GAINESVILLE STATE 1 COLLEGE GAINESVILLE, GEORGIA MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30,2011 11 : A Member Institution of the University System of Georgia Georgia ~ e ~ a r & e aoft ,",:. ! . -- Russell W.Hinton State A d t o r - -.- - GAlNESVlLLE STATE COLLEGE - TABLE OF CONTENTS - SECTION I FINANCIAL LElTER OF TRANSMITTAL SELECTED FINANCIAL INFORMATION EXH lBlTS 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 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND 4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND 5 RECONCILIATION OF SALARIES AND TRAVEL Page 18 19 20 22 25 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 8 , 2 0 1 1 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 Martha Nesbitt, President Gainesville State College Ladies and Gentlemen: As part of our audits of the basic financial statements of the University System of Georgia presented in the Annual Financial Reporffor the University System of Georgia, the basic financial statements of the State of Georgia presented in the State of Georgia ComprehensiveAnnual Financial Reportand the issuance of a State o f GeorgiaSingleAudt Reportpursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2011, we have performed certain audit procedures at Gainesville State College. Accordingly, the financial statements and compliance activities of Gainesville State College were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996. This Management Report contains information pertinent to the financial and compliance activities of Gainesville State 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 Gainesville State College, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, ~ u d e lWl . Hinton, CPA, CGFM State Auditor SELECTED FINANCIAL lNFORMATION GAlNESVlLLE STATE COLLEGE STATEMENT OF NET ASSETS - (GAAP BASIS) JUNE 30,2011 ASSETS Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net (Note 3) Receivables- Federal FinancialAssistance Receivables -Other Inventories Prepaid Items Total Current Assets Noncurrent Assets Capital Assets, Net (Note 4) Total Assets LIABILITIES Current Liabilities Accounts Payable Salaries Payable Deferred Revenue (Note 5) Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences Total Current Liabilities Noncurrent Liabil~ties Lease Purchase Obligations Comoensated Absences Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for: Expendable Unrestricted Total Net Assets EXHIBIT "A" GAlNESVlLLE STATE COLLEGE STATEMENTOF REVENUES, EXPENSESAND CHANGES IN NET ASSETS - (GMP BASIS) YEAR ENDED JUNE 30,2011 OPERATING REVENUES Student Tuition and Fees Less: Scholarship Allowances Grants and Contracts Federal Sales and Services Rents and Royalties Auxiliary Enterprises Bookstore Food Services Parking/Transportation Other Organizations Other Operating Revenues Total OperatingRevenues OPERATING EXPENSES Salaries Faculty Staff Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services De~reciation Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal Federal Stimulus State Other Gifts Investment lncome Interest Expense Net NonoperatingRevenues 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 "B" (This page left intentionally blank) GAINESVILLE STATE COLLEGE STATEMENT OF CASH FLOWS - (GAAP BASIS) YEAR ENDED JUNE 30,2011 CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarsh~psand Fellowships Auxlllary Enterprise Charges: Bookstore Food Services Parking/Transponation Other Organizations Other Receipts (Payments) Net Cash Provided (Used) by Operating Act~vities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriattons Agency Funds Transactions Gifts and Grants Receivedfor Other than Capital Purposes Net Cash Flows Provtded (Used)by Noncapital Financing Act~vit~es CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Purchases of Capital Assets Principal Paid on Capital Debt and Leases lnterest Paid on Capital Debt and Leases Net Cash Provided (Used)by Capital and Related FlnanctngActivities CASH FLOWS FROM INVESTING ACTIVITIES lnterest on Investments Purchase of Investments Net Cash Provided (Used) by InvestingActivities 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 Income (Loss) Adjustments to Reconcile Operating Income (Loss)to Net Cash Provided (Used) by Operating Activittes Deprectatton Change i n Assets and Liabilities: Accounts Receivable. Net Inventories Prepaid Items Accounts Payable Deferred Revenue Other Liabilities compensated Absences Net Cash Provlded (Used) by Operating Activittes NONCASH ACTIVITY Change In Accrued lnterest PayableAffect~nglnterest Paid GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Gainesville State College is one of thirty-five (35) State supported member institutions of higher education in Georgia which comprise the UniversitySystem of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Gainesville State College as a separate reporting entity. The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Gainesville State College does not have authority to retain unexpendedState appropriations (surplus) for any given fiscal year. Accordingly, Gainesville State College is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards. NET ASSETS The College's net assets are classified as follows: Invested in capital assets, 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. ResCricted 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. Unrestricted net 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 Gainesville State 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 $38,732.79. 