Georgia Southern University, Statesboro, Georgia, report on audit of the financial statements for the fiscal year ended June 30, 2016

Report on Audit of the Financial Statements for the Fiscal Year Ended June 30, 2016

GEORGIA SOUTHERN UNIVERSITY - TABLE OF CONTENTS -

Page

SECTION I

INTRODUCTORY SECTION

MESSAGE FROM THE PRESIDENT

LETTER OF TRANSMITTAL

SECTION II

FINANCIAL

INDEPENDENT AUDITOR'S REPORT

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

i

EXHIBITS

BASIC FINANCIAL STATEMENTS

A STATEMENT OF NET POSITION

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

4

C STATEMENT OF CASH FLOWS

6

D NOTES TO THE FINANCIAL STATEMENTS

9

SCHEDULES

REQUIRED SUPPLEMENTARY INFORMATION

1 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY -

TEACHERS RETIREMENT SYSTEM OF GEORGIA

41

2 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY -

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

42

3 SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA

43

4 SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 44

5 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

45

SUPPLEMENTARY INFORMATION

6 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND

47

7 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(NON-GAAP BASIS) BUDGET FUND

48

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GEORGIA SOUTHERN UNIVERSITY - TABLE OF CONTENTS -

SECTION II
FINANCIAL
SCHEDULES
SUPPLEMENTARY INFORMATION
8 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND
9 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND

Page
50 52

SECTION III
COMPLIANCE AND INTERNAL CONTROL REPORTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

SECTION IV AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION V CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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SECTION I INTRODUCTORY SECTION

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Message from the President

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Letter of Transmittal

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SECTION II 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

Kristina A. Turner
DIRECTOR
(404) 657-4352

March 23, 2017
Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Dr. Jaimie Hebert, President Georgia Southern University

INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying financial statements of the business-type activities, including each major fund of Georgia Southern University, a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2016 and the related notes to the financial statements, which collectively comprise the Georgia Southern University's basic financial statements as listed in the tables 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 this financial statement based on our audit. We did not audit the financial statements of Georgia Southern University Housing Foundation, Inc., which is a major fund and represents 6.77% of total assets and deferred outflows and 0.6% of total revenues of the Georgia Southern University's business-type activities. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for Georgia Southern University Housing Foundation, Inc. is based solely on the report 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 financial statements of the Georgia Southern University Housing Foundation, Inc. was not audited in accordance with Government Auditing Standards.

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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 Georgia Southern University'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 Georgia Southern University'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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinions
In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, including each major fund of Georgia Southern University as of June 30, 2016, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1, the financial statements of Georgia Southern University are intended to present the financial position and changes in financial position and cash flows of only those portions of the business-type activities and the major funds of the State of Georgia that are attributable to the transactions of Georgia Southern University. They do not purport to, and do not, present fairly the financial position of the State of Georgia as of June 30, 2016, 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. Our opinions are not modified with respect to this matter.
As described in Note 1 to the financial statements, in 2016, Georgia Southern University adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. Our opinions are not modified with respect to this matter.
Also as described in Note 1 to the financial statements, the Georgia Southern University Housing Foundation, Inc. financial statements have been included as a separate major fund. 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 on pages i through vi and the Schedules of Proportionate Share of the Net Pension Liability, Schedules of Contributions to Retirement Systems and the Notes to the Required Supplemental Information on pages 41 through 45 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 and other auditors 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 inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our

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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 basic financial statements of Georgia Southern University. The accompanying introductory and supplementary information, as listed in the accompanying table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The accompanying supplementary information (Schedules 6 through 9) is the responsibility of management and was derived from and relates 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 or 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. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 23, 2017, on our consideration of Georgia Southern University's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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 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 Georgia Southern University's internal control over financial reporting and compliance.
Respectfully,
Greg S. Griffin State Auditor

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REQUIRED SUPPLEMENTARY INFORMATION

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GEORGIA SOUTHERN UNIVERSITY
Management's Discussion and Analysis

Introduction

Georgia Southern University (Institution) is the state's largest and most comprehensive center of higher education south of Atlanta. With 125 degree programs at the baccalaureate, master's and doctoral levels, the Institution has been designated a Carnegie Doctoral-Research University and provides the classic residential campus experience and online learning options to about 20,500 students from 49 states and 86 nations. Georgia Southern University's nationally accredited academic programs prepare diverse scholars for leadership and service as world citizens. Georgia Southern University is one of 29 institutions of higher education of the University System of Georgia. The Institution boasts 200-plus student organizations, outstanding Division I athletics, and state-of-the art residence halls and campus facilities. Since 1906, the Institution's hallmark has been a culture of engagement that bridges theory with practice, extends the learning environment beyond the classroom, and promotes student growth and life success. Central to the Institution's mission is the faculty's dedication to excellence in teaching and the development of a fertile learning environment exemplified by a free exchange of ideas, high academic expectations, and individual responsibility for academic achievement. Faculty, staff, and students embrace core values expressed through integrity, civility, kindness, collaboration, and a commitment to lifelong learning, wellness, and social responsibility.
Students Students Faculty (Headcount) (FTE)

Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014

905

20,466 18,779

899

20,542 18,821

881

20,516 18,685

Overview of the Financial Statements and Financial Analysis

Georgia Southern University is pleased to present its financial statements for fiscal year 2016. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Position; the Statement of Revenues, Expenses and Changes in Net Position; and the Statement of Cash Flows. This discussion and analysis of the Institution's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2016 and fiscal year 2015.

In fiscal year 2016, Georgia Southern University Housing Foundation, Inc. (Foundation), a blended component unit of the State, has been included as a separate enterprise fund since the Foundation has been determined to be essential to the fair presentation to these departmental statements. Fiscal year 2015 comparative data does not include the Georgia Southern University Housing Foundation, Inc.

Statement of Net Position

The Statement of Net Position is a financial condition snapshot as of June 30, 2016 and includes all assets, deferred outflows of resources, liabilities, and deferred inflows of resources. The differences between current and non-current assets are discussed in the Notes to the Financial Statements. The Statement of Net Position is prepared under the accrual basis of accounting which requires revenue and asset recognition when the service is provided, and expense and liability recognition when goods or services are received despite when cash is actually exchanged.

i

From the data presented, readers of the Statement of Net Position are able to determine the assets available to continue the operations of the Institution and how much the Institution owes vendors. The difference between assets, deferred outflows of resources, liabilities, and deferred inflows of resources (net position) is one indicator of the Institution's financial health. Increase or decreases in net position provide an indicator of the improvement or decline of the Institution's financial health when considered in conjunction with other non-financial conditions, such as facilities and enrollment. Net Position is divided into three major categories.

The first category, net investment in capital assets, provides the Institution's equity in property, plant and equipment owned by the Institution.

The next category is restricted, which is divided into two categories, non-expendable and expendable. The corpus of non-expendable, restricted resources is available only for investment purposes. Expendable, restricted resources are available for expenditure by the Institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets.

The final category is unrestricted. Unrestricted resources are available to the Institution for any lawful purpose.

Statement of Net Position, Condensed

Institution June 30, 2016 June 30, 2015 (1)

Foundation June 30, 2016

Eliminations June 30, 2016

Totals June 30, 2016 June 30, 2015 (1)

Assets Current Assets Capital Assets, Net Other Assets

$ 61,042,490 $ 549,604,319 13,515,296

59,529,960 $ 546,081,786
13,787,940

13,790,686 $ 429,942
232,334,286

-6,690,360 -202,153,453

$ 68,142,816 $ 550,034,261 43,696,129

59,529,960 546,081,786
13,787,940

Total Assets

624,162,105

619,399,686

246,554,914

-208,843,813

661,873,206

619,399,686

Deferred Outflows of Resources

13,982,239

12,615,483

4,450,038

0

18,432,277

12,615,483

Liabilities Current Liabilities Noncurrent Liabilities

32,270,608 316,800,865

31,521,817 310,228,213

10,710,437 209,900,121

-6,690,360 -202,153,453

36,290,685 324,547,533

31,521,817 310,228,213

Total Liabilities

349,071,473

341,750,030

220,610,558

-208,843,813

360,838,218

341,750,030

Deferred Inflows of Resources

11,809,616

26,983,742

472,520

0

12,282,136

26,983,742

Net Position Net Investment in Capital Assets Restricted Nonexpendable Expendable Bond Covenants/Debt Service Unrestricted (Deficit)

318,609,377
2,465,814 6,908,259
-50,720,195

Total Net Position

$ 277,263,255 $

(1) Does not include the Georgia Southern Housing Foundation

308,053,863 2,465,814 8,553,930
-55,792,210 263,281,397 $

429,942
26,474,530 3,017,402
29,921,874 $

0

319,039,319

308,053,863

2,465,814 6,908,259 26,474,530 -47,702,793

2,465,814 8,553,930
-55,792,210

0 $ 307,185,129 $ 263,281,397

ii

Total assets and deferred outflows of resources for the Institution increased by $6,129,175 which was primarily due to an increase of $3,522,533 in the category of Capital Assets, Net, and $1,366,756 increase in estimated Deferred Loss on Defined Benefit Pension Plan. The balance of the increase is mainly in the current assets and deferred outflows categories.
The sum of total liabilities and deferred inflows of resources for the Institution decreased for the year by $7,852,683. This decrease is primarily due to an increase in pension liability and decrease in related deferred inflow. The combination of the increase in total assets and deferred outflows of resources and the decrease in total liabilities and deferred inflows of resources yielded an increase for the Institution in net position of $13,981,858. The increase in net position is primarily in the category of Net Investment in Capital Assets, in the amount of $10,555,514. Total net position increased by $53,903,732. The total increase in net position is primarily in the category of Bond Covenants/Debt Service in the amount of $26,474,530 associated with the blending of the Foundation.

