STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
UNIVERSITY OF GEORGIA ATHENS, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
Russell W. Hinton State Auditor

UNIVERSITY OF GEORGIA - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

3

C STATEMENT OF CASH FLOWS

4

D NOTES TO THE FINANCIAL STATEMENTS

6

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND

30

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(NON-GAAP BASIS) BUDGET FUND

31

3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING

SOURCE COMPARED TO BUDGET

(NON-GAAP BASIS) BUDGET FUND

32

4 RECONCILIATION OF SALARIES AND TRAVEL

37

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

Russell W. Hinton
STATE AUDITOR
(404) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
December 8, 2008

Honorable Sonny Perdue, Governor Members ofthe General Assembly of Georgia Members ofthe Board of Regents of the University System of Georgia
and Honorable Michael F. Adams, President University of Georgia
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying basic financial statements (Exhibits A through D) of the University of Georgia, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2008. These financial statements are the responsibility of the University of Georgia's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As discussed in Note 1, the financial statements ofthe University ofGeorgia are intended to present the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State of Georgia that is attributable to the transactions of the University of Georgia. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows ofthe State of Georgia, in conformity with accounting principles generally accepted in the United States of America.

08ARL-62

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the University of Georgia as of June 30, 2008, and its changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Management's Discussion and Analysis is not a required part ofthe basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthis required supplementary information. However, we did not audit this information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements of the University of Georgia taken as a whole. The accompanying supplementary information (Schedules 1 through 4) is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Respectfully submitted,
l
r3.:~;~nt~~p~~
State Auditor
RWH:as 08ARL-62

REQUIRED SUPPLEMENTARY INFORMATION

UNIVERSITY OF GEORGIA Management's Discussion and Analysis

Introduction

The University of Georgia is one of the 35 institutions of higher education of the University System of Georgia. The University of Georgia was incorporated by an act of the General Assembly on January 27, 1785. Georgia became the first state to charter a state-supported university.

The University of Georgia, a land-grant and sea-grant university with state-wide commitments and responsibilities, is the state's flagship institution of higher education. It is also the state's oldest, most comprehensive, and most diversified institution of higher education. Its motto, "to teach, to serve, and to inquire into the nature of things," reflects the University's integral and unique role in the conservation and enhancement of the state's and nation's intellectual, cultural, and environmental heritage. As a comprehensive land-grant and sea-grant institution, the University of Georgia offers baccalaureate, master's, doctoral and professional degrees in the arts, humanities, social sciences, biological sciences, physical sciences, agricultural and environmental sciences, business, environmental design, family and consumer sciences, forest resources, journalism and mass communication, education, law, pharmacy, social work, and veterinary medicine.

Fiscal Year 2008 Fiscal Year 2007 Fiscal Year 2006

Faculty
1,822 1,848 1,608

Students (Headcount)
33,831 33,959 33,660

Students (FTE)
31,818 31,987 31,492

Overview ofthe Financial Statements and Financial Analysis

The University of Georgia is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Net Assets; and the Statement of Cash Flows. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2008 and fiscal year 2007.

Statement ofNet Assets

The Statement of Net Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement ofNet Assets is to present to the readers of the financial statements a fiscal snapshot of the University of Georgia. The Statement of Net Assets presents end-of-year data concerning Assets (current and noncurrent), Liabilities (current and noncurrent), and Net Assets (assets minus liabilities). The difference between current and noncurrent assets will be discussed in the Notes to the Financial Statements.

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From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into three categories, nonexpendable, expendable, and capital projects. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose ofthe institution.

Statement of Net Assets, Condensed

June 30, 2008

June 30, 2007

Assets Current Assets Capital Assets, Net Other Assets

$ 284,248,689 1' 160,318,033 63,023,779

$ 246,945,794 1' 108,970,295 71.209.162

Total Assets

$1,507,590,501

$1,427.125.251

Liabilities Current Liabilities Noncurrent Liabilities

$ 120,406,694 167.155.107

$ 125,549,947 175.228.038

Total Liabilities

$ 287,561,801

$ 300,777,985

Net Assets Invested in Capital Assets, Net of Debt Restricted- Nonexpendable Restricted - Expendable Restricted- Capital Projects Unrestricted

$1,009,701,095 50,137,516 67,356,275 756,840 92,076,974

$ 947,231,389 47,281,351 63,543,343 863,501 67,427,682

Total Net Assets

$1,220,028,700

$1,126,34 7,266

The total assets of the institution increased by $80,465,250. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $51,347,738 in the category of Capital Assets, Net. The balance of the increase is due to $35,336,327 higher balances in cash and cash equivalents.

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The combination of the increase in total assets of $80,465,250 and the decrease in total liabilities of $13,216,184 yields an increase in total net assets of $93,681,434. The increase in total net assets is primarily in the category of Invested in Capital Assets, Net of Debt, in the amount of $62,469,706.

