{"response":{"docs":[{"id":"dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2017-belec-p-btext","title":"Armstrong State University, Savannah, Georgia, management report for fiscal year ended 2017 June 30","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2017-06-30"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016?","Issued by Georgia. Department of Audits and Accounts.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed March 24, 2020).","Fiscal year ended June 30, 2017 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts) (Georgia Government Publications database, viewed March 24, 2020)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Armstrong State University--Appropriations and expenditures--Periodicals","Auditors' reports--Georgia--Periodicals","Financial statements--Georgia--Periodicals.","Auditors' reports","Expenditures, Public","Financial statements","Georgia","Periodicals"],"dcterms_title":["Armstrong State University, Savannah, Georgia, management report for fiscal year ended 2017 June 30"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2017-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2017-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"ARMSTRONG STATE UNIVERSITY \nSAVANNAH, GEORGIA \nMANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2017 \nA Member Institution of the University System of Georgia \n \n ARMSTRONG STATE UNIVERSITY - TABLE OF CONTENTS - \n \nSECTION I \nFINANCIAL \nLETTER OF TRANSMITTAL \nSELECTED FINANCIAL INFORMATION \nEXHIBITS \nA STATEMENT OF NET POSITION - (GAAP BASIS) B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - \n(GAAP BASIS) C STATEMENT OF CASH FLOWS - (GAAP BASIS) D SELECTED FINANCIAL NOTES \nSUPPLEMENTARY INFORMATION \nSCHEDULES \n1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT \n(STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET \nBY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND \n4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND \n \nPage \n2 3 4 6 \n24 25 26 28 \n \nSECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS \n \n (This page left intentionally blank) \n \n SECTION I FINANCIAL \n \n (This page left intentionally blank) \n \n Greg S. Griffin \nSTATE AUDITOR \n(404) 656-2174 \n \nDEPARTMENT OF AUDITS AND ACCOUNTS \n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \nAugust 31, 2017 \n \nHonorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia \nand Dr. Jennifer L. Frum, Interim President Armstrong State University \nLadies and Gentlemen: \nThis Management Report contains information pertinent to the Armstrong State University's compliance with the requirements of the Southern Association of Colleges and Schools Commission on Colleges (COC) Core Requirement 2.11.1 (Financial resources) of as of and for the year ended June 30, 2017. Additionally, we audited Armstrong State University's Federal Student Aid programs for the year ended June 30, 2017 to meet the requirements of COC Comprehensive Standard 3.10.2. Included in this report is a section on findings and other items for any matters that came to our attention during our engagement, including results of our audit of the Federal Student Aid programs. The other information contained in this report is the representation of management. Accordingly, we do not express an opinion or any form of assurance on it. \nAdditionally, we have performed certain procedures at Armstrong State University to support our audit of the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2017. \nThis report is intended solely for the information and use of the management of Armstrong State University, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties. \nRespectfully, \n \nGreg S. Griffin State Auditor \n \n (This page left intentionally blank) \n \n SELECTED FINANCIAL INFORMATION - 1 - \n \n     ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \nREPORTING ENTITY As defined by Official Code of Georgia Annotated (O.C.G.A)  20-3-50, Armstrong State University (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. \nThe 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. \nThe 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. They do not purport to, and do not, present fairly the financial position of the State as of June 30, 2017, 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. \nThe accompanying basic financial statements should be read in conjunction with the State's CAFR. The State's CAFR as of and for the year ended June 30, 2017 has not been issued as of the release of this report. The most recent State of Georgia CAFR can be obtained through the State Accounting Office, 200 Piedmont Avenue, Suite 1604 (West Tower), Atlanta, Georgia 30334 or found at https://sao.georgia.gov/comprehensive-annual-financial-reports. \nBASIS OF ACCOUNTING AND FINANCIAL STATEMENT PREPARATION The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the Institution's assets, deferred outflows, liabilities, deferred inflows, net position, revenues, expenses, changes in net position and cash flows. \nThe 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. \n \n- 6 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nNEW ACCOUNTING PRONOUNCEMENTS For fiscal year 2017, the Institution adopted Governmental Accounting Standards Board (GASB) Statement No. 82, Pension Issues-an amendment of GASB Statements No. 67, No. 68, and No. 73. This Statement addresses accounting and financial reporting issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. \nFor fiscal year 2017, the Institution adopted Governmental Accounting Standards Board (GASB) Statement No. 80, Blending Requirements for Certain Component Units-an amendment of GASB Statement No. 14. This statement amends the blending requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of Statement No. 39, Determining Whether Certain Organizations Are Component Units. The adoption of this statement does not have a significant impact on the Institution's financial statements. \nFor fiscal year 2017, the Institution adopted GASB Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The objective of this statement is to address a practice issue regarding the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. The adoption of this statement does not have a significant impact on the Institution's financial statements. \nFor fiscal year 2017, the Institution adopted GASB Statement No. 77, Tax Abatement Disclosures. This statement requires governments that enter into tax abatement agreements to disclose certain information about the agreements. The adoption of this statement does not have a significant impact on the Institution's financial statements. \nFor fiscal year 2017, the Institution adopted GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. This statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. It also includes requirements for defined contribution other postemployment benefit (OPEB) plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, as amended, Statement No. 43, and Statement No. 50, Pension Disclosures. The objective of this statement is to improve the usefulness of information about postemployment benefits other than pensions. The adoption of this statement does not have a significant impact on the Institution's financial statements. \n \n- 7 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nDUE 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 institutions 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 institution 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. \nNET POSITION The Institution's net position is classified as follows: \nNet 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. 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. \nRestricted  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 System of Georgia permits each individual Institution to use prudent judgment in the spending of current realized and unrealized endowment appreciation. Donor-restricted endowment appreciation is periodically transferred to restricted-expendable accounts for expenditure as specified by the purpose of the endowment. The 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. \nRestricted  expendable: includes resources in which the Institution is legally or contractually obligated to spend resources in accordance with restrictions by external third parties. \nUnrestricted: 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 $32,980.84. Unexpended state appropriations must be refunded to the Office of the State Treasurer. The resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. \n \n- 8 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nSCHOLARSHIP ALLOWANCES Scholarship allowances are the differences 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 $12,097,606 and $86,438, respectively. \nNOTE 2: DEPOSITS AND INVESTMENTS \nDEPOSITS 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: \n1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. \n2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia. \n3. 