South Georgia State College, Douglas, Georgia, management report for fiscal year ended 2016 June 30

SOUTH GEORGIA STATE COLLEGE
DOUGLAS, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2016
A Member Institution of the University System of Georgia

SOUTH GEORGIA STATE 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 7
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

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SECTION I FINANCIAL

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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
November 11, 2016

Kristina A Turner
DIRECTOR
(404) 656-2174

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia
and Dr. Ingrid Thompson-Sellers, Interim President South Georgia State College
Ladies and Gentlemen:
This Management Report contains information pertinent to the South Georgia State College's compliance with the requirements of the Southern Association of Colleges and Schools Commission on Colleges (COC) Core Requirement 2.11.1 (Financial resources) as of and for the year ended June 30, 2016. Included in this report is a section on findings and other items for any matters that came to our attention during our engagement. 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 South Georgia State College to support our audits of the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2016.
This report is intended solely for the information and use of the management of South Georgia State College, members of the Board of Regents of the University System of Georgia 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,

GSG:es

Greg S. Griffin State Auditor

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SELECTED FINANCIAL INFORMATION - 1 -

SOUTH GEORGIA STATE COLLEGE STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2016
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net Federal Financial Assistance Other Due from Affiliated Organizations Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Due from USO - Capital Liability Reserve Fund Investments Notes Receivable, Net Capital Assets, Net
Total Noncurrent Assets
Total Assets
Deferred Outflows of Resources Deferred Loss on Defined Benefit Pension Plans
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Benefits Payable Contracts Payable Deposits Advances (Including Tuition and Fees) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Net Pension Liability
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources Deferred Gain on Defined Benefit Pension Plans
NET POSITION
Net Investment in Capital Assets Restricted for:
Nonexpendable Expendable Unrestricted
Total Net Position
- 2 -

EXHIBIT "A"

$

3,127,348

206,031 480,445 134,398 237,625 371,178

4,557,025

266,644 476,470
49,273 49,964,506
50,756,893
55,313,918

979,625

131,566 64,754 33,735 21,350 5
341,244 586,240 334,748 323,881 410,242
2,247,765
30,839,019 101,289
9,235,662
40,175,970
42,423,735
1,797,883

18,801,606
296,490 316,807 -7,342,978

$

12,071,925

SOUTH GEORGIA STATE COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2016

EXHIBIT "B"

OPERATING REVENUES
Student Tuition and Fees (Net) Grants and Contracts
Federal State Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal Other Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Nonoperating Expenses
Net Nonoperating Revenues
Loss Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Other
Total Other Revenues, Expenses, Gains or Losses
Decrease in Net Position
Net Position - Beginning of Year, Restated
Net Position - End of Year

$

3,206,933

16,153 2,153
38,339 1,090

1,285,657 1,068,844
900,099 11,891
481,791 97,670 68,344

7,178,964

4,211,663 5,005,914 3,033,936
282,546 257,599 2,916,183 1,095,699 5,420,940 2,502,610
24,727,090
-17,548,126

10,155,262
7,254,425 55,916
476,533 10,854
-1,979,589 -387,566
15,585,835
-1,962,291
1,032,661 147,971
1,180,632
-781,659
12,853,584

$

12,071,925

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SOUTH GEORGIA STATE COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES Payments from Customers Grants and Contracts (Exchange) 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 Capital Grants and Gifts Received Proceeds from Sale of Capital Assets Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Used by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Investment Income
Net Decrease in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

EXHIBIT "C"

