Oconee Fall Line Technical College, Sandersville, Georgia, report on audit of the financial statements for the fiscal year ended 2019 June 30

OCONEE FALL LINE TECHNICAL COLLEGE
SANDERSVILLE, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2019
A Member Institution of the Technical College System of Georgia

OCONEE FALL LINE TECHNICAL COLLEGE - TABLE OF CONTENTS -

SECTION I
FINANCIAL
LETTER OF TRANSMITTAL
SELECTED FINANCIAL INFORMATION
EXHIBITS
A STATEMENT OF NET POSITION - (GAAP BASIS) B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION -
(GAAP BASIS) C STATEMENT OF CASH FLOWS - (GAAP BASIS) D SELECTED FINANCIAL NOTES
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET
BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND

Page
2 3 4 6
25 26 28 30

SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

Greg S. Griffin
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
December 16, 2019

Honorable Brian P. Kemp, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the State Board of the Technical College System of Georgia Members of the Local Board of Directors
and Dr. Erica Harden, President Oconee Fall Line Technical College
Ladies and Gentlemen:
This Management Report contains information pertinent to the Oconee Fall Line Technical College's compliance with the requirements of the Southern Association of Colleges and Schools Commission on Colleges (COC) Standard 13.2 (Financial Resources) as of and for the year ended June 30, 2019. Additionally, we audited Oconee Fall Line Technical College's Federal Student Aid programs for the year ended June 30, 2019 to meet the requirements of COC Standard 13.6. Included in this report is a section on findings and other items for any matters that came to our attention during our engagement, including results of our audit of the Federal Student Aid programs. The other information contained in this report is the representation of management. Accordingly, we do not express an opinion or any form of assurance on it.
Additionally, we have performed certain procedures at Oconee Fall Line Technical College to support the issuance of the State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2019.
This report is intended solely for the information and use of the management of Oconee Fall Line Technical College, members of the State Board of the Technical College System of Georgia, members of the Local Board of Directors, and the Southern Association of Colleges and Schools Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully,

Greg S. Griffin State Auditor

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SELECTED FINANCIAL INFORMATION - 1 -

OCONEE FALL LINE TECHNICAL COLLEGE STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2019
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net State Appropriations Receivables - Federal Financial Assistance Receivables - Other Prepaid Items Inventories
Total Current Assets
Noncurrent Assets Net OPEB Asset Capital Assets, Net
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources Related to Defined Benefit Pension Plans and OPEB
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Unearned Revenue (Including Tuition and Fees) Deposits Held for Other Organizations Compensated Absences Other Liabilities
Total Current Liabilities
Noncurrent Liabilities Compensated Absences Net OPEB Liability Net Pension Liability
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources Related to Defined Benefit Pension Plans and OPEB
NET POSITION
Investment in Capital Assets Restricted
Expendable Unrestricted (Deficit)
Total Net Position

EXHIBIT "A"

$

648,325.17

30,000.00 112,844.47 735,764.22 199,384.85 270,002.27

1,996,320.98

178,553.00 34,688,215.94
34,866,768.94
36,863,089.92

4,187,787.00

223,520.63 47,134.07
383,486.49 202,738.41 481,458.49
1,763.15 1,340,101.24
391,061.15 6,564,915.00 11,392,171.00 18,348,147.15 19,688,248.39
4,254,712.00
34,688,215.94 178,553.06
(17,758,852.47)
$ 17,107,916.53

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OCONEE FALL LINE TECHNICAL COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2019

EXHIBIT "B"

OPERATING REVENUES
Student Tuition and Fees (Net) Grants and Contracts
Federal Rents and Royalties Sales and Services Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal State Local Gifts Other Nonoperating Revenues (Expenses)
Net Nonoperating Revenues
Income Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Nongovernmental
Total Other Revenues, Expenses, Gains, or Losses
Change in Net Position
Net Position - Beginning of Year
Net Position - End of Year

$

2,191,390.99

46,728.35 202,470.85 1,038,818.51
71,210.18

3,550,618.88

9,106,069.50 1,403,079.59
128,599.38 2,164,037.28 1,105,192.02 2,445,772.01 1,948,197.30
18,300,947.08
(14,750,328.20)

10,495,631.03
5,657,796.95 6,811.25
59,722.00 342,961.51 (342,961.51)
16,219,961.23
1,469,633.03
200,000.00 4,594.13
204,594.13
1,674,227.16
15,433,689.37

$ 17,107,916.53

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OCONEE FALL LINE TECHNICAL COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts (Exchange) Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Other Receipts
Net Cash Used by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Noncapital Financing Payments
Net Cash Flows Provided by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets
Net Increase in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Loss Adjustments to Reconcile Operating Income to Net Cash
Used by Operating Activities Depreciation Expense Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Accounts Payable Salaries Payable Unearned Revenue (Including Tuition and Fees) Compensated Absences Other Liabilities Net OPEB Asset Net Pension Liability Net OPEB Liability Change in Deferred Inflows/Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources
Net Cash Used by Operating Activities
NONCASH ACTIVITY Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts

EXHIBIT "C"

$

2,223,739.62

70,676.62

1,076,410.81

(7,673,454.96)

(9,149,083.53) (2,164,037.28)
317,304.49

(15,298,444.23)