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. NOTE 2: DEPOSITS DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the Gainesville State 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: GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2011 EXHIBIT "D" NOTE 2: DEPOSITS DEPOSITS 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 UniversitySystem of Georgia. At June 30, 2011, the carrying value of deposits was $11,269,390 and the bank balance was $11,794,947. Of the College's deposits, $10,944,947 were uninsured. Of these uninsured deposits, $539,130 were collateralized with securities held by the financial institution's trust department or agent in the College's name, $10,405,817 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the College's name. NOTE 3: ACCOUNTS RECEIVABLE Accounts receivable consisted of the following at June 30, 2011. Student Tuition and Fees Auxiliary Enterprises and Other OperatingActivities Federal, State and Private Funds Georgia State Financingand Investment Commission Other $ 563,482 80,344 229,418 1,887,262 Less Allowance for Doubtful Accounts Net Accounts Receivable $ 2,889,885 GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2011 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 Reductions Ending Balance June 30,2011 Capital Assets, Not Being Depreciated: Land $ 1,622,731 $ 0 $ 0 $ 1.622.731 Construction Work-In-Progress 596.508 596,508 Total Capital Assets, Not Being Depreciated $ 2,219,239 $ 0 $ 0 $ 2,219,239 Capital Assets, Being Depreciated: Infrastructure Buildingand Building Improvements Facilities and Other lmprovements Equipment Capital Leases Library Collections $ 1,049,233 40,014,149 $ 1049,233 40,014.149 Total Assets Being Depreciated $ 6L349,280 $ 689,531 $ 105,796 $ 61,933,015 Less: Accumulated Depreciation: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections $ 102,746 $ 209,118 14,424,560 1283,415 1,230,104 87.595 $ 1,922,522 285,770 598,444 403,522 l,883,973 81,386 $ 11,132 6,634 88,031 311864 15,707,975 1,306,567 2,201658 1,001966 1,877,328 Total Accumulated Depreciation $ 20,162,349$ 2,350,806$ 105.797 $ 22,407,358 Total Capital Assets, Being Depreciated, Net $ 41186,931 $ -1661,275$ 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 -1 $ 39,525,657 GAINESVILLE STATE 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 l, 2010 Additions Reductions Ending Balance June 30,2011 Current Portion Leases Lease Obligations $ 12,611,095$ 296,818 $ 357,609 $ 12,550,304$ 373,457 Other Liabilities Compensated Absences 991,880 781630 674,375 1099,135 628,221 Total Long-Term Obligations $ 13,602,975$ L078,448 $ 1031,984 $ 13,649,439$ 1,00L678 NOTE 7: NET ASSETS Changes in Net Asset activity for the year ended June 30, 2 0 1 1 are as follows: Beginning Balance July 1, 2010 Additions Reductions Ending Balance June 30,2011 Invested in Capital Assets Net of Related Debt Restricted Net Assets 0 15,022,641 15,023,835 -1194 Unrestricted Net Assets Total Net Assets NOTE 8: LEASE OBLIGATIONS Gainesville State College is obligated under various capital leases and installment purchase agreements for the acquisition of real property and equipment. CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to semi-annually and have terms expiring in 2012 and 2040. Expenses for fiscal year 2 0 1 1 were $977,884 of which $620,275 represented interest. Total principal paid on capital leases was $357,609 for the fiscal year ended June 30, 2011. Interest rates are 3.995 percent and 5.952 percent. GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2011 EXHIBIT "D" NOTE 8: LEASE OBLIGATIONS FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30,2011, were as follows: Capital Leases Year EndingJune 30: Ti012 $ 2013 2014 2015 2016 2017 - 2021 2022 - 2026 2027 - 2031 2032 - 2036 2037 - 2040 Total Minimum Lease Payments $ 22,681,459 Less: Interest Less: Executory Costs (if paid) 8,850,057 1,281,098 Principal Outstanding NOTE 9: RETIREMENT PLANS Gainesville State College participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that Gainesville State College participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law. 