Microsoft Word - MSU Financial Statements FY19 EMD 10.01.19

Financial Statements

for

MURRAY STATE UNIVERSITY

A COMPONENT UNIT OF THE

COMMONWEALTH OF KENTUCKY

For the Year Ended June 30, 2019

with Report of Independent Auditors

CONTENTS



 Pages

ReportofIndependentAuditors.........................................................................................................................................1‐2



Management’sDiscussionandAnalysis..........................................................................................................................3‐22



FinancialStatements

StatementsofNetPosition–MurrayStateUniversity.............................................................................................23‐24

StatementsofFinancialPosition–MurrayStateUniversityFoundation,Inc...........................................................25

StatementsofRevenues,ExpensesandChangesinNetPosition–

MurrayStateUniversity............................26‐27

StatementsofActivities–MurrayStateUniversityFoundation,Inc.....................................................................28‐29

StatementofCashFlows–MurrayStateUniversity................................................................................................30‐31

NotestoFinancialStatements......................................................................................................................................32‐75

SupplementaryInformation.........................................................................................................................................76‐83



ReportonInternalControloverFinancialReportingand

onComplianceandOtherMattersBasedonanAuditof

FinancialStatementsPerformedinAccordancewithGovernmentAuditingStandards.............................................84‐85

ScheduleofFindingsandResponses..............................................................................................................................86‐87



Lexington

■

Louisville

■

Raleigh deandorton.com

ReportofIndependentAuditors



BoardofRegents

MurrayStateUniversity

Murray,Kentucky



SecretaryofFinanceandAdministration

CabinetoftheCommonwealthofKentucky



ReportontheFinancialStatements

Wehaveauditedtheaccompanyingfinancialstatementsofthebusiness‐typeactivitiesandthediscretelypresented

componentunitofMurrayStateUniversity(theUnive

rsity),acomponentunitoftheCommonwealthofKentucky,

as of and for the years ended June 30, 2019 and 2018, and the related notes to the financial statements, which

collectivelycomprisetheUniversityʹsbasicfinancialstatementsaslistedinthetableofcontents.

ManagementʹsResponsibilityfortheFinanc

ial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fro

mmaterialmisstatement,whetherduetofraudorerror.

Auditor’sResponsibility

Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.Weconductedour

auditsinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmericaandthestandards

applicabletofinancialauditscontainedinGo

vernment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

fin

ancial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

fin

ancial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 and the

reason

ableness 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

opinion.

BoardofRegents

MurrayStateUniversity

ReportofIndependentAuditors,continued



2



Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial

positionofthebusiness‐typeactivitiesandthediscretelypresentedcomponentunitofMurrayStateUniversityas

ofJune 30,

2019 and 2018, and the changes inits financialposition and itscash flows thereof for theyears then

endedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.

OtherMatter

RequiredSupplementaryInformation

AccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirethat

themanagement’sdiscussion

andanalysisonpages3‐22andthepensionandOPEBinformationonpages76‐83bepresentedtosupplement

thebasicfinancialstatements.Suchinformation,althoughnotapartofthebasicfinancialstatements,isrequired

bytheGovernmentalAccountingStandardsBoardwhoconsidersittobe

anessentialpartoffinancialreporting

forplacingthebasicfinancialstatementsinanappropriateoperational,economic,orhistoricalcontext.Wehave

applied certain limited procedures to the required supplementary information in accordance with auditing

standardsgenerallyacceptedintheUnitedStatesofAmerica,whichconsistedofinquiriesofmanagement

about

the methods of preparing the information and comparing the information for consistency with management’s

responsestoourinquiries,thebasic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.

OtherReportingRequiredby GovernmentAuditingStandards

InaccordancewithGovernmentAuditingStandards,wehavealsoissuedour reportdatedOctober 2,2019 onour

considerationoftheUniversity’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. 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 the 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Universityʹsinternalcontroloverfinancialreportingandcompliance.



October2,2019

Lexington,Kentucky



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis



June30,2019



3

Introduction



ThefollowingManagement’sDiscussionandAnalysis(MD&A)providesanoverviewofthefinancialpositionand

activities of Murray State University (University) for the year ended June 30, 2019.

This discussion has been

preparedbymanagementandshouldbereadinconjunctionwiththefinancialstatementsandthenotesthereto,

which follow this section.The financial statements and related notes and this discussion and analysis are the

responsibilityofmanagement.



TheUniversityisacomprehensivepublicinstitutionofhigherlearning

locatedinwesternKentuckyandprimarily

servesstudentsinKentucky,Illinois,Missouri,TennesseeandIndiana.Foundedin1922,theUniversityhasstudy

centersinfourothercitieswhereitoffersadiverserangeofdegreeprogramsfromassociatetodoctorallevels,is

composedoffouracademiccollegesandtwoschools.

TheUniversitycontributestotheregionandstatethrough

relatedresearchandpublicserviceprograms.TheUniversityisachartermemberoftheOhioValleyConference

andaDivisionImemberofthe NCAA.TheUniversityservesasaresidential,regionaluniversityofferingcore

programs in the liberal arts, humanities, sciences

 and selected high‐quality professional programs for

approximately9,500students.Forthe2019‐20academicyear,tuitionandfeesincreasedby$42persemesterfor

fulltimeresidentundergraduatestudents.TuitionandfeesattheUniversitycontinuestobelessthanthenational

average.



MurrayStateUniversityconsistentlyranksamong

thenation’stoppublicuniversitiesandhasbeenrecognizedfor

thequalityandvalueofitsacademicprograms.Onceagain,U.S.News&WorldReport’sBestCollegeshasrecognized

theUniversityamongthetopschoolsinthecountry.TheUniversity’sstreakoftoprankingswasextendedto29

consecutiveyearswith

thereleaseofthe2020U.S.NewsBestCollegeslist.MurrayStatewasranked24

inthe“Best

Regional Universities in the South” category and is the highest‐ranked regional public university in Kentucky.

Murray State also ranked 11

 among peer institutions in the “Top Public Regional Universities in the South”

category.



InadditiontotheU.S.News&WorldReport’srankings,theUniversityisrankeda“MilitaryFriendlySchool”by

VictoryMediaandthe2019WashingtonMonthlycollegeguideandrankingslistedMurrayStateasabestvalue

for

studentsseekingacollegedegree,andthetop‐rankedpublicuniversityinKentucky.Forbesmagazinenamedthe

UniversityasoneofAmerica’sTopCollegesin2019.Thismarksthe12thstraightyearinwhichMurrayStatehas

garneredthisaccolade.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



4

FinancialHighlights



 The University’s financial net position dramaticallychanged in 2015 with the implementation of GASB

StatementNo.68‐AccountingandFinancialReportingforPensions—an

amendmentofGASBStatementNo.27,

andagainin2018withtheimplementationofGASBStatementNo.75–AccountingandFinancialReporting

forPostemploymentBenefitsotherthanPensions(OPEB).TheeffectsofimplementingGASBStatementNos.

68and75aresummarizedinthefollowingtable.Itisimportantto

notethattheimplementationofthese

standardshasnoeffectonpastorcurrentcashorcashequivalents.



2019 2018 2017

Beginningnet position,nopension/OPEBadj ustment 336,973,0 98$ 332,252,009$ 300,800,699$

Changeinnet position,nopension/OPEBadj ustment 5,227,09 8 4,721,089 31,451,310

Endingnetpositionbeforepension/OPEBadj ustment 342,200,196 336,973,098 332,252,009

Pensionb eginningadj ustment (290,776,657) (266,031,237) (244,041,269)

Pensionrevenue/(expense)adj ust ment 13,691,790 8,816,578 (21,989,968)

OPE Bpriorperiodbalanceadj ustment — (32 ,141,103) —

OPE Brevenue/(expense)adj ustment

(839,266) (1,420,895) —

Totalpension/OPEBadj ustment s (277,924,133) (290,776,657) (266,031,237)

Netpositionaft er pension/OPEBadjustment s 64,276,0 63$ 46,196,441$ 66,220,772$



 Infiscalyear2019,theUniversityhadassetsof$440.3million,deferredoutflowsof$42.4million,liabilities

of$313.6millionanddeferredinflowsof$104.8million.Netposition,whichrepresentstheUniversity’s

residualinterestinassetsand deferredoutflowsafter liabilitiesanddeferred inflowsare deducted,was

$64.3million

or13%oftotalassetsanddeferredoutflows.Netpositionincreasedby$18.0millionfrom

fiscal year 2018 to 2019. This increase in net position was the result of a $12.8 million net decrease in

pension/OPEB related activity.Additionally, there is a $4.6 million increase in liabilities other than

pension/OPEB

primarilyduetoincreasesinaccountspayableof$4.7millionandadecreaseinlong‐term

debtof($4.6million).Deferredoutflowsandinflowsareitemspreviouslyreportedasassetsorliabilities

respectively that are required to be reported separately from assets or liabilities by GASB Standard 65.

Deferred inflows increased

 $4.4 million to reflect future receipts related to a new dining operations

arrangementinDecember2018.



 Fiscaloperationswereinaccordancewiththeannualoperatingbudgetofapproximately $159.0 million.

TheUniversitycontinuedtobeastrongemployerfortheregionandemployed3,524individuals,including

578 faculty and

 927 staff members and 2,019 students.These totals include 1,266 regular and full‐time

facultyandstaff.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



5

 Total originally enacted operating state appropriations for fiscal year 2019 decreased by .5% $229,800,

decreasingto$45.6million,thisincludesgeneralappropriationsof$43.0million,$2million

newfunding

forBreathittVeterinaryCenterandperformancefundingpoolallocationsof$557,800.



 The University invests approximately 96% of its endowment funds with the Murray State University

Foundation,Inc.(Foundation).Thevalueofthesefundsisasfollows:



HistoricalValue $18.1million

MarketValue $21.7million



Thesefunds

experiencedanunrealizedgainof$138,412infiscalyear2019.Thisallowedformostprogram

spendingtoremainconstantduringtheyear.TheFoundationoperatedwitha4.0%caponendowment

spendingforthefiscalyear2019.



 J.H.RichmondResidenceHallwascompletedandreopenedforoccupancyin

August2019with279beds.



 TheUniversityinvestedinasignificantnumberofassetpreservationcampusenhancementprojectsin2019.

Total expenditures for these projects were $11.6 million, excluding J.H. Richmond Residence Hall

renovationsandrepairs.



 In July 2015, significant moisture issues, air pressurization issues, and the discovery

 of hidden water

damageswereidentifiedintheBiologyBuilding.TheUniversityiscontinuingtoworkwithconstruction

companies,architects,designfirmsandconsultantstoidentifythesourceoftheproblem.Duringfiscalyear

2019, the University engaged an architect and engineering firm to recommend appropriate repairs and

preparebid

documents.FinalbiddocumentsforrepairsshouldbeissuedinFall2019withworkbeginning

betweenFall2019andSpring2020.Finalcompletiondatehasnotbeendetermined.



 TheUniversityexperiencedlargechangesinthepensionliabilityinfiscalyear2019,overalladjustments

relatedto pensions/OPEB were a ($51.2

million)reductionto liabilitiesanda($6.1 million)reduction to

operatingexpenses.TheUniversity’sportionofthereducedliabilityreportedbytheTeachers’Retirement

System (TRS) of Kentucky, resulted in a ($55.3 million)reduction tothe TRS portion of thenet pension

liability and a ($7.9 million) reduction to expenses. However,

 these results were partially offset by an

increasetotheKentuckyEmployeesRetirementSystem(KERS)liability,whichincreasedtheUniversity’s

liability $6.2 million and increased expenses $2.4 million. Additionally, the University’s liabilities were

furtherreducedbytheadjustmentsrelatedtoOPEBpaidtotheretirementsystems.Thisresultedina

$2.1

milliondecreaseinliabilitiesand($.6million)decreaseinexpenses.



 TheUniversity’sdiningserviceswereoutsourcedtoSodexoOperations,LLCeffectiveDecember2018.The

agreementisthroughJune2029andencompassesallcampusdiningservicesaswellassignificantcapital

investmentsmadebySodexo.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



6

 TheUniversityexperienceda5.5%declineinenrollmentinfiscalyear2019.Theimpactofthedecreasewas

addressedbyaplannedreductioninexpendituresinfiscal

year2019andabudgetedcontingency.



PerformanceFunding



Theenacted2017‐18CommonwealthofKentuckybudgetincludedimplementationoftheperformancefunding

modelandincludedaperformancepool.Thepoolwasfundedwith5%ofthenetadjustedappropriationsofeach

ofthe four‐yearinstitutionsandKentuckyCommunity and

TechnicalCollegeSystem(KCTCS),which totaled

$31million.MurrayStateUniversitycontributed$2,293,200tothepoolandreceived$2,231,000inthe2017‐18

budgetbackfromthefundingpool.



Theenacted2018‐19CommonwealthofKentuckybudgetincludedaperformancefundingpoolof$38.7million

forallfour‐yearinstitutions

andKentuckyCommunityandTechnicalCollegeSystem(KCTCS).MurrayState

Universityreceived$557,800fromtheaboveperformancepool.



Thethreebasiccomponentsofthefundingmodelinclude:



 StudentSuccess:35%ofthemodeltiesthedistributionofallocablefundingdirectlytodegreeproduction

andprogressiontowardadegreeorcredential;



 CourseCompletion:35%ofthemodeltiesthedistributionofresourcestothenumberofcredithours

awardedateachcampus;



 OperationalSupport:30%ofthemodeltiesthedistributionofresourcestocampusservicesand

infrastructurethatsupportstudentlearningandsuccess.



UsingtheFinancialStatements



TheUniversity’sfinancialstatementsconsistofStatementsofNetPosition,StatementsofRevenues,Expensesand

Changes in Net Position, Statements of Cash Flows and Notes to the Financial Statements.These financial

statementsandaccompanyingnotesarepreparedinaccordance

withtheappropriateGovernmentalAccounting

StandardsBoard(GASB)pronouncements.



These financial statements provide an entity‐wide perspective and focus on the financial condition, results of

operationsandcashflowsoftheUniversityasawhole.



FinancialstatementshavealsobeenincludedfortheMSUFoundation,acomponentunit,inaccordance

withthe

requirementsofGASBStatementNo.39,DeterminingWhetherCertainOrganizationsareComponentUnits.Financial

statementsforthisentityconsistofStatementsofFinancialPositionandStatementsofActivities.Thesestatements

arepreparedinaccordancewiththeappropriateFinancialAccountingStandardsBoard(FASB)pronouncements.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



7

StatementsofNetPosition



TheStatementofNetPositionpresentsafinancialpictureoftheUniversity’sfinancialconditionattheendofthe

2019and2018fiscalyears

byreportingassets(currentandnoncurrent),deferredoutflowsofresources,liabilities

(currentandnoncurrent),deferredinflowsofresources,andnet position.Netposition,thedifferencebetween

total assets plus deferred outflows less total liabilities and deferred inflows, are an important indicator of the

currentfinancialcondition,whilethechangein

netpositionisanindicatorofwhethertheoverall financialposition

hasimprovedordeclinedduringtheyear.



Assets



Total assets at the end of the fiscal year 2019 were $440.3 million, of which capital assets, net of depreciation,

represented the largest portion.Capital assets totaled approximately$239.7 millionor 54% of total assetsand

wereprimarilycomprisedofUniversity‐ownedland,buildings,equipment,andlibraryholdings.Cashand

cash

equivalentsamountedto$156.4millionor36%oftotalassets.Totalassetsincreasedby$9.9millionduringthe

2019fiscalyear.Thisdecreaseingrosstotalassetsisdueprimarilytothefollowingitems:



 $6.0million‐Increaseinnetcapitalassets.Primarilydueto$12.7millioninnew

additionstoconstruction‐

in‐progress(CIP), largelyrelated to renovationandrepairs toJ. H. RichmondResidence Hall combined

with a $1.6 million increase in non‐building improvements offset by $9.1 million in current year

depreciation.



 $13.2million‐Increaseincashandcashequivalents.Thisincreasewastheresult

ofa$2.3millionincrease

inoperatingcashexplainedbytimingoftransactionsaswellasanadditional$3.1millioninprojectfunding

relatedtotheoutsourcingofdiningservices.Investmentincomeincreasedby$2.9millionduetoimproved

marketconditionsandunspentinsuranceproceedsincreasedby$1.5millionrelatedto

theJ.H.Richmond

ResidenceHallincident.IncreasesinEducation&General(E&G)netpositionpriortothepensionexpense

(non‐cash)adjustmenttotaled$1million,andanincreaseinrestrictednetpositionof$2.5million.



 ($9.0million)‐Decreaseinaccountsreceivable,net.Thisdecreaseistheresultof

a($10million)decrease

in an insurance receivable related to the J. H. Richmond Residence Hall incident offset by a $1 million

increaserelatedtotheeffectsofoutsourcingdiningservices.



Totalassetsdecreasedby$3.2millionduringthe2018fiscalyearduetothefollowing:



 ($16.6 million)‐

Decrease in net capital  assets.Primarily due to ($12 million) decrease in current year

depreciation combined with the ($9.5 million) decrease due to the J. H. Richmond impairment.This

combined($21.5million)decreasewasoffsetby$3.6millionincreaseinequipment,$2.1millionofwhich

was related to equipping the new

 Engineering and Physics building as well as $0.3 million in land

purchases,$0.4 non‐buildingimprovements with theremaining$0.6increaserelatedto thereductionin

construction‐in‐progress and related increase in buildings for the capitalization of Breathitt Veterinary

Center,H.C.FranklinHallandtheEngineeringandPhysicsbuilding.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



8



 $3.4million‐Increaseincashandcashequivalents.Thisincreasewastheresultofa$1.7millionincrease

in operating cash explained by increases in E&G net

 position prior to the pension expense (non‐cash)

adjustment, and an increase of $1.4 million in Auxiliary cash explained by an increase in Auxiliary net

positionpriortothepensionexpense(non‐cash)adjustmentaswellasanincreaseinrestrictednetposition

of$0.7million.Theseincreaseswereoffset

byanincreaseincollectionexpensesof$0.4million.



 $10.1million‐Increaseinaccountsreceivable,net.Thisincreaseistheresultofa$10.5millionincreasein

an insurance receivable related to the J. H. Richmond Residence Hall incident offset by a ($0.4 million)

decreaserelatedtotheeffects

ofthedeclineinenrollment.



DeferredOutflowsofResources



AnewsectionoftheStatementofNetPositionwasaddedin2014incompliancewithGASBStatementNo.65‐

ItemsPreviouslyReportedasAssetsandLiabilities.Thisstatementrequiredthatthedeferredbondrefundingloss,

previouslyreportedaspartofthe“Long‐termdebt”lines,bereportedinsteadas

adeferredoutflowofresources

in fiscal year 2014.GASB statement 65 also required that we restate this deferred outflow for all prior years

reported withinthese financial statements.Deferred outflows consisted of bond refunding lossfrom the 2011

refundingofhousinganddiningbondSeriesM,N,O,P,

andQwhichtotaled$1.6millionforfiscalyear2019,$1.7

millionforfiscalyear2018and$1.7millionfor2017.Alsoincludedisabondrefundinglossfromtherefunding

of2007generalreceiptsbondsSeriesAwhichtotaled$0.7millionforfiscalyear2019,$0.7millionand$0.8million



forfiscalyears2018and2017respectively.Deferredoutflowsalsoconsistedof$40.1millionforfiscalyear2019,

$51.3and$53.8millionforfiscalyears2018and2017respectively,relatedtoreportingrequirementsspecifiedin

GASBStatementsNo.68‐AccountingandFinancialReportingforPensions—anamendmentofGASB

StatementNo.

27andNo.75‐AccountingandFinancialReportingforPostemploymentBenefitsotherthanPensions.



Liabilities



Totalliabilitiesattheendofthefiscalyear2019were$313.6million,adecreaseof($51.2million).Thischangewas

duetothefollowing:



 ($51.2million)–Netdecreaseinpension/OPEBliability.GASBStatementNo.68‐AccountingandFinancial

Reporting for Pensions — an amendment of GASB Statement

 No. 27 required the reporting of the pension

liabilityforthefirsttimeinfiscalyear2015.GASBStatementNo.75–AccountingandFinancialReportsfor

PostemploymentBenefitsOtherthanPensions(OPEB)requiresthereportingoftherelatedliabilityforthefirst

time in fiscal year 2019.This represents

 the University’s proportionate share of the net pension/OPEB

liabilityfortheKentuckystateretirementplanstowhichtheUniversitymakescontributions.Theliability

relatedtopensionsdecreased($49.1million),whiletheliabilityrelatedtoOPEBdecreasedby($2.1million).



 $4.8million–Increaseinaccountspayable.Thisincreaseis

duetoaccountspayablesrelatedtorenovation

andconstructionprojectsincludingJ.H.RichmondResidenceHall,Chick‐fil‐A,andEinsteinBros.Bagels.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



9

 ($4.6million)–Decreaseinlong‐termdebt.Thisdecreaseistheresultofthe2019principalpaymentson

bondsandmasterleases.



Totalliabilitiesatthe

endofthe2018fiscalyearwere$364.8million,adecreaseof($52.1million).Thischangewas

duetothefollowing:



 ($43.8million)–Netdecreaseinpension/OPEBliability.GASBStatementNo.68‐AccountingandFinancial

Reporting for Pensions — an amendment of GASB Statement No. 27 required the

 reporting of the pension

liabilityforthefirsttimeinfiscalyear2015.GASBStatementNo.75–AccountingandFinancialReportsfor

PostemploymentBenefitsOtherthanPensions(OPEB)requiresthereportingoftherelatedliabilityforthefirst

time in fiscal year 2018.This represents the University’s proportionate share

 of the net pension/OPEB

liabilityfortheKentuckystateretirementplanstowhichtheUniversitymakescontributions.Theliability

relatedto pensionsdecreased($81.6million),whiletheliabilityrelatedtoOPEBincreasedby$37.8million.



 ($3.2million)‐Decreaseinaccountspayable.Thisdecreaseisattributedtothenet($3

million)decreasein

PlantaccountspayablerelatedtotheBreathittVeterinaryCenter,H.C.FranklinHallandtheEngineering

andPhysicsbuilding,andoffsetbya($0.2million)decreaseinrestrictedaccountspayableattributableto

timingdifferencesinroutinepayables.



 ($0.4 million) – Decrease in unearned revenue.This decrease is

 the result of reductions in E&G ($0.2

million)andRestricted($0.2million)unearnedrevenues.



 ($4.7million)‐Decreaseinlong‐termdebt.Thisdecreaseis theresultofthe2018principalpaymentson

bondsandmasterleases.



