Review report, state of Georgia, Dalton College, Dalton, Georgia, June 30, 1997

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REVIEW REPORT STATE OF GEORGIA DALTON COLLEGE DALTON, GEORGIA YEAR ENDED JUNE 30, 1997

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

DALTON COLLEGE - TABLE OF CONTENTS -

INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXIllBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET

ALL FUND GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

ALL FUND GROUPS

4

C STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

6

D NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

E COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESTRICTED

20

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENTFUNDS-UNRESTRICTED

21

G COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,

AND OTHER CHANGES

UNRESTRICTED

23

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET

1

RESIDENT INSTRUCTION

24

2

LOTTERY FOR EDUCATION

27

3 CHANGES IN INVESTMENT IN PLANT

28

4 SCHEDULE OF FUND BALANCES

CURRENT FUNDS AND PLANT FUNDS

30

5 RECONCILIATION OF SALARIES AND TRAVEL

32

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
October 2, 1997

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable James A. Burran, President Dalton College
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying fmancial statements (Exhibits A through D) of Dalton College as of and for the year ended June 30, 1997, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Dalton College.
A review consists principally of inquiries of College personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, with the exception of the matters described in the fourth and fifth paragraphs, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.
As disclosed in Note 1 to the financial statements, generally accepted accounting principles require encumbrances to be recorded as a reservation of fund balance. However, in accordance with Georgia Law and State budgetary policy, management recorded encumbrances as expenditures and liabilities. The effects of this departure from generally accepted accounting principles on the financial statements were not reasonably determinable.

97ARL-67

As disclosed in Note 1 to the fmancial statements, the College did not report the liability and related expenditure for compensated absences in the current funds as required by generally accepted accounting principles. If compensated absences were reported, liabilities would be increased and fund balance would be decreased by $365,822.52 as of June 30, 1997, and the net change in fund balance for the year ended June 30, 1997, would be decreased by $17,966.82.
Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles. The accompanying supplementary information (Exhibits E through G and Schedules 1 through 5) is presented only for supplementary analysis purposes. Such information has been subjected to the inquiries and analytical procedures applied in the review of the fmancial statements, and except for the effects of the matters discussed in the fourth and fifth paragraphs, we are not aware of any material modifications which should be made thereto.
Respectfully submitted,
~~
Claude L. Vickers
State Auditor
CLV:jy 97ARL-67

FINANCIAL STATEMENTS - 1-

DALTON COLLEGE COMBINED BALANCE SHEET
ALL FUND GROUPS JUNE 30, 1997

ASSETS
Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups Investment in Plant
Total Assets

CURRENT FUNDS UNRESTRICTED RESTRICTED UNEXPENDED

$

972,044,20

$ 336,979,60

67,564.42 $ 308,839.49

28,489,00

176,761,27

14,441,11

146,430,00

453,352,64

$ 1,684,163,64 $ 455,269.49 $ 365,468.60

LIABILITIES AND FUND BALANCES

Liabilities

Accounts Payable

$

Deferred Revenue

Tuition and Fees

Other

Deposits Held in Custody for Others

Due to Other Fund Groups

Total Liabilities

$

Fund Balances

Net Investment in Plant

Restricted

Unrestricted

$

Total Fund Balances

$

440,122,87
375,086,50 26,575.29
$ 841,784.66 $

$
453,352.64 453,352.64 $

365,318.60 365,318.60

$ 842,378.98
842,378.98 $

1,916.85 $
1,916.85 $

150.00 150.00

Total Liabilities and Fund Balances $ 1,684,163.64 $ 455,269.49 $ 365,468.60

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement.
-2-

EXHIBIT "A"

