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 Component 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 19.

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 $24 million and $18 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 in achieving excellence by providing supplemental resources from private gifts and bequests and valuable education support services. Florida Statutes authorize 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.

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.

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

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

Citrus Research and Development Foundation, Inc., advances 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 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.,* furthers agriculture and natural resource education and related activities, promotes agriculture and natural resources leadership, and makes 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.

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.

Cattle Enhancement Board, Inc.,* promotes research, education and extension at, or for the benefit of, the Institute of Food and Agricultural Sciences at the University of Florida on issues related to the Florida cattle industry, including, but not limited to production, disease prevention, forage development, and genetic research and technology.

D. Health Science Center Affiliates

The corporations listed below, except 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 professional fees from the clinical practice of the University of Florida physicians in order to fund and promote the educational, clinical and research missions, and support the clinical activities, of the Jacksonville campus of the College of Medicine.

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.

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 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.

Faculty Clinic, Inc.,* 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.

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 with the State Board of Education as of July 1, 1980, as subsequently restated and amended, to provide for the use of hospital facilities at the JHMHC through December 31, 2057, 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 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. Measurement Focus and Basis of Accounting

Basis of accounting refers to when revenues, expenses, 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 and its component units’ 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 and its component units follow GASB standards of accounting and financial reporting.

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. Nonoperating revenues include state noncapital appropriations, federal and state student financial aid, and investment income. Interest on capital asset-related debt is a nonoperating expense. Other revenues generally include revenues for capital construction projects.

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 payments 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, using a ratio of total aid to 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. Investments and Fair Value Measurement

The University categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. Level 2 inputs are significant other observable inputs. Level 3 inputs are significant unobservable inputs. The University reports certain investments at net asset value as allowed per GASB Statement No. 72 Fair Value Measurement and Application.

J. Capital Assets

University capital assets consist of land, construction in progress, works of art and historical treasures, buildings, infrastructure and other improvements, furniture and equipment, library resources, property under capital lease and leasehold improvements, 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 the entire amount if the costs are 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 - up to 50 years
• Computer Software - 5 years

K. 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 (OPEB) 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.

L. 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 positions 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 and HIS fiduciary net positions have been determined on the same basis as they are reported by the FRS and the HIS plans. 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 beginning net position of Shands was increased by $396,079,000 as a result of the acquisition of Central Florida Health, Inc. (UFHCF) effective January 1, 2020. As a result of this acquisition, Shands’ consolidated basic financial statements include the financial position and changes in financial position and cash flows of UFHCF as if the acquisition occurred at the beginning of the earliest period presented. Shands recognized, measured and combined the assets, deferred outflows, liabilities, deferred inflows and net position of UFHCF based upon GASB accounting principles.

Table 1 summarizes adjustment to the beginning net position of Shands reported in the Shands Hospital and Others column of the Statement of Revenues, Expenses, and Changes in Net Position:

Table 1. Adjustments to Beginning Net Position - Component Units
Description	Shands Hospital and Others
Shands Teaching Hospital & Clinics, Inc.	$ 396,079,000
Total Adjustments to Beginning Net Position	$ 396,079,000

The University reported a net position which included a deficit in unrestricted funds as shown in Table 2. This deficit can be attributed to the full recognition of long-term liabilities (i.e. net pension liabilities – GASB Statement No. 68 – and OPEB payable – GASB Statement No. 75) in these funds.

Table 2. Deficit Net Position in Individual Funds
Description	Net Position
Unrestricted	$ (371,984,789)
Total	$ (371,984,789)

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, 2020, are reported at fair value and shown in Tables 3 through 6.

Table 3. University Investments
		Fair Value Measurements Using
Investments by Fair Value Level	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
External Investments Pool:
State Treasury Special Purpose Investment Account	$ 680,321,132	$ -	$ -	$ 680,321,132
State Board of Administration Debt Service Accounts	8,119	8,119	-	-
Total Investments by Fair Value Level	680,329,251	$ 8,119	$ -	$ 680,321,132
Investments Measured at the Net Asset Value (NAV)
Private Equity Funds	1,318,832,825
Total University Investments	$ 1,999,162,076

Table 4. University Investments Measured at the NAV
Investments Measured at the NAV	Fair Value	Unfunded Commitments	Redemption Frequency (if Currently Eligible)	Redemption Notice Period
Private Equity Funds	$ 1,318,832,825	$ -	N/A	N/A

University investments measured at net asset value are comprised of the following category:

• Private Equity Funds - This category includes investments in several limited partnership funds that invest in equity securities and debt of private companies.

Table 5. Component Unit Investments
		Fair Value Measurements Using
Investments by Fair Value Level	Total	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
External Investment Pool:
State Treasury Special Purpose Investment Account	$ 420,158,759	$ -	$ -	$ 420,158,759
Commercial Paper	6,146,061	6,146,061	-	-
US Guaranteed Obligations	321,727	-	321,727	-
Federal Agency Obligations	20,129,906	15,998,430	4,131,476	-
Domestic Bonds and Notes	114,008,263	41,372,000	72,636,263	-
International Bonds and Notes	1,000,640	-	1,000,640	-
Domestic Stock	129,897,631	128,475,940	29,038	1,392,653
Bond Mutual Funds	186,039,571	135,700,564	50,339,007	-
Equity Mutual Funds	147,074,909	92,824,203	54,250,706	-
Other Investments	31,841,127	13,871,082	15,678,030	2,292,015
Real Estate Investments	3,054,000	3,054,000	-	-
Total Investments by Fair Value Level	1,059,672,594	$ 437,442,280	$ 198,386,887	$ 423,843,427
Investments Measured at the Net Asset Value (NAV)
International Equity	88,940
Real Estate Investments (Directly Owned)	6,634,817
Hedge Funds	5,645,839
Private Equity Funds	2,438,142,316
Total Investments Measured at the NAV	2,450,511,912
Total Investments Measured at Fair Value	3,510,184,506
Other
Money Market Funds	22,877,074
Cash Surrender Value of Life Insurance Policy	496,342
Certificates of Deposits	7,332,000
Cash Collateral on Deposit with Swap Counterparty	6,340,000
Real Estate Investments	15,526,000
Other Investments	9,064,586
Total Other Investments	61,636,002
Total Component Unit Investments	$ 3,571,820,508

Table 6. Component Unit Investments Measured at the NAV
Investments Measured at the NAV	Fair Value	Unfunded Commitments	Redemption Frequency (if Currently Eligible)	Redemption Notice Period
International Equity	$ 88,940	$ -	Illiquid	N/A
Real Estate Investments (Directly Owned)	6,634,8177	-	Illiquid	N/A
Hedge Funds	5,645,839	-	Quarterly	45 Days
Private Equity Funds	2,438,142,316	271,262,903	Monthly	30 Days
Total Component Unit Investments	$ 2,450,511,912	$ 271,262,903

Component unit investments measured at net asset value are comprised of the following categories:

• International Equity - This category includes an investment in a foreign-based publicly-traded company focused on providing law enforcement with new tools and technology.
• Real Estate Investments - This category includes contributions in the form of real estate with donor restrictions that the properties are to be sold and the proceeds to benefit the University or University of Florida Foundation. The real estate is held at fair value less estimated costs to sell.
• Hedge Funds - This category includes an investment in a hedge fund in which the fund manager is authorized to invest in a broad spectrum of securities that include, but are not limited to the following: equity and debt securities, currency, commodities, foreign debt, options, futures, and swaps.
• Private Equity Funds - This category includes investments in several limited partnership funds that invest in equity securities and debt of private companies.