DeferredInflowsofResources



AnewsectionoftheStatementofNetPositionaddedin2014incompliancewithGASBStatementNo.65–Items

PreviouslyReportedasAssetsandLiabilities.Thisstatementrequiresthatcertainitemsarenolongertobereported

asaliability.Thisconsistedof$100.4millioninfiscalyear

2019,$73.2millionand$7millioninfiscalyears2018

and2017respectively,fordeferredinflowsofresourcesrelatedtopensions/OPEBasspecifiedinGASBStatement

Nos. 68 and 75. An additional $4.4 million was record in fiscal year 2019 related to the outsourcing of dining

services.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



10



NetPosition



Netposition,whichrepresenttotalequity,oftheUniversityweredividedintothreemajorcategories,definedas

follows:



o Investedincapitalassets,netofrelateddebt‐Thiscategoryrepresentstheinstitution’sequityinproperty,

buildings, equipment, library holdings and other plant assets owned by the University, less related

depreciationandoutstandingbalancesofborrowingsusedtofinancethepurchaseorconstructionofthose

assets.



o Restricted‐This category represents those assets which are subject to externally imposed restrictions

governingtheiruseandincludesclassificationsofnonexpendableandexpendable.



 Restrictednonexpendablenetposition‐Restrictednonexpendablenetpositionconsistsolelyof

permanent endowments owned by the University.The corpus, as specified by the donor, is

investedinperpetuityandmaynotbeexpended.

 Restrictedexpendablenetposition‐Restrictedexpendablenetpositionconsistofthoseassetsthat

may be expended by the University, but must be spent for purposes as defined by the donors

and/orexternalentitiesthathaveplacedtimeorpurposerestrictionsontheuseoftheassets.



o Unrestricted‐This category represents the net position held by the University that has no formal

restrictions.Although unrestricted net position is not subject to externally imposed stipulations,

substantiallyalloftheunrestrictednetpositionhasbeendesignatedforvariousprogramsandinitiatives,

capitalprojectsandworkingcapitalrequirements.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



11

CondensedStatementsofNetPosition

June30,2019 June30, 2018 June30, 2017

Currentasset s 108,932,836$ 116,557,371$ 103,706,220$

Noncurr entasset s 91,658,940 80,169,828 79,651,477

Capitalassets 239,660,043 233,647,333 250,242,436

440,251,819 430,374,532 433,600,133

DeferredOutflows 42,40 2,028 53,839,367 56,508,116

Currentlia bilit ies 27 ,08 6 ,95 5 22,447,918 26,072,558

Noncurr entlia bilities 28 6,51 8 ,165 342,364,235 390,780,206

313,605,120 364,812,153 416,852,764

DeferredInflows 104,772,664 73,205,305 7,034,713

Investedincapita l

asset s, 170,681,775 159,215,284 173,041,810

net ofrelateddebt

Res t r ict edfor

Nonexpendable 22,517,317 22,285,087 21,973,233

Expendab le

Scholar ships,research,

instr uctionandother 7,183,574 6,979,462 6,271,792

Loans 3,646,465 3,469,792 4,081,721

Capital 14,567,160 17,812,615 2,667,171

Deb t ser vice 365,424 287,315 236,717

Unrestricted (154,685,652) (163,853,114) (142,051,672)

64,27 6,063$ 46,196,441$ 66,220,772$

Totalliabili ties

Ne tPosition

Totalnetposition

Asse ts

Totalassets

Liabilities



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



12

StatementsofRevenues,ExpensesandChangesinNetPosition

The Statements of Revenues, Expenses and Changes in Net Position, which are generally referred to as the

activitiesstatement

orincomestatement,presenttherevenuesearnedandexpensesincurredandincomeorloss

fromoperationsforthecurrentandpriorfiscalyears.Activitiesarereportedaseitheroperatingornon‐operating.

ChangesintotalnetpositionaspresentedontheStatementsofNetPositionarebasedontheactivitypresented



intheStatementsofRevenues,ExpensesandChangesinNetPosition.



The financial statements are prepared on the accrual basis of accounting, whereby revenues and assets are

recognizedwhen the serviceis provided and expenses and liabilities are recognized whenothers provide the

service,regardlessof when cash isexchanged.

Apublicuniversity’sdependencyon stateappropriations will

resultinreportedoperatinglosses.TheGovernmentalAccountingStandardsBoardrequiresstateappropriations

tobeclassifiedasnon‐operatingrevenues.Theutilizationoflong‐livedcapitalassetsisreflectedinthefinancial

statementsasdepreciation,whichexpensesthecostsofanasset

overitsexpectedusefullife.



Revenues

 Totaloperatingrevenues,whichexcludestateappropriations,forfiscalyear2019were$110.3million,

includingstudenttuitionandfees,netofrelateddiscountsandallowances,of$60.5million,operating

restrictedgrantsandcontractsrevenuesof$6.9million,sales,servicesandotherrevenuesof$16.0

million,andauxiliaryservicesnetrevenues

of$26.9million.



 Duringfiscalyear2019,operatingrevenuesdecreasedby($8.8million).Thisdecreasefromtheprioryear

iscomprisedprimarilyof($7.7million)inactualnettuition,offsetbyincreasesof$0.2millioningrants

andcontractsrevenue,$3.6millioninsales,services,andotherrevenuesand

($4.9million)decreasein

auxiliaryservices,specificallyhousing,diningandbookstore,largelyduetotheoutsourcingofdiningin

December2018.



 TheUniversityreceived$45.3millioninstateappropriationsforoperations,includingperformancepool

funding,forfiscalyear2019,and$45.8millionforfiscalyear2018.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



13

Thecomparativesourcesoftotaloperatingrevenuesandnonoperatingstateappropriationrevenuesarereflected

inthefollowingchart:



OperatingRevenuesandStateAppropriations

(InThousands)



$72,054

$6,787

$7,306

$32,474

$46,825

$68,175

$6,651

$12,454

$31,779

$45,344

$60,456

$6,887

$16,015

$26,928

$45,572

$— $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,00 0

Studenttuition&fees,net

Grants&contracts

Other

Auxiliary

Stateappropriations

2019

2018

2017



Expenses



Totaloperatingexpensesforfiscalyear2019were$168.9million.AcademicAffairs,whichincludeinstruction,

research,librariesandacademicsupport,representthelargestportionoftheoperatingexpensestotaling$73.4

millionor43%.StudentAffairs,whichincludestudentservices,financialaidandauxiliaryservices,was$49.5

millionor29%and

otherexpenseswhichincludepublicservice,institutionalsupport,depreciationandoperation

andmaintenanceandstatepensionexpenseamountedto$46.0millionor28%.DepreciationandPensionexpense

forallareasoftheUniversity,arereportedasanoperatingexpenseandwasnotallocatedtoeachprogramgroup,

exceptforauxiliaryenterprises.





MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



14

OperatingexpensesdecreasedfortheyearendedJune30,2019,by($17.6million).Theprimaryreasonsforthe

decreaseinoperatingexpensesareasfollows:



 ($5.5million)

‐DecreaseinoveralloperatingexpensesastheresultoftheUniversity’sproportionateshare

ofexpensesrelatedtoKentuckystatepensionplans.TheUniversity’sproportionateexpenseswere$12.6

millionin2019,$10.2millionin2018and$4.6 millionin2017fortheKERSanda$21.2millioncreditto

expensein

2019,$13.2millioncredittoexpensesin2018and$18millionchargetoexpensesin2017forthe

TRS.



 ($0.5million)–DecreaseinoveralloperatingexpensesastheresultoftheUniversity’sproportionateshare

of expenses related to Kentucky state OPEB plans. The University’s proportionate expenses were $1.0

millionin2019and$1.2millionin2018KERSand$0.3millionin2019and$0.6millionin2018fortheTRS.



 ($3.8million)‐DecreaseinoperationandmaintenanceofplantexpenseastheresultoftheNewBVCand

EngineeringandPhysicsbuildingsbeingplacedinservicein

2018.Whenthisoccurs,severalexpensesheld

asconstruction‐in‐progressarereleasedasplantexpensesrelatedtotheconstructionofthebuildingbut

notcapitalizedaspartofthebuilding.



 ($3.7 million)‐Decrease in overall operation spending, not including operations and maintenance

mentionedabove.Thisincludesa($3.6

million)decreaseinoverallsalariesandbenefitsanda($0.1million)

decreaseinotheroverallexpenditures.



 ($4.0million)–Decreaseinauxiliaryenterprisesprimarilyduetotheoutsourcingofdiningservices.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



15



Operatingexpensesbytypearereflectedinthefollowingchart:



UniversityOperatingExpenses

YearEndedJune30,2019



St udent

Affairs 29%

Academic

Affairs 43%

Other 28%



The net loss from operations for the year ended June 30, 2019, was ($58.7 million) including pension/OPEB

adjustments.Nonoperatingrevenues,netofexpenses,of$73.1million,insurancereimbursementsof$3.4million,

andcapitalgiftsof$0.1millionresultedinanincreaseinnetpositionof$18.1millionfortheyear

endedJune30,

2019.Thisincreaseinnetpositionisprimarilytheresultof$6.0millionrelatedtopension/OPEB,$4.0million

relatedtotheoutsourcingofdiningservices,$3.8millionrelatedtoadecreaseinoperationandmaintenanceof

plantexpensesrelatedand$3.7decreaseinoveralloperationspendingcombined

withanincreaseininvestment

income.



The net loss from operations for the year ended June 30, 2018, was ($67.6 million) including pension/OPEB

adjustments.Nonoperatingrevenues,netofexpenses,of$70.8million,statecapitalappropriationsof$4.4million

related to the Breathitt Veterinary Center and the Engineering and Physics building

projects, insurance

reimbursementrelatedtotheimpairmentofJ.H.RichmondResidenceHallandsurroundingbuildingswhich

wereimpactedof$3.9million,otherinsurancereimbursementsof$1.1million,andcapitalgiftsof$0.4million

resultedinanincreaseinnetpositionof$12.1millionfortheyearendedJune30,2018.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



16

CondensedStatementsofRevenues,Expe nses,andChangesinNetPosition

2019 2018 2017

Operatingre venues

Studenttuitionandfees,net 60,456,045$ 68,175,108$ 72,053,962$

Gra ntsandcontr acts 6,886,581 6,650,616 6,787,113

Other 16,015,020 12,453,726 7,306,302

Auxiliary,net 26,928,253 31,779,351 32,473,936

Totaloperatingr ev enues 110,285,899 119,058,801 118,621,313

Operatingexpe nses

Instr uction 61,064,980 62,572,485 62,523,230

Othereducationalandgener al 77,435,333 89,344,602 105,309,128

Depr eciation 9,154,634 9,330,382 8,585,227

Auxiliaryenter prises 18,599,020 22,608,719 22,570,810

Auxiliarydepr eciation 2,693,821 2,757,883 2,872,348

Totaloperating expenses 168,947,788 186,614,071 201,860,743

Operatingloss (58,661,889) (67,555,270) (83,239,430)

Nonoperatingrevenues

Stateappr opr iations 45,572,300 45,344,100 46,824,500

Othernonoperat ingrevenues 27,485,929 25,496,375 23,916,782

Totalnonoper at ingrevenues 73,058,229 70,840,475 70,741,282

Otherrevenues

Statecapitalappropr iationsandot her 3,683,282 8,831,567 21,959,490

Increaseinnetassets 18,079,622 12,116,772 9,461,342

Netposition,beginningofy ear 46,196,441 66,220,772 56,759,430

Res tat ementof2018b eginningnet positionfor

OPEBliab ility — (32,141,103) —

Netposition,beginningofyear 46,196,441 34,079,669 56,759,430

Netposition,endofyear 64,276,063$ 46,196,441$ 66,220,772$



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



17

StatementsofCashFlows



TheStatementsofCash Flows provideasummaryofthesourcesandusesofcashby definedcategories.The

principal purposes of the Statements

 of Cash Flows are to provide information about the University’s cash

receipts and payments during theyearsand to helpassessthe University’s ability to generate future netcash

flowsandmeetobligationsastheybecomedue,aswellasitsneedforexternalfinancing.



FortheyearendedJune

30,2019:

ThenetcashusedinoperatingactivitiesreflectsthenetcashusedforgeneraloperationsoftheUniversity,which

increasedby$11.3millionduringfiscalyear2019.Thisincreaseincashwasprimarilyduetoincreasesincash

providedbysalesandservicesofeducationandotherrevenuesactivitiesby$13.4

millionwhichincludesstate

pensionsupportanddecreasesincashusedbypaymentstosupplierstotaling$3.0millioncombinedwitha($3.5

million)decreaseincashusedbyauxiliariesforpaymentsforsalaries,wagesandfringesaswellas($1.6million)

decreasepaymentsto suppliers,primarilyresultingfrom theoutsourcing

ofdining services during fiscalyear

2019.



Thecashflowsfromnoncapitalfinancingactivitiesincreasedby$5.0millionduringfiscalyear2019.Thischange

wasprimarilyduetoanincreaseof$3.9millionfordeferredrevenuesrelatedtotheoutsourcingofdiningservices

and$1.1millionincreaseingrantsand

contracts.



The net cash flows used in capital and related financing activities represent cash used for the acquisition,

constructionandrenovationofcapitalassets,changedfrom($6.1million)usedduringfiscalyear2018to($17.3

million)usedduringfiscalyear2019, a  $11.2millionchange.Part of thisdecreaseis

dueto$5.8millionmore

cash used in the construction costs attributable to J.H. Richmond Hall. Additionally, the Breathitt Veterinary

Center,andEngineeringandPhysicsbuildingwerecompletedornearingcompletioninfiscalyear2018therefore,

reducedspendingonthesefacilitiesoccurredduringfiscalyear2019.Alsocontributingtothedecrease

wasa$3

millionreceiptofinsuranceproceedsforJ.H.RichmondResidenceHallreceivedinfiscalyear2018.



Thecashflowsprovidedbyinvestingactivitiesrepresentthecashactivitiesofinvestments,whichincreasedby

$2.9millionfor2019.Thisincreasewasprimarilytheresultofanincreaseininvestment

earnings,$2.9whichis

attributedtoanincreaseininterestearnedon cashaccountsheldby theTreasurerof theCommonwealthand

wasduetofavorablemarketperformance.



FortheyearendedJune30,2018:

ThenetcashusedinoperatingactivitiesreflectsthenetcashusedforgeneraloperationsoftheUniversity,which

decreasedby($10.9million)duringfiscal2018.Thisdecreaseincashusedwasprimarilyduetoincreasesincash

usedbypaymentstosuppliersandforsalaries,wagesandfringes,anddecreases

incashfromnettuitionand

fees,andsalesandotherrevenues.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



18

Thecashflowsfromnoncapitalfinancingactivitiesincreasedby$323,000duringfiscalyear2018.Thischange

was primarily due to an increase of $1.4 million for grants and

contract revenue, $227,000 for Endowment

proceedsand$209,000forgiftsotherthancapital,offsetbya($520,000)decreaseinstateappropriationsforfiscal

year2018anda($961,000)decreaseinstateappropriationreturnsofprioryeardeductions.



The net cash flows used in capital and related financing activities represent cash

used for the acquisition,

construction and renovation of capital assets, changed from ($16.2 million) used during 2017 to ($6.1million)

usedduring2018,a$10millionchange.Partofthisdecreaseisdueto$23.1millionlesscashusedinthepurchase

of capital assets, attributable to decreased spending on the

 Breathitt Veterinary Center, and Engineering and

Physicsbuildingbothofwhichwerecompletedornearingcompletionin2018.Alsocontributingtotheincrease

was a $3 million receipt of insurance proceeds for J.H. Richmond Hall. These were offset by a ($16.8 million)

decrease in state capital appropriations for the final

construction of the Breathitt Veterinary Center and the

EngineeringandPhysicsbuilding.



Thecashflowsprovidedbyinvestingactivitiesrepresentthecashactivitiesofinvestments,whichincreasedby

$1.1millionfor 2018.This increasewas primarily the result of anincreasein investmentreceipts, $900,000 of

which is attributed to

an increase in interest earned on local bank accounts as well as cash accounts held in

Frankfort.



CondensedStatementsofCashFlows

2019 2018 2017

Cash

rovided/(used)b

eratin

act ivities (50,285,029)$ (61,621,713)$ (50,689,875)$

Nonca

italfinancin

act ivities 74,117,599 69,112,066 68,789,385

it a landrelatedfinancin

act ivities (15,574,361) (6,105,745) (16,174,554)

Investin

act ivities 4,961,649 2,052,005 949,730

Netincr easeincash 13,219,858 3,436,613 2,874,686

Cashandcashequivalents,beginning

of

ear 143,192,525 139,755,912 136,881,226

Cashandcashe

uivalents,endof

ear 156,412,383$ 143,192,525$ 139,755,912$



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



19

CapitalAssetsandDebtAdministration



TheUniversityhada$15.0millionincreaseincapitalassets,beforeaccumulateddepreciation,duringthefiscal

yearendedJune30,2019.This change

isprimarilyduetoa$12.5millionincreaseinconstruction‐in‐progress

relatedtoJ.H.RichmondResidenceHall.



CapitalassetsasofJune30,2019,andchangesduringtheyearareasfollows:



Balance Balance NetChange

June30, 2019 June30,2018 2018‐19

Land 10,442,742$ 10,176,698$ 266,044$

Constructioninpr ogr ess 18,831,090 6,264,350 12,566,740

Museumandcollectibles 694,737 694,737 ‐

Buildings 372,556,320 372,149,804 406,516

Non‐buildingimpr ovements 18,507,858 17,172,063 1,335,795

Equipment 35,864,174 35,280,560 583,614

Softw ar e 1,932,019 1,932,019 —

Libra ryholdings 10,681,965 10,744,204 (62,239)

Livestock 137,749 151,749 (14,000)

Accumulateddepreciation (229,988,611) (220,918,851) (9,069,760)

Tot al 239,660,043$ 233,647,333$ 6,012,710$



DebtasofJune30,2019,andchangesduringtheyearareasfollows:



Balance Balance NetChange

June 30,2019 June30,2018 2018‐19

General receiptsb onds 64,400,000$ 68,290,000$ (3,890,000)$

Bonddiscount (46,219) (50,841) 4,622

Bondpremium 1,826,529 1,947,291 (120,762)

CityofMur ray 6,995,000 7,390,000 (395,000)

Tot al 73,175,310$ 77,576,450$ (4,401,140)$



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



20

InfrastructureAssets

InfrastructureassetsaredefinedbyGASBNo.34aslong‐livedassetsthatarenormallystationaryinnatureand

normallycanbepreservedforasignificantly

greaternumberofyearsthanmostcapitalassets.Thesetypesof

assets will typically be permanent nonbuilding additions that service the entire campus.The University has

adoptedthemodifiedapproachofaccountingforitsinfrastructureassets.Thisapproachrequiresthatanasset

managementsystembeestablishedandmaintained.Suchasystem

wouldassessanddisclosethatalleligible

infrastructureassetsarebeingpreservedapproximatelyat(orabove)aconditionlevelestablished.Todate,the

Universityhasnotidentifiedanyassetsthatshouldbeclassifiedasinfrastructure.



AdditionalinformationforCapitalAssetsandDebtcanbefoundinNotes7and11,

respectively,tothefinancial

statements.



EconomicFactorsAffectingFuturePeriods



 Infiscalyear2019,Kentucky’sGeneralFundreceiptsrosefortheninthconsecutiveyear.Final2019General

Fundrevenueswere$11,392.7million,or5.1%,morethan2018collections.FinalGeneralFundrevenues

were$194.5millionor1.7%more

thantheofficialrevenueestimatewhichhadprojected3.3%growth.



 Thenationaloutlookoverthenextthreefiscalquarterscallsforareturntothelong‐termGrossDomestic

Product(GDP)growthtrendandamaterialslowinginemploymentgains.RealGDPgrowthisexpected

to be 2% over the

next three quarters.Additionally, interest rates are expected to remain low and the

Federal Reserve has signaled a “dovish” policy for the near term.Recent gains in wealth, wages, and

employment have been coupled with increased consumer confidence, supporting continued growth in

consumerexpenditures.



Theabovewasreportedinthe

2019annualeditionofCommonwealthofKentuckyQuarterlyEconomic&

RevenueReport.



 TheUniversityissuedgeneralreceiptsbondsinJuly2019totaling$4.3millionfortherefundingofSeries

2009Ageneralreceiptsbondsoriginallyobtainedforthecomp letionofJ.H.RichmondResidenceHalland

variousotherprojectsunder

$600,000.



 TheUniversitycontinuestomanageongoingassetpreservationissues.Thesearebeingaddressedthrough

a combination of an annual budget allocation of university funds designated to deferred maintenance

projects,one‐timefundingandtheuseofreservesasappropriate.Withagingbuildingsandinfrastructure,

assetpreservationwillcontinue

tobeafundingpriorityfortheUniversity.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



21

The University will be requesting bond financing authorization for up to $11 million from the General

Assemblyintheir2020sessionaspartofthe2020‐22Budget

oftheCommonwealth.Inaddition,arequest

forupto $22millioninmatching fundswill berequested.This$33millionwillbe designatedfor asset

preservation.



The2020‐22bienniumcapitalbudgetrequestwillalsoinclude$16millionbondfinancingauthorizationfor

aconstruction/renovationofResidencehallsandupto

$66millionofthirdfinancingauthorizationforthe

construction/renovationofresidencehalls.



The University is currently developing an updated campus master plan, including residence halls and

athleticfacilities.Theseplansareexpectedtobecompletedinthewinter2020.



 The University continues to provide health insurance to employees through

a self‐funded program. As

reflectedinnationaltrends,thecostsofhealthclaimscontinuetobeamajorexpensefortheUniversity.

DetailsoffundingamountsfortheplancanbefoundinNote9.TheUniversityimplementedastronger

utilization management package, with additionalcontrols onspecialtydrugs to

 help manage pharmacy

costs.TheSegalCompany(SibsonConsulting)providesguidanceforallhealthandwellnessprograms.



 The Board of Regents authorized the exploration of outsourcing options and the issuance of necessary

requestforproposals(RFP)thatmaybeinthebestinterestoftheUniversityinJune2019.

AnRFPwas

releasedinSeptember2019relatedtotheoutsourcingoffacilitiesmanagementcustodial,groundsand/or

maintenancefunctions.TheRFPwillbefollowedbyareviewofvendorresponsesandcampusvisitsand

presentations,resultinginanevaluationofthefacilitiesmanagementoutsourcingoptions.



 Earlyheadcountenrollmentsfor

Fall2019arepromising,with first‐time freshmenenrollmentsup7.6%,

first‐timetransferenrollmentsup11.6%,andfirst‐timegraduateenrollmentup12.5%.Totalenrollmentis

projected to be up 1.1%, with freshmen to sophomore retention rate for baccalaureate‐degree seeking

studentsof79%.



