Bainbridge State College, Bainbridge, Georgia, management report for fiscal year ended June 30, 2014

BAINBRIDGE STATE COLLEGE
BAINBRIDGE, GEORGIA
MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2014
A Member Institution of the University System of Georgia
Georgia Department of Audits and Accounts Greg S. Griffin State Auditor

BAINBRIDGE STATE COLLEGE - TABLE OF CONTENTS -

SECTION I
FINANCIAL
LETTER OF TRANSMITTAL
SELECTED FINANCIAL INFORMATION
EXHIBITS
A STATEMENT OF NET POSITION - (GAAP BASIS)
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION (GAAP BASIS)
C STATEMENT OF CASH FLOWS - (GAAP BASIS)
D SELECTED FINANCIAL NOTES
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET
BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND
5 RECONCILIATION OF BUDGET TO GAAP 6 RECONCILIATION OF SALARIES AND TRAVEL

Page
2 3 4 6
20 21 22 24 26 27

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

BAINBRIDGE STATE COLLEGE - TABLE OF CONTENTS -
SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
December 15, 2014

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia
and Honorable Richard A. Carvajal, President Bainbridge State College
Ladies and Gentlemen:
As part of our audits of the basic financial statements of the University System of Georgia presented in the Annual Financial Report for the University System of Georgia, the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2014, we have performed certain audit procedures at Bainbridge State College. Accordingly, the financial statements and compliance activities of Bainbridge State College 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 Bainbridge State College as of and for the year ended June 30, 2014. 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 Bainbridge State College, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully,

GSG:as

Greg S. Griffin State Auditor

SELECTED FINANCIAL INFORMATION - 1 -

BAINBRIDGE STATE COLLEGE STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2014
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Receivables - Federal Financial Assistance Receivables - Other Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Due from USO - Capital Liability Reserve Fund Investments Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Advances (Including Tuition and Fees) (Note 5) Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences
Total Noncurrent Liabilities
Total Liabilities
NET POSITION
Net Investment in Capital Assets Restricted for:
Nonexpendable Expendable Unrestricted
Total Net Position

EXHIBIT "A"

$

2,078,998

448,522 1,384,711
4,449 14,125

3,930,805

56,574 149,284 1,668,573 53,074,315
54,948,746
58,879,551

408,350 39,594
809,909 738,749 285,616 295,698
2,577,916
19,800,619 280,254
20,080,873
22,658,789

32,988,080
1,600,228 172,944
1,459,510

$

36,220,762

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BAINBRIDGE STATE COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2014

EXHIBIT "B"

OPERATING REVENUES
Student Tuition and Fees (Net of Allowance for Doubtful Accounts) Less: Scholarship Allowances
Grants and Contracts Federal State Other
Sales and Services Rents and Royalties Auxiliary Enterprises
Bookstore Food Services Parking/Transportation Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Nonoperating Revenues
Net Nonoperating Revenues
Decrease in Net Position
Net Position - Beginning of Year, Restated

$

7,623,167

-1,693,559

565,385 1,295,716
21,381 51,402 53,233

173,164 38,773
163,545 70,638

8,362,845

4,549,492 5,881,160 3,321,247
66,412 145,334 7,979,774 762,676 4,769,476 1,848,881
29,324,452
-20,961,607
9,989,108
9,239,471 1,096,399
105,815 -1,119,779
6,111
19,317,125
-1,644,482
37,865,244

Net Position - End of Year

$

36,220,762

- 3 -

BAINBRIDGE STATE COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts (Exchange) Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Auxiliary Enterprise Charges: Bookstore Food Services Parking/Transportation Other Payments
Net Cash Used by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts
Net Cash Flows Provided by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Used by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Interest on Investments Purchase of Investments
Net Cash Used by Investing Activities
Net Decrease in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

EXHIBIT "C"

$

6,161,380

2,344,777

51,402

-9,076,940

-10,414,046

-7,979,774

176,709 39,068
165,151 -493,752

-19,026,025

9,989,108 279,749
10,335,870 6,111
20,610,838

-1,505,862 -262,117
-1,119,779
-2,887,758

85,913 19,902 -950,442
-844,627
-2,147,572
4,283,144

$

2,135,572

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BAINBRIDGE STATE COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2014
RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES:
Operating Loss Adjustments to Reconcile Operating Loss to Net Cash
Used by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Accounts Payable Advances (Including Tuition and Fees) Other Liabilities Compensated Absences
Net Cash Used by Operating Activities
NONCASH ACTIVITY Change in Fair Value of Investments Recognized as a Component of Interest Income

