The significant accounting policies followed by the University of Florida are described below to enhance the usefulness of the financial statements.

A. Reporting Entity

The University of Florida is a separate public instrumentality that is part of the State university system of public universities, which is under the general direction and control of the Florida Board of Governors. The University is directly governed by a Board of Trustees (Trustees) consisting of thirteen members. The Governor appoints six citizen members and the Board of Governors appoints five citizen members. These members are confirmed by the Florida Senate and serve staggered terms of five years. The chair of the faculty senate and the president of the student body of the University are also members. The Board of Governors establishes the powers and duties of the Trustees.

The Trustees are responsible for setting policies for the University, which provide governance in accordance with State law and Florida Board of Governors Regulations. The Trustees select the University President. The University President serves as the executive officer and the corporate secretary of the Trustees, and is responsible for administering the policies prescribed by the Trustees.

Criteria for defining the reporting entity are identified and described in the Governmental Accounting Standards Board's (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections 2100 and 2600. These criteria were used to evaluate potential component units for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the primary government's financial statements to be misleading or incomplete. Based on the application of these criteria, the University of Florida is a component unit of the State of Florida, and its financial balances and activities are discretely presented in the State's Comprehensive Annual Financial Report.

B. Discretely Presented Compenent Units

Based on the application of the criteria for determining component units, certain affiliated organizations are required to be included within the University reporting entity as discretely presented component units because of the significance of their relationship with the University. These organizations are legally separate from the University and are governed by separate boards. The University further categorizes its component units as Direct-Support Organizations, Health Science Center Affiliates, and Shands Hospital and Others. An annual audit of each organization's financial statements is conducted by independent certified public accountants. The annual reports are submitted to the Auditor General and the University Board of Trustees. Additional information is presented in Note 20.

However, financial activities of certain component units are not included in the University's financial statements and are denoted below with an asterisk (*). The total assets and operating revenues related to these component units are $47 million and $27 million, respectively. These amounts represent less than one percent of the total aggregate component units' assets and operating revenues.

C. Direct-Support Organizations

The University's direct-support organizations, as provided for in Section 1004.28, Florida Statutes, and Board of Governors Regulation 9.011, are considered component units of the University of Florida and therefore the latest audited financial statements of these organizations are discretely presented in the financial statements of the University. These legally separate, not-for-profit corporations are organized and operated exclusively to assist the University to achieve excellence by providing supplemental resources from private gifts and bequests, and valuable education support services. The Statute authorizes these organizations to receive, hold, invest, and administer property and to make expenditures to or for the benefit of the University. These organizations and their purposes are explained as follows:

University of Florida Foundation, Inc., solicits, collects, manages, and directs contributions to the various academic departments and programs of the University, and assists the University in fund raising, public relations, and maintenance of alumni records. Their financial statements include the activities of the University of Florida Alumni Association, Inc.

The University Athletic Association, Inc., conducts various inter-collegiate athletic programs for and on behalf of the University.

University of Florida Research Foundation, Inc., promotes, encourages, and assists research activities of the University through income derived from or related to the development and commercialization of intellectual properties, which include inventions, discoveries, processes, and work products.

GatorCare Health Management Corporation coordinates and facilitates the management of the self-insured health insurance plan of the University and its participating affiliated employers, collecting and paying employer and employee premiums.

Gator Boosters, Inc., solicits funds for the benefit of the University athletic programs.

University of Florida Development Corporation develops and maintains Innovation Square where the University-owned Florida Innovation Hub is located.

Citrus Research and Development Foundation, Inc., was formed to advance disease and production research and product development activities to ensure the survival and competitiveness of Florida's citrus growers through innovation.

University of Florida Alumni Association, Inc., supports activities of the alumni of the University of Florida. Its financial transactions are reflected in the financial statements of the University of Florida Foundation, Inc.

Florida Foundation Seed Producers, Inc.,* supplies Florida farmers and producers with crop seed and nursery stock. This organization stocks foundation seed of the best-known varieties acceptable to Florida climate and soils in adequate quantities and at reasonable prices.

The University of Florida Law Center Association, Inc.,* promotes, supports and improves legal education, legal research, the legal profession and the administration of justice; and assists the Levin College of Law in the development and maintenance of a law center.

Florida 4-H Club Foundation, Inc.,* promotes the educational objectives of the 4-H Youth Development Program, an official part of the Florida Cooperative Extension Service.

University of Florida Leadership and Education Foundation, Inc.,* was formed to further agriculture and natural resource education and related activities, promote agriculture and natural resources leadership, and make contributions to and confer benefits upon the University.

University of Florida Investment Corporation* promotes the educational purposes of the University of Florida by providing investment research, advice, counsel, and management to and for the University Board of Trustees and affiliated organizations of the University.

Citrus Research and Education Foundation, Inc.,* expedites citrus production, propagates new plant materials, collects and analyzes environmental impact research data, and provides research and education support to the University of Florida Citrus Research and Education Center at Lake Alfred.

Treasure Coast Agricultural Research Foundation, Inc.,* supports, encourages, and fosters research, education, and extension at the Institute of Food and Agricultural Sciences of the University on issues related to the citrus industry within the Indian River region.

UF Historic St. Augustine, Inc.,* ensures the long-term preservation and interpretation of State-owned historic properties in St. Augustine.

Southwest Florida Research and Education Foundation, Inc.,* provides research and educational support to the University of Florida Southwest Florida Research and Education Center.

D. Health Science Center Affiliates

The corporations listed below, except University of Florida Jacksonville Healthcare, Inc., and Faculty Clinic, Inc., are Faculty Practice Plans, as provided for in Board of Governors Regulation 9.017. The Faculty Practice Plans provide educationally-oriented clinical practice settings and opportunities through which faculty members provide health, medical, veterinary, and dental care to patients as an integral part of their academic activities and their employment as faculty. Because these faculty practice activities generate income, the colleges are authorized to regulate fees generated from faculty practice and maintain Faculty Practice Plans for the orderly collection and distribution of fees. These organizations provide significant support for the clinical instruction function of the University of Florida J. Hillis Miller Health Science Center (JHMHC) and are component units of the University of Florida.

Florida Clinical Practice Association, Inc., bills and collects clinical professional fees to support the educational, research, and service programs of the University of Florida College of Medicine.

University of Florida Jacksonville Physicians, Inc., bills and collects clinical professional fees to support the educational, research, and service programs of the University of Florida College of Medicine - Jacksonville.

Florida Veterinary Medicine Faculty Association, Inc., bills and collects clinical professional fees to support the educational, research, and service programs of the University of Florida College of Veterinary Medicine.

University of Florida Jacksonville Healthcare, Inc., is a not-for- profit health services support organization, as provided for in Board of Governors Regulation 9.011, the purpose of which is to further medical education and operate outpatient clinic facilities, by engaging in strategic alliances and partnerships with non-academic entities, effecting managed care contracting and provider network development for the JHMHC. Its operations are funded by University of Florida Jacksonville Physicians, Inc., and Shands Jacksonville.

Faculty Associates, Inc., bills and collects clinical professional fees to support the educational, research, and service programs of the University of Florida College of Dentistry.

Faculty Clinic, Inc.,* a not-for-profit, tax-exempt corporation operates primarily as a facility management company that leases space to Shands Jacksonville and University of Florida Jacksonville Physicians, Inc.

University of Florida College of Nursing Faculty Practice Association, Inc.,* performs billing and collection of professional fees to support the educational, research and service programs of the University of Florida College of Nursing.

Florida Health Professions Association, Inc.,* performs billing and collection of clinical professional fees to support the educational, research, and service programs of the University of Florida College of Public Health and Health Professions.

University of Florida College of Pharmacy Faculty Practice Association, Inc.,* performs billing and collection of fees to support the educational, research, and service programs of the University of Florida College of Pharmacy.

E. Shands Hospital and Others

Shands Teaching Hospital and Clinics, Inc., (Shands) was incorporated October 15, 1979, as a not-for-profit corporation. Shands, a major tertiary care teaching institution, is a leading referral center in the State of Florida and the southeast United States and facilitates medical education programs at the University.

Shands entered into a contractual agreement, as of July 1, 1980, as subsequently restated and amended, with the Florida Board of Education, to provide for the use of hospital facilities at the JHMHC through December 31, 2030, with renewal provisions. The contractual agreement also provides for the transfer to Shands of all other assets and liabilities arising from the operation of the hospital facilities prior to July 1, 1980. At termination of the contractual agreement, the net position of Shands reverts to the State Board of Education. Legal title to all buildings and improvements transferred to Shands remains with the State of Florida during the term of the contractual agreement. The contractual agreement provides for a 12-month grace period for any event of default, other than the bankruptcy of Shands. In addition, the contractual agreement limits the right of the State Board of Education to terminate the contractual agreement solely to the circumstance in which Shands declares bankruptcy and, in such event, requires net revenues derived from the operation of the hospital facilities to continue to be applied to the payment of Shands' debts.

Under the terms of the contractual agreement, Shands is obligated to manage, operate, maintain, and insure the hospital facilities in support of the programs of the JHMHC and further agrees to contract with the State Board of Education for the provision of these programs. By operation of law, the University of Florida Board of Trustees has become the successor-in interest to the State Board of Education.

Shands Jacksonville HealthCare, Inc., (Shands Jacksonville) is a Florida not-for-profit corporation. Shands Jacksonville was organized primarily to provide healthcare and related services to the community including the City of Jacksonville and surrounding counties, and to support the teaching and research missions of the University.

University Village Apartments, Inc., (the Corporation) was established in 1969, for the purpose of providing housing for low- and moderate-income families, especially those affiliated with the University of Florida. Capital was contributed at inception by the University of Florida Foundation, Inc., but no capital stock was issued because the Corporation does not operate for the benefit of any special interest. The Corporation provided housing under Section 221(d)(3) of the National Housing Act. The facility consists of 28 two-story buildings and was regulated by the United States Department of Housing and Urban Development (HUD) as to rent charges and operating methods. The Corporation is no longer regulated by HUD since it has repaid in full its Section 221 insured loan. The Corporation dissolved as of June 17, 2015, and merged into the University Department of Housing and Residence Education. All transactions during the 2014-15 fiscal year are included in the University's financial statements.

University of Florida Self-Insurance Program (the Program) was created by the Florida Board of Regents, succeeded by the Florida Board of Governors, pursuant to Section 1004.24, Florida Statutes. The Program provides comprehensive general liability and professional liability (malpractice) coverage for the University of Florida and affiliated teaching hospitals that are providing education in healthcare or veterinary services.