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. \n4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. \n5. 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. \n6. 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. \n \n- 9 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nAt June 30, 2017, the carrying value of deposits was $14,224,469 and the bank balance was $15,990,783. Of the Institution's deposits, $15,990,783 were uninsured. Of these uninsured deposits, $15,990,783 were collateralized with securities held by the financial institution's trust department or agency, but not in the Institution's name. \n \nINVESTMENTS At June 30, 2017, the carrying value of the Institution's investments were $8,533,994, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows: \n \nInvestment Pools Board of Regents Short-Term Fund Diversified Fund \n \n$ 5,155,375 3,378,619 \n \nTotal Investment Pools \n \n$ 8,533,994 \n \nThe 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 University System of Georgia. 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. \n \nNOTE 3: ACCOUNTS RECEIVABLE Accounts receivable consisted of the following at June 30, 2017: \n \nStudent Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission Due from Affiliated Organizations Due from Other USG Institutions Other \nLess Allowance for Doubtful Accounts \nNet Accounts Receivable \n \n$ \n \n1,107,120 \n \n839,955 \n \n963,951 \n \n793,146 \n \n10,613 \n \n220,862 \n \n666,149 \n \n4,601,796 359,302 \n \n$ \n \n4,242,494 \n \n- 10 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nNOTE 4: CAPITAL ASSETS \n \nFollowing are the changes in capital assets for the year ended June 30, 2017: \n \nBeginning \n \nBalance \n \nJuly 1, 2016 \n \nAdditions \n \nReductions \n \nCapital Assets, Not Being Depreciated: \n \nLand \n \n$ \n \n5,318,254 $ \n \n- $ \n \n- $ \n \nConstruction Work-In-Progress \n \n3,462,670 \n \n2,660,633 \n \n6,122,289 \n \nEnding Balance June 30, 2017 \n5,318,254 1,014 \n \nTotal Capital Assets Not Being Depreciated \n \n8,780,924 \n \n2,660,633 \n \n6,122,289 \n \n5,319,268 \n \nCapital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections Total Capital Assets Being Depreciated/Amortized \n \n3,782,462 139,277,403 \n3,246,634 12,375,002 10,835,372 \n16,575 169,533,448 \n \n356,416 4,050,395 1,865,755 \n320,581 362,501 \n6,955,648 \n \n155,287 433,684 19,139 608,110 \n \n4,138,878 143,327,798 \n4,957,102 12,261,899 11,178,734 \n16,575 175,880,986 \n \nLess: Accumulated Depreciation: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections Capitalized Collections Total Accumulated Depreciation/Amortization \nTotal Capital Assets, Being Depreciated/Amortized, Net \n \n1,801,932 46,067,086 \n2,121,195 8,706,079 10,259,224 \n7,018 68,962,534 \n100,570,914 \n \n143,510 3,603,376 \n161,129 1,005,448 \n216,314 414 \n5,130,191 \n1,825,457 \n \nCapital Assets, Net \n \n$ 109,351,838 $ 4,486,090 $ \n \n275,116 19,139 294,255 \n313,855 \n6,436,144 $ \n \n1,945,442 49,670,462 \n2,282,324 9,436,411 10,456,399 \n7,432 73,798,470 \n102,082,516 \n107,401,784 \n \nA comparison of depreciation expense for the last three fiscal years is as follows: \n \nFiscal Year \n \nDepreciation Expense \n \n2017 2016 2015 \n \n$ \n \n5,130,191 \n \n$ \n \n5,017,090 \n \n$ \n \n6,715,967 \n \n- 11 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nNOTE 5: ADVANCES (INCLUDING TUITION AND FEES) Advances (Including Tuitions and Fees) consisted of the following at June 30, 2017: \n \nPrepaid Tuition and Fees Other - Advances \nTotal Unearned Revenue \n \n$ 2,432,809 434,296 \n$ 2,867,105 \n \nNOTE 6: LONG-TERM LIABILITIES The Institution's Long-Term Liability activity for the year ended June 30, 2017 was as follows: \n \nBeginning Balance July 1, 2016 \n \nAdditions \n \nReductions \n \nEnding Balance June 30, 2017 \n \nCurrent Portion \n \nLeases Lease Obligations \n \n$ 38,938,031 $ \n \n673,694 $ \n \n953,523 $ \n \n38,658,202 $ \n \n1,238,420 \n \nOther Liabilities Compensated Absences Net Pension Liability \n \n1,936,777 24,075,146 \n \n1,381,009 7,545,928 \n \n1,333,972 139,364 \n \n1,983,814 31,481,710 \n \n1,388,670 \n \nTotal \n \n26,011,923 \n \n8,926,937 \n \n1,473,336 \n \n33,465,524 \n \n1,388,670 \n \nTotal Long-Term Obligations $ 64,949,954 $ \n \n9,600,631 $ \n \n2,426,859 $ \n \n72,123,726 $ \n \n2,627,090 \n \nNOTE 7: NET POSITION \n \nChanges in Net Position for the year ended June 30, 2017 are as follows: \n \nBeginning \n \nBalance \n \nJuly 1, 2016 \n \nAdditions \n \nReductions \n \nEnding Balance June 30, 2017 \n \nNet Investment in Capital Assets \n \n$ 66,920,129 $ \n \n4,447,515 $ 4,941,351 $ 66,426,293 \n \nRestricted Net Position \n \n3,291,750 \n \n17,779,960 \n \n17,268,944 \n \n3,802,766 \n \nUnrestricted Net Position \n \n(6,224,552) \n \n83,616,099 \n \n82,031,018 \n \n(4,639,471) \n \nTotal Net Position \n \n$ 63,987,327 $ 105,843,574 $ 104,241,313 $ 65,589,588 \n \n- 12 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nThe amounts within each category at June 30, 2017 were as follows: \n \nNET POSITION \n \nNet Investment in Capital Assets \n \n$ \n \nRestricted for Nonexpendable Permanent Endowment \n \nExpendable Restricted E\u0026G and Other Organized Activities \n \nUnrestricted Auxiliary Operations Reserve for Encumbrances Other Unrestricted USO Reserve Fund \n \nTotal Unrestricted \n \nTOTAL NET POSITION \n \n$ \n \n66,426,293 \n3,479,659 \n323,107 \n19,378,658 2,813,625 \n(27,052,616) 220,862 \n(4,639,471) 65,589,588 \n \nNOTE 8: ENDOWMENTS \nDonor 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 Institutions to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determined to be prudent. Realized and unrealized appreciation in excess of the amount budgeted for current spending is retained by the endowments. Current year net appreciation for the endowment accounts was $290,108 and is reflected as expendable restricted net position. \nFor endowment funds where the donor has not provided specific instructions, investment return of the Institution's endowment funds is predicated on the total return concept. Annual payouts from the Institution's endowment funds are based on a spending policy which limits spending to 4.25% of the endowments principal's market value. To the extent that the total return for the current year exceeds the payout, the excess is added to principal. If current year earnings do not meet the payout requirements, the Institution uses accumulated income and appreciation from restricted expendable net asset endowment balances to make up the difference. \nNOTE 9: LEASE OBLIGATIONS \nThe Institution is obligated under various capital and operating leases for the acquisition or use of real property and equipment. \n \n- 13 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nCAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2017 and 2039. Expenditures for fiscal year 2017 were $2,520,385 of which $1,566,862 represented interest. Total principal paid on capital leases was $953,523 for the fiscal year ended June 30, 2017. Interest rates range from 2.00 percent to 5.00 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2017: \n \nOutstanding \n \nNet Assets Held \n \nBalances \n \nUnder Capital \n \nper Lease \n \nAccumulated \n \nLease at \n \nSchedules at \n \nDescription \n \nGross Amount \n \nDepreciation \n \nJune 30, 2017 \n \nJune 30, 2017 \n \n(+) \n \n(-) \n \n(=) \n \nLeased Buildings \u0026 Building Improvements $ \n \n51,688,801 $ 15,957,413 $ 35,731,388 $ 38,658,202 \n \nCertain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms. \n \nThe following capital lease schedule lists the pertinent information for each lease including the building name, lessor, total principal amount, lease term, lease begin date, lease end date, and remaining long-term debt as of June 30, 2017. \n \nDescription \n \nLessor (1) \n \nCAPITAL LEASE SCHEDULE \n \nOriginal Principal \n \nLease Term \n \nBegin Date \n \nEnd Date \n \nOutstanding Principal Balance at \nJune 30, 2017 \n \nStudent Rec Center Armstrong Center Student Union \n \nEPFI Foundation $ EPFI Foundation EPFI Foundation \n \n5,284,696 17,506,253 23,162,477 \n \n26 Years 26 Years 26 Years \n \nJuly 2006 June 2010 March 2010 \n \nMay 2033 $ May 2035 June 2039 \n \n12,042,032 3,374,124 \n23,242,046 \n \nTotal Leases \n \n$ 45,953,426 \n \n(1) These capital leases are with related entities. \n \n$ \n \n38,658,202 \n \nOPERATING LEASES The Institution's non-cancellable operating leases have remaining terms of more than one year expire in various fiscal years from 2018 through 2021. 