Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2021
Summary
The State of Tennessee Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021, issued under Governor Bill Lee by the Department of Finance and Administration, Howard H. Eley, Commissioner, and the Division of Accounts, Mikel J. Corricelli, Chief of Accounts. The table of contents lists an introductory section with a Letter of Transmittal, a financial section with the Auditor's Report, Management's Discussion and Analysis and the basic financial statements, required supplementary information, and supplementary information on nonmajor funds and component units. It also reproduces statistical schedules, including Schedule 7, Revenue Capacity - Sales and Use Tax Collections by Taxpayer Classification for the last ten fiscal years.
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- Audit Report
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- Statewide Single Audit 2021 06 Census 0000171359
Cite this document
“Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2021.”
Original at app.fac.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/statewide-single-audit-2021-06-census-0000171359/
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Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2021
Bill Lee, Governor
Tennessee Annual
Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2021
BILL LEE, Governor
DEPARTMENT OF FINANCE AND ADMINISTRATION
HOWARD H. ELEY, Commissioner
Division of Accounts
MIKEL J. CORRICELLI, Chief of Accounts
STATE OF TENNESSEE
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Letter of Transmittal 2
Organization Chart 12
Certificate of Achievement for Excellence in Financial Reporting 13
FINANCIAL SECTION
Auditor’s Report 16
Management’s Discussion and Analysis 19
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position 33
Statement of Activities 34
Fund Financial Statements:
Balance Sheet - Governmental Funds 38
Statement of Revenues, Expenditures, and Changes in Fund Balances −
Governmental Funds 40
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances of Governmental Funds to the Statement of Activities 42
Statement of Net Position −Proprietary Funds 44
Statement of Revenues, Expenses, and Changes in Fund Net Position−
Proprietary Funds 45
Statement of Cash Flows−Proprietary Funds 46
Statement of Fiduciary Net Position−Fiduciary Funds 50
Statement of Changes in Fiduciary Net Position−Fiduciary Funds 51
Index for the Notes 53
Required Supplementary Information:
Infrastructure Assets Reported Using the Modified Approach 134
Other Postemployment Benefits Schedule of Changes in the Net/Total OPEB Liability
and Related Ratios 135
Schedule of Contributions 138
Other Postemployment Benefits Schedule of the State’s Proportionate
Share of the Collective Total OPEB Liability 139
Schedule of Changes in the State of Tennessee’s Net Pension Liability (Asset) and Related
Ratios Based on Participation in the Closed State and Higher Education Employee
Pension Plan of TCRS 140
Schedule of Changes in the State of Tennessee’s Net Pension Liability (Asset) and Related
Ratios Based on Participation in the State and Higher Education Employee
Retirement Plan of TCRS 141
Schedule of the State of Tennessee’s Contributions Closed State and Higher Education
Employee Pension Plan 142
Schedule of the State of Tennessee’s Contributions State and Higher Education
Employee Retirement Plan 142
Schedule of Changes in the Plan Net OPEB Liability and Related Ratios 144
Schedule of Employer Contributions to the State of Tennessee Postemployment Benefit Trust 145
Schedule of Investment Returns State of Tennessee Postemployment Benefits Trust 146
i
STATE OF TENNESSEE
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
Schedule of Revenues, Expenditures, and Changes in Fund Balances−
Budget and Actual–Major Governmental Funds 147
Note to RSI 149
Supplementary Information
Nonmajor Governmental Funds:
Combining Balance Sheet−Nonmajor Governmental Funds−by Fund Type 154
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances−
Nonmajor Governmental Funds−by Fund Type 155
Schedule of Revenues, Expenditures, and Changes in Fund
Balances−Budget and Actual (Budgetary Basis)−Debt Service Fund 157
Nonmajor Special Revenue Funds:
Combining Balance Sheet−Nonmajor Special Revenue Funds 160
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances−Nonmajor Special Revenue Funds 164
Combining Schedule of Revenues, Expenditures, and Changes in Fund
Balances - Budget and Actual (Budgetary Basis)−All Nonmajor Budgeted
Special Revenue Funds 168
Permanent Funds:
Combining Balance Sheet−Permanent Funds 182
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances−
Permanent Funds 183
Nonmajor Enterprise Funds:
Combining Statement of Net Position−Nonmajor Enterprise Funds 186
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position−
Nonmajor Enterprise Funds 188
Combining Statement of Cash Flows−Nonmajor Enterprise Funds 190
Internal Service Funds:
Combining Statement of Net Position−Internal Service Funds 194
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position−
Internal Service Funds 196
Combining Statement of Cash Flows−Internal Service Funds 198
Fiduciary Funds:
Combining Statement of Fiduciary Net Position−Pension and Other Employee
Benefit Trust Funds 202
Combining Statement of Changes in Fiduciary Net Position−Pension and Other
Employee Benefit Trust Funds 204
Combining Statement of Fiduciary Net Position−Investment Trust Funds 206
Combining Statement of Changes in Fiduciary Net Position−Investment Trust Funds 207
Combining Statement of Fiduciary Net Position−Private-Purpose Trust Funds 208
Combining Statement of Changes in Fiduciary Net Position−Private-Purpose Trust Funds 209
Combining Statement of Fiduciary Net Position−Custodial Funds 210
Combining Statement of Changes in Fiduciary Net Position−Custodial Funds 212
ii
STATE OF TENNESSEE
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
Component Units:
Combining Statement of Net Position−Component Units 216
Combining Statement of Activities−Component Units 218
Combining Statement of Revenues, Expenses, and Changes in Net Position−
Proprietary Fund Type Component Units 220
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances−
Governmental Fund Type Component Units 223
SUPPLEMENTARY SCHEDULES Schedule Page
Debt Service Requirements to Maturity−General Obligation Bonds 1 225
Schedule of Outstanding Debt−All Fund Types 2 226
Schedule of General Obligation Commercial Paper
Outstanding-By Purpose−All Fund Types 3 226
Schedule of Outstanding Debt−Component Units 4 227
General Fund Supplementary Schedules:
Comparative Schedules of Revenues by Source−General Fund 5 228
Comparative Schedules of Expenditures by Function and Department−General Fund 6 229
STATISTICAL SECTION
Index to Statistical Section 231
Financial Trends−Changes in Net Position 1 232
Financial Trends−Net Position By Component 2 234
Financial Trends−Fund Balances of Governmental Funds 3 235
Financial Trends−Changes in Fund Balances of Governmental Funds 4 236
Revenue Capacity−Taxable Sales By Classification 5 237
Revenue Capacity−Sales and Use Tax Rates 6 237
Revenue Capacity−Sales and Use Tax Collections By Taxpayer Classification 7 238
Debt Capacity−Ratios of Outstanding Debt By Type 8 239
Debt Capacity−Legal Debt Service Margin Information 9 240
Demographic and Economic Information 10 241
Demographic and Employment Information−Employment By Industry 11 242
Operating Information−Full Time Employees By Function 12 242
Operating Information−Capital Asset Statistics By Function 13 243
Operating Information−Operating Indicators 14 244
Schedule of Fees/Charges, Legislative Appropriations and Debt Service 15 245
Student Fees and Charges For Institutions With Tennessee State School Bond Authority Debt 16 249
Principal Amount of Debt Outstanding By Institution 17 249
National Federation of Municipal Analysts Recommended Disclosures for State Debt 250
Acknowledgments 255
iii
INTRODUCTORY SECTION
1
December 27, 2021
To the Citizens, Governor, and Members of the Legislature of the State of Tennessee
As part of its responsibility under Tennessee Code Annotated 4-3-1007 to maintain a system of
general accounts embracing all the financial transactions of state government, the Department of
Finance and Administration is pleased to submit to you the Annual Comprehensive Financial Report
(ACFR) for the State of Tennessee’s fiscal year ended June 30, 2021. Prepared in accordance with
Generally Accepted Accounting Principles (GAAP) applicable to governments as prescribed by the
Governmental Accounting Standards Board (GASB), the objective of this report is to present a clear
picture of our government as a single comprehensive reporting entity.
Responsibility for both the accuracy of the data and the completeness and fairness of this report,
including all disclosures, rests with the management of state government and this department. The
data and information presented is believed to be accurate in all material respects, and all disclosures
that are necessary to enable the reader to obtain a thorough understanding of the state’s financial
activities have been included.
The aforementioned belief is based on a comprehensive framework of internal control that has been
established by state government management to provide a reasonable basis for asserting
Tennessee’s financial statements are free of material misstatement. The concept of reasonable
assurance recognizes that the cost of a system of internal and operational control should not exceed
the benefits derived and recognizes that the evaluation of these factors necessarily requires
estimates and judgements by management.
The State of Tennessee Comptroller of the Treasury, Department of Audit, considered by federal and
state government to be independent auditors, has examined the accompanying financial statements,
and issued an unmodified opinion. Their report is located at the front of the financial section of this
report. We acknowledge the Department of Audit’s staff for their many contributions to the
preparation of this ACFR.
The audit of the financial statements of Tennessee is part of a broader, federally mandated Single
Audit designed to meet the special needs of federal grantor agencies. The Single Audit Report for the
state will be issued under separate cover and at a later date.
Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s
report in the financial section of this ACFR. Introducing the basic financial statements, MD&A
furnishes an objective and easily readable analysis of the state’s financial activities. This letter of
transmittal is intended to complement the MD&A, and we therefore encourage you to read it in
conjunction with this letter.
Department of Finance and Administration • State Capitol • Nashville, Tennessee 37243
https://www.tn.gov/finance.html
2 Transmittal Letter
Transmittal Letter 3
4 Transmittal Letter
Transmittal Letter 5
6 Transmittal Letter
Transmittal Letter 7
8 Transmittal Letter
Transmittal Letter 9
10 Transmittal Letter
Transmittal Letter 11
STATE OF TENNESSEE
ORGANIZATION CHART
As of June 30, 2021
Citizens of Tennessee
Supreme Court
General Governor Attorney General
Chief Justice Herbert H. Slatery III
Assembly Bill Lee
Jeffrey S. Bivins
Speaker of Speaker of Court of
Court of
The House The Senate Criminal
Appeals
Cameron Sexton Randy McNally Appeals
Secretary Comptroller State
Chancery Probate Circuit Criminal
of State of the Treasury Treasurer
Courts Courts Courts Courts
Tre Hargett Jason E. Mumpower David H. Lillard, Jr.
Departments
Agriculture Human Services
Children’s Services Intellectual and Developmental Disabilities
Commerce and Insurance Labor and Workforce Development
Correction Mental Health and Substance Abuse Services
Economic and Community Development Military
Education Revenue
Environment and Conservation Safety and Homeland Security
Finance and Administration Tourist Development
Financial Institutions Transportation
General Services Veterans Services
Health Agencies, Boards, Commissions, and Councils
Human Resources
12 Organization Chart
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
State of Tennessee
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June 30, 2020
Executive Director/CEO
GFOA Certificate 13
This Page Intentionally Left Blank
14 Introductory Section
FINANCIAL SECTION
15
Independent Auditor’s Report
Members of the General Assembly
The Honorable Bill Lee, Governor
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the aggregate discretely presented component units, each major fund, and
the aggregate remaining fund information of the State of Tennessee, as of and for the year ended
June 30, 2021, and the related notes to the financial statements, which collectively comprise the
State’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express
no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
16 Auditor's Report
and the reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions. Tennessee statutes, in addition to audit responsibilities, entrust certain other
responsibilities to the Comptroller of the Treasury. Those responsibilities include serving as a
member of the board of directors of the Board of Claims, Chairs of Excellence, Local Education
Insurance Committee, Local Government Insurance Committee, State Building Commission, State
Funding Board, State Insurance Committee, Tennessee Consolidated Retirement System, Pension
Stabilization Reserve Trust, Tennessee College Savings Trust, Tennessee Housing Development
Agency, Tennessee Local Development Authority, Tennessee Student Assistance Corporation,
and the Tennessee State School Bond Authority. We do not believe that the Comptroller’s service
in this capacity affected our ability to conduct an independent audit of the State of Tennessee.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of the governmental activities, the business-type activities, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund
information of the State of Tennessee as of June 30, 2021, and the changes in financial position
and, where applicable, cash flows thereof for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 4, the state implemented Governmental Accounting Standards Board
Statement (GASBS) 84, Fiduciary Activities, during the year ended June 30, 2021. Our opinion
is not modified with respect to this matter.
As discussed in Note 5, the Tennessee Retiree Group Trust investment pool has investments valued
at $15.8 billion, whose fair values have been estimated by management in the absence of readily
determinable fair values. These investments make up 0.2% of net position of the general fund,
20.3% of net position of pension and other employee benefit trust funds, 23.5% of net position of
investment trust funds, and 0.1% of net position of component units. In addition, the financial
statements of the University of Tennessee, a discretely presented component unit, include
investments valued at $597.3 million (5.7% of total component unit net position), whose fair values
have been estimated by management in the absence of readily determinable fair values.
Management’s estimates are based on information provided by the fund managers or the general
partners. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis and other required supplementary information listed in the
accompanying table of contents be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, which considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and
comparing the information for consistency with management’s responses to our inquiries, the basic
Auditor's Report 17
financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because
the limited procedures do not provide us with sufficient evidence to express an opinion or provide
any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the State of Tennessee’s basic financial statements. The supplementary
information and supplementary schedules listed in the accompanying table of contents are
presented for purposes of additional analysis and are not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from, and
relates directly to, the underlying accounting and other records used to prepare the basic financial
statements. The information has been subjected to the auditing procedures applied in the audit of
the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United
States of America. In our opinion, the information is fairly stated, in all material respects, in
relation to the basic financial statements as a whole. The introductory section and statistical section
listed in the accompanying table of contents are presented for purposes of additional analysis and
are not a required part of the basic financial statements. Such information has not been subjected
to the auditing procedures applied in the audit of the basic financial statements and, accordingly,
we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we will also issue our report dated December
27, 2021, on our consideration of the State of Tennessee’s internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters in the Tennessee Single Audit Report. The purpose of that report is
to describe the scope of our testing of internal control over financial reporting and compliance and
the results of that testing, and not to provide an opinion on internal control over financial reporting
or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the State of Tennessee’s internal control over
financial reporting and compliance.
Katherine J. Stickel, CPA, CGFM, Director
Division of State Audit
December 27, 2021
18 Auditor's Report
State of Tennessee
MANAGEMENT’S
to debt service payments made during the year exceeding
new debt expenditures made in the commercial paper
program.
DISCUSSION USING THIS ANNUAL REPORT
This annual report consists of a series of financial
AND ANALYSIS statements. The statement of net position and the
statement of activities (on pages 33-35) provide
information about the activities of the state as a whole
Our management discussion and analysis (MD&A) of the (government-wide statements) and present a longer-term
State of Tennessee’s (the state’s) financial performance view of the state’s finances. Fund financial statements
provides an overview of the state’s financial activities for start on page 38. For governmental activities, these
the year ended June 30, 2021. Please read it as a narrative statements tell how services were financed in the short
introduction to the financial statements that follow. The term as well as what remains for future spending. Fund
information included here should be considered along financial statements also report the state’s operations in
with the transmittal letter which can be found on pages more detail than the government-wide statements by
2-11 of this report. MD&A includes a description of the providing information about the state’s most significant
basic financial statements for government, condensed funds. The remaining statements provide financial
financial information along with analyses of balances and information about activities for which the state acts solely
financial position, descriptions of significant asset and as a trustee or agent for the benefit of those outside of
debt activity, discussions of budgetary matters and the government.
significant issues affecting financial position.
Reporting the State as a Whole
FINANCIAL HIGHLIGHTS
Government-wide The Statement of Net Position and the Statement of Activities
Net Position–The assets and deferred outflows of
resources of the state exceeded its liabilities and deferred Our analysis of the state as a whole begins on page 20.
inflows of resources at June 30, 2021, by $46 billion (net One of the most important questions asked about the
position). Of this amount, $10.7 billion represents state’s finances is, “Is the state as a whole better off or
unrestricted net position, which may be used to meet the worse off as a result of the year’s activities?” The
state’s ongoing obligations to citizens and creditors while statement of net position and the statement of activities
$32.4 billion represents net investment in capital assets. report information about the state as a whole and about
its activities in a way that helps answer this question.
Changes in Net Position– The state’s net position These statements include all assets, liabilities, and
increased by $4.7 billion. The increase was the result of a deferred outflows/inflows using the accrual basis of
significant increase in operating grants and contributions accounting, which is similar to the accounting used by
as well as an increase in capital assets. most private-sector companies. All of the current year’s
revenues and expenses are taken into account regardless
Component units–Component units reported total net of when cash is received or paid.
position of $10.5 billion, an increase of $1.2 billion.
These statements report financial information about the
Fund Level entire government except fiduciary activities. The
At June 30, 2021, the state’s governmental funds statements distinguish between the primary government
reported combined ending fund balances of $13.8 billion, and its component units, and also distinguish between
an increase of $3.9 billion (see discussion on page 24) governmental activities and business-type activities of the
compared to the prior year. Of the combined fund primary government. The statement of net position
balance, approximately $10.8 billion is spendable displays all the state’s financial and capital resources in
unrestricted (committed, assigned or unassigned) fund the format of assets, plus deferred outflows of resources,
balance and is available for spending at the government’s less liabilities, less deferred inflows of resources, equal
discretion or upon legislative approval; however, $1.45 net position. The statement of activities reports the
billion of this amount is set aside in a revenue fluctuation state’s operations by function to arrive at net revenue
account (rainy day fund). (expense). The statement reports what type revenue
(either program revenue or general revenue) funds the
Long-Term Debt government operations. The state functions that are
The state’s total general obligation bonds and commercial identified on this statement correspond to the functions
paper debt decreased by $91.6 million during the fiscal used for budgetary purposes:
year to a total of $2 billion. This change is primarily due
Management's Discussion and Analysis 19
State of Tennessee
• Governmental activities–general government; funds (serving citizens) and internal service funds
education; health and social services; law, justice and (serving state agencies). The enterprise funds are the
public safety; recreation and resources development; same as the business-type activities reported in the
regulation of business and professions; government-wide statements, but provide more
transportation; and interest on long-term debt. detail; whereas, the internal service funds are
included in the governmental activities.
• Business-type activities–employment security,
insurance programs, loan programs and other. • Notes to the financial statements. Notes to the
financial statements are also included and provide
• Component units–major discretely presented essential information to understand the financial
component units include the Tennessee Housing statements. They are an integral part of the financial
Development Agency, the Tennessee Education statements and focus on the primary government
Lottery Corporation, the State University and and its activities. Some information is provided for
Community College System, and the University of significant component units. The notes to the
Tennessee. Although these and other smaller financial statements can be found on pages 53-131.
entities are legally separate, these “component units”
are important because the state is financially The State as Trustee
accountable for them.
Reporting the State’s Fiduciary Responsibility
Reporting the State’s Most Significant Funds Fiduciary funds are used to report resources held for the
benefit of parties outside the government. Fiduciary
Fund financial statements
funds are not reflected in the government-wide financial
Our analysis of the state’s major funds begins on page 24. statements because the state cannot use these assets to
The fund financial statements begin on page 38 and finance its operations. Instead, the state is responsible
provide detailed information about the most significant for using the fiduciary assets for the fiduciary fund’s
funds–not the state as a whole. Some funds are required intended purposes.
to be established by state law and by bond covenants.
However, the state establishes many other funds to help THE STATE AS A WHOLE
it control and manage money for particular purposes (like Government-wide Financial Analysis
capital projects) or to show that it is meeting legal
responsibilities for using certain taxes, grants, and other Net position may serve over time as a useful indicator of
money. The state’s two kinds of funds, governmental a government’s financial position. In the case of the
and proprietary, use different accounting approaches. state, assets and deferred outflows of resources exceeded
liabilities and deferred inflows of resources by $46 billion
• Governmental Funds. Governmental funds are as of June 30, 2021.
used to account for essentially the same functions
reported as governmental activities in the By far, the largest portion of the state’s net position (70.4
government-wide financial statements. However, percent) reflects its net investment in capital assets (e.g.,
unlike the government-wide financial statements, land, infrastructure, structures and improvements,
governmental fund financial statements focus on machinery and equipment, construction in progress and
near-term inflows and outflows of spendable software in development), less any related debt and
resources, as well as on balances of spendable deferred outflows of resources used to acquire those
resources available at the end of the fiscal year. Such assets that is still outstanding. The state uses these
information may be useful in assessing a capital assets to provide services to its citizens;
government’s near-term financing requirements. consequently, these assets are not available for future
spending. Although the state’s investment in its capital
• Proprietary Funds. Proprietary funds report the assets is reported net of related debt, it should be noted
government services that charge service fees to its that the resources needed to repay this debt must be
customers. Proprietary funds include enterprise provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
20 Management's Discussion and Analysis
State of Tennessee
An additional portion of the state’s net position (6.2 operating grants and contributions, unrestricted net
percent) is restricted and represents resources that are position increased by $3.2 billion (42.2 percent).
subject to either external restrictions or legislative
restrictions on how they may be used. The remaining At the end of the current fiscal year, the state was able to
balance is unrestricted net position ($10.7 billion) and report positive balances in all three categories of net
may be used to meet the state’s ongoing obligations to position, for the government as a whole, and for its
citizens and creditors not funded by resources that are separate governmental and business-type activities. The
restricted. Primarily as a result of a significant increase in same situation held true for the prior fiscal year.
State of Tennessee
Net Position as of June 30
(Expressed in Thousands)
Governmental Activities Business Type Activities Total Primary Government
2021 2020* 2021 2020* 2021 2020*
Current and other assets $ 18,282,937 $ 15,036,557 $ 3,276,054 $ 3,619,395 $ 21,558,991 $ 18,655,952
Capital assets 32,942,674 31,952,586 - - 32,942,674 31,952,586
Total assets 51,225,611 46,989,143 3,276,054 3,619,395 54,501,665 50,608,538
Deferred outflows of resources 889,778 840,618 - - 889,778 840,618
Current and other liabilities 3,690,326 4,192,651 295,052 539,872 3,985,378 4,732,523
Noncurrent liabilities 5,060,507 4,953,438 7,871 11,420 5,068,378 4,964,858
Total liabilities 8,750,833 9,146,089 302,923 551,292 9,053,756 9,697,381
Deferred inflows of resources 347,631 475,502 - - 347,631 475,502
Net position:
Net investment in capital assets 32,396,815 31,425,755 - - 32,396,815 31,425,755
Restricted 2,866,255 2,307,203 - - 2,866,255 2,307,203
Unrestricted 7,753,855 4,475,212 2,973,131 3,068,103 10,726,986 7,543,315
Total net position $ 43,016,925 $ 38,208,170 $ 2,973,131 $ 3,068,103 $ 45,990,056 $ 41,276,273
* The 2020 amounts presented here have not been restated for prior period adjustments. See Note 4 for details of these
adjustments.
Management's Discussion and Analysis 21
State of Tennessee
State of Tennessee
Changes in Net Position
For the Fiscal Year Ended June 30
(Expressed in Thousands)
Governmental Activities Business-Type Activities Total Primary Government
2021 2020* 2021 2020* 2021 2020*
Revenues:
Program revenues:
Charges for services $ 3,196,469 $ 2,981,333 $ 1,006,464 $ 1,018,666 $ 4,202,933 $ 3,999,999
Operating grants and contributions 17,898,087 13,456,925 3,599,778 3,696,938 21,497,865 17,153,863
Capital grants and contributions 844,303 948,533 - - 844,303 948,533
General revenues:
Sales Taxes 11,052,798 9,624,865 - - 11,052,798 9,624,865
Other taxes 8,163,952 7,279,932 - - 8,163,952 7,279,932
Other 292,096 348,218 - - 292,096 348,218
Total revenues 41,447,705 34,639,806 4,606,242 4,715,604 46,053,947 39,355,410
Expenses:
General government 3,267,910 1,143,546 - - 3,267,910 1,143,546
Education 9,495,761 8,898,197 - - 9,495,761 8,898,197
Health and social services 19,105,994 16,603,681 - - 19,105,994 16,603,681
Law, justice and public safety 2,255,348 2,127,958 - - 2,255,348 2,127,958
Recreation and resources - -
development 935,195 786,375 - - 935,195 786,375
Regulation of business and - -
professions 252,866 211,446 - - 252,866 211,446
Transportation 1,328,049 1,507,127 - - 1,328,049 1,507,127
Intergovernmental revenue sharing - 1,407,229 - - - 1,407,229
Interest on long-term debt 51,097 58,733 - - 51,097 58,733
Employment security - - 3,931,631 3,969,607 3,931,631 3,969,607
Insurance programs - - 753,012 677,269 753,012 677,269
Loan programs - - 1,879 1,842 1,879 1,842
Other - - 695 83 695 83
Total expenses 36,692,220 32,744,292 4,687,217 4,648,801 41,379,437 37,393,093
Increase in net position
before contributions and transfers 4,755,485 1,895,514 (80,975) 66,803 4,674,510 1,962,317
Transfers (8,611) (7,558) 8,611 7,558 - -
Contributions to permanent funds 143 143 - - 143 143
Increase (decrease) in net position 4,747,017 1,888,099 (72,364) 74,361 4,674,653 1,962,460
Net position, July 1 38,269,908 36,320,071 3,045,495 2,993,742 41,315,403 39,313,813
Net position, June 30 $ 43,016,925 $ 38,208,170 $ 2,973,131 $ 3,068,103 $ 45,990,056 $ 41,276,273
* The 2020 amounts presented here have not been restated for prior period adjustments. See Note 4 for details of these adjustments.
22 Management's Discussion and Analysis
State of Tennessee
Governmental activities. Net position of the state’s grants and contributions that was primarily due to a $161
governmental activities increased by $4.7 billion (12.4 million drop from FY 2020 in Coronavirus Relief Funds
percent). This increase accounts for 102 percent of the that were used to pay for jobless benefits for unemployed
total increase in net position of the primary government Tennesseans. The Teacher Group and Local
and is the result of an increase in operating grants and Government Group Insurance funds had a combined
contributions ($4.4 billion) as well as the capitalization of decrease in net position of $24.3 million. This decrease in
$917 million in expenses related to roadways and bridges net position is primarily due to an increase in COVID
and not recording depreciation expense for these assets. related benefit payments when compared to the prior
year. The Nonmajor Enterprise funds’ activity resulted in
Business-type activities. Net position of the state’s business- a $15.4 million decrease in net position. Considering the
type activities decreased by $72.4 million (2.4 percent). decrease of the two insurance funds, the remaining funds
This is primarily the result of the Employment Security combined activity resulted in a $8.9 million increase in
fund’s increase in expenses and a decrease in operating net position.
EXPENSES BY FUNCTION-GOVERNMENTAL ACTIVITIES
TRANSPORTATION 4%
OTHER 1%
RECREATION AND RESOURCE DEVELOPMENT 2%
LAW, JUSTICE AND PUBLIC SAFETY 6%
HEALTH AND SOCIAL SERVICES 52%
EDUCATION 26%
GENERAL GOVERNMENT 9%
0% 10% 20% 30% 40% 50% 60%
Management's Discussion and Analysis 23
State of Tennessee
REVENUES BY SOURCE-GOVERNMENTAL ACTIVITIES
OTHER 1%
OTHER TAXES 1%
BUSINESS TAXES 15%
FUEL TAXES 3%
SALES TAXES 27%
CAPITAL GRANTS AND CONTRIBUTIONS 2%
OPERATING GRANTS AND CONTRIBUTIONS 43%
CHARGES FOR SERVICES 8%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
THE STATE’S FUNDS restricted for student financial assistance. Of the $1.2
billion fund balance in the education fund, $361.4 million
At June 30, 2021, governmental funds reported an is not available for future use because it is legally or
increase in total revenues and in total expenditures. contractually required to be maintained intact and $721.3
Details are in the following paragraphs. The revenue million is legally restricted or committed for specific
fluctuation account (rainy day fund), reported as purposes. Refer to Note 14, Governmental Fund
unassigned fund balance, has been increased to $1.45 Balances on page 97, for additional information regarding
billion or 6 percent of the general fund’s expenditures. those specific purposes.
The general fund reported a $3.7 billion increase in fund The highway fund inflows decreased by $483.3 million
balance. Most of this increase in fund balance was and outflows decreased $480 million. These decreases are
attributable to the increase in revenues. primarily a result of changes made because of the
The education fund reported an overall increase for implementation of a new accounting standard, Statement
inflows of $831.7 million (9.6%) and an increase of No. 84, Fiduciary Activities . As a result of the
outflows of $687.1 million (8.0%). Most of the increase implementation of this standard, expenditures and
in outflows were due to federally funded pandemic relief revenues from intergovernmental sharing that is now
programs. Additional contributing factors include the reported in its own special revenue fund, caused an equal
increased funding for the state’s Basic Education Program decrease of $406 million in revenues and expenditures.
(K-12 funding), providing funding to local education The capital projects fund had a $268.8 million decrease in
agencies for the learning loss remediation program, a fund balance. Most of this decrease is due to a $334
salary pool for higher education institutions, and million decrease in transfers from other funds to the
correctional education investment. capital projects fund. Overall inflows to the fund
The overall fund balance increased in the education fund decreased by $465 million, when compared to the
by $235.8 million. The majority of fund balance is previous year, outflows also decreased by $359.3 million.
24 Management's Discussion and Analysis
State of Tennessee
The decrease in expenditures is due to a decrease in owners for direct expenses or business interruption costs
capital outlay for current projects while the decrease in due to the COVID-19 pandemic.
inflows is due to decreased bond proceeds as well as
Employee vacancy and staff turnover as well as lower
appropriation transfers. Expenditures for capital projects
occupancy rates in the prisons and the local jail
are subject to various conditions that affect construction
population resulted in lower than anticipated expenditures
progress. The restricted fund balance of $50.4 million
in Corrections.
does not significantly affect the availability of fund
resources for future use. Actual expenditures in TennCare, Agriculture,
Environment and Conservation, Finance and
The total plan net position of the pension trust funds and
Administration, Human Services, Economic and
other postemployment benefits trust are $77.7 billion, an
Community Development, and Legislature programs
increase of approximately $14.8 billion from the prior
were significantly less than what was projected in the final
year. The pension trust funds was responsible for $14.6
budget primarily due to unexpended reserved amounts
billion of this increase. The increase was primarily the
and multi–year projects that were appropriated in the
result of improvements in the financial markets; the
current year.
pension trust funds incurred a net investment gain of
$16.2 billion. CAPITAL ASSET AND DEBT ADMINISTRATION
The total plan net position of the OPEB trust fund is Capital Assets
$446.7 million, an increase of approximately $164.5 The state’s investment in capital assets at June 30, 2021,
million from the prior year. The increase was primarily of $36 billion, net of $2.6 billion accumulated
the result of employers contributing funds in excess of depreciation, consisted of the following:
the actuarially determined contribution rate for the fiscal
year. The increase was also a result of improving market Capital Assets-Primary Government
conditions for trust investments. (Expressed in Thousands)
General Fund Budgetary Highlights Governmental Activities
2021 2020
A significant variance occurred in the General fund
Land $ 2,681,333 $ 2,592,013
between original and actual Business tax amounts due to
the unexpected significant increase in business filings. Infrastructure 26,169,338 25,252,859
The first quarter of calendar year 2021 saw the highest Construction in progress 1,274,064 1,514,846
business filings in history. In addition, online businesses Structures and improvements 3,198,016 2,995,971
grew substantially during the pandemic, likely explaining Machinery and equipment 2,064,986 1,833,995
Tennessee's sustained business growth through calendar Software in development 137,790 96,338
year 2020. Subtotal 35,525,527 34,286,022
Federal revenues were approximately 3% under collected Accumulated depreciation (2,582,853) (2,333,436)
due to a better-than-expected economic rebound from
the downturn caused by the pandemic and the projected Total $ 32,942,674 $ 31,952,586
timing of spending federal stimulus funds. Social
programs significantly funded with federal revenues such More detail of the activity during the fiscal year is
as the Temporary Assistance for Needy Families (TANF) presented in Note 8A to the financial statements.
programs at the Department of Human Services (DHS),
the Community and Environmental Disease emergency Capital assets, including those under construction,
services with the Department of Health and the increased from fiscal year 2020 to 2021 by approximately
utilization of the CoverKids program under TennCare all 3.1 percent. The change was primarily due to increases of
had slightly less than expected demand for services. infrastructure (highways and bridges). Infrastructure
increased in total by $916 million, the majority of which
The original budget for federal revenues was increased by resulted from highway and bridge projects completed and
approximately $3 billion for a final budgeted estimate of capitalized. Construction in progress for highways and
$15.7 billion to provide spending appropriations for the bridges increased by $746.3 million and decreased
CARES act fiscal relief funding. (projects completed and capitalized) by $926.9 million.
Final budgeted expenditures were less than appropriated Infrastructure right-of-way acreage increased the land
for the Department of Revenue primarily because of the classification by $84.5 million. The change in machinery
lower than projected number of applicants that applied and equipment of $231 million resulted largely from a
for the Small Business Relief Program, a small business $213 million increase that resulted from system projects
relief program designed to reimburse eligible business that were placed in operation and are now classified as
equipment.
Management's Discussion and Analysis 25
State of Tennessee
In accordance with generally accepted accounting redeemed with long-term bonds. The unissued balance
principles, the state is eligible for and has adopted an by function (expressed in thousands) follows:
alternative approach to depreciating its roadways and
bridges. Under the modified approach, governments are Unissued
permitted to expense the cost of preserving roadways and Purpose 6/30/21
bridges rather than to record a periodic charge for Highway $ 912,000
depreciation expense. Under the depreciation method, Higher Education 133,568
preservation expenses are capitalized. The state is Economic and Community Development 115,000
responsible for approximately 15,000 miles of roadway
General Government 293,413
and 8,401 bridges. Differences between the amount
estimated to be necessary for maintaining and preserving Total $ 1,453,981
infrastructure assets at targeted condition levels and the
actual amounts of expense incurred for that purpose More detail of the activity during the fiscal year is
during the fiscal period are the results of timing presented in Note 12A to the financial statements.
differences. The budgeting process and the fact that
projects are started at different times during the year and The state’s outstanding general obligation debt consists of
take more than 12 months to complete, results in the following (expressed in thousands):
spending in one-year amounts that were budgeted in a
previous fiscal year(s). Governmental Activities
The decision to use the modified approach was essentially 6/30/2021 6/30/2020
made because the state has consistently maintained its Bonds, net $1,771,713 $1,949,715
infrastructure in what it considers to be a good condition. Commercial Paper 207,343 120,996
The most recent condition assessment, which is discussed
in more detail in the Required Supplementary Total $1,979,056 $2,070,711
Information section (Page 134), indicated that bridges
were rated at 10 points above the state’s established
Nearly three-fourths of the outstanding debt has been
condition level, on a 100 point scale using the MRI
issued either for capital projects of two of the state’s
method, and roadways were 0.52 points above the state’s
major component units-University of Tennessee and
benchmark level, on a 4.0 scale using the MQA method.
State University and Community College System-or
Bridges are assessed biennially and roadways annually.
provided to local governments as capital grants; assets
The state’s capital outlay budget for the fiscal year 2020- acquired with this debt belong to those entities. The state
2021 reflects a $7 million increase from the previous year. has not issued bonds to fund infrastructure since 1976;
The capital outlay budget included funding for both infrastructure has been funded on a pay-as-you-go basis.
capital outlay projects and capital maintenance projects. Additional information on long-term obligations is
A significant portion of the budgeted amounts included presented in Note 12A to the financial statements.
$291 million for higher education projects, $35 million for
correction facilities, $13 million for state parks, and The state’s bonds are rated AAA, Aaa, and AAA by Fitch
various upgrades to state facilities. Ratings, Moody’s Investors Service, Inc., and Standard &
Poor’s Ratings Services, respectively. Under current state
Debt Administration statutes, the general obligation debt issuances are subject
In accordance with the Constitution, the state has the to a maximum allowable debt service limitation based on
authority to issue general obligation debt that is backed by a percentage of tax revenues allocated to the general fund,
the full faith and credit of the state. The Legislature highway fund and debt service fund. As of June 30, 2021,
authorizes a certain amount of debt each year and the the state’s maximum allowable debt service of $1.4 billion
State Funding Board has oversight responsibility to issue was well above the maximum annual debt service of $221
the debt for capital projects. Any improvement to real million, with a legal debt service margin of $1.1 billion.
property, including the demolition of any building or
structure located on real property in which the State of FACTS, DECISIONS, OR CONDITIONS WITH
Tennessee or any of its departments, institutions, or EXPECTED FUTURE IMPACT
agencies has an interest, other than Department of Tennessee Resiliency Plan
Transportation, highway and road improvements and
demolition of structures in highway rights-of-way requires Under the American Rescue Plan Act, the State of
State Building Commission approval. The state issues Tennessee will receive $3.725 billion in funds awarded via
commercial paper as a short-term financing mechanism the US Treasury “Fiscal Recovery Fund” (“FRF”). The
for capital purposes and the commercial paper is typically availability of one-time FRF funds presents a significant
opportunity for Tennessee to: (i) Continue its response to
26 Management's Discussion and Analysis
State of Tennessee
the COVID-19 pandemic and its secondary effects; (ii) • May be used to support a broad range of public
Invest in initiatives that support a strong economic health needs as it can be demonstrated that
recovery; (iii) Strengthen state fiscal stability by reducing such needs have been exacerbated by the
demand for state taxpayer dollars to fund existing pandemic,
initiatives or priorities.
• May, to alleviate economic hardship, be applied
To support the development of a comprehensive plan for to provide relief to individuals, non-profits, and
Tennessee’s Fiscal Recovery Fund, Governor Lee invited businesses directly impacted by the pandemic,
state agencies and stakeholders to submit proposals for
consideration by the Financial Stimulus Accountability • Can support physical infrastructure investments
Group (“FSAG”), a bipartisan group created by the without a specific nexus to COVID, but only if
Governor to ensure proper fiscal management of such investments fall within the statutorily
stimulus funds received by the state, first through the prescribed “necessary sewer, water, and
CARES Act Coronavirus Relief Fund, then through the broadband” projects, and
subsequent ARPA. The Tennessee Resiliency Plan
document summarizes proposals that have been • May be used by recipient governments who
considered and recommended for expenditure by FSAG. have experienced year-to-year revenue loss to
As new expenditures are approved throughout the grant replace lost revenue for the provision of
period, this document will be updated to reflect the state’s government services (due to Tennessee’s
plan. relatively strong economic recovery, the State
does not qualify for revenue replacement).
All proposals were subject to a process of review by the
state’s Department of Finance & Administration and the Recipients may only use funds to cover costs incurred
Governor’s Office for fiscal impact, eligibility, and between March 3, 2021, and December 31, 2024. FRF
alignment with state priorities. Proposals were then funds not expended by December 31, 2026, must be
submitted for feedback and discussion with the FSAG. returned.
Recommended proposals are posted for public comment The Act additionally created a new $10 billion
and community engagement prior to final approval. Coronavirus Capital Projects Fund for the Treasury
Department to make separate payments to states,
Background on the ARPA State Fiscal Recovery
territories, and tribal governments to carry out capital
Fund
projects to support work, education, and public health.
On March 11, the American Rescue Plan Act of 2021 Tennessee is estimated to receive $216 million in this
(“ARPA”) was enacted into law, expending $1.9 trillion in fund. State plans for the Coronavirus Capital Projects
federal spending to respond to the COVID-19 pandemic. Fund must be submitted by December 31, 2022. No
Several components of the Act build on previous plan has been submitted on behalf of Tennessee at this
programs included in earlier federal relief packages. time.
The State of Tennessee’s Response to the Fiscal
The ARPA established a new US Treasury Program, the
Recovery Fund
Coronavirus State and Local Fiscal Recovery Fund
(“FRF”), with the intent of assisting states and local To prepare for the prudent expenditure and a planning
governments in mitigating the fiscal effects of the for FRF dollars, the Financial Stimulus Accountability
COVID-19 pandemic. Group convened multiple times to develop a set of
consensus goals and unified strategy for expenditure of
Tennessee has received $3.725 billion from the State
funds. On March 29, 2021, the FSAG discussed the
Fiscal Recovery Fund. Tennessee counties, metros, and
details of the ARPA and committed to the following
non-metro cities are estimated to receive a combined total
goals:
of $2.28 billion in Local Fiscal Recovery Fund awards.
State and Local Fiscal Recovery Funds are statutorily • Plan one-time infrastructure improvements in
limited to the following uses: (i) to respond to the water, sewer, and broadband or other eligible
COVID-19 pandemic and its negative economic impact, capital projects;
(ii) provide premium pay to essential workers, (iii) supply • Align allowable uses of ARP funds to state’s
government services to the extent the government has strategic goals and review proposals for
experienced a revenue reduction relative to the previous initiatives to improve health outcomes and
fiscal year, and (iv) investments in water, sewer, and support economic, and community
broadband infrastructure. On May 10, the U.S. Treasury’s development;
Interim Final Rule was adopted to provide further
guidance on eligible uses within these overall categories. • Develop a single comprehensive approach for
Under the Treasury’s Interim Final Rule, FRF funding: economic relief;
Management's Discussion and Analysis 27
State of Tennessee
• Address the state’s role in supporting prudent The plan also reserves specific funds for future planning
local government administration. purposes:
In June and August, the FSAG reviewed and confirmed • $275 million is reserved for relief to affected
state plans to invest in the following programs of work industries, non-profits, and other organizations.
using FRF: Requests for new relief program will be
administered via competitive grant application
• After identifying a historic backlog of needs in after review by FSAG.
sewer, water, and broadband infrastructure, the
FSAG launched two comprehensive • $300 million is reserved for additional state
infrastructure programs that would leverage health capital planning.
local ARP funds to rebuild necessary sewer,
Several agency proposals were also deferred for additional
water, and broadband infrastructure.
briefing by the FSAG. With these additions and
• After discussing the unprecedented amount of reservations, a balance of approximately $494 million
funds to be administered by local entities, the remains in the Fiscal Recovery Fund.
FSAG recommended, and the administration Amendments to Tennessee Resiliency Plan
has invested in a Local Government Technical
Assistance program to train local governments Following the completion of the 30-day period of public
on necessary grant management and compliance comment on October 30, the FSAG will reconvene in the
and provide annual review of local government coming months to discuss potential amendments to the
plans. plan. Amendments under consideration are:
In September and October, the FSAG convened multiple • Expansion of criteria in the Department of
times to review state agency capital and program Health Hospital Staffing Assistance Program to
proposals, forming the next steps in launching the expand eligibility to a broader set of hospitals.
Tennessee Resiliency Plan. Each proposal included in the Estimated cost increase: $10 million.
Tennessee Resiliency Plan has been the result of a
collaborative effort between state agencies and the FSAG, • Reserving $30 million for increased contract
and all proposals have been vetted for eligibility, effective costs of compliance and accounting for the
project management, and long-term fiscal impact on the Department of Finance and Administration, the
state of Tennessee. agency overseeing administration of the State
Fiscal Recovery Fund.
This first tranche of spending priorities that reflect the Estimated cost increase: $30 million
most urgent needs and opportunities for Tennessee
include: The FSAG will continue to discuss allocation of $300
million currently reserved for state health capital planning
• Sewer, Water, and Broadband Infrastructure and $275 million for additional external economic relief.
initiatives;
• Capital investments to improve the resiliency of
state and local public health systems;
• Continuation of the state’s Hospital Staffing
Assistance program;
• Immediate support to Tourism, Agriculture, and
Arts and Culture Industries.
28 Management's Discussion and Analysis
State of Tennessee
A complete copy of the Tennessee Resiliency Plan is available at https://www.tn.gov/finance/looking-for/stimulus-
financial-accountability-group.html.
Tennessee Resiliency Plan–October 6 Recommendations
Category Agency Proposal Total Amount
Infrastructure Environment and Conservation Enhancements to Water and Wastewater Infrastructure $ 1,351,922,145
Economic and Community
Infrastructure Development Broadband Infrastructure $ 500,000,000
Public Health -
Capital Investments Health State Public Health Laboratory $ 200,000,000
Public Health - Reserved for Further Planning for State Managed Health
Capital Investments Multiple Agencies Capital Projects $ 300,000,000
Public Health -
Capital Investments Health Local Health Department Capital Investments $ 128,966,391
Public Health Health Hospital Staffing Assistance Program $ 110,000,000
Electronic Health Records project and supporting
Public Health Correction Infrastructure $ 13,050,000
Negative Economic
Impacts/Economic
Relief External Requests Reservation for Future External Relief Planning $ 275,000,000
Negative Economic
Impacts/Economic
Relief Labor Unemployment Insurance Tax & Benefits System $ 61,000,000
Negative Economic
Impacts/Economic
Relief Arts Commission Support for TN Arts Organizations $ 80,000,000
Negative Economic
Impacts/Economic Tennessee Tourism & Hospitality Recovery Fund (Pass
Relief Tourism through grant for Destination Marketing Organizations) $ 55,000,000
Negative Economic
Impacts/Economic
Relief Tourism Tennessee Tourism ARP Marketing Fund Request $ 45,000,000
Negative Economic
Impacts/Economic Commercial Agriculture & Forestry Supply Chain
Relief Agriculture Enhancements $ 50,000,000
Negative Economic
Impacts/Economic
Relief Transportation Sevier County Tourism Support Project $ 52,100,000
Negative Economic
Impacts/Economic
Relief Transportation Anderson County - Aspire Park Support Project $ 6,000,000
Administrative
(Evaluation and Data Finance and Administration -
Analysis) OEI Accelerating Program Inventory $ 2,000,000
Administrative
(Evaluation and Data Finance and Administration - To Provide Funding for Electronic Workpapers for
Analysis) Internal Audit Remote Workforce $ 1,333,943
$ 3,231,372,479
Management's Discussion and Analysis 29
State of Tennessee
Memphis Regional Megasite Lands $5.6 Billion REQUESTS FOR INFORMATION
Investment from Ford Motor Company and SK
Innovation This financial report is designed to provide a general
On September 27, 2021, it was announced that Ford overview of the State of Tennessee’s finances for all those
Motor Company selected the Memphis Regional Megasite with an interest in the state’s finances. Questions
(a 4,100-acre certified industrial site in West Tennessee) concerning any of the information provided in this report
for one of the largest battery and vehicle manufacturing or requests for additional financial information should be
campuses in the U.S. directed to the Department of Finance and
Administration, Division of Accounts, 312 Rosa Parks
Ford will be the fourth automotive original equipment Avenue, Suite 2100, Nashville, TN 37243.
manufacturer (OEM) with operations in Tennessee,
joining Nissan, General Motors and Volkswagen.
Through a joint venture, Ford and SK Innovation will
invest $5.6 billion to build a 3,600-acre mega campus
called Blue Oval City on the Memphis Regional Megasite,
where production of next generation all-electric F-Series
trucks will begin in 2025. The project will result in the
creation of 5,800 new jobs in West Tennessee.
Blue Oval City will be designed to be the largest, most
advanced and most efficient automotive production
campus in Ford’s history. The campus will include the
Ford assembly plant, a supplier park and a battery
manufacturing plant operated by BlueOvalSK, Ford and
SK Innovation’s joint venture. The site will become a
vertically integrated ecosystem with key suppliers and
battery manufacturing on the same campus where Ford
will assemble next generation all-electric F-Series trucks.
Economic analysis projects the Ford buildout of the
Memphis Regional Megasite will result in significant job
and gross state product gains. The Center for Economic
Research in Tennessee, a division of the Tennessee
Department of Economic and Community Development,
has determined that the project is projected to generate
the following economic and fiscal impacts. Annual
projections reflect estimates for the first year during
which the project becomes fully operational.
• The project is anticipated to generate more than
27,000 new jobs, both directly and indirectly, to
support the site’s operations. This will result in
more than $1.02 billion in annual earnings.
• This project is anticipated to contribute $3.5
billion each year to Tennessee’s gross state
product.
• This project is also expected to generate
temporary construction benefits including $5.6
billion spent on land, buildings, and other real
property improvements. Additionally, more than
32,000 jobs are expected to support the
construction period, with around $1.87 billion in
salaries related to construction activity.
30 Management's Discussion and Analysis
BASIC FINANCIAL STATEMENTS
Basic Financial Statements 31
This Page Intentionally Left Blank
32 Basic Financial Statements
STATE OF TENNESSEE
Statement of Net Position
June 30, 2021
(Expressed in Thousands)
Primary Government
Total
Governmental Business-Type Component
Activities Activities Total Units
ASSETS
Cash and cash equivalents $ 13,084,452 $ 840,300 $ 13,924,752 $ 3,095,092
Cash on deposit with fiscal agent - 1,139,272 1,139,272 -
Investments 926,676 - 926,676 509,878
Receivables, net 3,488,675 343,097 3,831,772 350,229
Internal balances 6,986 (6,986) - -
Due from primary government - - - 88,305
Due from component units 165,935 - 165,935 -
Inventories, at cost 90,477 - 90,477 10,924
Prepayments 11,530 - 11,530 25,902
Loans receivable, net 6,357 960,371 966,728 4,858,563
Net investment in capital leases 5,575 - 5,575 -
Fair value of derivatives - - - -
Other - - - 36,303
Restricted assets:
Cash and cash equivalents 50,954 - 50,954 667,757
Investments 421,174 - 421,174 2,776,031
Receivables, net - - - 483,620
Net pension assets 24,146 - 24,146 19,636
Other - - - 942
Capital assets:
Land, at cost 2,681,333 - 2,681,333 280,114
Infrastructure 26,169,338 - 26,169,338 898,031
Structures and improvements, at cost 3,198,016 - 3,198,016 7,868,319
Machinery and equipment, at cost 2,064,986 - 2,064,986 1,279,144
Less-accumulated depreciation (2,582,853) - (2,582,853) (4,190,723)
Construction in progress 1,274,064 - 1,274,064 514,702
Software in development 137,790 - 137,790 -
Total assets 51,225,611 3,276,054 54,501,665 19,572,769
DEFERRED OUTFLOWS OF RESOURCES 889,778 - 889,778 370,925
LIABILITIES
Accounts payable and other current liabilities 2,929,684 275,844 3,205,528 629,710
Due to primary government - - - 165,935
Due to component units 87,809 - 87,809 -
Unearned revenue 672,283 19,208 691,491 161,412
Fair value of derivatives - - - -
Payable from restricted assets 54 - 54 -
Due to component units from restricted assets 496 - 496 -
Other - - - 29,090
Noncurrent liabilities:
Due within one year 381,483 - 381,483 324,965
Due in more than one year 4,679,024 7,871 4,686,895 7,934,674
Total liabilities 8,750,833 302,923 9,053,756 9,245,786
DEFERRED INFLOWS OF RESOURCES 347,631 - 347,631 228,265
NET POSITION
Net investment in capital assets 32,396,815 - 32,396,815 4,741,640
Restricted for:
Highway projects 887,904 - 887,904 -
Student financial assistance 234,913 - 234,913 -
Natural and wildlife resources 102,611 - 102,611 -
Capital projects 50,403 - 50,403 121,326
Single family bond programs - - - 470,431
Regulatory activities 41,834 - 41,834 -
Pensions 24,146 - 24,146 19,636
Other 211,934 - 211,934 1,215,388
Permanent and endowment funds
Expendable 753,715 - 753,715 285,390
Nonexpendable 558,795 - 558,795 1,562,672
Unrestricted 7,753,855 2,973,131 10,726,986 2,053,160
Total net position $ 43,016,925 $ 2,973,131 $ 45,990,056 $ 10,469,643
The notes to the financial statements are an integral part of this statement
Basic Financial Statements 33
STATE OF TENNESSEE
Statement of Activities
For the Year Ended June 30, 2021
(Expressed in Thousands)
Program Revenues
Charges Operating Capital
for Grants and Grants and
Expenses Services Contributions Contributions
Functions/Programs
Primary Government:
Governmental activities:
General government $ 3,267,910 $ 1,188,460 $ 585,504 $ 636
Education 9,495,761 67,395 2,389,963 -
Health and social services 19,105,994 1,299,646 13,557,168 14
Law, justice and public safety 2,255,348 150,230 799,631 12,494
Recreation and resources development 935,195 195,412 347,710 500
Regulation of business and professions 252,866 234,485 2,978 -
Transportation 1,328,049 60,841 215,133 830,659
Interest 51,097 - - -
Total governmental activities 36,692,220 3,196,469 17,898,087 844,303
Business-type activities:
Employment security 3,931,631 265,762 3,577,292 -
Insurance programs 753,012 728,280 223 -
Loan programs 1,879 12,135 22,262 -
Other 695 287 1 -
Total business-type activities 4,687,217 1,006,464 3,599,778 -
Total primary government $ 41,379,437 $ 4,202,933 $ 21,497,865 $ 844,303
Component units:
Higher education institutions $ 5,268,307 $ 1,746,212 $ 2,475,739 $ 292,373
Loan programs 726,730 233,130 375,930 -
Lottery programs 1,945,963 1,945,939 28 -
Other 61,291 45,370 16,061 6,254
Total component units $ 8,002,291 $ 3,970,651 $ 2,867,758 $ 298,627
General revenues:
Taxes:
Sales and use
Fuel
Business
Other
Payments from primary government
Grants and contributions not restricted to specific programs
Unrestricted investment earnings
Miscellaneous
Contributions to permanent funds
Transfers
Total general revenues, contributions, and transfers
Change in net position
Net position, July 1, restated
Net position, June 30
The notes to the financial statements are an integral part of this statement
34 Basic Financial Statements
STATE OF TENNESSEE
Statement of Activities
For the Year Ended June 30, 2021
(Expressed in Thousands)
Net (Expense) Revenue and
Changes in Net Position
Primary Government
Total
Governmental Business-Type Primary Component
Activities Activities Government Units
$ (1,493,310) $ - $ (1,493,310) $ -
(7,038,403) - (7,038,403) -
(4,249,166) - (4,249,166) -
(1,292,993) - (1,292,993) -
(391,573) - (391,573) -
(15,403) - (15,403) -
(221,416) - (221,416) -
(51,097) - (51,097) -
(14,753,361) - (14,753,361) -
- (88,577) (88,577) -
- (24,509) (24,509) -
- 32,518 32,518 -
- (407) (407) -
- (80,975) (80,975) -
(14,753,361) (80,975) (14,834,336) -
- -
- -
- - - (753,983)
- - - (117,670)
- - - 4
- - - 6,394
- - - (865,255)
11,052,798 - 11,052,798 -
1,216,037 - 1,216,037 -
6,275,672 - 6,275,672 -
672,243 - 672,243 -
- - - 1,691,747
- - - 92,759
9,376 - 9,376 192,618
282,720 - 282,720 4,413
143 - 143 122,899
(8,611) 8,611 - -
19,500,378 8,611 19,508,989 2,104,436
4,747,017 (72,364) 4,674,653 1,239,181
38,269,908 3,045,495 41,315,403 9,230,462
$ 43,016,925 $ 2,973,131 $ 45,990,056 $ 10,469,643
Basic Financial Statements 35
This Page Intentionally Left Blank
36 Basic Financial Statements
GOVERNMENTAL FUNDS FINANCIAL
STATEMENTS
General Fund—The general fund is maintained to account It is the state's practice to appropriate matching dollars for
for all governmental financial resources and transactions not jointly funded projects in the year of federal apportionment.
accounted for in another fund. This front-end state funding, together with multi-year
disbursements on most projects, results in large cash balances
Education Fund—The education fund is maintained to in this fund.
account for revenues and expenditures associated with
programs involving the Departments of Education and State Shared Taxes Fund—The purpose of the state shared
Higher Education including the activities of the Tennessee taxes fund is to account for the sharing of state levied tax
Promise Scholarship Endowment Fund. Funding for these revenues and certain fees with local city and county
programs is accomplished primarily from the dedicated sales governments as authorized by various state statutes.
and services taxes, federal monies received from the U. S.
Department of Education, and net lottery proceeds. Capital Projects Fund—The capital projects fund is
maintained to account for the acquisition or construction of
Highway Fund—This fund is maintained to account for major governmental capital assets financed principally by
revenues and expenditures associated with programs of the long-term bonds.
Department of Transportation. Funding of these programs is
accomplished primarily from dedicated highway user taxes Nonmajor Governmental Funds—Nonmajor
and funds received from the various federal transportation governmental funds are presented by fund type in the
agencies. All federal funds accruing to the highway fund are supplementary section.
received on a reimbursement basis covering costs incurred.
Basic Financial Statements 37
STATE OF TENNESSEE
Balance Sheet
Governmental Funds
June 30, 2021
(Expressed in Thousands)
General Education Highway Capital Projects
ASSETS
Cash and cash equivalents $ 9,138,721 $ 9,281 $ 1,304,296 $ 1,060,749
Investments 9,072 408,513 - -
Receivables, net 2,241,007 968,035 292,624 14,281
Due from other funds 270,891 16,936 - 2,316
Due from component units 1,339 151,951 - 9,861
Inventories, at cost 59,575 130 27,883 -
Loans receivable, net 1,702 - 536 -
Prepayments and others 12,151 - - -
Restricted assets:
Cash and cash equivalents - - - 50,954
Investments 59,793 361,381 - -
Total assets $ 11,794,251 $ 1,916,227 $ 1,625,339 $ 1,138,161
LIABILITIES
Accounts payable and accruals 1,792,590 382,507 321,608 64,250
Due to other funds 19,806 263,126 665 95
Due to component units 14,778 16,512 2,119 50,336
Payable from restricted assets - - - 54
Due to component units from restricted assets - - - 496
Unearned revenue 624,938 101 5,023 -
Total liabilities 2,452,112 662,246 329,415 115,231
DEFERRED INFLOWS OF RESOURCES 11,224 40,040 40,704 -
FUND BALANCES
Nonspendable
Inventories $ 58,099 $ 130 $ 27,883 $ -
Long term portion of accounts receivable 5,850 - - -
Permanent fund and endowment corpus - 361,381 - -
Prepayments 1,516 - - -
Restricted 165,341 699,108 871,486 50,403
Committed 640,562 22,166 217,244 -
Assigned 4,688,970 131,156 138,607 972,527
Unassigned 3,770,577 - - -
Total fund balances 9,330,915 1,213,941 1,255,220 1,022,930
Total liabilities, deferred inflows of
resources and fund balances $ 11,794,251 $ 1,916,227 $ 1,625,339 $ 1,138,161
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not financial resources and therefore are not
reported in the funds.
Other long-term assets are not available to pay for current-period expenditures and therefore are
unavailable in the funds. In addition, other miscellaneous adjustments that are not reported in
the governmental funds balance sheet but are reported in the statement of net position.
Internal service funds are used by management to charge the costs of various internal operations
to individual funds. The assets and liabilities of internal service funds are included in the
governmental activities in the Statement of Net Position.
Resources and obligations related to pensions and other postemployment benefits are not available
nor due and payable, respectively, in the current period and therefore are not reported in the funds.
Long-term liabilities, other than pension and other postemployment benefits and including bonds
payable, are not due and payable in the current period and therefore are not reported in the funds.
Net position of governmental activities
The notes to the financial statements are an integral part of this statement.
