Review report, state of Georgia, Gainesville College, Gainesville, Georgia, year ended June 30, 1998

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REVIEW REPORT STATE OF GEORGIA GAINESVILLE COLLEGE GAINESVILLE, GEORGIA YEAR ENDED JUNE 30, 1998

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

GAINESVILLE COLLEGE - TABLE OF CONTENTS -

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

EXHIBITS

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

7

D NOTES TO THE FINANCIAL STATEMENTS

8

SUPPLEMENTARY INFORMATION

E COMBINING BALANCE SHEET

CURRENT FUNDS - UNRESTRICTED

20

F COMBINING STATEMENT OF CHANGES IN FUND BALANCES

CURRENT FUNDS - 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
August 24, 1998

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 Martha T. Nesbitt, President Gainesville College
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through D) of Gainesville College as of and for the year ended June 30, 1998, 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 Gainesville 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.
As disclosed in Note 1 to the financial 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
98ARL-67

be decreased by $431,619.14 as of June 30, 1998, and the net change in fund balance for the year ended June 30, 1998, would be decreased by $21,318.55. Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be madeto 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 financial 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:ds 98ARL-67
'Z ..

FINANCIAL STATEMENTS - 1-

GAINESVILLE COLLEGE COMBINED BALANCE SHEET
ALL FUND GROUPS JUNE 30, 1998

ASSETS
Cash and Cash Equivalents Accounts Receivable Inventories Due from Other Fund Groups Investment in Plant
"'.!,
Total Assets
LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Deferred Revenue Tuition and Fees Deposits Held in Custody for Others Due to Other Fund Groups
Total Liabilities
Fund Balances Endowment Net Investment in Plant Restricted Unrestricted
Total Fund Balances
Total Liabilities and Fund Balances

CURRENT FUNDS UNRESTRICTED RESTRICTED

ENDOWMENT FUNDS

$

910,294.97

$

10,722.50

120,508.32 $

26,209.93

62,246.35

15,510.81

$

1,108,560.45 $

26,209.93 $

10,722.50

$

325,330.09

398,237.20

$

15,510.81

$

723,567.29 $

15,510.81

$

10,722.50

$

10,699.12

$

384,993.16

$

384,993.16 $

10,699.12 $

10,722.50

$

1,108,560.45 $

26,209.93 $ ==1..0...,7.=2=2..5.0. ,=

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"

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

AGENCY FUNDS

TOTAL (Memorandum
Only)

$

358,905.00 $

578,939.99

$ 199,364.90 $ 2,058,227.36

16,219.20

162,937.45

62,246.35

15,510.81

_ _ _ _ _ _ $ 21,167,144.26

21,167,144.26

$

358,905.00 $

578,939.99 $ 21,167,144.26 $ 215,584.10 $ 23,466,066.23

$

358,905.00

$

358,905.00

$ $

$

58,803.81 $

743,038.90

156,780.29

398,237.20 156,780.29
15,510.81

$ 215,584.10 $ 1,313,567.20

$ 21,167,144.26
578,939.99
578,939.99 $ 21,167,144.26

$

10,722.50

21,167,144.26

10,699.12

963,933.15

$ 22,152,499.03

$

358,905.00 $

578,939.99 $ 21,167,144.26 $ 215,584.10 $ 23,466,066.23

-3-

GAINESVILLE COLLEGE COMBINED STATEMENT OF CHANGES IN FUND BALANCES
ALL FUND GROUPS YEAR ENDED JUNE 30,1998

REVENUES AND OTHER ADDITIONS

Unrestricted Current Fund Revenues

State Appropriations

Regular

Federal Grants and Contracts

State Grants and Contracts

Local Grants and Contracts

""

Private Gifts, Grants, and Contracts Investment Income

Endowment

Other

Adjustments

Prior Years' Expenditures/Accounts Payable

Prior Years' Checks Voided

Expended for Plant Facilities

Current Funds

Plant Funds

Unexpended

Renewals and Replacements

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
Disposals/Deletions/Adjustments

