Abraham Baldwin Agricultural College, management report for fiscal year ended June 30, 2018

Management Report
For Fiscal Year Ended June 30, 2018

ABRAHAM BALDWIN AGRICULTURAL COLLEGE - TABLE OF CONTENTS -

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

Page
2 3 4 6
31 32 33 36

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

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

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SECTION I FINANCIAL

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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
September 17, 2018

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia
and Dr. David Bridges, President Abraham Baldwin Agricultural College
Ladies and Gentlemen:
This Management Report contains information pertinent to the Abraham Baldwin Agricultural College's compliance with the requirements of the Southern Association of Colleges and Schools Commission on Colleges (COC) Standard 13.2 (Financial resources) as of and for the year ended June 30, 2018. Additionally, we audited Abraham Baldwin Agricultural College's Federal Student Aid programs for the year ended June 30, 2018 to meet the requirements of COC Standard 13.6. Included in this report is a section on findings and other items for any matters that came to our attention during our engagement, including results of our audit of the Federal Student Aid programs. The other information contained in this report is the representation of management. Accordingly, we do not express an opinion or any form of assurance on it.
Additionally, we have performed certain procedures at Abraham Baldwin Agricultural College to support our audit of the basic financial statements of the University System of Georgia in the University System of Georgia Annual Financial Report and the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2018.
This report is intended solely for the information and use of the management of Abraham Baldwin Agricultural College, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully,

Greg S. Griffin State Auditor

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SELECTED FINANCIAL INFORMATION - 1 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2018
ASSETS
Current Assets Cash and Cash Equivalents Cash and Cash Equivalents (Externally Restricted) Short-term Investments Accounts Receivable, Net Federal Financial Assistance Affiliated Organizations Other Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Notes Receivable, Net Non-current Cash (Externally Restricted) Investments (Externally Restricted) Capital Assets, Net
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Benefits Payable Advances (Including Tuition and Fees) Deposits Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Net Other Post Employment Benefits Liability Net Pension Liability
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources
NET POSITION
Net Investment in Capital Assets Restricted for:
Nonexpendable Expendable Unrestricted (Deficit)
Total Net Position
- 2 -

EXHIBIT "A"

$

9,893,081

292,267

118,948

809,610 568,305 1,710,739 306,582
24,122

13,723,654

229,082 1,588
1,924,929 105,388,239
107,543,838
121,267,492
7,044,089

952,025 347,451 109,632 1,048,697 155,500 974,162 379,733 750,340
4,717,540
17,458,716 447,050
42,402,042 25,507,132
85,814,940
90,532,480
6,645,834

87,549,790
1,851,787 862,837
(59,131,147)

$

31,133,267

ABRAHAM BALDWIN AGRICULTURAL COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2018
OPERATING REVENUES
Student Tuition and Fees (Net) Grants and Contracts
Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises (Net) Residence Halls Bookstore Food Services Parking /Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Faculty Salaries Staff Salaries Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal State Other Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Nonoperating Revenues (Expenses)
Net Nonoperating Revenues
Loss Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State
Change in Net Position
Net Position - Beginning of Year, Restated
Net Position - End of Year

EXHIBIT "B"

$

12,856,650

286,078 1,231,481
70,469 154,021 135,694

2,229,539 2,476,983 2,955,698
259,647 425,159 550,257 332,192 1,029,675

24,993,543

10,899,773 12,998,086 10,187,148
261,874 485,341 7,696,465 1,638,881 15,133,271 4,710,143
64,010,982
(39,017,439)

24,770,790
12,868,081 45,623
581,040 665,093
97,284 (1,125,978)
(390,770)
37,511,163
(1,506,276)
1,120,732
(385,544)
31,518,811

$

31,133,267

- 3 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES Payments from Customers Grants and Contracts (Exchange) Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Collection of Loans to Students
Net Cash Used by Operating Activities
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds - Receipts Agency Funds - Disbursements Gifts and Grants Received for Other than Capital Purposes Other Non-Capital Financing Payments
Net Cash Flows Provided by Non-Capital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Used by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Investment Income Purchase of Investments
Net Cash Provided by Investing Activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents - Beginning of Year (Restated)
Cash and Cash Equivalents - End of Year

EXHIBIT "C"

$

22,850,212

2,208,893

(26,499,295)

(24,372,246)

(7,696,465)

12,559

(33,496,342)

24,770,790 85,008,223 (85,265,544) 13,902,572
2,503
38,418,544

1,781,152 (2,803,330)
(344,386) (1,125,978)
(2,492,542)

42,320 (120)
42,200 2,471,860 7,715,076

$

10,186,936

- 4 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2018
RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Loss Adjustments to Reconcile Operating Loss to Net Cash
Used by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Salaries Payable Deposits Advances (Including Tuition and Fees) Other Liabilities Compensated Absences Net Pension Liability Other Post-Employment Benefit Liability
Change in Deferred Inflows/Outflows of Resources: Deferred Inflows of Resources Deferred Outflows of Resources
Net Cash Used by Operating Activities
NONCASH INVESTING, NON-CAPITAL FINANCING, AND CAPITAL AND RELATED FINANCING TRANSACTIONS
Non-Capital Financing Activities Accounts Receivable Accrual, Net of Allowances Recognition of Non-Capital Financing Activities Advances and Deferred Inflows Capital Financing Activities Accounts Receivable Accrual, Net of Allowance Gift of Capital Assets Loss on Disposal of Capital Assets Unrealized Gain on Investments