 TheUniversityisworking

todevelopastrongeronlineacademicprogrampresenceandplanstobegina

pilot project with the assistanceof a third‐party to assist with the marketing and management of select

graduateprograms.TheUniversity’sfacultywillcontinuetoteachtheseprogramsandwillmaintainall

responsibilitiesandoversight of

coursecontent.Enrollmentsareexpected togrow abovecurrentlevels

andnetrevenueswillassistwithacademicprogramenhancementandotherinstitutionalpriorities



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



Management’sDiscussionandAnalysis,continued



June30,2019



22

 Duringthe2019KentuckySpecialLegislationSession,HouseBill1(HB1)wasapprovedbythelegislatureand

approvedbytheGovernor,tobeeffectiveforfiscalyear

2020.HB1providedanemployercontributionrate

freezeof49.47%endingonJune30,2020.Thisratewasplannedtobe83.43%onJuly1,2019.Inaddition,the

legislation provides options for “quasi” agencies, which includes five comprehensive universities and the

communitycollegesystemwithinthestateofKentucky.These

optionsprovideforalumpsumora30‐year

financingoptionforeachagencytopaytheirportion,asdefinedbytheKentuckyRetirementSystem,ofthe

KERSunfundedpensionandOPEBliabilities.ThelegislationalsoallowstheseagenciestoremainintheKERS

andacceptincreasingemployeecontribution

ratesthatcurrentlyhavenodefinedmaximum.MurrayState

Universityisinthe processofanalyzingwhichoptionismostsustainableforthelong‐rangeoperationsofthe

University.



 TheUniversitiesstateperformancefundingmodelcapsthemaximumexposureoflossat1%ofappropriations

for fiscal year 2019.

This cap isa maximum of 2% for fiscalyear 2020 and current legislation requires the

elimination of a cap for fiscal years 2021 and after.The University is actively working with legislative

representativestoreinstatethelegislatively2%mandatedcapforfiscalyears2021andafter.Thiswillprovide

morestableallocationfromtheperformancefundingpoolandallowalluniversitiestheabilitytodevelop

long‐rangefinancialplans.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



StatementsofNetPosition



June30,2019and2018

Seeaccompanyingnotes.

23



2019 2018

Assets

CurrentAssets

Cashandcashequiv alents 93,721,297$ 92,230,046$

Accountsreceivable,net  9,775,707 18,727,240

Interestreceivable — 197,854

Inventor ies 2,742,521 3,141,909

Loanstostudent s,net 490,043 582,137

Prepa idexpenses 2,203,268 1,678,185

To ta lCurrentAssets

108,932,836 116,557,371

NoncurrentAsset s

Res tr ict edcashandcash equiv alents 62,691,086 50,962,479

Res tr ict edinv estments 26,723,042 26,555,267

Loanstostudent s,net 2,244,812 2,652,082

Capitalassets 469,648,654 454,566,184

Accumulateddepr eciat ion (229,988,611) (220,918,851)

To ta lNoncurrentAssets

331,318,983 313,817,161

To ta lAssets

440,251,819 430,374,532

DeferredOutflows ofRe sources

Bondrefundingloss 2,256,251 2,491,793

Defer r edoutflowsrelatedtopension/OPEBcont ributions 40,145,777 51,347,574

To ta lDeferredOutflowsofRe sources

42,402,028 53,839,367

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



StatementsofNetPosition



June30,2019and2018

Seeaccompanyingnotes.

24



2019 2018

Liabilities

CurrentLiabilities

Accountspayab le 11,431,746$ 6,646,037$

Accruedpay r oll 6,277,097 6,775,768

Self‐insuredhealt hliabilit y 716,162 624,291

Interestpayab le 777,860 814,646

Unearnedr evenue 2,920,163 2,850,441

Deposit s‐currentpor tion 302,787 275,595

Long‐termdebt‐cur rentpor t ion 4,661,140 4,461,140

To talCurrentLiabilities

27,086,955 22,447,918

NoncurrentLiabilities

Deposits 329,700 330,000

Long‐termdeb t 68,514,170 73,115,310

Netpension/OPEBliability,stat epen sionplans 217,674,295 268,918,925

To tal

NoncurrentLiabilities

286,518,165 342,364,235

To talLiabilities

313,605,120 364,812,153

DeferredInflowsofResource s

Defer r edinflows relatedtodiningcontr act 4,377,049 —

Defer r edinflows relatedtonetpension/OPEBliab ility 100,395,615 73,205,305

To ta lDeferredInflowsofResources

104,772,664 73,205,305

NetPosition

Netinvest mentincapitalassets 170,681,775 159,215,284

Res t rictedfor:

Nonexpendable:

Endow ment 22,517,317 22,285,087

Expen da b le:

Scholar ships,resear ch,instr uct ionandother 7,183,574 6,979,462

Loans 3,646,465 3,469,792

Capitalpr oj ects 14,567,160 17,812,615

Deb t service 365,424 287,315

Unr estr icted (154,685,652) (163,853,114)

To talNe tPosition

64,276,063$ 46,196,441$



MURRAYSTATEUNIVERSITYFOUNDATION,INC.



StatementsofFinancialPosition



June30,2019and2018

Seeaccompanyingnotes.

25



2019 2018

Cashandcas h equiv alents 3,091,087$ 1,503,097$

Account s r eceivable 176,764 2,765,584

Invest ment s 124,657,562 118,849,706

Realestateheldforinv estment 2,552,957 2,552,957

Prep aidandotherasset s 59,350 67,464

Contributionsreceivable,net 1,075,782 740,133

Proper tyandequipment,net 6,440,741 6,563,619

To ta lAssets 138,054,243$ 133,042,560$

Asse ts



2019 2018

Liabilities

Account s payable 128,367$ 114,648$

DuetoMurrayStateUniversity(MSU) 319,944 249,045

Accruedexpenses 59,122 57,729

Deferredrevenue 57,438 60,610

Assetsheldforother s 27,628,298 27,501,731

Capitalleaseobligation 74 ,28 3 130,284

Annuitiesandtrustspay able 5,208,773 5,378,187

Otherliabilit ies 328 ,20 3 338,459

To ta lLiabilities 33,804,428 33,830,693

Ne tAssets

Withoutdonorrest rictions 21,400,371 20,638,045

Withdonorrestr ictions 82,849,444 78,573,822

To ta lNetAssets

104,249,815 99,211,867

To ta lLiabilitiesandNetAssets 138,054,243$ 133,042,560$

LiabilitiesAndNe tAssets



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



StatementsofRevenues,Expenses,andChangesinNetPosition



YearsendedJune30,2019and2018

26



2019 2018

OperatingRevenues

Tuitionandfees 101,710,114$ 111,009,473$

Less:Dis count s andallowances (41,254,069) (42,834,365)

Nettuitionandfees 60,456,045 68,175,108

Federalgrantsandcontr acts 5,857,082 5,358,956

St ategrantsandcontr acts 640,649 924,241

Priva tegrantsandcontr acts 388,850 367,419

Totalgrantsandcont racts 6,886,581 6,650,616

Salesandser vicesofeducationalactivities 6,793,655 5,548,567

Otheroperatingrevenues 9,221,365 6,905,159

Totalsales,ser vices,

andotherrevenues 16,015,020 12,453,726

Auxilia ry enterpr ises 27,384,197 32,268,637

Less:Dis count s andallowan ces (4 5 5 ,94 4 ) (489,286)

Netauxiliary rev enue 26,928,253 31,779,351

To ta lOperatingRevenues 110,285,899 119,058,801

OperatingExpenses

Instr uction 61,064,980 62,572,485

Resear ch 2,258,101 2,472,027

Pub licser vice 5,977,242 6,731,676

Libr ar ies 3,391,475 3,527,421

Academicsuppor t 6,699,859 6,399,346

Studentser vices 15,537,491 16,467,202

In stit utionalsuppor t 18,292,223 18,453,802

Operationandmaintenanceofplant 19,956,224 23,777,931

Studentfinancialaid 12,649,543 12,735,820

Depreciation 9,154,634 9,330,382

St atepensionexpenseGASB68 (8,595,091) (3,008,564)

St atepensionexpense‐OPEBGASB75 1,268,266 1,787,941

Auxilia ry enterpr ises 18,599,020 22,608,719

Auxilia ry depreciation 2,693,821 2,757,883

To talOperatingExpens es 168,947,788 186,614,071

OperatingLoss (58,661,889) (67,555,270)



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



StatementsofRevenues,Expenses,andChangesinNetPosition,continued



YearsendedJune30,2019and2018

Seeaccompanyingnotes.

27



EndedJune30,

2019 2018

NonoperatingRe venues (Expense s)

Sta teappropr iations 45,572,300$ 45,344,100$

Res t rictedstudentfees(revenuesarepledgedas

security fortheCityofMurraydebtagr eement ) 595,887 620,681

Federalgrantsandcontr acts 13,719,413 12,878,368

Sta tegrantsandcontr acts 8,958,465 8,663,326

Localandpriv a tegrantsandcontr acts 634,072 602,347

Gift s 1,382,794 1,369,510

Investmentincome 5,363,133 3,191,632

Interestoncapital asset

‐relateddeb t (2,540,805) (1,630,671)

Lossondeletionanddisposalof capita lassets (507,629) (79,417)

Bondamor tization (119,401) (119,401)

NonoperatingRevenues(Expenses),Ne t 73,058,229 70,840,475

IncomeBeforeOtherRevenues,Expe ns es

Ga insandLo sse s 14,396,340 3,285,205

StateCapitalAppropriatio ns 131,988 4,378,656

GainontheInsuranceProc eedsfromtheImpairment

ofJ.H.Ri chmondResidenc eHall 3,057,744 2,845,855

Othe r

InsurancePro ceeds 359,653 1,194,604

CapitalGifts 127,916 403,899

AdditionstoPermanentEndowments 5,981 8,553

ChangeinNe tPosition 18,079,622 12,116,772

Net Position - Beginning of Year

46,196,441 66,220,772

Restatement of beginning net position for OPEB liability

— (32,141,103)

NetPosition‐BeginningofYear(adjusted) 46,196,441 34,079,669

NetPosition‐EndofYear 64,276,063$ 46,196,441$

MURRAYSTATEUNIVERSITYFOUNDATION,INC.



StatementsofActivities



YearendedJune30,2019

Seeaccompanyingnotes.

28



WithoutDo no

WithDonor

Restrictions Restrictions Totals

Revenues,Gains/(Lo sses)AndOtherSupport

Contributions 3,500$ 3,722,551$ 3,726,051$ 

Revenues fromoperationsofthe

FrancesE.MillerMemorialGolfCourse 414,298 — 414,298

Feesandrentalincome 45,605 37,920 83,525

Investmentreturn,net 1,588,327 3,502,129 5,090,456

Other (31,692) 22,9 87 (8,705)

Changeinvalueofan n uitiespayable — 31,829 31,829

Netasset sreleasedfromrestr ictions 3,174,935

(3,174,935) —

To talRevenues,Gains/(Losse s)AndOthe rSupport 5,194,973 4,142,481 9,337,454

Expens es:

Progr amser vicesexpenses:

Supportpr ovidedtoMSU,includingscholar ships 3,191,890 — 3,191,890

FrancesE.Miller MemorialGolfCourse 605,142 — 605,142

TotalProgramServ icesExpenese 3,797,032 — 3,797,032

Suppor tingser vicesexpenses:

Mana gem ent andgener al 466,387 — 466,387

Fundr aising 36,08 7 — 36,0 87

TotalSupporting

Servi cesExpenese 502,47 4 — 502,474

To talExpe nses 4,299,506 — 4,299,506

TransfersbetweenFoundationfundgroups (133,141) 133,141 —

ChangeinNetAssets 762,32 6 4,275,622 5,037,948

NetAssets‐ BeginningofYear 20,638,045 78,573,8 22 99,211,867

Ne tAssets‐EndofYea r 21,400,371$ 82,849 ,444$ 104,249,815$



MURRAYSTATEUNIVERSITYFOUNDATION,INC.



StatementsofActivities



YearendedJune30,2018

Seeaccompanyingnotes.

29



WithoutDonor WithDono

Restrictions Restrictions Totals

Revenues,Gains/(Losse s)AndOtherSupport

Contributions —$ 5,419,900$ 5,41 9,900$

Revenues fromoperationsofthe

FrancesE.Miller MemorialGolfCourse 420,310 — 420,31 0

Feesandrentalincome 518,666 41,258 559,924

Investmentreturn,net 2,520,794 4,715,573 7,236,367

Other 9,082 42,536 51,618

Changeinvalueofan n uities pa yable — (164,342) (164,342)

Netasset sreleasedfromrest r ictions 2,879,078 (2,879,078) —



To talRevenues,Gains/(Lo sse s)AndOtherSupport 6,347,930 7,175,847 13,523,777

Expens es :

Programser vicesexpenses:

Supportprov idedtoMSU,includingscholarships 3,506,665 — 3,506,665

FrancesE.MillerMemorialGolfCourse 598,570 — 598,570

TotalPr ogramServicesExpenese 4,105,235 — 4,105,235

Suppor tingser vicesexpenses:

Management andgener al 391,682 — 391,68 2

Fundrais in g 22,542 — 22,542

TotalSupportin gServ ic es

Expenese 414,224 — 414,224

To talExpe nses 4,519,459 — 4,51 9,459

Transfe rsbetweenFoundationfundgroups 2,168,056 (2,168,056) —

ChangeinNetAssets 3,996,527 5,007,791 9,00 4,318

NetAssets‐BeginningofYear 16,641 ,518 73,566,031 90,207,549

NetAssets‐EndofYe ar 20,638 ,045$ 78,573,822$ 99,211,867$



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky

StatementsofCashFlows



YearsendedJune30,2019and2018

Seeaccompanyingnotes.

30



2019 2018

CashFlowsFromOperatingActivities

Tuit ionandfees 59,213,135$ 66,266,582$

Gr ant sandcont r acts 6 ,400,296 6,549,597

Pa ymentsforsalar ies,wagesandfringes (102,330,390) (104,057,020)

Pa ymentstosupplier s (32,048,633) (35,143,546)

Pa ymentsforstudentfinancia laid (12,649,543) (12,735,820)

Loansissuedtoemployees (10,600) (26,546)

Collectionsof loan stoemployees 23,205 11,437

Loansissuedtostudents (63,378) (373,440)

Collectionsof loan sto

students 562,742 593,965

Salesandser vicesof educat ionalact ivities 18,288,760 7,880,793

Otheroperatingrevenues 3,694,436 639,481

Auxiliaryrevenues:

Diningservices 5,881,056 11,677,672

Housin

14,493,491 14,428,979

Bookstore 4,775,953 5,097,721

Contracteddiningservcies 761,618 —

Other 185,699 175,357

Auxiliarypaym ents:

Pa ymentsforsalar ies,wagesandfr inges (4,132,449) (7,661,947)

Pa ymentstosuppliers (13,330,427) (14,944,978)

NetCashUsedinOpera tingActi vi ties (50,285,029) (61,621,713)

CashFlowsFromNoncapita lFinancingActivities

St ateappr opriations 45,572,300 45,344,100

Endow ment proceedsforw ardedto

MSUFoundationforinvest ment (9,137) 390,535

Gr ant sandcontr acts 23,311,950

 22,144,041

Endow ment income 446,681 241,888

Gift sforotherthancapitalpurposes 889,356 992,437

Agencyt ransactions 13,400 (935)

Defer r edinflowscontrac teddiningserv ices 3,893,049 —

NetCashProvidedbyNonca pitalFinancing Activities 74,117,599 69,112,066

CashFlowsFromCapitalandRelatedFinancingActivities

Rest rictedstudentfeespledgedfordebtserv ice 595,887 620,681

Insuranceproceeds‐J.H.Richm ondResidenceHall 3,057,744

2,999,000

Insuranceproceeds‐other 3 59,653 91,496

St atecapitalappr opriations 132,852 4,376,453

Purchasesof ca pita lasset s (13,014,563) (7,240,859)

Capitalgifts 109,090 341,491

Pri n ci pa lpaidoncapita ldebtandleases (4,285,000) (4,581,619)

Interestpa i doncapita ldebtandleases (2,530,024) (2,712,388)

NetCashUsedinCapitalandRelatedFinancingActi v ites (15,574,361) (6,105,745)



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky

StatementsofCashFlows



YearsendedJune30,2019and2018

31

2019 2018

CashFlowsFromInvestingActivities

Proceeds fromsalesandmaturitiesofinvestments (4,850)$ 8,512$

Purc h asesofinvestments (9,395) (3,156)

Investmentreceipts 4,975,894 2,046,649

NetCashPro videdbyInvestingActivities

4,961,649 2,052,005

NetIncreaseinCashandCashEquivale nts

13,219,858 3,436,613

CashandCashEquivale nts‐BeginningofYea r

143,192,525 139,755,912

CashandCashEquivale nts‐End

ofYear

156,412,383$ 143,192,525$

ReconciliationofCashandCashEquivalents

totheStatementofNetPosition

Cashandcas h equivalents 93,721,297$ 92,230,046$

Rest rict edcash andcas h equivalents 62,691,086 50,962,479

To ta lCashandCashEquivalents

156,412,383$ 143,192,525$

ReconciliationofOpe ra tingLossto

Ne tCashUsedinOperatingActi vities

Operatingloss (58,661,889)$ (67,555,270)$

Adjustments

toreconcileoperatingloss to

net cash usedin operatingactivities:

Depr ecia t ionexpense 11,848,455 12,088,265

Baddebtexpense 377,840 319,939

Netpens i on(gain)/expense,proportionateshare (12,852,524) (7,395,683)

Netin‐kindexpenses 217,628 244,938

Changesinassetsandlia bilities:

Accountsandloan s receivable,net 9,450,897 625,439

Invent or ies 399,388 230,599

Prep aidexpenses (525,083) 192,013

Accountspayable (215,291) (87,969)

Self‐in suredhealt hliabilit y 91,871

 49,338

Accruedpay roll (498,671) 53,947

Deposits 13,492 (74,319)

Unearnedr evenue 68,858 (312,950)

NetCashUsedinOperatingActivities

(50,285,029)$ (61,621,713)$

SupplementalDisclosureofCashFlowInformation

Gift sof ca pitalassets 18,826$ 62,408$

Accountspayableincurr edforcapitalassetpur chases 5,966,334 819,003

Changesinfairvalueofinvest ment s 138,412 705,241





MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



32



1. SummaryofSignificantAccountingPolicies



ChangeinAccountingPrinciple

Effective July 1, 2017, Murray State University (University) was required to adopt Governmental

Accounting Standards Board (GASB) Statement No. 75,ʺAccounting and Financial Reporting for

PostemploymentBenefitsOtherThanPensions(OPEB)ʺ(Statement75).Statement75replacestherequirements

ofStatementsNo.45,“AccountingandFinancialReportingbyEmployersforPostemployment

BenefitsOtherThan

Pensions, as amended, and No.57, “OPEB Measurements by Agent Employers and Agent Multiple‐Employer

Plans”, for OPEB. GASB 75 isapplicable for government agenciesthat provide definedbenefit OPEB to

recognize their long‐term obligation for OPEB as a liability to more comprehensively and comparably

measure

the annual cost. The University participates in the Kentucky Employees Retirement System

(KERS)OPEBplanadministeredbytheBoardofTrusteesoftheKentuckyRetirementSystemsaswellas

theTeachers’ Retirement System(TRS)ofKentucky.These arecostsharing,multipleemployerdefined

benefitOPEBplans,whichcoveralleligiblefull

‐timeemployeesandprovideshealthinsurancebenefits.

Cost‐sharinggovernmentalemployers,suchastheUniversity,arerequiredtoreportanetOPEBliability,

OPEBexpenseandOPEB‐relatedassetsandliabilitiesbasedontheirproportionateshareofthecollective

amountsforallgovernmentagenciesintheplan.Forthesepurposes’

amountshavebeendeterminedon

thesamebasisastheyarereportedbyKERSandTRS.TheKERSandTRSfinancialstatementsareprepared

usingtheaccrualbasisofaccountingwithbenefitsbeingrecognizedwhendueandpayableinaccordance

withtermsoftheplan.Investmentsarereportedatfairvalue.

Allgovernmentsparticipatinginthedefined

benefit OPEB plan also are required to disclose various information in the footnotes to the financial

statements–seeNote14.



StatementNo.75requiredretrospectiveapplication.ThebeginningnetpositionfortheyearendedJune

30, 2018 was adjusted to reflect the retrospective

 application. The adjustment resulted in a $32,141,103

reductioninbeginningnetpositionforfiscalyear2018.



NatureofOperations

The University is a state‐supported institution of higher education located in Murray, Kentucky, and is

accredited by the Southern Association of Colleges and Schools.The University awards graduate and

undergraduate degrees from five colleges and two schools and serves a student population of

approximately 9,500.The University is a component

 unit of the Commonwealth of Kentucky and is

includedinthegeneral‐purposefinancialstatementsoftheCommonwealth.



ReportingEntity

InaccordancewiththeprovisionsofGASB,certainorganizationsaretobereportedascomponentunitsof

a primary government based on the nature and significance of that organization’s relationship to the

primary government.Application of this statement results in including Murray State University

Foundation, Inc. (the Foundation) as a discretely

 presented component unit of the University.The

Foundationisaprivatenonprofitorganizationthatreportsundergenerallyacceptedaccountingprinciples

setforthbyFinancialAccountingStandardsBoard(FASB)standards.Assuch,certainrevenuerecognition

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



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

33

criteriaandpresentationfeatures aredifferentfromGASBrevenue recognitioncriteriaandpresentation

features.NomodificationshavebeenmadetotheFoundation’sfinancialinformationintheUniversity’s

financialreportforthesedifferences.



BasisofAccountingandFinancialStatementPresentation

TheUniversitypreparesitsfinancialstatementsasabusinesstypeactivityinconformitywithapplicable

pronouncementsoftheGASB.



Forfinancialreportingpurposes,theUniversityisconsideredaspecialpurposegovernmentengagedonly 

inbusinesstypeactivities.Accordingly,theUniversity’sfinancialstatementshavebeenpresentedusing

theeconomicresourcesmeasurementfocus

andtheaccrualbasisofaccounting.Undertheaccrualbasis,

revenuesarerecognizedwhenearned,andexpensesarerecordedwhenanobligationhasbeenincurred.

Allsignificantintra‐agencytransactionshavebeeneliminated.



CashandCashEquivalents

TheUniversityconsidersallhighlyliquidinvestmentsthatareimmediatelyavailabletotheUniversityto

becashequivalents.FundsheldbytheCommonwealthofKentuckyareconsideredcashequivalents.