Statement of Revenues, Expenses and Changes in Net Position

Changes in total net position as presented on the Statement of Net Position are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Position. The purpose of the statement is to present the revenues received by the Institution, both operating and non-operating, and the expenses paid by the Institution, operating and non-operating, and any other revenues, expenses, gains and losses received or spent by the Institution. Generally, operating revenues are received for providing goods and services to the various customers and constituencies of the Institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the Institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are non-operating because they are provided by the Legislature to the Institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Position, Condensed

Institution June 30, 2016 June 30, 2015 (1)

Foundation June 30, 2016

Elimination June 30, 2016

Totals June 30, 2016 June 30, 2015 (1)

Operating Revenues Operating Expenses

$ 225,844,385 $ 338,704,187

221,466,308 $ 327,870,789

12,551,615 $ 3,517,505

-12,397,676 $ -1,592,650

225,998,324 $ 340,629,042

221,466,308 327,870,789

Operating Loss Nonoperating Revenues and Expenses Income Before other Revenues, Expenses, Gains or Losses Other Revenues, Expenses, Gains or Losses Increase in Net Position Net Position at Beginning of Year

-112,859,802 115,628,756
2,768,954 11,212,904 13,981,858 263,281,397

Net Position at End of Year

$ 277,263,255 $

-106,404,481 108,955,031
2,550,550 939,153
3,489,703 259,791,694 263,281,397 $

9,034,110 -9,204,210

-10,805,026 10,805,026

-114,630,718 117,229,572

-106,404,481 108,955,031

-170,100 0
-170,100 30,091,974
29,921,874 $

0 0 0 0
0$

2,598,854 11,212,904 13,811,758 293,373,371
307,185,129 $

2,550,550 939,153
3,489,703 259,791,694
263,281,397

(1) Does not include Georgia Southern Housing Foundation

iii

The Statement of Revenues, Expenses and Changes in Net Position reflect a positive year, which is represented by an increase in net position at the end of the year. Some highlights of the information presented on this statement are as follows:

Revenue by Source For the Years Ended June 30, 2016 and June 30, 2015

Operating Revenues Tuition and Fees Grants and Contracts Sales and Services Auxiliary Other
Total Operating Revenues Nonoperating Revenues
State Appropriations Grants and Contracts Gifts Investment Income Other
Total Nonoperating Revenues Capital Gifts and Grants
State Other Capital Gifts and Grants
Total Capital Gifts and Grants

Institution June 30, 2016 June 30, 2015 (1)

Foundation June 30, 2016

Elimination June 30, 2016

Totals June 30, 2016 June 30, 2015 (1)

$ 114,177,862 $ 111,214,653

14,321,548

17,328,121

5,563,121

4,736,641

89,397,136

86,006,395

2,384,718

2,180,498 $

225,844,385

221,466,308

12,551,615 $ 12,551,615

$ -12,397,676

114,177,862 $ 14,321,548 5,563,121 89,397,136 2,538,657

111,214,653 17,328,121 4,736,641 86,006,395 2,180,498

-12,397,676

225,998,324

221,466,308

91,640,673 31,745,661
4,240,402 210,645 -201,378
127,636,003

85,834,001 31,737,747
4,216,706 246,650 -264,607
121,770,497

427,113 427,113

0

91,640,673

85,834,001

31,745,661

31,737,747

4,240,402

4,216,706

637,758

246,650

-201,378

-264,607

0

128,063,116

121,770,497

9,959,147 1,253,757
11,212,904

939,153 939,153

0

0

9,959,147

939,153

1,253,757

0

0

11,212,904

939,153

Total Revenues

$ 364,693,292 $ 344,175,958 $

(1) Does not include Georgia Southern Housing Foundation

12,978,728 $

-12,397,676 $ 365,274,344 $ 344,175,958

Expenses (By Functional Classification) For the ARS Ended June 30, 2016 and June 30, 2015

Institution June 30, 2016 June 30, 2015 (1)

Foundation June 30, 2016

Elimination June 30, 2016

Totals June 30, 2016 June 30, 2015 (1)

Operating Expenses

Instruction

$

Research

Public Service

Academic Support

Student Services

Institutional Support

Plant Operations and Maintenance

Scholarships and Fellowships

Auxiliary Enterprises

104,292,977 $ 16,085,335 1,869,418 33,769,077 26,375,464 30,802,260 37,409,018 9,361,042 78,739,596

100,489,820 16,921,157 1,590,018 31,983,196 24,224,085 $ 34,295,983 33,771,818 9,668,280 74,926,432

3,517,505 $

$ -1,592,650

104,292,977 $ 16,085,335 1,869,418 33,769,077 28,300,319 30,802,260 37,409,018 9,361,042 78,739,596

100,489,820 16,921,157 1,590,018 31,983,196 24,224,085 34,295,983 33,771,818 9,668,280 74,926,432

Total Operating Expenses
Nonoperating Expenses Interest Expense (Capital Assets)

338,704,187 12,007,247

327,870,789 12,815,466

3,517,505 9,631,323

-1,592,650 -10,805,026

340,629,042 10,833,544

327,870,789 12,815,466

Total Expenses

$ 350,711,434 $

(1) Does not include Georgia Southern Housing Foundation

340,686,255 $

13,148,828 $ -12,397,676 $ 351,462,586 $ 340,686,255

Operating revenues for the Institution increased by $4,378,077 in fiscal year 2016. Although Tuition and Fees revenue increased by $2,963,209, revenues decreased in the Grants and Contracts category.

iv

The Auxiliary revenue increase of $3,390,741 is a result of several factors including increased sales of conference services and dining plans as well as changes in health services which resulted in increased revenues. Additionally Intercollegiate Athletic revenue increased due to higher National Collegiate Athletic Association game guarantees in the Football Bowl Subdivision conference.

Nonoperating revenues for the Institution increased by $5,865,506 for the year primarily due to an increase of $5,806,672 in State Appropriations.

The compensation and employee benefits category increased by $7,234,170. The increases are primarily in direct student instruction and support services due to an overall 2% salary merit increase and an effective 8.5% TRS employer rate increase.

Statement of Cash Flows

The final statement presented by the Georgia Southern University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the Institution during the year. Cash flow information can be used to evaluate the financial viability of the Institution's ability to meet financial obligations as they mature. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the Institution. The second section reflects cash flows from non-capital financing activities. This section reflects the cash received and spent for non-operating, non-investing, and non-capital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Position.

Cash Flows for the Years Ended June 30, 2016 and 2015, Condensed

Institution

June 30, 2016

June 30, 2015 (1)

Foundation June 30, 2016

Elimination June 30, 2016

Totals

June 30, 2016

June 30, 2015 (1)

Cash Provided (Used) By:

Operating Activities

$ -83,787,998 $

Noncapital Financing Activities

117,167,029

Capital and Related Financing Activities

-40,307,614

Investing Activities

217,630

-83,458,830 $ 121,433,606 -31,808,382
213,700

18,333,010 $ -10,805,026 $ -76,260,014 $

-440,178

116,726,851

-19,498,952

10,805,026

-49,001,540

-1,105,157

-887,527

-83,458,830 121,433,606 -31,808,382
213,700

Net Change in Cash Cash, Beginning of Year

-6,710,953 42,889,571

6,380,094 36,509,477

-2,711,277 38,041,459

0

-9,422,230

0

80,931,030

6,380,094 36,509,477

Cash, End of Year

$ 36,178,618 $

(1) Does not include Georgia Southern University Housing Foundation

42,889,571 $

35,330,182 $

0 $ 71,508,800 $

42,889,571

Capital Assets

The Institution had several significant capital asset additions for facilities in fiscal year 2016. At the beginning of fiscal year 2016 the new Shooting Sports Education Center was completed in the amount of $5,776,403. Construction of the new Central Warehouse was completed and placed into service in April 2016 in the amount of $6,820,858. The new Georgia Southern Health Services facility was fully funded by Georgia State Financing and Investment Commission (GSFIC) in the amount of $9,959,147.

Georgia Southern University also completed various major renovations to Herty Advanced Development Center in Savannah, Georgia in the amount of $2,750,626. In addition, there was a major repair to reroof Paulson Stadium in the amount of $822,748.
v

Georgia Southern University Housing Foundation, Inc. had capital assets in the amount of $429,942 in the category Land.
For additional information concerning Capital Assets, see Notes 1, 6, 8, and 13 in the Notes to the Financial Statements.
Long-Term Liabilities
Georgia Southern University had Long-Term Liabilities of $329,149,806 of which $12,348,941 was reflected as current liability at June 30, 2016.
Georgia Southern University Housing Foundation, Inc. had Long-Term Liabilities of $216,143,646 of which $6,243,525 was reflected as current liability at June 30, 2016.
For additional information concerning Long-Term Liabilities, see Note 8 in the Notes to the Financial Statements.
The Notes to the Financial Statements are an integral part of the basic financial statements and communicate information essential for fair presentation. For example, the notes convey information concerning significant accounting policies used to prepare the financial statements, detailed information on cash and investments, receivables, capital leases, compensated absences, retirement and other postemployment benefits, capital assets and a report of operating expenses by function.
Economic Outlook
Georgia Southern University is not aware of any currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations during this fiscal year. Georgia Southern University continues to be financially stable as was reported by the 2015 SACS reaffirmation committee. Georgia Southern University anticipates the current fiscal year will be much like last and will maintain a close watch over resources to maintain the Institution's ability to react to unknown internal and external issues.
Student enrollment continues to remain consistent with previous years, indicating a stable student enrollment. Enrollment management strategies include focusing on retention of current students and strategies to improve student academic success. Additionally, in accordance with the Complete College Georgia initiative which is part of Georgia's Higher Education Completion Plan to make college more accessible to everyone, Georgia Southern University is exploring alternative enrollment and collaborative projects, including programs for the adult population. This initiative will continue until 2020 with the goal of 60 percent of young adults in the state of Georgia holding a certificate or degree. The State of Georgia and Georgia Southern University's expectation is that this initiative and the resulting partnerships will provide economic sustainability to the people of Georgia by providing the educational tools necessary for employment success.
Dr. Jaimie L. Hebert, President Georgia Southern University
vi

BASIC FINANCIAL STATEMENTS - 1 -

ASSETS
Current Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable, Net Receivables - Federal Financial Assistance Receivables - Other Due from Affiliated Organizations Due from Other Funds Interfund Receivables Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Non-current Cash (Externally Restricted) Investments (Externally Restricted) Due from Other Funds Interfund Receivables Due from USO - Capital Liability Reserve Fund Notes Receivable, Net Capital Assets, Net Other Assets
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources Deferred Loss on Debt Refunding Deferred Loss on Defined Benefit Pension Plan
Total Deferred Outflows of Resources
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Retainage Payable Deposits Advances (Including Tuition and Fees) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences Due to Affiliated Organizations Due to Other Funds Interfund Payables Revenue/Mortgage Bonds Payable Notes and Loans Payable
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Due to Other Funds Interfund Payables Net Pension Liability Notes and Loans Payable Revenue/Mortgage Bonds Payable
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources Deferred Gain on Debt Refunding Deferred Gain on Defined Benefit Pension Plan
Total Deferred Inflows of Resources

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF NET POSITION JUNE 30, 2016

Georgia Southern University

Georgia Southern University
Housing Foundation

Interfund Elimination

EXHIBIT "A" Total

$

36,178,618 $

2,910,536 4,000,797

12,272,338 5,501,637 3,375,746 33,525
3,565,105 115,521

128,904
$ 6,656,835
93,614

61,042,490

13,790,686

$
-33,525 -6,656,835 -6,690,360

39,089,154 4,000,797
12,272,338 5,630,541 3,375,746 0 0 3,565,105 209,135
68,142,816

5,474,704 3,859,400
1,778,721 2,402,471 549,604,319
563,119,615
624,162,105

32,419,646
198,294,053
429,942 1,620,587 232,764,228 246,554,914

-3,859,400 -198,294,053
-202,153,453 -208,843,813

32,419,646 5,474,704 0 0 1,778,721 2,402,471
550,034,261 1,620,587
593,730,390
661,873,206

13,982,239 13,982,239

4,450,038 4,450,038

0

4,450,038

13,982,239

0

18,432,277

7,391,429 1,016,896
505,974 1,016,876
61,298 823,965 7,501,723
2,043 1,598,255
595,926 4,964,938
3,208
6,656,835
131,242
32,270,608

4,466,912
33,525 6,210,000 10,710,437

-33,525 -6,656,835
-6,690,360

11,858,341 1,016,896 505,974 1,016,876 61,298 823,965 7,501,723 2,043 1,598,255 595,926 4,964,938 3,208 0 0 6,210,000 131,242
36,290,685

21,079,128 1,882,429
198,294,053 94,297,247 1,248,008
316,800,865
349,071,473

3,859,400
206,040,721 209,900,121 220,610,558

-3,859,400 -198,294,053
-202,153,453 -208,843,813

21,079,128 1,882,429 0 0
94,297,247 1,248,008
206,040,721
324,547,533
360,838,218