38 Basic Financial Statements
STATE OF TENNESSEE
Balance Sheet
Governmental Funds
June 30, 2021
(Expressed in Thousands)
Nonmajor Total
State Shared Governmental Governmental
Taxes Funds Funds
$ 29,997 $ 463,081 $ 12,006,125
- 509,091 926,676
166,778 50,373 3,733,098
- 44 290,187
1,330 1,391 165,872
- - 87,588
- 4,119 6,357
- 20 12,171
- - 50,954
- - 421,174
$ 198,105 $ 1,028,119 $ 17,700,202
154,832 73,937 2,789,724
- 198 283,890
- 3,760 87,505
- - 54
- - 496
- 8 630,070
154,832 77,903 3,791,739
43,273 5,863 141,104
$ - $ - $ 86,112
- - 5,850
- 197,414 558,795
- - 1,516
- 531,031 2,317,369
- 199,808 1,079,780
- 16,100 5,947,360
- - 3,770,577
- 944,353 13,767,359
$ 198,105 1,028,119
32,183,180
(111,694)
1,218,848
(1,835,591)
(2,205,177)
$ 43,016,925
Basic Financial Statements 39
STATE OF TENNESSEE
Statement of Revenues, Expenditures and Changes in Fund
Balances
Governmental Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
General Education Highway Capital Projects
REVENUES
Taxes:
Sales and use $ 4,057,986 $ 6,401,533 $ 23,819 $ -
Fuel 12,285 - 695,021 -
Business 5,495,043 271,613 7,807 -
Other 540,932 19,761 - -
Licenses, fines, fees, and permits 522,173 4,662 323,231 -
Investment income 25,755 109,760 - -
Federal 15,230,077 1,645,133 1,047,434 12,494
Departmental services 2,449,724 144,680 42,672 80,887
Other 275,280 501,890 10,197 -
Total revenues 28,609,255 9,099,032 2,150,181 93,381
EXPENDITURES
General government 1,337,432 - - -
Education - 9,236,827 - -
Health and social services 19,959,835 - - -
Law, justice and public safety 2,188,551 - - -
Recreation and resources development 797,681 - - -
Regulation of business and professions 118,061 - - -
Transportation - - 2,135,196 -
Debt service:
Principal - - - 8,653
Interest - - - -
Debt issuance costs - - - -
Capital outlay - - - 521,160
Total expenditures 24,401,560 9,236,827 2,135,196 529,813
Excess (deficiency) of revenues over
(under) expenditures 4,207,695 (137,795) 14,985 (436,432)
OTHER FINANCING SOURCES (USES)
Bonds and commercial paper issued - - - 46,732
Insurance claims recoveries 673 - - -
Transfers in 57,021 412,498 80,412 120,876
Transfers out (537,019) (38,912) (2,771) -
Total other financing sources (uses) (479,325) 373,586 77,641 167,608
Net change in fund balances 3,728,370 235,791 92,626 (268,824)
Fund balances, July 1, restated 5,602,545 978,150 1,162,594 1,291,754
Fund balances, June 30 $ 9,330,915 $ 1,213,941 $ 1,255,220 $ 1,022,930
The notes to the financial statements are an integral part of this statement.
40 Basic Financial Statements
STATE OF TENNESSEE
Statement of Revenues, Expenditures and Changes in Fund
Balances
Governmental Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Nonmajor Total
State Shared Governmental Governmental
Taxes Funds Funds
$ 524,540 $ 78,865 $ 11,086,743
412,836 95,895 1,216,037
439,706 186,635 6,400,804
39,903 55,825 656,421
220 291,852 1,142,138
- 86,375 221,890
- 54,828 17,989,966
- 29,271 2,747,234
- 1 787,368
1,417,205 879,547 42,248,601
1,417,205 34,300 2,788,937
- 8,816 9,245,643
- - 19,959,835
- 6,556 2,195,107
- 214,453 1,012,134
- 143,891 261,952
- - 2,135,196
- 142,111 150,764
- 67,305 67,305
- 1,581 1,581
- - 521,160
1,417,205 619,013 38,339,614
- 260,534 3,908,987
- - 46,732
- - 673
- 7,087 677,894
- (137,687) (716,389)
- (130,600) 8,910
- 129,934 3,917,897
- 814,419 9,849,462
$ -$ 944,353 $ 13,767,359
Basic Financial Statements 41
STATE OF TENNESSEE
Reconciliation of the Statement of Revenues,
Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Net change in fund balances - total governmental funds $ 3,917,897
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the Statement
of Activities, the cost of those assets is allocated over their estimated useful lives as
depreciation expense. This is the amount by which capital outlays exceeded
depreciation in the current year. 977,483
Net effect of revenues reported on the accrual basis in the Statement of Activities
that do not provide current financial resources and thus are not reported as
revenues in the funds until available. (167,210)
The issuance of long-term debt (e.g. bonds, commercial paper) provides current
financial resources to governmental funds, while the repayment of the principal
of long-term debt consumes the current financial resources of governmental funds.
Neither transaction, however, has any effect on net position. Also, governmental
funds report the effect of premiums, discounts, and similar items when debt is first
issued, whereas these amounts are amortized over the life of the debt in the Statement
of Activities. This amount is the net effect of these differences in treatment of long-term
debt and related items. 104,032
Some expenses reported in the Statement of Activities do not require the
use of current financial resources and therefore are not reported as
expenditures in governmental funds. 1,200
Internal service funds are used by management to charge the cost of certain activities,
such as insurance and telecommunications, to individual funds. The net revenue
(expense) of internal service funds is reported with governmental activities. (86,385)
Changes in net position of governmental activities $ 4,747,017
The notes to the financial statements are an integral part of this statement.
42 Basic Financial Statements
PROPRIETARY FUNDS FINANCIAL
STATEMENTS
Sewer Treatment Loan—Created in 1987, this fund Nonmajor Enterprise Funds—Nonmajor enterprise
provides loans to local governments and utility districts for funds are presented in the supplementary section.
the construction of sewage treatment facilities. The initial
sources of the monies are federal grants and state Internal Service Funds—Internal service funds are
appropriations. presented in the supplementary section.
Employment Security Fund—This fund is maintained to
account for the collection of unemployment insurance
premiums from employers and the payment of
unemployment benefits to eligible claimants. Funds are also
received from the federal government for local office
building construction, supplemental unemployment
programs and work incentive payments. As required by
law, all funds not necessary for current benefit payments are
placed on deposit with the U.S. Treasury. Interest earned
from these monies is retained in the fund. Administrative
and operational expenses incurred by the Department of
Labor and Workforce Development are expenditures of the
general fund.
Basic Financial Statements 43
STATE OF TENNESSEE
Statement of Net Position
Proprietary Funds
June 30, 2021
(Expressed in Thousands)
Business Type Activities - Enterprise Funds
Governmental
Sewer Nonmajor Activities-
Treatment Employment Enterprise Internal
Loan Security Funds Total Service Funds
ASSETS
Current assets:
Cash and cash equivalents $ 396,617 $ - $ 443,683 $ 840,300 $ 1,078,325
Cash on deposit with fiscal agent - 1,139,272 - 1,139,272 -
Receivables:
Accounts receivable - 340,533 2,564 343,097 6,691
Loans receivable 58,509 - 18,162 76,671 -
Due from other funds - 66 - 66 743
Due from component units - - - - 63
Inventories, at cost - - - - 2,889
Prepayments - - - - 422
Total current assets 455,126 1,479,871 464,409 2,399,406 1,089,133
Noncurrent assets:
Loans receivable 727,401 - 156,299 883,700 -
Due from other funds - - - - 9
Net investment in capital leases - - - - 5,575
Restricted net pension assets - - - - 1,476
Capital assets:
Land, at cost - - - - 63,160
Structures and improvements, at cost - - - - 884,685
Machinery and equipment, at cost - - - - 393,356
Less: Accumulated depreciation - - - - (593,808)
Construction in progress - - - - 12,101
Total noncurrent assets 727,401 - 156,299 883,700 766,554
Total assets 1,182,527 1,479,871 620,708 3,283,106 1,855,687
DEFERRED OUTFLOWS OF RESOURCES - - - - 47,913
LIABILITIES
Current liabilities:
Accounts payable and accruals 6 210,691 65,147 275,844 122,562
Due to other funds 31 7,021 - 7,052 73
Due to component units - - - - 304
Lease obligations payable - - - - 472
Bond payable - - - - 13,349
Unearned revenue - 18,999 209 19,208 42,213
Others - - - - 83,835
Total current liabilities 37 236,711 65,356 302,104 262,808
Noncurrent liabilities:
Pension - - - - 73,694
Lease obligations payable - - - - 6,149
Commercial paper payable - - - - 63,332
Bonds payable - - - - 123,740
Others 4,600 - 3,271 7,871 142,140
Total noncurrent liabilities 4,600 - 3,271 7,871 409,055
Total liabilities 4,637 236,711 68,627 309,975 671,863
DEFERRED INFLOWS OF RESOURCES - - - - 12,889
NET POSITION
Net investment in capital assets - - - - 554,024
Restricted for:
Capital projects - - - - 1,276
Pensions - - - - 1,476
Unrestricted 1,177,890 1,243,160 552,081 2,973,131 662,072
Total net position $ 1,177,890 $ 1,243,160 $ 552,081 $ 2,973,131 $ 1,218,848
The notes to the financial statements are an integral part of this statement.
44 Basic Financial Statements
STATE OF TENNESSEE
Statement of Revenues, Expenses, and Changes in
Net Position
Proprietary Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Business Type Activities - Enterprise Funds
Governmental
Sewer Nonmajor Activities-
Treatment Employment Enterprise Internal Service
Loan Security Funds Total Funds
Operating revenues
Charges for services $ 9,927 $ -$ 2,495 $ 12,422 $ 669,495
Investment income 304 - 75 379 -
Premiums - 265,762 728,280 994,042 777,737
Total operating revenues 10,231 265,762 730,850 1,006,843 1,447,232
Operating expenses
Personal services - - - - 218,888
Contractual services 1,112 - 35,549 36,661 308,305
Materials and supplies - - - - 49,192
Rentals and insurance - - - - 75,273
Depreciation and amortization - - - - 48,404
Benefits - 3,931,631 713,672 4,645,303 851,654
Other - - 5,253 5,253 10,075
Total operating expenses 1,112 3,931,631 754,474 4,687,217 1,561,791
Operating income (loss) 9,119 (3,665,869) (23,624) (3,680,374) (114,559)
Nonoperating revenues (expenses)
Grants 18,549 3,584,339 4,894 3,607,782 -
Insurance claims recoveries - - - - 3,156
Gain on sales of capital assets - - - - (405)
Interest income - 26,124 224 26,348 652
Interest expense - - - - (5,815)
Other (640) (33,171) (920) (34,731) -
Total nonoperating revenues
(expenses) 17,909 3,577,292 4,198 3,599,399 (2,412)
Income (loss) before
contributions
and transfers 27,028 (88,577) (19,426) (80,975) (116,971)
Capital contributions - - - - 842
Transfers in 4,617 - 4,594 9,211 29,779
Transfers out - - (600) (600) (35)
Change in net position 31,645 (88,577) (15,432) (72,364) (86,385)
Net position, July 1, restated 1,146,245 1,331,737 567,513 3,045,495 1,305,233
Net position, June 30 $ 1,177,890 $ 1,243,160 $ 552,081 $ 2,973,131 $ 1,218,848
The notes to the financial statements are an integral part of this statement.
Basic Financial Statements 45
STATE OF TENNESSEE
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Business Type Activities - Enterprise Funds
Governmental
Sewer Nonmajor Activities-
Treatment Employment Enterprise Internal
Loan Security Funds Total Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users $ -$ 272,525 $ 738,806 $ 1,011,331 $ 411,246
Receipts from interfund services provided - 4,408 - 4,408 1,078,564
Payments to suppliers - - (740,651) (740,651) (1,200,544)
Payments to employees - - - - (212,463)
Payments for unemployment benefits - (4,456,206) - (4,456,206) -
Payments for interfund services used (1,081) - (1,637) (2,718) (118,696)
Net cash provided by (used for) operating activities (1,081) (4,179,273) (3,482) (4,183,836) (41,893)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Operating grants received 18,549 4,090,359 4,894 4,113,802 -
Reimbursements - (33,171) - (33,171) -
Negative cash balance implicitly financed - 7,021 - 7,021 -
Transfers in 4,617 - 4,594 9,211 29,744
Transfers out - - (600) (600) -
Net cash provided by (used for) noncapital financing
activities 23,166 4,064,209 8,888 4,096,263 29,744
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of capital assets - - - - (74,916)
Bond and commercial paper proceeds - - - - 58,278
Proceeds from sale of capital assets - - - - 5,661
Insurance claims recoveries - - - - 3,156
Principal payments - - - - (23,731)
Interest paid - - - - (7,089)
Net cash provided by (used for) capital and
related financing activities - - - - (38,641)
CASH FLOWS FROM INVESTING ACTIVITIES
Loans issued and other disbursements to borrowers (173,893) - (19,685) (193,578) -
Collection of loan principal 142,418 - 37,926 180,344 -
Interest received 10,237 26,124 2,365 38,726 653
Net cash provided by (used for) investing activities (21,238) 26,124 20,606 25,492 653
Net increase (decrease) in cash and cash equivalents 847 (88,940) 26,012 (62,081) (50,137)
Cash and cash equivalents, July 1, restated 395,770 1,228,212 417,671 2,041,653 1,128,462
Cash and cash equivalents, June 30 $ 396,617 $ 1,139,272 $ 443,683 $ 1,979,572 $ 1,078,325
(continued on next page)
46 Basic Financial Statements
STATE OF TENNESSEE
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Business Type Activities - Enterprise Funds
(continued from previous page)
Governmental
Sewer Nonmajor Activities-
Treatment Employment Enterprise Internal
Loan Security Funds Total Service Funds
Reconciliation of operating income to net cash
provided by (used for) operating activities
Operating income (loss) $ 9,119 $ (3,665,869) $ (23,624) $ (3,680,374) $ (114,559)
Adjustment to reconcile operating income (loss) to
net cash from operating activities:
Depreciation and amortization - - - - 48,404
Loss on disposal of capital assets - - - - 2,276
Interest income (9,927) - (2,178) (12,105) -
Investment income (304) - (75) (379) -
Changes in assets, deferred outflows of resources,
liabilities and deferred inflows of resources:
(Increase) decrease in receivables - (127,318) 7,953 (119,365) 9,109
(Increase) decrease in due from other funds - 1,213 - 1,213 1,158
(Increase) decrease in due from component units - - - - 60
(Increase) decrease in inventories - - - - (653)
(Increases) decreases in assets held for sale - - - - 65
(Increase) decrease in prepaids - - - - 586
(Increase) decrease in net pension assets - - - - 205
(Increase) decrease in deferred outflows of resources - - - - 5,522
Increase (decrease) in accounts payable - (372,295) 14,386 (357,909) 18,577
Increase (decrease) in due to other funds 31 - - 31 (958)
Increase (decrease) in due to component units - (30) - (30) 224
Increase (decrease) in deferred inflows of resources - - - - (8,735)
Increase (decrease) in unearned revenue - (14,974) 56 (14,918) (3,174)
Total adjustments (10,200) (513,404) 20,142 (503,462) 72,666
Net cash provided by (used for) operating activities $ (1,081) $ (4,179,273) $ (3,482) $ (4,183,836) $ (41,893)
Schedule of noncash investing, capital, and financing activities
Contributions of capital assets $ -$ -$ -$ -$ 842
Assets acquired by transfer - - - - 35
Capital assets disposed of by transfer - - - - (35)
Amortization of bond premium - - - - 2,030
Amortization of bond discount - - - - (986)
Total noncash capital and related financing activities $ -$ -$ -$ -$ 1,886
The notes to the financial statements are an integral part of this statement.
Basic Financial Statements 47
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48 Basic Financial Statements
FIDUCIARY FUNDS FINANCIAL
STATEMENTS
Pension (and other Employee Benefit) Trust Funds— Private–Purpose Trust Funds—These funds are presented
These funds are presented individually in the supplementary individually in the supplementary section.
section.
Custodial Funds—These funds are presented individually in
Investment Trust Funds—These funds are presented the supplementary section.
individually in the supplementary section.
Basic Financial Statements 49
STATE OF TENNESSEE
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2021
(Expressed in Thousands)
Custodial Funds
Pension and Other External
Employee Benefit Investment Trust Private-Purpose Custodial Investment
Trust Funds Funds Trust Funds Funds Pools
ASSETS
Cash and cash equivalents $ 126,714 $ -$ 21,185 $ 518,456 $ 2,028,410
Cash collateral on loaned
securities 3,130,122 - - - -
Receivables:
Account 2 - - 1 -
Employer contributions 78,730 - - - -
Member contributions 35,670 - - - -
Taxes - - - 381,062 -
Interest and dividends - - - - 18
Investments sold - 3,674 - - -
Loans receivable 31,754 - - - -
Other 871 - - 512 -
Due from other funds - - - 10 -
Investments, at fair value:
Government bonds - - - - 6,740
Mutual funds 11,931,724 - 282,769 - -
Private equities - 3,742 - - -
Real estate 40 - - - -
TRGT pooled funds 65,465,510 292,312 - - -
Other 9,402 - - - -
Investments, at amortized cost:
Short-term investments - - - - 2,015,953
Capital assets, at cost:
Machinery and equipment 37,140 - - - -
Less - accumulated depreciation (27,674) - - - -
Total assets 80,820,005 299,728 303,954 900,041 4,051,121
LIABILITIES
Accounts payable and accruals 35,930 - 34 5,656 -
Securities lending collateral 3,130,122 - - - -
Due to other governments - - - 825,481 -
Total liabilities 3,166,052 - 34 831,137 -
NET POSITION
Restricted for
Pensions 75,488,471 - - - -
Employee salary deferrals 1,717,569 - - - -
Other postemployment benefits 446,656 - - - -
Employees' flexible benefits 1,257 - - - -
Individuals, organizations and
other governments - - 303,920 68,904 -
Amounts held in trust for
Pool participants - 299,728 - - 4,051,121
Total net position $ 77,653,953 $ 299,728 $ 303,920 68,904 4,051,121
The notes to the financial statements are an integral part of this statement.
50 Basic Financial Statements
STATE OF TENNESSEE
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Custodial Funds
Pension and Other External
Employee Benefit Investment Trust Private-Purpose Custodial Investment
Trust Funds Funds Trust Funds Funds Pools
ADDITIONS
Contributions:
Members $ 695,761 $ -$ -$ 90,275 $ -
Employers 1,517,199 - - - -
Federal - - 193 - -
Private - - 48,346 - -
Transfers in from other plans 61,115 - - - -
Other 1,317 - 2,266 - -
Total contributions 2,275,392 - 50,805 90,275 -
Investment income:
Net increase/(decrease) in fair value
of investments 15,891,023 (79) 59,363 - (27)
Interest and dividends 322,447 54,517 1 52 7,856
Securities lending income 14,221 - - - -
Total investment income 16,227,691 54,438 59,364 52 7,829
Less: Investment expenses (66,091) (257) - - (1,731)
Securities lending expense (2,520) - - - -
Net investment income 16,159,080 54,181 59,364 52 6,098
Capital share transactions:
Shares sold - 59,295 - - 5,439,744
Less: Shares Redeemed - (9,828) - - (5,516,738)
Net capital share transactions - 49,467 - - (76,994)
Tax and fee collections for other
governments - - - 3,697,352 -
Member resources - - - 767,621 -
Total additions 18,434,472 103,648 110,169 4,555,300 (70,896)
DEDUCTIONS
Benefit payments 3,496,668 - - - -
Medical payments 75,864 - - 98,951 -
Deceased member benefit payments 20,883 - - - -
Payments made under trust agreements 5,540 - 16,567 - -
Member/claimant distributions 44,189 - 131 750,534 -
Payments of taxes and fees to other
governments - - - 3,697,352 -
Administrative expenses 35,793 87 574 9,969 6
Total deductions 3,678,937 87 17,272 4,556,806 6
Change in net position 14,755,535 103,561 92,897 (1,506) (70,902)
Net position, July 1, restated 62,898,418 196,167 211,023 70,410 4,122,023
Net position, June 30 $ 77,653,953 $ 299,728 $ 303,920 $ 68,904 $ 4,051,121
The notes to the financial statements are an integral part of this statement.
Basic Financial Statements 51
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52 Basic Financial Statements
State of Tennessee
Index
Notes to the Financial Statements
For the Fiscal Year Ended June 30, 2021
Note 1: Summary of Significant Accounting Policies…………………………………………….54
Note 2: Reconciliation of Government-Wide and Fund Financial Statements………………...….62
Note 3: Deficit Fund Equity……………………………………………………………………..63
Note 4: Accounting and Reporting Changes……………………………………………………..63
Note 5: Deposits and Investments……………………………………………………………….66
Note 6: Fair Value Measurements………………………………………………………………..77
Note 7: Receivables………………………………………….………………...…………………85
Note 8: Capital Assets……………………………………….…...………………………………86
Note 9: Interfund Balances, Payables and Receivables………………………………………….. 88
Note 10: Interfund Transfers……………………………………………………...………………89
Note 11: Leases…………………………………………………………...…………………….…90
Note 12: Long-Term Liabilities………………………………………………...……………….…92
Note 13: Payables…………………………………………….………………..………………… 96
Note 14: Governmental Fund Balances………………………………………………..….………97
Note 15: Component Units……………………………………………………………………….99
Note 16: Risk Management……………………………………………………………………… 105
Note 17: Other Postemployment Benefits (OPEB)…………………………………………….... 108
Note 18: Pension Plans…………………………………………………………………………..119
Note 19: External Investment Pools……………………………………………………………..127
Note 20: Contingencies…………………………………………………………………………..128
Note 21: Tax Abatements……………………………………………………………………….. 129
Note 22: Impairments and Insurance Recoveries………………………………………………… 131
Note 23: Subsequent Events…………………………………………………………………….. 131
Notes to the Financial Statements 53
State of Tennessee
NOTE 1
operation of a state lottery with net proceeds to be given
to the state to be used for education programs and
purposes in accordance with the Constitution of
Summary of Significant Accounting Tennessee. The corporation is governed by a board of
Policies directors composed of seven directors appointed by the
governor.
A. Financial Reporting Entity
5. State University and Community College System
As required by generally accepted accounting principles, (Proprietary Fund Type) includes six state universities,
these financial statements present the primary thirteen community colleges and twenty-seven colleges of
government (the state) and its component units, entities applied technology. Each of the universities is governed
for which the state is considered to be financially by an independent board appointed by the governor. The
accountable. Discretely presented component units are board of the community colleges and technical colleges is
reported in a separate column in the government-wide comprised of state officials and appointees by the
financial statements to emphasize they are legally separate governor. The state provides substantial funding to these
from the primary government. entities.
Blended Component Units 6. University of Tennessee Board of Trustees (UT)
(Proprietary Fund Type) is responsible for the operation
The Tennessee School for the Blind, Tennessee School of the University of Tennessee, located primarily on four
for the Deaf, and West Tennessee School for the Deaf campuses across the state. The Board is appointed by
were established to provide education and training to the governor and the state provides a substantial amount
blind and deaf students in Tennessee. Although of the funding.
established as separate legal entities with pertinent
corporate powers, their budgets are approved by the state 7. Tennessee Local Development Authority (TLDA)
and their facilities are owned and/or financed by the (Proprietary Fund Type) provides financing assistance to
state. Furthermore, the schools’ expenses and local governments through the issuance of bonds and
obligations are primarily paid from the state’s notes. In addition, the Authority assists non-profit
appropriations. Therefore, these schools are reported in corporations in the construction of mental health,
the primary government’s Education Trust Fund, a major developmental disabilities, or alcohol and drug facilities.
special revenue fund. The majority of the board consists of state officials. Any
deficiency in the statutory reserve will be included in the
Discretely Presented Component Units governor’s recommended budget submitted to the
1. Tennessee Student Assistance Corporation General Assembly for consideration.
(TSAC) (Governmental Fund Type) is responsible for
administering federal and state student financial 8. Tennessee Veterans’ Homes Board (Proprietary
assistance programs. The majority of the board is either Fund Type) is responsible for the operation of nursing
appointed by the governor or are state officials. TSAC’s homes for honorably discharged veterans of the United
budget is approved by the state. States armed forces. The Board is appointed by the
governor and its budget is approved by the state. In
2. Tennessee Community Services Agency (TCSA) addition, the issuance of bonds must be approved by the
(Governmental Fund Type) provides coordination of State Funding Board.
funds and programs for the care of the citizens of the
state. The board of the agency is appointed by the 9. Tennessee State School Bond Authority (TSSBA)
governor and the plan of operation and budget must be (Proprietary Fund Type) finances projects for the
approved by the state. University of Tennessee, State University and
Community College System, and the Tennessee Student
3. Tennessee Housing Development Agency Assistance Corporation. The Authority also finances
(THDA) (Proprietary Fund Type) is responsible for improvement projects for qualifying K-12 schools in the
making loans and mortgages to qualified sponsors, state in conjunction with a federal government program.
builders, developers and purchasers of low and moderate The board of the Authority consists primarily of state
income family dwellings. The board of the agency officials. The state can also impose its will on the
consists of state officials, appointees of the governor, and Authority.
appointees of the Speakers of the House and Senate.
The agency budget is approved by the state. 10. Tennessee Certified Cotton Growers’
Organization (Proprietary Fund Type) was formed to
4. Tennessee Education Lottery Corporation aid in the eradication of the boll weevil. The majority of
(TELC) (Proprietary Fund Type) is responsible for the the board is appointed by the Commissioner of the
54 Notes to the Financial Statements
State of Tennessee
Department of Agriculture. The state can also impose its conditions. The board of the insurance pool consists of
will on the organization. state officials, appointees of the Speakers of House and
Senate, and appointees of the Commissioner of Finance
11. The Access Tennessee (AccessTN) (Proprietary and Administration. The funding plan and plan of
Fund Type) health insurance pool was established to operation of the insurance pool are approved by the
offer health insurance coverage to eligible citizens of the state.
state who are considered uninsurable because of health
Complete financial statements for each of the individual component units may be obtained at the following addresses:
Tennessee Housing Development Agency Tennessee Local Development Authority
Andrew Jackson Building, 3rd floor Cordell Hull Building
502 Deaderick Street 425 Rep. John Lewis Parkway N.
Nashville, TN 37243 Nashville, TN 37243
Tennessee Veterans’ Homes Board Tennessee State School Bond Authority
345 Compton Road Cordell Hull Building
Murfreesboro, TN 37130 425 Rep. John Lewis Parkway N.
Nashville, TN 37243
University of Tennessee State University and Community College System
Office of the Treasurer 1 Bridgestone Park
301 Andy Holt Tower Nashville, TN 37214
Knoxville, TN 37996-0100
Tennessee Education Lottery Corporation All others may be obtained at the following:
One Century Place Finance & Administration, Division of Accounts
23 Century Boulevard, Suite 200 21st Floor William R. Snodgrass Tennessee Tower
Nashville, TN 37214 312 Rosa L. Parks Avenue
Nashville, TN 37243
Section 457(b) Plan, which is reported as the Deferred
Fiduciary Component Units
Compensation Plan Fund. These plans are administered
The Tennessee Consolidated Retirement System through trusts to be considered separate legal entities.
(TCRS) (pension plans) – TCRS administers pension The Commissioner of Finance and Administration, the
funds for various public employee retirement systems Chair of the Finance, Ways, and Means of the Senate, the
and plans of the State and its political subdivisions. TCRS Chair of the Finance, Ways, and Means Committee of the
is an independent state agency subject to legislative and House of Representatives, and the chair of the
executive department budgetary examination and consolidated retirement system board shall serve as
comment. The Tennessee Consolidated Retirement trustees of these plans. Because of the State’s trustee
System Board, a twenty-member board, is established by responsibilities for these plans, the Defined Contribution
statute to administer the systems and plans, and to serve Pension Plan Fund and the Deferred Compensation Plan
as investment trustees of the funds. The board consists Fund are reported as pension and other employee benefit
of eighteen voting members and two non-voting trust funds of the primary government rather than
members. Of the eighteen voting members, seven are ex- discretely presented component units.
officio members from the state's various agencies, four The State of Tennessee Postemployment Benefits
are selected by the Speaker of the Senate and the Speaker Trust (OPEB Trust)– The OPEB Trust was established
of the House of Representatives, and two are appointed for the purpose of prefunding other postemployment
by the Governor. Because of the State’s trustee healthcare benefits accrued by employees of the state and
responsibilities for these systems and plans, Generally certain component units. The trustees consist of the
Accepted Accounting Principles (GAAP) requires them Commissioner of Finance and Administration, the Chair
to be reported as pension trust funds of the primary of the Finance, Ways and Means Committee of the
government rather than discrete component units. Senate, the Chair of the Finance, Ways and Means
The Deferred Compensation Plans – The Tennessee Committee of the House of Representatives and the
Department of Treasury sponsors and, through third- chair of the consolidated retirement board. Investment
party service providers, administers the State of policies are set by the Trustees and implemented by the
Tennessee 401(k) Plan, the Optional Retirement Program state treasurer. Because of the State’s trustee
(ORP) for Higher Education, and the 3121 plans, which responsibilities for the trust, GAAP requires it to be
are collectively reported as the Defined Contribution reported as a pension and other employee benefit trust
Pension Plan Fund, and the Internal Revenue Code
Notes to the Financial Statements 55
State of Tennessee
fund of the primary government rather than discretely 50 states, plus the District of Columbia. Tennessee paid
presented component unit. $13,001 for 2021 membership dues.
10. The Nurse Licensure Compact is comprised of 33
B. Related Organizations states.
The state’s officials are also responsible for appointing
the members of the boards of other organizations, but 11. The Physical Therapy Licensure Compact is
the state’s accountability for these organizations do not comprised of 33 states, plus the District of Columbia.
extend beyond making appointments. The state appoints
the board members of the Beech River Watershed 12. The Interstate Commission of Emergency
Development Authority, Carroll County Watershed Medical Services Personnel Practice is comprised of
Authority, Tennessee Insurance Guaranty Association, 22 states.
Tennessee Life and Health Insurance Guaranty
Association, Local Neighborhood Development 13. The Interstate Medical Licensure Compact is
Corporations, Tennessee Holocaust Commission, Inc., comprised of 30 states, plus the District of Columbia and
Tennessee Automobile Insurance Plan, and the Doe Guam.
Mountain Recreation Authority.
14. The Psychology Interjurisdictional Compact is
comprised of 21 states plus the District of Columbia.
C. Jointly Governed Organizations
1. The Southern Regional Education Compact has 16 D. Joint Ventures
member states. Tennessee paid $208,508 for 2021 The state is a participant in a joint venture, the
membership dues. Tennessee-Tombigbee Waterway Development
Compact, with the states of Alabama, Kentucky and
2. The Compact for Education has 49 member states, Mississippi. The purpose of this compact is to promote
plus Puerto Rico, the Virgin Islands, American Samoa, the development of a navigable waterway connecting the
and the District of Columbia. Tennessee paid $77,300 Tennessee and Tombigbee Rivers and provide a nine
for 2021 membership dues. foot navigable channel. The fiscal year end of the
Tennessee-Tombigbee Waterway is December 31.
3. The Interstate Mining Compact has 24 member Financial statements for the Tennessee-Tombigbee
states. Tennessee paid $17,494 for 2021 membership Waterway may be obtained at: P.O. Drawer 671,
dues. Columbus, MS 39703.
4. The Southern States Nuclear Compact (also Presented below is summary financial data for this joint
known as the Southern States Energy Compact) has 16 venture (expressed in thousands):
member states, plus Puerto Rico and the Virgin Islands.
Tennessee paid $34,267 for 2021 membership dues. Tennessee-Tombigbee Waterway
Development Compact
2020 2019
5. The Southeast Interstate Low Level Radioactive
Current assets $ 485 $ 474
Waste Compact has 6 member states. Capital assets, less depreciation 281 286
6. The Interstate Insurance Product Regulation Total assets 766 760
Commission is comprised of 45 member states and
Puerto Rico. Total liabilities 97
7. The Interstate Compact for Juveniles is comprised Net position 766 663
of 50 states, plus the District of Columbia and the Virgin
Total liabilities and net position $ 766 $ 760
Islands. Tennessee paid $22,000 for 2021 membership
dues. Revenues $ 396 $ 318
Expenses 293 346
8. The Interstate Compact for Supervision of Adult
Offenders is comprised of all 50 states, plus the District Excess of revenues over
of Columbia, Puerto Rico, and the Virgin Islands. expenses 103 (28)
Tennessee paid $36,674 for 2021 membership dues.
Beginning net position 663 691
9. The Interstate Compact on Educational Ending net position $ 766 $ 663
Opportunities for Military Children is comprised of all
56 Notes to the Financial Statements
State of Tennessee
E. Government-wide and Fund Financial and available. Measurable means the amount of the
Statements transaction can be determined and available means
collectible within the current period or soon enough
The government-wide financial statements (i.e., the thereafter to be used to pay liabilities of the current
statement of net position and the statement of activities) period. Expenditures generally are recorded when a
report information on all of the nonfiduciary activities of liability is incurred, as under accrual accounting. Debt
the primary government and its component units. For service expenditures, as well as expenditures related to
the most part, the effect of interfund activity has been compensated absences and claims and judgments, are
removed from these statements. Governmental typically recorded only when payment is due. General
activities, which normally are supported by taxes and capital asset acquisitions are reported as expenditures and
intergovernmental revenues, are reported separately from issuance of long-term debt is reported as an other
business-type activities, which rely to a significant extent financing source in governmental funds.
on fees and charges for support. Likewise, the primary
government is reported separately from legally separate Principal revenue sources considered susceptible to
component units for which the primary government is accrual include taxes, federal funds, local funds and
financially accountable. investment income. The state generally considers taxes,
and similarly measurable fees and fines, available if
The statement of activities demonstrates the degree to collected within 60 days after fiscal year-end. Grants and
which the direct expenses of a given function or segment similar items are recognized as revenue when all eligibility
are offset by program revenues. Direct expenses are requirements imposed by the provider have been met,
those that are clearly identifiable with a specific function and the amount is received during the current period or
or segment. Program revenues include 1) charges to within 6 months after fiscal year-end. The state uses this
customers or applicants who purchase, use, or directly same 6 month availability period for most other
benefit from goods, services, or privileges provided by a measurable revenues, with the exception of the tobacco
given function or segment and 2) grants and and similar litigation settlement proceeds, which are
contributions that are restricted to meeting the generally considered to be available if collection is
operational or capital requirements of a particular expected within 12 months after fiscal year-end.
function or segment. Taxes and other items not properly Licenses, permits, and other similar miscellaneous
included among program revenues are reported instead revenue items are considered measurable and available
as general revenues. only when cash is received.
Separate financial statements are provided for The state reports the following major governmental
governmental funds, proprietary funds, and fiduciary funds:
funds, even though the latter are excluded from the
government-wide financial statements. Major individual • General Fund. This is the state’s primary operating
governmental funds and major individual enterprise fund. It accounts for all financial resources of the
funds are reported as separate columns in the fund general government, except those required to be
financial statements. accounted for in another fund.
F. Measurement Focus, Basis of • Education Fund. This fund accounts for financial
Accounting, and Financial Statement transactions and balances associated with K-12 and
Presentation higher education programs including the activities of
the Tennessee Promise Scholarship Endowment
The government-wide financial statements are reported Fund. Funding for these programs is accomplished
using the economic resources measurement focus and primarily from dedicated sales and services taxes,
the accrual basis of accounting, as are the proprietary federal monies received from the U.S. Department
fund and fiduciary fund financial statements. Revenues of Education, and net lottery proceeds.
are recorded when earned and expenses are recorded
when a liability is incurred, regardless of the timing of • Highway Fund. The Highway fund accounts for
related cash flows. Grants and similar items are financial transactions and balances associated with
recognized as revenue as soon as all eligibility programs of the Department of Transportation.
requirements imposed by the provider have been met. Funding for these programs is accomplished
primarily from dedicated highway user taxes and fees
Governmental fund financial statements are reported and funds received from the various federal
using the current financial resources measurement focus transportation agencies.
and the modified accrual basis of accounting. Earned
revenues are recognized when they become measurable
Notes to the Financial Statements 57
State of Tennessee
• State Shared Taxes Fund. The state shared taxes 3. Private Purpose Trust Funds – account for
fund accounts for state levied tax revenues and contributions made to 1) College Savings Plan –
certain fees shared with local city and county funds created under Section 529 of the Internal
governments as authorized by various state statutes. Revenue Code and 2) other small similar funds -
funds from liquidated assets of domestic
• Capital Projects Fund. This fund accounts for insurance companies that are in receivership
financial transactions and balances associated with and funds held in individual accounts under the
the acquisition or construction of major state's Achieving a Better Life Experience
governmental capital assets. These capital assets are (ABLE) Act program.
financed principally with long-term bonds.
4. The Custodial Funds – account for assets the
The state reports the following major proprietary funds: state holds on behalf of others, including local
levied taxes held for various local governments,
• Sewer Treatment Loan Fund. This fund accounts assets in postemployment benefit plans that are
for loans made to local governments and utility not equivalent to a qualified trust held for
districts for the construction of sewage treatment retirees, deposits from local governments in
facilities. cash and investment pools, and other receipts
held for others that are not held under trust
arrangements.
• Employment Security Fund. This fund accounts
for the collection of unemployment insurance
As a general rule, the effect of internal activity,
premiums from employers and the payment of
interdepartmental revenues and expenditures (both direct
unemployment benefits to eligible claimants.
and indirect expenditures), has been eliminated from the
Additionally, the state reports the following fund types: government-wide financial statements. An exception is
that interfund services provided and used between
• Internal Service Funds. These account for services functions have not been eliminated.
provided to other departments or agencies of the
state, or to other governments, on a cost Amounts reported as program revenues include 1)
reimbursement basis. Internal service fund services charges to customers or applicants for goods, services, or
include the provision of information technology, privileges provided, 2) operating grants and
facilities management, fleet services, risk contributions, and 3) capital grants and contributions.
management, employee health insurance, accounting Internally dedicated resources are reported as general
services, and purchasing services. Other services revenues rather than as program revenues. Likewise,
include human resource management, printing, general revenues include all taxes.
postal, products produced by Department of
Correction inmates, warehousing of supplies, and Proprietary funds distinguish operating revenues and
records management expenses from nonoperating items. Operating revenues
and expenses generally result from providing services and
• Fiduciary Funds. These funds are used to account producing and delivering goods in connection with a
for resources legally held in trust. Fiduciary activities proprietary fund’s principal ongoing operations.
include the following funds: Operating expenses for enterprise funds and internal
service funds include the cost of sales and services,
1. Pension and Other Employee Benefit Trust administrative expenses, and depreciation of capital
Funds – account for activities and balances of assets. Investment income of certain proprietary funds is
the defined benefit pension plans administered classified as operating revenue because those transactions
by the Tennessee Consolidated Retirement are a part of the funds’ principal ongoing operations. All
System, the defined contribution pension plans, revenues and expenses not meeting this definition are
the deferred compensation plans, the employee reported as nonoperating revenues and expenses.
flexible benefits plan, higher education
403(b)plan fund, and the State of Tennessee When both restricted and unrestricted resources are
Postemployment Benefit Trust. available for use, it is the state’s policy to use restricted
resources first, then unrestricted resources as they are
2. Investment Trust Funds – account for needed.
deposits belonging to entities outside of the
state’s financial reporting entity.
58 Notes to the Financial Statements
State of Tennessee
G. Assets, Liabilities, Deferred applicable to future accounting periods and are recorded
Outflows/Inflows of Resources, and Net as prepaid items in both government-wide and fund
financial statements. The cost of prepaid items is
Position/Fund Balance recorded as expenditures/expenses when consumed
Deposits and Investments—The state’s cash and cash rather than when purchased.
equivalents includes demand accounts, petty cash and
monies in cash management pools. The liquidity of the Restricted Assets—Proceeds of the state’s general
cash management pools is sufficient to cover any obligation bonds and commercial paper program that
withdrawal request by a participant. This classification remain unspent at year end are classified as restricted
also includes short-term investments with a maturity date cash on the statement of net position. The commercial
within three months of the date acquired by the state. paper program provides short-term financing for the
These short-term investments, which are not part of the state’s capital projects. Tennessee Promise Scholarship
State Cash Pool, are stated at fair value. The State Cash Endowment Fund (reported in the Education fund) has
Pool is part of the State Pooled Investment Fund (SPIF), restricted assets in an endowment trust agreement.
an external investment pool. Investments in the State Contributions to the State Hybrid Stabilization Reserve
Cash Pool are measured at amortized cost. Collateral, as Trust (reported in the general fund) are reported as
required by law, is pledged by the various banks and restricted investments. The state also has a restricted net
government securities dealers to guarantee state funds pension asset because pension plan net position is greater
placed with them. It is the state's policy to include cash than total pension liability.
management pools as cash.
Component units that issue revenue bonds – Tennessee
Investments not in the State Cash Pool are stated at fair Housing Development Agency, Tennessee State School
value. Securities traded on a national or international Bond Authority, and Tennessee Local Development
exchange are valued at the last reported sales price at Authority – report restricted cash to 1) satisfy bond
current exchange rates. Investments that do not have an covenant requirements, 2) reflect unspent bond,
established market are reported at estimated fair values. commercial paper, or note proceeds, and 3) reflect
Investment income consists of realized and unrealized resources set aside to meet future debt service payments.
appreciation or depreciation in the fair value of In addition to restricted cash, Tennessee Housing
investments. Interest income is recognized when earned. Development Agency and Tennessee State School Bond
Securities and security transactions are recorded in the Authority also report restricted investments for the same
financial statements on trade-date basis. purposes previously mentioned. In addition, Tennessee
Housing Development Agency also reports restricted
Receivables and Payables—All outstanding balances receivables for the same purposes mentioned. The State
between funds are reported as “due to/from other University and Community College System and the
funds”, except those to and from pension and other University of Tennessee report restricted cash,
employee benefit trust funds. Any residual balances investments, and receivables for those that come with
outstanding between the governmental activities and certain restrictions from donors, lenders, or grantors.
business-type activities are reported in the government- The State University and Community College System also
wide financial statements as “internal balances.” reports other restricted assets for the same purpose
mentioned above. Tennessee Education Lottery
All receivables are shown net of an allowance for Corporation has restricted cash to cover losses incurred
uncollectibles. Receivables in the state's governmental as a result of the nonfeasance, malfeasance, or
and fiduciary funds primarily consist of taxes, interest, misfeasance of the retailers. Tennessee Veterans’ Homes
departmental services and federal revenues. Board reports restricted cash in relation to loan
agreements for those belonging to the homes’ residents.
Inventories and Prepaid Items—Inventories of
materials and supplies are determined by physical count Tennessee Student Assistance Corporation, Tennessee
and are valued at cost, principally using the first-in/first- Community Services Agency, Tennessee Housing
out (FIFO) method. The weighted average cost method Development Agency, State University and Community
is used for the Highway Fund (a special revenue fund) College System, University of Tennessee, and Tennessee
and Strategic Technology Solutions, Postal Services, Veterans’ Homes Board have net pension assets because
Distribution Center, the breeding herd for Tennessee pension plan net position is greater than their total
Rehabilitative Initiative in Correction, and General pension liability.
Services Printing (internal service funds). The costs of
governmental fund-type inventories are recorded as Capital Assets—Capital assets, which include land,
expenditures when consumed rather than when buildings and building improvements, machinery and
purchased. Certain payments to vendors reflect costs equipment (e.g., furniture and fixtures, vehicles, works of
Notes to the Financial Statements 59
State of Tennessee
art and historical treasures), infrastructure assets (e.g., Deferred Outflows/Inflows—Deferred outflows of
roads, bridges, sidewalks, and similar items) and resources represents a consumption of net position that
intangibles (e.g., internally generated computer software, applies to a future period and so will not be recognized
patents, trademarks, copyrights, and easements), are as an outflow of resources (expense/expenditure) until
reported in the applicable governmental or business-type then. The primary government has three items that
activities columns in the government-wide financial qualify for reporting in this category. The first is the
statements. Capital assets, with the exception of result of five pension related factors. The first factor is
infrastructure, land and internally generated intangibles, contributions made subsequent to the measurement date,
are defined by the state as assets with an initial individual the second factor is the difference between the actual and
cost of $5,000 or more and an estimated useful life of expected economic and demographic factors that were
three years or more. Infrastructure assets and land are less favorable than anticipated, the third factor is the net
capitalized regardless of cost or useful life. The costs of effect from changes in actuarial assumptions, the fourth
normal maintenance and repairs that do not add to the factor is investment returns were less than projected, and
value of the asset or materially extend the life of the asset the fifth factor is the change in proportionate share of
are not capitalized. Internally generated intangibles are net pension liabilities and assets. The second item is
capitalized if the total estimated project costs are $1 refunding of debt. The third item is related to the
million or more, and have an estimated useful life of estimate of the state's Other Postemployment Benefit
three years or more. Capitalized assets are recorded at (OPEB) liabilities. In the governmental activities column
historical cost or estimated historical cost if purchased or of the government-wide statement of net position, the
constructed. Donated capital assets are recorded at state reported $15.7 million for refunding of debt, $316.4
estimated acquisition value at the date of donation. million for employer contributions made after the
Capitalized assets, except for land and infrastructure, are measurement date, $34.9 million for differences between
depreciated over their useful lives. expected and actual experience, $0.7 million for changes
in actuarial assumptions, $74.0 million for differences
The state holds certain assets such as works of art, between expected and actual investment returns, $5.2
historical documents, and artifacts that have not been million for the changes in proportionate shares, and
capitalized or depreciated because the collections are $442.8 million for various factors related to the estimate
protected and preserved for exhibition, education, or of the state's OPEB liabilities.
research and are considered to have inexhaustible useful
lives. Deferred inflows of resources represent an acquisition of
net position that applies to a future period, and so will
Major outlays for capital assets and improvements are not be recognized as an inflow of resources (revenue)
capitalized as projects are constructed. until that time. The primary government has four items
that qualify for reporting in this category. The first item
The state has elected to apply the modified approach to is the result of two pension related factors. The first
accounting for infrastructure—roadways and bridges. factor is the difference between the actual and expected
The modified approach is an alternative to depreciation economic and demographic factors that were more
that may be applied to infrastructure capital assets that favorable than anticipated and the second factor is the
meet certain requirements. Under the modified change in proportionate share of net pension liabilities
approach, depreciation expense is not recorded for these and assets. In the governmental activities column of the
assets. Instead, costs for both maintenance and government-wide statement of net position, the state
preservation of these assets should be expensed in the reported $11.4 million for these two pension related
period incurred. Additions and improvements are factors mentioned.
capitalized.
The other three items are related to debt refunding,
Land, construction in progress, software in development, capital lease activities, and the estimate of the state’s
and intangibles with indefinite useful lives are not OPEB liabilities in which the state reported $1.2 million,
depreciated. The other property, plant, and equipment $1.7 million, and $333.3 million, respectively, in its
of the primary government are depreciated using the governmental activities column of the government-wide
straight line method over the following estimated useful statement of net position. In addition, the state has one
lives: item which arises only under modified accrual basis of
accounting that qualifies for reporting in this category.
Assets Years Accordingly, the item, unavailable revenue, is reported
Buildings 40 - 50 only in the governmental funds balance sheet. The
governmental funds reported unavailable revenues from
Building Improvements 20 - 50 various taxes ($90.3 million), federal grants ($40.7
Machinery and Equipment 3 - 20
60 Notes to the Financial Statements
State of Tennessee
million), and other sources ($10.1 million) as deferred expense, information about the fiduciary net position of
inflows of resources. the State of Tennessee Postemployment Benefits Trust
(OPEB Trust), that services the Employee Group OPEB
Compensated Absences—It is the state’s policy to Plan (EGOP), and additions to/deductions from the
permit employees to accumulate earned but unused OPEB Trust fiduciary net position have been determined
vacation and sick pay benefits. There is no liability for on the same basis as they are reported by the OPEB
unpaid accumulated sick leave since the state’s policy is Trust. For this purpose, the OPEB Trust recognizes
to pay this only if the employee is sick or upon death. benefit payments when due and payable in accordance
with benefit terms. Investments are reported at fair
Long-term Liabilities—In the government-wide value. This trust meets the criteria in paragraph 4 of
financial statements, and proprietary fund types in the GASB Statement No. 75.
fund financial statements, long-term debt and other long-
term obligations are reported as liabilities in the Net Position—Consists of the following three
applicable governmental activities, business-type components:
activities, or proprietary fund type statement of net
position. Bond premiums and discounts are amortized • Net Investment in Capital Assets - consists of
over the life of the bonds using the straight-line method. capital assets (including restricted capital assets), net
Bonds payable are reported net of the unamortized bond of accumulated depreciation and reduced by the
premium or discount. Bond issuance costs are expensed outstanding balances of any bonds, notes or
as incurred. commercial paper, and leases that are attributable to
the acquisition, construction, or improvement of
In the fund financial statements, governmental fund those assets. Unspent debt proceeds at year end are
types recognize bond premiums and discounts, as well as not included in this calculation.
bond issuance costs, during the current period. The face
amount of debt issued is reported as other financing • Restricted net position - consists of net position in
sources. Premiums received on debt issuances are which constraints are placed on the use of net
reported as other financing sources while discounts on position either by external entities, such as creditors
debt issuances are reported as other financing uses. (debt covenants), grantors, contributors, and laws or
Issuance costs, whether or not withheld from the actual regulations of other governments; or by
debt proceeds received, are reported as debt service constitutional provisions or enabling legislation of
expenditures. the state. Restrictions imposed by enabling
legislation could be changed by future legislative
Pensions—For purposes of measuring the net pension action. Of the $2.9 billion restricted by the primary
liability, deferred outflows of resources and deferred government, $425 million was by enabling
inflows of resources related to pensions, pension legislation.
expense, information about the fiduciary net position of
the state’s participation in the Public Employee • Unrestricted Net Position - consists of net
Retirement Plan of the Tennessee Consolidated position that does not meet the definition of
Retirement System (TCRS), and additions to/deductions “restricted net position” or “net investment in
from the state’s fiduciary net position have been capital assets.”
determined on the same basis as they are reported by the
TCRS for the Public Employee Retirement Plan. For Fund Balance—In the governmental fund financial
this purpose, benefits (including refunds of employee statements, fund balances are classified as nonspendable,
contributions) are recognized when due and payable in restricted, committed, assigned, or unassigned.
accordance with the benefit terms of the Public
Employee Retirement Plan of TCRS. Investments are
• Nonspendable Fund Balance - represents
reported at fair value. For the year ended June 30, 2021,
amounts that cannot be spent because they are either
the state reported $1.15 billion of net pension liability,
(a) not in spendable form or (b) legally or
$24.2 million of net pension asset, $431.2 million of
contractually required to be maintained intact.
deferred outflows of resources, $11.4 million of deferred
inflows of resources, and $359.4 million of pension
expenses. • Restricted Fund Balance - represents amounts
where constraints placed on the resources are either
Postemployment Benefits Other Than Pension externally imposed or imposed by law through
(OPEB)—For purposes of measuring the net OPEB constitutional provisions or enabling legislation.
liability, deferred outflows of resources and deferred
inflows of resources related to OPEB, and OPEB
Notes to the Financial Statements 61
State of Tennessee
• Committed Fund Balance - represents amounts government-wide statement of net position. One
that can be used only for the specific purposes element of that reconciliation explains, “Long-term
determined by a formal action of the government’s liabilities, including bonds payable, are not due and
highest level of decision-making authority. The payable in the current period and therefore are not
General Assembly is the highest level of decision- reported in the funds.”
making authority for the state that can, by adoption
of legislation prior to the end of the fiscal year, The details of this $2.2 billion difference are as follows
commit fund balance. Once adopted, the limitation (expressed in thousands):
imposed by the legislation remains in place until the
same action is taken (i.e., adoption of other Bonds payable $ (1,436,292)
legislation) to remove or revise the limitation. Plus: premium on bonds issued (to be
amortized as interest expense) (198,332)
• Assigned Fund Balance - represents amounts that Net deferred outflows/inflows of resources for
are intended to be used by the government for bond refundings (to be amortized as interest
expense) 12,992
specific purposes but do not meet the criteria to be
classified as committed. Generally, the assignment is Commercial paper payable (144,011)
expressed by the General Assembly in the annual Accrued interest payable (24,887)
General Appropriations Act. Capital leases payable (5,283)
Claims and judgments (27,479)
• Unassigned Fund Balance - represents the
Compensated absences (326,674)
residual amount for the general fund not included in
the four categories described above. Also, any deficit Pollution remediation (54,148)
fund balances within the other governmental fund Other long-term liabilities and accounts payable (1,063)
types are reported as unassigned. Net adjustment to reduce fund balance—total
governmental funds to arrive at
When both restricted and unrestricted resources are net position—governmental activities $ (2,205,177)
available for use, it is the state's policy to use restricted
resources first, then unrestricted resources. Of the
unrestricted resources, the state considers that committed B. Explanation of certain differences
amounts would be reduced first, followed by assigned
amounts, and then unassigned amounts.
between the governmental fund statement
of revenues, expenditures, and changes in
Fiscal Year End—The fiscal year end of the primary fund balances and the government-wide
government and component units is June 30, except for statement of activities
the Agricultural Promotion Boards, a special revenue
fund; which has a December 31 year end. Also, the The governmental fund statement of revenues,
Certified Cotton Growers’ Organization, a component expenditures, and changes in fund balances includes a
unit, has a December 31 year end. reconciliation between net changes in fund balances-
total governmental funds and changes in net positions of
Comparative Data/Reclassifications—Comparative governmental activities as reported in the government-
total data for the prior year has not been presented. wide statement of activities. One element of that
reconciliation explains that “Governmental funds report
capital outlays as expenditures. However, in the
NOTE 2 statement of activities the cost of those assets is allocated
over their estimated useful lives as depreciation expense.”
Reconciliation of Government-wide and
The details of this $977.5 million difference are as
Fund Financial Statements follows (expressed in thousands):
A. Explanation of certain differences Capital outlay $ 1,110,056
between the governmental fund balance Depreciation expense (132,573)
sheet and the government-wide statement Net adjustment to increase net changes in
of net position fund balances – total governmental funds to
arrive at changes in net position of
The governmental fund balance sheet includes a governmental activities $ 977,483
reconciliation between fund balance—total governmental funds
and net position—governmental activities as reported in the
62 Notes to the Financial Statements
State of Tennessee
Another element of that reconciliation states that “The The records management fund, an internal service fund,
issuance of long-term debt (e.g., bonds, commercial has a total net position deficit of $171 thousand. This
paper) provides current financial resources to deficit was caused primarily as a result of the reporting of
governmental funds, while the repayment of the principal other postemployment benefits at the fund level in
of long-term debt consumes the current financial accordance with GASBS 75, Accounting and Financial
resources of governmental funds. Neither transaction, Reporting for Postemployment Benefits Other Than Pensions, and
however, has any effect on net positions. Also, as a result of the reporting of pensions at the fund level
governmental funds report the effect of premiums, in accordance with GASBS 68, Accounting and Financial
discounts, and similar items when debt is first issued, Reporting for Pensions.
whereas these amounts are amortized in the statement of
NOTE 4
activities.” The details of this $104 million difference are
as follows (expressed in thousands):
Debt issued or incurred: Accounting Changes
Issuance of commercial paper $ (46,732)
Debt reduced: Adoption of New Accounting Standards
General obligation debt 142,111
Commercial paper redeemed 8,653 During the fiscal year ended, June 30, 2021, the state
implemented the following new accounting standards
issued by the Governmental Accounting Standards Board
Net adjustment to increase net changes in fund (GASB).
balances – total governmental funds to arrive at
changes in net position of governmental activities $ 104,032
• Statement No. 84, Fiduciary Activities (GASBS
84), is intended to improve guidance regarding
Another element of that reconciliation states that “Some the identification of fiduciary activities for
expenses reported in the statement of activities do not accounting and financial reporting purposes and
require the use of current financial resources and how those activities should be reported. With
therefore are not reported as expenditures in the implementation of GASBS 84, numerous
governmental funds.” The details of this $1.2 million accounts were reclassified into governmental
difference are as follows (expressed in thousands): funds from the former fiduciary fund type–
Agency fund, and one private purpose trust
Pension $ (33,160) fund was reclassified to a governmental fund
Compensated absences (21,885) type. In addition, two former investment trust
Claims and judgments 6,310
funds were reclassified as custodial external
investment pools due to assets not being held in
Accrued interest 2,589
qualifying trusts. See below, Prior Period
Capital lease 1,035 Adjustments and Reclassifications, for further
Other postemployment benefits 37,968 explanations of the effects of this change on the
Pollution remediation 1,461 financial statements.
Pledged tax credits 266
• Statement No. 90, Majority Equity Interests – an
Loss on disposal of capital assets (12,407)
amendment of GASB Statements No. 14 and
Amortization of bond premiums 20,561 No. 61, is intended to improve consistency and
Amortization of deferred outflows/inflows comparability of the financial statement
of resources (6,942)
presentation of majority equity interests in
Other costs 5,404 legally separate organizations and to improve
the relevance of financial statement information
Net adjustment to decrease net changes in
fund balances – total governmental funds
for certain component units. The
to arrive at changes in net position of implementation of this standard did not have an
governmental activities $ 1,200 impact on the financial statement or note
disclosures.
• Statement No. 93, Replacement of Interbank Offered
NOTE 3 Rates, establishes accounting and financial
reporting requirements related to the
Deficit Fund Equity replacement of interbank offered rates in
hedging derivative instruments and leases. It
Notes to the Financial Statements 63
State of Tennessee
also identifies appropriate benchmark interest Component Units
rates for hedging derivative instruments. The
requirements of this Statement apply to the • The State University and Community College
financial statements of all state and local System (SUCCS) and its foundations recorded prior-
governments. The implementation of this period adjustments for a net decrease to net position
standard did not have an impact on the financial of $4.7 million for incorrectly recorded insurance
statements or note disclosures. accrual, incorrectly recorded equipment purchase
and deposits held for others and miscellaneous audit
• Statement No. 98, The Annual Comprehensive
adjustments. Of this amount, $56 thousand was
Financial Report , establishes the term annual
related to a cumulative effect of change in
comprehensive financial report and its acronym
accounting principle.
ACFR. That new term and acronym replaces
references of the term comprehensive annual
financial report and its acronym in generally
Change in Accounting Estimate
accepted accounting principles for state and For the fiscal year ended June 30, 2021, the state changed
local governments. its methodology for estimating liabilities for outstanding
unemployment claims. The new methodology was
Prior Period Adjustments and adopted to better estimate the amount that was recorded
Reclassifications as liabilities at year end to consider the impacts of the
significant changes that arose from new unemployment
Primary Government federal programs and the significant increase in claims
resulting from the coronavirus disease pandemic. This
• Governmental activities–$45.2 million, net increase change impacted expenditures and the accounts payable
in net position, is the effect of a change in and accruals financial statement line items for the
accounting principle related to the implementation employment security fund and business-type activities.
of GASBS 84, Fiduciary Activities.
• Governmental activities–$16.5 million, net increase
in net position, is an accounting change resulting
from the reclassification of the energy loan program
from an enterprise fund to the general fund due to
the repurpose of the funds no longer qualifying as a
business type activity.
• Business-type activities–$6.1 million, net decrease in
net position, is a result of a correction of an error
due to the overstatement of receivables, revenues,
and allowances in the employment security fund.
• Business-type activities–$16.5 million, net decrease
in net position, is an accounting change resulting
from the reclassification of the energy loan program
from an enterprise fund to the general fund due to
the repurpose of the funds no longer qualifying as a
business type activity.