$

7,136,466

-182,413

-11,162,984

-9,500,975

-2,916,183

502,882

-16,123,207

10,155,262 -70,238
7,786,874 -386,257
17,485,641

1,032,661 1,676
-1,210,427 -264,419
-1,952,689
-2,393,198

10,968 -1,019,796 4,147,144

$

3,127,348

- 4 -

SOUTH GEORGIA STATE COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2016
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Loss Adjustments to Reconcile Operating Income (Loss) to Net Cash
Used by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Accounts Payable Salaries Payable Advances (Including Tuition and Fees) Other Liabilities Compensated Absences Net Pension Liability Change in Deferred Inflows/Outflows of Resources: Deferred Inflows of Resources Deferred Outflows of Resources
Net Cash Used by Operating Activities
NONCASH ACTIVITY Capital Financing Activities Accounts Receivable Accrual, Net of Allowances Gift of Capital Assets Accrual of Capital Asset Related Payables Accrual of Capital Financing Interest Payable Unrealized Gain/Loss on Investments

EXHIBIT "C"

$

-17,548,126

2,502,610
68,271 15,677 -17,881 -909,945 19,385 -37,554 386,257 -45,185 1,283,223
-1,723,670 -116,269

$

-16,123,207

$

21,350

$

147,971

$

-21,350

$

-242,619

$

-114

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SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY As defined by Official Code of Georgia Annotated (O.C.G.A) 20-3-50, South Georgia State College (the Institution) is part of the University System of Georgia (USG), an organizational unit of the State of Georgia (the State) under the governance of the Board of Regents (Board). The Board has constitutional authority to govern, control and manage the USG. The Board is composed of 19 members, one member from each congressional district in the State and five additional members from the state-at-large, appointed by the Governor and confirmed by the Senate. Members of the Board serve a seven year term and members may be reappointed to subsequent terms by a sitting governor.
The Institution does not have the right to sue/be sued without recourse to the State. The Institution's property is the property of the State and subject to all the limitations and restrictions imposed upon other property of the State by the Constitution and laws of the State. In addition, the Institution is not legally separate from the State. Accordingly, the Institution is included within the State's basic financial statements as part of the primary government 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 are intended to supplement the State's Comprehensive Annual Financial Report (CAFR) by presenting the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State that is 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, 2016, 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 State's CAFR as of and for the year ended June 30, 2016 has not been issued as of the release of this report. 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, liabilities, deferred inflows, 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-Institution transactions have been eliminated.

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SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

NEW ACCOUNTING PRONOUNCEMENTS For fiscal year 2016, the Institution adopted Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. This Statement addresses accounting and financial reporting issues related to fair value measurements. The adoption of this Statement does not have a significant impact on the Institution's financial statements.
For fiscal year 2016, the Institution adopted GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That are not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. The adoption of this Statement does not have a significant impact on the Institution's financial statements.
For fiscal year 2016, the Institution adopted GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this Statement is to identify--in the context of the current governmental financial reporting environment--the hierarchy of GAAP. The "GAAP hierarchy" consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and non-authoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. The adoption of this Statement does not have a significant impact on the Institution's financial statements.
For fiscal year 2016, the Institution adopted GASB Statement No. 79, Certain External Investment Pools and Pool Participants. This Statement addresses accounting and financial reporting for certain external investment pools and pool participants. The adoption of this Statement does not have a significant impact on the Institution's financial statements.
DUE FROM USO - CAPITAL LIABILITY RESERVE FUND The Capital Liability Reserve Fund (Fund) was established by the Board of Regents to protect the fiscal integrity of the USG to maintain the strongest possible credit ratings associated with Public Private Venture (PPV) projects and to ensure that the Board of Regents can effectively support its long-term capital lease obligations. The Fund is financed by all USG institutions participating in the PPV program. The Fund serves as a pooled reserve that is managed by the University System Office. The Fund shall only be used to address significant shortfalls and only insofar as a requesting USG institution is unable to make the required PPV capital lease payment to the designated cooperative organization. The Fund will continue as long as the USG has rental obligations under the PPV program. At the conclusion of the Institution's participation in the program, funds will be returned to the Institution. The balance included on the Institution's Statement of Net Position represents the Institution's contribution to the Fund.