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. \nFacilities and equipment rented through operating leases are not recorded as assets on the balance sheet. Operating lease expenditures totaled $819,819 for the fiscal year ended June 30, 2017. \n \n- 14 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nFUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2017, were as follows: \n \nReal Property and Equipment \n \nCapital \n \nOperating \n \nLeases \n \nLeases \n \nYear Ending June 30: \n2018 2019 2020 2021 2022 2023 - 2027 2028 - 2032 2033 - 2037 2038 - 2042 \n \n$ \n \n2,715,525 $ \n \n2,734,680 \n \n2,771,216 \n \n2,762,477 \n \n2,749,801 \n \n14,005,579 \n \n14,120,713 \n \n11,036,523 \n \n3,230,006 \n \n842,967 796,374 844,873 \n70,577 - \n \nTotal Minimum Lease Payments \n \n56,126,520 $ \n \n2,554,791 \n \nLess: Interest \n \n17,468,318 \n \nPrincipal Outstanding \n \n$ 38,658,202 \n \nNOTE 10: RETIREMENT PLANS \nThe 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. \nThe 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. \nA. Defined Benefit Plans: \nTeachers Retirement System of Georgia and Employees' Retirement System of Georgia \nSummary of Significant Accounting Policies \nPensions: 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. \n- 15 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nGeneral Information about the Teachers Retirement System \nPlan 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. \nBenefits 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. \nContributions: 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 2017. The Institution's contractually required contribution rate for the year ended June 30, 2017 was 14.27% of annual Institution payroll. Institution contributions to TRS were $2,579,780 for the year ended June 30, 2017. \nGeneral Information about the Employees' Retirement System \nPlan 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. \nBenefits 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. \nUnder 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. \n \n- 16 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nRetirement 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. \nContributions: 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, 2017 was 24.69% of annual covered payroll for old and new plan members and 21.69% for GSEPS members. The Institution's contributions to ERS totaled $42,239 for the year ended June 30, 2017. 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. \nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions \nAt June 30, 2017, 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, 2016. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2015. An expected total pension liability as of June 30, 2016 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, 2016. At June 30 2016, the Institution's TRS proportion was 0.151626%, which was a decrease of 0.004287% from its proportion measured as of June 30, 2015. At June 30, 2016, the Institution's ERS proportion was 0.004219%, which was a decrease of 0.004147% from its proportion measured as of June 30, 2015. \nFor the year ended June 30, 2017, the Institution recognized pension expense of $3,322,114 for TRS and $(92,749) for ERS. At June 30, 2017, the Institution reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \n \nDifferences between expected and actual experience Changes of assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between University contributions and proportionate share of contributions University contributions subsequent to the measurement date \nTotal \n \nDeferred Outflows of Resources \n \nTRS Deferred Inflows of Resources \n \nERS Deferred Outflows of Resources \n \nDeferred Inflows of Resources \n \n$ \n \n466,019 $ \n \n154,690 $ \n \n- $ \n \n461 \n \n810,790 \n \n- \n \n1,690 \n \n- \n \n3,957,319 \n \n- \n \n20,291 \n \n- \n \n298,625 2,579,780 \n$ 8,112,533 $ \n \n625,628 - \n780,318 $ \n \n42,239 \n64,220 $ \n \n125,027 - \n125,488 \n \n- 17 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nThe Institution contributions subsequent to the measurement date of $2,579,780 for TRS and $42,239 for ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \n \nYear Ended June 30: \n \nTRS \n \nERS \n \n2018 2019 2020 2021 2022 \n \n$ \n \n573,356 $ \n \n$ \n \n573,355 $ \n \n$ \n \n2,168,245 $ \n \n$ \n \n1,404,120 $ \n \n$ \n \n33,359 $ \n \n(99,230) (21,997) 10,940 \n6,780 - \n \nActuarial assumptions: The total pension liability as of June 30, 2016 was determined by an actuarial valuation as of June 30, 2015 using the following actuarial assumptions, applied to all periods included in the measurement: \n \nTeachers Retirement System: \n \nInflation Salary increases Investment rate of return \n \n2.75% 3.25  9.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation \n \nPost-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward on year for males) for service retirements and dependent beneficiaries. The RP-2000 Disability Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \n \nThe actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \n \nEmployees' Retirement System: \n \nInflation Salary increases Investment rate of return \n \n2.75% \n3.25  7.00%, including inflation 7.50%, net of pension plan investment expense, including inflation \n \nPost-retirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward 2 years for both males and females for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB and set back 7 years for males and set forward 3 years for females was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths \n \n- 18 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nare 9-12% less than the actual number of deaths that occurred during the study period for service retirements and beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. \n \nThe actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2009  June 30, 2014. \n \nThe 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: \n \nAsset class \n \nTRS Target Allocation \n \nLong-Term ERS Target Expected Real Allocation Rate of Return* \n \nFixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives \n \n30.00% 39.80% \n3.70% 1.50% 19.40% 5.60% 0.00% \n \n30.00% 37.20% \n3.40% 1.40% 17.80% 5.20% 5.00% \n \n(0.50)% 9.00% \n12.00% 13.50% \n8.00% 12.00% 10.50% \n \nTotal \n \n100.00% 100.00% \n \n* Rates shown are net of the 2.75% assumed rate of inflation \n \nDiscount 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. \n \n- 19 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nSensitivity 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: \n \nTeachers Retirement System: \nInstitution's proportionate share of the net pension liability \n \n1% Decrease (6.50%) \n \nCurrent discount rate \n(7.50%) \n \n1% Increase (8.50%) \n \n$ 48,691,028 $ 31,282,134 $ 16,948,780 \n \nEmployees' Retirement System: \nUniversity's proportionate share of the net pension liability \n \n1% Decrease (6.50%) \n \nCurrent discount rate \n(7.50%) \n \n$ \n \n270,463 $ \n \n199,576 $ \n \n1% Increase (8.50%) \n139,167 \n \nPension 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. \n \nB. Defined Contribution Plan \n \nRegents Retirement Plan \n \nPlan 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. \n \nFunding 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 2017, 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. \n \nThe Institution and the covered employees made the required contributions of $1,592,447 (9.24%) and $1,034,056 (6%), respectively. \n \nVALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. \n \n- 20 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nNOTE 12: RISK MANAGEMENT \nThe USG offers its employees and retirees under the age of 65 access to four different healthcare plan options. For the USG's Plan Year 2017, the following healthcare plan options were available: \n BlueChoice HMO  Comprehensive Care  Consumer Choice HSA  Kaiser Permanente HMO \nThe 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. \nRetirees 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. \nThe 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. \nThe 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. \nA 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. \nThe 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. \nNOTE 13: CONTINGENCIES \nAmounts 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. \n \n- 21 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2017 \n \nEXHIBIT \"D\" \n \nLitigation, 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, 