University of Florida Healthcare Education Insurance Company (HEIC), was created on September 1, 1994, as a self-insurance mechanism created pursuant to Section 1004.24, Florida Statutes. HEIC writes coverage for the participants in the Self-Insurance Program (the Program) for loss exposure above the Program's retention. HEIC obtains excess loss reinsurance coverage from commercial insurance carriers for certain layers of exposure.

F. Basis of Presentation

The University's accounting policies conform with accounting principles generally accepted in the United States of America applicable to public colleges and universities as prescribed by GASB. The National Association of College and University Business Officers (NACUBO) also provides the University with recommendations prescribed in accordance with generally accepted accounting principles promulgated by GASB and the Financial Accounting Standards Board (FASB). GASB allows public universities various reporting options. The University of Florida has elected to report as an entity engaged in only business-type activities. This election requires the adoption of the accrual basis of accounting and entity-wide reporting including the following components:

• Management's Discussion and Analysis
• Basic Financial Statements:
1. Statement of Net Position
2. Statement of Revenues, Expenses, and Changes in Net Position
3. Statement of Cash Flows
4. Notes to the Financial Statements
• Other Required Supplementary Information

G. Basis of Accounting

Basis of accounting refers to when revenues, expenses, and related assets, deferred outflows of resources, liabilities, and deferred inflows of resources are recognized in the accounts and reported in the financial statements. Specifically, it relates to the timing of the measurements made, regardless of the measurement focus applied. The University's financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, deferred outflows of resources, liabilities, and deferred inflows of resources resulting from non-exchange activities are generally recognized when all applicable eligibility requirements, including time requirements, are met. The University follows GASB standards of accounting and financial reporting.

The University's component units use the economic resources measurement focus and accrual basis of accounting whereby revenues are recognized when earned and expenses are recognized when incurred. Twenty-three component units follow GASB standards of accounting and financial reporting. Eight component units (University of Florida Foundation, Inc., Florida Foundation Seed Producers, Inc., Southwest Florida Research and Education Foundation, Inc., Citrus Research and Education Foundation, Inc., Citrus Research and Development Foundation, Inc., Treasure Coast Agricultural Research Foundation, Inc., University of Florida Alumni Association, Inc., and University of Florida Investment Corporation) follow FASB standards of accounting and financial reporting for not-for- profit organizations.

Significant interdepartmental sales between auxiliary service departments and other institutional departments have been eliminated from revenues and expenses for reporting purposes.

The University's principal operating activities consist of instruction, research and public service. Operating revenues and expenses generally include all fiscal transactions directly related to these activities as well as administration, operation and maintenance of capital assets, and depreciation on capital assets. Non-operating revenues include Noncapital State Appropriations, Federal and State student financial aid, investment income and Capital State Appropriations for construction projects. Interest on capital asset-related debt is a non-operating expense.

The Statement of Net Position is presented in a classified format to distinguish between current and noncurrent assets and liabilities. When both restricted and unrestricted resources are available to fund certain programs, it is the University's policy to first apply the restricted resources to such programs, followed by the use of the unrestricted resources.

The Statement of Revenues, Expenses, and Changes in Net Position is presented by major sources and is reported net of tuition scholarships, discounts, and allowances. Tuition scholarships, discounts, and allowances are the differences between the stated charge for goods and services provided by the University and the amount that is actually paid by a student or a third party making payment on behalf of the student. The University applied "The Alternate Method" as prescribed in NACUBO Advisory Report 2000-05 to determine the reported net tuition scholarships, discounts, and allowances. Under this method, the University computes these amounts by allocating the cash payments to students, excluding payments for services, on a ratio of total aid to the aid not considered to be third-party aid.

The Statement of Cash Flows is presented using the direct method in compliance with GASB Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting.

H. Cash and Cash Equivalents

The amount reported by the University as cash and cash equivalents consists of cash on hand and cash in demand accounts. University cash deposits are held in banks qualified as public depositories under Florida law. All such deposits are insured by Federal depository insurance, up to specified limits, or collateralized with securities held in Florida's multiple financial institution collateral pool required by Chapter 280, Florida Statutes. Cash and cash equivalents that are externally restricted to make debt service payments, maintain sinking or reserve funds, or to purchase or construct capital assets or other restricted assets, are classified as restricted.

I. Capital Assets

University capital assets consist of land, construction in progress, buildings, infrastructure and other improvements, furniture and equipment, library resources, property under capital lease and leasehold improvements, works of art and historical treasures, computer software, and other capital assets. These assets are capitalized and recorded at cost at the date of acquisition or at estimated fair value on the date received in the case of gifts and purchases of State surplus property. Additions, improvements, and other outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. The University has a capitalization threshold of $4 million for intangible assets, which includes computer software, $5,000 for tangible personal property, and $250 for library resources. The costs of all new buildings and projects adding new square footage are capitalized. Infrastructure and leasehold improvements have a $250,000 capitalization threshold. For building renovations, the threshold is $250,000 or less if the amount expended is at least 25% of the cost basis of the building. Depreciation is computed on the straight-line basis over the following estimated useful lives:

• Buildings - 5 to 50 years, depending on construction
• Infrastructure and Other Improvements - 10 to 50 years
• Furniture and Equipment - 3 to 20 years
• Library Resources - 10 years
• Property Under Capital Lease and Leasehold Improvements - 10 to 50 years
• Computer Software - 5 years

J. Noncurrent Liabilities

Noncurrent liabilities include principal amounts of capital improvement debt payable, loans and notes payable, installment purchase agreements payable, capital leases payable, compensated absences payable, other postemployment benefits payable, net pension liabilities, and other noncurrent liabilities that are not scheduled to be paid within the next fiscal year. Capital improvement debt payable is reported net of unamortized premiums or discounts and losses on refunding. The University amortizes debt premiums and discounts over the life of the debt using the straight-line method. Losses on refunding are amortized over the life of the old debt or new debt (whichever is shorter) using the straight-line method.

K. Pensions

For purposes of measuring the net pension liabilities, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Florida Retirement System (FRS) defined benefit plan and the Health Insurance Subsidy (HIS) defined benefit plan and additions to/deductions from the FRS's and the HIS's fiduciary net position have been determined on the same basis as they are reported by the FRS and the HIS plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value.

The University participates in the Florida Retirement System (FRS) defined benefit pension plan and the Health Insurance Subsidy (HIS) defined benefit plan administered by the Florida Department of Management Services, Division of Retirement. As a participating employer, the University implemented Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions, which requires employers participating in cost-sharing multipleemployer defined benefit pension plans to report the employers’ proportionate share of the net pension liabilities of the defined benefit pension plans. The requirements of this Statement are being implemented prospectively, with the University reporting its proportionate share of the actuarially determined liabilities of $224,627,083 at the July 1, 2014, date of transition. The impact of the implementation of this Statement is discussed in Note 3 and Note 15.

In prior fiscal years, the University of Florida Self-Insurance Program and the University of Florida Healthcare Education Insurance Company were included within the University reporting entity as blended component units. However, University management determined during the 2014-15 fiscal year that these entities should be reported as discretely presented component units.

Table 1 summarizes the Adjustments to Beginning Net Position reported in the University's Statement of Revenues, Expenses, and Changes in Net Position.

Table 1. Adjustments to Beginning Net Position - University
Description	University
Implementation of GASB 68	$ (294,271,932)
University of Florida Self-Insurance Program - Change from blended to discrete presentation	(95,110,566)
University of Florida Healthcare Education Insurance Company - Change from blended to discrete presentation	(41,366,615)
Total Adjustments to Beginning Net Position	$ (430,749,113)

Table 2 summarizes the Adjustments to Beginning Net Position reported in the Component Units' Statement of Revenues, Expenses, and Changes in Net Position.

Table 2. Adjustments to Beginning Net Position - Component Units
Description	Shands Hospital and Others
Shands Teaching Hospitals and Clinics, Inc. - Implementation of GASB 68	$ (140,937,000)
University of Florida Self-Insurance Program - Change from blended to discrete presentation (1)	96,912,561
University of Florida Healthcare Education Insurance Company - Change from blended to discrete presentation	41,366,615
Total Adjustments to Beginning Net Position	$ (2,657,824)
(1) The Adjustment to Beginning Net Position reported in Table 2 is not equal to the amount in Table 1 due to timing differences. The difference was previously eliminated when the Program was blended with the University.

Section 1011.42(5), Florida Statutes, authorizes universities to invest funds with the State Treasury and State Board of Administration (SBA), and requires that universities comply with the statutory requirements governing investment of public funds by local governments. Accordingly, universities are subject to the requirements of Chapter 218, Part IV, Florida Statutes. The University's Board of Trustees has adopted a written investment policy providing that surplus funds of the University shall be invested in those institutions and instruments permitted under the provisions of Florida Statutes. Pursuant to Section 218.415(16), Florida Statutes, the University is authorized to invest in the Florida PRIME investment pool administered by the SBA; interest-bearing time deposits and savings accounts in qualified public depositories, as defined in Section 280.02, Florida Statutes; direct obligations of the United States Treasury; obligations of Federal agencies and instrumentalities; securities of, or interests in, certain open-end or closed-end management type investment companies; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; and other investments approved by the University’s Board of Trustees, as authorized by law. Investments set aside to make debt service payments, maintain sinking or reserve funds, or to purchase or construct capital assets are classified as restricted. Investments of the University and its component units at June 30, 2015, are reported at fair value and shown in Tables 3 and 4

Table 3. University Ivestments
Types of Investments	Fair Value
External Investments Pool:
State Treasury Special Purpose Investment Account	$ 776,023,517
State Board of Administration Debt Service Accounts	1,991,717
Stocks	516
Investment Agreements	704,304,686
Total University Investments	$ 1,482,320,436

Table 4. Component Units Investments
Types of Investments	Fair Value
External Investment Pools:
State Treasury Special Purpose Investment Accounts	$ 411,559,914
State Board of Administration Florida PRIME Investment Pool	6,143
United States Government and Federally-Guaranteed Obligations	3,310,538
Bonds and Notes	17,941,871
Investment Agreements	2,061,316,517
Real Estate Agreements	7,544,249
Stocks	889,435
Money Market Funds	12,076,837
Equity Mutual Funds	126,853,910
Bond Mutual Funds	182,446,093
Commercial Paper	7,831,000
Total Component Unit Investments	$ 2,831,776,507

A. External Investment Pools

The University and its discretely presented component units (see Note 1) reported investments at fair value totaling $776,023,517 and $411,559,914, respectively, at June 30, 2015, in the State Treasury Special Purpose Investment Account (SPIA) investment pool, representing ownership of a share of the pool, not the underlying securities. The SPIA carried a credit rating of A+f by Standard and Poor's and had an effective duration of 2.67 years and fair value factor of 1.0013 at June 30, 2015. The University relies on policies developed by the State Treasury for managing interest rate risk or credit risk for this investment pool. Disclosures for the State Treasury investment pool are included in the notes to the financial statements of the State's Comprehensive Annual Financial Report.

