GEORGIA Comprehensive Annual Financial Report June 30, 1998 State of Georgia Comprehensive Annual Financial Report June 30, 1998 Prepared by GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS Claude L. Vickers, State Auditor Georgia's State Flower Cover Drawing by Scott Fuss In 1916, with the support of the Georgia Federation of Women's Clubs, the Cherokee rose was named the state floral emblem. The name "Cherokee Rose" is a local designation derived from the Cherokee Indians who widely distributed the plant. State of Georgia Table of Contents June 30, 1998 INTRODUCTORY SECTION Letter of Transmittal.....................................................................................................................................................................................i Organizational Chart ..................................................................................................................................................................................xi Principal State Officials ............................................................................................................................................................................xiii FINANCIAL SECTION Independent Auditor's Report on General Purpose Financial Statements ............................................................................................1 General Purpose Financial Statements Combined Balance Sheet - All Fund Types, Account Groups and Discretely Presented Component Units ...............................6 Combined Statement of Revenues, Expenditures and Changes in Fund Balances All Governmental Fund Types, Expendable Trust Funds and Discretely Presented Component Units .................................10 Statement of Funds Available and Expenditures Compared to Budget - Budget Fund .................................................................14 Combined Statement of Revenues, Expenses and Changes in Fund Equity/Fund Balances All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units...............................16 Combined Statement of Cash Flows All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units...............................20 Statements of Plan Net Assets Pension Trust Funds, Investment Trust Fund and Discretely Presented Component Units....................................................22 Statements of Changes in Plan Net Assets Pension Trust Funds, Investment Trust Fund and Discretely Presented Component Units.....................................................24 Combined Statement of Changes in Fund Balances - College and University Funds....................................................................26 Combined Statement of Current Funds Revenues, Expenditures and Other Changes College and University Funds.............................................................................................................................................................30 Notes to the Financial Statements ..........................................................................................................................................................31 Required Supplementary Information Retirement Systems - Required Supplementary Schedules ................................................................................................................91 Year 2000 Issues ........................................................................................................................................................................................95 Combining Statements and Schedules Primary Government Capital Projects Funds Capital Projects Funds Descriptions........................................................................................................................................... 101 Combining Balance Sheet ..............................................................................................................................................................102 Combining Statement of Revenues, Expenditures and Changes in Fund Balances .............................................................104 Internal Service Funds Internal Service Funds Descriptions............................................................................................................................................109 Combining Balance Sheet ..............................................................................................................................................................112 Combining Balance Sheet - Risk Management...........................................................................................................................114 Combining Statement of Revenues, Expenses and Changes in Fund Equity........................................................................116 Combining Statement of Revenues, Expenses and Changes in Equity - Risk Management...............................................118 Combining Statement of Cash Flows ...........................................................................................................................................120 Combining Statement of Cash Flows - Risk Management........................................................................................................124 State of Georgia Table of Contents June 30, 1998 Trust and Agency Funds Combining Balance Sheet ..............................................................................................................................................................129 Expendable Trust Funds Expendable Trust Funds Descriptions.....................................................................................................................................131 Combining Balance Sheet ..........................................................................................................................................................132 Combining Statement of Revenues, Expenditures and Changes in Fund Balances .........................................................134 Nonexpendable Trust Funds Nonexpendable Trust Funds Descriptions .............................................................................................................................137 Combining Balance Sheet ..........................................................................................................................................................139 Combining Statement of Revenues, Expenses and Changes in Fund Balances................................................................140 Combining Statement of Cash Flows .......................................................................................................................................141 Pension Trust Funds Pension Trust Funds Descriptions...........................................................................................................................................143 Combining Statement of Plan Net Assets ...............................................................................................................................144 Agency Funds Major Agency Funds Descriptions..........................................................................................................................................147 Combining Statement of Changes in Assets and Liabilities.................................................................................................149 College and University Funds College and University Funds Descriptions...............................................................................................................................155 Combining Balance Sheet ..............................................................................................................................................................156 General Fixed Assets Account Group General Fixed Assets Account Group Description....................................................................................................................161 Schedule of General Fixed Assets by Function..........................................................................................................................162 Schedule of Changes in General Fixed Assets by Function.....................................................................................................163 Component Units Governmental Fund Types Governmental Fund Types Descriptions.....................................................................................................................................167 Combining Balance Sheet ..............................................................................................................................................................168 Combining Statement of Revenues, Expenditures and Changes in Fund Balances .............................................................169 Proprietary Fund Types Proprietary Fund Types Descriptions..........................................................................................................................................173 Combining Balance Sheet ..............................................................................................................................................................176 Combining Statement of Revenues, Expenses and Changes in Fund Equity........................................................................180 Combining Statement of Cash Flows ...........................................................................................................................................182 Fiduciary Fund Types Fiduciary Fund Types Descriptions.............................................................................................................................................189 Combining Statement of Plan Net Assets ...................................................................................................................................190 STATISTICAL SECTION Index to Statistical Tables ......................................................................................................................................................................195 Introductory Section CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174 May 13, 1999 The Honorable Roy E. Barnes Governor of Georgia and Members of the General Assembly Citizens of the State of Georgia The Comprehensive Annual Financial Report of the State of Georgia for the year ended June 30, 1998, is hereby submitted. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the State. All disclosures necessary to enable the reader to gain an understanding of the State's financial activities have been included. This report is presented in three sections: Introductory, Financial and Statistical. The Introductory Section, which is unaudited, includes this transmittal letter, an organization chart and a listing of principal officials. The Financial Section includes the general purpose financial statements and the combining financial statements, the auditor's report on the financial statements, and required supplementary information. The Statistical Section, which is unaudited, includes selected financial and demographic information, generally presented for multiple years. Federal laws and regulations require that the State undergo an annual audit in conformity with the Single Audit Act Amendments of 1996 and the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Information related to the single audit, which includes a schedule of expenditures of federal awards, a report on internal control and compliance applicable to each major program, and a schedule of findings and questioned costs, is included in a separately issued State of Georgia Single Audit Report. Also included is a report on internal control over financial reporting and compliance with certain laws, regulations, contracts and grants in accordance with Government Auditing Standards. This Comprehensive Annual Financial Report presents information on the financial position and operations of state government as one reporting entity. The various agencies, departments, boards, commissions and funds of Georgia state government which constitute the State financial reporting entity are included in the Comprehensive Annual Financial Report in accordance with criteria established by the Governmental Accounting Standards Board. These criteria define the financial reporting entity as the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The reporting entity is based primarily on the concept of financial accountability. A primary government is financially accountable for the organizations which make up its legal entity and for legally separate organizations if its officials appoint a voting majority of the organization's governing board and either the primary government is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or impose specific burdens on the primary government. The primary government may also be financially accountable for governmental organizations that are fiscally dependent upon it. The State of Georgia provides a variety of governmental services as set forth in its Constitution and statutes. These services include education, health and welfare, transportation, public safety, economic development, recreation and conservation. ECONOMIC CONDITION AND OUTLOOK Eight years after reaching cyclical peaks in economic activity, Georgia's private and public economic sectors still register signs of strong growth. In the private sector, unemployment levels have fallen low enough to indicate a virtually fully-employed labor force. Except for the impact of additional capital or improved technology, output and income have moved to their paths of practical maxima. In the public sector, income and sales taxes have been reduced, but their yields, bolstered by direct and indirect effects of capital gains, have held to the trends of the last several years. Of course, with full-employment, the opportunity for jobs to climb much more rapidly than the population has been essentially exhausted. Hence, neither the growth rates for income nor state revenues have broken any records in fiscal year 1998. At year's end, nevertheless, there is no sign of serious economic imbalances or developing shocks on the economic horizon. While growth rates in both sectors will surely slow in fiscal year 1999, a "soft", rather than "hard", landing is in prospect. In fact, the record-setting 116-month span separating the activity peaks in the 1960's may be challenged before a recessionary slippage occurs. If so, fiscal year 1999 will be marked by gains not appreciably weaker than those which marked fiscal year 1998. In the 1980's, increasing rates of participation of the population in the workforce allowed past achievements in the growth of jobs, incomes, and revenues to be exceeded. Georgia's employment rose by as much as 7.8 percent in one year (1984) and reached or exceeded 3.5 percent for 6 years running. The percentage of Georgia's population at work rose from 40 to 46 percent between the activity peaks of 1981 and 1990. In the 1990's, employment increases have drawn more from unemployment and much less from boosts in participation. The unemployed participants in the labor force have been reduced by 2 percentage points, while participation rates have risen by 3 percentage points to reach 49 percent. In fiscal year 1998, in contrast, participation rates in Georgia (as in the Nation) have been flat. Georgia's employment growth, fired by a rise in population of almost 2 percent and a reduction in the numbers unemployed to about 3.9 percent, has approached 3.0 percent. This is below the 3.7 and 3.1 percent rates for fiscal years 1997 and 1996, respectively. Undoubtedly, the restraint on worker supply will limit growth in employment in fiscal year 1999 as well. ii The calls for the output of the workers added in fiscal year 1998 have come mainly from three sources. Consumers in Georgia and in the Nation have shifted purchases towards durables, especially to motor vehicles and household furnishings-and-appliances. While a substantial proportion of these sales has been satisfied by imports, the domestic markets have strengthened as well. The surge in the consumption of durables in this year, the eighth after the cyclical peak, has been exceptional. It has been aided by strong gains in housing starts and home resales, low interest rates, weak inflation, and a continuing climb in the worth of financial assets. The calls for additional output have also come from Georgia businesses. Spending on information-processing equipment has continued to grow at an annual rate of over 15 percent for the fifth consecutive year. Finally, the greatest stimulus to the absorption of Georgia workers has come from the State's immersion in the U.S. economy. National output during fiscal year 1998 rose at a 3.8 percent rate. This was a stronger performance than in any other fiscal year in the 1990's. As employment in Georgia has risen, so has the level of income climbed. Wage inflation tied to tight labor markets and increases in productivity have combined to push compensation rates in fiscal year 1998 upward by roughly 3.6 percent. In combination with the 3 percent gain in employment, personal income has risen by about 6.8 percent. In nominal terms, this gain falls below levels of earlier years in the decade. When adjusted for inflation, nevertheless, the growth was the strongest since the eighties. Without doubt, the gain in income would have been greater had retail trade and service employments not been such dominant absorbers of additional workers. Income on a per capita basis, the mark of economic effectiveness, fared less well than total personal income. The gain during fiscal year 1998 was only 4.5 percent compared to an average of roughly 5.3 percent in the prior three years. Relative to U.S. per capita income, Georgia's per capita income slipped slightly to a level of about 94 percent. The catch-up which the State demonstrated in the 1980's (8 percentage points) flagged in the 1990's. In Georgia's public sector, the pace of collections in fiscal year 1998 has remained strong. The revenue gain, when finally tabulated, will likely to be between 5 and 6 percent. While this gain is what was built into the State's financial and budgetary plans, the growth falls below the rate of 6.6 percent in fiscal year 1997, and drops well below the rates above 8 percent in fiscal years 1993 to 1996. In the main, the State's yield has been limited by the slowing in the growth of the tax bases. Neither individual income, corporate income, nor taxable sales have matched their earlier growth rates. Additionally, cuts in income taxes and exclusions of sales of food from the sales and use tax base have restrained revenue yield. Since fiscal year 1999 begins in a condition of full employment, growth cannot be expected to match that achieved as full employment was being approached in fiscal year 1998. Certainly, it will fall far short of that experienced in the early years of the expansion when participation rates and worker absorption both contributed. In terms of output, productivity gains will be especially important. While output per hour will respond to the continuing investment in information-processing equipment, the response shows no signs of being sudden or concentrated. Should Georgia's economic advance fall short of the gains being achieved in states where labor supply and productivity are higher, the growth in population, which has driven the State's "horizontal expansion", may itself ease. Still, impressions of economic opportunity for households and businesses take time to change. Thus, a reduction in population growth will not likely be important in the next fiscal year. Overall, fiscal year 1999 will likely be marked by gains in employment of roughly 2 percent and in income of about 5 percent. If iii corporate profits are reduced because of rising labor costs in a world of competitively-stabilized prices, the growth in the State's revenues is likely to slip relative to growth in income and certainly to growth last year. Probably, an advance of about 4.5 percent is as much as can be assured for the State. MAJOR INITIATIVES Economic Development State funds will assist in launching a new program to create state development teams to promote and assist with regional and rural development in eleven regions throughout Georgia. These teams will focus on rural development and assist communities and businesses with planning, economic development, workforce development, infrastructure improvement and leadership development. Education A special funding initiative will provide funds to develop a Statewide Desktop Distance Learning known as "Georgia On-Line". This two year network pilot program, offering both credit and non-credit courses over the World Wide Web, will enable working professionals throughout Georgia to meet their educational needs on-line. Environment An executive order was issued during fiscal year 1998 requiring all departments of state government and all units of the university system in the thirteen county metropolitan Atlanta area to change ozone producing behaviors during summer months in order to improve the metro area's air quality. The Partnership for a Smog-Free Georgia (PSG) program was created to encourage voluntary participation in reducing ground-level ozone in the metro Atlanta area by an overall reduction of vehicles on the road during critical ozone producing hours. Prior to the State initiating the PSG program, the metro Atlanta area was considered in nonattainment for mandatory federal air quality standards for ground-level ozone; such standards must be met to avoid jeopardizing federal funding for Georgia and impacting the State's future economic growth and development. Additionally, enhancing the vehicle emission inspection program for the metro Atlanta area will ensure all vehicles will be required to meet tougher emission standards. Human Resources Funds will be reduced in the Temporary Assistance for Needy Families (TANF) program due to the continued decline in caseloads. The welfare program funds, state and federal, are being redirected to the provision of childcare and to support various social services. An additional amount of redirected state funds from TANF will provide the match for federal funds to support the newly enacted federal Welfareto-Work grant for hard-to-employ TANF recipients. Medicaid State funds were set aside to implement a federally enacted program to provide health care coverage for uninsured children from birth through age 18 in families with incomes under 200% of the Federal Poverty Level. This program, called the Children's Health Insurance Program (CHIP), will be implemented through passage of a new law creating a public-private partnership. iv Tax Reductions Funds were set aside from actual tax collections in order to fund two tax reductions. The first tax cut the largest in Georgia's history - represents the fourth and final year of the elimination of the State's 4 cents sales taxes on groceries. The second tax cut - the second largest in Georgia's history - will reduce state income taxes and will be implemented in two phases; the first phase will raise the income tax personal exemption for both taxpayers and dependents beginning January 1, 1998, and the second phase will raise the deductions for citizens over age 65. FINANCIAL INFORMATION Internal Controls Management of the State is responsible for establishing and maintaining internal accounting controls designed to ensure that assets are safeguarded and that financial transactions are properly recorded and adequately documented. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and that the valuation of costs and benefits requires estimates and judgments by management. Budgetary Controls The objective of budgetary control is to ensure compliance with legal provisions embodied in the General Appropriations Act enacted by the General Assembly. Annual appropriated budgets are adopted at the departmental level and are applicable to the general, debt service and capital projects funds. All unencumbered annual appropriations lapse at fiscal year end unless otherwise specified by the Constitution or statute. The Constitution further authorizes the passage of additional Supplementary Appropriation Acts for specific purposes, provided sufficient unappropriated funds are available or additional revenue measures have been enacted. Federal funds received by the State are continually appropriated in the exact amounts and for the purposes authorized and directed by the awarding federal agency. The budgetary basis of accounting required by state law differs materially from the basis used to report revenues and expenditures in accordance with generally accepted accounting principles (GAAP). In addition, the fund structure utilized to implement the annual budget differs extensively from the fund structure presented in these financial statements. The State of Georgia Report of the State Auditor is issued annually by the undersigned prior to the issuance of this report. The sole purpose of the Report of the State Auditor is to provide the General Assembly with information concerning financial compliance with the Amended Appropriations Act for the fiscal year. In contrast to issuing financial statements in accordance with generally accepted accounting principles, the financial statements presented in the Report of the State Auditor are reported in conformity with statutory requirements. General Governmental Functions The following schedules present summaries of general fund, special revenue fund, capital projects fund and debt service fund revenues and expenditures. These revenues and expenditures are reported on the modified accrual basis of accounting. Revenues from governmental fund type sources for fiscal years 1998 and 1997 are compared in the following table: v FY 1998_____ FY 1997_____ Revenues and Other Sources______ Taxes Licenses and Permits Intergovernmental Sales and Services Fines and Forfeits Interest and Other Investment Income Rents and Royalties Contributions and Donations Penalties and Interest on Taxes Unclaimed Property General Obligation Bond Proceeds Other Revenue Percent __ Amount___ of Total $ 11,439,170,422 61.0% 346,081,148 1.8% 5,617,029,811 536,827,964 29.9% 2.9% 49,204,317 0.26% 275,999,300 13,920,492 1.5% 0.07% 192,209,388 1.0% 9,485,653 20,690,958 0.05% 0.1% 257,123,411 1.4% 5,409,857 $18,763,152,721 0.02% 100.0% _ Amount____ $ 10,483,497,704 351,181,927 5,549,805,877 513,909,314 50,426,165 239,306,741 9,992,943 190,841,985 6,699,639 20,118,021 373,248,075 32,522,511 $17,821,550,902 Percent of Total 58.8% 2.0% 31.1% 2.9% 0.3% 1.3% 0.06% 1.1% 0.04% 0.1% 2.1% 0.2% 100.0% Increase (Decrease) From _ FY 1997_ $ 955,672,718 (5,100,779) 67,223,934 22,918,650 (1,221,848) 36,692,559 3,927,549 1,367,403 2,786,014 572,937 (116,124,664) (27,112,654) $941,601,819 Percent of Increase (Decrease) 9.1 % (1.5)% 1.2 % 4.5 % (2.4)% 15.3 % 39.3 % 0.7 % 41.6 % 2.8 % (31.1)% (83.4)% 5.3 % 1998 Revenues and Other Sources Taxes Licenses and Permits In tergovernmental vi Other Revenue General Obligation Bond Proceeds Unclaimed Property Penalties & Interest On Ta xes Contributions & Donations Rents & Royalties Intere st & Other Investment Incom e Fines and Forfe its Sales and Servic es Expenditures by governmental fund type function for fiscal years 1998 and 1997 are compared in the following table: FY 1998______ FY 1997______ Expenditures by Function General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Capital Outlay Debt Service Amount Percent of Total $ 653,302,692 6,155,220,908 6,479,723,177 1,385,250,996 1,193,748,916 264,913,965 185,622,125 45,865,385 346,296,387 645,791,398 $17,355,735,949 3.8% 35.5% 37.3% 7.9% 6.9% 1.53% 1.11% 0.26% 2.0% 3.7% 100.0% Amount Percent of Total $ 637,247,287 5,700,389,994 6,796,847,561 1,113,788,591 1,124,542,047 263,090,507 170,667,100 48,769,799 373,677,146 629,588,332 $16,858,608,364 3.8% 33.8% 40.3% 6.6% 6.7% 1.6% 1.0% 0.3% 2.2% 3.7% 100.0% Increase (Decrease) From FY 1997 Percent of Increase (Decrease) $ 16,055,405 454,830,914 (317,124,384) 271,462,405 69,206,869 1,823,458 14,955,025 (2,904,414) (27,380,759) 16,203,066 $497,127,585 2.5 % 8.0% (4.7)% 24.4 % 6.2 % 0.7 % 8.8 % (6.0)% (7.3)% 2.6 % 2.9 % 1998 Expenditures by Function Ed uc ation H ea lt h and W e lfa re T r an sp o r tatio n General Government Debt Serv ice Capital Outlay Con ser va tion Culture and Recreatio n Economic Develo pment and As sistan ce Public Safety vii Proprietary Operations The State maintains various proprietary funds which account for ongoing activities and organizations that are similar to those found in the private sector. Proprietary funds include such primary government activities as the Georgia Building Authority and the service centers of the Department of Administrative Services. Discretely presented component unit proprietary funds include, among others, the Georgia Ports Authority and the George L. Smith II Georgia World Congress Center Authority. Financial activities of the proprietary funds are presented in the combined and combining financial statements of the enterprise and internal service funds. Pension Trust Funds The State maintains sixteen pension plans, nine of which are included within the primary government. The major pension plans are the Employees' Retirement System of Georgia, which is included within the primary government, and the Teachers Retirement System of Georgia, which is included within these financial statements as a discretely presented component unit. Financial activities of the pension trust funds are presented in the combining financial statements of pension trust funds for the primary government (except for the Regents Retirement Plan, which is included in the college and university funds), and the combining financial statements of fiduciary fund types for the component units. Debt Administration At June 30, 1998, outstanding general obligation debt issues of the State of Georgia totaled $4,505,775,000. Outstanding revenue bonds of certain blended and discretely presented component units totaled $ 1,247,653,898, of which $ 177,700,898 are guaranteed by the State of Georgia. During fiscal year 1998, general obligation bonds in the amount of $ 387,030,000 were retired. General obligation debt issued during fiscal year 1998 totaled $ 256,875,000. At June 30, 1998, the State of Georgia maintained the following investment service bond ratings: Moody's Investors Service Standard & Poor's Corporation Fitch's Investor's Service, Incorporated Aaa AAA AAA Under the Constitution of the State of Georgia, the highest aggregate annual debt service for all outstanding general obligation and guaranteed revenue debt may not exceed 10 percent of the previous fiscal year's revenue collections. Further detailed information on outstanding bonds is reflected in the Financial Section, Notes to the Financial Statements and Statistical Section of this report. Cash Management The State's investment policy is to maximize the protection of State funds on deposit while accruing an advantageous yield of interest by investing the funds in excess of those required for current operating expenses. Cash is managed in pooled funds to maximize interest earnings. Types of investments are dictated by legislation and are reviewed quarterly. viii Risk Management The State assumes substantially all risks associated with the following: - Claims of covered employees for medical insurance and group life insurance benefits; - Claims with respect to death or permanent disability of any law enforcement officer, fireman, or prison guard in the line of duty (limited to a five year disbursement totaling $75,000 or an immediate lump sum settlement of $65,221 per occurrence); - Claims of covered employees for workers' compensation benefits; - Claims of State employees for unemployment compensation benefits; - Liability claims against employees of the University System of Georgia; and - Liability claims in connection with abatement and removal of asbestos and other hazardous materials. The State also purchases commercial insurance coverage and self-insures to cover risks associated with the following: - State owned real and personal property; - Liability claims actionable under the law which parties may file against the State, its agencies, officials, employees or appointees; - Liability claims against State authorities arising from their operations; and - Honesty and faithful performance bonds on employees. Various risk control techniques are utilized to minimize accident-related losses. These techniques include safety inspections, assistance in establishing safety programs, training and certification of employees as American Automobile Association instructors, and maintenance of an extensive safety library. OTHER INFORMATION Independent Audit The financial statements of all organizations comprising the State reporting entity have been separately examined and reported on by either the State Auditor or independent certified public accountants. The ix accompanying financial statements for the State of Georgia have been prepared from the results of those examinations. The State Auditor's opinion thereon appears at the beginning of the Financial Section of this report. Compilation of Transmittal Letter This transmittal letter has been compiled utilizing information contributed by various State management sources. Respectfully submitted, Claude L. Vickers State Auditor x GEORGIA ELECTORATE xi SUPREME COURT COURT OF APPEALS PUBLIC SERVICE COMMISSION STATE SCHOOL SUPERINTENDENT SECRETARY OF STATE COMMISSIONER OF INSURANCE GOVERNOR ATTORNEY GENERAL COMMISSIONER OF AGRICULTURE COMMISSIONER OF LABOR LIEUTENANT GOVERNOR GENERAL ASSEMBLY SENATE HOUSE OF REPRESENTATIVES SUPERIOR COURTS DISTRICT ATTORNEYS JUDICIAL AGENCIES OFFICE OF PLANNING AND BUDGET GOVERNOR'S OFFICE DEPARTMENT OF TECHNICAL AND ADULT EDUCATION DEPARTMENT OF ADMINISTRATIVE SERVICES DEPARTMENT OF REVENUE DEPARTMENT OF BANKING AND FINANCE DEPARTMENT OF DEFENSE DEPARTMENT OF AUDITS AND ACCOUNTS DEPARTMENT OF MEDICAL ASSISTANCE LEGISLATIVE AGENCIES DEPARTMENT OF PUBLIC SAFETY GEORGIA BUREAU OF INVESTIGATION STATE FORESTRY COMMISSION DEPARTMENT OF CORRECTIONS BOARD OF PARDONS AND PAROLES DEPARTMENT OF HUMAN RESOURCES DEPARTMENT OF JUVENILE JUSTICE DEPARTMENT OF NATURAL RESOURCES DEPARTMENT OF COMMUNITY AFFAIRS DEPARTMENT OF TRANSPORTATION OFFICE OF TREASURY AND FISCAL SERVICES DEPARTMENT OF INDUSTRY, TRADE, AND TOURISM GEORGIA STUDENT FINANCE COMMISSION UNIVERSITY SYSTEM OF GEORGIA STATE MERIT SYSTEM OF PERSONNEL ADMINISTRATION DEPARTMENT OF EDUCATION TEACHERS RETIREMENT SYSTEM OF GEORGIA STATE EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA STATE DEPARTMENT OF VETERANS SERVICE BOARD OF WORKERS' COMPENSATON EXAMINING AND LICENSING BOARDS ADVISORY BOARDS OTHER EXECUTIVE AGENCIES INTERSTATE AGENCIES AUTHORITIES 1998 GEORGIA GOVERNMENT ORGANIZATION CHART ELECTED APPOINTED State of Georgia Principal State Officials June 30, 1998 Executive: Zell Miller Governor Lewis A. Massey Secretary of State Thurbert E. Baker Attorney General Marti Fullerton Commissioner of Labor Linda C. Schrenko State Superintendent of Schools John W. Oxendine Commissioner of Insurance Thomas T. Irvin Commissioner of Agriculture Bobby Baker, Chairman Dave Baker Bob Durden Stan Wise Public Service Commission Legislative: Pierre Howard Lieutenant Governor/President of the Senate Thomas B. Murphy Speaker of the House of Representatives Judicial: Robert Benham Chief Justice of the Supreme Court xiii Financial Section CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174 INDEPENDENT AUDITOR'S REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS The Honorable Roy E. Barnes Governor of Georgia and Members of the General Assembly of the State of Georgia We have audited the accompanying general purpose financial statements of the State of Georgia, as listed in the Table of Contents, as of and for the year ended June 30, 1998. These general purpose financial statements are the responsibility of the State's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We did not audit the financial statements of certain organizations which, combined, represent less than 1% of the assets and revenues of the general fund, 100% of the assets and revenues of the capital projects funds, 62% of the assets and 29% of the revenues of the internal service funds, 68% of the assets of the fiduciary funds and less than 1% of the expendable trust funds revenues and 100% of the pension trust funds revenues, and 7% of the assets and less than 1% of the liabilities of the general fixed assets and general long-term debt account groups, respectively. In addition, we did not audit certain discretely presented component units which represent less than 1% of the assets and revenues of the component unit governmental fund types, 83% of the assets and 95% of the revenues of the component unit proprietary fund types and 98% of the assets and 99% of the revenues of the component unit fiduciary fund types. The financial statements of these organizations and component units were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for those financial statements, is based solely upon the reports of the other auditors. Except as discussed in the following paragraphs, we conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. The financial statements of the Employees' Retirement System of Georgia, Georgia Lottery Corporation, Georgia Ports Authority, Georgia State Financing and Investment Commission, and Teachers' Retirement System of Georgia were not audited in accordance with Government Auditing Standards. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinion. The State of Georgia's accounting system is decentralized in nature. The management of each organizational unit is responsible for maintaining accounting records pertinent to its operations and each retains complete responsibility and control over their operations, including revenue collections and disbursements. The State's principal accounting system, the Fiscal Accounting and Control System (FACS), is utilized by 66 state organizations. This accounting system allows for the accumulation of financial data, by state organization, on a basis of accounting prescribed or permitted by the budgetary statutes and regulations of the State of Georgia. Constitutional and statutory provisions of the State of Georgia do not provide for a position or organizational unit responsible for the preparation of statewide financial statements. It was necessary for staff of the Department of Audits and Accounts to consolidate financial information presented in individual organization financial statements and to prepare adjusting journal entries necessary for the production of the general purpose financial statements. We are therefore not independent with regard to the preparation of accounting entries required to convert the consolidated budgetary financial statements to general purpose financial statements prepared in accordance with generally accepted accounting principles. As discussed in Note 1 to the general purpose financial statements, the State of Georgia did not maintain adequate systems to account for or to depreciate (when required) fixed assets in conformity with generally accepted accounting principles. We were unable to determine the effect of these limitations on the general purpose financial statements. As discussed in Note 1 to the general purpose financial statements, the accounting systems of the State of Georgia did not facilitate recording encumbrances in conformity with generally accepted accounting principles. Contractual obligations for services performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. The recognition of encumbrances as expenditures and liabilities is not consistent with generally accepted accounting principles. We were unable to determine the effect of these limitations on the general purpose financial statements. As discussed in Note 1 to the general purpose financial statements, revenues for certain expendituredriven programs were accrued based on the unexecuted portion of contracts for goods and services. These accruals primarily affected the Intergovernmental and Sales and Services revenue categories. We were unable to determine the effect of this departure from generally accepted accounting principles on the general purpose financial statements. As discussed in Notes 9 and 10 to the general purpose financial statements, the State of Georgia did not maintain adequate systems to identify, classify, and report leases as operating or capital leases in conformity with generally accepted accounting principles. We were unable to determine the effect of these limitations on the general purpose financial statements. As discussed in Note 1 to the general purpose financial statements, the State of Georgia maintained certain pension trust funds on essentially the cash basis of accounting. This basis of accounting is not in conformity with generally accepted accounting principles. We were unable to determine the effect of this departure from generally accepted accounting principles on the general purpose financial statements. As discussed in Note 1 to the general purpose financial statements, the State's accounting system has limitations in identifying transactions between organizations whose financial activity is included within an individual fund. State accounting policies and procedures allow the recording of revenues, receivables, expenses and payables for such transactions. All such intrafund transactions have not been eliminated as required by generally accepted accounting principles. We were unable to determine the effect of these overstatements on the general purpose financial statements. 