

759,685 $

761,015 $

724,539 $

698,096

70,209

75,300

78,995

292,832

166,570

187,020

184,472

186,972

295,692

277,008

273,257

236,843

17,728,046

16,236,248

16,277,251

15,611,324

1,730,727

1,614,685

1,560,745

1,608,086

20,750,929

19,151,276

19,099,259

18,634,153

3,583,317

3,730,124

3,578,611

3,552,863

2,827,312

2,523,714

2,965,082

2,188,034

633,361

592,707

649,655

709,830

39,844

40,566

43,124

30,181

11,723,271

3,354,730

3,031,969

2,788,516

103,004

109,838

107,167

79,085

18,910,109

10,351,679

10,375,608

9,348,509

$ 39,661,038 $ 29,502,955 $ 29,474,867 $ 27,982,662

$ (21,220,371) $ (20,504,975) $ (19,841,129) $ (18,463,056)

(4,615,044)

(2,525,543)

(2,340,214)

(2,533,937)

$ (25,835,415) $ (23,030,518) $ (22,181,343) $ (20,996,993)

366

Fiscal Year

2016

2015

2014

2013

2012

2011

$

1,385,643 $

1,735,174 $

1,658,846 $

1,606,626 $

1,326,657 $

1,222,954

12,024,645

11,408,408

10,788,262

10,770,532

10,100,155

10,002,351

16,795,986

16,589,708

16,107,840

16,033,221

15,657,704

14,745,268

1,917,223

1,904,464

1,845,850

1,656,662

1,519,707

1,517,213

2,145,769

1,994,413

2,002,615

2,012,501

1,912,814

1,974,964

509,074

590,676

510,338

515,874

783,308

843,912

279,772

236,922

247,170

240,018

233,043

233,608

59,409

54,280

37,002

51,038

50,334

59,159

424,595 35,542,116

678,888 35,192,933

592,668 33,790,591

616,328 33,502,800

638,775 32,222,497

462,602 31,062,031

8,576,540

8,323,884

7,984,962

7,931,918

7,916,281

7,622,542

2,153,073

2,025,638

2,032,910

2,193,829

2,362,677

2,224,280

379,714

458,112

1,152,763

1,858,989

2,240,295

2,954,208

11,587

158,809

229,630

191,949

35,735

26,613

11,120,914

10,966,443

11,400,265

12,176,685

12,554,988

12,827,643

$

46,663,030 $

46,159,376 $ 45,190,856 $ 45,679,485 $ 44,777,485 $ 43,889,674

$

799,281 $

621,448 $

2,770,681 $

2,205,860 $

1,912,183 $

1,887,736

91,838

134,140

562,606

576,110

489,289

473,934

167,297

157,056

154,324

161,190

162,970

160,161

275,045

260,346

236,035

235,067

264,309

248,385

15,372,385

15,758,799

14,780,822

15,317,258

14,764,360

14,029,675

1,377,654

1,182,723

1,239,876

1,310,696

1,142,924

1,473,052

18,083,500

18,114,512

19,744,344

19,806,181

18,736,035

18,272,943

3,509,384

3,241,333

2,993,298

2,992,037

2,922,710

2,647,604

2,121,100

2,363,917

--

--

--

--

785,392

849,070

--

--

--

--

11,640

95,020

146,407

114,152

38,716

35,476

2,636,285

2,611,058

6,695,670

7,251,162

7,245,740

7,557,366

60,543

102,216

36,664

90,665

36,157

106,217

9,124,344

9,262,614

9,872,039

10,448,016

10,243,323

10,346,663

$

27,207,844 $

27,377,126 $ 29,616,383 $ 30,254,197 $ 28,979,358 $ 28,619,606

$

(17,458,616) $

(17,078,421) $ (14,046,247) $ (13,696,619) $ (13,486,462) $ (12,789,088)

(1,996,570)

(1,703,829)

(1,528,226)

(1,728,669)

(2,311,665)

(2,480,980)

$

(19,455,186) $

(18,782,250) $ (15,574,473) $ (15,425,288) $ (15,798,127) $ (15,270,068)

(continued)

367

State of Georgia
Schedule 2 Changes in Net Position For the Last Ten Fiscal Years
(accrual basis of accounting) (dollars in thousands)

General Revenues and Other Changes in Net Position

Governmental Activities (1) (2)

General Revenues

Taxes

Individual Income

$

Sales - General

Motor Fuel Tax

Motor Vehicle License and Title Ad Valorem Taxes(4)

Corporate Tax

Other Taxes Lottery for Education - Lottery Proceeds(4) Nursing Home and Hospital Provider Fees(4) Tobacco Settlement Funds(4)

Unrestricted Investment Income

Unclaimed Property

Other

Special Items

Transfers

Total Governmental Activities

Business-type Activities (1) (2) General Revenues

Contributions to Permanent Endowments Transfers Total Business-type Activities

Total Primary Government General Revenues

and Other Changes in Net Position

$

Changes in Net Position

Governmental Activities (1) (2)

$

Business-type Activities (1) (2) (3)

Total Primary Government

$

2020
12,529,857 $ 6,212,812 1,872,628 1,041,107 1,214,809 1,069,632 1,237,345
513,666 157,009 148,822 141,925 185,350
-- (3,035,910) 23,289,052
964 3,035,910 3,036,874
26,325,926 $
2,068,681 $ (1,578,170)
490,511 $

2019
12,255,424 $ 6,226,817 1,836,890 1,253,113 1,272,157
939,419 1,207,369
488,218 163,851 205,072 144,841 221,221
-- (3,485,850) 22,728,542
1,300 3,485,850 3,487,150
26,215,692 $
2,223,567 $ 961,607
3,185,174 $

2018
11,109,361 $ 5,905,929 1,800,191 1,314,354 1,004,524 1,124,370 1,143,515
465,595 168,926 104,230 151,462 184,240
-- (2,993,509) 21,483,188
345 2,993,509 2,993,854
24,477,042 $
1,642,059 $ 653,640
2,295,699 $