B. State Board of Administration Debt Service Accounts

The University reported investments at fair value totaling $1,991,717 at June 30, 2015, in the SBA Debt Service Accounts. These investments are used to make debt service payments on bonds issued by the State Board of Education for the benefit of the University. The University's investments consist of United States Treasury securities, with maturity dates of six months or less and are reported at fair value. The University relies on policies developed by the SBA for managing interest rate risk and credit risk for these accounts. Disclosures for the Debt Service Accounts are included in the notes to the financial statements of the State's Comprehensive Annual Financial Report.

C. Other Investments

In addition to external investment pools, the University and it's discretely presented component units invested in various debt and equity securities, money market funds, and mutual funds. For the University, the majority of the other investments are managed by the University of Florida Investment Corporation (UFICO). University management determined, during the 2014-15 fiscal year, that a portion of those investments managed by UFICO should be reported as Other Noncurrent Investments on the Statement of Net Position. For the University’s discretely presented component units, other investments are those reported primarily by the University of Florida Foundation, Inc., The University Athletic Association, Inc., University of Florida Research Foundation, Inc., Florida Clinical Practice Association, Inc., Shands Teaching Hospital and Clinics, Inc., Shands Jacksonville HealthCare, Inc., and the University of Florida Self-Insurance Program. The following risks apply to the University’s and its discretely presented component units’ investments other than external investment pools:

Interest Rate Risk - Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Pursuant to Section 218.415(16), Florida Statutes, the University's investments in securities must provide sufficient liquidity to pay obligations as they come due. Investments of the University's component units (excluding those reporting under FASB standards) in debt securities, bonds and notes, and bond mutual funds, and their future maturities at June 30, 2015, are shown in Table 5

Table 5. Component Units Debt Investment Maturities
			Investment Maturities (in Years)
Types of Investments	Fair Value	Less than 1	1-5	6-10	More than 10
United States Government and Federally-Guratneed Obligations	$ 2,540,311	$ -	$ 2,540,311	$ -	$ -
Bonds and Notes	17,765,095	8,523,967	8,245,970	995,158	-
Bond Mutual Funds	170,344,581	17,666,352	116,837,229	35,841,000	-
Total Component Units	$ 190,649,987	$ 26,190,319	$ 127,623,510	$ 36,836,158	$ -

Credit Risk - Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Obligations of the United States Government or obligations explicitly guaranteed by the United States Government are not considered to have credit risk and do not require disclosure of credit quality. The investment agreements are unrated. At June 30, 2015, the University's component units (excluding those reporting under FASB standards) had bonds and notes and bond mutual funds, with quality ratings by nationally recognized rating agencies (e.g., Moody's Investors Service), as shown in Table 6.

Table 6. Component Units Debt Investments Quality Ratings
Types of Investments	Fair Value	AAA/Aaa	AA/Aa	A/Ba	Less than A/Ba or Not Rated
Bonds and Notes	$ 17,765,095	$ 3,780,962	$ 4,993,351	$ 8,990,782	$ -
Bond Mutual Funds	170,344,581	13,631,571	61,243,988	35,495,077	59,973,945
Total Component Units	$ 188,109,676	$ 17,412,533	$ 66,237,339	$ 44,485,859	$ 59,973,945

Custodial Credit Risk - Custodial credit risk is the risk that in the event of the failure of the counterparty to a transaction, the University will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Exposure to custodial credit risk relates to investment securities that are held by someone other than the University and are not registered in the University's name. The University has no formal policy on custodial credit risk. The component units manage their custodial credit risk based on various investment policies, which may be obtained separately from the component units.

Concentration of Credit Risk - Concentration of credit risk is the risk of loss attributed to the magnitude of the University's investments in a single issuer. The University has no formal policy on concentration of credit risk. The component units manage their concentration of credit risk based on various investment policies, which may be obtained separately from the component units.

A. Accounts Receviable

Accounts receivable represent amounts for grant and contract reimbursements due from third parties, various sales and services provided to students and third parties, student tuition and fees, and interest accrued on investments and loans receivable. Accounts receivable, net of an allowance for uncollectible accounts, reported as of June 30, 2015, are summarized in Table 7.

Table 7. Accounts Receivable
Description	Amount
Grants and Contracts	$ 66,838,802
Sales and Services of Auxiliary Enterprises	4,267,841
Student Tuition and Fees	5,721,379
Sales and Services of Educational Departments	2,171,083
Interest	1,001,631
Total Accounts Receivable, Net	$ 80,000,736

B. Loans and Notes Receivable

Loans and notes receivable represent all amounts owed on promissory notes from debtors, including student loans made under the Federal Perkins Loan Program and other loan programs.

C. Allowances for Uncollectible Receivables

Allowances for uncollectible accounts, and loans and notes receivable, are reported based upon management’s best estimate as of fiscal year-end, considering type, age, collection history, and other factors considered appropriate. Accounts receivable for student tuition and fees, various sales and services provided to students and third parties, and interest are reported net of an allowance of $6,570,694, which is 33.3% of total related accounts receivable. Loans and notes receivable are reported net of an allowance of $3,967,430 which is 8.8% of total related loans and notes receivable. No allowance has been accrued for grants and contracts receivable. University management considers these to be fully collectible.

This amount consists of $65,305,309 of Public Education Capital Outlay due from the State to the University for construction of University facilities.

The University's financial statements are reported for the fiscal year ended June 30, 2015. The University’s discretely presented component units’ financial statements are reported for the most recent fiscal year for which an audit report is available. Some component units are not presented (see Note 1). Additionally, component units’ due from and due to amounts include receivables and payables between the various component unit columns. Accordingly, amounts reported by the University as due from and to component units on the Statement of Net Position may not agree with amounts reported by the component units as due from and to the University

Inventories have been categorized into the following two types:

Departmental Inventories - Those inventories maintained by departments and not available for resale. Departmental inventories are comprised of such items as classroom and laboratory supplies, teaching materials, and office supply items, which are consumed in the teaching and work process. These inventories are normally expensed when purchased and therefore are not reported on the Statement of Net Position.

Merhcandise Inventories - Those inventories maintained which are available for resale to individuals and other University departments, and are not expensed at the time of purchase. These inventories are reported on the Statement of Net Position and are valued at cost using either the moving average method or the first-in, first-out method.

Capital assets activity for the fiscal year ended June 30, 2015, is presented in Table 8.

Table 8. Capital Assets
Description	Beginning Balance	Additions	Reductions	Ending Balance
Nondepreciable Capital Assets:
Land	$ 11,278,599	$ 605,000	$ -	$ 11,883,599
Construction in Progress	130,441,333	154,947,647	60,218,319	225,170,661
Works of Art and Historical Treasures	4,140,344	64,570	-	4,204,914
Total Nondepreciable Capital Assets	145,860,276	155,617,217	60,218,319	241,259,174
Depreciable Capital Assets:
Buildings	2,292,087,101	62,552,924	1,172,280	2,353,467,745
Infrastructure and Other Improvements	112,919,046	8,297,781	20,067	121,196,760
Furniture and Equipment	550,699,507	41,265,557	22,500,068	569,464,996
Library Resources	321,757,530	9,692,326	3,485,120	327,964,736
Property Under Capital Lease and Leasehold Improvements	12,140,638	2,506,706	-	14,647,344
Works of Art and Historical Treasures	432,895	-	-	432,985
Computer Software	24,533,000	-	-	24,533,000
Other Capital Assets	55,110	11,500	-	66,610
Total Depreciable Capital Assets	3,314,624,827	124,326,794	27,177,535	3,411,774,086
Less Accumulated Depreciation:
Buildings	1,015,118,364	78,155,377	935,333	1,092,338,408
Infrastructure and Other Improvements	65,883,159	4,218,833	6,840	70,095,152
Furniture and Equipment	367,794,291	39,784,521	18,953,749	388,625,063
Library Resources	267,851,211	11,749,637	3,485,120	276,115,728
Property Under Capital Lease and Leasehold Improvements	4,248,700	585,596	-	4,834,296
Works of Art and Historical Treasures	280,327	23,183	-	303,510
Computer Software	24,533,000	-	-	24,533,000
Other Capital Assets	11,078	12,372	-	23,450
Total Accumulated Depreciation	1,745,720,130	134,529,519	23,381,042	1,856,868,607
Total Depreciable Capital Assets, Net	1,568,904,697	(10,202,725)	3,796,493	1,554,905,479
Total Capital Assets, Net	$ 1,714,764,973	$ 145,414,492	$ 64,014,812	$ 1,796,164,653

The Florida Museum of Natural History, which is part of the University, maintains a depository of biological, geological, archaeological, and ethnographic materials. The Museum’s collections contain approximately 40 million specimens, more than half of which are catalogued, either individually or in lots. While many of the collections are undoubtedly quite valuable and irreplaceable, the University has not placed a dollar value on these items and, accordingly, the financial statements do not include these assets.

The Samuel P. Harn Museum of Art, which is also part of the University, maintains a collection of over 10,000 works of art. Donations of artwork to the Museum are recorded by the University of Florida Foundation, Inc. (Foundation), and are included with reported "Permanent Collections" as further explained in Note 9 of the Foundation’s audited financial statements for the fiscal year ended June 30, 2015. Purchases of artwork by the Museum are included with the University's reported Non-depreciable Capital Assets as presented in Table 8.

Certain changes in the University's proportionate share of the net pension liabilities of the cost-sharing multiple-employer Florida Retirement System and Health Insurance Subsidy defined benefit plans are reported as deferred outflows and inflows of pension resources. These include changes in actuarial assumptions and other inputs used to measure the pension liabilities, differences between actual and expected experience in the measurement of the liabilities, the net difference between projected and actual earnings on pension plan investments, as well as changes in the University’s proportion of the collective net pension liabilities since the prior measurement date and changes between the University’s contributions and its proportionate share of contributions. In addition, University contributions to the pension plan subsequent to the measurement date for the collective net pension liabilities are reported as deferred outflows. Total deferred outflows of pension resources were $108,808,572 and deferred inflows of pension resources were $160,302,144 for the year ended June 30, 2015. Note 15 includes a complete discussion of defined benefit pension plans.

Unearned Revenue includes amounts received prior to the end of the fiscal year but related to subsequent accounting periods. Unearned Revenue, as of June 30, 2015, is summarized in Table 9.