2,979,359 8,830,257

$

11,809,616 $

- 2 -

472,520 472,520 $

0

3,451,879

8,830,257

0$

12,282,136

NET POSITION
Net Investment in Capital Assets Restricted for:
Nonexpendable Expendable
Bond Covenants/Debt Service Unrestricted (Deficit)
Total Net Position

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF NET POSITION JUNE 30, 2016

Georgia Southern University

Georgia Southern University
Housing Foundation

Interfund Elimination

Exhibit "A" Total

$

318,609,377 $

2,465,814 6,908,259

-50,720,195

$

277,263,255 $

429,942
26,474,530 3,017,402 $
29,921,874 $

$

319,039,319

2,465,814

6,908,259

26,474,530

0

-47,702,793

0$

307,185,129

The notes to the financial statements are an integral part of this statement. - 3 -

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
YEAR ENDED JUNE 30, 2016

EXHIBIT "B"

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

Georgia Southern University

Georgia Southern University
Housing Foundation

Interfund Elimination

$

114,177,862

4,525,900 529,836
9,265,812 5,563,121
471,817 $

31,130,465 11,465,747 20,322,133
4,467,406 4,540,373 17,380,952
90,060 1,912,901

225,844,385

$

10,805,026 $

-10,805,026

1,746,589 12,551,615

-1,592,650 -12,397,676

Total
114,177,862
4,525,900 529,836
9,265,812 5,563,121
471,817
31,130,465 11,465,747 20,322,133
4,467,406 4,540,373 17,380,952
90,060 2,066,840
225,998,324

63,992,657 92,938,759 47,998,408
933,711 3,533,310 15,074,478 12,377,533 73,643,640
28,211,691
338,704,187
-112,859,802

203,349
3,254,230 59,926
3,517,505 9,034,110

-1,532,724 -59,926
-1,592,650 -10,805,026

63,992,657 92,938,759 47,998,408
1,137,060 3,533,310 15,074,478 12,377,533 72,110,916 3,254,230
0 28,211,691
340,629,042
-114,630,718

91,640,673
31,745,661 4,240,402
210,645 -12,007,247
-201,378
115,628,756

$

2,768,954 $

427,113 -9,631,323
-9,204,210
-170,100 $

10,805,026 10,805,026
0$

91,640,673 31,745,661
4,240,402 637,758
-10,833,544 -201,378
117,229,572
2,598,854

- 4 -

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
YEAR ENDED JUNE 30, 2016

EXHIBIT "B"

Capital Grants and Gifts State Other
Total Other Revenues, Expenses, Gains or Losses
Increase in Net Position
Net Position - Beginning of Year, Restated

Georgia Southern University

Georgia Southern University
Housing Foundation

$

9,959,147

1,253,757 $

0$

Interfund Elimination
$ 0

11,212,904

0

0

13,981,858

-170,100

0

263,281,397

30,091,974

0

Total 9,959,147 1,253,757
11,212,904 13,811,758 293,373,371

Net Position - End of Year

$

277,263,255 $

29,921,874 $

0$

307,185,129

The notes to the financial statements are an integral part of this statement. - 5 -

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2016

EXHIBIT "C"

CASH FLOWS FROM OPERATING ACTIVITIES Payments from Customers Grants and Contracts (Exchange) Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students Collection of Loans to Students Receipts of Principal and Interest of Capital Leases Other Receipts Other Payments
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Noncapital Financing Payments
Net Cash Flows Provided (Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Proceeds from Issuance of Long-term Debt 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 Interest on Investments Purchase of Investments
Net Cash Provided (Used) by Investing Activities
Net Decrease in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

Georgia Southern University

Georgia Southern University
Housing Foundation

Interfund Elimination

Total

$

211,357,312

15,979,324

-136,276,582 $

-159,836,116

-15,074,478

-385,205

450,864

-3,117

$ 211,357,312

15,979,324

-518,835

-136,795,417

-159,836,116

-15,074,478

-385,205

450,864

17,315,770 $ -10,805,026

6,510,744

1,536,075

1,536,075

-3,117

-83,787,998

18,333,010 -10,805,026 -76,260,014

91,640,673 -9,554,863 35,165,394
-84,175

-440,178

0

91,640,673

-9,554,863

35,165,394

-524,353

117,167,029

-440,178

0 116,726,851

327,090 -21,131,304
-7,354,278 -12,149,122

28,588,531 -37,790,000 -10,297,483

10,805,026

327,090 -21,131,304 28,588,531 -45,144,278 -11,641,579

-40,307,614

-19,498,952 10,805,026 -49,001,540

217,630
217,630 -6,710,953 42,889,571

364,737 -1,469,894 -1,105,157 -2,711,277 38,041,459

0

582,367

-1,469,894

0

-887,527

0

-9,422,230

0

80,931,030

$

36,178,618 $

35,330,182 $

0 $ 71,508,800

- 6 -

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2016

EXHIBIT "C"

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Operating loss to Net Cash
Used by Operating Activities Depreciation Operating Expenses Related to Noncash Gifts Receipts of Principal on Capital Leases Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Salaries Payable Contracts Payable Retainage Payable Deposits Advances (Including Tuition and Fees) Other Liabilities Funds Held for Others Compensated Absences Due to Affiliated Organizations Net Pension Liability
Change in Deferred Inflows/Outflows of Resources: Deferred Inflows of Resources Deferred Outflows of Resources

Georgia Southern University

Georgia Southern University
Housing Foundation

Interfund Elimination

Total

$

-112,859,802 $

9,034,110 $ -10,805,026 $ -114,630,718

28,211,691 976,867
1,768,699 -482,851 -5,822 65,659 187,424 248,086 517,814 50,906 45,759 -299,310 -131 -3,117 378,950 -9,936
16,941,357

6,368,870 3,006,660
-7,992
-210,512

28,211,691 976,867
6,368,870
1,768,699 -482,851
3,000,838 65,659
179,432 248,086 517,814
50,906 45,759 -299,310 -210,643 -3,117 378,950 -9,936 16,941,357

-18,153,485 -1,366,756

141,874

-18,011,611 -1,366,756

Net Cash Used by Operating Activities

$

-83,787,998 $

18,333,010 $ -10,805,026 $ -76,260,014

NONCASH ACTIVITY Non-capital Financing Activities Accounts Receivable, Net of Allowances Non-capital Gifts (Foundations) Other Non-Capital Financing Activities Noncash items Gift of Capital Assets Loss on Disposal of Capital Assets Accrual of Capital Asset Related Payables Capital Assets Acquired by Incurring Capital Lease Obligations Gain/Loss on Capital Debt Refunded Amortization of Deferred Gain of Capital Debt Refunded Unrealized Loss on Investments

$

156,198

$

976,867

$

-10,885,814

$

-211,880

$

-826,303

$

-452,780

$

3,121,233

$

141,875

$

-6,985

$

156,198

$

976,867

$ -10,885,814

$

-211,880

$

-826,303

$

-452,780

$ 3,121,233

$

141,875

$

-6,985

The notes to the financial statements are an integral part of this statement. - 7 -

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Note 1. Summary of Significant Accounting Policies
Nature of Operations Georgia Southern University (Institution) serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
Reporting Entity As defined by Official Code of Georgia Annotated (O.C.G.A) 20-3-50, the Institution is part of the University System of Georgia (USG), an organizational unit of the State of Georgia (the State) under the governance of the Board of Regents (Board). The Board has constitutional authority to govern, control and manage the USG. The Board is composed of 19 members, one member from each congressional district in the State and five additional members from the state-at-large, appointed by the Governor and confirmed by the Senate. Members of the Board serve a seven year term and members may be reappointed to subsequent terms by a sitting governor.
The Institution does not have the right to sue/be sued without recourse to the State. The Institution's property is the property of the State and subject to all the limitations and restrictions imposed upon other property of the State by the Constitution and laws of the State. In addition, the Institution is not legally separate from the State. Accordingly, the Institution is included within the State's basic financial statements as part of the primary government as defined in section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The accompanying basic financial statements are intended to supplement the State's 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 Institution. In addition, the Georgia Southern University Housing Foundation, Inc. (Foundation), a blended component unit of the State, has been included since the Foundation has been determined to be essential to the fair presentation to these department statements. These financial statements do not purport to, and do not, present fairly the financial position of the State as of June 30, 2016, 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 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.
The Foundation is an independent nonprofit organization located in Statesboro, Georgia whose purpose is to acquire, construct or improve student housing and other student facilities. The construction projects completed include acquisition, construction and/or renovation of six housing facilities, containing approximately 4,348 beds, as well as other student facilities including expansion of the Recreation Athletic Complex, construction of a new track and a soccer field, a weight room renovation and expansion, a baseball stadium renovation and expansion, and two dining facilities, located on land owned by Georgia Southern University. Separately issued financial statements are available from the Foundation at the following address: Georgia Southern University Housing Foundation, Inc., P.O. Box 8020, Statesboro, GA 30460.

- 9-

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Basis of Accounting and Financial Statement Presentation The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the Institution's assets, deferred outflows, liabilities, deferred inflows, net position, revenues, expenses, changes in net position and cash flows.
The Institution's business-type activities 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-Institution transactions have been eliminated.
New Accounting Pronouncements For fiscal year 2016, the Institution adopted Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements.
For fiscal year 2016, the Institution adopted GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That are not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. The adoption of this Statement does not have a significant impact on the Institution's financial statements.
For fiscal year 2016, the Institution adopted GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this Statement is to identify--in the context of the current governmental financial reporting environment--the hierarchy of GAAP. The "GAAP hierarchy" consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and non-authoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. The adoption of this Statement does not have a significant impact on the Institution's financial statements.
For fiscal year 2016, the Institution adopted GASB Statement No. 79, Certain External Investment Pools and Pool Participants. This Statement addresses accounting and financial reporting for certain external investment pools and pool participants. The adoption of this Statement does not have a significant impact on the Institution's financial statements.
Cash and Cash Equivalents Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the Board of Regents Short-Term Investment Pool.

- 10 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Investments Investments include financial instruments with terms in excess of 13 months, certain other securities for the production of revenue, land, and other real estate held as investments by endowments. The Institution accounts for its investments at fair value. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses and Changes in Net Position. The Board of Regents Diversified Fund is included as Investments.
Accounts Receivable Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of whom reside in the State. Accounts receivable also includes amounts due from the federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the Institution's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
Inventories Consumable supplies are carried at the lower of cost or market on the first-in, first-out basis. Resale Inventories for Bookstore and other services are valued at cost using the first-in, first-out basis. Resale Inventories for Food Services are valued at cost using the average cost basis.
Non-current Investments Investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net Position.
Prepaid Items Payments made to vendors and state and local government organizations for services that will benefit periods beyond June 30, 2016 are recorded as prepaid items.
Capital Assets Capital assets are recorded at cost at the date of acquisition, or acquisition value (entry price) at the date of donation in the case of gifts. For equipment, the Institution's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation, which also includes amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software, is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values generally are 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To fully understand plant additions in the Institution, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) an organization that is external to the Institution. GSFIC issues bonds for and on behalf of the State, pursuant to powers granted to it in the Constitution of the State and the Act creating the GSFIC. These bonds constitute direct and general obligations of the State, to the payment of which the full faith, credit and taxing power of the State are pledged.

