Single audit report, June 30, 1997

~A A~DO
.A I~
111G-/'7

-----State of GeorfJla-----
aerr ~mer. Governor
Sin9fe 7\.udit CJ\9'ort
3une 30, 1997
Prepared by
GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
Oaud"e ~C{)ickers. State.r\ud"itor
- - - - - - - - - - - - - - GeorfJia's Su.te 6free - - - - - - - - - - - - - owr r.[}I"Rwlnflir &ott(Fuss qn 1937, the nw oak was lidopted as the offickl tra at the request of the 'Edmund 'Burke Oapter of the 'Daufftters of the A,merlain ~'Yofutlon. qt flourishes afollfJ the coastaC pCalns and on the lsCands where the first settfers made their homes. !Xany famous Georgians. as earfy as Genera[ .:James 'Edward Orfethorpe. were afU to enjoy It s &eauty.

v CLAUDE L. ICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF A uniTS AND AccouNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400

June 12, 1998

To the Citizens ofthe State of Georgia, The Honorable Zell Miller, Governor of Georgia
and Members of the General Assembly of Georgia
It is my pleasure to submit to you the Single Audit Report of the State of Georgia for the fiscal year ended June 30, 1997.
The Single Audit Report of the State of Georgia discloses the results of the fmancial operations of the State of Georgia reporting entity, as well as its compliance with requirements applicable to Federal financial assistance programs administered by the State.
Fiscal year 1997 proved to be a challenging year as auditors across the nation adjusted to significant audit changes. These changes were brought about as a result ofthe passage ofthe Single Audit Amendments of 1996 and the implementation of Office of Management and Budget Circulation A-133. This report ifs the culmination of extensive planning, coordination, testing and evaluation by many 1nembers of my staff.
We are grateful for all of the support given this office as we corporately strive to promote improvements in accountability and stewardship in state government.

State Auditor

- - - - - - - - S t a t e of Georfjla - - - - - - - -
Toole of Contents Jmc30, 1997

SECTION A- GENERAL PURPOSE FINANCIAL STATEMENTS

Page

Independent Auditor's Report on General Purpose Financial Statements .................................... A-3

General Purpose Financial Statements

Combined Balance Sheet- All Fund Types, Account Groups and Discretely Presented Component Units . 0 0 0 0 0 A-8

Combined Statement ofRevenues, Expenditures and Changes in Fund Balances-

All Governmental Fund Types, Expendable Trust Funds and Discretely Presented Component Units

. 0

0



0



A-12

Statement ofFunds Available and Expenditures Compared to Budget- Budget Fund

0 0 0 0 0

0 0

A-16

Combined Statement ofRevenues, Expenses and Changes in Fund Equity/Fund Balances-

All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units

A-18

Combined Statement ofCash Flows-

All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units

A-22

Statements ofPlan Net Assets - Pension Trust Funds and Discretely Presented Component Units 0 0 0 0 0 0 0 0 0 A-24

Statement ofChanges in Plan Net Assets- Pension Trust Funds and Discretely Presented Component Units 0 0 0 A-26

Combined Statement ofChanges in Fund Balances- College and University Funds

. 0

0. 0

0

0. 0

0

0. 0

0. 0

0

0

0

0

A-28

Combined Statement ofCurrent Funds Revenues, Expenditures and Other Changes-

College a n d University Funds A-32 0 0 0 0 0 0 0 0 0 0. 0 0. 0 0. 0 0. 0 0 0. 0 0 0 0 0 0 0 0 0. 0 0. 0 0. 0 0 0. 0. 0 0 0 0 0 0. 0 0 0 0 0 0 0

Notes to the Financial Statements A-33 0 0 0 0 0 0 0

0 0 0 0 0

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SECTION B- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

Schedule ofExpenditures ofFederal Awards . B-5 0 0 0 0 0 0

0 0 0 0

00 0 0 0 0 0

0 0

0 0 0 0 0 0 0 0

0 0 00 0

00 0 0

Schedule ofCluster Programs . B-47 0

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0

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0

0

0

0

0

0

SECTION C- REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS . ............. 0 C-3

SECTION D- REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 . . . . . . . . . . . . . . . . . . . . . 0 0 D-3

SECTION E- AUDITEE'S RESPONSE- SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-3

SECTION F- FINDINGS AND QUESTIONED COSTS

Summary ofAuditor's Results F-5 0

0. 0

0 0

0

0. 0

0. 0 0

0. 0 0

0

0

0 0. 0

0

0

0

0

0

0

0 0

0. 0

0 0. 0

0. 0 0

0

0

Table ofContents

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0

0 0 0 0 0

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0 0

0 0

0 0

0 0. 0 0. 0 0. 0

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0

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0 0. 0 0

0

F-9

Findings and Questioned Costs F-11 0

0 0



0

0

0

0



0

0



0 0

0 0

0 0

0 0

0

0 0

0 0

0 0

0

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APPENDIX "A"

Listing ofOrganizational Units Comprising the State ofGeorgia Reporting Entity.

0

0

0

0

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0

0 0

0 0

0 0

0 0 0

AP-3

Section.?\. Genera[ 9?urpose ~inancia[ Statements

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF A uniTS AND AccoUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400

INDEPENDENT AUDITOR'S REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS

The Honorable Zell Miller Governor of Georgia
and Members of the General Assembly of the State of Georgia
We have audited the accompanying general purpose financial statements ofthe State of Georgia, as listed in the Table of Contents, as of and for the year ended June 30, 1997. 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% ofthe assets and revenues ofthe general fund, 100% ofthe assets and revenues ofthe capital projects funds, 62% ofthe assets and 29% of the revenues of the internal service funds, 68% ofthe assets ofthe 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 ofthe 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% ofthe assets and revenues ofthe component unit governmental fund types, 83% ofthe assets and 95% of the revenues of the component unit proprietary fund types and 98% ofthe assets and 99% ofthe revenues ofthe component unit fiduciary fund types. The financial statements ofthese 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 paragraph, 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 ofthe 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 pui-pose 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 ofthe 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 expenditure-driven 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 ofthis 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 ofthis 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.
A-4

The State of Georgia did not maintain adequate systems to determine the accuracy of the amounts of salesbased taxes collected by the Department of Revenue on behalf of local governments and the disbursements of those taxes to local governments. State statutes require that all sales-based taxes be collected by the Department ofRevenue and remitted to the Office ofTreasury and Fiscal Services. Amounts of sales-based taxes collected on behalf of local governments are subsequently returned to local government jurisdictions based on information compiled by the Department of Revenue from sales tax returns. The Department of Revenue did not maintain adequate information systems to properly identify amounts of sales-based taxes collected on behalf oflocal governments. We were unable to determine the accuracy ofthe sales-based taxes retained by the State of Georgia or the accuracy ofthe amounts collected and subsequently disbursed to local governments for sales-based taxes.
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 ofthe State of Georgia as of June 30, 1997, and the results of its operations, the cash flows ofits 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 2 to the general purpose financial statements, the State of Georgia adopted Statement No. 25 ofthe Governmental Accounting Standards Board (GASB), Financial Reportingfor Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans in fiscal year 1997. In addition, as discussed in Note 4 to the general purpose financial statements, the State implemented GASB Statement No. 28, Accounting and Financial Reportingfor Securities Lending Transactions.
In accordance with Government Auditing Standards, we have also issued a report dated June 12, 1998 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.
The accompanying Schedule of Expenditures of Federal Awards (Section B) is presented for purposes of additional analysis as required by U.S. Office ofManagement and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, and is not a required part ofthe general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose fmancial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
May 19, 1998
A-5

(This page intentionallY left blank)

--Genera[ Wurpose ~inancia[ Statements---

State of GeorfJia - - - - - - -
Combined Balance Sheet
All Fund Tvpes, Account Groups and DiscretelY Presmtcd Componmt Units
June 30, 1997

Assets and Other Debits
Assets: cash and Cash Equivalents cash and cash Equivalents in Nonexpendable Trust Funds Investments Receivables (Net ofAllowances for Uncollectibles) Intergovenunental- Federal Interest and Dividends Notes and Loans Taxes Other Due from Other Funds Due from Primaiy Govenunent Due from Component Units 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 Flxed 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
Total Assets and Other Debits
Uabllltles, Equity and Other Credits
Liabilities: cash Overdraft Accounts Payable and Other Accruals Compensated Absences Payable Claims and Judgments Payable Contracts Payable Salaries/Wrthholding;; Payable Benefits Payable Due to Other Funds Due to Primaiy Govenunent Due to Component Units Accrued Interest Payable 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 Primaiy Govenunent Long-Term Debt Payable (Net ofUnamortized Discounts)
Total Liabilities

Govenunental Fund Types

Special Revenue

Debt Service

Capilal Projects

Primaiy Govenunent

Proprietary Fund Types

Enterprise

Intemal Senice

$ 2,628,862,273 $
600,398,816
1,728,213,699 17,675,652
664,360,025 164,182,456
67,540 41,878,493 72,415,975

1,762,517 $ 668,399

208,653,344 $

$

1,091,615,474

76,983,949 $ 174,978,124

272,299,546 584,772,437

11,480,997

2,802,452

1,865,404

965,443

13,523,053

10,892,781 32,343,724
470,419 11,177,328
659,846

6,925 161,250
88,523,030

230,662

402,588,254

$ 6,006,746,134 s

s s 4,296,320 $ 208,653,344 $ 1,104,061,914

268,518,240

1,315,204,335

s

$

610,639,917

1,540,985,327 568,945,094 453,540,192 28,020,157
1,393,024
158,003,752

40,894,516 349,835

$ 2,106
1,800

$ 3,402,771,814 $

3,906 $

$

20,191,665 $

$

15,779,528

2,349,599

23,716,644

151,931

7,632,640

258,497,047

15,616,910

440,462

13,460,711

120,275

148,196,779

13,117,287 10,618,996

67,317 2,062, 763
581,399

1,335,714

0 $

s 62,207,099 $ 164,256,058

307,474,510

The notes to the financial statements are an integral part ofthis statement
A-8

Fiducimy F\mdType
Trust and Agency

College and University

Accmmt Groups

General

General

Fixed

Long-Tenn

Assets

Debt

Totals(Memorandmn
Only)
Primary Government

Governmental F\md Types

Component Units
Proprietary F\md Types

Fiducimy F\md Types

Totals(Memorandmn
Only)
Reporting Entity

$ 3,449,920,761 $ 473,593,239 $

$

$ 7,112,075,629 $

19,102

19,102

10,024,517,246

101,798,437

12,578,748,933

707,627 87,700,223
4,311,922 86,595,170 60,475,924

44,639,644 46,110
47,843,318
150,351,575

22,788

26,826,099 9,178,825

1,773,560,970 119,705,434 52,155,240 750,955,195 402,256,636 32,343,724 0 537,959 79,881,920 82,277,434

