Georgia Highlands College, Rome, Georgia, management report for fiscal year ended June 30, 2011

COLLEGE
ROME, GEORGIA
MANAGEMENT REPORT
FOR FISCAL YEAR ENDED
JUNE 30,2011
A Member Institution of the
University System of Georgia
Georgia Department of
Audits and Acconxtts
Russell W.Hinton
State.Auditor

GEORGIA HIGHLANDS COLLEGE - TABLE OF CONTENTS -

SECTION I

FINANCIAL

LETTER OF TRANSMITTAL

SELECTED FINANCIAL INFORMATION

EXHIBITS

A STATEMENT OF NET ASSETS - (GAAP BASIS)

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (GAAP BASIS)

C STATEMENT OF CASH FLOWS - (GAAP BASIS)

D SELECTED FINANCIAL NOTES

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCESHEET-(STATUT0RYBASIS)BUDGETFUND

18

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(STATUTORY BASIS) BUDGET FUND

19

3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET

BY PROGRAM AND FUNDING SOURCE

(STATUTORY BASIS) BUDGET FUND

2 0

4 STATEMENT OF CHANGES TO FUND BALANCE

BY PROGRAM AND FUNDING SOURCE

(STATUTORY BASIS) BUDGET FUND

2 2

5 RECONCILIATION OF SALARIES AND TRAVEL

2 5

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

SECTION I FINANCIAL

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
December 2,2011

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 Randy Pierce, President Georgia Highlands College
Ladies and Gentlemen:
As part of our audits of the basic financial statements of the University System of Georgia presented in the AnnualFinancialReportfor the University System of Georgia, the basic financial statements of the State of Georgia presented in the State o f Georgia ComprehensiveAnnual FinancialReportand the issuance of a State of Georgia SingleAudit Reportpursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2011, we have performed certain audit procedures at Georgia Highlands College. Accordingly, the financial statements and compliance activities of Georgia Highlands College were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of Georgia Highlands College as of and for the year ended June 30, 2011. 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 Georgia Highlands College, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

CPA, CGFM

SELECTED FINANCIAL INFORMATION

GEORGIA HIGHLANDS COLLEGE STATEMENT OF NET ASSETS - (GAAP BASIS)
JUNE 30,2011
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3)
Receivables- Federal FinancialAssistance
Receivables- Other Due from Affiliated Organizations Prepaid Items
Total Current Assets
Noncurrent Assets Investments Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Deferred Revenue (Note 5) Other Liabilities Deposits Held for Other Organizations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Compensated Absences
Total Liabilities
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Unrestricted
Total Net Assets

EXHIBIT " A

GEORGIA HIGHLANDSCOLLEGE
STATEMENT OF REVENUES, EXPENSESAND CHANGES IN NET ASSETS - (GAAP BASIS)
YEAR ENDED JUNE 3 0 . 2 0 1 1
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal Federal Stimulus State Other
Sales and Services Auxiliary Enterprises
Bookstore Parking/Transportation 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 Deoreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATINF REVENUES (EXPENSES)
State Appropriations Grants and Contracts
Federal Gifts Investment Income
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State
Increase (Decrease) in Net Assets
- Net Assets Beginning of Year
Net Assets - End of Year

EXHIBIT "8'

GEORGIA HIGHLANDSCOLLEGE
STATEMENT OF CASH FLOWS - (GAAP BASIS)
YEAR ENDEDJUNE 3 0 . 2 0 1 1
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Auxiliary Enterprise Charges: Bookstore Food Services ParkingITransportation Other Organizations Other Receipts (Payments)
Net Cash Provided (Used) by OperatingActiv~ties
CASH FLOWS FROM NONCAPITAL FINANCINGACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes
Net Cash Flows Provided (Used) by Noncapital F~nancinAgctivities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capttal Grants and Gifts Received Purchases of C a ~ i t aAl ssets
Net Cash Provided (Used) by Capital and Related FinancingAct~vities
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments
Net Increase (Decrease) in Cash
- Cash and Cash Equivalents Beginning of Year
- Cash and Cash Equivalents End of Year
RECONCILIATIONOF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating lncome (Loss) Adjustments t o Reconcile Operating lncome (Loss) to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Prepaid Items Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Change in Fair Value of Investments Recognized as a Component of Interest lncome

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY Georgia Highlands College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia Highlands 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. Georgia Highlands College does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Highlands College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Re~ortingStandards.
NET ASSETS The College's net assets are classified as follows:
Invested in capital asse&, net of related debt: This represents the College's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restridednetassets - non~pendable;Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The College may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the College is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Unrestrictednet assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $5,668.68. 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.