$ 10,465,631.03 (84,089.72)
6,067,291.71 (342,961.51)
16,105,871.51

(605,773.35) 201,653.93 446,671.24

$

648,325.17

$ (14,750,328.20)
1,948,197.30
47,960.69 26,043.42 (8,245.60)
3,591.04 (193.59)
89,551.97 (42,820.44)
714.18 16,359.00 (75,445.00) (3,846,513.00)
2,220,671.00 (927,987.00)

$ (15,298,444.23)

$

204,594.13

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OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY
Oconee Fall Line Technical College (the Institution) is one of twenty-two (22) State supported member Institutions of postsecondary education in Georgia which comprise the Technical College System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Oconee Fall Line Technical College as a separate reporting entity.
The Institution's Local Board of Directors is composed of fifteen (15) members serving staggered threeyear terms who are appointed by the State Board of the Technical College System of Georgia. Appropriation of State funds is made to the Technical College System of Georgia by the General Assembly of Georgia. The System Office of the Technical College System of Georgia determines the amount of state appropriations to be received by the Institution. The Institution does not have authority to retain unexpended state appropriations (surplus) for any given fiscal year. Accordingly, the Institution is considered an organizational unit of the Technical College System of Georgia for financial reporting purposes because of the significance of its legal, operational, and financial relationships as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards.
The accompanying basic financial statements represent the financial position, changes in financial position and cash flows of only that portion of the business-type activities of the State that are attributable to the transactions of the Institution. They do not purport to, and do not, present fairly the financial position of the State as of June 30, 2019, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying basic financial statements should be read in conjunction with the State's CAFR. The most recent State of Georgia CAFR can be obtained through the State Accounting Office, 200 Piedmont Avenue, Suite 1604 (West Tower), Atlanta, Georgia 30334 or found at https://sao.georgia.gov/comprehensive-annual-financial-reports.
BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PREPARATION
The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the Institution's assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, revenues, expenses, changes in net position and cash flows.
The Institution's business-type activities 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. Grants and similar items are recognized as revenues in the fiscal year in which eligibility requirements imposed by the provider have been met. All significant intra-college transactions have been eliminated.
NEW ACCOUNTING PRONOUNCEMENTS
For fiscal year 2019, the Institution adopted Governmental Accounting Standards Board (GASB) Statement No. 83, Certain Asset Retirement Obligations. This statement addresses accounting and financial reporting for certain assert retirement obligations (AROs). This statement also requires disclosure of information about the nature of a government's AROs, the methods and assumptions
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OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

used for the estimates of the liabilities, and the estimated remaining useful life of the associated tangible capital assets. The adoption of this statement does not have a significant impact on the Institution's financial statements.
For fiscal year 2019, the Institution adopted Governmental Accounting Standards Board (GASB) Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. The objective of this statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. The adoption of this statement does not have a significant impact on the Institution's financial statements.
NET POSITION
The Institution's net position is classified as follows:
Net Investment in Capital Assets: This represents the Institution's total investment in capital assets, net of accumulated amortization/depreciation and reduced by outstanding debt obligations related to those capital assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction or improvement of capital assets or related debt are included in Net Investment in Capital Assets. If there are significant unspent related debt proceeds or deferred inflows of resources at the end of the reporting period, the portion of the debt or deferred inflows of resources attributable to the unspent amount are not included in Net Investment in Capital Assets.
Restricted: expendable: Includes resources in which the Institution is legally or contractually obligated to spend resources in accordance with restrictions by external third parties.
Unrestricted: Unrestricted represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments. These resources are used for transactions relating to the educational and general operations of the Institution, and may be used at the discretion of the Institution to meet current expenses for those purposes, except for unexpended state appropriations (surplus) in the amount of $24,128.85. Unexpended state appropriations must be refunded to the Office of the State Treasurer.
SCHOLARSHIP ALLOWANCES
Scholarship allowances are the differences between the stated charge for goods and services provided by the Institution, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or non-governmental programs are recorded as either operating or non-operating revenues in the Institution's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the Institution has recorded contra revenue for scholarship allowances. Sponsored and Unsponsored Scholarship Allowances totaled $1,341,245.76 for the year ending June 30, 2019.

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OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

NOTE 2: DEPOSITS Reconciliation of cash and cash equivalents balances to carrying value of deposits:

Cash and Cash Equivalents Statement of Net Position
Less: Cash on hand

$

648,325.17

2,525.00

Total carrying value of deposits - June 30, 2019 DEPOSITS

$

645,800.17

The custodial credit risk for deposits is the risk that in the event of a bank failure, the Institution's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the Institution) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:

1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.

2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.

3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.

4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.

5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.

6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

At June 30, 2019, the carrying value of deposits was $645,800.17 and the bank balances were $1,002,206.62. Of these deposits, $670,314.78 were uninsured. Of these uninsured deposits, $670,314.78 were collateralized with securities held by the financial institution's trust department or agency in the Technical College's name.