Statement ofRevenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operating Revenues Operating Expenses

$ 600,026,555 1,110,921.074

$ 571,632,022 1,044,982.474

Operating Loss

$ -510,894,519

$ -473,350,452

Nonoperating Revenues and Expenses

525,466,438

494,708,957

Income (Loss) Before Other Revenues, Expenses, Gains or Losses

$ 14,571,919

$ 21,358,505

Other Revenues, Expenses, Gains or Losses

79.109,515

42,170,577

Increase (Decrease) in Net Assets

$ 93,681,434

$ 63,529,082

Net Assets at Beginning of Year

1, 126,347,266

1,062,818,184

Net Assets at End of Year

$1,22Q,028,1QQ

$1,126,347,266

The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with a $93,681,434 increase to net assets. Some highlights of the information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows:

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Revenue By Source For The Years Ended June 30, 2008 and June 30, 2007

Operating Revenue Tuition and Fees Federal Appropriations Grants and Contracts Sales and Services of Educational Departments Auxiliary Other
Total Operating Revenue
Nonoperating Revenue State Appropriations Grants and Contracts Gifts Investment Income Other
Total Nonoperating Revenue
Capital Grants and Gifts State Other
Total Capital Grants and Gifts
Total Revenues

June 30, 2008

June 30, 2007

$ 203,244,615 15,395,942
201,514,041
47,404,503 129,804,359
2,663,095
$ 600,026,555

$ 188,304,864 12,341,315
201,050,423
43,873,579 123,636,927
2.424,914
$ 571,632,022

$ 471,177,285 17,346,248 34,870,520 6,571,468 7,798,838
$ 537,764,359

$ 437,026,757 16,769,344 35,886,836 13,286,246 2,552,756
$ 505,521,939

$ 43,671,987 35,437,528
$ 79,109,515
$1 12161900A29

$ 40,110,232 2,060,345
$ 42.170,577
$1!119!324!538

- IV -

Expenses (By Functional Classification) For The Years Ended June 30, 2008 and June 30, 2007

June 30, 2008

June 30, 2007

Operating Expenses Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises

$ 230,999,493 286,889,193 153,546,888 104,828,251 32,395,645 67,946,589 98,936,420 14,398,059 120,980,536

$ 216,315,911 275,723,066 144,818,743 103,393,106 30,497,714 57,950,436 91,393,260 11,503,764 113,386,474

Total Operating Expenses

$1,110,921,074

$1,044,982,474

Nonoperating Expenses Interest Expense (Capital Assets)

12,297,921

10,812,982

Total Expenses

$1.123.218.995

$1.055.795.456

Operating revenues increased by $28,394,533 in fiscal 2008, which included $14,939,751 net increase in tuition and fees, $3,530,924 in sales and services, and $6,167,432 in auxiliary revenues. While Federal grants and contracts revenues have decreased, the University experienced a slight increase overall in contracts and grants revenue due to a 16.6% increase in state grants and contracts and a 5.3% increase in private and other grants and contracts revenues.

As a result of modest fee increases and additional participation in services provided by Auxiliary units, the Auxiliary revenue increased overall by $6,167,432 as the result of a $1,351,403 increase in Residence Hall revenues, $925,600 in Food Services revenues, and $1,454,614 in Health Service revenues.

Nonoperating revenues increased by $32,242,420 for the year primarily due to an increase of $34,150,528 in State Appropriations resulting from salary increases provided by the Governor and State Legislature. Capital Gifts and Grants increased from fiscal year 2007 to fiscal year 2008 as a result of capital improvements and additions funded by Georgia State Financing and Investment Commission (GSFIC) and the University of Georgia Athletic Association, Inc. GSFIC project funding increased slightly and the UGA Athletic Association funded the Coliseum Practice Facility which was completed during fiscal 2008.

Total operating expenses increased overall by $65,938,600 that includes a $44,977,909 increase in employee compensation and benefits. Operating expense in the Instruction, Research, and Public Service categories increased by $34,577,854 with $17,089,227 of this increase representing the addition of faculty members and annual merit increases for faculty and staff.

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Statement of Cash Flows

The final statement presented by the University of Georgia is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets.

Cash Flows for the Years Ended June 30, 2008 and June 30, 2007, Condensed

June 30, 2008

June 30, 2007

Cash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities

$ -445,367,663 524,904,812 -76,191,024 24,878,440

$ -396,922,373 498,264,722 -90,257,246 27,431,636

Net Change in Cash Cash, Beginning of Year

$ 28,224,565 185,192,492

$ 38,516,739 146,675,753

Cash, End of Year

$ 213.417.057

$ 185.192.492

Capital Assets

The University had a significant capital asset addition in fiscal year 2008 provided by the University of Georgia Athletic Association, Inc. The new Coliseum Practice Facility was completed and placed into service early in fiscal year 2008. This 120,000 square foot facility will provide substantial expansion of facilities for the men's and women's basketball teams and the women's gymnastics team. The Practice Facility will house separate training areas for each team including two full-length practice courts, coaches' offices, locker rooms, lounges, video assessment rooms and meeting rooms. The history of each sport is commemorated and integrated into the interior design with displays of trophies, archives, graphics and interactive kiosks.

During fiscal year 2008, the University of Georgia also had other significant capital projects that are under construction. The new Lamar Dodd School of Art facility, the Tate Student Center Expansion and integrated parking deck, a new facility for the College of Pharmacy, a new Student Learning Center in Griffin that will enable the expansion of undergraduate degree programs being delivered at that campus, a new dining facility at the Rock Eagle 4-H Center, and the University Health Center Expansion.