Total Expenditures and Other Deductions

TRANSFERS BETWEEN FUNDS

Nonmandatory Renewals and Replacements Capital Projects

Total Transfers Between Funds

Net Increase/(Decrease) for the Year

FUND BALANCES JULY 1, 1997

CURRENT FUNDS UNRESTRICTED RESTRICTED

ENDOWMENT FUNDS

$ 13,661,213.38

$ 1,063,898.70 1,098,900.87 66,266.01

531.20 $

0.00

10,100.93 600.84

$ 13,671,915.15 $ 2,229,596.78 $

0.00

$ 13,331,776.03 $ 2,216,697.73 $

0.00

171,323.66

8,099.27

18,008.67 1,162.66

$ 13,522,271.02 $ 2,224,797.00 $

0.00

$

-54,263.57

-329,633.26

$

-383,896.83

$

-234,252.70 $

619,245.86

4,799.78 $ 5,899.34

0.00 10,722.50

FUND BALANCES JUNE 30,1998

$

384,993.16 $

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-

10,699.12 $

10,722.50

EXHIBIT "B"

UNEXPENDED

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL (Memorandum
Only)

$

$

413,500.00

39,789.25

$

453,289.25 $

0.00

$ 13,661,213.38

413,500.00

1,063,898.70

1,098,900.87

66,266.01

$

3,870.00

3,870.00

531.20 39,789.25

10,100.93 600.84

602,066.88

602,066.88

782,922.51 6,948.00

782,922.51 6,948.00

0.00 $ 1,395,807.39 $ 17,750,608.57

$ 15,548,473.76
171,323.66 8,099.27

$

782,922.51 $

$

782,922.51 $

6,948.00
$
6,948.00 $

18,008.67

1,162.66

242,438.21

789,870.51 242,438.21

242,438.21 $ 16,779,376.74

"-

$

$

329,633.26

$

329,633.26 $

$

0.00 $

0.00

54,263.57

$

0.00

0.00

54,263.57

$

0.00

47,315.57 $ 1,153,369.18 $

971,231.83

531,624.42

20,013,775.08

21,181,267.20

$

0.00 $

578,939.99 $ 21,167,144.26 $ 22,152,499.03

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THIS PAGE LEFT BLAHK

GAINESVILLE COLLEGE STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES YEAR ENDED JUNE 30,1998

EXHIBIT"C"

Net Increase/(Decrease) in Fund Balances

$

-234,252.70 $

4,799,78 $ ==-..2.2.:=9=,4=5:=2,:::::92=

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. -7-

GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY Gainesville 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 Gainesville 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. Gainesville College does not have authority to retain

unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Gainesville College is

considered an organizational unit ofthe Board ofRegents ofthe University System of Georgia reporting entity

for financial reporting purposes because ofthe significance ofits legal, operational, and financial relationships

with the Board of Regents as defined in Section 2100 of the 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 of the 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 financial statements, funds that have similar characteristics have been combined into fund groups. Accordingly, all financial 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 fmancial statements are as 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.

-8-

GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
ENDOWMENT FUNDS
The fund used to account for endowment funds. Endowment funds are subject to the restrictions of gift instruments requiring that the principal be invested in perpetuity and income only be utilized.
PLANT FUNDS
UNEXPENDED - The fund used to account for financial 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 financial 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 of accounting is defmed as that method of accounting 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 finance 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 fmancial 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.

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GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING 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$431,619.14 and a related net current year expenditure of$21,318.55 have not been reported in the current funds as required by generally accepted accounting principles.
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 financial statements.
To the extent that Current Funds and Plant Funds are used to finance 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 ofthe University System of Georgia. The appropriated budget is adopted at the departmental level and represents appropriations provided by the Amended Appropriations Act of 19971998. The appropriated budget covers current funds and plant funds, exc.ept 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.
A comparison of anticipated funds available and budgeted expenditures by budget unit object class indicates that the following object classes were overspent by the amounts identified below:

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GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUDGET

Resident Instruction Operating Expenses: Education, General and Departmental Services

$ 82.669.59

Capital Outlay

$ 1.008.51

These overexpenditures of budget constitute a violation of Board of Regents policy, but do not constitute statutory violations of budget authority. Statutory violations of budget authority are reported at the departmental level.

CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits, certificates of deposit and temporary investments in authorized financial institutions.
ACCOUNTS RECEIVABLE
Accounts receivable consist of 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 financial statements.

INVENTORIES Inventories of goods for resale are valued at cost using the first-in, first-out method.

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 financial 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 of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.

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GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (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 developmentautb.orities 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, 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, 1998, 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 fair value) held by the College or by its agent in the College's name.
Category 2 - Amounts collateralized with securities (at fair value) held by the pledging financial institution's trust department or agent in the College's name.
Category 3 - Amounts collateralized with securities (at fair value) held by the pledging financial institution, or by its trust department or agent but not in the College's name, and amounts uncollateralized.
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GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS

CATEGORIZATION OF DEPOSITS

Cash Deposits

Canying Amount

Bank Balances

$ 205639736 $ 2937.406.22 $

Risk Categories

2

3

51194461 $ 2,017500.00 $ 40796161

NOTE 3: INVESTMENTINPLANT
"
The following is a summary of Investment in Plant fixed assets as of June 30, 1998:

Land Buildings Improvements Other Than Buildings Equipment Library Books and Collections

$ 105,849.29 14,990,798.54 579,190.03 3,853,151.09 1,638,155.31

Total Investment in Plant

$ 21.167,144.26

NOTE 4: RISK MANAGEMENT

Gainesville College is a participant in the Board of Regents of the 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 of Regents ofthe University System of Georgia - Administrative Central Office. All units ofthe University System of Georgia share the risk of loss 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 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.

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GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 4: RISK MANAGEMENT

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 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 of the 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, 1998.

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 was converted effective July 1, 1998.

NOTE 6: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

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

Funding Policy Employees of the College who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 1998, the employer contribution rate was 11.81% for covered employees. In addition, the College

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GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 6: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy contributed 3.91 % to the TRS on behalf of employees electing to participate in the Regents Retirement Plan. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

1998 1997 1996

100% 100% 100%

$ 874,390.18 $ 787,178.71 $ 773,290.58

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia, under which it may purchase annuity contracts for the purpose of providing retirement and death benefits for eligible faculty and principal administrators. 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 Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly of the State of Georgia. The employer contributes 7.75% ofthe participating employee's earnable compensation. Employees contribute 5% oftheir earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.
'(.
The College and the covered employees made the required contributions of $74,655.22 (7.75%) and $48,164.89 (5%), respectively.

GEORGIA DEFINED CONTRIBUTION PLAN

Plan Description Gainesville College participates in the Georgia Defmed 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 ofGeorgia.

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GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 6: RETIREMENT PLANS

GEORGIA DEFINED CONTRIBUTION PLAN

Benefits

A member may retire and dect 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.

Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.

Total contributions made by employees during fiscal year 1998 amounted to $21,786.53 which represents 7.5% 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, except as noted in the subsequent paragraph.

Effective July 1, 1998, certain employees who retire with a minimum of three months of unused sick leave are entitled to additional service credit in the Teachers Retirement System of Georgia.

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.

- 16-

GAINESVILLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1998

EXHIBIT "D"

NOTE 8: CONTINGENCIES

Litigation, claims and assessments filed against Gainesville College(an organizational unit ofthe 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, 1998.

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 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 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.

As of June 30, 1998, there were 61 employees who had retired or were disabled that were receiving these postemployment health and life insurance benefits. For the year ended June 30, 1998, Gainesville College recognized as incurred $129,306.60 ofexpenditures, which was netof$45,570.12 ofparticipant contributions.

