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VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) INDEPENDENT AUDITORS’ REPORT AND AUDITED FINANCIAL STATEMENTS SEPTEMBER 30, 2021 and 2020 TABLE OF CONTENTS Independent Auditors’ Report……………………………………………………………………………..1 Management’s Discussion and Analysis………………………………………………………………….3 Financial Statements: Statements of Net Position………………………………………………………………………………9 Statements of Revenues, Expenses and Changes in Net Position……………………………………....10 Statements of Cash Flows…………………………………………………...……………………….....11 Notes to the Financial Statements……………………………………………………………………...13 Required Supplementary Information: Schedule of the System’s Proportionate Share of Net Pension Liability………………………………..26 Schedule of the System’s Contributions………………………………………………………………..27 Notes to the Required Supplementary Information…………………………………………………….28 Supplementary Information: Statement of Revenues and Expenses per Division……………………………………………………29 Other Supplementary Information: Independent Auditors’ 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…………………………………31 - 3 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) YEARS ENDED SEPTEMBER 30, 2021 and 2020 The purpose of the following management’s discussion and analysis of the financial performance and activity of the Virgin Islands Public Broadcasting System (the “System”) is to help the readers understand the basic financial statements of the System for the years ended September 30, 2021 and 2020. This discussion has been prepared by management and should be read in conjunction with the basic financial statements, supplementary information and the notes thereto, which follow this section. Financial Highlights The assets and deferred outflows of the System exceeded liabilities and deferred inflows by $11.4 million and $10 million as of September 30, 2021 and 2020, respectively. The net position increased by $1.4 million during the year ended September 30, 2021 and increased by $950 thousand during the year ended September 30, 2020. Reporting Entity The System is a public corporation and an autonomous governmental instrumentality of the Government of the U.S. Virgin Islands (“GVI”). It owns and operates the public television station of the U.S. Virgin Islands with the call letters WTJX, created by Act No. 2364 on November 15, 1968, to provide educational television services in the U.S. Virgin Islands, and to advance the general welfare, cultural development, and awareness of public affairs of the general population. The System is a member of the Public Broadcasting Service (“PBS”), a media foundation that provides grants and services to public and non- commercial stations. The System is also a member of the National Public Radio (“NPR”), a nonprofit media foundation broadcasting over the radio. Overview of the Financial Statements The System’s financial report includes three financial statements: The Statement of Net Position, the Statement of Revenues, Expenses and Changes in Net Position, and the Statement of Cash Flows. In addition to the three financial statements, the System has presented the Statement of Revenues and Expenses per Division, Schedule of the Share of the Net Pension Liability and Schedule of Contributions as supplementary information. The financial statements, and supplementary information, are prepared in accordance with accounting principles generally accepted in the United States of America. The Statement of Net Position reports all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position as of September 30, 2021 and 2020. The System’s net position is the difference between (a) assets and deferred outflows of resources, and (b) liabilities and deferred inflows of resources. Over time, the increase or decrease in net position may serve as a useful indicator of whether the financial position of the System is improving or deteriorating. The Statement of Revenues, Expenses and Changes in Net Position presents information showing how the System’s net position changed during the two most recent fiscal years, focusing on operating revenues and expenses, including support provided by grants from the Government of the Virgin Islands and the Corporation for Public Broadcasting (“CPB”). VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (Continued) YEARS ENDED SEPTEMBER 30, 2021 and 2020 - 4 - The Statement of Cash Flows presents information related to cash inflows and outflows, summarized by operating, financing and investing activities. This Statement indicates the financial viability of the System to meet financial obligations as they occur. Summary of Financial Results Statements of Net Position – Table 1 summarizes the System’s Statements of Net Position as of September 30, 2021, 2020 and 2019. Table 1: Summary of Statements of Net Position 2021 2020 2019 Unrestricted Current Assets $ 6,134,838 $ 6,658,297 $ 5,561,646 Restricted Current Assets 737,283 541,980 943,234 Capital Assets 7,956,942 5,617,504 5,163,987 Total Assets $ 14,829,063 $ 12,817,781 $ 11,668,867 Deferred Outflows of Resources $ 1,183,938 $ 768,156 $ 481,445 Current Liabilities $ 636,626 $ 344,888 $ 311,421 Noncurrent Liabilities 3,608,285 2,826,642 2,397,177 Total Liabilities $ 4,244,911 $ 3,171,530 $ 2,708,598 Deferred Inflows of Resources $ 393,047 $ 455,723 $ 434,319 Net Position Net Investment in Capital Assets $ 7,956,942 $ 5,617,504 $ 5,163,987 Restricted 737,283 541,980 943,234 Unrestricted 2,680,818 3,799,200 2,900,174 Total Net Position $ 11,375,043 $ 9,958,684 $ 9,007,395 For fiscal year 2021, the System’s assets amounted to $14.8 million, of which $5.2 million represented unrestricted cash and cash equivalents, $737 thousand represented cash and cash equivalents restricted in purpose, $90 thousand represented trade, and other receivables, $140 thousand was due from the Government of the Virgin Islands, $661 thousand represented prepaid expenses and $8.0 million represented capital assets net of accumulated depreciation. Total current assets decreased in fiscal year 2021 by $328 thousand mainly due to decrease in cash and cash equivalent of $573 thousand which was offset by an increase of $195 thousand in restricted cash. Non-current assets increased by $2.3 million, due to purchase of Production & Broadcast equipment for Repack project and St. Croix building improvement. Total liabilities and deferred inflows of resources amounted to 4.6 million and increased by $1.0 million mainly due to increase in Pension liability by $800 thousand and increase of accounts payable by $260 thousand. For fiscal year 2020, the System’s assets amounted to $12.8 million, of which $5.8 million represented unrestricted cash and cash equivalents, $542 thousand represented cash and cash equivalents restricted in purpose, $70 thousand represented trade, and other receivables, $141 thousand was due from the Government of the Virgin Islands, $631 thousand represented prepaid expenses and $5.6 million represented capital assets net of accumulated depreciation. Total current assets increased in fiscal year 2020 by $695 thousand mainly due to increases in prepaid expense of $543 thousand for PBS dues. Non-current assets increased by $454 thousand, due to purchase of Production & Broadcast equipment for Repack project and St. Croix building improvement. Total liabilities and deferred inflows of resources amounted to $3.2 million with little change from prior year. VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (Continued) YEARS ENDED SEPTEMBER 30, 2021 and 2020 - 5 - Statements of Revenues, Expenses and Changes in Net Position – Table 2 summarizes the activities of the System as of September 30, 2020 and 2019. Table 2: Summary of Statements of Revenues, Expenses