- 11 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Due From USO - Capital Liability Reserve Fund The Capital Liability Reserve Fund (Fund) was established by the Board of Regents to protect the fiscal integrity of the USG to maintain the strongest possible credit ratings associated with Public Private Venture (PPV) projects and to ensure that the Board of Regents can effectively support its long-term capital lease obligations. The Fund is financed by all USG Universities participating in the PPV program. The Fund serves as a pooled reserve that is managed by the University System Office. The Fund shall only be used to address significant shortfalls and only insofar as a requesting USG University is unable to make the required PPV capital lease payment to the designated cooperative organization. The Fund will continue as long as the USG has rental obligations under the PPV program. At the conclusion of the Institution's participation in the program, funds will be returned to the Institution. The balance included on the Institution's Statement of Net Position represents the Institution's contribution to the Fund.
Deferred Outflows of Resources Deferred outflows of resources consist of the consumption of net assets by the Institution that are applicable to a future reporting period.
Deposits Deposits represent good faith deposits from students to reserve housing assignments in the Institution's residence halls.
Advances Advances include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Advances also include amounts received from grant and contract sponsors that have not yet been earned.
Deposits Held for Other Organizations Deposits held for other organizations result primarily from the Institution acting as an agent, or fiduciary, for another entity. Deposits held for others consist of scholarships, fellowships, study abroad deposits and other funds held for various governments, companies, clubs or individuals.
Compensated Absences Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Position, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses and Changes in Net Position.
Noncurrent Liabilities Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as non-current assets.
Long-Term Obligations Outstanding long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as an expense of the current period. Refunding of debt may result in deferred gains or losses and are reported as deferred inflows and outflows of resources. The difference between the reacquisition price and the net carrying amount of the old debt is deferred and amortized as a component of interest expense using the straight-line method.

- 12 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Deferred Inflows of Resources Deferred inflows of resources consist of the acquisition of net assets by the Institution that are applicable to a future reporting period.
Pensions and Net Pension Liability The Net Pension Liability represents the unfunded pension obligation which is the difference between the total pension obligation as a result of the exchange for employee services for compensation and the fiduciary net position or the fair value of the plan assets as of a given measurement date.
For the purpose 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, additions/deductions from fiduciary net position have been determined on the same basis as they are reported by Teachers Retirement System of Georgia and Employees' Retirement System of Georgia. For this purpose, benefit payments (including refunds of employees' contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Net Position The Institution's net position is classified as follows:
Net Investment in Capital Assets: This represents the Institution's total investment in capital assets, net of accumulated amortization/depreciation and reduced by outstanding debt obligations related to those capital assets. The term "debt obligations" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1 Capital Assets section. 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 in Net Investment in Capital Assets.
Restricted non-expendable 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 be either expended or added to principal. For Institution - controlled, donorrestricted endowments, the by-laws of the Board of Regents of the University of System 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 Institution maintains pertinent information related to each endowment fund including donor; amount and date of donation; restrictions by the source of limitations; limitations on investments, etc.
Restricted expendable includes resources in which the Institution is legally or contractually obligated to spend resources in accordance with restrictions by external third parties.

- 13 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Unrestricted: Unrestricted represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the Institution, and may be used at the discretion of the Institution to meet current expenses for those purposes, except for unexpended state appropriations (surplus) in the amount of $33,361. Unexpended state appropriations must be refunded to the Office of the State Treasurer. Unrestricted Net Position also includes resources specifically designated by management, such as:
Auxiliary Enterprises Operations These resources are used for the continued operation of auxiliary enterprise activities, which are substantially self-supporting business operations conducted on campuses that provide services to students, faculty, and staff.
Auxiliary Enterprises Renewals and Replacement (R&R) Reserve These resources can be used for renewals and replacement of capitalizable assets related to auxiliary services. This R&R reserve can also be used for major renovations and rehabilitations auxiliary projects that do not meet the capitalization threshold.
When an expense is incurred that can be paid using either restricted or unrestricted resources, the Institution's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.
See Note 10, Net Position, for additional information.
Income Taxes The Institution, as a political subdivision of the State, is excluded from Federal income taxes under Section 115(1) of the Internal Revenue Code, as amended.
Classification of Revenues and Expenses The Statement of Revenues, Expenses and Changes in Net Position classify fiscal year activity as operating and non-operating according to the following criteria:
Operating revenue includes activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) certain federal, state and local grants and contracts, and (3) sales and services.
Non-operating revenue includes activities that have the characteristics of non-exchange transactions, such as gifts and contributions, and other revenue sources that are defined as non-operating revenue by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income.
Operating expense includes activities that have the characteristics of exchange transactions.
Non-operating expense includes activities that have the characteristics of non-exchange transactions, such as capital financing costs and costs related to investment activity.

- 14 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Scholarship Allowances Scholarship allowances are the difference between the stated charge for goods and services provided by the Institution, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or non-operating revenues in the Institution's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the Institution has recorded contra revenue for scholarship allowances. Student tuition and fees and auxiliary revenues reported on the Statement of Revenues, Expenses and Changes in Net Position are net of discounts and allowances of $31,189,060 and $142,245, respectively.
Changes in Financial Accounting and Reporting In fiscal year 2016, Georgia Southern University Housing Foundation, Inc. (Foundation), a blended component unit of the State, has been included as a separate enterprise fund since the Foundation has been determined to be essential to the fair presentation to these departmental statements. This change resulted in an increase in the beginning net position for the enterprise fund of $30,091,974. In addition, beginning cash and cash equivalents in the statement of cash flows was increased $38,041,459.
Note 2. Deposits and Investments
Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the Institution's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Institution) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 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. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

- 15 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

At June 30, 2016, the carrying value of deposits was $30,546,575 and the bank balance was $33,137,959. Of the Institution's deposits, $32,887,959 were uninsured. Of these uninsured deposits, $32,887,959 were collateralized with securities held by the financial institution, by its trust department or agent, but not in the Institution's name.

The following schedule reconciles cash and cash equivalents to the carrying value of deposits:

Reconciliation of Cash and Cash Equivalents Balances to Carrying Value of Deposits:

Business-type Activities:
Statement of Net Position Cash and Cash Equivalents Non-Current Cash and Cash Equivalents

Institution

Foundation

Total

$

36,178,618 $

2,910,536 $ 39,089,154 32,419,646 32,419,646

Total Cash and Cash Equivalents

36,178,618

35,330,182 71,508,800

Less: Cash on Hand

-153,000

-153,000

Investments with original maturity less than 90 days reported as Cash and Cash Equivalents
Investment pool reported as Cash and Cash Equivalents Board of Regents Short-Term Fund

-5,479,043

-32,419,646

-32,419,646 -5,479,043

Total Carrying Value of Deposits - June 30, 2016

$

30,546,575 $

2,910,536 $ 33,457,111

Investments The Institution maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each Institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable federal and state laws.

The Institution has adopted GASB No. 72, Fair Value Measurements and Application, which requires fair value measurement be classified and disclosed in one of the following three categories ("Fair Value Hierarchy"):
Level 1 Quoted prices are available in active markets for identical investments as of the reporting date. The types of investments which would generally be included in Level 1 include listed equity securities, mutual funds, and money market funds. As required by accounting principles generally accepted in the United States of America, the Foundation, to the intent that it holds such investments, does not adjust the quoted price for these investments, even in situations where the Foundation holds a large position and a sale could reasonably impact the quoted price.
Level 2 Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1: inputs include comparable market transactions, pricing of similar instruments, values reported by the administrator, and pricing expectations based on internal modeling. Fair value is determined through the use of models or other valuation methodologies. The types of investments which would generally be included in this category include publicly traded securities with restrictions on disposition, corporate obligations, and U.S. Government and Agency Treasure Inflation Indices.

- 16 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Level 3 Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investments. The types of investments which would generally be included in this category include debt and equity securities issued by private judgement or estimation. Inputs include recent transactions, earning forecasts, market multiples, and future cash flows.

The following table summarizes the valuation of the Institution's investments measured at fair value on a recurring basis and at net asset value as of June 30, 2016.

Investment by fair value level Money Market Mutual Fund Repurchase Agreements Other

Fair Value

Level 1

Level 2

Level 3

$ 25,087,788 $ 25,087,788

7,331,847

$ 7,331,847

11

$

11

Total Investments by fair value level
Investment Pools Board of Regents Short-Term Fund Balanced Income Fund Diversified Fund Diversified Fund for Foundations

32,419,646 $ 25,087,788 $ 7,331,847 $

11

5,479,043 1,483,036 2,517,761 5,474,704

Total Investments measured at fair value

$ 47,374,190

Investments classified in Level 1 are value using prices quoted in active markets for those securities. Investments classified in Level 2 are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices.
The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits and Accounts Education Audit Division or on their web site at http://www.audits.ga.gov.
The USG's policy for managing interest rate risk is contained in the investment policy guidelines for the various pooled funds:
1. In the Short-Term Fund, the average maturity of the fixed income portfolio shall not exceed three years.
2. In all the other pooled funds, the average maturity of the fixed income portfolio shall not exceed ten years.
3. Fixed income investments, except in the Diversified Fund, shall be limited to the U.S. government agency and corporate debt instruments that meet investment eligibility under Georgia Code 50-17-63.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

4. The fixed income target allocation is defined in the investment policy guidelines for each pooled investment fund. These targets may be modified upon recommendation of the fund investment manager and approval by the Board of Regents.

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Institution does not have a formal policy for managing interest rate risk.

The investments subject to interest rate risk are reflected below:

Investment type Debt Securities Money Market Mutual Fund Repurchase Agreements

Fair Value

Less Than 3 Months

$ 25,087,788 $ 25,087,788

7,331,847

7,331,847

32,419,635 $ 32,419,635

Other Investments

Other

11

Investment Pools Board of Regents Short-Term Fund Balanced Income Fund Diversified Fund Diversified Fund for Foundations

5,479,043 1,483,036 2,517,761 5,474,704

Total Investments measured at fair value

$ 47,374,190

The Effective Duration of the Short-Term Fund is 0.47 years. Of the Institution's total investment of $5,479,043 in the Short-Term Fund, $5,479,043 is invested in debt securities.
The Effective Duration of the Balanced Income Fund is 4.78 years. Of the Institution's total investment of $1,483,036 in the Balanced Income Fund, $993,635 is invested in debt securities.
The Effective Duration of the Diversified Fund is 4.64 years. Of the Institution's total investment of $5,474,704 in the Diversified Fund, $1,916,146 is invested in debt securities.
The Effective Duration of the Diversified Fund for Foundations is 3.98 years. Of the Institution's total investment of $2,517,761 in the Diversified Fund, $503,552 is invested in debt securities.
Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to the transaction, the Institution will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The Institution does not have a formal policy for managing custodial credit risk for investments.
At June 30, 2016, $32,419,635 were uninsured and held by the investment's counterparty's trust department or agent, but not in the Institution's name.
- 18 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Institution does not have a formal policy for managing credit quality risk.

The investments subject to credit quality risk are reflected on the following page:

Investment type Debt Securities Money Market Mutual Fund Repurchase Agreements

Fair Value

Unrated

$ 25,087,788 $ 25,087,788

7,331,847

7,331,847

$ 32,419,635 $ 32,419,635
Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The Institution does not have a formal policy for managing concentration of credit risk. Approximately 53% and 15.5% of investments are invested in Money Market Mutual Funds and Repurchase Agreements, respectively. The Money Market Mutual Funds and Repurchase Agreements were collateralized with investments in securities of U.S. agencies not explicitly guaranteed by the U.S. government.