EXHIBIT "C"

$

(39,017,439)

4,710,143
432,994 51,528 (4,765) 12,559
(332,222) 58,581 (10,340)
(126,973) (3,937)
(47,627) (3,621,410) (1,624,503)

4,442,256 1,584,813

$

(33,496,342)

$

251,669

$

5,596

$

539,602

$

28,159

$

(387,115)

$

55,062

- 5 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY As defined by Official Code of Georgia Annotated (O.C.G.A) 20-3-50, Abraham Baldwin Agricultural College (the College) is part of the University System of Georgia (USG), an organizational unit of the State of Georgia (the State) under the governance of the Board of Regents (Board). The Board has constitutional authority to govern, control and manage the USG. The Board is composed of 19 members, one member from each congressional district in the State and five additional members from the state-at-large, appointed by the Governor and confirmed by the Senate. Members of the Board serve a seven year term and members may be reappointed to subsequent terms by a sitting governor.
The College does not have the right to sue/be sued without recourse to the State. The College's property is the property of the State and subject to all the limitations and restrictions imposed upon other property of the State by the Constitution and laws of the State. In addition, the College is not legally separate from the State. Accordingly, the College is included within the State's basic financial statements as part of the primary government as defined in section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The accompanying basic financial statements are intended to supplement the State's Comprehensive Annual Financial Report (CAFR) by presenting the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State that is attributable to the transactions of the College. These financial statements do not purport to, and do not, present fairly the financial position of the State as of June 30, 2018, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying basic financial statements should be read in conjunction with the State's CAFR. The State's CAFR as of and for the year ended June 30, 2018 has not been issued as of the release of this report. The most recent State of Georgia CAFR can be obtained through the State Accounting Office, 200 Piedmont Avenue, Suite 1604 (West Tower), Atlanta, Georgia 30334 or found at https://sao.georgia.gov/comprehensive-annual-financial-reports.
BASIS OF ACCOUNTING ANDF FINANCIAL STATEMENT PREPARATION The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the College's assets, deferred outflows, liabilities, deferred inflows, net position, revenues, expenses, changes in net position and cash flows.
The College's business-type activities financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. Grants and similar items are recognized as revenues in the fiscal year in which eligibility requirements imposed by the provider have been met. All significant intra- fund transactions have been eliminated.
NEW ACCOUNTING PRONOUNCEMENTS For fiscal year 2018, the College adopted Governmental Accounting Standards Board (GASB) Statement No. 86, Certain Debt Extinguishment Issues. This statement addresses accounting and financial reporting issues regarding in-substance defeasance of debt. The adoption of this statement does not have a significant impact on the College's financial statements.

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

For fiscal year 2018, the College adopted Governmental Accounting Standards Board (GASB) Statement No. 85, Omnibus 2017. This statement addresses practice issues identified during implementation and application of certain other GASB Statements. This statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits. The adoption of this statement does not have a significant impact on the College's financial statements.
For fiscal year 2018, the College adopted Governmental Accounting Standards Board (GASB) Statement No. 81, Irrevocable Split-Interest Agreements. The objective of this statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is beneficiary of the agreement. The adoption of this statement does not have a significant impact on the College's financial statements.
For fiscal year 2018, the College adopted Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This statement replaces GASB Statements No. 45, Accounting and Financial Reporting by Employees for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. The objective of this statement is to improve the usefulness of information about postemployment benefits other than pensions. The adoption of this statement resulted in the accrual of the College's proportionate share of the net other post-employment benefit (OPEB) liability for the Board of Regents Retiree Health Benefit Plan, changes to the related OPEB note disclosures, additional OPEB required supplemental information, and the restatement of the July 1, 2017 net position balance.
NET POSITION The College's net position is classified as follows:
Net Investment in Capital Assets represents the College's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of net investment in capital assets. The term "debt obligations" as used in this definition does not include debt of the Georgia State Financing and Investment Commission (GSFIC).
Restricted non-expendable net position includes endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. For institution-controlled, donorrestricted endowments, the by-laws of the Board of Regents of the University System of Georgia permits each individual institution to use prudent judgment in the spending of current realized and unrealized endowment appreciation. Donor-restricted endowment appreciation is periodically transferred to restricted-expendable accounts for expenditure as specified by the purpose of the endowment. The College maintains pertinent information related to each endowment fund including donor; amount and date of donation; restrictions by the source of limitations; limitations on investments, etc.
Restricted expendable net position includes resources in which the USG is legally or contractually obligated to spend resources in accordance with restrictions by external third parties.
Unrestricted net position represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College, and may be used at the discretion of the governing board or management to meet current expenses
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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

for those purposes, except for unexpended state appropriations (surplus) in the amount of $34.37. Unexpended state appropriations must be refunded to the Office of the State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.
When an expense is incurred that can be paid using either restricted or unrestricted resources, the College's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
RESTATEMENT NOTE DISCLOSURE The College made the following restatements related to business-type activities:

Net Position, Beginning of Year, as Originally Reported (see Note 16 Mergers) $

74,544,684

Change is accounting principles

(43,025,873)

Net Position, Beginning of Year, Restated

$

31,518,811

For fiscal year 2018, the College made prior period adjustments due to the adoption of GASB Statement No. 75, which required the restatement of the June 30, 2017, net position. The result is a decrease in net position at July 1, 2017 of $43,025,873 of which $44,026,545 is represented in Net OPEB Liability and $1,000,672 is represented in deferred outflow. This change is in accordance with generally accepted accounting principles.