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$

498,027.48

$

_ _ _ _ _ _ $ 22,576,979.27

121,385.75 $

1,928,437.03 404,892.91 176,761.27 160,871.11 453,352.64
22,576,979.27

$

498,027.48 $ 22,576,979.27 $ 121,385.75 $ 25,701,294.23

$

61,908.61 $ 867,350.08

59,477.14

375,086.50 26,575.29 59,477.14 453,352.64

$ 121,385.75 $ 1,781,841.65

$ 22,576,979.27

$

498,027.48

$

498,027.48 $ 22,576,979.27

$ 22,576,979.27 1,916.85
1,340,556.46
$ 23,919,452.58

$

498,027.48 $ 22,576,979.27 $ 121,385.75 $ 25,701,294.23

-3-

DALTON COLLEGE COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30,1997

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues State Appropriations
Regular Lottery Proceeds Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Investment Income Other Adjustments Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided Expended for Plant Facilities Current Funds Plant Funds
Unexpended Georgia State Financing and Investment Commission Other Additions Proceeds from Sale of Plant Assets
Total Revenues and Other Additions
EXPENDITURES AND OTHER DEDUCTIONS
Educational and General Expenditures Auxiliary Enterprises Expenditures Indirect Costs Recovered Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable
Expended for Plant Facilities Capitalized Noncapitalized
Disposals/Deletions/Adjustments
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements
Total Transfers Between Funds
Netlncrease/(Decrease) for the Year
FUND BALANCES JULY 1. 1996

CURRENT FUNDS UNRESTRICTED RESTRICTED UNEXPENDED

$ 11,334,634.17
$ $ 1,575,737,15
2,359,987,37 135,625,39 430,540.72
1,187,30 20,593,57

430,000,00 269,000.00
84,500,00 90,268,56
150,00

s s 11,356,415.04 4,501,890,63 $

1,233.53 875,152.09

$ 10,998,432,39 $ 4,479,921.61 215,237,07 21,969,02

1,636.27 8,139.29

$

397,55

735,972,92 139,029.17

s 11,223,445.02 $ 4,501,890.63 $ 875,399.64

$

-57,834.55

$

-57,834.55

$

75,135.47 $

767,243.51

0.00 $ 1,916.85

-247.55 397.55

FUND BALANCES JUNE 30, 1997

$

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.

The notes to the financial statements are an integral part of this statement. -4-

842,378.98 $

1,916.85 $

150.00

EXHIBIT"B"

PLANTFUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$

0.00

$ 11,334,634.17

430,000.00

269,000.00

1,575,737.15

2,359,987.37

135,625.39

$

250.00

515,290.72

90,268.56

1,337.30 20,593.57

1,001,848.17 1,001,848.17

735,972.92 409,627.11

735,972.92 409,627.11

1,233.53

s

0.00 $ 2,147,698.20 $ 18,881,155.96

$ 15,478,354.00 215,237.07 21,969.02

2,033.82

8,139.29

735,972.92

$

4,449.76

143,478.93

$ -28,200.33

-28,200.33

$

4,449.76 $ -28,200.33 $ 16,576,984.72

$ _ _-=5.7.:,.8.J3=4":.=5=5..

$ - - - - = = : .0:.:0.0.

$ _ _-=5.7.:,.8.J3=4":.=5=5..

$--_..:.:..:0.:.0:0.,

$

53,384.79 s 2,175,898.53 $ 2,304,171.24

444,642.69 20,401,080.74 21,615,281.34

s

498,027.48 $ 22,576,979.27 $ 23,919,452.58

-5-

DALTON COLLEGE STATEMENT OF CURRENT FUNDS REVENUES. EXPENDITURES,
AND OTHER CHANGES YEAR ENDED JUNE 30. 1997

EXHIBIT"C"

REVENUES
State Appropriations Tuition and Fees Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants, and Contracts Sales and Services of Educational Activities Sales and Services of Auxiliary Enterprises Other Sources
Total Revenues
EXPENDITURES
Educational and General Instruction Public Service Academic Support Student Services Institutional Support Operation and Maintenance of Plant Scholarships and Fellowships
Auxiliary Enterprises Food Services Stores and Shops
Total Expenditures
OTHER TRANSFERS AND ADDITIONS/(OEDUCTIONS)
Excess of Restricted Receipts over Transfers to Revenues Transfers for Renewals and Replacements Prior Period Adjustments (Net) Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Total Other Transfers and Additions/(Deductions)