Note 3. Accounts Receivable and Interfund Balances

3a. Accounts Receivable Accounts receivable consisted of the following at June 30, 2016:

Institution Foundation

Total

Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia Student Finance Commission Georgia State Financing and Investment Commission Due from Affiliated Organizations Due From USO - Capital and Liability Reserve Fund Other

$ 378,144 1,718,627
12,272,338 3,090,742 448,288 3,375,746 1,778,721 225,586 $

$ 378,144

1,718,627

12,272,338

3,090,742

448,288

3,375,746

1,778,721

128,904

354,490

Less Allowance for Doubtful Accounts

23,288,192 359,750

128,904 23,417,096 359,750

Net Accounts Receivable

$ 22,928,442 $ 128,904 $ 23,057,346

- 19 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

3b. Interfund Balances The following is a summary of the receivables and payables between and among the Institution and the blended component unit at June 30, 2016:

Georgia Southern University Georgia Southern Housing Foundation - Interfund Payables - Current

Due From $

Due To 6,656,835

Georgia Southern Housing Foundation - Interfund Payables - Noncurrent

198,294,053

$

204,950,888

Georgia Southern Housing Foundation - Due From Other Funds - Current

$

33,525

Georgia Southern Housing Foundation - Due From Other Funds - Noncurrent $

3,859,400 3,892,925

Georgia Southern University Housing Foundation Georgia Southern University - Interfund Receivables - Current

$

6,656,835

Georgia Southern University - Interfund Receivables - Noncurrent

198,294,053

$

204,950,888

Georgia Southern University - Due To Other Funds - Current

$

33,525

Georgia Southern University - Due To Other Funds - Noncurrent

3,859,400

$

3,892,925

Activities between the Institution and the blended component unit that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are presented as Interfund Receivables and Interfund Payables. All other outstanding balances between the Institution and blended component unit, which are primarily related to services provided or used, are presented as Due to/from Other Funds.

Note 4. Inventories

Inventories consisted of the following at June 30, 2016:

Institution

Foundation

Total

Consumable Supplies Merchandise for Resale

$

85,174 $

3,479,931

0$

85,174

3,479,931

Total

$

Note 5. Notes/Loans Receivable The Institution

3,565,105 $

0 $ 3,565,105

The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2016. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the Institution for amounts cancelled under these provisions. As the Institution determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U. S. Department of Education. The Institution has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2016, the Institution did not have an allowance for uncollectible loans.
- 20 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Note 6. Capital Assets The Institution

Following are the changes in capital assets for the year ended June 30, 2016:

Beginning Balance July 1, 2015

Capital Leases Recategorization

Additions

Reductions

Ending Balance June 30, 2016 (1)

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

$ 18,875,157 $ 490,880
6,182,558

12,024,271 $

$ 504,720 13,273,808 $ 16,823,515

30,899,428 995,600
2,632,851

Total Capital Assets, Not Being Depreciated

25,548,595

12,024,271 13,778,528 16,823,515

34,527,879

Capital Assets, Being Depreciated/Amortized Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections

21,168,417 405,920,247
12,764,759 48,279,805 270,727,582 50,139,498
0

256,917,884 26,455,572

988,744 -269,930,899

5,550,783 424,047
2,546,189 14,500

2,112,508 1,220,730
28,139

21,168,417 689,293,703
12,764,759 52,706,824
0 52,657,548
14,500

Total Assets Being Depreciated/Amortized

809,000,308

-12,024,271 34,991,091

3,361,377

828,605,751

Less: Accumulated Depreciation/Amortization Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collecctions

16,326,701 133,820,272
2,450,369 32,512,436 62,860,789 40,496,550
0

68,512,970
308,013 -68,820,983

188,942 12,484,211
456,389 6,208,977 7,038,961 1,833,879
332

2,042,591 1,078,767
28,139

16,515,643 214,817,453
2,906,758 36,986,835
0 42,302,290
332

Total Accumulated Depreciation/Amortization

288,467,117

0 28,211,691

3,149,497

313,529,311

Total Capital Assets, Being Depreciated/Amortized 520,533,191

Capital Assets, Net

$ 546,081,786 $

-12,024,271

6,779,400

211,880

0 $ 20,557,928 $ 17,035,395 $

515,076,440 549,604,319

(1) Land in the amount of $429,942 for the Georgia Southern University Housing Foundation, Inc. is not included in the above balances.
For projects managed by GSFIC, GSFIC retains construction-in-progress on its books throughout the construction period and transfers the entire project to the Institution when complete. For projects managed by the Institution, the Institution retains construction-in-progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2016, GSFIC transferred capital additions valued at $9,959,147 to Georgia Southern University. In addition, at June 30, 2016, GSFIC had construction in progress of approximately $3,358,834 for incomplete projects for the Institution.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Note 7. Advances (Including Tuition and Fees) The Institution Advances (Including Tuitions and Fees) consisted of the following at June 30, 2016:

Prepaid Tuition and Fees Other Advances

$

5,994,695

1,507,028

Total Advances

$

7,501,723

Note 8. Long-Term Liabilities Long-Term liability activity for the year ended June 30, 2016 was as follows:

Beginning Balance July 1, 2015

Additions

Reductions

Ending Balance June 30, 2016

Current Portion

Georgia Southern University
Lease Purchase Obligations Compensated Absences Interfund Payables Net Pension Liability Notes and Loans Payable
Total Long-Term Liabilities Georgia Southern University
Georgia Southern University Housing Foundation
Due to Other Funds Revenue Bonds Payable Bond Discount Bond Premium

$

22,083,371 $

452,780 $

6,468,416

5,411,972

214,440,993

77,355,890

16,941,357

1,503,559

861,097 $ 21,675,054 $

5,033,021

6,847,367

9,490,105 204,950,888

94,297,247

124,309

1,379,250

595,926 4,964,938 6,656,835
131,242

$ 321,852,229 $ 22,806,109 $ 15,508,532 $ 329,149,806 $ 12,348,941

$

4,543,615

$

650,690 $

3,892,925 $

216,245,000 $ 26,270,000

37,790,000 204,725,000

-245,448

-98,866

-13,964

-330,350

6,429,985

2,417,397

991,311

7,856,071

33,525 6,210,000

Total Long-Term Liabilities Georgia Southern Housing Foundation $

226,973,152 $

28,588,531 $

39,418,037 $ 216,143,646 $

6,243,525

- 22 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Notes and Loans Payable The Institution Included in Long-Term liabilities is a $3,000,000 note payable that was originally payable to Georgia Education Authority (University), (GEA(U)). In July 2007, GEA(U) met and resolved to no longer conduct business as a state authority and dispose of all its assets and liabilities. As a result of that decision, a Note Receivable that was payable from Georgia Southern University was transferred by Resolution from GEA(U) to the University System Office (USO) of the University System of Georgia. Georgia Southern University continues to render payments according to the original amortization schedule to the USO. The note carries an interest rate of 5.50% and is due semi-annually through the year 2025. The outstanding balance at June 30, 2016 is $1,379,250. Annual maturities are as follows:

Year Ending June 30:
2017 2018 2019 2020 2021 2022 - 2025

Principal

Interest

Total Payments

Current Liabilities

Long-Term Liabilities

$ 131,242 $ 138,559 146,284 154,441 163,052 645,672

74,078 $ 66,761 59,036 50,879 42,268 72,948

205,320 $ 205,320 205,320 205,320 205,320 718,620

131,242 $

138,559 146,284 154,441 163,052 645,672

$ 1,379,250 $ 365,970 $

1,745,220 $ 131,242 $ 1,248,008

- 23 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016
Bond Obligations Georgia Southern Housing Foundation Bonds payable as of June 30, 2016 consisted of the following:
GSUHF1 Student Housing Refunding Revenue Bonds, Series 2012; issued November 29, 2012 in the original amount of $27,590,000; consisting of Serial Bonds, maturing annually through 2028, with interest rates varying from 2.00% to 5.00% over the bond term
GSUHF2 Refunding Revenue Bonds, Series 2013; dated March 14, 2013 in the original amount of $27,800,000; consisting of $23,970,000 Serial Bonds, maturing annually through 2028, and $3,830,000 Term Bonds, due August 1, 2030, with ineterest rates varying from 2.00% to 5.00% over the obligation term
GSUHF3 Student Housing Lease Revenue Bonds, Series 2005A (tax-exempt) and 2005B (non-exempt); issued March 9, 2005 in the original amount of $40,540,000; consisting of $13,235,000 Serial 2005A Bonds, maturing annually through 2021 $9,800,000 Term I 2005A Bonds, due August 1, 2026, $7,135,000 Term II 2005A Bonds, due August 1, 2029, $5,360,000 Term III 2005A Bonds, due August 1, 2031, and $5,010,000 Serial 2005B Bonds, matured annually through 2012, with interest rates varying from 3.50% to 5.25% over the obligation term
Refunding Revenue Bonds, Series 2015; issued November 17, 2015 in the original amount of $26,270,000; maturing annually through 2030, with interest rates varying from 3.00% to 5.00% over the obligation term
GSUHF4 Student Housing Lease Revenue Bonds, Series 2008; issued February 28, 2008 in the original amount of $69,000,000; consisting of $69,000,000 Serial Bonds, maturing annually through 2039, with interest rates varying from 3.00% to 5.00% over the obligation term
GSUHF5 Student Housing Lease Revenue Bonds, Series 2011; issued May 19, 2011 in the original amount of $42,770,000; consisting of $42,779,000 Serial Bonds, maturing annually through 2041, with interest rates varying from 2.00% to 5.125% over the obligation term
GSUHF6 Student Dining Revenue Bonds, Series 2012; issued August 22, 2012 in the original amount of $27,280,000; consisting of $10,270,000 Serial Bonds, maturing annually through 2028, $3,870,000 Term I Bonds, due July 1, 2032, $5,835,000 Term II Bonds, due July 1, 2037 and $7,305,000 Term Bonds, due July 1, 2042, with interest rates varying from 2.00% to 5.00% over the obligation term
Subtotal
Plus: Unamortized bond premium
Less: Unamortized bond discount
Total bond obligations

EXHIBIT "D"

$

24,150,000

23,965,000

26,270,000
62,980,000
41,140,000
26,220,000 204,725,000
7,856,071 -330,350
$ 212,250,721