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SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

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 non-expendable includes endowment and similar type funds, in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may be either expended or added to principal. For Institution-controlled, donorrestricted endowments, the by-laws of the Board of Regents of the University System of Georgia permits each individual Institution to use prudent judgment in the spending of current realized and unrealized endowment appreciation. Donor-restricted endowment appreciation is periodically transferred to restricted-expendable accounts for expenditure as specified by the purpose of the endowment. The Institution maintains pertinent information related to each endowment fund including donor; amount and date of donation; restrictions by the source of limitations; limitations on investments, etc.
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 and auxiliary enterprises. 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 $341.60. Unexpended state appropriations must be refunded to the Office of the State Treasurer. Unrestricted Net Position also includes resources specifically designated by management, such as:
Auxiliary Enterprises Operations These resources are used for the continued operation of auxiliary enterprise activities, which are substantially self-supporting business operations conducted on campuses that provide services to students, faculty, and staff.
Auxiliary Enterprises Renewals and Replacement (R&R) Reserve These resources can be used for renewals and replacement of capitalizable assets related to auxiliary services. This R&R reserve can also be used for major renovations and rehabilitations auxiliary projects that do not meet the capitalization threshold.
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

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SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

allowances. Sponsored and Unsponsored Scholarship Allowances totaled $5,042,879 for the year ending June 30, 2016.
RESTATEMENT NOTE DISCLOSURE The Institution made the following restatements related to business-type activities:

For fiscal year 2016, the Institution increased beginning net position related to the reevaluation of capital assets and capital lease agreements between the Institution and the related foundation in the amount of $456,473. These changes are in accordance with general accepted accounting principles.
Below is a summary of adjustments made to July 1, 2015 Net Position.

Business-type Activities:

Net Position, Beginning of Year, as Originally Reported

$

12,397,111

Adjustments related to re-evaluation of capital assets and capital lease agreements Decrease in capital lease liability Decrease in capital assets

4,896,498 -4,440,025

Net Position, Beginning of Year, Restated

$

12,853,584

NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS 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.
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SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2016, the carrying value of deposits was $3,204,718 and the bank balance was $3,802,308 . Of the Institution's deposits, $3,402,308 were uninsured. Of these uninsured deposits, $3,402,308 were collateralized with securities held by the financial institution's trust department or agency in the State's name.
INVESTMENTS At June 30, 2016, the carrying value of the Institution's investments was $367,411, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pool as follows:

Investment Type Investment Pool
Board of Regents Short-Term Fund Legal Fund Diversified Fund

Fair Value

$

40,941

84,039

242,431

Total Investments

$

367,411

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits and Accounts Education Audit Division or on their web site at http://www.audits.ga.gov.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2016:

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal Financial Assistance

Georgia State Financing and Investment Commission

Due from Affiliated Organizations

Other

144,185 110,287 206,031
21,350 134,398 383,896

1,000,147

Less: Allowance for Doubtful Accounts

179,273

Net Accounts Receivable

$

820,874

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SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS Following are the changes in capital assets for the year ended June 30, 2016:

Beginning Balance July 1, 2015 (Restated)

Capital Leases Recategorization

Additions

Reductions

Ending Balance June 30, 2016

Capital Assets, Not Being Depreciated: Land Construction Work-In-Progress

$

555,936

388,978 $

$

555,936

0$

784,075 $

320,490

852,563

Total Capital Assets, Not Being Depreciated

944,914

0

784,075

320,490

1,408,499

Capital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

3,873,605 44,658,565
2,962,790 3,934,013 31,340,481 2,365,456

31,340,481 -31,340,481

115,924 765,818
5,722

382,287 9,309

3,873,605 75,999,046
3,078,714 4,317,544
0 2,361,869

Total Assets Being Depreciated

89,134,910

0

887,464

391,596

89,630,778

Less: Accumulated Depreciation: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections

1,947,238 24,614,198
2,048,146 1,869,767 6,191,728 2,290,638

6,191,728 -6,191,728

112,614 1,994,751
49,755 324,015
21,475

380,245 9,309

2,059,852 32,800,677
2,097,901 1,813,537
0 2,302,804

Total Accumulated Depreciation

38,961,715

0

2,502,610

389,554

41,074,771

Total Capital Assets, Being Depreciated, Net

50,173,195

0

-1,615,146

2,042

48,556,007

Capital Assets, Net

$ 51,118,109 $

0$

-831,071 $

322,532 $ 49,964,506

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

Fiscal Year

Depreciation Expense

2016 2015 2014

$

2,502,610

$

2,645,825

$

2,598,469

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SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

NOTE 5: ADVANCES (INCLUDING TUITION AND FEES) Advances (Including Tuition and Fees) consisted of the following at June 30, 2016:

Prepaid Tuition and Fees

$

324,985

Other Advances

16,259

Total Advances

$

341,244

NOTE 6: LONG-TERM LIABILITIES

The Institution's Long-Term Liability activity for the year ended June 30, 2016 was as follows:

Beginning Balance July 1, 2015 (Restated)

Additions

Reductions

Ending Balance June 30, 2016

Current Portion

Leases Lease Obligations

$ 31,427,319 $

0$

264,419 $ 31,162,900 $

323,881

Other Liabilities Compensated Absences Net Pension Liability

556,716 7,952,438

429,402 1,283,224

474,587

511,531 9,235,662

410,242

Total

8,509,154

1,712,626

Total Long-Term Obligations $ 39,936,473 $ 1,712,626 $

474,587

9,747,193

739,006 $ 40,910,093 $

410,242 734,123

NOTE 7: NET POSITION

Changes in Net Position for the year ended June 30, 2016 are as follows:

Beginning Balance July 1, 2015 (Restated)

Additions

Reductions

Ending Balance June 30, 2016

Net Investments in Capital Assets

$

19,690,789 $

1,615,469 $

2,504,652 $

18,801,606

Restricted Net Position

648,162

7,299,155

7,334,020

613,297

Unrestricted Net Position

-7,485,367

16,646,276

16,503,887

-7,342,978

Total Net Position

$ 12,853,584 $ 25,560,900 $ 26,342,559 $

12,071,925

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SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

The amounts within each category at June 30, 2016 were as follows:

June 30, 2016

Net Investments in Capital Assets

$

18,801,606

Restricted for Nonexpendable Permanent Endowment Expendable Organized Activities Federal Loans Institutional Loans

296,490
281,585 -17,650 52,872

Total Restricted

613,297

Unrestricted Auxiliary Operations R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted USO Reserve Fund

1,054,480 1,077,748 2,601,500
11,746 -12,155,113
66,661

Total Unrestricted

-7,342,978

Total Net Position
NOTE 8: ENDOWMENTS

$

12,071,925

Donor Restricted Endowments: Investments of the Institution's endowment funds are pooled, unless required to be separately invested by the donor. For Institution controlled, donor-restricted endowments, where the donor has not provided specific instructions, the Board of Regents permits South Georgia State College to develop policies for authorizing and spending realized and unrealized endowment income and appreciation as they determined to be prudent. Realized and unrealized appreciation in excess of the amount budgeted for current spending is retained by the endowments. Current year net appreciation for the endowment accounts was $0.

For endowment funds where the donor has not provided specific instructions, investment return of the Institution's endowment funds is predicated under classical trust doctrines. Unless the donor has stipulated otherwise, capital gains and losses are accounted for as part of the endowment principal and are not available for expenditure.

NOTE 9: LEASE OBLIGATIONS

The Institution is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.

