I need these three questions answered please? I am attaching the Budget Analysis and the CAFR for Georgia for reference. These questions are pertaining to the assignment labeled CAFR Budget Analysis. Can someone please help me?

• Indicate the activities accounted for in both internal service funds and major enterprise funds. Comment on whether any of these activities could also have been accounted for in a general or other governmental fund.
• How are the internal service fund activities reported in the government-wide statement of net assets? How are they reported in the proprietary funds statement of net assets?
• Did any of the internal service funds report significant operating surpluses or deficits for the year? Were any accumulated significant net asset balances over the years not invested in capital assets?

Running head: CAFR BUDGET ANALYSIS CAFR Budget Analysis Ajia Gaspard, Babara, Brett Bendich, Nitasha Martin ACC460 March 7, 2016 MARTIN GINSBURG 1 CAFR BUDGET ANALYSIS 2 CAFR Budget Analysis While there are substantial complications with an increasing issue of over populated areas and pollution, Georgia is one of the largest and most populated of the 50 United States with a substantial growth in the economy and state revenues. Recognized and acknowledged in the present day as the peach state, Georgia was founded in 1733 as one of the original thirteen states with an exceptionally diverse and escalating population. The administrative configuration of Georgia, which is extremely parallel to the federal government, includes an executive, legislative, and a judicial branch. Georgia has persistently sustained a progressively robust fiscal development within the preceding years and is anticipated to endure into upcoming economic years with hopes that it shall carry on as a universal target of commercial evolution. Due to aggregated and amassed degree of occupation, individual revenue, and seminary matriculation, the dynamic living of Georgia shall continue to fluctuate throughout the course of the future. Population The region and capacity now known as Georgia has been colonized for over 12,000 years. The most primitive acknowledged occupants, which are known as the Paleo and Archaic people living between B.C. 10,000 to B.C. 1,000, left a slight and diminutive indication of their societies outside ceramic rubbles and spear heads. Preceding to European exploration, the Indians of Georgia had accomplished and attained the maximum level of administrative association north of the Maya and Aztec States. These southeastern administrations have been designated chiefdoms by anthropologists. A chiefdom, which had been governed by an inbred and often partially deific paramount, was naturally a multiple municipality society with a residency in the thousands. Chiefdoms had a sense of a Mississippian lifestyle, which meant that the women acted as farmers while the men operated as hunters and fishermen. CAFR BUDGET ANALYSIS 3 The population of Georgia has significantly increased between the years of 1790 and 1830, ranking among the nation's 100 firmest emerging. It is now the twenty-fourth largest and eight most densely colonized of the fifty United States. The present-day population of Georgia comprises of 10,097,343 individuals ("Population Estimates. ", 2016), which represents a drastic increase compared to the most recent years. It has also been concluded that the female population is far more superior to males. In recent times, new commerce and trades endure developing in Georgia to contribute with the extreme dealings of residency. Government Structure The state of Georgia has a government structure that is similar to the federal government. That is, an executive, legislative, and a judicial branch. The chief executive of the state is the Governor. The current Governor serving is Nathan Deal. He is part of the executive branch, along with the Lieutenant Governor, and other elected officials around the state. The maximum period that one can serve as governor is two four-year terms. The Lieutenant Governor assumes the office of Governor if there is a vacancy in the Governor office. Other elected officials include the Secretary of State, the Attorney General, and the State School Superintendent. The legislative branch is also called the Georgia General Assembly. It is made up of the State Senate and the House of Representatives. Legislators do not have any term limits as Governors do. Their responsibility is to serve the local districts. That includes submitting and passing bills and resolutions that affect the state and passing the state's budget for the next fiscal year. Before these bills become law, the Governor must sign them first. The Judicial branch consists of the Supreme Court, the Court of Appeals, Superior Courts, District Attorneys, and judicial agencies. There are various courts that hear cases depending on the issue or crime. For example, civil cases, divorces, and felonies are heard in the CAFR BUDGET ANALYSIS 4 Superior Court, wills, estates and marriage licenses are heard in the Probate Court, and the Magistrate Court hears warrants and other minor offenses (Georgia GOV, n.d.). Major Industries According to newsmax.com, the following are the top 5 industries of Georgia: agriculture, film, energy, automotive, and tourism. Georgia is well known for being producers of pecan, blueberries, peaches, peanuts, and poultry. When people hear Georgia, many first think of Georgia peaches. Agriculture is Georgia's $74 billion industry according to the Georgia Farm Bureau. As for the film industry, \"Forrest Gump\" is one of the most popular films in Georgia. The economic impact of the film industry may not be as big as the agriculture industry, but the film industry still made $6 billion in 2015 according to Georgia.org. Georgia's large crew bases and resources available are only two of the many reasons why Georgia is one of the leading states in the entertainment industry. Because of all the forests in Georgia, Georgia is one of the leading states in energy production. Because of the workforce training that Georgia offers for automotive industries, production within that industry rises continually. Better employees means better sales. Georgia is known for their tourism as well because of their popular destinations such as the Martin Luther King Jr. Memorial Park and the World of Coca-Cola. Demographic Information With all the job opportunities offered in Georgia, it is no surprise that in 2014 their unemployment rate was only 7.2%. In the last ten years, unemployment rates for Georgia were lowest in 2007 at only 4.5%. Between 2004 and 2014, population, personal income, and public school enrollment has all increased continuously. Due to these facts, it is safe to say that no matter how much the state of Georgia grows, the rate of employment will continue to fluctuate. It is a lot easier to predict growth rates than it is to predict unemployment. CAFR BUDGET ANALYSIS 5 Size of budget and its interrelationship with the CAFR The relationship amongst the size of the budget and the CAFR are actual high. To pay for disbursements throughout the year the state agency and the departments are given a particular amount of money. The state agencies and department make a grave effort to remain in their budget for the period. When they notice that their financial needs will surpass their budget, they will go to the legislature and request additional resources. In most cases the adjusted budget is almost identical to the final