- 24 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

$27,590,000 Student Housing Refunding Revenue Bonds, Series 2012 On October 1, 2002 the Development Authority of Bulloch County issued $38,180,000 of Student Housing Lease Revenue Bonds, Series 2002 on behalf of GSUHF1 which were used for the construction of student housing facilities. During the fiscal year ended June 30, 2013, the Development Authority of Bulloch County issued $27,590,000 of Student Housing Refunding Revenue Bonds, Series 2012, on behalf of GSUHF1 which were used to retire the Series 2002 bonds. Principal payments on the refunding bonds are due annually on August 1, commencing August 1, 2013 with interest payments due semi-annually on February 1 and August 1, commencing February 1, 2013, in the amounts so as to enable the trustee, Branch Banking and Trust to pay, on or before the dates due, the debt service on the bonds and any amounts required to be deposited to the Debt Service Reserve Fund and the Replacement Fund, both created pursuant to the provisions of the indenture.
$27,800,000 Refunding Revenue Bonds, Series 2013 On May 3, 2004 the Development Authority of Bulloch County issued $35,900,000 of Student Housing Lease Revenue Bonds, Series 2004 on behalf of GSUHF2 which were used for the construction of student housing facilities, an athletic training facility, the J I Clements Baseball Stadium, and a soccer and track stadium. On March 14, 2013, the Development Authority of Bulloch County issued $27,800,000 of Refunding Revenue Bonds, Series 2013, on behalf of GSUHF2 which were used to defease the Series 2004 bonds, which were paid in full on August 1, 2014. Principal payments are due annually on August 1, commencing August 1, 2013, with interest payments due semi-annually on February 1 and August 1, commencing August 1, 2013, in the amounts so as to enable the trustee, Branch Banking and Trust to pay, on or before the dates due, the debt service on the bonds and any amounts required to be deposited to the Debt Service Reserve Fund and the Replacement Fund, both created pursuant to the provisions of the indenture.
$40,540,000 Student Housing Lease Revenue Bonds, Series 2005A and 2005B On March 9, 2005, the Development Authority of Bulloch County issued $40,540,000 of Student Housing Lease Revenue Bonds, Series 2005A (tax-exempt) and Series 2005B (nonexempt), on behalf of GSUHF3 which were used for the construction of student recreation facilities. Principal payments are due annually on August 1, commencing August 1, 2008 with interest payments due semi-annually on February 1 and August 1, commencing August 1, 2005, in the amounts so as to enable the trustee, Branch Banking and Trust to pay, on or before the dates due, the debt service on the bonds and any amounts required to be deposited to the Debt Service Reserve Fund and the Replacement Fund, both created pursuant to the provisions of the indenture. The Series 2005A have been fully repaid as of August 1, 2012.
On November 17, 2015, the Development Authority of Bulloch County issued $26,270,000 Refunding Revenue Bonds. The proceeds of those bonds and funds available in the debt service reserve account were used to retire the Series 2005 bonds totaling $31,395,000, which were called.
$26,270,000 Refunding Revenue Bonds Pursuant to the refunding of the 2005 Series bonds noted above, the Development Authority of Bulloch County issued $26,270,000 of Refunding Revenue Bonds, Series 2015, on behalf of GSUHF3, which were used to retire the Series 2005 bonds. Principal payments are due annually on August 1, commencing August 1, 2016, with interest payments due semi-annually on February 1 and August 1, commencing February 1, 2016, in the amounts so as to enable the trustee, Branch Banking and Trust to pay, on or before the dates due, the debt service on the bonds and any amounts required to be deposited to the Replacement Fund, created pursuant to the provisions of the indenture.
- 25 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

$69,000,000 Student Housing Lease Revenue Bonds, Series 2008 On February 28, 2008, the Development Authority of Bulloch County issued $69,000,000 of Student Housing Lease Revenue Bonds, Series 2008, on behalf of GSUHF4 which were used for the acquisition of 472 beds of student housing and the construction of four new buildings to house 1,000 new beds of student housing. The project also included the design, development, and construction of approximately 8,700 square feet of retail space. Principal payments are due annually on July 1, commencing July 1, 2010 with interest payments due semi-annually on January 1 and July 1, commencing July 1, 2008, in the amounts so as to enable the trustee, Branch Banking and Trust to pay, on or before the dates due, the debt service on the bonds and any amounts required to be deposited to the Debt Service Reserve Fund and the Replacement Fund, both created pursuant to the provisions of the indenture.
$42,770,000 Student Housing Lease Revenue Bonds, Series 2011 On May 19, 2011 the Development Authority of Bulloch County issued $42,770,000 of Student Housing Lease Revenue Bonds, Series 2011, on behalf of GSUHF5 which were used for the acquisition of 276 units and 984 beds of student housing and amenities, including a swimming pool and surface parking. Principal payments are due annually on July 1, commencing July 1, 2014 with interest payments due semi-annually on January 1 and July 1, commencing July 1, 2011, in the amounts so as to enable the trustee, Branch Banking and Trust to pay, on or before the dates due, the debt service on the bonds and any amounts required to be deposited to the Debt Service Reserve Fund and the Replacement Fund, both created pursuant to the provisions of the indenture.

$27,280,000 Student Dining Revenue Bonds, Series 2012 On August 16, 2012 the Development Authority of Bulloch County issued $27,280,000 of Student Dining Revenue, Series 2012, on behalf of GSUHF6 which were used for the construction of replacements for the dining facilities currently known as "Dining Commons" and "Lakeside Dining Commons." Principal payments are due annually on July 1, commencing July 1, 2014 with interest payments due semi-annually on January 1 and July 1, commencing January 1, 2013, in the amounts so as to enable the trustee, Branch Banking and Trust to pay, on or before the dates due, the debt service on the bonds and any amounts required to be deposited to the Debt Service Reserve Fund and the Replacement Fund, both created pursuant to the provisions of the indenture.

Maturities of Debt Approximate maturities of the bonds are as follows:

June 30:
2017 2018 2019 2020 2021 2022 - 2026 2027 - 2031 2032 - 2036 2037 - 2041 2042 - 2043
Total

Series 2012 GSUHF1

Series 2013 GSUHF2

Series 2015 GSUHF3

Series 2008 GSUHF4

Series 2011 GSUHF5

Series 2012 GSUHF6

Total

$ 1,260,000 $ 1,295,000 1,360,000 1,425,000 1,495,000 8,665,000 8,650,000

1,295,000 $ 1,325,000 1,375,000 1,415,000 1,445,000 7,880,000 9,230,000

915,000 $ 1,340,000 1,395,000 1,450,000 1,520,000 8,755,000 10,895,000

1,315,000 $ 1,485,000 1,570,000 1,645,000 1,730,000 10,045,000 12,775,000 16,400,000 16,015,000

870,000 $ 905,000 935,000 965,000 1,000,000 5,790,000 7,195,000 9,125,000 11,655,000 2,700,000

555,000 $ 570,000 595,000 615,000 635,000 3,665,000 4,440,000 5,335,000 6,715,000 3,095,000

6,210,000 6,920,000 7,230,000 7,515,000 7,825,000 44,800,000 53,185,000 30,860,000 34,385,000 5,795,000

$ 24,150,000 $ 23,965,000 $ 26,270,000 $ 62,980,000 $ 41,140,000 $ 26,220,000 $ 204,725,000

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Note 9. Service Concession Arrangements The Institution For the year ended June 30, 2016, the Institution did not have any service concession arrangements. Note 10. Net Position Net Position is reported in the following three categories: Net Investment in Capital Assets, Restricted Non-Expendable, Restricted-Expendable, and Unrestricted. The amounts within each category at June 30, 2016 were as follows:

Net Position Net Investments in Capital Assets

Institution

Foundation

Total

$ 318,609,377 $

429,942 $ 319,039,319

Restricted for Nonexpendable Permanent Endowment

2,465,814

2,465,814

Expendable Bond Covenants/Debt Service Organized Activities Federal Loans Institutional Loans

4,145,130 2,707,936
55,193

26,474,530

26,474,530 4,145,130 2,707,936 55,193

Total Restricted

9,374,073

26,474,530

35,848,603

Unrestricted Auxiliary Operations R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted USO Reserve Fund

14,041,544 13,026,635 18,091,563
50,000 -97,708,658
1,778,721

3,017,402

14,041,544 13,026,635 18,091,563
50,000 -94,691,256
1,778,721

Total Unrestricted

-50,720,195

3,017,402

-47,702,793

Total Net Position

$ 277,263,255 $

29,921,874 $ 307,185,129

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Note 11. Endowments The Institution
Donor Restricted Endowments: Investments of the Institution's endowment funds are pooled, unless required to be separately invested by the donor. For Institution controlled, donor-restricted endowments, where the donor has not provided specific instructions, the Board of Regents permits Georgia Southern University to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determine to be prudent. Realized and unrealized appreciation in excess of the amount budgeted for current spending is retained by the endowments. Endowment net income of $60,159 and net appreciation of ($5,874) are reflected as restricted expendable change in net position of $54,285.
The Institution uses a conservative approach for endowment management by using a hybrid combination of the total return concept for income and gains/losses, and the classical trust method that protects the corpus of the endowments. Annual payouts from the Institution's endowment funds are based on a spending policy which limits annual endowed scholarship spending as 4% of the 3 year moving average of the endowment fair market value. To the extent that the total return for the current year exceeds payout, the excess is added to restricted expendable net position. If total payouts exceed total return, prior years' net appreciation is reduced.
Note 12. Significant Commitments The Institution
See Note 10 for amounts reserved for outstanding encumbrances at June 30, 2016. In addition to these encumbrances, the Institution had other significant unearned, outstanding, construction or renovation contracts executed in the amount of $9,109,183 as of June 30, 2016. This amount is not reflected in the accompanying basic financial statements.
Note 13. Lease Obligations The Institution
The Institution is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Capital Leases Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2017 and 2043. Below is a schedule of capital lease activity.

Description

CAPITAL LEASE SCHEDULE

Lessor

Original Principal

Lease Term

Begin

Outstanding Principal Balance End at June 30, 2016

PPV3901001 - Southern Courtyard PPV3901002 - Southern Pines PPV3902000 - Eagle Village PPV3903001 - J.I. Clements Baseball Stadium PPV3903002 - Athletic Training Center (Ironworks) PPV3903003 - Soccer & Track Stadium PPV3904001 - Recreation Activity Center (RAC) PPV3905000 - Centennial Place PPV3906000 - Campus Courtyard (University Villas) PPV390700 - Freedom's Landing PPV3908000 - Dining Commons Lakeside PPV3909000 - Dining Commons (Landrum) PPV3910000 - Football Stadium Expansion PPV3911000 - Football Operations Center Equipment

Georgia Southern Housing Foundation $ 18,296,060

27 years 9/2003 9/2030 $

Georgia Southern Housing Foundation 24,371,991

27 years 9/2003 9/2030

Georgia Southern Housing Foundation 30,179,998

25 years 8/2005 7/2030

Georgia Southern Housing Foundation

2,230,350

24 years 8/2005 7/2029

Georgia Southern Housing Foundation

694,056

24 years 8/2005 7/2029

Georgia Southern Housing Foundation

1,677,441

24 years 8/2005 7/2029

Georgia Southern Housing Foundation 28,884,853

15 years 11/2015 6/2030

Georgia Southern Housing Foundation 56,096,073

30 years 8/2009 7/2039

Georgia Southern Housing Foundation 13,360,301

30 years 8/2008 7/2038

Georgia Southern Housing Foundation 34,599,940

29 years 7/2012 6/2041

Georgia Southern Housing Foundation

7,851,917

29 years 8/2013 6/2042

Georgia Southern Housing Foundation 18,321,141

29 years 8/2013 6/2042

Athletic Foundation, Inc.

10,168,728

29 years 8/2014 6/2043

Athletic Foundation, Inc.

10,830,102

29 years 10/2014 6/2043

Various

988,744 36 to 60 mths 09/2009 FY 2020

12,420,246 (1) 16,544,880 (1) 20,998,634 (1)
1,530,198 (1) 475,944 (1)
1,149,275 (1) 27,642,602 (1) 51,945,580 (1) 12,647,961 (1) 34,037,617 (1)
7,699,294 (1) 17,858,660 (1) 10,253,601 (2) 10,786,142 (2)
635,308

Total Leases

$ 258,551,695

$ 226,625,942

(1) These capital leases are with the blended component unit. (2) These capital leases are related party transactions with affiliated organizations.