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SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2037 and 2040. Expenditures for fiscal year 2016 were $2,412,138 of which $1,979,589 represented interest and $168,130 represented executory costs. Total principal paid on capital leases was $264,419 for the fiscal year ended June 30, 2016. Interest rates range from 5.043 percent to 6.412 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2016:

Description

Gross Amount (+)

Accumulated Depreciation
(-)

Net Capital Assets Held Under Capital Lease
at June 30, 2016 (=)

Outstanding Balances per Lease Schedules at June 30, 2016

Buildings

$

31,340,481 $ 7,236,411 $

24,104,070 $

31,162,900

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

The following capital lease schedule lists the pertinent information for each lease including the building name, lessor, total principal amount, lease term, lease begin date, lease end date, and remaining long-term debt as of June 30, 2016.

Description

Lessor (1)

Original Principal

Lease Term

Begin Date End Date

Outstanding Principal Balance at June 30, 2016

Tiger Village I

SGC Real Estate Foundation, LLC $

SGC Real Estate Clower Student Activities Center
Foundation, LLC

Tiger Village II

SGC Real Estate Foundation, LLC

Dining Hall

SGC Real Estate Foundation, LLC

Total Leases

$

10,652,646 2,431,145 12,282,492 5,974,198 31,340,481

30 Years 30 Years

8/2007 8/2007

29 Years 29 Years

7/2010 7/2011

5/2037 $ 5/2037 5/2039 5/2040
$

10,374,619 2,324,695 12,729,292 5,734,294 31,162,900

(1) All of South Georgia State College's capital leases are with related entities.

OPERATING LEASES The Institution's non-cancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2017 through 2020. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers, other small business equipment, and buildings.
Facilities and equipment rented through operating leases are not recorded as assets on the balance sheet. Operating lease expenditures totaled $45,929 for the fiscal year ended June 30, 2016.

- 15 -

SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2016, were as follows:

Capital Leases

Operating Leases

Year Ending June 30: 2017 2018 2019 2020 2021 2022 - 2026 2027 - 2031 2032 - 2036 2037 - 2040

$

2,433,246 $

2,484,787

2,537,879

2,593,074

2,637,333

13,977,306

15,421,422

16,267,272

7,074,827

49,068 47,794 26,585
6,673

Total Minimum Lease Payments

65,427,146 $

130,120

Less: Interest Less: Executory Costs (if paid)

28,812,187 5,452,059

Principal Outstanding

$ 31,162,900

NOTE 10: 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.
In addition to the retirement plan administered by TRS and ERS, USG administers the Regents Retirement Plan as an optional retirement plan.
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.

- 16 -

SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

A. Defined Benefit Plans:
Teachers Retirement System of Georgia and Employees' Retirement System of Georgia
Summary of Significant Accounting Policies
Pensions: For purposes of measuring the Net Pension Liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teachers Retirement System of Georgia (TRS) and Employees' Retirement System (ERS), additions to/deductions from TRS's and ERS's fiduciary net position have been determined on the same basis as they are reported by TRS and ERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
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 contribute 6% of their annual pay during fiscal year 2016. The Institution's contractually required contribution rate for the year ended June 30, 2016 was 14.27% of annual Institution payroll. Institution contributions to TRS were $877,112 for the year ended June 30, 2016. 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.
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.

- 17 -

SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

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, 2016 was 24.72% of annual covered payroll for old and new plan members and 21.69% for GSEPS members. The Institution's contributions to ERS totaled $54,521 for the year ended June 30, 2016. 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.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2016, the Institution reported a liability for its proportionate share of the Net Pension Liability for TRS and ERS. The Net Pension Liability was measured as of June 30, 2015. The total pension liability used to calculate the Net Pension Liability was based on an actuarial valuation as of June 30, 2014. An expected total pension liability as of June 30, 2015 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, 2015. At June 30 2015, the Institution's TRS proportion was 0.058331%, which was a decrease of 0.002482% from its proportion measured as of June 30, 2014. At June 30, 2015, the Institution's ERS proportion was 0.008771%, which was an increase of 0.001585% from its proportion measured as of June 30, 2014.

