Report of the Treasurer for the Year Ended December 31, 2020 (2021) / Chapter Skim
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Notes to the Financial Statements
Notes to the Financial Statements
Pages 50-77
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From page 50... ...
To respond effectively to both the disciplinary concerns of the research community and the complex interdisciplinary problems facing American society, NRC performs its studies and workshops through the following major divisions: Behavioral and Social Sciences and Education; Earth and Life Studies; Engineering and Physical Sciences; Gulf Research Program; Health and Medicine; Policy and Global Affairs; and Transportation Research Board. NRC activities are under the control of the NAS governance structure and, therefore, are included in the NAS financial statements.
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From page 51... ...
. In addition, net assets with donor restrictions also include net assets whereby the respective donors have stipulated that the principal contributed be invested and maintained in perpetuity (Note 9)
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From page 52... ...
Upon termination of an annuity agreement, the remainder interest in the assets, if any, is available for use by NAS as net assets with or without donor restrictions in accordance with the respective donor's stipulation. At December 31, 2020 and 2019, NAS had charitable gift annuity assets of approximately $5.4 million and $4.4 million, respectively, which is included in other assets in the accompanying statements of financial position.
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From page 53... ...
Gifts of land, buildings, or equipment are reported as net assets without donor restrictions unless explicit donor stipulations specify how the donated assets must be used. Donor restrictions on gifts that must be used to acquire or construct long-lived assets are released in the period in which the assets are acquired and placed in service.
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From page 54... ...
Other changes in the balances of deferred revenue and advances were caused by normal timing differences between the satisfaction of performance obligations and payment received from the sponsoring organizations. For PNAS subscriptions, any subscription revenue received in advance of the subscription year is recorded as deferred revenue and advances in the accompanying statements of financial position.
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From page 55... ...
Due to the level of risk associated with these investments, it is at least reasonably possible that changes in the values of investments will occur in the near-term and that such changes could materially affect the amounts reported. NAS maintains its cash and cash equivalents in various bank accounts and money market funds that, at times, may exceed federally insured limits.
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From page 56... ...
The techniques utilized in estimating the fair values are affected by the assumptions used, including discount rates and estimates of the amount and timing of future cash flows. Care should be exercised in deriving conclusions about NAS' business, its value or financial position based on the fair value information of financial assets presented.
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From page 57... ...
: 2020 2019 Program pool investments $ 47,201 $ 47,577 Gulf Research Program investments 557,420 504,891 Long-term investment pool, including endowment assets 595,912 549,581 Other investments 52,882 46,623 $ 1,253,415 $ 1,148,672 The following table presents NAS' fair value hierarchy for those assets measured at fair value on a recurring basis at December 31, 2020 (in thousands) : Investments Measured at Total Level 1 NAV Investments: Cash equivalents $ 118,401 $ 118,401 $ Bonds and notes: U.S.
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From page 58... ...
TNAC investments participate in the investment pools proportionally with all other funds in the pools. The NAS obligation to TNAC for these funds held in trust, which totaled $13.9 million and $13.3 million as of December 31, 2020 and 2019, respectively, is reported as funds held on behalf of others in the accompanying statements of financial position.
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From page 59... ...
(e) This class includes several domestic private equity funds, which invest in domestic equity securities, warrants, or other securities that are generally not actively traded at the time of investment.
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From page 60... ...
in the accompanying statements of financial position, and mature as follows (in thousands) : 2020 2019 Less than one year $ 13,807 $ 13,631 One to five years 6,638 7,088 Thereafter - 600 20,445 21,319 Less: Discount at rates ranging from 0.43% to 3.35% (226)
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From page 61... ...
(1,084,079) Financial assets available to meet cash needs for general expenditures within one year $ 190,520 $ 163,555 NAS is substantially supported by cost reimbursable contracts and grants from federal and private sponsors, which includes indirect cost recovery (as further discussed in Note 11)
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From page 62... ...
which, once appropriated, are expendable to support: Other sponsored research and advisory programs 242,750 220,594 Prizes and awards 76,844 71,587 Woods Hole facility 8,359 7,875 General operations 146,990 138,193 474,943 438,249 Total net assets with donor restrictions $ 1,141,594 $1,034,867 Net assets were released from donor-imposed restrictions in satisfaction of the following purposes during the years ended December 31, 2020 and 2019 (in thousands) : 2020 2019 Purpose-restricted releases: Gulf Research Program $ 22,816 $ 30,174 Other sponsored research and advisory programs 34,537 46,431 Prizes and awards 2,262 1,440 Woods Hole facility 344 333 59,959 78,378 Time-restricted releases 5,834 5,603 Net assets released from restrictions $ 65,793 $ 83,981 The Gulf Research Program net assets relate to two agreements between NAS and BP Exploration and Production, Inc.