0

314,206,807 139,913

4,234,572,093

2,707,240,447

208,653,344 4,639,920,336

0 6,925 161,250 314,206,807
7,344,631,456 0
88,662,943
208,653,344
4,639,920,336

2,153,739 $ 274,791 102,219
2,859,426 164,256 233,819
73,906,597
6,069,631

235,116,239 $ 121,609,722

2,050,471 $ 28,871,305,417

7,351,396,078 19,102
41,571,938,863

93,106,069 13,591,857 873,890,791
86,743,653
1,393,024
5,433,251 3,991,821

229,029,590 176,832,155
39,650

1,866,667,039 362,326,881 926,148,250 750,955,195 668,691,870 32,343,724 1,393,024 537,959 85,479,427 86,542,724

134,103,413 370,043,252

134,103,413 370,043,252

6,858,741 581,124,003

6,858,741 581,124,003
6,925 161,250 314,206,807

811,115,756 16,455,000 91,426,657

693,725

8,230,347,534 16,455,000 180,089,600

208,653,344

4,645,989,967

$ 14,028,617,483 $ 5,088,849,340 $ 2,707,240,447 $ 4,848,573,680 $ 35,580,761,237 $

85,764,478 $ 3,446,003,249 $ 29,279,951,008 $ 68,392,479,972

$

-$

$

5,518,308

239,920,703

100,463,642

20,110 707,670

5,023,914 20,900,000
3,615,897

23,735 2,657,071,592
6,925

71,566,348 10,940,762
18,961,673 113,283
1,707,821

$ 2,663,348,340 $

14,000 473,228,043 $

$

$

20,191,665 $

897,926,805

203,717,363

311,965,576

697,979

259,195,026

1,570,503,410

574,109,393

622,636,971

32,343,724

0

1,393,024

0

242,780,239

5,319,332

18,322,857

0

2,716,927,781

11,082,114

2,289,220

6,925

0

4,638,839,006

4,640,188,720

0 $ 4,848,573,680 $ 11,921,863,450 $

$ 4,318,785
969,319
36,317

$ 88,686,632
2,694,679
2,472,261 538,791

328,877

183,024

635,000 5,100,312

18,566,782 81,052,557
126,110 30,446,467 281,684,101
8,836,793 15,201,360

161,250

1,461,927,233

11,388,610 $ 1,992,578,040 $

$ 1,850,697
58,985 26,058

20,191,665 992,782,919 315,629,574 259,195,026 1,572,975,671 574,743,486 622,636,971
32,343,724 537,959
1,393,024 18,566,782 324,467,796 23,549,279 30,446,467 2,998,611,882 19,918,907 17,490,580
6,925 161,250

6,1 02,115,953

1,935,740 $ 13,927,765,840

(continued)

A-9

State of Georffia - - - - - - - -
Combined Balance Sheet All Fund Tvpcs, Account Groups and Discrctelv Presented Component Llnits Cconnnued)
June 30, 1997

Primary Government

General

Equity and other Credits: other Credits: Investment in General Flxed .Assets

s

-s

Equity: Net Investment in Plant Colleges and Universities Contributed Capital Retained Earnings Reserved Unreserved Fund Balances Reserved for Encmnbrances Reserved for Advances Reserved for Inventories Reserved for Debt Service Reserved for Disaster Assistance Reserved for Distance Learning and Telemedicine Reserved for Pension Benefits Reserved for Guaranteed Revenue Debt Conunon Reserve Fimd Reserved for Hazardous Waste Trust Fimd Reserved for Lottery for Education Reserved for Midyear Adjustment Reserved for Motor Fuel Tax FUnds Reserved for Revenue Shortfi!ll Reserved for Underground Storage Trust Fimd Reserved for other Specific Pwposes Unreserved, Designated Designated for Liability Trust Fimd Designated for Future capital Outlay Designated for other Specific Pwposes Unreserved, Undesignated Total Equity

s

s

4,820,880 168,175
43,899,457
13,496,656 19,825,508
19,029,945 24,132,040 226,140,670 111,313,936 912,617,015 333,941,806 32,524,619 73,243,786
9,704,819
3,085,000 776,030,008
s s 2,603,974,320

Total Equity and other Credits

$ 2,603,974,320 $

Governmental Fimd ~

Special Revenue

Debt Service

capital Projects

Proprietary Fimd :!!Ees

En~rise

Internal Service

-s s

-s s

-$

-s

s

s

274,506,302

104,262,182

587,211,843 146,011,680

208,653,344

1,311,077

4,292,414
s 4,292,414
4,292,414 $

1,037,148,472

3,395,266

s s 208,653,344

1,041,854,815

s 208,653,344

1,041,854,815 $

s 104,262,182

1,007, 729,825

s 104,262,182

1,007, 729,825

Total Liabilities, Equity and other Credits

$ 6,006,746,134 $

s s s s 4,296,320

208,653,344

1,104,061,914

268,518,240

1,315,204,335

The notes to the financial statements are an integral part ofthis statement.

A-10

Fiduciary Fund Type
Trust and Agency

College and University

Account Groups

General FD<ed

General Long-Temt

Assets

Debt

Totals(Memorandum
Only)
Prirruuy Government

Govermnental Fund Types

Component Units
Proprietary Fund Types

Fiduciary Fund Types

Totals(Memorandwn
Only)
Reporting Entity

s

-$

- s s 2,707,240,447

- s s 2,707,240,447

s 73,906,597

s 270,903

- s 2,781,417,947

$

s s 4,223,590,203

s

392,031,094

9,499,471,214

1,837,849,473

27,948,456

s s s 11,365,269,143

4,615,621,297

0 s

s s s s 11,365,269,143

4,615,621,297

2,707,240,447

s 4,223,590,203 $
392,031,094
27 4,506,302

691,474,025 146,011,680

4,820,880 168,175
43,899,457 208,653,344
13,496,656 19,825,508 9,499,471,214 19,029,945 24,132,040 226,140,670 111,313,936 912,617,015 333,941,806 32,524,619 1,912,404,336

9,704,819

1,037,148,472

3,085,000

811,666,144

s 0

s 20,951,657,340

0 s 23,658,897,787 s

s

s

944,928,794

s 4,223,590,203
392,031,094
1,219,435,096

73,862,000 414,157,204

765,336,025 560,168,884

11,314,857

29,278,015,268

4,820,880 168,175
43,899,457 208,653,344
13,496,656 19,825,508 38,777,486,482 19,029,945 24,132,040 226,140,670 111,313,936 912,617,015 333,941,806 32,524,619 1,923, 719,193

469,271
s 469,271

8,891,451
s 1,453,154,306

9,704,819

1,037,148,472

3,085,000

821,026,866

s 29,278,015,268

51,683,296,185

s s s 74,375,868

1,453,425,209

29,278,015,268

54,464,714,132

s s s s s 14,028,617,483

5,088,849,340

2,707,240,447

4,848,573,680 $ 35,580,761,237

s s s 85,764,478

3,446,003,249

29,279,951,008

68,392,479,972

A-ll

State of GeortJia
Combined Statement of Revenues. Expenditures
and Changes in Fund Balances All Governmental Fund Tvpes, Expendable Trust Funds and
Discrdelv Presented Component Units For the Year Ended June 30, 1997

Primary Government

General

Governmental Fund Types

Special

Debt

Revenue

Service

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

$ 10,483,497,704 $ 351,181,927
5,515,982,683 33,823,194
495,535,328 50,426,165 160,825,540 9,948,603 190,841,985 6,699,639 20,118,021 30,840,942

$
18,373,986 361,311

Total Revenues

$ 17,349,721,731 $

18,735,297 $

0

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

$

633,990,021 $

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

3,187,232 $
392,165,000 236,835,498

Total Expenditures

$ 15,852,085,620 $

3,187,232 $

629,000,498

Excess (Deficiency) ofRevenues Over (Under) Expenditures

$ 1,497,636,111 $

15,548,065 $ (629,000,498)

The notes to the financial statements are an integral part ofthis statement.

A-12

Capital Projects

Fiduciary Fund Type Expendable
Trust

Totals(Memorandum
Only) Primary Government

Component Units Governmental Fund Type

Totals(Memorandum
Only) Reporting
Entity

$

$

400,146,643 $ 10,883,644,347 $

$ 10,883,644,347

351,181,927

351,181,927

78,119,890 44,340
1,681,569

21,563,745 146,557
113,951,115 38,650
163,182

5,537,546,428 33,823,194
514,055,871 50,426,165
353,257,856 9,992,943
190,880,635 6,699,639
20,118,021 32,685,693

27,000 2,879,976
375,470 32,388
11,550,110
646,041

5,537,573,428 33,823,194
516,935,847 50,426,165
353,633,326 10,025,331
202,430,745 6,699,639
20,118,021 33,331,734

$

79,845,799 $

536,009,892 $ 17,984,312,719 $

15,510,985 $ 17,999,823,704

$

70,034 $

36,360 $ 637,283,647 $

123,711

5,700,513,705

63,810,821

6,860,658,382

1,113,788,591

1,124,542,047

310,769,347

573,859,854

128,738

170,795,838

48,769,799

373,677,146

373,677,146

44,340 160,980 382,514

392,209,340 236,996,478
382,514

$

374,335,014 $

374,868,977 $ 17,233,477,341 $

$ 33,033,963

637,283,647 5,700,513,705 6,860,658,382 1,113,788,591 1,124,542,047
573,859,854 203,829,801
48,769,799 373,677,146

392,209,340 236,996,478
382,514

33,033,963 $ 17,266,511,304

$ (294,489,215) $

161,140,915 $ 750,835,378 $

(17,522,978) $

733,312,400 (continued)

A-13

--------State ofGeorfJkt--------
Combined Statement of Revenues. Expenditures
and Changes in Fund Balances All Governmental Fund Tvpes, Expendable Trust Funds and
Discrctelv Presented Component Units (continued) For the Ycar Ended June 30, 1997

Primary Government

General

Governmental Fund Types

Special

Debt

Revenue

Service

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

$

171,652,886 $

582,180,317 (2,081,658,683)
(57,431,561) 2,673,289 48,410

$ (14,500,000)

703,381,512

Total Other Financing Sources (Uses)

$ (1,382,535,342) $

(14,500,000) $

703,381,512

Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses

$

115,100,769 $

1,048,065 $

74,381,014

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 Increase in Inventories

2,472,800,480 8,957,903 82,000 14,123,115
(7,514,977) 425,030

3,244,349

134,272,330

Fund Balances, June 30

$ 2,603,974,320 $

4,292,414 $==2=0=8,=65=3=,3=44=

The notes to the financial statements are an integral part ofthis statement.