A. External Investment Pools

The University and its discretely presented component units (see Note 1) reported investments at fair value totaling $680,321,132 and $420,158,759, respectively, at June 30, 2020, in the State Treasury Special Purpose Investment Account (SPIA) investment pool, representing ownership of a share of the pool, not the underlying securities. Pooled investments with the State Treasury are not registered with the Securities and Exchange Commission. Oversight of the pooled investments with the State Treasury is provided by the Treasury Investment Committee per Section 17.575, Florida Statutes. The authorized investment types are set forth in Section 17.57, Florida Statutes. The SPIA investment pool carried a credit rating of AA-f by Standard & Poor’s and had an effective duration of 0.43 years and fair value factor of 1.0291 at June 30, 2020. Participants contribute to the SPIA investment pool on a dollar basis. These funds are commingled and a fair value of the pool is determined from the individual values of the securities. The fair value of the securities is summed and a total pool fair value is determined. A fair value factor is calculated by dividing the pool’s total fair value by the pool participant’s total cash balances. The fair value factor is the ratio used to determine the fair value of an individual participant’s pool balance. 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. Other Investments

In addition to external investment pools, the University and its 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 private equity funds managed by the University of Florida Investment Corporation (UFICO). 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., 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 in debt securities, bonds and notes, and bond mutual funds, and their future maturities at June 30, 2020, are shown in Table 7.

Table 7. 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-Guaranteed Obligations	$ 321,727	$ -	$ 321,727	$ -	$ -
Federal Agency Obligations	20,129,906	20,129,906	-	-	-
Bonds and Notes	115,008,903	11,809,995	55,475,518	37,915,390	9,808,000
Bond Mutual Funds	186,039,571	4,175,598	161,365,866	20,498,107	-
Total	$ 321,500,107	$ 36,115,499	$ 217,163,111	$ 58,413,497	$ 9,808,000

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 private equity funds are unrated. At June 30, 2020, the University’s component units 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 8.

Table 8. Component Units Debt Investments Quality Ratings
Types of Investments	Fair Value	AAA/Aaa	AA/Aa	A/Ba	Less than A/Ba or Not Rated
Federal Agency Obligations	$ 20,129,906	$ -	$ 19,190,200	$ -	$ 939,706
Bonds and Notes	115,008,903	5,381,235	6,162,889	7,729,249	95,735,530
Money Market Funds	22,877,074	4,903,074	-	-	17,974,000
Bond Mutual Funds	186,039,571	62,464,784	63,509,952	32,327,297	27,737,538
Total	$ 344,055,454	$ 72,749,093	$ 88,863,041	$ 40,056,546	$ 142,386,774

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, student tuition and fees, various sales and services provided to students and third parties, and interest accrued on investments and loans receivable. Accounts receivable, net of an allowance for uncollectible accounts, reported as of June 30, 2020, are summarized in Table 9.

Table 9. Accounts Receivable
Description
Grants and Contracts	$ 86,300,631
Student Tuition and Fees	20,091,358
Sales and Services	10,363,476
Interest	1,537,859
Total Accounts Receivable, Net	$ 118,293,324

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 $11,679,979, which is 26.7% of total related accounts receivable. Loans and notes receivable are reported net of an allowance of $4,523,254, which is 14.9% 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 $97,848,538 of Public Education Capital Outlay, Capital Improvement Fee Trust Fund, and general revenue allocations due from the State to the University for construction of University facilities.

Component units’ due from and due to amounts include receivables and payables between the various component unit columns. Some component units are not presented (see Note 1). 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.

Capital assets activity for the fiscal year ended June 30, 2020, is presented in Table 10.

Table 10. Capital Assets
Description	Beginning Balance	Additions	Reductions	Ending Balance
Nondepreciable Capital Assets:
Land	$ 12,467,035	$ -	$ -	$ 12,467,035
Construction in Progress	120,860,252	135,352,894	92,632,492	163,580,654
Works of Art and Historical Treasures	4,582,422	112,753	115,616	4,579,559
Total Nondepreciable Capital Assets	137,909,709	135,465,647	92,748,108	180,627,248
Depreciable Capital Assets:
Buildings	3,012,083,340	81,398,547	1,179,922	3,092,301,965
Infrastructure and Other Improvements	134,561,097	9,629,616	444,827	143,745,886
Furniture and Equipment	659,841,028	50,738,773	26,880,762	683,699,039
Library Resources	360,064,497	11,962,062	464,808	371,561,751
Property Under Capital Lease and Leasehold Improvements	23,113,034	1,874,121	-	24,987,155
Computer Software	62,886,853	-	-	62,886,853
Other Capital Assets	878,202	378,300	25,750	1,230,752
Total Depreciable Capital Assets	4,253,428,051	155,981,419	28,996,069	4,380,413,401
Less Accumulated Depreciation:
Buildings	1,486,651,203	89,146,811	1,073,182	1,574,724,832
Infrastructure and Other Improvements	86,607,400	4,435,999	444,827	90,598,572
Furniture and Equipment	449,241,314	40,354,950	25,474,146	464,122,118
Library Resources	313,629,125	10,594,574	464,808	323,758,891
Property Under Capital Lease and Leasehold Improvements	9,926,802	1,413,193	-	11,339,995
Computer Software	24,533,000	8,310,002	-	32,843,002
Other Capital Assets	704,365	95,065	23,742	775,688
Total Accumulated Depreciation	2,371,293,209	154,350,594	27,480,705	2,498,163,098
Total Depreciable Capital Assets, Net	1,882,134,842	1,630,825	1,515,364	1,882,250,303
Total Capital Assets, Net	$ 2,020,044,551	$ 137,096,472	$ 94,263,472	$ 2,062,877,551

The Florida Museum of Natural History, which is the official state-sponsored and chartered natural history museum and part of the University, maintains a depository of biological, paleontological, archaeological, and ethnographic materials. The Museum’s collections contain over 40 million specimens and objects, 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 11,000 works of art. In accordance with professional practice among the nation’s art mu- seums, and in compliance with museum accreditation standards, the University has not placed a dollar value on these items.