• Fiduciary funds–$9.3 billion, net increase in net
position for pension trusts, $4.1 billion net decrease
in investment trust fund net position, $42.2 million
decrease in private purpose trust funds net position
and $4.2 billion increase in custodial funds net
position are all effects of a change in accounting
principle related to the implementation of GASBS
84, Fiduciary Activities.
64 Notes to the Financial Statements
State of Tennessee
The following schedule enumerates adjustments for the fiscal year ended June 30, 2021, (expressed in thousands):
6/30/20 Net 6/30/20 Net
Position as Adjustments Position as
Reported to Net Position Restated
Government-wide statements:
Primary government
Governmental activities $ 38,208,170 $ 61,738 $ 38,269,908
Business-type activities 3,068,103 (22,608) 3,045,495
Total primary government $ 41,276,273 $ 39,130 $ 41,315,403
Component units - SUCCS 4,314,667 (4,666) 4,310,001
Total component units $ 4,314,667 $ (4,666) $ 4,310,001
Enterprise fund statements:
Employment security 1,337,800 (6,063) 1,331,737
Nonmajor enterprise funds
Energy loan program 16,545 (16,545) -
Total enterprise funds $ 1,354,345 $ (22,608) $ 1,331,737
Governmental funds statements:
Major governmental funds
General fund 5,562,357 40,188 5,602,545
Education fund 977,842 308 978,150
Nonmajor special revenue funds
Vehicle tag and analogous fees 500 500
Permanent funds
Other permanent funds 71,914 20,741 92,655
Total governmental funds $ 6,612,113 $ 61,737 $ 6,673,850
Fiduciary funds statements:
Pension and other employee trust funds
Defined contribution pension plan fund 7,862,399 7,862,399
Higher education 403(b) plan fund 801,164 801,164
Deferred compensation plan fund 601,852 601,852
Total pension trust $ 9,265,415 $ 9,265,415
Investment trust funds
External retirement investment fund 129,484 66,683 196,167
Intermediate term investment fund 12,033 (12,033) -
Local Government Investment Pool 4,109,990 (4,109,990) -
Total investment trust $ 4,251,507 $ (4,055,340) $ 196,167
Private-purpose trust funds
College savings plan 200,176 (12,114) 188,062
Children in state custody 5,560 (5,560) -
Oak Ridge monitoring 20,741 (20,741) -
TNInvestco 1,865 (1,865) -
Other private-purpose trust fund 24,874 (1,913) 22,961
Total private-purpose trust $ 253,216 $ (42,193) $ 211,023
(1)
Custodial funds
Custodial accounts 52,666 52,666
Intermediate term investment fund 12,033 12,033
Local government investment Pool 4,109,990 4,109,990
Retiree health funds 17,744 17,744
Total custodial funds $ 4,192,433 $ 4,192,433
(1)
The Custodial accounts and Retiree health funds were former Agency funds. Also, the State shared tax
fund, a major governmental fund, was formerly reported as an Agency fund but no restatement was
required as all assets held were payable at June 30, 2020.
Notes to the Financial Statements 65
State of Tennessee
NOTE 5 The Intermediate Term Investment Fund (ITIF) is
authorized by statute to invest funds in the investment
Deposits and Investments instruments specified under statutes for the SPIF. The
ITIF is intended to offer longer term investment vehicle
A. Primary Government and higher returns for participants who did not need
access to funds immediately.
The state’s cash includes deposits in demand accounts,
petty cash and monies in cash management pools. State In addition to the funds in the State Pooled Investment
statutes provide that funds in the state treasury be Fund, the Tennessee Retiree Group Trust (TRGT), an
invested by the State Treasurer. The State Pooled investment trust fund, was adopted for the purpose of
Investment Fund (SPIF) is established by Tennessee pooling funds solely for investment purposes including
Code Annotated, Section 9-4-603 “for the purpose of those assets of the Tennessee Consolidated Retirement
receiving and investing any money in the custody of any System (TCRS) and other exempt pension and similar
officer or officers of the state unless prohibited by statute trusts. TRGT may also invest its funds in SPIF. The
to be invested.” Participants in the SPIF include the Tennessee Promise Scholarship Endowment Fund, a part
general fund of the state and any department or agency of the Education Fund, a special revenue fund; the
of the state which are required by court order, contract, Chairs of Excellence (COE) Trust, a permanent fund;
state or federal law, or federal regulation to receive and the State of Tennessee Postemployment Benefits
interest on invested funds, and which are authorized by Trust, an other postemployment benefit trust fund, are
the State Treasurer to participate in the SPIF. In authorized by statutes to invest in long-term investments,
addition, funds in the State of Tennessee Local including bonds, debentures, preferred stock and
Government Investment Pool (LGIP) custodial fund is common stock, real estate and other good and solvent
consolidated with the SPIF for investment purposes securities subject to the approval of the applicable boards
only. The primary oversight responsibility for the of trustees. The State Funds Investment Portfolios,
investment and operations of the SPIF rests with the which include investments selected and managed by the
Funding Board of the State of Tennessee (Funding Tennessee Wildlife Resources Agency (TWRA), do not
Board). have specific investment policies that restrict their
investments.
The State Pooled Investment Fund is authorized by
statute to invest funds in accordance with policy The College Savings Plan (TNStars), a private-purpose
guidelines approved by the Funding Board. The current trust; the Achieving a Better Life Experience (ABLE TN)
resolution of the Funding Board gives the Treasurer fund, reported as part of Other private purpose trust
approval to invest in U.S. direct obligations, U.S. agency funds; the Defined Contribution Pension Plan Fund, a
securities, U.S. instrumentality securities, repurchase or pension trust fund; and the Deferred Compensation Plan
reverse repurchase agreements, collateralized certificates Fund and the Higher Education 403(b) Plan Fund,
of deposit in authorized state depositories, prime employee benefit trust funds; are authorized to invest in
commercial paper, prime bankers’ acceptances and commingled funds, mutual funds, fixed accounts and
securities lending agreements. Investments in derivatives self-directed brokerage accounts. The External
type securities and investments of high risk are Retirement Investment Fund, an investment trust fund,
prohibited. There are no limitations or restrictions on invest in commingled funds and private equities.
participant withdrawals with the exception of a 24-hour
notice for withdrawals exceeding $5 million.
66 Notes to the Financial Statements
State of Tennessee
As of June 30, 2021, the state’s investments for all funds were as follows (expressed in thousands):
POOLED INVESTMENT AND OTHER FUNDS INVESTMENTS
Other
private Employee Defined External Higher
State Funds College purpose Group Contribution Deferred Retirement Education
Investment Education Savings trust OPEB Pension Plan Compensation Investment 403(b) Plan
Credit Quality Rating SPIF TRGT ITIF Portfolios Fund COE Plan funds Trust Fund Plan Fund Fund Fund Total
AAA $ 116,112 $ 423,722 $ 57 $ 1,985 $ 541,876
AA 262,908 101 3,515 266,524
A 1,073,516 229 7,968 1,081,713
BBB 3,520,342 456 15,868 3,536,666
BB 448,696 16 550 449,262
B 154,965 154,965
CCC 66,637 66,637
CC 1,656 1,656
NR 9,653,574 4,130,842 898 31,266 $88,219 $9,637 $4,811,586 $348,718 $417,446 19,492,186
A1 (Commercial paper) 2,485,807 2,485,807
12,255,493 10,083,284 1,757 61,152 88,219 9,637 4,811,586 348,718 417,446 28,077,292
Government agencies
1
and obligations 6,914,708 7,323,162 $ 6,740 $ 73,573 2,170 75,582 14,395,935
Total debt investments 19,170,201 17,406,446 6,740 73,573 3,927 136,734 88,219 9,637 4,811,586 348,718 417,446 42,473,227
Non Fixed Income Assets
Equity 32,377,992 32,377,992
Equity mutual funds 765,968 298,784 170,112 14,801 $416,557 5,014,259 $394,778 528,380 7,603,639
Self-Directed Brokerage 7,294 $2,108 9,402
Accounts
Preferred stock 85,976 85,976
Real estate 5,111,807 40 5,111,847
Private equities 6,686,215 $3,742 6,689,957
Strategic lending 4,036,994 4,036,994
Derivatives (not rated) 394 394
Certificate of deposit
classified as short term 30,435 30,435
Short-term investment
fund at custodian (6,204) (6,204)
Less: short term (9,117,995) (890,871) (10,008,866)
Total investments $ 10,082,641 $ 64,808,749 $ 6,740 $ 73,573 $ 769,895 $ 435,518 $ 258,331 $ 24,438 $ 416,557 $ 9,833,139 $ 745,604 $ 3,742 $ 945,866 $ 88,404,793
Net noninvestment assets 1,034,474
Pool's net position² $ 65,843,223
1. Includes obligations of the US government or obligations explicitly guaranteed by the US government
2. This amount is the net position of TRGT whose audited financial reports can be obtained at www.treasury.tn.gov or calling (615) 741-2956.
Notes to the Financial Statements 67
State of Tennessee
Credit Risk investments and to transact with participants at a Stable
Credit risk is the risk that an issuer or other counterparty Net Asset Value. Additionally, the State had not
to an investment will not fulfill its obligations. Credit obtained or provided any legally binding guarantees to
quality ratings for the state’s investments in debt support the value of participant shares during the fiscal
securities as of June 30, 2021, are included in the year.
previous schedule. Securities are rated using Standard
and Poor’s and/or Moody’s and are presented above The TRGT, pursuant to Tennessee Code Annotated
using the Standard and Poor’s rating scale. State statutes (TCA) Title 8, Chapters 34-37, the TCRS Board and the
provide a process for financial institutions desiring to act State Treasurer as the Custodian are authorized to invest
as state depositories to be approved by the State the TRGT funds in the same manner as the funds of
Treasurer. Statutes also provide for the Commissioner of TCRS. TCRS’ investment policy specifies that bond
Financial Institutions to advise, on a timely basis, the issues subject for purchase are investment grade bonds
Treasurer and the Commissioner of Finance and rated by one of the Nationally Recognized Statistical
Administration of the condition of each state bank and Rating Organizations (NRSROs). There is no
state chartered savings and loan association, including his requirement to divest an asset if it is downgraded after
recommendations regarding its condition and safety as a purchase. For short-term investments, the TCRS’
state depository. Similar provisions apply to federally investment policy provides for the purchase of only the
chartered banks and savings and loan associations highest quality debt issues. Commercial paper should be
designated as state depositories. This process ensures rated in the highest tier by all rating agencies which rate
that institutions whose financial status is uncertain are the paper, with a minimum of two ratings required.
monitored for collateral sufficiency. All certificates of Commercial paper cannot be purchased if a rating agency
deposit are required by policy to be placed directly with has the commercial paper on a negative credit watch. The
state depositories. All repurchase agreements are done investment policy also requires preparation of a credit
with primary dealers in government securities which have analysis report on the corporation prior to purchasing
executed a master repurchase agreement with the state. commercial paper.
The SPIF’s investment policy requires a first tier quality The COE Trust’s investment policy states that the
criteria for the purchase of obligations of majority of investments should be placed in high quality
instrumentalities that are not fully guaranteed by the debt securities to produce adequate income with minimal
United States government. Prime banker’s acceptances risk. In addition, for short-term investments, the
must be issued by domestic banks with a minimum AA investment policy states that only the highest quality
long-term debt rating or foreign banks with a AAA long- short-term debt issues should be purchased.
term debt rating by a majority of the rating services that
have rated the issuer. The short-term debt rating must be The Education Fund’s state statute authorizes the
at least A1 or the equivalent by all of the rating services trustees to adopt an investment policy for the trust in
that rate the issuer. Commercial paper should be rated in accordance with the laws, policies and guidelines that
the highest tier by all rating agencies that rate the paper. govern investments by the Tennessee Consolidated
Commercial paper on a credit rating agency’s negative Retirement System. The trustees may issue other
credit watch list cannot be purchased under the SPIF’s directions further limiting such investments. The policy
investment policy. The policy requires that a credit also allows assets to be invested in shares of publicly
analysis report on the corporation be prepared prior to traded investment companies, including Unit Investment
acquisition of the commercial paper. Trusts (UIT’s), Exchange Traded Funds (ETF’s) and
open-end and closed-end mutual funds. In addition, it
The SPIF is not registered with the Securities and permits investment in publicly traded foreign securities
Exchange Commission (SEC) as an investment company. that are the same kinds, classes and investment grades
The State of Tennessee has not obtained a credit quality otherwise eligible for investment, and in non-investment
rating for the SPIF from a nationally recognized credit grade, fixed income securities, including but not limited
ratings agency. The SPIF is invested in a manner that to, high yield bonds.
meets the maturity, quality, diversification and liquidity
requirements set forth by GASB for external investment The ITIF is authorized by statute to invest funds in the
pools that elect to measure investments at amortized investment instruments specified under statutes for the
cost. The funds are limited to high quality obligations SPIF in accordance with the policy guidelines for the
with regulated maximum and average maturities, the ITIF as approved by the Funding Board. The current
effect of which is to minimize both market and credit policy of the Funding Board for the ITIF gives the
risk. The State Funding Board has elected for the SPIF Treasurer approval to invest funds in bonds, notes, and
to use amortized cost accounting measures to report
68 Notes to the Financial Statements
State of Tennessee
treasury bills of the United States or other obligations paper investments are limited to $250 million issued by
guaranteed as to principal and interest by the United any one issuer.
States or any of its agencies, obligations guaranteed as to
principal and interest by the federal home loan mortgage The TRGT is authorized to invest in securities in
corporation, federal national mortgage association, accordance with the investment policy of the TCRS. The
student loan marketing association and other United TCRS’ investment policy limits the maximum amount of
States government-sponsored corporations, prime securities in cash equivalents issued by any one issuer to
commercial paper, prime bankers’ acceptances, and $200 million, excluding those securities with the express
repurchase agreements for obligations of the United or implied backing of the United States government.
States or its agencies. State Fund Investment Portfolios is There are no other specific investment policies that limit
authorized to invest in obligations guaranteed by the US the investments of the TCRS, the COE Trust, the
government including bonds, notes, and US treasury College Savings Plan, the Education Fund or other State
bills. funds in any one issuer.
The College Savings Plan, the Other private purpose As of June 30, 2021, SPIF, Intermediate Term
trust fund, the Defined Contribution Pension Plan Fund, Investment Fund, and State Funds Investment Portfolios
the Deferred Compensation Plan Fund, and the Higher separately held investments in certain organizations
Education 403(b) Plan Fund seek to provide participants representing five percent (5%) or more of its total
with a prudent menu of investment options that is investments, excluding those organizations whose issues
diversified across a range of asset classes, risk levels and are explicitly guaranteed by the United States
investment strategies. These plans do not currently own government, and investments in mutual funds, external
specific fixed income securities but provide options to investment pools, and other pooled investments
invest in mutual funds that invest in fixed income (expressed in thousands):
securities. A fixed account will generally guarantee a
minimum rate of return or interest. Fixed accounts State Pooled Investment Fund (SPIF)
available through either a fixed or variable annuity Issuer Organization Carry Value Percentage
contracts and must have an issuer with long-term rating
of (or equivalent to) A+ or better as determined by a Federal Home Loan Bank $ 5,807,254 30.29
nationally recognized statistical rating agency. Fixed International Bank for Recon & Dev 1,506,154 7.86
accounts through a bank depository account must Federal Farm Credit Banks 2,436,512 12.71
provide participant-level FDIC protection. Self-directed
brokerage accounts (SDBA) are offered for flexibility to
participants who wish to take an active role selecting Intermediate Term Investment Fund (ITIF)
investment instruments not available as a direct Issuer Organization Fair Value Percentage
investment option in these plans. The State has no Federal Home Loan Bank $ 6,740 100.00
responsibility to review or assess the self-directed
brokerage account provider, brokerage window or the
State Funds Investment Portfolios
investment instruments available under a SDBA.
Issuer Organization Fair Value Percentage
Concentration of Credit Risk Federal National Mortgage Association $ 14,392 19.56
A concentration of investments in any one single issuer
of debt securities presents a greater risk for loss in the Interest Rate Risk
event the issuer fails on its obligations. An objective
Interest rate risk is the risk that future changes in
stated in the SPIF’s investment policy is that the
prevailing market rates of interest will have an adverse
investment portfolio will be diversified to avoid incurring
effect on the fair value of debt investments. The fair
unreasonable and avoidable risks regarding specific
values of securities with long terms to maturity may be
security types or individual financial institutions.
highly sensitive to interest rate changes. The SPIF’s
Acquisitions are monitored by policy to assure that no
investment policy with respect to maturity states that the
more than five percent (5%) of the pool, at the date of
weighted average maturity of the pool shall not exceed
acquisition, is invested in a single issuer of securities.
sixty (60) days calculated using Maturity Shortening
Additionally, no issuer of a demand feature or guarantee
Features for securities with a variable or floating interest
will exceed ten percent (10%) at the date of acquisition.
rate. The weighted average life of the SPIF cannot
These limits shall not apply to U.S. Government
exceed one hundred twenty (120) days calculated using
Securities. In addition, the SPIF’s investment policy
Stated Maturity and without using Maturity Shortening
limits the book value of prime banker’s acceptances to
Features. No security or investment may be purchased
$25 million issued by any one issuer. Prime commercial
with a remaining maturity of greater than three hundred
ninety-seven (397) calendar days. At June 30, 2021, the
Notes to the Financial Statements 69
State of Tennessee
weighted average maturity of the pool was forty-four (44)
Intermediate Term Investment Fund Weighted Average
days and the weighted average life of the pool was fifty- Maturity
one (51) days. It is the intent of the Funding Board that Weighted
the fair value of the SPIF not deviate more than one-half Average
percent (0.5%) from amortized cost. If it does, actions Deposit/Investment Type Fair Value Maturity (Years)
may include, but not be limited to, selling securities U.S. Government Agencies $ 6,740 2.64
whose fair value substantially deviates from amortized
cost, and investing in securities with ninety (90) days or
The TRGT is authorized to invest in securities in a
less to maturity.
manner consistent with the investment policy of the
TCRS. TCRS' investment policy does not specifically
As of June 30, 2021, the combined SPIF portfolio and
address limits on investment maturities.
other state cash deposits and investments had the
following weighted average maturities (expressed in
thousands): Tennessee Retiree Group Trust
Debt Investments
State Pooled Investment Fund Weighted Average June 30, 2021 (expressed in thousands)
Maturity Effective Duration
Investment Type Fair Value (Years)
Weighted
Debt Investments:
Average
Maturity Government Fixed Income
Deposit/Investment Type Carry Value (Months) Government Agencies $ 112,322 1.16
U.S. Government Agencies $ 9,769,686 1.84 Government Bonds 5,792,428 15.93
U.S. Government Treasuries 6,914,708 1.50 Government Inflation Indexed 90,897 4.13
Commercial paper 2,485,807 1.30 Government Mortgage-Backed 3,885,868 4.45
Government Asset-Backed 94,420 5.84
The ITIF’s investment policy with respect to maturity Municipal Bonds 66,577 14.43
states that the dollar weighted average maturity of the Corporate Fixed Income
Fund shall not exceed three (3) years, and that no security Commercial Mortgage Backed 523,050 1.99
will be bought with a remaining life of over five (5) years.
Asset Backed Securities 1,107,614 1.07
The maximum time period from the date of acquisition
to maturity of government or agency securities may not Corporate Bonds 4,741,233 10.47
exceed five (5) years. Prime commercial paper, including Short Term
asset-backed commercial paper, shall not have a maturity Commercial Paper 94,962 0.00
that exceeds two hundred seventy (270) days. Individual Short Term Bills and Notes 897,075 0.00
repurchase agreement transactions shall not have a Total Debt Investments $ 17,406,446
maturity that exceeds ninety (90) days. Prime banker’s
acceptances must have an original maturity of not more
than two hundred seventy (270) days to be eligible for The investment policy for the COE Trust states that the
purchase, with the intent to hold to maturity, however, maturity of its debt securities may range from short-term
they may be traded in the secondary market to maintain instruments, including investments in the State Pooled
liquidity. Investment Fund, to long-term bonds, with
consideration of liquidity needs. However, the policy
As of June 30, 2021, the Intermediate Term Investment does not specifically address limits on investment
Fund had the following weighted average maturities maturities. The fixed income portfolio is benchmarked
(expressed in thousands): against the Barclays Aggregate Index and tends to have a
duration within a range around that index.
70 Notes to the Financial Statements
State of Tennessee
Chairs of Excellence products for participants to select. Participants select
Debt Investments investment products that best suit their investment
June 30, 2021 (expressed in thousands) needs. These programs have no specific investment
policy limiting their investment choices based on interest
Effective rate risk.
Duration
Investment Type Fair Value (Years)
College Savings Plan
Debt Investments
Debt Investments
U.S. Government
U.S. Government Treasuries $ 33,533 10.21 June 30, 2021 (expressed in thousands)
U.S. TIPS 37,704 7.71 Effective
U.S. Agencies 1,938 3.77 Duration
Government Mortgage-Backed 28,931 4.60 Fund Name Blended Fair Value (Years)
Government Asset-Backed 2,774 4.51 Investment in Mutual Funds
Municipal Bonds 488 1.27 (Fixed) $ 66,020 7.57
Corporate Fixed Income Investment in Mutual Funds
Corporate Mortgage-Backed 1,036 2.96 (Blended) 22,199 7.96
Corporate Bonds 25,514 4.35 Total Debt Investments $ 88,219
Corporate Asset-Backed 4,816 0.61
Total Debt Investments $136,734
Other private purpose trust
Debt Investments
The investment policy of the Education Fund authorizes June 30, 2021 (expressed in thousands)
the trustees to adopt an investment policy for the trust in Effective
accordance with the laws, policies, and guidelines that Duration
govern investments by the TCRS. The TCRS investment Fund Name Blended Fair Value (Years)
policy does not specifically address limits on investment
Investment in Mutual Funds
maturity. (Fixed) $ 2,586 7.04
Investment in Mutual Funds
Education Fund (Blended) 7,051 7.96
Debt Investments Total Debt Investments $ 9,637
June 30, 2021 (expressed in thousands)
Effective
Duration Defined Contribution Pension Plan Fund
Investment Type Fair Value (Years) Debt Investments
June 30, 2021 (expressed in thousands)
Debt Investments
U.S. Government Effective
U.S. Government Treasuries $ 963 10.21 Duration
Fund Name Blended Fair Value (Years)
U.S. TIPS 1,082 7.71
U.S. Agencies 56 3.77
Investment in Mutual Funds
(Fixed) $ 2,134,367 9.95
Government Mortgage-Backed 831 4.60
Investment in Mutual Funds
Government Asset-Backed 80 4.51 (Blended) 2,677,219 7.58
Municipal Bonds 14 1.27 Total Debt Investments $ 4,811,586
Corporate Fixed Income
Corporate Mortgage-Backed 30 2.96
Corporate Bonds 733 4.35
Corporate Asset-Backed 138 0.61
Total Debt Investments $ 3,927
The College Savings Plan, the Other private purpose
trust fund, the Defined Contribution Plan Fund, the
Deferred Compensation Plan Fund, and the Higher
Education 403(b) Plan Fund provide investment
Notes to the Financial Statements 71
State of Tennessee
Deferred Compensation Plan Fund Total Fixed
Debt Investments Currency Fair Value Income Equity Cash
June 30, 2021 (expressed in thousands) Australian Dollar $ 426,509 $ 426,385 $ 124
British Pound Sterling 1,586,369 1,583,016 3,353
Effective
Duration Canadian Dollar 1,457,802 1,456,641 1,161
Fund Name Blended Fair Value (Years) Danish Krone 356,774 356,773 1
Investment in Mutual Funds Euro Currency 3,097,399 3,096,050 1,349
(Fixed) $ 174,893 6.39
Hong Kong Dollar 235,445 235,441 4
Investment in Mutual Funds
(Blended) 173,825 7.12 Japanese Yen 1,713,501 1,711,715 1,786
New Israeli Shekel 9,157 9,157
Total Debt Investments $ 348,718
New Zealand Dollar 8,540 8,538 2
Norwegian Krone 59,253 59,252 1
Higher Education 403(b) Plan Fund Singapore Dollar 105,222 105,127 95
Debt Investments
Swedish Krona 255,629 255,596 33
June 30, 2021 (expressed in thousands) Swiss Franc 795,949 $ 585 795,360 4
Effective Total $ 10,107,549 $ 585 $ 10,099,051 $ 7,913
Duration
Fund Name Blended Fair Value (Years)
Investment in Mutual Funds Derivatives
(Fixed) $ 342,896 12.35 The TRGT may buy or sell fixed income and equity
Investment in Mutual Funds index futures contracts for the purposes of making asset
(Blended) 74,550 8.05
allocation changes in an efficient and cost effective
Total Debt Investments $ 417,446 manner and to improve liquidity. Gains (losses) on
equity index futures hedge losses (gains) produced by any
deviation from the TRGT’s target equity allocation. The
The State Funds Investment Portfolio has no investment
gains and losses resulting from daily fluctuations in the
policy limiting their investment choice based on maturity
fair value of the outstanding futures contract are settled
of the assets.
daily, on the following day, and a receivable or payable is
established for any unsettled gain or loss as of the
State Funds Investment Portfolio financial statement date. As of June 30, 2021, the TRGT
Debt Investments was under contract for fixed income and equity index
June 30, 2021 (expressed in thousands) futures and the resulting receivable is reflected in the
financial statements at fair value.
Effective
Duration
Investment Type Fair Value (Years)
The TRGT is authorized to invest in To Be Announced
(TBA) mortgage backed securities similar to the foreign
U.S. Government Treasuries $ 38,195 6.20
currency forward contracts. The TRGT enters into an
Government Mortgage-
35,378 26.77
agreement to purchase pools of mortgage backed
Backed
securities prior to the actual security being identified.
The TRGT will roll this agreement prior to settlement
Foreign Currency Risk date to avoid taking delivery of the security. Any
Foreign currency risk is the risk that changes in exchange unrealized gain on TBA mortgage backed securities has
rates will adversely affect the fair value of an investment been reflected in the financial statements as an
or deposit. The TRGT is authorized to invest in investment. Any unrealized loss on TBA mortgage
securities in accordance with the investment policy of the backed securities has been included in the payable
TCRS. The TCRS' investment policy limits the asset established for mortgages. The notional amounts of
allocation for international investments to twenty-five these agreements have been included in the financial
percent of total assets. The TRGT's exposure to foreign statements as a receivable and a payable.
currency risk at June 30, 2021, was as follows (expressed
in thousands): The TRGT invests in the derivatives to adjust its
exposure to mortgage coupon risk and to replicate the
return on mortgage backed securities portfolios without
actually purchasing the security.
72 Notes to the Financial Statements
State of Tennessee
The fair value balances and notional amounts of derivative instruments for the year ended as reported in
derivative instruments outstanding at June 30, 2021, the financial statements are as follows (expressed in
classified by type, and the changes in fair values of such thousands):
Changes in Fair Value Fair Value at June 30, 2021
Financial Financial
Statement Statement Notional
Classification Amount Classification Amount Amount
Investment Derivative
Future Contracts Income $ 24,617 Instruments Receivable $ 2,954 $ 1,537,238
TBA Mortgage-Backed Investment Derivative
Securities Income $ 394 Instruments $ 394 $ 190,388
Custodial Credit Risk The TRGT securities lending program is managed by a
Custodial Credit Risk for deposits is the risk that in the third party lending agent, Deutsche Bank AG. The
event of a bank failure, the TRGT’s deposits may not be TRGT may loan any debt or equity securities which is
returned to TRGT. The TRGT does not have an explicit owned by TRGT. TRGT’s securities lending agent
policy with regards to Custodial Credit Risk for deposits. manages the average maturities of securities on loan
As of June 30, 2021, the TRGT had uninsured and against the average maturities of securities on collateral
uncollateralized cash deposits of $7.9 million in foreign invested. The maturity gap has a limit of 33 days. This is
currency held by our master custodian, State Street, in monitored by investment staff on a periodic basis to
State Street’s name. These deposits were used for ensure compliance. At June 30, 2021 the TRGT had the
investments pending settlement. following securities on loan and received the cash
collateral (expressed in thousands) as shown below:
The Insurance Receivership fund does not have an
explicit policy with regards to Custodial Credit Risk for Fair Value of
deposits. As of June 30, 2021, the Insurance Securities on Cash Collateral
Receivership fund had uninsured and uncollateralized Securities on Loan Loan Received
cash deposits of $1.2 million at various institutions. Fixed $ 1,400,887 $ 1,427,713
Equity 1,692,903 1,725,321
Securities Lending
Total $ 3,093,790 $ 3,153,034
The TRGT is authorized to invest in securities in
accordance with the investment policy of the TCRS.
TCRS is authorized to invest in securities lending The TRGT has the ability to sell the collateral securities
investments by Tennessee Code Annotated (TCA) 8-37- only in the case of a borrower default.
104(a)(6) with the terms established in the investment
policy whereby TRGT loans securities to brokers and
dealers (borrower) and in turn, TRGT receives cash or
securities as collateral. TRGT pays the borrower interest
on the collateral received and invests the collateral with
the goal of earning a higher yield than the interest rate
paid to the borrower. Loans are limited to no more than
thirty percent (30%) of the market value of the total
assets in the TRGT portfolio and provided further that
such loans are secured by collateral.
Securities received as collateral hereunder shall have a
market value equal to at least one hundred two percent
(102%) of the market value of the loaned domestic
security or one hundred five percent (105%) of any
foreign security. Cash received as collateral shall equal at
least one hundred percent (100%) of the market value of
the loaned securities and may be invested by or on behalf
of the TRGT in any instrument the TRGT may be
directly invested.
Notes to the Financial Statements 73
State of Tennessee
B. Component Units funds, can be invested in equity securities and various
other securities given prudent diversification.
The various component units are generally governed by
the same state statutes as the state’s policies described Credit Risk
above. The University has no investment policy limiting its
investment choice based on ratings issued by nationally
1. University of Tennessee recognized statistical rating agencies. The University’s
The University is authorized by statute to invest funds in securities are rated by Moody’s. As of June 30, 2021, the
accordance with the University’s investment policies. University’s investments were rated as follows (expressed
Funds, other than endowment, annuity, and life income in thousands):
Credit Quality Rating
Rated Debt Fair US Treasury 1/
Instruments Value Agency P-1* Aaa Aa1
U.S. Treasuries $ 244 $ 244
U.S. Treasuries (in pool) 243,608 243,608
U.S. Agencies 20 $ 20
U.S. Agencies (in pool) 942,975 39,849 $398,958 144,646
Commercial Paper (in pool) 142,991 $142,991
Corporate Bonds 185
Mutual Funds – Bonds 100,032 4
Money Market Mutual Funds 712
Total $ 1,430,767 $ 283,701 $ 142,991 $ 398,962 $ 144,666
(Continued) Credit Quality Rating
Rated Debt
Instruments Aa2 A1 A2 Baa1 Baa2
U.S. Treasuries
U.S. Treasuries (in pool)
U.S. Agencies
U.S. Agencies (in pool)
Commercial Paper (in pool)
Corporate Bonds $ 27 $ 85
Mutual Funds – Bonds $ 46,793 $ 40,071 8,124 1,178
Money Market Mutual Funds
Total $ 46,793 $ 40,071 $ 8,124 $ 27 $ 1,263
(Continued) Credit Quality Rating
Rated Debt
Instruments Baa3 Ba2 B2 Unrated
U.S. Treasuries
U.S. Treasuries (in pool)
U.S. Agencies
U.S. Agencies (in pool) $ 359,522
Commercial Paper (in pool)
Corporate Bonds $ 73
Mutual Funds – Bonds $ 1,916 1,946
Money Market Mutual Fund 712
Total $ 73 $ 1,916 $ 1,946 $ 360,234
* Sho rt -t erm rat ing s fro m M o o d y's
1. Includ es o b lig at io ns o f t he U.S. g o vernment o r o b lig at io ns exp licit ly g uarant eed b y t he U.S. g o vernment .
74 Notes to the Financial Statements
State of Tennessee
Interest Rate Risk
The University does not have a formal policy that addresses interest rate risk. As of June 30, 2021, the University had
the following debt investments and maturities (expressed in thousands):
Investment Maturities (in years)
Fair Less More Than
Investment Type Value Than 1 1 to 5 6 to 10 10
U.S. Treasuries $ 244 $ 244
U.S. Treasuries (in pool) 243,608 $ 89,937 $ 145,221 8,450
U.S. Agencies 20 20
U.S. Agencies (in pool) 942,975 $ 226,455 547,214 139,216 30,090
Commercial Paper (in pool) 142,991 142,991
Corporate Bonds 185 27 158
Bond Mutual Funds 100,032 4 42,301 56,190 1,537
$ 1,430,055 $ 369,450 $ 679,479 $ 340,647 $ 40,479
University foundations’ investments in the amount of partnership or manager of each corporate entity using
$303.865 million are not included in these disclosures various valuation techniques.
because the foundations utilize private-sector accounting
standards. 2. State University and Community College System
Credit Risk
Foreign Currency Risk The System is authorized by statute to invest funds in
Foreign currency risk is the risk that changes in exchange accordance with the State University and Community
rates will adversely affect the fair value of a deposit or College System’s investment policies. Under the current
investment. The university has $3.026 million invested in policy, funds other than endowments may be invested
foreign corporate equities at June 30, 2021. only in obligations of the United States or its agencies
which are backed by the full faith and credit of the
Alternative Investments United States, repurchase agreements for United States
In its Consolidated Investment Pool, as part of its securities, certificates of deposit in banks and savings and
endowment assets, the University has investments in one loan associations, banker's acceptances, commercial
hundred eighteen limited partnerships, limited paper, money market mutual funds and the State of
companies, trusts, corporations, and limited liability Tennessee Local Government Investment Pool. The
corporations. At June 30, 2021, the estimated fair value policy requires that investments of endowments in equity
of these assets is $597.296 million. These investments securities be limited to funds from private gifts or other
are not readily marketable, therefore, the estimated fair sources external to the System and that endowment
value is subject to uncertainty and may differ from the investments be prudently diversified. The System has no
value that would have been used had a ready market formal investment policy that limits its investment
existed; such differences could be material. The choices based on ratings issued by rating agencies. As of
University’s investment policy permits investment in June 30, 2021, debt investments of the System and its
various asset classes, such as these alternative foundations (that utilize governmental accounting
investments, to ensure portfolio diversity. The fair values standards) were rated by Standard and Poor’s as follows
were estimated by the general partner of each limited (expressed in thousands):
Credit Quality Rating
U.S.
Treasury ₁/
Rated Debt Instruments Fair Value Agency AAA AA A BBB BB B CCC Not Rated
U.S. Treasuries $ 106,187 $ 106,187
U.S. Agencies 179,021 127 $ 178,894
Corporate Bonds 18,680 $ 338 1,596 $ 9,475 $ 7,271
Mutual Funds—Bonds 65,406 1,980 537 1,937 12,307 $ 1,794 $ 211 $ 67 $ 46,573
Other -
Total Debt Instruments $ 369,294 $ 106,314 $ 2,318 $ 181,027 $ 11,412 $ 19,578 $ 1,794 $ 211 $ 67 $ 46,573
1. Includes obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government.
Notes to the Financial Statements 75
State of Tennessee
Interest Rate Risk
The System does not have a formal investment policy that limits investment maturities as a means of managing its
exposure to interest rate risk. As of June 30, 2021, debt investments and maturities of the system and its foundations
(that utilize governmental accounting standards) follow (expressed in thousands):
Investment Maturities (in years)
Fair Less More Than
Investment Type Value Than 1 1 to 5 6 to 10 10 Undetermined
U.S. Treasuries $106,187 $ 1,835 $101,724 $ 2,628
U.S. Agencies 179,021 26,920 142,774 6,849 $ 2,478
Corporate Bonds 18,680 2,576 8,878 7,094 132
Mutual Funds—Bonds 65,406 466 5,094 12,483 1,373 $ 45,990
Other 0
Total Debt Investments $369,294 $ 31,797 $258,470 $29,054 $ 3,983 $ 45,990
The investments of certain foundations of the System are resulting from over concentration of assets in a specific
not included in these disclosures because these maturity, a specific issuer, or a specific class of securities.
foundations utilize private-sector accounting standards. The Agency may invest 100 percent of its portfolio in
These foundations reported investments at fair value in U.S. government securities due to the absence of credit
the amount of $417.077 million. risk. A minimum of five percent of the daily fair market
value of total investments must mature within five years.
3. Tennessee Housing Development Agency No more than 50 percent of the daily fair market value of
(THDA) the combined portfolios can be invested in maturities
The Agency is authorized to establish policies for its greater than 15 years without approval of the Bond
funds to meet the requirements of bond resolutions and Finance Committee.
state statute. Funds are invested similarly to state
policies. Credit Risk
The Agency’s investments as of June 30, 2021, were rated
The Agency’s investment policy states that its portfolios by Standard and Poor’s and/or Moody’s as follows
will be diversified in order to reduce the risk of loss (expressed in thousands):
Credit Quality Rating
U.S.
Treasury ₁/
Rated Debt Instruments Fair Value Agency AA Not Rated²
U.S. Agency Coupon $ 136,216 $ 136,216
U.S. Treasury Coupon 6,221 $ 6,221
U.S. Agency Discount 289,986 $ 289,986
Total Debt Instruments $ 432,423 $ 6,221 $ 136,216 $ 289,986
1. Includes obligations of the U.S. government or obligations explicitly
guaranteed by the U.S. government.
2. Includes securities that are implicitly guaranteed by the U.S. government,
but are not rated by S&P or Moody's.
76 Notes to the Financial Statements
State of Tennessee
Concentration of Credit Risk Interest Rate Risk
At June 30, 2021, more than 5 percent of the Agency’s As of June 30, 2021, the Agency had the following debt
investments are invested in the following single issuers investments and effective duration (expressed in
(expressed in thousands): thousands):
Issuer Fair Value Percentage Effective
Duration
Federal Home Loan Bank $ 346,372 80.10 Investment Type Fair Value (Years)
U.S. Agency Coupon $ 136,216 0.691
Federal Home Loan
U.S. Treasury Coupon 6,221 1.985
Mortgage Corporation 38,448 8.89
U.S. Agency Discount 289,986 0.098
Federal National Mortgage Total $ 432,423
Association 41,383 9.57
NOTE 6
Fair Value Measurements
A. Primary Government
The fair value of assets held at June 30, 2021, represents the price that would be received were the asset to be sold or the
liability transferred in an orderly transaction between market participants. Assets held are categorized for fair value
measurement within the fair value hierarchy established by Generally Accepted Accounting Principles (GAAP). The
hierarchy is based on the valuation inputs used to measure the fair value of the asset and gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest
priority to unobservable inputs (Level 3 measurements).
Notes to the Financial Statements 77
State of Tennessee
Investments Measured at Fair Value
(expressed in thousands)
GAAP GAAP GAAP
Investment Hierarchy Hierarchy Hierarchy Total
Fund Aggregation Level 1 Level 2 Level 3 NAV Investments
Tennessee Retiree Government Agencies $ 112,322 $ 112,322
Group Trust Government Bonds $ 5,672,842 119,586 5,792,428
Government Inflation
Indexed 90,897 90,897
Government Mortgage
Backed 3,868,730 $ 17,138 3,885,868
Government Asset Backed 74,232 20,188 94,420
Municipal Bonds 58,472 8,105 66,577
Commercial Mortgage
Backed 328,395 194,655 523,050
Commercial Paper 94,962 94,962
Corporate Asset Backed
Securities 393,853 713,761 1,107,614
Corporate Bonds 4,724,114 17,119 4,741,233
Corporate Equities 32,335,477 42,515 32,377,992
Preferred Stocks 53,123 $32,841 12 85,976
Limited Partnership Units 1,076,213 $ 9,646,996 10,723,209
Real Estate 3,152,911 1,958,896 5,111,807
Derivatives 394 394
Education Fund Mutual Funds 765,968 765,968
Government Agencies 56 56
Government Asset Backed 55 25 80
Government Bonds 929 34 963
Government Mortgage Backed 831 831
Government Inflation Indexed 1,046 36 1,082
Municipal Bonds 14 14
Corporate Mortgage Backed 30 30
Corporate Asset Backed 110 28 138
Corporate Bonds 733 733
Chairs of Excellence Exchange Traded Funds 298,784 298,784
Government Agencies 1,938 1,938
Government Asset Backed 1,907 867 2,774
Government Bonds 32,363 1,170 33,533
Government Mortgage Backed 28,931 28,931
Government Inflation Indexed 36,438 1,266 37,704
Municipal Bonds 488 488
Corporate Mortgage Backed 1,036 1,036
Corporate Asset Backed 3,844 972 4,816
Corporate Bonds 25,514 25,514
Employee Group
OPEB Trust Mutual Funds 416,557 416,557
College Savings Plans Mutual Funds 192,311 66,020 258,331
Other private purpose
trust fund Mutual Funds 21,852 2,586 24,438
Intermediate Term
Investment Fund Agency Securities 6,740 6,740
Defined Contribution
Pension Plan Fund Mutual Funds 7,501,337 2,331,802 9,833,139
Deferred Compensation
Plan Fund Mutual Funds 546,168 199,436 745,604
Higher Education
403(b) Plan Fund Mutual Funds 595,829 350,037 945,866
State Fund Investment Government Bonds 38,195 38,195
Portfolios Government Mortgage Backed 35,378 35,378
External Retirement
Investment Fund 3,742 3,742
Total Investments $ 48,600,116 $ 12,867,893 $ 5,244,509 $ 11,609,634 $ 78,322,152
78 Notes to the Financial Statements
State of Tennessee
Level 1−Unadjusted quoted prices for identical assets or in active markets that can be accessed at the
liabilities in active markets that can be accessed at the measurement date. Debt and debt derivative securities
measurement date. classified in Level 2 are valued using a bid-ask spread
price from multiple independent brokers, dealers, or
Level 2−Quoted prices for similar assets or liabilities in market principals, which are known to be actively
active markets; quoted prices for identical or similar involved in the market. Level 3 debt securities are valued
assets or liabilities in markets that are not active; assets or using proprietary information, a single pricing source, or
liabilities that have a bid-ask spread price in an inactive other unobservable inputs related to similar assets or
dealer market, brokered market and principal-to-principal liabilities.
market; and Level 1 assets or liabilities that are adjusted.
Real estate investments classified in Level 3 are valued
Level 3−Valuations derived from valuation techniques in using the last valuations provided by external investment
which significant inputs are unobservable. advisors or independent external appraisers. Generally, all
direct real estate investments are appraised by a qualified
Investments where fair value is measured using the Net independent appraiser(s) with the professional
Asset Value (NAV) per share have no readily designation of Member of the Appraisal Institute
determinable fair value and have been determined to be (“MAI”), or its equivalent, every three (3) years beginning
calculated consistent with FASB principles for from the acquisition date of the property. The appraisals
investment companies. are performed using generally accepted valuation
approaches applicable to the property type.
Where inputs used in the measurement of fair value fall
into different levels of the hierarchy, fair value of the Investments in private mutual funds, traditional private
instrument in its entirety are categorized based on the equity funds, strategic lending funds and real estate funds
lowest level input that is significant to the valuation. This that report using GAAP, the fair value, as well as the
assessment requires professional judgement and as such unfunded commitments, was determined using the prior
management developed a fair value committee that quarter’s NAV, as reported by the fund managers, plus
worked in conjunction with our custodian and the current cash flows. These assets were then
investment professionals to make these valuations. All categorized by investment strategy. In instances where
assets held were valued individually and aggregated into the fund investment reported using non-GAAP
classes so to be represented in the table above. standards, the investment was valued using the same
method, but was classified in Level 3.
Short-term securities generally include investments in
money market-type securities reported at cost plus Commingled fixed income funds are pooled investments
accrued interest. in multiple debt-type securities, which are valued at
NAV. The NAV for the commingled fixed income
Equity and equity derivative securities classified in Level funds is calculated using the closing price of the
1 are valued using last reported sales prices quoted in underlying investments.
active markets that can be accessed at the measurement
date. Equity and equity derivative securities classified in The following table sets forth the additional disclosures
Level 2 are securities whose values are derived daily from of the TRGT’s and the External Retirement Investment
associated traded securities. Equity securities classified in Fund’s investments, which are stated at fair value based
Level 3 are valued with last trade data having limited on the NAV (expressed in thousands), as a practical
trading volume. expedient, reported by the investment managers or
general partners:
US Treasury Bill, Bonds, Notes and Futures classified in
Level 1 are valued using last reported sales prices quoted
Investments measured Number of Redemption Redemption
Strategy NAV Remaining Life
at NAV Funds Terms Restrictions
Various transfer
Traditional private equity
Limited Partnership 169 $ 9,646,996 Various N/A and sale
and strategic lending
restrictions
Various transfer
Real Estate Limited Real Estate Commingled
38 1,958,896 N/A N/A and sale
Partnerships Investments
restrictions
Various transfer
Limited Partnerships Traditional Private Equity 5 3,742 Various N/A and sale
restrictions
Notes to the Financial Statements 79
State of Tennessee
Traditional Private Equity and Strategic Lending: Real Estate Commingled Investments: The real
The private equity asset class is categorized into two estate asset class is comprised of two different
component portfolios: traditional and strategic lending. investment types: direct investments and commingled
Generally speaking, the types of private equity strategies investments. A commingled investment is a pooled
include: venture capital, buyout, natural resource, investment vehicle comprised of real estate investments
secondaries, special situations, tactical, structured credit, that is overseen by an external investment manager or
and high yield debt. The majority of these investments general partner. Generally speaking, the commingled real
have an approximate life of 10 years or greater and are estate investment strategies include: office, retail,
considered illiquid. During the life of the partnerships, industrial, multi-family, and diversified. The majority of
distributions are received as underlying partnership these investments have an approximate life of 10 years or
investments are realized. Transfer or sales of the greater and are considered illiquid. During the life of the
partnership interest are restricted over the life of the pooled investment vehicle, distributions are received as
partnership. The TRGT has no plans to liquidate any of underlying investments are realized. Transfer or sales of
these investments. In addition, the state holds limited the interest are restricted over the life of the investment.
partnership units for the External Retirement Investment The TRGT has no plans to liquidate any of these
Fund. These assets are held until maturity at which time investments.
the proceeds are invested into TRGT.
80 Notes to the Financial Statements
State of Tennessee
B. Component Units
University of Tennessee
The university categorizes its fair value measurements within the fair value hierarchy established by generally accepted
accounting principles. The university has the following recurring fair value measurements as of June 30, 2021 (expressed
in thousands):
Fair Value Measurements Using
Quoted Prices Significant Significant
in Active Markets Other Unobservable
for Identical Observable Inputs
Investments and other assets by fair value level 6/30/2021 Assets (Level 1) Inputs (Level 2) (Level 3)
Debt securities
U.S. Treasuries $ 254,604 $ 10,996 $ 243,608
U.S. Agencies 942,994 942,994
Corporate bonds 185 185
Corporate commercial paper 142,991 $ 142,991
Total debt securities 1,340,774 10,996 1,186,787 142,991
Corporate stock
Domestic 33,872 33,872
International 3,026 3,026
Total equity securities 36,898 36,898
Pooled investment vehicles (ETFs; Open-end funds
with published and non-published values)
Equity 234,525 233,428 1,097
Bonds 59,960 59,406 550 4
Real Estate 21,549 21,549
Total pooled investment vehicles 316,034 314,383 550 1,101
Real estate gifts 2,774 2,774
Assets held by others 7,894 7,894
Other assets 18,073 18,073
Private capital investments
Private equities 202,993 202,993
Private credit/debit 53,399 53,399
Private real assets 123,884 123,884
Private, other 6,454 6,454
Total private capital investments 386,730 386,730
Investments measured at the Net Asset Value (NAV)
Pooled investment vehicles (other open-end funds) 486,816
Limited partnerships 118,496
Hedge funds, long/short equity 86,688
Hedge funds, credit 21,012
Hedge funds, diversified 81,317
Total investments measured at NAV 794,329
Total investments and cash equivalents $ 2,903,506
Debt securities−The fair value of the majority of the Level 3 inputs. The university utilizes third-party pricing
debt securities category at June 30, 2021, was determined services and guidance provided by custodians and trading
based on Level 1, Level 2 and Level 3 inputs. The fair counterparties for fair value estimates of these
value of U.S. Treasury and Agency securities, as well as investments. In addition, it takes into account the nature
corporate bonds was based on Level 1 and Level 2 of the securities, trading activity, and availability of
inputs. Commercial paper holdings were valued using comparable securities in the marketplace.
Notes to the Financial Statements 81
State of Tennessee
Corporate stock–This category is comprised of Private capital investments–The fair value of the
common stock and preferred stock, the majority of private capital category at June 30, 2021, was determined
which are based on Level 1 inputs. This includes both based on Level 3 inputs. These investments center on
domestic and international holdings. three primary categories, private equity which invests in
private companies; private credit/debt which lends
Pooled investment vehicles–These investment directly to companies or invests in distressed debt; and
categories include exchange-traded funds (ETFs), real assets which invests in inflation-hedging strategies
exchange-traded closed-end funds, and two categories of and assets. Valuation methods such as the income
open-end funds, those with published values and other method and/or multiple analysis are examples of those
commingled vehicles that do not produce public, commonly utilized by managers to determine the fair
published values. These investments for which reliable value of these assets and are typically unobservable to the
values are available are categorized as Level 1. Assets for university. The university’s private capital investments
which no published values exist are measured at net asset have $210.525 million of unfunded commitments at June
value per share (or its equivalent), which is a fair value 30, 2021.
measurement provided on a recurring basis. Pooled
investment vehicles implement a variety of strategies that Hedge funds–Like certain pooled investment vehicles,
are primarily net long or long-only and invest in a variety hedge funds are measured at net asset value per share (or
of markets, including the global equity markets; sovereign its equivalent), provided to investors on a recurring basis.
debt, corporate bonds, and structured credits; and finally, These holdings are divided into three sub-categories.
real estate. The first is long/short equity, a strategy that typically
invests in common stock by both buying shares and
Real estate gifts-Level 3 inputs were utilized for the fair selling shares short. These strategies work across the
value calculations of this investment category. It global equity markets. The second category, entitled
contains direct real estate holdings of $2.774 million, the credit, focuses almost exclusively on fixed income
valuation of which is determined by periodic appraisals. instruments, which can include various types of bonds,
derivatives, and loans. These strategies also invest in
Assets held by others-This category consists of multiple jurisdictions around the world. The final
separately invested portfolios of $7.894 million. These category, diversified, is comprised of strategies that often
are managed externally for the benefit of the university, overlap in approach and frequently employ more than
and pricing is provided by third parties. one strategy within a single vehicle.
Net asset value (NAV) investments general redemption terms
The table below provides a summary of the liquidity terms and conditions of those investments with value measured
using net asset value (expressed in thousands):
Unfunded Redemption Redemption
Hedge Funds NAV Commitments Frequency Notice Period
Open-end funds $ 486,816 daily, quarterly 1 day- 45 days
Hedge funds, long/short equity 86,688 quarterly, annually 5 days- 90 days
Hedge funds, credit 21,012 annually 90 days -120 days
Hedge funds, diversified* 81,317 quarterly, semi-annually 60 days- 90 days
Limited partnerships 118,496 9,928 none, monthly, quarterly 30 days- 90 days
*At fiscal year-end, $18,256,809.81 of NAV investments were still within the initial lock-up period of two
years, with six months remaining and another $11,025,630.61 with eighteen months remaining. An
additional $16,017,650.00 was still within an initial lock-up period of three years, with fifteen months
remaining.
82 Notes to the Financial Statements
State of Tennessee
State University and Community College System
The system categorizes its fair value measurements within the fair value hierarchy established by generally accepted
accounting principles. The system has the following recurring fair value measurements as of June 30, 2021 (expressed in
thousands):
Fair Value Measurements Using
Quoted Prices Significant Significant
in Active Markets Other Unobservable
for Identical Observable Inputs
Investments by fair value level 6/30/2021 Assets (Level 1) Inputs (Level 2) (Level 3)
Debt securities
U.S. Treasuries $ 106,187 $ 104,403 $ 1,784
U.S. Agencies 179,021 64,420 114,601
Corporate bonds 18,680 11,544 7,136
Mutual bond funds 22,454 22,116 338
Other 9,419 8,730 689
Total debt securities 335,761 211,213 124,548
Equity securities
Corporate stock 481 481
Mutual equity funds 100,885 100,873 12
Real estate 4,678 $ 4,678
Equity REITs 1,561 1,561
Other 7,511 6,373 1,138
Total equity securities 115,116 109,288 12 5,816
Investments measured at the Net Asset Value (NAV)
Mutual bond funds 42,953
Mutual equity funds 133,039
Equity REITs 66
Private equities 9,025
Hedge funds 14,185
Natural resources 1,428
Other 848
Total investments measured at NAV 201,544
FASB foundations' investments at fair value 370,171 279,682 41,538 48,951
FASB foundations' investments at NAV 46,906
Total FASB foundations' investments 417,077
Total investments and cash equivalents $ 1,069,498
Assets classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those
securities. Assets classified in Level 2 of the fair value hierarchy are valued at amounts provided by statements from
investment companies and use of a third-party investment manager (US agencies), use of a third-party investment
manager (US Treasuries), price quotes for identical or similar assets in non-active markets (corporate bonds), use of
third-party pricing services and guidance provided by custodians and trading counterparties for fair value estimates
(mutual bond funds and mutual equity funds). Assets classified in Level 3 are valued based on modeling techniques that
are unobservable to the system.
The valuation method for assets and liabilities measured at the net asset value per share (or its equivalent) is presented
on the following table (expressed in thousands):
Notes to the Financial Statements 83
State of Tennessee
Investments measured at Unfunded Redemption Redemption
NAV NAV Commitments Frequency Notice Period
Mutual bond funds $ 42,953 Daily, monthly 5 business days
Mutual equity funds 133,039 Daily, monthly 5 business days
Equity REITs 66 not applicable not applicable
Private equities 9,025 $ 1,807 not applicable not applicable
Hedge funds 14,185 varies to quarterly varies - 91 calendar days
Natural resources 1,428 1,246 not applicable not applicable
Other 848 3,445 not applicable not applicable
The assets of the multi-strategy bond fund are allocated practicability of disposal of portfolio securities of the
among strategies in proportions that Commonfund Asset fund or the practicability of determining net asset value.
Management Company considers beneficial for a fully It is not probable that the system will sell an investment
diversified fixed income portion of an educational for an amount different from the NAV per share.
endowment. There are currently no redemption
restrictions on the multi-strategy bond funds, although Tennessee Housing Development Agency
they could be put in place in extraordinary circumstances, The agency categorizes its fair value measurements
such as any period during which the New York Stock within the fair value hierarchy established by generally
Exchange is closed other than customary weekend or accepted accounting principles. The agency has the
holiday closings, or during which trading thereon is following recurring fair value measurements as of June
restricted or there exists any emergency affecting the 30, 2021 (expressed in thousands):
Fair Value Measurements Using
Quoted Prices Significant
in Active Markets Other
for Identical Observable
Investments by fair value level 6/30/2021 Assets (Level 1) Inputs (Level 2)
Debt securities
Government agencies $ 136,216 $ 136,216
Government bonds 6,221 $ 6,221
Short term bills and notes 289,986 289,986
Total debt securities $ 432,423 $ 6,221 $ 426,202
Assets classified in Level 1 of the fair value hierarchy are valued using prices quoted
in active markets for identical assets of those securities. Assets classified in Level 2
of the fair value hierarchy are valued using prices quoted in active markets for
similar assets of those securities.
84 Notes to the Financial Statements
State of Tennessee
NOTE 7
Receivables
Receivables at June 30, 2021, for the state’s individual major funds and nonmajor and internal service funds in the
aggregate, including the applicable allowances for uncollectible accounts, consist of the following (expressed in
thousands):
Primary Government
Accounts Taxes and
including Due Certain Other
From Other Licenses, Fees, Total Allowance for Net Total
Governments and Permits Other Receivables Uncollectibles Receivables
Governmental
activities:
General $ 1,131,521 $ 1,238,095 $ 2,369,616 $ (128,609) $ 2,241,007
Education 281,077 724,140 1,005,217 (37,182) 968,035
Highway 189,222 102,751 $ 764 292,737 (113) 292,624
Capital projects 14,281 14,281 14,281
State shared taxes 170,593 170,593 (3,815) 166,778
Nonmajor
governmental
funds 17,206 32,399 1,216 50,821 (448) 50,373
Internal
service funds 6,711 553 7,264 (573) 6,691
Total-governmental
activities $ 1,640,018 $ 2,267,978 $ 2,533 $ 3,910,529 $ (170,740) $ 3,739,789
Amounts not expected
to be collected
within one year $ 109,061 $ 109,061
Business-type
activities:
Employment security $ 1,827,445 $ 64,627 $ 5,333 $ 1,897,405 $ (1,556,872) $ 340,533
Nonmajor
enterprise funds 3,024 3,024 (460) 2,564
Total-business-type
activities $ 1,830,469 $ 64,627 $ 5,333 $ 1,900,429 $ (1,557,332) $ 343,097
Notes to the Financial Statements 85
State of Tennessee
NOTE 8
Capital Assets
A. Primary Government
Capital asset activity for the year ended June 30, 2021, was as follows (expressed in thousands):
Beginning Ending
Balance Increases Decreases Balance
Governmental activities:
Capital assets, not being depreciated:
Land $ 2,592,013 $ 89,675 $ (355) $ 2,681,333
Infrastructure 25,252,859 926,929 (10,450) 26,169,338
Construction in progress 1,514,846 839,274 (1,080,056) 1,274,064
Software in development 96,338 258,095 (216,643) 137,790
Capital assets, being depreciated:
Structures and improvements 2,995,971 206,104 (4,059) 3,198,016
Machinery and equipment 1,833,995 293,461 (62,470) 2,064,986
Total capital assets 34,286,022 2,613,538 (1,374,033) 35,525,527
Less accumulated depreciation for:
Structures and improvements (1,346,987) (69,367) 3,084 (1,413,270)
Machinery and equipment (986,449) (232,803) 49,669 (1,169,583)
Total accumulated depreciation (2,333,436) (302,170) 52,753 (2,582,853)
Governmental activities capital assets, net $ 31,952,586 $ 2,311,368 $ (1,321,280) $ 32,942,674
Depreciation expense was charged to functions/programs of the primary government as follows (expressed in
thousands):
Governmental activities:
General government $ 17,229
Education 2,134
Health and social services 146,771
Law, justice and public safety 40,544
Recreation and resource development 10,958
Regulation of business and professions 1,824
Transportation 34,524
Capital assets held by the government’s internal service funds are
charged to the various functions based on their usage of the assets 48,186
Total depreciation expense – governmental activities $ 302,170
Highway Construction Commitments— At June 30, 2021, the Department of Transportation had contractual
commitments of approximately $807.8 million for construction of various highway projects. Funding of these future
expenditures is expected to be provided from federal grants ($710 million) and general obligation bond proceeds ($97.8
million).