and Changes in Net Position 2021 2020 2019 Operating Revenues $ 3,062,308 $ 1,921,897 $ 1,475,610 Operating Expenses (5,969,156) (5,202,377) (5,241,689) Loss from Operations (2,906,848) (3,280,480) (3,766,079) Non-Capital Appropriations from Government of the U.S. Virgin Islands 3,627,111 4,030,123 4,030,123 Capital Grants form Government of the U.S.V.I - - 1,450,000 Other non-operating revenue 439,111 200,000 200,000 Insurance Proceeds 255,328 - - Interest Income 1,657 1,646 1,637 Income (Loss) 1,416,359 951,289 1,915,681 Change in Net Position $ 1,416,359 $ 951,289 $ 1,915,681 Net Position – Beginning of Year 9,958,684 9,007,395 7,091,714 Net Position – End of Year $ 11,375,043 $ 9,958,684 $ 9,007,395 For fiscal year 2021, operating revenues of $3.1 million reflect contributions from the Corporation for Public Broadcasting of $1.1 million, funds from Federal Communications (FCC) of $1.5 million, tower space rental income of $82 thousand, underwriting revenue of $181 thousand, fundraising revenue of $51 thousand, advertising revenue of $3 thousand, membership subscriptions and other donations of $43 thousand, funds from Federal Emergency Management Agency of $115 thousand and other revenue of $41 thousand. Operating revenues increased by $1.1 million from the previous year mainly due to increase in revenue from FCC. For fiscal year 2021, operating expenses of $6.0 million reflect programming expenses of $3.5 million, general administration expenses of $2.0 million, fundraising expenses of $2 thousand and depreciation expense of $487 thousand. Operating expenses increased by $767 thousand, mainly due to increase in program services. For fiscal year 2020, operating revenues of $1.9 million reflect contributions from the Corporation for Public Broadcasting of $1 million, tower space rental income of $94 thousand, underwriting revenue of $131 thousand, fundraising revenue of $62 thousand, advertising revenue of $12 thousand, membership subscriptions and other donations of $39 thousand, funds from Federal Emergency Management Agency of $55 thousand, funds from Federal Communications (FCC) of $474 thousand and other revenue of $51 thousand. Operating revenues increased by $446 thousand from the previous year mainly due to increase in revenue from FCC. For fiscal year 2020, operating expenses of $5.2 million reflect programming expenses of $2.9 million, general administration expenses of $2.0 million, fundraising expenses of $25 thousand and depreciation expense of $334 thousand. Operating expenses decreased by $39 thousand, mainly due to decrease in program services. VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (Continued) YEARS ENDED SEPTEMBER 30, 2021 and 2020 - 6 - Grant Revenues Grant Revenues – Table 3 summarizes grant revenues received through allotments from the Government of the Virgin Islands, grants from the Corporation for Public Broadcasting, and other grant revenue. Table 3: Summary of Grant Revenues 2021 2020 2019 Non-Capital Appropriations from Government of the Virgin Islands $ 3,627,111 $ 4,030,123 $ 4,030,123 Grant Revenues – Corporation for Public Broadcasting 1,058,329 1,003,656 968,159 Grant Revenues – Community foundation 10,000 - - American Rescue Plan- CPB 439,111 - - CARES Act Funds – Corporation for Public Broadcasting - 200,000 - Grant Revenues – Public Broadcasting Service - - 9,989 Capital Grants form Government of the U.S.V. I - - 1,450,000 Grant Revenues – Federal Communications Commission 1,478,440 473,600 156,858 Emergency Funds – Federal Emergency Management Agency 115,140 55,466 9,646 Total Grant Revenues 6,728,131 5,762,845 6,624,775 Operating Revenues 400,399 389,175 375,681 Total Revenues $ 7,128,530 $ 6,152,020 $ 7,000,456 Grants as a Percentage of Total Revenue 94.4% 93.6% 94.6% Capital Assets The System’s capital assets include land, buildings, building improvements and equipment. Capital asset additions during the fiscal years ended September 30, 2021 and 2020 amounted to $3.4 million and $788 thousand, respectively. Summary of Capital Assets – Table 4 summarizes the System’s capital assets as of September 30, 2021and 2020: Table 4: Summary of Capital Assets 2021 2020 Land $ 1,284,996 $ 1,284,996 Production and Broadcasting Equipment 9,046,708 7,142,573 Buildings and Improvements 3,408,260 3,134,242 Other 2,756,770 1,881,743 Construction in Progress 25,000 586,112 Total Capital Assets 16,521,734 14,029,666 Less: Accumulated Depreciation 8,564,792 8,412,162 Net Capital Assets $ 7,956,942 $ 5,617,504 Note 5 to the financial statements provide detailed information regarding the capital assets of the System as of September 30, 2021 and 2020. VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (Continued) YEARS ENDED SEPTEMBER 30, 2021 and 2020 - 7 - Budgetary Analysis The System prepares an annual executive budget subject to approval by the Governor and the Legislature of the Virgin Islands. Following is a summary of the budget and actual results for the fiscal years ended September 30, 2021 and 2020: 2021 Budget 2021 Actual Variance Total Revenue $ 4,940,767 $ 5,097,495 $ 156,728 Total Operating Expenses (4,940,767) (5,080,201) (139,434) Non-Budgeted Revenues - 2,288,019 2,288,019 Non-Budgeted Expenditures - (888,954) (888,954) Income (Loss) $ - $ 1,416,359 $ 1,416,359 CPB grant revenue increased by $55 thousand, Underwriting increased by $69 thousand and other revenues increased by $33 thousand. Non-budgeted revenues consist of $439 thousands from the American Rescue Plan Act through CPB, re-packing funds from Federal Communications Commission (FCC) of $1.5 million, FEMA $115 thousand and Government insurance proceeds from the 2017 hurricanes of $255 thousand. The increase in operating expenses of $627 thousand is mainly due the use of prior year revenues to partly fund PBS dues of $744 thousand since the government funding had been reduced due to budget cuts. Non- budgeted expenses consist of depreciation expense of $487 thousand, pension expense of $330 thousand and other expenses of $72 thousand. 2020 Budget 2020 Actual Variance Total Revenue $ 5,296,782 $ 5,377,440 $ 80,658 Total Operating Expenses (5,296,782) (4,405,204) 891,578 Non-Budgeted Revenues - 776,227 776,227 Non-Budgeted Expenditures - (797,172) (797,172) Income (Loss) $ - $ 951,291 $ 951,291 CPB grant revenue increased by $35 thousand. Non-budgeted revenues consist of $200 thousands from the CARES Act through CPB, re-packing funds from Federal Communications Commission (FCC) of $474 thousand and other revenues of $102 thousand. The decrease in operating expenses of $891 thousand is mainly due to decreases in salaries and related expenses of $299 thousand, membership, dues and subscription expenses of $584 thousand due to PBS dues waiver and other expenses of $9 thousand. Non- budgeted expenses consist of depreciation expense of $334 thousand, pension expense of $165 thousand grant related expenses of $67 thousand and other expenses of $231 thousand. VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) (Continued) YEARS ENDED SEPTEMBER 30, 2021 and 2020 - 8 - Significant Currently Known Facts Budgetary Appropriations The ability of the System to continue as a going concern and providing public television services is dependent on grant allotments and other funds received from the Government of the Virgin Islands and the Corporation for Public Broadcasting. Hurricanes Irma and Maria In September 2017, the US Virgin Islands was hit directly by hurricanes Irma and Maria. The category 5 storms caused extensive damages to VIPBS properties and operations. Their headquarters in St. Thomas was destroyed and St. Croix received less extensive damages. The Mountain Top facility also endured considerable damages. The System was