2017. \nNOTE 14: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \nPursuant 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. \nThe 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. \nAs of June 30, 2017, there were 218 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2017, the Institution recognized as incurred $1,698,991 of expenditures, which was net of $185,698 of participant contributions. \nNOTE 15: SUBSEQUENT EVENT \nThe Board of Regents of the University System of Georgia (USG) has directed the Chancellor of the USG to pursue consolidation of Georgia Southern University and Armstrong State University, pending Southern Association of Colleges and Schools Commission on Colleges (SACSCOC) approval. If approved by the accreditation agency and the Board of Regents of the University System of Georgia the consolidation will be effective in January 2018. \n \n- 22 - \n \n SUPPLEMENTARY INFORMATION - 23 - \n \n       (This page left intentionally blank) \n \n SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS \n \n (This page left intentionally blank) \n \n ARMSTRONG STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS \nYEAR ENDED JUNE 30, 2017 \n \nCOMMUNICATION OF INTERNAL CONTROL DEFICIENCIES \n \nThe auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness. \nA 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. \n \nInternal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below: \n \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \n \nNo matters were reported. \n \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \n \nFA -2017-001 Monitoring of Logical Access Controls \n \nCompliance Requirement: \nInternal Control Impact: Compliance Impact: Federal Awarding Agency: Pass-Through Entity: CFDA Number and Title: Federal Award Number: Questioned Cost: \n \nActivities Allowed or Unallowed Eligibility Material Weakness Nonmaterial Noncompliance U. S. Department of Education None 84.SFA Student Financial Assistance Cluster Program P268K171292 (Year: 2017) $14,114.00 \n \nDescription: Institution policies and procedures were insufficient to provide adequate monitoring of the activities of personnel with access to the student information system used to process student financial assistance awards. \n \nCriteria: Management of the Institution is responsible for monitoring logical access controls that provide reasonable assurance that transactions are properly processed and reported, including the awarding of financial assistance to students. \n \nCondition: Our review of the established internal control structure associated with the student information system revealed deficiencies in the monitoring of logical access controls intended to protect student financial assistance information from unauthorized access, manipulation and corruption. \n \n- 1 - \n \n ARMSTRONG STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS \nYEAR ENDED JUNE 30, 2017 \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nThe details related to these deficiencies have been provided to Institution Management in accordance with Official Code of Georgia Annotated 50-6-9. \nQuestioned Cost: Questioned costs of $14,114.00 were identified for one student who received student financial assistance in excess of their eligible need. \nCause: In discussing these deficiencies with management, they stated that the cause was directly related to ineffective monitoring of user access to the student financial assistance processes. \nEffect or Potential Effect: Failure to maintain adequate internal controls related to logical access increases the risk that misappropriation of assets, fraud, errors, irregularities and/or noncompliance with Federal regulations could occur. \nRecommendation: Management should review and enhance their policies and procedures to ensure the monitoring of activities performed by users with access to the student information system. Additionally, management should ensure proper segregation of duties as it relates to student financial assistance processes. \nViews of Responsible Officials and Corrective Action plans: We concur with this finding. Management is currently reviewing, monitoring, and developing procedures to provide adequate controls of personnel with access to the student information system used to process student financial assistance awards. Additionally, the cost in question of $14,114.00 has been returned to the Department of Education. \nOTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) \nUntimely Enrollment Reporting Observation: Our testing of 19 students who withdrew during the Fall 2016 and Spring 2017 semesters revealed that 14 of the students' withdrawn enrollment statuses were not reported to the National Student Loan Data System (NSLDS) within the required 30 days or 60 days if a roster file was previously scheduled to be submitted. \nRecommendation: The Institution should implement policies and procedures to ensure that all changes in student enrollment statuses are reported in a timely manner. \nViews of Responsible Officials and Corrective Action Plans: We concur with this deficiency. Management has developed and implemented processes to update enrollment data in NSLDS as students withdraw from the University during the semester. \nContact Information: Tracey Mingo Director, Financial Aid tmingo@georgiasouthern.edu 912.478.1263 912.344.2624 \n- 2 - \n \n "},{"id":"dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2016-belec-p-btext","title":"Armstrong State University, Savannah, Georgia, management report for fiscal year ended 2016 June 30","collection_id":"dlg_ggpd","collection_title":"Georgia Government Publications","dcterms_contributor":["Georgia. Department of Audits and Accounts, issuing body."],"dcterms_spatial":["United States, Georgia, 32.75042, -83.50018"],"dcterms_creator":["Georgia. Department of Audits and Accounts"],"dc_date":["2016-06-30"],"dcterms_description":["Began with: Fiscal year ended June 30, 2016?","Issued by Georgia. Department of Audits and Accounts.","Fiscal year ended June 30, 2016 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts); title from PDF cover (Georgia Government Publications database, viewed March 24, 2020).","Fiscal year ended June 30, 2017 (received via FTP on January 31, 2018 from Georgia Department of Audits and Accounts) (Georgia Government Publications database, viewed March 24, 2020)."],"dc_format":["application/pdf"],"dcterms_identifier":null,"dcterms_language":["eng"],"dcterms_publisher":["Atlanta, Ga. : Georgia. Department of Audits and Accounts"],"dc_relation":null,"dc_right":["http://rightsstatements.org/vocab/InC/1.0/"],"dcterms_is_part_of":null,"dcterms_subject":["Armstrong State University--Appropriations and expenditures--Periodicals","Auditors' reports--Georgia--Periodicals","Financial statements--Georgia--Periodicals.","Auditors' reports","Expenditures, Public","Financial statements","Georgia","Periodicals"],"dcterms_title":["Armstrong State University, Savannah, Georgia, management report for fiscal year ended 2016 June 30"],"dcterms_type":["Text"],"dcterms_provenance":["University of Georgia. Map and Government Information Library"],"edm_is_shown_by":["https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2016-belec-p-btext"],"edm_is_shown_at":["https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-ba800-b-pr1-ba692-b2016-belec-p-btext"],"dcterms_temporal":null,"dcterms_rights_holder":null,"dcterms_bibliographic_citation":null,"dlg_local_right":null,"dcterms_medium":["reports"],"dcterms_extent":null,"dlg_subject_personal":null,"iiif_manifest_url_ss":null,"dcterms_subject_fast":null,"fulltext":"ARMSTRONG STATE UNIVERSITY \nSAVANNAH, GEORGIA \nMANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2016 \nA Member Institution of the University System of Georgia \n \n ARMSTRONG STATE UNIVERSITY - TABLE OF CONTENTS - \n \nSECTION I \nFINANCIAL \nLETTER OF TRANSMITTAL \nSELECTED FINANCIAL INFORMATION \nEXHIBITS \nA STATEMENT OF NET POSITION - (GAAP BASIS) \nB STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION (GAAP BASIS) \nC STATEMENT OF CASH FLOWS - (GAAP BASIS) \nD SELECTED FINANCIAL NOTES \nSUPPLEMENTARY INFORMATION \nSCHEDULES \n1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT \n(STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET \nBY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND \n4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND \n \nPage \n2 3 4 6 \n26 27 28 30 \n \nSECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS \n \n (This page left intentionally blank) \n \n SECTION I FINANCIAL \n \n (This page left intentionally blank) \n \n Greg S. Griffin \nSTATE AUDITOR \n(404) 656-2174 \n \nDEPARTMENT OF AUDITS AND ACCOUNTS \n270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 \nAugust 31, 2017 \n \nHonorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia \nand Dr. Jennifer L. Frum, President Armstrong State University \n \nLadies and Gentlemen: \n \nThis Management Report contains information pertinent to the Armstrong State University's compliance with the requirements of the Southern Association of Colleges and Schools Commission on Colleges (COC) Core Requirement 2.11.1 (Financial resources) as of and for the year ended June 30, 2016. Included in this report is a section on findings and other items for any matters that came to our attention during our engagement. The other information contained in this report is the representation of management. Accordingly, we do not express an opinion or any form of assurance on it. \n \nAdditionally, we have performed certain procedures at Armstrong State University to support our audits of the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report \npursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2016. \n \nThis report is intended solely for the information and use of the management of Armstrong State University, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties. \n \nRespectfully, \n \nGreg S. Griffin State Auditor \n \n (This page left intentionally blank) \n \n SELECTED FINANCIAL INFORMATION - 1 - \n \n ARMSTRONG STATE UNIVERSITY STATEMENT OF NET POSITION - (GAAP BASIS) \nJUNE 30, 2016 \nASSETS \nCurrent Assets Cash and Cash Equivalents Accounts Receivable, Net Receivables - Federal Financial Assistance Receivables - Student Tuition and Fees, net Georgia State Financing \u0026 Investment Commission Receivables - Other Due from Affiliated Organizations Prepaid Items \nTotal Current Assets \nNoncurrent Assets Non-current Cash (Externally Restricted) Investments (Externally Restricted) Due from USO - Capital Liability Reserve Fund Investments Capital Assets, Net \nTotal Noncurrent Assets \nTotal Assets \nDeferred Outflows of Resources Deferred Loss on Defined Benefit Pension Plan \nLIABILITIES \nCurrent Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Retainages Payable Deposits Advances (Including Tuition and Fees) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences \nTotal Current Liabilities \nNoncurrent Liabilities Lease Purchase Obligations Compensated Absences Net Pension Liability \nTotal Noncurrent Liabilities \nTotal Liabilities \nDeferred Inflows of Resources Deferred Gain on Defined Benefit Pension Plan Deferred Gain on Debt Refunding \nTotal Deferred Inflows of Resources \nNET POSITION \nNet Investment in Capital Assets Restricted for \nNonexpendable Expendable Unrestricted \nTotal Net Position \n- 2 - \n \nEXHIBIT \"A\" \n \n$ \n \n20,215,819 \n \n897,897 1,458,909 \n843,469 706,496 \n69,719 768,382 \n \n24,960,691 \n \n155,711 2,816,601 \n220,862 271,909 109,351,838 \n112,816,921 \n137,777,612 \n \n2,842,014 \n \n582,502 177,226 166,694 204,166 151,590 \n62,637 3,541,601 \n66,500 1,221,222 \n819,796 1,355,744 \n8,349,678 \n38,118,235 581,033 \n24,075,146 \n62,774,414 \n71,124,092 \n2,370,285 3,137,922 \n5,508,207 \n \n66,920,129 \n2,936,644 355,106 \n(6,224,552) \n \n$ \n \n63,987,327 \n \n ARMSTRONG STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS) \nYEAR ENDED JUNE 30, 2016 \n \nEXHIBIT \"B\" \n \nOPERATING REVENUES \nStudent Tuition and Fees (Net) Grants and Contracts \nFederal 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 \nTotal Operating Revenues \nOPERATING EXPENSES \nSalaries Faculty Staff \nEmployee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation \nTotal Operating Expenses \nOperating Loss \nNONOPERATING REVENUES (EXPENSES) \nState Appropriations Grants and Contracts \nFederal Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Nonoperating Revenues (Expenses) \nNet Nonoperating Revenues \nIncome Before Other Revenues, Expenses, Gains, or Losses \nCapital Grants and Gifts State \nIncrease in Net Position \nNet Position - Beginning of Year \nNet Position - End of Year \n \n$ \n \n35,897,629 \n \n1,372,606 78,418 \n1,704,721 164,557 25 \n \n3,651,986 252,715 \n3,589,720 473,576 283,128 \n2,793,805 2,600,677 \n651,418 \n \n53,514,981 \n \n20,803,103 20,907,255 12,042,288 \n313,888 806,756 10,979,260 2,678,063 21,354,359 5,017,090 \n94,902,062 \n(41,387,081) \n \n29,919,942 \n12,706,099 801,532 103,072 \n(1,823,286) (32,087) \n41,675,272 \n288,191 \n3,466,521 \n3,754,712 \n60,232,615 \n \n$ \n \n63,987,327 \n \n- 3 - \n \n ARMSTRONG STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS) \nYEAR ENDED JUNE 30, 2016 \nCASH FLOWS FROM OPERATING ACTIVITIES Payments from Customers Grants and Contracts (Exchange) Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships \nNet Cash Used by Operating Activities \nCASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes \nNet Cash Flows Provided by Noncapital Financing Activities \nCASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Proceeds from Sale of Capital Assets Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases \nNet Cash Used by Capital and Related Financing Activities \nCASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Investment Income \nNet Cash Provided by Investing Activities \nNet Increase in Cash \nCash and Cash Equivalents - Beginning of Year \nCash and Cash Equivalents - End of Year \n \nEXHIBIT \"C\" \n \n$ \n \n50,115,846 \n \n3,724,545 \n \n(37,443,798) \n \n(42,373,198) \n \n(10,979,260) \n \n(36,955,865) \n \n29,919,942 (165,271) \n13,390,118 \n43,144,789 \n \n3,869,192 6,750 \n(6,681,969) (376,978) \n(2,000,848) \n(5,183,853) \n \n43,477 62,712 106,189 1,111,260 19,260,270 \n \n$ \n \n20,371,530 \n \n- 4 - \n \n ARMSTRONG STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS) \nYEAR ENDED JUNE 30, 2016 \nRECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES: \nOperating Loss Adjustments to Reconcile Operating Loss to Net Cash \nUsed by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Prepaid Items Accounts Payable Salaries Payable Deposits Advances (Including Tuition and Fees) Other Liabilities Compensated Absences Net Pension Liability Change in Deferred Inflows/Outflows of Resources: Deferred Inflows of Resources Deferred Outflows of Resources \nNet Cash Used by Operating Activities \nNONCASH ACTIVITY Non-capital Financing Activities Accounts Receivable, Net of Allowances Capital Financing Activities Accounts Receivable Accrual, Net of Allowances Loss on Disposal of Capital Assets Accrual of Capital Asset Related Payables Gain on Capital Debt Refunded Amortization of Deferred Gain of Capital Debt Refunded Unrealized Gain on Investments \n \nEXHIBIT \"C\" \n \n$ (41,387,081) \n5,017,090 \n374,706 (433,059) 106,823 \n56,060 496 \n(41,296) (60,685) 154,038 3,330,910 \n(4,751,227) 677,360 \n$ (36,955,865) \n \n$ \n \n117,513 \n \n$ \n \n3,292,319 \n \n$ \n \n(38,837) \n \n$ \n \n(355,755) \n \n$ \n \n(3,315,484) \n \n$ \n \n177,562 \n \n$ \n \n40,360 \n \n- 5 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nNOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES \nREPORTING ENTITY As defined by Official Code of Georgia Annotated (O.C.G.A)  20-3-50, Armstrong State University (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. \nThe 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. \nThe 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. They 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. \nThe accompanying basic financial statements should be read in conjunction with the State's CAFR. The State's CAFR as of and for the year ended June 30, 2016 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. \nBASIS OF ACCOUNTING AND FINANCIAL STATEMENT PREPARATION The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the Institution's assets, deferred outflows, liabilities, deferred inflows, net position, revenues, expenses, changes in net position and cash flows. \nThe 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. \n \n- 6 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nNEW 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. The adoption of this statement does not have a significant impact on the Institution's financial statements. \nFor 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 No. 68, and Amendments to Certain Provisions of GASB Statements No. 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. \nFor 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. \nFor 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. \nDUE 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 institutions 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 institution 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. \n \n- 7 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nNET POSITION The Institution's net position is classified as follows: \nNet 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. 