86 Notes to the Financial Statements
State of Tennessee
B. Discretely Presented Component Units
Capital asset activity for the year ended June 30, 2021, for the discretely presented component units was as follows
(expressed in thousands):
Beginning Ending
Balance Increases Decreases Balance
Component Units:
Capital assets, not being depreciated:
Art and collections $ 12,664 $ (86) $ 12,578
Land 262,840 $ 8,938 (3,603) 268,175
Construction in progress 670,551 356,455 (512,304) 514,702
Capital assets, being depreciated:
Infrastructure 856,154 45,914 (5,047) 897,021
Structures and improvements 7,170,476 570,976 (23,199) 7,718,253
Machinery and equipment 1,213,620 89,301 (51,724) 1,251,197
Total capital assets 10,186,305 1,071,584 (595,963) 10,661,926
Less accumulated depreciation for:
Infrastructure (408,112) (36,664) 216 (444,560)
Structures and improvements (2,629,415) (163,549) 7,644 (2,785,320)
Machinery and equipment (822,782) (82,943) 47,771 (857,954)
Total accumulated depreciation (3,860,309) (283,156) 55,631 (4,087,834)
Component Units capital assets, net $ 6,325,996 $ 788,428 $ (540,332) $ 6,574,092
The University of Tennessee foundations and certain State University and Community College System foundations
utilize FASB standards; therefore, only the June 30, 2021, balances are available as follows (expressed in thousands):
Ending
Balance
Capital assets, not being depreciated:
Art and collections $ 875
Land 11,939
Total capital assets, not being depreciated 12,814
Capital assets, being depreciated:
Infrastructure 1,010
Structures and improvements 150,066
Machinery and equipment 14,494
Total capital assets being depreciated 165,570
Less: total accumulated depreciation (102,889)
Total capital assets, being depreciated, net 62,681
Total capital assets, net $ 75,495
Notes to the Financial Statements 87
State of Tennessee
NOTE 9
Interfund Balances, Payables and Receivables
A. Interfund Balances
Interfund balances at June 30, 2021, for the state’s individual major funds, nonmajor funds, internal service funds, and
fiduciary funds in the aggregate consist of the following (expressed in thousands):
Due From
Nonmajor Sewer Internal
Capital Governmental Employment Treatment Service
General Education Highway Projects Funds Security Loan Funds Total
General $ 263,112 $ 605 $ 95 $ 11 $ 7,021 $ 31 $ 16 $270,891
Education $ 16,936 16,936
Capital projects 2,109 13 51 143 2,316
D Nonmajor
U governmental
E funds 44 44
Employment
T security 66 66
O Internal service
funds 685 1 9 57 752
Custodial funds 10 10
Total $ 19,806 $ 263,126 $ 665 $ 95 $ 198 $ 7,021 $ 31 $ 73 $291,015
The $263.1 million due to the general fund from the education fund resulted from a time lag between the dates the
payments to local education agencies occurred and taxes are received in the education fund.
B. Component Units Payables
Component units’ accounts payable to the primary government at June 30, 2021, consisted of the following (expressed
in thousands):
Payable From Component Units
State
Tennessee University and University Nonmajor
Education Community of Component
Lottery College System Tennessee Units Total
P
A PRIMARY GOVERNMENT:
Y General $ 443 $ 134 $ 41 $ 721 $ 1,339
A Education 151,827 124 151,951
B Capital Projects 9,713 148 9,861
L Nonmajor governmental
E funds 1,391 1,391
State shared taxes 1,330 1,330
T Internal service funds 4 16 43 63
O
Total $ 153,600 $ 9,975 $ 1,448 $ 912 $ 165,935
88 Notes to the Financial Statements
State of Tennessee
C. Component Units Receivables
Component units’ accounts receivable from the primary government at June 30, 2021 consisted of the following
(expressed in thousands):
Receivable From PRIMARY GOVERNMENT
Nonmajor Internal
Capital Governmental Service
Receivable to General Education Highway Projects Funds Funds Total
COMPONENT UNITS:
Tennessee Housing Development
Agency $ 6 $ 6
State University and Community
College System 7,199 $ 11,237 $ 830 $ 1,166 $ 1,177 $ 37 21,646
University of Tennessee 6,089 5,275 1,289 49,666 2,583 267 65,169
Nonmajor component units 1,484 1,484
Total $ 14,778 $ 16,512 $ 2,119 $ 50,832 $ 3,760 $ 304 $ 88,305
NOTE 10
Interfund Transfers
Transfers between the various primary government funds for fiscal year ended June 30, 2021, are as follows (expressed
in thousands):
Transfers In
Private
Nonmajor Nonmajor Internal Purpose
Capital Governmental Sewer Enterprise Service Trust
Transfers Out General Education Highway Projects Funds Treatment Funds Funds Funds Total
General $ 411,898 $ 6,312 $ 72,842 $ 7,087 $ 4,617 $ 4,594 $ 29,529 $ 140 $ 537,019
Education 38,912 38,912
Highway $ 2,771 2,771
Nonmajor Governmental Funds 54,250 74,100 9,122 215 137,687
Nonmajor Enterprise Funds 600 600
Internal Service Funds 35 35
Total $ 57,021 $ 412,498 $ 80,412 $ 120,876 $ 7,087 $ 4,617 $ 4,594 $ 29,779 $ 140 $ 717,024
Transfers are generally used to (1) move revenues from In the fiscal year ended June 30, 2021, the general fund
the fund that statute or budget requires to collect them to transferred $537 million to other funds in accordance
the fund that statute or budget requires to expend them, with statute or budgetary authorizations for the following
(2) move receipts restricted to debt service from the purposes: $410 million to subsidize the activities of the
funds collecting the receipts to the debt service fund as education fund, $79.7 million for capital outlay
debt service payments become due, (3) use unrestricted expenditures, $12.5 million for OPEB expenditures in
resources from the general fund to finance various various funds, $20.2 million to provide appropriations to
programs accounted for in other funds in accordance internal service funds, $3.7 million for debt service
with statute or budgetary authorizations, and (4) move payments, and, $10.8 million to provide appropriations to
capital assets from one full accrual fund to another full finance various programs in other funds.
accrual fund.
The highway fund received a transfer from the debt
service fund for $74 million to cancel authorized and
Notes to the Financial Statements 89
State of Tennessee
unissued highway bonds. These authorizations were lease or (c) terminate the lease for convenience at any
originally recorded in the highway fund to fund a portion time after the fifth year. The following is an analysis of
of their budget. the leased property under capital leases (expressed in
thousands).
NOTE 11 Governmental
Activities
Leases Assets:
Land $ 158
A. Lease Obligations Buildings $ 32,445
Less: accumulated
Operating lease obligations — The state has entered depreciation (10,788) 21,657
into various operating leases for land, buildings and $ 21,815
equipment. Most leases contain termination clauses
providing for cancellation after 30, 60 or 90 days' written
notice to lessors. In addition, most leases contain At June 30, 2021, minimum annual lease payments are as
appropriation clauses indicating that continuation of the follows (expressed in thousands):
lease is subject to funding by the legislature. It is
expected that in the normal course of business most of Governmental
these leases will be replaced by similar leases. The state For the Activities
has also entered into various operating leases, which have Year(s) Lease
non-cancelable lease terms. Below is a schedule of future Ended June Executory Obligation
minimum lease payments under these leases (expressed in 30 Principal Interest Costs Payable
thousands). 2022 $ 1,449 $ 1,072 $ 852 $ 3,373
2023 1,536 1,039 873 3,448
For the Year(s) Noncancelable 2024 1,595 993 895 3,483
Ended June 30 Operating Leases 2025 1,712 927 918 3,557
2022 $ 18,744 2026 1,853 832 941 3,626
2023 15,689 2027-2029 3,759 1,349 2,760 7,868
2024 15,485 Total $ 11,904 $ 6,212 $ 7,239 $ 25,355
2025 10,988 Less - interest (6,212)
2026 7,277 Less - executory costs (7,239)
2027-2028 4,918 Present value of net minimum lease payments $ 11,904
Total minimum
$ 73,101
payments required
B. Lease Receivables
Expenditures for rent under leases for the year ended
June 30, 2021, amounted to $89.3 million. Capital lease receivable — The state, as lessor, entered
into a lease agreement with the Nashville/Davidson
Capital lease obligations — The state leases office County Metropolitan Government (lessee) for the Post-
buildings and equipment that in substance are purchases Mortem Facility. The lease term is 20 years beginning
and are reported as capital lease obligations. These leases July 15, 2001, with an option to renew the lease for an
are recorded as assets and liabilities at either the lower of unlimited period of time for a nominal amount. The
fair value or the present value of the future minimum state is subsidizing a part of the cost of this building.
lease payments in the government-wide and proprietary
fund statements. For capital leases reported in The state, as lessor, entered into a lease agreement with
governmental funds, both the principal and interest the Shelby County Government (lessee) for the Regional
portions of capital lease payments are recorded as Forensic Center facility. The lease term is 20 years
expenditures of the applicable governmental function. beginning July 1, 2012. The state shall transfer all of its
The office building leases expire over the next 8 years. rights, title and interest in and to the facility to Shelby
The effective interest rates for these leases range from county for a nominal amount upon the end of the lease
0.10 percent to 32.12 percent. Most of these leases term. The state is subsidizing a part of the cost of this
contain at least one of the following options: (a) the state building.
can, during the term of the lease or any period of
extension or holdover, purchase the property or (b) the
state can, at the end of the initial lease term, renew its
90 Notes to the Financial Statements
State of Tennessee
Minimum future lease payments to be received as of June
30, 2021 (expressed in thousands):
Year Ended June 30 Total
2022 $ 411
2023 404
2024 397
2025 391
2026 385
2027-2031 1,794
2032-2033 653
Total minimum future lease payments $ 4,435
Net investment in direct financing leases at
June 30:
Minimum lease payments receivable $ 4,435
Less: executory costs (754)
Plus: unamortized loss on leases 2,446
Net investment in direct financing lease $ 6,127
Notes to the Financial Statements 91
State of Tennessee
NOTE 12
Long-Term Liabilities
A. General Obligation Bonds
Bonds Payable at June 30, 2021, are shown below (expressed in thousands):
Governmental activities: Amount
General obligation bonds, 1.79% to 5%, due in generally decreasing amounts of principal
and interest from $113.7 million in 2022 to $6.6 million in 2040 $ 911,077
General obligation refunding bonds, 2009 Series B, 5%, principal and interest
due in amount of $7.5 million in 2022 7,360
General obligation refunding bonds, 2009 Series D, 4.67%, principal and interest
due in amount of $2.7 million in 2022 2,563
General obligation refunding bonds, 2011 Series B, 3% to 5%, principal and interest
due in amounts from $7.6 million in 2022 to $187.8 thousand in 2026 14,620
General obligation refunding bonds, 2011 Series C, 3.23% to 3.53%, principal and interest
due in amounts from $2 million in 2022 to $1.2 million in 2024 4,255
General obligation refunding bonds, 2012 Series A, 2.50% to 5%, principal and interest
due in amounts from $55.3 million in 2022 to $7.3 million in 2028 263,535
General obligation refunding bonds, 2014 Series B, 5%, principal and interest
due in amounts from $4 million in 2022 to $11.5 million in 2030 79,160
General obligation refunding bonds, 2015 Series B, 3% to 5%, principal and interest
due in amounts from $11.3 million in 2022 to $14.3 million in 2029 71,450
General obligation refunding bonds, 2016 Series B, 5%, principal and interest
due in amounts from $6.1 million in 2022 to $9.6 million in 2032 122,105
General obligation refunding bonds, 2016 Series C, 1.45% to 2.67%, principal and interest
due in amounts from $3.3 million in 2022 to $2.5 million in 2032 58,350
General obligation refunding bonds, 2018 Series B, 4%, principal and interest
due in amounts from $7.8 million in 2022 to $7.1 million in 2024 21,070
Total bonds outstanding 1,555,545
Plus unamortized bond premium 216,168
Total bonds payable $ 1,771,713
The official statements for the above bond series contains language that allows the state to call certain bonds for
repayment prior to the final maturity.
Prior-Year Defeasance of Debt B. General Obligation Commercial Paper
In current and prior years, the state defeased certain
general obligation bonds by placing the proceeds of new Governmental activities commercial paper payable at
bonds in an irrevocable trust to provide for all future June 30, 2021, is shown below (expressed in thousands):
debt service payments on old bonds. Accordingly, the Commercial
assets held in non-state administered trust accounts and Paper
the liability for the defeased bonds are not included in General obligation commercial paper, interest
the state’s financial statements. The entirety of these rates ranging from .13% to .69% for tax
trust account assets are covered under trust agreements exempt and .10% to .78% for taxable, varying
maturities $207,343
where the substitution of essentially risk-free monetary
assets with monetary assets that are not essentially risk-
free is not strictly prohibited. On June 30, 2021, $114.9 In March 2000, the state instituted a general obligation
million of bonds outstanding are considered defeased. commercial paper program to provide interim or short-
term financing of various authorized capital projects.
92 Notes to the Financial Statements
State of Tennessee
Commercial paper may be issued as federally taxable or above revenue streams were pledged for the payment of
tax exempt and constitute bond anticipation notes. The principal and interest on all general obligation bonds
commercial paper is sold at par as interest-bearing issued prior to July 1, 2013.
obligations in minimum denominations of $100 thousand
and integral multiples of one thousand in excess of such D. Other Debt
amount, with interest payable at maturity. The Per Tennessee Code Annotated (TCA) 7-51-210, the
commercial paper has varying maturities of not more estate of any emergency responder who is killed in the
than 270 days from their respective dates of issuance. line of duty shall be entitled to receive a two-hundred-
Interest rates vary depending on the market. The fifty-thousand-dollar annuity, with the estate receiving an
amount of principal outstanding may not exceed $350 annual installment of $50,000 for five years. The
million. emergency responder must have been current in any
required training and physical exams at the time the death
The state has entered into a Standby Commercial Paper occurred for the estate to receive the payment. Payment
Purchase Agreement with the Tennessee Consolidated shall be made from the general fund after receipt by the
Retirement System under which TCRS is obligated to department of Finance and Administration of a certified
purchase newly issued commercial paper issued to pay death certificate, letters testamentary or letters of
the principal of other commercial paper. The Program administration for the estate of the deceased from a
expires and the Standby Purchase Agreement terminates probate court, and an affidavit from the decedent’s
on July 1, 2026. At June 30, 2021, $207.3 million of employer or volunteer unit that the decedent was killed in
commercial paper was outstanding ($167.9 million tax the line of duty. For the purposes of this annuity,
exempt and $39.4 million federally taxable). This left an “emergency responder” means a firefighter, emergency
unused commercial paper capacity of $142.7 million. medical technician, a volunteer rescue squad worker, or
Commercial paper payable under this Program qualifies law enforcement officer.
for reporting as a non-current liability because provisions
in the Commercial Paper Resolution permit refinancing E. Debt Service Requirements to Maturity
the paper on a long-term basis.
Debt Service requirements to maturity for all general
C. Pledged Revenues/Collateralized obligation bonds payable at June 30, 2021, are as follows
Borrowing (expressed in thousands):
General obligation bonds and commercial paper For the Year(s) General Obligation Bonds Total
constitute direct general obligations of the state for the Ended June 30 Principal Interest Requirements
payment of principal and interest on which there is also
pledged the full faith and credit of the state; and a 2022 $ 155,710 $ 65,504 $ 221,214
charge and lien upon all fees, taxes and other revenues 2023 147,750 58,461 206,211
and funds allocated to the state’s general fund, debt
2024 145,095 52,238 197,333
service fund and highway fund and, if necessary, upon
2025 137,941 46,488 184,429
the first fees, taxes, revenues and funds thereafter
received and allocated to such funds, unless such fees, 2026 135,730 40,681 176,411
taxes, revenues and funds are legally restricted for other 2027-2031 538,917 125,629 664,546
purposes. The charge and lien on fees, taxes and other 2032-2036 244,565 38,809 283,374
revenues in favor of the bonds is subject to a specific 2037-2040 49,837 3,699 53,536
pledge of “Special Taxes” in favor of state general
obligation bonds issued prior to July 1, 2013. “Special $ 1,555,545 $ 431,509 $ 1,987,054
Taxes” consist of the annual proceeds of a tax of five
cents per gallon upon gasoline; the annual proceeds of
special tax of one cent per gallon upon petroleum Debt service requirements to maturity for commercial
products; one-half of the annual proceeds of motor paper payable at June 30, 2021, is as follows (expressed in
vehicle registration fees now or hereafter required to be thousands):
pledged the full faith and credit of the state; and the
For the Year(s) Commercial Paper Payable Total
annual proceeds of the franchise taxes imposed by the
Ended June 30 Principal Interest Requirements
franchise tax law of the state. The final maturity of
general obligation bonds issued prior to July 1, 2013 is
2022 $ 207,343 $ 60 $ 207,403
October 1, 2032. Thereafter, or upon the earlier
retirement of all general obligation bonds issued prior to
July 1, 2013, this pledge of “Special Taxes” will expire. Debt service requirements to maturity for all emergency
For fiscal year 2021, $1.7 billion or 67.9 percent of the first responder annuities at June 30, 2021, are as follows
(expressed in thousands):
Notes to the Financial Statements 93
State of Tennessee
For the Year(s) Emergency First Responder Annuity Total these bonds will not be issued but will be canceled
Ended June 30 Principal Interest Requirements because of sufficient fund balances.
2022 $ 650 $ - $ 650 Unissued Unissued
2023 550 - 550 Purpose 07/01/20 Authorized Canceled 06/30/21
2024 450 - 450
2025 150 - 150
Highway $ 860,600 $ 126,000 $ 74,600 $ 912,000
$ 1,800 $ - $ 1,800
Higher Education 134,037 469 133,568
F. General Obligation Bonds Authorized Economic and
Community
and Unissued Development 115,000 115,000
A summary of general obligation bonds authorized and General government 302,066 8,653 293,413
unissued at June 30, 2021, is shown below (expressed in
thousands). It is anticipated that a significant amount of Totals $ 1,411,703 $ 126,000 $ 83,722 $ 1,453,981
94 Notes to the Financial Statements
State of Tennessee
G. Changes in Long-Term Liabilities
A summary of changes in long-term obligations for the year ended June 30, 2021 follows (expressed in thousands):
Amounts
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities
Bonds and commercial paper $ 2,070,711 $ 95,000 $ (186,655) $ 1,979,056 $ 155,710
Capital leases 14,782 (2,878) 11,904 1,449
Compensated absences 325,088 186,122 (162,262) 348,948 104,328
Emergency responder 1,700 750 (650) 1,800 650
Governmental activities
Long-term debt $ 2,412,281 $ 281,872 $ (352,445) $ 2,341,708 $ 262,137
Other long-term liabilities
Pension 1,151,522
Other postemployment benefits 1,293,948 33,084
Pollution remediation 54,148 2,427
Unstructured claims and judgements 219,181 83,835
Total other long-term liabilities $ 2,718,799 $ 119,346
Total governmental activities $ 5,060,507 $ 381,483
Total long-term governmental liabilities $ 4,679,024
Business-type activities
Deposits payable $ 7,871
*Pleas e s ee No t e 11 fo r ad d it io nal info rmat io n relat ed t o cap it al leas es .
Governmental activities include all governmental funds and internal service funds. Typically, agencies accounted for in
the general fund, internal service funds, and special revenue funds liquidate compensated absences, OPEB and pension
liabilities. Claims and judgments are obligations of the highway fund (special revenue fund), risk management fund
(internal service fund) and the general fund. Typically, pollution remediation is liquidated from the general fund and
highway fund.
Notes to the Financial Statements 95
State of Tennessee
NOTE 13
Payables
Payables as of June 30, 2021, were as follows (expressed in thousands):
Due To
Salaries and Accrued Other Total
Vendors Benefits Interest Governments Other Payables
Governmental activities:
General $ 905,437 $ 96,598 $ 9 $ 518,469 $ 272,096 $ 1,792,609
Education 45,516 5,027 331,753 211 382,507
Highway 152,219 9,947 159,442 321,608
Capital projects 64,304 64,304
State shared taxes 154,832 154,832
Nonmajor governmental
funds 22,521 2,415 24,917 47,081 1,881 98,815
Internal service funds 105,520 6,861 2,003 591 88 115,063
Total—
governmental activities $ 1,295,517 $ 120,848 $ 26,929 $ 1,212,168 $ 274,276 $ 2,929,738
Business-type activities:
Employment security $ 566 $ 133,352 $ 76,773 $ 210,691
Sewer treatment loan $ 6 6
Nonmajor enterprise funds 64,774 3 370 65,147
Total—business-type
activities $ 65,340 $ 9 $ 133,722 $ 76,773 $ 275,844
96 Notes to the Financial Statements
State of Tennessee
NOTE 14
Governmental Fund Balances
Balances as of June 30, 2021, were as follows (expressed in thousands):
Restricted Committed Assigned
Purposes Purposes Purposes
General Fund
General operations:
Legislature $ 65,169
Constitutional offices $ 12,952 $ 20,838 75,145
Administrative services 52,461 2,533,160
Children's services 5,538 7,975
Public health 28,549 257,224 1,148,874
Human services 8,711 3,894 65,758
Business and industry development 5,650 576 513,629
Judicial 16,730 13,200 9,061
Natural resources 16,311 34,496 37,734
Public safety 64 58,335 127,375
Agriculture 930 44,686
Employment and business regulation 10,685 184,152 43,790
Other 60,151 14,456 16,614
Total general fund $ 165,341 $ 640,562 $ 4,688,970
Education Fund
After school program $ 47,419
Lottery for education 234,913
Energy efficient school initiative 1,256
TN Promise Scholarship Endowment Fund 413,656
Other 1,864 $ 22,166 $ 131,156
Total education fund $ 699,108 $ 22,166 $ 131,156
Highway Fund
State matching $ 871,486
Railway, aeronautics, and waterway program $ 145,067
State aid 69,891
Future highway projects $ 82,365
Railroad inspection 2,286
Aeronautics Economic Development 35,151
Other 21,091
Total highway fund $ 871,486 $ 217,244 $ 138,607
Capital Projects Fund
Total capital projects fund $ 50,403 $ 972,527
Nonmajor Governmental Funds
Debt service $ 16,100
Chairs of excellence $ 336,369
Criminal injuries $ 6,198
Wildlife resources 80,081 19,298
Underground storage tanks 56,425
Enhanced emergency 911 29,960 5,523
Environmental protection 44,432
Solid and hazardous waste 51 12,906
Parks acquisition 68,049
Other 28,145 43,402
Total nonmajor governmental funds $ 531,031 $ 199,808 $ 16,100
Notes to the Financial Statements 97
State of Tennessee
Budget Stabilization Accounts Means Committees of the Senate and the House of
Representatives. Subject to specific provisions of the
The state maintains two stabilization accounts: (1) the general appropriations bill, an amount not to exceed the
General Fund’s Reserve for Revenue Fluctuations greater of one hundred million dollars ($100,000,000) or
(“Rainy Day”) and (2) the Education Fund’s General one half (1/2) of the amount available in the reserve may
Shortfall Reserve (Lottery for Education Account). be used by the Commissioner to meet expenditure
requirements in excess of budgeted appropriation levels.
(1) General Fund’s Reserve for Revenue The General Fund’s Reserve for Revenue Fluctuations is
Fluctuations. In accordance with Tennessee Code reported as unassigned fund balance and has a balance of
Annotated (TCA) 9-4-211, the state established a reserve $1.45 billion as of June 30, 2021.
account in the General Fund known as the “Reserve for
Revenue Fluctuations.” Beginning in fiscal year 1999, at (2) Education Fund’s General Shortfall Reserve
least 10 percent of the estimated growth in state tax Account. In accordance with Tennessee Code Annotated
revenues to be allocated to the General and Education (TCA) 4-51-111, the state transferred one hundred
funds must be allocated to this account. Once the million dollars ($100,000,000) from the Lottery for
amount equals 8 percent of the estimated state tax Education Account to the General Shortfall Reserve
revenues allocated to the General Fund and Education Account. The resources of this account may be used
Fund, the following must be allocated to the account: when the net lottery proceeds are not sufficient to meet
the amount appropriated for educational programs and
The lesser of: other purposes consistent with Article XI, Section 5 of
(a) At least 10 percent (10%) of the estimated growth in the Constitution of Tennessee. In the event this account
state tax revenues to be allocated to the General Fund is drawn upon in any fiscal year, the account shall be
and Education Fund. brought back to its prior level in subsequent fiscal years.
(b) An amount to maintain the account at eight percent
(8%) of the estimated tax revenues allocated to the In addition to the $100 million mentioned, the State
General Fund and Education Fund. Funding Board may recommend appropriation of funds
to the account if it is deemed to have an inadequate
Amounts available in the revenue fluctuation reserve may balance. Likewise, the State Funding Board may
be used by the Commissioner of Finance and recommend appropriation of funds from the account if
Administration to offset shortfalls in state tax revenues adequate funds are deemed to be available in the account
which may occur and for which funds are not otherwise and if such funds are needed for educational programs
available. Upon determining that it is likely that amounts and other authorized purposes, provided that the
in the revenue fluctuation reserve will be required to be appropriation of funds from the account would not bring
utilized to meet a shortfall of state tax revenue, the its balance below $100 million. As of June 30, 2021, this
Commissioner shall report this determination account has a balance of $100 million and is reported as
immediately to the Chairs of the Finance, Ways, and restricted fund balance in the Education Fund.
98 Notes to the Financial Statements
State of Tennessee
NOTE 15
Component Units
A. Component Units – Condensed Financial Statements
Below are the condensed financial statements of the component units for the State of Tennessee as of June 30, 2021
(expressed in thousands):
Condensed Statement of Net Position
Component Units
Tennessee
Housing Tennessee State University Nonmajor Total
Development Education and Community University of Component Component
Agency Lottery College System Tennessee Units Units
Assets
Cash, investments,
and other assets $ 3,431,023 $ 277,831 $ 1,600,854 $ 1,434,258 $ 245,937 $ 6,989,903
Due from
primary government 6 21,646 65,169 1,484 88,305
Due from
other component units 1,896,988 1,896,988
Restricted assets 186,188 530 1,245,343 2,223,137 292,788 3,947,986
Capital assets, net 5,171 1,868 3,552,877 3,039,146 50,525 6,649,587
Total assets 3,622,388 280,229 6,420,720 6,761,710 2,487,722 19,572,769
Deferred outflows 4,103 181,058 142,317 43,447 370,925
Liabilities
Accounts payable and
other current liabilities 97,982 124,089 258,386 308,234 21,348 810,039
Due to primary
government 153,600 9,975 1,448 912 165,935
Due to other
component units 791,742 1,105,246 1,896,988
Long-term liabilities 2,977,731 2,510 526,722 547,428 2,318,433 6,372,824
Total liabilities 3,075,713 280,199 1,586,825 1,962,356 2,340,693 9,245,786
Deferred inflows 2,107 102,503 120,607 3,048 228,265
Net position
Net investment in capital
assets 5,171 1,868 2,778,791 1,908,862 46,948 4,741,640
Restricted 494,520 30 1,049,469 2,106,930 23,894 3,674,843
Unrestricted 48,980 (1,868) 1,084,190 805,272 116,586 2,053,160
Total net position $ 548,671 $ 30 $ 4,912,450 $ 4,821,064 $ 187,428 $ 10,469,643
Notes to the Financial Statements 99
State of Tennessee
Condensed Statement of Activities
Component Units
Tennessee
Housing Tennessee State University Nonmajor
Development Education and Community University of Component
Agency Lottery College System Tennessee Units Total
Expenses $ 533,614 $ 1,945,963 $ 2,838,153 $ 2,430,154 $ 254,407 $ 8,002,291
Program Revenues
Charges for services 164,147 1,945,939 909,502 836,710 114,353 3,970,651
Operating grants and contributions 382,474 28 1,151,820 1,323,919 9,517 2,867,758
Capital grants and contributions 175,066 117,307 6,254 298,627
Total program revenues 546,621 1,945,967 2,236,388 2,277,936 130,124 7,137,036
Net program revenues (expense) 13,007 4 (601,765) (152,218) (124,283) (865,255)
General Revenues
Payments from primary government 277 929,981 652,390 109,099 1,691,747
Unrestricted grants and contributions 83,027 9,732 92,759
Unrestricted investment earnings 20 400 166,355 25,733 110 192,618
Miscellaneous 3,051 1,362 4,413
Total general revenues 297 400 1,182,414 679,485 118,941 1,981,537
Contributions to permanent funds 21,800 101,099 122,899
Change in net position 13,304 404 602,449 628,366 (5,342) 1,239,181
Net Position- July 1, restated 535,367 (374) 4,310,001 4,192,698 192,770 9,230,462
Net Position - June 30 $ 548,671 $ 30 $ 4,912,450 $ 4,821,064 $ 187,428 $ 10,469,643
Significant transactions between the major component • The TELC generated net lottery proceeds of $482.3
units–State University and Community College System, million for the state’s Lottery for Education
University of Tennessee (UT) and the Tennessee Account.
Education Lottery Corporation (TELC)–and the primary
government consist of the following: The most significant transaction among component units
is that in which the Tennessee State School Bond
• State appropriations from the education fund in the Authority, a nonmajor component unit, makes loans to
amount of $952 million were made to the State the University of Tennessee and the State University and
University and Community College System and $652 Community College System to finance certain capital
million to UT. projects. At June 30, 2021 the Authority’s loan
receivable (expressed in thousands) consisted of:
• Capital project expenditures in the amount of $235
million were made for the State University and Current Noncurrent
Community College System and $104.5 million to State University and Community
UT in the form of expenditures in the capital College System $ 39,720 $ 747,759
projects fund for projects at these school systems. University of Tennessee 39,240 1,060,096
• The State University and Community College Total $ 78,960 $ 1,807,855
System paid the primary government $63.2 million
to reimburse the state for projects that were not a
part of the capital appropriations.
100 Notes to the Financial Statements
State of Tennessee
B. Major Component Units – Long-Term For the Year(s) Revenue Bonds Total
Ended June 30 Principal Interest Requirements
Debt
2022 $ 13,585 $ 88,750 $ 102,335
Tennessee Housing Development Agency (THDA)
2023 99,235 89,052 188,287
Bonds Payable at June 30, 2021, is shown below
2024 101,550 86,936 188,486
(expressed in thousands): 2025 103,720 84,617 188,337
2026 106,475 82,111 188,586
Homeownership program revenue bonds,
2027-2031 539,775 367,106 906,881
housing finance program bonds, and residential
2032-2036 520,115 285,847 805,962
finance program bonds, various series, .20% to
2037-2041 549,550 197,089 746,639
4.65%, due in amounts of principal and interest
2042-2046 484,850 105,383 590,233
ranging from $102.3 million in 2022 to $3.5
2047-2051 323,370 25,235 348,605
million in 2052 $ 2,845,645
2052 3,420 51 3,471
$ 2,845,645 $1,412,177 $ 4,257,822
Plus unamortized bond premium 64,126
Less unamortized bond discount (367)
Total bonds payable $ 2,909,404 The agency’s bond resolutions govern the outstanding
bonds payable for all bond programs in the amount of
$2,845,645 (expressed in thousands). The bond
The revenue bonds listed above are not obligations of
resolutions contain a provision that in an event of
the state. They are secured by pledges from the facilities
to which they relate and by certain other revenues, fees, default, the trustee can declare all bonds due and payable
and can sell program loans and investment securities for
and assets of the THDA.
payments to bondholders.
Bond sales during the year ended June 30, 2021, included
the following issues: The outstanding bonds payable of $2,845,645 (expressed
in thousands) are secured by a pledge of all assets in each
of the respective bond resolutions.
• July 2020—Residential Finance program bonds of
$145 million The agency has a line of credit in the amount of
• October 2020— Residential Finance program bonds $75,000,000. The unused portion as of June 30, 2021, is
of $145 million $73,221,799.
• April 2021—Residential Finance program bonds of
$149.9 million C. Nonmajor Component Units – Long-
Redemption of Bonds and Notes Term Debt
During the year ended June 30, 2021, bonds were retired
at par before maturity in the Homeownership Program in Tennessee Local Development Authority (TLDA)
the amount of $14,675,000, in the Housing Finance Bonds Payable at June 30, 2021, is shown below
Program in the amount of $13,070,000, and in the (expressed in thousands):
Residential Finance Program in the amount of
Revenue bonds, 4% to 4.375%, due in generally
$365,065,000. The respective carrying values of the decreasing amounts of principal and interest from
bonds were $15,106,459, $13,426,876, and $374,364,466. $272 thousand in 2022 to $21 thousand in 2029 $ 1,250
This resulted in revenue to the Homeownership Program
Plus unamortized bond premium -
of $431,459, to the Housing Finance Program of
Less unamortized bond discount (7)
$356,876, and to the Residential Finance Program of
Total bonds payable $ 1,243
$9,299,466.
On July 16, 2020, the agency issued $145,000,000 in The revenue bonds listed above are not obligations of
Residential Finance Program Bonds, Issue 2020-3. On the state. They are secured by pledges of resources from
October 28, 2020, the agency issued $145,000,000 in the facilities to which they relate and by certain other
Residential Finance Program Bonds, Issue 2020-4. On revenues, fees, and assets of TLDA.
April 28, 2021, the agency issued $149,900,000 in
Residential Finance Program Bonds, Issue 2021-1. Debt Service requirements to maturity for TLDA’s
revenue bonds payable at June 30, 2021, are as follows
Debt Service requirements to maturity for revenue bonds (expressed in thousands):
payable at June 30, 2021, are as follows (expressed in
thousands):
Notes to the Financial Statements 101
State of Tennessee
For the Year(s) Revenue Bonds Total $134,393,335 over the next 26 years and an economic
Ended June 30 Principal Interest Requirements gain (difference between the present values of the old
and new debt service payments) of $112,382,633.33. The
2022 $ 220 $ 52 $ 272 funds provided for the advance refundings were placed
2023 230 43 273 in an irrevocable refunding trust fund to pay the principal
240 34 274
and interest on the refunded bonds on each principal and
2024
interest payment date to and including the respective
2025 245 24 269
redemption date for the respective redemption price then
2026 260 13 273
due on the refunded bonds.
2027-2029 55 5 60
$ 1,250 $ 171 $ 1,421 Debt Service requirements to maturity for TSSBA’s
revenue and direct placement bonds payable at June 30,
2021, are as follows (expressed in thousands):
Tennessee State School Bond Authority (TSSBA)
Bonds and Revolving Credit Facility Payable at June 30,
For the Year(s) Revenue Bonds Total
2021, are shown below (expressed in thousands):
Ended June 30 Principal Interest Requirements
Revenue bonds, various Series, 0% to 5%, due in
decreasing amounts of principal and interest from 2022 $ 78,960 $ 55,829 $ 134,789
$134.8 million in 2022 to $4.9 million in 2050 $ 2,050,570
2023 92,000 50,133 142,133
Plus unamortized bond premium 143,676 2024 88,755 47,098 135,853
Less unamortized bond discount (18) 2025 90,020 44,113 134,133
Total bonds payable $ 2,194,228
2026 268,270 40,897 309,167
Revolving credit facility, interest rates ranging from 2027-2031 615,080 160,198 775,278
0.5% to 0.7%, varying maturities $ 115,521
2032-2036 323,170 109,864 433,034
2037-2041 277,660 64,445 342,105
The revenue bonds and credit facility listed above are not 2042-2046 180,840 23,401 204,241
obligations of the state. They are secured by pledge of 2047-2050 35,815 2,746 38,561
resources from the facilities to which they relate and by $ 2,050,570 $ 598,724 $ 2,649,294
certain other revenues, fees, and assets of the TSSBA.
Bond sales during the year ended June 30, 2021, included Revolving Credit Facility Program
the following issues: The Authority issues short-term debt to finance certain
capital projects for the State’s higher education
• February 2021— 2021 Series A Bonds of $713.4 institutions. On June 2, 2021, the Authority entered into
million an Amended and Restated Revolving Credit Agreement
(RCA) with Wells Fargo Bank, National Association, and
On February 24, 2021, the Authority issued the 2021
U.S. Bank, National Association. The original RCA dated
Series A Bonds (Federally Taxable) (“2021A”). The
March 20, 2014, as amended and extended, expired upon
2021A taxable bond proceeds in the amount of
the issuance of the new RCA. The RCA permits loans
$713,365,000 were issued to advance refund
(the Revolving Credit Facility or RCF) to be made from
$115,125,000 of the 2012 Series A bonds; $42,245,000 of
time to time (and prepayments and reborrowings) in an
the 2012 Series C bonds; $98,525,000 of the 2013 Series
aggregate principal amount outstanding at any time not
A Bonds; $47,245,000 of the 2014 Series A bonds;
to exceed $300,000,000. As of June 30, 2021, the unused
$76,325,000 of the 2014 Series B bonds; and
portion of the RCF was $184,479,310. As of June 30,
$226,150,000 of the 2015 Series B bonds. The balance of
2020, the unused portion of the RCF was $225,519,310.
the proceeds of the 2021A bonds will be used to pay for
The RCF may be issued as tax-exempt or as taxable
construction costs of a certain project and various costs
loans. As of June 30, 2021, $82,607,265 of tax-exempt
of issuance.
RCF loans and $32,913,425 of taxable RCF loans were
outstanding. As of June 30, 2020, $51,367,265 of tax-
The 2021 Series A refunding resulted in a difference
exempt RCF loans and $23,113,425 of taxable RCF loans
between the reacquisition price and the net carrying
were outstanding.
amount of the old debt of $24,188,644. This amount is
reported as a deferred outflow of resources and is being Events of Default
charged to operations through the year 2046 using the Debt under the Higher Education Facilities Programs is
straight-line method. The 2021 Series A refunding secured by a payment from the annual financing charges
resulted in a reduction of total debt service payments of by the Tennessee Board of Regents and the Board of
102 Notes to the Financial Statements
State of Tennessee
Trustees of the University of Tennessee (the “Boards”). Government Unit on the 20th day of the current month
In the event the Authority has been notified that one of in the amount of the unpaid loan payment to the
the Boards has insufficient funds to make a full payment, Authority. The Division of Accounts will deposit such
the Assistant Secretary to the Authority will notify the available state-shared tax, as soon as available, with the
Commissioner of Finance and Administration that the representatives of the TSSBA and prior to releasing any
Board has failed to pay and request the Commissioner to remaining funds to the Local Government Unit. The
intercept sufficient available appropriations. The Division of Accounts will continue such monthly
Commissioner will, within one business day, notify his deposits to the Authority's account until notified by the
accounting staff to withhold the Legislative Commissioner of Finance and Administration that the
appropriations as may be required to make the Board Local Government Unit is current on all of its
whole with respect to the unpaid annual financing obligations to the TSSBA. The TSSBA will use the
charges. proceeds of the state-shared tax intercept to timely fund
debt service and sinking fund payments due on the Bond
Debt under the Qualified Zone Academy Bond Program Debt Service Payment Dates and to fully fund the Local
was secured by an annual payment by each borrower. A Government Unit's portion of the Sinking Fund.
borrower is a Local Government Unit. In the event a
borrower failed to make a loan repayment in full, the If the Authority should default in the payment of the
Assistant Secretary to the Authority was required to principal, sinking fund installments, or interest, the bond
notify the Commissioner of Finance and Administration resolutions contain a provision that the Trustee may
that the borrower had failed to pay and request the proceed, (1) by suit, action or proceeding at law or in
Commissioner to intercept sufficient available state- equity in any court of competent jurisdiction, enforce all
shared taxes to the borrower. The Commissioner was rights of the Bondowners, including the right to require
required to, within three business days, notify the the Authority to enforce the Agreements and collect the
borrower of the failure to pay. If the borrower failed to Annual Financing Charges and Legislative
remit the full amount within 10 days of the notice, the Appropriations payable thereunder, or to carry out any
Commissioner was required to notify the accounting other covenant or agreement with Bondowners under the
staff to withhold the state-shared taxes as may be Resolution and to perform its duties under the Act, the
required to make the Board whole with respect to the Agreements and the Resolution; (2) bring suit upon the
unpaid annual financing charges. Bonds; (3) by action or suit, require the Authority to
account as if it were the trustee of an express trust for the
Debt under the Qualified School Construction Bond Owners of the Bonds; (4) by action or suit, enjoin any
Program is secured by a monthly payment from each acts or things which may be unlawful or in violation of
borrower. A borrower is a Local Government Unit. In the rights of the Owners of the Bonds; or (5) in
the event a borrower has failed to make a loan repayment accordance with the provisions of the Act, declare all
in full, the Assistant Secretary to the Authority will notify Bonds due and payable, and if all defaults shall be made
the Commissioner of Finance and Administration that good, then, with the written consent of the Owners of
the borrower has failed to pay and request the not less than twenty-five per centum (25%) in principal
Commissioner to intercept sufficient available state- amount of the Outstanding Bonds, to annul such
shared taxes to the borrower. The Commissioner will declaration and consequences, but no such annulment
notify the Division of Accounts, to withhold the state- shall extend to or effect any subsequent default or impair
shared taxes due and payable to the Local Government or exhaust any right or power consequent thereon.
Unit starting with the payment due to the Local
Notes to the Financial Statements 103
State of Tennessee
D. Component Units – Changes in Long-Term Liabilities
A summary of changes in long-term obligations for the year ended June 30, 2021, follows (expressed in thousands):
Changes in Long-term Liabilities
Amounts
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Revenue bonds, notes, and loans payable:
University of Tennessee (UT) $ 1,070,553 $ 496,805 $ (460,846) $ 1,106,512 $ 39,556
State University and Community College System (SUCCS) 781,094 339,020 (317,664) 802,450 41,940
Tennessee Housing Development Agency (THDA) 2,880,811 451,525 (422,932) 2,909,404 83,215
Nonmajor component units 2,337,711 758,365 (782,075) 2,314,001
79,570
Nonmajor component units-direct borrowings 30,145 - (30,145) - -
Long-term debt $ 7,100,314 $ 2,045,715 $ (2,013,662) $ 7,132,367 $ 244,281
Other long-term liabilities:
Compensated absences:
UT 91,294 37,766 (33,665) 95,395 33,665
SUCCS 84,562 43,879 (39,493) 88,948 17,115
THDA 1,685 1,376 (1,194) 1,867 861
Tennessee Education Lottery Corporation (TELC) 745 721 (731) 735 735
Nonmajor component units 1,832 1,825 (1,925) 1,732 923
Due to grantors, unearned revenue, annuities payable,
prizes annuities payable:
UT 28,165 3,340 (6,371) 25,134 -
SUCCS 29,911 2,347 (18,215) 14,043 -
TELC 2,148 - (373) 1,775 134
THDA 896 18,841 (2,575) 17,162 -
Escrow deposits and arbitrage rebate payable:
THDA 36,917 131,884 (128,014) 40,787 23,609
Pension:
UT - - 204,249 -
SUCCS - - 273,273 -
THDA - - 7,122 -
Nonmajor component units - - 2,145 -
Other postemployment benefits:
UT - - 138,202 -
SUCCS - - 135,487 -
THDA - - 1,389 -
Nonmajor component units - - 555 -
Component units long-term liabilities $ 7,378,469 $ 2,287,694 $ (2,246,218) $ 8,182,367 $ 321,323
The Tennessee State School Bond Authority, a nonmajor The University of Tennessee component units are not
component unit, issues revenue bonds to make loans to included in the above schedule. At year end, University
higher education institutions in the state. The nonmajor of Tennessee foundations’ long-term liabilities amounted
component units’ bonds payable includes the to $77.272 million ($3.643 million due within one year).
indebtedness on which the University of Tennessee and
the State University and Community College System’s
loans payable are based.
104 Notes to the Financial Statements
State of Tennessee
E. Endowments – Component Units The Teacher Group Insurance Fund, a public entity risk
pool, was established in January 1986 to provide a
If a donor has not provided specific instructions to the program of health insurance coverage for the teachers
University of Tennessee and State University and and other education system employees of the political
Community College System institutions, state law (TCA subdivisions of the state. In accordance with Tennessee
35-10-104) permits each institution to authorize for Code Annotated 8-27-302, all local education agencies
expenditure the net appreciation (realized and unrealized) are eligible to participate. Fund members at June 30,
of the investments of endowment funds. When 2021, included 121 local education agencies and one
administering its power to spend net appreciation, the education cooperative, with 51,022 active teachers and
institution is required to consider the institution’s long- support personnel enrolled in one of four health care
term and short-term needs, present and anticipated options: premier preferred provider organization plan
financial requirements, expected total return on its (PPO), standard preferred provider organization plan
investments, price-level trends, and general economic (PPO), limited preferred provider organization plan
conditions. Any net appreciation that is spent is required (PPO), or the consumer driven health plan with health
to be spent for the purposes for which the endowment savings account (CDHP/HSA). The state does not
was established. retain any risk for losses by this fund.
The University of Tennessee chooses to spend only a The Teacher Group Insurance Fund assumes
portion of the investment income (including changes in responsibility for: determining plan benefits and
the value of investments) each year. Under the spending eligibility, establishing premiums sufficient to fund plan
plan established by the University, 4.5 percent of a seven- obligations, recording and reporting financial transactions
year moving average of the fair value of endowment accurately, reporting enrollment to vendors, processing
investments has been authorized for expenditure. In of claims submitted for services provided to plan
fiscal year 2016, the University began transitioning to a participants, communicating with plan participants, and
seven-year moving average, by adding one year’s value to complying with appropriate state and federal laws and
the moving average calculation. This transition was regulations. Plan participants are required to: pay
complete in fiscal year 2019. The remaining amount premiums on time, file claims for services received,
after distributions, if any, is retained to be used in future report changes in eligibility of themselves or their
years when the amount computed using the spending dependents, and ensure that only eligible expenses are
plan exceeds the investment income. At June 30, 2021, paid by the plan. Individuals who cancel coverage may
net appreciation of $262.337 million is available to be be required to demonstrate a qualifying event to rejoin
spent, of which $257.285 million is restricted to specific the plan. Employers must wait twenty-four months
purposes. before rejoining the plan should the employer elect to
withdraw from the plan.
While some State University and Community College
System institutions/foundations spend all investment The Teacher Group Insurance Fund establishes claims
income, others choose to spend only a portion of the liabilities for self-insured options based on estimates of
investment income (including changes in the value of the ultimate cost of claims that have been reported but
investments) each year. Under the various spending not settled, and of claims that have been incurred but not
plans established by each institution/foundation, reported. Teachers and providers have 13 months to file
different percentages and/or amounts have been medical claims. The process used to compute claims
authorized for expenditure. The remaining amounts, if liabilities does not necessarily result in an exact amount.
any, are retained to be used in future years when the Claims liabilities are recomputed periodically using
amounts computed using the spending plans exceed the actuarial and statistical techniques to produce current
investment income. At June 30, 2021, net appreciation estimates. Adjustments to claims liabilities are charged or
of $23.053 million is available to be spent, of which credited to expense in the period in which they are made.
$22.531 million is restricted to specific purposes. The Teacher Group Insurance Fund considers
investment income in determining if a premium
NOTE 16 deficiency exists.
The Teacher Group Insurance Fund issues separate
Risk Management financial statements that may be obtained by writing the
Department of Finance and Administration, Division of
A. Teacher Group Insurance Accounts, 312 Rosa L. Parks Avenue, 21st Floor William
R. Snodgrass Tennessee Tower, Nashville, TN 37243-
0298 or by calling (615) 532-5823.
Notes to the Financial Statements 105
State of Tennessee
As discussed above, the Teacher Group Insurance Fund insured events, which includes estimates of both future
establishes a liability for both reported and unreported payments of losses and related claim adjustment
expenses. The following represents changes in those accurately, reporting enrollment to vendors, the
aggregate liabilities during the past two years (expressed processing of claims submitted for services provided to
in thousands): plan participants, communicating with plan participants,
and complying with appropriate state and federal laws
2021 2020 and regulations. Plan participants are required to: pay
Unpaid claims at beginning premiums on time, file claims for services received,
of year $ 30,870 $ 32,504 report changes in eligibility of themselves or their
dependents, and ensure that only eligible expenses are
paid by the plan. Individuals who cancel coverage may
Incurred claims:
be required to demonstrate a qualifying event to rejoin
Provision for insured events of the
current year 607,094 549,424 the plan. Employers must wait twenty-four months
Increase (decrease) in provision for before rejoining the plan should the employer elect to
insured events of prior years (1,259) (662) withdraw from the plan.
Total incurred claims expenses 605,835 548,762 The Local Government Group Insurance Fund
establishes claims liabilities for self-insured options based
Payments:
on estimates of the ultimate cost of claims that have been
reported but not settled, and of claims that have been
Claims attributable to insured
events of the current year 570,449 518,780 incurred but not reported. Employees and providers
have 13 months to file medical claims. The process used
Claims attributable to insured to compute claims liabilities does not necessarily result in
events of prior years 29,378 31,616 an exact amount. Claims liabilities are recomputed
periodically using actuarial and statistical techniques to
Total payments 599,827 550,396 produce current estimates. Adjustments to claims
liabilities are charged or credited to expense in the period
Total unpaid claims at end of year $ 36,878 $ 30,870
in which they are made. The Local Government Group
Insurance Fund considers investment income in
determining if a premium deficiency exists.
B. Local Government Group Insurance
The Local Government Group Insurance Fund issues
The Local Government Group Insurance Fund, a public separate financial statements that may be obtained by
entity risk pool, was established in July 1991 to provide a writing the Department of Finance and Administration,
program of health insurance coverage for employees of Division of Accounts, 312 Rosa L. Parks Avenue, 21st
local governments and quasi-governmental organizations Floor William R. Snodgrass Tennessee Tower, Nashville,
that were established for the primary purpose of TN 37243-0298 or by calling (615) 532-5823.
providing services for or on the behalf of state and local
governments. In accordance with Tennessee Code As discussed, the Local Government Group Insurance
Annotated 8-27-401 and 8-27-702, all local governments Fund establishes a liability for both reported and
and quasi-governmental organizations described above unreported insured events, which includes estimates of
are eligible to participate. Fund members at June 30, both future payments of losses and related claim
2021, included 70 counties, 196 municipalities and 119 adjustment expenses. The following represents changes
quasi-governmental organizations, with 16,486 active in those aggregate liabilities during the past two years
employees maintaining coverage through one of four (expressed in thousands):
options: premier preferred provider organization plan
(PPO), standard preferred provider organization plan
(PPO), limited preferred provider organization plan
(PPO), or the consumer driven health plan with health
savings account (CDHP/HSA). The state does not
retain any risk for losses by this fund.
The Local Government Group Insurance Fund assumes
responsibility for: determining plan benefits and
eligibility, establishing premiums sufficient to fund plan
obligations, recording and reporting financial transactions
106 Notes to the Financial Statements
State of Tennessee
2021 2020 liability purposes but is responsible for its own worker’s
Unpaid claims at beginning
of year $ 8,436 $ 9,941
compensation coverage.
Incurred claims: The RMF liabilities are reported when it is probable that
Provision for insured events of the
current year 181,339 155,903 a loss has occurred and the amount of that loss can be
Increase (decrease) in provision for reasonably estimated. Liabilities include an amount for
insured events of prior years 1,949 (1,595)
claims that have been incurred but not reported. Because
Total incurred claims expenses 183,288 154,308 actual claims liabilities depend on such complex factors
as inflation, changes in legal doctrines, and damage
Payments:
Claims attributable to insured
awards, the process used in computing claims liability
events of the current year 168,473 147,505 does not necessarily result in an exact amount. Claims
liabilities are reevaluated annually to take into
Claims attributable to insured
events of prior years 10,285 8,308 consideration recently settled claims, the frequency of
claims, and other economic and social factors. The
Total payments 178,758 155,813
present value of the casualty liability as actuarially
Total unpaid claims at end of year $ 12,966 $ 8,436 determined was $131.2 million (discounted at 1.0
percent) at June 30, 2021 and $135.02 million (discounted
at 1.0 percent) at June 30, 2020. The accrued liability for
C. Risk Management Fund incurred property losses was $13.96 million at June 30,
It is the policy of the state not to purchase commercial 2021 and $12.71 million at June 30, 2020. The changes
insurance for the risks associated with casualty losses for in the balances of the claims liabilities during fiscal years
general liability, automobile liability, medical malpractice 2020 and 2021 were as follows (expressed in thousands):
liability and workers' compensation. By statute, the
maximum liability for general liability, automobile 2020-2021 2019-2020
liability, and medical malpractice liability is $300
thousand per person and $1 million per occurrence. The Beginning of Fiscal Year Liability $ 191,803 $ 144,905
state’s management believes it is more economical to Current Year Claims and Changes
manage these risks internally and set aside assets for in Estimates 32,046 82,608
claim settlement in its internal service fund, the Risk
Claim Payments (30,347) (35,710)
Management Fund (RMF). The state purchases
commercial insurance for real property, crime, and Balance at Fiscal Year-End $ 193,502 $ 191,803
fidelity coverage on the state’s officials and employees,
and cyber liability coverage. For property coverage, the
deductible for an individual state agency is the first $25 The RMF held $234 million in cash at June 30, 2021 and
thousand to $75 thousand of losses based on a tiered $231 million in cash at June 30, 2020 that is designated
deductible system that accounts for averaged losses over for payment of these claims.
a three year period and the type of loss. The RMF is
responsible for property losses for the annual aggregate The RMF allocates the cost of providing claims servicing
deductible of $7.5 million for perils other than and claims payment by charging a premium to each
earthquake and flood. Purchased insurance coverage is agency based on a percentage of each organization’s
responsible for losses exceeding the $7.5 million annual expected loss costs which include both experience and
aggregate deductible. For earthquake, named storm, exposures. This charge considers recent trends in actual
wind/hail, and flood, there is a deductible of $10 million claims experience of the state as a whole.
per occurrence. The maximum insurance coverage is
$500 million per year for perils other than earthquake D. Employee Group Insurance
and flood. The maximum flood insurance coverage is
The Employee Group Insurance Fund, an entity other
$50 million per occurrence, except there is only $25
than a pool, was established in 1979 to provide a
million of coverage in flood zones A and V. The
program of health insurance coverage for the employees
maximum earthquake insurance coverage is $50 million
of the state with the risk retained by the state; therefore,
per occurrence, except there is only $25 million of
it is accounted for as an Internal Service Fund. In
coverage in the New Madrid Zone. Settled claims
accordance with Tennessee Code Annotated 8-27-202
resulting from these risks have not exceeded maximum
and 8-27-204, all state employees and certain former
commercial insurance coverage in any of the past three
employees with work related injuries are eligible to
fiscal years. All agencies and authorities of the state
participate. Fund members at June 30, 2021, included
participate in the RMF, except for the Dairy Promotion
61,028 active employees enrolled in one of three options:
Board and the Certified Cotton Growers’ Organization.
premier preferred provider organization plan (PPO),
The Tennessee Education Lottery Corporation
participates in the RMF for general
Notes to the Financial Statements 107
State of Tennessee
standard preferred provider organization plan (PPO), or part of Tennessee’s Medicaid program. Emphasis is
the consumer driven health plan with health savings placed on preventive care and the services most needed
account (CDHP/HSA). by children, including vaccinations, physician visits, and
hospitalization in addition to behavioral health, vision,
The Employee Group Insurance Fund establishes claims and dental benefits. Enrollment in the CoverKids
liabilities for self-insured options based on estimates of program totaled 43,235 at June 30, 2021.
the ultimate cost of claims that have been reported but
not settled, and of claims that have been incurred but not As part of the federally funded CHIP program,
reported. Employees and providers have 13 months to CoverKids receives the majority of funding from the
file medical claims. The process used to compute claims Federal Government at an approximately 83/17 ratio
liabilities does not necessarily result in an exact amount. match. There are no monthly premiums and the
Claims liabilities are recomputed periodically using program has no deductibles. Members pay affordable
actuarial and statistical techniques to produce current co-pays for services. CoverKids members used the
estimates. Adjustments to claims liabilities are charged or CoverKids Provider Network administered by BlueCare
credited to expense in the period in which they are made. through December 31, 2020. Thereafter, CoverKids
The Employee Group Insurance Fund considers moved from paying member claims to paying a per
investment income in determining if a premium member per month capitation fee to managed care
deficiency exists. organizations (MCOs). The three MCOs available to
CoverKids are Amerigroup Community Care, BlueCare
As discussed, the Employee Group Insurance Fund Tennessee, and United Healthcare Community Plan.
establishes a liability for both reported and unreported The following represents changes in those aggregate
insured events, which includes estimates of both future liabilities during the past two years (expressed in
payments of losses and related claim adjustment thousands):
expenses. The following represents changes in those
aggregate liabilities during the past two years (expressed 2021 2020
in thousands): Unpaid claims at beginning of year $ 5,173 $ 5,224
2021 2020 Incurred claims:
Unpaid claims at beginning of year $ 47,586 $ 54,367 Provision for insured events of the
current year 54,751 97,385
Incurred claims: Increase (decrease) in provision for
insured events of prior years (1,302) 1,620
Provision for insured events of the
893,908 825,694 Total incurred claims expenses 53,449 99,005
current year
Increase (decrease) in provision for
insured events of prior years 4,355 (5,968) Payments:
Total incurred claims expenses 898,263 819,726 Claims attributable to insured events
of the current year 54,703 92,199
Payments:
Claims attributable to insured events Claims attributable to insured events
of the current year 836,260 778,402 of prior years 3,919 6,857
Claims attributable to insured events Total payments 58,622 99,056
of prior years 51,662 48,105
Total unpaid claims at end of year $ - $ 5,173
Total payments 887,922 826,507
Total unpaid claims at end of year $ 57,927 $ 47,586
NOTE 17
Other Postemployment Benefits
E. CoverKids
(OPEB)
The CoverKids program was launched in 2007 as part of
the federally funded Children’s Health Insurance For the year ended June 30, 2021, primary government
Program (CHIP) and provides healthcare to children and employers reported $1.3 billion of net OPEB liability,
maternity coverage for pregnant women. In accordance $310.7 million of deferred outflows of resources related
with Tennessee Code Annotated 71-3-1103, the to OPEB, $333.3 million of deferred inflows of resources
CoverKids program serves eligible uninsured children related to OPEB, $86.1 million of OPEB expense and
who are not eligible for health care services under any $132.2 million of deferred outflows of benefits paid
108 Notes to the Financial Statements
State of Tennessee
subsequent to the measurement date. Component unit than 30 years, 70 percent; and less than 20 years, 60
employers reported $275.5 million of net OPEB liability, percent.
$50.8 million of deferred outflows of resources related to
OPEB, $166.6 million of deferred inflows of resources Employees covered by benefit terms−At July 1, 2020,
related to OPEB, $8.4 million of OPEB expense, and the following employees were covered by the benefit
$49.5 million of deferred outflows of benefits paid terms of the EGOP:
subsequent to the measurement date. These totals are
aggregated for all OPEB plans the above employers Primary Component
Government Units
participate in.
A. Closed Employee Group OPEB Plan Inactive employees currently receiving
benefit payments 5,074 2,058
1. General information about the OPEB plan Inactive employees entitled to but not yet
receiving benefit payments 77 30
Plan description−Employees of the state and of certain Active employees eligible for benefit payments 24,891 17,325
discretely presented component units, who were hired 30,042 19,413
prior to July 1, 2015, and choose coverage, are provided
with pre-65 retiree health insurance benefits through the
closed Employee Group OPEB Plan (EGOP) Contributions−Annually, an insurance committee,
administered by the Tennessee Department of Finance created in accordance with Tennessee Code Annotated
and Administration. This plan is considered to be a (TCA) 8-27-201, establishes the required contributions to
single-employer defined benefit plan that is used to the plan by member employees through the premiums
provide postemployment benefits other than pensions. established to approximate claims cost for the year. Pre-
This plan is closed to the employees of all participating age 65 retired members of the EGOP pay a premium
employers that were hired on or after July 1, 2015. The based on a blended rate that considers the cost of active
component units participating in the plan are the and retired employees as well as their individual years of
Tennessee Student Assistance Corporation, the service. These payments are made to the OPEB Trust.