A-14

Capital Projects

Fiduciary Fund Type Expendable
Trust

Totals(Memorandum
Only) Primary Government

Component Units Governmental Fund Type

Totals(Memorandum
Only) Reporting
Entity

$

$

1,401,130 (214,201,995)

373,248,075

$

160,447,210 $

3,400,000 $

878,434,398 $ 0
583,581,447 (2,310,360,678)
(57,431,561) 2,673,289 48,410
373,248,075

3,400,000 $ (529,806,620) $

$ 16,326,489

878,434,398 16,326,489
583,581,447 (2,310,360,678)
(57,431,561) 2,673,289 48,410
373,248,075

16,326,489 $ (513,480,131)

$ (134,042,005) $

164,540,915 $ 221,028,758 $

1,228,059,648
(2,885,570) (49,277,258)

1,701,041,188

5,539,417,995 8,957,903 82,000 14,123,115 (2,885,570)
(56,792,235) 425,030

(1,196,489) $

219,832,269

686,331 979,429

5,540,104,326 9,937,332 82,000 14,123,115 (2,885,570)
(56,792,235) 425,030

$ 1,041,854,815 $ 1,865,582,103 $ 5,724,356,996 $

469,271 $ 5,724,826,267

A-15

-------State of Georgia-------
Statement of Fmds Available and Expenditures Compared to Budget
Budget Fmd For the FISCal Year Ended Jme 30, 1997

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

Original Appropriation

Final Budget

Actual

Variance Favorable (Unfavorable)

$ 10,794,986,380 $ 11,145,256,617 $ 11,122,716,878 $

546,198,773

680,069,448

679,819,448

4,567,668,639

5,614,829,287

4,942,663,953

2,959,288,902

4,338,270,266

3,804,573,030

(22,539,739) (250,000)
(672,165,334) (533,697,236)

$ 18,868,142,694 $ 21,778,425,618 $ 20,549,773,309 $ (1,228,652,309)

1,672,666,173

1,446,324,703

(226,341,470)

$ 18,868,142,694 $ 23,451,091,791 $ 21,996,098,012 $ (1,454,993,779)

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 Children and Youth Services, Department of
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 ofthe 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 Labor, Department of Law, Department of Medical Assistance, Department of Natural Resources, Department of

$

185,912,104 $

290,312,166 $

266,433,598 $

4,921,827

5,705,964

5,692,679

49,751,824

52,446,553

51,606,982

1,375,300

1,118,677

1,072,672

19,706,494

20,967,654

20,484,013

9,318,265

9,318,265

9,189,889

37,538,499

45,025,906

44,450,931

142,719,890

163,305,260

159,014,407

76,410,979

184,488,458

172,834,213

695,760,881

724,281,283

701,007,059

15,780,248

27,229,349

26,619,111

4,818,221,159

5,124,275,856

5,084,841,287

4,389,972 40,350,065 26,278,571 414,482,451 50,704,653
0 2,382,300,078
21,097,481 16,512,068 46,619,323 87,045,066 155,808,877 13,427,658 3, 739,739,927 139,063,103

4,677,051 42,939,243 28,742,632 621,465,791 267,356,246
0 2,602,566,978
39,171,995 17,460,449 56,509,738 89,330,946 170,935,947 15,447,956 4,242,144,852 213,374,361

4,318,083 42,254,221 22,175,657 621,465,791 212,872,574
0 2,496,971,621
20,828,880 16,828,620 55,329,318 90,113,856 147,902,627 14,700,696 3,766,742,466 206,687,460

23,878,568 13,285
839,571 46,005 483,641 128,376 574,975 4,290,853 11,654,245 23,274,224 610,238 39,434,569
358,968 685,022 6,566,975
0 54,483,672
0 105,595,357
18,343,115 631,829
1,180,420 (782,910) 23,033,320 747,260 475,402,386 6,686,901

The notes to the financial statements are an integral part of this statement

A-16

---------State of Georgia---------
Statement of Funds Available and Expenditures Compared to Budget
Budget fund For the FISCal Ycar Ended June 30. 1997

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 ofthe University System ofGeorgia, 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

43,239,164 $
1,099,766,134 121,187,740 14,212,500 10,536,019 23,713,135
2,525,081,073 97,058,269 31,791,948 2,657,810
202,538,239 10,805,196
285,807,286 1,164,343,369
29,275,348 10,892,701

44,395,511 $
1,119,892,356 134,118,633 14,212,500 11,117,558 31,811,927
3,377,794,580 113,514,059 33,996,415 2,371,698 193,887,469 11,802,389 395,063,083
2,866,807,448 28,544,888 11,161,701

44,059,461 $
1,033,717,757 130,176,826 14,212,500 10,809,510 32,919,818
3,087,392,181 99,728,495 32,323,452 2,240,538
200,847,282 10,655,007
375,080,760 1,146,946,888
28,247,731 10,943,437

336,050
86,174,599 3,941,807
0 308,048 (1,107,891) 290,402,399 13,785,564 1,672,963 131,160 (6,959,813) 1,147,382 19,982,323 1,719,860,560 297,157 218,264

Total Expenditures

$ 18,868,142,694 $ 23,451,091,791 $ 20,522,740,354 $ 2,928,351,437

Excess ofFunds Available over Expenditures

$ 1,473,357,658 $ 1,473,357,658

The notes to the fmancial statements are an integral part of this statement.

A-17

State of GeorfJia

Combined Statemrnt of Revrnues, Exprn.ses and
Changes in Fund EquitY/Fund Balances All Propridmv Fund Tvpes,Noncxpendablc Trust Funds and
Discrctdv Presented Component Units For the FISCal Ycar Ended June 30, 1997

Primary Government

Proprietary Fund Types

Enterprise

Internal Service

Fiduciary Fund Type
Nonexpendable Trust

Operating Revenues: Contributions Insurance Recoveries Interest and Other Investment Income Intergovernmental Rents and Royalties Sales and Services Taxes Other

$ 974,191,768 $ 128,187,894 $

7,861,703

14,983,383

128,643,328

31,587

32,992,291 265,021,475

1,549,918

11,679

Total Operating Revenues

$ 989,206,738 $ 564,256,609 $

11,679

Operating Expenses: General and Administrative Goods and Services Interest Benefits Claims and Judgments Prizes Scholarships Depreciation Other

$ 190,381,605 $ 148,687,122 $ 164,204,806

820,471,531

15,871,000 105,228,182

1,387,958

3,847
1,300 903

Total Operating Expenses

$ 1,010,853,136 $ 435,379,068 $

6,050

Operating Income (Loss)

$ (21,646,398) $ 128,877,541 $

5,629

Nonoperating Revenues (Expenses): Contributions and Intergovernmental Revenue Interest and Other Investment Income Gain on Sale ofLoans Hotel/Motel Tax (Net) Interest Expense Other Debt Service Charges Other

$

$

$

794,867

(30,873)

(69,439) (11,648,671)

Total Nonoperating Revenues (Expenses) Net Income (Loss) Before Operating Transfers

$

(30,873) $ (10,923,243) $

$ (21,677,271) $ 117,954,298 $

0 5,629

The notes to the fmancial statements are an integral part ofthis statement. A-18

Totals(Memorandum
Only) Primary Government

Component Units Proprietary Fund Types

Totals(Memorandum
Only) Reporting
Entity

$ 1'1 02,379,662 $ 7,861,703
143,638,390 0
32,992,291 265,053,062
0 1,549,918
$ 1,553,475,026 $

38,928 $
80,031,640 28,253,099 65,288,058 1,836,327,617
1,439,287 16,573,581

1,102,418,590 7,861,703
223,670,030 28,253,099 98,280,349
2,101,380,679 1,439,287
18,123,499

2,027,952,210 $ 3,581,427,236

$ 339,072,574 $ 164,204,806 0 836,342,531 105,228,182 0 1,300 1,387,958 903
$ 1,446,238,254 $
$ 107,236,772 $

140,399,898 $ 323,522,300
58,720,450
857,283,000
33,092,551 55,510,140

479,472,472 487,727,106
58,720,450 836,342,531 105,228,182 857,283,000
1,300 34,480,509 55,511,043

1,468,528,339 $ 2,914,766,593

559,423,871 $

666,660,643

$

0 $

794,867

0

0

(69,439)

0

(11,679,544)

$ (10,954,116) $

$

96,282,656 $

518,498 $ 25,258,853
527,514 17,247,578 (35,232,947) (3,003,122)
933,242
6,249,616 $
565,673,487 $

518,498 26,053,720
527,514 17,247,578 (35,302,386) (3,003,122) (10,746,302)
(4,704,500)
661,956,143
(continued)
A-19

- - - - - - - - S t a t e of GeortJia - - - - - - - -

Combined Statement of Revenues. Expm.ses and
Changes in Fund EquitY/Fund Balances All Proprictmv Fund Tvpes.Noncxpendable Trust Funds and
Discrctclv Presented Component Units (continued)
For the FISCal Year Ended June 30. 1997