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, as well as in the University’s proportionate share of the total other postemployment benefits liability of the Division of State Group Insurance, are reported as deferred outflows and inflows of resources. These include changes in actuarial assumptions, 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 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 and other postemployment benefits plans subsequent to the measurement date for the collective liabilities are reported as deferred outflows of resources. See Note 12 for a discussion of the University’s other postemployment benefits payable and the related deferred outflows and inflows of resources. See Note 13 for a complete discussion of the University’s defined benefit pension plans and the related deferred outflows and inflows of resources. Other deferred outflows consists of the resources tied to the asset retirement obligation recorded by the University under GASB Statement No.83. See Note 12 for a complete discussion of the University’s asset retirement obligation and the related deferred outflows.

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, 2020, is summarized in Table 11.

Table 11. Unearned Revenue
Description
Grants and Contracts	$ 28,578,319
Auxillary Enterprises	6,406,540
Student Tuition and Fees	5,296,248
Total Unearned Revenue	$ 40,281,107

Long-term liabilities of the University at June 30, 2020, 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, 2020, is presented in Table 12.

Table 12. Long-term Liabilities
Description	Beginning Balance	Additions	Reductions	Ending Balance	Current Portion
Capital Asset-Related Debt:
Capital Improvement Debt Payable	$ 159,500,415	$ -	$ 10,054,502	$ 149,445,913	$ 9,992,000
Loans and Notes Payable	4,736,782	-	417,839	4,318,943	427,671
Installment Purchase Agreements Payable	500,088	2,613,999	496,860	2,617,227	570,400
Capital Leases Payable	2,167,241	-	187,380	1,979,861	199,466
Total Capital Asset-Related Debt	166,904,526	2,613,999	11,156,581	158,361,944	11,189,537
Other Long-term Liabilities:
Compensated Absences Payable	124,836,076	22,858,056	10,324,214	137,369,918	10,772,544
Other Postemployment Benefits Payable	1,043,548,000	436,529,410	241,076,698	1,239,000,712	16,022,540
Net Pension Liability	644,118,253	439,142,985	358,382,727	724,878,511	3,312,845
Other Noncurrent Liabilities	23,286,415	500,000	9,154,291	14,632,124	-
Total Long-term Liabilities	$ 2,002,693,270	$ 901,644,450	$ 630,094,511	$ 2,274,243,209	$ 41,297,466

A. Capital Improvement Debt Payable

Capital improvement debt is issued to construct student housing, parking, and various other University facilities. The outstanding debt for student housing and the parking facilities is secured by a pledged portion of housing rental revenues and parking fees. The outstanding debt for the Clinical Translational Research Building is secured by a pledged portion of indirect cost revenues received by the College of Medicine. The outstanding debt for the renovation and expansion of the student activity center building is secured by a pledged portion of the student and activity fees. Pledged revenues are equal to the remaining debt service requirements to maturity for the capital improvement debt.

A summary of the University’s capital improvement debt payable at June 30, 2020, is presented in Table 13.

Table 13. Capital Improvement Debt Payable
		Amount Outstanding
Type and Series	Amount of Original Issue	Principal	Interest	Interest Rates	Maturity Date
Student Housing Auxiliary Debt:
2011A Housing	$ 16,350,000	$ 5,410,000	$ 975,663	3.00 to 4.00%	2028
2012A Housing	26,500,000	17,550,000	3,731,200	3.00 to 4.00%	2031
2013A Housing	24,805,000	16,955,000	4,596,831	3.00 to 4.00%	2033
2016A Housing	19,390,000	14,980,000	3,421,088	3.00 to 4.00%	2030
Total Student Housing Debt	87,045,000	54,895,000	12,724,782
Parking Garage Auxiliary Debt:
2018A Parking	39,070,000	37,260,000	14,898,550	4.00 to 5.00%	2038
Total Parking Garage Debt	39,070,000	37,260,000	14,898,550
Other University of Florida Revenue Bonds:
2011 Clinical Translational Research Building	29,838,000	18,737,000	4,659,770	4.43%	2030
2013 Student Activity	41,540,000	31,365,000	10,661,706	4.00 to 5.00%	2033
Total Other University of Florida Revenue Bonds	71,378,000	50,102,000	15,321,476
Plus: Unamortized Premiums	-	8,236,485	-
Less: Unamortized Discounts	-	(22,130)	-
Less: Unamortized Refunding Losses	-	(1,025,442)	-
Total Capital Improvement Debt	$ 197,493,000	$ 149,445,913	$ 42,944,808

Annual requirements to amortize all capital improvement debt outstanding as of June 30, 2020, are presented in Table 14.

Table 14. Capital Improvement Debt Payable - Principal & Interest
Fiscal Year Ending June 30	Principal	Interest	Total
2021	$ 9,992,000	$ 6,045,056	$ 16,037,056
2022	10,459,000	5,574,892	16,033,892
2023	10,960,000	5,081,523	16,041,523
2024	10,587,000	4,577,830	15,164,830
2025	11,045,000	4,114,076	15,159,076
2026-2030	58,109,000	13,229,894	71,338,894
2031-2035	23,160,000	3,670,237	26,830,237
2036-2039	7,945,000	651,300	8,596,300
Total Principal & Interest	142,257,000	42,944,808	185,201,808
Plus: Unamortized Premiums	8,236,485	-	8,236,485
Less: Unamortized Discounts	(22,130)	-	(22,130)
Less: Unamortized Refunding Losses	(1,025,442)	-	(1,025,442)
Total	$ 149,445,913	$ 42,944,808	$ 192,390,721

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 energy savings contracts and renovation of the J. Wayne Reitz Union. The principal and interest costs are expected to be met by cost savings of the newer system. The University’s outstanding note is secured with collateral of the energy performance equipment used in the renovation. The note contains a provision that in an event of default, the contract can be terminated and equipment returned and/or declare all payments payable under the contract to the end of the then current budget year of the University, to be immediately due and payable. The note matures on August 31, 2029, and principal and interest payments are made annually. Annual requirements to amortize the note as of June 30, 2020, are presented in Table 15.

Table 15. Loans and Notes - Principal & Interest
Fiscal Year Ending June 30	Principal	Interest	Total
2021	$ 427,671	$ 96,001	$ 523,672
2022	437,734	85,938	523,672
2023	448,034	75,638	523,672
2024	458,576	65,096	523,672
2025	469,366	54,306	523,672
2026-2030	2,077,562	104,402	2,181,964
Total	$ 4,318,943	$ 481,381	$ 4,800,324

C. Installment Purchase Agreements Payable

The University has entered into several installment purchase agreements for the purchase of equipment with original cost bases totaling $2,967,249. There is no remaining stated interest on any of the outstanding agreements. Future minimum payments remaining under installment purchase agreements as of June 30, 2020, are presented in Table 16.