informed of their preliminary allocation of insurance for Federal Emergency Management Agency (FEMA) purposes of $792,461, and this amount will be deducted from FEMA proceeds. As at the date of this report VIPBS have 17 worksheets with FEMA Public Assistance. There are 13 on St. Thomas and 4 on St. Croix. We have collected $344 thousand to date for 6 project worksheets. The amount of $22,114 is outstanding as at the date of this report for 1 project worksheet. We have received insurance proceeds of $255 thousands towards 1 project worksheet. FCC Repack Project The System was included in the Federal Communications Commission (“FCC”) Repack Project. The project consists of certain realignment on the broadcasting frequency by which WTJX would change its broadcasting from channel 44 to channel 36, pursuant to a Transition Plan and Budget approved by the FCC (the “Plan”). As part of the Plan, the FCC will provide all the funding, which is estimated at $4.7 million, for the building of new tower and the purchase of new transmitters and underlying equipment. As of September 30, 2021, total repacking funds received amounted to $2,234,891. As of the date of issuing these financial statements, the System has paid $2,208,823 in FCC expenses. The System has $3K in outstanding payments. One tower was completed and is now in service. The second tower is near completion. We anticipate that the project will be completed in FY 2022. Contacting the Corporation This financial report is designed to provide a general overview of the System’s finances. If you have any questions about this report, or need additional information, contact the System at: Virgin Islands Public Broadcasting System - WTJX, P.O. Box 7879, Charlotte Amalie, St. Thomas, U.S. Virgin Islands 00801. - 9 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) STATEMENTS OF NET POSITION SEPTEMBER 30, 2021 and 2020 2021 2020 ASSETS Current Assets Cash and Cash Equivalents $ 5,243,906 $ 5,816,650 Accounts and Other Receivable 89,561 69,680 Due from the Government of the U.S. Virgin Islands 140,008 140,626 Prepaid Expenses 661,363 631,341 Restricted Cash 737,283 541,980 Total Current Assets 6,872,121 7,200,277 Noncurrent Assets Capital Assets, net of accumulated depreciation 7,956,942 5,617,504 Total Noncurrent Assets 7,956,942 5,617,504 Total Assets 14,829,063 12,817,781 Deferred Outflows of Resources Deferred Amounts Related to Pension 1,183,938 768,156 Total Assets and Deferred Outflows of Resources $ 16,013,001 $ 13,585,937 LIABILITIES Current Liabilities Accounts Payable $ 375,231 $ 114,907 Accrued Liabilities 140,821 141,471 Unearned Revenue 1,060 - Compensated Absences – Current Portion 119,514 88,510 Total Current Liabilities 636,626 344,888 Noncurrent Liabilities Compensated Absences 142,519 169,318 Net Pension Liability 3,465,766 2,657,324 Total Non-Current Liabilities 3,608,285 2,826,642 Total Liabilities 4,244,911 3,171,530 Deferred Inflows of Resources Deferred Amounts Related to Pension 393,047 455,723 Total Liabilities and Deferred Inflows of Resources $ 4,637,958 $ 3,627,253 NET POSITION Net Position Net Investment in Capital Assets $ 7,956,942 $ 5,617,504 Restricted 737,283 541,980 Unrestricted 2,680,818 3,799,200 Total Net Position $ 11,375,043 $ 9,958,684 The accompanying notes are an integral part of these financial statements. - 10 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020 2021 2020 Operating Revenues Grants from Corporation for Public Broadcasting $ 1,058,329 $ 1,003,656 Grant Revenues from Community Foundation 10,000 - Funds from Federal Emergency Management Agency 115,140 55,466 Grant Revenues from Federal Communications Commission 1,478,440 473,600 Tower Space Rental 81,676 94,011 Underwriting 180,545 130,931 Fundraising 4,150 62,151 Advertising 50,367 11,820 Membership Subscriptions and Other Donations 42,827 39,121 Other Operating Revenue 40,834 51,141 Total Operating Revenues 3,062,308 1,921,897 Operating Expenses Program Services 3,462,809 2,890,469 Management and General 2,017,390 1,952,815 Fundraising 1,735 24,807 Depreciation 487,222 334,286 Total Operating Expenses 5,969,156 5,202,377 Total Operating Revenues and Expenses 9,031,464 7,124,274 Loss from Operations (2,906,848) (3,280,480) Non-Operating Revenues and Expense Non-capital Appropriations from Government of the U.S. Virgin Islands 3,627,111 4,030,123 Other non-operating revenue 439,111 200,000 Insurance recoveries, including hurricane related claims 255,328 - Interest Income 1,657 1,646 Total Non-Operating Revenues and Expense 4,323,207 4,231,769 Change in Net Position 1,416,359 951,289 Net Position, at Beginning of Year 9,958,684 9,007,395 Net Position, at End of Year $ 11,375,043 $ 9,958,684 The accompanying notes are an integral part of these financial statements. - 11 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020 2021 2020 Cash Flows Used in Operating Activities Receipts from Grants, Customers and Others $ 3,043,045 $ 1,936,712 Payments to Suppliers and Employees (4,915,704) (5,213,889) Net Cash Used in Operating Activities (1,872,659) (3,277,177) Cash Flows Provided by Non-Capital Financing Activities Non-Capital Appropriations from Primary Government 3,625,782 4,030,123 Insurance recoveries on non-hurricane related claims 255,328 - Other Proceeds 439,111 200,000 Net Cash Provided by Non-Capital Financing Activities 4,320,221 4,230,123 Cash Flows Provided by Investing Activities Interest Received on Cash and Cash Equivalents 1,657 1,646 Cash Flows Used in Capital and Related Financing Activities Purchase of Capital Assets (2,826,660) (787,803) Capital Grants from primary government - - Net Cash Provided by Capital and related Financing Activities (2,826,660) (787,803) Net Increase in Cash and Cash Equivalents (377,441) 166,789 Cash and Cash Equivalents, at Beginning of Year 6,358,630 6,191,841 Cash and Cash Equivalents, at End of Year $ 5,981,189 $ 6,358,630 Cash and Cash Equivalents Unrestricted Cash and Cash Equivalents 5,243,906 $ 5,816,650 Restricted Cash and Cash Equivalents 737,283 541,980 Total Cash and Cash Equivalents $ 5,981,189 $ 6,358,630 Reconciliation to Net Cash Used in Operating Activities Loss from Operation $ (2,906,848) $ (3,280,480) Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities: Depreciation 487,222 334,286 Bad debt expense 1,329 - Change in Assets and Liabilities: Accounts and Other Receivable (19,881) 6,776 Due from the Government of the U.S. Virgin Islands 618 8,039 Prepaid Expenses (30,022) (543,423) Accounts Payable 260,324 57,173 Accrued Liabilities (650) (75,840) Unearned Revenue 1,060 (8,230) Compensated Absences 4,205 59,845 Deferred Outflows of Resources (415,782) (286,711) Deferred Inflows of Resources (62,676) 21,404 Net Pension Liability 808,442 429,984 Total Adjustments 1,034,189 3,303 Net Cash Used in Operating Activities $ (1,872,659) $ (3,277,177) The accompanying notes are an integral part of these financial statements. - 12 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) STATEMENTS OF CASH FLOWS (Continued) FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020 2021 2020 Non-Cash Transactions Disclosures Supplementary Disclosures of Cash Flows Information Salaries Paid by the Government of Virgin Islands in the Form of a Grant $ 2,482,927 $ 2,440,332 Donated Services $ 14,146 $ 72,105 The accompanying notes are an integral part of these financial statements. - 13 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2021 and 2020 NOTE 1 REPORTING ENTITY The Virgin Islands Public Broadcasting System (the “System) was created by Act No. 2364 on November 15, 1968, to provide education television services in the United States Virgin Islands, and to advance the general welfare, cultural development, and awareness