Primary Government

Proprietary Fund Types

Enterprise

Internal Service

Fiduciary Fund Type
Nonexpendable Trust

Operating Transfers: Transfers In Transfers from Primary Government Transfers Out Transfers to Primary Government
Net Operating Transfers
Net Income (Loss)

$

$

39,697,821 $

(21,189,792)

$

0 $

18,508,029 $

$ (21,677,271) $ 136,462,327 $

0 5,629

Deficiency ofRevenues 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 Ttansfer of Contributed Capital to Primary Government Increase (Decrease) in Inventories

125,939,453

1,027,788,074 (158,951,179)
2,885,570

(82,000) (372,967)

210,197

Fund Equity/Fund Balances, June 30

$ 104,262,182 $ 1,007,729,825 $

215,826

The notes to the financial statements are an integral part ofthis statement. A-20

Totals(Memorandum
Only) Primary Government

Component Units Proprietary Fund Types

Totals(Memorandum
Only) Reporting
Entity

$

39,697,821 $

0

(21,189,792)

0

$

18,508,029 $

$ 114,790,685 $

$ 53,331,561 (583,039,856) (529,708,295) $ 35,965,192 $

39,697,821 53,331,561 (21,189,792) (583,039,856)
(511,200,266)
150,755,877

0
1,153,937,724 (158,951,179)
2,885,570 0 0 0
(82,000) 0
(372,967)

(4,263,322)
1,364,973,768 (35,955,508)
56,792,235 28,615,928 21,126,652
(14,123,115) 22,476

(4,263,322)
2,518,911,492 (194,906,687)
2,885,570 56,792,235 28,615,928 21,126,652
(82,000) (14,123,115)
(350,491)

$ 1,112,207,833 $ 1,453,154,306 $ 2,565,362,139

A-21

State of Georftia
Combi\cd statement of Cash Flows
All Proprictarv Fmd Tvpcs. Noncxpmd<VIc Trust Fmds md Discrctdv Prcsmtcd Componmt U1its For the FISCal Ycar Ended Jmc 30. 1997

Cash Flows from Operating Activities: Cash Received from Customers Cash Received from Required Contributions Cash Reoeived from Insurance Proceeds Principal Payments Received on Program Loans Interest Received on Program Loans Cash Paid to Vendon Cash Paid to Employees Cash Paid for Benefits Cash Paid for Claims and Judgments Cash Paid for Lottery Prizes Cash Paid for Scholarships Origination ofProgram 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 Primacy Government Proceeds from Assigrunent ofProgram Loans Under Repurchase Agreements Issuance ofBonds/Loans!Notes Contributed Capital Hotel/Motel Tax (Net) Operating Transfers Out Operating Transfers to Primmy Government Repayment ofAdvances Principal Paid on Bonds/Loans!Notes Interest Paid on BondsJLoans/Notes Return ofContributed Capital Other Debt Semce Payments Other Noncapital Items (Net)
Net Cash Provided by (Used in) Noncapital Financing Activities
Cash Flows from Capital and Related Financing Activities: Issuance ofBonds/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 oflnvesttnents (Net) Interest on !nvesttnents Net Increase in Fair Value of 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

ProE:!etmy Fund T~

Fiducimy FundT~

Intcmal

Nonexpendable

Enterprise

Service

Trust

Totals-
(Memonmdum On!~) Primacy
Government

Component Units
Proprietmy FundT~

Totals(Memorandum
Only)
Reporting Entity

$

s 31,587 $ 286,158,359

976,344,710

126,647,464

7,861,703

(186,422,391) (2,182,191)
(831 ,648,569)

(237,879,223) (80,518,070) (15,871,000) (86,676,768)

-s
(903) (3,847)
(1,300)

286,189,946 $ 1,102,992,174
7,861,703 0 0
(424,302,517) (82,704,108)
(847 ,519,569) (86,676,768) 0 (1,300) 0 0 0

s 1,937,506,263
105,494,635 70,248,615
(444,518,764) (I 04,098,685)
(839,989,000)
(170,01 0,786) 9,278,983 234,000

2,223,696,209 1,102,992,174
7,861,703 I 05,494,635
70,248,615 (868,821,281 ) (186,802,793) (847,519.569)
(86,676,768) (839,989,000)
(1,300) (170,010,786)
9,278,983 234,000

s $ (43,876,854)

(277,535) s

s s (6,050)

(44,160,439) $ 564,145,261

519,984,822

s

- $ 39,697,821 $

- $ 39,697,821 $

- $ 39,697,821

0

53,331,561

53,331,561

(21,189,792)
(82,000) 96,789,117

0 0 0 0 (21,189,792) 0 0 0 0 (82,000) 0 96,789,117

11,602,888 156,349,835
47,397,522 3,334,037
(582,933,770) (53,750)
(136,185,819) (48,383,179) (14,123,115) (1,824,658) (1,902,899)

11,602,888 156,349,835
47,397,522 3,334,037 (21,189,792) (582,933,770)
(53,750) (136,185,819)
(48,383,179) (14,205,115)
(1,824,658) 94,886,218

s

0 $ 115,215,146 $

0 $ 115,215,146 $ (513,391,347) $ (398,176,201)

$

-$

-$

2,885,570

(98,377)

(21,297 ,953) (242,857) (69,439)

$

(98,377) $ (18,724,679) $

$ 57,040,591 $ 10,707,135 $

15,596,017

40,336,595

89,101,600

s

s 72,636,608

140,145,330 $

s $ 28,661,377 $ 236,358,262

48,322,572

35,941,284

s s 76,983,949 $ 272,299,546

-$ 0 $

0 $ 0 2,885,570 0 (21,396,330) (242,857) (69,439) 0 0
(18,823,056) $

15,000,000 $ 13,565,899 24,626,605
465,962 (67,818,097) (1 0,131 ,015) (40,748,092)
(1,424,804) (21,113)
(66,484,655) $

15,000,000 13,565,899 27,512,175
465,962 (89,214,427) (1 0,373,872) (40,817,531)
(1 ,424,804) (21,113)
(85,307,711)

(4,723) s
15,679
10,956 s 4,906 s

67,743,003 $ 55,948,291 89,101,600
0
212,792,894 $
265,024,545 s

79,707,721 s
40,893,005
(26,648)
120,574,078 s 104,843,337 s

147,450,724 96,841,296 89,101,600 (26,648)
333,366,972
369,867,882

14,196

84,278,052

264,376,315

348,654,367

s 19,102 $ 349,302,597 $ 369,219,652

718,522,249

The notes to 1he fmancial statements are an integral part of1his statement. A-22

State of GeortJia
Combined Statement of Cash Flows All Proprictarv Fmd Tvpcs, Nonexpendable Trust Fmds and
Discrctdv Presented Component Units For the FISCal Year Ended Jme 30, 1997

Operating Income (Loss)
Adjustments to Reconcile Operating Income to Net Cash Provided by (Used in) Operating Activities: Depreciation!Amortization Interest
Other Changes in Assets and Liabilities: Decrease in Intergovermnental Receivables Increase in Interest and Dividends Receivable Increase in Notes and Loans Receivable
Decrease (Increase) in Other Receivables Increase in Due from Other Funds Increase in Due from Component Units Decrease (Increase) in Inventories Decrease (Increase) in Prepaid Items Decrease in Deferred Charges 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 Increase in Salaries/Withho!dings Payable Decrease in Benefits Payable Decrease in Due to Other Funds Decrease in Due to Primary Government Increase (Decrease) in Deferred Revenue Decrease in FWlds Held for Others Increase in Other Liabilities Decrease in Deposits and Oveipayrnents Increase in Grand Prizes Payable
Total Adjustments

Primary Government

Proprietmy Fund Types

Fiduciary Fund Type

Internal

Nonexpendable

Enterprise

Service

Trust

Totals(Meniorandmn
Only)
Primary Government

Component Units
Proprietmy Fund Types

Totals(Memorandum
Only) Reporting
Entity

$ (2!,646,398) $ 128,877,541 $

5,629 $ 107,236,772 $ 559,423,871 $ 666,660,643

$

-$

1,387,958 $

(14,983,383)

(39,541,728)

(87 ,652,979)

2,022,928

(4,218,312) (6,073,269)
(318,230) 344,920
29,900

1,617,617 11,773
147,633 (11,177,038)
130,014

(6,321,721) 70,304
18,551,414 (748,691) 26,710
(188,747)
(3,762,703)

(739,902)

$ (22,230,456) $ (129,155,076) $

-$ (11,679)

1,387,958 $ (54,536,790) (87 ,652,979)

0 0 0 (2,195,384) (6,073,269) (318,230) 344,920 29,900 0 0 (4,704,104) 82,077 18,551,414 (601,058) 26,710 (11,177,038) (188,747) 0 (3,632,689) 0 0 (739,902) 0

(11,679) $ (151,397,211) $

34,783,856 $ 40,889,127
716,913

36,171,814 (13,647 ,663) (86,936,066)

909,985 (2,104,682) (64,507,748) (30,056,551)
(81,212) (167,365)
10,054 123,014 (34,546,824) 140,241
633,183 185,307
(143,063) 1,518,890 (420,345) 1,272,755 (279,145) 55,845,000

909,985 (2,104,682) (64,507,748) (32,251,935) (6,073,269)
(318,230) 263,708 (137,465) 10,054 123,014 (39,250,928) 222,318 18,551,414
32,125 212,017 (11,177,038) (188,747) (143,063) (2,113,799) (420,345) 1,272,755 (1,019,047) 55,845,000

4,721,390 $ (146,675,821)

Net Cash Provided by (Used in) Operating Activities

$ (43,876,854) $

(277,535) $

(6,050) $ (44,160,439) $ 564,145,261 $ 519,984,822

Noncash Investing, Capital, and Financing Activities: Disposal ofFixedAssets Donation ofFixed Assets Interest Earned on Grand Pri2e Investments and
Grand Pri2es Payable Write off ofFixed Assets

$

(30,873) $ (12,417,687) $

17,899

(16,544,667)

