COLUMBUS STATE UNIVERSITY
COLUMBUS, 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

COLUMBUS STATE UNIVERSITY - 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 7
24 25 26 28 30 31

SECTION II 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 12, 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 Timothy Mescon, President Columbus 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 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 Columbus State University. Accordingly, the financial statements and compliance activities of Columbus 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 Columbus State University 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 Columbus 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,

GSG:as

Greg S. Griffin State Auditor

SELECTED FINANCIAL INFORMATION - 1 -

COLUMBUS STATE UNIVERSITY STATEMENT OF NET POSITION - (GAAP BASIS)
JUNE 30, 2014
ASSETS
Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Due from Affiliated Organizations Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Investments (Externally Restricted) Due from USO - Capital Liability Reserve Fund Investments Notes Receivable, Net Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Deposits Advances (Including Tuition and Fees) (Note 5) Other Liabilities 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
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EXHIBIT "A"
$ 14,633,291 75,514
6,737,006 2,485,416
251,828 395,543 24,578,598
401,367 3,815,605
357,403 516,138 1,052,277 120,195,756 126,338,546 150,917,144
1,431,696 152,850 358,662
5,115,027 75,480
1,072,329 1,655,506 1,754,722 11,616,272
57,778,576 731,338
58,509,914 70,126,186
60,761,674 1,813,559 3,759,613
14,456,112
$ 80,790,958

COLUMBUS STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS)
YEAR ENDED JUNE 30, 2014
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
Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal State Other Gifts Investment Income (Endowments, Auxiliary and Other) Interest Expense (Capital Assets) Other Nonoperating Expenses
Net Nonoperating Revenues
Loss Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Other
Total Other Revenues, Expenses, Gains or Losses
Decrease in Net Position
Net Position - Beginning of Year
Net Position - End of Year

EXHIBIT "B"

$

60,067,475

-17,892,707

1,244,576 127,680 702,792
3,247,417 43,566

6,327,560 182,257 428,272
1,130,610 689,674
2,951,680 396,149 196,964

59,843,965

24,183,640 26,891,272 15,182,556
313,044 827,659 10,797,024 4,167,833 26,458,853 5,445,682
114,267,563
-54,423,598

33,008,566
15,319,686 33,892
3,660,007 2,146,131
641,530 -2,737,685
-684,457
51,387,670
-3,035,928
145,442 48,126
193,568
-2,842,360
83,633,318

$

80,790,958

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COLUMBUS STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDED JUNE 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Federal Appropriations Grants and Contracts (Exchange) Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts
Net Cash Used by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes
Net Cash Flows Provided by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received 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
Net Cash Provided by Investing Activities
Net Decrease in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

EXHIBIT "C"

$

42,515,344

2,193,200 3,247,418 -46,752,257 -50,942,627 -10,797,024 -1,565,866 1,673,915

5,867,537 182,669 422,928
1,077,158 692,587
2,999,412 396,835 220,252

-48,568,519

33,008,566 -3,160,285 21,159,716
51,007,997

145,442 -1,127,090 -1,622,569 -2,737,685
-5,341,902

987 42,288 43,275 -2,859,149 17,893,807

$

15,034,658

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COLUMBUS STATE UNIVERSITY 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 Prepaid Items Notes Receivable, Net Accounts Payable Advances (Including Tuition and Fees) Other Liabilities Compensated Absences
Net Cash Used by Operating Activities
NONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations Change in Fair Value of Investments Recognized as a Component of Interest Income Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts

EXHIBIT "C"

$

-54,423,598

5,445,682
-412,300 -17,222 108,049 -1,665 662,418 -29,137 99,254

$

-48,568,519

$

12,311,123

$

599,242

$

-48,126

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COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Columbus State University (University) 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 Columbus 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. Columbus State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Columbus 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 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 University's assets, deferred outflow of resources, liabilities, deferred inflows of resources, net position, revenues, expenses, changes in net position and cash flows, if applicable.
BASIS OF ACCOUNTING For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University'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-University transactions have been eliminated.
NEW ACCOUNTING PRONOUNCEMENTS In fiscal year 2014, the University 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 University did not have any deferred outflows of resources or deferred inflows of resources.
In fiscal year 2014, the University 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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COLUMBUS STATE UNIVERSITY 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 University's financial statements.
In fiscal year 2014, the University 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 University's financial statements.
FUTURE ACCOUNTING PRONOUNCEMENTS In fiscal year 2015, the University 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 University 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 University's liability, the effects of which are believed to be material.
NET POSITION The University net position is classified as follows:
Net Investment in Capital Assets: This represents the University'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 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 - expendable: Restricted expendable net position includes resources in which the University 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 Columbus State 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) of $53,606.04. 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 State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