UNRESTRICTED RESTRICTED

TOTAL (Memorandum
Only)

$ 7,781,686.00

$ 7,781,686.00

2,788,260.31

2,788,260.31

7,449.02 $ 1,568,288.13

1,575,737.15

14,520.00

2,345,467.37

2,359,987.37

135,625.39

135,625.39

430,540.72

430,540.72

320,512.19

320,512.19

307,829.19

307,829.19

114,377.46

114,377.46

$ 11,334,634.17 $ 4,479,921.61 $ 15,814,555.78

$ 5,827,030.96 $ 2,131,565.41 $ 7,958,596.37

1,749.13

1,749.13

919,781.99

14,175.00

933,956.99

1,073,810.32

121,809.32

1,195,619.64

2,025,145.44

43,234.86

2,068,380.30

1,107,439.55

1,107,439.55

43,475.00

2,169,137.02

2,212,612.02

105,080.45 110,156.62

105,080.45 110,156.62

$ 11,213,669.46 $ 4,479,921.61 $ 15,693,591.07

$

$

-57,834.55

13,641.58

-1,636.27

$

-45,829.24 $

0.00 $

0.00 -57,834.55 13,641.58

0.00 $

-1,636.27 -45,829.24

Net Increase/(Decrease) in Fund Balances

$

75,135.47 $

0.00 $====~;,;7;5;,,1;.3;5,.,4;.7,

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement.
-6-

DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,1997

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Dalton College is one of thirty-four (34) 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 Dalton 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. Dalton College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Dalton College is considered an organizational unit ofthe Board of Regents ofthe University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and fmancial relationships with the Board of Regents as defined in Section 2100 ofthe Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
FUND ACCOUNTING In order to ensure observance of limitations and restrictions placed on the use of the resources available to the College, the accounts ofthe College are maintained in accordance with the principles of fund accounting. This is the procedure by which resources for various purposes are classified for accounting and reporting purposes into funds that are in accordance with activities or objectives specified. Separate accounts are maintained for each fund; however, in the accompanying fmancial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all fmancial transactions have been recorded and reported by fund group.
Within each fund group, the College's fund balance allocations and designations represent those portions of the fund balances that are reserved, restricted and/or designated for specific future use by legal covenants, State policies, or institutional policies.
Fund groups and funds presented in the accompanying financial statements areas follows:
CURRENT FUNDS
UNRESTRICTED - The fund used to account for those economic resources over which the College retains full control to use for purposes of performing the primary functions ofthe College, e.g., instruction, public service, etc.
RESTRICTED - The fund used to record externally restricted funds which may only be utilized in accordance with the purposes established by their source. Restricted current funds are recorded as revenues and expenditures when expended for current operating purposes.

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DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1997

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
PLANT FUNDS
UNEXPENDED - The fund used to account for fmancial resources utilized to acquire or to construct physical properties for institutional purposes.
RENEWALS AND REPLACEMENTS - The fund used to account for resources set aside for the renewal and replacement of institutional properties.
INVESTMENT IN PLANT- The fund which shows the total amounts representing the book value of all physical properties owned by the College. Net Investment in Plant is an equity account showing the total book value of physical properties belonging to the College less the amount of any indebtedness to others.
AGENCY FUNDS
The fund used to account for resources held by the College as custodian or fiscal agent for individual students, faculty, staff members, and organizations.
BASIS OF ACCOUNTING Except as otherwise disclosed in these notes, the fmancial statements are prepared on the modified accrual basis of accounting, which is materially the same as the accrual basis of accounting applicable to colleges and universities prescribed in the American Institute of Certified Public Accountants' audit guide reporting model. The modified accrual basis ofaccounting is defined as that method ofaccounting in which expenditures, other than accrued interest on general long-term debt, are recorded at the time liabilities are incurred and revenues are recorded when available and measurable to fmance expenditures of the fiscal period.
Contractual obligations for goods and services which have not been received at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion of contracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.
Compensated absences represent obligations of the College relating to employees' rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave in which payment is probable and can be reasonably estimated. The compensated absences liability of $365,822.52 and the related current year expenditure of $17,966.82 have not been reported in the current funds as required by generally accepted accounting principles.
-8-

DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of current funds in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. The effect of this departure is deemed to be immaterial to the fair presentation of the fmancial statements.
To the extent that Current Funds and Plant Funds are used to fmance plant assets, the amounts so provided are accounted for as expenditures. The balances shown on the Combined Balance Sheet as Net Investment in Plant reflect the accumulated expenditures made for plant facilities through Current Funds and Plant Funds and also include expenditures made for plant facilities expended by the Georgia State Financing and Investment Commission on behalf ofthe College. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on physical plant and equipment.
The Statement of Current Funds Revenues, Expenditures, and Other Changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period as would a statement of income or a statement of revenues and expenses.
BUDGET The Board of Regents of the University System of Georgia - Administrative Central Office receives State appropriation allotments for units of the University System of Georgia. The appropriated budget is adopted at the departmental level and represents appropriations provided by the Amended Appropriations Act of 19961997. The appropriated budget covers current funds and plant funds, except for Auxiliary Enterprises and Student Activities which are not subject to appropriation. The budget allocation and disbursement of these funds is made to the various organizational units by the Administrative Central Office. In addition, the organizational units receive Federal funds and other funds directly and include these funds in the budget filed with the Administrative Central Office.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificate's of deposit and temporary investments in authorized financial institutions.
ACCOUNTS RECEIVABLE Accounts receivable consist of allotments due from the Board of Regents of the University System of Georgia - Administrative Central Office, reimbursements due from Federal, State, local, and private grants and contracts, and other receivables disclosed from information available. No provision has been made for an allowance for doubtful accounts within the accompanying fmancial statements.

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DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES Inventories of consumable suppl.es are recorded on the consumption method and are valued at cost on the Combined Balance Sheet using the first-in, first out method.
Inventories of goods for resale are valued at cost using the first-in, first-out method.
PREPAID ITEMS Prepaid items are payments made to vendors in advance ofthe receipt of goods and services that will benefit periods subsequent to the balance sheet date.
MEMORANDUM ONLY - TOTAL COLUMNS The total columns on the financial statements are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position or changes in fmancial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
(1) Bonds, bills, certificates ofindebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
(3) Bonds of any public authority created by the laws ofthe 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.

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DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE30, 1997

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (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, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.

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

As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (which includes organizational units of the Board of Regents of the University System of Georgia) the option of exempting demand deposits from the collateral requirements.

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.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1997, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk:

Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the College or by its agent in the College's name.

Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the College's name.

Category 3 - Amounts collateralized with securities (at market value) held by the pledging financial institution, or by its trust department or agent but not in the College's name, and amounts uncollateralized.

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$ 1924.01203 $ 2.63848990 $ 10000000 $ 2.538489 90 $,==~00~0

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DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

NOTE 3: INVESTMENT IN PLANT

The following is a summary of Investment in Plant fixed assets as of June 30, 1997:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

$ 72,465.30 12,606,265.42 1,641,080.02 5,410,956.55 2,846,211.98

Total Investment in Plant

$22.576,979.27

NOTE 4: RISK MANAGEMENT

Dalton College is a participant in the Board of Regents ofthe University System of Georgia Health Benefits Plan, which is a self-insurance program of health and dental benefits for employees and retirees of the University System of Georgia. The College and participating employees and retirees pay premiums to the Health Benefits Plan for this health insurance coverage. The Health Benefits Plan is included in the audit report ofthe Board ofRegents ofthe University System of Georgia - Administrative Central Office. All units of the University System of Georgia share the risk ofloss for claims of the Health Benefits Plan. The Health Benefits Plan is considered a self-sustaining risk fund that provides health coverage for its members up to a maximum lifetime benefit of $1,000,000.00 per person and dental coverage up to an annual maximum of $1,000.00 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the Health Benefits Plan as established by the Board of Regents.

The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. 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. The College, as an organizational unit of the Board of Regents.ofthe 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.