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For additional information concerning Capital Assets, see Notes 1, 6, 8, and 10 in the Notes to the Financial Statements.
Long-Term Liabilities
The University of Georgia had Long-Term Liabilities of $193,267,749 of which $28,068,540 was reflected as current liability at June 30, 2008.
For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the Financial Statements.
Economic Outlook
During fiscal year 2008, the University continued to use its resources wisely and emphasized energy and water conservation in terms of cost containment and environmental initiatives especially as the State of Georgia experienced drought conditions throughout the year. The University worked to balance the use of modest increases in operating revenues to provide additional support for the instruction, research, and public service missions, with the need to fund significant and oftentimes uncontrollable increases in energy and health care costs. In an effort to fiscally prepare for these needs, the University directed each of its academic and administrative units to set aside 1% of their operating budget during fiscal year 2008 budget development. Another component of the University's deliberate strategy to reduce expenditures throughout the institution was the March 2008 implementation of a hiring process that requires all faculty and state-funded staff positions to be approved by a senior vice president before the position can be posted. These actions provided the University with flexibility to address increasing energy and health care costs while also providing for increases in faculty lines and instructional support. These actions allowed the University to fund the instructional needs associated with increased access to education at the University campuses in Griffin, Georgia and the graduate center in Gwinnett County.
As fiscal year 2009 begins, the University is facing declines in State of Georgia revenues, budget reduction requirements, and rising energy and health care costs. In order to address the economic changes, the University directed each academic and administrative unit to reserve 2% of their budget during the development of the University's Fiscal Year 2009 budget and increased this to 6% of their current budget in August 2008. Along with continuing to control hiring for new and replacement positions through the approval process that was put in place in March 2008, all vehicle purchases now require approval at the senior vice president level and all out-of-state travel requires approval by either a dean or a vice president. In addition, all University units have been directed to exercise great prudence in authorizing expenditures of a discretionary nature and to limit equipment procurement actions to only those items that are vital to the delivery of our core missions and services. As the 2009 fiscal year progresses, the University will take appropriate action to increase these reserves and to implement any additional expenditure control measures that are necessary to meet state mandated budget reductions and to protect the University's ability to provide core mission instruction, research, and public service activities.
Michael F. Adams, President University of Georgia
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BASIC FINANCIAL STATEMENTS - 1-

UNIVERSITY OF GEORGIA STATEMENT OF NET ASSETS
JUNE 30, 2008
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories (Note 4) Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Other Assets Investments Notes Receivable, Net Capital Assets, Net (Note 6)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposits Deferred Revenue (Note 7) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Other Liabilities
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Capital Projects Unrestricted
Total Net Assets
The notes to the financial statements are an integral part of this statement.
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EXHIBIT"A"

$ 208,884,769
15,687,652 48,267,803
5,259,729 6,148,736
$ 284,248,689

$

4,532,288

1,649,017

45,444,641

11,397,833

1,160,318,033

$ 1,223,341,812

$ 1,507,590,501

$ 15,572,426 6,112,476 4,983,452 1,371,273
48,587,711 1,374,968
14,335,848 2,255,740 25,812,800
$ 120,406,694
$ 148,361 '198 16,838,011 1,955,898
$ 167,155,107
$ 287,561,801
$ 1,009,701 ,095
50,137,516 67,356,275
756,840 92,076,974
$ 1,220,028,700

UNIVERSITY OF GEORGIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2008
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Federal Appropriations Grants and Contracts
Federal State Other Sales and Services of Educational Departments Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES\
State Appropriations Grants and Contracts
Federal State Other Gifts Interest and Other Investment Income Interest Expense Other Nonoperating Revenues
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Other
Total Other Revenues, Expenses, Gains or Losses
Increase (Decrease) in Net Assets
Net Assets- Beginning of Year
Net Assets- End of Year
The notes to the financial statements are an integral part of this statement.
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EXHIBIT"B"

$ 280,659,875 -77,415,260 15,395,942
96,468,803 38,720,573 66,324,665 47,404,503
318,102
37,625,434 4,076,785
33,680,822 14,579,695 17,414,540 18,479,602
3,947,481 2,344,993
$ 600,026,555

$ 180,270,865 402,258,012 161,214,071 725,438 14,411,709 22,067,333 30,491,931 235,885,354 63,596,361
$ 1,110,921,074
$ -510,894,519

$ 471,177,285

4,500 916,832 16,424,916 34,870,520 6,571,468 -12,297,921 7,798,838

$ 525,466,438

$

14 571 919

$

43,671,987

35,437,528

$

79,109,515

$

93,681,434

1,126,347,266

$ 1,220,028,700

UNIVERSITY OF GEORGIA STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Federal Appropriations Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parkingffransportation Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments)
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Other Nonoperating Receipts
Net Cash Flows Provided (Used) by Noncapital Financing Activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gifts Received Proceeds from Sale of Capital Assets Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases
Net Cash Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturities of Investments Interest on Investments
Net Cash Provided (Used) by Investing Activities
Net Increase (Decrease) in Cash
Cash and Cash Equivalents- Beginning of Year
Cash and Cash Equivalents- End of Year

EXHIBIT"C"

$ 204,750,107 14,109,473
206,058,575 47,695,506
-443,293,545 -579,490,907
-22,067,333 -2,356,114 1 ,674,129
36,170,484 4,119,130
33,712,684 14,480,954 17,603,814 18,341,826 4,020,967
-897 413
$ -445,367,663

$ 471,177,285 -4,975,932 52,216,768 6,486,691
$ 524,904,812

$

45,066,339

530,786

-97,645,570

-11,844,658

-12,297,921

$ -76,191 ,024

$

16,388,056

8,490,384

$

24,878,440

$

28,224,565

185,192,492

$ 213,417,057

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UNIVERSITY OF GEORGIA STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2008
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations Change in Fair Value of Investments Recognized as a Component of Interest Income Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts