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COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

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 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 $14,924,955 and the bank balance was $16,075,990. Of the University's deposits, $15,825,990 were uninsured. Of these uninsured deposits, $15,825,990 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.
INVESTMENTS Columbus State University maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.

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COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

The University's investments as of June 30, 2014 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Type

Fair Value

Less Than 3 Months

Debt Securities Corporate Debt Mutual Bond Fund

$

11,383 $

11,383

5,000

5,000

Other Investments Bond/Equity Mutual Funds Equity Mutual Funds - Domestic Equity Mutual Funds - International Equity Securities - Domestic Equity Securities - International Miscellaneous Holdings

16,383 $
1,423,365 922,899 566,665
1,059,410 343,021 75,514

16,383

Total Investments

$

4,407,257

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk.

Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments.

At June 30, 2014, $2,895,137 of the University's applicable investments were uninsured and held by the investment's counterparty in the University's name.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk.

The investments subject to credit quality risk are reflected below:

Credit Quality Risk

Fair Value

AA

Unrated

Related Debt Investments Corporate Debt Mutual Bond Fund

$

11,383

5,000 $

$ 5,000

11,383

$

16,383 $

5,000 $

11,383

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COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The University does not have a formal policy for managing concentration of credit risk. As of June 30, 2014, the University does not have any applicable investments in a single issuer where those investments exceed 5% of total investments.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2014.

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal, State and Private Funds

Georgia State Financing and Investment Commission

Due from Affiliated Organizations

Other

1,687,561 168,827
6,737,006 296,645 251,828 891,932

Less Allowance for Doubtful Accounts

10,033,799 559,549

Net Accounts Receivable

$

9,474,250

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COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS

Following are the changes in the University's capital assets for the year ended June 30, 2014:

Beginning Balance July 1, 2013

Additions

Reductions

Ending Balance June 30, 2014

Capital Assets, Not Being Depreciated:

Land

$

2,680,543

Construction Work-In-Progress

81,925 $

132,285 $

$ 81,925

2,680,543 132,285

Total Capital Assets, Not Being Depreciated

2,762,468

132,285

81,925

2,812,828

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

2,183,116 88,585,578
2,240,227 14,440,639 69,337,956
7,785,600 22,000

1,091,670 12,311,123
33,186

540,740 17,176,500

2,183,116 88,585,578
2,240,227 14,991,569 64,472,579
7,818,786 22,000

Total Assets Being Depreciated

184,595,116

13,435,979

17,717,240

180,313,855

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

1,638,580 32,830,606
1,913,543 9,373,414 4,555,069 7,467,716

75,408 1,927,077
20,884 1,200,739 2,157,075
64,499

538,829 -245,146

1,713,988 34,757,683
1,934,427 10,035,324
6,957,290 7,532,215

Total Accumulated Depreciation

57,778,928

5,445,682

293,683

62,930,927

Total Capital Assets, Being Depreciated, Net

126,816,188

7,990,297

17,423,557

117,382,928

Capital Assets, Net
NOTE 5: ADVANCES

$

129,578,656 $

8,122,582 $

17,505,482 $

120,195,756

Advances consisted of the following at June 30, 2014.