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OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2019:

State Appropriations

$

Student Tuition and Fees

Federal Financial Assistance

Other

Less Allowance for Doubtful Accounts

Accounts Receivable, Net

$

30,000.00 80,557.99 112,844.47 659,106.23
882,508.69 3,900.00
878,608.69

NOTE 4: CAPITAL ASSETS

Following are the changes in capital assets for the year ended June 30, 2019:

Capital Assets, Not Being Depreciated: Land
Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections

Beginning Balance
July 1, 2018

Additions

Reductions

Ending Balance June 30, 2019

$

955,108.00 $

- $

- $

955,108.00

49,940,917.78 1,741,319.73 8,310,694.51 705,763.13

138,500.00 -
654,107.77 17,759.71

125,356.93 165,068.79

50,079,417.78 1,741,319.73 8,839,445.35 558,454.05

Total Assets Being Depreciated
Less: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Library Collections

60,698,695.15
16,878,368.54 1,366,830.52 7,023,464.18 559,094.15

810,367.48
1,329,493.12 73,092.95
492,652.19 52,959.04

290,425.72
125,356.93 165,068.79

61,218,636.91
18,207,861.66 1,439,923.47 7,390,759.44 446,984.40

Total Accumulated Depreciation

25,827,757.39

1,948,197.30

290,425.72

27,485,528.97

Total Capital Assets, Being Depreciated, Net

34,870,937.76

(1,137,829.82)

-

33,733,107.94

Capital Assets, Net

$ 35,826,045.76 $ (1,137,829.82) $

- $ 34,688,215.94

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OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

A comparison of depreciation expense for the last three fiscal years is as follows:

Fiscal Year

Depreciation Expense

2019 2018 2017

$ 1,948,197.30 $ 1,967,863.55 $ 1,939,709.40

NOTE 5: UNEARNED REVENUE (INCLUDING TUITION AND FEES)

Unearned Revenue (Including Tuitions and Fees) consisted of the following at June 30, 2019:

Current Liabilities

Prepaid Tuition and Fees

$ 383,486.49

NOTE 6: LONG-TERM LIABILITIES

The Institution's long-term liability activity for the year ended June 30, 2019 was as follows:

Other Liabilities

Compensated Absences

$

Net Pension Liability

Net Other Post Employment

Benefits Liability

Beginning Balance July 1, 2018
915,340.08 $ 11,467,616.00
10,411,428.00

Additions

Reductions

Ending Balance June 30, 2019

Current Portion

633,507.50 $ -
-

676,327.94 $ 75,445.00
3,846,513.00

872,519.64 $ 11,392,171.00
6,564,915.00

481,458.49 -
-

Total Long-Term Obligations $ 22,794,384.08 $ 633,507.50 $ 4,598,285.94 $ 18,829,605.64 $ 481,458.49

NOTE 7: NET POSITION

Changes in Net Position for the year ended June 30, 2019 are as follows:

Beginning Balance July 1, 2018

Additions

Reductions

Ending Balance June 30, 2019

Net Investment in Capital Assets $ 35,826,045.76 $

810,367.48 $ 1,948,197.30 $ 34,688,215.94

Restricted Net Position

210,799.04

4,929,351.09

4,961,597.07

178,553.06

Unrestricted Net Position

(20,603,155.43) 14,235,455.67

11,391,152.71

(17,758,852.47)

Total Net Position

$ 15,433,689.37 $ 19,975,174.24 $ 18,300,947.08 $ 17,107,916.53

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OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

NOTE 8: LEASE OBLIGATIONS
The Institution is obligated under various operating leases for the use of real property and equipment.
OPERATING LEASES
The Institution leases facilities and office equipment. Some of these leases are considered for accounting purposes to be operating leases. Although lease terms vary, many leases are subject to appropriations from the General Assembly to continue the obligation. Other leases generally contain provisions that, at the expiration date of the original term of the lease, the Institution has the option of renewing the lease on a year-to-year basis. Leases renewed yearly for a specified time period, i.e. lease expires at 12 months and must be renewed for the next year, may not meet the qualification as an operating lease. The Institution's operating lease expense for the fiscal year 2019 was $56,969.24.
NOTE 9: RETIREMENT PLANS
The Institution participates in various retirement plans administered by the State of Georgia under two major retirement systems: Teachers Retirement System of Georgia (TRS) and Employees' Retirement System of Georgia (ERS). These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective administrative offices.
The significant retirement plans that the Institution participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.
Teachers Retirement System of Georgia and Employees' Retirement System of Georgia
General Information about the Teachers Retirement System
Plan description: All teachers of the Institution as defined in 47-3-60 of the Official Code of Georgia Annotated (O.C.G.A.) are provided a pension through the Teachers Retirement System of Georgia (TRS). TRS, a cost-sharing multiple-employer defined benefit pension plan, is administered by the TRS Board of Trustees (TRS Board). Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. TRS issues a publicly available financial report that can be obtained at www.trsga.com/publications.
Benefits provided: TRS provides service retirement, disability retirement, and death benefits. Normal retirement benefits are determined as 2% of the average of the employee's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. An employee is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. Ten years of service is required for disability and death benefits eligibility. Disability benefits are based on the employee's creditable service and compensation up to the time of disability. Death benefits equal the amount that would be payable to the employee's beneficiary had the employee retired on the date of death. Death benefits are based on the employee's creditable service and compensation up to the date of death.
Contributions: Per Title 47 of the O.C.G.A., contribution requirements of active employees and participating employers, as actuarially determined, are established and may be amended by the TRS Board. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees were required to