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011

EXHIBIT "DM

NOTE 2: DEPOSITS AND INVESTMENTS

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

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

2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.

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

4.

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

State of Georgia.

5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National MortgageAssociation.

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

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

At June 30, 2011, the carrying value of deposits was $3,031,100 and the bank balance was $4,149,805. Of the College's deposits, $3,899,805 were uninsured. Of these uninsured deposits, $3,899,805 were collateralized with securities held by the financial institution, by its trust department or agency but not in the College's name.

l NVESTMENTS At June 30, 2011, the carrying value of the College's investment was $31,245, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents investment pool as follows:

Investment Pools Board of Regents Balanced Income Fund

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011

EXHIBrr "D"

NOTE 2: DEPOSITS AND INVESTMENTS

l NVESTMENTS The Board of Regents lnvestment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents lnvestment Pool is voluntary.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2011.

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal Financial Assistance

Georgia State Financingand Investment Commission

Due from Affiliated Organizations

Other

618,440 33,185
313,802 291,873
1,648 422,699

Less Allowance for Doubtful Accounts Net Accounts Receivable

$

1,681,647

137,912

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011

EXHIBlT "D"

NOTE 4: CAPITAL ASSETS

Following are the changes in the College's capital assets for the year ended June 30, 2011:

Beginning Balance July 1,2010

Additions

Reducrions

Ending Balance June 30,2011

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

$ 3,069,490 829,656 $

434560 $

$
1,058,806

3,069,490 202,410

Total Capital Assets, Not Being Depreciated $ 3,899,146$

434560 $

1,058,806 $

3,272900

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

$ 1,739,103 43,494,922 $ 1,149,942 3.009.929 3,169,950

1,058,806
506,043 $ 202,593

$
174,076 495,El

1,739,103 44.553.728
1,149,942 3.344896 2,877,392

Total Assets Being Depreciated

$ 52,563,846$

1,767,442$

669,227 $

53,662,061

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

$ l,l!30,056 $ 10,471,739 864,313
L 840,135
2,261,650

33,395 850,688
25,522 259,651 $ 157,954

$
182,613 495,151

1,223,451 11,322,427
889,835 l,917,173 1,924,453

Total Accumulated Depreciation

$ 16,627,893 $

1,327,210$

677.764 $

17,277,339

Total Capital Assets, Being Depreciated, Net $ 35,935,953$

440,232 $

-8,537 $

36,384,722

Capital Assets, Net
NOTE 5: DEFERRED REVENUE

Deferred revenue consisted of the following at June 30, 2011.
Prepaid Tuition and Fees Other Deferred Revenue
Total Deferred Revenue

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011

EXHIBIT "D"

NOTE 6: LONG-TERM LIABILITIES

The College's Long-Term liability activity for the year ended June 30, 2 0 1 1was as follows:

Beginning Balance July 1.2010

Additions

Reductions

Ending Balance June 30,2011

Current Portion

Other Liabilities
Compensated Absences 5

- 745,969 $

528,035 $

496,470 5

777,534 5

362,762

NOTE 7: NET ASSETS

Changes in Net Asset activity for the year ended June 30,2011 are as follows:

Beginning Balance July 1,2010

Additions

Reductions

Invested in Capital Assets Net of Related Debt

Restricted Net Assets

60,890

10,613,650

10,609,723

Unrestricted Net Assets

Total Net Assets

Ending Balance June 30,2011
64,817

NOTE 8: LEASE OBLIGATIONS
Georgia Highlands College is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment.
OPERATING LEASES Georgia Highlands College's cancellable 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.
FUTURE COMMITMENTS Future commitments for non-cancellable operating leases having remaining terms in excess of one year as of June 30,2011, were as follows:

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2011

NOTE 8: LEASE OBLIGATIONS

Real Property and
Equipment Operating
Leases

Year EndingJune 30: 2012

NOTE 9: RETIREMENT PLANS

Georgia Highlands College participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that Georgia Highlands College participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law.