Prepaid Tuition and Fees Other Advances

$ 3,639,102 1,475,925

Total Advances

$ 5,115,027

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COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

NOTE 6: LONG-TERM LIABILITIES

The University'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

$ 65,464,628 $ 12,311,123 $ 18,341,669 $ 59,434,082 $ 1,655,506

Other Liabilities Compensated Absences

2,386,805

1,872,376

1,773,121

2,486,060

1,754,722

Total Long-Term Obligations $
NOTE 7: NET POSITION

67,851,433 $ 14,183,499 $ 20,114,790 $ 61,920,142 $

3,410,228

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

Beginning Balance July 1, 2013

Additions

Reductions

Ending Balance June 30, 2014

Net Investments in Capital Assets

$

64,114,028 $ 26,464,251 $ 29,816,605 $

60,761,674

Restricted Net Position

5,061,349

21,088,633

20,576,810

5,573,172

Unrestricted Net Position

14,457,941

93,758,712

93,760,541

14,456,112

Total Net Position

$

NOTE 8: LEASE OBLIGATIONS

83,633,318 $ 141,311,596 $ 144,153,956 $

80,790,958

Columbus 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 and equipment.

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2015 and 2039. Expenses for fiscal year 2014 were $4,581,120 of which $2,737,685 represented interest and $220,866 represented executory costs. Total principal paid on capital leases was $1,622,569 for the fiscal year ended June 30, 2014. The remaining reduction in capital leases of $16,719,100 was related to not renewing leases for student housing. Interest rates range from 3.5 percent to 5.535 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2014:

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COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

Description

Gross Amount (+)

Accumulated Depreciation
(-)

Net Position Held Under Capital Lease at June 30, 2014
(=)

Outstanding Balances per Lease Schedules at June 30, 2014

Equipment Buildings

$

362,633 $

298,672 $

63,961 $

37,528

64,109,946

6,658,618

57,451,328

59,396,554

Total Assets Held Under Capital Lease

at June 30, 2014

$

64,472,579 $

6,957,290 $ 57,515,289 $ 59,434,082

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.

In the current fiscal year, Columbus State University had five capital leases with Foundation Properties, Inc., a discretely presented component unit of the State of Georgia.
In December 2006, Columbus State University entered into a capital lease of $6,010,597 whereby the University leases office space for one year with options to renew on a year-to-year basis for twentyfive consecutive one-year periods expiring on June 30, 2032. At the expiration of the lease, ownership transfers to the University. The outstanding liability at June 30, 2014 on this capital lease is $4,509,927.

In July 2013, Columbus State University entered into a capital lease of $806,461 at 3.5% whereby the University leases student housing for one year with the option to renew on a year-to-year basis for eighteen consecutive one-year periods expiring on June 30, 2031. At the expiration of the lease, ownership transfers to the University. The outstanding liability at June 30, 2014 on this capital lease is $780,334.

In July 2013, Columbus State University entered into a capital lease of $11,504,662 at 3.5% whereby the University leases student housing for one year with the option to renew on a year-to-year basis for eighteen consecutive one-year periods expiring on June 30, 2031. At the expiration of the lease, ownership transfers to the University. The outstanding liability at June 30, 2014 on this capital lease is $11,131,946.

In February 2006, Columbus State University entered into a capital lease of $9,180,000 at 4.5% whereby the University leases a parking deck for twenty-five year period that expires on June 30, 2032. The deck is constructed on land owned by the University and leased to Foundation Properties, Inc. for $10 annually for a period of twenty-five years commencing in February 2006. At the expiration of the ground lease, ownership of the parking deck transfers to the University. The outstanding liability at June 30, 2014 on this capital lease is $7,455,000.

In July 2012, Columbus State University entered into a capital lease of $4,483,500 at 3.5% whereby the University leases a conference center for one year with options to renew on a year-to-year basis for twenty consecutive one-year periods expiring on June 30, 2033. At the expiration of the lease, ownership transfers to the University. The outstanding liability at June 30, 2014 on this capital lease is $4,243,300.