expenditures. CAFR makes the required supplementary material available including budgetary assessment timetable for the general fund and each key special income fund, also, a reconciliation of the agenda of statutory and GAAP disbursements for the fiscal year. These is also a budget expenditure evaluation plan for the non-major special income funds provided. While there are considerable difficulties with an aggregate concern of over inhabited areas and contamination, Georgia is one of the most prevalent and occupied of the 50 United States with a lavish progression in the budget and state proceeds. Accepted and accredited in the existing day as the peach state, Georgia was originated in 1733 as one of the most innovative thirteen states with a remarkably multifarious and accelerating residency. The governmental formation of Georgia, which is exceptionally equivalent to the state government, includes an administrative, parliamentary, and a jurisdictional division. Georgia has continued a gradually vigorous monetary advancement within the preceding years and is foreseen to sustain into imminent cost-effective years with optimisms that it shall carry on as a worldwide objective of profitable advancement. Due to the accumulated and comprehensive grade of profession, CAFR BUDGET ANALYSIS 6 separate proceeds, and university enlistment, the vibrant living of Georgia shall endure to alter during the progression of the future. CAFR BUDGET ANALYSIS 7 References Georgia GOV. (n.d.). Georgia Government. Retrieved from http://georgia.gov Georgia. (2016). Retrieved from http://www.georgia.org/industries/entertainment/georgia-filmtv-production/ Georgia. (2016). Retrieved from http://www.georgia.org/industries/automotive/ Georgia. (2016). Retrieved from http://www.gfb.org/aboutus/georgia_agriculture.html Wozny, K. (2015, March 4). Top 5 Industries in Georgia: Which Parts of the Economy Are Strongest?. newsmax.com. Retrieved from http://www.newsmax.com/FastFeatures/georgia-industries-top-5strongest/2015/03/06/id/628277/ Georgia History: Historic Facts & Overview of Georgia History. . (2004-2016). Retrieved from http://www.ereferencedesk.com/resources/state-history/georgia.html. Population Estimates. . (2016). Retrieved from http://opb.georgia.gov/population-estimates State of Georgia. (2015). Comprehensive Annual Financial Report for the fiscal year ended June, 2015. Retrieved from https://sao.georgia.gov LA MADRUGADA DE DAHLONEGA GA (The Dawn of Dahlonega, GA) Christina Packard, Dahlonega, Georgia The artwork on the cover and within this document was created by Georgia artists and has been selected to hang in the Office of the Governor as part of a rotating exhibit \"The Art of Georgia\". For more information about the exhibit, the artists and their work visit www.gaarts.org. State of Georgia Comprehensive Annual Financial Report For the fiscal year ended June 30, 2015 Prepared by: State Accounting Office StateofGeorgia Table of Contents For the Fiscal Year Ended June 30, 2015 INTRODUCTORY SECTION Letter of Transmittal ..................................................................................................................................................................... i Organizational Chart .................................................................................................................................................................... v Principal State Officials ............................................................................................................................................................. vii Certificate of Achievement ......................................................................................................................................................... ix Acknowledgements..................................................................................................................................................................... xi FINANCIAL SECTION Independent Auditor's Report ..................................................................................................................................................... 1 Management's Discussion and Analysis...................................................................................................................................... 7 Basic Financial Statements Government-wide Financial Statements Statement of Net Position ................................................................................................................................................. 25 Statement of Activities...................................................................................................................................................... 26 Fund Financial Statements Governmental Funds Balance Sheet ................................................................................................................................................................ 28 Reconciliation of Fund Balances to the Statement of Net Position ............................................................................... 29 Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................................................ 30 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds to the Statement of Activities ....................................................................... 31 Proprietary Funds Statement of Net Position .............................................................................................................................................. 32 Statement of Revenues, Expenses, and Changes in Fund Net Position ......................................................................... 35 Statement of Cash Flows ............................................................................................................................................... 36 Fiduciary Funds Statement of Fiduciary Net Position ............................................................................................................................. 38 Statement of Changes in Fiduciary Net Position ........................................................................................................... 39 Component Units Statement of Net Position .............................................................................................................................................. 40 Statement of Activities .................................................................................................................................................. 43 Notes to the Financial Statements Index .............................................................................................................................. 45 Notes to the Financial Statements ........................................................................................................................................ 46 Required Supplementary Information Budgetary Comparison Schedule ....................................................................................................................................... 190 Budget to GAAP Reconciliation ........................................................................................................................................ 192 Notes to Required Supplementary Information - Budgetary Comparison ......................................................................... 194 Schedule of Funding Progress for Other Postemployment Benefits .................................................................................. 