Table 16. Installment Purchase Agreements Payable - Principal & Interest
Fiscal Year Ending June 30	Principal	Interest	Total
2021	$570,400	$-	$570,400
2022	522,800	-	522,800
2023	522,800	-	522,800
2024	522,800	-	522,800
2025	478,427	-	478,427
Total Minimum Payments	$ 2,617,227	$ -	$ 2,617,227

D. Capital Lease Payable

The University 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 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. Lease payments from the University to the Foundation 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 a cost of $3,000,000.

The University 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, which began on 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 a cost of $6,815,002. A summary of pertinent information related to the two capital leases is presented in Table 17.

Table 17. Capital Leases Payable
Capital Leases	Interest Rate	Original Balance	Outstanding Balance
Garage No. 06 (607 spaces)	6.45%	$ 1,382,470	$ 342,970
Garage No. 10 (800 spaces)	6.45%	2,981,939	1,636,891
Total		$ 4,364,409	$ 1,979,861

Future minimum payments under the capital lease agreements and the present value of the minimum payments as of June 30, 2020, are presented in Table 18.

Table 18. Capital Leases Payable - Principal & Interest
Fiscal Year Ending June 30	Principal	Interest	Total
2021	$199,466	$127,701	$327,167
2022	212,331	114,835	327,166
2023	226,027	101,140	327,167
2024	240,605	86,561	327,166
2025	156,124	71,042	227,166
2026-2030	945,308	190,528	1,135,836
Total	$ 1,979,861	$ 691,807	$ 2,671,668

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, state noncapital 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, 2020, the estimated liability for compensated absences, which includes the University’s share of the Florida Retirement System and FICA contributions, totaled $137,369,918. 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. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, for certain postemployment healthcare benefits administered by the Florida Department of Management Services, Division of State Group Insurance.

General Information about the OPEB Plan

Plan Description - The Division of State Group Insurance’s Other Postemployment Benefits Plan (OPEB Plan) is a multiple-employer defined benefit health plan administered by the State of Florida. Pursuant to the provisions of Section 112.0801, Florida Statutes, all employees who retire from the University are eligible to participate in the OPEB Plan. Retirees and their eligible dependents shall be offered the same health and hospitalization insurance coverage as is offered to active employees at a premium cost of no more than the premium cost applicable to active employees. A retiree means any officer or employee who retires under a State retirement system or State optional annuity or retirement program or is placed on disability retirement and who begins receiving retirement benefits immediately after retirement from employment. In addition, any officer or employee who retires under the Florida Retirement System Investment Plan is considered a “retiree” if he or she meets the age and service requirements to qualify for normal retirement or has attained the age of 59.5 years and has the years of service required for vesting. The University subsidizes the premium rates paid by retirees by allowing them to participate in the OPEB 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 retiree healthcare costs are generally greater than active employee healthcare costs. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. The OPEB Plan contribution requirements and benefit terms necessary for funding the OPEB Plan each year is on a pay-as-you-go basis as established by the Governor’s recommended budget and the General Appropriations Act. Retirees are required to enroll in the Federal Medicare (Medicare) program for their primary coverage as soon as they are eligible.

Benefits Provided - The OPEB Plan provides healthcare benefits for retirees and their dependents. The OPEB Plan only provides an implicit subsidy as described above.

Proportionate Share of the Total OPEB Liability

The University’s proportionate share of the total OPEB liability of $1,239,000,712 was measured as of June 30, 2019 and was determined by an actuarial valuation as of July 1, 2019. At June 30, 2019, the University’s proportionate share, determined by its proportion of total benefit payments made, was 9.79%, which decreased 0.10% from its proportionate share measured as of June 30, 2018.

Actuarial Assumptions and Other Inputs - The total OPEB liability was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified, as presented in Table 19.

Table 19. Actuarial Assumptions - OPEB
Inflation	2.60%
Salary Increases	Varies by FRS Class
Discount Rate	2.79%

Healthcare cost trend rates for the Preferred Provider Organizations (PPO) and Health Maintenance Organizations (HMO), respectively, are 6.7% and 5.2% for the 2019-20 fiscal year, increasing to a maximum rate of 8.6% and 6.6% in the 2022-23 fiscal year, and decreasing to 5.2% and 5.3% for 2072 and later years.

The discount rate was based on the S&P Municipal Bond 20-Year High Grade Rate Index as of June 30, 2019.

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

While an experience study has not been completed for the OPEB Plan, the actuarial assumptions that determined the total OPEB liability for the OPEB Plan were based on certain results of the most recent experience study for the FRS Plan.

The following changes have been made since the prior valuation:

• The discount rate as of the measurement date for GASB 75 purposes was changed to 2.79%. The prior GASB 75 report used 3.87%.
• The liability was increased 12 percent to reflect the full impact of the Excise Tax that will come into effect in 2022, notwithstanding a reasonable chance that this excise tax will be repealed before it takes effect.

Sensitivity of the University’s Proportionate Share of the Total OPEB Liability to Changes in the Discount Rate - Table 20 presents the University’s proportionate share of the total OPEB liability, as well as what the University’s proportionate share of the total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (1.79%) or 1 percentage point higher (3.79%) than the current rate:

Table 20. Sensitivity to Changes in Discount Rate - OPEB
	1% Decrease 1.79%	Current Discount Rate 2.79%	1% Increase 3.79%
University’s Proportionate Share of the Total OPEB Liability	$ 1,553,499,819	$ 1,239,000,712	$ 999,990,587

Sensitivity of the University’s Proportionate Share of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates - Table 21 presents the University’s proportionate share of the total OPEB liability, as well as what the University’s proportionate share of the total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage point lower or 1 percentage point higher than the current healthcare cost trend rates:

Table 21. Sensitivity to Changes in Healthcare Cost Trend Rates - OPEB
	1% Decrease	Healthcare Cost Trend Rates	1% Increase
University’s Proportionate Share of the Total OPEB Liability	$ 972,551,682	$ 1,239,000,712	$ 1,609,176,469

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB - For the fiscal year ended June 30, 2020, the University recognized OPEB expense of $64,643,879. At June 30, 2020, the University reported deferred outflows of resources and deferred inflows of resources related to OPEB as presented in Table 22.

Table 22. Deferred Outflows and Inflows of Resources Related to OPEB
Description	Deferred Outflows of Resources	Deferred Inflows of Resources	Recognition Period
Change of Assumptions	$ 155,347,531	$ 175,208,943	8.0 years
Differences Between Expected and Actual Experience	-	31,898,884	8.0 years
Changes in Proportion and Differences Between University Benefit Payments and Proportionate Share of Benefit Payments	-	17,804,871	8.0 years
Transactions Subsequent to the Measurement Date	16,022,540	-	1.0 year
Total	$ 171,370,071	$ 224,912,698

Of the total amount reported as deferred outflows of resources related to OPEB, $16,022,540 resulting from transactions subsequent to the measurement date and before the end of the fiscal year will be included as a reduction of the total OPEB liability and included in OPEB expense in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as presented in Table 23.