In July 2010, Columbus State University entered into a capital lease of $32,124,727 at 5.535% whereby the University leases a student recreation center for a twenty-nine year period that expires on June 30, 2039. The recreation center is constructed on land owned by the University and leased to the USG Real Estate Foundation II, LLC for $10 annually for a period of twenty-nine years

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COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

commencing July 2010. At the expiration of the ground lease, ownership of the recreation center transfers to the University. The outstanding liability at June 30, 2014 on this capital lease is $31,276,047.
Columbus State University also has two capital leases for equipment with an outstanding balance at June 30, 2014 in the amount of $37,528.
OPERATING LEASES Columbus 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.
FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2014, were as follows:

Capital Leases

Operating Leases

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

$

4,372,726 $

4,911,313

4,399,673

3,173,651

4,411,554

3,229,342

4,438,507

3,293,205

4,470,549

3,372,575

22,831,818

17,742,201

23,670,355

19,576,765

18,775,513

7,518,618

10,439,887

263,807

Total Minimum Lease Payments

97,810,582 $ 63,081,477

Less: Interest

38,376,500

Principal Outstanding

$ 59,434,082

University fiscal year 2014 expense for rental of real property and equipment under operating leases was $5,125,684.

- 15 -

COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
Columbus State University 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 Columbus State University 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.
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

- 16 -

COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

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, Columbus State University pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Columbus State 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. Columbus State 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 Columbus State University 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.

- 17 -

COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

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.

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 Columbus State University 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

16,946 11,946
6,090

100% 100% 100%

$ 2,974,886 $ 2,667,899 $ 2,315,644

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 Columbus 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 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.

- 18 -

COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

Columbus State University and the covered employees made the required contributions of $1,684,853 (9.24%) and $1,094,061 (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 Columbus 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 parttime 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 $222,776 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 self-insured 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
Columbus State University 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

- 19 -

COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

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' 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. Columbus State University, 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 Columbus State University expects such amounts, if any, to be immaterial to its overall financial positions.
Litigation, claims and assessments filed against Columbus 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 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

- 20 -

COLUMBUS STATE UNIVERSITY SELECTED FINANCIAL NOTES
JUNE 30, 2014

EXHIBIT "D"

portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University 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 307 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, Columbus State University recognized as incurred $1,373,762 of expenditures, which was net of $604,078 of participant contributions.
NOTE 13: AFFILIATED ORGANIZATIONS
The Columbus State University Foundation, Columbus State University Alumni Association, Foundation Properties, and Columbus State Athletic Fund are legally separate, tax exempt organizations whose activities primarily support Columbus State University. These affiliated organizations are considered potential component units 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 organizations are not included in these financial statements. Copies of the financial statements for the affiliated organizations may be obtained from Columbus State University.

- 21 -

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SUPPLEMENTARY INFORMATION - 23 -

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

SCHEDULE "1"

$

10,028,469.99

1,394,942.16

924,048.03 3,339,019.38
247,311.18

$

15,933,790.74

$

141,927.07

6,900,130.46

44,736.13

4,396,902.46

75,480.80

11,559,176.92

1,286,196.84 684,377.79 274,606.45
1,110,634.30 404,643.95 560,548.45
53,606.04
4,374,613.82

$

15,933,790.74

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.
- 24 -

COLUMBUS STATE UNIVERSITY 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
Special Funding Initiative Teaching
Total Expenditures
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
Early Return of Surplus in Fiscal Year 2014 Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$ 33,181,647.00 $ 33,181,647.00 $