NOTE 2: DEPOSITS AND INVESTMENTS

Cash and cash equivalents and investments as of June 30, 2018 are classified in the accompanying statement of net position as follows:

Cash and Cash Equivalents Cash and Cash Equivalents (Externally Restricted) Short-Term Investments Noncurrent Cash (Externally Restricted) Noncurrent Investments (Externally Restricted)

$

9,893,081

292,267

118,948

1,588

1,924,929

$

12,230,813

Cash on hand, deposits and investments as of June 30, 2018 consist of the following:

Cash on Hand Deposits with Financial Institutions Investments

$

14,799

10,291,085

1,924,929

$

12,230,813

- 8 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

DEPOSITS Deposits include certificates of deposits and demand deposit accounts, including certain interest bearing demand deposit accounts. The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the College) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section (O.C.G.A.) 50-17-59:
1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.
6. Letters of credit issued by a Federal Home Loan Bank
7. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
At June 30, 2018, the bank balances of the College's deposits totaled $11,984,158. Of the College's deposits, $11,285,617 were uninsured. Of these uninsured deposits, $11,285,617 were collateralized with securities held by the financial institution's trust department or agent, but not in the College's name.
INVESTMENTS The College maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility it has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy and applicable federal and state laws.
Board of Regents Pooled Investment Program The USG serves as fiscal agent for various units of the University System of Georgia and affiliated organizations. The USG pools the monies of these organizations with the USG's monies for investment purposes. The investment pool is not registered with the U.S. Securities and Exchange Commission as an investment company. The fair value of the investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each pooled investment fund balance at fair value along with a pro rata share of the pooled fund's investment returns.

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

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 College 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 College's position in the pooled investment fund is described below.
1. 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 30% and 40%, with a target of 35% of the total portfolio. The fixed income (bond) portion of the portfolio shall range between 60% and 70%, with a target of 65% 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 College's position in the Balanced Income Fund at June 30, 2018 was $1,924,929, of which 68% is invested in debt securities. The Effective Duration of the Fund is 4.01 years.
Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The College does not have a formal policy for managing interest rate risk for investments.

Investment Pools Board of Regents Balanced Income Fund

Fair Value

$

1,924,929

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2018:

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal Financial Assistance

Georgia State Financing and Investment Commission

Due from Affiliated Organizations

Due from Other USG Institutions

Other

Less: Allowance for Doubtful Accounts

Net Accounts Receivable

$

583,628 301,684 809,610 539,602 568,305
77,318 661,896
3,542,043 453,389
3,088,654

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS Following are the changes in capital assets for the year ended June 30, 2018:

(Restated) Beginning Balance July 1, 2017

Additions

Reductions

Ending Balance June 30, 2018

Capital Assets, Not Being Depreciated:

Land

$

Capitalized Collections

Construction Work-In-Progress

1,088,341 $ 1,602,283 2,379,548

- $ 529,427

- $ 2,379,548

1,088,341 1,602,283
529,427

Total Capital Assets, Not Being Depreciated

5,070,172

529,427

2,379,548

3,220,051

Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections

140,206,462 4,085,379 9,152,826 3,871,342 102,600

3,212,232 -
951,844 44,235 -

1,717,778 -
212,565 176,923
-

141,700,916 4,085,379 9,892,105 3,738,654 102,600

Total Assets Being Depreciated

157,418,609

4,208,311

2,107,266

159,519,654

Less: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections

42,433,132 1,878,810 6,438,265 3,573,901 37,366

3,692,006 172,028 768,524 76,245 1,340

1,332,529 -
210,698 176,924
-

44,792,609 2,050,838 6,996,091 3,473,222 38,706

Total Accumulated Depreciation

54,361,474

4,710,143

1,720,151

57,351,466

Total Capital Assets, Being Depreciated, Net

103,057,135

Capital Assets, Net

$ 108,127,307 $

(501,832) 27,595 $

387,115

102,168,188

2,766,663 $ 105,388,239

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

Fiscal Year

Depreciation Expense

2018

$

2017 - Restated $

2016 - Restated $

4,710,143 4,972,756 4,086,368

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

NOTE 5: ADVANCES (INCLUDING TUITION AND FEES) Advances, including tuitions and fees consisted of the following at June 30, 2018:

Current Liabilities

Prepaid Tuition and Fees

$

1,014,469

Other - Advances

34,228

Total
NOTE 6: LONG-TERM LIABILITIES

$

1,048,697

Changes in long-term liability for the year ended June 30, 2018 was as follows:

(Restated) Balance July 1, 2017

Additions

Reductions

Ending Balance June 30, 2018

Current Portion

Leases Lease Purchase Obligations $

18,182,835 $

- $

344,386 $

17,838,449 $

379,733

Other Liabilities Compensated Absences Net Pension Liability Net Other Post Employment '''''Benefits Liability