Tennessee Housing Development Agency, the University Employers currently contribute to the OPEB Trust
of Tennessee, and the institutions that make up the State based on an actuarially determined contribution (ADC)
University and Community College System. The State of rate calculated in a manner to meet the funding goals of
Tennessee Postemployment Benefits Trust (OPEB the state. During the fiscal year ended June 30, 2021, the
Trust) was established to accumulate resources to pay total ADC for primary government and component unit
retiree benefits for EGOP participants. The OPEB Trust employers was $87.3 million and $49.8 million
prepares a stand-alone financial report that can be found respectively. The OPEB Trust recognized contributions
at https://www.tn.gov/finance/rd-doa/opeb22121/ of $99.1 million from the primary government and $49.5
million from the component units during the reporting
Benefits provided−The EGOP is offered to provide period. The state general assembly has the authority to
health insurance coverage to eligible retired and disabled change the contribution requirements of the employers
participants and is the only postemployment benefit participating in the EGOP.
provided to eligible pre-65 participants. Benefits are
established and amended by an insurance committee 2. Net OPEB Liability
created by Tennessee Code Annotated (TCA) 8-27-201. The primary government and component unit employers
All retirees and disabled employees of the primary EGOP related net OPEB liabilities of $561.6 million and
government and certain component units, who are $275.5 million, respectively, was measured as of June 30,
eligible and choose coverage, and who have not yet 2020, and was determined by an actuarial valuation as of
reached the age of 65 are enrolled in this plan. All June 30, 2020.
members have the option of choosing between the
premier preferred provider organization (PPO) plan, Actuarial assumptions−The total OPEB liability in the
standard PPO plan or the wellness healthsavings June 30, 2020, actuarial valuation was determined using
consumer-driven health plan (CDHP) for healthcare the following actuarial assumptions and other inputs,
benefits. Retired plan members receive the same plan applied to all periods included in the measurement,
benefits, as active employees, at a blended premium rate unless otherwise specified:
that considers the cost of active and retired employees.
This creates an implicit subsidy for the retirees. The
retirees cost is then directly subsidized, by the employers,
based on years of service. Therefore, retirees with 30
years of service are subsidized 80 percent; 20 but less
Notes to the Financial Statements 109
State of Tennessee
Inflation 2.10 percent and guidelines adopted by the trustees. Any changes to
Graded salary ranges from 3.44 to the investment policy will be the responsibility of the
Salary increases 8.72 percent based on age, including
inflation, averaging 4 percent
established trustees. The OPEB Trust investment policy
target asset allocation and allocation range for each major
9.02 percent for 2021, decreasing
Healthcare cost trend
annually to an ultimate rate of 4.50
asset class is summarized in the following table:
rates
percent for 2031 and later years
Members are required to make
Allocation Range
monthly contributions in order to
maintain their coverage. For the Target
purpose of this valuation a weighted Asset Class Minimum Maximum Allocation
Retiree's share of
benefit-related costs average has been used with weights Equities 25% 80% 53%
derived from the current Fixed income and short-
distribution of members among
plans offered.
term securities 20% 50% 25%
Real estate 0% 20% 10%
Private equity and
Unless noted otherwise, the actuarial demographic strategic lending 0% 20% 7%
Cash and cash
assumptions used in the June 30, 2020, valuations were
equivalents 0% 25% 5%
the same as those employed in the July 1, 2017, Pension 100%
Actuarial Valuation of the Tennessee Consolidated
Retirement System (TCRS) for Group 1 employees.
These assumptions were developed by TCRS based on The best-estimates of geometric real rates of return for
the results of an actuarial experience study for the period each major asset class included in the OPEB Trust target
July 1, 2012-June 30, 2016. The demographic asset allocation are summarized in the following table:
assumptions were adjusted to more closely reflect actual
and expected future experience. Mortality tables are used Long-term
Expected Real
to measure the probabilities of participants dying before
Asset Class Rate of Return
and after retirement. The mortality rates employed in
U.S. equity 4.11%
this valuation are taken from the RP-2014 Employees
Developed market
and Healthy Annuitants Mortality Table projected international equity 5.19%
generationally with Scale MP-2016 from the central year Emerging market
for pre-retirement. Post-retirement tables are Blue Collar international equity 5.29%
and adjusted with a 2 percent load for males and a Cash (Gov't) -0.69%
negative 3 percent load for females. Mortality rates for Private equity and strategic
impaired lives are the same as those used by TCRS and lending 4.11%
are taken from a gender distinct table published in the U.S. fixed income 0.00%
IRS Ruling 96-7 for disabled lives with a 10 percent load. Real estate 3.72%
Long-term expected rate of return−The long-term
Discount rate−The discount rate used to measure the
expected rate of return of 6 percent on OPEB plan
total OPEB liability was 6 percent. This was the same
investments was determined using a building-block
rate used at the prior measurement date. The projection
method in which best-estimate ranges of expected future
of cash flows used to determine the discount rate
real rates of return (expected returns, net of OPEB plan
assumed plan member contributions will be made at the
investment expense and inflation) are developed for each
current contribution rates and that employer
major class. These ranges are combined to produce the
contributions will be made at rates equal to the ADC
long-term expected rate of return by weighting the
rates. Inactive plan members are assumed to contribute
expected future real rates of return by the target asset
their share of the premium rate for the coverage option
allocation percentage and by adding expected inflation.
in which they are enrolled. Based on these assumptions,
TCA 8-27-802 establishes the responsibility of the
the OPEB Trust fiduciary net position was projected to
trustees to adopt written investment policies authorizing
be available to make all projected future benefit payments
how assets in the OPEB Trust may be invested and
for current plan members. Therefore, the long-term
reinvested by the State Treasurer. The treasurer may
expected rate of return on OPEB Trust investments was
invest trust assets in any security or investment in which
applied to all periods of projected benefit payments to
the Tennessee Consolidated Retirement System (TCRS)
determine the total OPEB liability.
is permitted to invest, provided that investments by the
OPEB Trust shall be governed by the investment policies
110 Notes to the Financial Statements
State of Tennessee
Changes in the Net OPEB Liability (expressed in thousands):
EGOP- Primary government
Increase (Decrease)
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability
(a) (b) (a)-(b)
Balances at June 30, 2019 $ 786,714 $ 144,202 $ 642,512
Changes for the year:
Service cost 26,249 26,249
Interest 46,916 46,916
Differences between expected and
actual experience (25,201) (25,201)
Change in assumptions (25,485) (25,485)
Contributions from employer 103,683 (103,683)
OPEB plan net investment income (2,975) 2,975
Changes in proportion and differences
between contributions and
proportionate share of contributions (4,221) (1,541) (2,680)
Benefit payments (54,077) (54,077) -
Net changes (35,819) 45,090 (80,909)
Balances at June 30, 2020 $ 750,895 $ 189,292 $ 561,603
EGOP- Component units
Increase (Decrease)
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability
(a) (b) (a)-(b)
Balances at June 30, 2019 $ 379,169 $ 69,501 $ 309,668
Changes for the year:
Service cost 12,876 12,876
Interest 23,015 23,015
Differences between expected and
actual experience (12,362) (12,362)
Change in assumptions (12,502) (12,502)
Contributions from employer 49,339 (49,339)
OPEB plan net investment income (1,460) 1,460
Changes in proportion and differences
between contributions and
proportionate share of contributions 4,221 1,541 2,680
Benefit payments (26,063) (26,063) -
Net changes (10,815) 23,357 (34,172)
Balances at June 30, 2020 $ 368,354 $ 92,858 $ 275,496
Changes in assumptions−The excise tax was removed Sensitivity of the net OPEB liability to changes in
from the liability calculation, as of the measurement date, the discount rate−The following presents the primary
due to a change in federal law concerning health benefits government and component unit employers net OPEB
provided to employees. Other minor changes include a liability related to the EGOP, as well as what the net
change in the long term inflation rate, adjustments to the OPEB liability would be if calculated using a discount
medical and drug trend rate to reflect more recent rate that is 1-percentage-point lower (5 percent) or 1-
experience and a change in the expected per capita health percentage-point higher (7 percent) than the current
claims. These changes combined to decrease the total discount rate (expressed in thousands):
OPEB liability.
Notes to the Financial Statements 111
State of Tennessee
1% Decrease Discount Rate 1% Increase EGOP- Primary government Deferred Deferred
(5%) (6%) (7%)
Outflows of Inflows of
Primary government $ 615,973 $ 561,603 $ 511,867
Component units 299,960 275,496 252,705 Resources Resources
Differences between actual
Sensitivity of the net OPEB liability to changes in and expected experience $ 54,903
Changes of assumptions $ 28,894 148,059
the healthcare cost trend rate−The following presents
Difference between project
the primary government and component unit employers and actual earnings on
net OPEB liability related to the EGOP, as well as what plan investments 10,743
the net OPEB liability would be if it were calculated Changes in proportion and
differences between
using a healthcare cost trend rate that is 1-percentage- contributions and
point lower (8.02 percent decreasing to 3.50 percent) or proportionate share of
1-percentage-point higher (10.02 percent decreasing to contributions 62,556 26,890
5.50 percent) than the current healthcare cost trend rate Contributions subsequent to the
(expressed in thousands): measurement date 99,096
Total $ 201,289 $ 229,852
Healthcare Cost
1% Decrease Trend Rates 1% Increase EGOP- Component units Deferred Deferred
(8.02% decreasing (9.02% decreasing (10.02% decreasing Outflows of Inflows of
to 3.50%) to 4.50%) to 5.50%) Resources Resources
Primary government $ 498,209 $ 561,603 $ 634,865
Differences between actual
Component units 244,498 275,496 311,051
and expected experience $ 26,933
Changes of assumptions $ 14,174 72,631
OPEB plan fiduciary net position− Detailed Difference between project
information about the State of Tennessee and actual earnings on
Postemployment Benefits Trust fiduciary net position is plan investments 5,270
available in the separately issued financial report. This Changes in proportion and
differences between
trust was established to accumulate the assets used to pay contributions and
benefits for participants in the EGOP. proportionate share of
contributions 31,338 67,004
3. OPEB Expense and Deferred Outflows of Resources and Contributions subsequent to the
Deferred Inflows of Resources Related to OPEB measurement date 49,514
Total $ 100,296 $ 166,568
OPEB expense−For the fiscal year ended June 30,
2021, the primary government recognized OPEB
expense of $37.7 million. Component unit employers The amounts shown above for “contributions
recognized OPEB expense of $8.4 million. subsequent to the measurement date” for the primary
government and component units will be recognized as a
Deferred outflows of resources and deferred inflows reduction to net OPEB liability in the following
of resources− For the fiscal year ended June, 30, 2021, measurement period.
the primary government and component unit employers
reported deferred outflows of resources and deferred Other amounts reported as deferred outflows of
inflows of resources related to OPEB paid by the EGOP resources and deferred inflows of resources related to
from the following sources (expressed in thousands): OPEB paid by the EGOP will be recognized in OPEB
expense as follows (expressed in thousands):
112 Notes to the Financial Statements
State of Tennessee
EGOP- Primary government employers. This plan does not include pharmacy. In
accordance with Tennessee Code Annotated (TCA) 8-27-
For the year ended June 30: 209, benefits are established and amended by
2022 $ (25,482) cooperation of insurance committees created by TCAs 8-
2023 (25,482) 27-201, 8-27-301, and 8-27-701. Retirees and disabled
2024 (25,482) employees of the state, component units, local education
2025 (25,600) agencies, and certain local governments who have
2026 (22,692) reached the age of 65, are Medicare eligible, and also
Thereafter (2,921) receive a benefit from the Tennessee Consolidated
Retirement System may participate in this plan. All plan
EGOP- Component units
members receive the same plan benefits at the same
premium rates. Many retirees receive direct subsidies
For the year ended June 30: toward their premium cost; however, participating
2022 $ (22,596) employers determine their own policy in this regard. The
2023 (22,596) state contributes to the premiums of state and
2024 (22,596) component unit retirees, as well as, to the premiums of
2025 (22,654) eligible retirees of local education agencies based on years
2026 (22,401)
of service. Therefore, retirees with 30 years of service
Thereafter (2,943)
receive $50 per month; 20 but less than 30 years, $37.50;
and 15 but less than 20 years, $25. This plan is funded
on a pay-as-you-go basis and there are no assets
accumulating in a trust that meets the criteria of
In the tables above, for the primary government and
paragraph 4 of GASB Statement No. 75.
component units, positive amounts will increase OPEB
expense while negative amounts will decrease OPEB
Employees covered by benefit terms−At July 1, 2020,
expense.
the following employees of the state and certain
component units were covered by the benefit terms of
B. Closed Tennessee OPEB Plan the TNP:
1. General information about the OPEB plan
Primary Component
Plan description−Employees of the state and of certain Government Units
discretely presented component units, who were hired
prior to July 1, 2015, are provided with post-65 retiree
health insurance benefits through the closed Tennessee Inactive employees currently receiving
OPEB Plan (TNP) administered by the Tennessee benefit payments 9,209 6,248
Inactive employees entitled to but not yet
Department of Finance and Administration. This plan is
receiving benefit payments 5,792 3,130
considered to be a multiple-employer defined benefit Active employees 27,089 19,791
plan that is used to provide postemployment benefits 42,090 29,169
other than pensions. However, for accounting purposes,
this plan will be treated as a single-employer plan. This
plan is closed to the employees of all participating In accordance with TCA 8-27-209, the state insurance
employers that were hired on or after July 1, 2015. The committees established by TCAs 8-27-201, 8-27-301, and
component units participating in the plan are the 8-27-701 determine the required payments to the plan by
Tennessee Student Assistance Corporation, the member employers and employees. Claims liabilities of
Tennessee Housing Development Agency, the University the plan are periodically computed using actuarial and
of Tennessee, and the institutions that make up the State statistical techniques to establish premium rates.
University and Community College System. The state is Administrative costs are allocated to plan participants.
responsible for the liability related to both primary Employers contribute towards employee costs based on
government and component unit retirees. This plan also their own developed policies. During the current
serves eligible post-65 retirees of local education agencies reporting period, the State of Tennessee paid $4.8 million
and local governments. The state is a governmental and $2.5 million to the TNP for OPEB benefits as they
nonemployer contributing entity for eligible post-65 came due for primary government and component unit
retirees of local education agencies. employees, respectively.
Benefits provided−The state offers the TNP to help fill 2. Total OPEB Liability
most of the coverage gaps created by Medicare and is the The state’s total OPEB liabilities of $125.8 million and
only postemployment benefit provided to eligible post-65 $80.4 million, related to benefits offered to primary
retired and disabled employees of participating government and component unit employees, respectively,
Notes to the Financial Statements 113
State of Tennessee
was measured as of June 30, 2020, and was determined Changes in the Total OPEB Liability (expressed in
by an actuarial valuation as of July 1, 2020. thousands):
Actuarial assumptions−The total OPEB liability in the TNP Primary government
July 1, 2020, actuarial valuation was determined using the
following actuarial assumptions and other inputs, applied Total OPEB
to all periods included in the measurement, unless Liability
otherwise specified: (a)
Balances at June 30, 2019 $ 107,046
Inflation 2.10 percent Changes for the year:
Graded salary ranges from 3.44 to
Service cost 1,599
Salary increases 8.72 percent based on age, including Interest 3,719
inflation, averaging 4 percent Differences between expected and
The premium subsidies provided to actual experience (535)
retirees in the Tennessee Plan are Change in assumptions 19,166
Healthcare cost trend
assumed to remain unchanged for
rates Changes in proportion and differences
the entire projection; therefore,
trend rates are not applicable. between contributions and
proportionate share of contributions (225)
Unless noted otherwise, the actuarial demographic Benefit payments (4,955)
assumptions used in the June 30, 2020, valuations were Net changes 18,769
the same as those employed in the July 1, 2017, Pension Balances at June 30, 2020 $ 125,815
Actuarial Valuation of the Tennessee Consolidated
TNP Component units
Retirement System (TCRS) for Group 1 employees.
These assumptions were developed by TCRS based on Total OPEB
the results of an actuarial experience study for the period Liability
July 1, 2012-June 30, 2016. The demographic (a)
assumptions were adjusted to more closely reflect actual
Balances at June 30, 2019 $ 68,000
and expected future experience. Mortality tables are used
Changes for the year:
to measure the probabilities of participants dying before
Service cost 1,022
and after retirement. The mortality rates employed in
this valuation are taken from the RP-2014 Employees Interest 2,376
and Healthy Annuitants Mortality Table projected Differences between expected and
generationally with Scale MP-2016 from the central year actual experience (342)
for pre-retirement. Post-retirement tables are Blue Collar Change in assumptions 12,244
and adjusted with a 2 percent load for males and a Changes in proportion and differences
negative 3 percent load for females. Mortality rates for between contributions and
impaired lives are the same as those used by TCRS and proportionate share of contributions 225
are taken from a gender distinct table published in the Benefit payments (3,148)
IRS Ruling 96-7 for disabled lives with a 10 percent load. Net changes 12,377
Balances at June 30, 2020 $ 80,377
Discount rate−The discount rate used to measure the
total OPEB liability was 2.21 percent. This rate reflects
the interest rate derived from yields on 20-year, tax- Changes in assumptions−The discount rate was
exempt general obligation municipal bonds, prevailing on changed from 3.51 percent as of the beginning of the
the measurement date, with an average rating of AA as measurement period to 2.21 percent as of June 30, 2020.
shown on the Bond Buyer GO 20-Bond Municipal Bond This change in assumption increased the total OPEB
Index. liability by 17.5 percent. Other changes include a slight
decrease in the long-term inflation rate and updated
medical and drug trend rates. These changes had
minimal impact on total OPEB liability.
Sensitivity of the total OPEB liability to changes in
the discount rate−The following presents the state’s
total OPEB liability for primary government and
component unit retirees participating in the TNP, as well
as what the total OPEB liability would be if it were
114 Notes to the Financial Statements
State of Tennessee
calculated using a discount rate that is 1-percentage-point component units will be recognized as a reduction to
lower (1.21 percent) or 1-percentage-point higher (3.21 total OPEB liability in the following measurement
percent) than the current discount rate (expressed in period.
thousands):
Other amounts reported as deferred outflows of
1% Decrease Discount Rate 1% Increase resources and deferred inflows of resources will be
(1.21%) (2.21%) (3.21%)
Primary government $ 144,000 $ 125,815 $ 110,803
recognized in OPEB expense as follows (expressed in
Component units 91,490 80,377 71,147 thousands):
3. OPEB Expense and Deferred Outflows of Resources and TNP Primary government
Deferred Inflows of Resources Related to OPEB
OPEB expense−For the fiscal year ended June 30, For the year ended June 30:
2021, the state recognized OPEB expense of $6.2 million 2022 $ 832
and $4.5 million, for the primary government and
2023 832
component unit retirees, respectively.
2024 832
Deferred outflows of resources and deferred inflows 2025 2,560
of resources−For the fiscal year ended June 30, 2021, 2026 3,120
the state reported deferred outflows of resources and Thereafter 1,149
deferred inflows of resources related to OPEB benefits
in the TNP from the following sources (expressed in TNP Component units
thousands):
For the year ended June 30:
TNP Primary government Deferred Deferred
2022 $ 1,115
Outflows of Inflows of
2023 1,115
Resources Resources
2024 1,116
Differences between actual
2025 1,742
and expected experience $ 2,803
Changes of assumptions $ 17,453 4,297 2026 1,795
Thereafter 759
Changes in proportion and
differences between
contributions and
proportionate share of
In the tables above, for the primary government and
contributions 1,217 2,245 component units, positive amounts will increase OPEB
Payments subsequent to the expense while negative amounts will decrease OPEB
measurement date 4,812
expense.
Total $ 23,482 $ 9,345
C. Special Funding Situation
TNP Component units Deferred Deferred
Outflows of Inflows of The state is in a special funding situation and reports a
Resources Resources liability, deferred outflows of resources, deferred inflows
Differences between actual
of resources, and expense related to its statutory
requirement to contribute to the closed Teacher Group
and expected experience $ 1,791
OPEB Plan (TGOP) and TNP for eligible retired and
Changes of assumptions $ 11,150 2,745
disabled teachers employed by local education agencies.
Changes in proportion and
differences between 1. General information about the OPEB plan
contributions and Plan description−The Tennessee Department of
proportionate share of Finance and Administration administers the closed
contributions 2,245 1,217
TGOP as well as the closed TNP. Both plans are
Payments subsequent to the
considered to be multiple-employer defined benefit plans
measurement date 2,543
that are used to provide postemployment benefits other
Total $ 15,938 $ 5,753 than pensions. However, for accounting purposes, these
plans will be treated as single-employer plans. All eligible
pre-65 retired teachers and disability participants of local
The amounts shown above for “payments subsequent to
education agencies, who choose coverage, participate in
the measurement date” for the primary government and
Notes to the Financial Statements 115
State of Tennessee
the TGOP. All eligible post-65 retired teachers and An insurance committee, created in accordance with
disability participants of local education agencies, who TCA 8-27-301, establishes the required payments to the
choose coverage, participate in the TNP. The TNP also TGOP by member employers and employees through
includes eligible retirees of the primary government, the blended premiums established for active and retired
certain component units of the state, and certain local employees. For the TNP, insurance committees, created
governmental entities. These plans are closed to the in accordance with TCAs 8-27-201, 8-27-301, and 8-27-
employees of all participating employers that were hired 701, cooperate to establish the required payments to the
on or after July 1, 2015. plan by member employers and employees through the
premiums established for retired members. Claims
Benefits provided−The state offers the TGOP to liabilities of the plans are periodically computed using
provide health insurance coverage to eligible pre-65 actuarial and statistical techniques to establish premium
retired teachers and disabled participants of local rates. For the fiscal year ended June 30, 2021, the state
education agencies. The TNP is offered to help fill most paid $14 million and $11.7 million to the TGOP and
of the coverage gaps created by Medicare for eligible TNP, respectively, for OPEB benefits as they came due.
post-65 retired teachers and disabled participants of local
education agencies. This insurance coverage is the only Actuarial assumptions−The total OPEB liability in the
postemployment benefit provided to retirees. The TNP June 30, 2020, actuarial valuation was determined using
does not include pharmacy. An insurance committee the following actuarial assumptions and other inputs,
created in accordance with Tennessee Code Annotated applied to all periods included in the measurement,
(TCA) 8-27-301 establishes and amends the benefit terms unless otherwise specified:
of the TGOP. All members have the option of choosing
between the premier preferred provider organization Inflation 2.10 percent
(PPO), standard PPO, limited PPO, or the wellness
Graded salary ranges from 3.44 to
healthsavings consumer-driven health plan (CDHP) for
Salary increases 8.72 percent based on age, including
healthcare benefits. Retired plan members of the TGOP inflation, averaging 4 percent
receive the same plan benefits as active employees at a
blended premium rate that considers the cost of all Health trend for the TGOP is 9.02
participants. This creates an implicit subsidy for retirees. percent in 2021, decreasing
annually to an ultimate rate of 4.50
Individual employers may also provide a direct subsidy,
percent for 2031 and later years. As
according to their own policies and TCA. The state, as a
Healthcare cost trend it relates to the TNP, the premium
governmental nonemployer contributing entity, provides rates subsidies provided to retirees in the
a direct subsidy for eligible retirees’ premiums, based on Tennessee Plan are assumed to
years of service. Therefore, retirees with 30 or more remain unchanged for the entire
years of service will receive 45 percent; 20 but less than projection, therefore trend rates are
30 years, 35 percent; and less than 20 years, 20 percent of not applicable.
the scheduled premium. In accordance with TCA 8-27-
209, benefits of the TNP are established and amended by Unless noted otherwise, the actuarial demographic
cooperation of insurance committees created by TCAs 8- assumptions used in the June 30, 2020, valuations were
27-201, 8-27-301, and 8-27-701. Retirees and disabled the same as those employed in the July 1, 2017, Pension
employees of the state, component units, local education Actuarial Valuation of the Tennessee Consolidated
agencies, and certain local governments who have Retirement System (TCRS) for Group 1 employees.
reached the age of 65, are Medicare eligible, and also These assumptions were developed by TCRS based on
receive a benefit from the Tennessee Consolidated the results of an actuarial experience study for the period
Retirement System may participate in this plan. All plan July 1, 2012-June 30, 2016. The demographic
members receive the same plan benefits at the same assumptions were adjusted to more closely reflect actual
premium rates. Many retirees receive direct subsidies and expected future experience. Mortality tables are used
toward their premium cost; however, participating to measure the probabilities of participants dying before
employers determine their own policy in this regard. The and after retirement. The mortality rates employed in
state, as a governmental nonemployer contributing entity, this valuation are taken from the RP-2014 Employees
contributes to the premiums of eligible retirees of local and Healthy Annuitants Mortality Table projected
education agencies based on years of service. Therefore, generationally with Scale MP-2016 from the central year
retirees with 30 years of service receive $50 per month; for pre-retirement. Post-retirement tables are Blue Collar
20 but less than 30 years, $37.50; and 15 but less than 20 and adjusted with a 2 percent load for males and a
years, $25. The TGOP and TNP are funded on a pay-as- negative 3 percent load for females. Mortality rates for
you-go basis and there are no assets accumulating in a impaired lives are the same as those used by TCRS and
trust that meets the criteria of paragraph 4 of GASB are taken from a gender distinct table published in the
Statement No. 75. IRS Ruling 96-7 for disabled lives with a 10 percent load.
116 Notes to the Financial Statements
State of Tennessee
Discount rate−The discount rate used to measure the actuarially determined. At June 30, 2020, the state’s
total OPEB liability was 2.21 percent. This rate reflects proportion of the collective total Local Education
the interest rate derived from yields on 20-year, tax- Agency employer liabilities for the TGOP and TNP was
exempt general obligation municipal bonds, prevailing on 28.2 percent and 76.2 percent, respectively. This resulted
the measurement date, with an average rating of AA as in a change in proportion from the prior measurement
shown on the Bond Buyer GO 20-Bond Municipal Bond date of (.13) percent and 3.5 percent to the TGOP and
Index. TNP, respectively.
Sensitivity of proportionate share of collective total Changes in assumptions−The discount rate was
OPEB liability to changes in the discount rate−The changed from 3.51 percent as of the beginning of the
following presents the state’s proportionate share of the measurement period to 2.21 percent as of June 30, 2020.
collective total OPEB liability for the special funding This change in assumption increased the total OPEB
situations related to the TGOP and TNP, as well as what liability. Other changes in assumptions include
the share of the total OPEB liability would be if it were adjustments to initial per capita costs and health trend
calculated using a discount rate that is 1-percentage-point rates, as well as a slight decrease in the inflation rate.
lower (1.21 percent) or 1-percentage-point higher (3.21
percent) than the current discount rate (expressed in 3. OPEB Expense and Deferred Outflows of Resources and
thousands): Deferred Inflows of Resources Related to OPEB
OPEB expense− For the year ended June 30, 2021, the
1% Decrease Discount Rate 1% Increase state recognized OPEB expense of $18.7 million and
(1.21%) (2.21%) (3.21%)
Share of collective total $19.1 million in the TGOP and TNP, respectively,
OPEB liability- TGOP $ 279,110 $ 260,059 $ 241,751 related to special funding situations. At June 30, 2021,
Share of collective total
OPEB liability- TNP 312,833 266,093 228,593
the state reported deferred outflows of resources and
deferred inflows of resources related to OPEB, as a
result of special funding situations, from the following
Sensitivity of proportionate share of collective total
sources (expressed in thousands):
OPEB liability to changes in the healthcare cost
trend rate−The following presents the state’s
TGOP Deferred Deferred
proportionate share of the collective total OPEB liability Outflows of Inflows of
for the special funding situations related to the TGOP, as Resources Resources
well as, what the share of the total OPEB liability would Differences between actual
be if it were calculated using a healthcare cost trend rate and expected experience $ 8,659 $ 21,844
that is 1-percentage-point lower (8.02 percent decreasing Changes of assumptions 28,698 20,515
to 3.50 percent) or 1-percentage-point higher (10.02 Changes in proportion and
percent decreasing to 5.50 percent) than the current differences between benefits
healthcare cost trend. Premium subsidies in the TNP are paid and proportionate
share of benefits paid 11,486 12,994
projected to remain unchanged, and consequently, trend
Payments subsequent to the
rates are not applicable (expressed in thousands):
measurement date 14,001
Total $ 62,844 $ 55,353
Healthcare Cost
1% Decrease Trend Rates 1% Increase
TNP Deferred Deferred
(8.02% decreasing (9.02% decreasing (10.02% decreasing
Outflows of Inflows of
to 3.50%) to 4.50%) to 5.50%)
Resources Resources
Share of collective
total OPEB
Differences between actual
liability- TGOP $ 230,788 $ 260,059 $ 294,665 and expected experience $ 6,554 $ 15,465
Changes of assumptions 51,798 19,369
Changes in proportion and
2. Total OPEB Liability differences between benefits
At June 30, 2021, the state reported a liability of $260.1 paid and proportionate
million and $266.1 million for its proportionate shares of share of benefits paid 72,663 1,671
the collective total OPEB liability from special funding Payments subsequent to the
situations related to the TGOP and TNP, respectively. measurement date 11,728
Total $ 142,743 $ 36,505
The total OPEB liabilities were measured as of June 30,
2020, by an actuarial valuation dated July 1, 2020. The
state’s portion of the collective total OPEB liability was The amounts shown above for “payments subsequent to
based on a projection of the state’s long-term share of the measurement date” will be recognized as a reduction
contributions to the OPEB plan relative to the projected to total OPEB liability in the following measurement
share of benefit payments of all participating employers, period.
Notes to the Financial Statements 117
State of Tennessee
Means Committee of the Senate, the Chair of the
Other amounts reported as deferred outflows of Finance, Ways and Means Committee of the House of
resources and deferred inflows of resources related to Representatives and the chair of the consolidated
OPEB will be recognized in OPEB expense as follows retirement board. The trustees are responsible for the
(expressed in thousands): establishment of any trust for the purpose of pre-funding
OPEB, as well as for the adoption of an investment
TGOP policy authorizing how assets in the OPEB Trust may be
invested. The investment of OPEB Trust assets is
For the year ended June 30: administered by the state treasurer.
2022 $ (1,267)
2023 (1,267)
Rate of return−For the year ended June 30, 2021, the
annual money-weighted rate of return on investments
2024 (1,267)
was 29.76 percent. The money-weighted rate of return
2025 (1,267)
expresses investment performance, net of OPEB plan
2026 (1,235)
investment expense, adjusted for the changing amounts
Thereafter (207) actually invested.
TNP Net OPEB liability−The components of the net OPEB
liability for the OPEB Trust at June 30, 2021, were as
For the year ended June 30: follows (expressed in thousands):
2022 $ 16,411
2023 16,411 Total OPEB liability $ 1,153,592
2024 16,452 Plan fiduciary net position (446,656)
2025 16,633 Net OPEB liability $ 706,936
2026 10,092
Thereafter 18,511 Plan fiduciary net position
as a percentage of the
In the tables above, positive amounts will increase OPEB total OPEB liability 38.72%
expense while negative amounts will decrease OPEB
expense. Discount rate−The discount rate used to measure the
total OPEB liability was 6%.
D. State of Tennessee Postemployment
Benefits Trust Sensitivity of net OPEB liability to changes in the
discount rate− The following presents the net OPEB
The State of Tennessee Postemployment Benefits Trust liability of the OPEB Trust, as well as what the net
(OPEB Trust) was established for the purpose of pre- OPEB liability would be if it were calculated using a
funding OPEB accrued by employees of the state and discount rate that is 1-percentage-point lower (5 percent)
certain component units. While the trustees have the or 1-percentage-point higher (7 percent) than the current
discretion to also establish a trust for the purpose of pre- discount rate (expressed in thousands).
funding OPEB accrued by authorized employees of local
education agencies, at this time, the OPEB Trust is 1% Decrease Discount Rate 1% Increase
limited to eligible pre-65 retirees that participate in the (5%) (6%) (7%)
EGOP. Please refer to note 17A for the EGOP plan
Net OPEB Liability $ 788,057 $ 706,936 $ 632,173
description, information on plan investments, and any
actuarial assumptions not listed in sections that follow.
Actuarial procedures were used to roll forward the total Sensitivity of net OPEB liability to changes in the
OPEB liability, as determined in the employer reporting healthcare cost trend rate− The following presents the
valuation, to the OPEB plan’s fiscal year end. net OPEB liability of the OPEB Trust, as well as what
the net OPEB liability would be if it were calculated
Management of the underlying plan being served by the using a healthcare cost trend rate that is 1-percentage-
OPEB Trust is vested in the insurance committee point lower (8.02 percent decreasing to 3.50 percent) or
established in TCA 8-27-201. The trustees of the OPEB 1-percentage-point higher (10.02 percent decreasing to
Trust were established in TCA 8-27-801 to be the four 5.50 percent) than the current healthcare cost trend rate
trustees designated in TCA 8-27-205(f). These designated (expressed in thousands).
individuals include the Commissioner of Finance and
Administration, the Chair of the Finance, Ways and
118 Notes to the Financial Statements
State of Tennessee
Healthcare Cost Tennessee Student Assistance Corporation, the
1% Decrease Trend Rates 1% Increase Tennessee Housing Development Agency, the State
(8.02% decreasing (9.02% decreasing (10.02% decreasing
to 3.50%) to 4.50%) to 5.50%)
University and Community College System, and the
Net OPEB Liability $ 600,835 $ 706,936 $ 829,454 University of Tennessee.
Benefits provided−Tennessee Code Annotated Title 8,
NOTE 18 Chapters 34-37 establishes the benefit terms and can be
amended only by the Tennessee General Assembly.
Pension plans Members of the Closed State and Higher Education
Employee Pension Plan are eligible to retire with an
unreduced benefit at age 60 with 5 years of service credit
A. Tennessee Consolidated Retirement or after 30 years of service credit regardless of age.
System (TCRS) Benefits are determined using the following formula:
TCRS is a public employee retirement system comprised Average of Member's Highest
Compensation for 5 Consecutive Years of
of defined benefit pension plans covering Tennessee Years (up to the Social Security Service
state employees, employees of the state’s higher Integration Level) X 1.50% X Credit X 105%
education systems, teachers, and employees of political PLUS
subdivisions in Tennessee. The TCRS was established in Average of Member's Highest
Compensation for 5 Consecutive Years of
1972 by a statutory enactment of the Tennessee General Years (over the Social Security Service
Assembly. The provisions of the TCRS are codified in Integration Level) X 1.75% X Credit X 105%
Tennessee Code Annotated Title 8, chapters 34-37. In
accordance with Tennessee Code Annotated Title 8, A reduced early retirement benefit is available at age 55
Chapter 34, Section 202, all funds invested, securities, and vested. Members vest with five years of service
cash, and other property of the TCRS are held in trust credit. Service related disability benefits are provided
and can be expended only for the purposes of the trust. regardless of length of service. Five years of service is
Although the assets for all pension plans within the required for non-service related disability eligibility. The
TCRS are commingled for investment purposes, the service related and non-service related disability benefits
assets of each separate plan may legally be used only for are determined in the same manner as a service
the payment of benefits to the members of that plan and retirement benefit but are reduced 10 percent and include
for its administration, in accordance with the terms of the projected service credits. A variety of death benefits are
plan. available under various eligibility criteria.
The Tennessee Department of Treasury, an agency in the Member and beneficiary annuitants are entitled to
legislative branch of state government, administers the automatic cost of living adjustments (COLAs) after
plans of the TCRS. The TCRS issues a publicly available retirement. A COLA is granted each July for annuitants
financial report that can be obtained at https:// retired prior to July 2 of the previous year. The COLA is
treasury.tn.gov/. based on the change in the consumer price index (CPI)
during the prior calendar year, capped at 3 percent, and
B. Defined Benefit Plan applied to the current benefit. No COLA is granted if
the change in the CPI is less than one-half percent. A
Closed State and Higher Education Employee one percent COLA is granted if the CPI change is
Pension Plan between one-half percent and one percent. A member
who leaves employment may withdraw their employee
1. General information about the pension plan contributions, plus any accumulated interest.
Plan description−Employees of the state and four of its
discretely presented component units becoming Employees covered by benefit terms−At the
members of TCRS before July 1, 2014, are provided with measurement date of June 30, 2020, the following
pensions through the Closed State and Higher Education employees of the state and the four component units
Employee Pension Plan. This plan is one of several mentioned above were covered by the benefit terms:
comprising the TCRS administered Public Employee
Retirement Plan, an agent, multiple-employer defined Inactive employees or beneficiaries currently
benefit pension plan. The Closed State and Higher receiving benefits 60,183
Education Employee Pension Plan stopped accepting Inactive employees entitled to but not yet receiving
new membership on June 30, 2014, but will continue benefits 39,152
providing benefits to existing members and retirees. The Active employees 35,025
four discretely presented component units are the 134,360
Notes to the Financial Statements 119
State of Tennessee
Contributions−Contributions for employees are The long-term expected rate of return on pension plan
established in the statutes governing the TCRS and may investments was established by the TCRS Board of
only be changed by the Tennessee General Assembly. Trustees in conjunction with the June 30, 2016, actuarial
Employees are non-contributory, except for a small experience study. This return was selected from a range
group of public safety officers and judges. The state of values developed using historical market returns and
makes employer contributions at the rate set by the future capital market projection. The future capital
Board of Trustees as determined by an actuarial market projections were produced using a building-block
valuation. For the year ended June 30, 2021, employer method in which a best-estimate of expected future real
contributions by the state were $301 million based on an rates of return (expected returns, net of pension plan
average rate of 20.74 percent of covered payroll. For the investment expense and inflation) is developed for each
year ended June 30, 2021, employer contributions by the major asset class. These best-estimates are combined to
four previously mentioned component units were $125.9 produce the future capital market projection by weighting
million based on an average rate of 20.24 percent of the expected future real rates of return by the target asset
covered payroll. allocation percentage and by adding expected inflation of
2.5 percent. The best-estimates of geometric real rates of
By law, employer contributions are required to be paid. return and the TCRS investment policy target asset
The employer’s actuarially determined contribution allocation for each major asset class are summarized in
(ADC) and member contributions are expected to the following table:
finance the costs of benefits earned by members during
the year, the cost of administration, as well as an Long-term
amortized portion of any unfunded liability. Expected Real Target
Asset Class Rate of Return Allocation
2. Net Pension Liability (Asset) U.S. equity 5.69% 31%
The net pension liability (asset) of the state, as well as Developed market
that of the four previously mentioned component units, international equity 5.29% 14%
was measured as of June 30, 2020, and the total pension Emerging market
liability used to calculate net pension liability (asset) was international equity 6.36% 4%
determined by an actuarial valuation as of that date. Private equity and strategic
lending 5.79% 20%
Actuarial assumptions−The total pension liability as of U.S. fixed income 2.01% 20%
June 30, 2020, was determined using the following Real estate 4.32% 10%
actuarial assumptions, applied to all periods included in Short-term securities 0.00% 1%
the measurement: 100%
Inflation 2.5 percent
The long-term expected rate of return on pension plan
Graded salary ranges from 3.44 to investments was established by the TCRS Board of
Salary increases 8.72 percent based on age, including Trustees as 7.25 percent based on a comparison of
inflation, averaging 4 percent historical market returns and future capital market
7.25 percent, net of pension plan projections.
Investment rate of
investment expenses, including
return
inflation Discount rate−The discount rate used to measure the
Cost-of-living total pension liability was 7.25 percent. The projection of
2.25 percent
adjustment cash flows used to determine the discount rate assumed
that employee contributions will be made at the current
Mortality rates were based on customized tables based on rate and that contributions from the state will be made at
actual experience, including a projection of mortality the actuarially determined contribution rate pursuant to
improvement using Scale MP-2019, with static projection an actuarial valuation in accordance with the funding
to 6 years beyond the valuation date. policy of the TCRS Board of Trustees and as required to
be paid by state statute. Based on those assumptions, the
The actuarial assumptions used in the June 30, 2020, pension plan’s fiduciary net position was projected to be
actuarial valuation were based on the results of an available to make projected future benefit payments of
actuarial experience study performed for the period July current active and inactive members and to cover
1, 2012, through June 30, 2016. The demographic administrative expenses. Therefore, the long-term
assumptions were adjusted to more closely reflect actual expected rate of return on pension plan investments was
and expected future experience. applied to all periods of projected benefit payments to
determine the total pension liability.
120 Notes to the Financial Statements
State of Tennessee
Changes in Net Pension Liability (Asset) (expressed in thousands):
Primary Government Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
(a) (b) (a)-(b)
Balance at 6/30/19 $ 11,877,038 $ 10,888,087 $ 988,951
Effects of change in proportion 43,478 39,857 3,621
Adjusted balance at 6/30/2019 11,920,516 10,927,944 992,572
Changes for the year:
Service cost 120,580 120,580
Interest 847,695 847,695
Differences between expected and
actual experience 27,728 27,728
Contributions-employer 305,873 (305,873)
Contributions-employees 263 (263)
Net investment income 532,295 (532,295)
Benefit payments, including refunds
of employee contributions (697,506) (697,506)
Administrative expense (2,228) 2,228
Other 848 (848)
Net changes $ 298,497 $ 139,545 $ 158,952
Balance at 6/30/20 $ 12,219,013 $ 11,067,489 $ 1,151,524
Component Units Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
(a) (b) (a)-(b)
Balance at 6/30/19 $ 5,082,703 $ 4,659,488 $ 423,215
Effects of change in proportion (43,478) (39,857) (3,621)
Adjusted balance at 6/30/2019 5,039,225 4,619,631 419,594
Changes for the year:
Service cost 50,973 50,973
Interest 358,351 358,351
Differences between expected and
actual experience 11,722 11,722
Contributions-employer 129,304 (129,304)
Contributions-employees 111 (111)
Net investment income 225,020 (225,020)
Benefit payments, including refunds
of employee contributions (294,861) (294,861)
Administrative expense (942) 942
Other 358 (358)
Net changes $ 126,185 $ 58,990 $ 67,195
Balance at 6/30/20 $ 5,165,410 $ 4,678,621 $ 486,789
Sensitivity of the net pension liability to changes in using a discount rate that is 1 percentage–point lower
the discount rate−The following presents the net (6.25 percent) or 1 percentage-point higher (8.25 percent)
pension liability of the State of Tennessee and the four than the current rate (expressed in thousands):
mentioned component units calculated using the
discount rate of 7.25 percent, as well as, what the net
pension liability (asset) would be if it were calculated
Notes to the Financial Statements 121
State of Tennessee
Primary Government Year Ended June 30:
2022 $ (25,735)
Current
2023 30,091
1% Decrease Discount 1% Increase
(6.25%) Rate (7.25%) (8.25%) 2024 44,916
Net pension 2025 49,149
liability (asset) $ 2,552,316 $ 1,151,524 $ (29,832) $ 98,421
Component Units In the table shown above, positive amounts will increase
pension expense while negative amounts will decrease
Current pension expense.
1% Decrease Discount 1% Increase
(6.25%) Rate (7.25%) (8.25%)
Component Units Deferred Deferred
Net pension
liability (asset) $ 1,078,955 $ 486,789 $ (12,611) Outflows of Inflows of
Resources Resources
3. Pension Expense (Income) and Deferred Outflows of Resources Differences between expected
and Deferred Inflows of Resources Related to Pensions and actual experience $ 14,041 $ 4,422
Pension expense−For the year ended June 30, 2021, the
state and the four mentioned component units Net difference between projected
recognized pension expense of $346.1 million and $140.9 and actual earnings on pension
million, respectively.
plan investments $ 30,251
Deferred outflows of resources and deferred inflows
of resources−For the year ended June 30, 2021, the state Effects of change in proportion $ 128 $ 4,235
and its four component units mentioned reported
deferred outflows of resources and deferred inflows of Contributions subsequent to the
resources related to pensions from the following sources measurement date of June 30,
(expressed in thousands):
2020 $ 125,947
Primary Government Deferred Deferred The amount shown above for “Contributions subsequent
Outflows of Inflows of
Resources Resources
to the measurement date of June 30, 2020,” will be
Differences between expected recognized as a reduction to net pension liability in the
and actual experience $ 33,216 $ 10,461 following measurement period.
Net difference between projected Other amounts reported as deferred outflows of
and actual earnings on pension resources and deferred inflows of resources related to
plan investments $ 71,559 pensions will be recognized in pension expense as
follows (expressed in thousands):
Effects of change in proportion $ 4,235 $ 128
Year Ended June 30:
Contributions subsequent to the
2022 $ (13,710)
measurement date of June 30,
2020 $ 301,037 2023 9,708
2024 18,988
The amount shown above for “Contributions subsequent 2025 20,777
to the measurement date of June 30, 2020,” will be $ 35,763
recognized as a reduction to net pension liability in the
following measurement period. In the table shown above, positive amounts will increase
pension expense while negative amounts will decrease
Other amounts reported as deferred outflows of pension expense.
resources and deferred inflows of resources related to
pensions will be recognized in pension expense as 4. Payable to the Pension Plan
follows (expressed in thousands): At June 30, 2021, the state reported a payable of $10.1
million and the four mentioned component units
reported a payable of $10.3 million for the outstanding
amount of contributions to the pension plan required at
year ended June 30, 2021.
122 Notes to the Financial Statements
State of Tennessee
State and Higher Education Employee Retirement who leaves employment may withdraw their employee
Plan contributions, plus any accumulated interest.
1. General information about the pension plan
Employees covered by benefit terms−At the
Plan description−Employees of the state and four of its
measurement date of June 30, 2020, the following
discretely presented component units becoming
employees of the state and the four component units
members of TCRS after June 30, 2014, are provided with
mentioned above were covered by the benefit terms:
pensions through the State and Higher Education
Employee Retirement Plan. This plan is one of several
comprising the TCRS administered Public Employee Inactive employees or beneficiaries
Retirement Plan, an agent, multiple-employer defined currently receiving benefits 38
benefit pension plan. The four discretely presented Inactive employees entitled to but
component units are the Tennessee Student Assistance not yet receiving benefits 16,179
Corporation, the Tennessee Housing Development Active employees 25,017
Agency, the State University and Community College 41,234
System, and the University of Tennessee.
Contributions−Contributions for state and higher
Benefits provided−Tennessee Code Annotated Title 8,
education employees are established in the statutes
Chapters 34-37 establishes the benefit terms and can be
governing the TCRS and may only be changed by the
amended only by the Tennessee General Assembly.
Tennessee General Assembly. Employees contribute 5
Members of the State and Higher Education Employee
percent of their salary. Employers make contributions at
Retirement Plan are eligible to retire at age 65 with 5
the rate set by the Board of Trustees as determined by an
years of service credit or pursuant to the rule of 90, in
actuarial valuation. By law, employer contributions for
which the member’s age and years of service credit total
the State and Higher Education Employee Retirement
90. Members are entitled to receive unreduced service
Plan are required to be paid. Employer contributions by
retirement benefits, which are determined by multiplying
the state for the year ended June 30, 2021, to the State
the member’s highest five consecutive year average
and Higher Education Employee Retirement Plan were
compensation by 1.0 percent multiplied by the member’s
$15.4 million, which is 1.89 percent of covered payroll.
years of service credit. A reduced early retirement
Employer contributions by the four previously
benefit is available at age 60 with 5 years of service credit
mentioned component units were $7.4 million, which is
or pursuant to the rule of 80 in which member’s age and
1.80 percent of covered payroll.
years of service credit total 80. Service related disability
benefits are provided regardless of length of service.
The employer rate, when combined with member
Five years of service is required for non-service related
contributions, is expected to finance the costs of benefits
disability eligibility. The service related and non-service
earned by members during the year, the cost of
related disability benefits are determined in the same
administration, as well as, an amortized portion of any
manner as a service retirement benefit, but are reduced
unfunded liability.
10 percent and include projected service credits. A
variety of death benefits are available under various
2. Net Pension Liability (Asset)
eligibility criteria.
The net pension asset of the state, as well as that of the
four previously mentioned component units, was
Members and beneficiary annuitants are entitled to
measured as of June 30, 2020, and the total pension
automatic cost of living adjustments (COLAs) after
liability used to calculate the net pension asset was
retirement. A COLA is granted each July for annuitants
determined by an actuarial valuation as of that date.
retired prior to July 2 of the previous year. The COLA is
based on the change in the consumer price index (CPI)
Actuarial assumptions−The total pension liability as of
during the prior calendar year, capped at 3 percent, and
June 30, 2020, was determined using the following
applied to the current benefit. No COLA is granted if
actuarial assumptions, applied to all periods included in
the change in the CPI is less than one-half percent. A
the measurement:
one percent COLA is granted if the CPI change is
between one-half percent and one percent. A member
Notes to the Financial Statements 123
State of Tennessee
Inflation 2.5 percent Long-term
Expected Real Target
Graded salary ranges from 3.44 to
Asset Class Rate of Return Allocation
Salary increases 8.72 percent based on age, including
inflation, averaging 4 percent U.S. equity 5.69% 31%
7.25 percent, net of pension plan
Investment rate of Developed market
investment expenses, including
return
inflation international equity 5.29% 14%
Cost-of-living
adjustment 2.25 percent Emerging market
international equity 6.36% 4%
Mortality rates were based on customized tables based on Private equity and
actual experience, including a projection of mortality strategic lending 5.79% 20%
improvement using Scale MP-2019 (generational
projection). U.S. fixed income 2.01% 20%
The actuarial assumptions used in the June 30, 2020, Real estate 4.32% 10%
actuarial valuation were based on the results of an Short-term securities 0.00% 1%
actuarial experience study performed for the period July 100%
1, 2012, through June 30, 2016. The demographic
assumptions were adjusted to more closely reflect actual
and expected future experience. The long-term expected rate of return on pension plan
investments was established by the TCRS Board of
The long-term expected rate of return on pension plan Trustees as 7.25 percent based on a comparison of
investments was established by the TCRS Board of historical market returns and future capital market
Trustees in conjunction with the June 30, 2016, actuarial projections.
experience study. This return was selected from a range
of values developed using historical market returns and Discount rate−The discount rate used to measure the
future capital market projection. The future capital total pension liability was 7.25 percent. The projection of
market projections were produced using a building-block cash flows used to determine the discount rate assumed
method in which a best-estimate of expected future real that employee contributions will be made at the current
rates of return (expected returns, net of pension plan rate and that contributions from the state will be made at
investment expense and inflation) is developed for each the actuarially determined contribution rate pursuant to
major asset class. These best-estimates are combined to an actuarial valuation in accordance with the funding
produce the future capital market projection by weighting policy of the TCRS Board of Trustees and as required to
the expected future real rates of return by the target asset be paid by state statute. Based on those assumptions, the
allocation percentage and by adding expected inflation of pension plan’s fiduciary net position was projected to be
2.5 percent. The best-estimates of geometric real rates of available to make projected future benefit payments of
return and the TCRS investment policy target asset current active and inactive members and to cover
allocation for each major asset class are summarized in administrative expenses. Therefore, the long-term
the following table: expected rate of return on pension plan investments was
applied to all periods of projected benefit payments to
determine the total pension liability.
124 Notes to the Financial Statements
State of Tennessee
Changes in Net Pension Liability (Asset) (expressed in thousands):
Primary Government Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
(a) (b) (a)-(b)
Balance at 6/30/19 $ 128,492 $ 157,222 $ (28,730)
Effects of change in proportion (1,287) (1,574) 287
Adjusted balance at 6/30/2019 127,205 155,648 (28,443)
Changes for the year:
Service cost 49,305 49,305
Interest 12,678 12,678
Differences between expected and
actual experience 1,317 1,317
Contributions-employer 13,579 (13,579)
Contributions-employees 37,976 (37,976)
Net investment income 8,882 (8,882)
Benefit payments, including refunds
of employee contributions (3,285) (3,285)
Administrative expense (1,469) 1,469
Other 36 (36)
Net changes $ 60,015 $ 55,719 $ 4,296
Balance at 6/30/20 $ 187,220 $ 211,367 $ (24,147)
Component Units Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
(a) (b) (a)-(b)
Balance at 6/30/19 $ 57,016 $ 69,764 $ (12,748)
Effects of change in proportion 1,287 1,574 (287)
Adjusted balance at 6/30/2019 58,303 71,338 (13,035)
Changes for the year:
Service cost 22,598 22,598
Interest 5,811 5,811
Differences between expected and
actual experience 603 603
Contributions-employer 6,224 (6,224)
Contributions-employees 17,405 (17,405)
Net investment income 4,071 (4,071)
Benefit payments, including refunds
of employee contributions (1,506) (1,506)
Administrative expense (673) 673
Other 17 (17)
Net changes $ 27,506 $ 25,538 $ 1,968
Balance at 6/30/20 $ 85,809 $ 96,876 $ (11,067)
Sensitivity of the net pension asset to changes in the (6.25 percent) or 1 percentage-point higher (8.25 percent)
discount rate−The following presents the net pension than the current rate (expressed in thousands):
asset of the State of Tennessee and the four previously
mentioned component units calculated using the
discount rate of 7.25 percent, as well as, what the net
pension liability (asset) would be if it were calculated
using a discount rate that is 1 percentage–point lower
Notes to the Financial Statements 125
State of Tennessee
Primary Government Year Ended June 30:
Current
2022 $ 614
1% Decrease Discount Rate 1% Increase
(6.25%) (7.25%) (8.25%) 2023 922
Net pension 2024 1,091
liability (asset) $ 23,278 $ (24,147) $ (59,951)
2025 1,230
2026 356
Component Units
Current Thereafter 714
1% Decrease Discount Rate 1% Increase $ 4,927
(6.25%) (7.25%) (8.25%)
Net pension In the table shown above, positive amounts will increase
liability (asset) $ 10,669 $ (11,067) $ (27,477) pension expense while negative amounts will decrease
pension expense.
3. Pension Expense (Income) and Deferred Outflows of Resources
and Deferred Inflows of Resources Related to Pensions Component Units
Deferred Deferred
Pension expense−For the year ended June 30, 2021, the Outflows of Inflows of
state and the four previously mentioned component units Resources Resources
recognized pension expense of $13.2 million and $5.9 Differences between expected and
million, respectively. actual experience $ 779 $ 350
Deferred outflows of resources and deferred inflows Assumption changes $ 309
of resources−For the year ended June 30, 2021, the state Net difference between projected
and its four component units mentioned reported and actual earnings on pension plan
deferred outflows of resources and deferred inflows of investments $ 1,139
resources related to pensions from the following sources Effects of change in proportion $ 94 $ 926
(expressed in thousands):
Contributions subsequent to the
measurement date of June 30, 2020 $ 7,392
Deferred Deferred
Primary Government
Outflows of Inflows of
Resources Resources The amount shown above for “Contributions subsequent
Differences between expected and to the measurement date of June 30, 2020,” will be
actual experience $ 1,699 $ 763 recognized as an increase to net pension asset in the
following measurement period.
Assumption changes $ 674
Net difference between projected Other amounts reported as deferred outflows of
and actual earnings on pension plan resources and deferred inflows of resources related to
investments $ 2,485 pension will be recognized in pension expense as follows
Effects of change in proportion $ 926 $ 94 (expressed in thousands):
Contributions subsequent to the
measurement date of June 30, 2020 Year Ended June 30:
$ 15,398
2022 $ 112
The amount shown above for “Contributions subsequent 2023 253
to the measurement date of June 30, 2020,” will be 2024 330
recognized as an increase to net pension asset in the 2025 394
following measurement period. 2026 (5)
Thereafter (39)
Other amounts reported as deferred outflows of $ 1,045
resources and deferred inflows of resources related to
pensions will be recognized in pension expense as In the table shown above, positive amounts will increase
follows (expressed in thousands): pension expense while negative amounts will decrease
pension expense.
126 Notes to the Financial Statements
State of Tennessee
4. Payable to the Pension Plan Section 401(k). IRC Sections 401(k) establishes
At June 30, 2021, the state reported a payable of $561 participation, contribution, and withdrawal provisions for
thousand and the four previously mentioned component the plan. The plan is available to state and higher
units reported a payable of $668 thousand for the education employees, K-12 public school employees, and
outstanding amount of contributions to the pension plan employees of political subdivisions that elect to
required at year ended June 30, 2021. participate. A 401(k) participant directs contributions to
specific investment products made available by the plan’s
C. Defined Contribution Plan service provider.
The Tennessee Department of Treasury sponsors and, The plan is completely voluntary for employees hired
through third-party service providers, administers two prior to July 1, 2014. Pursuant to Public Chapter No. 259
defined contribution pension plans. of Public Acts of 2013, employees of the state and its
higher education institutions and local education agencies
Optional Retirement Plan (ORP) – The ORP is a hired after June 30, 2014, are automatically enrolled to
defined contribution plan. The ORP was established by contribute 2 percent of salary to the state’s 401(k) plan
state statute in Title 8, Chapter 25, Part 2 of the TCA. with the employer contributing an additional 5 percent to
This statute also sets out the plan provisions. The plan the plan. Employees may opt out of the 2 percent auto
provisions may be amended by the Tennessee General enrollment. Such contribution rates may only be
Assembly. The ORP was designed to provide benefits at amended by the Tennessee General Assembly. There are
retirement to faculty and staff of the State University and certain automatic cost controls and unfunded liability
Community College System institutions and the controls in the defined benefit plan where the employees
University of Tennessee system who are exempt from participate that may impact the non-matching 5 percent
the overtime provision of the Fair Labor Standards Act employer contribution to the 401(k) plan. For the fiscal
and who waive membership in the TCRS. As of June 30, year ended June 30, 2021, employees of the state and
2021, there were 36,593 ORP accounts with balances, of four of its discretely presented component units that
those 12,921 are from active members. participated in the 401(k) plan were eligible for a state
matching contribution of up to $50 per month. The
Employer and employee contribution amounts are set in funding of this match is subject to state appropriations
statute and made on a pre-tax basis. For employees each year. The four discretely presented component
employed prior to July 1, 2014, plan members are units are the Tennessee Student Assistance Corporation,
noncontributory. The State of Tennessee institutions of the Tennessee Housing Development Agency, the State
higher education contribute 10 percent of the employee’s University and Community College System, and the
base salary, plus 1 percent on the part of the employee’s University of Tennessee. Employees will vest
base salary in excess of the social security wage base. For immediately to both the employee and the employer
employees hired after June 30, 2014, plan members will match.
contribute 5 percent to the ORP, and the State of
Tennessee institutions of higher education will contribute During fiscal year ended June 30, 2021, the plan had
9 percent of the employee’s base salary. For fiscal year 106,008 active members from the state and its higher
ended June 30,2021, the State of Tennessee institutions education institutions, 53,630 from the local education
of higher education recognized pension expenses of agencies, and 12,240 from the political subdivisions. For
$99.5 million for their contributions to the ORP and fiscal year ended June 30, 2021, the state and the four
reported a related total liability of $2.4 million at June 30, mentioned component units recognized pension
2021. expenses of $94.5 million for its contributions to the
Section 401(k) plans and reported a related liability of
Members are immediately 100 percent vested in the $4.5 million at June 30, 2021.
employer contributions made pursuant to the ORP. The
Tennessee Department of Treasury has selected
investment vendors who offer a variety of investment
products in which members are responsible for selecting NOTE 19
how the contributions are invested. Each member makes External Investment Pools
the decision when to reallocate future contributions or
when to transfer funds from one investment product to
A. State Pooled Investment Fund
another.
The State Pooled Investment Fund (SPIF) is an external
State of Tennessee 401(k) Plan – The State of investment pool sponsored by the State of Tennessee.