RestrictedCash,CashEquivalentsandInvestments

Cash, cash equivalents and investments that are externally restricted are classified as restricted assets.

These assets are used to make debt service payments, maintain sinking or reserve funds, purchase or

constructcapitalorothernoncurrentassetsorforotherrestrictedpurposes.



Investments

TheUniversityaccountsforitsinvestments atfairvalue.Fair valueisdeterminedusingquotedmarket

prices.Changesinunrealizedgain(loss)onthecarryingvalueofinvestmentsarereportedasacomponent

ofinvestmentincomeinthestatementsofrevenues,expenses,andchangesinnetposition.



Assetsheldbythe

FoundationrepresentthosegiftsanddonationsmadedirectlytotheUniversity,which

areheldbytheFoundationforinvestmentpurposes.Thenetappreciationandincomeofdonorrestricted

endowmentsareavailabletotheUniversityforexpendituretotheextentpermittedbyKentuckylawand

thespendingpolicy oftheFoundation.

Therecognitionofgifts, donations and endowmentpledgesare

accounted for by the University in accordance with GASB Statement No. 33, Accounting and Financial

Reporting forNon‐exchange Transactions(GASB No.33) andare recognizedwhen allapplicableeligibility

requirementsaremet.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



34

AccountsReceivable

Accountsreceivableconsistsoftuitionandfeecharges,otheroperationalactivitiesandauxiliaryenterprise

servicesandamountsduefromcomponentunits.Accountsreceivablealsoincludeamountsduefromthe

federal government, state and local governments or private sources, for nonexchange type agreements

definedinaccordancewithGASBNo.33orin

connectionwithreimbursementofallowableexpenditures

madepursuanttotheUniversity’sgrantsandcontracts.Accountsreceivablearerecordednetofestimated

uncollectibleamounts.



Inventories

Inventoriesarestatedatthelowerofcost(first‐in,first‐outmethod)ormarketexceptinthecaseofFacilities

Managementinventorieswhichuseanaveragecostmethodtodeterminevalue.



CapitalAssets

All capital assets, as defined by University policy, are recorded at cost at the date of acquisition or, if

donated,atfair value atthedateof donation.Depreciationis computedusing the straight‐line method

overtheestimatedusefullifeoftheassetandisnotallocatedtofunctionalexpense

categories.Assetsunder

capitalleasesareamortizedovertheestimatedusefullifeoftheassetortheleaseterm,whicheverisshorter.

Routinerepairsandmaintenancearechargedtooperatingexpenseintheyearinwhichtheexpensewas

incurred.



Thefollowingestimatedusefullivesarebeingusedbythe

University:



 Estimated

Asset Life

Buildin

s 40

ears

Nonbuildingimprovements 8‐20years

Equipment 5‐15years

Libraryholdings 10years

Livestock 12years

Software 8years



TheUniversitycapitalizesinterestcostsasacomponentofconstructioninprogress,basedoninterestcosts

ofborrowingspecificallyfortheproject,netofinterestearnedoninvestmentsacquiredwiththeproceeds

ofborrowing.Totalinterestcapitalizedwas$243and$1,037,348fortheyearsendedJune30,2019and2018,

respectively.



The University owns historical collections housed throughout the campus that it does not capitalize,

includingartifactsinWratherMuseum.ThesecollectionsadheretotheUniversity’spolicyto(a)maintain

themforpublicexhibition,educationorresearch;(b)protect,keepunencumbered,careforandpreserve

them and (c) require proceeds from

 their sale to be used to acquire other collection items.Generally

acceptedaccountingprinciplespermitcollectionsmaintainedinthismannertobechargedtooperationsat

timeofacquisitionratherthancapitalized.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



35

CompensatedAbsences

ForemployeesparticipatingintheTeachers’RetirementSystem(TRS),vacationpayisaccruedatyearend

forfinancialstatementpurposes.Theliabilityandexpenseincurredareincludedatyearendwithaccrued

payroll,andasacomponentofcompensationandbenefitexpense.Sickleavebenefitsareexpectedtobe

realized as

 paid time off or used to purchase service credits upon retirement.These are recognized as

expensewhenthetimeoffoccursorwhenservicecreditpaymentsareincurred.Noliabilityisaccruedfor

such benefits employees have earned while participating in the TRS plan, but not yet realized.For

employees

participatinginoptionalretirementplans(ORP),sicktimeisaccruedasitisearned.



UnearnedRevenue

Unearnedrevenueincludesamountsfortuitionandfees,internationalprogramfeesandcertainauxiliary

activities,includingcontracteddiningservices,receivedpriortotheendofthefiscalyearbutrelatedtothe

subsequent accounting period.Unearned revenues also include amounts received from state capital

appropriations and grant and contract sponsors for

 which eligibility requirements have not been fully

satisfiedorthathavenotyetbeenearned.Suchamountsarerecognizedintheperiodtowhichtheservice

relatesorthegrant/contractrequirementshavebeenmet.



DeferredOutflowofResourcesandDeferredInflowofResources

Inadditionto assets,financialstatementsmayreportaseparatesectionfordeferredoutflowsofresources.

Deferred outflows of resources consist of the consumption of net position that is applicable to a future

reportingperiodandsowillnotberecognizedasanoutflowofresourcesuntilthen.Deferredoutflowsof



resourcesrelatedtorefundinglong‐termdebtandcertainpension/OPEBcontributionsarereportedinthe

statementofnetposition.Thedeferredbondrefundingamountresultsfromthedifferenceinthecarrying

value of refunded debt and its reacquisition price, and is amortized over the shorter of the life of the

refundedorrefundingdebt.Thedeferredoutflowforpension/OPEBcontributionsrepresentcontributions

made to the plan between the measurement date, which was the end of fiscal year 2018, of the

pension/OPEBobligationsandtheendoffiscalyear2019.



In addition to liabilities, financial statements may report a separate section for

 deferred inflows of

resources.Deferredinflowsof resourcesconsist of the acquisitionofnet positionthat is applicableto a

futurereportingperiodandsowillnotberecognizedasinflowofresourcesuntilthen.Deferredinflowsof

resourcesinclude statereimbursements as well as certain changes inpension/OPEB obligations

that are

amortizedoverfutureperiodsaswellasamountsrelatedtooutsourcingcampusdiningoperations.



NetPosition

TheUniversity’snetpositionisclassifiedasfollows:



Net investment in capital assets:This represents the University’s total investment in capital assets, net of

outstandingdebtobligationsandaccumulateddepreciationrelatedtothosecapitalassets.Totheextent

debt has been incurred but not yet expended for capital assets, such amounts

 are not included as a

componentofnetinvestmentincapitalassets.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



36

Restrictednetposition‐nonexpendable:Nonexpendablerestrictednetpositionconsistsofendowmentand

similar type funds in which donors or other outside sources have stipulated, as a condition of the gift

instrument,that

theprincipalistobemaintainedinviolateandinperpetuityandinvestedforthepurpose

ofproducingpresentandfutureincome,whichmayeitherbeexpendedoraddedtoprincipal.



Restricted net position‐expendable:Restricted expendable net position includes resources in which the

Universityis legallyorcontractuallyobligated to

spendin accordancewithtime orpurpose restrictions

imposedbyexternalthirdparties.



Unrestrictednetposition:Unrestrictednetpositionrepresentsresourcesderivedfromstudenttuitionand

fees,stateappropriations,salesandservicesofeducationaldepartments, auxiliaryenterprisesandother

sources.Theseresourcesareusedfortransactionsrelatingtotheeducational

andgeneraloperationsofthe

University,andmaybeusedatthediscretionoftheBoardofRegentstomeetcurrentexpensesorforany

purpose.These resources also include auxiliary enterprises, which are substantially self‐supporting

activitiesthatprovideservicesforstudents,facultyandstaff.



ReleaseofRestrictedNetPosition



When an expense is incurred for which both restricted and unrestricted net position are available, the

University’spolicy isto allow each departmentalunitthe flexibilityto determine whether tofirst apply

restricted or unrestricted resources based on the most advantageous application of resources in the

particularcircumstances.



Classificationof

Revenues

TheUniversityhas classifieditsrevenuesaseitheroperatingornonoperatingrevenues accordingtothe

followingcriteria:



Operating revenues: Operating revenues include activities that have the characteristics of exchange

transactions, such as (1) student tuition andfees, net of discounts and allowances,(2) federal, state and

localgrantsandcontracts

(excludingPellandsimilarlyfundedfederalandstategrantsforstudentfinancial

aid)and(3)salesandservicesofauxiliaryenterprises,netofdiscountsandallowances.



Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of

nonexchangetransactions.In anonexchange transaction, theUniversity receivesvaluewithoutdirectly

givingequal

value back, suchasa giftor grantforwhich thereis noreturnrequirement.Additionally,

certain significant revenues relied upon for operations, such as state appropriations, Pell and similarly

fundingfederalandstategrantsforstudentfinancialaid,investmentincomeandendowmentincome,are

recorded as nonoperating revenues, in

accordance with GASB No. 35, Basic Financial Statements and

Management’sDiscussionandAnalysisforPublicCollegesandUniversities–anAmendmentofGASBStatement

34.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



37

TuitionDiscountsandAllowances

Studenttuitionandfeerevenues,andcertainotherrevenuesfromstudents,arereportednetofdiscounts

and allowances.Discounts and allowances are the difference between the stated charge for goods and

servicesprovidedbytheUniversityandtheamountthatispayablebystudents.Certaingrants,including

federal,stateornongovernmental

programs,arerecordedaseitheroperatingornonoperatingrevenues,

whilePellgrantsarerecordedasnonoperatingrevenuesintheUniversity’sfinancialstatements.Tothe

extentthatrevenuesfromsuchprogramsareusedtosatisfytuitionandfeesandotherstudentcharges,the

Universityhas recordedadiscountand allowance.Financial

aidexpenserepresents payments madeto

students.



IncomeTaxes

TheUniversityisacomponentoftheCommonwealthofKentuckyandisnotsubjecttofederalincometax

asdescribed in section115 ofthe InternalRevenue Code.However,the University issubject tofederal

incometaxonanyunrelatedbusinesstaxableincome.



PensionsandOtherPostemploymentBenefits(OPEB)

Forpurposesofmeasuringthenetpension/OPEBliabilities,deferredoutflowsofresourcesanddeferred

inflowsofresourcesrelatedtopension/OPEB,andpension/OPEBexpense,informationaboutthefiduciary

net position of the Kentucky Employees’ Retirement System (KERS) and Teachers’ Retirement System

(TRS)plansandadditionsto/deductionsfromtheplans’fiduciarynetposition

havebeendeterminedon

the same basis as they are reported by KERS and TRS. For this purpose, benefit payments (including

refundsofemployeecontributions)arerecognizedwhendueandpayableinaccordancewiththebenefit

terms.Investmentsarereportedatfairvalue.



UseofEstimates

Thepreparationoffinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedinthe

United States of America requires management to use estimates and assumptions.The accompanying

financial statements include estimates for items such as allowances for doubtful accounts and loans

receivable, self‐insurance liabilities and other accrued liabilities.Actual results

 could differ from those

estimates.



SubsequentEvents



Subsequentevents have beenevaluatedthrough October 2,2019, the datethe financialstatementswere

availabletobeissued.



Reclassifications



Certainamountsinthe2018financialstatementshavebeenreclassifiedtoconformtothe2019presentation

withnoimpactontotalassets,liabilities,netpositionornetincome.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



38

2. AccountsReceivable



AccountsreceivableasofJune30consistedof:



2019 2018

Currentaccountsrec eiva ble:

Stude nttuitionandfees 8,026,149$ 7,946,542$

Grantsandcontracts 2,123,574 1,735,708

Auxiliaryfees 2,921,353 2,599,254

Auxiliary‐contracte ddiningservices 484,000 —

MSUFounda tion 319,944 249,045

Employe ecompute rloa ns 977 13,030

Outs ide sales 702,954 484,405

Ca pita lcons tructionre ce ivable –Richmondincide nt* — 10,465,183

Allow ance fordoubtfulaccounts (4,803,244) (4,765,927)

Tota

c urrentaccountsrec eiva

e 9,775,707

 18,727,240



*TheUniversityisrequiredtorecognizerevenuesforanyknownrecoveriestoimpairedassetsevenifthose

recoverieshavenotyettakenplace.ThisreceivablerepresentstheinsurancerecoveryfortheJ.H.Richmond

incidentwhichwillreimburseforexpensesmadetobringJ.H.RichmondResidenceHallbacktoitsoriginal

condition

priortotheincident.



3. Inventories



InventoriesasofJune30consistedof:



2019 2018

Unive rsitybooks tore ‐resale 1,306,380$ 1,411,102$

Physical pl ant‐supplies 1,387,211 1,502,698

Foodservices‐resaleandsuppli es ‐ 156,572

Artsupplies 48,930 55,269

CFSBconce s sions ‐ 16,268

Tota linve ntorie s

2,742,521$ 3,141,909$



4. LoansReceivable



StudentloansmadethroughtheFederalPerkinsLoanProgram(Program)comprisesubstantiallyallofthe

loansreceivableatJune30,2019and2018.TheProgramprovidesforservicecancellationofaloanatrates

of12.5%to30%peryearuptoamaximumof100%

iftheparticipantcomplieswithcertainprovisions.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



39



AstheUniversitydeterminesthatloansareuncollectibleandnoteligibleforreimbursementbythefederal

government,theloansarewrittenoffandassignedtotheU.S.DepartmentofEducation.The

University

hasprovidedanallowanceforuncollectibleloanswhich,inmanagement’sopinion,issufficienttoabsorb

loansthatwillultimatelybewrittenoff.TheallowanceforuncollectibleloansatJune30,2019and2018

was$263,810and$253,715,respectively.



LoansreceivableasofJune30consistedof:



2019 2018

Currentloa nsre c e iva ble :

Unive rsityloa nprograms 26,093$ 33,740$

Federalnursingprogram 87,580 88,480

FederalPerki nsprogram 376,370 459,917

Tota lcurre ntloans re ce iva ble ,net 490,043 582,137

Noncurrentloa ns rec eivable:

Unive rsityloa nprograms 10,845 14,686

Federalnursingprogram 383,042 376,745

FederalPerki nsprogram 1,850,925 2,260,651

Tota lnoncurrentloa nsrec eivable,net 2,244,812 2,652,082

Tota lloans re ce ivable ,ne t

2,734,855$ 3,234,219$



5. Deposits,InvestmentsandInvestmentIncome



Deposits

At June 30, 2019 and 2018, the carrying amounts of the University’s bank balances and deposits were

$156,412,383and$143,192,525,respectively.



CurrentlytheUniversitymaintainsitsdeposits,outsideofthoseheldbytheCommonwealthofKentucky,

in interest‐bearing accounts at FDIC‐insured institutions.All accounts are insured up to $250,000.

 The

deposits in these interest‐bearing accounts are covered by an irrevocable, unconditional, and

nontransferableletterofcreditissuedbyFederalHomeLoanBankofCincinnati.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



40

TheUniversityalsomaintainscashdepositswiththeCommonwealthofKentucky,asoverseenbytheState

Investment Commission (Commission). The Commission is charged with the oversight of the

Commonwealth’sinvestmentprogramspursuant

toKRS 42.500.The Commonwealth’sinvestmentsare

categorizedintotwodistinctclassificationsor“pools.”TheShort‐TermPoolconsistsprimarilyofGeneral

Fund cash balances.The Intermediate‐Term Pool and the Limited Term Pool represent Agency fund

investments,stateheldcomponentunitandfiduciaryfundaccountsheldforthebenefit

ofothersbythe

state.Sharesofeachpoolrepresentadivisibleinterestintheunderlyingsecuritiesandarenotfederally

insured or guaranteed by the U.S. Government, Federal Deposit Insurance Corporation or any federal

agency.ThepoolshavenotbeenapprovedbytheSecuritiesandExchangeCommission.TheUniversity’s

 within the pools may indirectly expose it to risks associated with fixed income investments;

however,specificinformationaboutanysuchtransactionsisnotavailabletotheUniversity.



Custodialcreditriskfordepositsistheriskthat,intheeventofabankfailure,theUniversity’sdeposits

maynotbereturned

totheUniversity.TheUniversitydoesnothaveaformaldepositpolicyforcustodial

creditriskotherthancompliancewiththeprovisionsofstatelaw.



Currentandnon‐currentcashandcashequivalentsasofJune30consistedof:



2019 2018

De positoryaccounts:

Localba nkdeposits,le tte rofcre dit

intheUnive rsityʹsname 11,459,865$ 8,212,336$

Ca s honhand 80,912 45,665

Sta te InvestmentPool‐colla te ralrequired

yKRS41.240 144,871,606 134,934,524

Tota ldeposits 156,412,383$ 143,192,525$



Currentandnon‐currentcashandcashequivalentsaspresentedinthestatementsofnetpositioncaptions

asofJune30include:



2019 2018

Ca s handcashequivalents,current 93,721,297$ 92,230,046$

Restricte dcas handca shequivalents 62,691,086 50,962,479

Tota lde posits

156,412,383$ 143,192,525$



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



41

Investments

InvestmentscarriedatfairvalueasofJune30consistedof:



2019 2018

Mone yma rke tfundsrestric tedfor

de btservicepurposes 319,317$ 305,072$

Restricte dassetsheldbytheFoundation 26,403,725 26,250,195

Tota linvestments 26,723,042$ 26,555,267$



Restrictedinvestmentsfordebtservicepurposes arecomprisedofamountsinvestedforsinkingfundand

debt service reserves.Investments in U.S. Government securities and the collateral for repurchase

agreementsareregisteredinthenameofMurrayStateUniversityorheldintheUniversity’snamebyits

agents and trustees.The

 University may legally invest in direct obligations of and other obligations

guaranteed as to principal by the U.S. Treasury and U.S. agencies and instrumentalities and in bank

repurchaseagreements.Itmayalsoinvesttoalimitedextentinequitysecurities.



UniversityinvestmentsheldbytheMSUFoundationarecomprisedof

privatedonationsreceiveddirectly

bythe University andstateendowmentmatching funds.Theseconsistof endowmentfunds,aswellas

expendablerestrictedfunds.AssetsheldbytheMSUFoundationareinvestedprimarilyinaninvestment

poolmanagedbytheMSUFoundationandarecarriedatfairvalue.



Theassetsinthe

MSUFoundationinvestmentpoolareinvestedasofJune30asfollows:



2019 2018

Perce nta geofpoolinve s te din:

Ce rtifica te s ofdepositand

mone ymarketmutualfunds 1% 1%

Mutualfunds 65% 63%

Equitysecurities 0% 3%

Fixedincome secur ities 34% 32%

Othe r 0% 1%

Tota linvestments 100% 100%



InterestRate Risk.Interest rate risk is the risk that changes in interestrates willadversely affect the fair

valueofaninvestment.TheUniversitydoesnot,withinitsinvestmentpolicy,formallylimitinvestment

maturitiesasameansofmanagingitsexposuretofairvaluelossesarisingfromincreasing

interestrates.

Themoneymarketmutualfundsareinvestmentswithamaturityoflessthanoneyearbecausetheyare

redeemableinfullimmediately.Inaddition,thefundsheldintheStateInvestmentPoolhaveamaturity

oflessthanoneyearbecausetheyareredeemableinfullimmediately.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



42

CreditRisk.Creditriskistheriskthattheissuerorothercounterpartytoaninvestmentwillnotfulfillits

obligations.TheUniversity’sinvestmentpolicyrequiresinvestmentstobeincompliance

withstatestatute.

TheUniversityhasnofurtherpolicythatwouldlimititsinvestmentchoices.Creditratingsforthemoney

marketmutualfundsandStateInvestmentPoolarenotavailableandaretherefore,consideredunrated.



ConcentrationofCreditRisk.Concentrationofcreditriskistheriskoflossattributedto

themagnitudeofa

government’s investment in a single user.The University places no limit on the amount that may be

investedinanyoneissuer.TheUniversitydoesnotholdmorethan5%ofitsinvestmentswithasingle

issuer.



