AUGUSTA STATE UNIVERSITY
AUGUSTA, GEORGIA
MANAGEMENT REPORT
FOR FISCAL YEAR ENDED JUNE 30,2010
A Member Institution of the University System of Georgia
Georgia Depaxtme~tltof &adits;sad Accounts

AUGUSTA STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I
FINANClAL
LETTER OF TRANSMITTAL
SELECTED FINANCIAL INFORMATION
EXHIBITS
A STATEMENTOFNETASSETS-(GAAPBASIS)
B STATEMENT OF REVENUES, EXPENSESAND CHANGES IN NET ASSETS (GAAP BASIS)
C STATEMENT OF CASH FLOWS - (GAAP BASIS)
D SELECTED FINANCIAL NOTES
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND
2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) BUDGET FUND
3 STATEMENT OF PROGRAM REVENUESAND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET (STATUTORY BASIS) BUDGET FUND
4 RECONCILIATIONOF SALARIES AND TRAVEL

Page

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

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

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404)656-2174

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
October 11,2010

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia
and Honorable William A. Bloodworth, President Augusta State University
Ladies and Gentlemen:
As part of our audits of the basic financial statements of the University System of Georgia presented in the Annual Financial Reportfor the University System of Georgia, the basic financial statements of the State of Georgia presented in the State of Georgia Co~nprehensiveAnnual FliancialReportand the issuance of a State of Georgia SingleAudit Reportpursuant to the Single Audit Act Amendments, as of and for the year ended June 30,2010, we have performed certain audit procedures at Augusta State University. Accordingly, the financial statements and compliance activities of Augusta State University were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of Augusta State University as of and for the year ended June 30, 2010. Information contained in this report is a by-product of our audits of the basic financial statements of the University System of Georgia and the basic financial statements of the State of Georgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1 is enumerated in the Table of Contents.
This report is intended solely for the information and use of the management of Augusta State University, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

~us!selWl . Hinton, CPA, CGFM State Auditor

SELECTED FINANCIAL INFORMATION

AUGUSTA STATE UNIVERSITY STATEMENT OF NET ASSETS - (GAAP BASIS)
JUNE 30,2010
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Investments (Externally Restricted) Investments Notes Receivable Capital Assets. Net (Note 4)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposits Deferred Revenue(Note 5) Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease PurchaseObligations Compensated Absences
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Unrestricted
Total Net Assets

EXHIBIT "A"

AUGUSTA STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSESAND CHANGES IN NET ASSETS - (GAAP BASIS)
YEAR ENDED JUNE 30,2010
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal State Other
Sales and Services of Educational Departments Rents and Royalt~es Auxiliary Enterprises
Residence Halls Bookstore Parking/Transportation Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other PersonalServices Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating lncome (Loss)
NONOPERATING REVENUES (EXPENSES)
State Appropriations
Federal Stimulus - Stabilization Funds
Grants and Contracts Federal State Other
Gifts lnterest and Other Investment Income lnterest EX~ense
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Other
Total Other Revenues. Expenses. Gains or Losses
Increase (Decrease)in Net Assets
Net Assets - Beginningof Year
Net Assets - End of Year

EXHIBIT "E"

AUGUSTA STATE UNIVERSITY
STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30. 2010
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and contracts Sales and S e ~ l c e sof Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarsh~psand Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxll~aryEnterprise Charges: Residence Halls Bookstore Food Services Park~ng/Transportatlon lntercolleg~ateAthletics Other Organizations Other Rece~pts
Net Cash Prov~ded(Used) by Operating Actlvltles
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropr~at~ons
Federal Stimulus - Stabilization Funds
Agency Funds Transact~ons Gifts and Grants Rece~vedfor Mher than Capital Purposes
Net Cash Flows Provided (Used) by Noncapital Financ~ngActivities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Pr~ncipaPl a~don Cap~taDl ebt and Leases lnterest Paid on Capltal Debt and Leases
Net Cash Provided (Used) by Capital and Related FinancingActivities
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments
Net Increase (Decrease) In Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONCILIATIONOF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operat~ngIncome (Loss) Adjustments to Reconcile Operat~nglncome to Net Cash
Provided (Used) by Operating Actlvltles Depreciat~on Change In Assets and Liabilities: Accounts Rece~vableN, et Inventories Prepald Items Notes Rece~vable Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activlt~es
NONCASH ACTIVITY Fixed Assets Acqu~redby Incurring Capital Lease Obl~gations Change in Fair Value of lnvestments Recogn~zedas a Component of Interest Income Gift of Cap~taAl ssets Reduc~ngProceeds of Capital Grants and Gifts