$

(30,873) $ (28,944,455) $

-$

(12,448,560) $ 17,899

0 (16,544,667)

(425,323) $ 21,705,422
16,343,000

(12,873,883) 21,723,321
16,343,000 (16,544,667)

0 $ (28,975,328) $ 37,623,099 $

8,647,771

The notes to the financial statements are an integral part ofthis statement. A-23

State of GeorfJl'l-------
Statements of Plan Net Assets
Pension Trust Fmds and Discrctclv Presented Component Units
Jmc 30. 1997

Assets
Cash and Cash Equivalents Investments Receivables (Net ofAllowances
for Uncollectibles) Interest and Dividends other Prepaid Items FJXed Assets (Ne~ Where Applicable, of Accumulated Depreciation)
Tots! Assets
Liabilities
Accounts Payable and Other Acc:ruals Salaries!Withholdings Payable Due to Other Fonds Due to Primaxy Government
Tots! Liabilities

Defined Contribution
Plan

District Attorneys Retirement
Fund

$

77,000 $

20,186,000

3,000

306,000 1,006,000

District Attomeys Retirement
System

Primaxy Govenunent

Employees' Retirement
System

Legislative Retirement
System

Superior Com! Judges Retirement
Fund

Superior Com! Judges Retirement
System

Trial Judges and Solicitors Retirement
Fund

25,000 $ 25,257,000

2,939,866 $ 9,179,587,000

20,000 $ 22,729,000

44,000 $ 1,259,000

52,000 93,455,000

104,000 44,203,000

46,000

87,393,000 26,511,000
14,014

32,000

2,000

241,000

215,000

21,575,000

$

1,000

1,000

3 000 $

25~~000 $ 9,296,444,880 $

2!.,781,000

l~05 1ooo $

93 748 000 $

4422!.,000

3,000 3 000

65,000 $ 65 000 $

5,344,886 $ 20,110 682,670
6 047 666 s

10,000 $ 25,000
35 000

37,000 $

41,000

37000 $

41000 $

6,000 6000

Fund Balances Reserved for Pension Benefits

$

2lii:74,000 $

(Schedules offunding progress are presented on pages 77 and 80)

0 s

25,263!000 $ 9,290,397!214

22,746!000 s

s 1~68!000

93!707!000 $

44,516 000

The notes to the financial statements are an integral part ofthis statement.

A-24

Total Prirnazy Govenunent
3,264,866 9,386,676,000
87,699,000 28,053,000
14,014
9,505,706,880

F'aemen's Pension
Fund

Judges ofthe Probate Courts
Retirement Fund

Component Units - Fiduciazy Fund TYPes

Public Scltool

Peace Officers'

Employees

Sheriffs'

Annuity and

Retirement

Retirement

Benefit Fund

System

Fund

48,167 s
261,644,190

20,702 s
30,793,275

1,771,747 s
214,754,374

131,000 578,396,000

55,739 32,157,003

Superior Court Clerks' Retirement
Fund

Teachers Retirement
System

12,531 32,294,575

10,585 27,721,266,000

Total Component
Units

Totals(Memoxandum
Only)
Reporting Entity

2,050,471 28,871,305,417

5,315,337 38,257,981,417

2,455,668

297,232

2,280,888

249,253
264,397,278 s

9189
31,120,398 s

403 162 219,210,171

578,527,000

238,802
16 662 32,468,206

223,757,000 176,832,155
39,650
15 459
32,322,565 s 28,121,905,390 s

229,029,590 176,832,155
39,650
693 725
29,279,951,008

316,728,590 204,885,155
53,664
693,725
38,785,657,888

5,507,886 s
20,110 707,670
0
6,235,666

s

s

228,000 s

s

s

228 000

s

1,622,697 s
58,985
26,058
1 707 740

1,850,697 s
58,985 0
26058
1935 740 s

7,358,583 79,095 707,670 26 058
8171406

s 9,499,471,214 s

s 264~97,278

31,120,398 s 219,210,171 s 578,299,000 s

32 468,206 $

32,322,565 s 28,120,197,650 s 29,278,015,268 $

38,777,486,482

A-25

- - - - - - - - S t a t e of Georfjia - - - - - - - -
Statements of Changes in Plan Net Assets Pension Trust Funds and
DiscretelY Presented Component Units For the FISCal Year Ended June 30. 1997

Additions: Contributions Employer and Employee Fmes and Forfeits Fines and Bond Forfeitures Interest and Other Investment lnc:ome Dividends and Interest Net Appreciationin FairValue of!nvestments Less: Investment Expense Net Gain on Disposal of!nvestment Securities Sales and Services Civil Cases Marriage License Fees Real Estate Recording Fees Taxes Insurance Companies Other Miscellaneous
Total Additions
Deductions: General and Adnrinistrative Expenses Benefits Refunds
Total Deductions
Net Increase Before Operating Transfers
Operating Transfm: Transfers from Primazy Govenunent Transfen; to Primazy Govermnent
Net Operating Transfers
Net Increase

D<Dned Contribu1ion
Plan

District Attorneys Retirement
Fund

District Attorneys Retirement
System

Primazy Govenunent

Employees' Retirement
System

Legislative Retirement
System

Superior Court Judges Retirement
Fund

Superior Court Judges Retirement
System

Trial Judges and Soliciton; Retirement
Fund

$

9,511,000 $

183,000 $

566,000 $ 339,751,000 $

351,000 $

1,844,000 $

2,338,000

1,426,000

1,025,000 178,000 (3,000)

876,330 3,635,646
(17,976)

341,292,760 1,414,915,112
(7,298,872)

951,210 3,946,302
(19,512)

65,715 . 272,633
(1,348)

3,440,775 14,274,805
(70,580)

1,519,830 6,305,346
(31,176)

10,711,000 $

245,000 $

7~17,000

$

7,56~000

s 3149 000 s

-S

$

-S

3,149,000 $

183 000 $

5106o,ooo

2,088,660,000

5:2:_29,000 $

-$ 183,000
183 000

-$ 284,000
59000

3,188,699 $ 320,165,000
9641 000

343 000 $ 332,994,699
4 717 000 s 1,755,665,301 s

-$ 915,000 47000
962 000 $
4,267,000 s

-S

-s

-$

-$

s

s

-S

$

s 4,717,000 $ 1,755,665,301 4,267,000 s

2,181,000 $

19,283,000

9:2:_20,000

1,970,000
1970 000 s 211000 s

$ 2,193,000
51,000
2:2:_44,000
17,739,000

534,000 175 000
709 000
8,511,000

-$

-$

s
211,000

-S
17,739,000 s

8,511,000

Fund Balances Reserved for Pension Benefits, July I Adjustments Change in Accounting Principle

18,647,000 (222,000)

s Fund Balances Reserved for Pension Benefits, June 30

2115741000 $

17,453,000 3,093,000

6,122,246,913 1,412,485,000

13,858,000 4,621,000

s s s 0

25,2631000 $ 9,290~97~14

~7461000

687,000 370 000

65,159,000 10,809,000

112681000 $

9317071000

28,882,000 7,123,000
44,5161000

The notes to the financial statements are an integral part ofthis statement.
A-26

Tollll Primai)' Government

Firemen's Pension
Fimd

Judges ofthe Probate Courts
Retirement Fimd

Comf2nen! Units - Fiduciary Fimd Types

Public School

Peace Officers'

Employees

Sheriffs'

Annuity and

Retirement

Retirement

Benefi!Fimd

System

Fimd

Superior Court Clerks' Retirement
Fimd

Teachers Retirement
System

Totlll Component
Units

Totals (Memorandmn
Only)
Reporting Entity

s

s 355,970,000

s 1,407,265

349,171,620 1,443,527,844
(7,442,464) 0

12,613,173 16,912,573

s

2,141,227,000

11,075,091 89952
s 42,098 054

190,845 395,219 1,728,386 1,797,001 139,643
6192 4,257,286

955,132 11,503,511 11,259,353
9,563,707

15,358,000
21,602,295 89,621,829
(443,124)

188 628
s 33,470,331

126,139,000

s 101,931
1,912,745 1,478,981
493,440
1461 3,988,558

110,755 572,489 1,878,753
278,403 1,125,031
3 965 431

930,841,591 $

948,965,519

14,383,964

1,008,618,000 4,245,539,000
(20,635,000)

1,059,178,941 4,335,160,829
(21,078,124) 28,766,721

278,403 139,643 1,125,031

11,075,091

s 6,164,363,591

286 233 6,378,282,251

1,304,935,519
14,383,964
1,408,350,561
5,778,688,673
(28,520,588) 28,766,721
278,403 139,643 1,125,031
11,075,091
286 233
8,519,509,251

s

3,433,699

326,244,000

17 290 000

s

346,967,699

$

1,794,259,301

1,282,733 $ 9,995,563
184 764
11,463,060 $
30 634 994 $

161,789 940,805
1,102,594 3,154,692

1,035,024 9,203,209
123,246
10,361,479
23,108,852

575,000 22,879,000
418 000
23,872,000
102,267,000

333,787 2,004,367
17628
2,355,782
1,632,776

85,355 $ 1,974,144
2 059 499 1,905,932

s 6,150,431
706,032,000 36,415,000
748,597,431 $
5,415,766,160 $

9,624,119 753,029,088
37,158,638
799,811,845
5,S78,47Q,406

13,057,818 1,079,273,088
54,448,638
1,146,779,544
7,372,729,707

s

$

s

s

s 1,794,259,301

30,634,994

$

s

$ 3,154,692 $

23,108,852 $

s
102,267,000

1,632,776

1,905,932

s 4,100,000
(541,591)
s 3 558 409
5,419,324,569 $

4,100,000 $ (541,591)

4,100,000 (541,591)

3 558409 $

3,558,409

5,582,028,815 $ 7,376,288,116

6,266,932,913 1,438,279,000

$

9,4991471,214

233,762,284

27,965,706

s 264~971278

311120~98

196,101,319

371,014,000 105z018,000

30,835,430

s s 219!210,171

578rl.99i000

32,4~06 $

30,416,633

18,117,673,081 4,583,200,000

s 3~2~565

28i120i197i650

19,007,768,453 4,688,218,000

25,274,701,366 6,126,497,000

29i278i015~68

38?77i486i482

A-27

State of GeorfJia - - - - - - - -
Combined Statement of Changes in Fund Balances
College and Universilv Funds For the FISCal Year Ended June 30. 1997

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

$ 1,045,579,557 $

$ 590,261,367 157,642,364
5,262,242 139,923,391
8,017,938 76,483
4,831,684

(48,652) 2,627
165,870
646,283 19,498
1,187,755

2,897,494 $ 1,048,477,051 $ 906,015,469 $

186,913 2,160,294

$ 2,007,649,578 $ 166,711,996 187,349,712

835,303,413 $
7,597,627 54,077,811

89,497

118,806 549,412 140,910

44,321

375,478

$ 2,361,711,286 $ 897,112,669 $

1,184,606

The notes to the financial statements are an integral part ofthis statement.