EXHIBIT"C"
$ -510,894,519
63,596,361 2,273,255 -536,716 -520,334 -453,382 -495,017 1'195,930 -1,868,527 2,335,286
$ -445,367,663
$ =====72=2=,6==9=0 $ ==-=-1=91=8=9=-1=6 $ ==-=3=-4,=04=3=,1=7=6

The notes to the financial statements are an integral part of this statement. - 5-

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS The University of Georgia serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
REPORTING ENTITY The University of Georgia 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 the University of Georgia 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. The University of Georgia does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the University of Georgia 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.
Legally separate, tax exempt organizations whose activities primarily support units of the University System of Georgia, which are organizational units of the State of Georgia, are considered potential component units of the State. See Note 16 for additional information.
FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Institutions of the University System of Georgia will continue to report summer revenues and expenses in the year in which the predominant activity takes place.
BASIS OF ACCOUNTING For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting, except as noted in the preceding paragraph. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool and the University's Investment Advisory Account which is invested in short-term highly liquid U. S. Agencies.
INVESTMENTS The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses and Changes in Net Assets. The Board of Regents Legal Fund and the Board of Regents Diversified Fund are included under Investments.
ACCOUNTS RECEIVABLE Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES Consumable supplies are carried at the lower of cost or market on the first-in, first-out ("FIFO") basis. Resale Inventories are valued at cost using the average cost basis.
NONCURRENT CASH AND INVESTMENTS Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement ofNet Assets.
CAPITAL ASSETS Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) - an organization that is external to the System. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. The bonds so issued constitute direct and general obligations of the State of Georgia, to the payment of which the full faith, credit and taxing power of the State are pledged.
For projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC transferred capital additions valued at $1,980,423 to the University of Georgia.
DEPOSITS Deposits represent good faith deposits from students to reserve housing assignments m a University residence hall.
DEFERRED REVENUES Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned.
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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPENSATED ABSENCES Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statements of Revenues, Expenses and Changes in Net Assets. The University of Georgia had accrued liability for compensated absences in the amount of $40,315,525 as of July 1, 2007. For fiscal year 2008, $29,138,606 was earned in compensated absences and employees were paid $26,803,320, for a net increase of $2,335,286. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $42,650,811.
NONCURRENT LIABILITIES Noncurrent liabilities include (1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
NET ASSETS The University's net assets are classified as follows:
Invested in capital assets, net ofrelated debt: This represents the University'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. The term "debt obligations" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1 - Capital Assets section.
Restricted net assets - nonexpendable: 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 University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia.
Restricted net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NET ASSETS Expendable Restricted Net Assets include the following:

Restricted- E&G and Other Organized Activities Federal Loans Institutional Loans

$ 46,546,393 10,360,828 10,449,054

Total Restricted Expendable

$ 67.356.275

Restricted net assets - expendable - Capital Projects: This represents resources for which the University is legally or contractually obligated to spend resources for capital projects 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 University, and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $234,482.78. 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 Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

Unrestricted Net Assets includes the following items which are quasi-restricted by management.

R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted

$ 11,223,820 63,200,586 1,487,000 16,165,568

Total Unrestricted Net Assets

$ 92!076!974

When an expense is incurred that can be paid using either restricted or unrestricted resources, the University's policy is to first apply the expense towards unrestricted resources, and then towards restricted resources.

INCOME TAXES The University of Georgia, as a political subdivision of the State of Georgia, is excluded from Federal income taxes under Section 115(1) ofthe Internal Revenue Code, as amended.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CLASSIFICATION OF REVENUES The University has classified its revenues as either operating or nonoperating revenues in the Statement of Revenues, Expenses and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) sales and services of auxiliary enterprises, net of scholarship allowances, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income.
SCHOLARSHIP ALLOWANCES Student tuition and fee revenues, and certain other revenues from students, are reported at gross with a contra revenue account of scholarship allowances in the Statement of Revenues, Expenses and Changes in Net Assets. Scholarship allowances are the difference between the stated charge for goods and services provided by the University, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or nonoperating revenues in the University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
Auxiliary Parking/Transportation and Health Services revenues of $14,579,695 and $17,414,540, respectively, are reported net of discounts and allowances of $518,749 and $1,179,768, respectively.
NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 2: DEPOSITS AND INVESTMENTS
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 Mortgage Association.
6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.
At June 30, 2008, the carrying value of deposits was $25,485,322 and the bank balance was $33,803,349. Of the University's deposits, $33,597,458 were uninsured. Of these uninsured deposits, $288,083 were collateralized with securities held by the financial institution's trust department or agent in the University's name, $33,309,375 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.
INVESTMENTS The University of Georgia maintains an investment policy which fosters sound and prudent judgment in the management of assets to ensure safety of capital consistent with the fiduciary responsibility each institution has to the citizens of Georgia and which conforms to Board of Regents investment policy. All investments are consistent with donor intent, Board of Regents policy, and applicable Federal and state laws.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS

INVESTMENTS The University's investments as of June 30, 2008 are presented below. All investments are presented by investment type and debt securities are presented by maturity.