NOTE 10: ENROLLMENT

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

Regular Term

Fall Quarter, 1997

2,087

Winter Quarter, 1998 Spring Quarter, 1998

1,952 1,788

""

Average Summer School, 1997

~
---.8.12

- 17 -

THIS PAGE LEn BLANK

SUPPLEMENTARY INFORMATION
"..
- 19-

GAINESVILLE COLLEGE COMBINING BALANCE SHEET CURRENT FUNDS - UNRESTRICTED
JUNE 30,1998

EXHIBIT "E"

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

RESIDENT

LOTTERY FOR

INSTRUCTION EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 599,155,31 $ 87,416.45
15,510.81

0,00 $

231,081,74 $ 27,038,37 62,246,35

80,057.92 $ 6,053.50

910,294,97 120,508.32
62,246.35 15,510.81

Total Assets

$ 702,082.57 $

0.00 $

320,366.46 $ 86,111.42 $ 1,108,560.45

LIABILITIES AND FUND BALANCES
Liabilities Accounts Payable Deferred Revenue Tuition and Fees
Total Liabilities
Fund Balances Unrestricted

$ 314,050.01 $ 372,129.95
$ 686,179.96 $
15,902.61

Total Liabilities and Fund Balances

$ 702,082.57 $

0.00 $ 0.00 $

1,361,75 $ 1,361.75 $

9,918,33 $ 26,107.25 36,025.58 $

325,330.09 398,237.20 723,567.29

319,004.71

50,085.84

384,993.16

0.00 $

320,366.46 $ 86,111.42 $ 1,108,560.45

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

GAINESVILLE COLLEGE COMBINING STATEMENT OF CHANGES IN FUND BALANCES
CURRENT FUNDS - UNRESTRICTED YEAR ENDED JUNE 30 1998

EXHIBIT"F"

REVENUES AND OTHER ADDITIONS
Unrestricted Current Fund Revenues Adjustments
Prior Years' Expenditures/Accounts Payable Prior Years' Checks Voided
Total Revenues and Other Additions
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
Total Expenditures and Other Deductions
TRANSFERS BETWEEN FUNDS
Nonmandatory Renewals and Replacements Capital Projects
Total Transfers Between Funds
Net Increasel(Decrease) for the Year
FUND BALANCES JULY 1. 1997

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 12,898,962.22 $
9,491.96 600.84
$ 12,909,055.02 $

221,566.00 $ 221,566.00 $

325,804.26 $ 325,804.26 $

214,880.90 $ 13,661,213.38

608.97

10,100.93 600.84

215,489.87 $ 13,671,915.15

$ 12,896,370.70 $

221,566.00 $

$ 171,323.66

213,839.33 $ 13,331,776.03 171,323.66

16,461.72 921.00
$ 12,913,753.42 $

1,546.95 223,112.95 $

221.66 171,545.32 $

18,008.67

20.00

1,162.66

213,859.33 $ 13,522,271.02

$

-54,263.57

-329,633.26

$

-54,263.57

-329,633.26

$ -383,896.83

$ -383,896.83

$

-4,698.40 $

-1,546.95 $ -229,637.89 $

1,630.54 $ -234,252.70

20,601.01

1,546.95

548,642.60

48,455.30

619,245.86

FUND BALANCES JUNE 30.1998

$

15,902.61 $

0.00 $

319,004.71 $

50,085.84 $

384,993.16

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
- 21 -

THIS PAGE LEFT BLANK

GAIN'ESVILLE COLLEGE COMBINING STATEMENT OF CURRENT FUNDS REVENUES, EXPENDITURES,
AND OTHER CHANGES UNRESTRICTED
YEAR ENDED JUNE 30,1998

EXHIBIT"G"

REVENUES
State Appropriations Tuition and Fees Federal 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 Other Service Units
Total Expenditures
OTHER TRANSFERS AND ADDITIONS/(DEDUCTIONSl
Transfers for Renewals and Replacements Transfers for Capital Projects 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 Additionsl(Deduclions)

RESIDENT INSTRUCTION

LOTTERY FOR EDUCATION

AUXILIARY ENTERPRISES

STUDENT ACTIVITIES

TOTAL

$ 9,408,236.00 $ 3,013,670.20 8,099.27 70,174.57 51,951.17
346,831,01
$ 12,898,962.22 $