2 The State of Georgia made payments to providers of medical services in excess of amounts authorized to be paid in accordance with the State of Georgia approved State Plan under Title XIX of the Social Security Act. The State of Georgia currently maintains on-going efforts to identify and recover overpayments made to providers. The actual amount of these overpayments, however, cannot be presently determined, and no provision for the amount of understatement of receivables from providers that may result has been made in the general purpose financial statements. The State of Georgia did not maintain adequate systems to effect the timely detection of either duplicate claim payments or claim overpayments of the Risk Management Trust Funds maintained at the Department of Administrative Services. The Department of Administrative Services also made claim payments without providing supporting documentation. We were unable to determine the accuracy and completeness of the transactions and balances that comprise these Risk Management Trust Funds, which are included in the Internal Service Fund. Apparent misappropriations of State of Georgia Building Authority assets were discovered in the food service and parking operations. The possible outcome of these matters, which have been reported to appropriate State officials, is uncertain at this time. Accordingly, no provision has been made in the Internal Service Fund for the resolution of these matters. In our opinion, based on our audit and the reports of other auditors, except for the effects of the matters discussed in the preceding paragraphs, the general purpose financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of the State of Georgia as of June 30, 1998, and the results of its operations, the cash flows of its proprietary fund types and its nonexpendable trust funds, and the changes in fund balances of the State's colleges and universities, for the year then ended in conformity with generally accepted accounting principles. As discussed in Note 4 to the general purpose financial statements, the State of Georgia implemented Statement No. 31 of the Governmental Accounting Standards Board, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, in fiscal year 1998. In accordance with Government Auditing Standards, we have also issued a report dated May 13, 1999 on our consideration of the State of Georgia's internal control over financial reporting and on our tests of its compliance with certain laws, regulations, contracts and grants. Those reports are included in the State of Georgia Single Audit Report. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining financial statements identified in the Table of Contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the State of Georgia. Further, the section entitled "Retirement Systems - Required Supplementary Schedules" within Financial Section, Required Supplementary Information is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, except for the effects of the matters noted above, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. 3 The section entitled "Year 2000 Issues" within Financial Section, Required Supplementary Information is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and do not express an opinion on it. In addition, we do not provide assurance that the State of Georgia is or will become year 2000 compliant, that the State of Georgia's year 2000 remediation efforts will be successful in whole or in part, or that parties with which the State of Georgia does business are or will become year 2000 compliant. The Introductory and Statistical Sections, identified in the Table of Contents, were not audited by us and, accordingly, we express no opinion on such information. Respectfully submitted, May 13, 1999 Claude L. Vickers State Auditor 4 General Purpose Financial Statements State of Georgia Combined Balance Sheet All Fund Types, Account Groups and Discretely Presented Component Units June 30, 1998 Primary Government Governmental Fund Types Proprietary Fund Types General Special Revenue Debt Service Capital Projects Enterprise Internal Service Assets and Other Debits Assets: Cash and Cash Equivalents Cash and Cash Equivalents in Nonexpendable Trust Funds Investments Receivables (Net of Allowances for Uncollectibles) Intergovernmental - Federal Interest and Dividends Notes and Loans Taxes Other Due from Other Funds Due from Primary Government Due from Component Units Interfund Receivables Inventories Prepaid Items Restricted Assets Cash and Cash Equivalents Investments Receivables Interest and Dividends Loans Advances to Other Funds Advances to Component Units Deferred Compensation Plan Assets Fixed Assets (Net, Where Applicable, of Accumulated Depreciation) Deferred Charges Other Assets Other Debits: Amount Available in Debt Service Fund Amount to be Provided for Retirement of General Long-Term Debt $ 2,712,193,919 $ 623,223,375 2,022,180,113 26,712,975 1,035,860,281 192,899,052 135,316 45,462,627 82,174,758 6,925 107,500 50,862,768 $ 233,215,021 $ $ 4,149,166 $ 7,283,687 2,872,348 963,777,869 222,841,604 1,014,906,672 11,903,012 2,338,835 1,779,103 1,599 1,189,172 3,300,425 16,230,434 10,837,247 18,191,794 419,830 12,262,992 682,774 15,209,275 313,620 411,401,860 Total Assets and Other Debits $ 6,791,819,609 $ 4,653,050 $ 233,215,021 $ 995,379,753 $ 245,873,659 $ 1,475,986,856 Liabilities, Equity and Other Credits Liabilities: Cash Overdraft Accounts Payable and Other Accruals Compensated Absences Payable Claims and Judgments Payable Contracts Payable Salaries/Withholdings Payable Benefits Payable Due to Other Funds Due to Primary Government Due to Component Units Accrued Interest Payable Undistributed Local Government Sales Tax Deferred Revenue Capital Leases/Installment Purchases Payable Mortgage Loans under Repurchase Agreements Funds Held for Others Other Liabilities Deposits and Overpayments Advances from Other Funds Advances from Primary Government Long-Term Debt Payable (Net of Unamortized Discounts) Total Liabilities $ $ 921,741,086 1,570,048,158 616,236,408 399,851,894 15,038,805 2,204,421 53,157,604 102,123,002 38,992,479 486,838 119,305 $ 172,257 93,490 1,800 $ 3,719,880,695 $ 386,852 $ $ 22,611,627 $ $ $ 26,573,264 1,000,427 20,535,769 236,200 7,964,738 357,293,702 15,363,494 255,655 18,910,273 40,481 159,758,318 143 86,456 14,513,809 73,701 10,579,816 18,588,773 1,764,138 1,092,857 0 $ 83,223,614 $ 175,764,409 $ 418,255,618 The notes to the financial statements are an integral part of this statement. 6 Fiduciary Fund Type Trust and Agency College and University Account Groups General General Fixed Long-Term Assets Debt Totals (Memorandum Only) Primary Government Component Units Governmental Fund Types Proprietary Fund Types Fiduciary Fund Types Totals (Memorandum Only) Reporting Entity $ 1,797,015,993 $ 429,544,828 $ $ $ 5,183,402,614 $ 185,698 185,698 14,644,907,465 209,917,340 17,682,446,673 1,014,811 93,409,000 4,104,717 71,787,161 40,504,983 38,607,643 57,940 48,693,306 155,835,048 24,544 26,848,073 10,094,414 2,061,802,567 134,421,762 52,798,023 1,107,647,442 419,275,039 18,191,794 0 555,146 3,300,425 84,573,692 92,978,089 0 0 394,622,648 0 0 6,925 15,316,775 394,622,648 4,636,846,469 2,914,888,301 37,733 7,963,450,250 0 50,900,501 233,215,021 233,215,021 4,492,541,351 4,492,541,351 $ 81,660,480 $ 3,357,636 $ 5,268,420,730 185,698 801,970 340,726,843 35,806,181,708 53,830,157,194 100,989 1,325,853 108,188,065 16,148,160 936,455,396 63,895,216 2,204,564 95,126 228,367 5,001,303 2,782,433 250,880,885 180,376,720 42,175 2,169,990,632 401,450,807 989,354,408 1,107,647,442 664,872,828 18,191,794 2,204,564 555,146 3,300,425 89,670,121 96,031,064 158,947,976 412,589,856 158,947,976 412,589,856 6,121,452 598,113,658 6,121,452 598,113,658 6,925 15,316,775 394,622,648 91,630,744 818,669,441 19,649,989 83,810,966 741,634 8,874,492,069 19,649,989 134,711,467 233,215,021 11,879,924 4,504,421,275 $ 17,047,614,753 $ 5,556,445,061 $ 2,914,888,301 $ 4,725,756,372 $ 39,991,632,435 $ 106,062,973 $ 3,654,965,798 $ 36,241,580,758 $ 79,994,241,964 $ $ $ 6,364,952 281,150,747 104,384,204 23,629 658,673 5,616,060 21,800,000 2,400,826 714,632,873 6,925 78,662,613 20,232,718 19,591,279 149,585 1,960,342 7,000 $ 721,687,052 $ 535,955,374 $ $ $ 22,730,932 $ 1,257,538,502 212,076,813 324,661,955 697,979 357,991,681 1,604,577,580 621,916,578 581,410,212 18,191,794 0 2,204,564 0 53,157,604 195,461,381 4,344,386 35,156,920 0 773,216,631 19,225,196 3,724,480 6,925 0 4,508,637,194 4,509,737,051 0 $ 4,725,756,372 $ 10,380,909,986 $ 1,157,986 $ 4,406,340 1,055,264 220,311 $ 86,933,034 2,961,892 2,125,414 319,857 290,951 224,249 16,444,144 215,666 10,824,660 96,167,505 739,421 17,728,827 302,332,077 11,699,366 14,651,065 107,500 1,534,164,900 18,171,178 $ 2,086,599,251 $ $ 2,254,730 68,434 39,946 23,888,918 1,351,132,606 328,679,111 357,991,681 1,606,702,994 622,525,180 581,410,212 18,191,794 555,146 2,204,564 16,444,144 53,157,604 291,844,552 46,721,001 17,728,827 1,075,548,708 30,924,562 18,375,545 6,925 107,500 6,043,901,951 2,363,110 $ 12,488,043,525 7 State of Georgia Combined Balance Sheet All Fund Types, Account Groups and Discretely Presented Component Units (continued) June 30, 1998 Primary Government Governmental Fund Types Proprietary Fund Types General Special Revenue Debt Service Capital Projects Enterprise Internal Service Equity and Other Credits: Other Credits: Investment in General Fixed Assets $ $ $ $ $ $ $ Equity: Net Investment in Plant $ $ Colleges and Universities Contributed Capital Retained Earnings Reserved Unreserved Fund Balances Reserved for Encumbrances 4,174,127 Reserved for Advances 114,425 Reserved for Inventories 44,268,275 Reserved for Debt Service Reserved for Disaster Assistance 588,489 Reserved for Distance Learning and Telemedicine 17,936,760 Reserved for Pension Benefits Reserved for Guaranteed Revenue Debt Common Reserve Fund 17,921,100 Reserved for Hazardous Waste Trust Fund 13,321,355 Reserved for Investment Trust Fund Reserved for Lottery for Education 201,315,730 Reserved for Midyear Adjustment 117,181,823 Reserved for Motor Fuel Tax Funds 887,743,155 Reserved for Revenue Shortfall 351,545,470 Reserved for Underground Storage Trust Fund 42,498,465 Reserved for Year 2000 Project 125,338,806 Reserved for Other Specific Purposes 72,247,308 Unreserved, Designated Designated for Liability Trust Fund 10,256,598 Designated for Future Capital Outlay Designated for Other Specific Purposes 112,000 Unreserved, Undesignated 1,165,375,028 Total Equity $ 3,071,938,914 $ $ $ 233,215,021 $ $ 274,590,158 70,109,250 715,471,828 67,669,252 1,408,165 907,629,259 4,266,198 3,118,715 4,266,198 $ 233,215,021 $ 912,156,139 $ 70,109,250 $ 1,057,731,238 Total Equity and Other Credits $ 3,071,938,914 $ 4,266,198 $ 233,215,021 $ 912,156,139 $ 70,109,250 $ 1,057,731,238 Total Liabilities, Equity and Other Credits $ 6,791,819,609 $ 4,653,050 $ 233,215,021 $ 995,379,753 $ 245,873,659 $ 1,475,986,856 The notes to the financial statements are an integral part of this statement. 8 Fiduciary Fund Type Trust and Agency College and University Account Groups General General Fixed Long-Term Assets Debt Totals (Memorandum Only) Primary Government Component Units Governmental Fund Types Proprietary Fund Types Fiduciary Fund Types Totals (Memorandum Only) Reporting Entity $ $ $ 2,914,888,301 $ $ 2,914,888,301 $ 91,630,744 $ 321,635 $ $ 3,006,840,680 $ $ 4,616,613,751 $ $ 403,875,936 11,622,441,106 2,659,446,092 1,991,907,383 52,133,120 $ 16,325,927,701 $ 5,020,489,687 $ 0$ $ 16,325,927,701 $ 5,020,489,687 $ 2,914,888,301 $ $ 4,616,613,751 $ 403,875,936 274,590,158 $ $ 1,001,936,816 $ 4,616,613,751 403,875,936 1,276,526,974 785,581,078 67,669,252 95,622,405 455,169,458 881,203,483 522,838,710 4,174,127 114,425 44,268,275 233,215,021 588,489 17,936,760 11,622,441,106 17,921,100 13,321,355 2,659,446,092 201,315,730 117,181,823 887,743,155 351,545,470 42,498,465 125,338,806 2,065,562,856 375,041 12,898,278 36,239,217,648 4,174,127 114,425 44,268,275 233,215,021 588,489 17,936,760 47,861,658,754 17,921,100 13,321,355 2,659,446,092 201,315,730 117,181,823 887,743,155 351,545,470 42,498,465 125,338,806 2,078,836,175 10,256,598 907,629,259 112,000 1,224,893,061 0 $ 26,695,834,148 $ 10,256,598 907,629,259 112,000 (4,113,990) 2,417,955 1,223,197,026 (3,738,949) $ 1,568,044,912 $ 36,239,217,648 $ 64,499,357,759 0 $ 29,610,722,449 $ 87,891,795 $ 1,568,366,547 $ 36,239,217,648 $ 67,506,198,439 $ 17,047,614,753 $ 5,556,445,061 $ 2,914,888,301 $ 4,725,756,372 $ 39,991,632,435 $ 106,062,973 $ 3,654,965,798 $ 36,241,580,758 $ 79,994,241,964 9 State of Georgia Combined Statement of Revenues, Expenditures and Changes in Fund Balances All Governmental Fund Types, Expendable Trust Funds and Discretely Presented Component Units For the Year Ended June 30, 1998 Revenues: Taxes Licenses and Permits Intergovernmental Federal Other Sales and Services Fines and Forfeits Interest and Other Investment Income Rents and Royalties Contributions and Donations Penalties and Interest on Taxes Unclaimed Property Other Total Revenues Expenditures: Current: General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Capital Outlay Debt Service: Principal Interest Other Debt Service Charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures General Primary Government Governmental Fund Types Special Debt Revenue Service $ 11,439,170,422 $ $ $ 346,081,148 5,582,612,574 34,417,237 518,179,693 49,204,317 194,805,638 13,873,680 192,209,388 9,485,653 20,690,958 3,828,832 18,648,271 446,092 $ 18,404,559,540 $ 19,094,363 $ 0 $ 650,346,672 $ 2,620,579 $ $ 6,155,220,908 6,479,723,177 1,385,250,996 1,193,748,916 264,913,965 185,622,125 45,865,385 387,030,000 258,317,069 $ 16,360,692,144 $ 2,620,579 $ 645,347,069 $ 2,043,867,396 $ 16,473,784 $ (645,347,069) The notes of the financial statements are an integral part of this statement. 10 Capital Projects Fiduciary Fund Type Expendable Trust Totals - (Memorandum Only) Primary Government Component Units Governmental Fund Type Totals - (Memorandum Only) Reporting Entity $ $ 372,536,413 $ 11,811,706,835 $ $ 11,811,706,835 346,081,148 346,081,148 80,747,570 46,812 1,581,025 20,717,427 127,596 126,070,142 33,888 80,738 5,603,330,001 34,417,237 536,955,560 49,204,317 402,069,442 13,920,492 192,243,276 9,485,653 20,690,958 5,490,595 2,681,917 135,849 163,972 10,162,233 5,603,330,001 34,417,237 539,637,477 49,204,317 402,205,291 14,084,464 202,405,509 9,485,653 20,690,958 5,490,595 $ 82,375,407 $ 519,566,204 $ 19,025,595,514 $ 13,143,971 $ 19,038,739,485 $ 335,441 $ $ 653,302,692 $ 99,275 6,155,320,183 64,702,740 6,544,425,917 1,385,250,996 1,193,748,916 279,499,324 544,413,289 102,521 185,724,646 45,865,385 346,296,387 346,296,387 46,812 158,508 239,009 387,076,812 258,475,577 239,009 $ 347,076,157 $ 344,403,860 $ 17,700,139,809 $ $ 36,267,248 653,302,692 6,155,320,183 6,544,425,917 1,385,250,996 1,193,748,916 544,413,289 221,991,894 45,865,385 346,296,387 387,076,812 258,475,577 239,009 36,267,248 $ 17,736,407,057 $ (264,700,750) $ 175,162,344 $ 1,325,455,705 $ (23,123,277) $ 1,302,332,428 (continued) 11 State of Georgia Combined Statement of Revenues, Expenditures and Changes in Fund Balances All Governmental Fund Types, Expendable Trust Funds and Discretely Presented Component Units (continued) For the Year Ended June 30, 1998 Other Financing Sources (Uses): Operating Transfers In Operating Transfers from Primary Government Operating Transfers from Component Units Operating Transfers Out Operating Transfers to Component Units Proceeds of General Fixed Asset Dispositions Capital Leases General Obligation Bond Proceeds Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses Fund Balances, July 1 Adjustments (Net) Residual Equity Transfers In Residual Equity Transfers from Component Units Residual Equity Transfers Out Residual Equity Transfers to Component Units Transfer of Equity to Component Units Increase in Inventories General Primary Government Governmental Fund Types Special Debt Revenue Service $ 87,322,527 $ $ 669,908,746 555,451,008 (2,173,952,811) (65,663,706) 4,114,623 131,085 (16,500,000) $ (1,592,597,274) $ (16,500,000) $ 669,908,746 $ 451,270,122 $ 2,603,974,320 1,504,009 82,000 14,894,947 (1,895,883) 2,109,399 (26,216) $ 24,561,677 4,292,414 208,653,344 Fund Balances, June 30 $ 3,071,938,914 $ 4,266,198 $ 233,215,021 The notes of the financial statements are an integral part of this statement. 12 Capital Projects Fiduciary Fund Type Expendable Trust Totals - (Memorandum Only) Primary Government Component Units Governmental Fund Type Totals - (Memorandum Only) Reporting Entity $ $ 4,414,614 (128,576,564) 257,123,411 $ 132,961,461 $ 3,281,250 $ 760,512,523 $ 0 559,865,622 (2,319,029,375) (65,663,706) 4,114,623 131,085 257,123,411 3,281,250 $ (802,945,817) $ $ 760,512,523 18,915,057 18,915,057 559,865,622 (2,319,029,375) (65,663,706) 4,114,623 131,085 257,123,411 18,915,057 $ (784,030,760) $ (131,739,289) $ 178,443,594 $ 522,509,888 $ 1,041,854,815 1,865,582,103 21,658,031 (6,504) 18,509,700 (165,856) (37,961,262) (199,786) 5,724,356,996 23,155,536 82,000 33,404,647 (165,856) (39,857,145) (199,786) 2,109,399 (4,208,220) $ 518,301,668 469,271 5,724,826,267 23,155,536 82,000 33,404,647 (165,856) (39,857,145) (199,786) 2,109,399 $ 912,156,139 $ 2,043,819,407 $ 6,265,395,679 $ (3,738,949) $ 6,261,656,730 13 State of Georgia Statement of Funds Available and Expenditures Compared to Budget Budget Fund For the Fiscal Year Ended June 30, 1998 Funds Available Revenues: State Appropriation Lottery Proceeds Federal Revenues Other Revenues Retained Total Revenues Carry-Over from Prior Year: Transfer from Fund Balance Total Funds Available Expenditures Administrative Services, Department of Agricultural Exposition Authority Agriculture, Department of Agrirama Development Authority Audits and Accounts, Department of Banking and Finance, Department of Building Authority Community Affairs, Department of Corrections, Department of Defense, Department of Education, Department of Employees' Retirement System Administrative Expense Fund Forestry Commission General Assembly General Obligation Debt Sinking Fund Governor, Office of the Guaranteed Revenue Debt Common Reserve Fund Human Resources, Department of Industry, Trade and Tourism, Department of Insurance, Department of Investigation, Georgia Bureau of Judicial Branch Juvenile Justice, Department of Labor, Department of Law, Department of Medical Assistance, Department of Natural Resources, Department of Original Appropriation Final Budget Actual Variance Favorable (Unfavorable) $ 11,262,036,635 $ 11,976,541,772 $ 11,971,597,333 $ 506,500,000 601,923,390 601,923,390 4,600,936,445 5,775,791,064 5,190,228,443 3,027,666,502 4,535,210,525 3,976,927,885 (4,944,439) 0 (585,562,621) (558,282,640) $ 19,397,139,582 $ 22,889,466,751 $ 21,740,677,051 $ (1,148,789,700) 1,938,643,415 1,463,059,924 (475,583,491) $ 19,397,139,582 $ 24,828,110,166 $ 23,203,736,975 $ (1,624,373,191) $ 180,889,649 $ 281,494,603 $ 252,980,630 $ 5,590,902 6,288,967 6,289,058 49,508,646 52,754,577 51,901,339 1,370,111 1,508,217 1,119,309 20,156,774 21,257,896 21,203,333 9,523,070 9,523,070 9,036,117 37,782,538 46,765,710 45,277,549 58,520,527 175,358,891 158,264,931 723,076,907 751,140,269 738,323,139 17,617,939 24,445,636 23,198,244 5,142,447,933 5,644,848,973 5,579,253,240 4,382,732 39,489,852 27,168,900 390,520,369 37,344,826 0 2,384,380,940 20,302,479 17,206,008 48,215,166 93,183,496 172,924,813 152,143,392 14,733,081 3,779,764,130 133,165,383 5,111,144 42,426,505 29,574,114 596,125,028 327,770,873 0 2,651,336,637 34,787,776 18,120,900 59,818,561 97,116,298 202,399,674 221,790,319 36,539,914 4,295,813,679 223,052,166 4,891,392 41,998,968 23,011,250 596,125,028 176,276,577 0 2,500,132,722 23,319,426 16,996,941 59,199,822 98,064,801 194,026,433 157,203,316 35,182,838 3,734,522,066 217,888,741 28,513,973 (91) 853,238 388,908 54,563 486,953 1,488,161 17,093,960 12,817,130 1,247,392 65,595,733 219,752 427,537 6,562,864 0 151,494,296 0 151,203,915 11,468,350 1,123,959 618,739 (948,503) 8,373,241 64,587,003 1,357,076 561,291,613 5,163,425 The notes of the financial statements are an integral part of this statement. 14 State of Georgia Statement of Funds Available and Expenditures Compared to Budget Budget Fund For the Fiscal Year Ended June 30, 1998 Original Appropriation Final Budget Actual Variance Favorable (Unfavorable) Pardons and Paroles, State Board of $ Personnel Board, State - Merit System of Personnel Administration Public Safety, Department of Public School Employees' Retirement System-Expense Fund Public Service Commission Public Telecommunications Commission Regents of the University System of Georgia, Board of Revenue, Department of Secretary of State Soil and Water Conservation Commission Student Finance Commission Teachers' Retirement System - Expense Fund Technical and Adult Education, Department of Transportation, Department of Veterans Service, Department of Workers' Compensation, State Board of 44,711,153 $ 1,098,162,845 119,228,086 15,110,000 10,731,875 28,139,624 2,669,910,681 97,699,116 32,132,511 2,495,590 208,845,430 11,082,683 292,599,277 1,165,727,067 28,044,624 11,108,457 45,919,221 $ 1,136,749,364 130,050,615 15,110,000 10,824,177 35,601,169 3,680,889,805 134,249,131 34,055,774 2,591,864 241,993,060 12,156,432 380,229,176 3,070,405,340 28,814,684 11,299,957 45,805,191 $ 1,090,873,718 126,325,714 15,110,000 10,521,639 37,470,922 3,428,712,864 119,423,166 32,235,514 2,560,723 228,415,821 11,119,585 354,065,195 1,445,291,600 28,138,454 11,238,813 114,030 45,875,646 3,724,901 0 302,538 (1,869,753) 252,176,941 14,825,965 1,820,260 31,141 13,577,239 1,036,847 26,163,981 1,625,113,740 676,230 61,144 Total Expenditures $ 19,397,139,582 $ 24,828,110,166 $ 21,752,996,129 $ 3,075,114,037 Excess of Funds Available over Expenditures $ 1,450,740,846 $ 1,450,740,846 The notes of the financial statements are an integral part of this statement. 15 State of Georgia Combined Statement of Revenues, Expenses and Changes in Fund Equity/Fund Balances All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units For the Fiscal Year Ended June 30, 1998 Operating Revenues: Contributions Insurance Recoveries Interest and Other Investment Income Intergovernmental Rents and Royalties Sales and Services Taxes Other Total Operating Revenues Operating Expenses: General and Administrative Goods and Services Interest Benefits Claims and Judgments Prizes Scholarships Depreciation Other Total Operating Expenses Operating Income (Loss) Nonoperating Revenues (Expenses): Contributions and Intergovernmental Revenue Interest and Other Investment Income Gain on Sale of Loans Hotel/Motel Tax (Net) Interest Expense Other Debt Service Charges Other Total Nonoperating Revenues (Expenses) Net Income (Loss) Before Operating Transfers Primary Government Fiduciary Proprietary Fund Types Fund Type Internal Nonexpendable Enterprise Service Trust $ 1,039,788,654 $ 116,076,367 $ 1,763,355 13,614,428 145,271,963 29,396 31,614,994 259,211,959 1,364,309 $ 1,053,432,478 $ 555,302,947 $ $ 12,917 12,917 $ 224,492,609 $ 157,027,387 $ 174,952,970 194,765 863,085,931 15,178,000 183,454,774 1,309,224 $ 1,087,578,540 $ 532,117,120 $ $ (34,146,062) $ 23,185,827 $ 4,066 2,320 878 7,264 5,653 $ $ $ $ 909,861 (57,945) (6,870) (1,537,414) $ (6,870) $ (685,498) $ $ (34,152,932) $ 22,500,329 $ 0 5,653 The notes to the financial statements are an integral part of this statement. 16 Totals - (Memorandum Only) Primary Government Component Units Proprietary Fund Types Totals - (Memorandum Only) Reporting Entity $ 1,155,865,021 $ 1,763,355 158,899,308 0 31,614,994 259,241,355 0 1,364,309 40,925 $ 1,155,905,946 1,763,355 76,750,929 235,650,237 21,091,686 21,091,686 63,009,735 94,624,729 1,873,520,358 2,132,761,713 1,569,994 1,569,994 22,897,569 24,261,878 $ 1,608,748,342 $ 2,058,881,196 $ 3,667,629,538 $ 381,524,062 $ 174,952,970 194,765 878,263,931 183,454,774 0 2,320 1,309,224 878 148,129,964 $ 321,862,745 59,393,081 902,465,000 34,405,479 48,937,250 529,654,026 496,815,715 59,587,846 878,263,931 183,454,774 902,465,000 2,320 35,714,703 48,938,128 $ 1,619,702,924 $ 1,515,193,519 $ 3,134,896,443 $ (10,954,582) $ 543,687,677 $ 532,733,095 $ 0 $ 909,861 0 0 (57,945) 0 (1,544,284) $ (692,368) $ $ (11,646,950) $ 571,059 $ 63,976,913 883,484 17,282,333 (35,695,827) (8,838,889) (12,288,879) 571,059 64,886,774 883,484 17,282,333 (35,753,772) (8,838,889) (13,833,163) 25,890,194 $ 25,197,826 569,577,871 $ 557,930,921 (continued) 17 State of Georgia Combined Statement of Revenues, Expenses and Changes in Fund Equity/Fund Balances All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units (continued) For the Fiscal Year Ended June 30, 1998 Primary Government Fiduciary Proprietary Fund Types Fund Type Internal Nonexpendable Enterprise Service Trust Operating Transfers: Transfers In Transfers from Primary Government Transfers Out Transfers to Primary Government $ $ 54,197,836 $ $ (17,427,367) Net Operating Transfers $ 0 $ 36,770,469 $ 0 Net Income (Loss) $ (34,152,932) $ 59,270,798 $ 5,653 Deficiency of Revenues under Expenditures from Governmental Operations and Expendable Trust Funds Fund Equity/Fund Balances, July 1 Adjustments (Net) Contributed Capital Contributed Capital from Primary Government Contributed Capital from Federal Government Contributed Capital from Other Sources Transfer of Contributed Capital Transfer of Contributed Capital to Primary Government Transfer of Equity from Primary Government Increase in Inventories 104,262,182 1,007,729,825 (10,336,230) 165,856 (82,000) 982,989 215,826 (383) Fund Equity/Fund Balances, June 30 $ 70,109,250 $ 1,057,731,238 $ 221,096 The notes to the financial statements are an integral part of this statement. 18 Totals - (Memorandum Only) Primary Government Component Units Proprietary Fund Types Totals - (Memorandum Only) Reporting Entity $ 54,197,836 $ 0 (17,427,367) 0 $ 62,019,706 (559,686,614) 54,197,836 62,019,706 (17,427,367) (559,686,614) $ 36,770,469 $ (497,666,908) $ (460,896,439) $ 25,123,519 $ 71,910,963 $ 97,034,482 0 1,112,207,833 (10,336,613) 165,856 0 0 0 (82,000) 0 0 982,989 (2,400,405) (2,400,405) 1,453,154,306 (20,471,837) 39,857,145 35,688,800 4,957,024 (14,894,947) 199,786 44,077 2,565,362,139 (30,808,450) 165,856 39,857,145 35,688,800 4,957,024 (82,000) (14,894,947) 199,786 1,027,066 $ 1,128,061,584 $ 1,568,044,912 $ 2,696,106,496 19 State of Georgia Combined Statement of Cash Flows All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units For the Fiscal Year Ended June 30, 1998 Cash Flows from Operating Activities: Cash Received from Customers Cash Received from Required Contributions Cash Received from Insurance Proceeds Principal Payments Received on Program Loans Interest Received on Program Loans Cash Paid to Vendors Cash Paid to Employees Cash Paid for Benefits Cash Paid for Claims and Judgments Cash Paid for Lottery Prizes Cash Paid for Scholarships Origination of Program Loans Governmental and Fiduciary Fund Type Activity (Net) Other Operating Items (Net) Net Cash Provided by (Used in) Operating Activities Cash Flows from Noncapital Financing Activities: Operating Transfers In Operating Transfers from Primary Government Proceeds from Assignment of Program Loans Under Repurchase Agreements Issuance of Bonds/Loans/Notes Contributed Capital Hotel/Motel Tax (Net) Operating Transfers Out Operating Transfers to Primary Government Repayment of Advances Principal Paid on Bonds/Loans/Notes Interest Paid on Bonds/Loans/Notes Return of Contributed Capital Transfer of Equity from Primary Government Other Debt Service Payments Other Noncapital Items (Net) Net Cash Provided by (Used in) Noncapital Financing Activities Cash Flows from Capital and Related Financing Activities: Issuance of Bonds/Loans/Notes Hotel/Motel Tax Received Contributed Capital Sale of Capital Assets Acquisition and Construction of Capital Assets Principal Paid on Bonds/Loans/Notes Interest Paid on Bonds/Loans/Notes Other Debt Service Payments Other Capital and Related Items (Net) Net Cash Used in Capital and Related Financing Activities Cash Flows from Investing Activities: Purchase of Investments (Net) Interest on Investments Other Investing Items (Net) Net Cash Provided by Investing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents, July 1 Cash and Cash Equivalents, June 30 Primary Government Fiduciary Proprietary Fund Types Fund Type Internal Nonexpendable Enterprise Service Trust Totals - (Memorandum Only) Primary Government Totals - (Memorandum Component Units Only) Proprietary Reporting Fund Types Entity $ 29,396 $ 308,349,050 $ 1,038,477,795 115,640,381 1,763,355 (223,443,697) (2,498,622) (851,524,392) (248,934,439) (81,119,778) (15,178,000) (84,658,119) $ 308,378,446 $ 2,026,445,498 $ 2,334,823,944 1,154,118,176 1,154,118,176 1,763,355 1,763,355 0 123,192,291 123,192,291 0 75,218,750 75,218,750 (4,944) (472,383,080) (431,389,348) (903,772,428) (83,618,400) (113,917,345) (197,535,745) (866,702,392) (866,702,392) (84,658,119) (84,658,119) 0 (864,420,000) (864,420,000) (2,320) (2,320) (2,320) 0 (174,392,226) (174,392,226) 0 (17,303,499) (17,303,499) 0 166,120 166,120 $ (38,959,520) $ (4,137,550) $ (7,264) $ (43,104,334) $ 623,600,241 $ 580,495,907 $ $ 54,197,836 $ $ 54,197,836 $ $ 54,197,836 0 62,019,706 62,019,706 (17,427,367) (82,000) 866,532 0 0 0 0 (17,427,367) 0 0 0 0 (82,000) 0 0 866,532 10,711,222 167,621,141 24,723,485 3,200,997 (555,617,071) (53,750) (172,969,802) (51,560,281) (14,894,947) 199,786 (2,182,005) (1,989,564) 10,711,222 167,621,141 24,723,485 3,200,997 (17,427,367) (555,617,071) (53,750) (172,969,802) (51,560,281) (14,976,947) 199,786 (2,182,005) (1,123,032) $ 0 $ 37,555,001 $ 0 $ 37,555,001 $ (530,791,083) $ (493,236,082) $ $ $ 165,856 (89,828) (14,345,953) (242,857) (57,945) $ (89,828) $ (14,480,899) $ $ 0 $ 76,654,509 $ 76,654,509 0 13,781,971 13,781,971 165,856 45,336,032 45,501,888 0 614,951 614,951 (14,435,781) (60,165,419) (74,601,200) (242,857) (90,215,248) (90,458,105) (57,945) (32,338,417) (32,396,362) 0 (7,809,710) (7,809,710) 0 (334,710) (334,710) 0 $ (14,570,727) $ (54,476,041) $ (69,046,768) $ (47,863,480) $ (320,961,015) $ 14,078,045 37,008,604 $ (33,785,435) $ (283,952,411) $ $ (72,834,783) $ (265,015,859) $ 76,983,949 272,299,546 161,724 $ (368,662,771) $ (211,337,264) $ (580,000,035) 12,136 51,098,785 44,271,915 95,370,700 0 121,036 121,036 173,860 $ (317,563,986) $ (166,944,313) $ (484,508,299) 166,596 $ (337,684,046) $ (128,611,196) $ (466,295,242) 19,102 349,302,597 369,219,652 718,522,249 $ 4,149,166 $ 7,283,687 $ 185,698 $ 11,618,551 $ 240,608,456 $ 252,227,007 The notes to the financial statements are an integral part of this statement. 20 State of Georgia Combined Statement of Cash Flows All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units For the Fiscal Year Ended June 30, 1998 Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash Provided by (Used in) Operating Activities: Depreciation/Amortization Interest and Other Investment Income Other Changes in Assets and Liabilities: Increase in Intergovernmental Receivables Increase in Interest and Dividends Receivable Increase in Notes and Loans Receivable Decrease (Increase) in Other Receivables Decrease in Due from Other Funds Increase in Due from Primary Government Increase in Due from Component Units Decrease in Inventories Decrease (Increase) in Prepaid Items Decrease in Other Assets Increase (Decrease) in Accounts Payable and Other Accruals Increase in Compensated Absences Payable Increase in Claims and Judgments Payable Increase (Decrease) in Contracts Payable Decrease in Salaries/Withholdings Payable Increase in Benefits Payable Increase in Due to Other Funds Increase in Due to Primary Government Increase in Due to Component Units Increase in Deferred Revenue Decrease in Funds Held for Others Decrease in Other Liabilities Increase (Decrease) in Deposits and Overpayments Increase in Grand Prizes Payable Total Adjustments Primary Government Fiduciary Proprietary Fund Types Fund Type Internal Nonexpendable Enterprise Service Trust Totals - (Memorandum Only) Primary Government Totals - (Memorandum Component Units Only) Proprietary Reporting Fund Types Entity $ (34,146,062) $ 23,185,827 $ 5,653 $ (10,954,582) $ 543,687,677 $ 532,733,095 $ $ 1,309,224 $ (13,614,428) (145,271,963) (2,707,381) (1,349,172) 84,269 (184,807) 11,561,539 1,396,522 55,534 13,832,580 50,589 (102,675) (22,928) (3,180,875) 332,098 98,796,655 5,449,562 (79,794) 319,350 143 6,384 1,182,739 $ (4,813,458) $ (27,323,377) $ $ 1,309,224 $ 36,318,512 $ 37,627,736 (12,917) (158,899,308) 57,242,065 (101,657,243) 0 (38,043,891) (38,043,891) 0 0 0 (2,651,847) 13,832,580 0 50,589 (102,675) (22,928) 0 (4,530,047) 416,367 98,796,655 5,264,755 (79,794) 11,561,539 319,350 0 143 1,402,906 0 0 1,182,739 0 (2,518,671) (1,367,878) (51,180,079) 9,947,439 (71) 476,213 1,209,943 5,256,224 334,264 267,213 (347,551) (218,934) 45,454 736,463 (6,859) (118,997) (550,295) 62,432,000 (2,518,671) (1,367,878) (51,180,079) 7,295,592 13,832,580 (71) 50,589 373,538 1,187,015 5,256,224 (4,195,783) 683,580 98,796,655 4,917,204 (298,728) 11,561,539 319,350 45,454 143 2,139,369 (6,859) (118,997) 632,444 62,432,000 (12,917) $ (32,149,752) $ 79,912,564 $ 47,762,812 Net Cash Provided by (Used in) Operating Activities $ (38,959,520) $ (4,137,550) $ (7,264) $ (43,104,334) $ 623,600,241 $ 580,495,907 Noncash Investing, Capital, and Financing Activities: Acquisition of Fixed Assets through Capital Leases Disposal of Fixed Assets Donation of Fixed Assets Interest Earned on Grand Prize Investments and Grand Prizes Payable Purchase of Building on Account Refunding Bond Proceeds Deposited Directly into Escrow Account Write off of Fixed Assets $ $ 10,520,820 $ (6,870) (2,395,749) (10,336,230) $ (6,870) $ (12,731,979) $ $ 10,520,820 $ $ 10,520,820 (2,402,619) (693,638) (3,096,257) 0 1,777,741 1,777,741 0 20,839,000 20,839,000 0 46,403 46,403 0 (10,336,230) 90,526,229 90,526,229 (10,336,230) 0 $ (12,738,849) $ 112,495,735 $ 99,756,886 The notes to the financial statements are an integral part of this statement. 21 State of Georgia Statements of Plan Net Assets Pension Trust Funds, Investment Trust Fund and Discretely Presented Component Units June 30, 1998 Assets Cash and Cash Equivalents Investments Receivables (Net of Allowances for Uncollectibles) Interest and Dividends Other Prepaid Items Fixed Assets (Net, Where Applicable, of Accumulated Depreciation) Total Assets Liabilities Cash Overdraft Accounts Payable and Other Accruals Salaries/Withholdings Payable Due to Other Funds Due to Primary Government Total Liabilities Defined Contribution Plan District Attorneys Retirement Fund District Attorneys Retirement System Primary Government Employees' Retirement System Legislative Retirement System Superior Court Judges Retirement Fund Superior Court Judges Retirement System Trial Judges and Solicitors Retirement Fund $ 70,000 $ 25,888,000 3,000 $ 17,000 $ $ 31,001,000 11,275,768,772 82,854 $ 26,386,820 60,000 $ $ 1,547,000 114,701,000 87,000 55,800,000 227,000 982,000 47,000 93,182,000 5,467,799 15,906 326 1,000 187,000 251,000 $ 27,167,000 $ 3,000 $ 31,065,000 $ 11,374,434,477 $ 26,470,000 $ 1,608,000 $ 114,888,000 $ 56,138,000 $ $ 2,000 $ 2,000 $ $ 3,000 3,000 $ $ 6,000 2,152,641 $ 6,232,428 23,629 632,673 6,000 $ 9,041,371 $ $ 13,000 26,000 39,000 $ $ 36,000 153,000 $ 45,000 36,000 $ 198,000 $ $ 7,000 7,000 Fund Balances Reserved for Pension Benefits and Investment Trust Fund $ 27,165,000 $ (Schedules of funding progress are presented on pages 91 and 93) 0 $ 31,059,000 $ 11,365,393,106 $ 26,431,000 $ 1,572,000 $ 114,690,000 $ 56,131,000 The notes to the financial statements are an integral part of this statement. 22 Investment Trust Fund Total Primary Government Firefighters' Pension Fund Judges of the Probate Courts Retirement Fund Component Units - Fiduciary Fund Types Public School Peace Officers' Employees Sheriffs' Annuity and Benefit Fund Retirement System Retirement Fund Superior Court Clerks' Retirement Fund Teachers Retirement System Total Component Units $ $ 319,854 $ $ 2,834,115,490 14,365,208,082 308,339,127 28,224 $ 3,389,458 $ $ 35,543,811 242,328,596 702,149,000 $ 38,813,522 52,760 $ $ 3,470,442 34,421,652 34,444,586,000 35,806,181,708 93,409,000 6,936,125 15,906 0 $ 2,834,115,490 $ 14,465,888,967 $ 2,313,832 267,407 310,920,366 $ 325,490 2,017,814 6,000 291,749 606 433,794 35,898,131 $ 248,169,662 $ 702,155,000 $ 20,620 39,125,891 $ 245,932,000 180,370,720 42,175 250,880,885 180,376,720 42,175 19,207 741,634 34,493,619 $ 34,870,930,895 $ 36,241,693,564 $ 174,669,398 $ $ 174,669,398 $ 176,975,039 $ 6,344,428 23,629 658,673 0 184,001,769 $ 394 $ 394 $ $ 1,279 1,279 $ $ 4,393 38,000 $ 267,000 4,393 $ 305,000 $ 9,130 $ 9,130 $ $ 65,282 $ 1,987,730 62,762 39,946 0 $ 2,155,720 $ 112,806 2,254,730 68,434 0 39,946 2,475,916 $ 2,659,446,092 $ 14,281,887,198 $ 310,919,972 $ 35,896,852 $ 248,165,269 $ 701,850,000 $ 39,116,761 $ 34,493,619 $ 34,868,775,175 $ 36,239,217,648 23 State of Georgia Statements of Changes in Plan Net Assets Pension Trust Funds, Investment Trust Fund and Discretely Presented Component Units For the Fiscal Year Ended June 30, 1998 Additions: Contributions Employer and Employee Fines and Forfeits Fines and Bond Forfeitures Interest and Other Investment Income Dividends and Interest Net Appreciation in Fair Value of Investments Less: Investment Expense Net Gain on Disposal of Investment Securities Pool Participant Deposits Sales and Services Civil Cases Marriage License Fees Real Estate Recording Fees Taxes Insurance Companies Other Miscellaneous Total Additions Deductions: General and Administrative Expenses Benefits Pool Participant Withdrawals Refunds Total Deductions Net Increase Before Operating Transfers Operating Transfers: Transfers from Primary Government Transfers to Primary Government Net Operating Transfers Net Increase Defined Contribution Plan District Attorneys Retirement Fund District Attorneys Retirement System Employees' Retirement System Primary Government Superior Legislative Court Judges Retirement Retirement System Fund Superior Court Judges Retirement System Trial Judges and Solicitors Retirement Fund $ 10,473,000 $ 179,000 $ 574,000 $ 341,623,000 $ 406,000 $ 1,893,000 $ 2,223,000 $ 1,670,000 1,153,904 2,159,680 (11,584) 978,750 4,668,750 (22,500) 366,261,980 1,747,350,100 (8,824,080) 743,676 3,547,420 (17,096) 50,112 239,040 (1,152) 3,732,300 17,803,500 (85,800) 1,835,178 8,754,010 (42,188) $ 13,775,000 $ 179,000 $ 6,199,000 $ 2,446,411,000 $ 4,680,000 $ 2,181,000 $ 23,673,000 $ 12,217,000 $ 245,000 $ 7,939,000 $ 8,184,000 $ $ 5,591,000 $ $ 179,000 179,000 $ 0 $ $ 3,760,108 $ 380,000 357,434,000 23,000 10,221,000 403,000 $ 371,415,108 $ 5,796,000 $ 2,074,995,892 $ $ 977,000 18,000 995,000 $ 3,685,000 $ $ 1,877,000 $ 2,437,000 $ 591,000 253,000 11,000 1,877,000 $ 2,690,000 $ 602,000 304,000 $ 20,983,000 $ 11,615,000 $ $ $ $ $ $ $ $ $ $ $ $ 5,591,000 $ $ $ $ $ 0 $ 5,796,000 $ 2,074,995,892 $ 3,685,000 $ $ $ $ 304,000 $ 20,983,000 $ 11,615,000 Fund Balances Reserved for Pension Benefits, July 1 Adjustments Change in Accounting Principle 21,574,000 0 25,263,000 9,290,397,214 22,746,000 1,268,000 93,707,000 44,516,000 Fund Balances Reserved for Pension Benefits and Investment Trust Fund, June 30 $ 27,165,000 $ 0 $ 31,059,000 $ 11,365,393,106 $ 26,431,000 $ 1,572,000 $ 114,690,000 $ 56,131,000 The notes to the financial statements are an integral part of this statement. 24 Investment Trust Fund Total Primary Government Firefighters' Pension Fund Judges of the Probate Courts Retirement Fund Component Units - Fiduciary Fund Types Public School Peace Officers' Employees Sheriffs' Annuity and Retirement Retirement Benefit Fund System Fund Superior Court Clerks' Retirement Fund Teachers Retirement System Total Component Units $ $ 359,041,000 $ 0 136,169,868 (1,231,885) 3,805,624,218 510,925,768 1,784,522,500 (10,236,285) 0 3,805,624,218 0 0 0 0 0 $ 3,940,562,201 $ 6,449,877,201 $ 1,446,610 $ 13,302,641 32,756,216 11,476,882 139,729 59,122,078 $ 191,961 $ 442,596 1,839,103 3,363,763 1,118,559 $ 16,274,000 $ 12,591,469 11,658,921 14,511,655 23,099,022 110,184,990 (531,012) 99,897 $ 2,074,867 1,527,419 5,439,715 128,195 8,232 5,973,850 $ 125,736 40,006,340 $ 149,027,000 $ 9,141,898 $ 82,682 $ 1,012,696,008 $ 1,031,909,717 608,956 15,717,888 2,104,104 1,104,247,000 5,483,218,000 (25,734,000) 1,157,778,210 5,593,402,990 (26,265,012) 56,071,349 0 290,579 1,244,726 290,579 128,195 1,244,726 11,476,882 273,697 4,331,047 $ 7,574,427,008 $ 7,842,029,221 $ $ 3,391,131,132 4,005,108 $ 363,875,000 3,391,131,132 18,465,000 $ 3,391,131,132 $ 3,777,476,240 $ $ 549,431,069 $ 2,672,400,961 $ 1,562,456 $ 10,869,240 167,688 12,599,384 $ 46,522,694 $ 128,864 $ 1,068,532 1,197,396 $ 4,776,454 $ 1,134,560 $ 575,000 $ 9,820,201 24,537,000 96,481 364,000 11,051,242 $ 25,476,000 $ 28,955,098 $ 123,551,000 $ 387,048 $ 2,106,295 2,493,343 $ 6,648,555 $ 79,547 $ 2,055,696 24,750 6,634,475 $ 780,582,000 42,098,000 10,501,950 831,038,964 0 42,750,919 2,159,993 $ 829,314,475 $ 884,291,833 2,171,054 $ 6,745,112,533 $ 6,957,737,388 $ $ 0 $ 0 $ $ 0 $ $ 549,431,069 $ 2,672,400,961 $ $ $ 46,522,694 $ $ $ $ $ $ 4,776,454 $ $ $ 28,955,098 $ 123,551,000 $ $ 6,648,555 $ $ 3,644,000 $ 3,644,000 (179,008) (179,008) $ 3,464,992 $ 3,464,992 2,171,054 $ 6,748,577,525 $ 6,961,202,380 0 2,110,015,023 9,499,471,214 2,110,015,023 264,397,278 31,120,398 219,210,171 578,299,000 32,468,206 32,322,565 28,120,197,650 29,278,015,268 0 $ 2,659,446,092 $ 14,281,887,198 $ 310,919,972 $ 35,896,852 $ 248,165,269 $ 701,850,000 $ 39,116,761 $ 34,493,619 $ 34,868,775,175 $ 36,239,217,648 25 State of Georgia Combined Statement of Changes in Fund Balances College and University Funds For the Fiscal Year Ended June 30, 1998 Revenues and Other Additions: Unrestricted Revenues Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants and Contracts Investment Income Endowment Other Sales and Services Net Gain/(Loss) on Investments Interest on Loans Receivable Expended for Plant Facilities Current Funds Plant Funds Unexpended Renewals and Replacements Georgia State Financing and Investment Commission Other Additions (Net) Insurance Recoveries Other Recovery of Prior Year's Cancelled Loans and Collection Costs Total Revenues and Other Additions Expenditures and Other Deductions: Education and General Expenditures Auxiliary Enterprises Expenditures Hospital Expenditures Indirect Cost Recoveries Loans Assigned to Federal Government Loan Cancellations and Write-offs Administrative and Collection Costs Expended for Plant Facilities Capitalized Non-Capitalized Other Deductions (Net) Disposals/Deletions/Adjustments Total Expenditures and Other Deductions Current Funds Unrestricted Restricted Loan Funds $ 1,133,372,899 $ $ 648,291,341 247,659,991 6,097,377 153,543,228 9,006,016 77,125 5,109,504 $ 136,277 3,387 180,823 828,883 942,634 2,762,120 146,784 $ 1,136,135,019 $ 1,069,931,366 $ 143,194 2,235,198 $ 2,185,798,986 $ 173,763,185 190,986,076 917,433,912 $ 76,720,453 58,432,729 93,992 $ 61,417 621,571 172,754 176,139 $ 2,550,548,247 $ 1,052,681,086 $ 1,031,881 The notes to the financial statements are an integral part of this statement. 26 Endowment and Similar Funds Unexpended Plant Funds Renewals and Replacements Investment in Plant Total (Memorandum Only) $ $ $ 7,599,657 10,457,258 1,044,029 9,727,268 21,836 15,241,544 13,398 14,838,207 4,399,556 2,082,959 $ 15,917,470 $ 49,508,242 $ $ $ 1,133,372,899 656,027,275 258,117,249 6,100,764 17,164,125 181,659,473 606,894 9,027,852 16,754,446 5,109,504 13,398 942,634 182,464,434 182,464,434 156,404,105 9,956,482 120,647,308 156,404,105 9,956,482 120,647,308 56,009 4,399,556 19,886,079 143,194 662,903 $ 486,636,454 $ 2,761,026,652 $ $ $ $ $ 3,103,232,898 173,763,185 267,706,529 58,432,729 61,417 621,571 58,360 325,106 156,404,105 13,459,410 9,956,481 3,197,137 93,612,906 166,360,586 16,656,547 176,139 93,612,906 $ 0 $ 169,921,875 $ 13,153,618 $ 93,612,906 $ 3,880,949,613 (continued) 27 State of Georgia Combined Statement of Changes in Fund Balances College and University Funds (continued) For the Fiscal Year Ended June 30, 1998 Transfers Between Funds, Net In (Out) Mandatory Nonmandatory Total Transfers Between Funds Operating Transfers: Transfers In Transfers Out Transfers to Component Units Total Operating Transfers Net Increase (Decrease) in Fund Balances Fund Balances, July 1 Adjustments Change in Accounting Principle Transfer of Equity Fund Balances, June 30 Current Funds Unrestricted Restricted Loan Funds $ (1,500,000) $ (36,373,817) $ (37,873,817) $ (519,664) $ (1,255,670) (1,775,334) $ (62,151) 48,520 (13,631) $ 1,450,720,478 $ (3,340,352) (18,915,057) $ 1,428,465,069 $ $ (23,821,976) $ 123,914,009 256,446 400,296 $ $ 0 $ 15,474,946 $ 55,262,001 1,738,172 (400,296) 0 1,189,686 59,452,142 289,846 $ 100,748,775 $ 72,074,823 $ 60,931,674 The notes to the financial statements are an integral part of this statement. 