InvestmentIncome

InvestmentincomefortheyearsendedJune30consistedof:



2019 2018

Asse tsheldbytheUniversity:

Interestincome 4,539,706$ 1,771,714$

Asse tsheldbyMSUFoundation:

Investmentincome endowmentfunds 688,822 718,653

Ne tincre a se infairvalue

ofendowmentinvestments 134,605 701,265

Tota linve stme ntincome  5,363,133

 3,191,632





6. Endowments



ChangesinendowmentassetsfortheyearsendedJune30areasfollows:



2019 2018

Endowmentassets,beginningofyear 22,285,087$ 21,973,233$

Investmentreturn

Ne tappreciation 138,412 705,241

Endowmentrestrictio nsreleas ed — (588,597)

Contributionsincre ase 93,818 195,210

owmentassets,en

o

ye ar 22,517,317

 22,285,087





MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



43

7. CapitalAssets



CapitalassetactivityfortheyearendedJune30,2019wasasfollows:



Balance Deletions

Balance

Ju ne30,20 18 Retirements June30,2019

Land 10,176,698$ 266,044$ —$ —$ 10,442,742$

Co nstruc tio ninpro g ress 6,264,350 17,024,208 (4,077,985) (379,483) 18,831,090

Museumandc o lle c tibles 694,737 — — — 694,737

Totalcapitalassetsno tbeing

de prec iate d 17,135,785 17,290,252 (4,077,985) (379,483) 29,968,569

Building s 372,149,804 — 2,742,190 (2 ,3 3 5 ,6 74 ) 372,556,320

Nonbu ildingimpro v eme nts 17,172,063 — 1,335,795 — 18,507,858

Equipment 35,280,560 2,079,499 —

(1 ,4 9 5 ,8 85 ) 35,864,174

Library ho ldings 10,744,204 47,171 — (109,410) 10,681,965

Live sto ck 151,749 10,000 — (24,000) 137,749

S o ftware 1,932,019 — — — 1,932,019

Totalothercapitalassets 437,430,399 2,136,670 4,077,985 (3,96 4 ,96 9 ) 439,680,085

Totalcapitalassetsbef ore

de prec iatio n 454,566,184 19,426,922 — (4 ,3 4 4,4 52 ) 469,648,654

Le ssaccumulatedde pre c iatio n:

Building s 173,787,964 9,027,513 — (1 ,9 3 3 ,8 93 ) 180,881,584

Impro vementsothertha

uildings 11,780,123 549,491 — — 12,329,614

Equipment 25,318,351 1,927,361 — (728,863) 26,516,849

Library ho ldings 8,005,229 333,798 — (103,939) 8,235,088

Liv esto c k 9 5,166 10,292 — (12,000) 93,458

S o ftware 1,932,018 — — — 1,932,018

Totalac c umu latedde pre c iatio

220,918,851 11,848,455 — (2,77 8 ,6 95 ) 229,988,611

Capitalasse ts,ne t 233,647,333$ 239,660,043$

Ad dition s Tran sfers



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



44

CapitalassetactivityfortheyearendedJune30,2018wasasfollows:



Balance Deletions

Balance

Ju ne30,20 17 Retirements June30,2018

Land 9,920,222$ 256,476$ —$ —$ 10,176,698$

Co nstruc tio ninpro g ress 36,057,601 8,200,446 (30,965,499) (7 ,0 2 8,1 98 ) 6,264,350

Museumandc o lle c tibles 692,546 2,191 — — 694,737

Totalcapitalassetsno tbeing

de prec iate d 46,670,369 8,459,113 (30,965,499) (7 ,0 2 8 ,1 98 ) 17,135,785

Building s 341,536,804 — 30,613,000 — 372,149,804

Nonbu ildingimpro v eme nts 16,819,564 — 352,499 — 17,172,063

Equipment 32,329,496 3,605,156 —

(654,092) 35,280,560

Library ho ldings 11,221,448 51,728 — (528,972) 10,744,204

Live sto ck 151,749 — — — 151,749

Totalothercapitalassets 403,991,080 3,656,884 30,965,499 (1 ,1 8 3,0 64 ) 437,430,399

Totalcapitalassetsbef ore

de prec iatio n 450,661,449 12,115,997 — (8 ,2 1 1,2 62 ) 454,566,184

Le ssaccumulatedde pre c iatio n:

Buildings* 155,165,472 18,622,492 — — 173,787,964

Impro vementsothertha

uildings 11,206,563 573,560 — — 11,780,123

Equipment 23,922,959 1,996,516 — (601,124) 25,318,351

Library ho ldings 8,108,293 399,459 — (502,523) 8,005,229

Liv esto c k 8 3,708 11,458 — — 95,166

Totalac c umu latedde pre c iatio

200,419,013 21,603,485 — (1,10 3 ,6 47 ) 220,918,851

Capitalasse ts,ne t 250,242,436$ 233,647,333$

Ad dition s Tran sfers



*Accumulated depreciation for buildings includes a $9,515,220 adjustment for the impairment of J.H. Richmond

ResidenceHall.Thisadjustmentwasbasedonthehistoricvalueoftherestorationcost.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



45

8. AccountsPayable



AccountspayableatJune30consistedof:

2019 2018

Currentaccountspayable:

Ve ndors 8,883,532$ 3,977,873$

Payroll be nefits andwithho ldings 2,478,824 2,597,152

MSUFounda tion 43,396 65,489

Loans 25,994 5,523

Totalc urrentaccountspayable

11,431,746$ 6,646,037$



9. UniversityHealthSelf‐InsuranceProgram



The University maintainsa self‐insurance program for employees’ health insurance.Forthe fiscal year

endedJune30,2019,theUniversitypaidapproximately80%oftotalplanexpensesforpermanentfull‐time

employeesandtheirfamilies.TheUniversity’scontributiontocoverclaimspaid

undertheplanforyears

endedJune30,2019and2018totaled$10,334,544and$9,869,157,respectively.Stoplossandadministrative

feesaredisclosedinthechartbelow.TheUniversity’sstop‐lossinsurancelimitsitsexposureforclaimsto

$225,000perindividualforthefiscalyear.



TheUniversity self‐insuredprogramoperates

ona calendar year(January– December) basis andatrue

pictureofthetotalplanyearsisnotpresentedinthisnote.



Changesintheliabilityforself‐insurancefortheyearsendedJune30areasfollows:



2019 2018

Lia bility,beginningofyear 624,291$ 574,953$

Accrua lsforcurre ntyearclaimsandcha nge s

inestimate(includesemployeeand

employercontributions) 13,741,202 12,977,937

Administrative andstop‐los sfees (989,641) (1,104,067)

Cla ims paid (12,659,690) (11,824,532)

Lia bility,endofyear 716,162

 624,291





MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



46



10. UnearnedRevenue



UnearnedrevenueasofJune30consistedof:



2019 2018

Currentunearnedrevenue:

Pre pa idtuitionandfees 2,594,061$ 2,415,902$

Grantsandcontracts 321,920 420,029

Auxiliarye nte rprises 4,182 14,510

Tota

curre ntunearne

revenue 2,920,163

 2,850,441





11. RevenueBonds,NotesPayableandCapitalLeases



Thefollowingisasummaryoflong‐termobligationtransactionsfortheUniversityfortheyearendedJune

30,2019:



Amounts

B eginning Ending DueWithi

Long‐Ter

B alance Additions

Deductions

B alance One Year P orti o

Bondspay able

68,290,000$ —$ (3,890,000)$ 64,400,000$ 4,130,000$

$60,270,000

Le ssbonddis c o unts

(50,841) — 4,622 (46,219) (4,622)

(41,597)

Plusbondpre miums

1,947,291 — (120,762) 1,826,529 120,762

1,705,767

Bondspay able,netofdisc o unts

pre miums

70,186,450 — (4,006,140) 66,180,310 4,246,140 61,934,170

CityofMurray

pay able

7,390,000 — (395,000) 6,995,000 415,000

6,580,000

Total

bonds,no tes

cap



eases

77,576,450$ —$ (4,401,140)$ 73,175,310$ 4,661,140$ 68,514,170$



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



47

Thefollowingisasummaryoflong‐termobligationtransactionsfortheUniversityfortheyearendedJune

30,2018:

Amounts

B e ginning Ending Due Within Long‐Ter

B alance Additions

De ductions

B alance OneYear P ortion

Bondspay able

72,150,000$ —$ (3,860,000)$ 6 8 ,29 0 ,0 00$ 3,950,000$

$64,340,000

Le ssbonddisc o unts

(55,463) — 4,622 (50,841) (4,622)

(46,219)

Plusbondpremiums

2,068,053 — (120,762) 1,947,291 120,762

1,826,529

Bondspay able ,netofdisc o unts

pre miums

74,162,590 — (3,976,140) 7 0 ,18 6 ,4 50 4,066,140 66,120,310

CityofMurra y

pay able

7,764,999 — (374,999) 7,390,000 395,000

6,995,000

Maste rleaseno tes

pay able

346,620 — (346,620) — —

—

Totalbonds,no tes

capita



eases

82,274,209$ —$ (4,697,759)$ 7 7 ,57 6 ,4 50$ 4,461,140$ 73,115,310$



MaturityInformation

A schedule of the mandatory principal and interest payments (excluding bond discounts) is presented

below:



2020 4,130,000$ 415,000$ 4,545,000$ 2,464,706$ 7,009,706$

2021 3,905,000 435,000 4,340,000 2,338,784 6,678,784

2022 4,105,000 440,000 4,545,000 2,206,984 6,751,984

2023 4,210,000 450,000 4,660,000 2,092,736 6,752,736

2024‐2028 23,980,000 2,445,000 26,425,000 7,714,995 34,139,995

2029‐2033 17,470,000 2,810,000 20,280,000 3,482,613 23,762,613

2034‐2036 6,600,000 — 6,600,000 330,400 6,930,400

Tota

64,400,000$ 6,995,000$ 71,395,000$ 20,631,218$ 92,026,218$

TotalPayments

YearsEndi ng

June30 Bonds Notes TotalPrincipal Interest



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



48

Long‐termliabilityactivityfortheyearendedJune30,2019wasasfollows:

In terest Bond s/Notes/

Original B ala nceDue Expense, LeasesMaturing

Issue June30,2 01 9 Curre ntYear 2019‐2020

General Re ceiptsB ondsPayable

SeriesA2009bondsdate dApril22,

2009,withaninterest rateof

2.50%to 4.20%;finalprinc ipal

pay mentdate September1,2028;

completionofRic hmond Halland

variouspro jec tsunde r$ 600,000 7,665,000$ 4,665,000$ 188,401$ 390,000$

SeriesA2011bondsdate d

July 12,

2011,withaninterest rateof

2.00%to 4.50%;finalprinc ipal

pay mentdate September1,2031;

reno vatio nofElizabe thHall 7,645,000 5,525,000 225,191 335,000

SeriesB2011refu nd ing bon dsdate

uly 26,2011,withaninterest rate

of2.00%to 3.75%;finalprinc ipal

pay mentdate September1,2021;

refu nd ingofHousingandDining

bondsse riesM,N,&O 4,6 70 ,0 00 705,000 26,428 495,000

SeriesC2011re fu nd ingbondsdate d

uly 12,2011,withaninterest rate

of2.00%to 4.00%;finalprinc ipal

pay mentdate September1,2027;

refu nd ingofHousingandDining

bondsse riesP&Q 15,620,000 8,840,000 339,221 920,000

SeriesA2013bondsdate

May29,2013,wit h anint erest rat e

of2.00%to 4.00%;finalprinc ipal

pay mentdate September1,2033;

reno vatio nofHesterHa ll,Colleg e

Courtssprinklers,andvario us

pro j e c tsunde r$600,000 15,635,000 12,420,000 377,381 680,000

SeriesA2015bondsdate

Marc h31,2015,wit h aninterest rate

of3.00%to 5.00%;finalprinc ipal

pay mentdate Marc h31,2035;

ConstructH.C.FranklinHall 26,0 00 ,0 00 24,830,000 1,021,634 550,000

SeriesA2016bondsdate

Marc h31,2016,wit h aninterest rate

of1.00%to 3.00%;finalprinc ipal

pay mentdate September1,2027;

Refund ingofSeriesA2007bo nds 8,3 10 ,00 0 7,415,000 168,534 760,000

Totalgeneralrec eipt sbondspayable 85,545,000 64,400,000 2,346,790 4,130,000

Bondspay able beforediscount 85,5 45 ,00 0 64,400,000 2,346,790 4,130,000

Le ssbo n ddisc o unt — (46,219) — (4,622)

Plusbondpremium — 1,826,529

— 120,762

Totalbondspay able 85,545,000 66,180,310 2,346,790 4,246,140



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



49

In terest Bon d s/Notes/

Origina

BalanceDue Expense, LeasesMaturing

Issue June30,2019 CurrentYear 2019‐2020

CityofMu rrayPayable

Agreementdate dApril17,2012,

withinterestof1.00%to 3.50%;final

princ ipalpay mentdueJune 1,2033;

WellnessCe nte rrefund ingofthe 

Dec e mber30,2002issue . 9,250,000 6,995,000 202,562 415,000

Less:CapitalizedInterest — — (243) —

TotalAllBondIssu es,Notes

Payable

andCapitalLea ses 9 4 ,7 9 5 ,00 0$ 73,175,310$ 2,549,109$ 4,661,140$



The revenue bond indentures require the University to maintain a reserve balance as a percentage of

outstandingbalances.AsofJune30,2019and2018,thesinkingfundandreservefundrequirementshave

beenfundedasrequired.



12. Deposits



ThedepositsheldasofJune30consistedof:



2019 2018

Curre nt:

Hors e stallre ntals 13,969$ 18,285$

Racerca rdde cliningbalances 13,244 15,922

Hous ingdeposits 167,909 147,123

Age ncyaccountbalances 107,665 94,265

Tota lcurre ntdeposits 302,787 275,595

Noncurrent:

Hous ingdeposits 329,700 330,000

Tota



eposits 632,487

 605,595





Noncurrenthousingdeposit additionswere$113,400and$88,950forthe yearsendedJune 30, 2019 and

2018,respectively.Noncurrenthousingdepositdeductionswere$113,700and$125,400fortheyearsended

June30,2019and2018,respectively.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



50

13. ServiceConcessionArrangement



TheUniversitycontractedwith athird‐party tomanage campus diningservicesduringfiscalyear2019.

Thetermofthearrangementistenyearsandfiveand

ahalfmonths,commencingonDecember15,2018,

and continuing through June 30, 2029.The arrangementprovides the third‐party the exclusive right to

manage and operate diningservices forthe University’s students, faculty, staff, employees,visitorsand

guests.ThecontractalsoincludesInvestment1‐$3millioninfiscalyear2019,

Investment2‐$3.5million

infiscalyear2020andInvestment3‐$1millioninfiscalyear2021.Theseinvestmentsaretobeusedfor

diningvenueservicerenovationsandwillbeamortizedoverthelifeofthecontract.AsofJune30,2019,

theUniversityhasreceived$2.5millionfor

Investment1andrecordedareceivableof$.5million.Deferred

Inflows,revenueswhichwillberecognizedinafutureperiod,relatedtothecontractare$2.9millionasof

June30,2019.TheUniversityreceives20%oftotalmealplansales,10%ofretail,cateringandcampsales

and40%of

concessionsales.



14.UnrestrictedNetPosition



TheUniversity’sdesignationsofunrestrictednetpositionatJune30consistedof:



2019 2018

Unres tric tednetposition

Alloca te dfor:

De partme ntaloperations 25,372,859$ 26,686,695$

Encum brances 183,737 326,867

Boardde signate dprojects 6,721,402 12,957,700

Ca pita lprojects 5,288,590 2,115,672

Renovationandmaintenance 12,043,080 11,034,770

Plantreserves 10,493,001 11,115,771

Workingcapital 12,668,811 11,247,321

Reve nuecontingency 2,278,615 2,290,105

Generalcontinge ncy 47,472,224 48,524,351

Se lf‐insurance 716,162 624,291

Totalunre stri cte dnetpositionbeforepension/OPEBadjustments 123,238,481 126,923,543

Pension/OPEBcurre ntyea radjustments,KERSnon‐

hazardous (126,400,049) (95,925,318)

Pension/OPEBcurre ntyea radjustments,KERShazardous (1,312,963) (1,364,618)

Pension/OPEBcurre ntyea radjustments,TRS (150,211,121) (161,345,618)

OPEBprioryearadjustments,KERSnon‐hazardous

—

(17,030,754)

OPEBprioryearadjustments,KERShazardous

—

224,399

OPEBprioryearadjustments,TRS

—

(15,334,748)

Totalunre stri cte dnetposition (154,685,652)

 (163,853,114)



.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



51

15. PensionPlansandOtherPostemploymentBenefits(OPEB)



a) GeneralInformationaboutthePension/OPEBPlans



 PlanDescriptions



 KentuckyRetirementSystems.UndertheprovisionsofKentuckyRevisedStatuteSection61.645,theBoard

of Trustees (the Board) of Kentucky Retirement Systems (KRS) administers the Kentucky Employees

Retirement System (KERS, listed herein as KERS‐nh for “non‐hazardous and KERS‐h for “hazardous”),

CountyEmployeesRetirementSystem(CERS),andStatePoliceRetirementSystem(SPRS).Althoughthe

assetsofthesystemsareinvestedasawhole,

eachsystem’sassetsareusedonlyforthepaymentofbenefits

tothemembersofthatplan,andaproratashareofadministrativecosts,inaccordancewiththeprovisions

of Kentucky Revised Statute Sections 16.555, 61.570, and 78.630. KERS‐nh and KERS‐h are cost‐sharing

multiple‐employer defined

benefit pension plans that cover all regular full‐time members employed in

non‐hazardousandhazardousdutypositionsofanystatedepartment,board,agency,county,city,school

board, and any additional eligible local agencies electing to participate. KRS issues a publicly available

financialreportthatcanbeobtainedat:https://kyret.ky.gov/Pages/index.aspx



 Teachers’RetirementSystem.UndertheprovisionsofKentuckyRevisedStatuteSection161.250,theBoard

ofTrustees(theBoard)ofTeachers’RetirementSystems(TRS)administerstheTeachers’RetirementSystem

(TRS).Allemployeesrequiredtoholdadegreeandoccupyingfull‐timepositions,definedasseven‐tenths

(7/10)ofnormalfull‐timeserviceonadailyorweeklybasis,arerequiredbystatelawtoparticipatein

the

TRSoranoptionalretirementplan,asallowedbyKRS161.567.TRS,isacostsharing,multiple‐employer,

publicemployeeretirementsystem.TRSissuesapubliclyavailablefinancialreportthatcanbeobtainedat

https://TRS.ky.gov/financial‐reports‐information/



 BenefitsProvided



KERS‐nh,membersbefore9/1/2008.Benefitsareavailable

withcompletionof27yearsofserviceorattainment

ofage65andfouryearsofservice.Reducedbenefitsareavailableat6.5%peryearforthefirstfiveyears,

and4.5%forthenextfiveyearsbeforeage65or27yearsofservicewiththeattainmentofage55andfive

yearsofserviceoranyagewith

25yearsofservice.



Theannualretirementallowanceisequalto1.97%oftheaverageofthefivehighestyearsofcompensation

multipliedbyserviceformembersthatdonothave13monthscreditfor1/1/1998‐1/1/1999.Theallowance

isequalto2.0%offinalcompensationmultipliedbyservicefor

membersthathave13monthscreditfrom

1/1/1998‐1/1/1999.Theallowanceisequalto2.2%offinalcompensationmultipliedbyserviceformembers

thathave20ormoreyearsofservice,including13monthsfrom1/1/1998‐1/1/1999andretiredby1/1/2009.



KERS‐nh,membersonandafter9/1/2008but

before1/1/2014.Benefitsareavailablewithattainmentofage65

andfiveyearsofservice,orattainmentofage57andageplusyearsofservicearegreaterthanorequalto

87.Reducedbenefitsareavailableat6.5%peryearforthefirstfiveyears,and4.5%forthenextfiveyears

beforeage65orageplusyearsof

servicearegreaterthanorequalto87withtheattainmentofage60and

10yearsofservice.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



52

KERS‐nh,membersonandafter1/1/2014.Benefitsareavailablewithattainmentofage65andfiveyearsof

service, or attainment of age 57 and age plus years of service are greater than or equal to 87. Reduced

benefitsarenotavailable.



Theannualretirementallowanceisequaltotheaverageofthelastcompletefiveyearsofservicemultiplied

by an increasing percent based on service at

retirement plus 2.0% for each year of service over 30. The

increasingpercentbasedonserviceatretirementis1.10%for10yearsofserviceorless,1.3%for10to20

yearsofservice,1.5%for20to26yearsofservice,and1.75%for26to30yearsof

service.



KERS‐nh, Other benefits.Ifthe member isreceivinga monthly benefit basedon atleastfour(4) yearsof

creditableservice,theretirementsystemwillpaya$5,000deathbenefitpaymenttothebeneficiarynamed

bythememberspecificallyforthisbenefit.Disabilitybenefitsarealsoprovidedatvariouslevelsdepending

onparticipationdatesandcircumstances.



 InsurancebenefitsareavailableformembersparticipatingpriortoJuly1,2003,KRS

paysapercentageof

themonthlypremiumforsinglecoveragebasedupontheservicecreditaccruedatretirement.Members

participatingonorafterJuly1,2003andbeforeSeptember1,2008arerequiredtoearnatleast10yearsof

servicecreditinordertobeeligibleforinsurancebenefitsat

retirement.Membersparticipatingonorafter

September1,2008arerequiredtoearnatleast15yearsofservicecreditinordertobeeligibleforinsurance

benefitsatretirement.Themonthlyhealthinsurancecontributionwillbe$10foreachyearofearnedservice

increasedbytheCPIpriorto

July1,2009,andby1.5%annuallyfromJuly1,2009.



 Uponterminationofemployment,arefundofmembercontributionsandaccumulatedinterestisavailable

tothemember.



 ForemployeesparticipatingpriortoSeptember1,2008,theinterestpaidissetbytheBoardofTrusteesand

willnot

belessthan2.0%,foremployeesparticipatingonorafterSeptember1,2008butbeforeJanuary1,

2014, interestwill be credited at a rate of 2.5%.For employees participatingon or afterJanuary 1, 2014,

interestwillbecreditedataminimumrateof4.0%.



KERS‐h,members

before9/1/2008.Benefitsareavailablewithcompletionof20yearsofserviceorattainment

ofage55andfive yearsofservice.Reducedbenefitsareavailableat6.5%peryearforthefirstfiveyears,

and4.5%forthenextfiveyearsbeforeage55or20yearsofservicewiththeattainmentofage50and15

yearsofservice.



Theannualretirement

allowanceisequalto2.49%oftheaverageofthethreehighestyearsofcompensation

multipliedbyyearsofservice.



KERS‐h,membersonandafter9/1/2008butbefore1/1/2014.Benefitsareavailablewithcompletionof25years

ofserviceorattainmentofage60and5yearsofservice.Reducedbenefitsareavailableat6.5%peryearfor

thefirstfiveyears,and4.5%forthenextfiveyearsbeforeage60or25yearsofservicewiththeattainment

ofage50and15yearsofservice.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



53

KERS‐h, members on and after 1/1/2014. Benefits are available with completion of 25 years of service or

attainmentofage60and5yearsofservice.Reducedbenefitsarenotavailable.



Theannualretirementallowanceisequaltoanincreasingpercent,basedonserviceatretirement,ofthe

averageofthethreehighestyearsofcompensationmultipliedbyyearsofserviceformembersparticipating

prior to 1/1/2014.The

 increasing percent isas follows:1.3%for 10years orless, 1.5%for 10 to20 years,

2.25%for20to25years,and2.5%for25yearsormore.



Formembersparticipatingonorafter1/1/2014:Eachyearthatamemberisanactivecontributingmember

toKRS,the

memberandthemember’semployerwillcontribute8.0%and7.5%ofcreditablecompensation

respectivelyintoanaccount.Thisaccountwillearninterestannuallyonboththemember’sandemployer’s

contributionataminimumrateof4%.IfKRS’sgeometricaveragenetinvestmentreturnfortheprevious

fiveyearsexceeds4%,

thentheaccountwillbecreditedwithanadditionalamountofinterestequalto75%

oftheamountofthereturnwhichexceeds4%.Allinterestcreditswillbeappliedtotheaccountbalanceon

June30basedontheaccountbalanceasofJune30ofthepreviousyear.Upon

retirementthehypothetical

account which includes member contributions, employer contributions and interest credits can be

withdrawnfromKRSasalumpsumorannuitizedintoasinglelifeannuityoption.



KERS‐h, Other benefits. If the member is receiving a monthly benefit based on at least four (4) years of



creditableservice,theretirementsystemwillpaya$5,000deathbenefitpaymenttothebeneficiarynamed

bythememberspecificallyforthisbenefit.Disabilitybenefitsarealsoprovidedatvariouslevelsdepending

onparticipationdatesandcircumstances.



ForbothKERS‐nhandKERS‐h,monthlyretirementallowancesareincreasedJuly

1eachyearbyoneand

one‐halfpercent(1.5%).TheKentuckyGeneralAssemblyhastheauthoritytoincrease,suspendorreduce

CostofLivingAdjustments(COLA).HB265of2012eliminatedtheJuly1,2012andJuly1,2013COLAsfor

allretirees.SB2of2013eliminatedallfutureCOLAs

unlesstheStateLegislaturesoauthorizesonabiennial

basisandeither(i)thesystemisover100%fundedor(ii)theLegislatureappropriatessufficientfundsto

paytheincreasedliabilityfortheCOLA.