1,245,016 29,128,542
44,026,545

968,759 -
-

1,016,385 3,621,410
1,624,503

1,197,390 25,507,132
42,402,042

750,340 -
-

Total Total Long-Term Obligations

74,400,103 $ 92,582,938 $

968,759 968,759 $

6,262,298 6,606,684 $

69,106,564 86,945,013 $

750,340 1,130,073

NOTE 7: DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES

Deferred outflows and inflows of resources reported on the Statement of Net Position as of June 30, 2017 and June 30, 2018, consisted of the following:

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

(Restated) Fiscal Year 2017
$ 7,628,230.00 -

Fiscal Year 2018
$ 4,445,974.00 2,598,115.00

Total Deferred Outflows of Resources

$ 7,628,230.00

$ 7,044,089.00

Deferred Inflows of Resources Deferred Gain on Defined Benefit Pension Plans (see Note 11) $ Deferred Gain on OPEB Plan (see Note 14)

2,203,578.00 -

$ 2,246,386.00 4,399,448.00

Total Deferred Inflows of Resources

- 13 -

$ 2,203,578.00

$ 6,645,834.00

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

NOTE 8: NET POSITION Changes in net position for the year ended June 30, 2018 are as follows:

(Restated) Balance July 1, 2017

Additions

Reductions

Ending Balance June 30, 2018

Net Investment in Capital Assets

$

89,471,173 $

2,702,576 $

4,623,959 $

87,549,790

Restricted Net Position

2,676,701

16,203,504

16,165,581

2,714,624

Unrestricted Net Position

(60,629,063)

48,938,682

47,440,766

(59,131,147)

Total Net Position

$

31,518,811 $ 67,844,762 $ 68,230,306 $

31,133,267

The breakdown of business-type activity net position for the College at June 30, 2018 is as follows:

June 30, 2018

Net Investment in Capital Assets

$

87,549,790

Restricted for Nonexpendable Permanent Endowment

1,851,787

Expendable Sponsored and Other Organized Activities Federal Loans Institutional Loans Quasi-Endowments

134,077 625,111
28,920 74,729

Total Restricted

862,837

Unrestricted Auxiliary Operations R & R Reserve Reserve for Encumbrances Other Unrestricted

2,397,973 3,516,393 1,884,664 (66,930,177)

Total Unrestricted

(59,131,147)

Total Net Position

$

31,133,267

- 14 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

NOTE 9: ENDOWMENTS
Donor Restricted Endowments: Investments of the College's endowment funds are pooled, unless required to be separately invested by the donor. For College controlled, donor-restricted endowments, where the donor has not provided specific instructions, the Board of Regents permits Institutions to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determined to be prudent. Realized and unrealized appreciation in excess of the amount budgeted for current spending is retained by the endowments. Current year net appreciation for the endowment accounts was $55,062 and is reflected as expendable restricted net position.
For endowment funds where the donor has not provided specific instructions, investment return of the College's endowment funds is predicated under classical trust doctrines. Unless the donor has stipulated otherwise, capital gains and losses are accounted for as part of the endowment principal and are not available for expenditure.
NOTE 10: LEASE OBLIGATIONS
The College is obligated under various capital and operating leases for the use of real property and equipment.
CAPITAL LEASES The College acquires certain real property and equipment through multi-year capital leases with varying terms and options. In accordance with O.C.G.A. 50-5-64, these agreements shall terminate absolutely and without further obligation at the close of the fiscal year in which it was executed and at the close of each succeeding fiscal year for which it may be renewed. These agreements may be renewed only by a positive action taken by the College. In addition, these agreements shall terminate if the State does not provide adequate funding, but that is considered a remote possibility. The College's principal and interest expenditures related to capital leases for fiscal year 2018 were $344,386 and $1,125,978, respectively. Interest rates range from 4.808% to 6.132%.
The following is a summary of the carrying values of assets held under capital lease at June 30, 2018:

Description

Leased Equipment

$

Leased Buildings and Building Improvements

Gross Amount (+) 166,215 $ 19,410,381

Accumulated Depreciation
(-) 37,123 4,464,388

Net Capital Assets

Outstanding

Held Under

Balances per

Capital Lease

Lease Schedules

at June 30, 2018 at June 30, 2018

(=)

$

129,092 $

50,408

14,945,993

17,788,041

Leased Equipment

$

19,576,596 $

4,501,511 $

15,075,085 $

17,838,449

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

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

Description

Lessor

CAPITAL LEASE SCHEDULE

Original Principal

Lease Term

Begin Date

End Date

Outstanding Principal Balance at June 30, 2018

Mini Excavator PNC Equipment Finance,

LLC

$

Boom Lift

PNC Equipment Finance ,

LLC

Student Wellness USG Real Estate

Center

Foundation II Inc.

32,085 48 months

October 2015 October 2019 $

79,868 60 months November 2015 November 2020

19,410,381

29 years December 2010

June 2039

10,696 39,712 17,788,041

Total Leases

$

19,522,334

$

17,838,449

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

OPERATING LEASES The College leases equipment. Some of these leases are considered for accounting purposes to be operating leases. Although lease terms vary, many leases are subject to appropriations from the General Assembly to continue the obligation. Other leases generally contain provisions that, at the expiration date of the original term of the lease, the College has the option of renewing the lease on a year-to-year basis. Leases renewed yearly for a specified time period, i.e. lease expires at 12 months and must be renewed for the next year, may not meet the qualification as an operating lease. The College's operating lease expense for fiscal year 2018 was $9,268.