2017
11,318,052 5,798,400 1,741,413 1,347,626
955,791 607,929 1,101,062 442,576 140,938 50,631 143,683 196,046
-- (2,803,960) 21,040,187
833 2,803,960 2,804,793
23,844,980
2,577,131 270,856
2,847,987

(1) Beginning in fiscal year 2013, the activity of the Armstrong Atlantic State University Educational Properties Foundation, Inc., the Georgia State University Foundation, Inc., the Georgia State University Research Foundation, Inc., the Georgia Tech Facilities, Inc., the University System of Georgia Foundation, Inc. and the VSU Auxiliary Services Real Estate Foundation, Inc., component units, are blended with those of the nonmajor enterprise funds (previously discretely presented). Beginning in the fiscal year 2014, the activity of the Georgia Southern University Housing Foundation, Inc., the Middle Georgia State University Real Estate Foundation, Inc., the North Georgia Real Estate Foundation, Inc., and the UWG Real Estate Foundation, component units, are blended with those of the nonmajor enterprise funds (previously discretely presented). Beginning in fiscal year 2015, the activity of the Georgia State University Foundation, Inc. is discretely presented (previously blended) and the activity of the Armstrong Atlantic State University Educational Properties Foundation, Inc. is removed as it no longer met requirements for inclusion in the financial reporting entity as nonmajor enterprise funds. Beginning in fiscal year 2016, the Georgia Tech Facilities, Inc., the Middle Georgia State University Real Estate Foundation, Inc., the University of North Georgia Real Estate Foundation, Inc., and the University System of Georgia Foundation, Inc. are discreetly presented (previously blended) and the activity of the Georgia State University Research Foundation, Inc. is removed as it no longer met requirements for inclusion in the financial reporting entity as nonmajor enterprise funds. Additionally, Georgia Southern University Housing Foundation, Inc., UWG Real Estate Foundation, Inc., and VSU Auxiliary Services Real Estate Foundation, Inc. are reported in the Higher Education Fund (previously blended nonmajor enterprise funds). Then in fiscal year 2017 these three foundations no longer met the requirements for being reported in the Higher Education Fund and are reported as discretely presented component units.
(2) In fiscal year 2015, the activities of SRTA were re-examined and all activities of this blended component unit are reported as Governmental Activities. In fiscal year 2017, SRTA was re-examined again and it was determined that the toll facilities and customer service center (previously part of governmental activities) are now reported as part of business-type activities.

368

Fiscal Year 2016

2015

2014

2013

2012

2011

$

9,799,035 $

9,769,658 $

8,976,720 $

8,854,916 $

8,196,187 $

7,797,739

5,730,560

5,235,481

4,988,620

5,082,342

5,141,871

5,133,404

1,668,568

1,210,079

1,196,154

1,149,110

1,201,532

931,443

1,307,054 981,475
1,515,674

1,167,421 1,014,290
774,605

-- 949,815 801,605

-- 806,881 752,103

-- 658,303 776,813

-- 582,039 816,856

1,097,823

980,653

--

--

--

--

434,126 137,035 33,936 153,257 12,916
-- (2,639,131) 20,232,328

454,372 138,385
9,103 156,360
9,646 --
(2,657,978) 18,262,075

-- -- 4,995 148,129 12,112 -- (2,308,895) 14,769,255

-- -- 323 138,832 126,862 -- (2,377,595) 14,533,774

-- -- 6,183 83,215 12,909 -- (2,346,986) 13,730,027

-- -- (3,066) 98,098 30,285 288,000 (2,532,118) 13,142,680

137 2,639,131 2,639,268

-- 2,657,978 2,657,978

7,522 2,308,895 2,316,417

1,231 2,377,595 2,378,826

-- 2,346,986 2,346,986

-- 2,532,118 2,532,118

$

22,871,596 $

20,920,053 $

17,085,672 $

16,912,600 $

16,077,013 $

15,674,798

$

2,773,712 $

1,183,654 $

723,008 $

837,155 $

642,698

954,149

788,191

650,157

$

3,416,410 $

2,137,803 $

1,511,199 $

1,487,312 $

243,565 $ 35,321 278,886 $

353,592 51,138 404,730

(3) Beginning in fiscal year 2015, Motor Vehicle License and Title ad valorem Taxes, Lottery for Education - Lottery Proceeds, Nursing Home and Hospital Provider Fees, and Tobacco Settlement Funds, previously reported within the General Government function program revenues, are reported as general revenues of the Governmental Activities.
(4) Beginning in fiscal year 2015, State Health Benefit Plan - Contributions/Premiums and Unemployment Compensation Fund - Contributions, previously reported within Program Revenues, Business-type Activities, Operating Grants and Contributions are reported as Sales and Charges for Services.
Source: Financial Statements included in Current and Prior Years' Comprehensive Annual Financial Reports and supporting working papers (certain amounts restated for purposes of comparability)

369

State of Georgia
Schedule 3 Fund Balances of Governmental Funds For the Last Ten Fiscal Years
(modified accrual basis of accounting) (dollars in thousands)

General Fund Nonspendable Restricted Unrestricted Committed Assigned Unassigned

2020

2019

2018

2017

2016

$

39,561 $

20,780 $

35,375 $

82,570 $

66,744

5,440,832

5,438,608

5,118,497

4,652,244

4,112,561

17,372 494,586 2,414,540

9,385 522,273 2,833,072

11,753 437,737 2,506,449

10,921 418,815 2,211,442

9,287 345,667 1,795,230

Total General Fund

$

All Other Governmental Funds (1) (2)