Operating Leases The Institution's non-cancellable operating lease having a remaining term of more than one year expires in fiscal year 2027. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis.
Facilities and equipment rented through operating leases are not recorded as assets on the balance sheet. Operating lease expenditures totaled $208,721 for the fiscal year ended June 30, 2016.
In 2014, Georgia Southern University entered into a real property operating lease with The Odd Lot, Inc., an unrelated party, for office space from July 2015 through June 2016 for a monthly rent of $10,833. The agreement contains a renewal option on a year-to-year basis. This real property operating lease expired June 30, 2016 and will not be renewed. Under this agreement, the Institution paid $130,000 in the current year.
In 2014, Georgia Southern University entered into a real property operating lease with S & F Partnership and FFF Properties LLC., an unrelated party, for Costume Shop storage space for monthly rental payments of $3,500. The agreement contains a renewal option on a year-to-year basis. This real property operating lease expired June 30, 2016 and will not be renewed. Under this agreement, the Institution paid $42,000 in the current year.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

In 2014, Georgia Southern University entered into a real property operating lease with Southern Trailers, an unrelated party, for storage space for monthly rental payments of $4,415. There was an additional agreement for in which remodeling costs would be deducted from monthly rent owed. The agreement contains a renewal option on a year-to-year basis. This real property operating lease expired June 30, 2016 and will not be renewed. Under this agreement, the Institution paid $35,321 in the current year.

In 2007, Georgia Southern University Herty Advanced Materials Development Center entered into a real property operating lease with the Georgia Ports Authority for land, at the site of the Herty Facility, located at 110 Brampton Road, Savannah, Georgia. The lease has a 20 year term and terminates July 27, 2027. The rental payment for the current year was $1,400. Subsequent years rent increase 5% annually, through the term of the lease.

Future Commitments Future commitments for capital leases (which include other installment purchase agreements) and for the non-cancellable operating lease having a remaining term in excess of one year as of June 30, 2016, were as follows:

Year Ending June 30:
2017 2018 2019 2020 2021 2022 - 2026 2027 - 2031 2032 - 2036 2037 - 2041 2042 - 2046

Capital Leases with the Foundation

Capital Leases with Other Organizations

Operating Leases

$

17,199,994 $

17,221,778

17,220,045

17,220,545

17,235,861

86,281,251

79,293,448

48,943,463

38,647,117

1,914,240

1,698,980 $ 1,626,938 1,569,082 1,507,915 1,425,068 7,137,496 7,162,944 7,210,316 7,248,945 2,910,371

1,470 1,543 1,620 1,702 1,787 10,366 2,394

Total Minimum Lease Payments

341,177,742

39,498,055 $

20,882

Less: Interest Principal Outstanding

136,226,854

$

204,950,888 $

17,823,001 21,675,054

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

The following is a summary of the carrying values of assets held under capital lease at June 30, 2016:

Description
Capital Leases with Georgia Southern University Housing Foundation
Buildings - (PPV Only)

Gross Amount (+)

Accumulated Depreciation
(-)

Net Capital Assets Held Under Capital Lease
at June 30, 2016 (=)

Outstanding Balances per Lease Schedules at June 30, 2016

$

235,919,055 $ 70,400,154 $ 165,518,901 $ 204,950,888

Capital Leases with Other Organizations

Land - (PPV Only)

$

Equipment

Buildings - (PPV Only)

12,024,271 988,744 $
20,998,829

$ 279,163 1,327,513

12,024,271 709,581 $
19,671,316

635,308 21,039,746

Total Assets Held Under Capital Lease

at June 30, 2016

$

34,011,844 $ 1,606,676 $

32,405,168 $ 21,675,054

Note 14. Retirement Plans The Institution
The Institution 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 two systems 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.
In addition to the retirement plans administered by TRS and ERS, USG administers the Regents Retirement Plan as an optional retirement plan.
The significant retirement plans that the Institution participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
A. Defined Benefit Plans:
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.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

General Information about the Teachers Retirement System
Plan description: All teachers of the Institution as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) 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% of their annual pay during fiscal year 2016. The Institution's contractually required contribution rate for the year ended June 30, 2016 was 14.27% of annual Institution payroll. Institution contributions to TRS were $9,781,560 for the year ended June 30, 2016.
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.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

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 Institution's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2016 was 24.72% of annual covered payroll for old and new plan members and 21.69% for GSEPS members. The Institution's contributions to ERS totaled $57,061 for the year ended June 30, 2016. 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.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2016, the Institution reported a liability for its proportionate share of the Net Pension Liability for TRS and ERS. The Net Pension Liability was measured as of June 30, 2015. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 was determined using standard roll-forward techniques. The Institution's proportion of the Net Pension Liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2015. At June 30 2015, the Institution's TRS proportion was 0.617783%, which was an increase of 0.007640% from its proportion measured as of June 30, 2014. At June 30, 2015, the Institution's ERS proportion was 0.006070%, which was a decrease of 0.001192% from its proportion measured as of June 30, 2014.

- 33 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

For the year ended June 30, 2016, the Institution recognized pension expense of $7,296,802 for TRS and ($37,065) for ERS. At June 30, 2016, the Institution 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

$ 827,230

$

1,965

Net difference between projected and actual earnings on pension plan investments

7,933,328

17,744

Changes in proportion and differences between

Institution contributions and proportionate share of

contributions

$

4,143,618

49,990

Institution contributions subsequent to the measurement date

9,781,560

$

57,061

Total

$ 13,925,178 $ 8,760,558 $

57,061 $

69,699

Institution contributions subsequent to the measurement date of $9,781,560 for TRS and $57,061 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, 2017. 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

2017 2018 2019 2020 2021

$ -2,721,072 $ -48,086

$ -2,721,072 $ -19,687

$ -2,721,078 $

-7,909

$

3,535,598 $

5,983

$

10,684

Actuarial assumptions: The total pension liability as of June 30, 2015 was determined by an actuarial valuation as of June 30, 2014 using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:

Inflation Salary increases Investment rate of return

3.00% 3.75 7.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Employees' Retirement System:

Inflation Salary increases Investment rate of return

3.00%
5.45 9.25%, including inflation 7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for the periods after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP-2000 Disabled Mortality Table set back eleven years for males for the period after disability retirement.

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

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

Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities
Total
* Rates shown are net of the 3.00% assumed rate of inflation

Target allocation
30.00% 39.70%
3.70% 1.60% 18.90% 6.10%
100.00%

Long-term expected real rate of return*
3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

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.

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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

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

Teachers Retirement System:
Institution's proportionate share of the net pension liability

1% Decrease (6.50%)

Current discount rate
(7.50%)

1% Increase (8.50%)

$ 161,620,095 $ 94,051,327 $ 38,358,585

Employees' Retirement System:
Institution's proportionate share of the net pension liability

1% Decrease (6.50%)

Current discount rate
(7.50%)

$

348,600 $

245,920 $

1% Increase (8.50%)
158,381

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.
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. 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 of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (VALIC, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy The Institution makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2016, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
The Institution and the covered employees made the required contributions of $6,326,242 (9.24%) and $4,107,951 (6%), respectively.
VALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
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GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Note 15. Risk Management The Institution
The USG offers its employees and retirees under the age of 65 access to four different healthcare plan options. For the USG's Plan Year 2016, the following healthcare plan options were available:
BlueChoice HMO Comprehensive Care Consumer Choice HSA Kaiser Permanente HMO
The Institution, participating employees and retirees pay premiums to the healthcare plan options to access benefits coverage. The respective health plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the USG share the risk of loss for claims associated with the self-insured plans; including the BlueChoice HMO, Comprehensive Care, and Consumer Choice HSA Plan.
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 reserves for these plans are considered to be a self-sustaining risk fund. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to serve as the claims administrator for the selfinsured healthcare plans. In addition to the self-insured healthcare plan options offered to the employees of the USG, fully insured HMO healthcare plan are also offered to System employees.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Institution, as an organizational unit of the Board of Regents of the University System of Georgia, 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 Official Code of Georgia Annotated Section 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.

- 37 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Note 16. Contingencies The Institution
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Institution expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the Institution (an organizational unit of the University System of Georgia), 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, 2016.
During the period of May 11, 2015 and May 15, 2015, the U.S. Department of Education conducted a compliance program review of Georgia Southern University's administration of the program authorized pursuant to Title IV of the Higher Education Act of 1965. The compliance program review revealed several deficiencies which will result in questioned costs being refunded to the grantor agency. At this time an estimate of the amount of questioned costs cannot be determined by the Institution. Note 17. Post-Employment Benefits Other Than Pension Benefits The Institution
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total 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 employee.
The Board of Regents Retiree Health Benefit Plan is a single-employer, defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The Institution pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year.
As of June 30, 2016, there were 860 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2016, Georgia Southern University recognized as incurred $3,690,827 of expenditures, which was net of $1,445,472 of participant contributions.

- 38 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2016

EXHIBIT "D"

Note 18. Natural Classifications with Functional Classifications The Institution

The Institution's operating expenses by functional classification for fiscal year 2016 are shown below:

Natural Classification
Salaries Faculty Staff
Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Natural Classification
Salaries Faculty Staff
Benefits Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses

Instruction

Functional Classification

Research

Public Service

Academic Support

Student Services

$ 59,802,773 $ 12,655,944 20,402,415 76,076 1,133,397 68,715 25,836 7,440,386 2,687,435

2,569,365 $ 5,092,319 1,764,715
159,576 579,867 109,563 1,093,757 3,065,986 1,650,187

79,162 $ 707,956 233,429
9,378 36,783 49,499
4,125 738,004
11,082

1,501,626 $ 15,502,386
4,961,598 105,134 425,271
64,436 8,847,851 2,360,775

7,952 14,826,314
4,037,702 21,681
282,824 476,379 651,300 5,540,298 531,014

$ 104,292,977 $ 16,085,335 $ 1,869,418 $ 33,769,077 $ 26,375,464

Institutional Support

Functional Classification

Plant Operations and
Maintenance

Scholarships and
Fellowships

Auxiliary Enterprises

Total Expenses

$

30,110

12,794,001 $

6,580,552

82,237

333,914

413

114,322

10,626,002

240,709

$ 11,758,462
4,536,114

21,441 $
6,310,654 4,174,311 10,608,036

9,355,525 5,517

1,669 $ 19,601,377
5,481,883 479,629 719,813
5,014,384 4,113,103 33,205,285 10,122,453

63,992,657 92,938,759 47,998,408
933,711 3,533,310 15,074,478 12,377,533 73,643,640 28,211,691

$ 30,802,260 $ 37,409,018 $ 9,361,042 $ 78,739,596 $ 338,704,187

- 39 -

REQUIRED SUPPLEMENTARY INFORMATION - 40 -

GEORGIA SOUTHERN UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TEACHERS RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "1"

Year Ended

Proportion of the Net Pension Liability

Proportionate Share of the Net Pension
Liability

Covered Employee Payroll

Proportionate Share of the Net Pension
Liability as a Percentage of Covered Payroll

Plan Fiduciary Net Position as a
Percentage of the Total Pension Liability

June 30, 2016 June 30, 2015

0.617783% $ 0.610143% $

94,051,327 $ 77,083,520 $

64,900,115 61,951,356

144.92% 124.43%

81.44% 84.03%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. - 41 -

GEORGIA SOUTHERN UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "2"

Year Ended

Proportion of the Net Pension Liability

Proportionate Share of the Net Pension
Liability

Covered Employee Payroll

Proportionate Share of the Net Pension
Liability as a Percentage of Covered Payroll

Plan Fiduciary Net Position as a
Percentage of the Total Pension Liability

June 30, 2016 June 30, 2015

0.006070% $ 0.007262% $

245,920 $ 272,370 $

138,794 163,525

177.18% 166.56%

76.20% 77.99%

This schedule is intended to show information for 10 years. Additional years will be displayed as they become available. - 42 -

GEORGIA SOUTHERN UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS TEACHERS RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "3"