FUTURE COMMITMENTS Future commitments for capital leases and for non-cancellable operating leases having remaining terms in excess of one year as of June 30, 2018, are as follows:

Real Property and Equipment

Capital

Operating

Leases

Leases

Year Ending June 30: 2019 2020 2021 2022 2023 2024 - 2028 2029 - 2033 2034 - 2038 2039 - 2043

$

1,484,002 $

1,486,106

1,482,914

1,487,134

1,496,384

7,673,936

7,981,488

8,302,458

931,168

9,268 -

Total Minimum Lease Payments

32,325,590 $

9,268

Less: Interest

14,487,141

Principal Outstanding

$ 17,838,449

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS
The College participates in various retirement plans administered by the State of Georgia under two major retirement systems: Teachers Retirement System of Georgia (TRS) and Employees' Retirement System of Georgia (ERS). These plans issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective administrative offices.
The significant retirement plans that the College participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
A. Teachers Retirement System of Georgia and Employees' Retirement System of Georgia
Summary of Significant Accounting Policies
Pensions: For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and Employees' Retirement System (ERS), additions to/deductions for TRS's and ERS's fiduciary net position have been determined on the same basis as they are reported by TRS and ERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
General Information about the Teachers Retirement System
Plan description: All teachers of the College as defined in O.C.G.A. 47-3-60 are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications.
Benefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to contribute 6.00% of their annual pay during fiscal year 2018. The College's contractually required contribution rate for the year ended June 30, 2018 was 16.81% of annual College payroll. College contributions to TRS were $2,579,777 for the year ended June 30, 2018.

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

General Information about the Employees' Retirement System
Plan description: ERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS.
Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Contributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200, plus 6% of annual compensation in excess of $4,200. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The required contribution rate for the year ended June 30, 2018 was 24.81% of annual covered payroll for old and new plan members and 21.81% for GSEPS members. The rates include the annual actuarially determined employer contributions rate of 24.69% of annual covered payroll for old and new plan members and 21.69% for GSEPS members, plus a 0.12% adjustment for the HB 751 onetime benefit adjustment of 3% to retired state employees. 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. The College's contributions to ERS totaled $68,712 for the year ended June 30, 2018.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2018, the College reported a liability for its proportionate share of the net pension liability for TRS and ERS. The net pension liability was measured as of June 30, 2017. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2016. An expected total pension liability as of June 30, 2017 was determined using standard roll-forward techniques. The College's proportion of the net pension liability was based on
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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

contributions to TRS and ERS during the fiscal year ended June 30, 2017. At June 30 2017, the College's TRS proportion was 0.134852%, which was a decrease of (0.002123)% from its proportion measured as of June 30, 2016. At June 30, 2017, the College's ERS proportion was 0.010944%, which was a decrease of (0.007428)% from its proportion measured as of June 30, 2016.
For the year ended June 30, 2018, the College recognized pension expense of $2,316,629 for TRS and ($64,487) for ERS. At June 30, 2018, the College reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

ERS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

Differences between expected and actual

experience

$

937,498 $

94,583 $

4,870 $

4

Change of Assumptions

549,405

-

1,012

-

Net difference between projected and actual earnings on pension plan investments

-

172,473

-

1,107

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

299,180

1,773,148

5,520

205,071

Institution contributions subsequent to the

measurement date

2,579,777

-

68,712

-

Total

$

4,365,860 $

2,040,204 $

80,114 $

206,182

College contributions subsequent to the measurement date of $2,579,777 for TRS and $68,712 for ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ending June 30:

TRS

ERS

2019 2020 2021 2022 2023

$ (596,202) $

$ 861,963 $

$ 252,630 $

$ (780,480) $

$

7,968 $

(132,425) (54,741) 4,990 (12,604) -

- 19 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

Actuarial assumptions: The total pension liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016 using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:

Inflation Salary increases Investment rate of return

2.75%
3.25 9.00%, average, including inflation
7.50%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward one year for males) for service requirements and dependent 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 the 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.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

Employees' Retirement System

Inflation Salary increases Investment rate of return

2.75%
3.25 7.00%, including inflation 7.50%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward 2 years for both males and females for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB and set back 7 years for males and set forward 3 years for females was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-12% less than the actual number of deaths that occurred during the study period for service retirements and beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

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

Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives
Total
* Rates shown are net of the 2.75% assumed rate of inflation

TRS Target allocation
30.00% 39.80%
3.70% 1.50% 19.40% 5.60%
-
100.00%

ERS Target allocation
30.00% 37.20%
3.40% 1.40% 17.80% 5.20% 5.00%
100.00%

Long-term expected real rate of return*
(0.50)% 9.00%
12.00% 13.5% 8.00%
12.00% 10.50%

Discount rate: The discount rate used to measure the total TRS and ERS pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and ERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the College's proportionate share of the net pension liability to changes in the discount rate: The following presents the College's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the College's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate:

Teachers Retirement System:
Proportionate share of the net pension liability

1% Decrease (6.50%)

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$ 41,130,765 $ 25,062,659 $ 11,826,152

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

1% Decrease (6.50%)