Nonspendable

$

Restricted

Unrestricted

Assigned

Total All Other Governmental

Funds

$

8,406,891 $
16,770 $ 1,781,860
54,949 1,853,579 $

8,824,118 $
16,770 $ 1,916,578
72,796 2,006,144 $

8,109,811 $
16,770 $ 1,475,928
84,912 1,577,610 $

7,375,992 $
15,289 $ 1,310,861
74,100 1,400,250 $

6,329,489
136 1,242,119
69,288 1,311,543

(1) Beginning in fiscal year 2015, all activities of SRTA, a blended component unit, are reported as Special Revenue Funds (previously only the balances of its General Fund are included in the State's Special Revenue Funds). In fiscal year 2017, the activities of SRTA were reexamined, and only SRTA's General Fund is included in the State's Special Revenue Funds.
(2) Beginning in fiscal year 2011, fund balance categories were reclassified as a result of implementing GASB Statement No. 54. Fund balance was not restated to the new categories for prior years.
Source: Financial Statements included in Current and Prior Years' Comprehensive Annual Financial Reports (certain amounts restated for purposes of comparability)

370

Fiscal Year 2015

$

50,979 $

3,284,676

7,713 444,077 1,282,974

2014
54,972 $ 3,371,495
3,232 325,552 1,073,662

2013
56,937 $ 3,177,010
4,954 365,985 798,630

2012
74,206 $ 3,004,697
7,695 298,557 334,655

2011
94,810 2,951,729
9,403 256,676 401,414

$

5,070,419 $

4,828,913 $

4,403,516 $

3,719,810 $

3,714,032

$

257 $

14 $

14 $

1,074,877

1,216,195

1,065,153

60,062

74,489

55,061

$

1,135,196 $

1,290,698 $

1,120,228 $

8,398 $ 963,782 18,227
990,407 $

68 1,079,604
20,442
1,100,114

371

State of Georgia
Schedule 4 Changes in Fund Balances of Governmental Funds For the Last Ten Fiscal Years
(modified accrual basis of accounting) (dollars in thousands)

Revenues (1) Taxes Individual Income Sales - General Motor Fuel Tax Motor Vehicle License and Title ad valorem Taxes(3) Corporate Tax Other Taxes Licenses and Permits Intergovernmental - Federal Intergovernmental - Other Sales and Services Fines and Forfeits Interest and Other Investment Income Unclaimed Property Lottery Proceeds Nursing Home Provider Fees Hospital Provider Payments Other
Total Revenues
Expenditures (1) Current General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Capital Outlay Debt Service Principal Interest Other Charges Intergovernmental
Total Expenditures
Excess (Deficiency) of Revenues Over (Under) Expenditures

2020

2019

2018

2017

2016

$

12,545,944 $

12,202,473 $

11,644,160 $

11,023,806 $

10,078,312

6,230,249

6,286,292

6,019,297

5,781,149

5,473,282

1,872,628

1,836,890

1,800,191

1,741,414

1,668,568

1,041,107 1,214,809 1,125,499
411,368 18,280,850
618,597 444,394 482,952 208,359 141,925 1,237,345 168,453 345,213 380,507

1,253,113 1,272,157
851,105 406,811 16,930,680 663,598 429,050 523,033 285,225 144,841 1,207,369 154,263 333,955 328,212

1,314,354 1,004,524 1,057,108
423,796 16,926,361
637,053 426,328 475,711 142,282 151,462 1,143,515 161,575 304,020 308,655

1,347,626 955,790 977,494 392,102
16,543,931 519,077 608,204 475,421 68,780 143,683
1,101,062 156,746 285,830 288,396

1,307,054 981,475
1,186,308 499,313
15,946,548 547,897 403,849 464,064 50,219 153,257
1,097,823 163,524 270,602 130,774

46,750,199

45,109,067

43,940,392

42,410,511

40,422,869

1,200,665 14,693,652 19,231,330 3,450,047 2,597,921
414,221 292,628 58,921 959,817
1,056,725 440,086 22,676 276,081
44,694,770
2,055,429

1,018,790 13,859,041 18,192,601 3,239,744 2,697,770
525,126 311,170 62,549 890,631
1,029,075 436,216 23,765 178,421
42,464,899
2,644,168

963,123 13,271,141 18,205,579 2,882,072 2,607,044
565,462 302,262 85,328 902,083
1,068,590 430,077 27,036 246,015
41,555,812
2,384,580

915,149 12,605,566 17,225,344 2,901,428 2,540,030
692,393 301,768 58,888 889,793
1,042,625 419,177 26,541 175,136
39,793,838
2,616,673

1,021,257 12,010,308 16,872,312 2,181,785 2,193,494
600,031 304,703 56,514 765,976
988,145 449,666 25,848 200,373
37,670,412
2,752,457

372

Fiscal Year 2015

2014

2013

2012

2011

$

9,714,090 $

8,976,720 $

8,854,916 $

8,196,187 $

7,797,739

5,263,011

4,988,620

5,082,342

5,141,871

5,133,404

1,210,079

1,196,154

1,149,110

1,201,532

931,443

1,167,421 1,014,290
871,158 328,028 16,056,116 646,442 439,342 444,301 26,243 156,360 980,653 175,414 278,958 129,092

-- 949,815 801,605 1,387,113 15,359,809 590,000 449,697 446,646 23,365 148,129 945,097 169,521 237,978 68,375

-- 806,881 752,103 753,517 15,935,839 626,723 483,606 607,862
7,244 138,832 927,479 176,864 232,080 75,148

-- 658,303 776,813 593,541 15,294,531 505,974 440,951 450,457 18,580 83,215 901,329 132,393 225,260 72,657

-- 582,039 816,856 581,994 14,709,708 652,244 471,236 458,341 12,930 98,098 846,106 128,771 215,080 94,327

38,900,998

36,738,644

36,610,546

34,693,594

33,530,316

1,059,255 11,435,031 16,713,851 2,095,554 2,122,905
610,472 263,263 53,394 1,010,110
966,445 460,214 27,284 223,531
37,041,309
1,859,689

1,119,722 10,787,182 16,106,379 1,847,149 1,969,468
512,286 257,416 47,471 699,126
850,290 466,787 75,372 209,097
34,947,745
1,790,899