196 Public Entity Risk Pool ...................................................................................................................................................... 197 Schedules of Employers' and Nonemployers' Contributions............................................................................................. 198 Schedules of Employers' and Nonemployers' Net Pension Liability ................................................................................ 199 Schedules of Changes in Employers' and Nonemployers' Net Pension Liability .............................................................. 200 Schedule of Investment Returns ......................................................................................................................................... 203 Notes to Required Supplementary Information - Methods and Assumptions.................................................................... 204 Schedules of State's Contributions - As Employer ............................................................................................................ 207 Schedules of State's Contributions - As Nonemployer Contribution Entity...................................................................... 208 Schedules of State's Proportionate Share of the Net Pension Liability - As Employer ..................................................... 209 Schedules of State's Proportionate Share of the Net Pension Liability - As Nonemployer Contributing Entity ............... 210 StateofGeorgia Table of Contents For the Fiscal Year Ended June 30, 2015 Supplementary Information - Combining and Individual Fund Statements Nonmajor Governmental Funds Description of Nonmajor Governmental Funds .............................................................................................................. 214 Combining Balance Sheet ............................................................................................................................................... 216 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................................................ 218 Nonmajor Enterprise Funds Description of Nonmajor Enterprise Funds .................................................................................................................... 223 Combining Statement of Net Position ............................................................................................................................ 224 Combining Statement of Revenues, Expenses and Changes in Fund Net Position ........................................................ 226 Combining Statement of Cash Flows.............................................................................................................................. 228 Internal Service Funds Description of Internal Service Funds ............................................................................................................................ 232 Combining Statement of Net Position ............................................................................................................................ 234 Combining Statement of Revenues, Expenses and Changes in Fund Net Position ........................................................ 236 Combining Statement of Cash Flows.............................................................................................................................. 238 Combining Statement of Net Position - Risk Management ........................................................................................... 242 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Risk Management ....................... 244 Combining Statement of Cash Flows - Risk Management............................................................................................. 246 Fiduciary Funds Description of Fiduciary Funds ...................................................................................................................................... 251 Combining Statement of Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds ......................... 256 Combining Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds ...... 258 Combining Statement of Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds - Defined Benefit Pension Plans .................................................................................................................................... 260 Combining Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds -Defined Benefit Pension Plans ....................................................................................................................... 262 Combining Statement of Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds - Defined Benefit Pension Plans - Other Defined Benefit Pension Plans ..................................................................... 264 Combining Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds -Defined Benefit Pension Plans - Other Defined Benefit Pension Plans ......................................................... 266 Combining Statement of Fiduciary Net Position - Investment Trust Funds................................................................... 268 Combining Statement of Changes in Fiduciary Net Position - Investment Trust Funds ................................................ 269 Combining Statement of Fiduciary Net Position - Private Purpose Trust Funds ........................................................... 270 Combining Statement of Changes in Fiduciary Net Position - Private Purpose Trust Funds ........................................ 271 Combining Statement of Fiduciary Assets and Liabilities - Agency Funds ................................................................... 272 Combining Statement of Changes in Fiduciary Assets and Liabilities - Agency Funds ................................................ 274 Nonmajor Component Units Description of Nonmajor Component Units ................................................................................................................... 279 Combining Statement of Net Position ............................................................................................................................ 282 Combining Statement of Activities ................................................................................................................................. 286 Combining Statement of Net Position - Economic Development Organizations ........................................................... 288 Combining Statement of Activities - Economic Development Organizations ............................................................... 289 Combining Statement of Net Position - Tourism/State Attractions ............................................................................... 290 Combining Statement of Activities - Tourism/State Attractions.................................................................................... 292 STATISTICAL SECTION Index to Statistical Section ...................................................................................................................................................... 297 Schedule 1 Net Position by Component ............................................................................................................................ 298 Schedule 2 Changes in Net Position .................................................................................................................................. 