Table 9. Unearned Revenue
Description	Amount
Grants and Contracts	$ 31,131,718
Sales and Services of Auxiliary Enterprises	6,258,875
Student Tuition and Fees	5,925,610
Total Unearned Revenue	$ 43,316,203

Long-term liabilities of the University at June 30, 2015, include capital improvement debt payable, loans and notes payable, installment purchase agreements payable, capital leases payable, compensated absences payable, other postemployment benefits payable, net pension liability, and other noncurrent liabilities. Long-term liability activity for the fiscal year ended June 30, 2015, is presented in Table 10.

A. Capital Improvement Debt Payable

Capital improvement debt is issued to construct student housing facilities, parking garages, and various other University facilities. The outstanding debt for student housing and parking garages is secured by a pledge of a portion of housing rental revenues and parking fees. The outstanding debt for the Clinical Translational Research Building is secured by a pledge of a portion of indirect costs revenues received by the College of Medicine. Pledged revenues are equal to the remaining debt service requirements to maturity for the capital improvement debt. During the 2014-15 fiscal year, $5,545,000 of the $21,755,000 in current outstanding University of Florida Housing Revenue Refunding Bonds Series 2005A was economically defeased by the University of Florida Dormitory Revenue Bonds Series 2013A.

A summary of the University’s capital improvement debt payable at June 30, 2015, appears in Table 11.

Annual requirements to amortize all capital improvement debt outstanding as of June 30, 2015, appear in Table 12.

Table 10. Long-Term Liabilities
Description	Beginning Balance	Additions	Reductions	Ending Balance	Current Portion
Capital Asset-Related Debt:
Capital Improvement Debt Payable	$ 181,578,712	$ -	$ 14,355,528	$ 167,223,184	$ 8,909,000
Loans and Notes Payable	11,472,538	-	280,476	11,192,062	527,465
Installment Purchase Agreements Payable	3,359,886	1,200,057	1,500,930	3,059,013	1,138,143
Capital Leases Payable	2,946,983	-	137,087	2,809,896	145,928
Total Capital Asset-Related Debt	199,358,119	1,200,057	16,274,021	184,284,155	10,720,536
Other Long-Term Liabilities
Compensated Absences Payable	125,950,609	14,991,601	11,662,464	129,279,746	11,860,885
Other Postemployment Benefits Payable	180,690,000	43,657,000	6,808,000	217,539,000	-
Net Pension Liability (1)	332,370,934	90,657,296	198,401,147	224,627,083	4,708,642
Liability for Self-Insured Claims (2)	45,801,534	-	45,801,534	-	-
Other Noncurrent Liabilities	18,481,891	-	268,231	18,213,660	-
Total Long-Term Libailities	$ 902,653,087	$ 150,505,954	$ 279,215,397	$ 773,943,644	$ 27,290,063
(1) Net pension liability included due to the implementations of GASB Statement No. 68 during the 2014-15 fiscal year. (2) The liability for self-insured claims was removed due to the change in reporting entity discussed in Note 2.

Table 11. Capital Improvement Debt Payable
		Amount Outstanding
Type and Series	Amount of Original Issue	Principal	Interest	Interest Rates	Maturity Date
Student Housing Auxiliary Debt:
2005A Housing	$ 37,610,000	$ 21,755,000	$ 9,582,863	4.000 to 5.125%	2030
2011A Housing	16,350,000	11,530,000	2,572,869	3.000 to 4.000%	2028
2012A Housing	26,500,000	23,530,000	7,434,106	3.000 to 4.000%	2031
2013A Housing	24,805,000	23,760,000	9,096,744	3.000 to 5.000%	2033
Total Student Housing Debt	105,265,000	80,575,000	28,686,582
Parking Garage Auxiliary Debt:
1998 Parking Garage	10,000,000	2,845,000	278,469	4.750%	2019
2007A Parking Garage	20,770,000	15,230,000	4,524,903	3.625 to 4.375%	2028
Total Parking Garage Debt	30,770,000	18,075,000	4,803,372
Other University of Florida Revenue Bonds:
2011 Clinical Translational Research Building	29,838,000	25,440,000	9,656,049	4.433%	2030
2013 Student Activity	41,540,000	39,155,000	19,041,175	4.000 to 5.000%	2033
Total Other University of Florida Revenue Bonds	71,378,000	64,595,000	28,697,224
Plus: Unamortized Premiums	-	5,418,274	-
Less: Unamortized Discounts	-	(272,398)	-
Less: Unamrotized Refunding Losses	-	(1,167,692)	-
Total Capital Improvement Debt	$ 207,413,000	$ 167,223,184	$ 62,187,178

Table 12. Capital Improvement Debt Payable - Principal & Interest
Fiscal Year Ending June 30	Principal	Interest	Total
2016	$ 8,909,000	$ 7,013,041	$ 15,922,041
2017	9,283,000	6,632,933	15,915,933
2018	9,707,000	6,224,331	15,931,331
2019	10,132,000	5,781,788	15,913,788
2020	8,872,000	5,353,514	14,225,514
2021-2025	48,953,000	20,421,015	69,374,015
2026-2030	52,514,000	9,542,818	62,056,818
2031-2033	14,875,000	1,217,738	16,092,738
Total Principal & Interest	163,245,000	62,187,178	225,432,178
Plus: Unamortized Premiums	5,418,274	-	5,418,274
Less: Unamortized Discounts	(272,398)	-	(272,398)
Less: Unamortized Refunding Losses	(1,167,692)	-	(1,167,692)
Total	$ 167,223,184	$ 62,187,178	$ 229,410,362

B. Loans and Notes Payable

On August 30, 2013, the University borrowed $6,472,538 at an interest rate of 2.33%, to finance the cost of heating, ventilation, and air conditioning (HVAC) update and renovation of J.Wayne Reitz Student Union. The principal and interest cost is expected to be met by cost savings of the newer system. The note matures on August 31, 2029, and principal and interest payments are made annually. On June 17, 2013, the University borrowed $5,000,000 at an interest rate of 3.58% for a similar renovation at Willard M. Fifield Hall. The note matures on November 1, 2033, and principal and interest payments are made annually. Annual requirements to amortize the two outstanding notes as of June 30, 2015, appear in Table 13.

Table 13. Loans and Notes - Principal & Interest
Fiscal Year Ending June 30	Principal	Interest	Total
2016	$ 527,465	$ 317,576	$ 845,041
2017	551,318	303,364	854,682
2018	572,130	288,408	860,538
2019	597,825	272,820	870,645
2020	569,277	256,427	825,704
2021-2025	3,232,168	1,037,825	4,269,993
2026-2030	3,540,858	555,804	4,096,662
2031-2034	1,601,021	148,082	1,749,103
Total	$ 11,192,062	$ 3,180,306	$ 14,372,368

C. Installment Purchase Agreements Payable

The University has entered into several installment purchase agreements for the purchase of equipment with original cost basis of $5,665,083. The stated interest rates ranged from 0.00% to 13.02%. Future minimum payments remaining under installment purchase agreements as of June 30, 2015, appear in Table 14.

Table 14. Installment Purchase Agreements Payable - Principal & Interest
Fiscal Year Ending June 30	Principal	Interest	Total
2016	$ 1,138,143	$ 79,705	$ 1,217,848
2017	951,671	43,597	995,268
2018	587,043	19,333	606,376
2019	341,979	6,748	348,727
2020	40,177	322	40,499
Total Minimum Payments	$ 3,059,013	$ 149,705	$ 3,208,718

D. Capital Lease Payable

On June 8, 1994, the former Board of Regents, on behalf of the University of Florida, entered into a lease agreement with the University of Florida Foundation, Inc. (the Foundation), a direct-support organization (component unit) of the University. Under the terms of the agreement, the University agreed to lease from the Foundation a 607-space parking garage (the garage) located near the Health Science Center Administrative Offices for a period of thirty years beginning July 1, 1994. Lease payments of $100,000 annually are due each July 1. The garage was simultaneously acquired by the Foundation from Shands Teaching Hospital and Clinics, Inc. (Shands), also a component unit, and financed by the Foundation through the issuance of a promissory note secured by a non-recourse mortgage containing payment terms similar to those in the lease agreement between the Foundation and the University. Lease payments from the University to the Foundation and from the Foundation to Shands were based on an original construction cost of $3,000,000 and no interest. For reporting purposes, the lease is considered a capital lease under GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The initial obligation was discounted at an imputed interest rate of 6.45% and was recorded at $1,382,470. The asset, which is included in the Property Under Capital Lease and Leasehold Improvements, was recorded at cost to Shands of $3,000,000.

On March 1, 2000, the University, acting for and on behalf of the former Board of Regents, entered into a lease agreement with Shands. Under the terms of the agreement, the University agreed to lease from Shands an 800-space parking garage located near the Health Science Center Administrative Offices for a period of thirty years beginning March 1, 2000. Annual lease payments of $227,167 are due each May 1, beginning May 1, 2001. Lease payment amounts were based on an original construction cost of $6,815,002 and no interest. For reporting purposes, the lease is considered a capital lease under GASB Statement No. 62. The initial obligation was discounted at an imputed interest rate of 6.45% and was recorded at $2,981,939. The asset, which is included in the Property Under Capital Lease and Leasehold Improvements, was recorded at cost to Shands of $6,815,002. A summary of pertinent information related to the two capital leases appears in Table 15

Table 15. Capital Leases Payable
Capital Leases	Interest Rate	Original Balance	Outstanding Balance
Shands Garage (607 spaces)	6.45%	$ 1,382,470	$ 667,045
Shands Garage (800 spaces)	6.45%	2,981,939	2,142,851
Total		$ 4,364,409	$ 2,809,896

Future minimum payments under the capital lease agreements and the present value of the minimum payments as of June 30, 2015, are presented in Table 16.

Table 16. Capital Leases Payable - Principal & Interest
Fiscal Year Ending June 30	Principal	Interest	Total
2016	$ 145,928	$ 181,238	$ 327,166
2017	155,341	171,826	327,167
2018	165,360	161,806	327,166
2019	176,026	151,141	327,167
2020	187,380	139,787	327,167
2021-2025	1,034,553	501,280	1,535,833
2026-2030	945,308	190,527	1,135,835
Total	$ 2,809,896	$ 1,497,605	$ 4,307,501

E. Compensated Absences Payable

Employees earn the right to be compensated during absences for annual leave (vacation) and sick leave earned pursuant to Board of Governors Regulations, University Regulations, and bargaining agreements. Leave earned is accrued to the credit of the employee and records are kept on each employee’s unpaid (unused) leave balance. The University reports a liability for the accrued leave in accordance with its policy regarding leave payment upon separation from employment. However, Noncapital State Appropriations fund only the portion of accrued leave that is used or paid in the current fiscal year. Although the University expects the liability to be funded primarily from future appropriations, generally accepted accounting principles do not permit the recording of a receivable in anticipation of future appropriations.