AUGUSTA STATE UNIVERSrrY SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Augusta State University is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Augusta State University as a separate reporting entity.
The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Augusta State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Augusta State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Re~ortingStandards.
NET ASSETS The University's net assets are classified as follows:
Invested in capital assek, net of related debt: This represents the University's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restridednetassets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the Office of Treasury and Fiscal Services. At June 30, 2010, there was a surplus balance of $ 0 to be refunded. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

AUGUSTA STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS

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

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

2.

Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or

municipalities of the State of Georgia.

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

4.

Industrial revenue bonds and bonds of development authorities created by the laws of the

State of Georgia.

5.

Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary

corporation of the United States government, which are fully guaranteed by the United States

government both as to principal and interest and debt obligations issued by the Federal Land

Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank

for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and

the Federal National MortgageAssociation.

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

The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

At June 30, 2010, the carrying value of deposits was $6,413,861 and the bank balance was $6,921,709. Of the University'sdeposits, $6,671,709 were uninsured. Of these uninsured deposits, $6,671,709 were collateralized with securities held by the financial institution's trust department or agent in the University's name.

l NVESTM ENTS At June 30, 2010, the carrying value of the University's investment was $6,723,116, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and/or Office of Treasury and Fiscal Services investment pools as follows:

AUGUSTA STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS
INVESTMENTS
lnvestment Pools
Board of Regents Short-Term Fund Total Return Fund
Office of Treasury and Fiscal Services Georgia Fund 1
Total Investments

$ 6,261,895 362,640
98,581

The Board of Regents lnvestment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents lnvestment Pool is voluntary. The Board of Regents Short-Term Fund is reported as Cash and Cash Equivalents on Exhibit "A" of this report.

The Georgia Fund 1lnvestment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the lnvestment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1lnvestment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the fund is 4 6 days.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2010.

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal, State and Private Funds

Georgia State Financingand InvestmentCommission

Other

483,952 209,219 124,006
7,137 789,520

Less Allowance for Doubtful Accounts

$ 1,613,834 320,284

Net Accounts Receivable

$ 1,293,550

AUGUSTA STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS Following are the changes in the University's capital assets for the year ended June 30, 2010:

Beginning Balance July 1.2009

Additions

Reductions

Ending Balance June 30.2010

Capital Assets. Not Being Depreciated: Land Capitalized Collections Construction Work-In-Progress

$

5,558,065

$

5,558,065

75,006

75,006

7,487,984 $

1,051,812 $

5,435,456

3,104,340

Total Capital Assets, Not Being Depreciated $

13,121,055 $

1,051,812 $

5,435,456 $

8,737,411

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

$

1,609,483 $

74,250,027

7,948,509

6,573,955

32,280.744

7,569,481

3,779,852 1,229,747
203,427 408,153
26.947 41,182 $

$ 7,873

5,389,335 75,479,774
8,151,936 6,982.108 32,307,691 7.602.790

Total Assets Being Depreciated

$

130,232,199 $

5,689,308 $

7,873 $

135,913,634

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

$

490.575 $

19,832,100

2,395,024

4,680,143

3,614,895

6,959.129

74,345 1,800,737
276,165 391,328 908,168 166,011 $

$ 7,872

564,920 21,632,837
2,671,189 5,071,471 4,523,063 7,117,268

Total Accumulated Depreciation

$

37,971.866 $

3,616,754 $

7,872 $

41,580,748

Total Capital Assets, Being Depreciated, Net $

92,260,333 $

2,072,554 $

1 $

94,332,886

Capital Assets. Net

NOTE 5: DEFERRED REVENUE Deferred revenue consisted of the following at June 30, 2010.