300 Schedule 3 Fund Balances of Governmental Funds .......................................................................................................... 304 Schedule 4 Changes in Fund Balances of Governmental Funds ....................................................................................... 306 Schedule 5 Revenue Base - Personal Income by Industry ................................................................................................ 310 Schedule 6 Individual Income Tax Rates by Filing Status and Income Level .................................................................. 312 StateofGeorgia Table of Contents For the Fiscal Year Ended June 30, 2015 STATISTICAL SECTION (continued) Schedule 7 Schedule 8 Schedule 9 Schedule 10 Schedule 11 Schedule 12 Schedule 13 Schedule 14 Individual Income Tax Filers and Liability by Income Level ........................................................................ 313 Ratios of Outstanding Debt by Type .............................................................................................................. 314 Ratios of General Bonded Debt Outstanding .................................................................................................. 316 Computation of Legal Debt Margin ................................................................................................................ 318 Population/Demographics ............................................................................................................................... 320 Principal Private Sector Employers ................................................................................................................ 321 State Government Employment by Function .................................................................................................. 322 Operating Indicators and Capital Assets by Function ..................................................................................... 324 INTRODUCTORY SECTION ADAIR'S MILL Judy Black, Gainesville, Georgia SAO Nathan Deal Governor Thomas Alan Skelton State Accounting Officer State Accounting Office January 8, 2016 The Honorable Nathan Deal, Governor of Georgia The Honorable Members of the General Assembly Citizens of the State of Georgia It is my privilege to present the Comprehensive Annual Financial Report (CAFR) on the operations of the State of Georgia (State) for the fiscal year ended June 30, 2015, in accordance with the Official Code of Georgia Annotated (O.C.G.A.), Section 50-5B-3(a)(7). The objective of this report is to provide a clear picture of our government as a single comprehensive reporting entity. This report consists of management's representations concerning the State's finances and management assumes full responsibility for the completeness and reliability of the information presented. This report reflects my commitment to you, the citizens of the State, and to the financial community to maintain our financial statements in accordance with Generally Accepted Accounting Principles (GAAP) applicable to governments as prescribed by the Governmental Accounting Standards Board (GASB). Information presented in this report is believed to be accurate in all material respects, and all disclosures have been included that are necessary to enable the reader to obtain a thorough understanding of the State's financial activities. The CAFR is presented in three sections: Introductory, Financial and Statistical. The Introductory section includes this transmittal letter and organization charts for state government. The Financial section includes the Independent Auditor's Report, Management's Discussion and Analysis (MD&A), audited government-wide and fund financial statements and related notes thereto, required supplementary information, and the underlying combining and individual fund financial statements and supporting schedules. The Statistical Section contains selected unaudited financial, economic and demographic data on a multi-year basis that is useful in evaluating the economic condition of the government. Internal Control The State's management is responsible for the establishment and maintenance of internal accounting controls which are designed to provide reasonable, but not absolute, assurance that assets are safeguarded and financial transactions are properly recorded and adequately documented, and to ensure the reliability of financial records for preparing financial statements. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived from such control and that the evaluation of those costs and benefits requires estimates and judgments by the State's management. Independent Audit The financial statements of significant organizations comprising the State reporting entity have been separately audited and reported on by either the State Auditor or independent certified public accountants. The State Auditor and other independent auditors have performed an examination of the accompanying financial statements for the State and have issued unmodified opinions on the State's basic financial statements included in this report. Federal regulations also require the State to undergo an annual Single Audit in conformance with the Single Audit Act Amendments of 1996 and the U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Information related to the Single Audit, including the schedule of expenditures of federal awards, audit findings and recommendations, summary of prior audit findings, and the Independent Auditor's reports, is issued in a separate report and will be available at a later date. Management's Discussion and Analysis GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of MD&A. This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The State's MD&A can be found immediately following the independent auditor's report. PROFILE OF THE STATE OF GEORGIA The State, founded on February 12, 1733, was the last of the original 13 colonies and became the fourth state by ratifying the U.S. Constitution on January 2, 1788. The State is an economic hub of the southeast. Atlanta, the state capital, is the major economic and population center of the State with major regional economic and population centers in Augusta, Savannah, and Macon. The State's economic base is diverse with major port facilities on the coast, agricultural resources throughout the State, manufacturing and service industries, and is a major transportation center with one of the busiest airports in the nation. The State is the eighth largest state with an estimated population of 10 million people. Reporting Entity The Constitution of the State of Georgia (Constitution) provides the basic framework for the State's government, which is divided into three separate branches: legislative, executive, and judicial, as shown on the organizational chart on page v. The duties of each branch are outlined in the Constitution and in the O.C.G.A. For financial reporting purposes, the State's reporting entity consists of (1) the primary government, (2) component unit organizations for which the primary government is financially accountable, and (3) other component unit organizations for which the nature and significance of their relationship with the primary government is such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. Further information about the State's reporting entity can be found in Note 1.B. to the financial statements. The State and its component units provide a full range of services to its