28 Endowment and Similar Funds Unexpended Plant Funds Renewals and Replacements Investment in Plant Total (Memorandum Only) $ 2,081,815 $ $ $ (490,706) 24,840,455 13,231,218 $ 0 0 $ 1,591,109 $ 24,840,455 $ 13,231,218 $ 0 $ 0 $ $ 72,796,332 $ 414,887 $ $ 1,523,931,697 1,155,038 (2,185,314) (18,915,057) $ 0 $ 73,951,370 $ 414,887 $ 0 $ 1,502,831,326 $ 17,508,579 $ (21,621,808) $ 1,155,390 $ 393,023,548 $ 382,908,365 81,739,275 38,673,908 32,989,759 4,223,590,203 4,615,621,297 19,713,172 (35,588) (2,023) 21,960,025 0 $ 118,961,026 $ 17,016,512 $ 34,143,126 $ 4,616,613,751 $ 5,020,489,687 29 State of Georgia Combined Statement of Current Funds Revenues, Expenditures and Other Changes College and University Funds For the Fiscal Year Ended June 30, 1998 Current Funds Unrestricted Restricted Total (Memorandum Only) Revenues: Tuition and Fees Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants and Contracts Investment Income Sales and Services of Educational Departments Sales and Services of Auxiliary Enterprises Sales and Services of Hospital Other Sources $ 535,016,387 $ $ 535,016,387 60,836,464 595,982,597 656,819,061 4,124,614 240,403,502 244,528,116 352,199 5,645,646 5,997,845 7,148,232 144,147,533 151,295,765 106,734 3,185,219 3,291,953 53,289,656 4,018,332 57,307,988 174,807,488 174,807,488 209,989,684 209,989,684 87,701,441 87,701,441 Total Revenues $ 1,133,372,899 $ 993,382,829 $ 2,126,755,728 Expenditures and Mandatory Transfers: Education and General Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Student Housing Faculty and Staff Housing Food Services Stores and Shops Intercollegiate Athletics Other Service Units Hospital Expenditures Medical College of Georgia Hospital Georgia Correctional Health Care Georgia War Veterans Nursing Home Mandatory Transfers, Net (In) Out $ 866,307,641 $ 87,458,437 $ 953,766,078 222,730,421 239,017,794 461,748,215 137,128,657 65,036,126 202,164,783 220,102,200 7,988,039 228,090,239 114,009,303 4,109,712 118,119,015 338,401,192 24,872,679 363,273,871 207,012,615 1,368,136 208,380,751 80,106,957 487,582,989 567,689,946 54,661,035 178,505 35,185,199 16,226,677 28,466,207 39,045,562 54,661,035 178,505 35,185,199 16,226,677 28,466,207 39,045,562 190,986,076 1,500,000 69,206,541 7,513,912 519,664 190,986,076 69,206,541 7,513,912 2,019,664 Total Expenditures and Mandatory Transfers $ 2,552,048,247 $ 994,674,029 $ 3,546,722,276 Other Transfers and Additions (Deductions): Excess of Restricted Receipts over Transfers to Revenues Nonmandatory Transfers, Net In (Out) Other Additions (Deductions), Net Operating Transfers Transfers In Transfers Out Transfers to Component Units $ $ (36,373,817) 2,762,120 1,450,720,478 (3,340,352) (18,915,057) 17,969,024 $ (1,255,670) 52,792 17,969,024 (37,629,487) 2,814,912 1,450,720,478 (3,340,352) (18,915,057) Total Other Transfers and Additions (Deductions) $ 1,394,853,372 $ 16,766,146 $ 1,411,619,518 Net Increase in Fund Balances The notes to the financial statements are an integral part of this statement. 30 $ (23,821,976) $ 15,474,946 $ (8,347,030) State of Georgia Notes to the Financial Statements Index Page Note 1 Summary of Significant Accounting Policies ................................................................................... 32 Note 2 Other Accounting Disclosures ....................................................................................................... 44 Note 3 Budgetary Accounting .................................................................................................................. 45 Note 4 Deposits and Investments ............................................................................................................. 48 Note 5 Receivables ................................................................................................................................. 55 Note 6 Fixed Assets................................................................................................................................ 57 Note 7 Risk Management ........................................................................................................................ 59 Note 8 Construction and Other Significant Commitments............................................................................ 60 Note 9 Operating Leases ......................................................................................................................... 60 Note 10 Capital Leases and Installment Purchases........................................................................................ 62 Note 11 Long-Term Debt.......................................................................................................................... 63 Note 12 Interfund Balances ....................................................................................................................... 68 Note 13 Contributed Capital....................................................................................................................... 70 Note 14 Contingencies .............................................................................................................................. 71 Note 15 Subsequent Events....................................................................................................................... 73 Note 16 Deferred Compensation Plan ......................................................................................................... 73 Note 17 Retirement Systems ..................................................................................................................... 74 Note 18 Nonmonetary Transactions ........................................................................................................... 81 Note 19 Postemployment Benefits.............................................................................................................. 82 Note 20 Fund Deficits .............................................................................................................................. 82 Note 21 Major Discretely Presented Component Unit Condensed Financial Statements..................................... 83 31 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies With the exception of the departures from generally accepted accounting principles (GAAP) disclosed in the following paragraphs, the financial statements of the State of Georgia have been prepared in conformity with GAAP as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The financial statements of the College and University Funds have been prepared in conformity with GAAP as promulgated by the provisions of the American Institute of Certified Public Accountants' "Industry Audit Guide - Audits of Colleges and Universities." The more significant of the State's accounting policies are described below: A. Reporting Entity In evaluating how to define the government for financial reporting purposes, management has considered both the organizations which compose the primary government and potential component units. The primary government consists of all the organizations that compose the legal entity of the State of Georgia. All agencies, departments, authorities, commissions, courts, councils, boards, universities, colleges, retirement funds, associations and other funds that are not legally separate are, for financial reporting purposes, considered part of the primary government. In addition, included within the primary government are organizations which are legally separate but so intertwined with the primary government that they are, in substance, part of the primary government. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in Section 2100 of the GASB Codification of Governmental Accounting and Financial Reporting Standards. This Section defines a component unit as a legally separate organization for which the primary government is financially accountable and other organizations for which the primary government is not accountable, but for which the nature and the significance of the relationship with the primary government are such that exclusion would cause the financial statements to be misleading or incomplete. Financial accountability is the ability to appoint a voting majority of an organization's governing board and to impose will upon the organization or to have exist the potential for the organization to provide specific financial benefits or impose specific financial burdens on the primary government. In addition, organizations which are fiscally dependent upon the primary government were considered as potential component units. As required by GAAP, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations and therefore data from these units are combined with that of the primary government. The blended component units are as follows: GeorgiaNet Authority (Special Revenue Fund) is an instrumentality of the State of Georgia and a public corporation. The authority is responsible for the centralized marketing of certain information maintained in electronic format to the public. Three of the five members of the Board are appointed by the Governor. Any funds in excess of those needed for the corporate purposes of the authority are required to be transferred to the General Fund. Georgia Building Authority (Hospital) (Capital Projects Fund) is a body corporate and politic. The authority is responsible for the construction and management of hospitals, health care facilities, dormitories and housing accommodations for the use of patients, officers and employees under the control of any State agency. The Board consists of four State officials designated by statute and one member appointed by the Governor. Georgia Building Authority (Markets) (Capital Projects Fund) is a body corporate and politic. The authority is responsible for the construction and management of farmers' markets. The Board consists of four State officials designated by statute and one member appointed by the Governor. Georgia Building Authority (Penal) (Capital Projects Fund) is a body corporate and politic. The authority was created for the purpose of constructing and managing penal institutions, penitentiaries, prisons and prison institutes, detention and corrections institutions, rehabilitation facilities and county correctional institutions. The Board consists of four State officials designated by statute and one member appointed by the Governor. 32 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) Georgia Education Authority (University) (Capital Projects Fund) is a body corporate and politic. The authority is charged with the overall responsibility of the construction and management of housing accommodations, classrooms, laboratories, libraries, dormitories and instructional, administrative and recreational facilities for students, faculty, officers and employees of any institution under control of the Board of Regents. The Board consists of five State officials designated by statute and one member appointed by the Governor. Georgia Building Authority (Internal Service Fund) is a body corporate and politic. The purpose of this authority is to construct and manage buildings and facilities intended for use as office space, public parks and public parking facilities, the executive mansion and laboratories. The Board consists of four State officials designated by statute and one member appointed by the Governor. Georgia Correctional Industries Administration (Internal Service Fund) is a public corporation which utilizes inmates in the manufacturing of products for sale to State agencies and others. The Governor appoints one Board member from each congressional district in the State, as well as appointing five additional members from the State at large. Employees' Retirement System of Georgia (Pension Trust Fund) is a single-employer, public employee retirement system established to provide benefits for employees of the State. The system is governed by a seven member Board of Trustees, three of which are State officials designated by statute, and one of which is appointed by the Governor. The system administers seven blended defined benefit pension plans: the Employees' Retirement System Fund, the District Attorneys' Retirement Fund, the District Attorneys' Retirement System, the Legislative Retirement System, the Superior Court Judges Retirement Fund, the Superior Court Judges Retirement System, and the Trial Judges and Solicitors Retirement Fund. The State provides a substantial amount of funding for these retirement systems in the form of employer contributions and administrative expenses. Georgia Military College (College and University Funds) is a body corporate and politic. This institution is dedicated to providing a high-quality military education to the youth of the State. The Board consists of the mayor of the City of Milledgeville, and one trustee elected from each of the six municipal voting districts of the City of Milledgeville, as required by statute. Discrete presentation entails reporting component unit financial data in columns separate from the financial data of the primary government. The discretely presented component units are as follows: Georgia Education Authority (Schools) (Governmental Fund Type) is a body corporate and politic. The authority is responsible for the construction of buildings and facilities intended for use as school buildings, classrooms, laboratories, libraries and instructional, administrative and recreational facilities for students, faculty, officers and employees of any institution under control of a county or city board of education or governing body of any independent district or system. The Board consists of six State officials designated by statute and one member appointed by the Governor. Georgia Public Telecommunications Commission (Governmental Fund Type) is a body corporate and politic. This commission is a public charitable organization created for the purpose of providing educational, instructional and public broadcasting services to citizens of Georgia. The budget of the commission must be approved by the State. The Board consists of three State officials designated by statute and six members appointed by the Governor. Georgia Agricultural Exposition Authority (Proprietary Fund Type) is a body corporate and politic. This authority is responsible for provision of a facility for the agricultural community, for public events, exhibits and other activities and for promotion and staging of a statewide fair. The nine Board members are appointed by the Governor. Georgia Agrirama Development Authority (Proprietary Fund Type) is a body corporate and politic. The purpose of this authority is to utilize all funds for the purpose of beautifying, improving, developing, maintaining, administering, managing and promoting an agricultural museum in or around Tifton, Georgia; this museum is designated as the State Museum of Agriculture. Of the fourteen members of the Board, four are State officials designated by statute and seven members are appointed by the Governor. Georgia Development Authority (Proprietary Fund Type) is a body corporate and politic. The authority was created to assist agricultural and industrial interests by providing credit and servicing functions to better enable farmers and businessmen to obtain needed capital funds. The Board consists of three State officials designated by statute and four members appointed by the Governor. Georgia Environmental Facilities Authority (Proprietary Fund Type) is a body corporate and politic. The authority 33 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) provides assistance to local governments in constructing, extending, rehabilitating, repairing, replacing and renewing environmental facilities by providing financial and technical assistance. The Board consists of three State officials designated by statute and eight members appointed by the Governor. Georgia Higher Education Assistance Corporation (Proprietary Fund Type) is a public authority, body corporate and politic. The corporation was created to improve the higher educational opportunities of eligible students by guaranteeing educational loan credit to students and to parents of students. The corporation is governed by the Board of Commissioners of the Georgia Student Finance Commission. The Board consists of five State officials designated by statute and eleven members appointed by the Governor. Georgia Highway Authority (Proprietary Fund Type) is a body corporate and politic. This authority was created to build, rebuild, relocate, construct, reconstruct, surface, resurface, layout, grade, repair, improve, widen, straighten, operate, own, maintain, lease and manage roads, bridges and approaches. The Board consists of three State officials designated by statute. Georgia Housing and Finance Authority (Proprietary Fund Type) is a body corporate and politic. The authority is responsible for facilitating housing and housing finance, and financing for health facilities and health care services throughout the State. The Board consists of two State officials designated by statute and ten members appointed by the Governor. Georgia International and Maritime Trade Center Authority (Proprietary Fund Type) is a body corporate and politic. The authority was created to develop and promote the growth of the State's import and export markets through its ports and other transportation modes. The Board consists of twelve members, eight of whom are appointed by State officials. Georgia Lottery Corporation (Proprietary Fund Type) is a public body, corporate and politic. The corporation operates lottery games to provide continuing entertainment to the public and maximize revenues, the net proceeds of which are utilized to support improvements and enhancements for educational purposes. The corporation is governed by a board of directors composed of seven members, all of which are appointed by the Governor. The State is legally entitled to residual resources of the corporation. Georgia Music Hall of Fame Authority (Proprietary Fund Type) is a body corporate and politic whose purpose is to construct, operate and maintain the Music Hall of Fame, as well as promoting music events at the facility and throughout the State. All nine members of the Board are appointed by the Governor. Georgia Ports Authority (Proprietary Fund Type) is a body corporate and politic. The purpose of the authority is to develop and improve the harbors or seaports of the State for the handling of waterborne commerce and to acquire, construct, equip, maintain, develop and improve said harbors, seaports and their facilities. The Board consists of nine members, all of which are appointed by the Governor. Georgia Rail Passenger Authority (Proprietary Fund Type) is a body corporate and politic. This authority is responsible for construction, financing, operation and development of rail passenger service and other public transportation projects. The Board includes one member appointed by the Governor from each congressional district, as well as two appointed members from the State at large. Georgia Seed Development Commission (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State whose purpose is to purchase, process, and resell breeders' and foundation seeds. The commission consists of ten members who are accountable as trustees. Of the ten members serving on the Board, six members are State officials or are appointed by State officials. Georgia Student Finance Authority (Governmental Fund Type) is a body corporate and politic. This authority was created for the purpose of improving higher educational opportunities by providing educational scholarship, grant and loan assistance. A substantial amount of funding is provided to the authority by the State. The Board consists of fifteen members, four of whom are State officials and the remaining eleven are appointed by the Governor. Geo. L. Smith II Georgia World Congress Center Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State. The authority is responsible for acquiring, constructing, equipping, maintaining and operating the World Congress Center to promote trade shows, conventions and political, musical, educational, entertainment, recreational, athletic or other events. The eleven members of the Board are appointed by the Governor. 34 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) Georgia Sports Hall of Fame Authority (Proprietary Fund Type) is a body corporate and politic. This authority was created to construct and maintain a facility to house the Georgia Sports Hall of Fame to honor those who have made outstanding and lasting contributions to sports and athletics, and to operate, advertise and promote the Sports Hall of Fame. The sixteen members of the Board are appointed by State officials. The issuance of bonds must be approved by the Georgia State Financing and Investment Commission. Jekyll Island State Park Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State. The authority was created to operate and manage resort recreational facilities on Jekyll Island. The Board consists of one State official designated by statute and eight members appointed by the Governor. Lake Lanier Islands Development Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State. The purpose of the authority is to manage, preserve and protect projects on Lake Lanier Islands. The Board consists of one State official designated by statute and eight members appointed by the Governor. North Georgia Mountains Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State responsible for the construction and management of recreation, accommodation and tourist facilities and services. The nine members of the Board are appointed by the Governor. Stone Mountain Memorial Association (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State. The authority is responsible for the preservation and protection of Stone Mountain as a Confederate memorial and public recreational area. The Board consists of one State official designated by statute and eight members appointed by the Governor. Superior Court Clerks' Cooperative Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State created to provide a cooperative for the development, acquisition and distribution of record management systems, information, services, supplies and materials for superior court clerks of the State. Of the seven members of the Board, three are appointed by the Governor. The nature of this organization is such that it would be misleading to exclude it from the reporting entity. Georgia Firefighters' Pension Fund (Fiduciary Fund Type) is a multiple-employer, defined benefit pension plan established for the purpose of paying retirement, death and disability benefits to the firemen of the State of Georgia. The Board of Trustees consists of two State officials designated by statute and three members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute. Judges of the Probate Courts Retirement Fund of Georgia (Fiduciary Fund Type) is a multiple-employer, defined benefit pension plan established for the purpose of paying retirement, death and disability benefits to the judges of the Probate Courts of the State of Georgia. The Board consists of one State official designated by statute and six members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute. Sapelo Island Heritage Authority (Proprietary Fund Type) is a body corporate and politic. The purpose of the authority is the preservation of the cultural and historic values of Hog Hammock Community located on Greater Sapelo Island. The three members serving on the Board are State officials. The State has assumed the obligation to provide financial support for real property acquisition. State Tollway Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State. The authority was created to construct, operate and manage a system of roads, bridges and tunnels and facilities related thereto. The three Board members are State officials; therefore, the State can impose its will on the authority. Peace Officers' Annuity and Benefit Fund of Georgia (Fiduciary Fund Type) is a multiple-employer, defined benefit pension plan established for the purpose of paying retirement, death and disability benefits to the peace officers of the State of Georgia. The Board of Commissioners of the Annuity and Benefit Fund consists of two State officials designated by statute and four members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute. Public School Employees Retirement System (Fiduciary Fund Type) is a single-employer, defined benefit pension plan established for the purpose of providing retirement 35 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. This retirement fund is administered by the Employees' Retirement System Board of Trustees and two other Governor's appointees not on the Employees' Retirement System Board. Sheriffs' Retirement Fund of Georgia (Fiduciary Fund Type) is a multiple-employer, defined benefit pension plan established for the purpose of paying retirement, death and disability benefits to the sheriffs of the State of Georgia. The Board consists of one State official designated by statute and five members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute. Superior Court Clerks' Retirement Fund of Georgia (Fiduciary Fund Type) is a multiple-employer, defined benefit pension plan established for the purpose of paying retirement, death and disability benefits to the Superior Court Clerks of the State of Georgia. The Board consists of one State official designated by statute and six members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute. Teachers Retirement System of Georgia (Fiduciary Fund Type) is a cost-sharing multiple-employer plan created by an act of the Georgia General Assembly to provide retirement, service, disability and survivors' benefits for qualifying teachers. The Board of Trustees is comprised of ten members, eight of which are State officials or are appointed by State officials. The State provides a substantial amount of funding to this retirement system in the form of employer contributions. B. Fund Accounting The State of Georgia uses funds and account groups to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. Primary Government - The financial statements of the primary government are divided into four fund categories (further divided by fund type) and two account groups, all of which are described below. The four fund categories include governmental, proprietary, fiduciary and college and university funds. The two account groups presented are the general fixed assets account group and the general long-term debt account group. Governmental Fund Types are used to account for all or most of a state's general activities. Governmental fund types include: General Fund - The General Fund is used to account for all financial transactions not required to be accounted for in another fund. These transactions relate to resources obtained and used for services traditionally provided by a state government. Special Revenue Funds - Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for specified purposes. The primary government special revenue fund is the GeorgiaNet Authority. The GeorgiaNet Authority is responsible for centralized marketing, sales, leasing and licensing of certain public information. Debt Service Funds - Debt Service Funds are used to account for the payment of principal and interest on general long-term debt. The primary government debt service fund is the General Obligation Debt Sinking Fund, which is administered by the Office of Treasury and Fiscal Services. The Debt Sinking Fund is responsible for the accumulation of resources for the payment of principal and interest on general obligation bonds. Capital Projects Funds - Capital Projects Funds are used to account for the acquisition or construction of capital facilities. Proprietary Fund Types are used to account for activities similar to those found in the private sector, where cost recovery and the determination of net income is necessary or useful for sound financial administration. 36 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) Enterprise Funds - Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. The primary government enterprise fund is the State Employees' Health Benefit Plan, which is administered by the State Personnel Board, Merit System of Personnel Administration. The State Employees' Health Benefit Plan is a self-insured program of health benefits for the employees of units of government of the State of Georgia, units of county government and local education agencies located within the State of Georgia. Internal Service Funds - Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other State departments or agencies, or to other governmental entities, on a cost-reimbursement basis. Fiduciary Fund Types are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the State. These fund types include: Expendable Trust Funds - Expendable Trust Funds are used to account for the activities of trusts in which both principal and income may be used for the purposes of the trust. Nonexpendable Trust Funds - Nonexpendable Trust Funds are used to account for the activities of trusts when the government is under an obligation to maintain the trust principal. Pension Trust Funds - Pension Trust Funds are used to account for State-administered retirement systems. Investment Trust Fund - Investment Trust Funds are used to account for the external portion of a government-sponsored investment pool. The primary government investment trust fund is Georgia Fund 1, which is administered by the Office of Treasury and Fiscal Services. Georgia Fund 1 was established to enable local governments to voluntarily invest any idle local moneys. Agency Funds - Agency Funds are used to account for assets that the State holds on behalf of others as their agent. College and University Funds are used to account for the operations of State colleges and universities in accordance with existing authoritative accounting and reporting principles applicable to government-operated colleges and universities. Accordingly, college and university funds are an aggregation of the following funds. Current Funds - Current Funds are used to account for current operating expenditures and related resources and include (1) unrestricted funds over which the college or university retains full control in achieving the institutions' purposes, and (2) restricted funds which may be utilized only in accordance with externally-restricted purposes. Loan Funds - Loan Funds are used to account for transactions of related resources obtained and used for loans to students. Endowment and Similar Funds - Endowment and Similar Funds are used to account for resources held by the institutions that must be administered in accordance with trust agreements. Plant Funds - Plant Funds are used to account for institutional property acquisition, renewal and replacement, debt retirement and investment. Agency Funds - Agency Funds are used to account for amounts held in custody for students, university-related organizations and others. Agency Funds are also used to account for the external portion of college and university fund-sponsored investment pools. The General Fixed Assets Account Group is used to account for all fixed assets acquired or constructed for use by the State, other than those accounted for in the proprietary, fiduciary, and college and university funds. The General Long-Term Debt Account Group is used to account for general obligation bonds outstanding, accrued annual and compensatory leave, capital lease obligations and other long-term liabilities not otherwise recorded in proprietary, fiduciary, and college and university funds. 37 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) Discretely Presented Component Units - The financial statements of the component units, other than the component units which financial statements were blended with the financial statements of the primary government due to their relationship with the primary government, are presented in separate columns. The three columns presented reflect financial activity for the following fund types: Governmental Fund Types are used to account for component unit general activities. Proprietary Fund Types are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful for sound financial management. Fiduciary Fund Types are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the State. The financial data presented in these columns are discretely presented with the balances and transactions for each component unit being aggregated within the component unit's predominant fund type. C. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. All proprietary funds, nonexpendable trust funds, pension trust funds and investment trust funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation of these funds are included on the balance sheet. Fund equity (i.e., net total assets) is segregated into contributed capital and retained earnings components. Proprietary fund type operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets. The modified accrual basis of accounting is used by all governmental fund types, expendable trust funds and agency funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Principal revenue sources which are susceptible to accrual include income taxes, sales and use taxes, federal grants and shared revenues. Revenues applicable to expendituredriven programs, however, may be accrued based on the unexecuted portion of contracts for goods and services. Expenditures are recorded when the related fund liability is incurred, as required by GAAP, with the exception of year-end encumbrances which are recorded as expenditures rather than as a reservation of fund balance. Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made early in the subsequent fiscal year. The accrual basis of accounting, as required by GAAP, is utilized by proprietary fund types, nonexpendable trust funds, pension trust funds and investment trust funds with the exception of the following individual pension trust funds which are reported essentially on the cash basis: Discretely Presented Component Units Fiduciary Fund Types Firefighters' Pension Fund Judges of the Probate Courts Retirement Fund Peace Officers' Annuity and Benefit Fund of Georgia Sheriffs' Retirement Fund of Georgia Superior Court Clerks' Retirement Fund of Georgia Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Depreciation of fixed assets has not been reported for all funds included within the proprietary fund types as required by GAAP. The College and University Funds are reported using the modified accrual basis of accounting (which is materially the same as the accrual basis of accounting applicable to colleges and universities), with the exception that contractual obligations for services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. As permitted by generally accepted accounting principles for colleges and universities, no depreciation is provided for the physical properties. 38 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) D. Budgets The annual budget of the State of Georgia is prepared on the modified accrual basis utilizing encumbrance accounting with the following exceptions: federal and certain other revenues are accrued based on the unexecuted portion of long-term contracts; and intrafund transactions are disclosed as revenue and expenditures. The budget represents departmental appropriations recommended by the Governor and adopted by the General Assembly prior to the beginning of the fiscal year. Annual appropriated budgets are adopted at the departmental level. The appropriated budget covers most governmental funds included in the State reporting entity but excludes the special revenue fund, capital projects funds and certain debt service funds which are not subject to appropriation. The budget includes certain proprietary funds, the college and university funds, and the administrative costs of operating certain public employee retirement systems. All unencumbered annual appropriations lapse at fiscal year end unless otherwise specified by constitutional or statutory provisions. Supplementary and amended appropriations may be enacted during the next legislative session by the same process used for original appropriations. Encumbrances are used to indicate the intent to purchase goods or services. Liabilities and expenditures are recorded upon issuance of completed purchase orders. Goods or services need not have been received for liabilities and expenditures to be recorded. Because the budgetary basis differs from GAAP, budget and actual amounts in the accompanying Statement of Funds Available and Expenditures Compared to Budget - Budget Fund are presented on the budgetary basis. A reconciliation of the excess of funds available over expenditures on the budgetary basis at June 30, 1998, to the excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses/net income (loss)/net increase in plan net assets/net increase (decrease) in fund balances - current funds presented in conformity with GAAP is set forth in Note 3. E. Deposits and Investments Cash and Cash Equivalents Cash and cash equivalents include currency on hand and demand deposits with banks and other financial institutions. Cash and cash equivalents also include short-term, highly liquid investments with maturity dates within three months of the date acquired, with the exception of the college and university funds, which report all time deposits as cash. Investments Investments are defined as those financial instruments with terms in excess of three months from the date of purchase and certain other securities held for the production of revenue. The investment policy of the State of Georgia is to maximize the protection of State funds on deposit while accruing an advantageous yield on those funds in excess of those required for current operating expenses (Official Code of Georgia Annotated [OCGA] 50-17-51). The State Depository Board may permit any department, board, bureau or other agency to invest funds collected directly by such organization in short term time deposit agreements, provided that the interest income of those funds is remitted to the Director of the Office of Treasury and Fiscal Services as revenues of the State of Georgia. As a matter of general practice, however, demand funds of any department, board, bureau or other agency in excess of current operating expenses are required to be deposited with the Director of the Office of Treasury and Fiscal Services for the purpose of pooled investment (OCGA 50-17-63). Such cash is managed in a pooled investment fund to maximize interest earnings. The pooled investment fund is also available on a voluntary basis to organizations outside of the State reporting entity. Authorized pool investments are limited to the following (OCGA 36-83-4 and 36-83-8): 1) Obligations of the State of Georgia or of other states; 2) Obligations issued by the United States government; 3) Obligations fully insured or guaranteed by the United States government or a United States government agency; 4) Obligations of any corporation of the United States government; 5) Prime banker's acceptances; 6) Repurchase agreements; and 7) Obligations of other political subdivisions of the State. Pooled cash and cash equivalents and investments are grouped into portfolios for investment purposes according to the operating needs of the State of Georgia and other pool contributors. The Primary Liquidity Portfolio is a stable net asset value investment pool which follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the Securities and Exchange Commission (SEC) as an investment company, but does operate in a 39 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal. Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participants' shares sold and redeemed at the pool's share price, $1.00 per share. The Extended Term Portfolio consist of repurchase agreements and certain U.S. Government Securities which include mortgage-backed securities such as collateralized mortgage obligations and adjustable rate mortgages. These mortgage-backed securities are reported as U.S. Government Securities in the disclosure of custodial credit risk (see Note 4). Investments in this portfolio are transacted by an external investment management firm under direction of an investment advisory agreement executed between the Office of Treasury and Fiscal Services and the investment management firm. The agreement directs the investment firm to utilize the Merrill Lynch 1-3 year Treasury Index in managing the average duration of the overall portfolio, excluding cash, to within plus or minus six months of the duration of the Index. As of June 30, 1998, the State had $47,362,040 invested in U. S. agency mortgage- and assetbacked securities. Other organizations of the State of Georgia reporting entity invest in a variety of financial activities. These investments may include brokered certificates of deposit, commercial paper, convertible bonds, corporate bonds, notes and obligations, foreign bonds, investment agreements, mortgages, municipal bonds, mutual funds, real estate, real estate mortgages and notes, real estate investment trust limited partnerships, repurchase agreements, short-term investments, stocks, and U. S. Treasury bonds, notes, and bills. Investments of other organizations are stated at fair value at June 30, 1998. The Commissioner of the Department of Agriculture is directed by statute to require dealers in certain agricultural products and livestock to make and deliver to the Department a surety or cash bond to secure the faithful accounting for and payment to producers of the proceeds of agricultural products or livestock handled or sold by the dealer. Cash bonds are required to designate the Department as trustee of the funds and may take the form of certificates of deposit, letters of credit, money orders or cashiers' checks. At June 30, 1998, the Department held surety bonds in the amount of $32,920,366, and cash bonds in the amount of $11,416,189. These bonds are not recorded on the Combined Balance Sheet. Securities are held pursuant to statutes which require licensed insurance companies to deposit securities with the Department of Insurance prior to issuance of a certificate of authority to transact insurance by the Commissioner of Insurance. These securities remain in the name of the licensed insurance company as long as the company has a pending claim in the State of Georgia or until a proper order of a court of competent jurisdiction has been issued to the receiver, conservator, rehabilitator, or liquidator of the insurer or to any other properly designated official or officials who succeed to the management and control of the insurer's assets. The purchase and redemption of such securities is allowed as long as the required levels of deposits are maintained. At June 30, 1998, securities in the amount of $194,651,483 were held by the Department of Insurance. These securities are not recorded on the Combined Balance Sheet. Construction contracts awarded by the Department of Transportation (Primary Government) and the State Tollway Authority (Discretely Presented Component Units) usually include provisions to withhold a percentage of the payments until the project reaches a specified state of completion. Georgia law requires that these funds be deposited in a state or national bank chartered within this State. The State controls only the release of these funds; the assets in the accounts are considered to be the property of the contractor. Therefore, no assets and liabilities for these escrow accounts have been included in these financial statements. At June 30, 1998, $42,105,490 in escrow deposits were administered by the Department of Transportation and $75,788 by the State Tollway Authority. F. Receivables Receivables in the State's governmental funds pertain primarily to Federal revenues and revenues applicable to charges for services. Receivables in all other funds have arisen in the ordinary course of business. Receivables are recorded when either the asset or revenue recognition criteria (See Note 1-C) have been met. Estimates of allowances for uncollectible receivables have not been made for the majority of receivables included within the financial statements. 