of public affairs of the general population. In December 2014, the System expanded operations to include a public education radio station, WTJX-FM. The radio promotes educational, general welfare and cultural programming including National Public Radio programming. On July 30, 2015, but effective November 2015, the Legislature of the Virgin Islands through Act 7748 officially changed the name of the Virgin Islands Public Television System to the Virgin Islands Public Broadcasting System. The System was formed as a public corporation and is an autonomous component unit of the Government of the U.S. Virgin Islands (the “GVI”) and, therefore, the financial statements of the System are not intended to present fairly the financial position and results of operations of the GVI. Only the accounts of the System are included in the reporting entity. The System’s Board of Directors consists of the Commissioner of the Department of Education, the Vice- Chair of the Board of Education, the President of the University of the Virgin Islands, the Director of the Office of Management and Budget, three members appointed by the President of the Legislature, four other members appointed by the Governor. The call letters of the System are WTJX, and it is a member of the Public Broadcasting Service (“PBS”), a media foundation that provides programs and services to public and non-commercial television stations. Also, it is a member of the National Public Radio (“NPR”). NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The System prepares it financial statements in conformity with accounting principles generally accepted in the United States of America for governmental enterprise funds as prescribed by the Government Accounting Standards Board (“GASB”). The financial statements of the System have been prepared 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. Basic Financial Statements – Standards for external financial reporting require that resources be classified for accounting and reporting purposed into net positions, categories and to report the change in net position. Net position is the residual of all other elements presented in the statements of net position. It is the difference between (a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources and consists of the following categories: • Net Investment in Capital Assets – This category of net position consists of capital assets, net accumulated depreciation, reduced by any outstanding balances of mortgages or notes attributable to the acquisition, construction or improvement of those assets. • Restricted Component of Net Position – This category consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) - 14 - • Unrestricted Component of Net Position – This category consists of the net amount of the assets, deferred outflows of resources, liabilities and deferred inflows of resources that are not included in the determination of net investment in capital assets, or the restricted component of net position. The System distinguishes operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from services provided in connection with the System’s community and education-based television system. The principal revenues of the System are grants, including grants from the Government of the U.S. Virgin Islands and grants from the Corporation for Public Broadcasting (“CPB”), underwriting, fundraising, tower space rental and advertising. Operating expenses mainly include programming services, management and general expenses, and depreciation. When both restricted and unrestricted resources are available for use, the System decides to use resources on a case by case basis. Cash and Cash Equivalents – All deposits of the System are made in board-designated official depositories. The System may designate, as an official depository, any bank or savings association whose principal office is located in the United States Virgin Islands. Also, the System may establish time deposit accounts such as certificates of deposits. The System’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition. The System receives cash allotments from the CPB in two installments during the year which are held in a separate bank account and are reported as restricted cash and cash equivalents. Under Virgin Islands law, government public funds are required to be deposited into accounts that are collateralized by security bond collateral that is satisfactory to the Commissioner of Finance. As of September 30, 2021, cash and cash equivalents held at banks were fully collateralized. Accounts and Other Receivable – All trade and grant receivables are reported as assets of the System. These accounts receivable mainly consist of underwriting, grants and rent from tower space. Allowance for Doubtful Accounts – The allowance for doubtful accounts is an amount that management believes will be adequate to absorb possible losses on existing accounts receivable that may become uncollectible based on evaluations of collectability of accounts receivable and prior credit loss experience. Because of uncertainties inherent in the estimation process, management’s estimate of credit losses inherent in the existing accounts receivable and related allowance may change in the future. Balance of the allowance for doubtful accounts at September 30, 2021 and 2020 amounted to $-0-. Prepaid Expenses – Certain cash outlays to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the statement of net position and are expensed as the items are used or the expense is realized. These prepaid expenses mainly consist of unamortized PBS dues, memberships and insurance. Capital Assets – Capital assets, which include property, plant, and equipment assets, are reported in the financial statements at the time of acquisition or donation. Acquired capital assets are reported at cost at the date of purchase or construction, and donated assets are reported at acquisition value at the date of donation. Only assets with an initial, individual cost, or fair market value, of more than $5,000 are capitalized. The costs of normal maintenance and repairs that do not add to the value of the assets, or materially extend the life of assets are not capitalized. Interest incurred during the construction phase of capital assets is included as part of the capitalized value of the assets constructed. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) - 15 - Capital assets are depreciated using the straight-line method by groups or classes over the following expected service lives: Years Buildings 40-60 Buildings and Improvements 15-30 Production & Broadcast Equipment 3-15 Others 7 When capital assets are retired, the cost and related accumulated depreciation is removed from the accounts and any gain or loss is recognized as non-operating revenue or expense. Compensated Absences – Employees are eligible under personnel policies established by the Government of the Virgin Islands to accrue annual leave (up to 480 hours) if not used during the Calendar year. Unpaid annual leave is accrued as a liability of the System, as well as the System’s share of related payroll taxes, if the compensated absence is attributable to past service and it is probable that the System will compensate the employee for the benefits. The number of compensated absences is computed using salary rates in effect at September 30th. As of September 30, 2021 and 2020, the System reported accrued compensated absences amounting to $262,033 and $257,828, respectively. Pension Plan – The Employees’ Retirement System of the government (the “GERS”) is the administrator of a cost-sharing multiple-employer, defined benefit pension plan (the “plan”) established as of October 1, 1959 by the Government to provide