1,045,120 10,768,786 16,031,121 1,879,877 2,033,814
494,016 263,636 51,314 600,128
774,855 461,432 155,290 138,161
34,697,550
1,912,996

920,513 10,099,224 15,668,820 1,664,812 1,921,717
782,055 258,472 54,694 674,905
803,600 475,208 98,368 239,879
33,662,267
1,031,327

873,658 9,981,903 14,721,528 1,699,712 1,874,257
836,341 275,974 51,573 882,731
845,300 493,845 57,923 153,190
32,747,935
782,381 (continued)

373

State of Georgia
Schedule 4 Changes in Fund Balances of Governmental Funds For the Last Ten Fiscal Years
(modified accrual basis of accounting) (dollars in thousands)

Other Financing Sources (Uses) (1) General Obligation Bonds Issuance Refunding Bonds Issuance Revenue Bond Issuance Debt Issuance - Other Premium on General Obligation Bonds Sold Premium on Refunding Bonds Sold Premium on GARVEE Bonds Sold Payment to Refunded Bond Escrow Agent Capital Leases Transfers In Transfers Out
Net Other Financing Sources (Uses)
Special Item
Net Change in Fund Balance
Debt Service Expenditures as a Percentage of Noncapital Expenditures (2)

2020

2019

2018

2017

2016

914,675 321,835
-- 63,850 85,090 29,772 11,455 (351,591) 13,300 1,758,836 (4,630,778)

1,228,625 285,915 -- 63,850 95,163 27,159 11,455 (313,095) 16,304
1,653,039 (4,477,445)

1,041,015 634,545 -- 63,850 119,498 91,178 11,455 (724,870) 9,625
1,705,963 (4,425,660)

920,035 1,340,265
-- 52,720 111,054 283,301
-- (1,620,595)
35,155 1,594,219 (4,165,721)

1,008,355 275,985 -- 20,926 94,194 -- -- (302,322) 27,617
1,718,186 (4,081,733)

(1,783,556)

(1,409,030)

(1,473,401)

(1,449,567)

(1,238,792)

--

--

--

--

--

$

271,873 $ 1,235,138 $

911,179 $ 1,167,106 $ 1,513,665

3.54 %

3.60 %

3.77 %

3.90 %

3.98 %

(1) Beginning in fiscal year 2015, all activities of SRTA, a blended component unit, are reported as Special Revenue Funds (previously only the balances of its General Fund are included in the State's Special Revenue Funds). In fiscal year 2017, the activities of SRTA were reexamined, and only SRTA's General Fund is included in the State's Special Revenue Funds.

(2)

Noncapital expenditures are calculated as total expenditures less capital outlay expenditures less capital expenditures in current

expenditure functions. Capital expenditures in current expenditure functions are identified in the process of reconciling Governmental

Funds to Governmental Activities.

(3)

Beginning in fiscal year 2015, Motor Vehicle License and Title ad valorem Taxes previously reported as Licenses and Permits are

reported as Taxes.

Source: Financial Statements included in Current and Prior Years' Comprehensive Annual Financial Reports and supporting working papers

374

Fiscal Year 2015

2014

2013

2012

2011

823,555 159,350 11,057
-- 78,602 13,819
-- (173,032)
12,825 1,609,361 (3,882,868)

857,670 --
32,718 --
62,075 -- -- --
8,207 1,550,566 (3,706,268)

834,870 486,825
-- -- 124,742 102,681 -- (587,396) 5,847 1,424,420 (3,481,263)

803,615 719,465
-- -- 78,781 86,523 -- (805,945) 11,179 1,414,093 (3,409,603)

653,925 344,420
-- -- 32,170 55,821 -- (398,339) 25,851 1,467,443 (3,532,786)

(1,347,331)

(1,195,032)

(1,089,274)

(1,101,892)

(1,351,495)

--

--

--

--

288,000

$

512,358

$

595,867

$

823,722

$

(70,565) $

(281,114)

3.98 %

3.91 %

3.67 %

3.95 %

4.27 %

375

State of Georgia
Schedule 5 Revenue Base - Personal Income by Industry For the Last Ten Calendar Years
(dollars in millions)

Accommodation and Food Services Administrative and Waste Management Services Arts, Entertainment and Recreation Construction Educational Services Farm Earnings Federal Government - Civilian Federal Government - Military Finance and Insurance Forestry, Fishing and Related Activities Health Care and Social Assistance Information Management of Companies and Enterprises Manufacturing Mining Other Services, Except Public Administration Professional, Scientific and Technical Services Real Estate, Rental and Leasing Retail Trade State and Local Government Transportation and Warehousing Utilities Wholesale Trade Other
Total Personal Income

2019

2018

2017

2016

$ 11,904 $ 10,980

18,895

17,805

2,777

2,527

21,712

21,267

5,658

5,362

1,907

2,649

12,262

11,313

7,212

6,838

23,368

22,063

1,125

1,000

37,057

34,561

21,721

21,089

14,117

10,529

31,096

31,805

994

862

12,130

11,361

36,339

34,522

9,354

7,766

21,203

20,738

39,087

37,692

17,170

17,980

3,467

3,012

22,951

20,846

138,238

126,646

$ 10,507 16,932 2,483 18,941 5,120 1,946 11,183 6,579 21,193 973 32,850 21,069 9,189 30,423 783 10,875 32,809 7,335 20,097 37,087 17,013 2,935 21,385 120,696

$ 10,209 15,610 2,171 17,604 4,849 1,814 10,806 6,446 19,269 1,045 31,688 18,669 8,443 29,125 787 10,528 31,180 6,262 19,375 35,643 16,172 2,902 21,150 112,931

$ 511,744 $ 481,213 $ 460,403 $ 434,678

Average Effective Rate (1)

2.4 %

2.4 %

2.4 %

2.3 %

(1) The total direct rate for personal income is not available. The average effective rate was calculated by dividing individual income tax collections on a fiscal year basis (see Schedule 4) by total personal income on a calendar year basis.
Source: U. S. Department of Commerce, Bureau of Economic Analysis