- 18 -

SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

For the year ended June 30, 2016, the Institution recognized pension expense of $320,700 for TRS and $54,217 for ERS. At June 30, 2016, the Institution reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

TRS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

ERS

Deferred

Deferred

Outflows of

Inflows of

Resources

Resources

Differences between expected and actual experience

$

78,107

$

2,839

Net difference between projected and actual earnings on pension plan investments

749,064

25,639

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

942,234 $

47,992

Institution contributions subsequent to the

measurement date

$

877,112

54,521

Total

$

877,112 $

1,769,405 $

102,513 $

28,478

Institution contributions subsequent to the measurement date of $877,112 for TRS and $54,521 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, 2017. 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 Ending June 30:

TRS

ERS

2017 2018 2019 2020 2021

$ -624,425 $

$ -624,425 $

$ -624,426 $

$ 123,855 $

$

-19,984

19,880 2,417
-11,428 8,645

Actuarial assumptions: The total pension liability as of June 30, 2015 was determined by an actuarial valuation as of June 30, 2014 using the following actuarial assumptions, applied to all periods included in the measurement:

- 19 -

SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

Teachers Retirement System:

Inflation Salary increases Investment rate of return

3.00% 3.75 7.00%, average, including inflation 7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females set back two years for males and set back three years for females.

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

Employees' Retirement System

Inflation Salary increases Investment rate of return

3.00%
5.45 9.25%, including inflation 7.50%, net of pension plan investment expense, including inflation

Mortality rates were based on the RP-2000 Combined Mortality Table for the periods after service retirement, for dependent beneficiaries, and for deaths in active service, and the RP2000 Disabled Mortality Table set back eleven years for males for the period after disability retirement.

The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2004 June 30, 2009.

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

Target Long-Term Expected Allocation Real Rate of Return *

Fixed Income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities

30.00% 39.70%
3.70% 1.60% 18.90% 6.10%

100.00% * Rates shown are net of the 3.00% assumed rate of inflation

3.00% 6.50% 10.00% 13.00% 6.50% 11.00%

- 20 -

SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

Discount rate: The discount rate used to measure the total TRS and ERS pension liability was 7.50%. 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 discount rate of 7.50%, 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 (6.50%) or 1-percentage-point higher (8.50%) 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%)

$ 15,260,151 $ 8,880,316 $ 3,621,813

Employees' Retirement System:
Institution's proportionate share of the Net Pension Liability

1% Decrease (6.50%)
$ 503,719

Current Discount Rate
(7.50%)

1% Increase (8.50%)

$ 355,348

$ 228,856

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 publically available at www.trsga.com/publications and www.ers.ga.gov/formspubs/formspubs, respectively.

B. Defined Contribution Plan

Regents Retirement Plan

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or all exempt full and partial benefit eligible employees, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (VALIC, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

- 21 -

SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

Funding Policy The Institution makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2016, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
The Institution and the covered employees made the required contributions of $189,519 (9.24%) and $123,065 (6%), respectively.
VALIC, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
NOTE 11: RISK MANAGEMENT
The USG offers its employees and retirees under the age of 65 access to four different healthcare plan options. For the USG's Plan Year 2016, the following healthcare plan options were available:
BlueChoice HMO Comprehensive Care Consumer Choice HSA Kaiser Permanente HMO
The Institution, participating employees and retirees pay premiums to the healthcare plan options to access benefits coverage. The respective health plan options are included in the financial statements of the Board of Regents of the University System of Georgia University System Office. All units of the USG share the risk of loss for claims associated with the self-insured plans; including the BlueChoice HMO, Comprehensive Care, and Consumer Choice HSA Plan.
Retirees age 65 and older participate in a secondary healthcare coverage for Medicare-eligible retirees and dependents provided through a retiree healthcare exchange option. The USG makes contributions to a health reimbursement account, which can be used by the retiree to pay premiums and out-ofpocket healthcare-related expenses.
The reserves for these plans are considered to be a self-sustaining risk fund. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to serve as the claims administrator for the selfinsured healthcare plans. In addition to the self-insured healthcare plan options offered to the employees of the USG, fully insured HMO healthcare plans are also offered to System employees.
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 Board of Regents of the University 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.
- 22 -