221,566.00
$ 221,566,00 $

$
308,961.32 16,842.94
325,804.26 $

$ 207,877.75
7,003.15

9,629,802.00 3,221,547.95
8,099.27 70,174.57 51,951.17 308,961,32 370,677.10

214,880.90 $ 13,661,213.38

$ 6,396,396,69 $ 97,042,96
1,720,099.21 1,143,394.77 1,942,544.10 1,557,673.97
39,219.00
$ 12,896,370.70 $

20,495.46 170,071.54
10,999.00 20,000.00
$
221,566.00 $

$
69,198.90 92,347.77
9,776.99 171,323.66 $

$ 213,839.33

6,416,892.15 97,042.96
1,890,170.75 1,368,233.10 1,962,544.10 1,557,673.97
39,219.00

69,198,90 92,347.77
9,776.99

213,839.33 $ 13,503,099.69

$

9,171,80

$

-54,263,57

-329,633,26

-221.66 $

$ 588.97

-54,263,57 -329,633.26
9,539.11

-16,461.72 $

$

-7,289,92 $

-1,546.95 -1,546,95 $ -384,118.49 $

-18,008.67

588.97 $

-392,366.39

Net Increasel(Decrease) in Fund Balances

$

-4,698,40 $

-1,546,95 $ -229,637.89 $

1,630.54 $

-234,252.70

'(

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

- 23-

GAINESVILLE COLLEGE SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
RESIDENT INSTRUCTION YEAR ENDED JUNE 30, 1998

REVENUES
State Appropriations Other Revenues Retained

CURRENT FUNDS UNRESTRICTED RESTRICTED

PLANT FUNDS RENEWALS AND
UNEXPENDED REPLACEMENTS

$

9,408,236,00

$ 413,500,00

3,490,726,22 $ 2,216,697,73

39,789,25 $

0:.:,,;:;,;00::.-

$ 12,898,962,22 $ 2,216,697,73 $ 453,289,25 $

...,;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

$ 10,348,209,11 $ 165,831.41

2,447,552,59 100,609,00

2,050,866,32 $

782,922,51 $

$ 12,896,370,70 $ 2,216,697,73 $ 782,922,51 $

6,948,00 ..,;.6:..;.,9_48_,_00_

Excess of Revenues over Expenditures

$

2,591,52 $ ====0,=:00= $ -329,633,26 $ =======-6:!::,9=48=,=:00,=

(1) To eliminate tuition waivers not budgeted and to reclassify current year transfers and prior year fund balances 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 (1 )

TOTAL (Budget Basis)

BUDGET

VARIANCE FAVORABLE (UNFAVORABLE)

$ 9,821,736.00 5,747,213.20 $

$ 9,821,736.00 $ 9,821,736.00 $

297,362.26

6,044,575.46

6,271,308.00

0.00 -226,732.54

$ 15,568,949.20 $

297,362.26 $ 15,866,311.46 $ 16,093,044.00 $ _ _-..;;;.22_6..;;;.,7_32_._54_

$ 10,348,209.11 165,831.41
2,447,552.59 $ 2,050,866.32
789,870.51 100,609.00

$ 10,348,209.11 $ 10,448,402.00 $

165,831.41

184,296.00

-39,219.00

2,408,333.59 2,050,866.32
789,870.51 100,609.00

2,325,664.00 2,245,211.00
788,862.00 100,609.00

100,192.89 18,464.59
-82,669.59 194,344.68
-1,008.51 0.00

$ 15,902,938.94 $

-39,219.00 $ 15,863,719.94 $ 16,093,044.00 $ _ _.::.22;:.:9:.:.:,3.::.24..;..:.:...;06:..,.