retirement, death, and disability benefits to its employees, and includes employees of Judicial, Executive and Legislative Branches of government and outside agencies. The plan covers all employees of the Government except employees compensated on a contract fee basis, casual, per diem or provisional and part-time employees who work less than 20 hours per week. Persons over the age of 55 may opt out of the plan by providing formal notification to the plan. Vesting of benefits occurs after 10 years of service. Benefits may be extended to beneficiaries of plan members. Deferred Outflows of Resources – In addition to assets, the statement of net position reports a separate section of deferred outflows of resources. Deferred outflows of resources represent a consumption of net position that applies to a future period and will not be recognized as an outflow of resources (expense) until that time. The deferred amounts related to pension consists of the unamortized portion of the net difference between projected and actual earnings on pension plan investments, changes in assumptions and other differences between expected and actual experience. Deferred Inflows of Resources – In addition to liabilities and net position, the statement of net position reports a separate section of deferred inflows of resources. Deferred inflows of resources represent an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The deferred amounts related to pension consists of the unamortized portion of the net difference between projected and actual earnings on pension plan investments, changes in assumptions and other differences between expected and actual experience. Revenue Recognition – The System distinguishes operating revenues and expenses from non-operating items. Revenues associated with the Contributions from Corporation for Public Broadcasting are recorded as operating revenues when cash is received. Expenses related to the program services, and management and general expenses are recorded as operating expenses. Non-operating revenues consist principally of non-capital appropriations from government of the U.S. Virgin Islands. These moneys are given to the system for its operations. The allotment amount is approved by the government which is split into monthly allotment set by OMB. A memo is sent monthly informing the System that the funds are available. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) - 16 - Operating Revenues and Expenses – Operating revenues and expenses generally result from providing services in connection with the System’s principal ongoing operations, mainly the production of educational and cultural programs. The System also recognizes grants received as operating revenue. Operating expenses for the System include cost of services, administrative expenses, and depreciation on capital assets. Use of Estimates in the Preparation of Financial Statements – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets, deferred inflows, liabilities, deferred outflows and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. New Accounting Pronouncements - Accounting Pronouncements Issued but Not Yet Adopted GASB Statement No. 87 - Leases In June 2017, the Governmental Accounting Standards Board issued GASB 87 Leases. The standard changes the way that entities account for leases in their financial disclosures, especially their statement of net position and statements of revenues, expenses and changes in net position. The statement establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. The requirements of this Statement are effective for reporting periods beginning after June 15, 2021. This will be effective for the System in fiscal year 2022. Reclassifications – Certain reclassifications were made to the 2021 financial statements to conform to the current year’s presentation. These reclassifications had no effect on the reported results of operations. - 17 - NOTE 3 CASH AND CASH EQUIVALENTS The System maintains unrestricted cash and cash equivalents including: (i) allotments from the Government of the Virgin Islands, (ii) Special Productions including underwriting, donations, and other fundraising activities, (iii) Emergency Maintenance funded from rental income of an up-link television broadcasting tower located in St. Thomas, (iv) Certificate of Deposit held as a reserve and (v) a petty cash account. Restricted cash consist of CPB funding. These funds will be used for the operation of the System, in compliance with the purposes and restrictions set forth in the CPB General Provisions and Eligibility criteria guidelines. As of September 30, 2021 and 2020, cash and cash equivalents consisted of the following deposits in banks and certificate of deposit: 2021 2020 Restricted: Corporation for Public Broadcasting $ 737,283 $ 541,980 Unrestricted: Government of the U.S. Virgin Islands 3,174,820 4,012,458 Special Productions 593,524 383,456 FCC Repacking 128,120 28,113 Emergency Maintenance 819,574 839,566 FEMA Funds Account 194,342 219,688 Petty Cash 1,500 3,000 Certificate of Deposit 332,026 330,369 Unrestricted Cash and Cash Equivalents 5,243,906 5,816,650 Total Cash and Cash Equivalents $ 5,981,189 $ 6,358,630 • Concentration of Credit Risk – The System utilizes one financial institution located in the United States Virgin Islands. • Credit Risk – Depository balances are fully collateralized with collateral satisfactory to the USVI Commissioner of Finance. NOTE 4 ACCOUNTS AND OTHER RECEIVABLES Accounts and other receivables at September 30, 2021 and 2020, consisted of the following: 2021 2020 Underwriting $ 46,764 $ 9,707 Rent 1,583 3,084 Fundraising - - Advertisement - 4,500 FEMA 22,114 22,114 Other 19,100 30,275 Donation - - Grants - - $ 89,561 $ 69,680 As of September 30, 2021, and 2020, the System had an outstanding receivable due from the GVI, a related party, amounting to $140,008 and $140,626, respectively to cover accrued payroll expenses. - 18 - NOTE 5 CAPITAL ASSETS Capital assets at September 30, 2021 and 2020 are comprised of the following: Balance at September 30, 2020 Additions Disposals Balance at September 30, 2021 Non-depreciable assets: Land $ 1,284,996 $ - $ - $ 1,284,996 Construction in Progress 586,112 25,000 (586,112) 25,000 Non-depreciable assets: 1,871,108 25,000 (586,112) 1,309,996 Depreciable assets: Production and broadcasting equipment 7,142,573 2,238,727 (334,592) 9,046,708 Buildings and improvements 3,134,242 274,018 - 3,408,260 Other 1,881,743 875,027 2,756,770 Total depreciable assets 12,158,558 3,387,772 (334,592) 15,211,738 Less: accumulated depreciation (8,412,162) (487,222) 334,592 (8,564,792) Total depreciable assets, net 3,746,396 2,900,550 $ - 6,646,946 Total capital assets, net $ 5,617,504 $2,925,550 $(586,112) $ 7,956,942 Balance at September 30, 2019 Additions Disposals Balance at September 30, 2020 Non-depreciable assets: Land $ 1,284,996 $ - $ - $ 1,284,996 Construction in Progress 586,112 - $ - 586,112 Non-depreciable assets: 1,871,108 - $ - 1,871,108 Depreciable assets: Production and broadcasting equipment 6,639,808 502,765 - 7,142,573 Buildings and improvements 2,934,009 200,233 - 3,134,242 Other 1,796,938 84,805 1,881,743 Total depreciable assets 11,370,755 787,803 - 12,158,558 Less: accumulated depreciation (8,077,876) (334,286) - (8,412,162) Total depreciable assets, net 3,292,879 453,517 $ - 3,746,396 Total capital assets, net $ 5,163,987 $ 453,517 $ - $ 5,617,504 Depreciation expense for the years ended September 30, 2021 and 2020 amount to $487,222 and $334,286, respectively. NOTE 6 PROGRAMMING DUES The System is a member station of the Public Broadcasting Services of the U.S. (“PBS”). PBS offers programming designed to expand the minds of children, documentaries, noncommercial