40 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) assets. The fund balance reserve is based on values established by the U. S. Department of Agriculture. G. Interfund Receivables The short-term portion of balances arising in connection with interfund loans are recorded as interfund receivables. H. Due To/From Other Funds Equally offsetting asset and liability accounts are used to account for amounts owed to a particular fund by another fund for short term obligations on goods sold or services rendered. K. Prepaid Items Payments made to vendors and local government organizations for services that will benefit periods beyond June 30, 1998, are recorded as prepaid items. L. Restricted Assets Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. I. Advances to Other Funds Noncurrent portions of long-term interfund loans receivable are reported as advances and are offset equally by a fund balance reserve account which indicates that they do not constitute expendable available financial resources and therefore are not available for appropriation. J. Inventories Inventories of supplies and materials are determined by physical count and/or perpetual inventory records and are valued at cost, current purchase price, fair market value, lower of cost or market using the first-in/first-out (FIFO) method, moving average cost, standard cost, or weighted average cost, depending on the individual organization's preference. The costs of governmental fund-type inventories are recorded as expenditures when consumed rather than when purchased for larger agencies and agencies with material inventories. Other agencies may use either the purchase or consumption method. Under the purchase method, a portion of the fund balance is reserved for inventories to indicate that it is not available for appropriation. Organizations under the consumption method normally reserve a portion of fund balance equal to the average monthly inventories on hand for the fiscal year. USDA Donated Food Inventories are shown at a value established by the U. S. Department of Agriculture. Donated food inventories are equally offset by an amount to indicate that they do not constitute "available expendable resources" even though they are a component of net current M. Fixed Assets General fixed assets of governmental fund types are reflected as expenditures in the funds used to acquire or construct them and the related assets are reported in the general fixed assets account group. Proprietary and trust fund fixed assets are capitalized in their respective funds, except for expendable trust fund fixed assets, which are reported in the general fixed assets account group. College and university funds report expenditures for fixed assets in the funds used to acquire or construct them and the related assets are reported within the plant funds. Due to the lack of complete and accurate inventory records applicable to State-owned land and buildings and the lack of historical cost values for certain parcels of land and buildings, the general fixed assets account group does not represent a comprehensive valuation of the assets owned by the State of Georgia. All purchased fixed assets are valued at cost or at estimated historical cost if historical cost is not practically determinable. Certain fixed assets acquired through capital leases in prior years have not been recorded on the financial statements at the net present value of the minimum lease payments as is required by GAAP. Donated fixed assets are valued at their estimated fair market value on the date received. Costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Material improvements adding to the value of assets are capitalized. Interest costs during construction are not capitalized for construction or acquisition of assets 41 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) funded by governmental fund types and college and university funds. Interest costs during construction for proprietary fund types are not capitalized with the exception of construction projects funded through the Stone Mountain Memorial Association (discretely presented component unit). With the exception of the college and university funds, public domain ("infrastructure") fixed assets consisting of such assets as roads, bridges, curbs, streets and sidewalks, drainage systems and lighting systems are not generally reported, as these assets are immovable and of value only to the State of Georgia. Assets in the general fixed assets account group and the college and university funds are not depreciated. The majority of proprietary funds do not record depreciation on fixed assets as required by GAAP. N. Compensated Absences The State's liability for accumulated unpaid annual leave is reported in the accompanying general long-term debt account group for governmental fund types. These amounts are not shown as a liability in the funds but are recorded as expenditures when paid. In the proprietary fund types and the college and university funds this obligation is reported as a liability in the respective funds. Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employee's length of continuous State service with a maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. Funds are provided in the appropriation of funds each fiscal year to cover the cost of annual leave of terminated employees. Employees earn ten hours of sick leave each month with a maximum accumulation of ninety days. Sick leave does not vest with the employee. Unused accumulated sick leave is forfeited upon retirement or termination of employment. However, certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits. O. Deferred Revenue The State reports deferred revenue on the combined balance sheet. Deferred revenues arise when a potential revenue does not meet the "available" criterion for recognition in the current period. Deferred revenues also arise when resources are received by the State before it has a legal claim to them, as when grant monies are received prior to qualifying expenditures being incurred. In subsequent periods, when the revenue recognition criterion is met, or when the State has a legal claim to the resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized. P. Mortgage Loans Under Repurchase Agreements At June 30, 1998, mortgage loans totaling $17,728,827 have been transferred and assigned to lenders under repurchase agreements by the Georgia Development Authority (Discretely Presented Component Units). The agreements give the lenders the option to have the Authority repurchase the mortgage loans for an amount equal to the then outstanding balance of principal and interest due during a specified period of time. In addition, the Authority guarantees the principal and interest payment by the borrower to the lender within thirty (30) days of the due date. Any payment not received within thirty (30) days is considered advanced to the borrower and paid to the lender by the Authority. The Authority then charges the borrower interest on these advances for the period outstanding at a penalty rate agreed upon at the loan origination date. Fund balance in the amount of fifteen percent (15%) of the principal balances outstanding of mortgage loans under repurchase agreements is reserved. Q. Long-Term Obligations Long-term debt and other long-term obligations are recognized as a liability of a governmental fund when due, or when resources have been accumulated in the debt service fund for payment early in the subsequent fiscal year. Other long-term obligations, with the exception of the long-term portion of some capital leases, are reported in the general long-term debt account group. Long-term debt expected to be financed from proprietary fund operations are accounted for in those funds. 42 State of Georgia Notes to the Financial Statements June 30, 1998 Note 1. Summary of Significant Accounting Policies (continued) R. Fund Equity Residual equity transfers are recorded for nonrecurring or nonroutine permanent transfers of equity. Operating transfers are recorded for all other interfund transactions. Contributed capital is recorded in proprietary funds that have received capital or contributions from developers, customers or other funds. Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. Designated fund balances represent tentative plans for future use of financial resources. S. Bond Discounts/Premiums/Issuance Costs In governmental fund types, bond discounts, premiums and issuance costs are recognized in the current period. Bond discounts, premiums and issuance costs for proprietary fund types are deferred and amortized over the term of the bonds using a method which approximates the effective interest method or the straight-line method. Bond premiums (discounts) are presented as increases (reductions) in the face amount of bonds payable whereas issuance costs are recorded as deferred charges. T. Interfund Transactions The State has the following types of interfund transactions: Quasi-external transactions for services rendered by one fund to another are accounted for as revenues by the recipient fund and expenditures or expenses by the disbursing fund. Reimbursements of expenditures/expenses initially made from a fund that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. U. Intrafund Transactions State accounting policies and procedures allow for the recording of revenues, receivables, expenses and liabilities for transactions between State organizations whose financial activity is included within a single fund. State accounting systems do not facilitate the identification of all such transactions. Adjustments have been made for material transactions and balances which have been identified during the preparation of the State's general purpose financial statements; however, all such intrafund transactions and balances were not identifiable and, accordingly, revenues, receivables, expenses and liabilities are overstated, primarily in the general and college and university funds. V. Memorandum Only - Total Columns Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations or cash flows in conformity with GAAP. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. W. Fiscal Reporting Periods The financial statements include financial activity for the Stone Mountain Memorial Association whose fiscal reporting period differs from that of the State of Georgia (July 1, 1997 through June 30, 1998). The applicable fiscal reporting period for the Stone Mountain Memorial Association is based on a fifty-two/fifty-three week period ending on the last Sunday of each calendar year. Financial activity is reported for the period December 30, 1996, through January 2, 1998. 43 State of Georgia Notes to the Financial Statements June 30, 1998 Note 2. Other Accounting Disclosures Change in Accounting Policy and Restatements Atlanta and Savannah Technical Institutes have been added to the reporting entity as a part of the General Fund for the year ended June 30, 1998. The beginning fund balance for the general fund has been increased by $1,504,009 due to the inclusion of these organizations. Primary Government General Fund Restatement of Beginning Fund Balance for the Inclusion of Atlanta and Savannah Technical Institutes $ 1,504,009 In fiscal year 1998, the State implemented GASB Statement 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools." The statement establishes fair value standards for reporting certain investments and establishes financial statement reporting standards for external investment pools. These changes are reflected as adjustments to fund equity in the applicable funds. A reconciliation of the equipment inventory records of the Department of Administrative Services revealed an unidentified difference between the computed balance based on current year purchases/deletions and the actual financial statement balance. The beginning fund equity of the internal service funds has been decreased by $10,336,230 for this correction. In prior years, the Ports Authority recorded contributions from the primary government to be used to construct certain facilities. The expenditure of these funds was charged to construction in progress. The Authority believes this investment is not recoverable and that the related cash receipts and expenditures should not have been recorded as contributions or as an asset of the Authority. The beginning fund equity of the discretely presented component units - proprietary fund types has been decreased by $8,600,000, and construction in progress has been restated. Capital Projects Funds Investments Reported at Fair Value Correction of Errors Internal Service Funds Fixed Assets Correction Expendable Trust Funds Investments Reported at Fair Value Nonexpendable Trust Funds Investments Reported at Fair Value Investment Trust Fund External Pool Reporting College and University Funds Investments Reported at Fair Value $ 14,058,031 7,600,000 $ 21,658,031 $ (10,336,230) $ (6,504) $ (383) $2,110,015,023 $ 21,960,025 Fund balances/fund equity at July 1, 1997, have been adjusted as follows: Discretely Presented Component Units Proprietary Fund Types Investments Reported at Fair Value $ (4,573,552) Contributed Capital Restatement (8,600,000) Correction of Errors (7,298,285) $ (20,471,837) 44 State of Georgia Notes to the Financial Statements June 30, 1998 Note 3. Budgetary Accounting The Official Code of Georgia Annotated (OCGA), Title 45, Chapter 12, Article 4 sets forth the process for the development and monitoring of an appropriated budget for the State of Georgia. Not later than September 1 of each year, the head of each executive branch budget unit must submit estimates of the financial requirements for the subsequent fiscal year to the Office of Planning and Budget, which operates under the direction of the Governor. Budget estimates relative to the legislative and judicial branches of State government are provided to the Office of Planning and Budget for the purpose of estimating the total financial needs of the State, but are not subject to revision or review by the Office of Planning and Budget. The Governor, through the Office of Planning and Budget, examines the estimates and may investigate and revise executive branch submissions as necessary. Upon the completion and revisions of the estimates, the Governor must prepare and submit a budget report to the General Assembly within five days of the date on which the General Assembly convenes. The Governor possesses the responsibility and authority to establish the revenue estimate for the corresponding fiscal year. The General Assembly, after adopting such modifications to the Governor's budget report as it deems necessary, enacts the General Appropriations Act for the subsequent fiscal year. Each General Appropriations Act enacted, along with amendments as are adopted, continues in force and effect for the next fiscal year after adoption. In accordance with the Constitution of the State of Georgia, Article III, Section IX, Paragraph 4, the General Assembly is prohibited from appropriating funds for any given fiscal year which, in the aggregate, exceeds the amount of unappropriated surplus funds expected to have accrued at the beginning of the subsequent fiscal year together with the total estimated amount of receipts from existing revenue sources, less refunds, anticipated to be collected in the subsequent fiscal year. The Constitution further authorizes the passage of additional Supplementary Appropriation Acts for specific purposes, provided sufficient unappropriated funds are available or additional revenue measures have been enacted. Federal funds received by the State are continually appropriated in the exact amounts and for the purposes authorized and directed by the awarding federal agency. Internal transfers within a budget unit and between objects of functional or activity budget units are subject to the condition that no State funds shall be transferred for the purpose of initiating a new program area not currently having a State funds appropriation. The Governor, through the Office of Planning and Budget, requires each budget unit, other than those of the legislative and judicial branches, to submit an annual operating budget based on the activities and functions set forth in the Appropriations Act. Budget units submit quarterly allotment requests which must be approved in conjunction with quarterly work programs prior to release of appropriated funds. Further monitoring of budget unit activities is accomplished by review of expenditure reports which are submitted quarterly to the Office of Planning and Budget. Budget units (i.e., agencies, commissions) of the State are responsible for budgetary control of their respective portion of the total State appropriated budget. The legal level of budgetary control is at the departmental level. Due to the complex nature of the State appropriated budget, a separate budgetary report entitled, "Report of the State Auditor of Georgia," is published each year. This report includes a listing of State organizations (appropriation units) which incurred expenditures in excess of amounts budgeted by object class. The appropriated budget covers the majority of the governmental funds included within the State of Georgia reporting entity, but excludes the special revenue fund, debt service fund and capital projects funds, which are not subject to appropriation. The budget does include certain proprietary funds, the college and university funds, and the administrative costs of operating various public employee retirement systems. The accompanying Statement of Funds Available and Expenditures Compared to Budget - Budget Fund presents comparisons of the legally adopted budget with actual data prepared on the budgetary basis of accounting utilized by the State. Because the budgetary and GAAP presentations for actual data differ, a reconciliation of "Excess of Funds Available Over Expenditures - Budget Fund (Budgetary Method)" and "Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses/Net Income (Loss)/Net Increase in Plan Net Assets/Net Increase (Decrease) in Fund Balances - Current Funds - GAAP Fund Types" appears below. 45 State of Georgia Notes to the Financial Statements June 30, 1998 Note 3. Budgetary Accounting (continued) Budgetary Fund Financial Statement Fund Types Primary Government Excess of Funds Available Over Expenditures - Budget Fund Budgetary Method Budget General Special Revenue Debt Service Capital Projects Enterprise Internal Service $ 1,450,740,846 $ - $ - $ - $ - $ - $ - Entity and Perspective Differences: Reclassification of Budgetary Funds to GAAP Financial Statement Fund Types Non-Budgeted Funds Budgeted Non-Current Funds Basis Differences: Net Accrued Revenues, Related Receivables and Deferred Revenues Net Accrued Expenditures/Expenses and Related Liabilities Timing Differences: Revenues Expenditures/Expenses Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses/Net Income (Loss)/ Net Increase in Plan Net Assets/Net Increase (Decrease) in Fund Balances - Current Funds GAAP Fund Types (1,450,740,846) - 1,381,141,302 578,997,585 - (26,216) - 24,561,677 - (131,739,289) - 80,102,715 - 27,055,475 45,703,375 - - (1,650,202,031) - - - 136,156,841 - - - 5,176,425 - - - - - - - (104,178,967) (23,320,739) - (10,076,680) 11,111,554 - - - - - (1,278,867) $ - $ 451,270,122 $ (26,216) $ 24,561,677 $ (131,739,289) $ (34,152,932) $ 59,270,798 46 State of Georgia Notes to the Financial Statements June 30, 1998 Excess of Funds Available Over Expenditures - Budget Fund Budgetary Method Entity and Perspective Differences: Reclassification of Budgetary Funds to GAAP Financial Statement Fund Types Non-Budgeted Funds Budgeted Non-Current Funds Basis Differences: Net Accrued Revenues, Related Receivables and Deferred Revenues Net Accrued Expenditures/Expenses and Related Liabilities Timing Differences: Revenues Expenditures/Expenses Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses/Net Income (Loss)/ Net Increase in Plan Net Assets/Net Increase (Decrease) in Fund Balances - Current Funds GAAP Fund Types Expendable Trust Financial Statement Fund Types Primary Government Nonexpendable Trust Pension/ Investment Trust College and University Discretely Presented Component Units Governmental Proprietary Fiduciary $ - $ - $ - $ - $ - $ - $ - 178,443,594 - 5,653 - 200 2,672,400,961 - (33,479,864) (6,107,820) 22,979,866 (4,542,999) (732,931) - 283,008 69,898,531 - 181,009 6,961,199,855 - - - (200) 9,208,371 (264,137) (718,915) (2,000) - - - (3,817,904) 1,331,847 47,934 2,525 - - - 18,760 - - - - - - 2,851,561 - - (179,009) $ 178,443,594 $ 5,653 $ 2,672,400,961 $ (8,347,030) $ (4,208,220) $ 69,510,558 $ 6,961,202,380 47 State of Georgia Notes to the Financial Statements June 30, 1998 Note 4. Deposits and Investments Deposits - Funds belonging to the State of Georgia 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 OCGA 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. 6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. As authorized in OCGA 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia the option of exempting demand deposits from the collateral requirements. Primary Government At year end, the carrying amounts of the State's deposits were $551,093,963, and the bank balances were $1,119,194,950. The amounts of these bank balances are classified into three categories of credit risk: (1) cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the State or by its agent in the State's name, (2) cash collateralized with securities held by the pledging financial institution's trust department or agent in the State's name and (3) uncollateralized bank accounts. The State's deposits were classified as follows at June 30, 1998: 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. Risk Category 1 2 3 Bank Balance $ 328,827,903 298,713,481 491,653,566 $ 1,119,194,950 48 State of Georgia Notes to the Financial Statements June 30, 1998 Note 4. Deposits and Investments (continued) Significant Discretely Presented Component Units At year end, the significant discretely presented component units' deposits were classified as follows: Governmental Fund Types Georgia Education Authority (Schools) Georgia Public Telecommunications Commission Proprietary Fund Types Environmental Facilities Authority Georgia Housing and Financing Authority Geo. L. Smith II Georgia World Congress Center Authority All Other Component Units Fiduciary Fund Types Peace Officers' Annuity and Benefit Fund All Other Component Units Risk Categories 1 2 Funds Held by (for) 3 Bank Balance Primary Government Carrying Amount $ 61 $ $ 282,704 $ - $ - $ - $ 397,925 $ 61 $ 680,629 $ 601,120 $ 1,910 $ $ 4,736,763 $ - $ - $ 4,736,763 $ $ 41,056,020 $ - $ 115,935,723 $ 156,991,743 $ $ 179,018 $ $ 36,933,499 $ 2,355,182 $ 6,211,864 $ - $ 38,596,715 $ 2,534,200 $ 81,742,078 $ 205,683,639 $ 9,085,952 $ 16,857 $ 57,881,964 $ 61 (1,118,441) 10,973,156 159,455,286 299,027 51,264,127 $ 100,000 $ $ 2,969,942 $ - $ 229,165 $ 3,304,795 $ - $ 3,404,795 $ 3,199,107 $ 13,008,506 $ 713,027,501 $ 3,389,258 385,162 Investments - Investments are stated at market value, and are summarized and classified as to risk in the following three categories: (1) insured or registered, or securities held by the State orits agent in the State's name, (2) uninsured or unregistered, with securities held by the counterparty's trust department or agent in the State's name or (3) uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the State's name. 49 State of Georgia Notes to the Financial Statements June 30, 1998 Note 4. Deposits and Investments (continued) Primary Government The carrying amounts, risk categories and market value applicable to the State's investments are listed below: Type of Investment Commercial Paper Municipal Bonds Repurchase Agreements Stocks U.S. Government Securities and Corporate Obligations Unclassified Mortgages Mutual Funds Other Unemployment Compensation Funds Pooled with the U.S. Treasury Total Investments Risk Categories 1 2 $ 1,708,951 $ 354,827,597 8,385,100 - 2,785,068,420 13,642,636 7,817,024,677 52,525,687 3 $ - - - - 10,216,310,485 98,760,653 - $ 20,828,497,633 $ 519,756,573 $ Carrying Amount $ 356,536,548 8,385,100 2,798,711,056 7,869,550,364 10,315,071,138 $ 21,348,254,206 4,758,905 14,848,031 6,255 1,914,400,343 $ 23,282,267,740 50 State of Georgia Notes to the Financial Statements June 30, 1998 Note 4. Deposits and Investments (continued) Significant Discretely Presented Component Units The carrying amounts, risk categories and market value of the investments of the State's significant discretely presented component units are listed below: Governmental Fund Types Georgia Public Telecommunications Commission Proprietary Fund Types Georgia Housing and Finance Authority Type of Investment Stocks Commercial Paper Corporate Bonds U.S. Government Securities and Corporate Obligations Unclassified Mortgages All Other Component Units Commercial Paper Corporate Bonds Repurchase Agreements U.S. Government Securities and Corporate Obligations Risk Categories 1 2 3 Carrying Amount $ 159,334 $ - $ - $ 159,334 $ 1,389,489 $ 2,726,805 - $ - - $ 1,389,489 - 2,726,805 36,502,945 $ 40,619,239 $ - - $ - 36,502,945 - $ 40,619,239 $ 1,508,677 $ 1,000,000 50,278,585 - $ - - 42,656,601 $ 83,275,840 - $ 1,508,677 1,000,000 - - 50,278,585 255,951,326 $ 308,738,588 $ 4,068,349 4,068,349 $ 103,053,000 103,053,000 363,072,675 $ 415,859,937 51 State of Georgia Notes to the Financial Statements June 30, 1998 Note 4. Deposits and Investments (continued) Fiduciary Fund Types Teachers Retirement System of Georgia All Other Component Units Type of Investment Repurchase Agreements Stocks U.S. Government Securities and Corporate Obligations Unclassified Real Estate Corporate Bonds Investment Accounts Notes Repurchase Agreements Stocks U.S. Government Securities and Corporate Obligations Unclassified Mutual Funds Real Estate Risk Categories 1 2 3 Carrying Amount $ 486,319,000 $ 20,685,510,000 13,268,987,000 $ 34,440,816,000 $ $ 14,723,618 $ 163,450 42,369,973 525,000 267,349,346 279,947,855 $ 605,078,242 $ - $ - - - $ - $ - - - - - - $ - $ 486,319,000 - 20,685,510,000 - 13,268,987,000 - $ 34,440,816,000 3,770,000 $ 34,444,586,000 - $ 14,723,618 - 163,450 - 42,369,973 - 525,000 - 267,349,346 - 279,947,855 - $ 605,078,242 28,846,747 1,217,703 $ 635,142,692 Investments Lending Program - The State is presently involved in a securities lending program with major brokerage firms. The State lends equity and fixed income securities for varying terms and receives a fee based on the loaned securities' value. During a loan, the State continues to receive dividends and interest as the owner of the loaned securities. The brokerage firms pledge collateral securities consisting of U. S. Government and agency securities, mortgage-backed securities issued by a U. S. Government agency, and U. S. Corporate bonds. The collateral value must be equal to at least 102% to 110% of the loaned securities value, depending on the type of collateral security. Securities loaned totaled $18,542,163,000 at June 30, 1998, and the collateral value was equal to 103.7%. The loaned securities are classified as category 1 investments in the component units - fiduciary fund types based on the custodial arrangements for the collateral securities. Loaned securities are included in the accompanying Combined Balance Sheet since the State maintains ownership. The related collateral securities are not recorded as assets on the Combined Balance Sheet, and a corresponding liability is not recorded, since the State does not pledge or trade the collateral securities. 52 State of Georgia Notes to the Financial Statements June 30, 1998 Note 4. Deposits and Investments (continued) Investment Pools - Separate reports on the State's external investment pools are not issued. Condensed financial statements, inclusive of external and internal participants for the fiscal year ended June 30, 1998, are as follows: Assets Investments State Investment Pool Statement of Net Assets June 30, 1998 $ 4,281,356,647 Liabilities Cash Overdraft 238,942,916 Net Assets $ 4,042,413,731 Distribution of Net Assets External Participant Account Balances Internal Participant Account Balances $ 2,659,446,092 1,382,967,639 $ 4,042,413,731 State Investment Pool Statement of Changes in Net Assets For the Fiscal Year Ended June 30, 1998 Additions Pool Participant Deposits Investment Income Less: Investment Expense Total Additions $ 9,937,242,067 333,916,752 (1,735,049) $10,269,423,770 Deductions Pool Participant Withdrawals Net Increase Net Assets July 1 9,557,355,504 $ 712,068,266 3,330,345,465 June 30 $ 4,042,413,731 53 State of Georgia Notes to the Financial Statements June 30, 1998 Note 4. Deposits and Investments (continued) Regents Investment Pool Statement of Net Assets June 30, 1998 Assets Investments Interest Receivable $ 100,703,314 427,114 Total Assets $ 101,130,428 Liabilities Cash Overdraft 1,523,174 Net Assets $ 99,607,254 Distribution of Net Assets External Participant Account Balances Internal Participant Account Balances $ 6,528,363 93,078,891 $ 99,607,254 Regents Investment Pool Statement of Changes in Net Assets For the Fiscal Year Ended June 30, 1998 Additions Investment Income Interest Fair Value Increases Less: Investment Expense Total Additions Deductions Pool Participant Withdrawals Capital Transactions Total Deductions Net Decrease Net Assets July 1 $ 4,022,844 10,531,063 (369,270) $ 14,184,637 $ 59,250,391 (26,951,815) $ 32,298,576 $ (18,113,939) 117,721,193 June 30 $ 99,607,254 54 Note 5. Receivables State of Georgia Notes to the Financial Statements June 30, 1998 Primary Government Receivables by fund type as of June 30, 1998, consist of the following: Governmental Fund Types General Special Revenue Capital Projects Proprietary Fund Types Enterprise Internal Service Fiduciary Fund Types Expendable Trust Pension Trust Agency College and University Funds Gross Receivables Allowance For Uncollectibles Net Total Receivables $ 3,277,652,421 1,779,103 13,092,184 20,749,365 10,837,247 99,540,799 100,345,125 26,373,232 302,345,438 $ 3,852,714,914 $ - - - (2,180,096) - (15,438,484) - (59,151,501) $ (76,770,081) $ 3,277,652,421 1,779,103 13,092,184 18,569,269 10,837,247 84,102,315 100,345,125 26,373,232 243,193,937 $3,775,944,833 55 State of Georgia Notes to the Financial Statements June 30, 1998 Note 5. Receivables (continued) Significant Discretely Presented Component Units Receivables of the significant discretely presented component units as of June 30, 1998, consist of the following: Governmental Fund Types Georgia Public Telecommunications Commission Proprietary Fund Types Georgia Environmental Facilities Authority Georgia Housing and Finance Authority Georgia Student Finance Authority All Other Component Units Fiduciary Fund Types Teachers Retirement System Of Georgia All Other Component Units Gross Receivables Allowance For Uncollectibles Allowance For Service Repayments Deferred Loan Fees Net Total Receivables $ 1,576,842 $ (150,000) $ - $ - $ 1,426,842 554,071,211 664,695,260 398,394,189 149,429,109 - (265,063) (1,727,749) (4,364,029) - (31,116,476) - - (194,505) 554,071,211 664,430,197 365,549,964 144,870,575 426,302,720 - 4,954,885 - - - 426,302,720 - - 4,954,885 $ 2,199,424,216 $ (6,506,841) $ (31,116,476) $ (194,505) $ 2,161,606,394 56 Note 6. Fixed Assets State of Georgia Notes to the Financial Statements June 30, 1998 Primary Government The following is a summary of changes in the general fixed assets account group during the fiscal year: Land and Buildings Improvements Other Than Buildings Machinery and Equipment Construction in Progress Total General Fixed Assets Balance July 1, 1997 $ 1,856,103,612 389,573 850,747,262 - $ 2,707,240,447 Additions $ 133,562,109 59,059 129,035,657 350,787 $ 263,007,612 Retirements $ (1,698,794) (53,660,964) - $ (55,359,758) Balance June 30, 1998 $ 1,987,966,927 448,632 926,121,955 350,787 $ 2,914,888,301 The following is a summary of the proprietary fund types and college and university funds fixed assets at June 30, 1998: Land and Buildings Improvements Other Than Buildings Machinery and Equipment Less: Accumulated Depreciation Construction in Progress Net Fixed Assets Proprietary Fund Types Enterprise Funds Internal Service Funds $ - $ 242,027,505 - - 313,620 181,354,768 - (11,980,413) - - $ 313,620 $ 411,401,860 College and University Funds $ 2,692,992,145 181,591,288 1,561,332,914 200,930,122 $ 4,636,846,469 57 State of Georgia Notes to the Financial Statements June 30, 1998 Note 6. Fixed Assets (continued) Significant Discretely Presented Component Units The following is a summary of the significant discretely presented component units' fixed assets at June 30, 1998: Land and Buildings Improvements Other Than Buildings Machinery and Equipment Less: Accumulated Depreciation Construction in Progress Net Fixed Assets Governmental Fund Types Proprietary Fund Types Georgia Public Telecommunications Commission Georgia Ports Authority Stone Mountain Memorial Association Geo. L. Smith II Georgia World Congress Center Authority All Other Component Units $ 27,360,330 $ 173,885,000 $ 81,304,479 $ 209,402,736 $ 87,078,996 - 200,806,000 18,980,870 - 2,710,490 64,270,414 117,111,000 28,009,630 11,729,405 29,963,747 - (204,906,000) (32,656,784) (43,869,410) (20,100,103) - 63,114,000 287,578 70,791,475 25,026,332 $ 91,630,744 $ 350,010,000 $ 95,925,773 $ 248,054,206 $ 124,679,462 Land and Buildings Machinery and Equipment Net Fixed Assets Fiduciary Fund Types Firefighters' Pension Fund $ 135,197 132,210 Peace Officers' Annuity and Benefit Fund $ 310,296 123,498 All Other Component Units $ - 40,433 $ 267,407 $ 433,794 $ 40,433 As noted in the Summary of Significant Accounting Policies (Note 1), the State does not maintain complete and accurate inventory records applicable to State-owned land and buildings, nor are there historical cost values for certain parcels of land and buildings; therefore, the tables above do not represent a comprehensive valuation of the assets owned by the State of Georgia. 58 State of Georgia Notes to the Financial Statements June 30, 1998 Note 7. Risk Management A. Public Entity Risk Pool The State Personnel Board, Merit System of Personnel Administration internally 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 government and local education agencies located within 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, and appropriations by the General Assembly of Georgia. The State Personnel Board, Merit System of Personnel Administration has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board. B. Board of Regents Employee Health Benefits Plan The Board of Regents of the University System of Georgia maintains a program of health and dental benefits for its employees and retirees. This plan is funded jointly through premiums paid by participants covered under the plan and employer contributions paid by the Board of Regents and its organizational units. All units of the University System of Georgia share the risk of loss for claims of the plan. The Board of Regents has contracted with Blue Cross Blue Shield to process all claims in accordance with medical coverage guidelines as established by the Board of Regents. A reconciliation of total claims liabilities for fiscal years ended June 30, 1998, and 1997, is shown below: A reconciliation of total claims liabilities for fiscal years ended June 30, 1998, and 1997, is shown below: Fiscal Year Ended June 30, 1998 Fiscal Year Ended June 30, 1997 Unpaid Claims and Claim Adjustments July 1 Fiscal Year Ended June 30, 1998 Fiscal Year Ended June 30, 1997 $148,196,779 $159,373,817 Incurred Claims and Claims Adjustment Expenses Provisions for Insured Events of the Current Year 863,085,931 820,471,532 Payments - Claims and Claim Adjustment Expenses Attributable to Insured Events of the Current Year and of Prior Years (851,524,392) (831,648,570) Unpaid Claims and Claim Adjustments June 30 $159,758,318 $148,196,779 Unpaid Claims and Claim Adjustments July 1 $ 20,900,000 $ 19,600,000 Incurred Claims and Claims Adjustment Expenses Provisions for Insured Events of the Current Year 140,916,616 138,407,492 Payments - Claims and Claim Adjustment Expenses Attributable to Insured Events of the Current Year and of Prior Years (140,016,616) (137,107,492) Unpaid Claims and Claim Adjustments June 30 $ 21,800,000 $ 20,900,000 C. 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. 59 State of Georgia Notes to the Financial Statements June 30, 1998 Note 7. Risk Management (continued) The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS services 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. Premiums for the risk management program are charged to the State agencies by DOAS to provide claims servicing and claims payment. Significant Discretely Presented Component Units Proprietary Fund Types At June 30, 1998, the Georgia Ports Authority had commitments for construction projects of approximately $34,000,000. Note 9. Operating Leases A. Lessee A reconciliation of total claims liabilities for fiscal year ended June 30, 1998, is shown below: Fiscal Year Ended June 30, 1998 Fiscal Year Ended June 30, 1997 Unpaid Claims and Claim Adjustments July 1 $ 258,497,047 $ 239,893,133 Incurred Claims and Claims Adjustment Expenses Provisions for Insured Events of the Current Year 183,454,774 123,841,662 Payments - Claims and Claim Adjustment Expenses Attributable to Insured Events of the Current Year and of Prior Years (84,658,119) (105,237,748) The State leases land, office facilities, office and computer equipment, and other assets. These leases are considered for accounting purposes to be operating leases. Although lease terms vary, many leases are subject to appropriation 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 State has the option of renewing the lease on a year-to-year basis. Certain organizations within the State's reporting entity do not maintain adequate systems for recording lease commitments in accordance with GAAP. Future minimum commitments for operating leases as of June 30, 1998, are listed below. Amounts are included for renewable leases for which the option to renew for the subsequent fiscal year has been exercised. Primary Government Unpaid Claims and Claim Adjustments June 30 $ 357,293,702 $ 258,497,047 Note 8. Construction and Other Significant Commitments Primary Government The Georgia State Financing and Investment Commission has entered into agreements with various State departments and agencies for the expenditure of bond sale proceeds and cash supplements (provided by the department or agency involved) to acquire and construct capital projects. At June 30, 1998, the undisbursed balance remaining on these agreements approximates $769,000,000. Fiscal Year Ended June 30 1999 2000 2001 2002 2003 2004 and Subsequent Total Minimum Commitments $ 59,531,531 10,632,192 8,855,963 8,367,523 7,984,919 39,155,571 $134,527,699 Expenditures for rental of real property and equipment for the year ended June 30, 1998, totaled $70,253,027. 