$ -333,989.74 $

336,581.26 $ ===2=,5=91=.5=2=

$ =====2:;,;,5=9:::;1.=52=

- 25-

THIS PAGE LEn BLANK

GAINESVILLE COLLEGE SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET
LOTIERY FOR EDUCATION YEAR ENDED JUNE 30,1998

SCHEDULE "2"

REVENUES State Appropriations
EXPENDITURES Equipment, Technology and Construction
Trust Fund Special Funding Initiatives

CURRENT FUNDS UNRESTRICTED

BUDGET

VARIANCE FAVORABLE (UNFAVORABLE)

$

- - - - - - - 221,566.00 $ 221,566.00 $

0.00

$

116,000.00 $ 116,000.00 $

0.00

105,566.00

105,566.00

0.00

Excess of Revenues over Expenditures

$

- - - - - - - 221,566.00 $ 221,566.00 $

0.00

$ ======0..0.0. ,=

$ = = = = = 0....0=0,=

"- ..
See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 27-

GAINESVILLE COLLEGE CHANGES IN INVESTMENT IN PLANT
YEAR ENDED JUNE 30, 1998

Land

BUildings

Improvements Other Than Buildings

Equipment

"),

Library Books and Collections

BALANCE JULY 1,1997

CURRENT FUNDS UNRESTRICTED RESTRICTED

$

105,849,29

14,266,465.28

560,390.03

3,510,084.02 $

534,537.75 $

18,126.00

1,570,986.46

49,403.13

$ 20,013,775.08 $ ======,;;;;58;;;3;:;;,9;.;.40;;,;,.8;;;,;;8~$ ==1=8=:,1.:::26=:.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

$

724,333.26

18,800.00

39,789.25 $

6,948.00 $

PRIVATE GIFTS

DEDUCTIONS DISPOSALS! DELETIONS! ADJUSTMENTS

BALANCE JUNE 30, 1998

$

105,849.29

14,990,798.54

579,190.03

$

256,333.93

3,853,151.09

3,870.00

-13,895.72

1,638,155.31

$

782,922.51 $ ====6=,9=48=.=,=00,= $ ===3=,8=7=0.=00= $

242,438.21 $ 21,167,144.26

- 29-

GAINESVILLE COLLEGE SCHEDULE OF FUND BALANCES CURRENT FUNDS AND PLANT FUNDS
JUNE 3D, 1998

NET INVESTMENT IN PLANT

RESIDENT INSTRUCTION

CURRENT FUNDS

UNRESTRICTED

LOTIERYFOR

AUXILIARY

EDUCATION

ENTERPRISES

STUDENT ACTIVITIES

Investment in Plant Facilities

RESTRICTED

Designated for Subsequent Years' Expenditures

""

UNRESTRICTED

Designated

For Bus Replacement Reserve

For Inventory Reserve

$

62,246.35

For Renewals and Replacements Reserve

For Subsequent Years' Expenditures

256,644.41 $ 50,085.84

For Uncollectible Accounts

$

4,139.29

113.95

Surplus

Regular

11,763.32

Lottery for Education

$

0.00

$

15,902,61 $

0.00 $

319,004.71 $ 50,085.84

$

15,902.61 $

0,00 $

319,004.71 $ ==5=0:.;;,0=85=.84==

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

SCHEDULE "4"

RESTRICTED

UNEXPENDED REGULAR

PLANT FUNDS RENEWALS AND REPLACEMENTS

INVESTMENT IN PLANT

TOTAL

$ 21,167,144.26 $ 21,167,144.26

$ 10,699.12

$ _ _1""'0.:...;;,6..;;.99;;..;.;.;;12;:...

$ $ $ 10,699.12 $

$

20,044.48

558,895.51

$

20,044.48

62,246.35

558,895.51

306,730.25

4,253.24

0.00 0.00 $ _ _....;:;5.;..;78:.i.,;,9:.:;3.~.9.::..;99;..

11,763.32 0.00
$ 963,933.15

0.00 $

578,939.99 $ 21,167,144.26 $ 22,141,776.53

- 31 -

GAINESVILLE COLLEGE RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 1998

SCHEDULE "5"

Totals per Annual Supplement

Adjustments

Shared Services on Jointly Staffed Personnel

Georgia College and State University

Coker,

Richard

Connor, David

Kennesaw State University

Dennison, Wayne

North Georgia College and State University

Marler,

Joan

Schafer, Brad

SALARIES $ 8,386,290.17 $

TRAVEL 119,408.62

-1,281.04 -1,281.04 5,140.31 -2,000.00 -10,000.00
$ 8,376,868.40 $ 119,408.62

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