Tennessee 401(k) Plan is a defined contribution plan The external portion of SPIF is the Local Government
established pursuant to the Internal Revenue Code, Investment Pool (LGIP) and is reported as a separate
Notes to the Financial Statements 127
State of Tennessee
investment pool fund, a custodial fund. The internal Agreement (MSA) includes base payments to all
portion, consisting of funds belonging to the state and its states and territories through 2025 and continues in
component units, has been included in the various funds perpetuity. Since the agreement is complex, the
and component units. annual payments have, and will continue to be,
subject to a number of adjustments including
B. Intermediate Term Investment Fund inflation, volume and non-participating
manufacturers (NPM). Some of these adjustments,
The Intermediate Term Investment Fund (ITIF) is an such as the inflation adjustment, result in the State
external investment pool sponsored by the State of receiving higher payments. Other factors, such as
Tennessee. All funds in the ITIF at June 30, 2021, volume adjustment and the market share adjustment
consist of funds belonging to entities outside of the can work to reduce annual payments. Third party
state’s financial reporting entity, and have been included lawsuits may also affect future payments. The net
as a separate external investment pool fund, a custodial effect of potential adjustments, and therefore the
fund. amount that Tennessee will receive each year from
this settlement, remains indeterminate.
C. Tennessee Retiree Group Trust
b. Opioid Settlement
The Tennessee Retiree Group Trust (TRGT) is an
Tennessee has participated in agreements with
external investment pool sponsored by the State of
different companies to resolve legal claims against
Tennessee. The external portion of the TRGT is the
them for their role in the opioid crisis. Tennessee
External Retirement Investment Fund (ERIF) which is
was one of 47 states that settled a suit with a
reported as a separate investment trust fund. The
consulting firm for the company’s role in helping
internal portion, consisting of funds belonging to the
opioid companies promote their drugs. Additionally,
state, has been included in the various funds.
there is a pending agreement with an opioid
manufacturer and another pending agreement with
A copy of the SPIF, ITIF, and TRGT report can be
three major pharmaceutical distributors. Whether
obtained at https://treasury.tn.gov/ or by calling (615)
these agreements become effective depends on
741-2956.
whether a critical threshold of political subdivisions
join the settlements. Additionally, estimations of
NOTE 20 amounts to be received in the future will be
dependent upon the level of participation by local
Contingencies cities and counties.
c. Unemployment Compensation
A. Litigation
The state is involved in various pending litigation matters Since the unprecedented increase in claims resulting
in which it is contesting vigorously. Some of these cases from the economic impact of the coronavirus
could include claims, which normally recur in disease pandemic, unemployment insurance
governmental operations and may result in future losses programs have become a target for fraud with
to the state or have a future budgetary programmatic significant numbers of imposter claims being filed
impact. Those unfavorable outcomes, which could result with stolen or synthetic identities. A fraud
in future programmatic costs, will be addressed in future overpayment occurs when a claimant knowingly
budgets. Other potential losses resulting from gives false information or withholds information and
unfavorable verdicts in legal proceedings are estimated to as a result receives benefits that should not have
cost the state approximately $38.6 million. This would been received. Recoveries of overpayments because
have a .095% impact on the budget. of fraudulent claims are not considered realizable
beyond a reasonable doubt (or recognized in the
B. Gain Contingencies Employment Security Fund) until collected or until
the overpayment has been investigated and
a. Tobacco settlement confirmed to be the result of a knowing and willful
act or concealment of facts.
In November 1998, Tennessee joined 45 other
states, the District of Columbia and five territories in Tennessee law provides severe penalties for any
a settlement agreement against the nation's largest individual who commits benefit payment fraud. The
tobacco manufacturers, to seek redress against the benefits received must be repaid plus penalties and
tobacco companies for violations of state consumer interest. In addition, the claimant shall remain
and antitrust laws. The Master Settlement disqualified from future benefits so long as any
128 Notes to the Financial Statements
State of Tennessee
portion of the overpayment or interest on the During the fiscal year, the state spent $2.8 million for
overpayment is still outstanding. The offense is a remediation activities and had an expected recovery of
felony and upon conviction, an individual may be $53 thousand from responsible parties. At June 30, 2021,
fined up to $3,000 and sentenced to prison for one the state had a pollution remediation obligation of $54.1
to six years. million and an estimated potential recovery of $4.7
million from other responsible parties.
C. Pollution Remediation Obligations
D. Federal Grants
The state has recognized a liability for its pollution
remediation obligations based on guidance in GASB The state receives significant financial assistance from the
Statement No. 49, Accounting and Financial Reporting for federal government in the form of grants and
Pollution Remediation Obligations. A pollution remediation entitlements. The receipt of federal grants is generally
obligation is a liability to address the current or potential conditioned upon compliance with terms and conditions
detrimental effects of existing pollution by participating of the grant agreements and applicable federal
in pollution remediation activities such as site regulations. Substantially, all federal grants are subject to
assessments, site cleanups, and postremediation either federal single audits or financial and compliance
monitoring. The recognition of a pollution remediation audits by grantor agencies or their representatives.
obligation is required when any of the following Questioned costs as a result of these audits may become
obligating events occur: disallowances after the appropriate review of federal
agencies. Material disallowances are recognized as fund
• The state is compelled to take remediation action liabilities when the loss becomes probable and reasonably
because of imminent danger to the public; estimable.
• The state is in violation of pollution related permit An audit of the Medical Assistance Program (TennCare)
or license; has resulted in likely questioned costs that could be
determined to be disallowances by the U.S. Department
• The state is identified as a responsible party or of Health and Human Services (HHS). These questioned
potentially responsible party by a regulator; costs relate to expenditures for uncompensated cost of
care (UCC) at public hospitals for Medicaid enrollees and
uninsured patients. The HHS Centers for Medicare and
• The state is named or has evidence that it will be
Medicaid Services (CMS) have not acted upon the audit
named in a lawsuit; or
findings which include $359.5 million to $767.5 million
of questioned costs.
• The state commences or legally obligates itself to
commence pollution remediation activities.
The pollution remediation obligation is an estimate and
this estimate is subject to change resulting from price
Note 21
increases or decreases, changes in technology, or changes Tax Abatements
in legal or regulatory requirements. In addition,
recoveries from other responsible parties can reduce the The State of Tennessee provides tax abatements through
state’s obligation. Several agencies within state five programs subject to the requirements of GASB
government have programs to investigate and oversee Statement No. 77: the Manufacturing and Industrial
remediation activities. These program personnel have Machinery Program, the Job Creation Program, the
the expertise to estimate the remediation obligations Community Investment Program, the Development
based on prior experience with similar remediation Opportunity Program and the Warehouse or Distribution
activities. These obligations are measured at current Facility and Qualified Data Programs.
value using the expected cash flow technique. In
addition, historical data is used in the estimation process A. Manufacturing and Industrial
for common sites with which the state has experience. Machinery Program
The state’s pollution remediation obligations are This program provides reductions in franchise and excise
primarily from chemical, fuel, and asbestos taxes to improve productivity and encourage investment
contamination. These obligations are the result of in manufacturing and machinery among certain
violations of various federal and state environmental Tennessee businesses. The program is established under
laws. TCA 67-4-2009 and TCA 67-4-2109. Abatements may
be granted to taxpayers who make qualified capital
investments. Abatements are obtained through a
Notes to the Financial Statements 129
State of Tennessee
business plan filed before the investment is made. The made. Recapture provisions for the small and rural
abatement is administered as a credit on a business’ development program provide that, if at the close of the
franchise and excise tax return. The amount of the tenth year of the period during which the credit is
abatement for industrial machinery is calculated using allowed, the taxpayer or its assignee has received
between 3% and 10% of the purchase price of the repayment, or retains any right to repayment, the
qualified machinery. The renewable energy department is entitled to recapture the credit allowed by
manufacturing tax credit is based on how much more the increasing the franchise or excise tax liability given to the
taxpayer pays for electricity than the maximum certified financial institution. The following table shows the
rate. Recapture provisions provide that, if the required amount of taxes abated by the state during the fiscal year
purchase amount of equipment is not met during the ended June 30, 2021.
investment period, the taxpayer shall be subject to an
assessment equal to the amount of the credit taken for Tax Abatement Amount of Taxes Abated
which the taxpayer failed to qualify plus interest. Program (in thousands)
Manufacturing and Industrial
B. Job Creation Program Machinery Program $50,740
This program provides reductions in franchise and excise Job Creation Program 98,178
taxes to encourage companies to create and retain jobs. Community Investment Program 58,013
The program is established under TCA 67-4-2109. Development Opportunity Program 7,782
Abatements may be granted to businesses agreeing to
create and retain a certain number of jobs. Abatements
are obtained through a business plan filed before the E. Warehouse or Distribution Facility and
investment is made. The abatement is administered as a Qualified Data Center Programs
credit on a business’ franchise and excise tax return. The
amount of the abatement is calculated using the size of These programs provide for sales or use tax exemptions
investment, number of jobs created, and project location. on purchases of material handling and racking systems
equipment to encourage investments in qualified
C. Community Investment Program warehouses or distribution centers and purchases of
computers, computer networks, software, systems and
This program provides reductions in franchise and excise peripheral hardware devices to encourage investments in
taxes to encourage the issuance of qualified loans or qualified data centers.
investments to low-income housing entities. The
program is established under TCA 67-4-2109. The warehouse or distribution program is established
Abatements may be granted to financial institutions under TCA 67-6-102(46), and for applications received
providing low-interest loans to non-profit organizations by October 1, 2019, TCA 67-6-318. Abatements may be
and government agencies that agree to build and granted to taxpayers who make capital investments in the
renovate low-income housing. Abatements are obtained building, construction or renovation of qualified
through a certification from THDA before making the warehouses or distribution centers. Abatements are
loans. The abatement is administered as a credit on a obtained through an application and business plan that
business’ franchise and excise tax return. The amount of includes an estimate of the qualified investments.
the abatement is calculated using either (1) the percentage Approved applicants will receive a certificate of
of the loan or long-term investment made or (2) exemption that may be presented to vendors at the time
percentage annually of the unpaid principal balance of of purchase of eligible equipment or building materials.
the loan made. Recapture provisions provide that, if the required
investment is not made within the stipulated period; the
D. Development Opportunity Program taxpayer shall be subject to assessment for any tax,
penalty or interest that would otherwise have been due.
This program provides for credits on franchise and
excise taxes for investments contributing to small and The qualified data center program is established under
rural development and brownfield development TCA 67-6-102(79). Abatements may be granted to
opportunities. The programs are established under TCA taxpayers who make capital investments in a qualified
67-4-2009 and TCA 67-4-2109. The amount of the small data center. Abatements are obtained through an
and rural development abatement is calculated using 10% application and business plan that includes an estimate of
of the financial institution’s contribution to the rural or the qualified investments. Approved applicants will
small business opportunity fund. The amount of the receive a certificate of exemption that may be presented
brownfield development credit is based on the location to vendors at the time of purchase of eligible equipment
and amount of the investment. Abatements are obtained and/or software.
through a business plan filed before the contribution is
130 Notes to the Financial Statements
State of Tennessee
Since the tax returns filed with the state do not require Subsequent to June 30, the Tennessee State School Bond
the exempt sales or purchases to be reported by category, Authority has issued $20 million in revolving credit
the amount of exempt purchases made by qualified facility.
warehouse or distribution centers or qualified data
centers is only available in the books and records of the Subsequent to June 30, the University of Tennessee
vendors and their customers. Thus, the estimate of the merged with Martin Methodist College located in Pulaski
gross dollar amount, on an accrual basis, by which the Tennessee. This merger creates the University of
state’s tax revenues were reduced by these exemptions, is Tennessee’s fifth campus, UT Southern. At June 30,
not available. However, based on the applications 2021, Martin Methodist College had total assets of $36.5
received and approved during the fiscal year, the million, total liabilities of $7.4 million, and total net assets
estimated equipment purchase amounts total $927 of $29.1 million.
million.
Note 22
Impairments and Insurance Recoveries
For the year ended June 30, 2021, a total impairment loss
of $3.4 million was included in the health and social
services function due to software development
stoppages.
Note 23
Subsequent Events
A. Primary government
Subsequent to June 30, the state issued $15 million in
tax-exempt general obligation commercial paper. In July
2021, the state issued 2021 Series A tax-exempt general
obligation bonds in the amount of $168 million at a
premium of $43.4 million, 2021 Series B refunding
taxable general obligation bonds in the amount of $491
million at par. The Series A issuance was used to redeem
commercial paper, fund certain capital projects, and
refund a portion of 2011 Series B and 2012 Series B.
The Series B issuance was used to redeem a portion of
2009 Series D, 2011 Series A, 2012 Series A, 2014 Series
A, 2014 Series B, and 2015 Series A.
Subsequent to June 30, the state made a one-time
additional contribution of $250 million to the Public
Employee Retirement Plan for the state and higher
education employees.
B. Component units
Subsequent to June 30, the Tennessee Housing
Development Agency had the following revenue bond
issuances: 2021-2 in September 2021 in the amount of
$100 million, and 2021-3 in December 2021 in the
amount of $175 million.
Notes to the Financial Statements 131
This Page Intentionally Left Blank
132 Notes to the Financial Statements
REQUIRED SUPPLEMENTARY
INFORMATION
Required Supplementary Information 133
State of Tennessee
Infrastructure Assets Reported Using Measurement Scale
The state maintains information on its 8,401 bridges in
the Modified Approach compliance with the National Bridge Inventory (NBI)
guidelines established by the Federal Highway
A. Roadways Administration. Bridges are inspected at least once every
two years and the results are coded on a 0 to 9 scale (with
Measurement Scale 9 being the most desirable). A bridge coded 4 or less for
The state uses a condition assessment method called the its deck, superstructure, or substructure, or coded 2 or
Maintenance Quality Assurance (MQA) program. The less for its structural evaluation or waterway adequacy, is
MQA program consists of 62 roadway characteristics and classified as “structurally deficient.” A structurally
each characteristic is grouped into one of six elements. deficient bridge is inadequate to carry legal loads,
The elements are: mainline pavement, roadway shoulder, whether caused by structural deterioration, obsolete
roadside, drainage, traffic, and ramps. The MQA design standards, or an insufficient waterway opening. A
provides a condition assessment, in the form of a Level- bridge coded 3 or less for its structural evaluation, deck
of-Service (LOS) grade, for roadway assets by evaluating geometry, vertical or horizontal underclearance, water
roadway segments. Each segment measures a 0.10 of a adequacy, or approach roadway alignment is classified as
mile (528 feet) and is randomly selected each fiscal year. “functionally obsolete.” A functionally obsolete bridge
The LOS grade for each individual characteristic is given cannot properly accommodate the current traffic.
an “A” or 4.0 through “F” or 0.0 with 4.0 being a perfect
grade. The grade is calculated by dividing the total Established Condition Level
deficiency by the total inventory for each characteristic. The state intends to maintain bridges so that 75 percent
This results in a score for each element. Each element or more of the total deck area is not classified as
score is then multiplied by a weighted element score and structurally deficient or functionally obsolete.
the six weighted scores are summed to the overall score.
Assessed Conditions
Established Condition Level The following table presents the percentage of deck area
The state intends to maintain roadways so that the whose condition assessment did not meet the criteria of
reported condition level each year does not fall below structurally deficient or functionally obsolete according
2.846 for MQA. to the NBI.
Assessed Conditions Percentage of Deck
The following table presents the MQA of all rated For the Two- Area Not Structurally
segments. Year Period Deficient or
Ended Functionally Obsolete
For the Period Maintenance Quality
06/30/20 85%
Ended Assurance
06/30/18 85%
06/30/21 3.368
06/30/16 85%
06/30/20 3.289
06/30/19 3.006
Estimated and Actual Costs to Maintain
The following table presents the state’s estimate of
Estimated and Actual Costs to Maintain spending to preserve and maintain the bridges at or
The following table presents the state’s estimate of above, the “Established Condition Level” cited above,
spending to preserve and maintain the roadways at or and the actual amount spent (in thousands):
above, the “Established Condition Level” cited above,
and the actual amount spent (in thousands):
For the Period Ended Estimated Actual
For the Period Ended Estimated Actual 06/30/21 $ 54,000 $ 84,646
06/30/21 $ 547,685 $ 582,408 06/30/20 50,525 85,505
06/30/20 481,703 660,630
06/30/19 44,330 46,978
06/30/19 450,813 633,360
06/30/18 41,610 57,541
06/30/18 447,013 543,913
06/30/17 440,913 419,788 06/30/17 41,610 52,468
* Actual and estimated maintenance/preservation expenses are * Actual and estimated maintenance/preservation expenses
determined using the accrual basis of accounting.
are determined using the accrual basis of accounting.
B. Bridges
134 Required Supplementary Information
State of Tennessee
Other Postemployment Benefits Information
A. Schedule of Changes in the Net OPEB Liability and Related Ratios
State of Tennessee
Other Postemployment Benefits
Schedule of Changes in the Net OPEB Liability and Related Ratios
(expressed in thousands)
CLOSED EMPLOYEE GROUP OPEB PLAN
Primary Government
2018 2019 2020 2021
Total OPEB liability
Service cost $ 47,219 $ 42,521 $ 44,521 $ 26,249
Interest 28,003 32,021 34,324 46,916
Changes of benefit terms - - - -
Differences between actual and expected
experience - (37,420) (14,447) (25,201)
Changes of assumptions (40,226) 46,108 (149,693) (25,485)
Changes in proportion and differences
between contributions and
proportionate share of contributions - (29,514) 20,618 (4,221)
Benefit payments (61,649) (57,061) (61,238) (54,077)
Net change in total OPEB liability (26,653) (3,345) (125,915) (35,819)
Total OPEB liability-beginning 942,627 915,974 912,629 786,714
Total OPEB liability-ending (a) $ 915,974 $ 912,629 $ 786,714 $ 750,895
Plan fiduciary net position
Contributions-employer $ - $ - $ 260,984 $ 103,683
Net investment income - - 3,487 (2,975)
Changes in proportion and differences
between contributions and
proportionate share of contributions - - (59,031) (1,541)
Benefit payments, including refunds of
employee contributions - - (61,238) (54,077)
Net change in plan fiduciary net position - - 144,202 45,090
Plan fiduciary net position-beginning - - - 144,202
Plan fiduciary net position-ending (b) $ - $ - $ 144,202 $ 189,292
Net OPEB liability - ending (a)-(b) $ 915,974 $ 912,629 $ 642,512 $ 561,603
Covered-employee payroll $ 1,369,106 $ 1,416,041 $ 1,463,373 $ 1,414,478
Net OPEB liability as a percentage of covered-employee payroll 66.90% 64.45% 43.91% 39.70%
In fiscal year 2019, the state transitioned the EGOP from a pay-as-you-go arrangement to a prefunding arrangement where
assets are accumulated in a qualified trust and benefits are paid directly from that trust.
The amounts reported for each fiscal year were determined as of the prior fiscal year-end.
This schedule is intended to display ten years of information. Additional years will be displayed as they become available.
Required Supplementary Information 135
State of Tennessee
State of Tennessee
Other Postemployment Benefits
Schedule of Changes in the Net OPEB Liability and Related Ratios
(expressed in thousands)
CLOSED EMPLOYEE GROUP OPEB PLAN
Component Units
2018 2019 2020 2021
Total OPEB liability
Service cost $ 21,990 $ 22,020 $ 21,458 $ 12,876
Interest 13,041 16,582 16,543 23,015
Changes of benefit terms - - - -
Differences between actual and expected
experience - (19,378) (6,963) (12,362)
Changes of assumptions (18,733) 23,877 (72,147) (12,502)
Changes in proportion and differences
between contributions and
proportionate share of contributions - 29,514 (20,618) 4,221
Benefit payments (28,710) (26,573) (31,713) (26,063)
Net change in total OPEB liability (12,412) 46,042 (93,440) (10,815)
Total OPEB liability-beginning 438,979 426,567 472,609 379,169
Total OPEB liability-ending (a) $ 426,567 $ 472,609 $ 379,169 $ 368,354
Plan fiduciary net position
Contributions-employer $ - $ - $ 40,502 $ 49,339
Net investment income - - 1,681 (1,460)
Changes in proportion and differences
between contributions and
proportionate share of contributions - - 59,031 1,541
Benefit payments, including refunds of
employee contributions - - (31,713) (26,063)
Net change in plan fiduciary net position - - 69,501 23,357
Plan fiduciary net position-beginning - - - 69,501
Plan fiduciary net position-ending (b) $ - $ - $ 69,501 $ 92,858
Net OPEB liability - ending (a)-(b) $ 426,567 $ 472,609 $ 309,668 $ 275,496
Covered-employee payroll $ 1,353,254 $ 1,339,543 $ 1,260,809 $ 1,183,016
Net OPEB liability as a percentage of covered-employee payroll 31.52% 35.28% 24.56% 23.29%
In fiscal year 2019, the state transitioned the EGOP from a pay-as-you-go arrangement to a prefunding arrangement where
assets are accumulated in a qualified trust and benefits are paid directly from that trust.
The amounts reported for each fiscal year were determined as of the prior fiscal year-end.
This schedule is intended to display ten years of information. Additional years will be displayed as they become available.
136 Required Supplementary Information
State of Tennessee
State of Tennessee
Other Postemployment Benefits
Schedule of Changes in the Total OPEB Liability and Related Ratios
(expressed in thousands)
CLOSED TENNESSEE OPEB PLAN
Primary Government
2018 2019 2020 2021
Total OPEB liability
Service cost $ 2,560 $ 2,046 $ 1,480 $ 1,599
Interest 3,455 3,790 3,792 3,719
Changes of benefit terms - - - -
Differences between actual and expected
experience - (3,200) (870) (535)
Changes of assumptions (9,094) (743) 1,843 19,166
Changes in proportion and differences
between contributions and
proportionate share of contributions - (3,531) 1,591 (225)
Benefit payments (4,588) (4,696) (4,833) (4,955)
Net change in total OPEB liability (7,667) (6,334) 3,003 18,769
Total OPEB liability-beginning 118,044 110,377 104,043 107,046
Total OPEB liability-ending $ 110,377 $ 104,043 $ 107,046 $ 125,815
Covered-employee payroll $ 1,420,835 $ 1,541,486 $ 1,575,865 $ 1,561,360
Total OPEB liability as a percentage of covered-employee payroll 7.77% 6.75% 6.79% 8.06%
Component Units
2018 2019 2020 2021
Total OPEB liability
Service cost $ 1,551 $ 1,353 $ 940 $ 1,022
Interest 2,093 2,507 2,409 2,376
Changes of benefit terms - - - -
Differences between actual and expected
experience - (2,117) (553) (342)
Changes of assumptions (5,511) (492) 1,171 12,244
Changes in proportion and differences
between contributions and
proportionate share of contributions - 3,531 (1,591) 225
Benefit payments (2,780) (2,845) (3,197) (3,148)
Net change in total OPEB liability (4,647) 1,937 (821) 12,377
Total OPEB liability-beginning 71,531 66,884 68,821 68,000
Total OPEB liability-ending $ 66,884 $ 68,821 $ 68,000 $ 80,377
Covered-employee payroll $ 1,574,315 $ 1,524,863 $ 1,484,617 $ 1,414,167
Total OPEB liability as a percentage of covered-employee payroll 4.25% 4.51% 4.58% 5.68%
There are no assets accumulating in a trust that meets the criteria in paragraph
4 of GASB Statement No. 75 related to this OPEB plan.
The amounts reported for each fiscal year were determined as of the prior
fiscal year-end.
This schedule is intended to display ten years of information. Additional years
will be displayed as they become available.
Required Supplementary Information 137
State of Tennessee
B. Schedule of Contributions
State of Tennessee
Other Postemployment Benefits
Schedule of Contributions to State of Tennessee Postemployment Benefits Trust
(expressed in thousands)
CLOSED EMPLOYEE GROUP OPEB PLAN
Primary Government
2019 2020 2021
Actuarially determined contribution $ 88,739 $ 95,731 $ 87,287
Contributions in relation to the actuarially determined contribution 260,984 103,683 99,096
Contribution deficiency (excess) (172,245) (7,952) (11,809)
Covered-employee payroll $ 1,463,373 $ 1,414,478 $ 1,371,486
Total OPEB contributions as a percentage of covered-employee payroll 17.83% 7.33% 7.23%
Component Units
2019 2020 2021
Actuarially determined contribution $ 47,071 $ 49,665 $ 49,787
Contributions in relation to the actuarially determined contribution 40,502 49,339 49,514
Contribution deficiency (excess) 6,569 326 273
Covered-employee payroll $ 1,260,809 $ 1,183,016 $ 1,117,645
Total OPEB contributions as a percentage of covered-employee payroll 3.21% 4.17% 4.43%
This schedule is intended to display ten years of information. Additional years
will be displayed as they become available.
Notes to Schedule of Contributions
Valuation Date: Actuarially determined contribution rates are calculated based on valuations as
of June 30 two years prior to the fiscal year, in which the ADC is calculated.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial cost method Entry age normal
Amortization method Level dollar, closed (not to exceed 20 years)
Remaining amortization period 16 years
Asset valuation Market value on measurement date
Inflation 2.10 percent
Salary increases Graded salary ranges from 3.44 to 8.72 percent based on age, including inflation.
Investment rate of return 6 percent
Retirement age Pattern of retirement determined by experience study
Mortality tables used in the July 1, 2017, actuarial valuation of the Tennessee
Consolidated Retirement System. RP-2014 Employees and Healthy Annuitants
mortality table projected generationally with MP-2016 from the central year for pre-
retirement. For post-retirement the tables are Blue Collar and adjusted with a 2% load
Mortality for males and a -3% load for females.
138 Required Supplementary Information
State of Tennessee
C. Schedule of the State’s Proportionate Share of the Collective Total OPEB Liability
State of Tennessee
Other Postemployment Benefits
Schedule of the State's Proportionate Share of the Collective Total OPEB Liability
Special Funding Situation
(expressed in thousands)
CLOSED TEACHER GROUP OPEB PLAN
2018 2019 2020 2021
State's proportion of the collective total OPEB liability 29% 26% 28% 28%
State's proportionate share of the collective total OPEB liability $ 256,924 $ 216,247 $ 232,297 $ 260,059
CLOSED TENNESSEE OPEB PLAN
2018 2019 2020 2021
State's proportion of the collective total OPEB liability 54% 75% 73% 76%
State's proportionate share of the collective total OPEB liability $ 215,044 $ 206,298 $ 222,668 $ 266,093
There are no assets accumulating in a trust that meets the criteria in paragraph
4 of GASB Statement No. 75 related to these two OPEB plans.
The amounts reported for each fiscal year were determined as of the prior
fiscal year-end.
This schedule is intended to display ten years of information. Additional years
will be displayed as they become available.
Required Supplementary Information 139
State of Tennessee
Pension Plan Information
A. Schedules of Changes in Net Pension Liability
State of Tennessee
Tennessee Consolidated Retirement Fund
Schedule of Changes in the State of Tennessee's Net Pension Liability (Asset) and Related Ratios
Based on Participation in the Closed State and Higher Education Employee Pension Plan of TCRS
(expressed in thousands)
2015 2016 2017 2018 2019 2020 2021
Total pension liability
Service cost $ 201,090 $ 200,001 $ 193,571 $ 183,931 $ 181,736 $ 175,903 $ 171,553
Interest 1,024,003 1,044,475 1,089,027 1,117,928 1,146,606 1,180,782 1,206,046
Differences between actual and expected
experience (186,051) 170,534 (30,039) 97,904 83,828 (29,767) 39,450
Changes of assumptions 406,329
Benefit payments, including refunds of
employee contributions (741,380) (788,612) (840,494) (874,626) (914,064) (955,844) (992,367)
Net change in total pension liability 297,662 626,398 412,065 931,466 498,106 371,074 424,682
Total pension liability-beginning 13,822,970 14,120,632 14,747,030 15,159,095 16,090,561 $16,588,667 $16,959,741
Total pension liability-ending (a) $ 14,120,632 $ 14,747,030 $ 15,159,095 $ 16,090,561 $ 16,588,667 $ 16,959,741 $ 17,384,423
Plan fiduciary net position
Contributions-employer $410,608 $392,466 $366,962 $360,337 $436,666 $433,581 $435,177
Contributions-employee 1,676 915 1,176 625 406 864 374
Net investment income 1,931,471 407,762 350,633 1,481,770 1,167,919 1,096,732 757,315
Benefit payments, including refunds of
employee contributions (741,380) (788,612) (840,494) (874,626) (914,064) (955,844) (992,367)
Administrative expense (2,791) (2,803) (3,654) (3,741) (3,930) (3,420) (3,170)
Other - 17,333 2,158 2,067 (14,702) 2,411 1,206
Net change in plan fiduciary net position 1,599,584 27,061 (123,219) 966,432 672,295 574,324 198,535
Plan fiduciary net position-beginning 11,831,098 13,430,682 13,457,743 13,334,524 14,300,956 $14,973,251 $15,547,575
Plan fiduciary net position-ending (b) $ 13,430,682 $ 13,457,743 $ 13,334,524 $ 14,300,956 $ 14,973,251 $ 15,547,575 $ 15,746,110
Net pension liability (asset)-ending (a)-(b) $ 689,950 $ 1,289,287 $ 1,824,571 $ 1,789,605 $ 1,615,416 $ 1,412,166 $ 1,638,313
Plan fiduciary net position as a percentage
of total pension liability 95.11% 91.26% 87.96% 88.88% 90.26% 91.67% 90.58%
Covered payroll $ 2,658,354 $ 2,540,327 $ 2,375,501 $ 2,333,672 $ 2,280,469 $ 2,213,382 $ 2,173,446
Net pension liability (asset) as a percentage
of covered payroll 25.95% 50.75% 76.81% 76.69% 70.84% 63.80% 75.38%
The amounts reported for each fiscal year were determined as of the prior fiscal year-end.
This schedule is intended to display ten years of information. Additional years will be displayed as they
become available.
140 Required Supplementary Information
State of Tennessee
State of Tennessee
Tennessee Consolidated Retirement Fund
Schedule of Changes in the State of Tennessee's Net Pension Liability (Asset) and Related Ratios
Based on Participation in the State and Higher Education Employee Retirement Plan of TCRS
(expressed in thousands)
2016 2017 2018 2019 2020 2021
Total pension liability
Service cost $ 7,431 $ 18,693 $ 33,132 $ 46,815 $ 57,928 $ 71,903
Interest 279 1,883 4,504 8,091 12,715 18,489
Differences between actual and expected
experience (1,164) 689 272 451 (931) 1,920
Changes of assumptions 1,638
Benefit payments, including refunds of
employee contributions (10) (233) (1,290) (2,079) (3,306) (4,791)
Net change in total pension liability 6,536 21,032 38,256 53,278 66,406 87,521
Total pension liability-beginning 6,536 27,568 65,824 $119,102 $185,508
Total pension liability-ending (a) $ 6,536 $ 27,568 $ 65,824 $ 119,102 $ 185,508 $ 273,029
Plan fiduciary net position
Contributions-employer $4,214 $11,923 $20,449 $28,663 $15,572 $19,803
Contributions-employee 5,154 15,113 25,927 36,495 45,105 55,381
Net investment income 142 600 6,595 9,733 13,806 12,953
Benefit payments, including refunds of
employee contributions (10) (233) (1,290) (2,079) (3,306) (4,791)
Administrative expense (183) (726) (1,244) (1,699) (1,869) (2,142)
Other 134 53
Net change in plan fiduciary net position 9,317 26,677 50,571 71,113 69,308 81,257
Plan fiduciary net position-beginning 9,317 35,994 86,565 157,678 226,986
Plan fiduciary net position-ending (b) $ 9,317 $ 35,994 $ 86,565 $ 157,678 $ 226,986 $ 308,243
Net pension liability (asset)-ending (a)-(b) $ (2,781) $ (8,426) $ (20,741) $ (38,576) $ (41,478) $ (35,214)
Plan fiduciary net position as a percentage
of total pension liability 142.55% 130.56% 131.51% 132.39% 122.36% 112.90%
Covered payroll $ 107,086 $ 305,424 $ 518,664 $ 727,339 $ 900,952 $ 1,105,290
Net pension liability (asset) as a percentage
of covered payroll (2.60%) (2.76%) (4.00%) (5.30%) (4.60%) (3.19%)
The amounts reported for each fiscal year were determined as of the prior fiscal year-end.
This schedule is intended to display ten years of information. Additional years will be
displayed as they become available.
Required Supplementary Information 141
State of Tennessee
B. Schedules of Contributions
Schedule of the State of Tennessee's Contributions
Closed State and Higher Education Employee Pension Plan
(expressed in thousands)
2014 2015 2016 2017 2018 2019 2020 2021
Actuarially determined contribution $ 410,608 $ 392,466 $ 366,114 $ 360,434 $ 435,455 $ 433,581 $ 435,177 $ 426,985
Contributions in relation of the actuarially
determined contribution 410,608 392,466 366,114 360,434 435,455 433,581 435,177 426,985
Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - $ -
Covered payroll $ 2,658,354 $ 2,540,327 $ 2,375,501 $ 2,333,672 $ 2,280,469 $ 2,213,382 $ 2,173,446 $ 2,073,599
Contributions as a percentage of covered
payroll 15.45% 15.45% 15.41% 15.44% 19.09% 19.59% 20.02% 20.59%
This schedule is intended to display ten years of information. Additional years will be displayed as they become
available.
Notes to Schedule of Contributions
Valuation Date: Actuarially determined contribution rates for 2021 were calculated based
on the June 30, 2019, actuarial valuation.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial cost method Entry age normal
Amortization method Level dollar, closed (not to exceed 20 years)
Remaining amortization period Various
Asset valuation 10-year smoothed within a 20 percent corridor to market value
Inflation 2.5 percent
Graded salary ranges from 3.44 to 8.72 percent based on age,
Salary increases including inflation, averaging 4 percent
Investment rate of return 7.25 percent, net of investment expense, including inflation
Retirement age Pattern of retirement determined by experience study
Customized table based on actual experience including an
Mortality adjustment for some anticipated improvement
Cost of living adjustments 2.25 percent
Schedule of the State of Tennessee's Contributions
State and Higher Education Employee Retirement Plan
(expressed in thousands)
2015 2016 2017 2018 2019 2020 2021
Actuarially determined contribution $ 2,142 $ 6,446 $ 6,232 $ 9,820 $ 15,572 $ 19,803 $ 22,790
Contributions in relation of the actuarially
determined contribution 4,255 12,016 20,339 28,611 15,572 19,803 22,790
Contribution deficiency (excess) $ (2,113) $ (5,570) $ (14,107) $ (18,791) $ - $ - $ -
Covered payroll $ 107,086 $ 305,424 $ 518,664 $ 727,339 $ 900,952 $ 1,105,290 $ 1,223,688
Contributions as a percentage of covered
payroll 3.97% 3.93% 3.92% 3.93% 1.73% 1.79% 1.86%
This schedule is intended to display ten years of information. Additional years will be displayed as they
become available.
142 Required Supplementary Information
State of Tennessee
Notes to Schedule of Contributions
Valuation Date: Actuarially determined contribution rates for 2021 were calculated based
on the June 30, 2019, actuarial valuation.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial cost method Entry age normal
Amortization method Level dollar, closed (not to exceed 20 years)
Remaining amortization period Various
10-year smoothed within a 20 percent corridor to market
Asset valuation value
Inflation 2.5 percent
Graded salary ranges from 3.44 to 8.72 percent based on age,
Salary increases including inflation, averaging 4 percent
Investment rate of return 7.25 percent, net of investment expense, including inflation
Retirement age Pattern of retirement determined by experience study
Customized table based on actual experience including an
Mortality adjustment for some anticipated improvement
Cost of living adjustments 2.25 percent
The Closed State and Higher Education Pension Plan The information of the annual money-weighted rate of
and the State and Higher Education Retirement Plan are return of the system is presented in TCRS’s financial
parts of TCRS, a public employee retirement system. report which can be obtained at https://treasury.tn.gov/.
Required Supplementary Information 143
State of Tennessee
State of Tennessee Postemployment Benefits Trust Information
A. Schedule of Changes in the Plan Net OPEB Liability and Related Ratios
State of Tennessee
Postemployment Benefits Trust
Schedule of Changes in the Closed EGOP's Net OPEB Liability and Related Ratios
(expressed in thousands)
2019 2020 2021
Total OPEB liability
Service cost $65,979 $40,419 $40,282
Interest 50,851 72,620 70,591
Changes in benefit terms - - -
Differences between actual and expected
experience - (37,425) (25,926)
Changes of assumptions (199,731) (31,242) (29,109)
Benefit payments, including refunds of
employee contributions (92,951) (80,140) (75,864)
Net change in total OPEB liability ($175,852) ($35,768) ($20,026)
Total OPEB liability-beginning 1,385,238 1,209,386 1,173,618
Total OPEB liability-ending (a) $1,209,386 $1,173,618 $1,153,592
Plan fiduciary net position
Contributions-employer $301,486 $153,022 $148,609
Net investment income 5,167 (4,435) 91,762
Benefit payments, including refunds of
employee contributions (92,951) (80,140) (75,864)
Administrative expense - - -
Net change in plan fiduciary net position 213,702 68,447 $164,507
Plan fiduciary net position-beginning - 213,702 282,149
Plan fiduciary net position-ending (b) $213,702 $282,149 $446,656
Net OPEB liability-ending (a)-(b) $995,684 $891,469 $706,936
Plan fiduciary net position as a percentage
of total OPEB liability 17.67% 24.04% 38.72%
This schedule is intended to display ten years of information. Additional years will be displayed as they become
available.
For 2019, the amount noted for change in assumptions is primarily due to the change in discount rate used to roll
the total liability forward from the June 30, 2018 actuarial date to June 30, 2019.
144 Required Supplementary Information
State of Tennessee
B. Schedule of Contributions
Schedule of Employer Contributions to the
State of Tennessee Postemployment Benefits Trust
(expressed in thousands)
2019 2020 2021
Actuarially determined contribution $135,810 $145,397 $137,075
Contributions in relation of the actuarially
determined contribution 301,486 153,022 148,609
Contribution deficiency (excess) ($165,676) ($7,625) ($11,534)
This schedule is intended to display ten years of information. Additional years will be displayed as they become
available.
Notes to Schedule of Contributions
Valuation Date: Actuarially determined contribution rates are calculated based on valuations as
of June 30 two years prior to the fiscal year, in which the ADC is calculated.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial cost method Entry age normal
Amortization method Level dollar, closed (not to exceed 20 years)
Remaining amortization period 16 years
Asset valuation Market value on measurement date
Inflation 2.10 percent
Graded salary ranges from 3.44 to 8.72 percent based on age, including
Salary increases inflation.
Investment rate of return 6 percent
Retirement age Pattern of retirement determined by experience study
Mortality tables used in the July 1, 2017, actuarial valuation of the
Tennessee Consolidated Retirement System. RP-2014 Employees and
Healthy Annuitants mortality table projected generationally with MP-2016
from the central year for pre-retirement. For post-retirement the tables
are Blue Collar and adjusted with a 2% load for males and a -3% load for
Mortality females.
Required Supplementary Information 145
State of Tennessee
C. Schedule of Investment Returns
Schedule of Investment Returns
State of Tennessee Postemployment Benefits Trust
2019 2020 2021
Annual money-weighted rate of return, net of investment expense 6% -0.95% 29.76%
This schedule is intended to display ten years of information. Additional years will be displayed as they become available.
146 Required Supplementary Information
STATE OF TENNESSEE
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
Required Supplementary Information
Major Governmental Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
General
Budgeted Amounts
Actual Variance With
Original Budget Final Budget (Budgetary Basis) Final Budget
REVENUES
Taxes $ 8,151,316 $ 8,151,316 $ 10,106,246 $ 1,954,930
Licenses, fines, fees, and permits 516,527 516,527 522,173 5,646
Investment income 63,700 63,700 25,755 (37,945)
Federal 12,539,402 15,724,373 15,230,077 (494,296)
Departmental services 2,082,651 2,256,896 2,449,724 192,828
Other 188,682 188,682 275,280 86,598
Total revenues 23,542,278 26,901,494 28,609,255 1,707,761
EXPENDITURES
General government
Legislative 117,209 118,083 51,429 66,654
Secretary of State 74,430 74,969 44,585 30,384
Comptroller 154,035 155,158 111,211 43,947
Treasurer 43,256 57,405 43,999 13,406
Governor 5,892 5,892 5,324 568
Commissions 111,455 128,728 102,019 26,709
Finance and Administration 1,006,358 1,504,587 527,980 976,607
General Services 81,160 51,196 29,902 21,294
Revenue 136,440 511,746 420,983 90,763
Miscellaneous Appropriations 2,793 2,793 - 2,793
Health and social services
Veterans Services 9,477 9,197 7,602 1,595
Labor and Workforce Development 334,220 350,139 246,148 103,991
TennCare 13,728,247 13,749,261 13,076,166 673,095
Mental Health 442,512 460,437 419,087 41,350
Intellectual Disabilities 222,828 222,184 191,535 30,649
Health 843,859 1,517,662 1,104,327 413,335
Human Services 3,219,895 4,296,469 3,997,222 299,247
Children's Services 978,691 986,301 917,748 68,553
Law, justice, and public safety
Judicial 437,031 446,527 408,966 37,561
Correction 1,157,752 1,128,126 1,007,223 120,903
Probation and Paroles 9,024 8,588 8,298 290
Military 117,611 463,692 417,234 46,458
Bureau of Criminal Investigation 97,230 97,176 90,878 6,298
Safety 293,120 297,105 255,952 41,153
Recreation and resources development
Agriculture 138,979 247,111 203,007 44,104
Tourist Development 35,304 62,429 54,429 8,000
Environment and Conservation 337,969 352,575 262,429 90,146
Economic and Community Development 720,520 869,299 277,816 591,483
Regulation of business and professions
Commerce and Insurance 111,452 112,691 97,261 15,430
Financial Institutions 31,210 31,160 20,800 10,360
Total expenditures 24,999,959 28,318,686 24,401,560 3,917,126
Excess (deficiency) of revenues over
(under) expenditures (1,457,681) (1,417,192) 4,207,695 5,624,887
OTHER FINANCING SOURCES (USES)
Insurance claims recoveries (672) 673 673 -
Transfers in 73,580 57,021 57,021 -
Transfers out (1,967,014) (537,019) (537,019) -
Total other financing sources (uses) (1,894,106) (479,325) (479,325) -
Net change in fund balances (3,351,787) (1,896,517) 3,728,370 5,624,887
Fund balances (budgetary basis), July 1, restated 5,602,545 5,602,545 5,602,545 -
Fund balances (budgetary basis), June 30 $ 2,250,758 $ 3,706,028 $ 9,330,915 $ 5,624,887
Required Supplementary Information 147
STATE OF TENNESSEE
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
Required Supplementary Information
Major Governmental Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Education
Budgeted Amounts
Actual Variance With
Original Budget Final Budget (Budgetary Basis) Final Budget
REVENUES
Taxes $ 5,536,400 $ 5,536,400 $ 6,692,907 $ 1,156,507
Licenses, fines, fees, and permits 2,962 2,962 4,662 1,700
Investment income 175 175 194 19
Federal 1,555,348 3,265,131 1,645,133 (1,619,998)
Departmental services 92,242 318,098 144,680 (173,418)
Other 403,020 403,020 500,266 97,246
Total revenues 7,590,147 9,525,786 8,987,842 (537,944)
EXPENDITURES
Education 6,947,227 9,020,036 7,086,287 1,933,749
Higher education 2,203,170 2,147,517 2,119,346 28,171
Total expenditures 9,150,397 11,167,553 9,205,633 1,961,920
Excess (deficiency) of revenues over
(under) expenditures (1,560,250) (1,641,767) (217,791) 1,423,976
OTHER FINANCING SOURCES (USES)
Transfers in 1,842,493 1,842,493 412,498 (1,429,995)
Transfers out (80,622) (119,534) (119,534) -
Total other financing sources (uses) 1,761,871 1,722,959 292,964 (1,429,995)
Net change in fund balance 201,621 81,192 75,173 (6,019)
Fund balances (budgetary basis), July 1, restated 363,731 363,731 363,731 -
Fund balances (budgetary basis), June 30 $ 565,352 $ 444,923 $ 438,904 $ (6,019)
Highway
Budgeted Amounts
Actual Variance With
Original Budget Final Budget (Budgetary Basis) Final Budget
REVENUES
Taxes $ 716,000 $ 716,000 $ 726,647 $ 10,647
Licenses, fines, fees, and permits 310,344 310,344 323,231 12,887
Federal 1,041,382 4,146,898 1,047,434 (3,099,464)
Departmental services 38,761 210,021 42,672 (167,349)
Other 10,975 10,975 10,197 (778)
Total revenues 2,117,462 5,394,238 2,150,181 (3,244,057)
EXPENDITURES
Transportation 3,400,326 6,683,414 2,135,196 4,548,218
Total expenditures 3,400,326 6,683,414 2,135,196 4,548,218
Excess (deficiency) of revenues over
(under) expenditures (1,282,864) (1,289,176) 14,985 1,304,161
OTHER FINANCING SOURCES (USES)
Bond authorizations 124,000 50,000 - (50,000)
Transfers in - 80,412 80,412 -
Transfers out (2,771) (2,771) (2,771) -
Total other financing sources (uses) 121,229 127,641 77,641 (50,000)
Net change in fund balance (1,161,635) (1,161,535) 92,626 1,254,161
Fund balances (budgetary basis), July 1 1,162,594 1,162,594 1,162,594 -
Fund balances (budgetary basis), June 30 $ 959 $ 1,059 $ 1,255,220 $ 1,254,161
State Shared Taxes
Budgeted Amounts
Actual Variance With
Original Budget Final Budget (Budgetary Basis) Final Budget
REVENUES
Taxes $ 1,416,985 $ 1,416,985 $ 1,416,985 $ -
Licenses, fines, fees, and permits 220 220 220 -
Total revenues 1,417,205 1,417,205 1,417,205 -
EXPENDITURES
General government 1,417,205 1,417,205 1,417,205 -
Total expenditures 1,417,205 1,417,205 1,417,205 -
Excess (deficiency) of revenues over
(under) expenditures - - - -
148 Required Supplementary Information
STATE OF TENNESSEE
Required Supplementary Information
Note to RSI
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
1. Explanation for differences between the budgetary revenues, expenditures, and other financing sources (uses) and the GAAP revenues, expenditures, and other
financing sources (uses).
Education
Revenues
Actual amount (budgetary basis) $ 8,987,842
The revenues for the Tennessee Promise Scholarship Endowment Fund are not included in the
annually adopted budget. 111,190
Total revenues as reported on the Statement of Revenues, Expenditures,
and Changes in Fund Balances - Governmental Funds $ 9,099,032
Expenditures
Actual amount (budgetary basis) $ 9,205,633
The expenditures for the Tennessee Promise Scholarship Endowment Fund are not included in the
annually adopted budget. 31,194
Total expenditures as reported on the Statement of Revenues, Expenditures,
and Changes in Fund Balances - Governmental Funds $ 9,236,827
Other financing sources (uses)
Actual amount (budgetary basis) $ 292,964
The transfers out to the Tennessee Promise Scholarship Endowment Fund were eliminated in the
Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. 80,622
Total other financing sources (uses) as reported on the Statement of Revenues,
Expenditures, and Changes in Fund Balances - Governmental Funds $ 373,586
2. Budgetary process
The law requires the Governor to submit a recommended budget to the General Assembly annually. Annual budgets are adopted on a basis consistent
with generally accepted accounting principles for the departments in the general fund and the special revenue funds (except Fraud and Economic Crime,
Agricultural Promotion Boards, Opioid Abatement Fund and Tennessee Promise Scholarship Endowment Fund, included in the Education Trust Fund),
and for the debt service fund. The General Assembly enacts the budget through passage of specific departmental appropriations, the sum of which may
not exceed estimated revenues. Before signing the Appropriations Act, the Governor may veto or reduce any specific appropriation, subject to legislative
override. Once passed and signed, the budget becomes the state's financial plan for the coming year.
Budgetary control is maintained at the department level. Budget revisions during the year, reflecting program changes or intradepartmental transfers of
an administrative nature, may be affected with certain executive and legislative branch approval.
Generally, appropriations lapse at the end of each fiscal year. It is the state's budgetary practice to appropriate matching dollars for jointly funded projects
in the year of federal apportionment for the highway fund and these appropriations do not lapse at year-end but are reappropriated for subsequent year
expenditure. There were no outstanding encumbrances reported as of June 30, 2021. In order to provide sufficient funding for several programs during
the year, supplemental appropriations of $102.7 million were required.
Required Supplementary Information 149
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150 Required Supplementary Information
SUPPLEMENTARY INFORMATION
Combining and Individual Fund Financial Statements 151
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152 Combining and Individual Fund Financial Statements
NONMAJOR GOVERNMENTAL
FUNDS
Special Revenue Funds—A description of these funds is Permanent Funds—A description of these funds is found
found later in this section. later in this section.
Debt Service Fund—The debt service fund is maintained to
account for accumulation of resources for, and the payment
of, principal and interest on general long-term debt.
Combining and Individual Fund Financial Statements 153
STATE OF TENNESSEE
Combining Balance Sheet
Nonmajor Governmental Funds - By Fund Type
June 30, 2021
(Expressed in Thousands)
Total
Nonmajor
Special Revenue Debt Service Permanent Governmental
Funds Fund Funds Funds
ASSETS
Cash and cash equivalents $ 407,166 $ 8,528 $ 47,387 $ 463,081
Investments 17,904 - 491,187 509,091
Receivables, net 41,029 8,114 1,230 50,373
Due from other funds 44 - - 44
Due from component units - - 1,391 1,391
Loans receivable - 4,119 - 4,119
Prepayments and others 20 - - 20
Total assets $ 466,163 $ 20,761 $ 541,195 $ 1,028,119
LIABILITIES
Accounts payable and accruals 72,711 68 1,158 73,937
Due to other funds 198 - - 198
Due to component units 1,196 - 2,564 3,760
Unearned revenue 8 - - 8
Total liabilities 74,113 68 3,722 77,903
DEFERRED INFLOWS OF RESOURCES 1,270 4,593 - 5,863
FUND BALANCES
Nonspendable
Permanent fund and endowment corpus $ -$ - $ 197,414 $ 197,414
Restricted 190,972 - 340,059 531,031
Committed 199,808 - - 199,808
Assigned - 16,100 - 16,100
Total fund balances 390,780 16,100 537,473 944,353
Total liabilities, deferred inflows of
resources and fund balances $ 466,163 $ 20,761 $ 541,195 $ 1,028,119
154 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances
Nonmajor Governmental Funds - By Fund Type
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Nonmajor
Special Revenue Debt Service Permanent Governmental
Funds Funds Funds Funds
REVENUES
Taxes:
Sales and use $ -$ 78,865 $ - $ 78,865
Fuel 21,895 74,000 - 95,895
Business - 186,635 - 186,635
Other 55,825 - - 55,825
Licenses, fines, fees, and permits 283,952 2,700 5,200 291,852
Investment income (139) - 86,514 86,375
Federal 54,828 - - 54,828
Departmental services 28,287 984 - 29,271
Other 1 - - 1
Total revenues 444,649 343,184 91,714 879,547
EXPENDITURES
General government 34,300 - - 34,300
Education - - 8,816 8,816
Law, justice and public safety 6,556 - - 6,556
Recreation and resources development 214,424 - 29 214,453
Regulation of business and professions 143,891 - - 143,891
Debt service:
Principal - 142,111 - 142,111
Interest - 67,305 - 67,305
Debt issuance costs - 1,581 - 1,581
Total expenditures 399,171 210,997 8,845 619,013
Excess (deficiency) of revenues over
(under) expenditures 45,478 132,187 82,869 260,534
OTHER FINANCING SOURCES (USES)
Transfers in 3,380 3,707 - 7,087
Transfers out (465) (137,222) - (137,687)
Total other financing sources (uses) 2,915 (133,515) - (130,600)
Net change in fund balances 48,393 (1,328) 82,869 129,934
Fund balances, July 1, restated 342,387 17,428 454,604 814,419
Fund balances, June 30 $ 390,780 $ 16,100 $ 537,473 $ 944,353
Combining and Individual Fund Financial Statements 155
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156 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
Debt Service Fund
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Debt Service Fund
Actual
Budget (Budgetary Basis) Variance
REVENUES
Taxes $ 339,500 $ 339,500 $ -
Licenses, fines, fees, and permits 2,700 2,700 -
Departmental services 984 984 -
Total revenues 343,184 343,184 -
EXPENDITURES
Debt service 210,998 210,997 1
Total expenditures 210,998 210,997 1
Excess (deficiency) of revenues over
(under) expenditures 132,186 132,187 1
OTHER FINANCING SOURCES (USES)
Transfers in 3,707 3,707 -
Transfers out (137,222) (137,222) -
Total other financing sources (uses) (133,515) (133,515) -
Net change in fund balances (1,329) (1,328) 1
Fund balances (budgetary basis), July 1 17,428 17,428 -
Fund balances (budgetary basis), June 30 $ 16,099 $ 16,100 $ 1
Combining and Individual Fund Financial Statements 157
NONMAJOR SPECIAL REVENUE
FUNDS
Specific revenues, earmarked to finance particular activities of from the transfer of real property are used to acquire parks by
government, are accounted for in the Special Revenue Funds. both local and state governments.
A brief description of each fund follows.
Supreme Court Boards—This organization was formed by
Wildlife Resources Agency—This agency is responsible for the Tennessee Supreme Court to consider and investigate
the preservation, management, enhancement and protection alleged grounds for discipline or alleged incapacity of any
of the state's wildlife resources and their environs. An attorney and to provide continuing legal education for
additional responsibility is the enforcement of boating safety attorneys. Revenues are collected from attorneys.
on state lakes and streams. Revenues are derived principally
from hunting and fishing licenses, fees and permits. Underground Storage Tanks—This program is
administered by the Department of Environment and
Criminal Injuries Compensation—The Treasury Conservation. Revenues are collected primarily from a tax of
Department administers this fund for the award of four tenths of a cent per gallon on petroleum products and an
compensation to victims (or their dependents) who suffer annual fee on owners and operators of underground storage
personal injury or death as a result of a criminal act. The tanks containing petroleum substances.
primary revenue source is the privilege tax levied by the
courts at the time of conviction of the offender. Enhanced Emergency 911 Service—This program is
administered by the Department of Commerce and
Solid Waste—This program is administered by the Insurance. Revenues are collected from a monthly fee on
Department of Environment and Conservation. Revenues users of cellular telephone services. This fee is used to
collected for a tipping fee on solid waste are used to provide enhance the effectiveness of response times when a cellular
grants to local governments to reduce the solid waste going user calls 911.
into landfills.
Driver Education—This program is administered by the
Help America Vote—This program is administered by the Department of Safety. Highway safety is promoted by
Secretary of State. Federal funds, along with state matching providing driver education and training in schools, colleges,
dollars, are used in implementing the provisions of the federal and community organizations. The $2 fee for moving traffic
Help America Vote Act. The provisions of the act require the violations is the source of funding for this program.
funds be used to improve election administration and to
replace punch card and lever voting machines. Abandoned Land Program—This program is administered
by the Department of Environment and Conservation.
Environmental Protection—This program is administered Revenues collected from surface mining permit fees and
by the Department of Environment and Conservation. forfeited performance bonds are used to reclaim and restore
Revenues collected from the various fees under the lands affected by abandoned mining operations.
environmental protection fund are used to offset the cost of
administering regulatory environmental programs. Agricultural Non-Point Water Pollution—This program is
administered by the Department of Agriculture. Revenues
Hazardous Waste—This program is administered by the collected from the transfer of real property are used to abate
Department of Environment and Conservation. Revenues pollution from agricultural sources.
collected from applicants and holders of storage, treatment or
disposal permits of hazardous waste are used to supervise the Salvage Title Enforcement—This program is administered
construction, operation, maintenance, closure and, where by the Department of Revenue. Revenues are collected on
necessary, the post-closure care of hazardous waste facilities. the titlement of salvage vehicles and are used to enforce
motor vehicle title and salvage laws and inspection of rebuilt
Parks Acquisition—This program is administered jointly by vehicles.
the Departments of Environment and Conservation,
Agriculture, and Wildlife Resources. Revenues collected
158 Combining and Individual Fund Financial Statements
Agricultural Promotion Boards—These boards were Revenues are collected from individuals prosecuted for bad
formed to promote the consumption of agricultural products. checks. These monies are used to increase resources available
Revenue is derived from an assessment levied on the to prosecute bad check cases.
commercial producers of certain agricultural products.
Vehicle Tag and Analogous Fees—This fund is to account
Drycleaner’s Environmental Response—This program is for the collection and disbursement of revenues produced
administered by the Department of Environment and from the sale or renewal of special purpose motor vehicle
Conservation. Revenues collected from drycleaners are an registration plates and other state fees that are allocated to
annual registration fee and a fee for the various dry-cleaning nonprofit and other external organizations as authorized by
solvents used. state statute.
Agricultural Regulatory Fund—This program is Opioid Abatement Fund—This fund is to account for
administered by the Department of Agriculture. Revenues are expenses incurred for purposes of funding and supporting
collected from fees on the various agricultural related opioid abatement and remediation purposes and related
industries regulated by the department. These fees are then administrative costs. This fund is the designated repository of
used in the administration of this regulatory function. funds that are either dedicated to opioid abatement or
remediation or are otherwise directed to abatement or
Tennessee Public Utility Commission—This commission remediation and that are received by the state pursuant to a
is responsible for executing and enforcing all statutes judgement on opioid-related claims, a recovery in bankruptcy
governing utilities. Revenues are derived principally from on opioid-related claims, or a settlement of opioid-related
inspection and supervision fees. claims.
Fraud and Economic Crime—This program is
administered by the District Attorneys General of the State.