60 State of Georgia Notes to the Financial Statements June 30, 1998 Note 9. Operating Leases (continued) B. Lessor Significant Discretely Presented Component Units Proprietary Fund Types Georgia Lottery Corporation Fiscal Year Ended June 30 1999 $ 1,961,000 2000 1,963,000 2001 1,963,000 2002 1,963,000 2003 1,963,000 2004 and Subsequent 14,000 $ 9,827,000 Less: Sublease Revenues (1,804,000) Total $ 8,023,000 The State leases certain of its facilities for use by others for terms varying from 1 to 65 years, with the majority of leases controlled by the State Properties Commission. These leases are accounted for as operating leases; revenues for services provided and for use of facilities are recorded when earned. Minimum future revenues and rentals to be received under operating leases as of June 30, 1998, are as follows: Primary Government Fiscal Year Ended June 30 1999 2000 2001 2002 2003 2004 and Subsequent Total $ 8,193,263 8,312,029 8,427,780 8,555,230 8,685,546 172,646,184 $ 214,820,032 Expenditures for rental of real property and equipment for the year ended June 30, 1998, totaled $1,606,000. North Georgia Mountains Authority Fiscal Year Ended June 30 1999 $ 1,429,219 2000 1,432,064 2001 1,434,982 2002 1,438,486 2003 1,448,954 2004 and Subsequent 16,858,914 Total Minimum Commitments $ 24,042,619 Expenditures for rental of real property and equipment for the year ended June 30, 1998, totaled $1,426,635. Revenues from rental of facilities for the year ended June 30, 1998, totaled $8,071,765. Significant Discretely Presented Component Units Proprietary Fund Types Lake Lanier Islands Development Authority Fiscal Year Ended June 30 1999 $ 3,100,000 2000 3,100,000 2001 3,100,000 2002 3,200,000 2003 3,200,000 2004 and Subsequent 141,066,667 Total $ 156,766,667 61 State of Georgia Notes to the Financial Statements June 30, 1998 Note 9. Operating Leases (continued) Primary Government Revenues from rental of facilities for the year ended June 30, 1998, totaled $2,850,000. Note 10. Capital Leases and Installment Purchases The State acquires certain property and equipment through multi-year installment purchases or capital leases with varying terms and options. The majority of these agreements contain fiscal funding clauses in accordance with OCGA 50-5-64 which prohibits the creation of a debt to the State of Georgia for the payment of any sums under such agreements beyond the fiscal year of execution if appropriated funds are not available. If renewal of such agreements is reasonably assured, however, capital leases requiring appropriation by the General Assembly are considered noncancellable for financial reporting purposes. Capital leases for the proprietary funds and the college and university funds are reported as a long-term obligation in those funds along with the related assets. Capital leases for the governmental funds are reported in the general long-term debt account group and the related assets are reported in the general fixed assets account group. As noted in the Summary of Significant Accounting Policies (Note 1), capital lease transactions have not been consistently recorded in conformity with GAAP. Fixed assets in prior years have not been recorded in the general fixed assets account group at the net present value of the minimum payments nor has the long-term liability applicable to capital leases been consistently recorded in the general long-term debt account group. Also, the State does not record expenditures and other financing sources in the governmental fund types when capitalized leases are entered into as required by GAAP. At June 30, 1998, future commitments under installment purchases and capital leases were as follows: Fiscal Year Ended June 30 1999 2000 2001 2002 2003 2004 and Subsequent Total Capital Lease and Installment Purchase Payments Less: Interest Present Value of Capital Lease and Installment Purchase Payments Installment Purchases Capital Leases $ 14,153,483 12,978,185 9,012,456 2,418,097 140,830 34,835 $ 38,737,886 (3,580,966) $ 35,156,920 $ 2,485,830 32,671,090 $ 35,156,920 Significant Discretely Presented Component Units Governmental Fund Types Georgia Public Telecommunications Commission Fiscal Year Ended June 30 1999 $ 2,087,411 2000 2,083,804 2001 2,083,804 2002 2,083,804 2003 2,083,804 2004 and Subsequent 2,309,919 Total Installment Purchase Payments $ 12,732,546 Less: Interest (1,907,886) Present Value of Installment Purchase Payments $ 10,824,660 62 State of Georgia Notes to the Financial Statements June 30, 1998 Note 10. Capital Leases and Installment Purchases (continued) Proprietary Fund Types Geo. L. Smith II Georgia World Congress Center Authority Fiscal Year Ended June 30 1999 2000 2001 2002 2003 2004 and Subsequent Total Capital Lease and Installment Purchase Payments Less: Interest Present Value of Capital Leases and Installment Purchases $ 312,464 309,657 154,827 - $ 776,948 (106,850) $ 670,098 Installment Purchases Capital Leases $ 670,098 - $ 670,098 Note 11. Long-Term Debt Primary Government General Obligation Bonds. The State issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both general State and proprietary activities, to provide loans to local governments for water and sewer systems, to construct educational facilities for local school systems, and to refund general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the State. General obligation bonds currently outstanding are as follows: Purpose General Government General Government Refunding Interest Rates 2.00% 9.00% 2.40% 6.75% Amount $ 3,836,880,000 668,895,000 $ 4,505,775,000 63 State of Georgia Notes to the Financial Statements June 30, 1998 Note 11. Long-Term Debt (continued) Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Ended June 30 1999 2000 2001 2002 2003 Thereafter Principal $ 303,500,000 305,920,000 248,290,000 256,455,000 257,215,000 3,134,395,000 $ 4,505,775,000 Interest $ 263,587,830 244,851,877 227,637,800 212,068,870 196,730,950 994,420,584 $ 2,139,297,911 Total $ 567,087,830 550,771,877 475,927,800 468,523,870 453,945,950 4,128,815,584 $ 6,645,072,911 General State Bonds. All General State Bonds of the State of Georgia are past due, but have not been presented for redemption. This obligation will be liquidated if and when the past due outstanding bonds and coupons are presented. Unredeemed General State Bonds at June 30, 1998, were $15,505 with accumulated interest of $11,475. Revenue Bonds. Revenue bonds have been issued by the organizational units listed below. Income derived from acquired or constructed assets is pledged to fund the debt service requirements of these issues. The College and University fund is responsible for repayment of Georgia Military College bonds. Revenue bonds outstanding at June 30, 1998, are as follows: Georgia Military College - Library Building Purpose Interest Rates 3.00% Amount $ 7,000 64 State of Georgia Notes to the Financial Statements June 30, 1998 Note 11. Long-Term Debt (continued) Revenue bond debt service requirements to maturity are as follows: Fiscal Year Ended June 30 1999 2000 2001 2002 2003 Thereafter Georgia Military College Principal $ 7,000 - - - - - $ 7,000 Interest $ 210 - - - - - $ 210 Total $ $ 7,210 0 0 0 0 0 7,210 At June 30, 1998, $110,675,000 of outstanding general obligation bonds (including prior years' refundings), and $2,378,000 of outstanding Georgia Education Authority (University) revenue bonds (including prior years' defeasances) are considered defeased. Changes in Long-Term Liabilities. During the year ended June 30, 1998, the following changes occurred in liabilities reported in the general long-term debt account group: Compensated Absences Claims and Judgements Capital Leases and Installment Purchases General Obligation Debt General State Bond Debt Long-Term Notes Balance July 1 Additions Reductions Earned and Utilized (Net) Balance June 30 $ 203,717,363 $ - $ - $ 8,359,450 $ 212,076,813 697,979 - - - 697,979 5,319,332 1,128,801 (2,103,747) - 4,344,386 4,635,930,000 256,875,000 (387,030,000) - 4,505,775,000 15,505 - - - 15,505 2,893,501 - (46,812) - 2,846,689 $ 4,848,573,680 $ 258,003,801 $ (389,180,559) $ 8,359,450 $ 4,725,756,372 65 State of Georgia Notes to the Financial Statements June 30, 1998 Note 11. Long-Term Debt (continued) Significant Discretely Presented Component Units Governmental Fund Types Defeased Debt. At June 30, 1998, $735,000 of outstanding Georgia Education Authority (Schools) revenue bonds (including prior year's defeasances) are considered defeased. Proprietary Fund Types Long-Term Operating Debt. Long-term operating debt has been issued by the Georgia Student Finance Authority. This debt consists of a financing agreement with SunTrust Bank with an outstanding balance at June 30, 1998, of $30,284,767. Purpose Georgia Student Finance Authority Interest Rates Amount Varies Based on Market Rates $ 30,284,767 Long-term operating debt requirements to maturity are as follows: Fiscal Year Ended June 30 Georgia Student Finance Authority Principal Interest Total 1999 $ 30,284,767 $ - $ 30,284,767 Interest varies based on market rates and therefore is not available for this . schedule Revenue Bonds. Revenue bonds have been issued by the significant discretely presented component units listed below. Income derived from acquired or constructed assets is pledged to fund the debt service requirements of these issues. Significant discretely presented component unit revenue bonds outstanding, net of unamortized discounts, of $779,660,753 and $194,779,336 at the Georgia Housing and Finance Authority and the Geo. L. Smith II Georgia World Congress Center Authority, respectively, at June 30, 1998, are as follows: 66 State of Georgia Notes to the Financial Statements June 30, 1998 Note 11. Long-Term Debt (continued) Purpose Georgia Housing and Finance Authority - Financing the Purchase of Single Family Mortgage Loans for Eligible Persons and Families of Low and Moderate Income within the State of Georgia - Financing the Purchase of Hospital Equipment and Facilities by Eligible Hospitals Geo. L. Smith II Georgia World Congress Center Authority - Construction of the Georgia Dome Stadium Interest Rates 2.95% - 9.50% - 6.850% - 7.875% Revenue bond debt service requirements to maturity are as follows: Amount $ 775,802,753 $ 3,858,000 $ 194,779,336 Georgia Housing and Finance Authority Fiscal Year Ended June 30 Principal Interest Total 1999 $ 7,880,000 $ 46,009,000 $ 53,889,000 2000 9,950,000 45,389,000 55,339,000 2001 12,900,000 44,832,000 57,732,000 2002 15,515,000 44,106,000 59,621,000 2003 17,015,000 43,245,000 60,260,000 Thereafter 790,038,000 560,235,000 1,350,273,000 Unamortized Discount (552,650) 552,650 - Future Accretion of Capital Appreciation Bonds (76,942,597) 76,942,597 - $ 775,802,753 $ 861,311,247 $ 1,637,114,000 Various series of bonds issued under Resolution 1 and 3 include capital appreciation bonds which require no payments of principal or interest until maturity. Capital appreciation bonds accrete to their maturity values at effective yields ranging from 7.10% to 11.25%. 67 State of Georgia Notes to the Financial Statements June 30, 1998 Note 11. Long-Term Debt (continued) In addition to the above listed revenue bonds, the Georgia Housing and Finance Authority maintains revenue bonds originally issued by the Hospital Financing Authority. The balance at June 30, 1998, was $3,858,000. The bonds bear interest at an adjustable daily rate with interest payable on a monthly basis. The interest rate basis is subject to change, at the election of the Authority, to a weekly, monthly, semiannual, or fixed rate. The bond indenture limits the interest rate on the bonds to 20% per annum. The bonds are limited obligations of the Authority, repayable solely from revenues provided from loans and other specific property pledged under the bond debenture, and are not an obligation of the State of Georgia or any political subdivision thereof. Fiscal Year Ended June 30 1999 2000 2001 2002 2003 Thereafter Unamortized Discount Geo. L. Smith II Georgia World Congress Center Authority Principal $ 3,150,000 3,485,000 3,745,000 4,025,000 4,330,000 176,515,000 (470,664) $ 194,779,336 Interest $ 15,042,440 14,813,449 14,559,398 14,281,550 13,977,522 153,387,804 470,664 $ 226,532,827 Total $ 18,192,440 18,298,449 18,304,398 18,306,550 18,307,522 329,902,804 $ 421,312,163 Defeased Debt. At June 30, 1998, $1,380,000 of outstanding Georgia Highway Authority revenue bonds (including prior years' defeasances) are considered defeased. Note 12. Interfund Balances Interfund assets and liabilities at June 30, 1998, consist of the following: Interfund Receivables: Receivable Fund Capital Projects Funds Payable Fund Proprietary Fund Types - Discretely Presented Component Units Interfund Receivable $ 3,300,425 Interfund Payable $ - Georgia State Financing and Investment Commission (Capital Projects Funds) interfund receivables from Stone Mountain Memorial Association (Proprietary Fund Types - Discretely Presented Component Units) do not reconcile due to the difference in fiscal reporting periods (See Note 1). 68 State of Georgia Notes to the Financial Statements June 30, 1998 Note 12. Interfund Balances (continued) Due From/To Other Funds: Receivable Fund General Fund Internal Service Funds Internal Service Funds Internal Service Funds Internal Service Funds Internal Service Funds Internal Service Funds Internal Service Funds Proprietary Fund Types - Discretely Presented Component Units Proprietary Fund Types - Discretely Presented Component Units Total Payable Fund Proprietary Fund Types - Discretely Presented Component Units General Fund Special Revenue Fund College and University Funds Pension Trust Funds Governmental Fund Types - Discretely Presented Component Units Proprietary Fund Types - Discretely Presented Component Units Fiduciary Fund Types - Discretely Presented Component Units Internal Service Funds General Fund Due From $ 135,316 15,038,805 93,490 2,400,826 658,673 290,951 88,933 39,946 143 2,204,421 $ 20,951,504 Due To $ 135,316 15,038,805 93,490 2,400,826 658,673 290,951 88,933 39,946 143 2,204,421 $ 20,951,504 Advances From/To Other Funds: Receivable Fund General Fund General Fund Capital Projects Funds Total Payable Fund Agency Funds Proprietary Fund Types - Discretely Presented Component Units Proprietary Fund Types - Discretely Presented Component Units Advance To $ 6,925 Advance From $ 6,925 107,500 107,500 15,209,275 $ 15,323,700 $ 114,425 Advances made from Georgia State Financing and Investment Commission (Capital Projects Funds) to Stone Mountain Memorial Association (Proprietary Fund Types - Discretely Presented Component Units) do not reconcile due to the difference in fiscal reporting periods (See Note 1). 69 State of Georgia Notes to the Financial Statements June 30, 1998 Note 13. Contributed Capital During the year, contributed capital increased (decreased) by the following amounts: Primary Government Source General Obligation Bond Proceeds/ Fixed Assets Contributed by Primary Government General Obligation Bond Proceeds/ Capital Outlay Returned to Primary Government Net Additions Contributed Capital July 1, 1997 Contributed Capital June 30, 1998 Internal Service Funds Department of Administrative Services Georgia Building Authority (Regular) Georgia Correctional Industries Administration Total $ - $ 165,856 $ - $ 165,856 - - (82,000) (82,000) $ - $ 165,856 $ (82,000) $ 83,856 53,384,666 219,893,688 $ 53,384,666 $ 220,059,544 $ 1,227,948 1,145,948 274,506,302 $ 274,590,158 Significant Discretely Presented Component Units Proprietary Fund Types Source General Obligation Bond Proceeds/Capital Outlay Contributed by Primary Government Contributions from Federal Government Contributions from Other Sources Capital Contributions Written Off General Obligation Bond Proceeds/Capital Outlay Returned to Primary Government Net Additions Contributed Capital July 1, 1997 Contributed Capital June 30, 1998 Georgia Environmental Facilities Authority $ 676,875 35,688,800 - - - $ 36,365,675 490,479,608 $ 526,845,283 Georgia Ports Authority $ 36,260,000 (8,600,000) (11,080,000) $ 16,580,000 233,116,794 $ 249,696,794 Geo. L. Smith Georgia World Congress Center Authority $ - - 4,953,860 - - $ 4,953,860 58,750,000 $ 63,703,860 All Other Component Units $ 2,920,270 3,164 (3,814,947) $ (891,513) 162,582,392 $ 161,690,879 70 State of Georgia Notes to the Financial Statements June 30, 1998 Note 13. Contributed Capital (continued) Contributed Capital / Residual Equity Transfers for the fiscal year ended June 30, 1998, are as follows: General Fund General Fund Receiving Fund Capital Projects Funds Internal Service Funds Proprietary Fund Types - Discretely Presented Component Units Proprietary Fund Types - Discretely Presented Component Units Proprietary Fund Types - Discretely Presented Component Units Contributing Fund Internal Service Fund Proprietary Fund Types - Discretely Presented Component Units Proprietary Fund Types - Discretely Presented Component Units Capital Projects Funds General Fund Capital Projects Funds Other Sources Received $ 82,000 Contributed $ 82,000 14,894,947 14,894,947 18,509,700 165,856 165,856 1,895,883 1,895,883 37,961,262 37,961,262 $ 73,509,648 $ 54,999,948 40,645,824 - $ 114,155,472 $ 54,999,948 Residual equity transfers received by Georgia State Financing and Investment commission (Capital Projects Funds) from Stone Mountain Memorial Association (Proprietary Fund Types - Discretely Presented Component Units) do not reconcile due to the difference in fiscal reporting periods (See Note 1). Note 14. Contingencies Amounts received or receivable from grantor agencies are subject to audit and review by grantor agencies, principally the Federal government. This could result in a request for reimbursement by the grantor agency for any expenditures which are disallowed under grant terms. The State believes that such disallowances, if any, will be immaterial to its overall financial position. The State is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine governmental operations. The ultimate disposition of these proceedings is not presently determinable. However, the ultimate disposition of these proceedings would not have a material adverse effect on the financial condition of the State, with the following exceptions: Primary Government Two suits for refund have been filed against the State of Georgia by out-of-state producers of alcoholic beverages. The first suit seeks $96,000,000 in refunds of alcohol import taxes, plus interest, imposed under OCGA Section 3-4-60. These claims constitute 99% of all such taxes paid during the three years preceding these claims. In addition, the claimants have filed a second suit for refund of an additional $23,000,000, plus interest, for later time periods. The trial court has granted the State's motion for summary judgment, and 12 of the 23 claimants have appealed to the Georgia Supreme Court. The total principal amount of the claims for refund by the 12 plaintiffs who did appeal now appears to be approximately $42,000,000. The total principal dollar amount of the claims for refund by the 11 plaintiffs who did not appeal, which claims appear to be 71 State of Georgia Notes to the Financial Statements June 30, 1998 Note 14. Contingencies (continued) conclusively resolved in favor of the State by virtue of the trial court's judgement, now appears to be approximately $54,000,000. A suit was filed March 13, 1998, by DeKalb County against the State of Georgia, the Department of Revenue, Zell Miller (in his official capacity as Governor), and T. Jerry Jackson (in his official capacity as Revenue Commissioner) (collectively, "the State") in connection with the State's collection and distribution of a special local option sales tax in effect in DeKalb County since July 1997. DeKalb's complaint, as amended, seeks an accounting, mandamus, injunctive relief, declaratory judgment, unjust enrichment, bailment, inverse condemnation, and a determination that OCGA Section 48-8-67 is unconstitutional. The complaint, as amended, seeks damages of $27,700,000. Subsequently, DeKalb County has re-estimated its alleged damages as $12,000,000. DeKalb County's action was dismissed by the trial court, and this dismissal was affirmed in part and reversed in part by the Georgia Supreme Court in an order dated February 22, 1999. The Supreme Court's decision remands to the trial court the accounting claim on the question of whether the Department of Revenue made reasonable efforts to identify county tax proceeds that have been determined by the Department to be unidentifiable to any county. The defendants may seek reconsideration of this issue before the case is remitted to the trial court. Georgia Biocontainment Research Center. The claimant bases its claim upon the encountering of extensive subsurface rock, delays allegedly caused by the Board of Regents (as owner) and redesign overhead costs and time extensions. The total contract cost is approximately $18,270,000. The Board of Regents believes the claim to be grossly overstated and anticipates resolving any legitimate portions of the claim for a substantially lesser sum than that claimed. A contract claim has been made in the amount of $9,850,000 against the Board of Regents of the University System of Georgia in connection with construction at the Children's Medical Center, Augusta, Georgia. The claimant bases the claim upon delays allegedly caused by the Board of Regents (as owner) and redesign overhead costs and time extensions. A subcontractor has filed suit for $5,000,000 on its claim against the Construction Manager, which amount is a part of the Construction Manager's contract claim against the Board of Regents. The total contract cost is approximately $44,000,000. The Board of Regents believes that the claim is grossly overstated and anticipates resolving any legitimate portions of the claim for a substantially lesser sum than that claimed. Significant Discretely Presented Component Units Proprietary Fund Types A suit was filed against the Department of Administrative Services and the Department of Human Resources seeking damages of approximately $8,500,000 under breach of contract and promissory estoppel theories. The case arises out of a notice of award in connection with the federallyfunded WIC Infant Formula Rebate Program. The award was subsequently cancelled and rebidding ordered because of conflicting information that had created a contradiction in the initial bidding specifications. Discovery is ongoing in this matter. At present, the State intends to file a motion for summary judgment at the close of discovery. A financial institution has filed suit for refund of sales taxes based upon alleged bad debts on installment sales contracts purchased from motor vehicle dealers. The suit seeks a refund of approximately $300,000. The total amount of all similar pending administrative claims for refund (for the years 1991 - 1998) is approximately $24,000,000. This case is in the discovery phase. A contract claim has been made in the amount of $6,600,000 against the Board of Regents of the University System of Georgia in connection with construction at the University of The Federal Government, through the Guaranteed Student Loan Programs of the U.S. Department of Education, fully reinsured loans guaranteed through September 30, 1993, until the State's rate of annual losses (defaults) exceeded five percent (5%). In the event of future adverse loss experience, the State could be liable for up to (1) twenty percent (20%) of the outstanding balance of loans in repayment status at the beginning of each year which were disbursed prior to October 1, 1993, and (2) twenty-two percent (22%) of the outstanding balance of loans in repayment status at the beginning of each year which were disbursed on or after October 1, 1993. In a civil action case filed August 26, 1996, the plaintiffs seek a court order declaring that two games sponsored by the Georgia Lottery Corporation, "Quick Cash" and "Cash Three," are unconstitutional and enjoining the lottery from further offering of these games. Plaintiffs seek the return of all monies played on these games during a specified period, approximately $1,703,462,781. On an interlocutory appeal, the Georgia Court of Appeals ruled that the Lottery Corporation does not have sovereign immunity but ruled for the Corporation on the merits. The plaintiffs petitioned for 72 State of Georgia Notes to the Financial Statements June 30, 1998 Note 14. Contingencies (continued) a writ of certiorari to the Supreme Court of Georgia, and the Supreme Court denied the petition. The remittitur of the Court of Appeals has been returned to the trial court. Note 15. Subsequent Events Primary Government General Obligation Bonds Issued The State issued General Obligation Bonds in the amount of $326,350,000 on July 1, 1998 (Series 1998A and 1998B); in the amount of $220,645,000 on September 1, 1998 (Series 1998C); and in the amount of $172,610,000 on October 1, 1998 (Series 1998D). Proceeds from these bonds will be used for the purpose of financing various capital outlay projects. Note 16. Deferred Compensation Plan The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees of the State of Georgia and county health departments, permits such employees to defer a portion of their salary until future years. This plan is administered by a third party. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights of the State of Georgia subject only to the claims of the State's general creditors. Participants' rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair market value of the deferred account of each participant. In the equity funds, the market value may be either greater or less than the participants' contributions. It is the opinion of the Attorney General that the State has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. It is unlikely that the State will use the assets of the plan to satisfy the claims of general creditors in the future. Market values, which approximate cost, of investments at June 30, 1998, by plan type are as follows: Guaranteed Investment Contracts Index Trust 500 Portfolio The Vanguard Group of Investment Companies Magellan Fund Fidelity Institutional Retirement Services Company Over-The-Counter Portfolio Fidelity Institutional Retirement Services Company Prime Portfolio The Vanguard Group of Investment Companies United International Growth Fund Waddell and Reed Asset Management Company Wellesley Income Fund The Vanguard Group of Investment Companies Windsor II The Vanguard Group of Investment Companies Participants Accounts Reserve for Administration of Plan $ 135,028,960 67,760,617 72,827,465 27,162,014 3,444,203 9,320,620 29,525,508 49,553,261 $ 394,622,648 $ 388,104,810 6,517,838 $ 394,622,648 73 State of Georgia Notes to the Financial Statements June 30, 1998 Note 17. Retirement Systems District Attorneys' Retirement Fund Primary Government Georgia Defined Contribution Plan Plan Description Organization and Purpose The Georgia Defined Contribution Plan ("GDCP") is a singleemployer, defined contribution plan established by the Georgia General Assembly in July 1993 for the purpose of providing retirement allowances for State employees who are not members of a public retirement or pension system. GDCP is administered by the Employees' Retirement System (ERS) Board of Trustees. Membership As of June 30, 1998, participation in GDCP is as follows: Active Plan Members Terminated Employees Entitled to Benefits but not yet Receiving Benefits 61,103 61,570 122,673 Benefits A member may retire and elect to receive periodic payments after attainment of age sixty-five (65). The payments will be based upon mortality tables and interest assumptions to be adopted by the Board. If a member has less than $3,500 credit to his/her account, the Board has the option of requiring a lump sum distribution to the member. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Contributions Members are required to contribute seven and one-half percent (7.5%) of their gross salary. There are no employer contributions. Earnings will be credited to each member's account as adopted by the Board. Upon termination of employment, the amount of the member's account is refundable upon request by the member. Plan Description Organization and Purpose The District Attorneys' Retirement Fund ("DARF") is a single-employer, defined benefit pension plan established by the Georgia General Assembly in 1949 for the purpose of providing retirement benefits to the district attorneys of the State of Georgia. DARF is directed by its own Board of Trustees. The Boards of Trustees for ERS and DARF entered into a contract for ERS to administer the plan effective July 1, 1995. Membership As of June 30, 1998, DARF had twelve (12) retirees and beneficiaries currently receiving benefits. Benefits Persons appointed as district attorney emeritus shall receive an annual benefit of $15,000 or one-half of the State salary received by such person as a district attorney for the calendar year immediately prior to the person's retirement, whichever is greater. Contributions and Vesting Member contributions were five percent (5.0%) of their salary plus an additional two and one-half percent (2.5%) for the spousal coverage benefit if elected. The State paid member contributions of five percent (5.0%) of the member's annual salary. Additional employer contributions are not actuarially determined but are provided on an as-needed basis to fund current benefits. District Attorneys' Retirement System Plan Description Organization and Purpose The District Attorneys' Retirement System (DARS) is a single-employer, defined benefit pension plan established by the Georgia General Assembly in 1978 for the purpose of providing retirement benefits to the district attorneys of the State of Georgia. DARS is directed by its own Board of Trustees. The Boards of Trustees for ERS and DARS entered into a contract for ERS to administer the plan effective July 1, 1995. Any person who on June 30, 1998, was an active, inactive or retired member or beneficiary of DARS shall be transferred to the newly created Georgia Judicial Retirement System in the same status effective July 1, 1998. 74 State of Georgia Notes to the Financial Statements June 30, 1998 Note 17. Retirement Systems (continued) Membership As of June 30, 1998, participation in DARS is as follows: Retirees and Beneficiaries Currently Receiving Benefits 9 Active Plan Members 54 Terminated Employees Entitled to Benefits but not yet Receiving Benefits 8 71 Benefits The normal retirement for DARS is age sixty (60) with ten (10) years of creditable service with a benefit of four percent (4.0%) of the member's average annual compensation for each year of creditable service. If service exceeds sixteen (16) years, the benefit is four percent (4.0%) for each year of creditable service plus one percent (1.0%) for each year served after sixteen (16), not to exceed twenty four (24) years (72%). "Average annual compensation" is the highest average of two (2) consecutive years of creditable service, except no increase during such period in excess of five percent (5.0%) may be used. Death, disability, and spousal benefits are also available. Early retirement benefits are not available. Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of their salary plus an additional two and one-half percent (2.5%) for the spousal coverage benefit if elected. The State pays member contributions of four and three-fourths percent (4.75%) of the member's annual salary. Employer contributions are actuarially determined and approved and certified by the Board. Members become vested after ten (10) years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if a member later holds office as a district attorney, the member shall be reinstated as if never before a member and may re-establish prior service by repaying the amount withdrawn, plus interest. Employees' Retirement System of Georgia Plan Description Organization and Purpose Employees' Retirement System of Georgia ("ERS") is a single-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 and has the powers and privileges of a corporation. On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan ("SRBP") of ERS. SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code ("IRC") as a portion of ERS. The purpose of the SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1, 1998, all members and retired former members in ERS are eligible to participate in the SRBP whenever their benefits under ERS exceed the IRC Section 415 imposed limitation on benefits. Membership As of June 30, 1998, participation in ERS is as follows: Retirees and Beneficiaries Currently Receiving Benefits Active Plan Members Terminated Employees Entitled to Benefits but not yet Receiving Benefits 22,011 71,161 64,176 157,348 As of June 30, 1998, one hundred sixty-four (164) members were eligible to participate in the SRBP of ERS. Benefits The benefit structure of ERS was significantly modified on July 1, 1982. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provision in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions. 75 State of Georgia Notes to the Financial Statements June 30, 1998 Note 17. Retirement Systems (continued) Under both the old and new plans, a member may retire and receive normal retirement benefits after completion of ten (10) years creditable service and attainment of age sixty (60). Additionally, there are certain provisions allowing for retirement after twenty-five (25) years of service regardless of age. Retirement benefits paid to members are based upon the monthly average of the member's highest twenty-four (24) consecutive calendar quarters multiplied by the number of years of creditable service. Post - retirement cost - of - living adjustments are also made to members' benefits. Legislative Retirement System Plan Description Organization and Purpose Legislative Retirement System ("LRS") is a single-employer, defined benefit plan established by the Georgia General Assembly in 1979 for the purpose of providing retirement allowances for all members of the Georgia General Assembly. LRS is administered by the ERS Board of Trustees. Membership As of June 30, 1998, participation in LRS is as follows: 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 and Vesting Member contributions under the old plan are four percent (4.0%) of annual compensation up to $4,200 plus six percent (6.0%) of annual compensation in excess of $4,200. Under the old plan, the State pays member contributions in excess of one and one-fourth percent (1.25%) of annual compensation. Under the old plan, these State contributions are included in the members' accounts for refund purposes. Member contributions under the new plan are one and one-fourth percent (1.25%) of annual compensation. The State is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. Under the SRBP, employer contributions of $626,000 and retirement payments of $480,000 are included in the Statement of Changes in Plan Net Assets for the year ended June 30, 1998. Cash of $30,000 and employer receivable of $116,000 are included in the Statement of Plan Net Assets for the year ended June 30, 1998. Retirees and Beneficiaries Currently Receiving Benefits 178 Active Plan Members 206 Terminated Employees Entitled to Benefits but not yet Receiving Benefits 362 746 Benefits A member's normal retirement is after eight (8) years of creditable service and attainment of age sixty-five (65) or eight (8) years of membership service (4 legislative terms) and attainment of age sixty-two (62). A member may retire early and elect to receive a monthly retirement benefit after completion of eight (8) years of membership service and attainment of age sixty (60); however, the retirement benefit is reduced by five percent (5.0%) for each year the member is under age sixty-two (62). Upon retirement, the member will receive a monthly service retirement allowance of $28 multiplied by the number of years of creditable service reduced by age reduction factors, if applicable. Death, disability, and spousal benefits are also available through the plan. Members become vested after ten (10) years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits. The employer contributions are projected to liquidate the unfunded actuarial accrued liability within eight (8) years based upon the actuarial valuation at June 30, 1997. Contributions and Vesting Member contributions are eight and one-half percent (8.5%) of annual salary. The State pays member contributions in excess of four percent (4.0%) of annual compensation. Employer contributions are actuarially determined and approved and certified by the Board. Members become vested after eight (8) years of creditable service. Upon termination of employment, member 76 State of Georgia Notes to the Financial Statements June 30, 1998 Note 17. Retirement Systems (continued) contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits. Contributions and Vesting Member contributions are five percent (5.0%) of their salary plus an additional two and one half percent (2.5%) for the spousal coverage benefit if elected. The State pays member contributions of five percent (5.0%) of the member's annual salary. Additional employer contributions are not actuarially determined but are provided on an as-needed basis to fund current benefits. Based on the June 30, 1997, actuarial valuation of LRS (the latest actuarial valuation; present Board policy requires a biennial valuation), LRS does not have an unfunded accrued liability. Superior Court Judges Retirement Fund Plan Description Organization and Purpose The Superior Court Judges Retirement Fund ("SCJRF") is a single-employer, defined benefit pension plan established by the Georgia General Assembly in 1945 for the purpose of providing retirement benefits to the superior court judges of the State of Georgia. SCJRF is directed by its own Board of Trustees. The Boards of Trustees for ERS and SCJRF entered into a contract for ERS to administer the Plan effective July 1, 1995. Membership As of June 30, 1998, participation in SCJRF is as follows: Superior Court Judges Retirement System Plan Description Organization and Purpose The Superior Court Judges Retirement System ("SCJRS") is a single-employer, defined benefit pension plan established by the Georgia General Assembly in 1976 for the purpose of providing retirement benefits to the superior court judges of the State of Georgia. SCJRS is directed by its own Board of Trustees. The Boards of Trustees for ERS and SCJRS entered into a contract for ERS to administer the plan effective July 1, 1995. Any person who on June 30, 1998, was an active, inactive or retired member or beneficiary of SCJRS shall be transferred to the newly created Georgia Judicial Retirement System in the same status effective July 1, 1998. Membership As of June 30, 1998, participation in SCJRS is as follows: Retirees and Beneficiaries Currently Receiving Benefits Retirees and Beneficiaries Currently Receiving Benefits 57 33 Active Plan Members 154 Active Plan Members Terminated Employees Entitled to Benefits but not yet Receiving Benefits 3 Terminated Employees Entitled to Benefits but not yet Receiving Benefits 24 3 235 39 Benefits The normal retirement for SCJRF is age sixty-eight (68) with nineteen (19) years of creditable service with a benefit of two-thirds the salary paid to superior court judges. A member may also retire at age sixty-five (65) with a minimum of ten (10) years of creditable service with a benefit of onehalf the salary paid to superior court judges. Death, disability, and spousal benefits are also available. Benefits The normal retirement for SCJRS is age sixty (60) with sixteen (16) years of creditable service with a benefit of twothirds of the State salary paid to superior court judges at the time of the member's retirement, plus one percent (1.0%) for each year of creditable service over sixteen (16) up to a maximum of twenty-four (24) years. Additionally, a member may retire with reduced benefits at age sixty (60) with a minimum of ten (10) years of creditable service. A member must retire at age seventy-five (75), or at the end of 77 State of Georgia Notes to the Financial Statements June 30, 1998 Note 17. Retirement Systems (continued) Retirees and Beneficiaries Currently Receiving Benefits 36 the term in which the member becomes seventy-five (75), or Active Plan Members 174 forfeit all retirement and disability benefits. Death, Terminated Employees Entitled to disability, and spousal benefits are also available. Benefits but not yet Receiving Benefits 121 Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of their salary plus an additional two and one-half percent (2.5%) for the spousal coverage benefit or two and threefourths percent (2.75%) for the spouse plus benefit if elected. The State pays member contributions of four and three-fourths percent (4.75%) of the member's annual salary. Employer contributions are actuarially determined and approved and certified by the Board. Members become vested after ten (10) years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if a member later holds office as a superior court judge, the member shall be reinstated as if never before a member and may re-establish prior service by repaying the amount withdrawn, plus interest, within sixty (60) days of certification of such amount. Trial Judges and Solicitors Retirement Fund Plan Description Organization and Purpose Trial Judges and Solicitors Retirement Fund ("TJSRF") is a multiple-employer cost-sharing defined benefit plan established by the Georgia General Assembly in 1968 for the purpose of providing retirement allowances for trial judges and solicitors of certain courts of Georgia, and their survivors and other beneficiaries. TJSRF is administered by the ERS Board of Trustees and three other trustees not on the ERS Board. Any person who on June 30, 1998, was an active, inactive or retired member or beneficiary of TJSRF shall be transferred to the newly created Georgia Judicial Retirement System in the same status effective July 1, 1998. Membership As of June 30, 1998, participation in TJSRF is as follows: 331 Benefits The normal retirement for TJSRF is age sixty (60) with sixteen (16) years of creditable service; however, a member may retire at age sixty (60) with a minimum of ten (10) years of creditable service. Additionally, a member must retire at age seventy (70) or forfeit all retirement and disability benefits. Members holding office on July 1, 1980, are exempt from this provision. Retirement benefits paid to members are computed as four percent (4.0%) of the average annual compensation multiplied by the total years of creditable service not to exceed sixteen (16) years. The average annual compensation is the average salary of a member during the two (2) consecutive years of creditable service producing the highest such average but excluding any salary increases exceeding five percent (5.0%) over the previous year during the two-year period. Death, disability and spousal benefits are also available. Contributions and Vesting Members are required to contribute seven and one-half percent (7.5%) of their salary plus an additional two and one-half percent (2.5%) if spousal benefit is elected. Employer contributions are actuarially determined and approved and certified by the Board. Members become vested after ten (10) years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits. Based on the June 30, 1997, actuarial valuation (the latest actuarial valuation; present Board policy requires a biennial valuation), TJSRF does not have an unfunded accrued liability. 78 State of Georgia Notes to the Financial Statements June 30, 1998 Note 17. Retirement Systems (continued) Regents Retirement Plan Significant Discretely Presented Component Units Georgia Ports Authority Retirement Plan Plan Description Plan Description Organization and Purpose The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia (College and University Funds), under which it may purchase annuity contracts for the purpose of providing retirement and death benefits for eligible faculty and principal administrators. 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. Contributions and Vesting Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly of the State of Georgia. A) Members' Contributions: Members' contributions are calculated as five percent (5.0%) of the earnable compensation. Organization and Purpose The Georgia Ports Authority Retirement Plan ("Plan") is a single-employer defined benefit plan covering all full-time employees of the Georgia Ports Authority. Benefits The Plan provides pension benefits that are based on years of service and compensation earned during years of employment. Contributions and Vesting Members contribute one percent (1.0%) of their earnings each month for the first $9,000 earned during the plan year and one and one-half percent (1.5%) after earnings reach $9,000. The employer's contributions are two and onefourth percent (2.25%) of the employee's first $9,000 of annual earnings for the plan year plus three and one-fourth percent (3.25%) of the employee's annual earnings for the plan year in excess of $9,000. Members become vested after reaching age 55 or after completing five (5) or more years of service. Teachers Retirement System of Georgia B) State of Georgia Contributions: Employer contributions are calculated as seven and three-fourths percent (7.75%) of the participating employee's earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable. Plan Description Organization and Purpose The Teachers Retirement System of Georgia ("TRS") is a cost-sharing multiple-employer plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. 