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OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

contribute 6.00 % of their annual pay during fiscal year 2019. The Institution's contractually required contribution rate for the year ended June 30, 2019 was 20.90% of annual Institution payroll. Institution contributions to TRS were $1,147,066.00 for the year ended June 30, 2019.
General Information about the Employees' Retirement System
Plan description: ERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees. Title 47 of the O.C.G.A. assigns the authority to establish and amend the benefit provisions to the State Legislature. ERS issues a publicly available financial report that can be obtained at www.ers.ga.gov/formspubs/formspubs.
Benefits provided: The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the old plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are new plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS.
Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor. Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Contributions: Member contributions under the old plan are 4% of annual compensation, up to $4,200, plus 6% of annual compensation in excess of $4,200. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The Institution's contractually required contribution rate, actuarially determined annually, for the year ended June 30, 2019 was 24.78% of annual covered payroll for old and new plan members and 21.78% for GSEPS members. The rates include the annual actuarially determined employer contribution rate of 24.66% of annual covered payroll for old and new plan members and 21.66% for GSEPS members, plus a 0.12% adjustment for the HB751 one-time benefit adjustment of 3% to retired state employees. The Institution's contributions to ERS totaled $418,502.00 for the year ended June 30, 2019. Contributions are expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.

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OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2019, the Institution reported a liability for its proportionate share of the net pension liability for TRS and ERS totaling $11,392,171.00. The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was based on an actuarial valuation as of June 30, 2017. An expected total pension liability as of June 30, 2018 was determined using standard roll-forward techniques. The Institution's proportion of the net pension liability was based on contributions to TRS and ERS during the fiscal year ended June 30, 2018. At June 30 2018, the Institution's TRS proportion was 0.045761%, which was an increase of 0.000798 % from its proportion measured as of June 30, 2017. At June 30, 2018, the Institution's ERS proportion was 0.070492%, which was a decrease of 0.006111% from its proportion measured as of June 30, 2017.

For the year ended June 30, 2019, the Institution recognized pension expense of $572,289.00 for TRS and $232,624.00 for ERS. At June 30, 2019, the Institution reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS
Deferred Outflows of Resources

Deferred Inflows of Resources

ERS
Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual

experience

$ 562,329.00 $ 17,507.00 $ 90,132.00 $

-

Changes of assumptions

128,175.00

-

136,530.00

-

Net difference between projected and actual earnings on pension plan investments

-

232,249.00

-

66,783.00

Changes in proportion and differences between Institution contributions and proportionate share of contributions

148,196.00

471,925.00

-

172,683.00

Instutution contributions subsequent to the measurement date

1,147,066.00

-

418,502.00

-

Total

$ 1,985,766.00 $ 721,681.00 $ 645,164.00 $ 239,466.00

The Institution's contributions subsequent to the measurement date of $1,147,066.00 for TRS and $418,502.00 for ERS are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ended June 30:

TRS

ERS

2020 2021 2022 2023 2024

$ 216,986.00 $ 84,908.00 $ (220,766.00) $ 25,098.00 $ 10,793.00
- 13 -

$ 101,825.00

$ 26,225.00

$ (111,015.00)

$ (29,839.00)

$

-

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

Actuarial assumptions: The total pension liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions, applied to all periods included in the measurement:

Teachers Retirement System:

Inflation Salary increases Investment rate of return

2.75% 3.25 9.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 White Collar Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB (set forward on year for males) for service retirements and dependent beneficiaries. The RP-2000 Disability Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB (set forward two years for males and four years for females) was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

Employees' Retirement System

Inflation Salary increases Investment rate of return

2.75%
3.25 7.00%, including inflation 7.30%, net of pension plan investment expense, including inflation

Post-retirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward 2 years for both males and females for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries' projection scale BB and set back 7 years for males and set forward 3 years for females was used for death after disability retirement. There is a margin for future mortality improvement in the tables used by the System. Based on the results of the most recent experience study adopted by the Board on December 17, 2015, the numbers of expected future deaths are 9-12% less than the actual number of deaths that occurred during the study period for service retirements and beneficiaries and for disability retirements. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.

- 14 -

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

The long-term expected rate of return on TRS and ERS pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected nominal returns, net of pension plan investment expense and the assumed rate of 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. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class
Fixed income Domestic large stocks Domestic mid stocks Domestic small stocks International developed market stocks International emerging market stocks Alternative
Total
* Rates shown are net of the 2.75% assumed rate of inflation

TRS Target allocation
30.00% 39.80%
3.70% 1.50% 19.40% 5.60%
-
100.00%

ERS Target allocation
30.00% 37.20%
3.40% 1.40% 17.80% 5.20% 5.00%
100.00%

Long-term expected real rate of return*
(0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50%

Discount rate: The discount rate used to measure the total TRS pension liability was 7.50% and ERS pension liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the TRS and ERS pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the Institution's proportionate share of the net pension liability to changes in the discount rate: The following presents the Institution's proportionate share of the net pension liability calculated using the applicable discount rate, as well as what the Institution's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate:

Teachers Retirement System:
Institution's proportionate share of the net pension liability

1% Decrease (6.50%)

Current discount rate
(7.50%)

1% Increase (8.50%)

$ 14,179,288.00 $ 8,494,222.00 $ 3,809,438.00

Employees' Retirement System:
Institution's proportionate share of the net pension liability

1% Decrease (6.30%)

Current discount rate
(7.30%)

1% Increase (8.30%)