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DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXIllBIT "D"

NOTE 5: DEFERRED COMPENSATION PLAN
The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees ofthe State of Georgia and county health departments, permits such employees to defer a portion of their salary until future years. Participation in the plan is optional. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights ofthe State of Georgia subject only to the claims of the State's general creditors. Participants' rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair market value of the deferred account for each participant. Financial information relative to the plan will be presented in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 1997.
A change in the Internal Revenue Code Section 457, effective August 20, 1996, requires that by January 1, 1999, all existing eligible deferred compensation plans must be held in trust for the exclusive benefit of participants and their beneficiaries. The State of Georgia's plan will be converted effective July 1, 1998.
NOTE 6: RETIREMENT PLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Dalton College participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multipleemployer public employee retirement system (PERS) established by the General Assembly of Georgia for the purpose of providing retirement allowances and other benefits for teachers of the State of Georgia.
TRS provides service retirement, disability retirement, and survivor's benefits for its members. A member is eligible for service retirement after the member (l) has attained the age of 60 years and has at least ten years of creditable service, or (2) has at least 25 years of creditable service. For those members with 30 years of service or those age 60 with at least ten years of service, normal retirement benefits are equal to 2% of the average of the member's two consecutive highest paid 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 1/12 of7% 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. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at a reduced rate to a designated beneficiary on the member's death.
Retirement benefits also include death and disability benefits whereby the disabled member or surviving spouse is entitled to receive annually an amount equal to the member's service retirement benefit or disability retirement, whichever is greater. The benefit is based on member's creditable service (minimum of 10 years of service) and compensation up to the date of death or up to the time of disability.
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DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,1997

EXHIBIT"D"

NOTE 6: RETrnEMENTPLANS
TEACHERS RETIREMENT SYSTEM OF GEORGIA
Plan Description Members become fully vested after ten years of service. If a member terminates with less than ten years of service, no vesting of employer contributions occurs, but the member's contributions are refunded with interest.
Funding Policy Employees of the College who are covered by TRS are required to pay 5% of their gross earnings to TRS. The College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees as advised by their independent actuary. For fiscal year 1997, the employer contribution rate was 11.81% for covered employees. In addition, the College contributed 4.24% to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. The interest rate assumption (rate of return on investments) was 7.50%. The College's payroll for the year ended June 30, 1997, for employees covered by TRS was $6,365,804.94. The College's total payroll for all employees was $8,162,879.78.
Total contributions to the plan made during fiscal year 1997 amounted to $1,119,636.46, of which $801,345.50 was made by the College and $318,290.96 was made by employees. These contributions represented 12.59% (College) and 5% (employees) of covered payroll.
Total contributions from all employers to TRS for the year ended June 30, 1997, were $652,928,555.00. The College's contribution for the year ended June 30, 1997, of $801,345.50 was actuarially determined and represented .1273% of total contributions made by all participating employers.
Actuarial and Trend Information Actuarial and historical trend information is presented in the TRS June 30, 1997, financial report which can be obtained through TRS.
REGENTS RETIREMENT PLAN
Plan Description The State of Georgia provides optional pension benefits for eligible faculty and principal administrators through a defined contribution plan. In a defmed contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings.

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DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT "D"

NOTE 6: RETrnEMENTPLANS
REGENTS RETIREMENT PLAN
Funding Policy State legislation requires that prior to January 1, 1997, the employer contribute 4% of the participating employee's earnable compensation, and on and after January 1, 1997, an amount equal to the normal cost contribution determined by the 1RS Board ofTrustees. Since January 1, 1997, the employer contribution rate was 7.42%. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. The College's payroll for employees covered by the Regents Retirement Plan for the year ended June 30, 1997, was $1,168,478.27. The College's total payroll for all employees was $8,162,879.78.
The College and the covered employees made the required contributions of$71,187.98 (6%) and $58,618.63 (5%), respectively.
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description Dalton 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 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 $ 3,500.00 credited to hislher 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 ofa member, a lump sum distribution equaling the amount credited to hislher account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
The Employees' Retirement System of Georgia issues a financial report each fiscal year which may be obtained through ERS.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. The College's payroll for the year ended June 30, 1997, for employees covered by GDCP was $209,603.90. The College's total payroll for all employees was $8,162,879.78.
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DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1997