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$

627,351 $

444,473 $

288,472

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

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

B. Defined Contribution Plan
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia (Board). O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or all exempt full and partial benefit eligible employees, as designated by the regulations of the Board. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (VALIC, Fidelity, and TIAACREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy The institutions of the USG make monthly employer contributions for the Regents Retirement Plan on behalf of participants at rates determined by the Board. The Board reviews the contribution amount every three (3) years. For fiscal year 2018, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6.00% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
The College and the covered employees made the required contributions of $515,767 (9.24%) and $334,441 (6%), respectively.
VALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
NOTE 12: RISK MANAGEMENT
The USG offers its employees and retirees under the age of 65 access to three self-insured healthcare plan options and one fully insured plan option. For the USG's Plan Year 2018, the following self-insured health care plan options were available: BlueChoice HMO, (Blue Cross and Blue Shield of Georgia) Consumer Choice HSA plan, and the (Blue Cross and Blue Shield of Georgia) Comprehensive Care plan.
The College's participating employees and retirees pay premiums to the plan fund to access benefits coverage. All units of the USG share the risk of loss for claims associated with these plans. The plan fund is considered to be a self-sustaining risk fund. The USG has contracted with Blue Cross and Blue Shield of Georgia, a wholly owned subsidiary of Anthem, Inc., to serve as the claims administrator for the self-insured healthcare plan options. In addition to the self-insured healthcare plan options offered to the employees and eligible retirees of the USG, a fully insured HMO healthcare plan option also is offered through Kaiser Permanente. The Comprehensive Care plan has a carved-out prescription drug plan administered through CVS Caremark. Pharmacy drug claims are processed in accordance with guidelines established for the Board of Regents' Prescription Drug Benefit Program. Generally, claims are submitted by participating pharmacies directly to CVS Caremark for verification, processing and payment. CVS Caremark maintains an eligibility file based on information furnished by Blue Cross and Blue Shield of Georgia on behalf of the various organizational units of the University System of Georgia. The self-insured dental plan is administered through Delta Dental.

- 22 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

Retirees age 65 and older participate in a secondary healthcare coverage for Medicare-eligible retirees and dependents provided through a retiree healthcare exchange option. The USG makes contributions to a health reimbursement account, which can be used by the retiree to pay premiums and out-ofpocket healthcare-related expenses.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks.
The College is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the O.C.G.A. 45-9-1.
The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 13: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the College, if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2018.
NOTE 14: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Board of Regents Retiree Health Benefit Plan
Plan Description and Funding Policy The Board of Regents Retiree Health Benefit Plan (Plan) is a single-employer, defined-benefit, healthcare plan administered by the University System Office, an organizational unit of the USG. The Plan was authorized pursuant to O.C.G.A. 47-21-21 for the purpose of accumulating funds necessary to meet employer costs of retiree post-employment health insurance benefits.
Pursuant to the general powers conferred by the O.C.G.A 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 that become permanently and totally disabled
- 23 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

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 2018, the following self-insured health care options were available: Blue Choice HMO plan, (Blue Cross and Blue Shield of Georgia) Consumer Choice HSA plan, and the (Blue Cross and Blue Shield of Georgia) Comprehensive Care plan. The USG offers a selfinsured dental plan administered by Delta Dental.

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

The College's membership in the Plan consisted of the following at June 30, 2018:

Active Employees

401

Retirees or Beneficiaries Receiving Benefits

226

Retirees Receiving Life Insurance Only

28

Total

655

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

The College pays the employer portion for group insurance for eligible retirees. The employer portion of health insurance for its eligible retirees is based on rates that are established annually by the Board for the upcoming plan year. For the 2018 plan year, the employer rate was approximately 85% of the total health insurance cost for eligible retirees and the retiree rate was approximately 15%. With regard to life insurance, the employer covers the total premium cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the retiree.

For fiscal year 2018, the College contributed $1,567,781 to the plan for current premiums or claims.

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB At June 30, 2018, the College reported a liability for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2017. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2016. An expected total OPEB liability as of June 30, 2017 was determined using standard roll-forward techniques. The College's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2017. At June 30, 2017, the College's proportion was 1.004853%, which was a decrease of (0.042786) % from its proportion measured as of June 30, 2016.

- 24 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

For the year ended June 30, 2018, the College recognized OPEB expense of $2,745,283. At June 30, 2018, the College reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience $

1,028,998 $

-

Changes of assumptions
Net difference between projected and actual earnings on OPEB plan investments
Changes in proportion and differences between contributions and proportionate share of

1,336
-

2,903,582 -
1,495,866

Contributions subsequent to the measurement date

1,567,781

-

Total

$

2,598,115 $

4,399,448

The College's contributions subsequent to the measurement date of $1,567,781 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30:

2019 2020 2021 2022 2023

$

(680,566.00)

$

(680,566.00)

$

(680,566.00)

$

(680,566.00)

$

(646,850.00)

- 25 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

Actuarial assumptions The total OPEB liability as of June 30, 2017 was determined by an actuarial valuation as of June 30, 2016 using the following actuarial assumptions, applied to all periods included in the measurement:

Cost Method Amortization Method Asset Method
Interest Discounting and Salary Growth

Entry Age Normal
Closed amortization period for initial unfunded and subsequent actuarial gains/losses.
Fair Value
Interest Rate as of 6/30/2016 2.85% from Bond Buyer Interest Rate as of 6/30/2017 3.58% from Bond Buyer General Inflation 2.50% Salary Growth 3.00% Salary Scale 4.00%
Healthy: RP-2014 Mortality Table with Generational Improvements by Scale MP-2014