$ 4,121,908.00 $ 2,897,949.00 $ 1,855,106.00

- 15 -

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

Pension plan fiduciary net position: Detailed information about the pension plan's fiduciary net position is available in the separately issued TRS and ERS financial reports which are publicly available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs, respectively.
NOTE 10: RISK MANAGEMENT
Public Entity Risk Pool The Department of Community Health administers for the State of Georgia a program of health benefits for the employees of units of government of the State of Georgia, units of county governments, and local education agencies located with the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan.
Other Risk Management The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Institution, as an organizational unit of the Technical College System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
NOTE 11: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Institution expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the Institution (an organizational unit of the Technical College System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2019.
NOTE 12: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Georgia State Employees Post-Employment Health Benefit Fund (State OPEB Fund)
General Information about the State OPEB Fund
Plan description: - Employees of State organizations as defined in 45-18-25 of the Official Code of Georgia Annotated (O.C.G.A.) are provided OPEB through the State OPEB Fund - a cost-sharing multipleemployer defined benefit postemployment healthcare plan, reported as an employee trust fund and administered by a Board of Community Health (Board). Title 45 of the O.C.G.A. assigns the authority to establish and amend the benefit terms of the group health plan to the Board.
- 16 -

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

Benefits provided: The State OPEB Fund provides healthcare benefits for retirees and their dependents due under the group health plan for employees of State organizations (including technical colleges) and other entities authorized by law to contract with Department of Community Health (DCH) for inclusion in the plan. Retiree medical eligibility is attained when an employee retires and is immediately eligible to draw a retirement annuity from Employees' Retirement System (ERS), Georgia Judicial Retirement System (JRS), Legislative Retirement System (LRS), Teachers Retirement System (TRS) or Public School Employees Retirement System (PSERS). If elected, dependent coverage starts on the same day as retiree coverage. Medicare-eligible retirees are offered Standard and Premium Medicare Advantage plan options. Non-Medicare eligible retiree plan options include Health Reimbursement Arrangement (HRA), Health Maintenance Organization (HMO) and a High Deductible Health Plan (HDHP). The State OPEB Fund also pays for administrative expenses of the fund. By law, no other use of the assets of the State OPEB Fund is permitted.
Contributions: As established by the Board, the State OPEB Fund is substantially funded on a pay-asyou-go basis; that is, annual cost of providing benefits will be financed in the same year as claims occur. Contributions to the State OPEB Fund from the Institution were $1,364,839.00 for the year ended June 30, 2019. Active employees are not required to contribute to the State OPEB Fund.
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
At June 30, 2019, the Institution reported a liability of $6,564,915.00 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2018. The total OPEB liability used to calculate the net OPEB liability was based on an actuarial valuation as of June 30, 2017. An expected total OPEB liability as of June 30, 2018 was determined using standard roll-forward techniques. The Institution's proportion of the net OPEB liability was actuarially determined based on employer contributions during the fiscal year ended June 30, 2018. At June 30, 2018, the Institution's proportion was 0.250992%, which was a decrease of 0.004553% from its proportion measured as of June 30, 2017.

- 17 -

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

For the year ended June 30, 2019, the Institution recognized OPEB expense of $493,030.00. At June 30, 2019, the Institution reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Resources

OPEB

Deferred Inflows of Resources

Differences between expected and actual experience $

- $ 516,331.00

Changes of assumptions
Net difference between projected and actual earnings on OPEB plan investments

151,750.00

2,379,680.00 -

Changes in proportion and differences between contributions and proportionate share of

-

368,036.00

Contributions subsequent to the measurement

1,364,839.00

-

Total

$ 1,516,589.00 $ 3,264,047.00

The Institution's contributions subsequent to the measurement date of $1,364,839.00 are reported as deferred outflows of resources and will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30:

2020 2021 2022 2023

$(1,030,804.00) $(1,030,804.00) $ (815,972.00) $ (234,717.00)

- 18 -

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

Actuarial assumptions: The total OPEB liability as of June 30, 2018 was determined by an actuarial valuation as of June 30, 2017 using the following actuarial assumptions and other inputs, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2018:

Inflation Salary increases Long-term expected rate of return Healthcare cost trend rate
Pre-Medicare Eligible Medicare Eligible Ultimate trend rate Pre-Medicare Eligible Medicare Eligible Year of Ultimate trend rate Pre-Medicare Eligible Medicare Eligible

2.75% 3.25% - 7.00%, including inflation 7.30%, compounded annually, net of investment expense, and including inflation 7.50% 5.50%
4.75% 4.75%
2028 2022

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB as follows:
For ERS, JRS and LRS members: The RP-2000 Combined Mortality Table projected to 2025 with projection scale BB and set forward 2 years or both males and females is used for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB and set back 7 years for males and set forward 3 years for females is used for the period after disability retirement.
For TRS members: The RP-2000 White Collar Mortality Table projected to 2025 with projection scale BB (set forward 1 year for males) is used for death after service retirement and beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward two years for males and four years for females) is used for death after disability retirement.
The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the pension systems, which covered the five-year period ending June 30, 2014.
The remaining actuarial assumptions (e.g. initial per capita costs, health care cost trends, rate of plan participation, rates of plan election, etc.) used in the June 30, 2017 valuation were based on a review of recent plan experience done concurrently with the June 30, 2017 valuation.
Projection of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan

- 19 -

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation.