EXHIBIT"D"

NOTE 6: RETIrnEMENTPLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Contributions and Vesting Total contributions made by employees during fiscal year 1997 amounted to $15,720.55 which represents 7.50% of covered payroll. These contributions met the requirements of the plan.
NOTE 7: LEAVE POLICIES
Employees earn annual leave ranging from one and one-quarter days to one and three-quarter days each month depending upon the employees' length of continuous State service with maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1- Basis of Accounting (Compensated Absences)
Employees earn one day of sick leave each month with no maximum accumulation established. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment.
NOTE 8: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Dalton 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, 1997.
NOTE 9: POSTEMPLOYMENT 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 ofthe University System of Georgia. It is the policy ofthe 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 ofthe group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System of Georgia and who have at least ten years of service with the University System of Georgia are eligible for these postemployment 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.
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DALTON COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1997

EXHIBIT"D"

NOTE 9: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS

As of June 30, 1997, there were 30 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 1997, Dalton College recognized as incurred $48,529.55 of expenditures, which was net of$17,169.39 of participant contributions.

NOTE 10: ENROLLMENT

The equivalent full-time student enrollment of Dalton College was as follows:

Regular Term Fall Quarter, 1996 Winter Quarter, 1997 Spring Quarter, 1997

2,125 1,969 1,802

Average

Summer School, 1996

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SUPPLEMENTARY INFORMATION - 19-

DALTON COLLEGE COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED
JUNE 30, 1997

EXHIBIT "E"

ASSETS
Cash and Cash Equivalents Accounts Receivable Inventories Prepaid Items Due from Other Fund Groups

RESIDENT INSTRUCTION

LOTIERYFOR AUXILIARY EDUCATION ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 326,529.17 $ 34,802.22 28,622.90 14,441.11
453,352.64

13,431.00 $

572,535,60 $ 32,553,70 148,138.37

59,548.43 $ 208.50

972,044.20 67,564.42
176,761.27 14,441.11
453,352.64

Total Assets

$ 857,748,04 $

13,431.00 $ 753,227.67 $ 59,756.93 $ 1,684,163.64

LIABILITIES AND FUND BALANCES

Liabilities

Accounts Payable

$

Deferred Revenue

Tuition and Fees

Other

Total Liabilities

$

Fund Balances Unrestricted

420,549.37 $ 363,818.50
26,575.29 810,943.16 $
46,804.88

13,431.00 $ 13,431.00 $

6,142.50

$ 440,122.87

$ 11,268.00

375,086.50 26,575.29

6,142.50 $ 11,268.00 $ 841,784.66

0.00

747,085.17

48,488.93

842,378.98

Total Liabilities and Fund Balances

$ 857,748.04 $

13.431.00 $ 753,227.67 $ 59,756.93 $ 1,684,163.64

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 20-

DALTON COLLEGE COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30,1997

EXHIBIT"F"

RESIDENT

LOTIERYFOR AUXILIARY

INSTRUCTION EDUCATION ENTERPRISES

STUDENT ACTIVITIES

TOTAL

REVENUES AND OTHER ADDITIONS

Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided

$ 10,857,765,74 $
1,187.30 20,541,17

61,500.00 $

330,294.53 $ 52.40

85,073.90 $ 11,334,634.17
1,187.30 20,593.57

Total Revenues and Other Additions

$ 10,879,494.21 $

61,500.00 $

330,346.93 $

85,073.90 $ 11,356,415.04

EXPENDITURES AND OTHER DEDUCTIONS

Educational and General Expenditures Auxiliary Enterprises Expenditures Remittances to the Board of Regents of the
University System of Georgia Prior Year's Unrestricted Fund Balance (Surplus)
Adjustments Prior Years' Revenues/Accounts Receivable