Prepaid Tuition and Fees Other Deferred Revenue

Total Deferred Revenue

$ 4,967,543

AUGUSTA STATE UNIVERSrrY SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 6: LONG-TERM LIABILITIES The university's Long-Term liability activity for the year ended June 30, 2010 was as follows:

Beginning Balance July 1,2009

Additions

Reductions

Ending Balance June 30,2010

Current Portion

Leases Lease Obligation

$

31,896,704 $

26,947 $

367,014 $

31,556,637 $

441.605

Other Liabilities Compensated Absences

1,647,943

1,159,543

1,166,645

1,640,841

823,046

Total Long-Term Obligations $

33,544,647 $

1,186.490 $

1,533.659 $

33,197.478 $ 1,264,651

NOTE 7: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2010 are as follows:

Balance July 1,2009

Additions

Reductions

Balance June 30,2010

Invested in Capital Assets Net of Related Debt
Restricted Net Assets

1,813,588 12,764,463 12,687,958

1,890,093

Unrestricted Net Assets Total Net Assets

NOTE 8: LEASE OBLIGATIONS
Augusta State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.
CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2 0 1 1 and 2036. Expenses for fiscal year 2010 were $2,148,062 of which $1,602,205 represented interest and $178,843 represented executory costs. Total principal paid on capital leases was $367,014 for the fiscal year ended June 30, 2010. Interest rates range from 4.72 percent to 13.54 percent.

AUGUSTA STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 8: LEASE OBLIGATIONS

OPERATING LEASES Augusta State University's noncancellable operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancelable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers, other small business equipment, and buildings.

Noncancellable operating lease rental expenses in 2010 were $102,090 for real property and/or equipment.

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30,2010, were as follows:

Capital Leases

Operating Leases

Year Ending June 30:
2011 2012 2013 2014 2015
2016 - 2020 2021- 2025
2026 - 2030 2031- 2035 2036
Total Minimum Lease Payments $ 62,322,922 $

28,187

Less: Interest Less: Executory Costs (if paid)

Principal Outstanding

$

24,215,133 6,551,152
31,556,637

AUGUSTA STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Augusta State University participates in the Teachers Retirement System of Georgia (TRS), a costsharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia. TRS provides service retirement, disability retirement, and survivor's benefits for its members in accordance with State statute. The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtained from the TRS offices or the Georgia Department of Audits and Accounts.

Funding Policy Employees of Augusta State University who are covered by TRS are required by State statute to contribute 5.25% of their gross earnings to TRS. Augusta State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2010, the employer contribution rate was 9.74% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description Augusta State University participates in the Employees' Retirement System of Georgia (ERS), a single-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia.
The ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1,1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415.
The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1,1982, is an "old plan" member subject to the plan provisions in effect prior to July 1,1982. Members hired on or after July 1,1982 but prior to January 1,2009 are "new plan" members subject to the modified plan provisions. Effective January I, 2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1,2009 also have the option to change their membership to the GSEPS plan.

AUGUSTA STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 1 0 years of creditable service and attainment of age 6 0 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.

Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 2 4 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1,2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2010, for employees covered by ERS was $29,218. The University's total payroll for all employees was $33,947,394.

Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, the University pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these University contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The University is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These University contributions are not at any time refundable to the member or his/her beneficiary.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

AUGUSTA STATE UNIVERSrrY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
EMPLOYEES' RETIREMENTSYSTEM OF GEORGIA
Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2010 financial report, which may be obtained through ERS.
REGENTS RETIREMENT PLAN
Plan Description The Regents Retirement Plan, a singleemployer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et. seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.
Funding Policy Augusta State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State Statute and as advised by their independent actuary. For fiscal year 2010, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 5%of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
Augusta State Universityand the covered employees made the required contributions of $1,236,931 (9.24%)and $669,337 (5%),respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Augusta State University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.