FormembersparticipatingpriortoJuly1,2003,KRSpaysapercentageofthemonthlypremium

forsingle

coveragebasedupontheservicecreditaccruedatretirement.Hazardousdutymembersarealsoeligible

foranadditionalcontributionfordependentsbaseduponhazardousserviceonly.Membersparticipating

onorafterJuly1,2003andbeforeSeptember1,2008arerequiredtoearnatleast10yearsofservice

credit

inordertobeeligibleforinsurancebenefitsatretirement.MembersparticipatingonorafterSeptember1,

2008arerequiredtoearnatleast15yearsofservicecreditinordertobeeligibleforinsurancebenefitsat

retirement.Themonthlyhealthinsurancecontributionwillbe$15foreach

yearofearnedserviceincreased

bytheCPIpriortoJuly1,2009,andby1.5%annuallyfromJuly1,2009.



Uponterminationofemployment,arefundofmembercontributionsandaccumulatedinterestisavailable

tothemember.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



54

Active member accounts have been credited with interest on July 1 of each year at 3% compounded

annuallythroughJune30,1981;6%thereafterthroughJune30,1986;4%thereafterthroughJune

30,2003,

and2.5%thereafter.ForemployeeshiredpriortoSeptember1,2008,theinterestpaidissetbytheBoardof

Trusteesandwillnotbelessthan2%,foremployeeshiredonorafterSeptember1,2008,interestwillbe

creditedatarateof2.5%.



 TRS,

membersbefore7/1/2008.Benefitsareavailablewithcompletionof27yearsofserviceorattainmentof

age55andfiveyearsofservice.Theannualretirementallowancefornon‐universitymembersisequalto

2% of final average salary multiplied by service before July 1, 1983, plus 2.5% of final average salary

multipliedbyserviceafterJuly1,1983.For individualswhobecome membersofTRS on

orafterJuly1,

2002andhavelessthan10yearsofserviceatretirement,theretirementallowanceis2%offinalaverage

salarymultipliedbyservice.If,however,theyhave10ormoreyears,theyreceiveabenefitpercentageof

2.5%forallyears ofserviceupto30

years.Formembersretiringon orafterJuly1, 2004,the retirement

allowanceformulais3.0%offinalaveragesalaryforeachyearofservicecreditearnedinexcessof30years.



Theannualretirementallowanceforuniversitymembersisequalto2%offinalaveragesalarymultiplied

byall

yearsofservice.Forallmembers,theannualallowanceisreducedby5%peryearfromtheearlierof

age60orthedate thememberwouldhave completed 27yearsof service. The minimum annualservice

allowanceforallmembersis$440multipliedbycreditedservice.



 TRS,memberson

andafter7/1/2008.Benefitsareavailablewithcompletionof27yearsofservice,attainment

ofage60andfiveyearsofserviceorattainmentofage55and10yearsofservice.Theannualretirement

allowancefornon‐universitymembersisequalto1.7%offinalaveragesalaryifserviceis10yearsorless.

2%offinalaveragesalaryifserviceisgreaterthan

10yearsandnomorethan20years,2.3%offinalaverage

salaryifserviceisgreaterthan20yearsbutnomorethan26years,2.5%offinalaveragesalaryifserviceis

greaterthan26yearsbutnomorethan30years,3%offinalaveragesalaryfor

yearsofservicegreaterthan

30years.



Theannualretirementallowanceforuniversitymembersisequalto1.5%offinalaveragesalaryifservice

is10yearsorless,1.7%offinalaveragesalaryifserviceisgreaterthan10yearsandnomorethan20years,

1.85%offinal

averagesalaryifserviceisgreaterthan20yearsbutlessthan27years,2%offinalaverage

salaryifserviceisgreaterthanorequalto27years.



Forallmembers,theannualallowanceisreducedby6%peryearfromtheearlierofage60orthedate

the

memberwouldhavecompleted27yearsofservice.



 TRS, Other benefits. Disability benefits are provided for employeestotally andpermanentlyincapable of

being employed as a teacher and under age 60 but after completing 5 years  of service. The disability

allowanceisequaltothegreateroftheserviceretirementallowanceor60%ofthememberʹsfinalaverage

salary.Thedisabilityallowanceispayableoveranentitlementperiodequalto25%of

theservicecredited

tothememberatthedateofdisabilityorfiveyears,whicheverislonger.Afterthedisabilityentitlement

periodhasexpiredandifthememberremainsdisabled,hewillberetiredunderserviceretirement.The

service retirement allowance will be computed with service credit given for the

period of disability

retirement.Theallowancewillnotbelessthan$6,000peryear.Theserviceretirementallowancewillnot

bereducedforcommencementoftheallowancebeforeage60orthecompletionof27yearsofservice.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



55

Tobeeligibleformedicalbenefits,themembermusthaveretiredeitherforserviceordisability.TheTRS

medicalplanofferscoveragetomembersundertheageof65throughtheKentucky

EmployeesHealthPlan

(KEHP)administeredbytheKentucky DepartmentofEmployeeInsurance.TRSretiredmembersaregiven

a supplement to be used for payment of their health insurance premium. The amount of the memberʹs

supplement is based on a contribution supplement table approved by the TRS Board of Trustees.

The

retiredmemberpayspremiumsinexcessofthemonthlysupplement.



Anymemberwhoceasestobeinserviceisentitledtoreceivehiscontributionswithallowableinterest.A

memberwhohascompletedfiveyearsofcreditableserviceandleaveshiscontributionswiththeSystem

maybecontinuedinthemembership

oftheSystemafterseparationfromservice,andfileapplicationfor

serviceretirementaftertheattainmentofage60.



AseparateLifeInsurancefundhasbeencreatedasofJune30,2000topaybenefitsonbehalfofdeceased

TRSactiveandretiredmembers.



Asurvivingspouseofanactive

memberwithlessthan10yearsofservicemayelecttoreceiveanannual

allowanceof$2,880exceptthatifincomefromothersourcesexceeds$6,600peryeartheannualallowance

willbe$2,160.Asurvivingspouseofanactivememberwith10ormoreyearsofservicemayelect

toreceive

anallowancewhichistheactuarialequivalentoftheallowancethedeceasedmemberwouldhavereceived

uponretirement.Theallowancewillcommenceonthedatethedeceasedmemberwouldhavebeeneligible

forserviceretirementandwillbepayableduringthelifeofthespouse.Ifthedeceasedmember

issurvived

byunmarriedchildrenunderage18thefollowingscheduleofannualallowancesapplies:



NumberofChildren AnnualAllowance

1 $2,400

2 4,080

3 4,800

4+5,280



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



56

Theallowancesarepayableuntilachildattainsage18,orage23ifafull‐timestudent.Ifthememberhas

noeligiblesurvivor,arefundofhisaccumulatedcontributionsis

payabletohisestate.



Theretirementallowanceofeachretiredmemberandofeachbeneficiaryshallbeincreasedby1.50%each

July1.



Contributions



KERS‐nh. Per KRS 61.565 and KRS 61.752, contribution requirements of the active employees and the

participatingemployersareestablishedandmaybeamendedbytheKRSBoard.Employeesarerequired

tocontribute5%oftheirannualpay.Theparticipatingemployers’contractuallyrequiredcontributionrate

fortheyearendedJune30,2018,was49.47%ofannualpayroll,actuariallydeterminedasanamountthat,

when combined with employee

 contributions, is expected to finance the costs of benefits earned by

employees during the year, with an additional amount to finance any unfunded accrued liability.

ContributionstothepensionplanfromtheUniversitywere$5,175,756and$5,640,951fortheyearsended

June30,2019and2018,respectively.



KERS‐h. Per

 KRS 61.565 and KRS 61.752, contribution requirements of the active employees and the

participatingemployersareestablishedandmaybeamendedbytheKRSBoard.Employeesarerequired

tocontribute8%oftheirannualpay.Theparticipatingemployers’contractuallyrequiredcontributionrate

fortheyearendedJune30,2019,was36.85%ofannualpayroll,actuariallydeterminedasanamountthat,

when combined with employee

 contributions, is expected to finance the costs of benefits earned by

employees during the year, with an additional amount to finance any unfunded accrued liability.

ContributionstothepensionplanfromtheUniversitywere$278,279and$171,214fortheyearsendedJune

30,2019and2018,respectively.



TheUniversity’soverall

contributions,whichincludepension,medical,andlifeinsurancecontributions,

toKERSfortheyearsendedJune30,2019and2018were$6,534,025and$6,985,604,respectively,andwere

equaltotherequiredcontributions.



 TRS.PerKRS161.250,contributionrequirementsoftheactiveemployeesandtheparticipatingemployers

areestablishedandmaybeamendedbytheTRSBoard.Employeesarerequiredtocontribute8.185%of

theirannualpay.Theparticipatingemployers’contractuallyrequiredcontributionratefortheyearended

June30,2019,was15.865%ofannualpayroll,actuariallydeterminedasanamountthat,whencombined

withemployeecontributions,is

expectedtofinancethecostsofbenefitsearnedbyemployeesduringthe

year,withanadditionalamounttofinanceanyunfundedaccruedliability.Contributionstothepension

plan from the University were $4,040,309 and $5,481,388 for the years ended June 30, 2019 and 2018,

respectively.



 TheUniversity’soverallcontributions,

whichincludepension,medical,andlifeinsurancecontributions,

toTRSforthefiscalyearsendedJune30,2019and2018were$4,748,102and$6,101,239,respectively.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



57

b) PensionLiabilities,PensionExpense,andDeferredOutflowsofResourcesandDeferredInflowsof

ResourcesRelatedtoPensions



 TheUniversityreportedaliabilityof$181,969,231and$231,097,640fortheyearsendedJune30,2019and

2018, respectively, for its proportionate shares of the net pension liability in the plans. The net

 pension

liabilityforTRSandKERSplansweremeasuredasofJune30,2018andJune30,2017andthetotalpension

liabilityusedtocalculatethenetpensionliabilitywasdeterminedbyanactuarialvaluationasofthatdate

forall plans. TheUniversity’sproportions ofthe netpension

liabilities werebased onprojections ofthe

University’slong‐termshareofcontributionstothepensionplanrelativetotheprojectedcontributionsof

allparticipatingschooldistricts,actuariallydetermined.AtJune30,2018,theUniversity’sproportionwas

0.42899966% for TRS, 0.889474% for KERS‐nh, and 0.411530% for KERS‐h, and at

 June 30, 2017, the

University’sproportionwas0.40417645%forTRS,0.858544%forKERS‐nh,and0.38949%forKERS‐h.



 For the years ended June 30, 2019 and 2018, the University recognized the pension (benefit) expense of

($8,595,091) and ($3,008,564), respectively. At June 30, 2019 and 2018, the University reported

deferred

outflowsofresourcesanddeferredinflowsofresourcesrelatedtopensionsfromthefollowingsources:



June30,2019 June30,2018

DeferredOutflows DeferredInflows DeferredOutflows DeferredInf lows

ofResources ofResources ofResources ofResources

Differencesbetweenexpectedand

actualexperience

1,446,165$ 6,272,837$ 752,202$ 3,155,792$

Change inassumptions

15,512,893 46,989,857 29,080,563 7,929,103

Ne tdifferencebetweenproje cte dand

actualearnings oninve stme nts

1,004,497 2,370,667 1,588,363 1,894,762

Change inproportiona te share

7,675,911 41,054,088 3,651,094 59,503,138

Contributionssubsequenttothe

measurement

date 9,494,344

— 11,293,553 —

Tota

35,133,810$ 96,687,449$ 46,365,775$ 72,482,795$



Inthe yearsended June30,2019and 2018 deferred outflows of resources of$9,494,344 and$11,293,553,

respectively, related to pensions resulting from the University contributions subsequent to the

measurementdatewillberecognizedasareductionofthenetpensionliabilityintheyearsendedJune30,

2019 and

 2018, respectively.Other amounts reported as deferred outflows of resources and deferred

inflowsofresourcesrelatedtopensionsatJune30,2019willberecognizedinpensionexpenseasfollows:



DeferredOutflows DeferredInflows

YearendedJune30: ofResources ofResources

2020 16,161,900$ 40,186,696$

2021

6,142,720 39,060,679

2022

3,216,103 17,159,400

2023

118,743 280,674

25,639,466$ 96,687,449$



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



58

Actuarialassumptions.ThetotalpensionliabilityintheJune30,2018and2017actuarialvaluationwas

determinedusingthefollowingactuarialassumptions,appliedtoallperiodsincludedinthe

measurement:



June30,2018 June30,2017

KERS TRS KERS TRS

Inflation

2.30% 3.0% 2.3% 3.0%

Salaryincre a s e s 3.05%3.5%to7.3%,

includinginfla tion

0.00%3.5%to7.3%,

includinginfla tion

Inve stmentrateofreturn

5.25%‐nh 7.50% 5.25% 7.50%

6.25%‐h



AsofJune 30,2018, and2017, mortalityratesforKERSwerebasedon theRP‐2000Combined Mortality

TableprojectedwithscaleBBto2013forallactiveandhealthyretiredmembersandtheRP‐2000Combined

DisabledMortalityTableprojectedwithScaleBBto2013fordisabledmembers.





AsofJune30,2018,and2017,mortalityratesforTRSwerebasedontheRP‐2000CombinedMortalityTable

forMalesorFemales,asappropriate,withadjustmentsformortalityimprovementsbasedonaprojection

ofScaleBBto2025withasetbackof1yearforfemales.



The

actuarial assumptions used in the June 30, 2018 and 2017 valuations were based on the results of

actuarialexperiencestudyfortheperiodJuly1,2008–June30,2013forKERSandJuly1,2010–June30,

2015 for TRS. As a result of the actuarial experience studies, the

 expectation of life after disability was

adjustedintheJuly30,2015actuarialvaluationstomorecloselyreflectactualexperience.



ForKERSthelong‐termexpectedreturnonplanassetsisreviewedaspartoftheregularexperiencestudies

preparedeveryfiveyearsforKRS.Themostrecentanalysis,performed

fortheperiodcoveringfiscalyears

2008through2013,isoutlinedinareportdatedApril30,2014.Severalfactorsareconsideredinevaluating

thelong‐termrateofreturnassumptionincludinglongtermhistoricaldata,estimatesinherentincurrent

marketdata,andalog‐normaldistributionanalysisinwhichbest

‐estimaterangesofexpectedfuturereal

rates of return (expected return, net of investment expense, and inflation) were developed by the

investmentconsultantforeach majorassetclass.These ranges were combinedtoproducethelong‐term

expectedrateofreturnbyweightingtheexpectedfuturerealratesofreturn

bythetargetassetallocation

percentage and then adding expected inflation. The capital market assumptions developed by the

investment consultant are intendedfor use over a 10‐year horizon and may not be useful in setting the

long‐termrateof returnforfundingpension plans which coversa longertimeframe.

The assumptionis

intendedto be along‐term assumption andisnot expectedto changeabsent asignificantchangeinthe

assetallocation,achangeinthe inflationassumption,orafundamentalchangeinthemarketthatalters

expectedreturnsinfutureyears.Thetarget assetallocationandbest

estimatesofarithmeticrealratesof

return for each major asset class, as provided by KERS’s investment consultant, are summarized in the

followingtables:



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



59

KERS‐n

June30,2018 KERS‐

June30,2018

Asse tCla s s

Target

All oca tion

Long‐Term

Expe cte d

RealRateof

Return AssetCla s s

Target

Alloca tion

Long‐Term

Expe cte d

RealRateof

Return

U.S.Equity

17.5%

U.S.Equity

17.5%

U.S.LargeCa p

8.5% 4.50%

U.S.Large Ca p

5.0% 4.50%

U.S.MidCa p

5.0% 4.50%

U.S.MidCa p

6.0% 4.50%

U.S.SmallCap

4.0% 5.50%

U.S.SmallCa p

6.5% 5.50%

InternationalEquity 17.5% InternationalEquity 17.5%

InternationalDeveloped 12.5% 6.50% InternationalDeveloped 12.5% 6.50%

Eme rgingMarkets 5.0% 7.25% Eme rgingMarkets 5.0% 7.25%

GlobalBonds 10.0% 3.00% GlobalBonds 4.0% 3.00%

GlobalCre dit

17.0%

GlobalCre dit

24.0%

GlobalIGCre dit

10.0% 3.75%

Gl obalIGCre dit

2.0% 3.75%

HighYield

3.0% 5.50%

HighYield

7.0% 5.50%

EMD

4.0% 6.00%

EMD

5.0% 6.00%

RealEstate 5.0% 7.00% I lliquidPrivate

10.0% 8.50%

Absolute Return 10.0% 5.00% RealEstate 5.0% 9.00%

RealReturn 10.0% 5.00% AbsoluteReturn 10.0% 5.00%

Private Equity 10.0% 6.50% RealReturn 10.0% 7.00%

Ca shEquivalent 3.0% 1.50% Private Equity 10.0% 6.50%

Total 100% C ashEquivalent 2.0% 1.50%

Tota l 100%



KERS‐nh June30,2017 KERS‐h June30,2017

Ass e tCla s s

Targe t

Alloca tion

Long‐Term

Expe cte d

Real Rateof

Return Ass e tCla s s

Targe t

Alloca tion

Long‐Te rm

Expe cte d

Real Rateof

Return

U.S.Equity

17.5% 5.75%

U.S.Equity

17.5% 5.75%

InternationalEquity 17.5% 7.38% Inte rnationalEquity 17.5% 7.38%

Gl obalBonds 10.0% 2.63% GlobalBonds 10.0% 2.63%

Gl obalCre dit

17.0% 3.63%

GlobalCre dit

17.0% 3.63%

Real Estate 5.0% 6.63% RealEstate 5.0% 6.63%

Abs olute Return 10.0% 5.63% AbsoluteReturn 10.0% 5.63%

Real Return 10.0% 5.13% RealReturn 10.0% 5.13%

Priva te

Equity 10.0% 8.25% Private Equity 10.0% 8.25%

Ca s hEquivalent 3.0% 1.88% CashEquivalent 3.0% 1.88%

Total 100% Total 100%



ForTRSthelong‐termexpectedrateofreturnonpensionplaninvestmentswasdeterminedusingalog‐

normaldistributionanalysisinwhichbest‐estimaterangesofexpectedfuturerealratesofreturn(expected

returns,net of pension plan investmentexpenseand inflation)aredeveloped foreach majorassetclass.



Theseranges are combinedto produce thelong‐term expectedrateof returnby weightingthe expected

futurerealratesofreturnbythetargetassetallocationpercentageandbyaddingexpectedinflation.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



60



TRS: June30,2018 June30,2017

AssetCla s s

Target

Allocation

Long‐Term

Expe cte d

RealRateof

Return AssetCla s s

Target

Allocation

Long‐Te rm

Expe cte d

RealRateof

Return

U.S.Equity 40% 4.20% U.S.Equity 42% 4.40%

NonU.S.Equity 22% 5.20% NonU.S.Equity 20% 5.30%

FixedIncome 15% 1.20% FixedIncome 16% 1.50%

Additiona lCate gories 8% 3.30% AdditionalCategories 9% 3.60%

RealEstate 6% 3.80% RealEstate 5% 4.40%

Priva te Equity 7% 6.30% PrivateEquity 6% 6.70%

Cash 2% 0.90% Cash 2% 0.80%

Total 100% Total 100%



Discountrate.ForKERSthediscountratesusedtomeasurethetotalpensionliabilityasoftheMeasurement

Date(June30,2018)andPriorMeasurementDate(June30,2017)were5.25%and5.25%,respectively,for

nonhazardous and 6.25% and 6.25%, respectively, for hazardous. The projection of cash flows used to



determinethediscountrateassumedthatcontributionsfromplanmembersandemployerswillbemade

atstatutorycontributionrates.Projectedinflowsfrominvestmentearningswerecalculatedusingthelong‐

termassumedinvestmentreturnof5.13%fortheyearendingJune30,2018and5.25%fortheyearending

June 30,

2017. The long‐term assumed investment rate of return was appliedto all periods of projected

benefitpaymentstodeterminethetotalpensionliability.



ForTRSthediscountratesusedtomeasuretheTPLasoftheMeasurementDateandPriorMeasurement

Datewere7.5%and4.49%,respectively.Theprojectionof

cashflowsusedtodeterminethediscountrate

wasperformedinaccordancewithGASB67.ItwasassumedthatPlanmembercontributionswillbemade

atthecurrentcontributionratesandthatEmployercontributionswillbemadeatstatutorilyrequiredrates.

Basedonthoseassumptions,thepensionplan’sfiduciarynet

positionwasprojectedtobeavailabletomake

allprojectedfuturebenefitpaymentsofcurrentplanmembersuntilthe2040planyearand,asaresult,the

MunicipalBondIndexRatewasusedinthedeterminationoftheSEIR.TherewasachangeintheMunicipal

BondIndexRatefromthe

PriorMeasurementDatetotheMeasurementDate,soasrequiredunderGASB

68,theSEIRattheMeasurementDateof4.49%wascalculatedusingtheMunicipalBondIndexRateasof

the Measurement Date (3.56%). This change in the discount rate is considered a change in actuarial

assumptionsorother

inputsunderGASB68.



SensitivityofMurrayStateUniversity’sproportionateshareofthenetpensionliabilitytochangesinthediscount

rate.The following presents the University’s proportionate share of the net pension liability calculated

usingthediscountratesasoftheMeasurementDateandthePriorMeasurementDate:



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



61

June30,2018

1%De creaseDiscountRate 1%Increase

Unive rsityʹsproportionate share‐KERS ‐nh

137,845,527$ 121,002,043$ 106,965,806$

4.25% 5.25% 6.25%

Unive rsityʹsproportionate share‐KERS ‐h

2,659,747 2,078,739 1,596,264

5.25% 6.25% 7.25%

Unive rsityʹsproportionate share‐TRS

75,483,214 58,888,449 44,925,998

6.50% 7.50% 8.50%



June30,2017

1%De creaseDiscountRate1%Increase

Unive rsityʹsproportiona te share‐KERS ‐nh

131,243,928$ 114,944,761$ 101,392,774$

4.25% 5.25% 6.25%

Unive rsityʹsproportiona te share‐KERS ‐h

2,462,793 1,936,158 1,499,167

5.25% 6.25% 7.25%

Unive rsityʹsproportiona te share‐TRS

141,583,047 114,216,721 91,761,714

3.49% 4.49% 5.49%



Pensionplanfiduciary net position. Detailedinformationaboutthepensionplans’fiduciarynetpositionis

availableintheseparatelyissuedKERSandTRSfinancialreports.



c) OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of

ResourcesRelatedtoOPEB



 The University reported a liability of $35,705,064 and $37,821,285 years ended June 30, 2019 and 2018,

respectively,foritsproportionatesharesofthenetOPEBliabilityintheplans.ThenetOPEBliability

for

TRSandKERSplansweremeasuredasofJune30,2018andJune30,2017andthetotalOPEBliabilityused

tocalculatethenetOPEBliabilitywasdeterminedbyanactuarialvaluationasofthatdateforallplans.