Investment Maturity

Investment Txge

Fair Value

Less Than I Year

I -5 Years

6- 10 Years

More than 10 Years

Debt Securities U. S. Treasuries U.S. Agencies Explicitly Guaranteed Implicitly Guaranteed

$

293,062 $

100,281 $

102,359

I ,431,180 57,854,271

586,837 24,191,703

841,390 $ 33.653.594

$
2,953 8 974

90,422

$ 59,578,513 $ 24,878,821 $ 34.597.343 $

II ,921 $

20,~22

Other Investments Bond/Equity Mutual Funds Equity Mutual Funds Equity Securities - Domestic Real Estate Held for Investment Purposes

13,631,366 21,398,911
893,748
240,469

Investment Pools Board of Regents Legal Fund Diversified Fund Office of Treasury and Fiscal Services Georgia Fund I

7,460,547 1,478,176
123,325,285

Total Investments

$ 228 OQ7 Ql5

The Board of Regents Investment 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 Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia - University System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits -Education Audit Division or on their web site at http://www.audits.state.ga.us/ internet/ searchRpts.html.

The Georgia Fund I Investment Pool, managed by the Office of Treasury and Fiscal Services, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1 per share. The Georgia Fund 1 Investment Pool is an AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 days.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS

INVESTMENTS Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University's policy for managing interest rate risk is divided between Short-Term and Long-Term investments. Short-Term investments will have a maximum maturity ofthree years and Long-Term investments will have a maximum maturity often years.

The Weighted Average Maturity of the Legal Fund is 3.84 years. Of the University's total investment of$7,460,547 in the Legal Fund, $7,393,402 is invested in debt securities.

The Weighted Average Maturity of the Diversified Fund is 7.84 years. Ofthe University's total investment of$1,478,176 in the Diversified Fund, $459,713 is invested in debt securities.

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

At June 30, 2008, $59,271,165 of the University's applicable investments were uninsured and held by the investment's counterparty in the University's name and $1,186,204 were uninsured and held by the investment's counterparty's trust department or agent, but not in the University's name.

Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University's policy for managing credit quality risk focuses in investment of loan and endowment funds which are funded by private sources. For loan and endowment funds, investments should have an average rating of "AAA". All other investments follow Board of Regents investment guidelines.

The investments subject to credit quality risk are reflected below:

Credit Quality Risk

Fair Value

Unrated

Related Debt Investments U. S. Agencies

$ 57.854.271 $ 57.854.271

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 2: DEPOSITS AND INVESTMENTS

INVESTMENTS Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The University's policy for managing concentration of credit risk is divided between Short-Term and Long-Term investments. For Short-Term investments, certificates of deposit and repurchase agreements should comprise 25-50%, investment in the Office of Treasury and Fiscal Services, Georgia Fund I should not exceed 50%, and investment in U. S. Treasury obligations or U. S. government agency securities can be 100%. For LongTerm investment of loan and endowment funds, equities comprise 50-75%, fixed income can range between 25-50%, and cash and cash equivalents will range between 10-25%.

As of June 30, 2008, applicable investments in a single issuer where those investments exceed 5% oftotal investments were as follows:

Federal National Mortgage Association

16%

Federal Home Loan Mortgage Corporation

8%

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2008:

Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission Other

$ 3,378,113 1,319,600
15,687,652 3,332,807 40,906,651

Less Allowance for Doubtful Accounts

$ 64,624,823 669,368

Net Accounts Receivable

$ 63!255.455

NOTE 4: INVENTORIES

Inventories consisted ofthe following at June 30, 2008:

Food Services Physical Plant Other

$ 1,593,325 1,794,128 1,872,276

Total

$ 5259!722

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2008

EXHIBIT "D"

NOTE 5: NOTES/LOANS RECEIVABLE

The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. T he Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U. S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $665,004.

NOTE 6: CAPITAL ASSETS

Following are the changes in capital assets for the year ended June 30, 2008:

Beginning Balance July 1, 2007

Additions

Reductions

Ending Balance June 30, 2008

Capital Assets, Not Being Depreciated:

Land

$

Capitalized Collections

Construction Work-In-Progress

25,741,440 $ 11,624,515 41,619,023

740,000 $ 1,084,100 52,801,416

3,142 $ 7,732,479

26,478,298 12,708,615 86,687,960

Total Capital Assets Not Being Depreciated

$ 78,984,978 $ 54,625,516 $ 7,735,621 $ 125,874,873

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

$ 42,944,512 $ 1,103,702,038 149,153,268 313,357,339 966,932 214,958,854

1,124,431 41,267,449 $
1,246,179 27,688,978
722,690 10,351,016

$ 44,068,943

11,781,594 1,133,187,893

150,399,447

15,031,999 326,014,318

850,239

839,383

81,995 225,227,875

Total Assets Being Depreciated

$ 1,825,082,943 $ 82,400,743 $ 27,745,827 $ 1,879,737,859

Less: Accumulated Depreciation:

Infrastructure

$ 15,535,036 $

Building and Building Improvements

343,336,845

Facilities and Other Improvements

34,826,651

Equipment

243,249,841

Capital Leases

462,547

Library Collections

157,686,706

1,353,131 25,580,624 $
3,730,990 21,983,077
176,756 10,771,783

$ 691,709
12,373,078 252,506 81,995

16,888,167 368,225,760 38,557,641 252,859,840
386,797 168,376,494

Total Accumulated Depreciation

$ 795,097,626 $ 63,596,361 $ 13,399,288 $ 845,294,699

Total Capital Assets, Being Depreciated,

Net

$ 1,029,985,317 $

Capital Assets, Net

$ 1 108 970.295 $

18,804,382 $ 73 429 898 $

14,346,539 $ 1,034,443,160 22.082.160 $ 1.160 318 033

Buildings include $157,197,425 of property held under capital leases with the University of Georgia Real Estate Foundation. Accumulated depreciation for those properties is $14,248,586 and $272,421 in depreciation expense was recognized for these properties in fiscal year 2008.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 7: DEFERRED REVENUE