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. \nRestricted  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 System of Georgia permits each individual Institution to use prudent judgment in the spending of current realized and unrealized endowment appreciation. Donor-restricted endowment appreciation is periodically transferred to restricted-expendable accounts for expenditure as specified by the purpose of the endowment. The 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. \nRestricted  expendable includes resources in which the Institution is legally or contractually obligated to spend resources in accordance with restrictions by external third parties. \nUnrestricted: 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 $6,068.40. 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: \n 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. \n Auxiliary Enterprises Renewals and Replacement (R\u0026R) Reserve  These resources can be used for renewals and replacement of capitalizable assets related to auxiliary services. This R\u0026R reserve can also be used for major renovations and rehabilitations auxiliary projects that do not meet the capitalization threshold. \n \n- 8 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nSCHOLARSHIP ALLOWANCES Scholarship allowances are the differences 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 $11,520,498 and $52,686, respectively. \nNOTE 2: DEPOSITS AND INVESTMENTS \nDEPOSITS 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: \n1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia. \n2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia. \n3. 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. \n4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia. \n5. 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. \n6. 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. \nAt June 30, 2016, the carrying value of deposits was $10,271,948 and the bank balance was $11,884,144. Of the Institution's deposits, $11,884,144 were uninsured. Of these uninsured deposits, $11,884,144 were collateralized with securities held by the financial institution's trust department or agent, but not in the Institution's name. \n \n- 9 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nINVESTMENTS At June 30, 2016, the carrying value of the Institution's investments was $13,179,692, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pool as follows: \n \nInvestment Type \n \nValue \n \nInvestment Pool Board of Regents Short-Term Fund \nLegal Fund Diversified Fund \n \n10,091,182 \n257,409 2,831,101 \n \nTotal Investment Pools \n \n$ \n \n13,179,692 \n \nThe 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. \n \nNOTE 3: ACCOUNTS RECEIVABLE \n \nAccounts receivable consisted of the following at June 30, 2016: \n \nStudent Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission Due from Affiliated Organizations Due from Other USG Institutions Other \nLess Allowance for Doubtful Accounts \n \n$ \n \n1,315,757 \n \n895,812 \n \n897,897 \n \n843,469 \n \n69,719 \n \n220,862 \n \n706,496 \n \n4,950,012 752,660 \n \nNet Accounts Receivable \n \n$ \n \n4,197,352 \n \n- 10 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nNOTE 4: CAPITAL ASSETS Following are the changes in capital assets for the year ended June 30, 2016: \n \nBeginning Balance July 1, 2015 \n \nCapital Leases Recategorization \n \nAdditions \n \nReductions \n \nEnding Balance June 30, 2016 \n \nCapital Assets, Not Being Depreciated: Land Construction Work-In-Progress \n \n$ \n \n5,318,254 $ \n \n10,553,517 \n \n- $ \n \n- $ \n \n- $ \n \n- \n \n6,162,515 \n \n13,253,362 \n \n5,318,254 3,462,670 \n \nTotal Capital Assets, Not Being Depreciated \nCapital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections \nTotal Assets Being Depreciated \n \n15,871,771 \n \n- \n \n6,162,515 \n \n13,253,362 \n \n8,780,924 \n \n3,782,462 78,853,276 \n3,246,634 12,372,748 48,158,488 10,767,963 \n16,575 \n157,198,146 \n \n48,158,488 \n(48,158,488) \n- \n- \n \n12,265,639 \n814,231 \n114,807 - \n13,194,677 \n \n- \n811,977 \n47,398 - \n859,375 \n \n3,782,462 139,277,403 \n3,246,634 12,375,002 \n10,835,372 \n16,575 \n169,533,448 \n \nLess: Accumulated Depreciation: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections \nTotal Accumulated Depreciation \nTotal Capital Assets, Being Depreciated, Net \nCapital Assets, Net \n \n1,668,723 31,728,021 \n2,030,622 8,356,175 10,910,665 10,065,172 \n6,604 \n64,765,982 \n \n10,910,665 \n(10,910,665) - \n- \n \n133,209 3,428,400 \n90,573 1,123,044 \n241,450 \n414 \n5,017,090 \n \n773,140 47,398 - \n820,538 \n \n1,801,932 46,067,086 \n2,121,195 8,706,079 \n10,259,224 \n7,018 \n68,962,534 \n \n92,432,164 \n \n- \n \n8,177,587 \n \n38,837 \n \n100,570,914 \n \n$ 108,303,935 $ \n \n- $ 14,340,102 $ 13,292,199 $ 109,351,838 \n \n- 11 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nA comparison of depreciation expense for the last three fiscal years is as follows: \n \nFiscal Year \n \nDepreciation Expense \n \n2016 2015 2014 \n \n$ \n \n5,017,090 \n \n$ \n \n6,715,967 \n \n$ \n \n6,813,165 \n \nNOTE 5: ADVANCES (INCLUDING TUITION AND FEES) Advances (Including Tuitions and Fees) consisted of the following at June 30, 2016: \n \nPrepaid Tuition and Fees \n \n$ \n \n3,031,798 \n \nOther - Advances \n \n509,803 \n \nTotals \n \n$ \n \n3,541,601 \n \nNOTE 6: LONG-TERM LIABILITIES \n \nThe Institution's Long-Term Liability activity for the year ended June 30, 2016 was as follows: \n \nLeases Lease Obligations \n \nBeginning Balance July 1, 2015 \n \nAdditions \n \nReductions \n \nEnding Balance June 30, 2016 \n \nCurrent Portion \n \n$ 42,630,493 $ \n \n- $ 3,692,462 $ 38,938,031 $ \n \n819,796 \n \nOther Liabilities Compensated Absences Net Pension Liability \n \n1,782,738 20,161,073 \n \n1,445,882 3,979,150 \n \n1,291,843 65,077 \n \n1,936,777 24,075,146 \n \n1,355,744 - \n \nTotal \n \n21,943,811 \n \n5,425,032 \n \n1,356,920 \n \n26,011,923 \n \n1,355,744 \n \nTotal Long-Term Obligations $ 64,574,304 $ 5,425,032 $ 5,049,382 $ 64,949,954 $ \n \n2,175,540 \n \n- 12 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nNOTE 7: NET POSITION Changes in Net Position for the year ended June 30, 2016 are as follows: \n \nBeginning Balance July 1, 2015 \n \nAdditions \n \nReductions \n \nEnding Balance June 30, 2016 \n \nNet Investments in Capital Assets $ \n \n65,673,442 $ 9,796,292 $ \n \n8,549,605 $ 66,920,129 \n \nRestricted Nonexpendable \n \n3,283,548 \n \n17,545,226 \n \n17,537,024 \n \n3,291,750 \n \nUnrestricted Net Position \n \n(8,724,375) \n \n82,966,921 \n \n80,467,098 \n \n(6,224,552) \n \nTotal Net Position \n \n$ \n \n60,232,615 $ 110,308,439 $ 106,553,727 $ 63,987,327 \n \nThe amounts within each category at June 30, 2016 were as follows: \n \nNet Position \n \nNet Investments in Capital Assets \nRestricted for Nonexpendable Permenant Endowment \nExpendable Restricted E\u0026G and Other Organized Activities \n \n$ \n \n66,920,129 \n \n2,936,644 \n \n355,106 \n \nUnrestricted Auxiliary Operations R \u0026 R Reserve Reserve for Encumbrances Other Unrestricted USO Reserve Fund \nTotal Unrestricted \nTotal Net Position \n \n15,897,539 2,390,628 5,408,183 \n(30,141,764) 220,862 \n(6,224,552) \n \n$ \n \n63,987,327 \n \n- 13 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nNOTE 8: ENDOWMENTS \nDonor 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 Institutions to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determined to be prudent. Realized and unrealized appreciation in excess of the amount budgeted for current spending is retained by the endowments. Current year net appreciation for the endowment accounts was $4,503 and is reflected as a decrease in expendable restricted net position. \nFor endowment funds where the donor has not provided specific instructions, investment return of the Institution's endowment funds is predicated on the total return concept. Annual payouts from the Institution's endowment funds are based on a spending policy which limits spending to 4.5% of the endowments principal's market value. To the extent that the total return for the current year exceeds the payout, the excess is added to principal. If current year earnings do not meet the payout requirements, the Institution uses accumulated income and appreciation from restricted expendable net asset endowment balances to make up the difference. \nNOTE 9: LEASE OBLIGATIONS \nThe 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. \nCAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2017 and 2039. Expenditures for fiscal year 2016 