EXHIBIT "C"

$

-20,961,607

1,848,881
-6,670 -41
-7,224 -2,681 61,463 26,859 14,995

$

-19,026,025

$

85,913

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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Bainbridge State College is one of thirty-one (31) 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 Bainbridge State College 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. Bainbridge State College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Bainbridge State College 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 Reporting Standards.
FINANCIAL STATEMENT PREPARATION The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the College's assets, deferred outflow of resources, liabilities, deferred inflows of resources, net position, revenues, expenses, changes in net position and cash flows.
BASIS OF ACCOUNTING For financial reporting purposes, the College is considered a special-purpose government engaged only in business-type activities. Accordingly, the College's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues, are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-College transactions have been eliminated.
NEW ACCOUNTING PRONOUNCEMENTS In fiscal year 2014, the College adopted the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this Statement clarify the use of deferred inflows of resources and deferred outflows of resources. Certain items, including those items which were previously reported as assets and liabilities, will now be reported as outflows of resources or inflows of resources. As of June 30, 2014, the College did not have any deferred outflows of resources or deferred inflows of resources.
In fiscal year 2014, the College adopted Governmental Accounting Standards Board (GASB) Statement No. 66, Technical Corrections - 2012, an amendment to GASB Statements No. 10 and No. 62. The objective of this Statement is to resolve conflicting guidance by amending GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues and GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in PreNovember 30, 1989 FASB and AICPA Pronouncements. GASB Statement No. 10 was amended by removing the provision that limited fund based reporting of an entity's risk and financing activities to

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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

certain funds. GASB Statement No. 62 was amended by modifying guidance on (1) operating lease payments that vary from a straight-line basis, (2) purchases of a loan or a group of loans, and (3) recognition of servicing fees on mortgage loans that are sold when the stated service fee rate differs from a current (normal) servicing fee rate. The adoption of this statement does not have a significant impact on the College's financial statements.
In fiscal year 2014, the College adopted Governmental Accounting Standards Board (GASB) Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. This Statement establishes accounting and reporting requirements for state and local governments that extend or receive financial guarantees that are nonexchange transactions. The adoption of this statement does not have a significant impact on the College's financial statements.
FUTURE ACCOUNTING PRONOUNCEMENTS In fiscal year 2015, the College will adopt Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. The provisions of this Statement establish accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts. Implementation of this Statement will require the College to record a liability for its proportionate share of the Net Pension Liability of pension plans in which it participates. Actuarial estimates are currently being made to determine the College's liability, the effects of which are believed to be material.
NET POSITION The College's net position is classified as follows:
Net Investment in Capital Assets: This represents the College's total investment in capital assets, net of outstanding debt obligations, deferred outflows of resources and deferred inflows of resources related to those capital assets. To the extent debt has been incurred or deferred inflows of resources have been received but not yet expended for capital assets, such amounts are not included as a component of the net investment in capital assets.
Restricted - nonexpendable: Nonexpendable restricted net position 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 College 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 - expendable: Restricted expendable net position includes resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Unrestricted: Unrestricted net position represents resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $52,535.95. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia,

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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

University System Office for remittance to the Office of State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.
RESTATEMENT OF PRIOR YEAR NET POSITION Bainbridge State College has a restatement of prior year net position increasing beginning net position by $688,503 related to an error in calculating depreciation expense on Capital Assets.
NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the College) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.
6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
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, 2014, the carrying value of deposits was $2,130,122 and the bank balance was $2,524,524. Of the College's deposits, $2,264,881 were uninsured. Of these uninsured deposits, $2,264,881 were collateralized with securities held by the financial institution's trust department or agent in the College's name.

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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

INVESTMENTS At June 30, 2014, the carrying value of the College's investment was $1,668,573, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pools as follows:

Investment Pools Board of Regents Balanced Income Fund

$

1,668,573

The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary.
NOTE 3: ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following at June 30, 2014.