news programs, and programs designed to expose listeners to music, theatre, dance and art. Dues for the member year of July 1, 2021 through June 30, 2022 amounted to $723,121, was paid as of September 30, 2021. Unamortized portion amounting to $542,341 in FY 2021 is included as part of prepaid expenses in the accompanying statement of net Position. Dues for the member year of July 1, 2020 through June 30, 2021 amounted to $724,937, was paid as of September 30, 2020. Unamortized portion amounting to $543,703 in FY 2020 is included as part of prepaid expenses in the accompanying statement of net Position - 19 - NOTE 7 NON-CAPITAL APPROPRIATIONS AND GRANTS REVENUE The System receives two main sources of revenues: (i) noncapital appropriations from the Government of the U.S. Virgin Islands to pay salaries and related expenses and operating expenditures, and (ii) grants from the Corporation for Public Broadcasting (“CPB”) to provide funding for the System’s member dues to the Public Broadcasting Service, salaries and related benefits and operating expenses. For the fiscal years ended September 30, 2021 and 2020, the System received the following grant revenue from these organizations: 2021 2020 Government of the Virgin Islands $ 3,627,111 $ 4,030,123 Corporation for Public Broadcasting 1,497,440 1,203,656 Community Foundation 10,000 - Re-Packing Fund-FCC 1,478,440 473,600 FEMA Grants 155,140 55,466 $ 6,768,131 $ 5,762,845 During the years ended September 30, 2021 and 2020, the GVI supported $2,358,179 and $2,440,332 in salary and related costs through its appropriations to the System. NOTE 8 TOWER SPACE RENTALS The System leases certain tower facilities to tenants under the terms requiring the payment of minimum annual rentals. Future income under the annual minimum rentals under noncancelable operating leases in effect at September 30, 2021, are as follows: Year Ending September 30 Amount 2022 $ 61,258 2023 59,056 2024 39,865 2025 37,029 $ 197,209 Tower space rental income for the years ended September 30, 2021 and 2020 amounted to $81,676 and $94,011, respectively. NOTE 9 COMMITMENTS AND CONTINGENCIES The System derives most of its operating revenue from appropriations provided by the local Government and the Corporation for Public Broadcasting. The continuing operation of the System is dependent on a continuation of grants for sustainable operations. The Government of the Virgin Islands Department of Property and Procurement provides casualty insurance on System assets under a blanket insurance policy covering both the primary Government and certain autonomous agencies. In FY 2021 the System received $255,328 in insurance proceed from the Government of the Virgin Island. NOTE 9 – COMMITMENTS AND CONTINGENCIES (Continued) - 20 - During September 2017, Hurricanes Irma and Maria hit the U.S. Virgin Islands causing enormous losses and devastation. The System suffered damages to equipment and property. The System’s headquarters and its main broadcasting facility was severely damaged. Management and the Board continue to identify funding sources and estimated outlay of funds for the restoration of the facilities. The System is anticipating federal funding from FEMA to aid in the rebuild. The total funds to be expended is not yet determinable. The System is part of the FCC Re-Packing Project that will allow for significant equipment acquisition related to a global repositioning of the FCC’s broadcasting spectrum. Total estimated costs of the project amount to $4.7 million, of which $2,167,041 has been disbursed as of September 30, 2021. The Re-Packing Project will continue simultaneous to the System’s recovery efforts previously explained. The United States has been affected the Novel-Coronavirus (COVID-19), an aggressive and potent pandemic, which has spread globally and is expected to adversely affect economic conditions throughout the world. The System’s allotment from the Government of the Virgin Islands was reduced by ten percent in fiscal year 2021. The System is working to minimize the economic impact through fundraising ventures and the use of other internal funds. Management is actively monitoring the impact of COVID-19 on its financial liquidity and operations. Management is currently unable to estimate the complete future financial impact. NOTE 10 PENSION PLAN The System follows the provisions of GASB Statement No. 68 Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27. This Statement establishes financial reporting standards for state and local governments for pensions. Plan Description The System’s employees are members of the Employees’ Retirement System of the Government of the U.S. Virgin Islands (“GERS”), cost sharing multiple employer defined benefit, public employee retirement system as defined by GASB 68. The system was established by the Government to provide retirement, death and disability benefits to its employees. All of the System’s full-time regular employees are mandated to participate in the retirement plan administered by GERS. The System’s part-time employees who regularly work more than 50% of the normal work period, and full- time regular employees who at the time of employment are under age 55 years with one year of government service are eligible to participate in the system. Effective January 1, 2017, the System’s required contribution was 23.5% of the member’s annual salary. Prior to that date, the percentage was 17.5%. Effective January 1, 2017, member contributions were 11% and 11.5% for Tier I and Tier II employees. Total amount of the System’s covered payroll for the year ended September 30, 2020 was $202,388. Plan descriptions, funding policies, and a schedule of employee required and paid contributions for the defined benefit plans are presented in the Virgin Islands Comprehensive Annual Financial Report (Report) for the fiscal year ended September 30, 2021. The Report also provides detailed historical trend information showing the progress in accumulating sufficient assets to pay benefits when due. In addition, GERS issues a publicly available report that includes financial statements and required supplementary information. The report may be obtained from the Employees’ Retirement System of the Government of the Virgin Islands, GERS Complex, 3438 Kronpindsens Gade, St. Thomas, and VI 00802. - 21 - NOTE 11 NET PENSION LIABILITY Net Pension Liability Effective July 1, 2014, the System implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement No. 68. Following is a description of the pension plan and accounting for pension expense, liabilities, and deferred outflows/inflows of resources. Plan Description and Benefits Full time employees of the System are members of the Government Employees’ Retirement System of the Virgin Islands (GERS), a cost sharing multiple-employer, defined benefit pension plan (the plan) established as of October1,1959 in accordance with Title 3, Chapter 27 of the Virgin Islands Code to provide retirement, death, and disability benefits. Benefits may be extended to beneficiaries of plan members. The plan covers all employees of the Government, including the System, except employees compensated on a contract fee basis, casual, per diem or provisional and part time employees who work less than 20 hours per week. Persons over the age of 55 may opt out of the plan by providing formal notification to the plan. Vesting of benefits occurs after 10 years of service. Benefits may be extended to beneficiaries of plan members. There are two tiers within the plan: Tier I: Employees hired prior to September 30, 2005 Tier II: Employees hired on or after October 1, 2005 Regular Tier I employees are eligible for full-service retirement at age 60 with 10 years of credited