376

Calendar Year

2015

2014

2013

2012

2011

2010

$

9,838 $

9,551 $

8,969 $

8,595 $

8,040 $

7,625

15,166

14,828

13,744

12,873

12,418

11,618

2,231

2,379

2,277

2,162

2,066

1,995

15,391

14,766

13,365

12,471

12,113

12,274

4,705

4,638

4,391

4,318

4,134

3,980

2,476

3,230

3,640

3,429

1,982

1,749

10,421

9,824

9,796

10,076

10,303

10,043

6,825

6,833

7,048

7,229

7,500

7,529

18,663

18,200

17,386

16,492

15,364

15,007

1,010

1,010

872

847

761

778

29,914

28,658

27,487

26,127

25,083

24,282

15,118

12,225

11,414

10,922

10,239

9,974

8,179

7,776

7,009

6,626

5,974

5,471

27,921

26,822

25,876

24,977

24,267

22,969

560

592

558

524

505

412

10,309

10,460

10,055

9,619

9,095

8,807

30,183

28,908

26,708

25,972

24,313

22,853

5,784

6,454

6,135

5,740

4,780

3,852

19,046

18,127

17,303

16,415

15,985

15,472

33,051

32,454

32,139

32,100

31,825

31,814

14,838

13,881

13,143

12,498

11,945

11,092

2,657

2,435

2,401

2,294

2,422

2,161

20,493

19,539

18,709

17,917

17,238

16,700

106,943

101,183

97,731

98,926

98,954

85,102

$ 411,722 $ 394,773 $ 378,156 $ 369,149 $ 357,306 $ 333,559

2.4 %

2.3 %

2.3 %

2.2 %

2.2 %

2.1 %

377

State of Georgia
Schedule 6 Individual Income Tax Rates by Filing Status and Income Level For the Last Ten Calendar Years

Filing Status
Income Level Single
Not Over $750 Over $750 But Not Over $2,250 Over $2,250 But Not Over $3,750 Over $3,750 But Not Over $5,250 Over $5,250 But Not Over $7,000 Over $7,000

Georgia Taxable Net Income Level

2020 - 2018

2017 - 2010

Tax Rate

Tax Rate

1%
$7.50 Plus 2% of Amount Over $750
$37.50 Plus 3% of Amount Over $2,250
$82.50 Plus 4% of Amount Over $3,750
$142.50 Plus 5% of Amount Over $5,250
$230.00 Plus 5.75% of Amount Over $7,000

1%
$7.50 Plus 2% of Amount Over $750
$37.50 Plus 3% of Amount Over $2,250
$82.50 Plus 4% of Amount Over $3,750
$142.50 Plus 5% of Amount Over $5,250
$230.00 Plus 6% of Amount Over $7,000

Married Filing Separately Not Over $500 Over $500 But Not Over $1,500 Over $1,500 But Not Over $2,500 Over $2,500 But Not Over $3,500 Over $3,500 But Not Over $5,000 Over $5,000

1%
$5.00 Plus 2% of Amount Over $500
$25.00 Plus 3% of Amount Over $1,500
$55.00 Plus 4% of Amount Over $2,500
$95.00 Plus 5% of Amount Over $3,500
$170.00 Plus 5.75% of Amount Over $5,000

1%
$5.00 Plus 2% of Amount Over $500
$25.00 Plus 3% of Amount Over $1,500
$55.00 Plus 4% of Amount Over $2,500
$95.00 Plus 5% of Amount Over $3,500
$170.00 Plus 6% of Amount Over $5,000

Head of Household and Married Filing Jointly

Not Over $1,000 Over $1,000 But Not Over $3,000
Over $3,000 But Not Over $5,000
Over $5,000 But Not Over $7,000
Over $7,000 But Not Over $10,000 Over $10,000

1%
$10.00 Plus 2% of Amount Over $1,000
$50.00 Plus 3% of Amount Over $3,000
$110.00 Plus 4% of Amount Over $5,000
$190.00 Plus 5% of Amount Over $7,000
$340.00 Plus 5.75% of Amount Over $10,000

1%
$10.00 Plus 2% of Amount Over $1,000
$50.00 Plus 3% of Amount Over $3,000
$110.00 Plus 4% of Amount Over $5,000
$190.00 Plus 5% of Amount Over $7,000
$340.00 Plus 6% of Amount Over $10,000

Source: OCGA 48-7-20, Paragraph (b)(1)

378

State of Georgia
Schedule 7 Individual Income Tax Filers and Liability by Income Level For Calendar Years 2018(1) and 2009
(dollars, except income level, are in thousands)

Income Level $1,000 and under (2) $1,001 to $5,000 $5,001 to $10,000 $10,001 to $15,000 $15,001 to $20,000 $20,001 to $25,000 $25,001 to $30,000 $30,001 to $50,000 $50,001 to $100,000 $100,001 to $500,000 $500,001 to $1,000,000 $1,000,001 and higher

Number of Filers
878,761 211,479 291,888 356,868 310,667 271,802 246,777 697,362 763,534 576,633 25,152 11,810

Percentage of Total

2018(1)

Personal Income Tax
Liability

18.9 % $ 4.6 % 6.3 % 7.7 % 6.7 % 5.9 % 5.3 % 15.0 % 16.4 % 12.4 % 0.5 % 0.3 %

876,435 1
2,188 27,649 74,174 129,831 182,028 947,489 2,307,918 4,984,691 894,414 1,830,224

Totals

4,642,733

100.0 % $

12,257,042

Income Level $1,000 and under (2) $1,001 to $5,000 $5,001 to $10,000 $10,001 to $15,000 $15,001 to $20,000 $20,001 to $25,000 $25,001 to $30,000 $30,001 to $50,000 $50,001 to $100,000 $100,001 to $500,000 $500,001 to $1,000,000 $1,000,001 and higher
Totals

Number of Filers
675,065 223,188 348,296 364,536 324,943 285,204 241,483 626,357 681,045 380,045 11,528
4,808
4,166,498