AUGUSTA STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2010

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500.00 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2010 amounted to $89,530 which represents 7.5%of covered payroll. These contributions met the requirements of the plan.
The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices.
NOTE 10: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Augusta State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Augusta State University (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Reportfor the fiscal year ended June 30,2010.
NOTE 11: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.

AUGUSTA STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 11: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2009 and 2010 plan years, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%.
As of June 30, 2010, there were 197 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2010, Augusta State University recognized as incurred $1,014,977 of expenditures, which was net of $335,615 of participant contributions.
NOTE 12: AFFILIATED ORGANIZATIONS
The Augusta State University Foundation, Inc., is a legally separate, tax exempt organization whose activities primarily support Augusta State University. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of this affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Augusta State University.

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SUPPLEMENTARY INFORMATION

AUGUSTA STATE UNIVERSITY BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30,2010
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EOUlTY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over lnventories
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

Statutory Basisfinancial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

AUGUSTA STATE UNIVERSITY SUMMARY BUDGET COMPARISONAND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDEDJUNE 30.2010

REVENUES
state ApproprlatIon State General Funds
Federal Funds Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEARS
Transfers from Resewed Fund Balance
Total Funds Available
EXPENDITURES
Teaching
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Resewed
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Early Remittanceof Surplus Non-MandatoryTransfers Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCEJUNE 3 0
SUMMARY OF FUND BALANCE
Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds UncollectibleAccounts Receivable Tuition Carry-Over Inventories
Total Fund Balance

BUDGET

ACTUAL

SCHEDULE "2"
VARIANCE -
FAVORABLE (UNFAVORABLE)

Statutory Basis financial information was prepared on a prescribed basis of accountingthat demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

AUGUSTA STATE UNlVERSlM STATEMENT OF PROGRAM REVENUESAND EXPENDITURESBY FUNDINGSOURCE COMPARED TO BUOGCl
(STATUTORYBASIS) BUDGETFUN0 YEAR ENDEDJUNE 30.2010

Teaching State Approprlatlon State General Funds Federal Funds American Recoveryand ReinvestmentAct of 2009 Federal Stabilization Funds Other Funds

Or~ginal Approprlatlon

Final Budget

Current Year Revenue5

Funds Available Compared to Budget

Prror Year Carry-Over

Total FundsAvatlable

variance Posit~ve (Negative)

Total Teaching

Statutory Basls financial informauonwas preparedon a prescribedbasis of accwnting that demonstratescomplianoe with budgetary statutes and regulationsof the State of Georgla. which is a comprehensive basts of accountingother than generallyacceptedamuntlng princlpies.

ExpendituresCompared to Budget

Variance

Posctlue

Actual

(Negative)

Actual Funds Available
Over/(Under) Expenditures

P r ~ o rPeriod Adjustments

Otner Adjustments

Early Remittance of Surplus

Program Fund
Balances

Transfers

Program Fund Balances

Reserve

Surplus

Total Fund Balance

Unexpendable Reserves UncollectibleAccounts Receivable Inventories
Total Fund Balancx

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AUGUSTA STATE UNIVERSITY RECONCILIATIONOF SALARIES AND TRAVEL
YEAR ENDEDJUNE 30,2010

SCHEDULE "4"

Totals per Annual Supplement

Accruals June 30,2010 June 30,2009

Compensated Absences June 30,2010 June 30,2009

Lag Salaries June 30,2010 June 30,2009

Prepaid Salaries June 30,2010 June 30,2009

Adjustments

Shared Services on Jointly Staffed Personnel

Medical College of Georgia

Barton,

Barbara

McDougald, Amanda

Rock,

Dav~d

Rychly,

Carol

Unidentified Variance

SALARI ES $ 33,826,919 $

TRAVEL 353,852

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

AUGUSTA STATE UNIVERSITY ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGSAND QUESTIONEDCOSTS YEAR ENDED JUNE 30,2010

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-527-07-02

Previously Reported Corrective Action Implemented

PRIOR YEAR FEDERAL AWARD FINDINGS AND OUESTIONED COSTS

No matters were reported.

SECTION Ill FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

AUGUSTA STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30,2010
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND OUESTIONED COSTS No matters were reported. OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) No matters were reported.