At June 30, 2015, the estimated liability for compensated absences, which includes the University’s share of the Florida Retirement System and FICA contributions, totaled $129,279,746. The current portion of the compensated absences liability is the amount expected to be paid in the coming fiscal year, and is based on actual payouts over the last three years, calculated as a percentage of those years’ total compensated absences liability.

F. Other Postemployment Benefits Payable

The University follows Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, for certain postemployment healthcare benefits administered by the State Group Health Insurance Program.

Plan Description - Pursuant to the provisions of Section 112.0801, Florida Statutes, all employees who retire from the University are eligible to participate in the State Group Health Insurance Program, an agent multiple-employer, defined benefit plan (Plan). The University subsidizes the premium rates paid by retirees by allowing them to participate in the Plan at reduced or blended group (implicitly subsidized) premium rates for both active and retired employees. These rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the Plan, on average, than those of active employees. Retirees are required to enroll in the Federal Medicare program for their primary coverage as soon as they are eligible. A stand-alone report is not issued and the Plan information is not included in the report of a public employee retirement system or another entity.

Funding Policy - Plan benefits are pursuant to provisions of Section 112.0801, Florida Statutes, and benefits and contributions can be amended by the Florida Legislature. The State has not advance-funded Other Postemployment Benefit (OPEB) costs or the net OPEB obligation. Premiums necessary for funding the Plan each year on a pay-as-you-go basis are established by the Governor’s recommended budget and the General Appropriations Act. For the 2014-15 fiscal year, 2,412 retirees received postemployment healthcare benefits. The University provided required contributions of $6,808,000 toward the annual OPEB cost, comprised of benefit payments made on behalf of retirees for claims expenses (net of reinsurance), administrative expenses, and reinsurance premiums. Retiree contributions totaled $16,397,000, which represents 1.4% of covered payroll.

Annual OPEB Cost and Net OPEB Obligation - The University’s annual OPEB cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents a level of funding that if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. Table 17 shows the University’s annual OPEB cost for the fiscal year, the amount actually contributed to the Plan, and the changes in the University’s net OPEB obligation.

Table 17. Annual OPEB Cost and Net OPEB Obligation
Description	Amount
Normal Cost (service cost for one year)	$ 21,128,000
Amortization of Unfunded Acturial Accrued Liability	19,923,000
Interest on Normal Cost and Amortization	1,642,000
Annual Required Contribution	42,693,000
Interest on Net OPEB Obligation	7,228,000
Adjustment to Annual Required Contribution	(6,264,000)
Annual OPEB Cost (Expense)	43,657,000
Contribution Toward the OPEB Cost	(6,808,000)
Increase in Net OPEB Obligation	36,849,000
Net OPEB Obligation, Beginning of Year	180,690,000
Net OPEB Obligation, End of Year	$ 217,539,000

The University's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation as of June 30, 2015, and for the two preceding fiscal years, are presented in Table 18.

Table 18. Annual OPEB Cost, Percentage Contributed, and Net Obligation
Fiscal Year	Annual OPEB Cost	Percentage of Annual OPEB Cost Contributed	Net OPEB Obligation
2012-13	$ 47,382,000	21.2%	$ 139,775,000
2013-14	48,595,000	15.8%	180,690,000
2014-15	43,657,000	15.6%	217,539,000

Funded Status and Funding Progress - As of July 1, 2013, the most recent actuarial valuation date, the actuarial accrued liability for benefits was $663,395,000 and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability of $663,395,000 and a funded ratio of 0%. The covered payroll (annual payroll of active participating employees) was $1,140,761,801 for the 2014-15 fiscal year, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 58.2%.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment and termination, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Funding Progress, presented as required supplementary information following the Notes to the Financial Statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions - Projections of benefits for financial reporting purposes are based on the substantive plan provisions, as understood by the employer and participating members, and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and participating members. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

The University's OPEB actuarial valuation as of July 1, 2013, used the entry-age cost actuarial method to estimate the actuarial accrued liability as of June 30, 2015, and the University’s estimated 2014-15 fiscal year annual required contribution. This method was selected because it is the same method used for the valuation of the Florida Retirement System. Because the OPEB liability is currently unfunded, the actuarial assumptions included a 4% rate of return on invested assets. The actuarial assumptions also included a payroll growth rate of 4% per year and an inflation rate of 3%. Healthcare trend rates were 7.2%, 7.9%, and 7.6% for the first three years respectively for all retirees in the PPO (Preferred Provider Organization) Plan and were 7.0%, 7.6%, and 7.8% for the first three years for all retirees in the Health Maintenance Organization (HMO) Plan. The PPO and HMO healthcare trend rates both grade down to an ultimate rate of 5.0% over 70 years. The unfunded actuarial accrued liability is being amortized over 30 years using the level percentage of projected payroll on an open basis.

Interdepartmental sales between auxiliary service departments and other institutional departments have been eliminated from expenses and revenues for reporting purposes. The interdepartmental transactions eliminated in the financial statement preparation totaled $113,472,559 for the fiscal year ended June 30, 2015.

A. Defined Benefit Pension Plans

The University follows GASB No. 68, Accounting and Financial Reporting for Pensions, for reporting the employer’s proportionate share of the net pension liabilities for the FRS and HIS defined benefit plans.

General information about the Florida Retirement System (FRS) and Health Insurance Subsidy (HIS)

The Florida Retirement System (FRS) was created in Chapter 121, Florida Statutes. The FRS was created to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the Retiree Health Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit pension plan to assist retired members of any State-administered retirement system in paying the costs of health insurance. Chapter 121, Florida Statutes, also provides for nonintegrated, optional retirement programs in lieu of the FRS to certain members of the Senior Management Service Class (SMSC) employed by the State and faculty and specified employees in the State university system.

Essentially all regular employees of the University are eligible to enroll as members of the State-administered FRS. Provisions relating to the FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112, Part IV, Florida Statutes; Chapter 238, Florida Statutes; and Florida Retirement System Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Department of Management Services, Division of Retirement, and consists of two cost-sharing, multiple-employer defined benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services' Web site (ww.dms.myflorida.com).

The University's pension expense totaled $26,107,645 for the 2014-15 fiscal year for both the FRS Pension Plan and HIS Program.

1. Florida Retirement System Defined Benefit Pension Plan

Plan Description - The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a Deferred Retirement Option Program (DROP) for eligible employees. The general classes of membership are as follows:

• Regular Class – Members of the FRS who do not qualify for membership in the other classes.
• Senior Management Service Class (SMSC) – Members in senior management level positions.
• Special Risk Class – Members who are employed as law enforcement officers and meet the criteria to qualify for this class.

Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All vested members, enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service, except for members classified as special risk who are eligible for normal retirement benefits at age 55 or at any age after 25 years of service. All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service, except for members classified as special risk who are eligible for normal retirement benefits at age 60 or at any age after 30 years of service. Employees enrolled in the Plan may include up to 4 years of credit for military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.

DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS-participating employer. An employee may participate in DROP for a period not to exceed 60 months after electing to participate. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest. The net pension liability does not include amounts for DROP participants, as these members are considered retired and are not accruing additional pension benefits.

Benefits Provided - Benefits under the Plan are computed on the basis of age, and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on retirement plan and/or the class to which the member belonged when the service credit was earned. Members are eligible for in-line-of-duty or regular disability and survivors' benefits. Table 19 shows the percentage value for each year of service credit earned.

As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of- living adjustment is 3% per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of 3% determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by 3%. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.

Table 19. Class, Initial Enrollment, and Retirement Age/Years of Service
	Value
Regular Class members initially enrolled before July 1, 2011
Retirement up to age 62 or up to 30 years of service	1.60%
Retirement at age 63 or with 31 years of service	1.63%
Retirement at age 64 or with 32 years of service	1.65%
Retirement at age 65 or with 33 or more years of service	1.68%
Regular Class members initially enrolled on or after July 1, 2011
Retirement up to age 65 or up to 33 years of service	1.60%
Retirement at age 66 or with 34 years of service	1.63%
Retirement at age 67 or with 35 years of service	1.65%
Retirement at age 68 or with 36 or more years of service	1.68%
Special Risk Regular
Service from December 1, 1970, through September 30, 1974	2.00%
Service on and after October 1, 1974	3.00%
Senior Management Service Class	2.00%

Contributions - The Florida Legislature establishes contribution rates for participating employers and employees. Contribution rates during the 2014-15 fiscal year are shown in Table 20.

The University's contributions to the Plan totaled $38,680,557 for the fiscal year ended June 30, 2015.

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At June 30, 2015, the University reported a liability of $92,657,576 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2014. The University’s proportionate share of the net pension liability was based on the University’s 2013-14 fiscal year contributions relative to the total 2013-14 fiscal year contributions of all participating members. At June 30, 2014, the University’s proportionate share was 1.52%, which was an increase of 0.29% from its proportionate share of 1.23% measured as of July 1, 2013.

Table 20. Florida Retirement System Rates
Class	Percent of Employee	Gross Salary Employer (A)
Florida Retirement System, Regular	3.00%	7.37%
Florida Retirement System, Senior Management Service	3.00%	21.14%
Florida Retirement System, Special Risk	3.00%	19.82%
Deferred Retirement Option Program-Applicable to Members from All of the Above Classes	0.00%	12.28%
Florida Retirement System, Reemployed Retiree	(B)	(B)
(A) Employer rates for each membership class include 1.26% for Health Insurance Subsidy. Also, employer rates, other than for DROP participants, include 0.04% for administrative costs of the Investment Plan. (B) Contribution Rates are dependent upon retirement class in which reemployed.

For the year ended June 30, 2015, the University recognized pension expense of $16,552,292. At June 30, 2015, the University reported deferred outflows of resources and deferred inflows of resources related to pensions as presented in Table 21.

The deferred outflows of resources related to pensions totaling $38,680,557, resulting from University contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the year ending June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as shown in Table 22.

Actuarial Assumptions - The total pension liability in the July 1, 2014, actuarial valuation was determined using the following actuarial assumptions applied to all periods included in the measurement, as presented in Table 23.