Percentage of Total

2009

Personal Income Tax
Liability

16.2 % $ 5.4 % 8.4 % 8.7 % 7.8 % 6.8 % 5.8 % 15.0 % 16.3 % 9.1 % 0.3 % 0.1 %

374,507 --
9,680 44,639 96,325 142,532 173,445 768,363 1,791,559 2,682,564 387,880 607,521

99.9 % $

7,079,015

(1) Most recent available data. (2) Category also includes payments from out-of-state residents and partial-year payers

Source: Georgia Department of Revenue

Percentage of Total
7.2 % 0.0 % -- % 0.2 % 0.6 % 1.1 % 1.5 % 7.7 % 18.8 % 40.7 % 7.3 % 14.9 %
100.0 %
Percentage of Total
5.3 % 0.0 % 0.1 % 0.6 % 1.4 % 2.0 % 2.5 % 10.9 % 25.3 % 37.9 % 5.5 % 8.6 %
100 %

379

State of Georgia
Schedule 8 Ratios of Outstanding Debt by Type For the Last Ten Fiscal Years
(dollars in thousands, except per capita amounts)

Fiscal Year
2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

General Obligation
Bonds

Governmental Activities (1)

Revenue(2) Bonds

Capital Leases

Notes and Loans

$

10,351,636 $

10,352,603

10,043,489

9,851,713

9,493,441

9,367,381

9,437,844

9,072,784

8,889,868

8,774,586

613,770 $ 613,770 613,770 745,477 983,947 1,200,365 1,367,068 1,503,925 1,678,744 1,848,570

212,709 $ 219,259 233,398 237,505 184,689 221,690 252,830 255,763 262,111 223,429

62,364 69,262 74,141 78,450 87,228 21,662 4,024 4,000 14,600 19,600

(1) In fiscal year 2015, the activities of State Road and Tollway Authority (SRTA), a blended component unit, were reported as Governmental Activities. In fiscal year 2017, a re-examination determined that activities of this blended component unit should be reported in both Governmental Activities and Business-type Activities as was the presentation in fiscal years 2014 and prior.
(2) The Governmental Activities Revenue Bonds include $202.6 million of bonds secured by a joint resolution between the Department of Transportation (DOT) (General Fund) and the SRTA (Nonmajor Governmental Fund) whereby DOT has pledged to provide sufficient motor fuel tax funds to pay the principal and interest of the revenue bonds. According to the State Constitution, motor fuel tax funds are imposed and appropriated for all activities incident to maintaining an adequate system of roads and bridges in the State. In fiscal year 2020, the State collected $1.8 billion of motor fuel tax funds. The principal and interest on the revenue bonds for fiscal year 2020 was $53.8 million. The debt service requirements to maturity on these bonds is included in the Notes to the Financial Statements.
(3) See Schedule 11 (Population/Demographics) for personal income and population data.
Source: Financial Information included in Current and Prior Years' Comprehensive Annual Financial Reports

380

Business -Type Activities (1)

Revenue Bonds

Capital Leases

Notes and Loans

Total Primary Government

$

234,234 $

2,810,668 $

242,003

2,856,209

266,150

2,914,195

269,136

3,044,125

756,539

2,633,261

1,384,058

1,948,804

1,781,514

1,829,517

1,211,200

2,370,028

319,247

3,436,099

328,597

3,170,521

267,240 $ 269,459 264,793 256,768 11,677
6,027 3,923 397,692 751,299 734,189

14,552,621 14,612,268 14,407,067 14,483,174 14,150,782 14,149,987 14,676,720 14,815,392 15,351,968 15,099,492

Percentage of Personal Income(3)

Outstanding Debt
Per Capita(3)

2.8 % $ 3.0 %
3.1 %0
3.3 % 3.4 % 3.6 % 3.9 % 4.0 % 4.3 % 4.5 %

1,371 1,389 1,376 1,400 1,380 1,396 1,464 1,488 1,559 1,549

381

State of Georgia
Schedule 9 Ratios of General Bonded Debt Outstanding For the Last Ten Fiscal Years
(dollars in thousands, except per capita amounts)

Fiscal Year
2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

Net
General Bonded Debt(1)

$

10,449,792

10,450,756

10,141,642

10,061,106

9,720,956

9,620,047

9,767,110

9,427,553

9,278,490

9,197,267

Percentage of Personal Income(2)
2.04% 2.17% 2.20% 2.31% 2.36% 2.44% 2.58% 2.55% 2.60% 2.76%

Outstanding
Debt Per Capita(2)

$

984.21

993.47

972.41

975.82

951.65

952.75

977.54

950.58

945.60

946.86

(1)

In fiscal year 2015, the activities of SRTA were re-examined and all activities of this blended component unit are reported as

Governmental Activities. In fiscal year 2017, SRTA's activities reverted back to the blended presentation, where its activity and

balances are included in both Governmental Activities and Business-type Activities.

(2) See Schedule 11 (Population/Demographics) for personal income and population data.

Source: Financial Information included in Current and Prior Years' Comprehensive Annual Financial Reports

382

State of Georgia
Schedule 10 Computation of Legal Debt Margin For the Last Ten Fiscal Years
(in whole dollars)

2020 (3)

2019

2018

2017

2016

Revenue Base: Treasury Receipts for the Preceding Fiscal Year (1)

$22,748,258,000 $25,649,499,261 $24,519,402,190 $23,476,964,889 $21,557,498,541

Debt Limit Amount: Highest Aggregate Annual Commitments
(Principal and Interest) Permitted Under Constitutional Limitation (10% of above)

$ 2,274,825,800 $ 2,564,949,926 $2,451,940,219 $2,347,696,489 $2,155,749,854

Debt Applicable to the Limit: Highest Total Annual Commitments in Current or
any Subsequent Fiscal Year (2)