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 nominal returns, net of investment expense and the assumed rate of 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. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class
Fixed Income Domestic Stocks - Large Cap Domestic Stocks - Mid Cap Domestic Stocks - Small Cap Int'l Stocks - Developed Mkt Int'l Stocks - Emerging Mkt Alternatvies
Total

Target allocation
30.00% 37.20%
3.40% 1.40% 17.80% 5.20% 5.00%
100.00%

Long-term expected real rate of return *
(0.05)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50%

* Rates shown are net of inflation.

Discount rate: The discount rate has changed since the prior measurement date from 3.60% to 5.22%. In order to measure the total OPEB liability for the State OPEB Fund, a single equivalent interest rate of 5.22% was used as the discount rate. This is comprised mainly of the yield or index rate for twentyyear tax-exempt general obligation municipal bonds with an average rating of AA or higher (3.87% per the Bond Buyers Index). The projection of cash flows used to determine the discount rate assumed that contributions from members and from the employer will be made at the current level as averaged over the last five years, adjusted for annual projected changes in headcount. Projected future benefit payments for all current plan members were projected through 2118. Based on these assumptions, the OPEB plan's fiduciary net position was projected to be available to make OPEB payments for inactive employees through year 2040. Therefore, the calculated discount rate of 5.22% was applied to all periods of projected benefit payments to determine the total OPEB liability.

Sensitivity of the Institution's proportionate share of the net OPEB liability to changes in the discount rate: The following presents the Institution's proportionate share of the net OPEB liability calculated using the discount rate of 5.22%, as well as what the Institution's proportionate share of the net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (4.22%) or 1-percentage-point higher (6.22%) than the current discount rate:

Proportionate Share of the Net OPEB Liability

1% Decrease 4.22%

Current Rate 5.22%

1% Increase 6.22%

$ 7,799,350.00 $ 6,564,915.00 $ 5,545,044.00

- 20 -

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

Sensitivity of the Institution's proportionate share of the net OPEB liability to changes in the healthcare cost trend rates: The following presents the Institution's proportionate share of the net OPEB liability, as well as what the Institution's proportionate share of the net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates:

Proportionate Share of the Net OPEB Liability

1% Decrease $ 5,415,593.00

Current Rate $ 6,564,915.00

1% Increase $ 7,970,577.00

OPEB plan fiduciary net position Detailed information about the OPEB plan's fiduciary net position is available in the Comprehensive Annual Financial Report (CAFR) which is publicly available at https://sao.georgia.gov/comprehensiveannual-financial-reports.

Postemployment Benefits Other Than Pensions (SEAD OPEB)

General Information about the SEAD-OPEB Fund

Plan Description: SEAD-OPEB was created in 2007 by the Georgia General Assembly to amend Title 47 of the O.C.G.A., relating to retirement, so as to establish a fund for the provision of term life insurance to retired and vested inactive members of the Employees' Retirement System of Georgia (ERS), the Legislative Retirement System (LRS), and the Georgia Judicial Retirement System (GJRS). The plan is a cost-sharing multiple-employer defined benefit other postemployment benefit plan as defined in Governmental Accounting Standards Board (GASB) Statement No. 74, Financial Reporting for Postemployment Benefit Plans other than OPEB Plans. The SEAD-OPEB trust fund accumulates the premiums received from the aforementioned retirement plans, including interest earned on deposits and investments of such payments.

Benefits Provided: The amount of insurance for a retiree with creditable service prior to April 1, 1964 is the full amount of insurance in effect on the date of retirement. The amount of insurance for a service retiree with no creditable service prior to April 1, 1964 is 70% of the amount of insurance in effect at age 60 or at termination, if earlier. Life insurance proceeds are paid in a lump sum to the beneficiary upon death of the retiree.

Contributions: Georgia law provides that employee contributions to the plan shall be in an amount established by the Board of Trustees not to exceed one-half of one percent of the member's earnable compensation. There were no employer contributions required for the fiscal year ended June 30, 2019.

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

At June 30, 2019, the Institution reported an asset of $178,553.00 for its proportionate share of the net OPEB asset. The net OPEB asset was measured as of June 30, 2018. The total OPEB asset used to calculate the net OPEB asset was based on an actuarial valuation as of June 30, 2017. An expected total OPEB asset as of June 30, 2018 was determined using standard roll-forward techniques. The Institution's proportion of the net OPEB asset was based on actual member salaries reported to the SEAD-OPEB plan during the fiscal year ended June 30, 2018. At June 30, 2018, the Institution's proportion was 0.065973%, which was a decrease of 0.015133 % from its proportion measured as of June 30, 2017.

- 21 -

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

For the year ended June 30, 2019, the Institution recognized a credit to OPEB expense of $5,609.00 At June 30, 2019, the Institution reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

SEAD-OPEB

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

Differences between expected and actual experience

$

1,951.00 $

-

Changes of assumptions

9,174.00

-

Net difference between projected and actual earnings on OPEB plan investments

-

29,518.00

Changes in proportion and differences between contributions and proportionate share of contributions
Total

29,143.00 $ 40,268.00 $

29,518.00

Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:

Year Ended June 30:

2020 2021 2022 2023

$ 18,030.00 $ 4,203.00 $ (9,018.00) $ (2,465.00)

Actuarial assumptions: The total OPEB asset as of June 30, 2018 was determined by an actuarial

valuation as of June 30, 2017 using the following actuarial assumptions and other inputs, applied to

all periods included in the measurement:

Inflation

2.75%

Salary increases:

ERS

3.25% 7.00%

GJRS

4.50%

LRS Investment rate of return

N/A
7.30%, net of OPEB plan investment expense, including inflation

Postretirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries' projection scale BB and set forward two years for both males and females for service retirements and dependent beneficiaries. There is a margin for future mortality improvement in the tables used by the plan.