Mortality Rates Initial Healthcare Cost Trend
Pre-Medicare Eligible Medicare Eligible Ultimate Trend Rate Pre-Medicare Eligible Medicare Eligible Year Ultimate Trend is Reached
Experience Study

Disabled: RP-2000 Disabled Mortality Table projected 2025 with projection scale BB (set forward two years for males and four years for females)
7.3% 7.3%
4.5% 4.7% 2031 for Pre-Medicare Eligible, 2072 for Medicare Eligible Based on experience of the Teachers Retirement System of Georgia

Changes in Assumptions Since Prior Valuation Expected claims costs were updated to reflect actual claims experience. Trend was reset based on current conditions. Disability, Termination, Retirement, and Disabled Mortality were updated to reflect the current Teachers Retirement System of Georgia.

The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014.

- 26 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

The long-term expected rate of return on OPEB plan investments was determined using a buildingblock method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation as of June 30, 2017 are summarized in the following table:

Asset Class
Cash Equivalents Fixed Income
Domestic Fixed Income (Corporate Long Term) Domestic Fixed Income (Corporate Short Term) International Fixed Income Equity Allocation Domestic Equity (Large Cap) International Equity

Expected Return 2.6%
4.2% 3.5% 4.9%
6.5% 7.3%

Target Allocation Less than 5% 60% to 70%
30% to 40%

Discount rate The Plan's projected fiduciary net position at the end of 2018 is $0, based on the valuation completed for the fiscal year ending June 30, 2017. As such, the Plan's fiduciary net position was not projected to be available to make all projected future benefit payments for current Plan members. The projected "depletion date" when projected benefits are not covered by projected assets is 2018. Therefore, the long-term expected rate of return on Plan investments of 4.50% per annum was not applied to all periods of projected benefit payments to determine the total OPEB liability as of June 30, 2017. Instead, a yield or index rate for a 20 year, tax-exempt general obligation municipal bond with an average rating of AA or higher was used. This rate was determined to be 3.58% from the Bond Buyer.
Sensitivity of the net OPEB liability to changes in the discount rate The following presents the College's proportionate share of the net OPEB liability, as well as what the College's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1% lower (2.58%) or 1% (4.58%) higher than the current discount rate (3.58%):

1% Decrease 2.58%

Current Rate 3.58%

1% Increase 4.58%

Proportionate Share of the Net OPEB Liability

$

50,654,020 $ 42,402,042 $ 35,969,061

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

Proportionate Share of the Net OPEB Liability $

1% Decrease 35,767,795 $

Current Rate 42,402,042 $

1% Increase 51,167,085

Pre-Medicare Eligible Medicare Eligible

6.3% decreasing to 3.5% 7.3% decreasing to 4.5% 8.3% decreasing to 5.5% 6.3% decreasing to 3.7% 7.3% decreasing to 4.7% 8.3% decreasing to 5.7%

- 27 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

OPEB plan fiduciary net position: Detailed information about the Plan's fiduciary net position is available in the USG Consolidated Annual Financial Report which is publicly available at www.usg.edu/fiscal_affairs/financial_reporting.
NOTE 15: SUBSEQUENT EVENTS In fiscal year 2019, the College transferred most of the inventory and assets of the Bainbridge and Blakely campuses to the Southern Regional Technical College, an organizational unit of the Technical College System of Georgia. In addition, the University System of Georgia Foundation extinguished the College's lease agreement related to the Bainbridge Student Wellness Center located on the Bainbridge campus.
NOTE 16: MERGERS In January 2018, Bainbridge State College merged into Abraham Baldwin Agriculture College. This merger was initiated by the Board of Regents of the University System of Georgia in an effort to streamline operations. Ending balances at June 30, 2017 for Bainbridge State College are recognized in Abraham Baldwin Agriculture College's July 1, 2017 beginning net position balance. No adjustments were made to Bainbridge State College's June 30, 2017 balances as a result of the merger. The initial opening balance of Abraham Baldwin Agricultural College assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position, as of the beginning of the period, were determined on the basis of carrying values reported in the separate financial statements of Abraham Baldwin Agricultural College and Bainbridge State College as of June 30, 2017, as follows:

- 28 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2018

EXHIBIT "D"

ASSETS
Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net Federal Financial Assistance Affiliated Organizations Receivables - Other Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Notes Receivable, Net Non-current Cash (Externally Restricted) Investments (Externally Restricted) Investments Capital Assets, Net
Total Noncurrent Assets
TOTAL ASSETS
TOTAL DEFERRED OUTFLOWS OF RESOURCES
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Retainage Payable Advances (Including Tuition and Fees) Other Liabilities Deposits Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Non-current Liabilities Lease Purchase Obligations Compensated Absences Net Pension Liability
Total Noncurrent Liabilities
TOTAL LIABILITIES
TOTAL DEFERRED INFLOWS OF RESOURCES
NET POSITION
Net Investment in Capital Assets Restricted for:
Nonexpendable Expendable Unrestricted
TOTAL NET POSITION