Year Ended
June 30, 2016 June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 June 30, 2011 June 30, 2010 June 30, 2009 June 30, 2008 June 30, 2007

Contractually Required
Contribution

Contributions in Relation to the Contractually Required Contribution

Contribution Deficiency (Excess)

Covered Employee Payroll

Contributions as a Percentage of Covered-
Employee Payroll

$

9,781,560 $

$

8,575,191 $

$

7,643,896 $

$

6,685,303 $

$

5,748,680 $

$

5,470,825 $

$

5,078,763 $

$

4,658,740 $

$

4,403,648 $

$

4,074,725 $

9,781,560 $ 8,575,191 $ 7,643,896 $ 6,685,303 $ 5,748,680 $ 5,470,825 $ 5,078,763 $ 4,658,740 $ 4,403,648 $ 4,074,725 $

0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$

68,228,960 64,900,115 61,951,356 58,603,283 55,921,012 53,218,142 52,143,357 50,201,940 47,453,103 43,908,675

14.34% 13.21% 12.34% 11.41% 10.28% 10.28%
9.74% 9.28% 9.28% 9.28%

- 43 -

GEORGIA SOUTHERN UNIVERSITY REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF CONTRIBUTIONS EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
FOR THE YEAR ENDED JUNE 30

SCHEDULE "4"

Year Ended

Contractually Required
Contribution

Contributions in Relation to the Contractually Required Contribution

Contribution Deficiency (Excess)

Covered Employee Payroll

Contributions as a Percentage of Covered-
Employee Payroll

June 30, 2016 $ June 30, 2015 $ June 30, 2014 $ June 30, 2013 $ June 30, 2012 $ June 30, 2011 $ June 30, 2010 $ June 30, 2009 $ June 30, 2008 $ June 30, 2007 $

57,061 $ 30,479 $ 30,187 $ 29,986 $ 26,844 $ 26,056 $ 30,300 $ 39,842 $ 31,755 $ 25,615 $

57,061 $ 30,479 $ 30,187 $ 29,986 $ 26,844 $ 26,056 $ 30,300 $ 39,842 $ 31,755 $ 25,615 $

0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$

230,829 138,794 163,525 210,458 230,817 250,298 291,066 334,252 304,514 245,721

24.72% 21.96% 18.46% 14.25% 11.63% 10.41% 10.41% 11.92% 10.43% 10.42%

- 44 -

GEORGIA SOUTHERN UNIVERSITY NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED JUNE 30, 2016

SCHEDULE "5"

Teachers Retirement System
Changes of assumptions: In 2010 and later, the expectation of retired life mortality was changed to the RP2000 Mortality Tables rather than the 1994 Group Annuity Mortality Table, which was used prior to 2010. In 2010, rates of withdrawal, retirement, disability and mortality were adjusted to more closely reflect actual experience. In 2010, assumed rates of salary increase were adjusted to more closely reflect actual and anticipated experience.
Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, 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 contractually required contributions for year ended June 30, 2016 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases Investment rate of return

June 30, 2013 Entry age Level percentage of payroll, open 30 years Seven-year smoothed market 3.00% 3.75 7.00%, including inflation 7.50%, net of pension plan investment
expense, including inflation

Employees' Retirement System

Changes of assumptions: There were no changes in assumptions or benefits that affect the measurement of the total pension liability since the prior measurement date.

Method and assumptions used in calculations of actuarially determined contributions: The actuarially determined contribution rates in the schedule of contributions are calculated as of June 30, 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 contractually required contributions for year ended June 30, 2016 reported in that schedule:

Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation rate Salary increases
Investment rate of return

June 30, 2013 Entry age Level dollar, open 30 years Seven-year smoothed market 3.00% 2.725% 4.625% for FY 2012-2013, 5.45% - 9.25% for FY2014+ 7.50%, net of pension plan investment
expense, including inflation

- 45 -

SUPPLEMENTARY INFORMATION - 46 -

GEORGIA SOUTHERN UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND JUNE 30, 2016
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue Funds Held for Others Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "6"

$

30,830,425.96

2,750,919.04

1,654,576.19 4,128,411.68
109,612.37 42,954.74

$

39,516,899.98

$

618,241.58

16,031,845.53

275,312.78

5,905,868.72

-1,679.45

-1,939.82

22,827,649.34

6,606,066.19 2,664,467.50
223,461.18 3,887,160.21
192,363.37 3,032,371.20
50,000.00
33,360.99
16,689,250.64

$

39,516,899.98

Actual amounts were 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.
- 47 -

GEORGIA SOUTHERN UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2016

SCHEDULE "7"

REVENUES
State Appropriation State General Funds
Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEARS
Transfers from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Special Funding Initiative Teaching
Total Expenditures
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned
to Board of Regents - University System Office Year Ended June 30, 2015
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$

91,737,886.00 $

91,737,886.00 $

205,653,473.00

183,497,016.73

297,391,359.00

275,234,902.73

0.00 -22,156,456.27
-22,156,456.27

0.00 297,391,359.00

16,475,561.04 291,710,463.77

16,475,561.04 -5,680,895.23

198,784.00 297,192,575.00

297,391,359.00

$

0.00

198,784.00 275,023,955.53
275,222,739.53
16,487,724.24 $

0.00 22,168,619.47
22,168,619.47
16,487,724.24

16,672,372.39 97,213.01

30,012.53 -25,297.48

-97,213.01 -16,475,561.04

$

16,689,250.64

SUMMARY OF FUND BALANCE
Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories
Total Reserved
Unreserved Surplus

$

6,606,066.19

2,664,467.50

223,461.18

3,887,160.21

192,363.37

3,032,371.20

50,000.00

16,655,889.65

33,360.99

Total Fund Balance

$

16,689,250.64

Actual amounts were 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.
- 48 -

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GEORGIA SOUTHERN UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2016

State 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

$

198,784.00 $

198,784.00 $

198,784.00 $

198,784.00

91,460,935.00 185,018,855.00
276,479,790.00

91,460,935.00 185,018,855.00
276,479,790.00

91,539,102.00 205,653,473.00
297,192,575.00

91,539,102.00 183,497,016.73
275,036,118.73

$ 276,678,574.00 $ 276,678,574.00 $ 297,391,359.00 $ 275,234,902.73

Actual amounts were 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.
- 50 -

SCHEDULE "8"

Funds Available Compared to Budget

Prior Year

Adjustments and

Total

Carry-Over

Program Transfers

Funds Available

Variance Negative

Expenditures Compared to Budget

Variance

Actual

Positive

Excess of Funds Available
Over Expenditures

$

0.00 $

0.00 $

198,784.00 $

0.00 $

198,784.00 $

0.00 $

0.00

0.00 16,475,561.04
16,475,561.04

0.00 0.00
0.00

91,539,102.00 199,972,577.77
291,511,679.77

0.00 -5,680,895.23
-5,680,895.23

91,539,102.00 183,484,853.53
275,023,955.53

0.00 22,168,619.47
22,168,619.47

0.00 16,487,724.24
16,487,724.24

$ 16,475,561.04 $

0.00 $ 291,710,463.77 $

-5,680,895.23 $ 275,222,739.53 $ 22,168,619.47 $

16,487,724.24

- 51 -

GEORGIA SOUTHERN UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2016

Special Funding Initiatives State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity
Prior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Receivable

Beginning Fund Balance July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2015
Surplus

Prior Period Adjustments

$

8,194.49 $

0.00 $

-8,194.49 $

1,290.61

23,420.96 16,541,158.60
16,564,579.56
16,572,774.05

0.00 -16,475,561.04
-16,475,561.04
-16,475,561.04

-23,420.96 -65,597.56
-89,018.52
-97,213.01

12,341.58 -8,917.14
3,424.44
4,715.05

64,000.00 132,811.35

0.00 0.00

0.00 0.00

0.00 0.00

Budget Unit Totals

$

16,769,585.40 $

-16,475,561.04 $

-97,213.01 $

4,715.05

Actual amounts were 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.
- 52 -

SCHEDULE "9"

Other Adjustments

Early Return Fiscal Year 2016
Surplus

Excess of Funds Available
Over Expenditures

Ending Fund Balance June 30

Analysis of Ending Fund Balance

Reserved

Surplus

Total

$

0.00 $

0.00 $

0.00 $

1,290.61 $

0.00 $

1,290.61 $

1,290.61

14,000.00 -59,552.02
-45,552.02
-45,552.02

0.00 0.00
0.00
0.00

0.00 16,487,724.24
16,487,724.24
16,487,724.24

26,341.58 16,419,255.08

0.00 16,413,526.28

16,445,596.66 16,413,526.28

16,446,887.27 16,413,526.28

26,341.58 5,728.80
32,070.38
33,360.99

26,341.58 16,419,255.08
16,445,596.66
16,446,887.27

-14,000.00 59,552.02

0.00 0.00

0.00 0.00

50,000.00 192,363.37

50,000.00 192,363.37

0.00 0.00

50,000.00 192,363.37

$

0.00 $

0.00 $

16,487,724.24 $ 16,689,250.64 $ 16,655,889.65 $

33,360.99 $ 16,689,250.64

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

$ 6,606,066.19 2,664,467.50 223,461.18 3,887,160.21 192,363.37 3,032,371.20 50,000.00
$
$ 16,655,889.65 $

$ 6,606,066.19 2,664,467.50 223,461.18 3,887,160.21 192,363.37 3,032,371.20 50,000.00

33,360.99

33,360.99

33,360.99 $ 16,689,250.64

- 53 -

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SECTION III COMPLIANCE AND INTERNAL CONTROL REPORTS

(This page left intentionally blank)

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
March 23, 2017

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Dr. Jaimie Hebert, President Georgia Southern University
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited, 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, the business-type and major funds of Georgia Southern University as of and for the year ended June 30, 2016 and the related notes to the financial statements, and have issued our report thereon dated March 23, 2017.
Our report includes a reference to other auditors who audited the financial statements of Georgia Southern University Housing Foundation, Inc. as described in our report on Georgia Southern University's basic financial statements.
This report includes our consideration of the results of other auditors' testing of internal control over financial reporting and compliance and other matters that are reported on separately by those other auditors. However, this report, insofar as it relates to the results of the other auditors is based solely on the reports of the other auditors.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Georgia Southern University's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Georgia Southern University's internal control. Accordingly, we do not express an opinion on the effectiveness of Georgia Southern University's internal control.

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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. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we and other auditors did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Georgia Southern University's financial statements are free from material misstatement, we and other auditors performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests and those of other auditors disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,
Greg S. Griffin State Auditor

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SECTION IV AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

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GEORGIA SOUTHERN UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FS-2015-001 Inadequate Controls over the Information Technology Store

Control Category:
Internal Control Impact: Compliance Impact:

Expenditures/Liabilities/Disbursements Inventories Significant Deficiency N/A

Finding Status:

Previously Reported Corrective Action Implemented

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-539-14-01 Calculation of Title IV Refunds

Control Category: Internal Control Impact: Compliance Impact: Federal Award Agency: CFDA Number and Title:

Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education 84.SFA Student Financial Assistance Cluster

Finding Status:

Partially Resolved

The corrective action plan for this finding has been fully implemented. The auditors nor Federal Program Reviewers found any problems with refund calculations in fiscal year 2015. We are awaiting confirmation from the U.S. Department of Education that this finding has been resolved.

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SECTION V CURRENT YEAR FINDINGS AND QUESTIONED COSTS

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GEORGIA SOUTHERN UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2016
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.