0.00

81,659,451.00

71,129,815.06

-10,529,635.94

114,841,098.00

104,311,462.06

-10,529,635.94

0.00 114,841,098.00

3,963,292.42 108,274,754.48

3,963,292.42 -6,566,343.52

361,750.00 114,479,348.00

114,841,098.00

$

0.00

361,557.11 103,906,526.25

192.89 10,572,821.75

104,268,083.36

10,573,014.64

4,006,671.12 $ 4,006,671.12

4,383,941.50 172,880.91

46,244.37 -98,750.75

-172,880.91 -200.00
-3,963,292.42

$

4,374,613.82

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.
- 25 -

$

1,286,196.84

684,377.79

274,606.45

1,110,634.30

404,643.95

560,548.45

4,321,007.78

53,606.04

$

4,374,613.82

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

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity

Original Appropriation

Amended Appropriation

Final Budget

Current Year Revenues

$

361,750.00 $

361,750.00 $

361,750.00 $

361,750.00

32,619,897.00 69,268,610.00
101,888,507.00

32,619,897.00 80,596,207.00
113,216,104.00

32,819,897.00 81,659,451.00
114,479,348.00

32,819,897.00 71,129,815.06
103,949,712.06

$ 102,250,257.00 $ 113,577,854.00 $ 114,841,098.00 $ 104,311,462.06

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.
- 26 -

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 $

0.00 $

361,750.00 $

0.00 $

361,557.11 $

192.89 $

192.89

0.00 3,963,292.42
3,963,292.42

0.00 0.00
0.00

32,819,897.00 75,093,107.48
107,913,004.48

0.00 -6,566,343.52
-6,566,343.52

32,812,224.01 71,094,302.24
103,906,526.25

7,672.99 10,565,148.76
10,572,821.75

7,672.99 3,998,805.24
4,006,478.23

$ 3,963,292.42 $

0.00 $ 108,274,754.48 $

-6,566,343.52 $ 104,268,083.36 $

10,573,014.64 $

4,006,671.12

- 27 -

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

Special Funding Initiative State Appropriation State General Funds
Teaching State Appropriation State General Funds Other Funds
Total Teaching
Total Operating Activity
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

$

139,703.00 $

0.00 $

-139,703.00 $

474.65

6,965.04 3,989,505.29
3,996,470.33
4,136,173.33

0.00 -3,963,292.42
-3,963,292.42
-3,963,292.42

-6,965.04 -26,212.87
-33,177.91
-172,880.91

34,810.59 -87,791.62
-52,981.03
-52,506.38

420,649.08

0.00

0.00

0.00

Budget Unit Totals

$ 4,556,822.41 $

-3,963,292.42 $

-172,880.91 $ -52,506.38

Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework.
- 28 -

SCHEDULE "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 $

0.00 $

192.89 $

667.54 $

0.00 $

667.54 $

667.54

0.00 16,005.13
16,005.13
16,005.13

-200.00 0.00
-200.00
-200.00

7,672.99 3,998,805.24
4,006,478.23
4,006,671.12

42,283.58 3,927,018.75
3,969,302.33
3,969,969.87

0.00 3,916,363.83
3,916,363.83
3,916,363.83

42,283.58 10,654.92
52,938.50
53,606.04

42,283.58 3,927,018.75
3,969,302.33
3,969,969.87

-16,005.13

0.00

0.00

404,643.95

404,643.95

0.00

404,643.95

$

0.00 $

-200.00 $

4,006,671.12 $ 4,374,613.82 $ 4,321,007.78 $

53,606.04 $ 4,374,613.82

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

$ 1,286,196.84 684,377.79 274,606.45
1,110,634.30 404,643.95 560,548.45
$
$ 4,321,007.78 $

$ 1,286,196.84 684,377.79 274,606.45
1,110,634.30 404,643.95 560,548.45

53,606.04

53,606.04

53,606.04 $ 4,374,613.82

- 29 -

COLUMBUS STATE UNIVERSITY 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")
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.
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.
Funds placed on deposit with the Georgia State Financing and Investment Commission for use in capital outlay projects are reported as an outlay in the Budget Fund, but are included as an accounts receivable item on the Statement of Net Position.
Changes in the Fair Market Value of Investments are recognized on the Statement of Net Position, but are not reported in the Budget Fund.
Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity
Auxiliary Enterprises Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Auxiliary Enterprises Fund Activity
Endowment Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Endowment Fund Activity
Loan Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Loan 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
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. Total Net Effect of Encumbrance Activity
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

$

4,374,613.82

120,195,756.32

-404,643.95

$ 3,919,713.18 -3,919,713.18
$ 6,390,150.60 -718,438.46
$ 1,969,020.99 0.00
$ 2,202,071.19 0.00
$ 2,732,174.26 -371,375.37

-886,840.62 328,480.60
0.00 5,671,712.14 1,969,020.99 2,202,071.19 2,360,798.89

6,900,130.46

$ -59,434,081.89 -2,486,059.95

-61,920,141.84

Net Position of Business-Type Activities (Exhibit "A")
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.
- 30 -