- 22 -

OCONEE FALL LINE TECHNICAL COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2019

EXHIBIT "D"

The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
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 nominal returns, net of plan investment expense and the assumed rate of 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. The target asset allocation and estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternative
Total
* Rates shown are net of inflation

Target allocation
30.00% 37.20%
3.40% 1.40% 17.80% 5.20% 5.00%
100.00%

Long-term expected real rate of return*
(0.50)% 9.00% 12.00% 13.50% 8.00% 12.00% 10.50%

Discount rate: The discount rate used to measure the total OPEB liability was 7.30%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and State of Georgia contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the OPEB plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Sensitivity of the Institution's proportionate share of the net OPEB asset to changes in the discount rate: The following presents the Institution's proportionate share of the net OPEB asset calculated using the discount rate of 7.30%, as well as what the Institution's proportionate share of the net OPEB asset would be if it were calculated using a discount rate that is one-percentage-point lower (6.30%) or one-percentage-point higher (8.30%) than the current rate:

1% Decrease (6.30%)

Current Discount Rate
(7.30%)

1% Increase (8.30%)

Net OPEB Asset

$

(96,204.00) $

(178,553.00) $

(246,052.00)

OPEB plan fiduciary net position

Detailed information about the OPEB plan's fiduciary net position is available in the separately issued ERS comprehensive annual financial report which is publicly available at www.ers.ga.gov/financials.

- 23 -

SUPPLEMENTARY INFORMATION - 24 -

ASSETS
Cash and Cash Equivalents Accounts Receivable
State Appropriations Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Unearned Revenue Funds Held for Others
Total Liabilities
Fund Balances Reserved Refunds to Grantors Local Grants and Contracts Sales and Services Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable Inventories Bookstore Tuition Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

OCONEE FALL LINE TECHNICAL COLLEGE BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30, 2019

SCHEDULE "1"

$

957,433.99

30,000.00 74,490.92 2,031,602.01 272,522.44 270,002.27

$

3,636,051.63

$

47,134.07

2,022,279.48

223,976.51

383,486.49

1,421.22

2,678,297.77

0.02 0.04 68,259.17 53,408.47 51,145.45 94,640.09 3,900.00 269,954.95 155,080.01 237,236.81
24,128.85
957,753.86

$

3,636,051.63

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 25 -

OCONEE FALL LINE TECHNICAL COLLEGE SUMMARY BUDGET COMPARISON SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2019

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Federal Funds Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Adult Literacy Economic Development Technical Education
Total Expenditures
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned
to Technical College System of Georgia Year Ended June 30, 2018
Refunds to Grantors Federal Financial Assistance Returned to Technical College System of Georgia Year Ended June 30, 2018
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$

10,499,467.00 $

10,499,467.00 $

-

3,110,780.15

2,487,355.60

(623,424.55)

7,821,083.39

7,173,826.87

(647,256.52)

21,431,330.54

20,160,649.47

(1,270,681.07)

21,431,330.54

609,246.49 20,769,895.96

609,246.49 (661,434.58)

1,105,337.00 1,306,665.38 19,019,328.16
21,431,330.54

$

-

1,040,148.25 1,043,973.30 17,964,928.56
20,049,050.11
720,845.85 $

65,188.75 262,692.08 1,054,399.60
1,382,280.43
720,845.85

897,978.69 3,835.97

40,238.54 (92,062.69)
(3,835.97)

(0.04) (609,246.49)

$

957,753.86

SUMMARY OF FUND BALANCE
Reserved Refunds to Grantors Local Grants and Contracts Sales and Services Live Work Projects Continuing Education Technology Fees Uncollectible Accounts Receivable Inventories Bookstore Tuition
Total Reserved
Unreserved Surplus
Total Fund Balance

$

0.02

0.04

68,259.17

53,408.47

51,145.45

94,640.09

3,900.00

269,954.95

155,080.01

237,236.81

933,625.01

24,128.85

$

957,753.86

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
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OCONEE FALL LINE TECHNICAL COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2019

Adult Literacy State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Adult Literacy
QuickStart Federal Funds Federal Funds Not Specifically Identified Other Funds
Total QuickStart
Technical Education State Appropriations State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Technical Education
Economic Development Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Economic Development
Totals by Program

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

429,100.00 $

424,562.00 $

424,562.00 $

424,562.00

486,889.00 62,000.00

605,000.00 75,000.00

605,775.00 75,000.00

573,345.07 65,875.00

977,989.00

1,104,562.00

1,105,337.00

1,063,782.07

154,594.00

-

-

-

600,000.00

-

-

-

754,594.00

-

-

-

9,287,791.00
1,827,659.00 5,866,001.00 16,981,451.00

10,074,905.00
2,091,151.02 6,853,272.14 19,019,328.16

10,074,905.00
2,091,151.02 6,853,272.14 19,019,328.16

10,074,905.00
1,694,782.17 6,283,206.93 18,052,894.10

-
-

$

18,714,034.00 $

413,854.00 860,000.00 1,273,854.00
21,397,744.16 $

413,854.13 892,811.25 1,306,665.38
21,431,330.54 $

219,228.36 824,744.94 1,043,973.30
20,160,649.47

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 28 -

SCHEDULE "3"