TheUniversity’sproportionsofthenetOPEBliabilitieswere

basedonprojectionsoftheUniversity’slong‐

term share of contributions to the OPEB plan relative to the projected contributions of all participating

schooldistricts,actuariallydetermined.AtJune30, 2018,the University’sproportionwas 0.417902% for

TRS‐medical,0.948638%forTRS‐life,0.888860%forKERS‐nh,and0.411632%forKERS

‐h.



 For the yearsended June30, 2019 and2018, the Universityrecognized OPEB expense of $1,268,266 and

$1,789,947,respectively.AtJune30,2019and2018,theUniversityreporteddeferredoutflowsofresources

anddeferredinflowsofresourcesrelatedtoOPEBsfromthefollowingsources:



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



62

June30,2019 June30,2018

DeferredOutflows DeferredInflows DeferredOutflows DeferredInflows

ofResources ofResources ofResources ofResources

Differencesbetweenexpectedand

actualexperience

—$ 2,236,244$ —$ 30,314$

Cha nge inassumptions

2,665,320 81,661 3,143,508 —

Ne tdifferencebetweenproje cte dand

actualearningsoninve s tme nts

73,000 476,478 45,000 528,923

Cha nge inproportiona te share

485,839 913,783 — 163,273

Contributionssubse que ntto the

measurement

date

1,787,808 — 1,793,291 —

Tota

5,011,967$ 3,708,166$ 4,981,799$ 722,510$



In the year ended June 30, 2019 deferred outflows ofresources of $1,787,808 related to OPEBs resulting

fromtheUniversitycontributionssubsequenttothemeasurementdatewillberecognizedasareduction

ofthenetOPEBliabilityintheyearsendedJune30,2019.Otheramountsreportedasdeferredoutflows

of

resourcesanddeferredinflowsofresourcesrelatedtoOPEBatJune30,2019willberecognizedinOPEB

expenseasfollows:



DeferredOutflows DeferredInflows

YearendedJune30: ofResources ofResources

2020 976,233$ 894,666$

2021 976,233 894,666

2022 976,233 894,666

2023 252,318 715,754

Thereafter 43,142 308,414

3,224,159$ 3,708,166$



Actuarialassumptions.ThetotalOPEBliabilityintheJune30,2018and2017actuarialvaluationwas

determinedusingthefollowingactuarialassumptions,appliedtoallperiodsincludedinthe

measurement:



June30,2018 J une30,2017

KERS TRS KERS TRS

Inflation 3.25% 3.0% 2.30% 3 .00%

Sa la ryincre a s e s 4.00%3.5%to7.2%,

includinginflation

4.00% 3.5%to7.2%,

includinginfla tion

Investmentrateofreturn 7.50% 8.00%(Med) 6.25% 8.00%(Med)

7.50%(Life) 7.50%(Life)



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



63

AsofJune 30,2018, and2017, mortalityratesforKERSwerebasedon theRP‐2000Combined Mortality

TableprojectedwithscaleBBto2013forallactiveandhealthyretired

membersandtheRP‐2000Combined

DisabledMortalityTableprojectedwithScaleBBto2013fordisabledmembers.



AsofJune30,2018,and2017,mortalityratesforTRSwerebasedontheRP‐2000CombinedMortalityTable

forMalesorFemales,asappropriate,withadjustmentsformortalityimprovementsbased

onaprojection

ofScaleBBto2025withasetbackof1yearforfemales.



The actuarial assumptions used in the June 30, 2018 and 2017 valuations were based on the results of

actuarialexperiencestudyfortheperiodJuly1,2008–June30,2013forKERSand

July1,2010–June30,

2015 for TRS. As a result of the actuarial experience studies, the expectation of life after disability was

adjustedintheJuly30,2015actuarialvaluationstomorecloselyreflectactualexperience.



ForKERSthelong‐termexpectedreturnonplanassetsisreviewedas

partoftheregularexperiencestudies

preparedeveryfiveyearsforKRS.Themostrecentanalysis,performedfortheperiodcoveringfiscalyears

2008through2013,isoutlinedinareportdatedApril30,2014.Severalfactorsareconsideredinevaluating

thelong‐termrateofreturnassumptionincludinglong

termhistoricaldata,estimatesinherentincurrent

marketdata,andalog‐normaldistributionanalysisinwhichbest‐estimaterangesofexpectedfuturereal

rates of return (expected return, net of investment expense, and inflation) were developed by the

investmentconsultantforeach majorassetclass.These ranges were combinedto

producethe long‐term

expectedrateofreturnbyweightingtheexpectedfuturerealratesofreturnbythetargetassetallocation

percentage and then adding expected inflation. The capital market assumptions developed by the

investment consultant are intendedfor use over a 10‐year horizon and may not be

usefulin setting the

long‐termrateof returnforfundingpension plans which coversa longertimeframe. Theassumptionis

intendedto be along‐term assumption andisnot expectedto changeabsent asignificantchangeinthe

assetallocation,achangeinthe inflationassumption,orafundamental

changeinthe marketthatalters

expectedreturnsinfutureyears.Thetarget assetallocationandbestestimates ofarithmeticrealratesof

return for each major asset class, as provided by KERS’s investment consultant, are summarized in the

followingtables:



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



64

KERS June30,2018

AssetCla s s Targe tAllocation

Long‐Te rmExpe cte d

RealRateofReturn

U.S.Equity 17.5%

U.S.LargeCap 5.0% 4.50%

U.S.MidCap 6.0% 4.50%

U.S.SmallCap 6.5% 5.50%

InternationalEquity 17.5%

Developed 12.5% 6.50%

Emerging 5.0% 7.25%

GlobalBonds 4.0% 2.63%

GlobalCr e dit 2.0% 3.63%

HighYield 7.0% 5.75%

EmergingMarketDebt 5.0% 5.50%

Priva te Credit 10.0% 8.75%

RealEstate 5.0% 7.63%

Abs olute Return 10.0% 5.63%

RealReturn 10.0% 6.13%

Priva te Equity 10.0% 8.25%

Ca s hEquivalent 2.0% 1.88%

Total 100%



For TRS the long‐term expected rate of return on OPEB plan investments was determined using a log‐

normaldistributionanalysisinwhichbest‐estimaterangesofexpectedfuturerealratesofreturn(expected

returns,net of pension plan investmentexpenseand inflation)aredeveloped foreach majorassetclass.



Theseranges are combinedto produce thelong‐term expectedrateof returnby weightingthe expected

futurerealratesofreturnbythetargetassetallocationpercentageandbyaddingexpectedinflation.



TRS‐Med June30,2018

AssetCla s s Targe tAllocation

Long‐Te rmExpe cte d

RealRateofReturn

GlobalEquity 58.0% 4.60%

FixedIncome 9.0% 1.20%

RealEstate 5.5% 3.80%

Priva te Equity 6.5% 6.30%

OtherAdditionalCategories 20.0% 3.30%

Ca s h(LIBOR) 1.0% 0.90%

Total 100%



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



65

TRS‐Li fe June30,2018

AssetCla s s Targe tAl loca tion

Long‐Te rmExpe cte d

RealRateofReturn

U.S.Equity 40.0% 4.20%

InternationalEquity 23.0% 5.20%

FixedIncome 18.0% 1.20%

RealEstate 6.0% 3.80%

Priva te Equity 5.0% 6.30%

OtherAdditionalCategories 6.0% 3.30%

Ca s h(LIBOR) 2.0% 0.90%

Total 100%



Discountrate.ForKERSthediscountratesusedtomeasurethetotalOPEBliabilityasoftheMeasurement

Date(June30,2018)was5.86%fornonhazardousand5.88%forhazardous.Theprojectionofcashflows

usedtodeterminethediscountrateassumedthatcontributionsfromplanmembersandemployerswill

be

madeatstatutorycontributionrates.Projectedinflowsfrominvestmentearningswerecalculatedusingthe

long‐term assumed investment return of 6.25%. The long‐term assumed investment rate of return was

appliedtoallperiodsofprojectedbenefitpaymentstodeterminethetotalOPEBliability.



ForTRSthediscountrates

usedtomeasurethetotalOPEBliabilityasoftheMeasurementDatewas8.0%

for medical and 7.5% for life. The projection of cash flows used to determine the discount rate was

performedinaccordancewithGASB74.ItwasassumedthatPlanmembercontributionswillbemadeat

the

currentcontributionratesandthatEmployercontributionswillbemadeatstatutorilyrequiredrates.



SensitivityofMurrayStateUniversity’sproportionateshareofthenetOPEBliabilitytochangesinthediscountrate.

ThefollowingpresentstheUniversity’sproportionateshareofthenetOPEBliabilitycalculatedusingthe

discountratesas

oftheMeasurementDate:



June30,2018

1%De crease DiscountRate 1%Increase

Unive rsityʹsproportionate share‐KERS ‐nh

24,726,227$ 21,074,088$ 18,035,205$

4.86% 5.86% 6.86%

Unive rsityʹsproportionate share‐KERS ‐h

137,404 (136,530) (356,166)

4.88% 5.88% 6.88%

Unive rsityʹsproportionate share‐TRS‐medic a

17,002,709 14,500,008 12,414,907

7.00% 8.00% 9.00%

Unive rsityʹsproportionate share‐TRS‐life 407,239 267,498 152,875

6.50% 7.50% 8.50%



OPEB plan fiduciary net position. Detailed information about the OPEB plans’ fiduciary net position is

availableintheseparatelyissuedKERSandTRSfinancialreports.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



66



16. ComponentUnits



MurrayStateUniversityFoundation,Inc.

Murray State University Foundat io n , Inc. (Foundation) is a Kentucky nonprofit corporation formed to

receive, investand expend funds for the enhancement and improvement

 of the University.It is a legally

separate,tax‐exemptcomponentunitoftheUniversitythatmanagescertainendowmen tsandinvestments

onbehalfoftheUniversity.TheFoundation has aBoardofTrusteesseparate fromthatoftheUniversity.

AlthoughtheUniversitydoesnotcontrolthetimingoramount of

receiptsfromtheFoundation,themajority

of resources or income thereon that the Foundation holds and invests is restricted to the activities of the

Universitybythedonors. Becausetheserestrictedre sourc es heldby theFoundationcanonlybeusedby,or

for the benefit of, the University, the Foundationis

 considered a component unitof the University and is

discretelypresentedintheUniversity’sfinancialstatementpackage.



During the years ended June 30, 2019 and 2018, the Foundation made payments of $3,174,935 and

$2,827,770,respectively,onbehalfoftheUniversityfromrestrictedsources.AccountsreceivableatJune

30,2019and

2018,fromtheFoundationwere$319,944and$249,045,respectively.Accountspayabletothe

Foundation as of June30, 2019 and 2018 were not significant.Complete financial statements for the

FoundationcanbeobtainedfromtheMSUFoundationOffice,100NashHouse,Murray,Kentucky42071.



SignificantnotestotheFoundation’sfinancial

statementsareasfollows:

a) InvestmentsandInvestmentReturn

InvestmentsatJune30consistedof:



2019 2018

Moneymarketmutualfunds 1,693 ,111$ 1,738,348$

Equity secur ities 818,400 781,200

Cashvalueof lifeins ura n cepolicies 266,987 246,916

Mutualfunds 75,470,251 72,588,053

Asset‐backedbonds 1,343 ,314 401,871

Mortgage‐backedb onds 1,566,292 1,871,468

Governmentbonds 27,858,234 27,377,02 3

Municipalbonds 369,691 461,928

Corporateb onds 7,270,684 6,481,095

Ot her 255,203 —

Benefici alinterestsintr usts 7,745,395 6,901,804

124,657,562$ 118,849,706$



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



67

Totalinvestmentreturniscomprisedofthefollowing:



2019 2018

Interestanddividen dincome 1,532,760$ 1,184,057$

Realizedgainsoninv estments 1,728,547 2,366,282

Unrealizedlossesoninvestments 1,278,222 3,148,312

Management fees 550,927 537,716

5,090,456$ 7,236,367$



b) AssetsHeldforOthers

Assets held for others represent resources in the possession of, but not under the control of, the

Foundation.AssetsheldforothersasofJune30wereasfollows:



2019 2018

MurraySt a teUniver sity 26,403,726$ 26,250,195$

MurraySt a teUniversityAlumniAssociat ion 1,180,268 1,207,232

Ot hers 44,304 44,304

27,628,298$ 27,501,731$



c) AnnuitiesandTrustsPayable

TheFoundationhasbeentherecipientofseveralgiftannuitieswhichrequirefuturepaymentstothe

donorortheirnamedbeneficiaries.Theassetsreceivedfromdonorsarerecordedatfairvalueonthe

dateofthegift.TheFoundationhasrecordedaliabilityasofJune

30,2019and2018,$1,207,310and

$1,131,067,respectively,whichrepresentsthepresentvalueofthefuturegiftannuityobligations.The

liabilityhasbeendeterminedusingdiscountratesrangingfrom1.2%to7.0%.AsofJune30,2019,and

2018,cash,cashequivalents,andinvestmentsrelativetosplitinterestagreementsand

otherliabilities

discussedintheFoundation’sNote12total$8,689,131and$8,076,000,respectively.

The Foundation administers several charitableremainder unitrusts and annuitytrusts. A charitable

remainder trust provides for the payment of distributions to the grantor or other designated

beneficiariesoverthetrustʹsterm(usuallythedesignatedbeneficiaryʹslifetime),

eitherintheformofa

percentageofthefairvalueofthetrustʹsassets(unitrust)orintheformofaspecifieddollaramount

(annuitytrust).Attheendofthetrustʹsterm,theremainingassetsareavailablefortheFoundationʹs

use. The portion of the

trust attributable to the future interest of the Foundation is recorded in the

statements of activities as contributions withdonor restriction in the period the trust is established.

Assets (investments) held in the charitable remainder trusts are recorded at fair value in the

Foundationʹsstatementsoffinancialposition.Thepresent

valueoftheestimatedfuturepaymentsis

$4,001,463 and $4,247,120 as of June 30, 2019 and 2018, respectively, which was calculated using

discountratesrangingfrom1.8%to8.0%,andapplicablemortalitytables.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



68

d) NetAssetswithDonorRestrictions

NetassetswithdonorrestrictionsasofJune30,2019and2018arerestrictedforthefollowingpurposes:



2019 2018

Subject toexpenditureforspecifiedpurpose:

Scholarships 5,13 0,197$ 4,890,231$

Instructionandinstitutionalsuppor t 8,739,118 8,274,306

Chairs,profess orsh ips,academicstipendsandseminar s 604,192 525,020

Operationsofthegolfcours e 83 ,932 36,385

Prom isetogive,theproceedsfromwhichhavebeen

restrictedbydonorsfor: — —

Scholar ships 511,313 80,764

Institutionalsupport 245 ,13 9 207,396

15,313,891

14,014,102

Subject topassageoftime:

Assetsheldundersplit ‐interestagr eements 76 3,186 603,425

Subject toa ppropriationandexpenditurewhena

specificeventoccurs:

Scholarships 1,17 5,090 3,547,647

Instructionandinstitutionalsuppor t 1,633,630 1,296,733

Prom isetogive,theproceedsfromwhichhavebeen

restrictedbydonorsfor:

Scholar ships 258,943 285,843

Institutionalsupport 6 0,38 7 47,381



Chairsandprofessor sh ips — 118,750

3,128,050 5,296,354



Subject toendow mentspendingpolicyandappropr i a tion:

Scholarships 44,058,146 39,841,195

Instructionandinstitutionalsuppor t 14,158,481 13,543,809

Chairsandpr ofessor ships 3,344,347 3,205,053

Operationsofthegolfcourse 1,595,771 1,589,435

Anyactivity oftheFoundat ion 487,572 480,449

63,644,317 58,659,941

Tota lnet asset swithdonorr estr ict ions 82,849,444$ 78,573,822$



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



69

NetAssetsReleasedfromRestriction



2019 2018

Satisfactionofpurposerestrictions:

Scholar ships 1,76 5,478$ 1,656,831$

Instructionandins titutionalsuppor t 1,026,674 1,219,588

Chairsandprofess orsh ips 175 ,30 8 182,718

Oper at ionsof theGolfCourse — 45,768

Ba ddebtexpense 100,000 —

Dist r ib ut ion s (proceedsar enot restrictedbydonors ):

Netchangesinannuitiesandsplit‐interestagr eement 107,475 (225,827)

3,174,935$ 2,879,078$



17. RiskManagement



TheUniversityisexposedtovarious risks of lossrelatedtotorts;theftof, damagetoanddestruction of

assets; error and omission; employee injuries and illnesses; natural disasters and employee health and

accidentbenefits.Commercialinsurancecoverageispurchasedforclaimsarisingfromsuchmattersother

thanthoserelatedtoworkers’compensation,naturaldisastersandemployeehealthbenefits.Settledclaims

havenotexceededthiscommercialcoverageinanyofthethreeprecedingyears.EffectiveJune30,2018,

Murray State withdrew from the Kentucky Personnel Cabinetʹs Workersʹ Compensation Program and

enteredintoafullinsurancecontractwithBrickStreetInsuranceCompanyonJuly1,2018.Thischangehas

providedahigherlevelofinstitutionalsupportforthesafetyandlosscontrolmanagementservice.



ClaimsandLitigation

TheUniversityisadefendantinvariouslawsuits.Itistheopinionofmanagementanditslegalcounsel,

based in part on the doctrine of sovereign immunity and other statutory provisions, that the ultimate

outcomeof litigation willnot havea materialeffect onthe future operationsor financial positionof

the

University.



Commitments

TheUniversityhasoutstandingcommitmentsunderconstructioncontractsof$8,809,347and$2,166,099as

ofJune30,2019and2018,respectively.



GovernmentGrants

TheUniversityiscurrentlyparticipatinginnumerousgrantsfromvariousdepartmentsandagenciesofthe

federal and state governments.The expenditures of grant proceeds must be for allowable and eligible

purposes.Single Audits and audits by the granting department or agency may result in requests for

reimbursementofunusedgrantproceeds

ordisallowedexpenditures.Uponnotificationoffinalapproval

bythegrantingdepartmentoragency,thegrantsareconsideredclosed.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



70



18. FairValueMeasurement



The University categorizes its fair value measurements within the fair value hierarchy established by

generallyacceptedaccountingprinciples(GAAP).Thehierarchyisbasedonthevaluationinputs

(sources

of informationfor calculating fair value) used to measure the fair value of the asset. Level 1 inputs are

quotedpricesinactivemarketsforidenticalassets;Level2inputsaresignificantotherobservableinputs;

Level3inputsaresignificantunobservableinputs.



TheUniversityhasthefollowingrecurringfair

valuemeasurementsasofJune30,2019:



 Cash equivalents with a value of $144,871,606 held by the Commonwealth of Kentucky in an

intermediateinvestmentpool;fairvaluehierarchylevel2.



 Restrictedinvestmentsfordebtreserveswithavalueof$319,317heldbyUSBankinmoneymarket

accounts;

fairvaluehierarchylevel1.



 Restrictedquasi‐endowmentandendowmentinvestmentswithavalueof$26,403,725heldbytheMSU

Foundationinaninvestmentpool;fairvaluehierarchylevels1,2,or3.

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



71

19. NaturalExpenseClassificationswithFunctionalClassifications



The University’s operating expenses by functional classification for the years ended June30 were as

follows:





Fund Compensation Noncapitalized

Cl assifi cati on andBenefits Operati ons Uti li ti es Equi pment Schol arshi ps Total

Instruction 53,346,041$ 7,310,718$ 268$ 407,953$ —$ 61,064,980$

Research 1,386,830 793,881 243 77,147 — 2,258,101

Publicservice 4,185,736 1,358,514 358,049 74,943 — 5,977,242

Libraries 1,766,640 1,610,502 — 14,333 — 3,391,475

Acade micsupport 4,187,473 2,220,942 76,221 215,223 — 6,699,859

Stude ntservice s 9,761,944 5,711,500 10,114 146,208 (92,275) 15,537,491

Ins titutiona lsupport 18,618,324 (506,834) 89,529 91,204 —

 18,292,223

Ope ra tionsandmaintenance

ofplant 7,416,132 6,322,728 6,210,115 7,249 — 19,956,224

Stude ntfinancialaid — — — — 12,649,543 12,649,543

Depre ciation — 9,154,634 — — — 9,154,634

Sta te pensionexpense

GASB68 (8,595,091) — — — — (8,595,091)

Sta te pensionexpense‐OPEB

GASB75 1,268,266 — — — — 1,268,266

Auxiliarye nterprises 5,268,592 10,309,669 2,844,822

 68,352 107,585 18,599,020

uxi

iary

epreciation — 2,693,821 — — — 2,693,821

Tota lexpenses 98,610,887$ 46,980,075$ 9,589,361$ 1,102,612$ 12,664,853$ 168,947,788$

NaturalCl assi fi cati on

YearEndedJune30,2019



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



72



Fund Compensation Noncapitalized

Classification and Benefits Operations Utilities Equipment Scholarships Total

Ins truction

55,175,427$ 6,899,102$ 4,158$ 493,798$ —$

62,572,485$

Research

1,349,591 1,067,699 — 54,737 —

2,472,027

Public service

5,027,949 1,280,651 388,359 34,717 —

6,731,676

Libraries

1,773,201 1,672,064 60 82,096 —

3,527,421

Academic support

4,384,363 1,876,034 57,366 81,583 —

6,399,346

Student services

10,234,942 5,436,611 12,385 122,232 661,032

16,467,202

Institutional support

18,893,825 (956,656) 429,183 87,450 —

18,453,802

Ope ra tionsand

maintenance

ofplant 7,469,780 10,058,930 6,233,870 15,351 —

23,777,931

Stude ntfinancialaid — — — — 12,735,820

12,735,820

Depreciation

— 9,330,382 — — —

9,330,382

Sta te pensionexpense

GASB68 (3,008,564) — — — —

(3,008,564)

Sta te pensionexpense‐OPEB

GASB75 1,787,941 — — — —

1,787,941

Auxiliarye nterprises 7,663,741 12,044,366 2,834,209 66,403 —

22,608,719

uxi

iary

epreciation — 2,757,883 — — —

757

883

Total expenses 110,752,196$ 51,467,066$ 9,959,590$ 1,038,367$ 13,396,852$ 186,614,071$

Natural Classification

Year Ended June 30, 2018



20. SegmentInformation



Asegmentisanidentifiableactivityreportedasastand‐aloneentityforwhichoneormorerevenuebonds

areoutstanding.Asegmenthasaspecificallyidentifiablerevenuestreampledgedinsupportofrevenue

bondsandhasrelatedexpenses,gainsandlossesandassetsandliabilities

thatarerequiredbyanexternal

partytobeaccountedforseparately.TheSusanE.BauernfeindStudentRecreationandWellnessCenteris

theUniversity’sonlyreportablesegment.