79 State of Georgia Notes to the Financial Statements June 30, 1998 Note 17. Retirement Systems (continued) On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers ("SRBP"). SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code ("IRC") as a portion of TRS. The purpose of the SRBP is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. Membership All teachers in the State public schools, the University System of Georgia (except those professors and principal administrators electing to participate in an optional retirement plan), and certain other designated employees in educational-related work are eligible for membership. As of June 30, 1998, participation in TRS is as follows: by the number of years of creditable service up to forty (40) years. Early retirement benefits are reduced by the lesser of one-twelfth (1/12) of seven percent (7.0%) for each month the member is below age sixty (60), or by seven percent (7.0%) for each year or fraction thereof by which the member has less than thirty (30) years of service. It is also assumed that certain cost-of-living adjustments, based on the CPI, will be made in future years. Retirement benefits are payable monthly for life. Death, disability and spousal benefits are also available. Contributions and Vesting TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Under the SRBP, employer contributions of $83,000 and retirement payments of $82,000 were reflected in the Statement of Changes in Plan Net Assets for the year ended June 30, 1998. Contributions required by the annual actuarial valuation are as follows: Member 5.00% Retirees and Beneficiaries Currently Receiving Benefits Active Plan Members Terminated Employees Entitled to Benefits but not yet Receiving Benefits 41,420 180,417 27,518 249,355 Employer: Normal Unfunded Accrued Liability Expenses 7.75% 3.91% .15% 11.81% As of June 30, 1998, seven (7) members were eligible to participate in the SRBP of TRS. Benefits A member is eligible for normal service retirement after thirty (30) years of creditable service, regardless of age, or after ten (10) years of service and attainment of age sixty (60). A member is eligible for early retirement after twenty-five (25) years of creditable service. Normal retirement (pension) benefits paid to members are equal to two percent (2.0%) of the average of the member's two (2) highest paid consecutive years of service multiplied Members become fully vested after ten (10) years of service. If a member terminates with less than ten (10) years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. The employer contributions to the unfunded accrued liability will liquidate the unfunded accrued liability over approximately eighteen (18) years on the assumption that the aggregate amount of unfunded accrued liability contribution will increase by three and one-half percent (3.5%) each year. 80 State of Georgia Notes to the Financial Statements June 30, 1998 Note 18. Nonmonetary Transactions Primary Government The State of Georgia received donated goods for its use and for distribution to other qualifying organizations outside the State reporting entity under the following programs: Program Agriculture, U. S. Department of Food Distribution Program Temporary Emergency Food Assistance Program Health and Human Services, U.S. Department of Childhood Immunization Grant HIV Prevention Activities - Health Department Based Preventive Health and Health Services Block Grant Preventive Health Services - Sexually Transmitted Disease Control Grants Project Grants and Cooperative Agreements for Tuberculosis Control Programs Value of Inventory Received Value of Inventory Reported at June 30, 1998 $ 27,544,161 $ $ 4,323,951 $ 154,808 2,093,495 $ 149,853 $ - $ 34,000 $ - $ 408,986 $ - $ 1,085,100 $ - $ 145,112 $ - The value of donated commodities received and distributed is not reported as revenues and expenses on the combined statement of revenues, expenditures and changes in fund balances. Information is not available to determine the items used within the State and the items distributed to (or held for) other qualifying organizations outside the State reporting entity. In addition, the Georgia Department of Administrative Services operates the Donation of Federal Surplus Personal Property program for the purpose of distributing surplus properties made available by the General Services Administration to eligible institutions, organizations and agencies. The value of surplus property received and distributed is not reported as revenues and expenses on the combined statement of revenues, expenditures and changes in fund balances, and the inventory on hand at June 30, 1998, is not reported on the combined balance sheet. The changes in Federal surplus personal property inventory during the fiscal year ended June 30, 1998, were as follows: Balance July 1, 1997 Additions Property Received Deductions Property Donated and Other Distributions Balance June 30, 1998 $ 9,923,202 12,878,908 $ 22,802,110 13,043,580 $ 9,758,530 81 State of Georgia Notes to the Financial Statements June 30, 1998 Note 18. Nonmonetary Transactions (continued) The Federal government provides food stamps to low-income households. The amount of food stamps a household receives depends on the household's size and financial circumstances. The Georgia Department of Human Resources is responsible for determining eligibility for participation in the food stamp program within the State. During the year under review, the total value of food stamps distributed as approved by the Department was $454,601,632. Significant Discretely Presented Component Units Governmental Fund Types Donated support of volunteer services and other sources totaling $566,543 was provided to the Georgia Public Telecommunications Commission during the year ended June 30, 1998. The value of these services and other sources are not reported as revenue on the Combining Statement of Revenues, Expenditures and Changes in Fund Balances. Note 19. Postemployment Benefits In addition to the pension benefits described in Note 17, the State of Georgia provides postretirement health care benefits through the State Health Benefit Plan to retirees pursuant to Title 45, Chapter 18 of the OCGA. An individual eligible for these benefits must have been a full time employee at the time of retirement of either the State of Georgia or a county social service agency and must be receiving monthly retirement benefits from either the Employees' Retirement System of Georgia or a county employees' retirement system. The State Health Benefit Plan is a public entity risk pool funded by employee and employer contributions. Employees and retirees subject to the Plan contribute amounts determined by the State Personnel Board for various health insurance plans. The various agencies of the State contribute to the health insurance fund based upon amounts recommended by the State Personnel Board and set forth in the Appropriations Act. The State Health Benefit Plan is funded on a "pay-as-you-go" basis. Expenses of the Plan include provisions for incurred but not reported claims. As of June 30, 1998, there were 53,055 employees who had retired and were receiving postretirement health care benefits through the State Health Benefit Plan. For the fiscal year ended June 30, 1998, the State recognized expenditures of $185,695,559, which was net of retiree contributions of $46,382,185. Pursuant to the general powers conferred by OCGA Section 20-3-31, the Board of Regents of the University System of Georgia (college and university funds) has established group health and life insurance programs for regular employees of the University System. It is the policy of the Board of Regents to permit employees of the University System eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System and who have at least ten years of service with the University System are eligible for these postemployment health and life insurance benefits. The University System pays the employer portion for group insurance for affected individuals. For the fiscal year ended June 30, 1998, the University System recognized expenditures of $18,526,266, which was net of participant contributions of $4,960,723. Note 20. Fund Deficits The following organizations had deficit balances at June 30, 1998. Primary Government Internal Service Funds Hazard and Insurance Reserve Fund - At June 30, 1998, the Fund had an unreserved retained earnings deficit of $601,888. Liability Self-Insurance Reserve Fund - At June 30, 1998, the Fund had an unreserved retained earnings deficit of $5,894,056. Unemployment Compensation Fund - At June 30, 1998, the Fund had an unreserved retained earnings deficit of $1,509,313. Workers' Compensation Fund - At June 30, 1998, the Fund had an unreserved retained earnings deficit of $68,774,678. 82 State of Georgia Notes to the Financial Statements June 30, 1998 Note 20. Fund Deficits (continued) North Georgia Mountains Authority - At June 30, 1998, the Authority had an unreserved retained earnings deficit of $1,570,931. Significant Discretely Presented Component Units Governmental Fund Types Note 21. Major Discretely Presented Component Unit Condensed Financial Statements Georgia Public Telecommunications Commission - At June 30, 1998, the Commission had an unreserved, undesignated fund balance deficit of $4,340,130. Proprietary Fund Types Lake Lanier Islands Development Authority - At June 30, 1998, the Authority had an unreserved retained earnings deficit of $19,196,141. The condensed financial statements of the major discretely presented component units of the State of Georgia reporting entity are presented below. "Major" component units, for purposes of this presentation, have been determined by giving consideration to each component units' significance relative to the other component units and the nature and significance of its relationship to the primary government. Condensed financial statements for all nonmajor discretely presented component units are presented in the aggregate. 83 State of Georgia Notes to the Financial Statements June 30, 1998 Note 21. Major Discretely Presented Component Unit Condensed Financial Statements (continued) ASSETS AND OTHER DEBITS Other Assets Property, Plant and Equipment (Net) Amount to be Provided for Retirement of General Long-Term Debt Total Assets and Other Debits LIABILITIES Due to Primary Government Other Liabilities Bonds and Other Long-Term Liabilities Total Liabilities EQUITY AND OTHER CREDITS Investment in Fixed Assets Fund Balances Unreserved Total Equity and Other Credits Total Liabilities, Equity and Other Credits Governmental Fund Types Georgia Education Georgia Public Authority Telecommunica- (Schools) tions Commission Total $ 568,842 $ 5,219,408 $ 5,788,250 73,906,597 73,906,597 6,069,631 6,069,631 $ 568,842 $ 85,195,636 $ 85,764,478 $ $ 328,877 $ 328,877 4,990,102 4,990,102 6,069,631 6,069,631 $ 0 $ 11,388,610 $ 11,388,610 $ $ 73,906,597 $ 73,906,597 568,842 (99,571) 469,271 $ 568,842 $ 73,807,026 $ 74,375,868 $ 568,842 $ 85,195,636 $ 85,764,478 REVENUES $ 29,655 $ 15,481,330 $ 15,510,985 EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES Operating Transfers from Primary Government EXCESS (DEFICIENCY) OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES FUND BALANCES, JULY 1 Adjustments Inclusion of Foundation for Public Broadcasting in Georgia, Inc. FUND BALANCES, JUNE 30 85 $ 0 $ 33,033,963 $ 33,033,963 $ 29,655 $ (17,552,633) $ (17,522,978) 16,326,489 16,326,489 $ 29,655 $ (1,226,144) $ (1,196,489) 539,187 147,144 686,331 979,429 979,429 $ 568,842 $ (99,571) $ 469,271 State of Georgia Notes to the Financial Statements June 30, 1998 Note 21. Major Discretely Presented Component Unit Condensed Financial Statements (continued) Proprietary Fund Types ASSETS Due from Primary Government Other Assets Restricted Assets Property, Plant and Equipment (Net) Total Assets LIABILITIES Due to Primary Government Other Liabilities Bonds and Other Long-Term Liabilities Total Liabilities Environmental Facilities Authority Housing and Finance Authority Lottery Corporation Ports Authority $ 2,204,493 $ 776,993,205 321,635 $ 134,284,294 801,473,270 5,840,980 $ 41,505,930 309,380,000 2,994,000 51,531,298 1,240,269 350,010,000 $ 779,519,333 $ 941,598,544 $ 353,879,930 $ 402,781,567 $ $ 21,600,352 88,665,393 $ 110,265,745 $ 1,852 $ 79,788,010 782,092,228 861,882,090 $ 16,143 $ 44,034,787 297,298,000 341,348,930 $ 50,659 11,334,802 33,109,539 44,495,000 EQUITY AND OTHER CREDITS Investment in Fixed Assets Contributed Capital Retained Earnings Reserved Unreserved Fund Balances Reserved Unreserved Total Equity and Other Credits $ 321,635 $ 526,845,283 2,925,051 126,065,307 12,265,010 831,302 $ 669,253,588 $ $ 28,726,437 48,770,096 633,268 1,586,653 79,716,454 $ $ 249,696,794 12,531,000 108,589,773 12,531,000 $ 358,286,567 Total Liabilities, Equity and Other Credits $ 779,519,333 $ 941,598,544 $ 353,879,930 $ 402,781,567 OPERATING REVENUES Sales and Services Operating Grants Taxes Other Total Operating Revenues $ $ 6,487,484 $ 1,676,898,000 $ 94,075,000 19,364,313 47,972,705 $ 19,364,313 $ 54,460,189 $ 1,676,898,000 $ 94,075,000 OPERATING EXPENSES Depreciation Other Total Operating Expenses $ $ 534,847 $ 1,393,000 $ 16,494,000 5,425,862 64,605,115 1,125,253,000 65,552,000 $ 5,425,862 $ 65,139,962 $ 1,126,646,000 $ 82,046,000 OPERATING INCOME (LOSS) $ 13,938,451 $ (10,679,773) $ 550,252,000 $ 12,029,000 Nonoperating Revenues/Expenses (Net) Operating Transfers to/from Primary Government NET INCOME (LOSS) 8,308,325 4,624,073 $ 26,870,849 $ 20,580,929 20,220,000 (555,272,000) 9,901,156 $ 15,200,000 $ (18,227,080) (6,198,080) EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES FROM GOVERNMENTAL OPERATIONS AND EXPENDABLE TRUST FUNDS (2,317,783) (110,501) FUND EQUITY, JULY 1 Adjustments (Net) Current Capital Contributions (Net) Transfer of Equity from Primary Government Increase (Decrease) in Inventories 615,311,497 (7,298,285) 36,365,675 71,582,858 (1,657,059) 287,000 (2,956,000) 347,904,647 (8,600,000) 25,180,000 FUND EQUITY, JUNE 30 $ 668,931,953 $ 86 79,716,454 $ 12,531,000 $ 358,286,567 State of Georgia Notes to the Financial Statements June 30, 1998 Student Finance Authority Geo L. Smith II All Other Georgia World Discretely Presented Congress Center Proprietary Authority Fund Types Total $ $ $ 382,398,598 36,014,434 46,333,730 2,649,874 248,054,206 71 $ 2,204,564 245,296,933 1,668,024,692 17,345,673 1,175,772,942 208,798,746 818,669,441 $ 385,048,472 $ 330,402,370 $ 471,441,423 $ 3,664,671,639 $ 135,316 $ 19,782 $ 2,184,570 31,992,478 335,450,022 211,341,977 $ 337,769,908 $ 243,354,237 $ 497 $ 224,249 20,760,796 211,695,795 136,427,889 1,884,385,048 157,189,182 $ 2,096,305,092 $ $ $ $ 321,635 63,703,860 161,690,879 1,001,936,816 27,604,818 19,673,746 124,634 23,219,639 23,710,465 128,850,897 95,622,405 455,169,458 12,898,278 2,417,955 $ 47,278,564 $ 87,048,133 $ 314,252,241 $ 1,568,366,547 $ 385,048,472 $ 330,402,370 $ 471,441,423 $ 3,664,671,639 $ 2,240,224 $ 18,395,317 $ 75,424,333 $ 1,873,520,358 21,091,686 21,091,686 1,569,994 1,569,994 5,852,868 34,122,987 55,386,285 162,699,158 $ 8,093,092 $ 52,518,304 $ 153,472,298 $ 2,058,881,196 $ 321,456 $ 8,758,583 $ 6,903,593 $ 34,405,479 45,669,148 45,593,493 128,689,422 1,480,788,040 $ 45,990,604 $ 54,352,076 $ 135,593,015 $ 1,515,193,519 $ (37,897,512) $ (1,833,772) $ 17,879,283 $ 543,687,677 865,001 47,956,323 $ 10,923,812 $ 1,372,978 (238,985) (699,779) $ (7,229,959) 25,890,194 5,263,681 (497,666,908) 15,913,005 $ 71,910,963 27,879 (2,400,405) 36,354,752 82,786,492 4,953,860 7,560 298,927,060 39,507 (891,513) 199,786 36,517 1,453,154,306 (20,471,837) 65,608,022 199,786 44,077 $ 47,278,564 $ 87,048,133 $ 314,252,241 $ 1,568,044,912 87 Required Supplementary Information State of Georgia Required Supplementary Information June 30, 1998 Retirement Systems - Required Supplementary Schedules Primary Government Schedule of Funding Progress (Thousands of Dollars) DARS ERS LRS (1) SCJRS TJSRF (1) Actuarial Valuation Date 6/30/96 6/30/97 6/30/96 6/30/97 6/30/95 6/30/97 6/30/96 6/30/97 6/30/95 6/30/97 Actuarial Value of Plan Assets (a) $ 19,277 21,816 $ 6,140,080 7,432,306 $ 13,137 18,197 $ 72,642 81,921 $ 25,925 35,613 Actuarial Accrued Liability ("AAL") Entry Age (b) $ 12,669 14,068 $ 7,243,105 8,159,345 $ 13,860 18,086 $ 50,753 56,132 $ 21,953 26,308 Unfunded AAL/(Funding Excess) (b - a) $ (6,608) (7,748) $ 1,103,025 727,039 $ 723 (111) $ (21,889) (25,159) $ (3,972) (9,305) Funded Ratio (a/b) 152.2% 155.1% 84.8% 91.1% 94.8% 100.6% 143.1% 144.8% 118.1% 135.4% Annual Covered Payroll (c) Unfunded AAL/(Funding Excess) as a Percentage of Covered Payroll [(b - a)/c] $ 3,737 4,113 (176.8)% (188.4)% $ 1,968,714 1,977,928 56.0 % 36.8 % $ 2,186 2,340 33.1 % (4.7)% $ 13,294 13,678 (164.7)% (183.9)% $ 5,991 7,305 (66.3)% (127.4)% Information is shown only for the plans and years available in accordance with the parameters of GASB 25. Additional information will be added as data become available. (1) Actuarial valuations are performed biennially Schedule of Employer Contributions (Thousands of Dollars) DARS ERS LRS SCJRS TJSRF Year Ended June 30 1996 1997 1996 1997 1996 1997 1996 1997 1996 1997 State Annual Required Contribution - $ 271,342 282,249 $ 164 159 - $ 472 809 Percentage Contributed 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Information is shown only for the plans and years available in accordance with the parameters of GASB 25. Additional information will be added as data become available. 91 State of Georgia Required Supplementary Information June 30, 1998 Retirement Systems - Required Supplementary Schedules (continued) Notes to Required Supplementary Schedules Schedule of Funding Progress The actuarial value of assets recognizes a portion of the difference between the market value of assets and the expected actuarial value of assets, based on the assumed valuation rate of return. The amount recognized each year is 20% of the difference between market value and expected actuarial value. The actuarial value of assets is limited to a range between 80% and 120% of market value. Schedule of Employee Contributions The required employer contributions and percent of those contributions actually made are presented in the schedule. Actuarial Assumptions The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation is presented in the following table: DARS ERS LRS SCJRS TJSRF Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Post-Retirement Cost-ofLiving Adjustment June 30, 1997 Entry Age Normal Level payment, closed June 30, 1997 June 30, 1997 Entry Age Unit Credit Level percentage of pay, Level dollar, open open June 30, 1997 Entry Age Normal Level payment, closed June 30, 1997 Entry Age Level percentage of pay, open 26 years Market-related value 8 years 40 years 26 years 5-year smoothed market 5-year smoothed market Market-related value 26 years 5-year smoothed market 7.5% (2) 5.5% (2) 7.0% (1) 5.20 - 9.0% (1) 7.0% (1) n/a 7.5% (2) 5.5% (2) 7.0% (1) 5.5% (1) None None 3% annually None (3) None (1) Includes inflation rate of 3.50% (2) Includes inflation rate of 3.00% (3) Certain members retired from other systems who are due death benefits from this system are assumed to receive 5.50% cost-of-living adjustments. 92 State of Georgia Required Supplementary Information June 30, 1998 Retirement Systems - Required Supplementary Schedules (continued) Significant Discretely Presented Component Units Schedule of Funding Progress (Thousands of Dollars) Actuarial Valuation Date Actuarial Value of Plan Assets (a) Actuarial Accrued Liability ("AAL") Entry Age (b) Unfunded AAL/(Funding Excess) (b - a) Funded Ratio (a/b) Annual Covered Payroll (c) Unfunded AAL/(Funding Excess) as a Percentage of Covered Payroll [(b - a)/c] TRS 6/30/95 $ 16,335,944 $ 19,771,740 $ 3,435,796 82.6% $ 4,712,292 72.9% 6/30/96 $ 18,750,568 $ 22,163,755 $ 3,413,187 84.6% $ 5,086,924 67.1% 6/30/97 $ 22,496,125 $ 24,895,047 $ 2,398,922 90.4% $ 5,467,905 43.9% Information is shown only for the plans and years available in accordance with the parameters of GASB 25. Additional information will be added as data become available. Schedule of Employer Contributions (Thousands of Dollars) Year Ended June 30 State Annual Required Contribution Percentage Contributed TRS 1991 $ 452,522 100.0% 1992 $ 454,138 100.0% 1993 $ 485,121 100.0% 1994 $ 512,429 100.0% 1995 $ 1996 $ 1997 $ 556,522 600,766 652,928 100.0% 100.0% 100.0% Information is shown only for the plans and years available in accordance with the parameters of GASB 25. Additional information will be added as data become available. 93 State of Georgia Required Supplementary Information June 30, 1998 Retirement Systems - Required Supplementary Schedules (continued) Notes to Required Supplementary Schedules Schedule of Funding Progress The actuarial value of assets recognizes a portion of the difference between the market value of assets and the expected actuarial value of assets, based on the assumed valuation rate of return. The amount recognized each year is 20% of the difference between market value and expected actuarial value. The actuarial value of assets is limited to a range between 80% and 120% of market value. Schedule of Employee Contributions The required employer contributions and percent of those contributions actually made are presented in the schedule. Actuarial Assumptions The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation is presented in the following table: Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Inflation Rate Post-Retirement Cost-of-Living Adjustment June 30, 1997 Entry Age Level percentage of pay, open 18 years 5-year smoothed market 7.25% 3.50% - 6.25% 3.50% 3% annually 94 State of Georgia Required Supplementary Information June 30, 1998 Year 2000 Issues On March 29, 1999, the Governmental Accounting Standards Board (GASB) issued Technical Bulletin 99-1, "Disclosures about Year 2000 Issues-An Amendment of Technical Bulletin 98-1." The amendment provides that required year 2000 disclosures may be reported as required supplementary information. The State of Georgia has elected to present year 2000 disclosures as required supplementary information. The year 2000 issue refers to the fact that many computer programs use only the last two digits to refer to a year. Therefore, both 1900 and 2000 would be referred to as "00." Computer programs have to be adjusted to recognize the difference between those two years or programs will fail or create errors. In addition, some programs may not be able to recognize the year 2000 as a leap year. Further, the year 2000 issue could affect electronic equipment - such as environmental systems, elevators, and vehicles - containing computer chips that have date recognition features. The State has established a State of Georgia Year 2000 Project Office (Year 2000 Project Office) to coordinate remediation efforts. The mission of the Year 2000 Project Office is to provide policies, standards, state-level management, compliance reporting and project oversight for all year 2000 activities within and among state agencies and the University System of Georgia. The Year 2000 Project Office communicates agency readiness status and risks to the Governor on a monthly basis. The statewide effort began in 1996 with the development of a condition assessment, followed by a statewide assessment of mission critical projects and the establishment of the State of Georgia Year 2000 Project Office. This effort is receiving a high priority from the Governor and Georgia General Assembly. The following stages have been identified as necessary to address the year 2000 issue: Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 issue. Assessment Stage - When the organization begins the actual process of identifying all of its systems and individual components of the systems. An organization may decide to review all system components or, through a risk analysis, identify only mission-critical systems - systems and equipment critical to conducting operations. Remediation Stage - When the organization actually makes changes to systems and equipment. This stage deals primarily with the technical issues of converting existing systems, or switching to compliant systems. During this stage, decisions are made on how to address year 2000 system or equipment issues, and the required changes are made. Validation/Testing Stage - When the organization validates and tests changes made during the conversion process. The development of test data and test scripts, the running of test scripts, and the review of test results are crucial for this stage of the conversion process to be successful. If the testing results show anomalies, the tested area needs to be corrected and retested. The Year 2000 Project Office has completed an extensive impact assessment of major systems including identification of risk, program impact, and cost and conversion alternatives. Corresponding hardware upgrades and/or purchases have also been identified. The Year 2000 Project Office is currently tracking 366 projects which various State agencies have identified as critical to their operations. Of these projects, the State has currently identified 133 mission-critical systems. Reported items for these systems include software remediation, re-writing or replacement and corresponding hardware upgrades or purchases. The State of Georgia Year 2000 Project Office is currently not compiling Year 2000 readiness information for the State Judicial System, the University System of Georgia, the Georgia Lottery Corporation or the Georgia General Assembly. Process control devices, and general purpose agency infrastructure, if they are not a part of these reported information technology systems, are not included in the 133 mission-critical systems being tracked. The Year 2000 Project Office defines technical testing as the point where a particular system has been fixed, replaced or remediated, systems and user acceptance testing has been satisfactorily completed, and the system is ready for deployment in the operating environment. As of March 26, 1999, the State of Georgia had completed technical testing (as defined in the preceding sentence) for 56% of its mission critical-systems. Units of the University System of Georgia are responsible for assessment and remediation of systems unique to their operations. The majority of these institution-specific systems are in the remediation and validation/testing stages. The Board of Regents of the University System of Georgia supports the College and University Fund Accounting System, the Regents Budget Reporting System, the Property Inventory System, the Regents Payroll/Personnel System and the Banner Student Information System on behalf a majority of its member institutions. The Regents Budget Reporting System and the Property Inventory System are 95 State of Georgia Required Supplementary Information June 30, 1998 Year 2000 Issues (contintued) beyond the validation/testing stage and management considers them year 2000 ready. The remainder of these common systems are in the remediation and validation/testing stages. The General Assembly appropriated $152 million in Fiscal Year 1998 and an additional $170 million in Fiscal Year 1999 for remediation efforts.. Anticipated Federal funding for year 2000 remediation efforts will boost total funding for year 2000 related activities to approximately $369 million. Because of the unprecedented nature of the year 2000 issue, its effects and the success of related remediation efforts will not be fully determinable until the year 2000 and thereafter. Management cannot assure that the State of Georgia is or will be year 2000 ready, that the State's remediation efforts will be successful in whole or in part, or that parties with whom the State does business will be year 2000 ready. 96 Combining Statements and Schedules Primary Government Capital Projects Funds State of Georgia Primary Government - Capital Projects Funds For the Fiscal Year Ended June 30, 1998 Capital Projects Funds account for the acquisition or construction of major governmental general fixed assets. The State's capital projects funds are described below: Georgia Building Authority (Hospital) accounts for the acquisition, construction, repair, maintenance, improvement, operation and management of self-liquidating projects on property owned by the authority. These projects include hospitals, health care facilities, dormitories and housing accommodations for patients, officers and employees of institutions controlled by state agencies. Georgia Building Authority (Markets) accounts for the construction and renovation of farmers markets and related facilities. Georgia Building Authority (Penal) accounts for the acquisition, construction, repair, maintenance, improvement, operation and management of buildings, facilities, equipment and services for the State penal system. Georgia Education Authority (University) accounts for the construction and improvement of buildings and facilities of institutions under the authority of the Board of Regents of the University System of Georgia. Georgia State Financing and Investment Commission accounts for the construction of projects for state agencies financed through the issuance of public debt, including educational facilities for county and independent school systems. 101 State of Georgia Primary Government - Capital Projects Funds Combining Balance Sheet June 30, 1998 Assets Investments Receivables (Net of Allowances for Uncollectibles) Interest and Dividends Other Interfund Receivables Advances to Component Units Total Assets Liabilities and Fund Balances Liabilities: Cash Overdraft Accounts Payable and Other Accruals Contracts Payable Deferred Revenue Other Liabilities Total Liabilities Fund Balances: Reserved for Other Specific Purposes Unreserved, Designated Designated for Future Capital Outlay Unreserved, Undesignated Total Fund Balances Total Liabilities and Fund Balances Georgia Building Authority (Hospital) Georgia Building Authority (Markets) $ 294,798 $ 283,409 $ 294,798 $ 283,409 $ 15,562 $ 14,787 $ 15,562 $ 14,787 $ $ 30,763 279,236 237,859 $ 279,236 $ 268,622 $ 294,798 $ 283,409 102 Georgia Building Authority (Penal) Georgia Education Authority (University) Georgia State Financing and Investment Commission Total $ 1,657,452 $ 1,336,508 $ 960,205,702 $ 963,777,869 1,189,172 11,903,012 3,300,425 15,209,275 11,903,012 1,189,172 3,300,425 15,209,275 $ 1,657,452 $ 2,525,680 $ 990,618,414 $ 995,379,753 $ 100,590 $ 17,064 $ 86,456 22,463,624 $ 26,573,264 15,363,494 18,588,773 22,611,627 26,573,264 15,363,494 86,456 18,588,773 $ 100,590 $ 103,520 $ 82,989,155 $ 83,223,614 $ 1,377,402 $ $ $ 1,408,165 179,460 2,422,160 907,629,259 907,629,259 3,118,715 $ 1,556,862 $ 2,422,160 $ 907,629,259 $ 912,156,139 $ 1,657,452 $ 2,525,680 $ 990,618,414 $ 995,379,753 103 State of Georgia Primary Government - Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended June 30, 1998 Revenues: Interest and Other Investment Income Rents and Royalties Other Total Revenues Expenditures: General Government Capital Outlay Debt Service Principal Interest Other Debt Service Charges Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Operating Transfers from Component Units Operating Transfers Out General Obligation Bond Proceeds Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses Fund Balances, July 1 Adjustments Change in Accounting Principle Other Residual Equity Transfers from Component Units Residual Equity Transfers Out Residual Equity Transfers to Component Units Georgia Building Authority (Hospital) Georgia Building Authority (Markets) Georgia Building Authority (Penal) $ 19,953 $ 21,543 $ 84,648 $ 19,953 $ 21,543 $ $ 111,154 $ 191,367 $ 84,648 6,074 2,000 $ 111,154 $ 191,367 $ $ (91,201) $ (169,824) $ $ $ $ 8,074 76,574 $ $ 0 $ 0 $ 0 $ (91,201) $ (169,824) $ 76,574 370,437 438,446 1,480,288 Fund Balances, June 30 $ 279,236 $ 268,622 $ 1,556,862 104 Georgia Education Authority (University) Georgia State Financing and Investment Commission Total $ 183,363 $ 80,438,063 $ 80,747,570 46,812 46,812 6,979 1,574,046 1,581,025 $ 237,154 $ 82,012,109 $ 82,375,407 $ 26,846 $ $ 335,441 346,294,387 346,296,387 46,812 158,508 239,009 46,812 158,508 239,009 $ 232,166 $ 346,533,396 $ 347,076,157 $ 4,988 $ (264,521,287) $ (264,700,750) $ $ 4,414,614 $ 4,414,614 (128,576,564) (128,576,564) 257,123,411 257,123,411 $ 0 $ 132,961,461 $ 132,961,461 $ 4,988 $ (131,559,826) $ (131,739,289) 2,417,172 1,037,148,472 1,041,854,815 14,058,031 7,600,000 18,509,700 (165,856) (37,961,262) 14,058,031 7,600,000 18,509,700 (165,856) (37,961,262) $ 2,422,160 $ 907,629,259 $ 912,156,139 105 Primary Government Internal Service Funds State of Georgia Primary Government - Internal Service Funds For the Fiscal Year Ended June 30, 1998 Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis. The State's internal service funds are described below: The Department of Administrative Services delivers a variety of supportive services to all state agencies and, upon request, to local governments in Georgia. Among the services provided are purchasing, surplus property, printing, telecommunications, motor pool and building space management. The Georgia Building Authority is primarily responsible for constructing and maintaining State office buildings, maintaining the grounds within the State Capitol complex, maintaining the Governor's Mansion and operating parking facilities. The Correctional Industries Administration utilizes the inmate work force to manufacture products and provide services for the penal system, other units of state government and local governments. The Merit System of Personnel Administration provides a career service to the classified employees in the executive branch based on the principles of merit, equal opportunity and freedom from political influence. The Agency for Removal of Hazardous Materials administers a program for the abatement and removal of asbestos and other hazardous materials from the premises of the State, state authorities, counties, municipal corporations, local and independent school systems, and other units and authorities of government. The Risk Management column is an accumulation of the funds used to account for self-insurance programs established by individual agreement, statute or administrative action: The Georgia State Indemnification Commission is used to account for the accumulation of funds for the purpose of providing indemnification with respect to the death of any law enforcement officer, fireman or prison guard killed in the line of duty. The Hazard and Insurance Reserve Fund is used to account for the assessment of premiums against various state agencies for the purpose of providing property, fire and extended coverage, automobile, aircraft and marina insurance. The Liability Self-Insurance Reserve Fund is used to account for the accumulation of funds for the purpose of providing liability insurance coverage for employees of the State against personal liability for damages arising out of performance of their duties. The State Employees' Assurance Department is used to account for the accumulation of funds for the purpose of providing survivors' benefits for eligible members of the Employees' Retirement System. 109 State of Georgia Primary Government - Internal Service Funds For the Fiscal Year Ended June 30, 1998 The Unemployment Compensation Fund was created for the purpose of consolidating processing of unemployment compensation claims against state agencies and the payment of sums due to the Department of Labor. The Workers' Compensation Fund was established to authorize insurance coverage for employees of the State and for the receipt of premiums as prescribed by the Workers' Compensation statutes of the State. 110 State of Georgia Primary Government - Internal Service Funds Combining Balance Sheet June 30, 1998 Assets Current Assets: Cash and Cash Equivalents Receivables (Net of Allowances for Uncollectibles) Other Accounts Miscellaneous Due from Other Funds Due from Component Units Inventories Prepaid Items Long-Term Assets: Investments Fixed Assets: Land and Buildings Machinery and Equipment Accumulated Depreciation Total Assets Liabilities and Fund Equity Liabilities Current Liabilities: Cash Overdraft Accounts Payable and Other Accruals Compensated Absences Payable Claims and Judgments Payable Contracts Payable Salaries/Withholdings Payable Due to Other Funds Due to Component Units Deferred Revenue Long-Term Liabilities: Capital Leases/Installment Purchases Payable Deposits and Overpayments Long-Term Debt Payable (Net of Unamortized Discounts) Notes and Loans Payable Total Liabilities Fund Equity Contributed Capital State of Georgia Other Total Contributed Capital Retained Earnings Reserved Unreserved Total Retained Earnings Total Fund Equity Total Liabilities and Fund Equity Administrative Services, Department of Building Authority, Georgia Correctional Merit System Industries of Personnel Administration Administration $ 13,377,269 $ $ $ 2,223,168 706,704 18,039,383 419,830 4,405,271 401,754 1,880,064 12,021,743 154,727,903 3,946,583 402,822 139,628 10,791,659 221,366,831 11,230,646 3,156,487 2,463 7,431,720 75,741 6,837,614 8,638,931 13,184,028 (11,980,413) 201,964 60,229 65,651 1,108,109 $ 205,979,921 $ 247,878,169 $ 27,346,571 $ 3,659,121 $ $ 16,645,483 4,910,382 15,999,408 1,058 143 10,507,655 $ 48,064,129 $ 661,091 $ 1,654,878 1,810,134 1,180,470 38,080 17,552 73,701 1,764,138 7,200,044 $ 177,717 $ 966,831 684,870 129 21,874 38,808 1,092,857 2,983,086 $ $ 632,419 559,352 1,730,395 1,214 33,353 2,956,733 $ 53,384,666 $ 198,222,120 $ 1,145,948 $ $ 21,837,424 $ 53,384,666 $ 220,059,544 $ 1,145,948 $ 0 $ 6,488,100 $ $ $ 98,043,026 20,618,581 23,217,537 $ 104,531,126 $ 20,618,581 $ 23,217,537 $ $ 157,915,792 $ 240,678,125 $ 24,363,485 $ 549 701,839 702,388 702,388 $ 205,979,921 $ 247,878,169 $ 27,346,571 $ 3,659,121 112 Removal of Hazardous Materials, Agency for Risk Management Total Before Eliminations Eliminations Total $ 332,376 $ $ 15,932,813 $ $ 15,932,813 304,353 9,688 23,179 1,104,082 2,509,005 1,042,660 8,316,091 2,521,156 19,142,272 419,830 12,262,992 682,774 995,397,335 1,014,906,672 242,027,505 181,354,768 (11,980,413) (950,478) 8,316,091 2,521,156 18,191,794 419,830 12,262,992 682,774 1,014,906,672 242,027,505 181,354,768 (11,980,413) $ 1,773,678 $ 998,949,000 $ 1,485,586,460 $ (950,478) $ 1,484,635,982 $ $ 7,810,318 $ 8,649,126 $ $ 8,649,126 636,158 20,535,769 20,535,769 7,964,738 7,964,738 357,293,702 357,293,702 357,293,702 18,910,273 18,910,273 40,481 40,481 911,052 950,478 (950,478) 0 143 143 73,701 73,701 10,579,816 1,764,138 10,579,816 1,764,138 1,092,857 1,092,857 $ 636,158 $ 366,015,072 $ 427,855,222 $ (950,478) $ 426,904,744 $ $ $ 252,752,734 $ $ 252,752,734 21,837,424 21,837,424 $ 0 $ 0 $ 274,590,158 $ 0 $ 274,590,158 $ 23,179 $ 708,960,000 $ 715,471,828 $ 1,114,341 (76,026,072) 67,669,252 $ 1,137,520 $ 632,933,928 $ 783,141,080 $ $ 1,137,520 $ 632,933,928 $ 1,057,731,238 $ $ 715,471,828 67,669,252 0 $ 783,141,080 0 $ 1,057,731,238 $ 1,773,678 $ 998,949,000 $ 1,485,586,460 $ (950,478) $ 1,484,635,982 113 State of Georgia Primary Government - Internal Service Funds Risk Management Combining Balance Sheet June 30, 1998 Assets Current Assets: Receivables (Net of Allowances for Uncollectibles) Other Miscellaneous Due from Other Funds Long-Term Assets: Investments Total Assets Liabilities and Equity Liabilities Current Liabilities: Cash Overdraft Claims and Judgments Payable Due to Other Funds Total Liabilities Equity Retained Earnings Reserved Unreserved Total Equity Total Liabilities and Equity Georgia State Indemnification Commission Hazard and Insurance Reserve Fund Liability Self-Insurance Reserve Fund State Employees' Assurance Department Unemployment Compensation Fund $ $ 117,419 $ 851,712 $ $ 15,686 442,598 600,000 62 891,453 16,217,961 191,661,182 708,360,000 1,487,965 $ 891,453 $ 16,335,380 $ 192,955,492 $ 708,960,000 $ 1,503,713 $ 24,257 $ 441,292 $ 5,215,122 $ 113,333 16,221,404 193,634,426 274,572 $ 137,590 $ 16,937,268 $ 198,849,548 $ $ 40,487 2,972,539 0 $ 3,013,026 $ $ $ $ 708,960,000 $ $ 753,863 (601,888) (5,894,056) (1,509,313) $ 753,863 $ (601,888) $ (5,894,056) $ 708,960,000 $ (1,509,313) $ 891,453 $ 16,335,380 $ 192,955,492 $ 708,960,000 $ 1,503,713 114 Workers' Compensation Fund Total $ 1,524,188 $ 2,509,005 1,042,660 76,778,774 995,397,335 $ 78,302,962 $ 998,949,000 $ 2,089,160 $ 7,810,318 144,352,000 357,293,702 636,480 911,052 $ 147,077,640 $ 366,015,072 $ $ 708,960,000 (68,774,678) (76,026,072) $ (68,774,678) $ 632,933,928 $ 78,302,962 $ 998,949,000 115 State of Georgia Primary Government - Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Equity For the Fiscal Year Ended June 30, 1998 Operating Revenues: Contributions Insurance Recoveries Interest and Other Investment Income Rents and Royalties Sales and Services Other Total Operating Revenues Operating Expenses: General and Administrative Goods and Services Interest Benefits Claims and Judgments Depreciation Total Operating Expenses Operating Income (Loss) Nonoperating Revenues (Expenses): Interest and Other Investment Income Interest Expense Other Total Nonoperating Revenues (Expenses) Net Income (Loss) Before Operating Transfers Operating Transfers: Transfers In Transfers Out Net Operating Transfers Net Income (Loss) Fund Equity, July 1 Adjustments Other Contributed Capital Transfer of Contributed Capital Increase in Inventories Fund Equity, June 30 Administrative Services, Department of Building Authority, Georgia Correctional Merit System Industries of Personnel Administration Administration $ $ $ $ $ 199,289,789 1,364,309 31,614,994 17,372,731 27,364,273 13,265,891 $ 200,654,098 $ 48,987,725 $ 27,364,273 $ 13,265,891 $ 96,729,496 $ 130,338,622 194,765 27,108,319 $ 17,222,704 9,997,677 $ 15,149,046 13,168,305 1,309,224 $ 227,262,883 $ 44,331,023 $ 26,455,947 $ 13,168,305 $ (26,608,785) $ 4,656,702 $ 908,326 $ 97,586 $ 209,740 $ (2,405,788) $ (2,196,048) $ $ (28,804,833) $ 307,078 $ 567,171 874,249 $ 5,530,951 $ 393,043 $ (57,945) 327,953 663,051 $ 1,571,377 $ $ (26,750) (26,750) 70,836 $ 53,897,836 $ $ $ (17,226,464) $ 36,671,372 $ 0 $ 0 $ $ 7,866,539 $ 5,530,951 $ 1,571,377 $ 159,402,494 234,981,318 22,874,108 (10,336,230) 982,989 165,856 (82,000) $ 157,915,792 $ 240,678,125 $ 24,363,485 $ 300,000 (200,903) 99,097 169,933 532,455 702,388 116 Removal of Hazardous Materials, Agency for Risk Management Total Before Eliminations Eliminations Total $ $ 116,167,640 $ 116,167,640 $ 1,763,355 1,763,355 145,271,963 145,271,963 31,614,994 1,919,275 259,211,959 