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

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2011

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS

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 1 0 years of creditable service and attainment of age 6 0 or 3 0 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.

Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 2 4 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1,2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

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

Employer contributions required for fiscal year 2 0 1 1 were based on the June 30, 2008 actuarial valuation for the old and new plans and were set by the Board of Trustees on September 18, 2008 for GSEPS as follows:

Old Plan* New Plan GSEPS

10.41% 10.41% 6.54%

* 5.66% exclusive of contributions paid by the employer on behalf of old plan members

Members become vested after 1 0 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.

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2011

EXHIBIT "D"

NOTE 9: RETIREMENT PLANS
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 3 0 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service.
Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 4 0 years. Early retirement benefits are reduced by the lesser of onetwelfth 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 3 0 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 lumpsum 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 1 0 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, 2 0 1 1 were 5.53% of annual salary. Employer contributions required for fiscal year 2 0 1 1 were 10.28% of annual salary as required by the June 30, 2009 actuarial valuation.

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011

NOTE 9: RETIREMENT PLANS

Teachers Retirement System of Georgia

The following table summarizes the Georgia Highlands College contributions by defined benefit plan for the years ending June 30,2011, June 30,2010, and June 30,2009:

Fiscal Year

ERS

Required

Percentage

Contribution

Contributed

TRS

Required

Percentage

Contribution

Contributed

Regents Retirement Plan
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 Georgia Highlands College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2011, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 5%of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
Georgia Highlands College and the covered employees made the required contributions of $367,224 (9.24%) and $198,715 (5%), respectively.
AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices.
Georgia Defined Contribution Plan
Plan Description Georgia Highlands 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.

GEORGIA HIGHLANDS COLLEGE SELECED FINANCIAL NOTES
JUNE 30, 2011

EXHIBIT " 0

NOTE 9: RETIREMENT PLANS
Georgia Defined Contribution Plan
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500 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 2 0 1 1 amounted to $69,880 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: 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 UniversitySystem of Georgia define and delineate who is 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. 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 College pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2009 and 2 0 1 1 plan years, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%.

GEORGIA HIGHLANDS COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2011

EXHIBIT "D"

NOTE 10: POST-EMPLOYMENTBENEFITS OTHER THAN PENSION BENEFITS
As of June 30, 2011, there were 104 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2011, Georgia Highlands College recognized as incurred $480,153 of expenditures, which was net of $124,703 of participant contributions.
NOTE 11: AFFILIATED ORGANIZATIONS
The Georgia Highlands College Foundation, Inc., is a legally separate, tax exempt organization whose activities primarily support Georgia Highlands College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organizations are mmponent Units. Therefore, the financial statements of this affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Georgia Highlands College.

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SUPPLEMENTARY INFORMATION

GEORGIA HIGHLANDS COLLEGE BALANCE SHEET (STATUTORY BASIS)
BUDGET FUND JUNE 30,2011
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Deferred Revenue 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"

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 comprehensive basis of accounting other than generally accepted accounting principles.
-18-

GEORGIA HIGHLANDS COLLEGE SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS)
BUDGET FUND YEAR ENDED JUNE 30,2011

REVENUES State Appropriation State General Funds Other Funds Total Revenues
ADJUSTMENTS AND PROGRAM TRANSFERS CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance Total FundsAva~lable
EXPENDITURES

BUDGET

Excess of Funds Available over Expenditures
FUND BALANCF JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expend~tures Prlor Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned
to Board of Regents- Un~versitySystem Office Year EndedJune 30.2010
Early Return of Surplus in Current Fiscal Year Prior Year Reserved Fund Balance Included in Funds Available
FUND BAUNCE JUNE 3Q

SUMMARY OF FUND BALANCE
Reserved Depanment Sales and Serv~ces Indirect Cost Recoveries Technology Fees Restncted/Sponsored Funds Uncollectible Accounts Recetvable Tuit~onCarry-Over
Total Reserved
Unreserved Surplus

Total Fund Balance

Statutory Basis financial ~nformaUonwas prepared on a prescribed basis of accountlng that demonstrates compl~ancewith budgetary statutes and regulations of the State of Georgia. which is a comprehensive basis of accountlng other than generally accepted accounting principles.