A-28

Endowment and Similar
Funds

Unexpended

Plant Funds Renewals and Replacements

Investment in Plant

Total (Memorandum
Only)

$

$

$

69,096,513

2,151,147

891,232

7,041,749

2,932,299

12,798,132

7,829,640 317,192

$

3,823,531 $

99,234,373 $

$

$ 1,045,579,557

659,309,228

159,793,511

5,264,869

48,592,388

196,614,630

505,098 1,173

8,017,938 14,025,996 4,831,684 2,952,970
1,187,755

191,837,076

191,837,076

130,799,797 9,465,183 89,411,446

130,799,797 9,465,183
89,411,446

14,189

7,829,640 3,228,875

186,913

520,460 $ 470,105,890 $ 2,530,337,068

$

-$

$

-$

40,614

$ 2,842,952,991 166,711,996 194,947,339 54,077,811 118,806 549,412 271,021

130,799,797 21,458,474

9,465,183 1,937,776

55,999,492

140,264,980 23,396,250
419,799 55,999,492

$

0 $ 152,298,885 $

11,402,959 $

55,999,492 $ 3,479,709,897

(continued)

A-29

- - - - - - - S t a t e of GeortJ1a-------
Combined Statement of Changes in Fund Balances
College and Univcrsitv Funds (continued) For the FISCal Ycar Ended June 30. 1997

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
Fund Balances, June 30

Current Funds

Unrestricted

Restricted

Loan Funds

$

752,514 $

(25,570,982)

$ (24,818,468) $

(398,752) $ (2,690,177)
(3,088,929) $

(176,233) (4,924)
(181,157)

$ 1,363,372,659 $ (6,191,914)
(16,326,489)

$ 1,340,854,256 $

$

2,801,553 $

121,112,456

$
0 $ 5,813,871 $ 49,448,130

0 794,531 58,657,611

$ 123,914,009 $

55,262,001 $

59,452,142

The notes to the fmancial statements are an integral part ofthis statement.

A-30

Endowment and Similar
Funds

Unexpended

Plant Funds Renewals and Replacements

Investment in Plant

Total (Memorandum
Only)

$

(177,529) $

$

$

(716,413)

15,946,555

13,035,941

$

0

0

$

(893,942) $

15,946,555 $

13,035,941 $

0 $

0

$

$

56,743,969 $

561,443 $

$ 1,420,678,071

(1,067,906)

(7,259,820)

(16,326,489)

$

0 $

55,676,063 $

561,443 $

0 $ 1,397,091,762

$

2,929,589 $

18,558,106 $

2,714,885 $ 414,106,398 $ 447,718,933.

78,809,686

20,115,802

30,274,874

3,809,483,805

4,167,902,364

$

81,739,275 $

38,673,908 $

32,989,759 $ 4,223,590,203 $ 4,615,621,297

A-31

---------State of Georgia---------
Combined Statement of Current Funds Revenues.
Expenditures and Other Changes College and U1iversifv Funds
For the FISCal Year Ended June 30. 1997

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 ofEducational Departments Sales and Services ofAuxiliary Enterprises Sales and Services ofHospital Other Sources
Total Revenues
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 StaffHousing Food Services Stores and Shops Intercollegiate Athletics Other Service Units Hospital Expenditures Medical College of Georgia Hospital Georgia War Veterans Nursing Home Mandatory Transfers, Net (In) Out
Total Expenditures and Mandatory Transfers
Other Transfers and Additions (Deductions): Excess ofRestricted Receipts over Transfers to Revenues Nonmandatory Transfers, Net In (Out) Other Additions (Deductions), Net Operating Transfers Transfers In Transfers Out Transfers to Component Units
Total Other Transfers and Additions (Deductions)

Current Funds

Unrestricted

Restricted

Total (Memorandum
Only)

$ 481,300,286 $ 54,470,445 4,511,487 267,533 7,577,426 108,049 44,552,352 161,383,527
203,041,315 88,367,137
$ 1,045,579,557 $

$ 543,796,656 154,346,772
4,754,301 131,554,665
3,027,711 4,606,070

481,300,286 598,267,101 158,858,259
5,021,834 139,132,091
3,135,760 49,158,422 161,383,527 203,041,315 88,367,137

842,086,175 $ 1,887,665,732

$ 803,538,977 $

84,272,564 $ 887,811,541

218,635,385

226,341,644

444,977,029

132,873,946

57,548,622

190,422,568

196,419,002

7,330,571

203,749,573

105,447,948

4,074,366

109,522,314

286,510,035

22,186,665

308,696,700

197,316,064

251,642

197,567,706

66,908,221

433,297,339

500,205,560

52,093,574 1,731,980
32,219,491 19,233,204 25,780,992 35,652,755

52,093,574 1,731,980
32,219,491 19,233,204 25,780,992 35,652,755

187,349,712 (752,514)

7,597,627 398,752

187,349,712 7,597,627 (353,762)

$ 2,360,958,772 $ 843,299,792 $ 3,204,258,564

$

-$

(25,570,982)

2,897,494

1,363,372,659 (6,191,914)
(16,326,489)

$ 1,318,180,768 $

9,851,483 $ (2,690,177)
(133,818)

9,851,483 (28,261,159)
2,763,676

1,363,372,659 (6,191,914)
(16,326,489)

7,027,488 $ 1,325,208,256

Net Increase in Fund Balances The notes to the :financial statements are an integral part ofthis statement.
A-32

$

2,801,553 $

5,813,871 $

8,615,424

--------State of Georgia--------
Notes to the Fnandal Statements
~dcx
Page
Note 1 Summary of Significant Accounting Policies ......................................................... ,........................ A-34 Note 2 Other Accounting Disclosures ......................................................................................................... A-45 Note 3 Budgetary Accounting...................................................................................................................... A-47 Note 4 Deposits and Investments................................................................................................................. A-50 Note 5 Receivables....................................................................................................................................... A-55 Note 6 Fixed Assets ..................................................................................................................................... A-51 Note 7 Risk Management............................................................................................................................. A-59 Note 8 Construction and Other Significant Commitments .......................................................................... A-60 Note 9 Operating Leases .............................................................................................................................. A-60 Note 10 Capital Leases and Installment Purchases ....................................................................................... A-62 Note 11 Long-Term Debt............................................................................................................................... A-63 Note 12 Interfund Balances ........................................................................................................................... A-69 Note 13 Contributed Capital .......................................................................................................................... A-70 Note 14 Contingencies ................................................................................................................................... A-71 Note 15 Subsequent Events............................................................................................................................ A-72 Note 16 Deferred Compensation Plan ........................................................................................................... A-73 Note 17 Retirement Systems.......................................................................................................................... A-74 Note 18 Nonmonetary Transactions .............................................................................................................. A-84 Note 19 Postemployment Benefits................................................................................................................. A-85 Note 20 Fund Deficits .................................................................................................................................... A-85 Note 21 Major Discretely Presented Component Unit Condensed Financial Statements ............................. A-86
A-33

State of GeorfJkt - - - - - - - -
Notes to the Fnandal Statements
JLBIC 30, 1997

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 fmancial 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 fmancial 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 fmancial 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 fmancial 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 21 00 of the GASB Codification of Governmental Accounting and Financial Reporting Standards. This Section defmes a component unit as a legally separate organization for which the primary government is fmancially 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 fmancial benefits or impose specific fmancial 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 fmancial statements present the government and its component units, entities for which the government is considered to be fmancially 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 ofthe 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.

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Notes to the Fnandal Statements Jme 30. 1997

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 ofGeorgia (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 defmed 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 fmancial 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, maintammg, 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

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Notes to the Fnandal Statements Jme 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
provides assistance to local governments in constructing, extending, rehabilitating, repairing, replacing and renewingenvironmental 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 ofthe 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 fmance, and fmancing 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 eleven 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 ofFame Authority (Proprietary Fund Type) is a body corporate and politic whose purpose is to construct, operate and maintain the Music Hall of}<ame, as well as promoting music events at the facility and throughouHhe 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 ofthe 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 RaU Passenger Authority (Proprietary Fund Type) is a body corporate and politic. This authority is responsible for construction, fmancing, 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.

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Note.s to the Fnandal Statements Jmc 30. ICJJ7

Note 1. Summary of Significant Accounting Policies (continued)
Georgia Sports HaU ofFame 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 thirteen members ofthe 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 develop, 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 ofrecreation, accommodation and tourist facilities and services. The nine members of the Board are appointed by the Governor.
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 fmancial 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.
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 proper development, management, 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 Firemen's Pension Fund (Fiduciary Fund Type) is a multiple-employer, defmed 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 ofthe Probate Courts Retirement Fund ofGeorgia (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.
Peace Officers' Annuity and Benefit Fund of Georgia (Fiduciary Fund Type) is-'ll multiple-employer, defmed benefit pension plan established for the purpose of paying retirement, death and disability benefits to the peace officers ofthe State of Georgia. The Board of Commissioners ofthe 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, defmed benefit pension plan established for the purpose of providing retirement 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.

A-37

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Notes to the Fnandal Statements
June 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
Sheriffs' Retirement Fund of Georgia (Fiduciary Fund Type) is a multiple-employer, defmed 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, defmed 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 fmancial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid fmancial 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 fmancial 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 fmancial resources.