1,364,309 $ 1,919,275 $ 263,202,958 $ 555,394,220 $ (91,273) $ 116,076,367 1,763,355 145,271,963 31,614,994 259,211,959 1,364,309 (91,273) $ 555,302,947 $ 454,408 $ 9,660,455 $ 157,118,660 $ 1,461,964 10,780,634 174,952,970 194,765 15,178,000 15,178,000 183,454,774 183,454,774 1,309,224 $ 1,916,372 $ 219,073,863 $ 532,208,393 $ $ 2,903 $ 44,129,095 $ 23,185,827 $ (91,273) $ 157,027,387 174,952,970 194,765 15,178,000 183,454,774 1,309,224 (91,273) $ 532,117,120 0 $ 23,185,827 $ $ $ 909,861 $ (57,945) (1,537,414) $ 0 $ 0 $ (685,498) $ $ 2,903 $ 44,129,095 $ 22,500,329 $ $ 909,861 (57,945) (1,537,414) 0 $ (685,498) 0 $ 22,500,329 $ $ $ 54,197,836 $ (17,427,367) $ 0 $ 0 $ 36,770,469 $ $ 2,903 $ 44,129,095 $ 59,270,798 $ 1,134,617 588,804,833 1,007,729,825 (10,336,230) 165,856 (82,000) 982,989 $ 1,137,520 $ 632,933,928 $ 1,057,731,238 $ $ 54,197,836 (17,427,367) 0 $ 36,770,469 0 $ 59,270,798 1,007,729,825 (10,336,230) 165,856 (82,000) 982,989 0 $ 1,057,731,238 117 State of Georgia Primary Government - Internal Service Funds Risk Management Combining Statement of Revenues, Expenses and Changes in Equity For the Fiscal Year Ended June 30, 1998 Operating Revenues: Contributions Insurance Recoveries Interest and Other Investment Income Total Operating Revenues Operating Expenses: General and Administrative Goods and Services Benefits Claims and Judgments Total Operating Expenses Net Income (Loss) Equity, July 1 Georgia State Indemnification Commission Hazard and Insurance Reserve Fund Liability Self-Insurance Reserve Fund State Employees' Assurance Department $ 700,000 $ 14,452,316 $ 35,006,061 $ 11,162,000 1,763,355 73,642 751,715 9,149,483 131,534,000 $ 773,642 $ 16,967,386 $ 44,155,544 $ 142,696,000 $ $ 612,479 $ 3,408,862 $ 147,000 3,055,025 4,155,213 15,178,000 1,024,644 2,969,496 123,255,086 $ 1,024,644 $ 6,637,000 $ 130,819,161 $ 15,325,000 $ (251,002) $ 10,330,386 $ (86,663,617) $ 127,371,000 1,004,865 (10,932,274) 80,769,561 581,589,000 Equity, June 30 $ 753,863 $ (601,888) $ (5,894,056) $ 708,960,000 118 Unemployment Compensation Fund Workers' Compensation Fund Total $ 2,757,483 $ 52,089,780 $ 116,167,640 1,763,355 155,507 3,607,616 145,271,963 $ 2,912,990 $ 55,697,396 $ 263,202,958 $ 529,421 $ 4,962,693 $ 9,660,455 3,570,396 10,780,634 15,178,000 3,076,297 53,129,251 183,454,774 $ 3,605,718 $ 61,662,340 $ 219,073,863 $ (692,728) $ (5,964,944) $ 44,129,095 (816,585) (62,809,734) 588,804,833 $ (1,509,313) $ (68,774,678) $ 632,933,928 119 State of Georgia Primary Government - Internal Service Funds Combining Statement of Cash Flows For the Fiscal Year Ended June 30, 1998 Cash Flows from Operating Activities: Cash Received from Customers Cash Received from Required Contributions Cash Received from Insurance Proceeds Cash Paid to Vendors Cash Paid to Employees Cash Paid for Benefits Cash Paid for Claims and Judgments Net Cash Provided by (Used in) Operating Activities Cash Flows from Noncapital Financing Activities: Operating Transfers In Operating Transfers Out Return of Contributed Capital Other Noncapital Items (Net) Net Cash Provided by Noncapital Financing Activities Cash Flows from Capital and Related Financing Activities: Contributed Capital Acquisition and Construction of Capital Assets Principal Paid on Note Interest Paid on Note Net Cash Used in Capital and Related Financing Activities Cash Flows from Investing Activities: Purchase of Investments (Net) Interest on Investments Net Cash Used in Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, July 1 Cash and Cash Equivalents, June 30 Administrative Services, Department of Building Authority, Georgia $ 217,086,341 $ 48,433,451 (176,864,679) (47,906,257) (24,423,172) (19,962,450) $ (7,684,595) $ 4,047,829 $ 53,897,836 $ (17,226,464) (3,810,139) $ 32,861,233 $ $ 1,228,262 1,228,262 $ $ 165,856 (10,587,843) (2,228,216) $ (10,587,843) $ (2,062,360) $ (1,421,266) $ (8,834,408) 209,740 307,078 $ (1,211,526) $ (8,527,330) $ 13,377,269 $ (5,313,599) 0 5,313,599 $ 13,377,269 $ 0 120 Correctional Merit System Industries of Personnel Administration Administration Removal of Hazardous Materials, Agency for Risk Management Total $ 27,726,515 $ 13,136,449 $ (18,457,461) (7,022,301) (6,977,890) (6,228,770) $ 2,246,753 $ (70,211) $ 1,966,294 $ (1,889,639) $ 308,349,050 115,640,381 115,640,381 1,763,355 1,763,355 (20,321,598) (248,934,439) (81,119,778) (15,178,000) (15,178,000) (84,658,119) (84,658,119) 76,655 $ (2,753,981) $ (4,137,550) $ $ 300,000 $ (200,903) (82,000) 460,367 $ 378,367 $ 99,097 $ $ $ 54,197,836 (17,427,367) (82,000) 7,810,318 5,688,808 0 $ 7,810,318 $ 42,377,277 $ $ (1,377,759) (242,857) (57,945) $ (1,678,561) $ $ (150,155) (150,155) $ $ (1,980) (1,980) $ $ 165,856 (14,345,953) (242,857) (57,945) 0 $ (14,480,899) $ (5,406,226) $ 393,043 $ (5,013,183) $ $ (4,066,624) $ 4,066,624 $ 0 $ (121,269) $ 2,344,437 $ (305,299,115) $ (320,961,015) 36,098,743 37,008,604 0 $ (269,200,372) $ (283,952,411) 74,675 $ (264,144,035) $ (260,193,583) 257,701 264,144,035 276,126,396 $ 0 $ 2,223,168 $ 332,376 $ 0 $ 15,932,813 (continued) 121 State of Georgia Primary Government - Internal Service Funds Combining Statement of Cash Flows (continued) For the Fiscal Year Ended June 30, 1998 Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used In) Operating Activities: Depreciation Interest and Other Investment Income Changes in Assets and Liabilities: Decrease (Increase) in Other Receivables Decrease (Increase) in Due from Other Funds Decrease in Due from Component Units Decrease (Increase) in Inventories Decrease (Increase) in Prepaid Items Increase (Decrease) in Accounts Payable and Other Accruals Increase (Decrease) in Compensated Absences Payable Increase in Claims and Judgments Payable Increase in Contracts Payable Increase (Decrease) in Salaries/Withholdings Payable Increase (Decrease) in Due to Other Funds Increase in Due to Component Units Increase (Decrease) in Deferred Revenue Increase in Deposits and Overpayments Total Adjustments Net Cash Provided by (Used in) Operating Activities Noncash Investing, Capital, and Financing Activities: Disposal of Fixed Assets Acquisition of Fixed Assets through Capital Leases Write off of Fixed Assets Administrative Services, Department of Building Authority, Georgia $ (26,608,785) $ 4,656,702 $ $ $ 2,111,285 14,270,226 50,589 (23,213) (2,827,844) 251,170 (1,749,557) 69,933 (826) (249,154) 93,905 5,147,388 (55,554) 143 10,750 25,422 (4,629) 12,544 1,182,739 $ 18,924,190 $ (608,873) $ (7,684,595) $ 4,047,829 $ (2,422,499) $ $ 10,520,820 (10,336,230) $ (2,237,909) $ 0 122 Correctional Merit System Industries of Personnel Administration Administration Removal of Hazardous Materials, Agency for Risk Management Total $ 908,326 $ 97,586 $ 2,903 $ 44,129,095 $ 23,185,827 $ 1,309,224 $ $ 367,488 (172,919) 3,111 (239,926) 55,722 13 21,874 (6,160) (129,442) (60,229) (2,000) 110,870 (68,699) 291,424 (49,675) (260,046) $ 1,338,427 $ (167,797) $ $ 2,246,753 $ (70,211) $ $ $ 1,309,224 (145,271,963) (145,271,963) 47,019 1,243 311 25,179 (591,259) (378,660) 98,796,655 562,151 55,534 13,832,580 50,589 (102,675) (22,928) (3,180,875) 332,098 98,796,655 5,449,562 (79,794) 319,350 143 6,384 1,182,739 73,752 $ (46,883,076) $ (27,323,377) 76,655 $ (2,753,981) $ (4,137,550) $ $ (26,750) $ $ $ (2,449,249) 10,520,820 (10,336,230) $ 0 $ (26,750) $ 0 $ 0 $ (2,264,659) 123 State of Georgia Primary Government - Internal Service Funds Risk Management Combining Statement of Cash Flows For the Fiscal Year Ended June 30, 1998 Cash Flows from Operating Activities: Cash Received from Required Contributions Cash Received from Insurance Proceeds Cash Paid to Vendors Cash Paid for Benefits Cash Paid for Claims and Judgments Net Cash Provided by (Used in) Operating Activities Cash Flows from Noncapital Financing Activities: Other Noncapital Items (Net) Cash Flows from Investing Activities: Purchase of Investments (Net) Interest on Investments Net Cash Provided by (Used in) Investing Activities Net Decrease in Cash and Cash Equivalents Cash and Cash Equivalents, July 1 Cash and Cash Equivalents, June 30 Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Interest and Other Investment Income Changes in Assets and Liabilities: Increase in Other Receivables Decrease (Increase) in Due from Other Funds Increase (Decrease) in Claims and Judgments Payable Increase (Decrease) in Due to Other Funds Total Adjustments Net Cash Provided by (Used in) Operating Activities Georgia State Indemnification Commission Hazard and Insurance Reserve Fund Liability Self-Insurance Reserve Fund State Employees' Assurance Department $ 700,000 $ 14,436,314 $ 34,638,497 $ 11,226,000 1,763,355 (3,413,401) (8,125,746) (147,000) (15,178,000) (933,811) (6,156,735) (28,067,112) $ (233,811) $ 6,629,533 $ (1,554,361) $ (4,099,000) $ 24,257 $ 441,292 $ 5,215,122 $ $ $ (891,453) $ (16,217,961) $ (191,661,182) $ (18,261,780) 73,642 751,715 9,149,483 22,360,780 $ (817,811) $ (15,466,246) $ (182,511,699) $ 4,099,000 $ (1,027,365) $ (8,395,421) $ (178,850,938) $ 0 1,027,365 8,395,421 178,850,938 0 $ 0 $ 0 $ 0 $ 0 $ (251,002) $ 10,330,386 $ (86,663,617) $ 127,371,000 $ (73,642) $ (751,715) $ (9,149,483) $ (131,534,000) 90,833 (16,002) (3,187,239) 254,103 (367,564) (442,598) 95,187,974 (119,073) 64,000 $ 17,191 $ (3,700,853) $ 85,109,256 $ (131,470,000) $ (233,811) $ 6,629,533 $ (1,554,361) $ (4,099,000) 124 Unemployment Compensation Fund Workers' Compensation Fund Total $ 2,741,797 $ 51,897,773 $ 115,640,381 1,763,355 (534,864) (8,100,587) (20,321,598) (15,178,000) (2,668,210) (46,832,251) (84,658,119) $ (461,277) $ (3,035,065) $ (2,753,981) $ 40,487 $ 2,089,160 $ 7,810,318 $ (1,487,965) $ (76,778,774) $ (305,299,115) 155,507 3,607,616 36,098,743 $ (1,332,458) $ (73,171,158) $ (269,200,372) $ (1,753,248) $ (74,117,063) $ (264,144,035) 1,753,248 74,117,063 264,144,035 $ 0 $ 0 $ 0 $ (692,728) $ (5,964,944) $ 44,129,095 $ (155,507) $ (3,607,616) $ (145,271,963) (15,686) (62) 408,087 (5,381) (192,007) 6,297,000 432,502 (591,259) (378,660) 98,796,655 562,151 $ 231,451 $ 2,929,879 $ (46,883,076) $ (461,277) $ (3,035,065) $ (2,753,981) 125 Primary Government Trust and Agency Funds State of Georgia Primary Government - Trust and Agency Funds Combining Balance Sheet June 30, 1998 Assets Cash and Cash Equivalents Investments Receivables (Net of Allowances for Uncollectibles) Intergovernmental - Federal Interest and Dividends Notes and Loans Taxes Other Prepaid Items Other Assets Deferred Compensation Plan Assets Expendable Trust Nonexpendable Trust Pension Trust Investment Trust Agency Total $ 1,909,739,632 $ 49,989,346 270,823 4,104,717 71,787,161 7,939,614 8,638 185,698 $ $ $ 63,931,546 $ 1,973,856,876 35,398 11,531,092,592 2,834,115,490 229,674,639 14,644,907,465 93,409,000 6,936,125 15,906 743,988 25,629,244 37,733 394,622,648 1,014,811 93,409,000 4,104,717 71,787,161 40,504,983 24,544 37,733 394,622,648 Total Assets $ 2,043,839,931 $ 221,096 $ 11,631,453,623 $ 2,834,115,490 $ 714,639,798 $ 17,224,269,938 Liabilities and Fund Balances Liabilities: Cash Overdraft Accounts Payable and Other Accruals Salaries/Withholdings Payable Due to Other Funds Funds Held for Others Advances from Other Funds Total Liabilities Fund Balances: Reserved for Pension Benefits Reserved for Investment Trust Fund Reserved for Other Specific Purposes Unreserved, Undesignated Total Fund Balances Total Liabilities and Fund Balances $ $ 20,524 $ 20,524 $ $ $ 1,991,758,883 52,060,524 $ 2,043,819,407 $ $ 2,043,839,931 $ $ 1,985,787 $ 174,669,398 $ $ 176,655,185 6,344,428 6,364,952 23,629 23,629 658,673 658,673 714,632,873 714,632,873 6,925 6,925 0 $ 9,012,517 $ 174,669,398 $ 714,639,798 $ 898,342,237 $ 11,622,441,106 $ $ 2,659,446,092 148,500 72,596 221,096 $ 11,622,441,106 $ 2,659,446,092 $ $ 11,622,441,106 2,659,446,092 1,991,907,383 52,133,120 0 $ 16,325,927,701 221,096 $ 11,631,453,623 $ 2,834,115,490 $ 714,639,798 $ 17,224,269,938 129 State of Georgia Primary Government - Expendable Trust Funds For the Fiscal Year Ended June 30, 1998 Expendable Trust Funds are used to account for assets held by the government in a trustee capacity in which both the principal and revenues earned on that principal may be expended for purposes designated by the trust agreement. The State's expendable trust funds are described below: The Auctioneers Recovery Fund provides for actual or compensatory damages in instances where a person is aggrieved by an act, representation, transaction, or conduct of a person licensed under OCGA 43-6 (duly licensed auctioneer, apprentice auctioneer, or auction company) who is in violation of state law. Also, the fund is used to help underwrite the cost of developing courses, conducting seminars, conducting research projects on matters affecting auctioneers, publishing and distributing educational materials, or other education and research programs for the benefit of licensees and the public. The Housing Trust Fund for the Homeless provides financial assistance to sponsors of housing programs and activities which are designed to enhance home ownership opportunities of low income Georgia households. The Keds Corporation Settlement Fund is responsible for the direct delivery of services to women between fifteen and forty-four years of age with specific priority being given to job training in non-traditional employment fields. The Real Estate Recovery Fund provides for actual or compensatory damages in instances where a person is aggrieved by an act, representation, transaction, or conduct of a duly licensed broker, associate broker or salesperson who is in violation of state law. Also, the fund is used to help underwrite the cost of developing courses, conducting seminars, conducting research projects on matters affecting real estate brokerage, publishing and distributing educational materials, or other education and research programs for the benefit of licensees and the public. The Sports Hall of Fame Board is responsible for the establishment and maintenance of a hall of fame to honor those who have made outstanding contributions to sports and athletics in Georgia or elsewhere. The Subsequent Injury Trust Fund is a special workers' compensation fund designed to encourage employers to hire workers with pre-existing impairments by insuring against the aggravating impact such impairment could have if the worker were subsequently injured on the job. The Unemployment Compensation Contributions and Benefits Fund accounts for the collection of employers' unemployment insurance tax and the payment of unemployment insurance benefits. 131 State of Georgia Primary Government - Expendable Trust Funds Combining Balance Sheet June 30, 1998 Assets Cash and Cash Equivalents Investments Receivables (Net of Allowances for Uncollectibles) Intergovernmental - Federal Notes and Loans Taxes Other Prepaid Items Total Assets Liabilities and Fund Balances Liabilities: Cash Overdraft Accounts Payable and Other Accruals Total Liabilities Fund Balances: Reserved for Other Specific Purposes Unreserved, Undesignated Total Fund Balances Total Liabilities and Fund Balances Auctioneers Recovery Fund Housing Trust Fund for the Homeless Keds Corporation Settlement Fund $ 248,944 $ $ 12,925,423 4,104,717 17,315 64,999 $ 248,944 $ 17,047,455 $ 64,999 $ $ 721,624 $ $ $ 0 $ 721,624 $ 0 $ $ $ 248,944 16,325,831 $ 248,944 $ 16,325,831 $ $ 248,944 $ 17,047,455 $ 64,999 64,999 64,999 132 Real Estate Sports Hall Recovery Fund of Fame Board Subsequent Injury Trust Fund Unemployment Compensation Contributions and Benefits Fund Total $ $ 1,601,194 $ 1,601,194 $ $ $ 1,911,796,903 $ 1,912,110,846 35,462,729 49,989,346 8,638 270,823 71,787,161 7,922,299 270,823 4,104,717 71,787,161 7,939,614 8,638 0 $ 35,471,367 $ 1,991,777,186 $ 2,046,211,145 $ 59,007 $ $ 59,007 $ $ $ 1,542,187 $ 1,542,187 $ $ 1,601,194 $ $ 1,590,583 $ 2,221 0 $ 1,592,804 $ $ 18,303 18,303 $ 2,371,214 20,524 2,391,738 $ $ 1,991,758,883 $ 1,991,758,883 33,878,563 52,060,524 0 $ 33,878,563 $ 1,991,758,883 $ 2,043,819,407 0 $ 35,471,367 $ 1,991,777,186 $ 2,046,211,145 133 State of Georgia Primary Government - Expendable Trust Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended June 30, 1998 Revenues: Taxes Intergovernmental Federal Sales and Services Interest and Other Investment Income Contributions and Donations Other Total Revenues Expenditures: Education Health and Welfare Economic Development and Assistance Culture and Recreation Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources: Operating Transfers In Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures Fund Balances, July 1 Adjustments Change in Accounting Principle Transfer of Equity Fund Balances, June 30 Auctioneers Recovery Fund Housing Trust Fund for the Homeless Keds Corporation Settlement Fund $ $ $ 17,550 764,001 $ 17,550 $ 764,001 $ $ $ $ 3,321,836 $ 0 $ 3,321,836 $ $ 17,550 $ (2,557,835) $ 3,281,250 $ 17,550 $ 723,415 $ 231,394 15,608,920 (6,504) 0 $ 1,546 1,546 (1,546) (1,546) 66,545 $ 248,944 $ 16,325,831 $ 64,999 134 Real Estate Sports Hall Recovery Fund of Fame Board Subsequent Injury Trust Fund Unemployment Compensation Contributions and Benefits Fund Total $ $ $ 85,081,284 $ 287,455,129 $ 372,536,413 105,193 81,188 1,385 9,344 33,888 57,351 3,468 3,177,700 20,717,427 122,037,909 23,387 20,717,427 127,596 126,070,142 33,888 80,738 $ 186,381 $ 101,968 $ 88,262,452 $ 430,233,852 $ 519,566,204 $ 99,275 $ $ $ $ 99,275 64,702,740 64,702,740 276,175,942 279,499,324 102,521 102,521 $ 99,275 $ 102,521 $ 64,702,740 $ 276,175,942 $ 344,403,860 $ 87,106 $ (553) $ 23,559,712 $ 154,057,910 $ 175,162,344 3,281,250 $ 87,106 $ 1,455,081 (553) $ 200,339 (199,786) 23,559,712 $ 154,057,910 $ 178,443,594 10,318,851 1,837,700,973 1,865,582,103 (6,504) (199,786) $ 1,542,187 $ 0 $ 33,878,563 $ 1,991,758,883 $ 2,043,819,407 135 State of Georgia Primary Government - Nonexpendable Trust Funds For the Fiscal Year Ended June 30, 1998 Nonexpendable Trust Funds are used to account for assets held by the government in a trustee capacity in which the principal of the trust must be preserved intact. The State=s nonexpendable trust funds are described below: The Pupils= Trust Fund - Georgia Academy for the Blind is used to account for principal trust amounts received and related interest income. The interest portion of the trust may be used for student activities at Georgia Academy for the Blind. The Lenora M. Sarling Scholarship Fund is used to account for principal trust amounts received and related interest income. The interest portion of the trust may be used for scholarships at North Georgia Technical Institute. The Carl Patrick Chair is used to account for principal trust amounts received and related interest income. The interest portion of the trust may be used to supplement salaries of engineers on staff at Columbus Technical Institute. 137 State of Georgia Primary Government - Nonexpendable Trust Funds Combining Balance Sheet June 30, 1998 Assets Cash and Cash Equivalents Investments Total Assets Fund Balances Reserved for Other Specific Purposes Unreserved, Undesignated Total Fund Balances Pupils' Trust Fund - Georgia Academy for the Blind Lenora M. Sarling Scholarship Fund Carl Patrick Chair Total $ 13,500 $ 592 $ 171,606 $ 185,698 35,398 35,398 $ 13,500 $ 35,990 $ 171,606 $ 221,096 $ 13,500 $ 35,000 $ 100,000 $ 148,500 990 71,606 72,596 $ 13,500 $ 35,990 $ 171,606 $ 221,096 139 State of Georgia Primary Government - Nonexpendable Trust Funds Combining Statement of Revenues, Expenses and Changes in Fund Balances For the Fiscal Year Ended June 30, 1998 Operating Revenues: Interest and Other Investment Income Operating Expenses: General and Administrative Scholarships Other Total Operating Expenses Net Income Fund Balances, July 1 Adjustments Change in Accounting Principle Fund Balances, June 30 Pupils' Trust Fund - Georgia Academy for the Blind Lenora M. Sarling Scholarship Fund Carl Patrick Chair Total $ 878 $ 2,668 $ 9,371 $ 12,917 $ $ $ 4,066 $ 4,066 2,320 2,320 878 878 $ 878 $ 2,320 $ 4,066 $ 7,264 $ 0 $ 348 $ 5,305 $ 5,653 13,500 36,025 166,301 215,826 (383) (383) $ 13,500 $ 35,990 $ 171,606 $ 221,096 140 State of Georgia Primary Government - Nonexpendable Trust Funds Combining Statement of Cash Flows For the Fiscal Year Ended June 30, 1998 Cash Flows from Operating Activities: Cash Paid to Vendors Cash Paid for Scholarships Net Cash Used in Operating Activities Cash Flows from Investing Activities: Purchase of Investments (Net) Interest on Investments Net Cash Provided by Investing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents, July 1 Cash and Cash Equivalents, June 30 Operating Income Adjustments to Reconcile Operating Income to Net Cash Used in Operating Activities: Interest and Other Investment Income Net Cash Used in Operating Activities Pupils' Trust Fund - Georgia Academy for the Blind Lenora M. Sarling Scholarship Fund Carl Patrick Chair Total $ (878) $ $ (4,066) $ (4,944) (2,320) (2,320) $ (878) $ (2,320) $ (4,066) $ (7,264) $ $ $ 161,724 $ 161,724 878 1,887 9,371 12,136 $ 878 $ 1,887 $ 171,095 $ 173,860 $ 0 $ 13,500 $ 13,500 $ (433) $ 1,025 167,029 $ 4,577 166,596 19,102 592 $ 171,606 $ 185,698 $ 0 $ 348 $ 5,305 $ 5,653 (878) (2,668) (9,371) (12,917) $ (878) $ (2,320) $ (4,066) $ (7,264) 141 State of Georgia Primary Government - Pension Trust Funds For the Fiscal Year Ended June 30, 1998 Pension Trust Funds account for activities of the public employee retirement systems. The State's pension trust funds are described below: The Defined Contribution Plan is used to account for the accumulation of resources for the purpose of providing retirement allowances for State employees who are not members of a public retirement or pension system. The District Attorneys Retirement Fund (old plan) is used to account for the accumulation of resources for the purpose of paying retirement benefits to the district attorneys of the State of Georgia. The District Attorneys Retirement System (new plan) is used to account for the accumulation of resources for the purpose of paying retirement benefits to the district attorneys of the State of Georgia. The Employees' Retirement System is used to account for the accumulation of resources for the purpose of providing retirement allowances for qualified employees of the State of Georgia and its political subdivisions. The Legislative Retirement System is used to account for the accumulation of resources for the purpose of providing retirement allowances for all members of the General Assembly. The Superior Court Judges Retirement Fund (old plan) is used to account for the accumulation of resources for the purpose of paying retirement benefits to the Superior Court Judges of the State of Georgia. The Superior Court Judges Retirement System (new plan) is used to account for the accumulation of resources for the purpose of paying retirement benefits to the Superior Court Judges of the State of Georgia. The Trial Judges and Solicitors Retirement Fund is used to account for the accumulation of resources for the purpose of providing retirement allowances for trial judges and solicitors of certain courts of Georgia, and their survivors and other beneficiaries. 143 State of Georgia Primary Government - Pension Trust Funds Combining Statement of Plan Net Assets June 30, 1998 Assets Cash and Cash Equivalents Investments Receivables (Net of Allowances for Uncollectibles) Interest and Dividends Other Miscellaneous Prepaid Items Defined Contribution Plan District Attorneys Retirement Fund District Attorneys Retirement System Employees' Retirement System Legislative Retirement System $ 70,000 $ 25,888,000 227,000 982,000 3,000 $ 17,000 $ $ 82,854 31,001,000 11,275,768,772 26,386,820 93,182,000 47,000 5,467,799 326 15,906 Total Assets Liabilities Cash Overdraft Accounts Payable and Other Accruals Salaries/Withholdings Payable Due to Other Funds Total Liabilities $ 27,167,000 $ 3,000 $ 31,065,000 $ 11,374,434,477 $ 26,470,000 $ $ $ $ 2,152,641 $ $ 2,000 3,000 6,000 6,232,428 13,000 23,629 632,673 26,000 $ 2,000 $ 3,000 $ 6,000 $ 9,041,371 $ 39,000 Fund Balances Reserved for Pension Benefits $ 27,165,000 $ 0 $ 31,059,000 $ 11,365,393,106 $ 26,431,000 144 Superior Court Judges Retirement Fund Superior Court Judges Retirement System Trial Judges and Solicitors Retirement Fund Total $ 60,000 $ $ 87,000 $ 319,854 1,547,000 114,701,000 55,800,000 11,531,092,592 1,000 187,000 251,000 93,409,000 6,936,125 15,906 $ 1,608,000 $ 114,888,000 $ 56,138,000 $ 11,631,773,477 $ $ 153,000 $ 36,000 45,000 $ 36,000 $ 198,000 $ $ 7,000 7,000 $ 2,305,641 6,344,428 23,629 658,673 9,332,371 $ 1,572,000 $ 114,690,000 $ 56,131,000 $ 11,622,441,106 145 State of Georgia Primary Government - Agency Funds For the Fiscal Year Ended June 30, 1998 Agency Funds report those assets for which the State acts solely in a custodial capacity. The State's major agency funds are described below: Agriculture, Department of The Agricultural Commodity Commissions account for assessments levied on producers and handlers of various commodities. These funds are disbursed upon approval and request of the commodity commissions to promote the production, marketing, sale, utilization, processing, research and improvement of agricultural products in Georgia. Corrections, Department of Detainees' Accounts are held for the detainees of statewide probation offices, correctional institutions, diversion centers, detention centers, transitional centers and boot camps for the purpose of paying court ordered fines, fees and restitutions and for operating recreational activities for detainees. Human Resources, Department of The Child Support Recovery Program accounts for the collection of court ordered child support or child support amounts due as determined in conformity with the Social Security Act. Amounts collected are distributed and deposited in conformity with state law and the standards prescribed in the Social Security Act. Non-Centralized Agency Funds account for donations, vending machine proceeds, client funds and fund raising projects at hospitals, development centers, group homes and other Department of Human Resources sites around the State. Insurance, Department of Receiverships are held to pay claims and expenses against out-of-state defunct insurance companies. Medical Assistance, Department of The Medicaid Special Holding Account consists of refunds and recoveries made on specific claims for which disposition has not yet been determined. Merit System of Personnel Administration, State Personnel Board The Deferred Compensation Program accounts for participant earnings deferred in accordance with Internal Revenue Code Section 457. 147 State of Georgia Primary Government - Agency Funds For the Fiscal Year Ended June 30, 1998 Merit System of Personnel Administration, State Personnel Board The Flexible Benefits Program accounts for participant payroll deductions for benefits and spending accounts; disbursements are made to insurance companies for premiums and to participants for spending account reimbursements. Public Service Commission The Universal Access Fund was established to assure the provision of reasonably priced access to basic local exchange services throughout Georgia. All telecommunications companies providing telecommunications services within Georgia contribute to this fund. Distributions are made to providers of basic local exchange services upon application and demonstration that the reasonable costs to provide such service exceed the maximum fixed price permitted. Revenue, Department of The Real Estate Transfer Tax fund is used to collect real estate transfer taxes on behalf of county governments and to remit the taxes back to the counties. Treasury and Fiscal Services, Office of The Local Government Investment Pool was established to enable local governments to voluntarily invest any idle local moneys. The sources of this fund are local government investment deposits and their share of the investment earnings of the fund; deductions occur as withdrawals are requested by local governments. Local Option Sales Tax Collections accounts for the collection and disbursement of local option sales taxes on behalf of county and municipal governments. Special Purpose Tax Collections accounts for the collection and disbursement of special purpose sales taxes on behalf of county and municipal governments. 148 State of Georgia Primary Government - Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 1998 Agriculture, Department of Agricultural Commodity Commissions Assets Cash and Cash Equivalents Investments Total Assets Liabilities Funds Held for Others Corrections, Department of Detainees' Accounts Assets Cash and Cash Equivalents Liabilities Funds Held for Others Human Resources, Department of Child Support Recovery Program Assets Cash and Cash Equivalents Liabilities Funds Held for Others Non-Centralized Agency Funds Assets Cash and Cash Equivalents Investments Receivables Other Total Assets Liabilities Funds Held for Others Balance July 1, 1997 Additions Deletions Balance June 30, 1998 $ 2,567,817 $ 5,655,144 $ 7,687,614 $ 535,347 1,821,788 3,519,267 771,788 4,569,267 $ 4,389,605 $ 9,174,411 $ 8,459,402 $ 5,104,614 $ 4,389,605 $ 5,273,356 $ 4,558,347 $ 5,104,614 $ 26,512,433 $ 110,470,688 $ 108,556,925 $ 28,426,196 $ 26,512,433 $ 110,470,688 $ 108,556,925 $ 28,426,196 $ 6,744,606 $ 311,704,694 $ 315,215,102 $ 3,234,198 $ 6,744,606 $ 311,704,694 $ 315,215,102 $ 3,234,198 $ 4,689,313 $ 17,005,047 $ 17,402,186 $ 4,292,174 3,305,945 844,846 465,815 3,684,976 48,694 133,159 181,853 0 $ 8,043,952 $ 17,983,052 $ 18,049,854 $ 7,977,150 $ 8,043,952 $ 17,325,861 $ 17,392,663 $ 7,977,150 (continued) 149 State of Georgia Primary Government - Agency Funds Combining Statement of Changes in Assets and Liabilities (continued) For the Fiscal Year Ended June 30, 1998 Insurance, Department of Receiverships Assets Cash and Cash Equivalents Liabilities Funds Held for Others Medical Assistance, Department of Medicaid Special Holding Account Assets Cash and Cash Equivalents Receivables Other Total Assets Liabilities Funds Held for Others Merit System of Personnel Administration, State Personnel Board Deferred Compensation Program Assets Cash and Cash Equivalents Receivables Other Deferred Compensation Plan Assets Total Assets Liabilities Funds Held for Others Flexible Benefits Program Assets Cash and Cash Equivalents Investments Receivables Other Total Assets Liabilities Funds Held for Others Balance July 1, 1997 Additions Deletions Balance June 30, 1998 $ 1,369,521 $ $ 1,369,521 $ 27,838 $ 27,838 $ 12 $ 12 $ 1,397,347 1,397,347 $ 6,371,492 $ 899,590,460 $ 890,519,078 $ 15,442,874 24,564,277 1,998,978 22,565,299 $ 30,935,769 $ 899,590,460 $ 892,518,056 $ 38,008,173 $ 30,935,769 $ 899,590,460 $ 892,518,056 $ 38,008,173 $ 1,880,482 $ $ 101,475 314,206,807 129,885,792 $ 316,188,764 $ 129,885,792 $ 1,986,929 $ 101,475 49,469,951 51,558,355 $ (106,447) 0 394,622,648 394,516,201 $ 316,188,764 $ 129,885,792 $ 51,558,355 $ 394,516,201 $ 8,901,974 $ 46,456,734 $ 51,815,357 $ 3,543,351 0 7,904,214 7,904,214 108,703 260,801 231,520 137,984 $ 9,010,677 $ 54,621,749 $ 52,046,877 $ 11,585,549 $ 9,010,677 $ 2,574,872 $ 150 $ 11,585,549 State of Georgia Primary Government - Agency Funds Combining Statement of Changes in Assets and Liabilities (continued) For the Fiscal Year Ended June 30, 1998 Public Service Commission Universal Access Fund Assets Cash and Cash Equivalents Investments Total Assets Liabilities Funds Held for Others Revenue, Department of Real Estate Transfer Tax Assets Cash and Cash Equivalents Investments Total Assets Liabilities Funds Held for Others Treasury and Fiscal Services, Office of Education Local Option Sales Tax Collections Assets Cash and Cash Equivalents Investments Total Assets Liabilities Funds Held for Others Homestead Option Sales Tax Collections Assets Cash and Cash Equivalents Investments Total Assets Liabilities Funds Held for Others Balance July 1, 1997 Additions Deletions Balance June 30, 1998 $ 6,743,356 $ 14,627,273 $ 21,245,930 $ 124,699 1,298,321 1,319,613 1,298,321 1,319,613 $ 8,041,677 $ 15,946,886 $ 22,544,251 $ 1,444,312 $ 8,041,677 $ 13,328,952 $ 19,926,317 $ 1,444,312 $ 3,480,841 $ 43,074,804 $ 44,365,178 $ 2,190,467 1,210,392 12,266,962 1,210,392 12,266,962 $ 4,691,233 $ 55,341,766 $ 45,575,570 $ 14,457,429 $ 4,691,233 $ 41,864,412 $ 32,098,216 $ 14,457,429 $ 0 $ 586,968,184 $ 590,287,937 $ (3,319,753) 0 53,864,985 53,864,985 $ 0 $ 640,833,169 $ 590,287,937 $ 50,545,232 $ 0 $ 586,968,184 $ 536,422,952 $ 50,545,232 $ 0 $ 60,452,454 $ 60,760,009 $ (307,555) 0 4,990,263 4,990,263 $ 0 $ 65,442,717 $ 60,760,009 $ 4,682,708 $ 0 $ 60,452,454 $ 55,769,746 $ 4,682,708 (continued) 151 State of Georgia Primary Government - Agency Funds Combining Statement of Changes in Assets and Liabilities (continued) For the Fiscal Year Ended June 30, 1998 Treasury and Fiscal Services, Office of Local Government Investment Pool Assets Cash and Cash Equivalents Investments Total Assets Liabilities Funds Held for Others Local Option Sales Tax Collections Assets Cash and Cash Equivalents Investments Total Assets Liabilities Funds Held for Others Special Purpose Tax Collections Assets Cash and Cash Equivalents Investments Total Assets Liabilities Funds Held for Others Various Agencies and Departments Other Agency Funds Assets Cash and Cash Equivalents Investments Receivables Intergovernmental - Federal Other Other Assets Total Assets Liabilities Funds Held for Others Advances from Other Funds Total Liabilities Balance July 1, 1997 Additions Deletions Balance June 30, 1998 $ 1,530,083,996 $ $ 1,530,083,996 $ 0 579,931,027 579,931,027 0 $ 2,110,015,023 $ 0 $ 2,110,015,023 $ 0 $ 2,110,015,023 $ $ 2,110,015,023 $ 0 $ 39,081,102 $ 777,543,437 $ 819,903,668 $ (3,279,129) 14,812,483 53,205,830 14,812,483 53,205,830 $ 53,893,585 $ 830,749,267 $ 834,716,151 $ 49,926,701 $ 53,893,585 $ 762,730,954 $ 766,697,838 $ 49,926,701 $ 33,231,484 $ 672,272,743 $ 708,299,705 $ (2,795,478) 12,595,367 45,358,311 12,595,367 45,358,311 $ 45,826,851 $ 717,631,054 $ 720,895,072 $ 42,562,833 $ 45,826,851 $ 659,677,376 $ 662,941,394 $ 42,562,833 $ 18,864,733 $ 436,420,226 $ 440,731,704 $ 14,553,255 9,368,301 43,798,707 10,656,790 42,510,218 528,640 757,868 542,520 743,988 2,513,234 11,945,763 11,533,036 2,925,961 139,913 2,800 104,980 37,733 $ 31,414,821 $ 492,925,364 $ 463,569,030 $ 60,771,155 $ 31,407,896 $ 458,724,488 $ 429,368,154 $ 60,764,230 6,925 6,925 $ 31,414,821 $ 458,724,488 $ 429,368,154 $ 60,771,155 152 Primary Government College and University Funds State of Georgia Primary Government - College and University Funds For the Fiscal Year Ended June 30, 1998 Current Funds account for resources that the Institutions may use for any purpose in carrying out their primary objectives. Unrestricted Current Funds account for economic resources that are fully controlled by the Institutions and are used in the performance of their primary functions. Restricted Current Funds account for externally restricted funds which may be utilized only in accordance with the purposes established by their source. Loan Funds account for resources which have been made available for financial loans to students. Endowment and Similar Funds account for assets that are subject to restrictions of gift instruments. Plant Funds account for transactions involving physical properties of the Institutions. Unexpended Plant Funds account for financial resources utilized to acquire or to construct physical properties. Renewals and Replacements Funds account for resources set aside for the renewal and replacement of physical properties. Investment in Plant Funds disclose amounts representing the book value of all physical properties owned. Agency Funds account for resources held by Institutions as custodians or fiscal agents for individual students, faculty, staff members and organizations. 155 State of Georgia Primary Government - College and University Funds Combining Balance Sheet June 30, 1998 Assets Cash and Cash Equivalents Investments Receivables (Net of Allowances for Uncollectibles) Intergovernmental - Federal Interest and Dividends Notes and Loans Other Due from Other Funds Inventories Prepaid Items Fixed Assets Land Buildings Improvements Other Than Buildings Equipment Construction in Progress Total Assets Liabilities and Fund Equity Liabilities: Accounts Payable and Other Accruals Compensated Absences Payable Salaries/Withholdings Payable Benefits Payable Due to Other Funds Deferred Revenue Capital Leases Payable Funds Held for Others Other Liabilities Deposits and Overpayments Long-Term Debt Payable Revenue Bonds Payable Total Liabilities Fund Equity: U. S. Government Grants Refundable Institutional Loans - Restricted Institutional Loans - Unrestricted Endowment Term Endowment Quasi-Endowment - Unrestricted Quasi-Endowment - Restricted Net Investment in Plant Restricted Unrestricted Total Fund Equity Total Liabilities and Fund Equity Current Funds Unrestricted Restricted Loan Funds Endowment and Similar Funds $ 186,509,233 $ 18,642,912 $ 10,838,968 $ 66,156,765 135,681,398 14,894,711 45,677 52,775,542 997,458 103,496,053 7,706,580 26,848,073 6,945,666 34,485,678 35,211,990 474,664 27,421 57,940 48,682,699 26,461 1,264,536 10,607 40,946 6,384 $ 468,184,461 $ 103,709,955 $ 60,943,702 $ 118,990,244 $ 154,120,708 $ 88,835,673 5,616,060 21,800,000 16,291,992 78,662,613 661,916 $ 15,526,289 15,446,927 148,298 1,960,342 $ 12,028 $ 29,218 $ 367,435,686 $ 31,635,132 $ 12,028 $ 29,218 $ $ $ 47,793,530 $ $ 13,120,618 17,526 100,356,768 3,012,354 8,082,933 7,508,971 100,748,775 72,074,823 $ 100,748,775 $ 72,074,823 $ 60,931,674 $ 118,961,026 $ 468,184,461 $ 103,709,955 $ 60,943,702 $ 118,990,244 156 Unexpended Plant Funds Renewals and Replacements Investment in Plant Agency Funds Total Before Eliminations Eliminations Total (Memorandum Only) $ 76,741,093 $ 30,754,678 $ 5,496,009 1,020,410 $ 39,901,179 $ 429,544,828 $ 3,593 209,917,340 $ 429,544,828 209,917,340 2,681,192 15,692,300 5,834,972 2,604,584 184,272 9,940,491 415,894 1,183,026 7,277,607 69,500 38,607,643 57,940 48,693,306 155,835,048 32,030,570 26,848,073 10,094,414 (32,030,570) 38,607,643 57,940 48,693,306 155,835,048 0 26,848,073 10,094,414 94,233,195 2,598,758,950 181,591,288 1,561,332,914 200,930,122 94,233,195 2,598,758,950 181,591,288 1,561,332,914 200,930,122 94,233,195 2,598,758,950 181,591,288 1,561,332,914 200,930,122 $ 109,050,150 $ 41,899,851 $ 4,636,846,469 $ 48,850,799 $ 5,588,475,631 $ (32,030,570) $ 5,556,445,061 $ 90,998,400 $ 22,242 1,004,709 1,287 7,000 $ 92,033,638 $ 7,438,340 $ 318,385 7,756,725 $ $ 20,232,718 27,931,383 $ 1,328,137 19,591,279 281,150,747 $ 104,384,204 5,616,060 21,800,000 34,431,396 78,662,613 20,232,718 19,591,279 149,585 1,960,342 $ (32,030,570) 281,150,747 104,384,204 5,616,060 21,800,000 2,400,826 78,662,613 20,232,718 19,591,279 149,585 1,960,342 7,000 7,000 20,232,718 $ 48,850,799 $ 567,985,944 $ (32,030,570) $ 535,955,374 $ $ $ $ 491,081 16,525,431 4,616,613,751 34,143,126 $ 17,016,512 $ 34,143,126 $ 4,616,613,751 $ $ 47,793,530 $ 13,120,618 17,526 100,356,768 3,012,354 8,082,933 7,508,971 4,616,613,751 72,565,904 151,417,332 0 $ 5,020,489,687 $ $ 47,793,530 13,120,618 17,526 100,356,768 3,012,354 8,082,933 7,508,971 4,616,613,751 72,565,904 151,417,332 0 $ 5,020,489,687 $ 109,050,150 $ 41,899,851 $ 4,636,846,469 $ 48,850,799 $ 5,588,475,631 $ (32,030,570) $ 5,556,445,061 157 Primary Government GeneralFixed AssetsAccountGroup State of Georgia Primary Government - General Fixed Assets Account Group For the Fiscal Year Ended June 30, 1998 The General Fixed Assets Account Group is used to account for fixed assets acquired or constructed for use by the State for general governmental purposes. These include all Primary Government fixed assets, except those accounted for in the Proprietary, Nonexpendable Trust, Pension Trust, and College and University funds. 161 State of Georgia Schedule of General Fixed Assets By Function June 30, 1998 Land and Buildings Improvements Other Than Buildings Construction In Progress Equipment Total Function General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Capital Outlay $ 339,656,745 $ 282,537,505 161,851,036 758,622,446 77,558,558 178,361,570 6,349,029 183,030,038 $ 448,632 $ 350,787 55,978,786 $ 189,906,049 152,895,071 189,024,826 169,015,443 36,315,287 68,093,451 64,893,042 395,635,531 472,443,554 314,746,107 189,024,826 927,637,889 113,873,845 247,254,440 71,242,071 183,030,038 Total General Fixed Assets $ 1,987,966,927 $ 448,632 $ 350,787 $ 926,121,955 $ 2,914,888,301 162 State of Georgia Schedule of Changes in General Fixed Assets By Function For the Fiscal Year Ended June 30, 1998 General Fixed Assets July 1, 1997 Function General Government $ Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Capital Outlay 380,882,170 $ 405,221,601 288,098,414 177,442,654 863,522,993 109,070,344 229,976,065 68,541,188 184,485,018 Additions 19,670,238 $ 76,189,633 41,741,409 17,309,691 77,989,457 5,328,786 20,654,015 3,623,737 228,431 Deletions Retroactive Restatement of Prior Year Balance General Fixed Assets June 30, 1998 4,916,877 $ 9,239,895 15,093,716 5,727,519 13,874,561 525,285 3,375,640 922,854 1,683,411 $ 272,215 395,635,531 472,443,554 314,746,107 189,024,826 927,637,889 113,873,845 247,254,440 71,242,071 183,030,038 $ 2,707,240,447 $ 262,735,397 $ 55,359,758 $ 272,215 $ 2,914,888,301 163 Component Units Governmental Fund Types State of Georgia Component Units - Governmental Fund Types For the Fiscal Year Ended June 30, 1998 Georgia Education Authority (Schools) is responsible for construction and financing of buildings and facilities for the State board and local boards of education. Georgia Public Telecommunications Commission is responsible for providing public telecommunications services statewide to meet the needs of the public in Georgia. 