$ 80,790,958.00

COLUMBUS STATE UNIVERSITY 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 Shared Services on Jointly Staffed Personnel Albany State University Porter, Rhonda Clayton State University Attick, Dennis Dalton State College Bates, James Darton State College Liss-Green, Deborah Morway, Rhonda Fort Valley State University Anderson, Shae Georgia Gwinnett College Bass, Danny Georgia Southwestern State University Linton, Ronald Zohn, Andrew Georgia State University Johnston, Barbara Gordon State College Trice, Frances Middle Georgia College Fitzgerald, Tayme Southern Polytechnic State University Preston, Jon Valdosta State University Williamson, Lowell A.
Car Allowances Cell Phone Allowances

SALARIES $ 51,029,823.69 $

TRAVEL 827,658.63

152,850.46 -110,656.00

2,309,391.50 -2,217,190.58

743.56 909.10 349.37 538.25 10,303.80 5,500.00 -3,875.40 -3,229.50 -1,076.50 -500.00 4,565.25 1,102.00 538.25 2,250.90 -21,185.76 -86,240.00

$ 51,074,912.39 $

827,658.63

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SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

COLUMBUS STATE UNIVERSITY 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 during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.

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

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

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-530-14-01 Weaknesses in Logical Access IT General Controls

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

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

Description: University policies and procedures were insufficient to provide adequate internal controls over logical access IT general controls.

Criteria: Management of the University 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 University revealed design and operating effectiveness deficiencies in logical access controls intended to protect financial and student financial assistance information from unauthorized access, manipulation and corruption.

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

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COLUMBUS STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Cause: In discussing these deficiencies with the University, they 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 University has implemented corrective procedures to update/modify the financial aid and bursar user accounts and access level to include the removal of update access to ensure integrity and accuracy as well as prevent fraud and irregularities. To ensure ongoing compliance, the financial aid and bursar roles have been permanently modified to query only to the student module.

Contact Person:
Telephone: Fax: E-mail:

Valerie Alexander-Spicer Director of Enterprise Software, UITS Banner Functional Leader (706) 507-8828 (706) 569-3083 alexander-spicer_valerie@columbusstate.edu

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COLUMBUS STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-530-14-02 Overpayment of Student Financial Assistance

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

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

Description: The University's Student Financial Assistance Office improperly determined the financial need of eligible students.

Criteria: Provisions included in 34 CFR 668 provide general guidance for administering Student Financial Assistance (SFA) programs and 34 CFR 685, provide eligibility and other related program requirements that are specific to the Federal Direct Loan Program.

Condition: A sample of 60 financial aid awards were selected to determine if financial assistance was properly calculated and disbursed to eligible students. One student in the sample received Direct Unsubsidized Student Loans before the subsidized need-based loan limit was reached. Two students in the sample were not in compliance with the University's published satisfactory academic progress policies. Federal regulations (34 CFR 668.32 and 668.34) state that a student is eligible to receive financial assistance under Title IV programs if satisfactory academic progress is maintained.

Questioned Cost: Questioned costs of $8,062.00, with likely questioned costs of $796,008.47, were identified for students who received student financial assistance in excess of their eligible need.

Cause: In discussing the condition with Columbus State University officials, these issues occurred due to system processing issues including failures in the application of the Satisfactory Academic Progress (SAP) assessment process and the application of the student "Year in School" process, which determines Direct Loan limits. These processes were not adequately tested or monitored to ensure they were functioning as intended.

Effect or Potential Effect: The University was not in compliance with federal regulations concerning awarding of SFA funds to students.

Recommendation: The University should perform a risk assessment of its processes and procedures for determining each student's financial aid eligibility. Where vulnerable, the University should develop and/or modify policies and procedures to ensure that correct amounts are awarded to students in conformity with financial need requirements. Additionally, the University should develop and implement a monitoring process to ensure that controls continue to operate as intended. The University should also contact the U. S. Department of Education regarding resolution of this finding.

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COLUMBUS STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Views of Responsible Officials and Corrective Action Plans: We concur with this finding.

We acknowledge that SFA funds were not awarded in the correct amounts as a result of insufficient controls. We agree that risk assessments should be performed and processes for monitoring controls should be developed and implemented. The above items have been corrected by the Office of Financial Aid.

We will implement procedures to ensure that exception reports are generated and consistently monitored to ensure grade level and awarding comparisons match. Columbus State University (CSU) will bring Argos, the Banner companion reporting software package at the end of January, 2015. We will use the reporting tool to develop a broader array of comparative information to be certain all funds are properly awarded.