Auxiliary Enterprises and Other Operating Activities

$

Federal, State and Private Funds

Other

Less Allowance for Doubtful Accounts

Net Accounts Receivable

$

20,858 448,522 1,791,964 2,261,344
428,111
1,833,233

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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS Following are the changes in the College's capital assets for the year ended June 30, 2014:

Beginning Balance July 1, 2013 (Restated)

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

$

571,231

1,236,086 $

Total Capital Assets, Not Being Depreciated

1,807,317

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

38,197,510 829,499
4,158,627 20,448,550
1,020,962

Additions

Reductions

Ending Balance June 30, 2014

1,043,631 $ 1,043,631
2,177,768 413,072 67,685

$ 2,279,717
2,279,717

571,231 0
571,231

87,962 10,127

40,375,278 829,499
4,483,737 20,448,550
1,078,520

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

64,655,148
7,526,301 458,414
2,484,401 1,692,293
781,750

2,658,525
762,647 25,706
382,836 634,610
43,082

98,089
69,413 10,127

67,215,584
8,288,948 484,120
2,797,824 2,326,903
814,705

Total Accumulated Depreciation

Total Capital Assets, Being Depreciated, Net

Capital Assets, Net

$

12,943,159 51,711,989 53,519,306 $

1,848,881 809,644
1,853,275 $

79,540 18,549 2,298,266 $

14,712,500 52,503,084 53,074,315

NOTE 5: ADVANCES (including Tuition and Fees) Advances (including Tuition and Fees) consisted of the following at June 30, 2014.

Prepaid Tuition and Fees

$

809,909

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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

NOTE 6: LONG-TERM LIABILITIES

The College's Long-Term liability activity for the year ended June 30, 2014 was as follows:

Beginning Balance July 1, 2013

Additions

Reductions

Ending Balance June 30, 2014

Current Portion

Leases Lease Obligations

$ 20,348,352

$

262,117 $ 20,086,235 $

285,616

Other Liabilities Compensated Absences

560,957 $

419,630

404,635

575,952

295,698

Total Long-Term Obligations
NOTE 7: NET POSITION

$ 20,909,309 $

419,630 $

666,752 $ 20,662,187 $

581,314

Changes in Net Position for the year ended June 30, 2014 are as follows:

Beginning Balance July 1, 2013 (Restated)

Additions

Reductions

Ending Balance June 30, 2014

Invested in Capital Assets Net of Related Debt

$ 33,170,954.00 $ 2,115,392.00 $ 2,298,266.00 $ 32,988,080.00

Restricted Net Position

808,434.00

11,121,953.00

10,157,215.00

1,773,172.00

Unrestricted Net Position

3,885,856.00

17,677,796.00

20,104,142.00

1,459,510.00

Total Net Position
NOTE 8: LEASE OBLIGATIONS

$ 37,865,244.00 $ 30,915,141.00 $ 32,559,623.00 $ 36,220,762.00

Bainbridge College is obligated under a capital lease and installment purchase agreement 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 2014 and 2039. Expenses for fiscal year 2014 were $1,381,896 of which $1,119,779 represented interest. Total principal paid on capital leases was $262,117 for the fiscal year ended June 30, 2014. The interest rate is 5.54 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2014:

Description Buildings

Outstanding

Net Assets Held

Balances

Under Capital

per Lease

Accumulated

Lease at

Schedules at

Gross Amount

Depreciation

June 30, 2013

June 30, 2013

(+)

(-)

(=)

$

20,448,550 $

2,326,903 $ 18,121,647 $ 20,086,235

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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.
Bainbridge State College had one capital lease with related entities in the current fiscal year. The outstanding liability at June 30, 2014, on this capital lease is $20,086,235. In August 2009, the College entered into a capital lease of $20,448,550 at 5.54 percent with Bainbridge College Real Estate Foundation, Inc. whereby the College leases a building for a twenty-nine year period that began October 2010 and expires June 2039.
FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) as of June 30, 2014, were as follows:

Capital Leases

Year Ending June 30: 2015 2016 2017 2018 2019 2020 - 2024 2025 - 2029 2030 - 2034 2035 - 2039

$ 1,390,296 1,402,896 1,414,496 1,425,095 1,438,733 7,354,915 7,659,653 7,967,355 7,521,949

Total Minimum Lease Payments

37,575,388

Less: Interest

17,489,153

Principal Outstanding

$ 20,086,235

Bainbridge State College had no expense for rental of real property and equipment under operating leases in fiscal year 2014.
NOTE 9: RETIREMENT PLANS
Bainbridge State College participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate publicly
available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that Bainbridge State College participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.