Deferred revenue consisted of the following at June 30, 2008:

Prepaid Tuition and Fees Research Other Deferred Revenue

$ 20,581,117 13,328,816 14,677,778

Totals

$ 48.587.711

NOTE 8: LONG-TERM LIABILITIES

Long-Term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences
Total Long-Term Obligations

Beginning Balance Julx I, 2007
$ 161,738,906
40,315,525 $ 202.054.431

Additions

$

722,690

29,138,606 $ 29,861,296

Reductions $ 11,844,658
26,803,320 $ 38.647,978

Ending Balance June 30, 2008
$ 150,616,938
42,650,811 $ 193,267.749

Current Portion
$ 2,255,740
25,812,800 $ 28.068.540

NOTE9: SIGNIFICANT COMMITMENTS

The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $21,854,926 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.

NOTE 10: LEASE OBLIGATIONS

The University of Georgia is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.

CAPITAL LEASES The University of Georgia occupies six real properties and holds various equipment items under capital leases. The real property leases expire in fiscal years 2032, 2033, three expire in 2034, and one expires in 2036. The equipment capital leases expire between 2009 and 2012. Reductions in principal on capital leases were $11,844,658 with $12,297,921 in interest expense for a total of $24,142,579 in fiscal year 2008. Interest rates range from 6.83 percent to 9.00 percent. The carrying values of assets held under capital lease at June 30, 2008 were as follows:

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 10: LEASE OBLIGATIONS

CAPITAL LEASES Buildings Equipment

$ 143,221,259 421,493

Total Assets Held Under Capital Lease

$ 143.642.752

All six of the University of Georgia's current real property capital leases are with the University of Georgia Real Estate Foundation (UGAREF), a related entity which is a component unit ofthe University of Georgia Research Foundation. In August of 2001, the University of Georgia entered into a capital lease with the UGAREF, whereby the University leases the Carlton Street Parking Deck for a 30 year period that began September 30, 2001 and expires August 31, 2031. In November of 2002, the University of Georgia entered into the second capital lease with the UGAREF whereby the University leases the East Village Parking Deck for a 30 year period that began on November 1, 2002 and expires July 31,2032. In September of2003, the University of Georgia entered into the third capital lease with the UGAREF, whereby, the University leases the Complex Carbohydrate Research Center for a 30 year period that began on September 25, 2003 and expires September 30, 2033. The University of Georgia entered into the fourth and fifth capital leases with the UGAREF, whereby the University leases the East Campus Village dormitory complex and the East Village Commons dining hall for a 30 year period that began July 1, 2004, and expires June 30, 2034. The University of Georgia entered into a sixth capital lease with UGAREF whereby the University leases the Coverdell Center for a 30 year period that began December 9, 2005 and expires November 30, 2035. The outstanding liability at June 30,2008 on these capital leases is $150,036,057.

The University of Georgia will enter into two additional real property capital leases with UGAREF during fiscal year 2009. The exact capital lease amounts and related payment amounts have not yet been established. There is no outstanding liability related to these leases at June 30, 2008.

The University also has various capital leases for equipment with an outstanding balance of $580,881 at June 30, 2008.

OPERATING LEASES The University of Georgia is Lessee under a number of one year operating leases, which generally provide for four (4) renewal option periods. All agreements are cancelable ifthe 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.

Properties are leased for a variety of functions, from farm acreage to office space to parking lots.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 10: 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, 2008, were as follows:

Year Ending June 30: 2009 2010 2011 2012 2013 2014- 2018 2019-2023 2024-2028 2029-2033 2034-2036

Real ProQerty and EguiQment CaQital Leases 0Qerating Leases

$ 13,677,918 $ 13,631,938 13,611,786 13,555,689 13,425,271 67,126,355 67,126,355 67,126,355 64,872,272 12,030,901

7,019,521

Total Minimum Lease Payments

$ 346,184,840 $ 7.019.521

Less: Interest Less: Executory Costs (If Paid)

182,480,902 13,087,000

Principal Outstanding

$ 150,616,238

Noncancellable operating lease expenditures in 2008 were $6,783,013 for real property. No expenditures were made for equipment under noncancellable operating leases.

NOTE 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description The University of Georgia participates in the Teachers Retirement System of Georgia (TRS), a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly. TRS provides retirement allowances and other benefits for plan participants. 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 TRS offices or from the Georgia Department of Audits and Accounts.

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2008

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy Employees of the University of Georgia who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The University of Georgia 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 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 32,103,416 $ 30,182,072 $ 29,007,246

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The University of Georgia participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia.
The benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected 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. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.
Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension

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UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion ofERS. The purpose ofSRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415.

The ERS issues a financial report each fiscal year, which may be obtained through ERS.

Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $1,122,242. The University's total payroll for all employees was $582,528,877.

For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.

Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 122,876

$

98,268

$

59,819

- 21 -

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 11: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.
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. 472 I-1 et.seq. and is 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 The University of Georgia 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 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
The University of Georgia and the covered employees made the required contributions of $11,308,338 (8.13% or 8.15%) and $6,947,655 (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 The University of Georgia 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,
-22-

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2008

EXHIBIT "D"

NOTE 11: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Plan Description seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees ofthe 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 2008 amounted to $1,799,075 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 12: RISK MANAGEMENT
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options - a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. The University of Georgia and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia - University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare

- 23-

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 12: RISK MANAGEMENT
plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental 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 University of Georgia, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 13: 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 that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the University of Georgia expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the University of Georgia (an organizational unit ofthe Board ofRegents ofthe 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, 2008.