Table 23. Recognition of Deferred Inflows related to OPEB
Fiscal Year Ending June 30
2021	$ (17,679,150)
2022	(17,679,150)
2023	(17,679,150)
2024	(17,679,150)
2025	(17,676,256)
Thereafter	18,827,689
Total	$ (69,565,167)

G. Asset Retirement Obligation Payable

The University follows GASB Statement No. 83, Certain Asset Retirement Obligations, to account for significant asset retirement obligations (AROs). These AROs are included as part of Other Noncurrent Liabilities in Table 12, and the total amount of the AROs for the University was $9,480,000 as of June 30, 2020. The University’s AROs consist of radioactive and biohazardous tangible capital assets. The University utilizes governmental agency estimates and current remediation costs to estimate the AROs. The source of the obligations are federal and state regulations, and there are no legally required funding or assurance provisions associated with the AROs. There are no assets restricted for payments of the AROs. The remaining useful lives of the tangible capital assets range from 25 to 50 years. The University amortizes the associated deferred outflows of resources associated with the AROs by applying the straight-line method over the estimated remaining useful lives of the assets.

A. Defined Benefit Pension Plans

The University follows GASB Statement 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 and Health Insurance Subsidy Program

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 (DROP) 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 as well as 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 Florida Department of Management Services, Division of Retirement, and consists of two costsharing, 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 website (www.dms.myflorida.com).

The University’s pension expense totaled $161,601,983 for the 2019-20 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 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 creditable 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 creditable service. All vested members enrolled in the Plan on or after July 1, 2011, 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 creditable service. Employees enrolled in the Plan may include up to four years of 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.

The 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 24 shows the percentage value for each year of service credit earned.

Table 24. Percentage Value of Service Credit Earned per Year
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%
Senior Management Service Class	2.00%
Special Risk Class
Service on and after October 1, 1974	3.00%

As provided in Section 121.101, Florida Statutes, if the member was initially enrolled in the Plan before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3.00% per year. If the member was 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 3.00%, determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement, multiplied by 3.00%. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.

Contributions - The Florida Legislature establishes contribution rates for participating employers and employees. Contribution rates during the 2019-20 fiscal year are shown in Table 25. The University’s contributions to the Plan totaled $53,482,766 for the fiscal year ended June 30, 2020.

Table 25. Florida Retirement System Contribution Rates
	Percent of Gross Salary
Class	Employee	Employer (A)
Florida Retirement System, Regular	3.00%	8.47%
Florida Retirement System, Senior Management Service	3.00%	25.41%
Florida Retirement System, Special Risk	3.00%	25.48%
Deferred Retirement Option Program-Applicable to Members from All of the Above Classes	0.00%	14.60%
Florida Retirement System, Reemployed Retiree	(B)	(B)
(A) Employer rates for each membership class include 1.66% for Health Insurance Subsidy. Also, employer rates, other than for DROP participants, include 0.06% for administrative costs of the Investment Plan. (B) Contribution Rates are dependent upon retirement class in which reemployed.

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At June 30, 2020, the University reported a liability of $558,623,812 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2019. The University’s proportionate share of the net pension liability was based on the University’s 2018-19 fiscal year contributions relative to the total 2018-19 fiscal year contributions of all participating members. At June 30, 2019, the University’s proportionate share was 1.62%, which was the same as its proportionate share measured as of June 30, 2018.

For the year ended June 30, 2020, the University recognized pension expense of $147,495,890. At June 30, 2020, the University reported deferred outflows of resources and deferred inflows of resources related to pensions as presented in Table 26.

Table 26. 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	$ 33,133,576	$ 346,677	6.4 years
Change of Assumptions	143,478,631	-	6.4 years
Net Difference Between Projected and Actual Earnings on Plan Investments	-	30,905,985	5.0 years
Changes in Proportion and Difference Between University Contributions and Proportionate Share of Contributions	15,437,489	3,464,586	6.4 years
University FRS Contributions Subsequent to the Measurement Date	53,482,766	-	1.0 year
Total	$ 245,532,462	$ 34,717,248

The deferred outflows of resources related to pensions totaling $53,482,766 resulting from University contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2021. 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 27.

Table 27. Recognition of Deferred Outflows and Inflows Related to Pensions - FRS
Fiscal Year Ending June 30	Amount
2021	$ 57,991,458
2022	17,662,481
2023	40,041,695
2024	31,200,802
2025	8,528,976
Thereafter	1,907,036
Total	$ 157,332,448

Actuarial Assumptions - The total pension liability in the July 1, 2019, 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 - FRS
Inflation	2.60%
Salary Increases	3.25%	average, including inflation
Investment Rate of Return	6.90%	net of pension Plan invesment expense, including inflation

Mortality rates were based on the PUB-2010 base table, projected generationally with Scale MP‑2018. This is a change from the prior year mortality assumption which was based on the Generational RP-2000 with Projection Scale BB tables.

The actual assumptions, used in the July 1, 2019, valuation, were based on the results of an actuarial experience study for the period July 1, 2013, through June 30, 2018.

The long-term expected rate of return on Plan investments was not based on historical returns, but instead was 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 was 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 29.

Table 29. Target Allocation and Expected Rate of Return
Asset Class	Target Allocation	Long-term Expected Rate of Return
Cash	1.00%	3.30%
Fixed Income	18.00%	4.10%
Global Equity	54.00%	8.00%
Real Estate (Property)	10.00%	6.70%
Private Equity	11.00%	11.20%
Strategic Investments	6.00%	5.90%
Total	100.00%

Discount Rate - The discount rate used to measure the total pension liability was 6.90%, which was a decrease of 0.10% from the prior measurement date. 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 Pension Liability to Changes in the Discount Rate - Table 30 presents the University’s proportionate share of the net pension liability calculated using the discount rate of 6.90%, 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 (5.90%) or 1 percentage point higher (7.90%) than the current rate.

Table 30. Sensitivity to Changes in Discount Rate - FRS
	1% Decrease 5.90%	Current Discount Rate 6.90%	1% Increase 7.90%
University's Proportionate Share of the Net Pension Liability	$ 965,674,550	$ 558,623,812	$ 218,667,594

Pension Plan Fiduciary Net Position - Detailed information about the 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 Stateadministered 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, 2020, 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, 2020, the contribution rate was 1.66% 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 $8,668,442 for the fiscal year ended June 30, 2020.

Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions - At June 30, 2020, the University reported a liability of $166,254,699 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 1 year, net of the University’s proportionate share of the HIS Plan’s fiduciary net position available to pay that amount. The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2018, and update procedures were used to determine liabilities as of June 30, 2019. The University’s proportionate share of the net pension liability was based on the University’s 2018-19 fiscal year contributions relative to the total 2018-19 fiscal year contributions of all participating members. At June 30, 2019, the University’s proportionate share was 1.49%, which was an increase of 0.01% from its proportionate share of 1.48% measured as of June 30, 2018.

For the fiscal year ended June 30, 2020, the University recognized pension expense of $14,106,093. In addition, the University reported deferred outflows of resources and deferred inflows of resources related to pensions as presented in Table 31.

Table 31. Deferred Outflows and Inflows Related to Pensions - HIS
Description	Deferred Outflows of Resources	Deferred Inflows of Resources	Recognition Period
Differences Between Expected and Actual Experience	$ 2,019,349	$ 203,574	7.2 years
Change of Assumptions	19,250,724	13,588,304	7.2 years
Net Difference Between Projected and Actual Earnings on Plan Investments	107,282	-	5.0 years
Changes in Proportion and Difference Between University Contributions and Proportionate Share of Contributions	3,460,462	-	7.2 years
University Contributions Subsequent to the Measurement Date	8,668,442	-	1.0 year
Total	$ 33,506,259	$ 13,791,878

The deferred outflows of resources related to pensions totaling $8,668,442 resulting from University contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2021. 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 32.

Table 32. Recognition of Deferred Outflows and Inflows Related to Pensions - HIS
Fiscal Year Ending June 30	Amount
2021	$ 4,587,532
2022	3,629,044
2023	1,900,116
2024	(783,410)
2025	401,599
Thereafter	1,311,058
Total	$ 11,045,939

Actuarial Assumptions - The total pension liability in the July 1, 2018, actuarial valuation was determined using the following actuarial assumptions applied to all periods included in the measurement, as presented in Table 33.

Table 33. Actuarial Assumptions - HIS
Inflation	2.60%
Salary Increases	3.25%	average, including inflation
Municipal Bond Rate	3.50%

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

While an experience study had not been completed for the HIS Plan, the actuarial assumptions that determined the total pension liability for the HIS Plan were based on certain results of the most recent experience study for the FRS Plan.

Discount Rate - The discount rate used to measure the total pension liability was 3.50%, which was a decrease of 0.37% from the prior measurement date. 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 34 presents the University’s proportionate share of the net pension liability calculated using the discount rate of 3.50%, 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 (2.50%) or 1 percentage point higher (4.50%) than the current rate.

Table 34. Sensitivity to Changes in Discount Rate - HIS
	1% Decrease 2.50%	Current Discount Rate 3.50%	1% Increase 4.50%
University's Proportionate Share of the Net Pension Liability	$ 189,788,262	$ 166,254,699	$ 146,653,906

Pension Plan Fiduciary Net Position - Detailed information about the HIS 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’s 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 as the FRS defined benefit plan; these contributions are based on salary and membership class (Regular Class, Senior Management Service Class, etc.). 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 Investment Plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.06% of payroll and by forfeited benefits of plan members. Allocations to the Investment Plan member investment accounts during the 2019-20 fiscal year are presented in Table 35.

Table 35. 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.

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. Nonvested 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 or her 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, 2020, 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 roll over vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lumpsum 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 3,000 University participants during the 2019-20 fiscal year. The University’s Investment Plan pension expense totaled $11,467,970 for the fiscal year ended June 30, 2020.

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 the 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 investment 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, 3.56% to cover the unfunded actuarial liability of the FRS pension plan, and 0.01% to cover administrative costs. Employees contribute 3.00% 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 7,530 University participants during the 2019-20 fiscal year. The University’s contributions to the Program totaled $50,778,302 and employee contributions totaled $30,287,149 for the 2019-20 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. Five employees were covered by the U.S. Civil Service Retirement System during the 2019-20 fiscal year. Employer contributions totaled $23,885 and employee contributions totaled $23,885 for the 2019-20 fiscal year. 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 includes a social security benefit. No additional persons can become eligible for this supplement.

There were 5 University participants during the 2019-20 fiscal year. Required employer contributions made to the program totaled $77,780. Employees do not contribute to this program.

The University’s construction commitments at June 30, 2020, are presented in Table 36.

Table 36. Construction Commitements
Project Title	Total Commitment	Completed to Date	Balance Committed
Central Energy Plant & Utilities Infrastructure	$ 295,115,373	$ 6,109,518	$ 289,005,855
Honors Residential College	175,000,228	175,893	174,824,335
Data Science and Information Technology Building	150,000,000	2,031,349	147,968,651
Herbert Wertheim Laboratory for Engineering Excellence	73,213,945	58,211,037	15,002,908
Norman Hall Rehabilitation and College of Education Center Addition	38,285,039	30,695,697	7,589,342
PK Yonge Middle and High School Expansion	29,950,352	10,061,870	19,888,482
Student Health Care Center	26,000,001	120,906	25,879,095
VetMed Plant Energy Services Contract	25,657,599	22,985,363	2,672,236
Public Safety Building	23,500,000	248,594	23,251,406
SW Campus Transportation Improvements	12,595,934	1,105,869	11,490,065
Utility Infrastructure Improvements - Stadium Road and O'Connell Center	8,819,296	349,973	8,469,323
Florida Museum of Natural History Special Collections Building	8,000,000	234,418	7,765,582
Electrical Substation 2 - Cable and Switchgear Replacement	6,010,162	5,228,936	781,226
Music Building Renovation	5,927,338	4,533,202	1,394,136
IFAS Blueberry Research Facility	5,091,253	122,502	4,968,751
UF Architecture Exterior Envelope Repair	5,000,000	94,358	4,905,642
Subtotal	888,166,520	142,309,485	745,857,035
Projects Under $5,000,000	78,933,154	21,271,169	57,661,985
Total	$ 967,099,674	$ 163,580,654	$ 803,519,020

The University is exposed to various risks of loss related to torts; theft of, 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 2019-20 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 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 $68.5 million for named windstorm and flood through February 14, 2020, and decreased to $62.75 million starting February 15, 2020. For perils other than named windstorm and flood, losses in excess of $2 million per occurrence were commercially insured up to $225 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. Settlements have not exceeded insurance coverage during the past 3 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.

The University of Florida Self-Insurance Program (the 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 Note 1), 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, direct-support organizations, 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 Program and HEIC are distinct from and entirely independent of the self-insurance programs administered by the State described in Note 15.

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 participants subject to Section 768.28, Florida Statutes.

The University is involved in certain 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 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 classification. Table 37 presents those same expenses in functional classification as recommended by NACUBO.