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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

Employees' Retirement System of Georgia
The ERS System is comprised of individual retirement systems and plans covering substantially all employees of the State of Georgia except for teachers and other employees covered by the Teachers Retirement System of Georgia. One of the ERS System plans, the Employees' Retirement System of Georgia (ERS), is a cost-sharing multiple-employer defined benefit pension plan that was established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract.
On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) of ERS. SRBP-ERS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of the SRBP-ERS is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1, 1998, all members and retired former members in ERS are eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 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 1, 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.
Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 24 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.

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, Bainbridge State College pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Bainbridge State College 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
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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

new plan and GSEPS are 1.25% of annual compensation. Bainbridge State College 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 Bainbridge State College contributions are not at any time refundable to the member or his/her beneficiary.

Employer contributions required for fiscal year 2014 were based on the June 30, 2011 actuarial valuation as follows:

Old Plan* New Plan GSEPS

18.46% 18.46% 15.18%

* 13.71% exclusive of contributions paid by the employer on behalf of old plan members
Members become vested after 10 years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions; the member forfeits all rights to retirement benefits.

Teachers Retirement System of Georgia

The Teachers Retirement System of Georgia (TRS) is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS.

On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.

TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.

Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living

adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Death, disability and spousal benefits are also available.

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BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2014 were 6.00% of annual salary. Employer contributions required for fiscal year 2014 were 12.28% of annual salary as required by the June 30, 2011 actuarial valuation.

The following table summarizes the Bainbridge State College contributions by defined benefit plan

for the years ending June 30, 2014, June 30, 2013, and June 30, 2012:

ERS

TRS

Required

Percentage

Required

Percentage

Fiscal Year

Contribution

Contributed Contribution

Contributed

2014

$

2013

$

2012

$

Regents Retirement Plan

31,673 26,377 20,751

100% $ 100% $ 100% $

796,861 739,918 655,827

100% 100% 100%

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or 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 Bainbridge State College 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 2014, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Bainbridge State College and the covered employees made the required contributions of $201,753 (9.24%) and $131,008 (6%), 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 Bainbridge State College 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
- 15 -

BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

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.
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 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 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 2014 amounted to $42,235 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: RISK MANAGEMENT
The University System of Georgia offers its employees and retirees access to four different selfinsured healthcare plan options. For the University System of Georgia's Plan Year 2014, the following health care options were available:
Blue Choice HMO plan (Blue Cross Blue Shield) HSA Open Access POS plan (Blue Cross Blue Shield) Open Access POS plan Kaiser Permanente HMO plan
Bainbridge State College and participating employs and retirees pay premiums to either of the selfinsured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia - University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these plans are considered to be a self-sustaining risk fund. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the selfinsured healthcare plan products. In addition to the self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HMO healthcare plan option is also offered to System employees through Kaiser.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental loses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers'
- 16 -

BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Bainbridge State College, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 11: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Bainbridge State College expects such amounts, if any, to be immaterial to its overall financial positions.
Litigation, claims and assessments filed against Bainbridge State College (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 Report for the fiscal year ended June 30, 2014.
NOTE 12: 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.

- 17 -

BAINBRIDGE STATE COLLEGE SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

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 2014 plan year, 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, 2014, there were 55 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2014, Bainbridge State College recognized as incurred $313,436 of expenditures, which was net of $154,610 of participant contributions.
NOTE 13: AFFILIATED ORGANIZATIONS
The Bainbridge State College Foundation, Inc. is a legally separate, tax exempt organization whose activities primarily support Bainbridge State College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 61, The Financial Reporting Entity: Omnibus - an amendment of GASB Statements No. 14 and No. 34, and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of the affiliated organization is not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Bainbridge State College.