citizens, including education, health and welfare, transportation, public safety, economic development and assistance, culture and recreation, conservation, and general government services. The financial statements present information on the financial position and operations of state government associated with these services as a single comprehensive reporting entity. Accordingly, the various agencies, departments, boards, commissions, authorities, foundations, funds, and accounts of the State that have been identified as part of the primary government or a component unit have been included in this report. ii Budgetary Control The Constitution requires that budgeted expenditures not exceed the estimated revenues and other funding sources, including beginning fund balances. The State's legal level of budgetary control is funding source within program. Annually, the Governor submits a balanced budget by program to the Legislature. In addition to the internal controls previously discussed, the State maintains budgetary controls to ensure compliance with the legal provisions of the State's Appropriation Act, which reflects the Georgia General Assembly's approval of the annual budget. Budgetary control is maintained through a formal appropriation and allotment process. The State's annual budget is prepared on a statutory basis which is principally the modified accrual basis utilizing encumbrance accounting. The State monitors spending activity to ensure that expenditures do not exceed appropriated amounts by agency at the legal level of control as provided for by the Constitution. Information regarding the State's budgetary process can be found in the Notes to Required Supplementary Information within this report. The statutory basis of accounting required by state law differs materially from the basis used to report revenues and expenditures in accordance with GAAP. Detailed information on the statutory basis of accounting and the results of operations on that basis for fiscal year 2015 can be found in the separately issued Budgetary Compliance Report (BCR) dated November 20, 2015. Budget Stabilization The State maintains the Revenue Shortfall Reserve (RSR) which provides for the sound management of excess revenue collections in any given fiscal year. By statute, all surplus state funds existing at the end of each fiscal year shall be reserved and added to the RSR. Funds in the RSR carry forward from fiscal year to fiscal year without reverting to the revenue collections fund within the General Fund at the end of a fiscal year. Additional information about the State's RSR balances can be found in MD&A. Long Term Financial Planning - Debt Management Each year, the Georgia State Financing and Investment Commission (Commission) issues its debt management plan (Plan) which provides a five-year projection of the State general obligation and guaranteed revenue bond issuances and the debt service requirements for all outstanding debt and projected new debt issuances. The Plan covers the current fiscal year and the four succeeding fiscal years. The resulting projected annual debt service requirements are compared to the actual treasury receipts of the State for the immediately preceding fiscal year and projected future treasury receipts of the State to determine the ratio of debt service requirements to the prior year's State treasury receipts. This ratio, which is established by the Constitution at a maximum of 10%, but the Plan is limited to a maximum of 7% by Commission policy, along with several other ratios discussed in the Plan, serves as a guide for the Governor and the General Assembly in their consideration of the authorization of new State debt during the budget preparation, review, and adoption process. Projected issuances of new debt may be increased or decreased depending on the capital needs of the State and projections of estimated treasury receipts in future years. Fiscal Year Budget Overview State General Fund Receipts (net revenue collections) deposited with the Office of the State Treasurer during fiscal year 2015 were $20.4 billion, which was 3.1% greater than the final amended revenue estimate of $19.8 billion. State General Fund Receipts were 6.6% greater in fiscal year 2015 than fiscal iii year 2014 and indicated continued economic growth in Georgia. As a result, the balance of the RSR as of June 30, 2015 was $1.6 billion. By statute, up to 1% of fiscal year 2015 net revenue collections ($204 million) may be appropriated from the RSR in fiscal year 2016 for K-12 needs. As of the date of this report, the $1.6 billion RSR balance has not been adjusted for this potential appropriation of $204 million. In addition, the Governor may release, for appropriation in a subsequent year, funds in excess of 4% of current year (fiscal year 2015) revenue collections. ECONOMIC FACTORS AND OUTLOOK Introduction Georgia's economy is experiencing a moderate recovery with growth in employment, home prices, and residential construction permits. It appears that the Great Recession may finally be in the rear view mirror. While a moderate economic recovery is expected to continue, there are significant risks to continued growth, with federal fiscal policy the biggest threat. Georgia Economy Many factors indicate that the State's economy is continuing to recover from the Great Recession. Some of these indicators include job growth, personal income growth, lower initial unemployment claims and the recovery of home prices. Additional information on the economic outlook for the State including detailed information on employment, personal income, and housing markets can be found in the State's MD&A which can be found immediately following the independent auditor's report. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association (GFOA) awarded the Certificate of Achievement for Excellence in Financial Reporting to the State of Georgia for its comprehensive annual financial report for the fiscal year ended June 30, 2014. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. We are committed to this effort, and we intend to maintain a highly qualified and professional staff to make this certification possible. The preparation of this report would not have been possible without the dedicated and efficient service of the entire staff of the State Accounting Office. We also express our appreciation to the fiscal officers throughout state government for their dedicated efforts in assisting us in the preparation of this report. Respectfully submitted, Thomas Alan Skelton State Accounting Officer iii Citizens of Georgia JUDICIAL Supreme Court Court of Appeals Superior Courts District Attorneys Judicial Agencies EXECUTIVE LEGISLATIVE Constitutional Officers General Assembly Senate House of Representatives Lieutenant Governor Public Service Commission State School Superintendent Secretary of State Commissioner of Insurance Attorney General Commissioner of Agriculture Commissioner of Labor Governor Legislative Agencies Department of Audits and Accounts Office of Planning and Budget Governor's Office Department of Administrative Services Department of Banking and Finance Department of Behavioral Health & Developmental Disabilities Department of Community Affairs Department of Community Health Department of Corrections Department of Defense Department of Driver Services Department of Early Care and Learning Department of Economic Development Department of Education Department of Human Services Department of Juvenile Justice Department of