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From page 63... ...
Appreciation on donor-restricted endowment funds is classified in net assets with donor restrictions until such amounts are appropriated for spending by the NAS Council in a manner consistent with the standard of prudence prescribed by the Act. In accordance with the Act, NAS considers the following factors in making a determination to appropriate investment funds attributable to donor-restricted endowments: (1)
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From page 64... ...
The over-recovery is included in the deferred revenue and advances balance in the accompanying statements of financial position. NOTE 12 - BUILDING PROJECT AND FINANCING Building Project Revenue Bonds In January 1999, the District of Columbia issued Series 1999A, Series 1999B, and Series 1999C tax-exempt revenue bonds in the amount of $130,960,000 on behalf of NAS.
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From page 65... ...
In December 2017, the District of Columbia issued Series 2017A tax-exempt revenue bonds in the amount of $52,760,000 on behalf of NAS. The proceeds were used to complete an advance refunding of a portion of the Series 2010A revenue bonds.
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From page 66... ...
Interest Rate Swaps In October 1999, NAS entered into an interest-rate swap agreement, with an effective date of February 1, 2000, relating to the $66 million face amount of its Series 1999A revenue bonds. The agreement provides for NAS to receive 4.97% in interest on a notional amount of $65 million and to pay interest at a floating rate option based on the weekly interest rate resets of tax-exempt variable-rate issues per the Securities Industry and Financial Markets Association ("SIFMA")
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From page 67... ...
The fair value of investments held for the two plans totaled $1.7 million and $1.2 million as of December 31, 2020 and 2019, respectively, which is reported within other assets in the accompanying statements of financial position. The related obligation is included in accrued employee benefits in the accompanying statements of financial position.
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From page 68... ...
The accrued postretirement benefit obligation is reported within other assets in the accompanying statements of financial position. Postretirement changes other than net periodic benefit cost are as follows (in thousands)
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From page 69... ...
(56) Recognized actuarial loss 603 684 Net periodic benefit cost $ 657 $ 892 The assumptions used to determine net periodic benefit cost for the years ended December 31, 2020 and 2019 are as follows: 2020 2019 Discount rate 3.27% 4.25% Expected long-term return on plan assets 6.50% 6.75% Rate of increase in healthcare costs: Under age 65 5.77% 5.99% Over age 65 5.30% 5.43% The assumptions used to calculate the accumulated postretirement benefit obligation as of December 31, 2020 and 2019 are as follows: 2020 2019 Discount rate 2.42% 3.27% Rate of increase in healthcare costs for next year: Under age 65 5.56% 5.77% Over age 65 5.16% 5.30% The trend rate for growth in healthcare costs was assumed to decline gradually beginning in 2020 to 4.0% by the year 2046.
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From page 70... ...
The following table presents the fair value hierarchy for the postretirement benefit plan assets at December 31, 2020 (in thousands) : Fair Value Measurements Using Total Level 1 Level 2 Financial assets: Retiree Welfare Benefit Plan investments: Cash equivalents $ 2,213 $ 2,213 $ Bonds and notes: U.S.
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From page 71... ...
is a separately incorporated tax-exempt organization established by NAE to raise funds to support its goals. The financial activities and results of NAEF are not included in the NAS financial statements.
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From page 72... ...
The lease contains no variable lease payments or residual value guarantees. The amount recognized as a right-of-use asset is included in other assets in the accompanying statements of financial position, while the related lease liability is included in other current liabilities and other long-term liabilities.
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From page 73... ...
In the opinion of management, this offset of revenues and expenses due to virtual operations will not have a material adverse effect on the financial statements of NAS. NOTE 16 - SUBSEQUENT EVENTS NAS has evaluated subsequent events from the statement of financial position date through June 9, 2021, the date at which the financial statements were issued, and determined that there are no additional items to disclose or adjustments to record.
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From page 75... ...
Parkinson William W Stead FINANCIAL MANAGEMENT STAFF Didi Salmon, Chief Financial Officer Laura Douglas, Controller 75
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