service or any age with 30 years of credited service. Regular Tier II employees are eligible for full-service retirement at age 65 with 10 years of credited service. Tier 1 members who are considered “safety employees” as defined in the Code are eligible for full retirement benefits at age 55 with 10 years of credited service or any age with 20 years of credited service. Tier II safety employees are eligible for full retirement benefits at age 60 with 10 years of service or age 58 with 25 years of service. Regular and safety employees who have attained age 50 with at least 10 years of credited service may elect to retire early with a reduced benefit. The monthly annuity benefit payment is determined by applying a stipulated benefit ratio to the member’s average compensation. Average compensation for Tier I members is determined by averaging the five highest years of credited service within the last ten years of service, subject to the maximum salary limitations in effect during such service. Average compensation for Tier II members is determined by averaging the most recent five years of credited service within the last ten years of service, subject to the maximum salary limitations in effect during the service. The maximum annual salary that can be used in this computation is $65,000, except for senators and judges, whose annual maximum compensation is $85,000. Funding and Contribution Policy Contributions to GERS are established by the Board of Trustees of GERS. Contribution rates to the retirement plan for regular employees vary based on classification as Tier I or Tier II. The GVI’s employer contribution for Tier I and Tier II employees is 23.5% of the member’s annual salary, effective on January 1, 2020. Employee contribution rates effective on January 1, 2017 are as follows: NOTE 11 – PENSION LIABILITY (Continued) - 22 - Tier I Tier II Regular Employees 11% 11.5% Public Safety Employees 13% 13.625% Legislature 12% 14% Judges 15% 15% Both the Plan and the System have a September fiscal year end. GASB Statement No. 68 requires that the reported results must pertain to liability and asset information within certain defined time frames. For this report, the following time frames are used: Valuation Date: October 1, 2020 Measurement Date: September 30, 2020 Measurement Period: October 1, 2019 – September 30, 2020 The System’s proportionate share of employer contributions recognized by GERS was $53,570 for the Plan’s fiscal year ended September 30, 2020. Pension Liabilities and Expense and Deferred Outflows/Inflows of Resources The actuarial calculated net pension liability for the System’s proportionate share of the net pension liability of the plan was $3,465,766 and $2,657,324 as of September 30, 2020 and September 30, 2019. The net pension liability of the plan is measured as of September 30, 2020, and the total pension liability for the plan used to calculate the net pension liability was determined by an actuarial valuation as of October 1, 2020. Actuarially determined proportionate share information from GERS was estimated by management based on an average five-year respective share of the System’s contributions to the plan relative to all contributions to the plan. The System’s proportion was .0600% and .0500% at September 30, 2020 and September 30, 2019 which was a decrease of .0001%. The pension liability reported in the System’s financial statements relates to the payroll funded by sources other than government appropriations since the pension liability for all the employees paid by the GVI is accounted for at the GVI’s financial statements. The System’s proportionate share of employer contributions recognized by GERS from the payroll funded by sources other than government appropriations was $53,570. The System recognized $386,002 and 241,623 of pension expense at September 30 2020 and September 30,2019, inclusive of amortization of deferred outflows of pension-related items. Following is a schedule of deferred outflows/inflows of resources allocated to the System in the computation of net pension liability: September 30, 2020 Deferred Outflows by Resources Deferred Inflows of Resources Change in assumptions $ 672,726 $ 197,527 Difference between expected and actual experience 29,604 1,182 Net difference between projected and actual earnings on pension plan investments - $ 4,122 Change in proportionate share 425,589 190,216 Contributions made subsequent to measurement date 56,018 $ - $ 1,183,937 $ 393,047 NOTE 11 – PENSION LIABILITY (Continued) - 23 - September 30, 2019 Deferred Outflows by Resources Deferred Inflows of Resources Change in assumptions $ 589,126 $ 212,216 Difference between expected and actual experience 32,788 1,231 Net difference between projected and actual earnings on pension plan investments 1,507 $ - Change in proportionate share 67,836 242,276 Contributions made subsequent to measurement date 76,899 $ - $ 768,156 $ 455,723 Amounts reported as deferred outflows of resources and deferred inflows of resources, exclusive of contributions made after the measurement date, will be recognized in pension expense as follows: Year ending September 30, 2022 $ 117,110 2023 79,406 2024 103,385 2025 42,011 2026 42,011 Actuarial Assumptions A summary of the actuarial assumptions and methods used to calculate the total pension liability as of September 30, 2020, is provided below, including any assumptions that differ from those used in the October 1, 2020 actuarial valuation. Refer to October 1, 2020 actuarial valuation report for a complete description of all other assumptions, which can be found on GERS’ website. Inflation Rate: 2.00% Salary Increases: 3.25% including inflation Actuarial Cost Method: Entry Age Normal Expected Rate of Return: 4.0% Municipal Bond Yield: 2.21% Discount Rate: 2.23% Mortality Table: RP-2014 Blue Collar Investment Rate of Return The expected rate of return of 4.0% on plan investments was determined using a building-block method 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 expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the plan’s target asset allocation as of September 30, 2020, are summarized as follows: NOTE 11 – PENSION LIABILITY (Continued) - 24 - Asset Class Target Allocation ¹Long-Term Expected Real Rate of Return Domestic Equity 009% 06.23% Fixed Income 060% 00.98% Real Estate 010% 04.33% Cash 012% 00.48% Private Equities (Alternatives) 009% 10.23% Total 100% ¹Real rates of return are net of inflation Discount Rate The discount rate used to measure the total pension liability was 2.23% as of September 30, 2020 and 2.67% as of September 30, 2019. The projection of cash flows used to determine the discount rate assumed plan member contributions will be made at the current contribution rate, including the future increases in the employee contribution rates legislated. Based on those assumptions, the plan’s fiduciary net position was not projected to be available to make all projected future benefit payments of current plan members. Therefore, the expected rate of return on plan investments of 4.0% was applied to all periods of projected benefit payments that are covered by projected assets. For periods where projected future benefit payments are not covered by projected assets, the yield on a 20-year AA Municipal Bond index was applied, which was 2.21% and 2.66% at September 30, 2020 and 2019, respectively. Sensitivity of Proportionate Share of Net Pension Liability to Changes in the Discount Rate The following presents the System’s allocated proportionate share of the net pension liability (NPL) for the plan, calculated using the discount rate of 2.23% as well as what the System’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1% lower (1.23%) or 1% higher (3.23%) than the current rate. 1% Decrease (1.23%) Current Discount (2.23%) 1% Increase (3.23%) $4,021,079 $3,465,766 $3,012,232 Detailed information about pension plan’s fiduciary net position is available in the separately issued GERS financial report. NOTE 12 OTHER POSTEMPLOYMENT BENEFIT LIABILITY The Governmental Accounting Standards Board issued GASB STATEMENT NO. 75 – Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. The statement is effective for fiscal years beginning after June 15, 2017. The Government of the Virgin Islands adopted and implemented GASB 75 for the year-end September 30, 2018. The objective of the statement is to improve Accounting and Financial Reporting for state and local governments (including component units) for Postemployment Benefits Other than Pensions (OPEB). The System is a component unit of the U.S. Virgin Islands Primary Government. For purposes of GASB 75, the plan is classified as a nontrusted multiple employer plan. In this Special Funding Situation, the Primary Government covers the plan expenses as they occur. The plan is considered a “pay as you go” plan. NOTE 12 – OTHER POST EMPLOYMENT BENEFIT LIABILITY (Continued) - 25 - The Primary Government is the only entity responsible for the payment of OPEB for retirees of the System. As of July 1, 2021, all compensation of the System’s employees is paid by the Primary Government. Management has communicated that because the Primary Government is responsible for all employment cost of the System’s employees, no adjustments to its financial statements are recorded. NOTE 13 SUBSEQUENT EVENTS The Authority’s management has evaluated subsequent events through March 14, 2022, the date the financial statements were available to be issued. The accompanying financial statements recognize the effects of subsequent events that provided evidence about conditions that exist at the balance sheet date, including the estimates inherent in the process of preparing financial statements. The accompanying financial statements do not recognize the effect of subsequent events that did not exist at the balance sheet date, but disclosures of such events, if any, are included in the accompanying notes. REQUIRED SUPPLEMENTARY INFORMATION - 26 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) SCHEDULE OF THE SYSTEM’S PROPORTIONATE SHARE OF NET PENSION LIABILITY LAST 10 FISCAL YEARS 2021 2020 2019 2018 2017 2016 System’s proportion of the net pension liability 0.0600% 0.0500% 0.0534% 0.0568% 0.0522% 0.0571% System’s proportionate share of the net pension liability $3,465,766 $2,657,324 $2,227,340 $2,487,214 $2,552,151 $2,322,908 System’s covered-employee payroll 239,632 202,388 317,367 223,583 203,205 203,050 System’s proportion share of the net pension liability as a percentage of its covered-employee payroll 1446% 1313% 701.82% 1,112.43% 1,256.00% 1,144.00% Plan fiduciary net position as percentage of the total pension liability 9.16% 11.32% 13.72% 16.18% 16.54% 19.58% *The schedule is intended to show a 10-year trend. Additional years will be reported as they become available. The amounts presented for each fiscal year are as of the measurement date (September 30 of the previous fiscal year). - 27 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) SCHEDULE OF THE SYSTEM’S CONTRIBUTIONS LAST 10 FISCAL YEARS 2021 2020 2019 2018 2017 2016 2015 Actuarially required contributions $219,482 $138,762 $142,975 $142,276 $136,431 $114,251 $95,427 Contributions in relation to the actuarially required contributions 53,570 47,495 43,543 42,715 40,208 41,276 34,354 Contribution deficiency/(excess) 165,912 91,267 99,432 99,561 96,223 72,975 61,073 Covered-employee payroll 239,632 202,388 214,172 223,583 203,205 203,050 186,176 Contributions as a percentage of covered- employee payroll 22.36% 23.47% 20.33% 19.11% 19.79% 20.33% 18.45% *The schedule is intended to show a 10-year trend. Additional years will be reported as they become available. The amounts presented for each fiscal year are as of the measurement date (September 30 of the previous fiscal year). - 28 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2021 Valuation Date: October 1, 2020 Measurement Date: September 30, 2020 Actuarially determined contribution rates are calculated as of September 30, 2020, one year prior to end of the fiscal year in which contributions are reported and applied to all periods included in the measurement. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry Age Normal Cost Method Inflation 2.00% Salary increases 3.25% including inflation Discount rate 2.23%, net of pension plan investment expense, including inflation Mortality rates RP-2014 Blue Collar Employee Healthy Annuitant Employee Mortality Tables Municipal bond yield 2.21% SUPPLEMENTARY INFORMATION - 29 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) STATEMENTS OF REVENUES AND EXPENSES PER DIVISION FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020 TOTAL WTJX-TV WTJX-FM 2021 2020 Operating Revenues Grants and Funds $ 2,661,909 $ - $ 2,661,909 $ 1,532,722 Tower Space Rental 81,676 - 81,676 94,011 Underwriting 66,864 113,681 180,545 130,931 Fundraising 4,150 47,108 51,258 62,151 Advertising 3,259 3,259 11,820 Membership Subscriptions and Other Donations 33,167 9,660 42,827 39,121 Other Operating Revenue 40,834 $ - 40,834 51,141 Total Operating Revenues 2,891,859 170,449 3,062,308 1,921,897 Non-Operating Revenues Contribution from the Government of the U.S. Virgin Islands 3,486,887 140,224 3,627,111 4,030,123 Interest Income 1,657 $ - 1,657 1,646 Insurance Proceeds 255,328 $ - 255,328 - Other non-operating revenue $ 439,111 $ - $ 439,111 $ 200,000 Total Non-Operating Revenues 4,182,983 $ 140,224 4,323,207 4,231,769 Total Revenues $ 7,074,842 $ 310,673 $ 7,385,515 $ 6,153,666 Operating Expenses Program Services Salaries $ 1,636,944 $ 75,868 $ 1,712,812 $ 1,665,811 Program Acquisition 734,465 9,271 743,736 200,040 Annual Leave Accrual 5,763 - 5,763 59,844 Employee Benefits 623,888 14,900 638,788 544,141 Equipment Rental and Maintenance 206,873 - 206,873 199,426 Professional Fees - - - 51,940 Utilities 65,212 5,823 71,035 69,848 Travel 17,709 - 17,709 29,071 Supplies and Other 52 - 52 10,234 Production 31,587 34,454 66,041 60,114 Total Program Services 3,322,493 140,316 3,462,809 2,890,469 Management and General Salaries 285,088 - 285,088 380,784 Employee Benefits 411,261 - 411,261 386,723 Depreciation 487,222 - 487,222 334,286 Payroll Taxes and Contributions 146,064 5,804 151,868 155,760 Utilities 239,966 - 239,966 257,618 - 30 - VIRGIN ISLANDS PUBLIC BROADCASTING SYSTEM (A Component Unit of the Government of the United States Virgin Islands) STATEMENTS OF REVENUES AND EXPENSES PER DIVISION (Continued) FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020 TOTAL WTJX-TV WTJX-FM 2021 2020 Professional Fees 189,234 - 189,234 150,897 Production 7,996 - 7,996 12,395 Printing and Publication 16,310 - 16,310 20,660 Repairs and Maintenance 104,790 551 105,341 90,322 Insurance 129,157 - 129,157 87,661 Subscriptions and Memberships 2,851 - 2,851 24,829 Professional Development/Training 8,175 3,000 11,175 15,074 Supplies and Other 136,600 6,351 142,951 105,536 Program Acquisition - 22,161 22,161 13,710 Automobile 32,355 - 32,355 23,471 Equipment Rental and Maintenance 1,452 - 1,452 1,777 Small Equipment 80,830 15,837 96,667 53,620 Postage and Freight 19,558 26 19,584 4,830 Advertising 5,443 - 5,443 24,651 Computer Supplies 60,091 2,858 62,949 63,815 Security 11,830 - 11,830 11,987 FCC Repacking 21,252 - 21,252 32,946 FEMA 50,499 - 50,499 33,749 Total Management and General 2,448,024 56,588 2,504,612 2,287,101 Fundraising 142 1,593 1,735 24,807 Total Operating Expenses $ 5,770,659 $ 198,497 $ 5,969,156 $ 5,202,377