-24-

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 14: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, 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 ofthe University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 3,810 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, the University of Georgia recognized as incurred $21,053,488 of expenditures, which was net of$7,438,830 of participant contributions.

- 25-

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 15: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The University's operating expenses by functional classification for fiscal year 2008 are shown below:

Natural Classification
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and
Fellowships Utilities Supplies and Other
Services Depreciation
Total Operating Expenses

Instruction

Functional Classification

Research

Public Service

Academic SUJ:!l:!Or!

Student Services

$ 90,014,667 $ 76,217,243 $ 13,328,102 $

637,231 $

61,192,420

87,347,302

70,899,516

50,368,200

35,826,821

37,809,572

27,998,638

14,988,685

74,316

23,559

6,077

27,324

2,750,909

5,849,041

3,728,512

872,802

3,719,099 1,459,871

1,154,409 1,153,782

94,794 1,338,097

8,589 717,164

22,699,152 13,262,238

60,541,391 16,792,894

32,433,143 3,720,009

23,055,171 14,153,085

$ 230 999 493 $ 286,889,193 $ 153,546,888 $ 104,828,251 $

71,112 14,772,670 4,412,648
7,160 275,680
1,817,843 218,816
10,152,587 667 129
32,395,645

Natural Classification
Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and
Fellowships Utilities Supplies and Other
Services Depreciation
Total Operating Expenses

Institutional SU]2]20rt

Functional Classification

Plant

Operations and Scholarships

Auxiliary

Maintenance and FellowshiQS

Enter12rises

Total Operating Ex12enses

$

2,510

37,053,208 $ 29,008,012

16,139,175

11,362,957

585,202

630,045

81,289

$ 180,270,865

$ 51,616,684

402,258,012

12,675,575

161,214,071

1,800

725,438

223,431

14,411,709

10,000 650,151

$ 14,398,059 18,825,377

864,540 6,128,673

22,067,333 30,491,931

11,837,671 1,038,627

36,741,112 2 917 673

38,425,127 II 044 706

235,885,354 63,596,361

$__67,946,589 $ 98,936,420 $ 14,398,059 $ 120,980,536 $ I II 0 921 074

NOTE 16: COMPONENT UNITS

In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment of GASB Statement No. 14, The Reporting Entity, which became effective for the year ended June 30, 2004, the University of Georgia Research Foundation, the University of Georgia Athletic Association, Inc., and the University of Georgia Foundation have been determined to be legally separate, tax exempt organizations whose activities primarily support the University of Georgia, a unit of the University System of Georgia (an organizational unit of the State of Georgia). The State Accounting Office has determined Component Units of the State of Georgia, as required by GASB No. 39, should be assessed in relation to their significance to the State of Georgia. Accordingly, the University of Georgia has not included financial activity for these affiliated organizations in these financial statements.

- 26-

UNIVERSITY OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 16: COMPONENT UNITS
The University of Georgia Research Foundation, Inc., the University of Georgia Athletic Association, Inc., and the University of Georgia Foundation have been determined significant to the State of Georgia for the year ended June 30, 2008, and as such, are reported as discretely presented component units in the Comprehensive Annual Financial Report of the State of Georgia (CAFR). The significant discretely presented component units issue separate audited financial statements that can be obtained from the Board of Regents of the University System of Georgia.

-27-

(This page left intentionally blank)

SUPPLEMENTARY INFORMATION - 29-

UNIVERSITY OF GEORGIA BALANCE SHEET (NON-GMP BASIS)
BUDGET FUND JUNE 30, 2008
ASSETS
Cash and Cash Equivalents Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Salaries Payable Accounts Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$ 137,371,268.33 12,619,453.07 36,604,056.60 3,832,996.75 3,017,703.79
$ 193,445,478.54

$

5,133,159.09

61,227,611.71

48,151,087.04

768,469.62

$ 115,280,327.46

$

2,433,217.90

4,231,941.07

18,552,620.71

1,248,013.66

47,302,633.36

576,499.70

2,098,741.90

1,487,000.00

234,482.78

$ 78,165,151.08

$ 193,445,478.54

Actual amounts were 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.
-30-

UNIVERSITY OF GEORGIA SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

REVENUES
State Appropriation State General Funds
Federal Funds Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Agricultural Experiment Station Athens Tifton Veterinary Laboratories Cooperative Extension Service Forestry Cooperative Extension Service Forestry Research Marine Institute Marine Resources Extension Center Office of Minority Business Research Consortium Special Funding Initiatives Teaching Veterinary Medicine Experiment Station Veterinary Medicine Teaching Hospital
Total Expenditures
Excess of Funds Available over Expenditures
FUND BALANCE JULY 1
Reserved Unreserved
ADJUSTMENTS
Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned
to Board of Regents- University System Office Year Ended June 30, 2007
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 471 '193,907.00 $ 471 '193,907.00 $