ACTUAL

SCHEDULE "2"
VARIANCE FAVORABLE (UNFAVORABLE)

GEORGIA HIGHLANDS COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDEDJUNE 30.2011

TeaCll~ng State Appropriation State General Funds Federal Funds American Recoveryand RelnvestmentAct Federal Stablllzat~onFunds Other Funds

Original Appropr~auon

Amended Appropriation

F~nal Budget

Current Year Revenues

Total OperatingActlvity

Statutory Basis financial ~nformationwas prepared on a prescribed basis of accounting that demonstrates compliance w ~ t hbudgetarystatutes and regulabonsof the State of Georgia, wh~chis a comprehensivebasis of accounting other than generallyaccepted accounting principles.

SCHEDULE "3"

Funds Available Compared to Budget

Pr~oYr ear

Adjustments and

Total

Carry-Over

Program Transfers

Funds Available

Variance Positive (Negative)

Expenditures Compared to Budget Variance

Actual

Pos~tive(Negat~ve)

Excess (Deficiency) of Funds Available
Over/(Under) Expenditures

GEORGIA HIGHLANDS COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30,2011

Teaching State Appropriation State General Funds Federal Funds Amertcan Recovery and Reinvestment Act Federal Stablliratlon Funds Other Funds
Total Teaching
Prior Year R e s e ~ e S Not Available for Expenditure UncollectlbleAccounts Receivable

Beginning Fund Balance/(Defic~t)
July 1

Fund Balance Carrled Over from
Prior Period as FundsAvailable

Return of Fiscal Year 2010
Surplus

Prior Period Adjustments

Budget Unit Totals

Statutory Basls financial information was prepared on a prescribed basis of accounting that demonstrates compl~ancewith budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

SCHEDULE "4'

Other Adjustments

Early Return F~scaYl ear 2011
Surplus

Excess (Deficiency) of Funds Ava~lable
Over/(Under) Expend~tures

Ending Fund Balance/(Deficit)
June 30

Analysisof Ending Fund Balance

Reserved

Surplus/(Deficit)

Total

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

$

124,093.81

276.01

67,731.41

34,580.22

130.059.55

286.654.78

$

$

643.395.78 $

$
5.668.68 5.668.68 $

124.093.81 276.01
67.731.41 34.580.22 130.059.55 286,654.78
5.668.68
649,064.46

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GEORGIA HIGHLANDS COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDEDJUNE 3 0 , 2 0 1 1

SCHEDULE "5"

Totals per Annual Supplement

Accruals June 30.2011 June 30,2010

Prepaids June 30,2011 June 30.2010

Compensated Absences June 30,2011 June 30,2010

Adjustments

Shared Services on Jointly Staffed Personnel

Dalton State College

Blackwell,

Natalie

Georgia Institute of Technology

Decker,

Adam

Georgia Perimeter College

Clark.

Merry

Kennesaw State University

Brown,

Cheryl

Kasiner,

Keridan

Miles,

Nicoly

Shaw,

Alan

Tubre,

Jennifer

Wilson,

Mal~

University of West Georgia

Sorrells,

Darrell

Unidentified Variance/Rounding

SALARIES $ 15,887,038.83 $

TRAVEL 136.367.99

SECTION II FINDINGS, QUESTIONEDCOSTS AND OTHER ITEMS

GEORGIA HIGHLANDS COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30,2011
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND OUESTIONED COSTS No matters were reported. OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) The auditor noted several instances where the Payroll Account bank reconciliations were not performed timely. All bank reconciliation should be completed in a timely manner.