- 18 -

SUPPLEMENTARY INFORMATION - 19 -

BAINBRIDGE STATE COLLEGE BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30, 2014
ASSETS
Accounts Receivable Federal Financial Assistance Other
Prepaid Expenditures
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Cash Overdraft Accrued Payroll Encumbrances Payable Accounts Payable Advances (Including Tuition and Fees)
Total Liabilities
Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$

448,521.99

1,217,321.05

14,124.70

$

1,679,967.74

$

288,784.27

37,771.67

27,476.94

46,184.97

665,248.55

1,065,466.40

3,388.08 72,850.13 10,831.52 60,549.82 402,153.59 12,192.25
52,535.95
614,501.34

$

1,679,967.74

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 20 -

BAINBRIDGE STATE COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2014

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEARS
Transfers from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Teaching
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned
to Board of Regents - University System Office Year Ended June 30, 2013
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$ 10,007,069.00 $ 10,007,069.00 $

0.00

25,924,617.00

17,879,126.80

-8,045,490.20

35,931,686.00

27,886,195.80

-8,045,490.20

0.00 35,931,686.00

527,191.95 28,413,387.75

527,191.95 -7,518,298.25

35,931,686.00

$

0.00

28,119,575.32

7,812,110.68

293,812.43 $

293,812.43

799,196.65 17,960.91

32,241.15 16,443.06

-17,960.91 -527,191.95

$

614,501.34

SUMMARY OF FUND BALANCE
Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over
Total Reserved
Unreserved Surplus
Total Fund Balance
Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 21 -

$

3,388.08

72,850.13

10,831.52

60,549.82

402,153.59

12,192.25

561,965.39

52,535.95

$

614,501.34

BAINBRIDGE STATE COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2014

Teaching State Appropriation State General Funds Other Funds
Total Teaching

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

9,682,069.00 $

9,682,069.00 $

10,007,069.00 $ 10,007,069.00

27,366,705.00

25,624,617.00

25,924,617.00

17,879,126.80

$

37,048,774.00 $

35,306,686.00 $

35,931,686.00 $ 27,886,195.80

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 22 -

SCHEDULE "3"

Funds Available Compared to Budget

Prior Year

Adjustments and

Total

Carry-Over

Program Transfers

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget

Variance

Actual

Positive (Negative)

Excess of Funds Available Over Expenditures

$

0.00 $

527,191.95

0.00 $ 0.00

10,007,069.00 $ 18,406,318.75

0.00 $ -7,518,298.25

10,006,722.73 $ 18,112,852.59

346.27 $ 7,811,764.41

346.27 293,466.16

$ 527,191.95 $

0.00 $ 28,413,387.75 $

-7,518,298.25 $ 28,119,575.32 $

7,812,110.68 $

293,812.43

- 23 -

BAINBRIDGE STATE COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2014

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

Beginning Fund Balance July 1

Fund Balance Carried Over from
Prior Period as Funds Available

Return of Fiscal Year 2013
Surplus

Prior Period Adjustments

$

1,864.96 $

0.00 $

-1,864.96 $

3,683.20

543,287.90

-527,191.95

-16,095.95

45,001.01

545,152.86

-527,191.95

-17,960.91

48,684.21

272,004.70

0.00

0.00

0.00

Budget Unit Totals

$

817,157.56 $

-527,191.95 $

-17,960.91 $

48,684.21

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 24 -

SCHEDULE "4"

Other Adjustments

Early Return Fiscal Year 2014
Surplus

Excess of Funds Available Over Expenditures

Ending Fund Balance June 30

Analysis of Ending Fund Balance

Reserved

Surplus

Total

$

0.00 $

-130,148.89

-130,148.89

0.00 $ 0.00
0.00

346.27 $ 293,466.16
293,812.43

4,029.47 $ 208,318.28
212,347.75

0.00 $ 159,811.80
159,811.80

4,029.47 $ 48,506.48
52,535.95

4,029.47 208,318.28
212,347.75

130,148.89

0.00

0.00

402,153.59

402,153.59

0.00

402,153.59

$

0.00 $

0.00 $

293,812.43 $

614,501.34 $ 561,965.39 $

52,535.95 $

614,501.34

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

$

3,388.08

72,850.13

10,831.52

60,549.82

402,153.59

12,192.25

$

$ 561,965.39 $

$
52,535.95 52,535.95 $

3,388.08 72,850.13 10,831.52 60,549.82 402,153.59 12,192.25
52,535.95
614,501.34

- 25 -

BAINBRIDGE STATE COLLEGE RECONCILIATION OF BUDGET TO GAAP
YEAR ENDED JUNE 30, 2014

SCHEDULE "5"

Presented below is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.

Total Fund Balances - Budget Fund - Non-GAAP Basis (Schedule "1")

$

614,501.34

Amounts reported for Business-Type Activities in the Statement of Net Position are different because:

Capital Assets used in Business-Type Activities are not reported in the Budget Fund.