SusanE.BauernfeindStudentRecreationandWellnessCenter

The Universityentered into anagreement with the City of Murray, Kentuckyon December 30, 2002, to

finance the construction of a student recreation/wellness center.The University established a $3.00 per

credithourstudentfee,effectivefortheFall2002semester,tobedesignatedastheWellnessCenterFee.A

portion

oftherevenuesfromthisfeewillbeusedtofundalldebtanddebtrelatedexpensesaccordingto

the terms and provisions of the Memorandum of Agreement between the University and the City of

Murray.



The City of Murray refinanced the original bonds in the Spring of 2012 to

take advantage of an overall

decrease in net interest costs.The terms of original agreement between the University and the City of

Murrayremainedunchanged,withtheexceptionofchangesintheamountofdebtandinterestpayments.



CondensedfinancialinformationasofandfortheyearsendedJune30of

theUniversity’sWellnessCenter

segmentisasfollows:

MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



73



WellnessCenter‐CondensedStatementsofNetPosition



2019 2018

Asse ts

Curre ntassets 901,156$ 899,978$

Noncurrentassets 1,709,881 1,786,542

Ca pitalassets,netofaccumulated

depreciation 6,706,507 6,975,221

Tota lasse ts 9,317,544 9,661,741

Deferre doutflows ofresources

Bondrefundingloss 235,541 285,268

Tota ldeferredoutflows ofresources 235,541 285,268

Lia bilitie s

Curre ntliabilitie s 29,587 29,347

Noncurrentliabilities 6,994,999 7,389,999

Tota lliabilities 7,024,586 7,419,346

Ne tposition

Investedinca pitalassets,netof

de btandaccumulateddepre ciation (52,952) (129,510)

Restricted

Expe ndablecapital 893,048 995,348

Expe ndablede btservice 787,247 762,996

Unr e st ricted 901,156 898,829

Tota

netposition 2,528,499

 2,527,663





MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



74



WellnessCenter‐CondensedStatementsofRevenues,Expenses

andChangesinNetPosition

2019 2018

Ope ra tingrevenues 93,813$ 91,197$

Ope ra tingexpenses (556,216) (495,515)

Depre ciatione xpense (268,715) (268,715)

Ope ra tingloss (731,118) (673,033)

Nonope ra tingreve nues 731,954 776,783

Cha nge innetposition 836 103,750

Ne tposition,beginningofyear 2,527,663 2,423,913

Ne tposition,en

o

year 2,528,499

 2,527,663





WellnessCenter‐CondensedStatementsofCashFlows



2019 2018

Ca s hflowsfrom

Ope ratingactivities (562,853)$ (505,218)$

Nonc a pita lfinancing activities 461,271 495,584

Ca pita landrelatedfinancingact ivities 2,466 15,166

Investingact ivities 24,783 7,262

Ne tincre a s e incash (74,333) 12,794

Ca s h,beginningofyear 2,685,370 2,672,576

Ca s

,en

o

ye ar 2,611,037

 2,685,370





21. RiskandUncertainties



TheUniversityinvestsinvariousinvestmentsecurities.Investmentsecuritiesareexposedtovariousrisks

suchasinterestrate,marketandcreditrisks.Duetothelevelofriskassociatedwithcertaininvestment

securities,itisatleastreasonablypossiblethatchangesinvaluesofinvestment

securitieswilloccurinthe

neartermandthatsuchchangecouldmateriallyaffecttheinvestmentamountsreportedinthestatements

ofnetposition.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



NotestotheFinancialStatements



75



22. Contingency



Asofthisdate,June30,2019,J.H.RichmondResidenceHallisfullyrestoredtotheconditionitwasinprior

totheeventandwasopenforoccupancy

inAugust2019.



OtherclaimsrelatedtopersonalpropertydamageandbodilyinjuryareonfilewiththeKentuckyClaims

Commission.Themaximumamount/totalawardforallclaimsfiledwiththeKentuckyClaimsCommission

is$400,000whichiswithinthelimitsofgeneralliabilityinsuranceineffectatthetime

oftheevent.



23. CurrentEconomicConditions(unaudited)



The current economic environment presents the University with unprecedented circumstances and

challenges which, in some cases, have resulted in declines in contributions, governmental support and

grant revenue.The financial statements have been prepared using values and information currently

availabletothe

University.



24. SubsequentEvents



TheUniversityissuedgeneralreceiptsbonds inJuly2019totaling$4.3millionfor therefundingof2009

SeriesA generalreceiptsbondsoriginallyobtainedforthecompletionofJ.H.RichmondResidenceHall

andvariousotherprojectsunder$600,000.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



SchedulesofRequiredSupplementaryInformation



YearsendedJune30,2018,2017,2016,2015,and2014



SeeReportofIndependentAuditors

76



ProportionateShareOfTheNetPensionandOPEBLiabilities



KERS‐No n‐Ha za rdo us Pe nsionPlan

2018 2017 2016 2015 2014

Unive rs ityʹsproportionofthenetpe nsionliability 0.889474% 0.858544% 0.836194% 0.854037% 0.882259%

Unive rs ityʹsproportionate shareofthenetpensi on

liability 121,002,044$ 114,944,760$ 95,321,852$ 85,676,061$ 79,154,689$

Unive rs ityʹscove red‐employeepayroll 13,430,657$ 13,757,275$ 12,787,487$ 13,188,333$ 13,917,604$

Unive rs ityʹsproportionate shareofthenetpensi on

lia bilityasa

perce ntage ofits cove re d‐employeepayroll 900.94% 835.52% 745.43% 649.64% 568.74%

Planfiduciarynetpositionasaperce ntage oftheto tal

pensionliability 12.84% 13.00% 14.80% 18.83% 22.32%



KERS‐Ha za r do us Pe nsionPlan

2018 2017 2016 2015 2014

Unive rs ityʹsproportionofthenetpe nsionlia bility 0.411530% 0.389490% 0.396922% 0.388584% 0.405301%

Unive rs ityʹsproportiona te shareofthenetpe nsion

liability 2,078,740$ 1,936,158$ 1,554,497$ 1,332,707$ 1,035,001$

Unive rs ityʹscove re d‐employeepayroll 629,378$ 695,282$ 585,712$ 492,259$ 523,146$

Unive rs ityʹsproportiona te shareofthenetpe nsion

liabilityasa

perce ntage ofits cove red‐employeepayroll 330.28% 278.47% 265.40% 270.73% 197.84%

Planfiduciarynetpos itionasapercentage ofthetotal

pensionlia bility 56.10% 55.00% 57.41% 61.70% 68.74%



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



SchedulesofRequiredSupplementaryInformation



YearsendedJune30,2018,2017,2016,2015,and2014



SeeReportofIndependentAuditors

77

ProportionateShareOfTheNetPensionandOPEBLiabilities(Continued)



KERS ‐Non‐Ha za r dous OPEBPlan

2018 2017

Unive rs ityʹsproportionofthenetOPEBliability 0.888860% 0.858544%

Unive rs ityʹsproportiona te shareofthene tOPEBliability 21,074,087$ 21,772,351$

Unive rs ityʹscove re d‐employeepayroll 13,989,750$ 13,677,439$

Unive rs ityʹsproportiona te shareofthene tOPEBliability

asaperce ntageofits cove red‐employeepayroll 150.64% 159.18%

Planfiduciar yne tpositi on

asape rcentage ofthetotal

OPEBliability 27.32% 24.40%



KERS ‐Ha za rdous OPEBPla n

2018 2017

Unive rs ityʹsproportionofthenetOPEBliability 0.411632% 0.389490%

Unive rs ityʹsproportiona te shareofthene tOPEBliability (136,532)$ 23,490$

Unive rs ityʹscove re d‐employeepayroll 783,406$ 666,367$

Unive rs ityʹsproportiona te shareofthene tOPEBliability

asaperce ntageofits cove red‐employeepayroll ‐17.43% 3.53%

Planfiduciar yne tpositi on

asape rcentage ofthetotal

OPEBliability 106.83% 98.80%



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



SchedulesofRequiredSupplementaryInformation



YearsendedJune30,2018,2017,2016,2015,and2014



SeeReportofIndependentAuditors

78



ProportionateShareOfTheNetPensionandOPEBLiability(Continued)



TRSPe nsionPlan

2018 2017 2016 2015 2014

Unive rsityʹsproportionofthenetpe nsionli ability 0.429000% 0.404176% 0.698165% 0.722622% 0.710400%

Unive rsityʹsproportionate shareofthenetpe nsion

liability 58,888,449$ 114,216,721$ 215,900,958$ 176,518,973$ 153,391,029$

Unive rsityʹscove re d‐employeepayrol l 14,824,781$ 13,804,356$ 23,671,557$ 24,966,648$ 24,460,052$

Unive rsityʹsproportionate shareofthenetpe nsion

lia bilityasape rce ntageof

its cove re d‐employeepayroll 397.23% 827.40% 912.07% 707.02% 627.11%

Planfid uciarynetpositionasape rcentage oftheto tal

pensionlia bility 59.28% 39.83% 35.22% 42.49% 45.59%



TRSOPEB‐Me dica l

2018 2017

Unive rsityʹsproportio nofthenetOPEBlia bility 0.417902% 0.443448%

Unive rsityʹsproportio nate share ofthenetOPEBliability 14,500,008$ 15,812,389$

Unive rsityʹscove re d‐employeepayroll 14,441,272$ 15,145,665$

Unive rsityʹsproportio nate share ofthenetOPEBlia bility

asaperce ntageofitscove re d‐employeepayroll 100.41% 104.40%

Planfiduciarynetposi tionas

aperce ntageoftheto tal

OPEBlia bility 25.54% 21.18%



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



SchedulesofRequiredSupplementaryInformation



YearsendedJune30,2018,2017,2016,2015,and2014



SeeReportofIndependentAuditors

79

ProportionateShareOfTheNetPensionandOPEBLiability(Continued)



TRSOPEB‐Life

2018 2017

Unive rs ityʹsproportionofthenetOPEBliability 0.948638% 0.970240%

Unive rs ityʹsproportiona te shareofthene tOPEBliability 267,497$ 213,055$

Unive rs ityʹscove re d‐employeepayroll 32,781,704$ 33,137,887$

Unive rs ityʹsproportiona te shareofthene tOPEBliability

asaperce ntageofits cove red‐employeepayroll 0.82% 0.64%

Planfiduciar yne tpositi onasa

percentageoftheto tal

OPEBliability 74.97% 79.99%



Thesescheduleswillultimatelypresenttenyearsofdatawhenavailable.



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



SchedulesofRequiredSupplementaryInformation



YearsendedJune30,2018,2017,2016,2015,and2014



SeeReportofIndependentAuditors

80

SchedulesofMurrayStateUniversityContributions



KERS‐No n‐Ha za rdous PensionPlan

20182017201620152014

Contra c tuallyrequiredcontribution 5,577,805$ 5,341,635$ 4,290,378$ 4,420,027$ 3,912,372$

Contributionsinrelationtothe 

contractuallyrequiredcontribution (5,577,805) (5,341,635) (4,290,378) (4,420,027) (3,912,372)

Contributiondeficiency ‐$ ‐$ ‐$ ‐$ ‐$

Universityʹscovere d‐employee

payroll 13,430,657$ 13,757,275$ 12,787,487$ 13,188,333$ 13,917,604$

Contributionsasape rcentage of

cove re d

‐employeepayroll 41.53% 38.83% 33.55% 33.51% 28.11%



KERS‐Ha za rdous PensionPlan

2018 2017 2016 2015 2014

Contra ctua llyrequiredcontr ibution 146,694$ 136,435$ 94,306$ 115,000$ 183,317$

Contributionsinrela tiontothe 

contractuallyrequiredcontribution (146,694) (136,435) (94,306) (115,000) (183,317)

Contributionde ficie ncy ‐$ ‐$ ‐$ ‐$ ‐$

Unive rs ityʹscove re d‐employee

payroll 629,378$ 695,282$ 585,712$ 492,259$ 523,146$

Contributionsasaperce ntage of

cove red‐employee

payroll 23.31% 19.62% 16.10% 23.36% 35.04%



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



SchedulesofRequiredSupplementaryInformation



YearsendedJune30,2018,2017,2016,2015,and2014



SeeReportofIndependentAuditors

81

SchedulesofMurrayStateUniversityContributions(Continued)



KERS‐Non‐Ha za rdo us OPEBPlan

2018 2017

Contractua llyrequiredcontr ibution 1,142,681$ 1,108,416$

Contributionsinrelationtothe

contractua llyrequiredcontribution (1,142,681) (1,108,416)

Contributionde ficie ncy ‐$ ‐$

Unive rs ityʹscove re d‐employee

payroll 13,989,750$ 13,677,439$

Contributionsasape rcentageof

cove re d‐employeepayroll 8.17% 8.10%



KERS‐Ha za rdous OPEBPlan

2018 2017

Contractua llyrequiredcontribution 15,463$ 17,734$

Contributionsinrelationtothe

contractua llyrequiredcontribution (15,463) (17,734)

Contributionde ficie ncy ‐$ ‐$

Unive rs ityʹscove re d‐employee

payroll 783,406$ 666,367$

Contributionsasape rcentageof

cove re d‐employeepayroll 1.97% 2.66%



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



SchedulesofRequiredSupplementaryInformation



YearsendedJune30,2018,2017,2016,2015,and2014



SeeReportofIndependentAuditors

82

SchedulesofMurrayStateUniversityContributions(Continued)



TRSPe nsionPlan

2018 2017 2016 2015 2014

Contra ctua llyrequiredcontr ibution 5,349,835$ 5,326,832$ 5,555,229$ 5,684,344$ 5,519,075$

Contributionsinrela tiontothe 

contractuallyrequiredcontribution (5,349,835) (5,326,832) (5,555,229) (5,684,344) (5,519,075)

Contributionde ficie ncy ‐$ ‐$ ‐$ ‐$ ‐$

Unive rs ityʹscove re d‐employee

payroll 14,824,781$ 13,804,356$ 23,671,557$ 24,966,648$ 24,460,052$

Contributionsasaperce ntage of

cove red‐employeepayroll 36.09% 38.59% 23.47% 22.77% 22.56%



TRS‐Me dicalOPEBPlan

2018 2017

Contractuallyrequiredcontribution 744,415$ 759,751$

Contributions inrelationtothe 

contra ctua llyrequiredcont rib ution (744,415) (759,751)

Contributionde ficie ncy ‐$ ‐$

Unive rsityʹscove red‐employee

payroll 14,441,272$ 15,145,665$

Contributions asapercentage of

cove red‐employeepayroll 5.15% 5.02%



MURRAYSTATEUNIVERSITY

AComponentUnitoftheCommonwealthofKentucky



SchedulesofRequiredSupplementaryInformation



YearsendedJune30,2018,2017,2016,2015,and2014



SeeReportofIndependentAuditors

83

SchedulesofMurrayStateUniversityContributions(Continued)



TRS‐Life OPEBPlan

2018 2017

Contrac tua llyrequiredcontributio n 9,288$ 9,362$

Contributions inrela tiontothe

contractua llyrequiredcont rib ution (9,288) (9,362)

Contributionde ficie ncy ‐$ ‐$

Unive rs ityʹscove re d‐employee

payroll 32,781,704$ 33,137,887$

Contributions asape rce nta geof

cove re d‐employeepayroll 0.03% 0.03%



Therewerenochangestobenefittermsfortheplans’yearendedJune30,2018.Changesinassumptions

didoccurfortheKERSandTRSplansastheresultofachangeinthediscountrates,whichchangedfrom

5.25%and4.49%,respectively,inplanyear2017to5.25%and

7.50%,respectively,inplanyear2018.



Thesescheduleswillultimatelypresenttenyearsofdatawhenavailable.

Lexington

■

Louisville

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Raleigh deandorton.com



ReportonInternalControloverFinancialReportingandonComplianceandOtherMattersBasedonanAudit

ofFinancialStatementsPerformedinAccordancewithGovernmentAuditingStandards

ReportofIndependentAuditors



BoardofRegents

MurrayStateUniversity

Murray,Kentucky

Wehaveaudited,inaccordancewiththeauditingstandards generallyacceptedintheUnit

edStatesofAmerica

and the standards applicable to financial audits contained in Government Auditing Standards issued by the

ComptrollerGeneraloftheUnitedStates,thefinancialstatementsofMurrayState University(theUniversity),as

ofandfortheyearsendedJune30,2019and2018,andtherelatednotestothef

inancialstatementswhichcollectively

comprisetheUniversityʹsbasicfinancialstatements,andhaveissuedourreportthereondatedOctober2,2019.

InternalControlOverFinancialReporting

Inplanningandperformingourauditsofthefinancialstatements,weconsideredtheUniversityʹsinternalcontrol

over financial reporting (internal control) to deter

mine the audit procedures that are appropriate in the

circumstancesfor the purpose of expressingour opinion on thefinancial statements,but not for the purpose of

expressinganopinionontheeffectivenessoftheUniversity’sinternalcontrol.Accordingly,wedonotexpressan

opinionontheeffectivenessoftheUn

iversity’sinternalcontrol.

Adeficiencyin internal control existswhen thedesign oroperationof acontrol doesnot allowmanagement or

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,

misstatementsonatimelybasis.Amaterialweaknessisadeficiency,oracombinationofde

ficiencies,ininternal

control,suchthatthereisareasonablepossibilitythatamaterialmisstatementoftheentity’sfinancialstatements

will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a

combinationofdeficiencies,ininternalcontrolthatisles

sseverethanamaterialweakness,yetimportantenough

tomeritattentionbythosechargedwithgovernance.

Ourconsiderationofinternalcontrolwasforthelimitedpurposedescribedinthefirstparagraphofthissection

andwasnotdesignedtoidentifyalldeficienciesininternalcontrolthatmightbema

terialweaknessesorsignificant

deficiencies.Giventheselimitations,duringourauditwedidnotidentifyanydeficienciesininternalcontrolthat

weconsidertobematerialweaknesses.Wedididentifyacertaindeficiencyininternalcontrol,describedinthe

accompanying schedule of findings and responses as item 2019‐001, which we consider to be a si

gnificant

deficiency.

BoardofRegents

MurrayStateUniversity

ReportofIndependentAuditors,continued

85

ComplianceandOtherMatters

AspartofobtainingreasonableassuranceaboutwhethertheUniversityʹsfinancialstatementsarefreeofmaterial

misstatement,weperformedtestsofitscompliancewithcertainprovisionsoflaws,regulations,contractsandgrant

agreements,noncompliance

withwhichcouldhaveadirectandmaterialeffectonthedeterminationoffinancial

statementamounts.However,providinganopiniononcompliancewiththoseprovisionswasnotanobjectiveof

ourauditand,accordingly,wedonotexpresssuchanopinion.Theresultsofourtestsdisclosednoinstancesof

noncomplianceorothermattersthatarerequiredtobereportedunderGovernmentAuditingStandards.

TheUniversity’sResponsetoFinding

The University’s response to the findings identified in our audit is described in the accompanying schedule of

findingsandresponses.TheUniversity’sresponsewasnotsubjectedtoauditproceduresappliedin

theauditof

thefinancialstatementsand,accordingly,weexpressnoopiniononit.

PurposeofthisReport

Thepurposeofthisreportissolelytodescribethescopeofourtestingofinternalcontrolandcomplianceandthe

resultsofthattesting,andnottoprovideanopinionon

theeffectivenessoftheUniversityʹsinternalcontroloron

compliance.ThisreportisanintegralpartofanauditperformedinaccordancewithGovernmentAuditingStandards

inconsideringtheUniversity’sinternalcontrolandcompliance.Accordingly,thiscommunicationisnotsuitable

foranyotherpurpose.



Lexington,Kentucky

October2,2019



86

MURRAYSTATEUNIVERSITY

ScheduleofFindingsandResponses

YearendedJune30,2019

SectionI‐SummaryofAuditorsʹResults:

FinancialStatements:

a. Thetypeofauditorsʹreportissuedonthefinancialstatements:Unmodifiedopinion

b. Internalcontroloverfinancialreporting:

Materialweaknessesidentified:No

Significantdeficiencyidentified:Yes

c. Noncompliancematerialtothefinancialstatementsnoted:No

SectionII–FinancialStatementFinding:

FindingsRelatingtotheFinancialStatementsReportedinAccordancewithGovernmentAccountingStandards:

Finding2019‐001:

Condition,effect,andrecommendation:

During 2019, the University and Murray State University Foundation, Inc. (the Foundation), fell victim to a

sophisticatedandrelativelynewbusinessemailcompromisescheme.TheUniversityhadcontractedwithavendor

topurchaseequipmentfortheWellnessCenterforapproximately$33,000.TheFoundationwasprovidingfunds

forthepurchase.InMay

of2019,theUniversityreceivedaninvoiceandpaymentrequestviaacompromisedlook‐

a‐like email account. The provided invoice flowed through the disbursement process and was approved by

appropriateparties.InordertoprovidepaymentviaACHasrequestedbythevendor,theUniversityprovidedthe

vendora

directdepositform.Thedirectdepositformwasreturnedwiththefraudulentbankinginformationfrom

thecompromisedemailaccount.ThepaymentwasremittedtothefraudulentbankaccountonMay16,2019.The

UniversitydiscoveredtheerrorinJune2019,whenthevendorinquiredoftheUniversityaccountingdepartment

aboutthe

unpaidinvoice.TheUniversity’scontrolstructuredidnotpreventthefraudulentpayment.Basedupon

all communication with the vendor being email, we recommend that the University implement a policy that

requiresindependentconfirmationofanychangeinbankinginformationdirectlywiththevendor.



87

MURRAYSTATEUNIVERSITY

ScheduleofFindingsandResponses,continued

YearendedJune30,2019

Finding2019‐001,continued:

Managementresponseandplannedcorrectiveaction:

The University has implemented a new procedure to independently confirm vendor banking information.

Additionally,two‐factor authentication was made mandatory forfaculty,staff andstudents on October1, 2019.

TheUniversitystrivestocontinuouslyidentifymethodstoimproveinternalcontrolsandincreasesecurity.

TheFoundationrecoveredthisloss,withtheexception

ofasmalldeductible,throughinsuranceproceeds.