1,452,097,870

1,432,215,164

1,398,096,186

1,405,379,184 1,311,486,764

Legal Debt Margin

$ 822,727,930 $ 1,132,734,762 $1,053,844,033 $ 942,317,305 $ 844,263,090

Total Debt Applicable to the Limit as Percentage of Debt Limit Amount

63.8 %

55.8 %

57.0 %

59.9 %

60.8 %

(1) Includes Indigent Care Trust Fund Receipts, Brain and Spinal Injury Trust Fund Receipts, Lottery Proceeds and Tobacco Settlement Funds.
(2) Includes issued and outstanding debt as of the end of each fiscal year and appropriated debt service for any authorized but unissued general obligation (and guaranteed revenue) bonds.
(3) The 2020 treasury receipts, debt limit amount and debt applicable to the limit is based on unaudited, preliminary data due to the timing of the series 2020AB bonds issuance in August (fiscal year 2021) and pandemic related impacts on state revenues. Final fiscal year 2020 data was not available as of the date of the 2020AB Official Statement. The unaudited, preliminary treasury receipts used for the legal debt margin calculation includes only those revenues received by the Department of Revenue through July 6, 2020. It does not include receipts of various other state revenues collected by other state agencies which were not available as of the time of the 2020AB Official Statement. Additionally, no provision was made for state individual or corporate income taxes collected in July due to the State's decision to align its tax payment deadlines to coincide with the extended federal income tax payment deadline of July 15, 2020 for calendar year 2019 and the first and second quarters of 2020. The legal debt margin calculation follows the provisions set forward in the State Constitution.
Source: Prior Year's Comprehensive Annual Financial Reports, other annual state reports, Georgia State Financing and Investment Commission, Constitution of the State of Georgia.
Note: The Constitution of the State of Georgia limits the combined total of highest annual debt service requirements for general obligation and guaranteed revenue debt to 10% of the prior year's revenue collections.

384

Fiscal Year 2015

2014

2013

2012

2011

$ 20,256,765,494 $ 19,539,691,058 $ 18,316,797,048 $ 17,546,376,094 $ 16,251,244,423

$ 2,025,676,549 $ 1,953,969,106 $ 1,831,679,705 $ 1,754,637,609 $ 1,625,124,442

1,305,012,971

1,320,929,740

1,289,411,544

1,310,228,303

1,328,679,199

$ 720,663,578 $ 633,039,366 $ 542,268,161 $ 444,409,306 $ 296,445,243

64.4 %

67.6 %

70.4 %

74.7 %

81.8 %

385

State of Georgia
Schedule 11 Population/Demographics For the Last Ten Calendar Years

Year
2019 2018 2017 2016 2015 2014 2013 2012 2011 2010

Population

Personal lncome Per Capita

Public School

(in millions) Personal Income Enrollment

Unemployment Rate

10,617,423 $ 10,519,475 10,429,379 10,310,371 10,214,860 10,097,132 9,991,562 9,917,639 9,812,280 9,713,454

511,744 $ 481,213 460,403 434,678 411,722 394,773 378,156 369,149 357,306 333,559

48,236 45,745 44,145 42,159 40,306 39,097 37,845 37,229 36,422 34,341

1,760,739 1,759,838 1,761,472 1,757,543 1,749,852 1,736,416 1,716,905 1,693,374 1,673,740 1,665,557

3.5% 3.9% 4.7% 5.4% 5.9% 7.1% 8.2% 9.2% 10.2% 10.5%

Sources:

Population - U. S. Department of Commerce, Bureau of the Census (midyear population estimates) Personal Income - U. S. Department of Commerce, Bureau of Economic Analysis Public School Enrollment - Georgia Department of Education (March of each school year) Unemployment Rate - U. S. Department of Labor (annual average)

386

State of Georgia
Schedule 12 Principal Private Sector Employers Fiscal Year 2020 and Nine Years Previous (2011)

2020 Employers Amazon.Com Services, Inc Children's Healthcare Delta Air Lines, Inc. Emory Healthcare, Inc. Emory University G4 Secure Solutions USA, Inc The Home Depot, Inc. The Kroger Company Lowe's Home Center, Inc. McDonalds Northside Forsyth Publix Super Markets, Inc. Shaw Industries Group, Inc. United Parcel Service, Inc Waffle House Wal-Mart Stores, Inc Wellstar Health System, Inc.

2011 Employers Delta Air Lines, Inc. Emory Health Care Emory University Georgia Power Company GMRI, Inc. Lockheed Martin Inc. Lowe's Home Centers Mohawk Carpet Publix Supermarkets, Inc. Shaw Industries, Inc. Target The Home Depot, Inc. The Kroger Company United Parcel Service, Inc. Wal-Mart Stores, Inc. Wellstar Health System

To protect employer confidentiality, OCGA 34-8-121(b)(3) prohibits the release of employee numbers by employer.
Sources: 2020 - Georgia Department of Labor (1st quarter 2020) 2011 - Comprehensive Annual Financial Report - Fiscal Year Ended June 30, 2011

387

State of Georgia
Schedule 13 State Government Employment by Function For the Last Ten Fiscal Years (1)

Governmental Activities General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation
Business-Type Activities (2) (5) State Road and Tollway Authority (3) Higher Education Fund (4)
Total Employment