53,074,315.00

Uncollectible accounts receivable are reported as an asset and reserved fund balance in the Budget Fund and as a contra-asset account on the Statement of Net Position.

-402,153.59

Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity

$ 1,093,792.76 -1,093,792.76

0.00

Auxiliary Enterprises Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Auxiliary Enterprises Fund Activity

$

682,161.01

-20,820.42

661,340.59

Endowment Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Endowment Fund Activity
Student Activities Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Student Activity Fund Activity

$ 1,670,161.13 0.00
$ 1,370,090.96 -126,509.71

1,670,161.13 1,243,581.25

The budgetary basis of accounting implemented by the State of Georgia recognizes expenditures when encumbered. The following adjustments were made to eliminate this activity for reporting on the Statement of Net Position. Payables reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Payables for goods and services provided in the current fiscal year reported in the Budget Fund as encumbrances payable are reported as accounts payable for GAAP reporting. Total Net Effect of Encumbrance Activity

$

27,476.94

-6,273.57

21,203.37

Certain Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the Budget Fund. Capital Leases Payable Compensated Absences Payable Total Liabilities

-20,086,235.00 -575,952.09

-20,662,187.09

Net Position of Business-Type Activities (Exhibit "A")

$ 36,220,762.00

The supplementary information presented on Schedules 1, 2, 3 and 4 was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. The information was derived from, and relates directly to, the same information used to prepare the financial statements. However, the budgetary statutes and regulations of the State of Georgia require reporting of certain information that is not in accordance with generally accepted accounting principles. Presented on this schedule is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A.
- 26 -

BAINBRIDGE STATE COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2014

SCHEDULE "6"

Totals per Annual Supplement
Accruals June 30, 2014 June 30, 2013
Compensated Absences June 30, 2014 June 30, 2013
Adjustments Dr. Richard Carvajal Deferred Compensation Shared Services on Jointly Staffed Personnel Georgia Southwestern State University Stewart, Spencer Middle Georgia State University Lucas, Gerald Valdosta State University Paulino, Anthony

SALARIES

$

10,430,303 $

TRAVEL 145,334

39,594 -34,739

535,024 -521,093

-14,800

-8,343 508
4,198

$

10,430,652 $

145,334

- 27 -

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

BAINBRIDGE STATE COLLEGE ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-562-13-01 FA-562-13-02 FA-562-13-03 FA-562-13-04

Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

FA-562-13-01 Return of Title IV Funds

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

Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster $255.71

The College is awaiting final resolution from the U. S. Department of Education.

FA-562-13-02 Failure to Reconcile the Federal Direct Loan Program

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

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

The College is awaiting final resolution from the U. S. Department of Education.

FA-562-13-03 Overpayment of Student Financial Assistance

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

Eligibility Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster $144,032.00

The College is awaiting final resolution from the U. S. Department of Education.

BAINBRIDGE STATE COLLEGE ENTITY'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

CORRECTIVE ACTION/RESPONSES

FA-562-13-04 Inadequate Control Procedures over Unofficial Withdrawals

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

Special Tests and Provisions Significant Deficiency Nonmaterial Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster $20,671.61

The College is awaiting final resolution from the U. S. Department of Education.

SECTION III FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

BAINBRIDGE STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES

The auditor is required to communicate to management and those charged with governance control deficiencies identified that, in the auditor's judgment, constitute significant deficiencies or material weakness.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-562-14-01 Ineffective Logical Access Controls

Compliance Requirement:
Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Activities Allowed or Unallowed Eligibility Material Weakness N/A U. S. Department of Education 84.SFA Student Financial Assistance Cluster

Description: Bainbridge State College's policies and procedures were insufficient to provide adequate internal controls over logical access IT general controls.

Criteria: Management of the College is responsible for designing and maintaining internal controls that provide reasonable assurance that transactions are properly processed and reported.

Condition: Our review of the established internal control structure associated with significant financial applications at the College revealed pervasive design and operating effectiveness deficiencies in logical access controls intended to protect financial and student information from unauthorized access, manipulation and corruption.

The details related to these deficiencies have been provided to management of the College in accordance with Official Code of Georgia Annotated 50-6-9.