were $2,377,826 of which $2,000,848 represented interest. Total principal paid on capital leases was $376,978 for the fiscal year ended June 30, 2016. Interest rates range from 2 percent to 5 percent. \nDuring fiscal year 2016 the Armstrong Education Properties Foundation (EPFI) refinanced the bond debt associated with the Armstrong Center and the Student Recreation Center, As a result, the University recognized a deferred gain on the associated capital leases of $3,315,484. For fiscal year 2016, the University realized $177,562 of this gain, leaving $3,137,922 to be amortized over the remaining lives of the leases. \nThe following is a summary of the carrying values of assets held under capital lease at June 30, 2016: \n \nDescription Leased Buildings and Building Improvements \n \nGross Amount \n \nAccumulated Depreciation \n \nNet Capital Assets Held Under \nCapital Lease at \nJune 30, 2016 \n \nOutstanding Balance Per Lease \nSchedules at \nJune 30, 2016 \n \n(+) \n \n(-) \n \n(=) \n \n$ 51,688,801 $ 14,276,119 $ \n \n37,412,682 $ \n \n38,938,031 \n \nCertain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms. \n \n- 14 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nThe following capital lease schedule lists the pertinent information for each lease including the building name, lessor, total principal amount, lease term, lease begin date, lease end date, and remaining long-term debt as of June 30, 2016: \n \nDescription \n \nLessor (1) \n \nCAPITAL LEASE SCHEDULE \n \nOriginal Principal \n \nLease Term \n \nBegin \n \nOutstanding Principal Balance \n \nEnd \n \nat June 30, 2016 \n \nStudent Rec Center Student Union Armstrong Center \nTotal Leases \n \nEPFI Foundation $ EPFI Foundation EPFI Foundation \n$ \n \n5,284,696 23,162,477 17,506,253 \n45,953,426 \n \n26 years 26 years 25 years \n \n7/2006 3/2010 6/2010 \n \n5/2033 $ 6/2039 5/2035 \n$ \n \n3,531,506 22,912,224 12,494,301 \n38,938,031 \n \n(1) These capital leases are with related entities. \n \nOPERATING LEASES The Institution's non-cancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2017 through 2021. 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. \n \nFacilities and equipment rented through operating leases are not recorded as assets on the balance sheet. Operating lease expenditures totaled $856,448 for the fiscal year ended June 30, 2016. \n \n- 15 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nFUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2016, were as follows: \n \nReal Property and Equipment \n \nCapital \n \nOperating \n \nLeases \n \nLeases \n \nYear Ending June 30: 2017 2018 2019 2020 2021 2022 - 2026 2027 - 2031 2032 - 2036 2037 - 2039 \n \n$ \n \n2,705,852 $ \n \n2,737,149 \n \n2,760,698 \n \n2,806,516 \n \n2,826,618 \n \n14,657,400 \n \n15,621,373 \n \n14,843,881 \n \n5,919,780 \n \n819,687 830,206 796,374 844,873 \n70,577 \n \nTotal Minimum Lease Payments \n \n64,879,267 $ \n \n3,361,717 \n \nLess: Interest \n \n25,941,236 \n \nPrincipal Outstanding \n \n$ \n \n38,938,031 \n \nNOTE 10: RETIREMENT PLANS \nThe 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. \nIn addition to the retirement plans administered by TRS and ERS, USG administers the Regents Retirement Plan as an optional retirement plan. \n \n- 16 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nThe 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. \nA. Defined Benefit Plans: \nTeachers Retirement System of Georgia and Employees' Retirement System of Georgia \nSummary of Significant Accounting Policies \nPensions: 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. \nGeneral Information about the Teachers Retirement System \nPlan 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. \nBenefits 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. \nContributions: 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 $2,381,333 for the year ended June 30, 2016. Contributions are expected to finance any unfunded accrued liability. \n \n- 17 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nGeneral Information about the Employees' Retirement System \nPlan 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. \nBenefits 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. \nUnder 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. \nRetirement 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. \nContributions: 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 $24,247 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. \n \n- 18 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nPension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions \nAt 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 0.155913%, which was an increase of 0.000471% from its proportion measured as of June 30, 2014. At June 30, 2015, the Institution's ERS proportion was 0.008366%, which was a decrease of 0.002406% from its proportion measured as of June 30, 2014. \nFor the year ended June 30, 2016, the Institution recognized pension expense of $2,164,167 for TRS and $42,004 for ERS. At June 30, 2016, the Institution reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: \n \nTRS \n \nDeferred \n \nDeferred \n \nOutflows of \n \nInflows of \n \nResources \n \nResources \n \nERS \n \nDeferred \n \nDeferred \n \nOutflows of \n \nInflows of \n \nResources \n \nResources \n \nDifferences between expected and actual \n \nexperience \n \n$ \n \nNet difference between projected and actual earnings on pension plan investments \n \nChanges in proportion and differences between Institution contributions and proportionate share of contributions \n \n- $ \n \n208,772 $ \n \n- \n \n2,002,174 \n \n423,051 \n \n64,817 \n \n- $ 13,383 \n \n2,708 24,455 67,359 \n \nInstitution contributions subsequent to the \n \nmeasurement date \n \n2,381,333 \n \n- \n \n24,247 \n \n- \n \nTotal \n \n$ \n \n2,804,384 $ \n \n2,275,763 $ \n \n37,630 $ \n \n94,522 \n \n- 19 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nInstitution contributions subsequent to the measurement date of $2,381,333 for TRS and $24,247 for ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: \n \nYear Ending June 30: \n \nTRS \n \nERS \n \n2017 2018 2019 2020 2021 \n \n$ (870,445) $ \n \n$ (870,445) $ \n \n$ (870,446) $ \n \n$ \n \n771,648 \n \n$ \n \n$ \n \n(13,024) $ \n \n(44,229) (34,256) (10,900) \n8,246 - \n \nActuarial 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: \n \nTeachers Retirement System: \n \nInflation Salary increases Investment rate of return \n \n3.00% 3.75  7.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation \n \nMortality 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. \n \nThe 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. \n \nEmployees' Retirement System \n \nInflation Salary increases Investment rate of return \n \n3.00% \n5.45  9.25%, including inflation 7.50%, net of pension plan investment expense, including inflation \n \nMortality 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. \nThe 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. \n \n- 20 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nThe 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: \n \nAsset Class \n \nTarget Allocation \n \nLong-Term Expected Real Rate of Return * \n \nFixed Income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities \n \n30.00% 39.70% \n3.70% 1.60% 18.90% 6.10% \n \n3.00% 6.50% 10.00% 13.00% 6.50% 11.00% \n \n100.00% \n \n* Rates shown are net of the 3.00% assumed rate of inflation \nDiscount 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. \n \n- 21 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nSensitivity 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: \n \nTeachers Retirement System: \nInstitution's proportionate share of the net pension liability \n \n1% Decrease (6.50%) \n \nCurrent Discount Rate \n(7.50%) \n \n1% Increase (8.50%) \n \n$ 40,788,875 $ 23,736,206 $ 9,680,749 \n \nEmployees' Retirement System: \nInstitution's proportionate share of the net pension liability \n \n1% Decrease (6.50%) \n \nCurrent Discount Rate \n(7.50%) \n \n1% Increase (8.50%) \n \n$ \n \n480,460 $ \n \n338,940 $ \n \n218,289 \n \nPension 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. \nB. Defined Contribution Plan: \nRegents Retirement Plan \nPlan 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. \nFunding 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 6.00% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times. \nThe Institution and the covered employees made the required contributions of $1,792,481 (9.24%) and $1,163,949 (6%), respectively. \n- 22 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nVALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. \nNOTE 11: RISK