Table 21. Deferred Outflows and Inflows Related to Pensions - FRS
Description	Deferred Outflows of Resources	Deferred Inflows of Resources	Recognition Period
Differences Between Expected and Actual Experience	$ -	$ 5,733,928	6.3 years
Change of Assumptions	16,046,750	-	6.3 years
Net Difference Between Projected and Actual Earnings on Pension Plan Investments	-	154,568,216	5.0 years
Changes in Proportion and Difference Between University Contributions and Proportionate Share of Contributions	41,317,585	-	6.3 years
University FRS Contributions Subsequent to the Measurement Date	38,680,557	-	1.0 year
Total	$ 96,044,892	$ 160,302,144

Table 22. Recognition of Deferred Outflows and Inflows Related to Pensions - FRS
Fiscal Year Ending June 30	Amount
2016	$ (28,900,468)
2017	(28,900,468)
2018	(28,900,468)
2019	(28,900,468)
2020	9,741,586
Thereafter	2,922,477
Total	$ (102,937,809)

Table 23. Actuarial Assumptions - FRS
Inflation	2.60%
Salary Increases	3.25%, average, including inflation
Investment rate of return	7.65%, net of pension plan invesment expense, including inflation

Mortality rates were based on the Generational RP-2000 with Projection Scale BB.

The actual assumptions used in the July 1, 2014, valuation were based on the results of an actuarial experience study for the period July 1, 2008, through June 30, 2013.

The long-term expected rate of return on pension plan investments was not based on historical returns, but instead is based on a forward-looking capital market economic model. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions, and includes an adjustment for the inflation assumption. The target allocation and best estimates of long-term expected rates of arithmetic return for each major asset class are summarized in Table 24.

Table 24. Target Allocation and Expected Rate of Return
Asset Class	Target Allocation	Long-Term Expected Rate of Return
Cash	1.00%	3.11%
Intermediate-Term Bonds	18.00%	4.18%
High Yield Bonds	3.00%	6.79%
Broad US Equities	26.50%	8.51%
Developed Foreign Equities	21.20%	8.66%
Emerging Market Equities	5.30%	11.58%
Private Equity	6.00%	11.80%
Hedge Funds / Absolute Return	7.00%	5.81%
Real Estate (Property)	12.00%	7.11%
Total	100.00%

Discount Rate - The discount rate used to measure the total pension liability was 7.65%. The plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return.

Sensitivity of the University’s Proportionate Share of the Net Position Liability to Changes in the Discount Rate - Table 25 presents the University’s proportionate share of the net pension liability calculated using the discount rate of 7.65%, as well as what the University’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.65%) or 1-percentagepoint higher (8.65%) than the current rate.

Table 25. Sensitivity to Changes in Discount Rate - FRS
	1% Decrease 6.65%	Current Discount Rate 7.65%	1% Increase 8.65%
University's
Proportionate
Share of the Net
Pension Liability	$ 396,308,759	$ 92,657,576	$ (159,922,269)

Pension Plan Fiduciary Net Position - Detailed information about pension plan's fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.

2. Health Insurance Subsidy Defined Benefit Pension Plan

Plan Description - The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance costs and is administered by the Division of Retirement within the Florida Department of Management Services.

Benefits Provided - For the fiscal year ended June 30, 2015, eligible retirees and beneficiaries received a monthly HIS payment equal to the number of years of creditable service completed at the time of retirement multiplied by $5. The payments are at least $30 but not more than $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS Plan benefit, a retiree under a State-administered retirement system must provide proof of health insurance coverage, which can include Medicare.

Contributions - The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended June 30, 2015, the contribution rate was 1.26% of payroll pursuant to Section 112.363, Florida Statues. The University contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which HIS payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.

The University's contributions to the HIS Plan totaled $5,578,364 for the fiscal year ended June 30, 2015.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources Related to Pensions - At June 30, 2015, the University reported a liability of $131,969,507 for its proportionate share of the net pension liability. The current portion of the net pension liability is the University’s proportionate share of benefit payments expected to be paid within one year, net of the University’s proportionate share of the pension plan’s fiduciary net position available to pay that amount. The net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2014. The University’s proportionate share of the net pension liability was based on the University's 2013-14 fiscal year contributions relative to the total 2013-14 fiscal year contributions of all participating members. At June 30, 2014, the University’s proportionate share was 1.41%, which was an increase of 0.03% from its proportionate share of 1.38% measured as of June 30, 2013.

For the fiscal year ended June 30, 2015, the University recognized pension expense of $9,555,353. In addition, the University reported deferred outflows of resources related to pensions as presented in Table 26.

Table 26. Deferred Outflows Related to Pension - HIS
Description	Deferred Outflows of Resources	Recognition Period
Change of Assumptions	$ 4,695,999	7.2 years
Net Difference Between Projected and Actual Earnings on Pension Plan Investments	63,349	5.0 years
Changes in Proportion and Difference Between University Contributions and Propotionate Share of Contributions	2,425,968	7.2 years
University HIS Contributions Subsequent to the Measurement Date	5,578,364	1.0 year
Total	$ 12,763,680

The deferred outflows of resources totaling $5,578,364 was related to pensions resulting from University contributions subsequent to the measurement date and will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2016. Other amounts reported as deferred outflows of resources related to pensions will be recognized in pension expense as showed in Table 27.

Table 27. Recognition of Deferred Outflows Related to Pensions - HIS
Fiscal Year Ending June 30	Amount
2016	$ 1,164,542
2017	1,164,542
2018	1,164,542
2019	1,164,542
2020	1,148,704
Thereafter	1,378,444
Total	$ 7,185,316

Actuarial Assumptions - The total pension liability in the July 1, 2014, actuarial valuation was determined using the following actuarial assumptions applied to all periods included in the measurement, as presented in Table 28.

Table 28. Actuarial Assumptions - HIS
Inflation	2.60%
Salary Increases	3.25%, average, including inflation
Municipal Bond Rate	4.29%

Mortality rates were based on the Generational RP-2000 with Projected Scale BB. While an experience study had not been completed for the plan, the Florida Retirement System Actuarial Assumptions Conference reviewed the actuarial assumptions for the plan.

Discount Rate - The discount rate used to measure the total pension liability was 4.29%. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index.

Sensitivity of the University’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - Table 29 presents the University’s proportionate share of the net pension liability calculated using the discount rate of 4.29%, as well as what the University’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (3.29%) or 1-percentagepoint higher (5.29%) than the current rate.

Table 29. Sensitivity to Changes in Discount Rate - HIS
	1% Decrease 3.29%	Current Discount Rate 4.29%	1% Increase 5.29%
University's
Proportionate
Share of the Net
Pension Liability	$ 150,104,628	$ 131,969,507	$ 116,831,871

Pension Plan Fiduciary Net Position - Detailed information about pension plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.

B. Defined Contribution Pension Plans

1. FRS Investment Plan

The State Board of Administration (SBA) administers the defined contribution plan officially titled the FRS Investment Plan (Investment Plan). The Investment Plan is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report.

As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. University employees already participating in the State University System Optional Retirement Program or DROP are not eligible to participate in this program. Employer and employee contributions are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Service retirement benefits are based upon the value of the member’s account upon retirement. Benefit terms, including contribution requirements, are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contributions, that are based on salary and membership class (Regular Class, Senior Management Service Class, etc.), as the FRS defined benefit plan. Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Costs of administering the plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.04% of payroll and by forfeited benefits of plan members. Allocations to the Investment Plan member accounts during the 2014-15 fiscal year are presented in Table 30.

Table 30. Florida Retirement System - Investment Plan Rates
Class	Percent of Gross Compensation
Florida Retirement System, Regular	6.30%
Florida Retirement System, Senior Management Service	7.67%
Florida Retirement System, Special Risk	14.00%

For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings regardless of membership class. If an accumulated benefit obligation for service credit originally earned under the FRS Pension Plan is transferred to the FRS Investment Plan, the member must have the years of service required for FRS Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Non-vested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS-covered employment within the five year period, the employee will regain control over his account. If the employee does not return within the five year period, the employee will forfeit the accumulated account balance. For the fiscal year ended June 30, 2015, the information for the amount of forfeitures was unavailable from the SBA; however, management believes these amounts, if any, would be immaterial to the University.

After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump-sum distribution, leave the funds invested for future distribution, or select any combination of these options. Disability coverage is provided in which the member may either transfer the account balance to the FRS Pension Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan, or remain in the Investment Plan and rely upon that account balance for retirement income.

There were 1,936 University participants during the 2014-15 fiscal year. The University's Investment Plan pension expense totaled $6,623,159 for the fiscal year ended June 30, 2015.

2. State University System Optional Retirement Program

Section 121.35, Florida Statutes, provides for an Optional Retirement Program (Program) for eligible university instructors and administrators. The Program is designed to aid State universities in recruiting employees by offering more portability to employees not expected to remain in FRS for eight or more years.

The Program is a defined contribution plan, which provides full and immediate vesting of all contributions submitted to the participating companies on behalf of the participant. Employees in eligible positions can make an irrevocable election to participate in the Program, rather than the FRS, and purchase retirement and death benefits through contracts provided by certain insurance carriers. The employing university contributes 5.14% of the participant’s salary to the participant’s account, 2.54% to cover the unfunded actuarial liability of the FRS pension plan, and 0.01% to cover administrative costs. Employees contribute 3% of their salary. Additionally, the employee may contribute, by payroll deduction, an amount not to exceed the percentage contributed by the University to the participant’s annuity account. The contributions are invested in the company or companies selected by the participant to create a fund for the purchase of annuities at retirement.

There were 5,962 University participants during the 2014-15 fiscal year. The University's contributions to the Program totaled $35,136,871 and employee contributions totaled $24,828,214 for the 2014-15 fiscal year.

C. Other Retirement Programs

1. U.S. Civil Service Retirement System

Some University employees participate in the U.S. Civil Service Retirement System. Twenty-three employees were covered by the U.S. Civil Service Retirement System during the 2014-15 fiscal year. Employer contributions totaled $150,206, and employee contributions totaled $150,210. The University’s participation in the Federal retirement system is not considered material by University management.

2. Institute of Food and Agricultural Sciences Supplemental Retirement

In 1984, the Florida Legislature enacted the Institute of Food and Agricultural Sciences Supplemental Retirement Act to provide a supplement to the monthly retirement benefit being paid under the Federal Civil Service Retirement System to retirees of the Institute of Food and Agricultural Sciences (IFAS) at the University of Florida. The supplement is designated for IFAS cooperative extension employees employed before July 1, 1983, who are not entitled to benefits from either a State-supported retirement system or social security based on their service with IFAS. It was intended to compensate these IFAS employees for the difference between their Civil Service benefit and the benefits an FRS member receives, which include a social security benefit. No additional persons can become eligible for this supplement.