167 State of Georgia Component Units - Governmental Fund Types Combining Balance Sheet June 30, 1998 Assets and Other Debits Assets: Investments Receivables (Net of Allowances for Uncollectibles) Notes and Loans Other Inventories Prepaid Items Fixed Assets Land and Buildings Equipment Other Debits: Amounts to be Provided for Retirement of General Long-Term Debt Total Assets and Other Debits Liabilities, Fund Balances and Other Credits Liabilities: Cash Overdraft Accounts Payable and Other Accruals Compensated Absences Payable Salaries/Withholdings Payable Due to Primary Government Deferred Revenue Capital Leases/Installment Purchases Payable Total Liabilities Fund Balances and Other Credits: Other Credits: Investment in Fixed Assets Fund Balances: Reserved for Other Specific Purposes Unreserved, Undesignated Total Fund Balances Total Fund Balances and Other Credits Total Liabilities, Fund Balances and Other Credits Georgia Education Authority (Schools) Georgia Public Telecommunications Commission Total $ 640,601 $ 161,369 $ 801,970 100,989 1,325,853 95,126 228,367 100,989 1,325,853 95,126 228,367 27,360,330 64,270,414 27,360,330 64,270,414 11,879,924 11,879,924 $ 640,601 $ 105,422,372 $ 106,062,973 $ 39,420 $ 1,118,566 $ 1,157,986 4,406,340 4,406,340 1,055,264 1,055,264 220,311 220,311 290,951 290,951 215,666 215,666 10,824,660 10,824,660 $ 39,420 $ 18,131,758 $ 18,171,178 $ $ $ $ $ 168 $ 91,630,744 $ 91,630,744 $ 601,181 601,181 $ 601,181 $ 375,041 $ (4,715,171) (4,340,130) $ 87,290,614 $ 375,041 (4,113,990) (3,738,949) 87,891,795 640,601 $ 105,422,372 $ 106,062,973 State of Georgia Component Units - Governmental Fund Types Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended June 30, 1998 Revenues: Sales and Services Interest and Other Investment Income Rents and Royalties Contributions and Donations Total Revenues Expenditures: Culture and Recreation Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources: Operating Transfers from Primary Government Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures Fund Balances, July 1 Fund Balances, June 30 Georgia Education Authority (Schools) Georgia Public Telecommunications Commission Total $ $ 2,681,917 $ 2,681,917 32,339 103,510 135,849 163,972 163,972 10,162,233 10,162,233 $ 32,339 $ 13,111,632 $ 13,143,971 $ 0 $ 36,267,248 $ 36,267,248 $ 32,339 $ (23,155,616) $ (23,123,277) $ 0 $ 18,915,057 $ 18,915,057 $ 32,339 $ (4,240,559) $ (4,208,220) 568,842 (99,571) 469,271 $ 601,181 $ (4,340,130) $ (3,738,949) 169 Component Units Proprietary Fund Types State of Georgia Component Units - Proprietary Fund Types For the Fiscal Year Ended June 30, 1998 Proprietary Funds are used to account for business-type activities. The State's major proprietary funds are described below: The Development Authority assists agricultural and industrial interests in starting and expanding their operations by providing credit and servicing functions necessary to enable farmers and businessmen to obtain capital funds. The Environmental Facilities Authority provides funding to eligible municipalities, counties and water and sewer authorities in the State for construction and expansion of public water and sewer facilities. The Housing and Finance Authority assists in providing housing for low and moderate income families and persons unable to find adequate dwellings through the purchase or origination of mortgage loans. The authority also provides financing for the acquisition and construction of hospital facilities and equipment. The Jekyll Island State Park Authority is responsible for developing and maintaining Jekyll Island and the adjacent marshes and marsh islands along the Atlantic coast in Glynn County, Georgia. The Lake Lanier Islands Development Authority is responsible for the development, operation and maintenance of the islands in Lake Lanier for recreational purposes. The Lottery Corporation is responsible for the provision of lotteries on behalf of the State. The Ports Authority operates deepwater and inland barge terminals offering loading and off-loading facilities, storage warehouses and cargo transfer facilities. The authority also develops industrial sites on and adjacent to each port facility and makes these sites available to private industry. The Stone Mountain Memorial Association operates Stone Mountain and the surrounding area as a Confederate memorial and a public recreation area. The Student Finance Authority provides educational scholarships, grants and loan assistance to help Georgia residents obtain a higher education or other postsecondary training. The Tollway Authority provides financing for the construction of toll highways and bridges in the State. The World Congress Center Authority operates the World Congress Center, a comprehensive international trade and convention meeting facility providing exhibit space to handle large numbers of trade displays, and the Georgia Dome. The authority promotes trade shows, conventions, tourism and sporting events within the State. The Other Entities column is an accumulation of the proprietary funds that are not individually material to the total assets presented on the proprietary fund type balance sheet. The State's other proprietary funds are described below: The Agricultural Exposition Authority operates a facility at Perry, Georgia, where the agricultural community can exhibit and promote products and livestock, and where other public events may be held. 173 State of Georgia Component Units - Proprietary Fund Types For the Fiscal Year Ended June 30, 1998 The Agrirama Development Authority operates and maintains an agricultural museum and restoration complex at Tifton, Georgia. The Higher Education Assistance Corporation is responsible for the implementation of a guaranteed educational loan program within the State. The Highway Authority administers a program for financing State roads and highways. The Georgia International and Maritime Trade Center Authority was created to develop and promote the growth of the State's import and export markets through its ports and other transportation modes. The Music Hall of Fame Authority was created to construct, operate and manage a facility to house the Georgia Music Hall of Fame. The North Georgia Mountains Authority was created to acquire, build, equip, maintain, operate and promote recreation, accommodations and tourist facilities and services in the North Georgia Mountains area. The Rail Passenger Authority was created for the purpose of construction, financing, operation and development of rail passenger service and other public transportation projects within and without the State of Georgia. The Sapelo Island Heritage Authority was created to preserve the cultural and historic values of the Hog Hammock community on Greater Sapelo Island in McIntosh County, Georgia. The Seed Development Commission receives and serves as an agent for breeders' seeds and other parent material. The commission also purchases, processes and resells breeders' and foundation seeds. The Sports Hall of Fame Authority was created to construct and maintain a facility to house the Georgia Sports Hall of Fame to honor those, living or deceased, who by achievement or service have made outstanding and lasting contributions to sports and athletics in this State or elsewhere. The Superior Court Clerks' Cooperative Authority was created to provide a cooperative for the development, acquisition and distribution of record management systems, information, services, supplies and materials for superior court clerks of the State. 174 State of Georgia Component Units - Proprietary Fund Types Combining Balance Sheet June 30, 1998 Assets Current Assets: Cash and Cash Equivalents Receivables (Net of Allowances for Uncollectibles) Intergovernmental - Federal Interest and Dividends Other Accounts Miscellaneous Due from Primary Government Inventories Prepaid Items Long-Term Assets: Investments Receivables Notes and Loans Restricted Assets Cash and Cash Equivalents Investments Receivables Interest and Dividends Loans Deferred Charges Fixed Assets: Land and Buildings Improvements Other Than Buildings Machinery and Equipment Accumulated Depreciation Construction in Progress Other Assets Development Authority Environmental Facilities Authority Housing and Finance Authority Jekyll Island State Park Authority Lake Lanier Islands Development Authority $ 37,047 $ $ 13,408,834 $ 5,290 $ 2,237,676 103,020,611 4,527,397 405,437 20,646 1,020,521 2,204,493 8,404 200,998 87,560 565,285 219,192,706 41,170,084 3,631,038 75,315,920 446,502,557 59,789,650 145,449,696 51,788,464 3,620,884 6,121,452 598,113,658 12,901,365 6,488,422 30,648,410 321,635 1,400,665 (2,048,107) 3,485,571 100,000 6,608,924 1,527,112 112,463 1,153 3,300,000 13,456 4,578 Total Assets Liabilities and Fund Equity Liabilities Current Liabilities: Cash Overdraft Accounts Payable and Other Accruals Compensated Absences Payable Contracts Payable Salaries/Withholdings Payable Due to Primary Government Accrued Interest Payable Deferred Revenue Long-Term Liabilities: Capital Leases/Installment Purchases Payable Mortgage Loans under Repurchase Agreements Funds Held for Others Other Liabilities Deposits and Overpayments Advances from Primary Government Long-Term Debt Payable (Net of Unamortized Discounts) Grand Prizes Payable Notes and Loans Payable Revenue Bonds Payable Total Liabilities $ 78,155,928 $ 779,519,333 $ 941,598,544 $ 39,079,388 $ 4,958,762 $ $ 2,535,911 $ $ 1,094,297 4,307,417 18,785,550 500,000 2,367,697 12,389,327 1,852 3,913,540 57,088,920 $ 359,247 413,716 257,455 318,828 17,728,827 2,000,000 931 107,500 $ 30,672 17,946 4,578 32,134,000 88,665,393 431,475 779,660,753 $ 51,457,124 $ 110,265,745 $ 861,882,090 $ 1,457,677 $ 176 53,196 Lottery Corporation Ports Authority Stone Mountain Memorial Association Student Finance Authority Tollway Authority World Congress Center Authority Other Entities Total $ $ 11,349,610 $ 9,386,794 $ 3,161,859 $ 9,053,397 $ 15,574,259 $ 27,862,119 $ 91,366,321 206,463 8,879,367 57,496 4,960,991 40,787 108,188,065 16,148,160 38,560,207 1,886,000 13,019,000 216,000 2,746,000 165,000 1,403,006 15 1,498,819 444,540 1,616,865 88,404 1,888 6,699,066 100,000 243,242 159,633 1,021,861 17,177 56 312,244 28,255 63,562,039 333,177 2,204,564 5,001,303 2,782,433 1,059,723 7,530,688 13,686,775 14,485,136 10,110,494 25,994,914 340,726,843 354,847,269 936,455,396 347,000 309,033,000 (81,486) 1,321,755 3,414,025 13,931,648 9,818,741 36,514,989 158,947,976 412,589,856 3,127,740 6,121,452 598,113,658 19,649,989 1,962,000 11,847,000 (10,815,000) 173,885,000 200,806,000 117,111,000 (204,906,000) 63,114,000 16,505,000 81,304,479 18,980,870 28,009,630 (32,656,784) 287,578 235,872 4,067,835 993,181 (2,411,142) 4,950,883 2,710,490 4,085,722 (4,798,058) 1,095,712 60,118,446 209,402,736 11,729,405 (43,869,410) 70,791,475 38,961,446 7,816,517 (27,796) 23,930,620 238,146 551,671,211 222,497,360 186,813,782 (301,532,297) 159,219,385 83,810,966 $ 353,879,930 $ 402,781,567 $ 108,894,819 $ 385,048,472 $ 109,195,189 $ 330,402,370 $ 131,157,337 $ 3,664,671,639 $ 7,169,930 $ 36,864,857 16,143 449,000 $ 8,839,099 1,081,539 1,442,000 46,703 50,659 1,007,000 6,183,000 $ 4,408,677 $ 325,955 952,697 135,316 1,858,615 302,270,278 2,894,977 $ 648,723 164,687 $ 4,057,516 1,196,131 1,634,055 2,059,616 19,782 7,575,164 20,359,798 670,098 133,245 6,203 172,389 14,517,820 $ 7,211,024 252,560 518,727 15,699 497 991 585,401 9,705,841 86,933,034 2,961,892 2,125,414 319,857 224,249 16,444,144 96,167,505 69,323 50,087 739,421 17,728,827 302,332,077 11,699,366 14,651,065 107,500 296,849,000 8,445,000 17,400,000 $ 341,348,930 $ 44,495,000 $ 30,284,767 85,375,176 194,779,336 5,361,374 $ 337,769,908 $ 90,015,502 $ 243,354,237 $ 177 140,000 296,849,000 71,295,242 1,166,020,658 8,844,309 $ 2,096,305,092 (continued) State of Georgia Component Units - Proprietary Fund Types Combining Balance Sheet (continued) June 30, 1998 Fund Equity and Other Credits: Other Credits Investment in General Fixed Assets Fund Equity Contributed Capital State of Georgia Federal Government Other Total Contributed Capital Retained Earnings Reserved Unreserved Total Retained Earnings Fund Balances Reserved for Other Specific Purposes Unreserved Total Fund Balances Total Fund Equity Total Fund Equity and Other Credits Total Liabilities, Fund Equity and Other Credits Development Authority Environmental Facilities Authority Housing and Finance Authority Jekyll Island State Park Authority Lake Lanier Islands Development Authority $ $ 321,635 $ $ $ $ $ $ 208,140,508 $ $ 12,969,775 $ 21,822,261 318,704,775 $ 0 $ 526,845,283 $ 0 $ 12,969,775 $ 21,822,261 $ 2,668,771 $ 2,925,051 $ 28,726,437 $ $ 2,279,446 24,030,033 126,065,307 48,770,096 24,651,936 (19,196,141) $ 26,698,804 $ 128,990,358 $ 77,496,533 $ 24,651,936 $ (16,916,695) $ $ 12,265,010 $ 633,268 $ $ 831,302 1,586,653 $ 0 $ 13,096,312 $ 2,219,921 $ 0 $ $ 26,698,804 $ 668,931,953 $ 79,716,454 $ 37,621,711 $ $ 26,698,804 $ 669,253,588 $ 79,716,454 $ 37,621,711 $ $ 0 4,905,566 4,905,566 $ 78,155,928 $ 779,519,333 $ 941,598,544 $ 39,079,388 $ 4,958,762 178 Lottery Corporation Ports Authority Stone Mountain Memorial Association Student Finance Authority Tollway Authority World Congress Center Authority Other Entities Total $ $ $ $ $ $ $ $ 321,635 $ $ 239,727,849 $ 43,536,341 $ $ $ $ 67,194,277 $ 593,391,011 9,676,882 328,381,657 292,063 15,126,652 63,703,860 1,041,573 80,164,148 $ 0 $ 249,696,794 $ 58,662,993 $ 0 $ 0 $ 63,703,860 $ 68,235,850 $ 1,001,936,816 $ 12,531,000 $ $ $ 27,604,818 $ $ 124,634 $ 18,762,248 $ 95,622,405 108,589,773 44,870,452 19,673,746 19,179,687 23,219,639 35,314,930 455,169,458 $ 12,531,000 $ 108,589,773 $ 44,870,452 $ 47,278,564 $ 19,179,687 $ 23,344,273 $ 54,077,178 $ 550,791,863 $ $ $ $ $ $ $ $ 12,898,278 2,417,955 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 15,316,233 $ 12,531,000 $ 358,286,567 $ 103,533,445 $ 47,278,564 $ 19,179,687 $ 87,048,133 $ 122,313,028 $ 1,568,044,912 $ 12,531,000 $ 358,286,567 $ 103,533,445 $ 47,278,564 $ 19,179,687 $ 87,048,133 $ 122,313,028 $ 1,568,366,547 $ 353,879,930 $ 402,781,567 $ 108,894,819 $ 385,048,472 $ 109,195,189 $ 330,402,370 $ 131,157,337 $ 3,664,671,639 179 State of Georgia Component Units - Proprietary Fund Types Combining Statement of Revenues, Expenses and Changes in Fund Equity For the Fiscal Yea r Ended June 30, 1998 Operating Revenues: Contributions Interest and Other Investment Income Intergovernmental Rents and Royalties Sales and Services Taxes Other Total Operating Revenues Operating Expenses: General and Administrative Goods and Services Interest Prizes Depreciation Other Total Operating Expenses Operating Income (Loss) Nonoperating Revenues (Expenses): Contributions and Intergovernmental Revenue Interest and Other Investment Income Gain on Sale of Loans Hotel/Motel Tax (Net) Interest Expense Other Debt Service Charges Other Total Nonoperating Revenues (Expenses) Net Income (Loss) Before Operating Transfers Operating Transfers: Transfers from Primary Government Transfers to Primary Government Net Operating Transfers Net Income (Loss) Excess (Deficiency) of Revenues Over (Under) Expenditures from Governmental Operations and Expendable Trust Funds Fund Equity, July 1 Adjustments Change in Accounting Principle Other Contributed Capital from Primary Government Contributed Capital from Federal Government Contributed Capital from Other Sources Transfer of Contributed Capital to Primary Government Transfer of Equity from Primary Government Increase (Decrease) in Inventories Fund Equity, June 30 Development Authority Environmental Facilities Authority Housing and Finance Authority Jekyll Island State Park Authority Lake Lanier Islands Development Authority $ $ $ $ $ 4,745,401 19,364,313 47,007,238 18,808 692,247 6,487,484 273,220 4,293,653 9,713,858 1,182,394 20,388 2,878,053 35,497 387,600 12,827 $ 4,764,209 $ 19,364,313 $ 54,460,189 $ 15,210,293 $ 3,313,977 $ 644,058 $ 776,864 $ 9,645,279 $ 13,211,742 $ 2,274,519 1,181,557 2,151,016 4,648,998 52,593,067 657,468 (20,587) 534,847 92,250 $ 2,774,487 $ 5,425,862 $ 65,139,962 $ 14,393,299 $ 657,468 $ 1,989,722 $ 13,938,451 $ (10,679,773) $ 816,994 $ 2,656,509 $ $ $ $ 88,459 $ 217,516 9,906,864 21,594,772 261,461 356,934 (190) (1,598,349) (1,013,843) (388,478) (149) (7,167) (1,478,334) $ 217,516 $ 8,308,325 $ 20,580,929 $ (45,874) $ (1,121,400) $ 2,207,238 $ 22,246,776 $ 9,901,156 $ 771,120 $ 1,535,109 $ $ 4,624,073 $ $ $ 0 $ 4,624,073 $ 0 $ $ 2,207,238 $ 26,870,849 $ 9,901,156 $ $ 0 $ 771,120 $ (4,175,629) (4,175,629) (2,640,520) 24,491,566 (2,317,783) 615,311,497 (7,298,285) 676,875 35,688,800 (110,501) 71,582,858 (1,657,059) 37,301,198 (450,607) 8,731,684 (1,185,598) $ 26,698,804 $ 668,931,953 $ 79,716,454 $ 37,621,711 $ 4,905,566 180 Lottery Corporation Ports Authority Stone Mountain Memorial Association Student Finance Authority Tollway Authority World Congress Center Authority Other Entities Total $ $ $ $ 1,676,898,000 $ 1,676,898,000 $ 94,075,000 94,075,000 $ 19,578,152 25,781,123 1,353,929 46,713,204 $ $ 5,633,977 2,240,224 218,891 8,093,092 $ $ 56,490 21,234,951 21,291,441 $ $ 34,122,987 18,395,317 52,518,304 $ 40,925 21,091,686 1,388,153 18,658,904 20,999,506 $ 40,925 76,750,929 21,091,686 63,009,735 1,873,520,358 1,569,994 22,897,569 62,179,174 $ 2,058,881,196 $ 18,581,000 $ 202,748,000 902,465,000 1,393,000 1,459,000 $ 1,126,646,000 $ $ 550,252,000 $ 19,808,000 $ 45,744,000 16,494,000 82,046,000 $ 12,029,000 $ 33,103,738 $ 4,605,835 $ 7,196,530 31,388,524 5,984,705 321,456 9,674,789 46,284,973 $ 45,990,604 $ 428,231 $ (37,897,512) $ 2,973,868 $ 3,180,009 908,587 2,613,082 9,675,546 $ 11,615,895 $ 20,707,718 $ 24,885,775 8,758,583 54,352,076 $ (1,833,772) $ 23,414,394 $ 3,263,831 10,301 35,118,716 148,129,964 321,862,745 59,393,081 902,465,000 34,405,479 48,937,250 61,807,242 $ 1,515,193,519 371,932 $ 543,687,677 $ $ $ $ $ $ $ 20,099,000 1,907,920 498,967 1,409,112 2,084,511 3,412,530 81,000 802,484 17,282,333 (9,288,000) (2,132,791) (1,731,740) (4,575,059) (15,209,386) (3,519,570) (4,304,636) 121,000 (10,928,000) (173,244) 385,145 (283,004) 192,137 $ 20,220,000 $ (18,227,080) $ (1,807,068) $ 865,001 $ (6,293,122) $ 1,372,978 $ 482,600 $ 2,227,326 (892,039) (501) 2,603 571,059 63,976,913 883,484 17,282,333 (35,695,827) (8,838,889) (12,288,879) 1,819,989 $ 25,890,194 $ 570,472,000 $ (6,198,080) $ (1,378,837) $ (37,032,511) $ 5,322,773 $ (460,794) $ 2,191,921 $ 569,577,871 $ $ (555,272,000) $ (555,272,000) $ $ 15,200,000 $ $ 0 $ (6,198,080) $ $ 47,956,323 $ 0 $ (1,378,837) $ 47,956,323 $ 10,923,812 $ $ 0 $ 5,322,773 $ $ (238,985) (238,985) $ (699,779) $ 9,439,310 $ 62,019,706 (559,686,614) 9,439,310 $ (497,666,908) 11,631,231 $ 71,910,963 287,000 (2,956,000) 347,904,647 (8,600,000) 36,260,000 106,547,376 36,354,752 (11,080,000) (1,635,094) 13,856,914 82,786,492 4,953,860 7,560 27,879 107,998,322 39,507 2,920,270 3,164 (543,648) 199,786 36,517 (2,400,405) 1,453,154,306 (4,573,552) (15,898,285) 39,857,145 35,688,800 4,957,024 (14,894,947) 199,786 44,077 $ 12,531,000 $ 358,286,567 $ 103,533,445 $ 47,278,564 $ 19,179,687 $ 87,048,133 $ 122,313,028 $ 1,568,044,912 181 State of Georgia Component Units - Proprietary Fund Types Combining Statement of Cash Flows For the Fiscal Yea r Ended June 30, 1998 Cash Flows from Operating Activities: Cash Received from Customers Principal Payments Received on Program Loans Interest Received on Program Loans Cash Paid to Vendors Cash Paid to Employees Cash Paid for Lottery Prizes Origination of Program Loans Governmental and Fiduciary Fund Type Activity (Net) Other Operating Items (Net) Net Cash Provided by (Used in) Operating Activities Cash Flows from Noncapital Financing Activities: Operating Transfers from Primary Government Proceeds from Assignment of Program Loans Under Repurchase Agreements Issuance of Bonds/Loans/Notes Contributed Capital Hotel/Motel Tax (Net) Operating Transfers to Primary Government Repayment of Advances Principal Paid on Bonds/Loans/Notes Interest Paid on Bonds/Loans/Notes Return of Contributed Capital Transfer of Equity from Primary Government Other Debt Service Payments Other Noncapital Items (Net) Net Cash Provided by (Used in) Noncapital Financing Activities Cash Flows from Capital and Related Financing Activities: Issuance of Bonds/Loans/Notes Hotel/Motel Tax Received Contributed Capital Sale of Capital Assets Acquisition and Construction of Capital Assets Principal Paid on Bonds/Loans/Notes Interest Paid on Bonds/Loans/Notes Other Debt Service Payments Other Capital and Related Items (Net) Net Cash Provided by (Used in) Capital and Related Financing Activities Cash Flows from Investing Activities: Purchase of Investments (Net) Interest on Investments Other Investing Items (Net) Net Cash Provided by (Used in) Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, July 1 Cash and Cash Equivalents, June 30 Development Authority Environmental Facilities Authority Housing and Finance Authority Jekyll Island State Park Authority Lake Lanier Islands Development Authority $ $ $ 7,193,756 $ 15,427,719 $ 16,762,648 29,065,192 77,364,451 4,895,511 19,147,854 46,307,189 (2,546,087) (669,470) (5,209,057) (7,421,980) (445,500) (653,848) (5,386,812) (6,927,783) (15,732,050) (58,863,718) (20,725,106) (94,185,835) 2,585,824 (491) 7,176,742 191,834 (153,347) $ 2,934,522 $ (32,699,096) $ 28,669,516 $ 1,077,465 $ 7,215,229 $ $ 4,624,073 $ $ $ 10,711,222 29,434,000 24,723,485 135,147,884 (47,562,819) (117,879,715) (49,731,484) 937,562 (2,182,005) (53,750) (450,607) 90,836 (1,185,598) (2,775,629) $ (7,417,597) $ 30,285,120 $ (34,645,320) $ (413,521) $ (3,961,227) $ $ 76,654,509 $ $ $ (80,124,248) (5,052,715) (190) (387,184) (449,423) (130,000) (388,478) (149) (4,065) (1,478,334) $ 0 $ (8,522,644) $ (387,184) $ (968,050) $ (1,482,399) $ (404,966) $ (149,626,689) $ 16,277,846 $ (2,744,945) $ (3,244,656) 217,516 9,906,864 16,679,397 261,461 301,590 $ (187,450) $ (139,719,825) $ 32,957,243 $ (2,483,484) $ (2,943,066) $ (4,670,525) $ (150,656,445) $ 26,594,255 $ (2,787,590) $ (1,171,463) 4,707,572 150,656,445 132,264,275 2,792,880 2,698,575 $ 37,047 $ 0 $ 158,858,530 $ 5,290 $ 1,527,112 182 Lottery Corporation Ports Authority Stone Mountain Memorial Association Student Finance Authority Tollway Authority World Congress Center Authority Other Entities Total $ 1,683,230,793 $ 95,168,000 $ 47,231,438 $ 1,843,281 $ (204,844,000) (13,819,000) (864,420,000) (23,523,443) (41,967,557) (18,317,056) (19,897,060) 4,868,196 (45,652,795) (5,610,623) 814,262 21,588,602 $ (6,679,909) 88,355,310 $ (64,909,091) (20,062,329) (8,562) 166,120 59,229,857 $ 2,026,445,498 123,192,291 75,218,750 (51,808,294) (431,389,348) (4,604,109) (113,917,345) (864,420,000) (174,392,226) 30,574 (17,303,499) 166,120 $ 600,147,793 $ 29,677,000 $ 9,017,322 $ (43,737,679) $ 14,908,693 $ 3,541,448 $ 2,848,028 $ 623,600,241 $ $ $ $ 47,956,323 $ 3,039,257 (555,272,000) (11,080,000) (1,635,094) (7,527,268) (1,828,797) (11,296,289) 1,072,000 385,145 $ $ 9,439,310 $ 62,019,706 3,200,997 (345,071) 362,027 (543,648) 199,786 414,406 10,711,222 167,621,141 24,723,485 3,200,997 (555,617,071) (53,750) (172,969,802) (51,560,281) (14,894,947) 199,786 (2,182,005) (10,809,942) $ (566,568,289) $ (10,008,000) $ (1,635,094) $ 42,024,660 $ 0 $ 3,217,953 $ 9,509,854 $ (539,611,461) $ $ $ $ (1,042,000) 36,260,000 608,000 (43,940,000) (3,696,000) (1,358,000) 6,951 (1,940,815) (2,176,869) $ (48,319) $ $ 13,781,971 7,853,860 (1,164,016) (3,720,000) (5,758,467) (3,181,012) (9,870,382) (2,500,000) (15,234,704) (4,627,858) (334,710) $ 1,222,172 (1,319,215) (45,000) (890,850) (501) 76,654,509 13,781,971 45,336,032 614,951 (60,165,419) (90,215,248) (32,338,417) (7,809,710) (334,710) $ (1,042,000) $ (12,126,000) $ (4,110,733) $ (48,319) $ (13,823,495) $ (10,931,823) $ (1,033,394) $ (54,476,041) $ (37,437,504) $ (6,422,158) $ 4,960,000 1,988,000 $ (32,477,504) $ $ 60,000 $ 287,000 (4,434,158) $ 3,108,842 $ 8,159,282 $ (12,412,844) $ 381,848 1,445,232 121,036 (2,251,250) $ 1,928,230 5,659,320 $ (18,729,418) $ (211,337,264) 3,976,809 2,224,968 44,271,915 121,036 502,884 $ (10,967,612) $ (323,020) $ 9,636,129 $ (16,504,450) $ (166,944,313) 3,774,379 $ (12,728,950) $ 762,178 $ 5,463,707 $ (5,179,962) $ (137,431,574) 5,612,415 15,890,809 11,705,244 19,929,293 33,042,081 387,745,871 $ 347,000 $ 11,268,124 $ 9,386,794 $ 3,161,859 $ 12,467,422 $ 25,393,000 $ 27,862,119 $ 250,314,297 (continued) 183 State of Georgia Component Units - Proprietary Fund Types Combining Statement of Cash Flows (continued) For the Fiscal Yea r Ended June 30, 1998 Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Depreciation/Amortization Interest and Other Investment Income Other Changes in Assets and Liabilities: Decrease (Increase) in Intergovernmental Receivables Decrease (Increase) in Interest and Dividends Receivable Decrease (Increase) in Notes and Loans Receivable Decrease (Increase) in Other Receivables Increase in Due from Primary Government Decrease (Increase) in Inventories Decrease (Increase) in Prepaid Items Decrease (Increase) in Other Assets Increase (Decrease) in Accounts Payable and Other Accruals Increase (Decrease) in Compensated Absences Payable Increase (Decreaes) in Contracts Payable Increase (Decrease) in Salaries/Withholdings Payable Increase (Decrease) in Due to Primary Government Increase (Decrease) in Deferred Revenue Increase (Decrease) in Funds Held for Others Increase (Decrease) in Other Liabilities Increase (Decrease) in Deposits and Overpayments Increase in Grand Prizes Payable Total Adjustments Net Cash Provided by (Used in) Operating Activities Noncash Investing, Capital, and Financing Activities: Disposal of Fixed Assets Donation of Fixed Assets Interest Earned on Grand Prize Investments and Grand Prizes Payable Purchase of Building on Account Refunding Bond Proceeds Deposited Directly into Escrow Account Development Authority Environmental Facilities Authority Housing and Finance Authority Jekyll Island State Park Authority Lake Lanier Islands Development Authority $ 1,989,722 $ 13,938,451 $ (10,679,773) $ 816,994 $ 2,656,509 $ $ $ (165,202) $ $ 4,648,998 52,593,067 (20,725,106) 2,678,074 131,302 1,030,598 (766,001) (29,778,670) (16,821,384) (217,100) (19,856) (546,454) (259,195) 1,339,044 549,542 (15,115) 279,360 (34,042) (40,680) (31,042) 23,246 126,449 (395) (61,934) (491) 6,352,530 28,381 501 (1,820,248) (1,943) (501) $ 944,800 $ (46,637,547) $ 39,349,289 $ 260,471 $ 4,558,720 $ 2,934,522 $ (32,699,096) $ 28,669,516 $ 1,077,465 $ 7,215,229 $ $ $ $ (23,544) $ 14,000 $ 0 $ 0 $ 0 $ (9,544) $ 0 184 Lottery Corporation Ports Authority Stone Mountain Memorial Association Student Finance Authority Tollway Authority World Congress Center Authority $ 550,252,000 $ 12,029,000 $ 428,231 $ (37,897,512) $ 11,615,895 $ (1,833,772) $ Other Entities Total 371,932 $ 543,687,677 $ 1,393,000 $ 16,494,000 $ (20,839,000) 6,332,793 (423,000) 486,000 4,244,000 (4,047,580) (13,420) (288,000) 469,000 1,292,000 636,348 64,948 (468,000) (355,227) 1,931 224,000 (92,000) 62,432,000 $ 49,895,793 $ 17,648,000 $ 5,984,705 $ 321,456 $ 814,262 518,234 (15) 793,598 211,956 160,154 (765,781) (5,610,623) (936,667) 1,080,613 (12,191) 67,776 320,833 (199,386) 8,589,091 $ (5,840,167) $ 3,521,669 $ 8,758,583 $ 10,301 $ 36,318,512 57,242,065 27,879 (38,043,891) 3,136 123 (431,945) (94,210) 271,240 22,785 (1,766,184) 12,558 60,202 (736,421) 124,544 (79) 9,383 (678,113) (8,562) 172,389 (573,080) (2,678,825) 32,602 (412,763) (56) (7,901) (5,039) (1,226) 5,121,240 56,418 214,659 9,923 (4,706) 110,895 2,695 (2,518,671) (1,367,878) (51,180,079) 9,947,439 (71) 476,213 1,209,943 5,256,224 334,264 267,213 (347,551) (218,934) 45,454 736,463 (6,859) (118,997) (550,295) 62,432,000 3,292,798 $ 5,375,220 $ 2,476,096 $ 79,912,564 $ 600,147,793 $ 29,677,000 $ 9,017,322 $ (43,737,679) $ 14,908,693 $ 3,541,448 $ 2,848,028 $ 623,600,241 $ (61,000) $ 20,839,000 $ 20,778,000 $ $ 0 $ $ 0 $ $ (536,218) $ 46,403 90,526,229 0 $ 90,036,414 $ $ (72,876) $ (693,638) 1,763,741 1,777,741 20,839,000 46,403 90,526,229 0 $ 1,690,865 $ 112,495,735 185 Component Units Fiduciary Fund Types State of Georgia Component Units - Fiduciary Fund Types For the Fiscal Yea r Ended June 30, 1998 The Firefighter's Pension Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the firemen of the State of Georgia. The Judges of the Probate Courts Retirement Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the judges of the Probate Courts of the State of Georgia. The Peace Officers' Annuity and Benefit Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the peace officers of the State of Georgia. The Public School Employees Retirement System is used to account for the accumulation of resources for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System. The Sheriffs' Retirement Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the sheriffs of the State of Georgia. The Superior Court Clerks' Retirement Fund is used to account for the accumulation of resources for the purpose of paying retirement benefits to the Superior Court Clerks of the State of Georgia. The Teachers Retirement System is used to account for the accumulation of resources for the purpose of providing retirement allowances and other benefits for teachers and administrative personnel employed in the public schools and the University System of Georgia. 189 State of Georgia Component Units - Fiduciary Fund Types Combining Statement of Plan Net Assets June 30, 1998 Assets Cash and Cash Equivalents Investments Receivables (Net of Allowances for Uncollectibles) Interest and Dividends Other Miscellaneous Prepaid Items Fixed Assets Land and Buildings Equipment Total Assets Liabilities Cash Overdraft Accounts Payable and Other Accruals Salaries/Withholdings Payable Due to Primary Government Total Liabilities Fund Balances Reserved for Pension Benefits Firefighters' Pension Fund Judges of the Probate Courts Retirement Fund Peace Officers' Annuity and Benefit Fund $ $ 308,339,127 28,224 $ 3,389,458 35,543,811 242,328,596 2,313,832 325,490 2,017,814 135,197 132,210 $ 310,920,366 $ 310,296 606 123,498 35,898,131 $ 248,169,662 $ 394 $ $ $ 1,279 4,393 $ 394 $ 1,279 $ 4,393 $ 310,919,972 $ 35,896,852 $ 248,165,269 190 Public School Employees Retirement System Sheriffs' Retirement Fund Superior Court Clerks' Retirement Fund Teachers Retirement System Total $ $ 702,149,000 $ 38,813,522 52,760 $ $ 3,470,442 34,421,652 34,444,586,000 35,806,181,708 6,000 $ 702,155,000 $ 291,749 20,620 39,125,891 $ 245,932,000 250,880,885 180,370,720 42,175 180,376,720 42,175 19,207 445,493 296,141 34,493,619 $ 34,870,930,895 $ 36,241,693,564 $ 38,000 $ 267,000 $ 305,000 $ 9,130 $ 9,130 $ $ 65,282 $ 112,806 1,987,730 2,254,730 62,762 68,434 39,946 39,946 0 $ 2,155,720 $ 2,475,916 $ 701,850,000 $ 39,116,761 $ 34,493,619 $ 34,868,775,175 $ 36,239,217,648 191 Statistical Section Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 State of Georgia Statistical Section Index Page General Governmental Expenditures by Function..............................................................................196 General Governmental Revenues by Source.......................................................................................198 State Tax Revenues by Source - All Governmental Fund Types.....................................................200 Principal Nongovernmental Employers................................................................................................202 Computation of Legal Debt Margin......................................................................................................203 Ratio of Annual Debt Service Expenditures for General Obligation Debt to Total General Governmental Expenditures................................................................................203 Demographic Statistics...........................................................................................................................204 Schedule of Bank Deposits....................................................................................................................204 Miscellaneous Statistics ........................................................................................................................205 195 State of Georgia General Governmental Expenditures by Function (1) For the Last Eight Fiscal Years (2) Table 1 Expenditures by Function General Government Education (4) Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Capital Outlay Debt Service Intergovernmental Total General Governmental Expenditures 1998 1997 1996 1995 $ 653,302,692 $ 637,247,287 $ 6,155,220,908 5,700,389,994 6,479,723,177 6,796,847,561 1,385,250,996 1,113,788,591 1,193,748,916 1,124,542,047 264,913,965 263,090,507 185,622,125 170,667,100 45,865,385 48,769,799 346,296,387 373,677,146 645,791,398 629,588,332 (3) (3) 471,240,748 $ 4,998,994,142 6,558,077,298 1,287,172,005 1,104,443,315 294,112,317 169,961,642 46,557,857 391,876,879 571,524,445 (3) 539,762,518 4,625,591,699 5,693,088,331 1,401,010,780 1,030,957,652 190,029,084 156,234,675 45,875,856 493,326,267 537,800,975 (3) $ 17,355,735,949 $ 16,858,608,364 $ 15,893,960,648 $ 14,713,677,837 (1) General Governmental Functions include general, special revenue, capital projects and debt service funds. (2) The state did not prepare financial statements in conformity with generally accepted accounting principles until the fiscal year ended June 30, 1991. Comparable data for earlier years is not available. (3) The "Intergovernmental" expenditure category was eliminated in 1993. Such expenditures are categorized by "Current" expenditure function. (4) In fiscal year 1995, the state began recording a liability and related expenditures for teachers' summer salaries. 196 1994 1993 1992 1991 $ 409,630,033 $ 380,920,519 $ 297,671,885 $ 307,358,275 4,168,677,500 3,738,241,752 3,356,647,585 3,429,066,240 5,257,989,665 4,684,027,431 4,159,170,527 3,589,402,101 975,771,056 1,088,108,187 898,101,022 1,056,209,827 891,894,168 798,451,763 702,543,743 706,878,373 175,159,029 184,179,867 186,742,307 173,618,821 121,413,898 116,370,238 103,007,704 97,930,563 45,299,326 42,923,710 40,267,999 43,968,291 325,340,789 347,403,119 249,777,992 242,582,555 427,689,905 451,136,869 409,267,811 417,490,455 (3) (3) 325,890,492 330,633,230 $ 12,798,865,369 $ 11,831,763,455 $ 10,729,089,067 $ 10,395,138,731 197 State of Georgia General Governmental Revenues by Source (1) For the Last Eight Fiscal Years (2) Table 2 Revenues by Source Taxes (4) Licenses and Permits Intergovernmental Sales and Services Fines and Forfeits Interest and Other Investment Income Rents and Royalties Contributions and Donations Penalties and Interest on Taxes Unclaimed Property General Obligation Bond Proceeds Other Revenue (3) Total General Governmental Revenues 1998 1997 1996 1995 $ 11,439,170,422 $ 10,483,497,704 $ 346,081,148 351,181,927 5,617,029,811 5,549,805,877 536,827,964 513,909,314 49,204,317 50,426,165 275,999,300 239,306,741 13,920,492 9,992,943 192,209,388 190,841,985 9,485,653 6,699,639 20,690,958 20,118,021 257,123,411 373,248,075 5,409,857 32,522,511 9,891,126,837 $ 343,118,630 5,457,487,877 363,320,801 32,022,270 242,059,488 17,600,277 169,020,652 9,082,163 25,809,698 960,650,338 6,781,951 9,068,979,799 335,061,015 4,837,628,972 339,380,452 34,043,976 184,686,971 17,733,647 170,464,588 8,282,630 19,815,272 727,775,339 24,833,072 $ 18,763,152,721 $ 17,821,550,902 $ 17,518,080,982 $ 15,768,685,733 (1) General Governmental Revenues include general, special revenue, capital projects and debt service funds and proceeds from the issuance of General Obligation bonds. (2) The state did not prepare financial statements in conformity with generally accepted accounting principles until the fiscal year ended June 30, 1991. Comparable data for earlier years is not available. (3) The increase in Other Revenue in Fiscal Year 1994 is primarily due to the recognition of revenue in the General Fund for Distance Learning and Telemedicine funds; these funds were reflected previously in Agency Funds as the Universal Service Fund. (4) In fiscal year 1995, the state began accounting for certain tax revenues on the modified accrual basis. 198 1994 1993 1992 1991 $ 8,337,801,318 $ 7,761,536,952 $ 7,014,576,028 $ 6,913,824,337 323,679,549 273,530,522 156,555,971 142,682,174 4,163,447,196 4,024,383,231 3,481,785,992 3,059,490,557 304,600,443 273,321,290 284,191,405 254,698,693 32,570,070 27,968,839 26,684,051 23,819,450 131,238,703 122,575,976 113,224,780 138,668,503 9,285,637 22,275,341 25,757,175 18,912,013 149,621,154 103,743,601 95,966,335 39,881,852 16,110,883 18,888,188 17,936,355 19,715,782 19,935,473 34,611,896 11,798,133 10,972,108 977,957,328 356,333,042 667,655,288 612,441,613 121,670,497 6,437,851 9,936,790 19,964,620 $ 14,587,918,251 $ 13,025,606,729 $ 11,906,068,303 $ 11,255,071,702 199 State of Georgia State Tax Revenues by Source - All Governmental Fund Types For the Last Ten Fiscal Years Table 3 Source: Income General Sales Selective Sales Motor Fuel Alcoholic Beverages Cigars/Cigarettes Insurance Premium Estate Property Corporation Net Worth Other Total Tax Revenues - All Governmental Fund Types 1998 1997 1996 1995 $ 6,133,784,892 $ 5,488,547,143 $ 4,964,393,724 $ 4,498,902,508 4,238,397,531 4,062,494,318 3,954,442,920 3,651,583,790 405,269,766 126,825,895 80,051,470 212,839,904 84,808,642 36,021,442 108,615,750 12,555,130 387,418,653 124,667,603 76,391,777 204,744,512 60,295,856 35,630,751 24,185,794 19,121,297 391,550,566 121,702,379 91,248,012 196,508,650 66,538,071 33,091,530 21,511,434 50,139,551 379,119,386 114,681,538 86,176,720 187,190,136 73,607,282 31,106,689 25,338,172 21,273,578 (1) $ 11,439,170,422 $ 10,483,497,704 $ 9,891,126,837 $ 9,068,979,799 (1) In Fiscal Year 1995, the state began accounting for certain tax revenues on the modified accrual basis. Sources: Fiscal Years 1989-1990 - Annual Audit Reports: Georgia Departments of Revenue and Insurance Fiscal Years 1991-1998 - Georgia Comprehensive Annual Financial Report Note: Governmental Fund Types are described in the Notes to the Financial Statements. 200 1994 1993 1992 1991 1990 1989 $ 4,102,592,850 $ 3,850,571,615 $ 3,452,551,939 $ 3,355,808,517 $ 3,342,947,428 $ 3,250,782,776 3,361,513,613 3,072,269,685 2,777,595,357 2,754,539,969 2,724,130,258 2,100,042,193 365,243,573 110,633,761 83,186,371 162,867,502 87,808,192 29,969,838 18,830,421 15,155,197 345,758,031 111,976,311 84,714,936 196,175,858 39,103,941 28,039,074 18,428,111 14,499,390 332,156,403 113,642,855 84,102,100 161,691,146 37,583,865 25,866,148 18,062,835 11,323,380 324,407,536 114,245,028 84,893,427 184,369,909 41,261,832 24,341,012 17,951,998 12,005,109 327,180,367 116,471,315 86,370,739 164,258,642 27,616,177 23,313,141 18,338,297 6,380,430 325,994,676 115,617,591 88,293,658 152,694,717 37,325,922 21,361,081 17,171,335 9,290,520 $ 8,337,801,318 $ 7,761,536,952 $ 7,014,576,028 $ 6,913,824,337 $ 6,837,006,794 $ 6,118,574,469 201 State of Georgia Principal Nongovernmental Employers June 30, 1998 Table 4 Company Wal-Mart Stores, Incorporated Delta Air Lines, Incorporated * Bell South Corporation * Promina Health System * Shaw Industries, Incorporated * Publix Supermarkets, Incorporated The Southern Company/Georgia Power Company * Columbia Healthcare Corporation Mohawk Industries * Emory System of Health Care* AT&T Company K-Mart Corporation The Kroger Company Lockheed Martin Corporation CVS/Pharmacy Winn Dixie Stores, Incorporated Georgia-Pacific Corporation * United Parcel Service * Beaulieu of America Dayton Hudson/Target Stores Cox Enterprises* Lucent Technologies IBM Inc. NationsBank Springs Industries SunTrust Banks, Incorporated Home Depot, Incorporated * Marriott Corporation General Motors Corporation Morris Communications Queen Carpet Corporation Federated Department Stores National Service Industries, Incorporated * Southwire Company RTM Restaurant Group Sears, Roebuck and Company Coca-Cola Company* J.C. Penney Company Wachovia Corporation Gold Kist Corporation * Indicates Georgia Headquarters Source: Georgia Department of Industry, Trade and Tourism, January, 1999. 202 Number of Employees 29,920 27,552 21,651 18,000 17,350 15,377 13,603 12,000 11,750 10,800 10,550 10,500 10,500 10,100 10,000 10,000 9,600 9,500 9,000 8,600 7,720 7,300 7,200 7,000 6,310 6,118 6,091 5,700 5,641 5,600 5,500 5,340 5,306 5,300 5,250 5,200 5,150 5,100 5,100 5,000 State of Georgia Computation of Legal Debt Margin June 30, 1998 Table 5 Treasury Receipts - Fiscal Year Ended June 30, 1997 (1) $ 11,905,829,999 Legal Debt Margin: Highest Annual Commitments Permitted Under Constitutional Limitation (10% of above) $ 1,190,583,000 Highest Total Annual Commitments in any Fiscal Year (Highest FY 1999) As a Percentage of FY 1997 State Treasury Receipts As a Percentage of FY 1998 State Treasury Receipts $ 580,531,875 4.88% 4.65% (1) Includes Indigent Care Trust Fund Receipts and Lottery Proceeds Source: Georgia State Financing and Investment Commission Ratio of Annual Debt Service Expenditures For General Obligation Debt to Total General Governmental Expenditures (1) For the Last Eight Fiscal Years (2) Table 6 Fiscal Year Principal General Bonded Debt Interest and Other Total Fiscal Charges Debt Service General Governmental Expenditures (1) Ratio of Debt Service to General Governmental Expenditures 1998 1997 1996 1995 1994 1993 1992 1991 $ 387,030,000 $ 392,165,000 352,300,000 350,385,000 246,840,000 258,548,346 243,921,646 274,980,000 258,317,069 $ 236,835,498 218,523,118 186,826,275 179,738,306 191,022,895 164,291,856 135,960,182 645,347,069 629,000,498 570,823,118 537,211,275 426,578,306 449,571,241 408,213,502 410,940,182 $ 17,355,735,949 16,858,608,364 15,893,960,648 14,713,677,837 12,798,865,369 11,831,763,455 10,729,089,067 10,395,138,731 3.72% 3.73% 3.59% 3.65% 3.33% 3.80% 3.80% 3.95% (1) See Table 1, Total General Governmental Expenditures (2) The state did not prepare financial statements in conformity with generally accepted accounting principles until the fiscal year ended June 30, 1991. Comparable data for earlier years is not available. Source: Georgia Comprehensive Annual Financial Report 203 State of Georgia Demographic Statistics For the Last Ten Calendar Years Table 7 Calendar Year 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 Population 7,642,207 7,486,242 7,353,225 7,102,000 7,055,000 6,917,000 6,773,000 6,623,000 6,478,000 6,436,000 Per Capita Personal Income 25,020 24,061 22,709 21,278 20,251 19,278 18,549 17,364 17,045 16,223 Public School Enrollment 1,401,291 1,346,761 1,311,126 1,271,903 1,233,362 1,205,357 1,174,437 1,148,256 1,126,352 1,174,118 Unemployment Rate 4.20% 4.50% 4.60% 4.90% 5.20% 5.80% 6.90% 5.00% 5.40% 5.50% Source: Population - U. S. Department of Commerce, Bureau of the Census Per Capita Income - U. S. Department of Commerce, Bureau of Economic Analysis Public School Enrollment - Georgia Department of Education Note: Calculation Method for Public School Enrollment Changed in 1990 Unemployment Rate - Georgia Department of Labor Fiscal Year 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 Schedule of Bank Deposits For the Last Ten Years (Dollars in Thousands) Table 8 Commercial Banks $ 77,505,212 42,235,312 91,933,990 66,895,898 62,065,439 60,063,284 55,066,858 52,295,306 49,912,986 46,175,163 Savings and Loan Associations Total Deposits $ 4,191,658 $ 81,696,870 4,798,940 47,034,252 4,640,878 96,574,868 5,107,013 72,002,911 5,285,489 67,350,928 5,180,763 65,244,047 10,659,544 65,726,402 13,140,105 65,435,411 13,406,430 63,319,416 14,402,867 60,578,030 Source: Federal Reserve Bank of Atlanta 204 State of Georgia Miscellaneous Statistics June 30, 1998 Table 9 Date Entered Union Form of Government Miles of State Highway Land Area January 2, 1788 Legislative-Executive-Judicial 17,954 59,441 Square Miles State Police Protection: Number of Stations 48 Number of State Troopers 881 State Colleges and Universities: Number of Separate Institutions Number of Educators Number of Students 34 9,426 205,389 Recreation: Number of State Parks Number of Historic Sites Area of State Parks and Historic Sites 48 15 71,150 acres Sources: Facts About the States, 1989 - Kane, Anzovin, Podell Georgia Descriptions in Data, 1988 - Georgia Office of Planning and Budget State and Metropolitan Area Data Book, 1991 - U. S. Department of Commerce Georgia Department of Transportation Georgia Department of Public Safety Board of Regents of the University System of Georgia Georgia Department of Natural Resources 205