Natural Resources Department of Public Health Department of Public Safety Department of Revenue Department of Transportation Department of Veterans Service Employees' Retirement System of Georgia Georgia Bureau of Investigation Georgia Forestry Commission Georgia Lottery Corporation Georgia State Financing and Investment Commission Georgia Student Finance Commission Georgia Technology Authority Office of the State Treasurer State Accounting Office State Board of Pardons and Paroles State Board of Workers' Compensation Technical College System of Georgia Teachers' Retirement System of Georgia University System of Georgia Examining and Licensing Boards Advisory Boards Other Executive Agencies Interstate Agencies Authorities v StateofGeorgia Principal State Officials June 30, 2015 Executive: Nathan Deal .................................................................................................................................................. Governor Brian P. Kemp ................................................................................................................................. Secretary of State Sam Olens......................................................................................................................................... Attorney General Mark Butler ............................................................................................................................ Commissioner of Labor Richard Woods ......................................................................................................... State Superintendent of Schools Ralph T. Hudgens ............................................................................................................. Commissioner of Insurance Gary W. Black ............................................................................................................... Commissioner of Agriculture Chuck Eaton (Chairman) ...............................................................................................Public Service Commissioner Tim Echols ....................................................................................................................Public Service Commissioner H. Doug Everett .............................................................................................................Public Service Commissioner Lauren \"Bubba\" McDonald, Jr. .....................................................................................Public Service Commissioner Stan Wise .......................................................................................................................Public Service Commissioner Legislative: Casey Cagle .......................................................................................... Lieutenant Governor/President of the Senate David Ralston .............................................................................................. Speaker of the House of Representatives Judicial: Hugh P. Thompson ............................................................................................... Chief Justice of the Supreme Court vii Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Text38: State of Georgia Text53: For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2014 Executive Director/CEO ACKNOWLEDGEMENTS The Georgia Comprehensive Annual Financial Report (CAFR) for the fiscal year ending June 30, 2015 was prepared by: STATE ACCOUNTING OFFICE Kris Martins, Deputy State Accounting Officer, Financial Reporting STATEWIDE ACCOUNTING AND REPORTING Renita Coleman Bobbie R. Davis Zeina Diallo Michelle Flymn Tessica Harvey Eddy A. Hicks Sharon Hill Pamela Hintze Tanya Jackson Metsehet Ketsela Rachael Krizanek Dan Lawson Michael A. McBride II Troy Senter Ellen K. Tate Rhonda Twyman Dina Williams Jennifer Williams Keri Williams SPECIAL APPRECIATION The State Accounting Office would like to extend special appreciation to all fiscal and accounting personnel throughout the State who contributed the financial information for their agencies. Additionally, the Division of Statewide Accounting and Reporting would like to acknowledge the efforts given by all of the functional and support personnel of the State Accounting Office. xi FINANCIAL SECTION IN THE VALLEY OF THE LITTLE TENNESSEE Laurence Holden, Clayton, Georgia DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 GREG S. GRIFFIN STATE AUDITOR (404) 656-2174 Independent Auditor's Report The Honorable Nathan Deal, Governor of Georgia and Members of the General Assembly of the State of Georgia Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the State of Georgia (the \"State\") as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the State of Georgia's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We did not audit the financial statements of the following entities: Department of Community Health Employees' Retirement System of Georgia Georgia College & State University Foundation, Inc. Georgia Environmental Finance Authority Georgia State Financing and Investment Commission Georgia Housing and Finance Authority Kennesaw State University Foundation, Inc. Georgia Lottery Corporation MCG Health System, Inc. Medical College of Georgia Foundation, Inc. Georgia State University Foundation Georgia Ports Authority Teachers Retirement System of Georgia Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Foundation, Inc. Georgia Tech Research Corporation University of Georgia Athletic Association, Inc. University of Georgia Foundation University of Georgia Research Foundation, Inc. University System of Georgia Foundation, Inc. Those financial statements represent part or all of the total assets or deferred outflows of resources, and revenues or additions of the governmental activities, the business-type activities, the aggregate discretely presented component units, the major funds (governmental fund-general fund, governmental fund-general obligation bond projects fund, and proprietary/enterprise fund-state health benefit plan), and the aggregate remaining fund information as reported in the following table: Opinion Unit Governmental Activities Business-type Activities Aggregate Discretely Presented Component Units Governmental Fund - General Fund Governmental Fund - General Obligation Bond Projects Fund Proprietary Fund/Enterprise Fund - State Health Benefit Plan Aggregate Remaining Fund Information Percent of Total Assets/Deferred Outflows of Resources 8% 10% 89% 12% 100% 100% 88% Percent of Total Revenues/ Additions 24% 20% 89% 21% 100% 100% 39% Those statements were audited by other auditors whose reports have been furnished to us, and our opinions, insofar as it relates to the amounts included for the above mentioned organizations and component units, are based solely on the reports of other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The following financial statements were not audited in accordance with Government Auditing Standards: Georgia College & State University Foundation, Inc. Kennesaw State University Foundation, Inc. Georgia Lottery Corporation Georgia State University Foundation Medical College of Georgia Foundation, Inc. Georgia Tech Athletic Association Georgia Tech Facilities, Inc. Georgia Tech Foundation, Inc. University of Georgia Athletic Association, Inc. University of Georgia Foundation University System of Georgia Foundation, Inc. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the State's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the State's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Georgia statutes, in addition to audit responsibilities, entrust other responsibilities to the Department of Audits and Accounts. Those responsibilities include service by the State Auditor on the governing boards of various agencies, authorities, commissions, and component units of the State. The Department of Audits and Accounts elected to not provide audit services for the organizational units of the State of Georgia associated with these boards. The Department of Audits and Accounts also has a contractual obligation with the Department of Community Health to conduct certain non-audit services. 2 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the reports of other auditors, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of the State, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter Change in Accounting Principles For fiscal year 2015, the State adopted Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions, and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. As a result of the implementation of these standards, the State reported a restatement for the change in accounting principles (see Notes 2 and 3 for further information). Our opinions are not modified with respect to the restatement. Correction of Errors As described in Note 2 to the financial statements, the State restated beginning balances resulting from the correction of accounting errors that occurred in the prior period. The State also made changes in account classifications of certain Program and General Revenues in previously issued financial statements. Our opinions are not modified with respect to these matters. Change in Reporting Entity As identified in Note 2 to the financial statements, the Georgia State University Foundation is no longer reported as a blended component unit within the nonmajor enterprise funds but, rather, as a discretely presented component unit. In addition, Armstrong Atlantic State University Educational Properties Foundation, Inc. no longer met requirements for inclusion in the financial reporting entity as a nonmajor enterprise fund. Our opinions are not modified with respect to these matters. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 7 through 22, budgetary comparison information on pages 190 through 195, information on other postemployment benefits on page 196, claims development information for the public entity risk pool on page 197, and information on defined benefit pension plans on pages 198 through 210 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information 3 MANAGEMENT'S DISCUSSION AND ANALYSIS State of Georgia Management's Discussion and Analysis (Unaudited) INTRODUCTION The Management's Discussion and Analysis (MD&A) of the State of Georgia's Comprehensive Annual Financial Report (CAFR) presents an overview and analysis of the financial activities of the State for the fiscal year ended June 30, 2015. It should be read in conjunction with the letter of transmittal, located in the Introductory Section of this report, and the State's financial statements, including the notes to the financial statements, which are an integral part of the statements that follow this narrative. FINANCIAL HIGHLIGHTS - PRIMARY GOVERNMENT Government-wide Net Position. Total assets and deferred outflows of resources of the State exceeded liabilities and deferred inflows of resources by $18.3 billion (reported as \"net position\"). Contributing to this amount, a deficit of $7.9 billion was reported as \"unrestricted net position.\" Changes in Net Position. The State's total net position decreased by $4.1 billion in fiscal year 2015 compared to the balances reported in the prior year. More specifically, net position of governmental activities decreased by $1.9 billion while net position of business-type activities decreased by $2.2 billion. o o This change is primarily the result of the recognition of net pension liabilities associated with the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). The impact on net position as a result of this implementation was a decrease of $7.1 billion. In contrast, total net position actually increased apart from this and certain other changes. When adjusted for GASB 68 and other restatements and reclassifications, total net position of the State increased by $2.1 billion, governmental activities increased by $1.2 billion while net position of business-type activities increased by $954.2 million. Excess of Revenues over Expenses - Governmental Activities. During the fiscal year, the State's total revenues for governmental activities, which totaled $39.0 billion, were $3.8 billion more than total expenses (excluding transfers). Expenses totaled $35.2 billion. General revenues, which are primarily made up of tax collections, totaled $20.9 billion, and program revenues, which primarily come from operating grants and contributions, totaled $18.1 billion. Fund Level Governmental Funds - Fund Balances. The governmental funds reported combined ending fund balances of $6.2 billion. This amount represents an increase of $512.4 million, or 9.0% (as restated), when compared with the prior year. Of this total fund balance, $51.2 million, or 0.8%, represents nonspendable fund balance; $4.4 billion, or 70.3%, represents restricted fund balance; $7.7 million, or 0.1%, represents committed fund balance; $504.1 million, or 8.1%, represents assigned fund balance; and $1.3 billion, or 20.7%, represents unassigned fund balance. General Fund - Fund Balances. The General Fund ended the fiscal year with a total fund balance of $5.1 billion, of which $1.3 billion was classified as unassigned fund balance. Total revenues increased by $2.1 billion, or 5.7%, over the prior year which is a sign of a growing economy. 7 State of Georgia Management's Discussion and Analysis (Unaudited) Enterprise Funds - Net position. The Enterprise Funds ended the fiscal year with a total net position of $4.9 billion. More specifically, the areas with significant net positons were the Higher Education Fund of $3.4 billion, the State Health Benefit Plan of $600.7 million, and the Unemployment Compensation Fund of $989.9 million. Long-term Debt The long-term bond debt of the primary government decreased $634.6 million, or 5.0%, during the fiscal year. The decrease represents the net difference between new issuances, maturing principal payments, the net effect of refunding bonds and prior period adjustments. The amount owed for general obligation bonds decreased by $70.5 million, or 0.7%, for the primary government, while the amount owed for revenue bonds decreased $564.2 million, or 17.9%, for the primary government. The change in total long-term debt, resulting primarily from revenue bonds, includes $329.8 million in restatements. The State issued new bonded debt during the year in the amount of $1.1 billion for the primary government. The State continues to balance the need to issue debt for capital improvements against State management's desire to maintain a conservative approach to debt management. OVERVIEW OF THE FINANCIAL STATEMENTS This financial section of this report includes four parts: (1) management's discussion and analysis, (2) basic financial statements, (3) required supplementary information, and (4) other supplementary information. The Basic Financial Statements consist of three components: government-wide financial statements, fund financial statements, and notes to the financial statements. Government-wide Financial Statements - Reporting the State as a Whole