Table 37. Functional Expenses
Functional Classification
Instruction	$ 799,010,458
Public Service	784,964,026
Research	739,787,091
Academic Support	239,613,932
Scholarships, Fellowships, and Waivers, Net	198,967,850
Institutional Support	169,403,077
Depreciation	154,350,594
Operation and Maintenance of Plant	132,883,987
Auxiliaries	120,886,674
Student Services	47,610,571
Total Operating Expenses	$ 3,387,478,260

The University’s financial statements include 17 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 on the following pages in Tables 38, 39, and 40.

Table 38. 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	$ 33,912	$ 570	$ 160,770	$ 584
Other Current Assets	117,493	91,422	10,899	43,583
Capital Assets, Net	62,776	245,409	-	8
Other Noncurrent Assets	1,936,674	49,234	-	18,023
Total Assets	2,150,855	386,635	171,669	62,198
Liabilities
Due to Component Units/University	36,547	25,840	54,506	21,629
Other Current Liabilities	5,497	43,085	9,748	24,568
Noncurrent Liabilities	44,869	116,453	-	11,634
Total Liabilities	86,913	185,378	64,254	57,831
Deferred Inflows of Resources
Deferred Amounts Related to Pensions	435	-	-	-
Other Deferred Outflows	17,077	-	-	-
Total Liabilities and Deferred Inflows of Resources	104,425	185,378	64,254	57,831
Net Position
Net Investment in Capital Assets	61,877	126,035	-	7
Restricted-Nonexpendable Endowment	1,424,644	-	-	-
Restricted-Expendable Endowment	533,442	-	-	-
Restricted-Expendable Other	-	15,044	-	-
Unrestricted	26,467	60,178	107,415	4,360
Total Net Position	$ 2,046,430	$ 201,257	$ 107,415	$ 4,367
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues	$ 149,246	$ 156,657	$ 46,966	$ 854
Operating Expenses	(203,210)	(138,514)	(48,917)	(1,324)
Operating Income (Loss)	(53,964)	18,143	(1,951)	(470)
Nonoperating Revenues (Expenses) and Other Revenues, Expenses, Gains, or Losses
Investment Income (Loss), Net of Expenses	45,567	4,648	2	1,938
Net Increase (Decrease) in the Fair Value of Investments	737	-	530	-
Other Nonoperating Revenues	-	14,611	2,300	-
Other Nonoperating Expenses	-	(5,141)	-	-
Addition to Permanent Endowments	61,454	-	-	-
Change in Net Position	53,794	32,261	881	1,468
Net Position, Beginning of Year	1,992,636	168,996	106,534	2,899
Net Position, End of Year	$ 2,046,430	$ 201,257	$ 107,415	$ 4,367

Table 38. Direct-Support Organizations (continued) (amounts expressed in thousands)
	Florida Foundation Seed Producers, Inc.	University of Florida Development Corporation	Gator Boosters, Inc.	Citrus Research and Development Foundation, Inc.	Total Direct-Support Organizations
CONDENSED STATEMENT OF NET POSITION
Assets
Due from Component Units/University	$ -	$ -	$ 28,440	$ -	$ 224,276
Other Current Assets	15,945	2,680	1,612	6,192	289,826
Capital Assets, Net	4,921	9,132	-	-	322,246
Other Noncurrent Assets	-	-	496	-	2,004,427
Total Assets	20,866	11,812	30,548	6,192	2,840,775
Liabilities
Due to Component Units/University	-	4,663	570	-	143,755
Other Current Liabilities	8,580	274	28,798	2,013	122,563
Noncurrent Liabilities	-	-	117	-	173,073
Total Liabilities	8,580	4,937	29,485	2,013	439,391
Deferred Inflows of Resources
Deferred Amounts Related to Pensions	-	-	-	-	435
Other Deferred Outflows	-	-	-	-	17,077
Total Liabilities and Deferred Inflows of Resources	8,580	4,937	29,485	2,013	456,903
Net Position
Net Investment in Capital Assets	4,921	4,469	-	-	197,309
Restricted-Nonexpendable Endowment	-	-	496	-	1,425,140
Restricted-Expendable Endowment	-	-	-	-	533,442
Restricted-Expendable Other	-	-	-	4,179	19,223
Unrestricted	7,365	2,406	567	-	208,758
Total Net Position	$ 12,286	$ 6,875	$ 1,063	$ 4,179	$ 2,383,872
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues	$ 3,219	$ 1,774	$ 20,231	$ 2,815	$ 381,762
Operating Expenses	(574)	(2,225)	(4,010)	(10,296)	(409,070)
Operating Income (Loss)	2,645	(451)	16,221	(7,481)	(27,308)
Nonoperating Revenues (Expenses) and Other Revenues, Expenses, Gains, or Losses
Investment Income, Net of Expenses	152	-	1,523	91	53,921
Net Increase in the Fair Value of Investments	-	-	-	-	1,267
Other Nonoperating Revenues	26	-	-	7,664	24,601
Other Nonoperating Expenses	(175)		(17,729)	-	(23,045)
Addition to Permanent Endowments	-	-	3	-	61,457
Change in Net Position	2,648	(451)	18	274	90,893
Net Position, Beginning of Year	9,638	7,326	1,045	3,905	2,292,979
Net Position, End of Year	$ 12,286	$ 6,875	$ 1,063	$ 4,179	$ 2,383,872

Table 39. Health Science Center Affiliates (amounts expressed in thousands)
	Florida Clinical Practice Association, Inc.	University of Florida Jacksonville Physicians, Inc.	Faculty Associates, Inc.	Florida Veterinary Medicine Faculty Association, Inc.	University of Florida College of Pharmacy Faculty Practice Association, Inc.	Total Health Science Center Affiliates
CONDENSED STATEMENT OF NET POSITION
Assets
Due from Component Units/University	$ 8,546	$ 470	$ -	$ 1,371	$ -	$ 10,387
Other Current Assets	167,244	90,066	17,635	4,607	2,907	282,459
Capital Assets, Net	91,817	43,949	-	-	-	135,766
Other Noncurrent Assets	9,134	-	-	-	-	9,134
Total Assets	276,741	134,485	17,635	5,978	2,907	437,746
Liabilities
Due to Component Units/University	16,505	584	-	1,799	-	18,888
Other Current Liabilities	25,509	27,917	308	716	-	54,450
Noncurrent Liabilities	90,238	32,666	-	-	-	122,904
Total Liabilities	132,252	61,167	308	2,515	-	196,242
Net Position
Net Investment in Capital Assets	4,249	15,690	-	-	-	19,939
Unrestricted	140,240	57,628	17,327	3,463	2,907	221,565
Total Net Position	$ 144,489	$ 73,318	$ 17,327	$ 3,463	$ 2,907	$ 241,504
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues	$ 706,087	$ 311,364	$ 17,391	$ 17,012	$ 6,879	$ 1,058,733
Operating Expenses	(208,583)	(153,317)	(320)	(791)	-	(363,011)
Operating Income	497,504	158,047	17,071	16,221	6,879	695,722
Nonoperating Revenues (Expenses)
Investment Income (Loss), Net of Expenses	(802)	514	4	-	-	(284)
Net Decrease in the Fair Value of Investments	(4,959)	(5,341)	-	-	-	(10,300)
Other Nonoperating Revenues	13,420	5,000	-	-	-	18,420
Other Nonoperating Expenses	(520,743)	(153,577)	(22,030)	(14,645)	(4,078)	(715,073)
Change in Net Position	(15,580)	4,643	(4,955)	1,576	2,801	(11,515)
Net Position, Beginning of Year	160,069	68,675	22,282	1,887	106	253,019
Net Position, End of Year	$ 144,489	$ 73,318	$ 17,327	$ 3,463	$ 2,907	$ 241,504