MANAGEMENT \nThe 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: \n BlueChoice HMO  Comprehensive Care  Consumer Choice HSA  Kaiser Permanente HMO \nThe 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. \nRetirees 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. \nThe 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, a fully insured HMO healthcare plan is also offered to System employees. \nThe 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. \nA 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. \nThe 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. \n \n- 23 - \n \n ARMSTRONG STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2016 \n \nEXHIBIT \"D\" \n \nNOTE 12: CONTINGENCIES \nAmounts 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. \nLitigation, 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. \nNOTE 13: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS \nPursuant 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. \nThe 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. \nAs of June 30, 2016, there were 217 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, the Institution recognized as incurred $1,004,329 of expenditures, which was net of $358,960 of participant contributions. \nNOTE 14: SUBSEQUENT EVENT \nThe Board of Regents of the University System of Georgia (USG) has directed the Chancellor of the USG to pursue consolidation of Georgia Southern University and Armstrong State University, pending Southern Association of Colleges and Schools Commission on Colleges (SACSCOC) approval. If approved by SACSCOC and the Board of Regents of the University System of Georgia, the consolidation is expected to be effective January 2018. \n \n- 24 - \n \n SUPPLEMENTARY INFORMATION - 25 - \n \n ARMSTRONG STATE UNIVERSITY BALANCE SHEET (STATUTORY BASIS) \nBUDGET FUND JUNE 30, 2016 \nASSETS \nCash and Cash Equivalents Investments Accounts Receivable \nFederal Financial Assistance Other Prepaid Expenditures \nTotal Assets \nLIABILITIES AND FUND EQUITY \nLiabilities Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue \nTotal Liabilities \nFund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus \nTotal Fund Balances \nTotal Liabilities and Fund Balances \n \nSCHEDULE \"1\" \n \n$ \n \n5,292,193.50 \n \n11,000.00 \n \n376,635.17 5,068,449.50 \n528,104.70 \n \n$ \n \n11,276,382.87 \n \n$ \n \n171,327.93 \n \n5,216,828.01 \n \n15,968.04 \n \n3,071,484.04 \n \n8,475,608.02 \n \n880,931.79 625,122.44 140,790.46 360,899.22 451,984.86 334,977.68 \n6,068.40 \n2,800,774.85 \n \n$ \n \n11,276,382.87 \n \nStatutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \n- 26 - \n \n ARMSTRONG STATE UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) \nBUDGET FUND YEAR ENDED JUNE 30, 2016 \n \nSCHEDULE \"2\" \n \nREVENUES State Appropriation State General Funds Other Funds Total Revenues \nCARRY-OVER FROM PRIOR YEARS Transfers from Reserved Fund Balance Total Funds Available \nEXPENDITURES Teaching \n \nBUDGET \n \nACTUAL \n \nVARIANCE FAVORABLE (UNFAVORABLE) \n \n$ \n \n29,927,995.00 $ \n \n29,927,995.00 $ \n \n0.00 \n \n62,317,476.00 \n \n59,763,714.62 \n \n(2,553,761.38) \n \n92,245,471.00 \n \n89,691,709.62 \n \n(2,553,761.38) \n \n0.00 92,245,471.00 \n \n2,851,559.29 92,543,268.91 \n \n2,851,559.29 297,797.91 \n \n92,245,471.00 \n \n90,111,000.00 \n \n2,134,471.00 \n \nExcess of Funds Available over Expenditures \n \n$ \n \nFUND BALANCE JULY 1 \n \nReserved Unreserved \n \nADJUSTMENTS \n \nPrior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned \nto Board of Regents - University System Office Year Ended June 30, 2015 \nPrior Year Reserved Fund Balance Included in Funds Available \n \nFUND BALANCE JUNE 30 \n \n0.00 \n \n2,432,268.91 $ \n \n2,432,268.91 \n \n3,207,761.54 8,053.32 \n \n14,648.46 (2,344.77) \n \n(8,053.32) (2,851,559.29) \n \n$ \n \n2,800,774.85 \n \nSUMMARY OF FUND BALANCE \nReserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over \nTotal Reserved \nUnreserved Surplus \n \n$ \n \n880,931.79 \n \n625,122.44 \n \n140,790.46 \n \n360,899.22 \n \n451,984.86 \n \n334,977.68 \n \n2,794,706.45 \n \n6,068.40 \n \nTotal Fund Balance \n \n$ \n \n2,800,774.85 \n \nStatutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \n- 27 - \n \n ARMSTRONG STATE UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE \n(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2016 \n \nTeaching State Appropriation State General Funds Other Funds \nTotal Operating Activity \n \nOriginal Appropriation \n \nAmended Appropriation \n \nFinal Budget \n \nCurrent Year Revenues \n \n$ \n \n29,912,995.00 $ \n \n29,912,995.00 $ \n \n29,927,995.00 $ 29,927,995.00 \n \n60,949,400.00 \n \n60,949,400.00 \n \n62,317,476.00 \n \n59,763,714.62 \n \n$ \n \n90,862,395.00 $ \n \n90,862,395.00 $ \n \n92,245,471.00 $ 89,691,709.62 \n \nStatutory basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \n- 28 - \n \n SCHEDULE \"3\" \n \nFunds Available Compared to Budget \n \nPrior Year \n \nAdjustments and \n \nTotal \n \nCarry-Over \n \nProgram Transfers \n \nFunds Available \n \nVariance Positive (Negative) \n \nExpenditures Compared to Budget \n \nVariance \n \nActual \n \nPositive \n \nExcess of Funds Available Over Expenditures \n \n$ \n \n0.00 $ \n \n2,851,559.29 \n \n0.00 $ 0.00 \n \n29,927,995.00 $ 62,615,273.91 \n \n0.00 $ 297,797.91 \n \n29,927,995.00 $ 60,183,005.00 \n \n0.00 $ 2,134,471.00 \n \n0.00 2,432,268.91 \n \n$ 2,851,559.29 $ \n \n0.00 $ 92,543,268.91 $ \n \n297,797.91 $ 90,111,000.00 $ \n \n2,134,471.00 $ \n \n2,432,268.91 \n \n- 29 - \n \n ARMSTRONG STATE UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE \n(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2016 \n \nTeaching State Appropriation State General Funds Other Funds \nTotal Teaching \nPrior Year Reserves Not Available for Expenditure Uncollectible Accounts Receivable \n \nBeginning Fund Balance July 1 \n \nFund Balance Carried Over from \nPrior Period as Funds Available \n \nReturn of Fiscal Year 2015 \nSurplus \n \nPrior Period Adjustments \n \n$ \n \n7,871.01 $ \n \n0.00 $ \n \n2,851,741.60 \n \n(2,851,559.29) \n \n2,859,612.61 \n \n(2,851,559.29) \n \n(7,871.01) $ (182.31) \n(8,053.32) \n \n5,876.59 6,427.10 \n12,303.69 \n \n356,202.25 \n \n0.00 \n \n0.00 \n \n0.00 \n \nBudget Unit Totals \n \n$ \n \n3,215,814.86 $ \n \n(2,851,559.29) $ \n \n(8,053.32) $ \n \n12,303.69 \n \nStatutory basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. \n- 30 - \n \n SCHEDULE \"4\" \n \nOther Adjustments \n \nEarly Return Fiscal Year 2016 \nSurplus \n \nExcess of Funds Available \nOver Expenditures \n \nEnding Fund Balance June 30 \n \nAnalysis of Ending Fund Balance \n \nReserved \n \nSurplus \n \nTotal \n \n$ \n \n0.00 $ \n \n(95,782.61) \n \n(95,782.61) \n \n0.00 $ 0.00 \n0.00 \n \n0.00 $ 2,432,268.91 \n \n5,876.59 $ 2,342,913.40 \n \n0.00 $ 2,342,721.59 \n \n2,432,268.91 \n \n2,348,789.99 \n \n2,342,721.59 \n \n5,876.59 $ \n \n5,876.59 \n \n191.81 \n \n2,342,913.40 \n \n6,068.40 \n \n2,348,789.99 \n \n95,782.61 \n \n0.00 \n \n0.00 \n \n451,984.86 \n \n451,984.86 \n \n0.00 \n \n451,984.86 \n \n$ \n \n0.00 $ \n \n0.00 $ \n \n2,432,268.91 $ 2,800,774.85 $ 2,794,706.45 $ \n \n6,068.40 $ 2,800,774.85 \n \nSummary of Ending Fund Balance Reserved \nDepartment Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus \nTotal Ending Fund Balance - June 30 \n \n$ \n \n880,931.79 $ \n \n625,122.44 \n \n140,790.46 \n \n360,899.22 \n \n451,984.86 \n \n334,977.68 \n \n0.00 \n \n$ 2,794,706.45 $ \n \n0.00 $ 0.00 0.00 0.00 0.00 0.00 \n \n880,931.79 625,122.44 140,790.46 360,899.22 451,984.86 334,977.68 \n \n6,068.40 \n \n6,068.40 \n \n6,068.40 $ 2,800,774.85 \n \n- 31 - \n \n (This page left intentionally blank) \n \n SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS \n \n (This page left intentionally blank) \n \n ARMSTRONG STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS \nYEAR ENDED JUNE 30, 2016 \nCOMMUNICATION OF INTERNAL CONTROL DEFICIENCIES \nThe auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness. \nA 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. \nInternal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below: \nFINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS \nNo matters were reported. \nFEDERAL AWARD FINDINGS AND QUESTIONED COSTS \nNo matters were reported. \n \n "}],"pages":{"current_page":1,"next_page":null,"prev_page":null,"total_pages":1,"limit_value":10,"offset_value":0,"total_count":2,"first_page?":true,"last_page?":true},"facets":[{"name":"type_facet","items":[{"value":"Text","hits":2}],"options":{"sort":"count","limit":16,"offset":0,"prefix":null}},{"name":"creator_facet","items":[{"value":"Georgia. 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