Additionally, the IT services office has completed and released an upgrade to their SAP calculation module (release 8.37) which will allow CSU to capture and assign SAP status to students who attend but do not apply for aid. This will create a cleaner SAP progression and proper assignment of SAP status. The release is available now and will be used during Fall 2014 end of term processing.

Estimated Implementation Dates: November 2014 (GA Modification Banner upgrade, completed) February 15, 2015 (Argos)

Contact Person:
Telephone: E-mail:

Russ Romandini Director of Financial Aid and Enrollment Information (706) 507-8807 Romandini_russ@columbusstate.edu

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COLUMBUS STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FA-530-14-03 Return of Title IV Funds

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

Description: Unearned Title IV funds were not identified and returned for students who unofficially withdrew from the University.

Criteria: 34 CFR 668.22 provides requirements over the treatment of Title IV funds when a student withdraws. The University is required to determine the amount of Title IV grant that the student earned as a of the student's withdrawal date when a recipient of a Title IV grant withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance. A refund must be returned to Title IV programs when the total amount of Title IV grant and loan assistance, or both, that the student earned is less than the amount of the Title IV grant or loan assistance that was disbursed to the student as of the withdrawal date.

Condition: Twelve students who received Federal financial assistance for the Fall 2013 and Spring 2014 semesters and withdrew from the University but for whom no Return of Title IV calculation was performed were selected to determine if a refund should have been calculated. Our examination revealed that refund calculations were not performed for five students who unofficially withdrew during the Fall 2013 or Spring 2014 semesters.

Questioned Cost: Questioned costs of $14,559.39, with likely questioned costs of $140,408.21, were identified due to refunds not being calculated for students who unofficially withdrew from the University.

Cause: In discussing the condition with Columbus State University officials, this deficiency occurred because the University's method of identifying withdrawn students was not detecting all students that unofficially withdrew from the University. The University's method of identifying withdrawn students was not adequately tested when developed and placed in operation.

Effect or Potential Effect: The Office of Financial Aid did not calculate the correct amount of refunds for the Title IV federal program.

Recommendation: The University should implement policies and procedures to ensure that unofficial withdrawals that received Title IV funds are identified and the required refund calculation is performed. The University should also contact the U. S. Department of Education regarding the resolution of this finding.

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COLUMBUS STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30, 2014

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

Views of Responsible Officials and Corrective Action Plans: We concur with the finding.

We acknowledge that SFA funds were not returned in the correct amounts as a result of insufficient controls. We agree that risk assessments should be performed and processes for monitoring controls should be developed and implemented.

We will implement procedures to ensure that unofficial withdrawals are properly reported to the Office of the Registrar in a timely manner to allow the Office of Financial Aid time to process returns within the 45 day threshold. CSU has activated programming within Banner that requires faculty to record a Last Date of Attendance (LDA) when they enter withdrawal grades. This is in addition to established Registrar policy to verify all students with all F and/or WF grades to ensure F grades were earned. To supplement, Columbus State University will bring Argos, the Banner companion reporting software package live at the end of January, 2015. We will use the reporting tool to develop a broader array of comparative information to be certain all students with F and WF grades have an accompanying LDA. It should be noted that the Office of Financial Aid has worked with the Office of the Registrar and the faculty to identify and resolve all unofficial withdrawals within the audited period.

Estimated Implementation Dates: November 2014 (Banner modification, completed) February 15, 2015 (Argos)

Contact Person:
Telephone: E-mail:

Russ Romandini Director of Financial Aid and Enrollment Information (706) 507-8807 Romandini_russ@columbusstate.edu

OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION)

Unallowable Use of P-cards Observation: A review of purchasing card transactions revealed purchasing card users that did not follow the guidelines for purchasing card transactions as prescribed in the University's Procurement Card (PCard) Manual. Several instances of split purchases were identified.

Recommendation: Management should review procedures in place and implement changes necessary to ensure that all purchasing card transactions adhere to the policies and procedures as outlined in the University's Procurement Card (P-Card) Manual.

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