SOUTH GEORGIA STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2016

EXHIBIT "D"

A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1.
The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 12: 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 University 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, 2016.
NOTE 13: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single-employer, defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The Institution pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year.
As of June 30, 2016, there were 113 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2016, the Institution recognized as incurred $412,756 of expenditures, which was net of $202,859 of participant contributions.

- 23 -

SUPPLEMENTARY INFORMATION - 24 -

ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories

SOUTH GEORGIA STATE COLLEGE BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2016

Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories Unreserved Surplus
Total Fund Balances

Total Liabilities and Fund Balances

SCHEDULE "1"

$

2,204,484.44

67,326.24

61,126.80 2,359,334.37
45,788.08 15,035.35

$

4,753,095.28

$

60,447.81

2,601,500.34

10,885.57

297,225.95

386,256.96

3,356,316.63

166,873.52 100,734.10 628,795.35 242,047.73
76,626.49 169,613.88
11,745.98
341.60
1,396,778.65

$

4,753,095.28

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 -

SOUTH GEORGIA STATE COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2016

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEARS
Transfers from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Teaching
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 Board of Regents - University System Office Year Ended June 30, 2015
Early Return of Surplus in Fiscal Year 2016 Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$

10,217,432.00 $

10,217,432.00 $

18,463,404.00

17,719,847.28

28,680,836.00

27,937,279.28

0.00 -743,556.72
-743,556.72

0.00 28,680,836.00

1,188,525.75 29,125,805.03

1,188,525.75 444,969.03

28,680,836.00

$

0.00

27,820,212.70 1,305,592.33 $

860,623.30 1,305,592.33

1,280,716.88 62,170.05

12,857.71 -13,862.52

-62,170.05

-1,188,525.75

$

1,396,778.65

SUMMARY OF FUND BALANCE
Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories
Total Reserved
Unreserved Surplus
Total Fund Balance

$

166,873.52

100,734.10

628,795.35

242,047.73

76,626.49

169,613.88

11,745.98

1,396,437.05

341.60

$

1,396,778.65

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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SOUTH GEORGIA STATE COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2016

Teaching State Appropriation State General Funds Other Funds
Total Operating Activity

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

10,017,432.00 $

10,017,432.00 $

10,217,432.00 $ 10,217,432.00

16,836,322.00

16,836,322.00

18,463,404.00

17,719,847.28

$

26,853,754.00 $

26,853,754.00 $

28,680,836.00 $ 27,937,279.28

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

Total

Carry-Over

Program Transfers

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive

Excess of Funds Available
Over Expenditures

$

0.00 $

1,188,525.75

-87.20 $ 87.20

10,217,344.80 $ 18,908,460.23

-87.20 $ 445,056.23

10,217,288.95 $ 17,602,923.75

143.05 $ 860,480.25

55.85 1,305,536.48

$ 1,188,525.75 $

0.00 $ 29,125,805.03 $

444,969.03 $ 27,820,212.70 $

860,623.30 $

1,305,592.33

- 29 -

SOUTH GEORGIA STATE COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2016

Teaching State Appropriation State General Funds Other Funds
Total Teaching
Prior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Receivable

Beginning Fund Balance July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2015
Surplus