Abraham Baldwin Agricultural College

Bainbridge State College

Total

$

6,958,418 $

118,829

403,920 50,225
2,221,532 358,110 5,994

10,117,028

755,070 $ -
442,193 11,349
1,274,305 -
13,363
2,496,280

7,713,488 118,829
846,113 61,574
3,495,837 358,110 19,357
12,613,308

241,641 -
57,576,314
57,817,955
67,934,983
5,068,939

1,588 1,794,967 74,999 50,550,993
52,422,547
54,918,827
2,559,291

241,641 1,588
1,794,967 74,999
108,127,307
110,240,502
122,853,810
7,628,230

647,807 213,267
76,723 379,654
93,645 647,368
165,840 896,346
23,640 562,011
3,706,301
50,408 380,893 18,576,021
19,007,322
22,713,623
299,596

653,748 75,603 25,989 -
533,898 3,937 -
763,560 320,746 217,449
2,594,930
17,788,041 84,663
10,552,521
28,425,225
31,020,155
1,903,982

1,301,555 288,870 102,712 379,654 93,645
1,181,266 3,937
165,840 1,659,906
344,386 779,460
6,301,231
17,838,449 465,556
29,128,542
47,432,547
53,733,778
2,203,578

57,028,967
664,977 (7,703,241)
$ 49,990,703 $

32,442,206
1,799,668 212,056
(9,899,949)
24,553,981 $

89,471,173
1,799,668 877,033
(17,603,190)
74,544,684

- 29 -

SUPPLEMENTARY INFORMATION - 30 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30, 2018
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Other Assets
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Unearned Revenue
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

2,823,671.57

682,068.21 1,147,431.31
24,447.79 127,026.28

$

4,804,645.16

$

309,587.12

1,732,866.20

461,861.56

884,636.43

3,388,951.31

244,912.33 258,765.07 197,212.27
96,503.37 254,099.82 364,166.62
34.37
1,415,693.85

$

4,804,645.16

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

ABRAHAM BALDWIN AGRICULTURAL COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2018

Public Service / Special Funding Initiatives State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity

Original Appropriation

Amended Appropriation

$

- $

- $

Final Budget

Current Year Revenues

75,000.00 $

75,000.00

24,671,727.00 35,188,013.00
59,859,740.00

24,671,727.00 35,188,013.00
59,859,740.00

24,695,891.00 34,243,601.00
58,939,492.00

24,695,891.00 32,941,614.33
57,637,505.33

$

59,859,740.00 $

59,859,740.00 $

59,014,492.00 $ 57,712,505.33

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 32 -

SCHEDULE "2"

Funds Available Compared to Budget

Prior Year

Adjustments and

Total

Carry-Over

Program Transfers

Funds Available

Variance Positive/Negative

Expenditures Compared to Budget

Variance

Actual

Positive/Negative

Excess of Funds Available Over Expenditures

$

- $

- $

75,000.00 $

- $

75,000.00 $

- $

-

997,100.53
997,100.53

5.00 (5.00)
-

24,695,896.00 33,938,709.86
58,634,605.86

5.00 (304,891.14)
(304,886.14)

24,695,896.00 32,471,709.89
57,167,605.89

(5.00) 1,771,891.11
1,771,886.11

1,466,999.97
1,466,999.97

$ 997,100.53 $

- $ 58,709,605.86 $

(304,886.14) $ 57,242,605.89 $

1,771,886.11 $

1,466,999.97

- 33 -

ABRAHAM BALDWIN AGRICULTURAL COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2018

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

Beginning Fund Balance July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2017
Surplus

Prior Period Adjustments

$

100.62 $

- $

997,100.53

(997,100.53)

997,201.15

(997,100.53)

(100.62) $ -
(100.62)

34.37 (719,025.03)
(718,990.66)

667,684.54

-

-

-

Budget Unit Totals

$

1,664,885.69 $

(997,100.53) $

(100.62) $

(718,990.66)

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 34 -

SCHEDULE "3"

Other Adjustments

Early Return Fiscal Year 2018
Surplus

Excess of Funds Available Over Expenditures

Ending Fund Balance June 30

Analysis of Ending Fund Balance

Reserved

Surplus

Total

$

- $

413,584.72

413,584.72

- $ -
-

- $ 1,466,999.97
1,466,999.97

34.37 $

- $

1,161,559.66

1,161,559.66

1,161,594.03

1,161,559.66

34.37 $ -

34.37 1,161,559.66

34.37

1,161,594.03

(413,584.72)

$

- $

-

-

254,099.82

254,099.82

- $

1,466,999.97 $ 1,415,693.85 $ 1,415,659.48 $

-

254,099.82

34.37 $ 1,415,693.85

Summary of Ending Fund Balance Reserved
Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Ending Fund Balance - June 30

$ 244,912.33 $ 258,765.07 197,212.27 96,503.37 254,099.82 364,166.62
-
$ 1,415,659.48 $

- $ -
34.37
34.37 $

244,912.33 258,765.07 197,212.27
96,503.37 254,099.82 364,166.62
34.37
1,415,693.85

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

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2018

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-2017-001

Excessive Cash Balances

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Cost: Repeat of Prior Year Finding:

Cash Management Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education None 84.SFA Student Financial Assistance Cluster P268K173411 (Year: 2017), P268K163411 (Year: 2016) None Identified FA 2016-001

Finding Status:

Previously Reported Corrective Action Plan Implemented

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SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

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ABRAHAM BALDWIN AGRICULTURAL COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2018
COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES
The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were reported.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.