Funds Available Compared to Budget

Prior Year

Adjustments and

Carry-Over

Program Transfers

Total Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive

Excess of Funds Available
Over Expenditures

$

- $

-

-

- $

424,562.00 $

-

573,345.07

-

65,875.00

-

1,063,782.07

- $
(32,429.93) (9,125.00)
(41,554.93)

401,073.50 $
573,345.05 65,729.70
1,040,148.25

23,488.50 $
32,429.95 9,270.30
65,188.75

23,488.50
0.02 145.30
23,633.82

-

-

-

-

-

-

-

5,239.86

-

5,239.86

5,239.86

-

-

5,239.86

5,239.86

-

5,239.86

5,239.86

-

-

5,239.86

-
604,006.63 604,006.63

-
-

$

609,246.49 $

-

10,074,905.00

-

1,694,782.17

-

6,887,213.56

-

18,656,900.73

-
- $

219,228.36 824,744.94 1,043,973.30
20,769,895.96 $

-
(396,368.85) 33,941.42
(362,427.43)

10,074,905.00
1,694,782.17 6,195,241.39 17,964,928.56

-
396,368.85 658,030.75 1,054,399.60

-
691,972.17 691,972.17

(194,625.77) (68,066.31)
(262,692.08)
(661,434.58) $

219,228.36 824,744.94 1,043,973.30
20,049,050.11 $

194,625.77 68,066.31
262,692.08
1,382,280.43 $

-
720,845.85

- 29 -

OCONEE FALL LINE TECHNICAL COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2019

Adult Literacy State Appropriation State General Funds Federal Funds Federal Funds Not Specifically Identified Other Funds
Total Adult Literacy
QuickStart Other Funds
Technical Education State Appropriation State General Funds Other Funds
Total Technical Education
Economic Development Other Funds
Total Operating Activity
Prior Year Reserves Not Available for Expenditure Inventories Refunds to Grantors Uncollectible Accounts Receivable

Beginning Fund
Balance July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of
Fiscal Year 2018 Surplus

Prior Period Adjustments

$

3,266.68 $

509.29

3,775.97

- $

(3,266.68) $

-

-

-

(509.29)

-

(3,775.97)

435.87
(145.30)
290.57

5,239.86

(5,239.86)

-

-

604,066.63 604,066.63
613,082.46

(604,006.63) (604,006.63)
(609,246.49)

(60.00) (60.00)
(3,835.97)

204.48 (52,319.20) (52,114.72)
(51,824.15)

284,832.16

-

-

-

0.04

-

-

-

3,900.00

-

-

-

Totals by Program

$

901,814.66 $

(609,246.49) $

(3,835.97) $

(51,824.15)

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 30 -

SCHEDULE "4"

Other Adjustments

Early Return of
Fiscal Year 2019 Surplus

Excess of Funds Available
Over Expenditures

Ending Fund
Balance June 30

Analysis of Ending Fund Balance

Reserved

Fiscal Year 2019 Surplus

Total

$

- $

(0.02) -

(0.02)

(5,239.86)

- $

23,488.50 $

23,924.37 $

-

0.02

-

-

145.30

-

-

23,633.82

23,924.37

-

5,239.86

-

- $ -
-

23,924.37 $ -
23,924.37
-

23,924.37 -
23,924.37
-

(114,164.76) (114,164.76)
134,281.83 14,877.19

-

-

204.48

-

-

691,972.17

525,488.21

525,488.21

-

691,972.17

525,692.69

525,488.21

204.48 -
204.48

204.48 525,488.21
525,692.69

-

-

134,281.83

134,281.83

-

134,281.83

-

720,845.85

683,898.89

659,770.04

24,128.85

683,898.89

(14,877.21) (0.02) -

$

(0.04) $

-

-

269,954.95

269,954.95

-

269,954.95

-

-

0.02

0.02

-

0.02

-

-

3,900.00

3,900.00

-

3,900.00

- $

720,845.85 $

957,753.86 $

933,625.01 $

24,128.85 $

957,753.86

Summary of Ending Fund Balance

Reserved

Refunds to Grantors

$

0.02 $

Local Grants and Contracts

0.04

Sales and Services

68,259.17

Live Work Projects

53,408.47

Continuing Education

51,145.45

Technology Fees

94,640.09

Uncollectible Accounts Receivable

3,900.00

Inventories

269,954.95

Bookstore

155,080.01

Tuition

237,236.81

Unreserved

Surplus

-

Total Ending Fund Balance - June 30

$

933,625.01 $

- $ -
24,128.85
24,128.85 $

0.02 0.04 68,259.17 53,408.47 51,145.45 94,640.09 3,900.00 269,954.95 155,080.01 237,236.81
24,128.85
957,753.86

- 31 -

SECTION II ENTITY'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

OCONEE FALL LINE TECHNICAL COLLEGE ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2019
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were reported.
PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.

SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

OCONEE FALL LINE TECHNICAL COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2019
COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES
The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.
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 combination of deficiencies, 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 less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were reported.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.