Combining and Individual Fund Financial Statements 159
STATE OF TENNESSEE
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2021
(Expressed in Thousands)
Wildlife Criminal
Resources Injuries Help America
Agency Compensation Solid Waste Vote
ASSETS
Cash and cash equivalents $ 77,936 $ 7,424 $ 6,309 $ 45,999
Investments 17,904 - - -
Receivables, net 9,865 5,624 631 2
Due from other funds - - - -
Prepayments and others - - - -
Total assets $ 105,705 $ 13,048 $ 6,940 $ 46,001
LIABILITIES
Accounts payable and accruals 5,066 6,840 907 41,427
Due to other funds 144 10 - -
Due to component units 1,116 - - -
Unearned revenue - - - -
Total liabilities 6,326 6,850 907 41,427
DEFERRED INFLOWS OF RESOURCES - - - -
FUND BALANCES
Restricted $ 80,081 $ -$ -$ 4,574
Committed 19,298 6,198 6,033 -
Total fund balances 99,379 6,198 6,033 4,574
Total liabilities, deferred inflows of resources
and fund balances $ 105,705 $ 13,048 $ 6,940 $ 46,001
160 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2021
(Expressed in Thousands)
Supreme Enhanced
Environmental Hazardous Parks Court Underground Emergency Driver
Protection Waste Acquisition Boards Storage Tanks 911 Service Education
$ 44,433 $ 7,143 $ 67,252 $ 5,297 $ 58,999 $ 22,924 $ 1,365
- - - - - - -
- 124 4,747 10 1,933 13,639 63
- - - - - - -
- - - - - - -
$ 44,433 $ 7,267 $ 71,999 $ 5,307 $ 60,932 $ 36,563 $ 1,428
1 343 3,950 69 4,507 1,036 16
- - - - - 44 -
- - - - - - -
- - - 7 - - -
1 343 3,950 76 4,507 1,080 16
- - - - - - -
$ - $ 51 $ -$ 5,231 $ 56,425 $ 29,960 $ -
44,432 6,873 68,049 - - 5,523 1,412
44,432 6,924 68,049 5,231 56,425 35,483 1,412
$ 44,433 $ 7,267 $ 71,999 $ 5,307 $ 60,932 $ 36,563 $ 1,428
Combining and Individual Fund Financial Statements 161
STATE OF TENNESSEE
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2021
(Expressed in Thousands)
Abandoned Agricultural Non- Agricultural
Land Point Water Salvage Title Promotion
Program Pollution Enforcement Boards
ASSETS
Cash and cash equivalents $ 6,574 $ 13,534 $ 3,595 $ 613
Investments - - - -
Receivables, net 6 1,267 - 45
Due from other funds - - - -
Prepayments and others - - - 20
Total assets $ 6,580 $ 14,801 $ 3,595 $ 678
LIABILITIES
Accounts payable and accruals 148 729 60 101
Due to other funds - - - -
Due to component units - 80 - -
Unearned revenue - - - -
Total liabilities 148 809 60 101
DEFERRED INFLOWS OF RESOURCES - - - -
FUND BALANCES
Restricted $ 6,028 $ - $ -$ -
Committed 404 13,992 3,535 577
Total fund balances 6,432 13,992 3,535 577
Total liabilities and fund balances $ 6,580 $ 14,801 $ 3,595 $ 678
162 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Balance Sheet
Nonmajor Special Revenue Funds
June 30, 2021
(Expressed in Thousands)
Total
Vehicle Nonmajor
Drycleaner's Agricultural Tennessee Fraud and Tag and Opioid Special
Environmental Regulatory Public Utility Economic Analogous Abatement Revenue
Response Fund Commission Crime Fees Fund Funds
$ 865 $ 11,489 $ 7,591 $ 3,280 $ 1,931 $ 12,613 $ 407,166
- - - - - - 17,904
- 3 3 - 462 2,605 41,029
- - 44 - - - 44
- - - - - - 20
$ 865 $ 11,492 $ 7,638 $ 3,280 $ 2,393 $ 15,218 $ 466,163
15 - 277 - 1,893 5,326 72,711
- - - - - - 198
- - - - - - 1,196
- - 1 - - - 8
15 - 278 - 1,893 5,326 74,113
- - - - - 1,270 1,270
$ -$ - $ - $ - $ - $ 8,622 $ 190,972
850 11,492 7,360 3,280 500 - 199,808
850 11,492 7,360 3,280 500 8,622 390,780
$ 865 $ 11,492 $ 7,638 $ 3,280 $ 2,393 $ 15,218 $ 466,163
Combining and Individual Fund Financial Statements 163
STATE OF TENNESSEE
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances
Nonmajor Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Wildlife Resources Criminal Injuries Help America
Agency Compensation Solid Waste Vote
REVENUES
Taxes:
Fuel $ 2,767 $ -$ -$ -
Other 20,843 - 2,403 -
Licenses, fines, fees, and permits 51,944 6,976 6,565 -
Investment income (320) 4 4 4
Federal 34,722 5,151 1 7,780
Departmental services 22,059 - 38 -
Other - 1 - -
Total revenues 132,015 12,132 9,011 7,784
EXPENDITURES
General government - 12,109 - 7,864
Law, justice and public safety - - - -
Recreation and resources development 113,611 - 3,911 -
Regulation of business and professions - - - -
Total expenditures 113,611 12,109 3,911 7,864
Excess (deficiency) of revenues over
(under) expenditures 18,404 23 5,100 (80)
OTHER FINANCING SOURCES (USES)
Transfers in 1,852 - 18 -
Transfers out (215) - - -
Total other financing sources (uses) 1,637 - 18 -
Net change in fund balances 20,041 23 5,118 (80)
Fund balances, July 1, restated 79,338 6,175 915 4,654
Fund balances, June 30 $ 99,379 $ 6,198 $ 6,033 $ 4,574
164 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances
Nonmajor Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Supreme Enhanced
Environmental Hazardous Parks Court Underground Emergency Driver
Protection Waste Acquisition Boards Storage Tanks 911 Service Education
$ -$ -$ -$ -$ 19,128 $ -$ -
- - 20,843 - - - -
48,900 134 - 5,550 2,230 127,301 621
29 5 47 4 44 17 -
- 964 2,002 - 1,293 1,564 -
- 4,336 - 310 86 2 -
- - - - - - -
48,929 5,439 22,892 5,864 22,781 128,884 621
- - - - - - -
- - - 5,770 - - 490
40,643 6,743 10,763 - 19,924 - -
- - - - - 143,891 -
40,643 6,743 10,763 5,770 19,924 143,891 490
8,286 (1,304) 12,129 94 2,857 (15,007) 131
- 1,089 - 71 170 21 11
- - (250) - - - -
- 1,089 (250) 71 170 21 11
8,286 (215) 11,879 165 3,027 (14,986) 142
36,146 7,139 56,170 5,066 53,398 50,469 1,270
$ 44,432 $ 6,924 $ 68,049 $ 5,231 $ 56,425 $ 35,483 $ 1,412
Combining and Individual Fund Financial Statements 165
STATE OF TENNESSEE
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances
Nonmajor Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Agricultural Non- Agricultural
Abandoned Point Water Salvage Title Promotion
Land Program Pollution Enforcement Boards
REVENUES
Taxes:
Fuel $ -$ -$ -$ -
Other - 9,620 - 910
Licenses, fines, fees, and permits 21 - 2,507 -
Investment income 5 8 - 1
Federal 374 - 2 -
Departmental services - - - 7
Other - - - -
Total revenues 400 9,628 2,509 918
EXPENDITURES
General government - - 1,956 -
Law, justice and public safety - - - -
Recreation and resources development 66 5,983 - 998
Regulation of business and professions - - - -
Total expenditures 66 5,983 1,956 998
Excess (deficiency) of revenues over
(under) expenditures 334 3,645 553 (80)
OTHER FINANCING SOURCES (USES)
Transfers in 1 - 36 -
Transfers out - - - -
Total other financing sources (uses) 1 - 36 -
Net change in fund balances 335 3,645 589 (80)
Fund balances, July 1, restated 6,097 10,347 2,946 657
Fund balances, June 30 $ 6,432 $ 13,992 $ 3,535 $ 577
166 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances
Nonmajor Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Vehicle Nonmajor
Drycleaner's Agricultural Tennessee Fraud and Tag and Opioid Special
Environmental Regulatory Public Utility Economic Analogous Abatement Revenue
Response Fund Commission Crime Fees Fund Funds
$ -$ -$ -$ -$ -$ -$ 21,895
- - - - 1,206 - 55,825
485 12,206 5,174 432 4,284 8,622 283,952
1 8 - - - - (139)
- - 975 - - - 54,828
- 39 1,410 - - - 28,287
- - - - - - 1
486 12,253 7,559 432 5,490 8,622 444,649
- - 6,881 - 5,490 - 34,300
- - - 296 - - 6,556
390 11,392 - - - - 214,424
- - - - - - 143,891
390 11,392 6,881 296 5,490 - 399,171
96 861 678 136 - 8,622 45,478
5 - 106 - - - 3,380
- - - - - - (465)
5 - 106 - - - 2,915
101 861 784 136 - 8,622 48,393
749 10,631 6,576 3,144 500 - 342,387
$ 850 $ 11,492 $ 7,360 $ 3,280 $ 500 $ 8,622 $ 390,780
Combining and Individual Fund Financial Statements 167
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Wildlife Resources Agency
Actual
Budget (Budgetary Basis) Variance
REVENUES
Taxes $ 17,450 $ 23,610 $ 6,160
Licenses, fines, fees, and permits 51,502 51,944 442
Investment income (loss) - (320) (320)
Federal 30,445 34,722 4,277
Departmental services 13,837 22,059 8,222
Other - - -
Total revenues 113,234 132,015 18,781
EXPENDITURES
Judicial - - -
Secretary of State - - -
Treasurer - - -
Commissions - - -
Finance and Administration - - -
Safety - - -
Agriculture - - -
Environment and Conservation - - -
Wildlife Resources 124,725 113,611 11,114
Commerce and Insurance - - -
Revenue - - -
Total expenditures 124,725 113,611 11,114
Excess (deficiency) of revenues over
(under) expenditures (11,491) 18,404 29,895
OTHER FINANCING SOURCES (USES)
Transfers in 1,852 1,852 -
Transfers out (215) (215) -
Total other financing sources (uses) 1,637 1,637 -
Net change in fund balances (9,854) 20,041 29,895
Fund balances (budgetary basis), July 1 79,338 79,338 -
Fund balances (budgetary basis), June 30 $ 69,484 $ 99,379 $ 29,895
168 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Criminal Injuries Compensation Solid Waste
Actual Actual
Budget (Budgetary Basis) Variance Budget (Budgetary Basis) Variance
$ - $ - $ - $ 2,558 $ 2,403 $ (155)
12,237 6,976 (5,261) 5,749 6,565 816
- 4 4 - 4 4
4,138 5,151 1,013 - 1 1
- - - 1 38 37
10 1 (9) - - -
16,385 12,132 (4,253) 8,308 9,011 703
- - - - - -
- - - - - -
16,385 12,109 4,276 - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - 8,308 3,911 4,397
- - - - - -
- - - - - -
- - - - - -
16,385 12,109 4,276 8,308 3,911 4,397
- 23 23 - 5,100 5,100
- - - 18 18 -
- - - - - -
- - - 18 18 -
- 23 23 18 5,118 5,100
6,175 6,175 - 915 915 -
$ 6,175 $ 6,198 $ 23 $ 933 $ 6,033 $ 5,100
Combining and Individual Fund Financial Statements 169
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Help America Vote
Actual
Budget (Budgetary Basis) Variance
REVENUES
Taxes $ - $ - $ -
Licenses, fines, fees, and permits - - -
Investment income - 4 4
Federal 26,500 7,780 (18,720)
Departmental services - - -
Other - - -
Total revenues 26,500 7,784 (18,716)
EXPENDITURES
Judicial - - -
Secretary of State 27,500 7,864 19,636
Treasurer - - -
Commissions - - -
Finance and Administration - - -
Safety - - -
Agriculture - - -
Environment and Conservation - - -
Wildlife Resources - - -
Commerce and Insurance - - -
Revenue - - -
Total expenditures 27,500 7,864 19,636
Excess (deficiency) of revenues over
(under) expenditures (1,000) (80) 920
OTHER FINANCING SOURCES (USES)
Transfers in - - -
Transfers out - - -
Total other financing sources (uses) - - -
Net change in fund balances (1,000) (80) 920
Fund balances (budgetary basis), July 1 4,654 4,654 -
Fund balances (budgetary basis), June 30 $ 3,654 $ 4,574 $ 920
170 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Environmental Protection Hazardous Waste
Actual Actual
Budget (Budgetary Basis) Variance Budget (Budgetary Basis) Variance
$ - $ - $ - $ - $ - $ -
54,829 48,900 (5,929) - 134 134
- 29 29 - 5 5
- - - 1,891 964 (927)
- - - 4,404 4,336 (68)
- - - - - -
54,829 48,929 (5,900) 6,295 5,439 (856)
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
54,829 40,643 14,186 10,327 6,743 3,584
- - - - - -
- - - - - -
- - - - - -
54,829 40,643 14,186 10,327 6,743 3,584
- 8,286 8,286 (4,032) (1,304) 2,728
- - - 1,089 1,089 -
- - - - - -
- - - 1,089 1,089 -
- 8,286 8,286 (2,943) (215) 2,728
36,146 36,146 - 7,139 7,139 -
$ 36,146 $ 44,432 $ 8,286 $ 4,196 $ 6,924 $ 2,728
Combining and Individual Fund Financial Statements 171
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Parks Acquisition
Actual
Budget (Budgetary Basis) Variance
REVENUES
Taxes $ 6,931 $ 20,843 $ 13,912
Licenses, fines, fees, and permits - - -
Investment income - 47 47
Federal 2,000 2,002 2
Departmental services - - -
Other - - -
Total revenues 8,931 22,892 13,961
EXPENDITURES
Judicial - - -
Secretary of State - - -
Treasurer - - -
Commissions - - -
Finance and Administration - - -
Safety - - -
Agriculture - - -
Environment and Conservation 12,931 10,763 2,168
Wildlife Resources - - -
Commerce and Insurance - - -
Revenue - - -
Total expenditures 12,931 10,763 2,168
Excess (deficiency) of revenues over
(under) expenditures (4,000) 12,129 16,129
OTHER FINANCING SOURCES (USES)
Transfers in - - -
Transfers out (250) (250) -
Total other financing sources (uses) (250) (250) -
Net change in fund balances (4,250) 11,879 16,129
Fund balances (budgetary basis), July 1 56,170 56,170 -
Fund balances (budgetary basis), June 30 $ 51,920 $ 68,049 $ 16,129
172 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Supreme Court Boards Underground Storage Tanks
Actual Actual
Budget (Budgetary Basis) Variance Budget (Budgetary Basis) Variance
$ - $ - $ - $ 18,951 $ 19,128 $ 177
5,489 5,550 61 4,443 2,230 (2,213)
- 4 5 - 44 44
- - - 1,973 1,293 (680)
- 310 310 - 86 86
- - - - - -
5,489 5,864 375 25,367 22,781 (2,586)
5,935 5,770 165 - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - 25,618 19,924 5,694
- - - - - -
- - - - - -
- - - - - -
5,935 5,770 165 25,618 19,924 5,694
(446) 94 540 (251) 2,857 3,108
71 71 - 170 170 -
- - - - - -
71 71 - 170 170 -
(375) 165 540 (81) 3,027 3,108
5,066 5,066 - 53,398 53,398 -
$ 4,691 $ 5,231 $ 540 $ 53,317 $ 56,425 $ 3,108
Combining and Individual Fund Financial Statements 173
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Enhanced Emergency 911 Service
Actual
Budget (Budgetary Basis) Variance
REVENUES
Taxes $ - $ - $ -
Licenses, fines, fees, and permits 112,114 127,301 15,187
Investment income - 17 17
Federal - 1,564 1,564
Departmental services - 2 2
Other - - -
Total revenues 112,114 128,884 16,770
EXPENDITURES
Judicial - - -
Secretary of State - - -
Treasurer - - -
Commissions - - -
Finance and Administration - - -
Safety - - -
Agriculture - - -
Environment and Conservation - - -
Wildlife Resources - - -
Commerce and Insurance 149,392 143,891 5,501
Revenue - - -
Total expenditures 149,392 143,891 5,501
Excess (deficiency) of revenues over
(under) expenditures (37,278) (15,007) 22,271
OTHER FINANCING SOURCES (USES)
Transfers in 21 21 -
Transfers out - - -
Total other financing sources (uses) 21 21 -
Net change in fund balances (37,257) (14,986) 22,271
Fund balances (budgetary basis), July 1 50,469 50,469 -
Fund balances (budgetary basis), June 30 $ 13,212 $ 35,483 $ 22,271
174 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Driver Education Abandoned Land Program
Actual Actual
Budget (Budgetary Basis) Variance Budget (Budgetary Basis) Variance
$ - $ - $ - $ - $ - $ -
828 621 (207) 500 21 (479)
- - - - 5 5
- - - 918 374 (544)
- - - - - -
- - - - - -
828 621 (207) 1,418 400 (1,018)
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
829 490 339 - - -
- - - - - -
- - - 1,418 66 1,352
- - - - - -
- - - - - -
- - - - - -
829 490 339 1,418 66 1,352
(1) 131 132 - 334 334
11 11 - 1 1 -
- - - - - -
11 11 - 1 1 -
10 142 132 1 335 334
1,270 1,270 - 6,097 6,097 -
$ 1,280 $ 1,412 $ 132 $ 6,098 $ 6,432 $ 334
Combining and Individual Fund Financial Statements 175
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Agricultural Non-Point Water Pollution
Actual
Budget (Budgetary Basis) Variance
REVENUES
Taxes $ 3,188 $ 9,620 $ 6,432
Licenses, fines, fees, and permits - - -
Investment income - 8 8
Federal - - -
Departmental services - - -
Other - - -
Total revenues 3,188 9,628 6,440
EXPENDITURES
Judicial - - -
Secretary of State - - -
Treasurer - - -
Commissions - - -
Finance and Administration - - -
Safety - - -
Agriculture 10,188 5,983 4,205
Environment and Conservation - - -
Wildlife Resources - - -
Commerce and Insurance - - -
Revenue - - -
Total expenditures 10,188 5,983 4,205
Excess (deficiency) of revenues over
(under) expenditures (7,000) 3,645 10,645
OTHER FINANCING SOURCES (USES)
Transfers in - - -
Transfers out - - -
Total other financing sources (uses) - - -
Net change in fund balances (7,000) 3,645 10,645
Fund balances (budgetary basis), July 1 10,347 10,347 -
Fund balances (budgetary basis), June 30 $ 3,347 $ 13,992 $ 10,645
176 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Salvage Title Enforcement Drycleaner's Environmental Response
Actual Actual
Budget (Budgetary Basis) Variance Budget (Budgetary Basis) Variance
$ - $ - $ - $ - $ - $ -
1,941 2,507 566 1,939 485 (1,454)
- - - - 1 1
- 2 2 - - -
- - - - - -
- - - - - -
1,941 2,509 568 1,939 486 (1,453)
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - 1,940 390 1,550
- - - - - -
- - - - - -
2,342 1,956 386 - - -
2,342 1,956 386 1,940 390 1,550
(401) 553 954 (1) 96 97
36 36 - 5 5 -
- - - - - -
36 36 - 5 5 -
(365) 589 954 4 101 97
2,946 2,946 - 749 749 -
$ 2,581 $ 3,535 $ 954 $ 753 $ 850 $ 97
Combining and Individual Fund Financial Statements 177
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Agricultural Regulatory Fund
Actual
Budget (Budgetary Basis) Variance
REVENUES
Taxes $ - $ - $ -
Licenses, fines, fees, and permits 11,272 12,206 934
Investment income - 8 8
Federal - - -
Departmental services 2 39 37
Other - - -
Total revenues 11,274 12,253 979
EXPENDITURES
Judicial - - -
Secretary of State - - -
Treasurer - - -
Commissions - - -
Finance and Administration - - -
Safety - - -
Agriculture 11,392 11,392 -
Environment and Conservation - - -
Wildlife Resources - - -
Commerce and Insurance - - -
Revenue - - -
Total expenditures 11,392 11,392 -
Excess (deficiency) of revenues over
(under) expenditures (118) 861 979
OTHER FINANCING SOURCES (USES)
Transfers in - - -
Transfers out - - -
Total other financing sources (uses) - - -
Net change in fund balances (118) 861 979
Fund balances (budgetary basis), July 1 10,631 10,631 -
Fund balances (budgetary basis), June 30 $ 10,513 $ 11,492 $ 979
178 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Tennessee Public Utility Commission Vehicle Tag and Analogous Fees
Actual Actual
Budget (Budgetary Basis) Variance Budget (Budgetary Basis) Variance
$ - $ - $ - $ 1,206 $ 1,206 $ -
7,004 5,174 (1,830) 4,284 4,284 -
- - - - - -
969 975 6 - - -
1,431 1,410 (21) - - -
- - - - - -
9,404 7,559 (1,845) 5,490 5,490 -
- - - - - -
- - - - - -
- - - - - -
9,404 6,881 2,523 - - -
- - - 5,490 5,490 -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
- - - - - -
9,404 6,881 2,523 5,490 5,490 -
- 678 678 - - -
106 106 - - - -
- - - - - -
106 106 - - - -
106 784 678 - - -
6,576 6,576 - 500 500 -
$ 6,682 $ 7,360 $ 678 $ 500 $ 500 $ -
Combining and Individual Fund Financial Statements 179
STATE OF TENNESSEE
Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (Budgetary Basis)
All Nonmajor Budgeted Special Revenue Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total Nonmajor Special Revenue Funds
Actual
Budget (Budgetary Basis) Variance
REVENUES
Taxes $ 50,284 $ 76,810 $ 26,526
Licenses, fines, fees, and permits 274,131 274,898 767
Investment income (loss) - (140) (140)
Federal 68,834 54,828 (14,006)
Departmental services 19,675 28,280 8,605
Other 10 1 (9)
Total revenues 412,934 434,677 21,743
EXPENDITURES
Judicial 5,935 5,770 165
Secretary of State 27,500 7,864 19,636
Treasurer 16,385 12,109 4,276
Commissions 9,404 6,881 2,523
Finance and Administration 5,490 5,490 -
Safety 829 490 339
Agriculture 21,580 17,375 4,205
Environment and Conservation 115,371 82,440 32,931
Wildlife Resources 124,725 113,611 11,114
Commerce and Insurance 149,392 143,891 5,501
Revenue 2,342 1,956 386
Total expenditures 478,953 397,877 81,076
Excess (deficiency) of revenues over
(under) expenditures (66,019) 36,800 102,819
OTHER FINANCING SOURCES (USES)
Transfers in 3,380 3,380 -
Transfers out (465) (465) -
Total other financing sources (uses) 2,915 2,915 -
Net change in fund balances (63,104) 39,715 102,819
Fund balances (budgetary basis), July 1 338,586 338,586 -
Fund balances (budgetary basis), June 30 $ 275,482 $ 378,301 $ 102,819
180 Combining and Individual Fund Financial Statements
PERMANENT FUNDS
Chairs of Excellence Fund—This fund was created by the program. The chair also receives the interest earned from
General Assembly in 1986. Its purpose is to endow faculty investment of these matched monies.
chairs at the State University and Community College System
and University of Tennessee campuses in order to attract Other—This column includes various smaller funds in which
more highly qualified professors. For a chair to be legal restrictions require that the principal remain intact and
established, private contributions which a school collects are only the earnings may be spent.
matched by monies the state has appropriated to fund this
Combining and Individual Fund Financial Statements 181
STATE OF TENNESSEE
Combining Balance Sheet
Permanent Funds
June 30, 2021
(Expressed in Thousands)
Total
Other Permanent Permanent
Chairs of Excellence Funds Funds
ASSETS
Cash and cash equivalents $ 6,328 $ 41,059 $ 47,387
Investments 435,518 55,669 491,187
Receivables, net 1,216 14 1,230
Due from component units 1,391 - 1,391
Total assets $ 444,453 $ 96,742 $ 541,195
LIABILITIES
Accounts payable and accruals 1,158 - 1,158
Due to component units 2,564 - 2,564
Total liabilities 3,722 - 3,722
FUND BALANCES
Nonspendable
Permanent fund and endowment corpus $ 104,362 $ 93,052 $ 197,414
Restricted 336,369 3,690 340,059
Total fund balances 440,731 96,742 537,473
Total liabilities and fund balances $ 444,453 $ 96,742 $ 541,195
182 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances
Permanent Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Other Permanent Permanent
Chairs of Excellence Funds Funds
REVENUES
Licenses, fines, fees, and permits $ - $ 5,200 $ 5,200
Investment income 87,598 (1,084) 86,514
Total revenues 87,598 4,116 91,714
EXPENDITURES
Education 8,816 - 8,816
Recreation and resources development - 29 29
Total expenditures 8,816 29 8,845
Excess (deficiency) of revenues over
(under) expenditures 78,782 4,087 82,869
Net change in fund balances 78,782 4,087 82,869
Fund balances, July 1, restated
361,949 92,655 454,604
Fund balances, June 30 $ 440,731 $ 96,742 $ 537,473
Combining and Individual Fund Financial Statements 183
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184 Combining and Individual Fund Financial Statements
NONMAJOR ENTERPRISE FUNDS
The Enterprise Funds are used to account for the operations Drinking Water Loan—Created in 1998, this fund provides
of state agencies that provide goods or services to the general loans to local governments and utility districts for the
public on a user charge basis. The state's nonmajor enterprise improvement of drinking water systems. The initial sources
operations are described below. of the monies are federal grants and state appropriations.
Teacher Group Insurance—Established in January 1986, Grain Indemnity—This program is administered by the
this fund is used to account for revenues received and claims Department of Agriculture. Revenues are collected from fees
paid on behalf of currently employed teachers of political on grain sold by producers. These revenues are to be used to
subdivisions of the state who have elected coverage under a protect commodity producers in the event of the financial
group medical plan similar to that offered state employees. failure of a commodity dealer or warehouseman.
Local Government Group Insurance—Established in July Energy Efficient Schools Initiative—Created to award
1991, this fund is used to account for revenues received and grants and loans to local school systems for capital outlay
claims paid on behalf of active employees of local projects which meet established energy efficient design and
governments and quasi-governmental organizations technology guidelines for school facilities.
established for the primary purpose of providing services for
or on the behalf of state and local governments. This plan is Client Protection—Created by the Tennessee Supreme
similar to the plan offered to state employees. Court, this fund provides services to protect clients from
dishonest conduct by attorneys. Revenue is mainly generated
through annual registration fees for attorneys.
Combining and Individual Fund Financial Statements 185
STATE OF TENNESSEE
Combining Statement of Net Position
Nonmajor Enterprise Funds
June 30, 2021
(Expressed in Thousands)
Local
Teacher Government
Group Group Drinking Grain
Insurance Insurance Water Indemnity
ASSETS
Current assets:
Cash and cash equivalents $ 255,203 $ 53,954 $ 106,226 $ 10,131
Receivables:
Accounts receivable 1,954 610 - -
Loans receivable - - 7,754 -
Total current assets 257,157 54,564 113,980 10,131
Noncurrent assets:
Loans receivable - - 99,190 -
Total noncurrent assets - - 99,190 -
Total assets 257,157 54,564 213,170 10,131
LIABILITIES
Current liabilities:
Accounts payable and accruals 48,903 16,210 3 -
Unearned revenue 101 71 - -
Total current liabilities 49,004 16,281 3 -
Noncurrent liabilities:
Others - - 3,271 -
Total noncurrent liabilities - - 3,271 -
Total liabilities 49,004 16,281 3,274 -
NET POSITION
Unrestricted 208,153 38,283 209,896 10,131
Total net position $ 208,153 $ 38,283 $ 209,896 $ 10,131
186 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Net Position
Nonmajor Enterprise Funds
June 30, 2021
(Expressed in Thousands)
Total
Nonmajor
Energy Efficient Enterprise
Schools Initiative Client Protection Funds
$ 16,690 $ 1,479 $ 443,683
- - 2,564
10,408 - 18,162
27,098 1,479 464,409
57,109 - 156,299
57,109 - 156,299
84,207 1,479 620,708
- 31 65,147
37 - 209
37 31 65,356
- - 3,271
- - 3,271
37 31 68,627
84,170 1,448 552,081
$ 84,170 $ 1,448 $ 552,081
Combining and Individual Fund Financial Statements 187
STATE OF TENNESSEE
Combining Statement of Revenues, Expenses, and
Changes in Net Position
Nonmajor Enterprise Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Local
Teacher Government
Group Group Drinking Grain
Insurance Insurance Water Indemnity
Operating revenues
Charges for services $ - $ - $ 1,482 $ -
Investment income - - 61 -
Premiums 566,354 161,926 - -
Total operating revenues 566,354 161,926 1,543 -
Operating expenses
Contractual services 25,734 8,213 737 140
Benefits 544,612 169,060 - -
Other 3,997 1,256 - -
Total operating expenses 574,343 178,529 737 140
Operating income (loss) (7,989) (16,603) 806 (140)
Nonoperating revenues (expenses)
Grants - - 4,894 -
Interest income 174 41 - 8
Other - - (920) -
Total nonoperating revenues (expenses) 174 41 3,974 8
Income (loss) before contributions and
transfers (7,815) (16,562) 4,780 (132)
Transfers in - - 4,594 -
Transfers out - - - -
Change in net position (7,815) (16,562) 9,374 (132)
Net position, July 1, restated 215,968 54,845 200,522 10,263
Net position, June 30 $ 208,153 $ 38,283 $ 209,896 $ 10,131
188 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Revenues, Expenses, and
Changes in Net Position
Nonmajor Enterprise Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Nonmajor
Energy Efficient Enterprise
Schools Initiative Client Protection Funds
$ 726 $ 287 $ 2,495
14 - 75
- - 728,280
740 287 730,850
30 695 35,549
- - 713,672
- - 5,253
30 695 754,474
710 (408) (23,624)
- - 4,894
- 1 224
- - (920)
- 1 4,198
710 (407) (19,426)
- - 4,594
(600) - (600)
110 (407) (15,432)
84,060 1,855 567,513
$ 84,170 $ 1,448 $ 552,081
Combining and Individual Fund Financial Statements 189
STATE OF TENNESSEE
Combining Statement of Cash Flows
Nonmajor Enterprise Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Local
Teacher Government
Group Group Drinking Grain
Insurance Insurance Water Indemnity
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users $ 573,037 $ 165,452 $ -$ -
Payments to suppliers (565,054) (174,933) - -
Payments for interfund services used (599) (131) (737) (140)
Net cash provided by (used for) operating activities 7,384 (9,612) (737) (140)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Operating grants received - - 4,894 -
Transfers in - - 4,594 -
Transfers out - - - -
Net cash provided by (used for) noncapital financing
activities - - 9,488 -
CASH FLOWS FROM INVESTING ACTIVITIES
Loans issued and other disbursements to borrowers - - (7,595) -
Collection of loan principal - - 27,075 -
Interest received 174 41 1,546 8
Net cash provided by (used for) investing activities 174 41 21,026 8
Net increase (decrease) in cash and cash
equivalents 7,558 (9,571) 29,777 (132)
Cash and cash equivalents, July 1, restated 247,645 63,525 76,449 10,263
Cash and cash equivalents, June 30 $ 255,203 $ 53,954 $ 106,226 $ 10,131
Reconciliation of operating income to net cash
provided by (used for) operating activities
Operating income (loss) $ (7,989) $ (16,603) $ 806 $ (140)
Adjustment to reconcile operating income (loss) to
net cash from operating activities:
Interest income - - (1,482) -
Investment income - - (61) -
Changes in assets, deferred outflows of resources,
liabilities and deferred inflows of resources:
(Increase) decrease in receivables 6,074 1,879 - -
Increase (decrease) in accounts payable 9,271 5,084 - -
Increase (decrease) in unearned revenue 28 28 - -
Total adjustments 15,373 6,991 (1,543) -
Net cash provided by (used for) operating activities $ 7,384 $ (9,612) $ (737) $ (140)
190 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Cash Flows
Nonmajor Enterprise Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Nonmajor
Energy Efficient Enterprise
Schools Initiative Client Protection Funds
$ 30 $ 287 $ 738,806
- (664) (740,651)
(30) - (1,637)
- (377) (3,482)
- - 4,894
- - 4,594
(600) - (600)
(600) - 8,888
(12,090) - (19,685)
10,851 - 37,926
595 1 2,365
(644) 1 20,606
(1,244) (376) 26,012
17,934 1,855 417,671
$ 16,690 $ 1,479 $ 443,683
$ 710 $ (408) $ (23,624)
(696) - (2,178)
(14) - (75)
- - 7,953
- 31 14,386
- - 56
(710) 31 20,142
$ -$ (377) $ (3,482)
Combining and Individual Fund Financial Statements 191
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192 Combining and Individual Fund Financial Statements
INTERNAL SERVICE FUNDS
Internal Service Funds are used to account for the operations distributing incoming, outgoing and interdepartmental mail
of state agencies that provide goods or services to other state for state agencies located in Nashville.
agencies on a cost-reimbursement basis. The following
operations are included in these funds: Central Procurement Office—A division of the
Department of General Services, is responsible for the
Strategic Technology Solutions—A division of the procurement of supplies, equipment, and certain specialized
Department of Finance and Administration, functions as the services.
data and voice service bureau for state government.
Distribution Center—A division of the Department of
Risk Management—Administered by the Treasury General Services, is responsible for the purchasing of office
Department, this fund is used to pay awards for claims made supplies and the receipt and distribution of surplus property
against the state and for damage to state owned property. for all state government and quasi-governmental entities that
opt to use this service.
Motor Vehicle Management—A division of the
Department of General Services, is responsible for Records Management—A division of the Secretary of State,
administering a uniform program for the operation and is responsible for the retention and disposal of official records
maintenance of all state vehicles. for state government.
General Services Printing—A division of the Department Human Resources—This fund’s responsibilities include
of General Services, operates a printing facility to provide providing departments with applicants for employment,
such services as general printing, typesetting and binding for providing training to state employees, and administering the
state agencies located in Nashville. In addition, this division Sick Leave Bank.
provides photographic services to the various state agencies.
Division of Accounts—A division of the Department of
Facilities Revolving Fund—Created in 1989, this fund Finance and Administration, is responsible for the centralized
provides the maintenance, repair and total housing needs of accounting function for the state.
state government for all office and warehouse space in the
state, except institutional space. TRICOR (Tennessee Rehabilitative Initiative in
Correction)—Manages correctional industry, agriculture, and
Employee Group Insurance Fund—Established in January service operations. Its purpose is to employ and train inmates
1978, this fund is used to account for transactions pertaining and provide products and services to state agencies, local
to the state's self-insured group medical plan. This fund governments, and not for profit organizations.
primarily includes employees of the state, University of
Tennessee, and the State University and Community College Edison—Maintained by the Department of Finance and
System. Group life and accident insurance premiums, dental Administration’s Enterprise Resource Planning division, is the
premiums, and long-term care premiums paid to private state’s integrated software package for administrative business
insurance companies are also recorded in this fund. functions such as financials and accounting, procurement,
payroll, benefits, and personnel administration.
Postal Services—A division of the Department of
General Services, is responsible for processing and
Combining and Individual Fund Financial Statements 193
STATE OF TENNESSEE
Combining Statement of Net Position
Internal Service Funds
June 30, 2021
(Expressed in Thousands)
Strategic Motor General Facilities Employee
Technology Risk Vehicle Services Revolving Group
Solutions Management Management Printing Fund Insurance
ASSETS
Current assets:
Cash and cash equivalents $ 108,600 $ 234,195 $ 56,245 $ 1,239 $ 329,828 $ 271,864
Receivables, net 1,251 319 39 - 554 2,720
Due from other funds 238 - - - 505 -
Due from component units - 43 - - 9 -
Inventories, at cost 354 - - 235 - -
Prepayments - - - 14 - -
Total current assets 110,443 234,557 56,284 1,488 330,896 274,584
Noncurrent assets:
Due from other funds 9 - - - - -
Net investment in capital leases - - - - 5,575 -
Restricted net pension assets 928 - 10 24 - -
Capital assets:
Land, at cost - - - - 62,414 -
Structures and improvements, at cost - - - - 881,735 -
Machinery and equipment, at cost 69,849 - 189,742 3,224 2,246 -
Less: Accumulated depreciation (47,747) - (114,350) (2,402) (306,643) -
Construction in progress - - - - 11,961 -
Total noncurrent assets 23,039 - 75,402 846 657,288 -
Total assets 133,482 234,557 131,686 2,334 988,184 274,584
DEFERRED OUTFLOWS OF RESOURCES 24,345 - 276 543 1,606 -
LIABILITIES
Current liabilities:
Accounts payable 15,403 621 2,959 404 11,043 74,278
Accrued payroll and related deductions 8,376 - 90 181 - -
Due to other funds - 12 - 11 3 1
Due to component units - 59 - - 7 57
Lease obligations payable - - - - 472 -
Bond payable - - - - 13,349 -
Unearned revenue - 1 - - - 42,212
Others - 83,835 - - - -
Total current liabilities 23,779 84,528 3,049 596 24,874 116,548
Noncurrent liabilities:
Pension 40,782 - 441 1,031 - -
Lease obligations payable - - - - 6,149 -
Commercial paper payable - - - - 63,332 -
Bonds payable - - - - 123,740 -
Others 17,037 109,667 290 482 - -
Total noncurrent liabilities 57,819 109,667 731 1,513 193,221 -
Total liabilities 81,598 194,195 3,780 2,109 218,095 116,548
DEFERRED INFLOWS OF RESOURCES 5,988 - 327 331 34 -
NET POSITION
Net investment in capital assets 22,102 - 75,392 822 446,243 -
Restricted for:
Capital projects - - - - 1,276 -
Pensions 928 - 10 24 - -
Unrestricted 47,211 40,362 52,453 (409) 324,142 158,036
Total net position $ 70,241 $ 40,362 $ 127,855 $ 437 $ 771,661 $ 158,036
194 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Net Position
Internal Service Funds
June 30, 2021
(Expressed in Thousands)
Total
Central Internal
Postal Procurement Distribution Records Human Division of Service
Services Office Center Management Resources Accounts TRICOR Edison Funds
$ 4,061 $ 3,074 $ 1,368 $ 101 $ 11,246 $ 17,860 $ 6,233 $ 32,411 $ 1,078,325
2 569 4 - - 2 1,231 - 6,691
- - - - - - - - 743
- - - 11 - - - - 63
168 - 25 - - - 2,107 - 2,889
408 - - - - - - - 422
4,639 3,643 1,397 112 11,246 17,862 9,571 32,411 1,089,133
- - - - - - - - 9
- - - - - - - - 5,575
20 60 9 4 72 200 40 109 1,476
- - - - - - 746 - 63,160
- - - - - - 2,950 - 884,685
4,735 21 77 12 170 400 9,369 113,511 393,356
(3,895) (19) (77) (12) (126) (391) (6,147) (111,999) (593,808)
- - - - - - 140 - 12,101
860 62 9 4 116 209 7,098 1,621 766,554
5,499 3,705 1,406 116 11,362 18,071 16,669 34,032 1,855,687
236 987 394 144 2,963 12,523 1,132 2,764 47,913
303 171 16 36 103 258 1,323 1,284 108,202
98 425 81 40 937 2,642 431 1,059 14,360
- - - - 46 - - - 73
- - - 1 180 - - - 304
- - - - - - - - 472
- - - - - - - - 13,349
- - - - - - - - 42,213
- - - - - - - - 83,835
401 596 97 77 1,266 2,900 1,754 2,343 262,808
386 2,148 504 221 4,470 16,281 2,543 4,887 73,694
- - - - - - - - 6,149
- - - - - - - - 63,332
- - - - - - - - 123,740
209 713 306 98 1,979 7,595 1,045 2,719 142,140
595 2,861 810 319 6,449 23,876 3,588 7,606 409,055
996 3,457 907 396 7,715 26,776 5,342 9,949 671,863
272 306 372 35 1,574 2,280 616 754 12,889
840 2 - - 44 9 7,058 1,512 554,024
- - - - - - - - 1,276
20 60 9 4 72 200 40 109 1,476
3,607 867 512 (175) 4,920 1,329 4,745 24,472 662,072
$ 4,467 $ 929 $ 521 $ (171) $ 5,036 $ 1,538 $ 11,843 $ 26,093 $ 1,218,848
Combining and Individual Fund Financial Statements 195
STATE OF TENNESSEE
Combining Statement of Revenues, Expenses, and
Changes in Net Position
Internal Service Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Strategic Motor General Facilities Employee
Technology Risk Vehicle Services Revolving Group
Solutions Management Management Printing Fund Insurance
Operating revenues
Charges for services $ 261,499 $ 59,263 $ 46,406 $ 5,502 $ 158,443 $ 1,000
Premiums - - - - - 777,737
Total operating revenues 261,499 59,263 46,406 5,502 158,443 778,737
Operating expenses
Personal services 124,453 - 1,227 2,911 - -
Contractual services 129,833 12,425 4,889 2,856 89,554 37,253
Materials and supplies 11,519 - 15,264 835 1,943 -
Rentals and insurance 12 20,104 9,247 10 45,611 -
Depreciation and amortization 12,068 - 17,043 412 17,209 -
Benefits - 25,470 126 - - 826,058
Other 4,744 - - 2 6 4,963
Total operating expenses 282,629 57,999 47,796 7,026 154,323 868,274
Operating income (loss) (21,130) 1,264 (1,390) (1,524) 4,120 (89,537)
Nonoperating revenues (expenses)
Insurance claims recoveries - - 227 - 201 -
Gain on sales of capital assets - - - - (256) -
Interest income - 171 - - 249 232
Interest expense - - - - (5,815) -
Total nonoperating revenues
(expenses) - 171 227 - (5,621) 232
Income (loss) before contributions
and transfers (21,130) 1,435 (1,163) (1,524) (1,501) (89,305)
Capital contributions - - 636 - 206 -
Transfers in 7,846 - 4,671 394 13,082 -
Transfers out (16) - - - (19) -
Change in net position (13,300) 1,435 4,144 (1,130) 11,768 (89,305)
Net position, July 1 83,541 38,927 123,711 1,567 759,893 247,341
Net position, June 30 $ 70,241 $ 40,362 $ 127,855 $ 437 $ 771,661 $ 158,036
196 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Revenues, Expenses, and
Changes in Net Position
Internal Service Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Central Internal
Postal Procurement Distribution Records Human Division of Service
Services Office Center Management Resources Accounts TRICOR Edison Funds
$ 16,078 $ 10,510 $ 3,113 $ 1,123 $ 15,074 $ 43,607 $ 23,442 $ 24,435$ 669,495
- - - - - - - - 777,737
16,078 10,510 3,113 1,123 15,074 43,607 23,442 24,435 1,447,232
1,592 6,162 1,471 606 14,435 45,007 6,437 14,587 218,888
2,010 3,784 1,072 588 1,853 4,326 8,882 8,980 308,305
12,028 1 693 2 71 94 6,620 122 49,192
110 6 2 1 14 8 145 3 75,273
178 1 - - 17 2 520 954 48,404
- - - - - - - - 851,654
- 3 5 - 14 4 332 2 10,075
15,918 9,957 3,243 1,197 16,404 49,441 22,936 24,648 1,561,791
160 553 (130) (74) (1,330) (5,834) 506 (213) (114,559)
- - - - - - 2,728 - 3,156
- - - - - - (149) - (405)
- - - - - - - - 652
- - - - - - - - (5,815)
- - - - - - 2,579 - (2,412)
160 553 (130) (74) (1,330) (5,834) 3,085 (213) (116,971)
- - - - - - - - 842
45 37 58 9 223 3,175 86 153 29,779
- - - - - - - - (35)
205 590 (72) (65) (1,107) (2,659) 3,171 (60) (86,385)
4,262 339 593 (106) 6,143 4,197 8,672 26,153 1,305,233
$ 4,467 $ 929 $ 521 $ (171) $ 5,036 $ 1,538 $ 11,843 $ 26,093 $ 1,218,848
Combining and Individual Fund Financial Statements 197
STATE OF TENNESSEE
Combining Statement of Cash Flows
Internal Service Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Strategic Motor General Facilities Employee
Technology Risk Vehicle Services Revolving Group
Solutions Management Management Printing Fund Insurance
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users $ 8,032 $ 19,943 $ 560 $ 26 $ 6,129 $ 360,906
Receipts from interfund services provided 253,723 39,389 43,578 5,476 149,658 464,817
Payments to suppliers (129,384) (48,601) (25,611) (2,432) (68,139) (888,178)
Payments to employees (118,621) - (1,282) (3,007) - (2,385)
Payments for interfund services used (15,102) (7,927) (4,809) (1,059) (73,901) (1,563)
Net cash provided by (used for) operating activities (1,352) 2,804 12,436 (996) 13,747 (66,403)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers in 7,827 - 4,671 394 13,066 -
Net cash provided by (used for) noncapital financing
activities 7,827 - 4,671 394 13,066 -
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of capital assets (5,465) - (20,770) - (45,851) -
Bond and commercial paper proceeds - - - - 58,278 -
Proceeds from sale of capital assets - - 5,045 - 580 -
Insurance claims recoveries - - 227 - 201 -
Principal payments - - - - (23,731) -
Interest paid - - - - (7,089) -
Net cash provided by (used for) capital and
related financing activities (5,465) - (15,498) - (17,612) -
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received - 171 - - 250 232
Net cash provided by (used for) investing activities - 171 - - 250 232
Net increase (decrease) in cash and cash
equivalents 1,010 2,975 1,609 (602) 9,451 (66,171)
Cash and cash equivalents, July 1 107,590 231,220 54,636 1,841 320,377 338,035
Cash and cash equivalents, June 30 $ 108,600 $ 234,195 $ 56,245 $ 1,239 $ 329,828 $ 271,864
Reconciliation of operating income to net cash
provided by (used for) operating activities
Operating income (loss) $ (21,130) $ 1,264 $ (1,390) $ (1,524) $ 4,120 $ (89,537)
Adjustment to reconcile operating income (loss) to
net cash from operating activities:
Depreciation and amortization 12,068 - 17,043 412 17,209 -
Loss (gain) on disposal of capital assets 4,652 - (2,376) - - -
Changes in assets, deferred outflows of resources,
liabilities and deferred inflows of resources:
(Increase) decrease in receivables (145) (122) 42 - 25 9,149
(Increase) decrease in due from other funds 402 - - - 725 -
(Increase) decrease in due from component units - 68 - - (9) -
(Increase) decrease in inventories 49 - - 36 - -
(Increases) decreases in assets held for sale - - 65 - - -
(Increase) decrease in prepaids - - - (14) - -
(Increase) decrease in net pension assets 125 - 1 7 - -
(Increase) decrease in deferred outflows of resources 4,873 - (6) (24) - -
Increase (decrease) in accounts payable 3,257 1,530 (844) 222 (4,882) 13,789
Increase (decrease) in due to other funds (457) 8 (4) (2) (50) (9)
Increase (decrease) in due to component units - 56 - - 6 (18)
Increase (decrease) in deferred inflows of resources (5,046) - (95) (109) - -
Increase (decrease) in unearned revenue - - - - (3,397) 223
Total adjustments 19,778 1,540 13,826 528 9,627 23,134
Net cash provided by (used for) operating activities $ (1,352) $ 2,804 $ 12,436 $ (996) $ 13,747 $ (66,403)
Schedule of noncash investing, capital, and financing activities
Contributions of capital assets $ -$ -$ 636 $ -$ 206 $ -
Assets acquired by transfer 19 - - - 16 -
Capital assets disposed of by transfer (16) - - - (19) -
Amortization of bond premium - - - - 2,030 -
Amortization of bond discount - - - - (986) -
Total noncash capital and related financing activities $ 3$ -$ 636 $ -$ 1,247 $ -
198 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Cash Flows
Internal Service Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Central Internal
Postal Procurement Distribution Records Human Division of Service
Services Office Center Management Resources Accounts TRICOR Edison Funds
$ 42 $ 4,078 $ 664 $ 64 $ 94 $ 117 $ 10,459 $ 132 $ 411,246
16,036 6,814 2,462 1,060 14,979 43,521 12,748 24,303 1,078,564
(12,792) (1,358) (853) (494) (758) (801) (14,743) (6,400) (1,200,544)
(1,715) (6,084) (1,558) (587) (14,494) (41,747) (6,519) (14,464) (212,463)
(1,181) (3,264) (881) (114) (1,123) (3,650) (1,746) (2,376) (118,696)
390 186 (166) (71) (1,302) (2,560) 199 1,195 (41,893)
45 37 58 9 223 3,175 86 153 29,744
45 37 58 9 223 3,175 86 153 29,744
(143) - - - - - (2,517) (170) (74,916)
- - - - - - - - 58,278
- - - - - - 36 - 5,661
- - - - - - 2,728 - 3,156
- - - - - - - - (23,731)
- - - - - - - - (7,089)
(143) - - - - - 247 (170) (38,641)
- - - - - - - - 653
- - - - - - - - 653
292 223 (108) (62) (1,079) 615 532 1,178 (50,137)
3,769 2,851 1,476 163 12,325 17,245 5,701 31,233 1,128,462
$ 4,061 $ 3,074 $ 1,368 $ 101 $ 11,246 $ 17,860 $ 6,233 $ 32,411 $ 1,078,325
$ 160 $ 553 $ (130) $ (74) $ (1,330) $ (5,834) $ 506 $ (213) $ (114,559)
178 1 - - 17 2 520 954 48,404
- - - - - - - - 2,276
- 383 12 - - - (235) - 9,109
- - - - - 30 - 1 1,158
- - - 1 - - - - 60
(1) - 54 - - - (791) - (653)
- - - - - - - - 65
(22) - - - - - 622 - 586
2 14 - 1 26 (1) 7 23 205
4 47 (8) (23) (324) 1,327 39 (383) 5,522
156 (468) (1) 46 767 3,502 59 1,444 18,577
(4) (22) (5) (3) (84) (174) (99) (53) (958)
- - - - 180 - - - 224
(83) (322) (88) (19) (554) (1,412) (429) (578) (8,735)
- - - - - - - - (3,174)
230 (367) (36) 3 28 3,274 (307) 1,408 72,666
$ 390 $ 186 $ (166) $ (71) $ (1,302) $ (2,560) $ 199 $ 1,195 $ (41,893)
$ -$ -$ -$ -$ -$ -$ -$ -$ 842
- - - - - - - - 35
- - - - - - - - (35)
- - - - - - - - 2,030
- - - - - - - - (986)
$ -$ -$ -$ -$ -$ -$ -$ -$ 1,886
Combining and Individual Fund Financial Statements 199
FIDUCIARY FUNDS
The Fiduciary Funds are used to account for assets held by • The Deferred Compensation Plan Fund– An
the state in a fiduciary capacity. The state reports three employee benefit trust fund accounts for participant
trusted types of fiduciary funds: pension and other employee earnings deferred in accordance with Internal Revenue
benefit trust funds, investment trust funds, and private- Code Section 457. The plan is administered by Treasury
purpose trust funds. The state also reports custodial type and is offered to state and higher education institution
funds, which are non-trusted arrangements. employees. K-12 teachers may participate in the 457(b)
PENSION AND OTHER EMPLOYEE BENEFIT Plan if their local board of education has elected to offer
TRUST FUNDS: the plan. This fund is a fiduciary component unit.
1. PENSION TRUST FUNDS • Other Employee Benefit Trust Funds—This includes
• The Tennessee Consolidated Retirement System the Employee Flexible Benefits fund which was
(TCRS) was established in July 1972 superseding seven established in January 1988 to account for monies
former retirement systems. The accounts of each contributed by employees under the IRC Section 125
superseded system were transferred to the new system cafeteria plan. It also includes the State of Tennessee
wherein separate accounting is maintained for assets and Postemployment Benefits Trust fund which was
liabilities attributable to the various classes of members established in January 2019 to account for employer
and beneficiaries. Benefits under the system are funded contributions and benefit payments made for other
by contributions of members and employers. The level of postemployment benefits offered to eligible retired
contributions is determined by an actuarial valuation. employees of the state and certain component units.
• Higher Education 403(b) Plan Fund– An employee
o The Public Employee Retirement Plan covers
benefit trust fund accounts for the participant earnings
employees of the state and its higher education
deferred in accordance with Internal Revenue Code
institutions and employees of political
Sections 403(b) for employees of higher education
subdivisions in Tennessee.
institutions within the meaning of Section 170(b)(l)(A)(ii)
of the Internal Revenue Code. The State University and
o The Teacher Legacy Pension Plan covers
Community College System (SUCCS) and the University
employees of local education agencies who were
of Tennessee established 403(b) Retirement Plans (Plan),
hired before July 1, 2014.
effective January 1, 2009. Effective October 9, 2019,
pursuant to Tennessee Code Annotated, Section 8-25-
o The Teacher Hybrid Pension Plan covers
104, the State of Tennessee assumed sponsorship of both
employees of local education agencies who were
plans and the Chair of the Board of Trustees for the
hired after June 30, 2014.
Tennessee Consolidated Retirement System became the
Administrator of the Plans. The Plans are governmental
• Defined Contribution Pension Plan Fund–A pension
plans within the meaning of Code Section 414(d) and
trust fund administered by Treasury. The State of
Section 3(32) of the Employee Retirement Income
Tennessee 401(k) Plan, the Optional Retirement Program
Security Act of 1974.
(ORP) for higher education institutions, and the 3121
plans are collectively reported as the Defined INVESTMENT TRUST FUNDS:
Contribution Pension Plan Fund, a fiduciary component
unit. The Defined Contribution Pension Plan Fund • External Retirement Investment Fund—This fund
accounts for participant earnings deferred in accordance accounts for assets in the custody of the Treasurer, solely
with Internal Revenue Code Sections 401(k), 401(a), and for investment purposes, that consist exclusively of assets
3121, and are offered to employees of the state, the of local government and local education agency
state’s higher education institutions, and local and retirement accounts.
education agencies. Employer and employee
contribution amounts are set in statute and made on a PRIVATE-PURPOSE TRUST FUNDS:
pre-tax basis. • College Savings Plan— This fund accounts for the
activity in the college savings plan created in September
2. OTHER EMPLOYEE BENEFITS TRUST 2012 named the Tennessee Stars College Savings 529
FUNDS Program (TNStars). This program offers parents and
other interested persons a way to save for children’s
college expenses with investment options and special tax
200 Combining and Individual Fund Financial Statements
advantages. The program is not guaranteed by the State governments achieve higher investment income by
of Tennessee or any other entity. pooling their funds than they realize individually.