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 GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2011 EXHIBIT " D NOTE 9: RETIREMENT PLANS Employees' Retirement System of Georgia 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 4 1 5 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of the SRBP-ERS is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1,1998, all members and retired former members in ERS are eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 415. The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1,1982, is an "old plan" member subject to the plan provisions in effect prior to July 1,1982. Members hired on or after July 1,1982 but prior to January 1,2009 are "new plan" members subject to the modified plan provisions. Effective January 1,2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to change their membership to the GSEPS plan. Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 1 0 years of creditable service and attainment of age 60 or 3 0 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 2 5 years of creditable service for members under age 60. Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 24 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' benefits provided the members were hired prior to July 1,2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. Member contribution rates are set by law. Member contributions under the old plan are 4%of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, Gainesville State College pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Gainesville State College contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. Gainesville State College is required to GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011 EXHIBIT "D" NOTE 9: RETIREMENT PLANS Employees' Retirement System of Georgia 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 Gainesville State 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 10 years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions; the member forfeits all rights to retirement benefits. Teachers Retirement System of Georgia The Teachers Retirement System of Georgia (TRS) is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1,1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 3 0 years of creditable service, regardless of age, or after 1 0 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 one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 3 0 years of service. It is also assumed that certain cost-of-living GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30, 2011 EXHIBIT "D" NOTE 9: RETIREMENT PLANS Teachers RetirementSystem of Georgia 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 1 0 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. The following table summarizes the Gainesville State College contributions by defined benefit plan for the years ending June 30,2011, June 30, 2010, and June 30, 2009 (dollars in thousands): 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 Gainesville State College makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 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. GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011 EXHIBIT "DM NOTE 9: RETIREMENT PLANS Regents Retirement Plan Funding Policy Gainesville State College and the covered employees made the required contributions of $570,751 (9.24%) and $308,848 (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 Gainesville State College participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia. Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute. Contributions Member contributions are seven and one-half percent (7.5%)of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. Total contributions made by employees during fiscal year 2 0 1 1 amounted to $133,749 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-EMPLOYMENTBENEFITS 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 GAINESVILLE STATE COLLEGE SELECTED FINANCIAL NOTES JUNE 30,2011 NOTE 10: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. 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%. As of June 30, 2011, there were 116 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, Gainesville State College recognized as incurred $490,085 of expenditures, which was net of $193,884 of participant contributions. NOTE 11: AFFILIATED ORGANIZATIONS The Gainesville State College Foundation, Inc., and the Gainesville State College Real Estate Foundation are legally separate, tax exempt organizations whose activities primarily support Gainesville Sate College. These affiliated organizations are considered potential component units of the State of Georgia in accordance with GAS0 Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of these affiliated organizations are not included in these financial statements. Copies of the financial statements for the affiliated organizations may be obtained from Gainesville State College. (This page left intentionally blank) SUPPLEMENTARY INFORMATION GAlNESVlLLE STATE COLLEGE BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30,2011 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Federal Financial Assistance Other Prepaid Expenditures Total Assets LIABILITIES AND FUND EOUITY Liabilities Accrued Payroll Encumbrance Payable Accounts Payable Deferred Revenue Funds Held for Others Total Liabilities Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Tuition