Primary Government - The fmancial 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 fmancial 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 fmancial administration.
Enterprise Funds - Enterprise Funds are used to account for operations (a) that are fmanced 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

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Notes to the F~nandal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
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 fmancing 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.
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 ofrelated 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.
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 armual and compensatory leave, capital lease obligations and other long-term liabilities not otherwise recorded in proprietary, fiduciary, and college and university funds.
Discretely Presented Component Units - The fmancial statements of the component units, other than the component units which fmancial 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 fmancial 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 ofnet income is necessary or useful for sound fmancial management.

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Notes to the Fnandal Statements Jmc 30, 1997

Note 1. Summary of Significant Accounting Policies (continued)
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 fmancial 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 fmancial 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 fmancial 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 fmancing sources) and decreases (i.e., expenditures and other fmancing uses) in net current assets.
All proprietary funds, nonexpendable trust funds and pension 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 retlUirod by -GAAP, is utilized by proprietary fund types, nonexpendable trust funds and pension 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 Firemen's 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 ofthe fiscal year are recognized as expenditures and liabilities in the accompanying fmancial statements.
As permitted by generally accepted accounting principles for colleges and universities, no depreciation is provided for the physical properties.
D. Budgets
The annual budget ofthe 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 begirming 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

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Notes to the Fnandal Statements Jmc 30, 1997

Note 1. Summary of Significant Accounting Policies (continued)
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, 1997, to the excess of revenues over expenditures and other fmancing sources (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 fmancial 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 defmed as those fmancial 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. Investments are stated at cost. 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 ofthe State.
Other organizations of the State of Georgia reporting entity invest in a variety offmancial 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 are stated at cost or amortized cost at June 30, 1997, with the exception of deferred compensation plan assets which are stated at market value (See Note 16), as well as investments of Teachers Retirement System and all funds administered by Employees' Retirement System of Georgia, which are stated at fair value.
In accordance with State statutes and investment policy and guidelines adopted by the State Depository Board, the State of Georgia invests a portion of the assets of the various portfolios in certain structured notes and certain mortgagebacked securities, such as collateralized mortgage obligations and adjustable rate mortgages. These securities are reported as U. S. Government Securities in the disclosure of custodial credit risk (See Note 4).
As of June 30, 1997, the State had $34,976,371 in two portfolios invested in U. S. agency mortgage and assetbacked securities. Investments in these portfolios are transacted by external investment management firms under

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Notes to the Fnandal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
direction of investment advisory agreements executed between the State and the investment management firms.
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 ofthe 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, 1997, the Department held surety bonds in the amount of $24,621,366 and cash bonds in the amount of $11,232,037. 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, 1997, securities in the amount of $195,342,785 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 fmancial statements. At June 30, 1997, $43,363,105 in escrow deposits were administered by the Department of Transportation and $74,732 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 fmancial statements.
G. 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.
H. Advances to Other Funds
Noncurrent portions oflong-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 fmancial resources and therefore are not available for appropriation.
I. 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 frrst-in/frrst-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 ofthe 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.

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Notes to the Fnandal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
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 ofnet current assets. The fund balance reserve is based on values established by the U. S. Department of Agriculture.
J. Prepaid Items
Payments made to vendors and local government organizations for services that will benefit periods beyond June 30, 1997, are recorded as prepaid items.
K. 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.
L. 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 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 ofthe 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 ofnormal 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 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.
M. 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 ofninety 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

A-43

- - - - - - - S t a t e of Georgia-------
Notes to the F11andal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
are entitled to additional seniice credit in the Employees' Retirement System of Georgia. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits.
N. 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.
0. Mortgage Loans Under Repurchase Agreements
At June 30, 1997, mortgage loans totaling $30,446,467 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 ofthe 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.
P. 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 generallong~term debt account group.
Long-term debt expected to be fmanced from proprietary fund operations are accounted for in those funds.
Q. Fund Equity
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 fmancial resources.
R. 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.
S. Interfund Transactions
The State has the following types ofinterfund 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.
Residual equity transfers are recorded for nonrecurring or nonroutine permanent transfers of equity.

A-44

--------State of Georgia--------
Notes to the F11andal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
Operating transfers are recorded for all other interfund transactions.
T. Intrafund Transactions
State accounting policies and procedures allow for the recording of revenues, receivables, expenses and liabilities for transactions between State organizations whose fmancial 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 fmancial 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.
U. Memorandum Only- Total Columns
Total columns on the general purpose fmancial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate fmancial analysis. Data in these columns do not present fmancial position, results of operations or cash flows in conformity with GAAP. Neither are such data comparable to a consolidation. lnterfund eliminations have not been made in the aggregation of this data.
V. Fiscal Reporting Periods
The fmancial statements include fmancial activity for the Stone Mountain Memorial Association whose fiscal reporting period differs from that of the State of Georgia (July 1, 1996 through June 30, 1997). 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 January 1, 1995 through December 29, 1996.

Note 2. Other Accounting Disclosures
Change in Accounting Policy and Restatements
The State's Regional Educational Service Agencies and DeKalb Technical Institute have been added to the reporting entity as a part ofthe General Fund for the year ended June 30, 1997. The beginning fund balance for the general fund has been increased by $8,957,903 due to the inclusion of these organizations. These organizations also had beginning fixed assets balances of $4,384,840, and this amount is shown as "Retroactive Restatement of Prior Year Balance" in Note 6.
In fiscal year 1997, certain internal service (risk management) funds adopted the accrual basis of accounting in accordance with GAAP. The beginning fund equity of the internal service funds has been decreased by $239,893,133 for this change in accounting principle.
In fiscal year 1997, the State Employees' Assurance Department early implemented GASB Statement 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools." The statement requires investments to be reported at fair value rather than at cost. The beginning fund equity of the internal service funds has been increased by $96,038,000 for this change in accounting principle.
A reconciliation of the EDP 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 balance on the fmancial statements. The beginning fund equity of the internal service funds has been decreased by $16,544,667 for this correction.
In fiscal year 1997, the State implemented GASB Statement 25, "Financial Reporting for Defmed Benefit Pension Plans and Note Disclosures for Defmed Contribution Plans" for all primary government pension trust funds and for the Public School Employees' Retirement System and the Teachers' Retirement System (discretely presented component units - fiduciary fund types). The statement requires, among other things, that the investments of the pension trust funds be reported at fair value rather than at cost. This change is reflected as an adjustment in the applicable funds.

A-45

--------State of Georgia--------
Notes to the Fnandal Statements Jmc 30. 1997

Note 2. Other Accounting Disclosures
The Foundation for Public Broadcasting in Georgia, Inc., a blended component unit of the Georgia Public Telecommunications Commission has been added to the reporting entity for the year ended June 30, 1997. The beginning fund balance of the discretely presented component units - governmental fund types has been increased by $979,429 due to the inclusion of the Foundation.
Effective May 16, 1996, the Lake Lanier Islands Development Authority entered into a management agreement with KSL Lake Lanier, Incorporated, to manage the properties previously operated by the Authority. Terms of the management agreement called for KSL to utilize certain accounts for maintaining the fmancial records of the project and stated that these accounts were to remain the property of the Authority during the term of the management agreement. As a result of this agreement, certain financial activity maintained by KSL was included in the financial statements of the Authority for the year ended June 30, 1996. The privatization agreement was entered into on August 1, 1997, and was retroactive to May 16, 1996. As a result, the beginning fund equity of the discretely presented component units - proprietary fund types has been decreased by $35,366,099 to reflect the retroactive clause of the privatization agreement.
In prior years, the Student Finance Authority did not record a reserve for the estimated portion of voided serviced loans that the Authority is required to purchase under the terms of the existing servicing agreements. The Authority also had overstated certain amounts due to the U.S. Department of Education. The correction of these errors resulted in a net decrease of $1,731,608 in the beginning fund equity of the discretely presented component units - proprietary fund types.
Fund balances/fund equity at July 1, 1996, have been adjusted as follows:

Primary Government

General Fund

Restatement of Beginning Fund Balance

for the Inclusion ofRESA's and

DeKalb Technical Institute

$

8.957.903

Internal Service Funds Conversion to Accrual Basis Investments Reported at Fair Value Fixed Assets Correction Other (Georgia Building Authority)

$ (239,893,133) 96,038,000 (16,544,667) I 448 621
$ (!58 951.179)

Pension Trust Funds Investments Reported at Fair Value

$1.438.279.000

Discretely Presented Component Units

Governmental Fund Types

Restatement of Beginning Fund Balance

for the Inclusion of Foundation for

Public Broadcasting

$

979.429

Proprietary Fund Types Retroactive Privatization Agreement Correction of Errors Other

$ (35,366,099) (I,731 ,608) 1142199
$ (35 955.508)

Fiduciary Fund Types Investments Reported at Fair Value

$4.688.218.000

A-46

--------State of Georgia--------
Notes to the Fnandal Statements Jmc 30, ICJ7

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 I of each year, the head of each executive branch budget unit must submit estimates of the fmancial requirements for the subsequent fiscal year to the Office of Planning and Budget, which operates under the direction ofthe 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 fmancial 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 ofthe 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 un1t; other than those ofthe legis1ative 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 oftheir 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 maJonty 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.

A-47

State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997
Note 3. Budgetary Accounting (continued)

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 of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses/Net Income (Loss)/Net Increase in Plan Net A.ssets/Net Increase (Decrease) in Fund Balances - Current Funds GAAP Fund Types

Budgetary Fund

Bude;et 1,473,357,658

General

Special Revenue

Financial Statement Fund Tyoes

Primary Government

Debt Service

Capital frgiects

EnterJ!rise

Internal Service

(1,473,357,658)

1,345,015,054 801,706,680

1,048,065

74,381,014

(134,042,005)

93,640,275

1,584,537 I 32,858,553

(1,990,948,465) (53,679, 194) 13,006,694

(125,899,773) 10,582,227

(4,827,664) I 1,888,193

(5 041 292)

115100769

I 048 065

74 381 014 m34042005J

$(21 677 271)

136 462 327

A-48

State of G e o r g i a - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997

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 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 Tynes

Primary Government

Nonexpendable Trust

Pension Trust

College and Univenitt

Discretely Presented Component Units

Governmental

Prol!rietao:

Fiducia!J:

164,540,915

5,629

200 1,794,259,301

33,318,450 8,119,586
(27,965,023)

(1,454,524) 367,631

710,075 31,691,316

543,591 5,582,022,246

(200)

5,374,894

(5,675,850)

(15,114) !4 541 519l

(137,244) 27,648

(766,748) 67,227

(2,000) 6,569
!541 591l

164 540 915

5 629 $ I 794 259301

a6J5424

!I 196 489l

31701 870 $ 5 582 028 815

A-49

--------State of GeorfJia - - - - - - - -
Notes to the Frmndal Statements June 30, 1997

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 ofthe State of Georgia.
2) Bonds, bills, notes, certificates of indebtedness or other obligations ofthe counties or municipalities ofthe 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 ofthe bonds for this purpose.
4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5) Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.