The Statement of Net Position and the Statement of Activities together comprise the government-wide financial statements and provide a broad overview of the State's financial activities as a whole. These statements are prepared with a long-term focus using the full-accrual basis of accounting, similar to private-sector businesses. This means all revenues and expenses associated with the fiscal year are recognized regardless of when cash is spent or received, and all assets, deferred outflows of resources, liabilities and deferred inflows of resources, including capital assets and long-term debt, are reported at the entity level. The government-wide statements report the State's net position, which is the difference between total assets and deferred outflows of resources and total liabilities and deferred inflows of resources. These statements also include how these items have changed from the prior year. Over time, increases and decreases in net position measure whether the State's overall financial condition is improving or declining. In evaluating the State's overall condition, however, additional non-financial information should be considered, such as the State's economic outlook, changes in demographics, and the condition of its capital assets and infrastructure. The government-wide statements report three activities: Governmental Activities. The majority of the State's basic services fall under this activity, including services related to general government, education, health and welfare, transportation, public safety, economic development and assistance, culture and recreation, and conservation. Taxes and intergovernmental revenues are the major funding sources for these programs. Business-Type Activities. The State operates certain activities similar to private-sector businesses by charging fees to customers to recover all or a significant portion of their costs of providing goods and services. The Unemployment Compensation Fund, the self-insured State Health Benefit Plan (SHBP), and the Higher Education Fund are some examples of business-type activities. 8 State of Georgia Management's Discussion and Analysis (Unaudited) Component Units. Certain organizations are legally separate from the State; however, the State remains financially accountable for them. The Georgia Environmental Finance Authority, Georgia Housing and Finance Authority, and Georgia Lottery Corporation are examples of component units. Fund Financial Statements - Reporting the State's Most Significant Funds The fund financial statements provide detailed information about individual major funds, not the State as a whole, and are located in the Basic Financial Statements - Fund Financial Statements section. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The State, like other state and local governments, uses funds to ensure and demonstrate compliance with finance-related and legal requirements. All of the State funds are divided into three types, each of which use a different accounting approach and should be interpreted differently. Governmental Funds. Most of the basic services provided by the State are financed through governmental funds and are essentially the same functions reported as governmental activities in the government-wide financial statements. Governmental funds use the modified accrual basis of accounting, and focus on short-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. These statements provide a detailed short-term view of the State's finances that assist in determining whether there will be adequate financial resources available to meet the current needs of the State. Proprietary Funds. The Proprietary funds, which include enterprise funds and internal service funds, account for state activities that are similar to private-sector businesses. Like government-wide statements, proprietary fund statements are presented using the full-accrual basis of accounting. Activities whose customers are mostly outside of state government are accounted for in enterprise funds and are the same functions reported as business-type activities. The enterprise fund financial statements provide more detail and additional information than in the government-wide statements, such as cash flows. Activities whose customers are mostly other state organizations are accounted for in internal service funds. The internal service fund activities are allocated proportionately between the governmental activities (predominately) and the business-type activities in the government-wide statements based on the benefit of the services provided to those activities. Fiduciary Funds. These funds are used to account for resources held for the benefit of parties outside the state government. The State is responsible for ensuring these assets are used for their intended purposes. Fiduciary funds use full-accrual accounting but are not reflected in the government-wide financial statements because the resources from these funds are not available to support the State's own programs. Reconciliation between Government-wide and Fund Statements This report also includes two schedules that reconcile and explain the differences between the amounts reported for the governmental activities on the government-wide statements (full-accrual accounting, long-term focus) with the amounts reported on the governmental fund statements (modified accrual accounting, short-term focus). The schedules are located in the Basic Financial Statements - Fund Financial Statements - Governmental Funds section. The following explanations represent some of the reporting differences between the two statements: Capital outlays result in capital assets on the government-wide statements but are reported as expenditures in the governmental fund financial statements. Bond proceeds are recorded as long-term debt on the government-wide statements but are listed as current financial resources on the governmental fund statements. 9 State of Georgia Management's Discussion and Analysis (Unaudited) Notes to the Financial Statements The Notes to the Financial Statements located at the end of the Basic Financial Statements section provide additional information essential to a complete understanding of the financial statements. The notes are applicable to both the government-wide financial statements and the fund financial statements. Required and Other Supplementary Information In addition to this MD&A, the Basic Financial Statements are followed by a section containing other required supplementary information which further explains and supports the information in the financial statements. This section of the report includes: (1) a budgetary comparison schedule of the General Fund (Budget Fund), including reconciliations of revenues and expenditures on the statutory and GAAP basis for the fiscal year, (2) the State's funding progress for other postemployment benefits, (3) information on the State's public entity risk pool and (4) information on the State's defined benefit pension plans. Other supplementary information includes combined financial statements for the State's non-major governmental funds, non-major enterprise funds, internal service funds, fiduciary funds and non-major component units. The total columns of these combined financial statements carry forward to the applicable fund financial statements. FINANCIAL ANALYSIS OF THE STATE AS A WHOLE Net Position Governmental entities are required by Generally Accepted Accounting Principles (GAAP) to report on their net position. The Statement of Net