Table 40. Shands Hospital and Others (amounts expressed in thousands)
	Shands Teaching Hospital & Clinics, Inc.	Shands Jacksonville HealthCare, Inc.	University of Florida 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	$ 52,042	$ 8,383	$ -	$ 59,043	$ 119,468
Other Current Assets	907,319	305,814	233,785	2,265	1,449,183
Capital Assets, Net	1,379,065	247,717	-	-	1,626,782
Other Noncurrent Assets	1,033,880	59,364	-	-	1,093,244
Total Assets	3,372,306	621,278	233,785	61,308	4,288,677
Deferred Outflows of Resources
Deferred Amounts Related to Pensions	42,228	2,666	-	-	44,894
Deferred Amounts Related to OPEB	-	1,278	-	-	1,278
Other Deferred Outflows	77,101	2,469	-	-	79,570
Total Assets and Deferred Outflows of Resources	3,491,635	627,691	233,785	61,308	4,414,419
Liabilities
Due to Component Units/University	8,546	14,407	59,043	-	81,996
Other Current Liabilities	553,649	163,228	9,052	15	725,944
Noncurrent Liabilities	1,201,778	232,605	21,985	8,294	1,464,662
Total Liabilities	1,763,973	410,240	90,080	8,309	2,272,602
Deferred Inflows of Resources
Deferred Amounts Related to Pensions	71,023	5,523	-	-	76,546
Deferred Amounts Related to OPEB	-	1,607	-	-	1,607
Other Deferred Inflows	2,121	-	-	-	2,121
Total Liabilities and Deferred Inflows of Resources	1,837,117	417,370	90,080	8,309	2,352,876
Net Position
Net Investment in Capital Assets	309,071	20,403	-	-	329,474
Restricted-Nonexpendable Endowment	626	-	-	-	626
Restricted-Expendable Endowment	3,939	5,181	-	-	9,120
Other Restricted Net Position	-	-	143,705	52,999	196,704
Unrestricted	1,340,882	184,737	-	-	1,525,619
Total Net Position	$ 1,654,518	$ 210,321	$ 143,705	$ 52,999	$ 2,061,543
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues	$ 1,966,610	$ 754,367	$ 11,342	$ 1,050	$ 2,733,369
Operating Expenses	(1,890,852)	(725,639)	(10,286)	(7,673)	(2,634,450)
Operating Income (Loss)	75,758	28,728	1,056	(6,623)	98,919
Nonoperating Revenues (Expenses)
Investment Income, Net of Expenses	79,348	1,845	8,642	3,150	92,985
Net Increase in the Fair Value of Investments	(18,294)	-	-	-	(18,294)
Other Nonoperating Revenues	55,787	36,021	-	-	91,808
Other Nonoperating Expenses	(120,558)	(46,201)	-	-	(166,759)
Change in Net Position	72,041	20,393	9,698	(3,473)	98,659
Net Position, Beginning of Year	1,186,398	189,928	134,007	56,472	1,566,805
Adjustments to Beginning Net Position (Note 2)	396,079	-	-	-	396,079
Net Position, Beginning of Year, as Restated	1,582,477	189,928	134,007	56,472	1,962,884
Net Position, End of Year	$ 1,654,518	$ 210,321	$ 143,705	$ 52,999	$ 2,061,543

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 41.

Table 41. SEGMENT INFORMATION
	Transportation and Parking Services	Department of Housing and Residence Education
CONDENSED STATEMENT OF NET POSITION
Assets
Current Assets	$ 17,274,661	$ 13,341,487
Capital Assets, Net	60,428,853	112,977,822
Other Noncurrent Assets	199,187	338,464
Total Assets	77,902,701	126,657,773
Liabilities
Current Liabilities	3,632,204	6,785,605
Noncurrent Liabilities	40,598,899	52,400,183
Total Liabilities	44,231,103	59,185,788
Net Position
Net Investment in Capital Assets	18,319,286	55,812,639
Restricted	-	2,175,176
Unrestricted	15,352,312	9,484,170
Total Net Position	$ 33,671,598	$ 67,471,985
CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Operating Revenues (Expenses):
Operating Revenues	$ 12,598,952	$ 47,775,865
Depreciation Expense	(2,176,531)	(7,299,729)
Other Operating Expense	(7,863,916)	(39,918,860)
Operating Income	2,558,505	557,276
Nonoperating Revenues (Expenses):
Investment Income	60,551	-
Interest on Capital Asset-Related Debt	(1,858,069)	(2,331,763)
Other Nonoperating Revenues (Expenses)	(548,011)	2,111,100
Net Nonoperating Revenues (Expenses)	(2,345,529)	(220,663)
Change in Net Position	212,976	336,613
Net Position, Beginning of Year	33,458,622	67,135,372
Net Position, End of Year	$ 33,671,598	$ 67,471,985
CONDENSED STATEMENT OF CASH FLOWS
Net Cash Provided (Used) by
Operating Activities	$ 3,455,204	$ 6,401,364
Noncapital Financing Activities	1,861,078	(4,095,232)
Capital and Related Financing Activities	(26,878,150)	(130,998)
Investing Activities	21,561,868	(2,175,134)
Net Increase in Cash and Cash Equivalents	-	-
Cash and Cash Equivalents, Beginning of Year	-	-
Cash and Cash Equivalents, End of Year	$ -	$ -

On October 14, 2020, the Florida Board of Governors, on behalf of the University, issued a $19,025,000 University of Florida Clinical Translational Research Building Revenue Refunding Bond, Series 2020A (Taxable). The bond will be repaid from indirect cost revenues received by the UF College of Medicine. The proceeds will refund all of the outstanding State of Florida, Board of Governors, University of Florida Clinical Translational Research Building Revenue Bonds, Series 2011, maturing in fiscal years 2021 through 2030. The average interest rate on the debt being refinanced is 4.43% compared to the interest rate of 1.54% on the refunding bond. The new bond matures on July 1, 2030. Interest and principal amortization payments are due semiannually on January 1 and July 1 beginning January 1, 2021. The bond was issued to achieve debt service savings from lower interest rates.