• Other—These funds account for trust arrangements • Intermediate Term Investment Fund—This fund was
under which the principal and income benefit individuals created for deposits with the state treasurer to be a
or private organizations. These funds include funds longer-term option for investment of funds as an
from liquidated assets of domestic insurance companies alternative to the State Pooled Investment Fund, which
that are in receivership and held for the benefit of policy includes the Local Government Investment Pool
holders, creditors, and other claimants. Other funds also (“LGIP”).
include funds held in individual accounts under the
state’s Achieving a Better Life Experience (ABLE) Act • Custodial Accounts—This fund is used to account for
program. monies held by the State that are not in trusts or
equivalent arrangements. The monies belong to
CUSTODIAL FUNDS: individuals or other organizations. These include patient
and resident trusts, restitution recoveries pending
• Local Government Tax Fund—The purpose of this distribution and other various funds.
fund is to account for local levied taxes collected by the
state and distributed to the various counties and cities of • Retiree Health Funds—These funds are used to
the state. account for funding received and claims paid on behalf
of retirees who elect coverage. Pre- and post-65 retired
• Local Government Investment Pool—This fund was employees of local education and local government
created in July 1980 to account for local government employers and post-65 retired employees of the state and
deposits with the state treasurer and the related interest its higher education institutions are included.
earning. Through this program, the participating local
Combining and Individual Fund Financial Statements 201
STATE OF TENNESSEE
Combining Statement of Fiduciary Net Position
Pension and Other Employee Benefit Trust Funds
June 30, 2021
(Expressed in Thousands)
Defined
Teacher Contribution
Public Employee Teacher Legacy Hybrid Pension Plan
Retirement Plan Pension Plan Pension Plan Fund
ASSETS
Cash and cash equivalents $ 12,508 $ 11,481 $ 223 $ 56,514
Cash collateral on loaned securities 1,617,076 1,484,262 28,784 -
Receivables:
Account - - - -
Employer contributions 40,268 35,505 2,957 -
Member contributions 10,296 17,980 7,394 -
Loans receivable - - - 31,620
Other - - - -
Investments, at fair value:
Mutual funds - - - 9,825,845
Real estate - - - -
TRGT pooled funds 33,767,815 30,994,378 601,069 86,409
Other - - - 7,294
Capital assets, at cost:
Machinery and equipment 19,187 17,611 342 -
Less - accumulated depreciation (14,297) (13,123) (254) -
Total assets 35,452,853 32,548,094 640,515 10,007,682
LIABILITIES
Accounts payable and accruals 15,880 14,099 572 -
Securities lending collateral 1,617,076 1,484,262 28,784 -
Total liabilities 1,632,956 1,498,361 29,356 -
NET POSITION
Restricted for
Pension benefits 33,819,897 31,049,733 611,159 10,007,682
Employee salary deferrals - - - -
Other postemployment benefits - - - -
Employees' flexible benefits - - - -
Total net position $ 33,819,897 $ 31,049,733 $ 611,159 $ 10,007,682
202 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Fiduciary Net Position
Pension and Other Employee Benefit Trust Funds
June 30, 2021
(Expressed in Thousands)
Total
Higher Pension
Deferred Education Other (and Other
Compensation 403(b) Plan Employee Benefit Employee Benefit)
Plan Fund Fund Trust Funds Trust Funds
$ 480 $ 9,646 $ 35,862 $ 126,714
- - - 3,130,122
- - 2 2
- - - 78,730
- - - 35,670
134 - - 31,754
- - 871 871
743,496 945,826 416,557 11,931,724
- 40 - 40
15,839 - - 65,465,510
2,108 - - 9,402
- - - 37,140
- - - (27,674)
762,057 955,512 453,292 80,820,005
- - 5,379 35,930
- - - 3,130,122
- - 5,379 3,166,052
- - - 75,488,471
762,057 955,512 - 1,717,569
- - 446,656 446,656
- - 1,257 1,257
$ 762,057 $ 955,512 $ 447,913 $ 77,653,953
Combining and Individual Fund Financial Statements 203
STATE OF TENNESSEE
Combining Statement of Changes in Fiduciary Net Position
Pension and Other Employee Benefit Trust Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Defined
Teacher Contribution
Public Employee Teacher Legacy Hybrid Pension Plan
Retirement Plan Pension Plan Pension Plan Fund
ADDITIONS
Contributions:
Members $ 162,282 $ 164,845 $ 72,213 $ 231,214
Employers 723,254 337,067 29,153 279,097
Transfers in from other plans - - - 35,530
Other 1,076 - - 238
Total contributions 886,612 501,912 101,366 546,079
Investment income:
Net increase (decrease) in fair value
of investments 7,033,366 6,481,587 116,123 1,872,023
Interest and dividends - - - 275,662
Securities lending income 7,338 6,762 121 -
Total investment income (loss) 7,040,704 6,488,349 116,244 2,147,685
Less: Investment expenses (34,102) (31,426) (563) -
Securities lending expense (1,301) (1,198) (21) -
Net investment income (loss) 7,005,301 6,455,725 115,660 2,147,685
Total additions 7,891,913 6,957,637 217,026 2,693,764
DEDUCTIONS
Benefit payments 1,524,681 1,340,897 104 524,521
Medical payments - - - -
Deceased member benefit payments 2,790 2,771 80 13,037
Other - - - -
Member/claimant distributions 24,240 15,880 4,069 -
Administrative expenses 12,680 4,589 2,560 10,923
Total deductions 1,564,391 1,364,137 6,813 548,481
Change in net position 6,327,522 5,593,500 210,213 2,145,283
Net position, July 1, restated 27,492,375 25,456,233 400,946 7,862,399
Net position, June 30 $ 33,819,897 $ 31,049,733 $ 611,159 $ 10,007,682
204 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Changes in Fiduciary Net Position
Pension and Other Employee Benefit Trust Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Higher Pension
Deferred Education Other (and Other
Compensation 403(b) Plan Employee Benefit Employee Benefit)
Plan Fund Fund Trust Funds Trust Funds
$ 41,133 $ 18,475 $ 5,599 $ 695,761
19 - 148,609 1,517,199
3,837 21,748 - 61,115
- 3 - 1,317
44,989 40,226 154,208 2,275,392
130,652 169,765 87,507 15,891,023
28,340 10,385 8,060 322,447
- - - 14,221
158,992 180,150 95,567 16,227,691
- - - (66,091)
- - - (2,520)
158,992 180,150 95,567 16,159,080
203,981 220,376 249,775 18,434,472
40,437 66,028 - 3,496,668
- - 75,864 75,864
2,205 - - 20,883
- - 5,540 5,540
- - - 44,189
1,134 - 3,907 35,793
43,776 66,028 85,311 3,678,937
160,205 154,348 164,464 14,755,535
601,852 801,164 283,449 62,898,418
$ 762,057 $ 955,512 $ 447,913 $ 77,653,953
Combining and Individual Fund Financial Statements 205
STATE OF TENNESSEE
Combining Statement of Fiduciary Net Position
Investment Trust Funds
June 30, 2021
(Expressed in Thousands)
External Retirement
Investment Fund
ASSETS
Receivables:
Investments sold 3,674
Investments, at fair value:
Private equities 3,742
TRGT pooled funds 292,312
Total assets 299,728
NET POSITION
Amounts held in trust for:
Pool participants 299,728
Total net position $ 299,728
206 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Changes in Fiduciary Net Position
Investment Trust Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
External Retirement
Investment Fund
ADDITIONS
Investment income:
Net increase in fair value of investments (79)
Interest $ 54,517
Total investment income 54,438
Less: Investment expenses (257)
Net investment income 54,181
Capital share transactions:
Shares sold 59,295
Less: Shares redeemed (9,828)
Net capital share transactions 49,467
Total additions 103,648
DEDUCTIONS
Administrative expenses 87
Total deductions 87
Change in net position 103,561
Net position, July 1, restated 196,167
Net position, June 30 $ 299,728
Combining and Individual Fund Financial Statements 207
STATE OF TENNESSEE
Combining Statement of Fiduciary Net Position
Private-Purpose Trust Funds
June 30, 2021
(Expressed in Thousands)
College Total
Savings Private-Purpose
Plan Other Trust Funds
ASSETS
Cash and cash equivalent $ 8,657 $ 12,528 $ 21,185
Investments, at fair value:
Mutual funds 258,331 24,438 282,769
Total assets 266,988 36,966 303,954
LIABILITIES
Accounts payable and accruals - 34 34
Total liabilities - 34 34
NET POSITION
Restricted for:
Individuals, organizations and other
governments 266,988 36,932 303,920
Total net position $ 266,988 $ 36,932 $ 303,920
208 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Changes in Fiduciary Net Position
Private-Purpose Trust Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
College Total
Savings Private-Purpose
Plan Other Trust Funds
ADDITIONS
Contributions:
Federal $ - $ 193 $ 193
Private 38,257 10,089 48,346
Other 140 2,126 2,266
Total contributions 38,397 12,408 50,805
Investment income:
Net increase/(decrease) in fair value
of investments 53,915 5,448 59,363
Interest - 1 1
Total investment income 53,915 5,449 59,364
Total additions 92,312 17,857 110,169
DEDUCTIONS
Payments made under trust agreements 12,949 3,618 16,567
Member/claimant distributions - 131 131
Administrative expenses 437 137 574
Total deductions 13,386 3,886 17,272
Change in net position 78,926 13,971 92,897
Net position, July 1, restated 188,062 22,961 211,023
Net position, June 30 $ 266,988 $ 36,932 $ 303,920
Combining and Individual Fund Financial Statements 209
STATE OF TENNESSEE
Combining Statement of Fiduciary Net Position
Custodial Funds
June 30, 2021
(Expressed in Thousands)
Retiree Local Total
Health Government Custodial Custodial
Funds Tax Fund Accounts Funds
ASSETS
Cash and cash equivalents $ 23,791 $ 407,582 $ 87,083 $ 518,456
Receivables:
Account 1 - - 1
Taxes - 381,062 - 381,062
Interest and dividends - - - -
Other 512 - - 512
Due from other funds - - 10 10
Investments, at fair value:
Government bonds - - - -
Investments, at amortized cost:
Short-term investments - - - -
Total assets 24,304 788,644 87,093 900,041
LIABILITIES
Accounts payable and accruals 5,618 - 38 5,656
Due to other governments - 788,644 36,837 825,481
Total liabilities 5,618 788,644 36,875 831,137
NET POSITION
Restricted for:
Individuals, organizations and other governments 18,686 - 50,218 68,904
Amounts held in custody for:
Pool participants - - - -
Total net position $ 18,686 $ - $ 50,218 $ 68,904
210 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Fiduciary Net Position
Custodial Funds
June 30, 2021
(Expressed in Thousands)
External Investment Pools
Local Intermediate Total
Government Term External
Investment Investment Investment
Pool Fund Pools
$ 2,023,121 $ 5,289 $ 2,028,410
- - -
- - -
- 18 18
- - -
- - -
- 6,740 6,740
2,015,953 - 2,015,953
4,039,074 12,047 4,051,121
- - -
- - -
- - -
- - -
4,039,074 12,047 4,051,121
$ 4,039,074 $ 12,047 $ 4,051,121
Combining and Individual Fund Financial Statements 211
STATE OF TENNESSEE
Combining Statement of Changes in Fiduciary Net Position
Custodial Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Retiree Local Total
Health Government Custodial Custodial
Funds Tax Fund Accounts Funds
ADDITIONS
Contributions:
Members $ 90,275 $ - $ - $ 90,275
Total contributions 90,275 - - 90,275
Investment income:
Net increase/(decrease) in fair value
of investments - - - -
Interest 40 - 12 52
Total investment income 40 - 12 52
Less: Investment expenses - - - -
Net investment income 40 - 12 52
Tax and fee collections for other governments - 3,696,662 690 3,697,352
Member resources 19,035 - 748,586 767,621
Capital share transactions:
Shares sold - - - -
Less: Shares redeemed - - - -
Net capital share transactions - - - -
Total additions 109,350 3,696,662 749,288 4,555,300
DEDUCTIONS
Medical payments 98,951 - - 98,951
Member/claimant distributions 3,903 - 746,631 750,534
Payments of taxes and fees to other governments - 3,696,662 690 3,697,352
Administrative expenses 5,554 - 4,415 9,969
Total deductions 108,408 3,696,662 751,736 4,556,806
Change in net position 942 - (2,448) (1,506)
Net position, July 1, restated 17,744 - 52,666 70,410
Net position, June 30 $ 18,686 $ - $ 50,218 $ 68,904
212 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Changes in Fiduciary Net Position
Custodial Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
External Investment Pools
Local Intermediate Total
Government Term External
Investment Investment Investment
Pool Fund Pools
$ - $ - $ -
- - -
- (27) (27)
7,809 47 7,856
7,809 20 7,829
(1,731) - (1,731)
6,078 20 6,098
- - -
- - -
5,439,744 - 5,439,744
(5,516,738) - (5,516,738)
(76,994) - (76,994)
(70,916) 20 (70,896)
- - -
- - -
- - -
- 6 6
- 6 6
(70,916) 14 (70,902)
4,109,990 12,033 4,122,023
$ 4,039,074 $ 12,047 $ 4,051,121
Combining and Individual Fund Financial Statements 213
COMPONENT UNITS
Tennessee Student Assistance Corporation (TSAC)—The coordinated network of public education with each campus
corporation was created by the legislature in 1974 and is offering unique characteristics and services.
responsible for administering student financial assistance
programs supported by federal and state funds. In 2015, The system consists of the following institutions:
TSAC’s board voted to wind down the activities of the
Federal Family Education Loan Program, a loan guarantee UNIVERSITIES
program administered by the board and separately reported as
Austin Peay State University, Clarksville
another component unit of the state. The portfolio was later
East Tennessee State University, Johnson City
transferred to the U.S. Department of Education. In this
fiscal year, the remaining balances in this program were Middle Tennessee State University, Murfreesboro
reported with the corporation. Tennessee State University, Nashville
Tennessee Technological University, Cookeville
Tennessee Community Services Agency—In 1989, the University of Memphis, Memphis
Legislature created twelve Community Services Agencies
which are to provide a mechanism to coordinate health care COMMUNITY COLLEGES
for indigents. In 1996, the title and focus of these agencies Chattanooga State Community College, Chattanooga
changed to that of facilitating the providing of services to Cleveland State Community College, Cleveland
children and other citizens from state agencies. The state has Columbia State Community College, Columbia
significant oversight responsibilities for these agencies; Dyersburg State Community College, Dyersburg
therefore, they have been incorporated into the Annual Jackson State Community College, Jackson
Comprehensive Financial Report. In 2009, all CSAs merged Motlow State Community College, Tullahoma
operations into one agency. Nashville State Community College, Nashville
Northeast State Community College, Blountville
Tennessee Housing Development Agency—Created by Pellissippi State Community College, Knoxville
the legislature in 1973, the purpose of this agency is to Roane State Community College, Harriman
improve the quality of housing available to lower and Southwest Tennessee Community College, Memphis
moderate income Tennesseans. This objective is Volunteer State Community College, Gallatin
accomplished in part by (1) making funds available for loans Walters State Community College, Morristown
for residential construction or rehabilitation, (2) making or
participating in the making of insured mortgage loans, and (3) COLLEGES OF APPLIED TECHNOLOGY
purchasing existing mortgages from lending institutions. Athens, Chattanooga, Covington, Crossville, Crump,
These programs are funded primarily from the sale of revenue Dickson, Elizabethton, Harriman, Hartsville, Hohenwald,
bonds or notes. Jacksboro, Jackson, Knoxville, Livingston, McKenzie,
McMinnville, Memphis, Morristown, Murfreesboro,
Tennessee Education Lottery Corporation—Created by Nashville, Newbern, Oneida, Paris, Pulaski, Ripley,
the General Assembly in 2003, the purpose of the corporation Shelbyville, Whiteville
is to operate a state lottery with net proceeds to be transferred
to the state to be used for education programs and purposes The purpose of these colleges is to provide occupational and
in accordance with the Constitution of Tennessee, consisting technical training.
primarily of financial assistance to Tennessee citizens to
enable such citizens to attend post-secondary educational The University of Tennessee Board of Trustees—The
institutions within Tennessee. University of Tennessee was first established in 1794 by the
Legislature of the Federal Territory. Since that time, it has
State University and Community College System— grown into an institution of twenty-four different colleges and
Created by the General Assembly in 1972 to serve the state schools. The main campus is located in Knoxville. The other
and its citizenry by providing educational opportunities, primary campuses are located in Memphis, Martin and
research, continuing education and public activities. As a Chattanooga.
system, the institutions span the state and are reported as a
214 Combining and Individual Fund Financial Statements
Local Development Authority—This authority was created boards of the institutions and the TSSBA, and revenue bonds
in 1978 for the purpose of providing to local governments, are issued using the constructed facilities as collateral.
through the issuing of revenue bonds or notes, the financing Charges levied on the universities provide the funds necessary
assistance previously provided by the State Loan Program. for payment of principal and interest on bonds. The
The Authority has also issued bonds to assist non-profit Authority also issues Qualified Zone Academy Bonds, which
corporations in the construction of mental health, are part of a federal government program to finance loans to
developmental disabilities, or alcohol and drug facilities. In qualifying K-12 schools in the state. In addition, under the
addition, the Authority may assist small business concerns in American Recovery and Reinvestment Act of 2009, the
financing pollution control facilities, farmers in financing Authority issued Qualified School Construction Bonds to
certain capital improvements and airport authorities and finance the construction, repair, or rehabilitation of public
municipal airports in financing improvements. school facilities.
Tennessee Veterans Homes Board—Created in 1988, the Certified Cotton Growers’ Organization—This
primary purpose of the homes is to provide support and care organization was formed to aid in the eradication of the boll
for honorably discharged veterans of the United States Armed weevil. Revenues are collected from assessments on cotton
Forces. The revenue sources are the Veterans growers and from state appropriations.
Administration, Medicaid, and a user fee.
Access Tennessee—Established in 2007, this health
Tennessee State School Bond Authority (TSSBA)— insurance pool offers health insurance coverage to eligible
Established in 1965, the TSSBA provides a mechanism for citizens of the state who are considered uninsurable because
financing building projects for the state's higher education of health conditions.
institutions. Agreements are executed between the governing
.
Combining and Individual Fund Financial Statements 215
STATE OF TENNESSEE
Combining Statement of Net Position
Component Units
June 30, 2021
(Expressed in Thousands)
Governmental Fund Types Proprietary Fund Types
Tennessee Tennessee Tennessee
Student Community Housing Tennessee State University University
Assistance Services Development Education and Community of
Corporation Agency Agency Lottery College System Tennessee
ASSETS
Cash and cash equivalents $ 2,905 $ 72 $ 355,161 $ 179,112 $ 1,134,649 $ 1,300,850
Investments - - 96,032 - 348,929 61,023
Receivables, net 4,193 15 86,635 89,397 95,713 56,610
Due from primary government - 732 6 - 21,646 65,169
Inventories, at cost - - - - 3,122 7,293
Prepayments - 3 - 9,322 12,895 3,305
Loans receivable - - 2,868,339 - - -
Other - - 24,856 - 5,546 5,177
Restricted assets:
Cash and cash equivalents - - 64,239 530 304,600 287,588
Investments - - 121,397 - 758,080 1,623,148
Receivables, net - - 322 - 175,586 307,712
Net pension assets 13 7,144 230 - 6,135 4,689
Other - - - - 942 -
Capital assets:
Land, at cost - - - - 177,554 100,093
Infrastructure - - - - 630,706 263,591
Structures and improvements, at cost - - - 2,635 4,118,641 3,693,447
Machinery and equipment, at cost 16 13 10,706 6,684 580,797 676,214
Less accumulated depreciation (16) (8) (5,535) (7,451) (2,160,029) (1,994,244)
Construction in progress - - - - 205,208 300,045
Total assets 7,111 7,971 3,622,388 280,229 6,420,720 6,761,710
DEFERRED OUTFLOWS OF RESOURCES 903 782 4,103 - 181,058 142,317
LIABILITIES
Accounts payable and accruals 343 120 94,809 121,201 169,023 225,643
Due to primary government - 49 - 153,600 9,975 1,448
Unearned revenue - - 1,395 2,888 84,105 70,851
Other - - 1,778 - 9,521 17,650
Noncurrent liabilities:
Due within one year 209 99 107,685 869 59,055 76,864
Due in more than one year 2,835 230 2,870,046 1,641 1,255,146 1,569,900
Total liabilities 3,387 498 3,075,713 280,199 1,586,825 1,962,356
DEFERRED INFLOWS OF RESOURCES 379 470 2,107 - 102,503 120,607
NET POSITION
Net investment in capital assets - 5 5,171 1,868 2,778,791 1,908,862
Restricted for:
Debt service - - - - 17,278 1,151
Capital projects - - - - 57,577 63,749
Single family bond programs - - 470,431 - - -
Pensions 13 7,144 230 - 6,135 4,689
Other 4,150 - 23,859 30 475,270 682,488
Permanent and endowment:
Expendable - - - - 23,053 262,337
Nonexpendable - - - - 470,156 1,092,516
Unrestricted 85 636 48,980 (1,868) 1,084,190 805,272
Total net position $ 4,248 $ 7,785 $ 548,671 $ 30 $ 4,912,450 $ 4,821,064
216 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Net Position
Component Units
June 30, 2021
(Expressed in Thousands)
Proprietary Fund Types
Tennessee
Local Veterans' Tennessee Certified Access Total
Development Homes State School Cotton Tennessee Component
Authority Board Bond Authority Growers' Insurance Plan Units
$ 16,215 $ 21,761 $ 36,778 $ 922 $ 46,667 $ 3,095,092
- - - 3,894 - 509,878
- 3,521 14,110 35 - 350,229
- 752 - - - 88,305
- 509 - - - 10,924
- 377 - - - 25,902
2,394 - 1,987,830 - - 4,858,563
- 716 - 8 - 36,303
272 3,863 6,665 - - 667,757
- - 273,406 - - 2,776,031
- - - - - 483,620
- 1,425 - - - 19,636
- - - - - 942
- 2,467 - - - 280,114
- 3,734 - - - 898,031
- 53,596 - - - 7,868,319
- 4,714 - - - 1,279,144
- (23,440) - - - (4,190,723)
- 9,449 - - - 514,702
18,881 83,444 2,318,789 4,859 46,667 19,572,769
- 3,276 38,486 - - 370,925
139 1,842 16,335 242 13 629,710
- 863 - - - 165,935
- - 2,173 - - 161,412
- 141 - - - 29,090
220 1,004 78,960 - - 324,965
1,023 3,066 2,230,787 - - 7,934,674
1,382 6,916 2,328,255 242 13 9,245,786
- 886 1,313 - - 228,265
- 46,943 - - - 4,741,640
- 429 - - - 18,858
- - - - - 121,326
- - - - - 470,431
- 1,425 - - - 19,636
- 10,733 - - - 1,196,530
- - - - - 285,390
- - - - - 1,562,672
17,499 19,388 27,707 4,617 46,654 2,053,160
$ 17,499 $ 78,918 $ 27,707 $ 4,617 $ 46,654 $ 10,469,643
Combining and Individual Fund Financial Statements 217
STATE OF TENNESSEE
Combining Statement of Activities
Component Units
For the Year Ended June 30, 2021
(Expressed in Thousands)
Program Revenues
Net
(Expense)
Revenue
Charges Operating Capital and Changes
for Grants and Grants and in
Expenses Services Contributions Contributions Net Position
Functions/Programs
Component units
Higher education institutions:
State University and Community College
System $ 2,838,153 $ 909,502 $ 1,151,820 $ 175,066 $ (601,765)
University of Tennessee 2,430,154 836,710 1,323,919 117,307 (152,218)
Total higher education institutions 5,268,307 1,746,212 2,475,739 292,373 (753,983)
Loan programs:
Tennessee Student Assistance Corporation 115,696 5,357 486 - (109,853)
Tennessee Housing Development Agency 533,614 164,147 382,474 - 13,007
Local Development Authority 212 667 13 - 468
Tennessee State School Bond Authority 77,208 62,959 (7,043) - (21,292)
Total loan programs 726,730 233,130 375,930 - (117,670)
Tennessee Education Lottery 1,945,963 1,945,939 28 - 4
Other programs:
Tennessee Community Services Agency 4,601 1,381 3,021 - (199)
Access Tennessee Insurance Plan 1,293 45 - - (1,248)
Tennessee Veterans' Homes Board 54,979 43,535 13,040 6,254 7,850
Certified Cotton Growers' 418 409 - - (9)
Total other programs 61,291 45,370 16,061 6,254 6,394
Total $ 8,002,291 $ 3,970,651 $ 2,867,758 $ 298,627 $ (865,255)
218 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Activities
Component Units
For the Year Ended June 30, 2021
(Expressed in Thousands)
General Revenues
Payments Contributions Net
from Unrestricted Unrestricted to Change Position Net
Primary Grants and Investment Permanent in Net July 1, Position
Government Contributions Earnings Miscellaneous Funds Position restated June 30
$ 929,981 $ 83,027 $ 166,355 $ 3,051 $ 21,800 $ 602,449 $ 4,310,001 $ 4,912,450
652,390 - 25,733 1,362 101,099 628,366 4,192,698 4,821,064
1,582,371 83,027 192,088 4,413 122,899 1,230,815 8,502,699 9,733,514
109,099 - - - - (754) 5,002 4,248
277 - 20 - - 13,304 535,367 548,671
- - - - - 468 17,031 17,499
- 9,708 - - - (11,584) 39,291 27,707
109,376 9,708 20 - - 1,434 596,691 598,125
- - 400 - - 404 (374) 30
- - - - - (199) 7,984 7,785
- - 37 - - (1,211) 47,865 46,654
- 24 - - - 7,874 71,044 78,918
- - 73 - - 64 4,553 4,617
- 24 110 - - 6,528 131,446 137,974
$ 1,691,747 $ 92,759 $ 192,618 $ 4,413 $ 122,899 $ 1,239,181 $ 9,230,462 $ 10,469,643
Combining and Individual Fund Financial Statements 219
STATE OF TENNESSEE
Combining Statement of Revenues, Expenses and
Changes in Net Position
Proprietary Fund Type Component Units
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Tennessee
Housing Tennessee State University University Local
Development Education and Community of Development
Agency Lottery College System Tennessee Authority
Operating revenues
Charges for services $ 164,147 $ 1,944,873 $ 886,494 $ 813,390 $ 667
Investment income 276 - 6,563 7,039 13
Grants and contributions - - 261,549 569,484 -
Other - 1,066 78,282 93,862 -
Total operating revenues 164,423 1,945,939 1,232,888 1,483,775 680
Operating expenses
Personal services 24,172 16,551 1,751,995 1,614,753 -
Contractual services 15,959 180,709 - - 142
Mortgage service fees - - - - -
Materials and supplies 1,195 - 610,526 519,573 -
Rentals and insurance 51 1,775 - - -
Interest 80,015 - - - 70
Depreciation and amortization 4,972 882 130,199 152,404 -
Lottery prizes - 1,236,252 - - -
Nursing home services - - - - -
Scholarships and fellowships - - 318,586 96,792 -
Benefits - - - - -
Other 14,939 8,261 - - -
Total operating expenses 141,303 1,444,430 2,811,306 2,383,522 212
Operating income (loss) 23,120 501,509 (1,578,418) (899,747) 468
Nonoperating revenues (expenses)
Grant income 382,218 - 880,539 324,905 -
Grant expense (392,311) - - - -
Interest expense - - (18,959) (39,516) -
Interest income - 400 165,031 378,549 -
Payments from primary government 277 - 929,981 652,390 -
Grants and contributions - - - 7,082 -
Gifts - - 8,236 (8,805) -
Payments to primary government - (501,510) - - -
Other - 5 18,318 (6,248) -
Total nonoperating revenues (expenses) (9,816) (501,105) 1,983,146 1,308,357 -
Income (loss) before capital
grants and contributions 13,304 404 404,728 408,610 468
Capital payments from primary government - - 170,286 104,509 -
Capital grants and gifts - - 5,635 12,798 -
Additions to permanent endowments - - 21,800 101,099 -
Other - - - 1,350 -
Change in net position 13,304 404 602,449 628,366 468
Net position, July 1, restated 535,367 (374) 4,310,001 4,192,698 17,031
Net position, June 30 $ 548,671 $ 30 $ 4,912,450 $ 4,821,064 $ 17,499
220 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Revenues, Expenses and
Changes in Net Position
Proprietary Fund Type Component Units
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Tennessee Proprietary
Veterans' Tennessee Certified Access Fund Type
Homes State School Cotton Tennessee Component
Board Bond Authority Growers' Insurance Plan Units
$ 42,832 $ 62,959 $ 409 $ 45 $ 3,915,816
- (7,043) - - 6,848
- - - - 831,033
702 - - - 173,912
43,534 55,916 409 45 4,927,609
26,387 - - - 3,433,858
- 2,217 418 173 199,618
- - - - -
- - - - 1,131,294
- - - 1,120 2,946
- 61,860 - - 141,945
1,842 - - - 290,299
- - - - 1,236,252
26,630 - - - 26,630
- - - - 415,378
- - - - -
- 13,131 - - 36,331
54,859 77,208 418 1,293 6,914,551
(11,325) (21,292) (9) (1,248) (1,986,942)
13,012 9,708 - - 1,610,382
- - - - (392,311)
(109) - - - (58,584)
28 - 73 37 544,118
- - - - 1,582,648
- - - - 7,082
24 - - - (545)
- - - - (501,510)
(10) - - - 12,065
12,945 9,708 73 37 2,803,345
1,620 (11,584) 64 (1,211) 816,403
6,254 - - - 281,049
- - - - 18,433
- - - - 122,899
- - - - 1,350
7,874 (11,584) 64 (1,211) 1,240,134
71,044 39,291 4,553 47,865 9,217,476
$ 78,918 $ 27,707 $ 4,617 $ 46,654 $ 10,457,610
Combining and Individual Fund Financial Statements 221
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222 Combining and Individual Fund Financial Statements
STATE OF TENNESSEE
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
Governmental Fund Type Component Units
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Total
Tennessee Tennessee Governmental
Student Community Fund Type
Assistance Services Component
Corporation Agency Units
REVENUES
Interest on investments $ 417 $ - $ 417
Departmental services 114,457 4,402 118,859
Other 68 - 68
Total revenues 114,942 4,402 119,344
EXPENDITURES
Education 115,655 (1) 115,654
Health and social services - 4,395 4,395
Total expenditures 115,655 4,394 120,049
Excess (deficiency) of revenues
over (under) expenditures (713) 8 (705)
Fund balances, July 1 7,468 645 8,113
Fund balances, June 30 $ 6,755 $ 653 $ 7,408
Reconciliation to net position:
Fund balances per above $ 6,755 $ 653 $ 7,408
Capital assets used in governmental
activities are not financial resources
and therefore are not reported in
the funds - 5 5
Long-term liabilities are not due
and payable in the current period
and therefore are not reported in
the fund. (480) (193) (673)
Resources and obligations related
to pension and other postemployment
benefits are not available nor
due and payable, respective, in
the current period and therefore
are not reported in the fund. (2,027) 7,320 5,293
Net position on statement of net position $ 4,248 $ 7,785 $ 12,033
Combining and Individual Fund Financial Statements 223
SUPPLEMENTARY SCHEDULES
224 Supplementary Schedules
STATE OF TENNESSEE Schedule 1
Debt Service Requirements to Maturity
General Obligation Bonds
June 30, 2021
(Expressed in Thousands)
General Long-Term Debt Facilities Revolving Fund Debt
For the Total Total
Year Ended Require- Require-
June 30 Principal Interest ments Principal Interest ments
2022 $ 142,361 $ 60,402 $ 202,763 $ 13,349 $ 5,102 $ 18,451
2023 135,132 53,995 189,127 12,618 4,466 17,084
2024 132,819 48,322 181,141 12,276 3,916 16,192
2025 125,797 43,073 168,870 12,144 3,415 15,559
2026 123,913 37,786 161,699 11,817 2,895 14,712
2027 118,465 32,702 151,167 10,210 2,413 12,623
2028 114,270 27,860 142,130 9,615 1,982 11,597
2029 107,193 23,074 130,267 8,208 1,578 9,786
2030 84,277 18,756 103,033 6,774 1,227 8,001
2031 74,568 15,092 89,660 5,337 945 6,282
2032 67,928 11,831 79,759 4,102 730 4,832
2033 45,965 9,217 55,182 3,810 547 4,357
2034 39,378 7,183 46,561 3,392 371 3,763
2035 39,378 5,248 44,626 3,392 201 3,593
2036 36,403 3,385 39,788 817 96 913
2037 22,412 1,944 24,356 498 63 561
2038 13,658 1,072 14,730 461 39 500
2039 6,187 419 6,606 217 16 233
2040 6,187 140 6,327 217 6 223
TOTALS $ 1,436,291 $ 401,501 $ 1,837,792 $ 119,254 $ 30,008 $ 149,262
Supplementary Schedules 225
STATE OF TENNESSEE Schedule 2
Schedule of Outstanding Debt
All Fund Types
For the Last Five Fiscal Years
(Expressed in Thousands)
June 30
2017 2018 2019 2020 2021
Internal service funds:
General obligation commercial paper $ 12,788 $ 13,767 $ 25,130 $ 15,063 $ 63,332
Facilities Revolving Fund general
obligation bonds 167,529 156,640 142,172 132,553 119,254
180,317 170,407 167,302 147,616 182,586
General long-term debt:
General obligation bonds 1,738,001 1,741,155 1,596,443 1,578,402 1,436,291
General obligation commercial paper 180,168 151,409 212,266 105,933 144,011
1,918,169 1,892,564 1,808,709 1,684,335 1,580,302
Totals for primary government $ 2,098,486 $ 2,062,971 $ 1,976,011 $ 1,831,951 $ 1,762,888
STATE OF TENNESSEE Schedule 3
Schedule of General Obligation
Commercial Paper Outstanding- By Purpose
All Fund Types
June 30, 2021
(Expressed in Thousands)
General obligation commercial paper - Tax exempt $ 167,880
Purpose: To finance the construction, improvements, repairs, and replacements of
buildings and facilities and the acquisition of land, equipment and other
property of the state.
General obligation commercial paper - Taxable 39,463
Purpose: To finance improvements to certain other projects and grants to local
governments when tax-exempt is not the ideal funding source.
Total Outstanding $ 207,343
226 Supplementary Schedules
STATE O F TENNESSEE Sche dule 4
Sche dule of O utstanding De bt
Compone nt Units
For the Last Five Fiscal Ye ars
(Expre sse d in Thousands)
June 30
2017 2018 2019 2020 2021
Component units:
Local Development Authority bonds $ 3,130 $ 2,521 $ 2,003 $ 1,543 $ 1,243
T ennessee Housing Development Agency
bonds 1,944,050 2,089,025 2,575,725 2,816,040 2,909,404
Veterans' Homes Board loan 5,106 4,255 3,763 3,391 3,011
T ennessee State School Bond Authority bonds 2,002,387 2,208,003 2,125,541 2,288,441 2,194,228
T ennessee State School Bond Authority
revolving credit 188,152 95,299 178,739 74,481 115,521
University of T ennessee notes 75 55 - - -
University of T ennessee bonds 68,283 65,676 62,987 60,247 57,432
State University and Community College
System notes 840 1,372 1,370 6,046 1,089
State University and Community College
System commercial paper 3,222 2,722 2,037 1,577 1,108
State University and Community College
System loans - - - 730 75
$ 4,215,245 $ 4,468,928 $ 4,952,165 $ 5,252,496 $ 5,283,111
Supplementary Schedules 227
STATE OF TENNESSEE Schedule 5
Comparative Schedules of Revenues by Source
General Fund
For the Fiscal Years Ended June 30, 2021 and 2020
(Expressed in Thousands)
For the Year Ended
June 30, 2021 June 30, 2020
Revenue by Source
Taxes:
Sales and use $ 4,057,986 $ 3,988,573
Gasoline 9,336 9,348
Motor fuel 2,206 2,065
Gasoline inspection 743 706
Total fuel taxes 12,285 12,119
Franchise 1,204,481 986,264
Excise 2,035,940 1,684,492
Gross receipts 215,171 387,246
Beer 12,041 14,836
Alcoholic beverage 69,410 75,824
Mixed drink - 57,606
Tobacco 29,100 29,207
Business 156,002 278,896
Insurance companies premium 1,108,406 1,047,167
Retaliatory 14,183 11,731
Workers compensation premium 35,939 36,533
Enhanced coverage 602,351 707,370
Medicaid provider 10,923 10,988
Fantasy Sports 265 290
Other 831 1,254
Total business tax 5,495,043 5,329,704
Income 56,245 150,709
Privilege 484,165 377,586
Inheritance and estate 503 1,438
Other 19 5,629
Total other taxes 540,932 535,362
Total taxes 10,106,246 9,865,758
Licenses, fines, fees and permits:
Motor vehicle registration 53,839 50,846
Motor vehicle title registration fees 20,944 19,531
Drivers licenses 28,638 35,865
Arrests, fines and fees 5,688 7,012
Regulatory board fees 176,897 179,724
Other 236,167 205,623
Total licenses, fines, fees and
permits 522,173 498,601
Investment income 25,755 122,768
Federal 15,230,077 11,576,654
Departmental services:
Charges to the public 309,033 284,655
Interdepartmental charges 1,033,126 886,217
Charges to cities, counties, etc. 1,107,039 1,030,473
Other 526 1,057
Total departmental services 2,449,724 2,202,402
Other 275,280 228,257
Total revenues by source $ 28,609,255 $ 24,494,440
228 Supplementary Schedules
STATE OF TENNESSEE Schedule 6
Comparative Schedules of Expenditures by
Function and Department
General Fund
For the Fiscal Years Ended June 30, 2021 and 2020
(Expressed in Thousands)
For the Year Ended
June 30, 2021 June 30, 2020
Expenditures by Function and Department
General government:
Legislative $ 51,429 $ 48,688
Secretary of State 44,585 43,082
Comptroller 111,211 108,808
Treasurer 43,999 54,980
Governor 5,324 5,233
Commissions 102,019 91,518
Finance and Administration 527,980 186,331
General Services 29,902 29,404
Revenue 420,983 117,486
Total general government 1,337,432 685,530
Health and social services:
Veterans Services 7,602 7,908
Labor and Workforce Development 246,148 182,838
TennCare 13,076,166 12,551,724
Mental Health 419,087 406,863
Intellectual Disabilities 191,535 146,245
Health 1,104,327 752,592
Human Services 3,997,222 2,373,112
Children's Services 917,748 933,456
Total health and social services 19,959,835 17,354,738
Law, justice and public safety:
Judicial 408,966 412,334
Correction 1,007,223 1,030,535
Probation and Paroles 8,298 8,520
Military 417,234 264,835
Bureau of Criminal Investigation 90,878 91,901
Safety 255,952 257,759
Total law, justice and public safety 2,188,551 2,065,884
Recreation and resource development:
Agriculture 203,007 180,164
Tourist Development 54,429 26,800
Environment and Conservation 262,429 235,101
Economic and Community Development 277,816 172,375
Total recreation and resources development 797,681 614,440
Regulation of business and professions:
Commerce and Insurance 97,261 96,358
Financial Institutions 20,800 21,817
Total regulation of business and professions 118,061 118,175
Intergovernmental revenue sharing - 1,000,870
Total expenditures by function and
department $ 24,401,560 $ 21,839,637
Supplementary Schedules 229
STATISTICAL SECTION
230 Statistical Section
STATISTICAL SECTION
This part of the State of Tennessee’s annual comprehensive financial report presents detailed
information as a context for understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the state’s overall financial health.
Contents Page
Financial Trends 232
These schedules contain trend information to help the reader understand how the
state’s financial performance and well-being have changed over time.
Revenue Capacity 237
These schedules contain information to help the reader assess the state’s most
significant local revenue sources, the sales tax.
Debt Capacity 239
These schedules present information to help the reader assess the affordability
of the state’s current levels of outstanding debt and the state’s ability to issue
additional debt in the future.
Demographic and Economic Information 241
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the state’s financial activities take
place.
Operating Information 242
These schedules contain service and infrastructure data to help the reader
understand how the information in the state’s financial report relates to the
services the state provides and the activities it performs.
Component Units 245
These schedules contain debt information related to the University of Tennessee
and the Tennessee Board of Regent’s institutions – component units of the
state. The schedules assist in understanding the resources available to pay debt
service.
National Federation of Municipal Analysts Recommended Disclosures for State Debt 250
Sources: Unless otherwise noted, the information in these schedules is derived
from the annual comprehensive financial reports for the relevant year. No
adjustments have been made for prior period adjustments.
Statistical Section 231
Schedule 1
232 STATE OF TENNESSEE
FINANCIAL TRENDS - CHANGES IN NET POSITION
LAST TEN FISCAL YEARS
(accrual basis of accounting, expressed in thousands)
(continued on next page)
FOR THE FISCAL YEAR ENDED JUNE 30,
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Expenses
Governmental activities:
General government (3) $ 942,465 $ 987,800 $ 959,641 $ 858,569 $ 981,862 $ 961,058 $ 870,036 $ 937,895 $ 1,143,546 $ 3,267,910
Education 7,018,189 7,083,806 7,383,077 7,302,492 7,507,413 7,927,694 8,234,390 8,576,479 8,898,197 9,495,761
Health and social services 13,952,342 14,079,899 13,912,421 14,258,216 14,930,669 14,976,007 15,192,989 15,168,397 16,603,681 19,105,994
Law, justice, and public safety 1,567,730 1,539,288 1,612,248 1,522,333 1,605,231 1,692,610 1,784,864 1,848,904 2,127,958 2,255,348
Recreation and resources development 646,494 554,421 646,781 666,997 665,491 628,906 716,104 719,649 786,375 935,195
Regulation of business and professions 126,395 158,228 158,644 175,667 194,662 205,684 215,749 217,075 211,446 252,866
Transportation 1,012,399 1,062,091 1,126,744 1,126,447 1,045,959 1,282,462 1,213,247 1,474,457 1,507,127 1,328,049
Intergovernmental revenue sharing (3) 851,535 844,628 897,312 980,258 1,045,095 1,073,737 1,309,519 1,388,848 1,407,229 -
Interest on long-term debt 62,119 71,933 67,520 60,622 60,891 58,503 62,430 62,928 58,733 51,097
Payments to fiduciary fund 58,453 22,386 827 400 680 664 372 - - -
Total governmental activities expenses 26,238,121 26,404,480 26,765,215 26,952,001 28,037,953 28,807,325 29,599,700 30,394,632 32,744,292 36,692,220
Business-type activities:
Employment security (1) 1,232,324 750,529 451,470 289,415 241,852 232,690 222,988 205,234 3,969,607 3,931,631
Insurance programs 540,746 544,250 541,205 556,634 585,757 620,734 620,005 672,422 677,269 753,012
Loan programs 1,757 1,577 1,469 1,493 1,865 1,710 1,705 1,613 1,842 1,879
Other 620 163 76 68 367 216 1,014 305 83 695
Total business-type activities expenses 1,775,447 1,296,519 994,220 847,610 829,841 855,350 845,712 879,574 4,648,801 4,687,217
Total primary government expenses $ 28,013,568 $ 27,700,999 $ 27,759,435 $ 27,799,611 $ 28,867,794 $ 29,662,675 $ 30,445,412 $ 31,274,206 $ 37,393,093 $ 41,379,437
Program Revenues
Governmental activities:
Charges for services:
General government $ 673,945 $ 775,135 $ 812,528 $ 787,280 $ 796,608 $ 784,087 $ 1,019,219 $ 1,045,776 $ 1,066,858 $ 1,188,460
Education 56,898 85,722 73,276 58,961 50,274 40,849 38,385 30,633 70,672 67,395
Health and social services 772,850 714,788 756,038 957,133 1,030,133 1,189,026 1,071,646 1,130,530 1,248,321 1,299,646
Law, justice, and public safety 125,879 139,622 140,123 137,905 161,110 168,808 161,132 159,868 153,575 150,230
Recreation and resources development 151,545 155,422 145,675 153,788 164,390 169,896 175,065 184,084 175,672 195,412
Regulation of business and professions 168,590 154,896 165,611 182,959 200,087 194,108 214,121 203,660 208,333 234,485
Transportation 29,601 35,470 31,863 45,840 56,466 59,301 63,670 65,208 57,902 60,841
Operating grants and contributions (4) 11,897,517 11,697,733 11,355,859 11,291,412 11,930,270 11,742,175 12,064,641 11,974,935 13,456,925 17,898,087
Capital grants and contributions 903,281 772,061 762,251 727,573 686,774 695,029 738,173 725,242 948,533 844,303
Total governmental activities program revenues 14,780,106 14,530,849 14,243,224 14,342,851 15,076,112 15,043,279 15,546,052 15,519,936 17,386,791 21,938,859
Business-type activities:
Charges for services:
Employment security 769,446 632,408 370,752 343,808 290,005 288,964 260,627 256,943 286,104 265,762
Insurance programs 542,756 569,982 598,209 581,436 565,174 599,635 652,846 702,429 719,987 728,280
Loan programs 15,600 12,450 8,897 8,865 9,214 10,255 11,386 11,850 12,233 12,135
Other 133 231 221 230 239 236 242 155 342 287
Operating grants and contributions (2) 749,005 327,928 134,026 64,053 85,287 57,418 88,198 76,576 3,696,938 3,599,778
Total business-type activities program revenues 2,076,940 1,542,999 1,112,105 998,392 949,919 956,508 1,013,299 1,047,953 4,715,604 4,606,242
Total primary government program revenues $ 16,857,046 $ 16,073,848 $ 15,355,329 $ 15,341,243 $ 16,026,031 $ 15,999,787 $ 16,559,351 $ 16,567,889 $ 22,102,395 $ 26,545,101
Net (Expense)/Revenue
Governmental activities $ (11,458,015) $ (11,873,631) $ (12,521,991) $ (12,609,150) $ (12,961,841) $ (13,764,046) $ (14,053,648) $ (14,874,696) $ (15,357,501) $ (14,753,361)
Business-type activities 301,493 246,480 117,885 150,782 120,078 101,158 167,587 168,379 66,803 (80,975)
Statistical Section Total primary government net expense $ (11,156,522) $ (11,627,151) $ (12,404,106) $ (12,458,368) $ (12,841,763) $ (13,662,888) $ (13,886,061) $ (14,706,317) $ (15,290,698) $ (14,834,336)
Schedule 1
STATE OF TENNESSEE
FINANCIAL TRENDS - CHANGES IN NET POSITION (continued)
LAST TEN FISCAL YEARS
(accrual basis of accounting, expressed in thousands)
FOR THE FISCAL YEAR ENDED JUNE 30,
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Statistical Section
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes
Sales and use $ 6,884,762 $ 7,018,128 $ 7,276,443 $ 7,713,695 $ 8,258,134 $ 8,547,149 $ 8,831,333 $ 9,351,611 $ 9,624,865 $ 11,052,798
Fuel 842,133 834,956 843,164 862,156 899,631 915,415 1,099,342 1,170,828 1,189,072 1,216,037
Business 3,926,566 4,122,814 3,948,253 4,336,333 4,631,629 5,206,841 5,196,013 5,326,127 5,546,908 6,275,672
Other 608,762 648,193 641,244 719,370 722,040 627,070 624,585 607,748 543,952 672,243
Unrestricted investment earnings 772 4,144 7,079 6,121 15,076 36,148 84,104 151,602 108,918 9,376
Miscellaneous 253,489 282,705 221,138 224,064 243,432 234,586 284,299 193,899 239,300 282,720
Contributions to permanent funds 174 180 547 136 170 2,624 142 145 143 143
Transfers (4,655) (4,256) (4,622) (8,046) (1,096) (5,290) (4,715) (18,521) (7,558) (8,611)
Total governmental activities 12,512,003 12,906,864 12,933,246 13,853,829 14,769,016 15,564,543 16,115,103 16,783,439 17,245,600 19,500,378
Business-type activities:
Transfers 4,655 4,256 4,622 8,046 1,096 5,290 4,715 18,521 7,558 8,611
Total business-type activities 4,655 4,256 4,622 8,046 1,096 5,290 4,715 18,521 7,558 8,611
Total primary government general revenues and
other changes in net position $ 12,516,658 $ 12,911,120 $ 12,937,868 $ 13,861,875 $ 14,770,112 $ 15,569,833 $ 16,119,818 $ 16,801,960 $ 17,253,158 $ 19,508,989
Changes in Net Position
Governmental activities $ 1,053,988 $ 1,033,233 $ 411,255 $ 1,244,679 $ 1,807,175 $ 1,800,497 $ 2,061,455 $ 1,908,743 $ 1,888,099 $ 4,747,017
Business-type activities 306,148 250,736 122,507 158,828 121,174 106,448 172,302 186,900 74,361 (72,364)
Total primary government $ 1,360,136 $ 1,283,969 $ 533,762 $ 1,403,507 $ 1,928,349 $ 1,906,945 $ 2,233,757 $ 2,095,643 $ 1,962,460 $ 4,674,653
(1) The increase in expenses in the employment security program between fiscal years 2019 and 2020 is due to the extra benefits
provided to the unemployed in response to the pandemic.
(2) The increase in operating grants and contributions for business-type activities between fiscal years 2019 and 2020 is primarily
because of the extra benefits provided to the unemployed in response to the pandemic.
(3) The increase in expenses for general government between fiscal years 2020 and 2021 is primarily due to changes made because of the implementation of GASBS 84.
Amounts previously reported in intergovernmental revenue sharing is now reported as general government.
(4) The increase in operating grants and contributions between fiscal years 2020 and 2021 is primarily because of increased
COVID funding received from the federal government.
233
Schedule 2
234 STATE OF TENNESSEE
FINANCIAL TRENDS - NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(accrual basis of accounting, expressed in thousands)
FOR THE FISCAL YEAR ENDED JUNE 30,
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Governmental activities
Net investment in capital assets (3) $ 25,628,600 $ 26,326,451 $ 26,855,523 $ 27,432,234 $ 28,201,282 $ 28,617,760 $ 29,616,706 $ 30,355,607 $ 31,425,755 $ 32,396,815
Restricted 1,172,812 1,193,341 1,242,324 1,150,817 1,595,049 1,777,806 2,081,564 2,210,725 2,307,203 2,866,255
Unrestricted (1)(2)(4) 1,183,704 1,458,291 1,299,446 940,922 1,534,817 2,736,079 2,704,085 3,739,918 4,475,212 7,753,855
Total governmental activities net position $ 27,985,116 $ 28,978,083 $ 29,397,293 $ 29,523,973 $ 31,331,148 $ 33,131,645 $ 34,402,355 $ 36,306,250 $ 38,208,170 $ 43,016,925
Business-type activities
Net investment in capital assets $
Unrestricted 1,880,812 $ 2,134,924 $ 2,264,747 $ 2,420,530 $ 2,541,704 $ 2,648,152 $ 2,806,842 $ 2,993,742 $ 3,068,103 $ 2,973,131
Total business-type activities net position $ 1,880,812 $ 2,134,924 $ 2,264,747 $ 2,420,530 $ 2,541,704 $ 2,648,152 $ 2,806,842 $ 2,993,742 $ 3,068,103 $ 2,973,131
Primary Government
Net investment in capital assets $ 25,628,600 $ 26,326,451 $ 26,855,523 $ 27,432,234 $ 28,201,282 $ 28,617,760 $ 29,616,706 $ 30,355,607 $ 31,425,755 $ 32,396,815
Restricted 1,172,812 1,193,341 1,242,324 1,150,817 1,595,049 1,777,806 2,081,564 2,210,725 2,307,203 2,866,255
Unrestricted 3,064,516 3,593,215 3,564,193 3,361,452 4,076,521 5,384,231 5,510,927 6,733,660 7,543,315 10,726,986
Total primary government net position $ 29,865,928 $ 31,113,007 $ 31,662,040 $ 31,944,503 $ 33,872,852 $ 35,779,797 $ 37,209,197 $ 39,299,992 $ 41,276,273 $ 45,990,056
(1) The increase in unrestricted net position between fiscal years 2015 and 2016 is mostly attributable to the increase in cash and cash equivalents
caused by an increase in revenue collections from business and sales taxes.
The increase in unrestricted net position between fiscal years 2016 and 2017 and between 2018 and 2019 is attributable to (1) the increase in
(2) cash and cash equivalents caused by an increase in revenue collections from business and sales taxes. The increase between 2016 and 2017 is
also attributable to a correction of a federal billing issue from fiscal year 2016.
(3) The increase in net investment in capital assets between fiscal years 2017 and 2018 is mostly attributable to an increase in infrastructure.
(4) The increase in unrestricted net position between fiscal years 2020 and 2021 is attributable to the increase in cash and cash equivalents caused by an increase in federal revenue and an increase in tax revenue.
Statistical Section
Schedule 3
STATE OF TENNESSEE
FINANCIAL TRENDS - FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting, expressed in thousands)
Statistical Section
FOR THE FISCAL YEAR ENDED JUNE 30,
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General Fund
Nonspendable $ 18,609 $ 21,349 $ 21,075 $ 20,184 $ 18,765 $ 25,117 $ 21,208 $ 23,489 $ 31,111 $ 65,465
Restricted 63,192 73,346 68,331 69,540 71,304 73,855 73,202 92,579 102,123 165,341
Committed 286,918 355,546 281,969 302,603 314,545 334,316 372,189 362,881 487,351 640,562
Assigned (1) 1,250,677 1,585,964 1,138,496 1,285,945 1,612,001 2,263,154 1,949,089 2,298,179 3,265,698 4,688,970
Unassigned (2) 698,663 476,264 567,286 885,215 1,224,464 1,008,428 1,410,118 1,651,697 1,676,074 3,770,577
Total general fund $ 2,318,059 $ 2,512,469 $ 2,077,157 $ 2,563,487 $ 3,241,079 $ 3,704,870 $ 3,825,806 $ 4,428,825 $ 5,562,357 $ 9,330,915
All Other Governmental Funds
Nonspendable $ 147,468 $ 150,579 $ 153,004 $ 519,590 $ 525,078 $ 531,981 $ 536,481 $ 561,387 $ 569,348 $ 586,808
Restricted 980,972 990,317 1,024,350 575,853 1,020,805 1,207,452 1,507,973 1,583,287 1,667,138 2,152,028
Committed 344,696 398,864 396,298 389,401 373,312 336,412 379,483 391,014 436,241 439,218
Assigned 672,610 575,300 759,845 736,691 787,006 1,148,144 1,596,551 1,612,649 1,552,641 1,258,390
Unassigned
Total all other governmental funds $ 2,145,746 $ 2,115,060 $ 2,333,497 $ 2,221,535 $ 2,706,201 $ 3,223,989 $ 4,020,488 $ 4,148,337 $ 4,225,368 $ 4,436,444
(1) The increase in assigned fund balance for the general fund between fiscal years 2019 and 2020 is primarily because of an increase in
the reserve for supplemental appropriation and an increase in carry forwards. The increase in assigned fund balance between the
fiscal years 2020 and 2021 is primarily because of increases in carry forwards, supplemental appropriations, and the civil defense
reserve.
(2) The increase in unassigned fund balance for the general fund between fiscal years 2020 and 2021 is primarily because of an
increase between the reserve fluctuations and future requirements.
235
Schedule 4
236 STATE OF TENNESSEE
FINANCIAL TRENDS - CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(modified accrual basis of accounting, expressed in thousands)
FOR THE FISCAL YEAR ENDED JUNE 30,
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Revenues
Taxes $ 12,280,198 $ 12,605,171 $ 12,762,694 $ 13,717,684 $ 14,536,940 $ 15,151,281 $ 15,694,388 $ 16,391,417 $ 17,176,466 $ 19,360,005
Licenses, fines, fees, and permits 731,752 725,785 727,158 799,462 913,535 973,810 1,058,073 1,081,355 1,055,468 1,142,138
Interest on investments 17,411 35,987 67,117 27,865 56,708 89,231 119,676 234,307 187,336 221,890
Federal (7) 12,334,256 12,085,185 11,750,878 11,601,522 12,126,450 11,915,967 12,245,029 12,098,767 13,820,131 17,989,966
Departmental services 2,077,429 1,933,141 1,994,334 2,108,043 2,170,683 2,392,179 2,342,471 2,333,469 2,501,103 2,747,234
Other 595,305 630,355 604,336 584,672 647,996 622,690 734,439 639,714 677,192 787,368
Total revenues 28,036,351 28,015,624 27,906,517 28,839,248 30,452,312 31,145,158 32,194,076 32,779,029 35,417,696 42,248,601
Expenditures
Current:
General government (5) 575,919 538,243 553,807 565,415 573,475 654,354 683,678 689,119 710,720 2,788,937
Education 6,828,619 6,875,325 7,182,444 7,140,936 7,322,279 7,778,143 8,134,979 8,364,522 8,557,814 9,245,643
Health and social services 14,807,999 14,668,483 14,493,610 14,906,413 15,600,711 15,655,566 15,875,861 16,007,652 17,354,738 19,959,835
Law, justice, and public safety 1,528,766 1,499,252 1,555,028 1,552,156 1,618,669 1,693,161 1,772,563 1,868,133 2,072,747 2,195,107
Recreation and resources development 705,043 655,168 711,526 757,166 777,748 736,884 797,848 821,557 849,015 1,012,134
Regulation of business and professions 135,877 164,673 165,238 187,360 205,830 215,733 222,903 229,082 224,307 261,952
Transportation 1,952,887 1,864,946 1,753,581 1,708,328 1,672,379 1,728,331 1,910,831 2,017,320 2,208,900 2,135,196
Intergovernmental revenue sharing (5) 851,535 844,628 897,312 980,258 1,045,095 1,073,737 1,309,519 1,388,848 1,407,229
Debt service:
Principal 115,935 274,858 142,643 313,050 246,503 296,444 267,376 153,111 292,993 150,764
Interest 65,471 76,041 75,155 68,325 67,409 71,817 75,163 75,165 73,246 67,305
Debt issuance costs 4,793 2,659 1,452 1,741 2,324 2,225 2,193 1,741 2,093 1,581
Capital outlay 483,279 515,999 491,077 406,396 469,307 462,231 339,789 408,337 562,098 521,160
Total expenditures 28,056,123 27,980,275 28,022,873 28,587,544 29,601,729 30,368,626 31,392,703 32,024,587 34,315,900 38,339,614
Revenues over (under) expenditures (19,772) 35,349 (116,356) 251,704 850,583 776,532 801,373 754,442 1,101,796 3,908,987
Other Financing Sources (Uses)
Bonds and commercial paper issued 637,868 290,178 91,281 143,200 447,222 274,348 243,419 69,256 187,650 46,732
Commercial paper redeemed (201,235)
Insurance claim recoveries 2,734 1,061 1,335 1,597 1,288 725 1,058 367 1,099 673
Premium on bond sale 37,069 10,308 53,170 42,335 25,282 315
Refunding bonds issued (1) 464,809 25,713
Refunding bond premium (1) 88,775 11,672 81,321 98,390 214,452 36,059
Refunding payment to escrow (1) (552,898) (25,473) (81,092) (98,159) (214,016) (35,976)
Other
Proceeds from pledged revenue 58,453 22,183 472
Transfers in (6) 1,285,701 1,361,860 1,561,780 1,173,753 1,229,231 1,711,662 2,028,533 1,550,136 1,982,336 677,894
Transfers out (2) (3) (4) (1,366,400) (1,545,068) (1,763,423) (1,206,423) (1,419,467) (1,824,459) (2,225,529) (1,619,426) (2,062,633) (716,389)
Total other financing sources (uses) 454,876 142,126 (108,555) 122,664 311,675 205,047 72,846 333 108,767 8,910
Net Change in Fund Balances $ 435,104 $ 177,475 $ (224,911) $ 374,368 $ 1,162,258 $ 981,579 $ 874,219 $ 754,775 $ 1,210,563 $ 3,917,897
Debt Service as a Percentage of Noncapital Expenditures 0.6910% 1.3065% 0.8050% 1.3743% 1.0971% 1.2523% 1.1326% 0.7406% 1.1082% 0.5900%
Note: T.C.A 67-1-1702 requires returns, tax information, and tax administration information to remain confidential except as authorized by said T.C.A.
(1) The state issued approximately $500 million less in refunding bonds in FY 2013 than in the prior year resulting in significant decreases to refunding bonds issued, premiums and payments to escrow.
(2) The decrease in transfers out between 2014 and 2015 is due primarily to a reduction of transfers out from the general fund to the capital projects fund, to the debt service fund, and transfers out for the leasing of buildings.
(3) The decrease in transfers out between 2018 and 2019 is due primarily to a reduction of transfers out from the general fund to the capital projects fund, to the facilities revolving fund, and to the highway fund.
(4) The decrease in transfers out between 2020 and 2021 is due primarily to a reduction of transfers out from the general fund to the capital projects fund and the education fund.
(5) The increase in general government expenditures between 2020 and 2021 is due primarily to changes made because of the implementation of GASBS 84. Amounts previously reported as intergovernmental revenue sharing
is now reported in general government.
(6) The decrease in transfers in between 2020 and 2021 is due primarily to a reduction of transfers in to the capital projects fund and the education fund from the general fund.
Statistical Section (7) The increase in federal revenue between 2020 and 2021 is due primarily to COVID funding.
Schedule 5
STATE OF TENNESSEE
REVENUE CAPACITY - TAXABLE SALES BY CLASSIFICATION
LAST TEN CALENDAR YEARS
(expressed in millions)
FOR THE CALENDAR YEAR ENDED DECEMBER 31,
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Statistical Section
Auto dealers $ 8,429 $ 9,275 $ 9,827 $ 10,558 $ 11,789 $ 12,609 $ 12,868 $ 13,336 $ 13,920 $ 14,066
Purchases from manufacturers 4,009 4,042 4,170 4,460 4,876 5,205 5,478 5,938 6,448 6,781
Miscellaneous durable goods 15,583 16,372 16,804 17,542 18,614 20,127 21,351 22,638 24,017 26,087
Eating and drinking places 9,507 10,197 10,576 11,196 12,032 12,612 12,916 13,685 15,099 13,101
Food stores 9,216 9,690 10,249 10,696 11,102 11,513 12,120 12,791 13,208 14,503
Liquor stores 728 793 836 894 971 975 908 973 1,056 1,314
Hotels and motels 2,333 2,488 2,539 2,881 3,223 3,600 3,606 3,834 4,712 2,990
Other retail and service 28,756 30,178 31,134 32,884 34,916 36,531 38,036 41,281 43,604 47,165
Miscellaneous nondurable goods 7,987 8,423 8,693 9,046 9,466 9,902 9,874 10,414 10,796 10,325
Transportation, communication 7,085 6,560 6,396 6,306 6,491 6,388 8,094 8,819 8,810 7,792
Total taxable sales $ 93,633 $ 98,018 $ 101,224 $ 106,463 $ 113,480 $ 119,462 $ 125,251 $ 133,709 $ 141,670 $ 144,124
Source: An Economic Report to the Governor of the State of Tennessee January 2021
Schedule 6
STATE OF TENNESSEE
REVENUE CAPACITY - SALES AND USE TAX RATES
LAST TEN FISCAL YEARS
FOR THE FISCAL YEAR ENDED JUNE 30,
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
General Rate applied to gross proceeds 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
derived from the retail sale or use
of tangible personal property
and specific services
Rates for specific items or services:
Retail sale of food and food 5.50% 5.50% 5.25% 5.00% 5.00% 5.00% 4.00% 4.00% 4.00% 4.00%
ingredients for human
consumption (except
vending machines)
Energy fuels used by manufacturers 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%
and nurserymen
Water used by manufacturers 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Manufactured homes 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50%
Aviation fuel 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50%
Common carriers 3.75% 3.75% 3.75% 3.75% 3.75% 3.75% 3.75% 3.75% 3.75% 3.75%
Interstate telecommunication 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50%
services sold to businesses
Cable and wireless TV (between 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
$15 and $27.50) and
satellite services
Additional tax added to the 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75% 2.75%
general rate for single
article sales of personal
property ($1,601 to $3,200)
Source: State of Tennessee Budget; Department of Finance and Administration, Division of Budget
237 Note: Please see the Budget Document for more information on the sales and use tax basis of apportionment.
238 Schedule 7
STATE OF TENNESSEE
REVENUE CAPACITY - SALES AND USE TAX COLLECTIONS BY TAXPAYER CLASSIFICATION
LAST TEN FISCAL YEARS
(expressed in thousands)
FOR THE FISCAL YEAR ENDED JUNE 30,
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Retail:
Building materials $ 355,263 $ 354,513 $ 371,086 $ 392,853 $ 430,312 $ 468,750 $ 492,326 $ 528,112 $ 585,686 $ 737,200
General merchandise 840,896 836,055 845,407 854,971 889,297 895,864 881,916 883,068 911,558 983,751
Food stores 539,402 546,972 555,692 579,660 595,739 618,427 571,341 580,520 629,611 658,854
Auto dealers and service stations 830,875 869,748 933,751 1,013,333 1,123,746 1,177,213 1,184,189 1,230,277 1,273,167 1,481,269
Apparel and accessory stores 205,480 215,308 217,170 228,680 238,993 239,541 242,207 254,355 232,224 276,847
Furniture and home furnishings 224,096 221,025 228,231 250,667 268,657 281,955 291,561 301,500 302,089 340,370
Eating and drinking places 653,210 681,255 706,095 757,929 809,367 838,150 845,819 928,084 911,187 963,720
Miscellaneous retail stores 613,097 637,761 664,927 736,728 812,020 818,129 848,254 895,942 973,829 1,366,377
Total retail 4,262,319 4,362,637 4,522,359 4,814,821 5,168,131 5,338,029 5,357,613 5,601,858 5,819,351 6,808,388
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