There were 20 University participants during the 2014-15 fiscal year. Required employer contributions made to the program totaled $372,910. Employees do not contribute to this program.

The University’s construction commitments at June 30, 2015, are presented in Table 31.

Table 31. Construction Project Commitements
Project Title	Total Commitment	Completed to Date	Balance Committed
Reitz Union Expansion and Renovation	$ 77,223,053	$ 50,713,052	$ 26,510,001
Chemistry/Chemical Biology Building	66,608,204	15,983,277	50,624,927
Stephen O'Connell Center Renovation and Addition	58,430,000	4,653,589	53,776,411
NEXUS Engineering Addition	50,000,000	385,378	49,614,622
Harrell Medical Education Building	46,629,581	33,392,497	13,237,084
ENT/Ophthalmology Clinics Facility	38,625,000	11,080	38,613,920
Joint Use Library Storage Facility	26,666,000	1,516,636	25,149,364
Cyrpress Hall - Single Student Housing	21,900,000	16,608,188	5,291,812
PK Yonge Middle and High School Expansion	18,830,800	534,386	18,296,414
Newell Hall Renovation	16,635,000	348,764	16,286,236
Rabon Steam Boiler Design / Installation	7,000,000	42,750	6,957,250
Broward Hall - Bathrooms, Lounges, Apartment Renovation	6,500,000	6,487,668	12,332
Veterinary Medicine Clinical Simulation Lab Addition	6,089,140	3,798,378	2,290,762
Entomogly and Nematology - Energy Efficiencies for HVAC, Roof and Automation Controls	6,082,711	5,805,402	277,309
Basic Sciences Building - Ground Floor Renovation	5,237,000	122	5,236,878
Chilled Water Plant Boiler Replacement	4,381,326	3,933,192	448,134
MIRADAS Telescopes	4,152,648	732,426	3,420,222
Marston Science Library Renovation	4,118,001	3,721,061	396,940
Corry Village Building 277 Renovation	3,807,093	2,160,242	1,646,851
Nanoscale Research Facility - Clean Room Renovation	2,542,879	13,910	2,528,969
Buckman Hall - Air Conditioning Design and Installation	2,515,800	2,068,824	446,976
Thomas Hall - Air Conditioning Replacement	2,500,000	1,615,170	884,830
Corry Village Building 284 Renovation	2,400,000	2,003,465	396,535
Corry Village Building 278 Renovation	2,400,000	2,390,047	9,953
Corry Village Building 282 Renovation	2,268,300	2,146,035	122,265
Corry Village Building 283 Renovation	2,200,000	2,188,293	11,707
Health Science Center Addition of Modular Buildings	2,097,133	16,932	2,080,201
Dental Science Building - Air Handling Units Replacement, Fire Sprinkler Installation, and Reroof	2,082,435	1,828,251	254,184
Yon Hall - Air Handling Units Replacement	2,077,451	1,648,989	428,462
Broward Hall - Electrical Upgrades	2,000,000	8,717	1,991,283
Broward Hall - Fire Sprinkler and Alarm Systems	2,000,000	376,456	1,623,544
Subtotal	495,999,555	167,133,177	328,866,378
Projects Under $2,000,000	100,500,996	58,037,484	42,463,512
Total	$ 596,500,551	$ 225,170,661	$ 371,329,890

A. State Self-Insurance Programs

The University is exposed to various risks of loss related to torts; damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Pursuant to Section 1001.72(2), Florida Statutes, the University participates in State self-insurance programs providing insurance for property and casualty, workers' compensation, general liability, fleet automotive liability, Federal Civil Rights, and employment discrimination liability. During the 2014-15 fiscal year, for property losses, the State retained the first $2 million per occurrence for all perils except named windstorm and flood. The State retained the first $2 million of losses per occurrence with an annual aggregate retention of $40 million for named windstorm and flood losses. After the annual aggregate retention, losses in excess of $2 million per occurrence were commercially insured up to $54 million for named windstorm and flood losses. For perils other than named windstorm and flood, losses in excess of $2 million per occurrence were commercially insured up to $200 million; and losses exceeding those amounts were retained by the State. No excess insurance coverage is provided for workers’ compensation, general and automotive liability, Federal Civil Rights and employment action coverage; all losses in these categories are completely self-insured by the State through the State Risk Management Trust Fund established pursuant to Chapter 284, Florida Statutes. Payments on tort claims are limited to $200,000 per person, and $300,000 per occurrence as set by Section 768.28(5), Florida Statutes. Calculation of premiums considers the cash needs of the program and the amount of risk exposure for each participant. There have been no significant reductions in insurance coverage from the prior year coverage. Settlements have not exceeded insurance coverage during the past three fiscal years.

Pursuant to Section 110.123, Florida Statutes, University employees may obtain healthcare services through participation in the State’s group health insurance plan or through membership in a health maintenance organization plan under contract with the State. The State’s risk financing activities associated with State group health insurance, such as risk of loss related to medical and prescription drug claims, are administered through the State Employees' Group Health Insurance Trust Fund. It is the practice of the State not to purchase commercial coverage for the risk of loss covered by this Fund. Additional information on the State’s group health insurance plan, including the actuarial report, is available from the Florida Department of Management Services, Division of State Group Insurance.

B. University Self-Insurance Programs

The University of Florida Self-Insurance Program (Program) and the University of Florida Healthcare Education Insurance Company (HEIC), which are included in the University's reporting entity as discretely presented component units (see Notes 1, 2, and 3), provide general and professional liability protection for the University of Florida Board of Trustees (UFBOT) on behalf of the six health colleges of the JHMHC, the College of Veterinary Medicine teaching hospitals, the Student Health Care Center, its direct-support organization, and their employees and agents. Hospital professional liability protection, including general liability, is provided to Shands Teaching Hospital and Clinics, Inc., Shands Jacksonville Medical Center, Inc. (a subsidiary of Shands Jacksonville HealthCare, Inc. - Shands Jacksonville), other entities statutorily authorized to participate in the Program, and their employees and agents.

The UFBOT and other immune entities are protected for losses which are subject to Section 768.28, Florida Statutes, including legislative claims bills, that in combination with the waiver of immunity limits described in Section 768.28, Florida Statutes, do not exceed $1 million per claim and, for voluntary settlements, $2 million per claim. For those protected entities not subject to Section 768.28, Florida Statutes, the Program provides $2 million per claim. The per claim limit of liability protection for the participants does not exceed $2 million per claim in the event more than one protected entity is involved in the same claim or action.

HEIC provides coverage for claims that are in excess of the protections provided by the Program, at limits of $4 million per legislative claims bill coverage for insured participants subject to Section 768.28, Florida Statutes, and $3 million per claim for voluntary settlements and insured participants that are not subject to Section 768.28, Florida Statutes. HEIC provides additional limits of liability coverage of $50 million per claim and in the aggregate, which is in excess of the coverages described above.

The University is involved in several pending and threatened legal actions. The range of potential loss from all such claims and actions, as estimated by the University's legal counsel and management, should not materially affect the University’s financial position.

The University of Florida reached an agreement with the United States Department of Health and Human Services and with the United States Department of Justice (civil division) regarding the University's practices related to Federal awards finances and accounting. See Note 22 for more details.

The functional classification of operating expenses (instruction, research, etc.) is assigned to each individual transaction based on the nature of the activity. The operating expenses on the Statement of Revenues, Expenses, and Changes in Net Position are presented by natural classifications. Table 32 presents those same expenses in functional classifications as recommended by NACUBO.

Table 32. Functional Expenses
Functional Classifications	Amount
Instruction	$ 716,265,312
Research	606,122,948
Public Service	475,734,937
Academic Support	176,226,237
Institutional Support	164,402,362
Depreciation	134,529,519
Auxiliary Operations	118,559,716
Operation and Maintenance of Plant	104,580,297
Scholarships, Fellowships and Waivers, Net	61,531,590
Student Services	36,337,047
Total Operating Expenses	$ 2,594,289,965

The University's financial statements include 16 discretely presented component units as discussed in Note 1. These component units comprise 100% of the transactions and account balances of the aggregate discretely presented component units’ columns of the financial statements. Summary financial information from the most recently available audited financial statements for these component units is presented in Tables 33, 34, and 35.

Table 33. Direct-Support Organizations (amounts expressed in thousands)
	University of Florida Foundation, Inc.	The University Athletic Association, Inc.	University of Florida Research Foundation, Inc.	GatorCare Health Management Corporation
CONDENSED STATEMENT OF NET POSITION
Assets
Due from Component Units/University	$ 44,427	$ 15,461	$ 113,500	$ -
Other Current Assets	101,964	67,965	7,055	12,896
Capital Assets, Net	88,825	174,581	-	10
Other Noncurrent Assets	1,625,353	58,862	-	23,766
Total Assets	1,860,569	316,869	120,555	36,672
Liabilities
Due to Component Units/University	39,603	-	20,580	-
Other Current Liabilities	24,100	68,973	5,260	36,482
Noncurrent Liabilities	33,261	82,776	-	-
Total Liabilities	96,964	151,749	25,840	36,482
Net Position
Net Investment in Capital Assets	32,921	93,951	-	-
Restricted-Nonexpendable Endowment	1,228,173	-	-	-
Restricted-Expendable Endowment	383,947	-	-	-
Restricted-Expendable Other	143,218	23,844	-	-
Unrestricted	(24,654)	47,325	94,715	190
Total Net Position	$ 1,763,605	$ 165,120	$ 94,715	$ 190
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues	$ 86,343	$ 68,329	$ 25,748	$ 426
Operating Expenses	(324,633)	(129,677)	(34,649)	(624)
Operating Income (Loss)	(238,290)	(61,348)	(8,901)	(198)
Nonoperating Revenues (Expenses) and Other Revenues, Expenses, Gains or Losses
Investment Income, Net of Expenses	70,659	2,697	91	-
Net Decrease in the Fair Value of Investments	(665)	(569)	(463)	-
Other Nonoperating Revenues	-	79,435	2,300	-
Other Nonoperating Expenses	(3,915)	(7,906)	(1,691)	-
Addition to Permanent Endowments	32,742	-	-	-
Change in Net Position	(139,469)	12,309	(8,664)	(198)
Net Position, Beginning of Year	1,903,074	152,811	103,379	388
Net Position, End of Year	$ 1,763,605	$ 165,120	$ 94,715	$ 190