2020
8,118 2,466 21,013 4,618 24,991 2,026 3,097
766 67,095

2019
8,619 2,513 20,922 4,883 26,789 2,092 3,227
808 69,853

2018
8,408 2,342 21,203 4,863 28,686 2,258 3,112
818 71,690

2017
8,432 2,152 21,845 4,872 27,780 2,421 3,080
852 71,434

2016
8,722 2,184 21,073 5,023 25,728 2,487 2,982
820 69,019

132 85,707 85,839
152,934

129 82,525 82,654
152,507

116 80,237 80,353
152,043

107 79,456 79,563
150,997

-- 80,004 80,004
149,023

(1) Includes employees that were active at any time during the Fiscal Year. An individual employee may, therefore, be included in multiple functions if the employee transferred among functions during the fiscal year. This does not represent the number of active employees at the end of the year.
(2) Employees of certain Business-Type Activities organizations are included in Governmental Activities as follows: Employees of the State Health Benefit Plan are included as employees of the Department of Community Health in Health and Welfare. Employees of the Unemployment Compensation Fund are included as employees of the Department of Labor in Economic Development and Assistance.
(3) In fiscal year 2015, the activities of State Road and Tollway Authority (SRTA) were examined and all activity was reported as Governmental Activities. In fiscal year 2017 SRTA, was re-examined and it was determined that the toll facilities and customer service center (previously part of Governmental Activities) are now reported as part of Business-Type Activities.
(4) Beginning in fiscal year 2013, Georgia Military College, formerly a blended component unit included in the Higher Education Fund, is reported as a discretely presented component unit and is no longer included in this schedule.
(5) No employees for the Nonmajor Enterprise Funds (Business-Type Activities) Georgia Higher Education Finance Authority and Higher Education Foundations are included as these organizations either have no employees, their data is not available or their employees are already reported as employees of another organization in either the Governmental Activities or Business-Type Activities.

Source: Open.Georgia.gov

388

Fiscal Year
2015
8,402 1,836 22,102 5,102 25,513 2,760 2,838
837 69,390

2014
7,848 1,419 18,868 4,379 23,430 2,757 2,284
638 61,623

2013
8,194 1,422 20,463 4,385 21,418 2,459 2,403
647 61,391

2012
7,729 1,371 18,007 4,577 20,449 4,802 3,169
664 60,768

2011
9,658 1,213 18,616 5,273 21,997 5,144 2,548
686 65,135

-- 76,972 76,972
146,362

70 76,594 76,664
138,287

79 74,503 74,582
135,973

71 82,109 82,180
142,948

52 79,174 79,226
144,361

389

State of Georgia
Schedule 14 Operating Indicators and Capital Assets by Function For the Last Ten Years (1)

General Government Department of Revenue Number of Personal Income Tax Filers

2020

2019

2018

2017

NCA

NCA

NCA

4,532,560

Education Department of Education Public School Enrollment (March FTE Count) Pre Kindergarten through Grade 5 Grades 6 through 8 Grades 9 through 12

833,266 415,766 511,707

841,190 409,008 509,640

850,534 400,469 510,469

856,077 394,565 506,901

Board of Regents of the University System of Georgia Number of Separate Institutions Number of Active Educators Number of Students

26 15,242 333,507

26 15,197 328,712

29 15,161 325,203

29 15,012 321,551

Health and Welfare Department of Human Services Food Stamp Recipients Temporary Assistance for Needy Families Recipients

1,396,889 15,852

1,379,463 18,968

1,564,906 21,993

1,654,152 21,876

Transportation Department of Transportation Miles of State Highway

17,953

17,943

17,959

17,912

Public Safety Department of Corrections Number of Inmates Number of Probationers Number of Offenders

51,219 NCA
223,635

54,757 NCA
221,434

54,758 NCA
275,777

54,636 165,635 258.843

Economic Development and Assistance Department of Economic Development Economic Impact of Tourism (in millions): Domestic Traveler Spending - Direct Domestic Travel-generated State Tax Revenues

NCA NCA

NCA $ NCA $

27,902 $ 1,421 $

26,483 1,356

Culture and Recreation: Department of Natural Resources Number of State Parks Number of Historic Sites Acreage of State Parks and Historic Sites (in acres) Number of Daily Park Passes Sold Number of Annual Park Passes Sold Number of Hunting and Fishing Licenses Sold Number of Registered Boats

51 15 83,184 962,076 46,300 1,584,133 367,762

50 15 79,216 871,566 26,981 1,443,657 368,094

Conservation

Forestry Commission

Economic Impact of Forestry Industry

Output (in millions)

NCA

NCA $

Employment

NCA

NCA

Compensation (in millions)

NCA

NCA $

(1) Data is presented by either fiscal year or calendar year based on availability of information.

(2) As of 2017 -DCS no longer uses the categories Parolees and Probationers. DCS has one category-Felony Offenders

Source: NCA - Not Currently Available; Information obtained from the individual organizations listed.

49 15 85,490 875,817 15,498 1,196,097 338,210
21,500 $ 55,089 4,000 $

49 15 85,430 905,504 11,954 1,335,703 134,095
21,300 53,933 3,840

390

Fiscal Year 2016

2015

2014

2013

2012

2011

4,389,981

4,423,664

4,471,307

4,319,711

4,226,144

4,265,347

856,413 392,095 500,808
29 14,606 318,164

854,352 392,433 489,631
30 14,478 312,936

846,364 392,381 478,160
31 14,309 309,469

836,627 388,542 468,205
31 13,903 314,365

829,900 383,553 460,287
35 13,855 318,027

828,005 376,315 461,237
35 13,311 311,442

1,745,876 26,635

1,825,606 27,219

1,823,017 31,598

1,957,886 35,185

1,875,000 35,887

1,737,545 36,534

17,902

17,907

17,912

17,967

17,985

17,985

53,852 168,088
--

51,002 165,926
--

51,216 165,560
--

53,168 164,051
--

54,336 163,265
--

55,162 156,630
--

$

25,558 $

24,526 $

23,707 $

22,354 $

21,489 $

20,537

$

1,307 $

1,170 $

1,059 $

989 $

949 $

919

49 15 85,430 802,267 9,444 1,346,360 143,587

49 15 85,647 790,020 7,852 1,346,360 144,979

49 15 92,880 659,391 6,187 1,025,782 147,854

49 15 92,880 650,651 5,595 955,340 125,280

48 18 86,000+ 659,860 8,042 1,004,771 124,610

48 18 86,000+ 679,838 10,792 997,651 132,832

$

20,800 $

19,200 $

16,800 $

16,900 $

16,313 $

15,100

51,900

50,385

48,740

50,110

49,516

46,378

$

3,740 $

3,550 $

3,030 $

3,100 $

3,078 $

2,900

391