- 1 -

BAINBRIDGE STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Questioned Cost: N/A

Cause: In discussing these deficiencies with the College, management stated that the cause was directly related to ineffective policies and failure to adequately monitor general security settings and user access to the financial application.

Effect or Potential Effect: Failure to maintain adequate internal controls related to logical access increases the risk that misappropriation of assets, fraud, errors, irregularities and/or noncompliance with Federal regulations could occur.

Recommendation: Management should review and enhance their policies and procedures to ensure the integrity and accuracy of the information used within the financial statements and as part of awarding financial assistance to students. Additionally, management should ensure proper separation of duties as it relates to financial and student financial assistance processes.

Views of Responsible Officials and Corrective Action Plans: We concur with this finding. The College will implement adequate policies and procedures to adequately monitor general security settings and user access to the student information system as well as ensure proper separation of duties as it relates to financial and student financial aid processes.

Estimated Implementation Date: February 2015.

Contact Person: Scott Dunn, Chief Information Officer Telephone: (229) 248 3903; Fax: (229) 248 2600; E mail: sdunn@bainbridge.edu

FA-562-14-02 Inadequate Controls over Enrollment Reporting

Compliance Requirement: Internal Control Impact: Compliance Impact: Federal Awarding Agency: CFDA Number and Title:

Special Tests and Provisions Material Weakness Material Noncompliance U. S. Department of Education 84.SFA Student Financial Assistance Cluster

Description: Bainbridge State College is not reporting the enrollment status of unofficially withdrawn students.

Criteria: Provisions in 34 CFR 685.309 and 34 CFR 690.83(b)(2) set forth reporting requirements for the Federal Direct Student Loan and Pell Grant Program, respectively. In addition, Compliance Supplement Part III, N. 5. Enrollment Reporting, states, "....enrollment reporting in a timely and accurate manner is critical for effective management of the programs. Enrollment information must be reported within 30 days whenever attendance changes for students, unless a roster will be submitted within 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence."

- 2 -

BAINBRIDGE STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Condition: Out of a sample of 60 students, 20 of the students were unofficial withdrawals whose statuses were never reported to the National Student Loan Data System (NSLDS).
Questioned Cost: N/A
Cause: In discussing the deficiency with the College's Management, they stated that they were not aware that the status of unofficial withdrawals had to be reported to the NSLDS, as unofficial withdrawals are usually determined after a semester ends.
Effect or Potential Effect: The College was not in compliance with federal regulations concerning the Enrollment Reporting requirement.
Recommendation: The College should develop and/or modify its policies and procedures to ensure the proper reporting of enrollment status for all students, including the unofficially withdrawn. Additionally, the College should develop and implement a monitoring process to ensure that controls are properly implemented. The College should also contact the U. S. Department of Education regarding the resolution of this finding.
Views of Responsible Officials and Corrective Action Plans: We concur with the finding. We acknowledge that unofficially withdrawn students' enrollment status was not properly reported. We will implement procedures to ensure proper reporting of enrollment status for all students, including unofficially withdrawn students and implement a monitoring process to ensure controls are properly implemented.
Estimated Implementation Date: December 2014.
Contact Person: Spencer Stewart, Registrar Telephone: (229) 248 2503; Fax: (229) 248 2623; E mail: spencer.stewart@bainbridge.edu
OTHER ITEMS (NOTED FOR MANAGEMENTS CONSIDERATION)
Capital Assets
Observation: Our review of Capital Assets noted insignificant variances between the Asset Management Module and the Financial Statements. Variances were noted with Accumulated Depreciation Equipment, Accumulated Depreciation Buildings and Improvements, Accumulated Depreciation Facilities and Improvements, and Accumulated Depreciation Infrastructure.
Recommendation: Management should ensure that the various ledgers and modules associated with capital assets are reconciled to the capital asset information reported on the College's financial statements.
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BAINBRIDGE STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014 OTHER ITEMS (NOTED FOR MANAGEMENTS CONSIDERATION) Student Financial Aid Verification Observation: A sample of 25 students was performed to test the College's compliance with 34 CFR section 668.53 related to verifying student applications. This test revealed that Institutional Student Information Records (ISIRs) did not match supporting documentation for two students. Recommendation: Management should strengthen controls to ensure that the verification process is completed in accordance with 34 CFR section 668.53. Management should also ensure that updated and/or corrected ISIRs are submitted by students, as necessary.
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