6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
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 $479,403,589, and the bank balances were $960,522,782. 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 fmancial 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, 1997:

Risk Category
2 3

Bank Balance

$

297,399,206

231,690,300

431 433 276

$ 960,522,782

A-50

State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jme30, 1997
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
Teachers Retirement System of Georgia
All Other Component Units

Risk Categories 3

Bank Balance

Funds Held by (for) Primao: Government

Carn::ina:; Amount

61 101,136

569,250

61 670,386

568,781 76,055

61 1,783,633

3,548,503 29,824,958
186,623 9,131,365

1,767,952 14,287,208

I 00,336,593 42,327,100

3,548,503 130,161,551
1,954,575 65,745,673

193,819,476 475,164 15,951
55,240,778

10,107,645 131,919,709
1,292,642 19,718,403

100,000 2,198,134 1,577,886

225,856

2,010,325

2,110,325

12,376,101

2,198,134 $ 1,803,743

(541,591) 589,031,179

1,771,547 552,176 468,113

Investments - Investments are stated at cost or amortized cost, with the exception of deferred compensation plan assets which 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 or

its 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.

A-51

State of Georgia-------
Notes to the Fnandal Statements Jmc 30. 1997
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:

Tl:!!!: of Investment Commercial Paper Corporate Bonds Municipal Bonds Repurchase Agreements Stocks U.S. Government
Securities and Corporate Obligations
Unclassified Loans (Interfund) Mortgages Mutual Funds Unemployment
Compensation Funds Pooled with the U.S. Treasury Other Total Investments

Risk Categories

1,998,769 2,853,379 10,180,605 1,933,951,491 6,445,350,914
9 368 051408 17 762 386 566

10,253,898
357,689,837 23,955,291
121 501 751 513 400 777

3

Ca!:!Jjn& Amount

Market Value

1,998,769

1,967,740

13,107,277

12,987,348

10,180,605

10,180,169

2,291,641,328

2,291,641,329

6,469,306,205

6,512,705,875

227 029 227 029

9 489 780 188 18,276,014,372

9 516 214 222 18,345,696,683

41,128 3,486,343 8,565,971

41,128 3,564,645 9,029,402

1,745,915,543 6297
20 034 029 654

1,745,915,543 6 297
20 I 04 253 698

A-52

State of G e o r g i a - - - - - - -
Notes to the F11andal Statements Jmc 30. 1997
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: Proprietary Fund Types
A-53

State of GeorfJia - - - - - - -
Notes to the Fnandal Statements Jmc30. 1997
Note 4. Deposits and Investments (continued)
Fiduciary Fund Types

Risk Categories

Tl:J!!:: of Investment

3

Fidllciary Fund Types

Teachers Retirement System of Georgia

Repurchase Agreements

16,850,878,000

Stocks

363,342,000

U.S. Government Securities and Corporate Obligations

I0 504 465 000

27 718 685 000

Unclassifred

Real Estate

All Other Component Units

Corporate Bonds
Investment Accounts
Notes Repurchase Agreements
Stocks
U.S. Government Securities and Corporate Obligations

Unclassified Mutual Funds Real Estate

16,620,590 197,696
48,319,810 250,000
201,660,760
243 375 936 510 424 792

Ca!::!Jjn& Amount

Market Value

16,850,878,000 363,342,000
10 504 465 000 27,718,685,000
2 581 000 27 721 266 000
16,620,590 197,696
48,319,810 250,000
201,660,760
243 375 936 510,424,792
36,406,804 I 600 542
548 432 138

16,850,878,000 363,342,000
10 504 465 000 27,718,685,000
2581000 27 721 266 000
16,447,298 197,696
48,291,398 250,000
326,087,472
246 903 758 638,177,622
I 057 559 639 235 181

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 aU. 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 $11,407,654,000 at June 30, 1997, and the collateral value was equal to 102.8%. 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.

A-54

--------State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc30. 1997
Note 5. Receivables
Primary Government
Receivables by fund type as of June 30, 1997, 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

$2,574,431,832

$

1,865,404

12,446,440

$ 2,574,431,832 1,865,404 12,446,440

18,294,998 10,892,781

(1,969,493)

16,325,505 10,892,781

111,999,766 115,752,000 27,865,023 304.423.817

(15,825,923) (61 543. 170)

96,173,843 115,752,000 27,865,023 242.880.647

$3.177.972 061

$ (79,338,586)

~ 3,098,633,47~

A-55

- - - - - - - - S t a t e of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jme 30. 1997
Note 5. Receivables (continued)
Significant Discretely Presented Component Units
Receivables of the significant discretely presented component units as of June 30, 1997, 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 Rel!a:rments

Deferred Loan Fees

Net Total Receivables

$ 3,033,920 $

(72,275) $

$

$ 2,961,645

511,964,667
638,361,366 365,606,219 170,499,851

(265,063) (1,492,748) (3,665,616)

(25,520,877)

(I 72,685)

511,964,667
638,096,303 338,592,594 166,661,550

400,589,155 5.272.590

400,589,155 5 272 590

$ 2,095,327,768 $ (5,495 702} $ (25,520,877} $ (172,685} $2,064,138,504

A-56

--------State of GeorfJia - - - - - - - -
Notes to the F11andal Statements Jmc30. 1997
Note 6. Fixed Assets
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

Balance Jul~ 1,1996
$ 1,770,738,936

Retroactive Restatement
of Prior Year Balance

$

18,758

779 778 914

4.366.082

Additions $ 142,166,150
389,573 131.022.789

R~:lirements
$ (56,820,232)
(64.420.523)

Balance June 30, 1997 $ 1,856,103,612
389,573 850.747.262

Total General Fixed Assets

~ 2 550,517,850 $ 4,384,840 ~ 273,578,512 ~ (121,240,755) ~ 2,707,240 447

The following is a summary ofthe proprietary fund types and college and university funds fixed assets at June 30, 1997.

Land and Buildings Improvements Other Than Buildings Machinery and Equipment Less: Accumulated Depreciation Construction in Progress Net Fixed Assets

Proprietary Fund T~pes

Enterprise Funds

Internal Service Funds

$

$ 239,585,046

230,662

174,048,563 (11,045,355)

$

230 662

$ 402,588,254

College and Universi!l: Funds $ 2,481,623,048
160,263,555 1,445,741,492
146 943 998 $ 4,234,572,093

A-57

--------State of GeorfJ1a--------
Notes to the Fnandal Statements
Jli\C 30, 1997
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, 1997:

Land and Buildings Improvements Other Than Buildings Machinery and Equipment Less: Accumulated Depreciation Construction in Progress Net Fixed Assets

Governmental Fund TyDH
Georgia Public Telecommunications
Commission 26,924,094
46,982,503
73 906 597

Georgia Ports
Authority
171,257,987 194,224,835 114,599,140 (177,964,489) 41 573 848 343 691 321

Proorietarv Fund Types

Stone Mountain Memorial Association

Geo. L. Smith n
Georgia World Congress Center
Authority

87,045,525 22,020,461 25,481,377 (34,996,035)
425 286 99 976 614

209,402,736
11,194,149 (36,138,594)
61 098 965 245 557 256

All Other CompOnent
Units
85,074,906 2,710,490
27,584,741 (17,194,897)
23 715 325 121890565

Land and Buildings Machinery and Equipment
Net Fixed Assets

Fiduciary Fund Types

Firemen's Pension Fund

$

132,909

116 344

Peace Officers' Annuity and Benefit Fund

$

310,296

92 866

All Other Component
Units
$
41 310

$

249,253 $

403,162 $ 41,310

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 ofland and buildings; therefore, the tables above do not represent a comprehensive valuation ofthe assets owned by the State of Georgia.

A-58

- - - - - - - - S t a t e of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997

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.
A reconciliation of total claims liabilities for fiscal years ended June 30, 1997, and 1996, is shown below:

Unpaid Claims and Claim Adjustments July I

Fiscal Year Ended June 30. 1997

Fiscal Year Ended June 30. 1996

$159,373,817 $157,898,978

Incurred Claims and Claims Adjustment Expenses Provisions for Insured Events of the Current Year

820,4 71,532

784,718,552

Payments -Claims and Claim Adjustment Expenses Attributable to Insured Events of the Current Year and of Prior Years

(831 ,648,570}

(783,243, 713}

Unpaid Claims and Claim Adjustments June 30

$148 196 779 $I 59 373,8I7

B. Board of Regents Employee Health Benefits Plan
The Board ofRegents ofthe University System of Georgia maintains a program ofhealth 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 ef Regents and its organizational units. All units of the University System of Georgia share the risk of loss for claims ofthe 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, 1997, and 1996, is shown below:

Fiscal Year Ended June 30 1997

Fiscal Year Ended June 30, 1996

Unpaid Claims and Claim Adjustments July I

$ 19,600,000 $ 25,480,000

Incurred Claims and Claims Adjustment Expenses Provisions for Insured Events of the Current Year

138,407,492

115,501,490

Payments - Claims and Claim

Adjustment Expenses

Attributable to Insured Events of

the Current Year and of Prior

Years

037,107,492}

(121,381,490}

Unpaid Claims and Claim Adjustments June 30

~ 20,900,000 ~ 19,600,000

C. Other Risk Management
The Department ofAdministrative 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.

A-59

--------State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997

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 commerci