$ 10,857,609,46 $
1,636,27 362.24

61,500.00 $

$ 215,237.07
7,777,05

79,322.93 $ 10,998,432.39 215,237.07
1,636.27 8,139.29

Total Expenditures and Other Deductions

$ 10,859,607,97 $

61,500.00 $

223,014.12 $

79,322,93 $ 11,223,445.02

TRANSFERS BETWEEN FUNDS

Nonmandatory Renewals and Replacements

$

-57,834.55

$

-57,834.55

Total Transfers Between Funds

$

-57,834.55

$

-57,834,55

Net Increase/(Decrease) for the Year $

19,886.24 $

0.00 $

49,498.26 $

5,750.97 $

75,135.47

FUND BALANCES JULY 1, 1996

26,918.64

0.00

697,586.91

42,737.96

767,243,51

FUND BALANCES JUNE 30,1997

$

46,804.88 $

0.00 $

747,085.17 $ 48,488.93 $

842,378.98

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
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THIS PAGE LEFT BLANK

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS UNRESTRICTED RESTRICTED

PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

$ 7,720,186.00

$ 430,000.00

3,137,579.74 $ 4,479,92(61

176,002.09 $

..0.::..0:.;0:=

$ 10,857,765.74 $ 4,479,921.61 $ 606,002.09 $

---0..;0;0~

EXPENDITURES
Personal Services: Education, General and Departmental Services $ Sponsored Operations
Operating Expenses: Education, General and Departmental Services Sponsored Operations
Capital Outlay Special Funding Initiative

8,505,045.92 $ 1,631,091.25

2,257,348.54 95,215.00

2,848,830.36 $

606,002.09 $

$ 10,857,609.46 $ 4,479,921.61 $ 606,002.09 $

Excess of Revenues over Expenditures

$

156.28 $

0.00 $

0.00 $

4,449.76 4,;,"4:4..9;,.,7,.6=~ -4;",r4",;"4,;9.76_

(1) To eliminate tuition waivers not bUdgeted and to reclassify current year transfers budgeted as revenues.

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-24-

SCHEDULE "1"

TOTAL

ADJUSTMENTS

TOTAL

(1 )

(BudgetBasis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$ 8,150,186.00 7,793,503.44 $

$ 8,150,186.00 $ 8,150,186.00 $

0.00

-37,915.24 7,755,588.20 8,855,731.00

-1,100,142.80

$ 15,943,689.44 $

-37,915.24 $ 15,905,n4.20 $ 17,005,917.00 $ -1,100,142.80

$ 8,505,045.92 1,631,091.25
2,257,348.54 $ 2,848,830.36
610,451.85 95,215.00

$ 8,505,045.92 $ 8,623,305.00 $ 1,631,091.25 1,725,137.00

-42,365.00

2,214,983.54 2,848,830.36
610,451.85 95,215.00

2,233,645.00 3,619,115.00
709,500.00 95,215.00

118,259.08 94,045.75
18,661.46 nO,284.64 99,048.15
0.00

$ 15,947,982.92 $

-42,365.00 $ 15,905,617.92 $ 17,005.917.00 $ 1,100,299.08

$

4,449.76 $ _ _.....;1,;;5;,;6;;,.;2:;;8;;.

$ - _.....1..5-6-;.;2;8;.

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THIS PAGE LEn BLANK

DALTON COLLEGE SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
LOTTERY FOR EDUCATION YEARENDEDJUNE 30,1997

SCHEDULE "2"

REVENUES State Appropriations

CURRENT FUNDS PLANTFUNDS

TOTAL

UNRESTRICTED UNEXPENDED (BudgetBasis)

BUDGET

VARIANCEFAVORABLE (UNFAVORABLE)