Table 33. Direct-Support Organizations (continued) (amounts expressed in thousands)
	Gator Boosters, Inc.	University of Florida Development Corporation	Citrus Research and Development Foundation, Inc.	Total Direct- Support Organizations
CONDENSED STATEMENT OF NET POSITION
Assets
Due from Component Units/University	$ 5,561	$ -	$ -	$ 178,949
Other Current Assets	10,453	2,298	3,691	206,322
Capital Assets, Net	34	10,832	-	274,282
Other Noncurrent Assets	452	-	-	1,708,433
Total Assets	16,500	13,130	3,691	2,367,986
Liabilities
Due to Component Units/University	15,233	-	-	75,416
Other Current Liabilities	136	265	1,847	137,063
Noncurrent Liabilities	126	-	-	116,163
Total Liabilities	15,495	265	1,847	328,642
Net Position
Net Investment in Capital Assets	34	10,832	-	137,738
Restricted-Nonexpendable Endowment	452	-	-	1,228,625
Restricted-Expendable Endowment	-	-	-	383,947
Restricted-Expendable Other	-	-	-	167,062
Unrestricted	519	2,033	1,844	121,972
Total Net Position	$ 1,005	$ 12,865	$ 1,844	$ 2,039,344
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues	$ 53,625	$ 1,290	$ 10,703	$ 246,464
Operating Expenses	(2,672)	(3,027)	(12,528)	(507,810)
Operating Income (Loss)	50,953	(1,737)	(1,825)	(261,346)
Nonoperating Revenues (Expenses) and Other Revenues, Expenses, Gains or Losses
Investment Income, Net of Expenses	1,288	-	24	74,759
Net Decrease in the Fair Value of Investments	-	-	-	(1,697)
Other Nonoperating Revenues	-	3,748	3,500	88,983
Other Nonoperating Expenses	(52,238)	-	-	(65,750)
Addition to Permanent Endowments	7	-	-	32,749
Change in Net Position	10	2,011	1,699	(132,302)
Net Position, Beginning of Year	995	10,854	145	2,171,646
Net Position, End of Year	$ 1,005	$ 12,865	$ 1,844	$ 2,039,344

Table 34. Health Science Center Affiliates (amounts expressed in thousands)
	Florida Clinical Practice Association, Inc.	University of Florida Jacksonville Physicians, Inc.	Florida Veterinary Medicine Faculty Association, Inc.	University of Florida Jacksonville Healthcare, Inc.	Faculty Associates, Inc.	Total Health Science Center Affiliates
CONDENSED STATEMENT OF NET POSITION
Assets
Due from Component Units/University	$ 30,057	$ 6,127	$ 7,899	$ -	$ 1,500	$ 45,583
Other Current Assets	82,224	57,138	2,039	599	7,434	149,434
Capital Assets, Net	45,779	17,283	-	3,222	-	66,284
Other Noncurrent Assets	15,184	-	-	-	-	15,184
Total Assets	173,244	80,548	9,938	3,821	8,934	276,485
Liabilities
Due to Component Units/University	8,021	-	-	1,049	-	9,070
Other Current Liabilities	2,260	20,088	1,144	2,403	138	26,033
Noncurrent Liabilities	33,916	5,264	-	-	-	39,180
Total Liabilities	44,197	25,352	1,144	3,452	138	74,283
Net Position
Net Investment in Capital Assets	10,436	11,251	-	3,222	-	24,909
Unrestricted	118,611	43,945	8,794	(2,853)	8,796	177,293
Total Net Position	$ 129,047	$ 55,196	$ 8,794	$ 369	$ 8,796	$ 202,202
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues	$ 562,841	$ 244,423	$ 8,965	$ 227	$ 19,076	$ 835,532
Operating Expenses	(143,227)	(124,695)	(432)	(34,270)	(271)	(302,895)
Operating Income (Loss)	419,614	119,728	8,533	(34,043)	18,805	532,637
Nonoperating Revenues (Expenses) and Other Revenues, Expenses, Gains or Losses
Investment Income, Net of Expenses	(427)	87	3	-	4	(333)
Net Decrease in the Fair Value of Investments	(383)	-	-	-	-	(383)
Other Nonoperating Revenues	-	-	-	34,043	-	34,043
Other Nonoperating Expenses	(399,468)	(111,682)	(7,620)	-	(16,067)	(534,837)
Change in Net Position	19,336	8,133	916	-	2,742	31,127
Net Position, Beginning of Year	109,711	47,063	7,878	369	6,054	171,075
Net Position, End of Year	$ 129,047	$ 55,196	$ 8,794	$ 369	$ 8,796	$ 202,202

Table 35. Shands Hospital and Others (amounts expressed in thousands)
	Shands Teaching Hospital & Clinics, Inc.	Shands Jacksonville HealthCare, Inc.	University of Floirda Self-Insurance Program	University of Florida Healthcare Education Insurance Company	Total Shands Hospital and Others
CONDENSED STATEMENT OF NET POSITION
Assets
Due from Component Units/University	$ 56,685	$ -	$ -	$ 49,164	$ 105,849
Other Current Assets	456,711	225,792	184,517	3,940	870,960
Capital Assets, Net	741,104	203,336	-	-	944,440
Other Noncurrent Assets	767,086	44,894	-	6	811,986
Total Assets	2,021,586	474,022	184,517	53,110	2,733,235
Deferred Outflows of Resources
Deferred Amounts Related to Pensions	41,573	2,563	-	-	44,136
Accumulated Decrease in Fair Value of Interest Rate Swap Agreements	47,809	348	-	-	48,157
Losses on Debt Refunding	496	-	-	-	496
Total Assets and Deferred Outflows of Resources	2,111,464	476,933	184,517	53,110	2,826,024
Liabilities
Due to Component Units/University	10,057	41,927	49,164	-	101,148
Other Current Liabilities	220,846	94,821	9,126	9	324,802
Noncurrent Liabilities	920,645	163,550	24,099	7,475	1,115,769
Total Liabilities	1,151,548	300,298	82,389	7,484	1,541,719
Deferred Inflows of Resources
Deferred Amounts Related to Pensions	78,717	7,422	-	-	86,139
Gains on Debt Refunding	10,758	-	-	-	10,758
Total Liabilities and Deferred Inflows of Resources	1,241,023	307,720	82,389	7,484	1,638,616
Net Position
Net Investment in Capital Assets	60,853	52,469	-	-	113,322
Restricted-Nonexpendable Endowment	97	-	-	-	97
Restricted-Expendable Endowment	7,646	4,093	-	-	11,739
Other Restricted Net Position	-	-	102,128	45,626	147,754
Unrestricted	801,845	112,651	-	-	914,496
Total Net Position	$ 870,441	$ 169,213	$ 102,128	$ 45,626	$ 1,187,408
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues	$ 1,280,902	$ 590,077	$ 10,005	$ 656	$ 1,881,640
Operating Expenses	(1,071,317)	(577,609)	(9,517)	2,312	(1,656,131)
Operating Income	209,585	12,468	488	2,968	225,509
Nonoperating Revenues (Expenses)
Investment Income, Net of Expenses	13,384	10,762	4,727	1,291	30,164
Net Decrease in the Fair Value of Investments	(5,244)	-	-	-	(5,244)
Other Nonoperating Revenues	26,485	419	-	-	26,904
Other Nonoperating Expenses	(170,197)	(22,783)	-	-	(192,980)
Change in Net Position	74,013	866	5,215	4,259	84,353
Net Position, Beginning of Year	937,365	168,347	-	-	1,105,712
Adjustments to Beginning Net Position (Note 2)	(140,937)	-	96,913	41,367	(2,657)
Net Position, Beginning of Year, as Restated	796,428	168,347	96,913	41,367	1,103,055
Net Position, End of Year	$ 870,441	$ 169,213	$ 102,128	$ 45,626	$ 1,187,408

A segment is defined as an identifiable activity (or grouping of activities) that has one or more bonds or other debt instruments outstanding, with a revenue stream pledged in support of that debt. In addition, the activity's related revenues, expenses, gains, losses, assets, and liabilities are required to be accounted for separately. Transportation and Parking Services provides the University with safe and adequate parking facilities. Several parking garages have been constructed from the proceeds of revenue-backed debt instruments. The Department of Housing and Residence Education provides safe and affordable living space for students of the University of Florida. Capital improvement debt has been issued over the years to provide funding for the construction of facilities to house students of the University. A summary of the financial activity for these segments is presented in Table 36.

Table 36. SEGMENT INFORMATION
	Transportation and Parking Services	Department of Housing and Residence Education
CONDENSED STATEMENT OF NET POSITION
Assets
Current Assets	$ 7,812,961	$ 5,092,925
Capital Assets, Net	34,981,268	149,144,199
Other Noncurrent Assets	9,206,157	6,448,844
Total Assets	52,000,386	160,685,968
Liabilities
Current Liabilities	3,446,262	16,752,238
Noncurrent Liabilities	19,154,954	82,096,253
Total Liabilities	22,601,216	98,848,491
Net Position
Net Investment in Capital Assets	15,680,386	68,569,199
Restricted	9,200,930	197,712
Unrestricted	4,517,854	(6,929,434)
Total Net Position	$ 29,399,170	$ 61,837,477
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues (Expenses):
Operating Revenues	$ 22,161,453	$ 54,585,412
Depreciation Expense	(2,311,100)	(7,773,736)
Other Operating Expense	(15,694,856)	(40,552,383)
Operating Income	4,155,497	6,259,293
Nonoperating Revenues (Expenses):
Investment Income	23,337	257,282
Interest on Capital Asset-Related Debt	(981,062)	(3,781,506)
Other	(1,049,025)	(6,593,656)
Transfers	(2,350,718)	5,593,410
Net Nonoperating Revenues (Expenses)	(4,357,468)	(4,524,470)
Change in Net Position	(201,971)	1,734,823
Net Position, Beginning of Year	29,601,141	60,102,654
Net Position, End of Year	$ 29,399,170	$ 61,837,477
CONDENSED STATEMENT OF CASH FLOWS
Net Cash Provided (Used) by:
Operating Activities	$ 6,781,316	$ 19,397,323
Noncapital Financing Activities	(2,311,019)	(7,710,430)
Capital and Related Financing Activities	(3,798,326)	(37,100,716)
Investing Activities	(671,971)	28,657,276
Net Increase in Cash and Cash Equivalents	-	3,243,453
Cash and Cash Equivalents, Beginning of Year	-	1,327,296
Cash and Cash Equivalents, End of Year	$ -	$ 4,570,749

On November 20, 2015, the University reached a settlement with the Federal Government for $19,875,000, which closes an investigation of the University by the Department of Health and Human Services and the Department of Justice related to deficiencies in the University’s research accounting systems from 2005-2010. These deficiencies have since been remedied with significant upgrades in systems and procedures.

The University paid the settlement on November 25, 2015, from non-State funds.