Carry-Over Uncollectible Accounts Receivable 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- GAINESVILLE STATE 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-OVERFROM P R W Y P R S Transfers from Reserved Fund Balance Total Funds Available EXPENDITURES BUDGET Excess of Funds Available over Exoenditures FUND BALANCE JULY 1 Reserved Unreserved ADJUSTMENTS Unreserved Fund Balance (Surplus) Returned to Board of Regents - University System Office Year Ended June 30,2010 Early Return of Surplus in Current Fiscal Year Prtor Year Reserved Fund Balance Included in Funds Available FUN0 BALANCF JUNE 3Q SUMMARY OF FUND BALANCE Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Tultlon Carfy-Over Uncollectible Accounts Receivable Total Reserved Unrese~ed Surplus Total Fund Balance Statutory Basis financial information was prepared on a prescribed basts of accountingthat demonstrates compliance with budgetaly statutes and regulations of the State of Geor-gia. which is a comprehensive basis of accounting other than generally accepted accounting principles. ACTUAL SCHEDULE "2" VARIANCE - FAVORABLE (UNFAVORABLE) GAINESVILLE STATE COLLEGE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND YEAR ENDEDJUNE 30.2011 Teaching State Appropriation State General Funds Federal Funds American Recovery and Reinvestment Act Federal Stabil~zationFunds Other Funds Total Teaching Original Appropriation Amended Appropriation Final Budget Current Year Revenues Statutory Basis financial ~nformationwas prepared on a prescribed basis of accounting that demonstrates compliance with budgetarystatutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generallyaccepted accounting principles. - 20 SCHEDULE '3" Funds Available Compared to Budget Prior Year Adjustments and Total CarlyOver Program Transfers Funds Available Variance Positive (Negative) Expenditures Compared to Budget Variance Actual Postnve (Negative) Excess (Deficiency) of Funds Available Over/(Under) Expenditures GAlNESViLLE STATE COLLEGE STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORYBASIS)BUDGET FUND YEAR ENDEDJUNE 30,2011 Teachtng State Approprtatlon State General Funds Federal Funds American Recovery and Reinvestment Act Federal Stabilization Funds Other Funds Begtnnlng Fund Balance/(Deficit) July 1 Fund Balance Carrted Over from Prlor Perlod as Funds Available Return of FlscalYear 2010 Surplus Prior Period Adjustments Prior Year Reserves Not Available for Expenditure Uncollecttble Accounts Receivables Budget Unit Totals Statutoiy Basls financtal information was preparedon a prescribed basis of accountingthat demonstrates compliancewith budgetary statutes and regulationsof the State of Georgla. which is a comprehensive basis of accountingother man generally accepted accounting principles. SCHEDULE -4' Other Adjustments Early Return FiscalYear 2011 Surplus Excess (Deficiency) of Funds Available Over/(Under) Exoenditures Ending Fund Balance/(Def~c~t) June 30 Analysis of EndingFund Balance Resewed Surplus/(Def~c~t) Total SUmmaVOf Ending Fund Balance Reserved DepartmentSales and Sewlces indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Tuit~onCarry-Over UncollectibleAccounts Receivable UnreSeNed Surplus Total Endlng Fund Balance - June 30 (This page left intentionally blank) GAINESVILLE STATE COLLEGE RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDEDJUNE 30,2011 SCHEDULE "5" Totals per Annual Supplement Accruals June 30.2011 June 30,2010 Prepaid June 30,2011 June 30,2010 Compensated Absences June 30,2011 June 30,2010 Adjustments Shared Services on Jointly Staffed Personnel Georgia State University Vines, Anthony Clark Universityof Georgia Durham, Kat~e Hagood, Samantha Hight, Katie Jimenez, Elizabeth SALARIES $ 25,017,795.80 $ TRAVEL 290,959.27 SECTION II FINDINGS, QUESTIONEDCOSTS AND OTHER ITEMS GAIN ESVILLE STATE COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 3 0 . 2 0 1 1 FINANCIAL STATEMENT FINDINGS AND OUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND OUESTIONED COSTS No matters were reported. OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) During fiscal year 2010 the Georgia State Financing and Investment Commission (GSFIC) project J145 was changed from being a campus managed project to a GSFIC managed project. Gainesville State College was instructed by the Board of Regents central office to remove all activity associated with this project. This decision was made after the fiscal year 2010 general ledger was closed so post-closing entries were required on the fiscal year 2010 Annual Financial Report (AFR). The College actually removed this activity on the fiscal year 2 0 1 1 general ledgers and was reported as negative Capital Gifts on the Statement of Revenues, Expenses and Changes in Net Assets within the fiscal year 2 0 1 1 AFR presented for review. The 2 0 1 1 AFR should have been manually adjusted because the activity had previously been removed on the 2010 AFR. Adjustments to the 2 0 1 1 AFR were proposed and accepted to correct the presentation.