$

61,500,00 $ 269,000,00 $ 330,500.00 $ 330,500,00 $

0,00

EXPENDITURES

Equipment, Technologyand Construction

Trust Fund

$ 169,000,00 $ 169,000.00 $ 169,000,00 $

0.00

Special Funding Initiatives

$

61,500,00

100,000,00

161,500,00 161,500,00

0.00

$

61,500.00 $ 269,000.00 $ 330,500.00 $ 330,500.00 $

0,00

Excessof Revenues over Expenditures

$

0.00 $

0.00 $

0.00

$

0,00

See accompanying notes and Independent Accountant's Combined Report on Review of FinancialStatements and Supplementary Information.
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DALTON COLLEGE CHANGES IN INVESTMENT IN PLANT
YEAR ENDED JUNE 30, 1997

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

BALANCE JULY 1,1996

CURRENT FUNDS UNRESTRICTED RESTRICTED

$

72,465,30

$

0,00

11,779,676,92

1,585,615,20

4,242,565.52 $

876,600.68

2,720,757,80

125,247.49

$ 20,401,080,74 $ 1,001,848.17 $===:::::::::0::.0=0=

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 28-

SCHEDULE "3"

ADDITIONS
PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

GEORGIA STATE FINANCING AND
INVESTMENT COMMISSION

PRIVATE GIFTS

DEDUCTIONS DISPOSALSI DELETIONSI ADJUSTMENTS

BALANCE JUNE 30, 1997

$

0.00

$

72,465.30

$ 417,111.39

$

409,627.11

$

150.00 12,606,265.42

55,464.82

1,641,080.02

263,396.71

-28,393.64

5,410,956.55

$

250.00

43.31

2,846,211.98

$ 735,972.92 $

0.00 $

409,627.11 $

250.00 $

-28,200.33 $ 22,576,979.27

- 29-

DALTON COLLEGE SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS
JUNE 30,1997

RESIDENT INSTRUCTION

CURRENT FUNDS UNRESTRICTED LOTIERY FOR AUXILIARY EDUCATION ENTERPRISES

STUDENT ACTIVITIES

NET INVESTMENT IN PLANT

Investment in Plant Facilities

RESTRICTED

Designated for SUbsequent Years' Expenditures

UNRESTRICTED

Designated

For Inventory Reserve

$

25,500.00

$ 148,138.37

For Renewals and Replacements Reserve

For Subsequent Years' Expenditures

598,946.80 $

48,488.93

Surplus

Regular

21,304.88

Lottery for Education

- - - - - $-----=0.,0;0~

$

46,804.88 $

0.00 $

747,085.17 $_----:..4:.8r,.4..8:.8:=.9=3_

$

46,804.88 $

= 0.00 $ 747,085.17 $ =====4=80,.4;,;8...8......9..3

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-30-

SCHEDULE"4"

RESTRICTED

PLANT FUNDS

UNEXPENDED

LOTIERY FOR RENEWALS AND

REGULAR

EDUCATION REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 22,576,979.27 $ 22,576,979.27

$ _ _.1.:..,z9.:.1..:.6::..:.8:::5:::..

$ _ _.1.,:9..1z6..:8..5=~

$

498,027.48

$ 173,638.37 498,027.48 647,435.73

$

150.00

- - - - - $---~.=0..00.

$

150.00 $

0.00 $ _ _4..:9..=8.,:;0.=2..7:...:4..8=..

21,454.88 0.00
$ 1,340,556.46

$

1,916.85 $

150.00 $

0.00 $

498,027.48 $ 22,576,979.27 $ 23,919,452.58

- 31 -

DALTON COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30.1997

SCHEDULE "5"

Totals per Annual Supplement
Adjustments Shared Services on Jointly Staffed Personnel University of Georgia Currey, Sue
Totals per Report
DISTRIBUTION BY FUND
CURRENT FUNDS Unrestricted Resident Instruction Regular Special Funding Initiative Auxiliary Enterprises Student Activities Restricted Resident Instruction

SALARIES

TRAVEL

$ 8,174,812.78 $ 129,419.05

-11,933.00 $ 8,162,879.78 $ 129,419.05

$ 6,573,239.99 $ 74,548.00 144,326.07
1,370,765.72

75,300.27 2,241.06 730.19 4,939.77
46,207.76

$ 8,162,879.78 $ 129,419.05

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 32-