Prior Period Adjustments

$

14,855.84 $

0.00 $

1,235,839.96

-1,188,525.75

1,250,695.80

-1,188,525.75

-14,855.84 $ -47,314.21
-62,170.05

128.50 -1,133.31
-1,004.81

11,745.98 80,445.15

0.00 0.00

0.00 0.00

0.00 0.00

Budget Unit Totals

$

1,342,886.93 $

-1,188,525.75 $

-62,170.05 $

-1,004.81

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 Fiscal Year 2016
Surplus

Excess of Funds Available
Over Expenditures

Ending Fund Balance June 30

Analysis of Ending Fund Balance

Reserved

Surplus

Total

$

0.00 $

3,818.66

3,818.66

0.00 $ 0.00
0.00

55.85 $ 1,305,536.48
1,305,592.33

184.35 $

0.00 $

1,308,221.83 1,308,064.58

1,308,406.18 1,308,064.58

184.35 $ 157.25

184.35 1,308,221.83

341.60

1,308,406.18

0.00 -3,818.66

0.00 0.00

0.00 0.00

11,745.98 76,626.49

11,745.98 76,626.49

0.00 0.00

11,745.98 76,626.49

$

0.00 $

0.00 $

1,305,592.33 $ 1,396,778.65 $ 1,396,437.05 $

341.60 $ 1,396,778.65

Summary of Ending Fund Balance Reserved
Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories Unreserved Surplus
Total Ending Fund Balance - June 30

$ 166,873.52 100,734.10 628,795.35 242,047.73 76,626.49 169,613.88 11,745.98
$
$ 1,396,437.05 $

$

166,873.52

100,734.10

628,795.35

242,047.73

76,626.49

169,613.88

11,745.98

341.60

341.60

341.60 $ 1,396,778.65

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

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SOUTH GEORGIA STATE COLLEGE ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-588-14-01 Weaknesses in Logical Access IT General Controls

Control Category:
Internal Control Impact: Compliance Impact: Federal Award Agency: CFDA Number and Title:

Activities Allowed or Unallowed Eligibility Significant Deficiency None U.S. Department of Education 84.SFA Student Financial Assistance Cluster

Finding Status:

Partially Resolved

The Institution is awaiting a response from the U.S. Department of Education regarding this finding.

FA-588-14-02 Return of Title IV Funds

Control Category: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title: Questioned Cost:

Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education 84.SFA Student Financial Assistance Cluster $1,498.19

Finding Status:

Partially Resolved

We concur with this finding. South Georgia State College (SGSC) self-reported to the United States Department of Education (USDOE) on March 20, 2015, that problems in this area were found to exist. On March 25, 2015, the USDOE notified SGSC that an Off-Site Program Review was scheduled to begin April 7, 2015. A Program Review Report was issued on April 24, 2015, to which SGSC responded on June 23, 2015. As of the date of this finding response, the USDOE has not issued a clearance letter in relation to this matter. Additional training on the refund calculation process has been provided to personnel in the SGSC Student Financial Aid office in response to the four immaterial clerical errors noted for fiscal year 2015.

The Institution is awaiting a response from the U.S. Department of Education regarding this finding.

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SOUTH GEORGIA STATE COLLEGE ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2016

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA 2015-001 Return of Title IV Funds

Control Category: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title: Questioned Cost:

Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U.S. Department of Education 84.SFA Student Financial Assistance Cluster $534.39

Finding Status:

Partially Resolved

We concur with this finding. South Georgia State College (SGSC) self-reported to the United States Department of Education (USDOE) on March 20, 2015, that problems in this area were found to exist. On March 25, 2015, the USDOE notified SGSC that an Off-Site Program Review was scheduled to begin April 7, 2015. A Program Review Report was issued on April 24, 2015, to which SGSC responded on June 23, 2015. As of the date of this finding response, the USDOE has not issued a clearance letter in relation to this matter. Additional training on the refund calculation process has been provided to personnel in the SGSC Student Financial Aid office in response to the four immaterial clerical errors noted for fiscal year 2015.

The Institution is awaiting a response from the U.S. Department of Education regarding this finding.

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SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

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SOUTH GEORGIA STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2016
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.
OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)
No matters were reported.