306,514,217.00

237,666,986.00

408 661 861.00

396,771,069.60

$ 1,186,369,985.00 $ 1,105,631,962.60 $

0.00 -68,847,231.00 -11 890 791.40
-80,738,022.40

0.00

64 853 118.80

$ 1'186,369,985.00 $ 1 170 485 081.40 $

64 853 118.80 -15,884,903.60

$

86,015,877.00 $

80,354,212.99 $

6,268,386.00

5,908,662.02

68.438,718.00

65,093,392.11

1,170,484.00

1,008,149.45

7,706,916.00

7,645,793.68

1,786,536.00

1.420,923.86

4,316,521.00

3,684,272.67

480,169.00

480,169.00

6.404,587.00

6,404,587.00

1,648,860.00

1,648,860.00

986.496,092.00

907,588,930.13

3,384,254.00

3,384,254.00

12,252,585.00

10 068 145.59

$ 1'186,369,985.00 $ 1,094,690,352.50 $

$

0.00 $

75,794,728.90 $

5,661,664.01 359,723.98
3,345,325.89 162,334.55 61,122.32 365,612.14 632,248.33 0.00 0.00 0.00
78,907,161.87 0.00
2 184 439.41
91 679 632.50
75 794 728.90

1,755,548.95 16,622.11

674,071.08 -59,197.85

-16 622.11

$

78 165 151.08

SUMMARY OF FUND BALANCE
Reserved Capital Outlay Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Tuition Carry-Over Inventories
Total Reserved
Unreserved Surplus

$

2.433,217.90

4,231,941.07

18,552,620.71

1,248,013.66

47,302,633.36

576.499.70

2,098,741.90

1 487 000.00

$

77,930,668.30

234 482.78

Total Fund Balance
Actual amounts were 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.
-31-

$

78165151.08

UNIVERSITY OF GEORGIA STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Agricultural Experiment Station State Appropriation State General Funds Federal Funds Other Funds
Total AgricuHural Experiment Station

Original A1212ro12riation

Final Budget

Current Year Revenues

Funds Available Come!red to Budget

Prior Year
Ca[!):~OVer

Total Funds Available

Variance Positive {N!j!gative}

42,936,221.00 $ 22,000,000.00 10 441 262.00
75,377,483.00

42,936,221.00 25,000,000.00 18 079,656.00
86,015,877.00

42,936,221.00 23,791 '1 06.14 14,305,679.24
81,033,006.38

0.00 7,974,091.98
709197.47
8,683,289.45 $

42,936,221.00 31,765,198.12 15 014 876.71
89,716,295.83

0.00 6,765,198.12 -3 064 779.29
3,700,418.83

Athans Tifton Veterinary Laboratories State Appropriation State General Funds Federal Funds Other Funds
Total Athens Tifton Veterinary Laboratories

$

62,192.00

4,820,138.00

0.00

4.882.330.00

62,192.00 6,120,138.00
86056.00
6 266 386.00

62,192.00 5,771,956.96
73161.01
5 907 309.97

0.00 2,293,261.29
35099.40
2 328 380.69

62,192.00 8,065,218.25
108 260.41
8 235 670.86

0.00 1,945,080.25
22,204.41
1 967284.86

Cooperative Extension Service State Appropriation State General Funds Federal Funds Other Funds
Total Cooperative Extension Service

35,391,924.00 13,000,000.00 10 094137.00
58,486,061.00

35,391,924.00 19,000,000.00 14,046,794.00
68,438,718.00

35,391 ,924.00 18,567,741.73 11,571,359.19
65,531,024.92

0.00 $ 1,914,732.87
240,190.33
2,154,923.20

35,391,924.00 20,482,474.60 11 811,549.52
67,685,948.12

0.00 1,482,474.80 -2,235,244.48
-752,769.86

Forestry Cooperative Extension Service Stele Appropriation State General Funds Federal Funds Other Funds
Total Forestry Cooperative Extension Service

$

687,388.00

200,000.00

100 405.00

987 793.00

687,388.00 350,000.00 133,096.00
1' 170,484.00

687,388.00 317,731.81
16477.69
1,021,597.50

0.00 29,896.06 38 801.37
68,697.43

687,388.00 347,627.87
55 279.06
1,090,294.93

0.00 -2,372.13 -77 816.94
-80 189.07

Forestry Research State Appropriation State General Funds Federal Funds Other Funds
Total Forestry Research

3,276,331.00 2,000,000.00
550 000.00
5,826,331.00

3,276,331.00 3,500,000.00
930,585.00
71706,916.00

3,276,331.00 3,553,178.63 1,070,782.29
7,900,291.92

0.00 673,544.71 358 490.09
1 ,032,034.80

3,276,331.00 4,226, 723.34 1429 272.38
8,932,326. 72

0.00 726,723.34 498887.38
1,225,410.72

Marino Institute State Appropriation State General Funds Federal Funds OUler Funds
Total Marine Institute

964,361.00 700,000.00 67633.00
1 ,731,994.00

984,361.00 700,000.00 122175.00
1,786,536.00

984,361.00 372,941.32 48194.24
1,365,496.56

0.00 11,273.94 54 542.13
65,816.07

964,381.00 384,215.26 102 738.37
1,451 ,312.63

0.00 -315,784.74
-19,438.63
-335,223.37

Marine Resources Extension Canter State Appropriation State General Funds Federal Funds Other Funds
Total Marine Resources Extension Center

1,576,721.00 600,000.00 584,800.00
2,761,521.00

1 ,576, 721.00 2,000,000.00
739,800.00
4,316,521.00

1,576,721.00 1,400,996.35
702,918.25
3,680,635.60

0.00 185,949.68
0.00
185,949.68

1,576,721.00 1 ,588,948.03
702 918.25
3,866,585.28

0.00 -413,053.97
-36 881.75
-449,935.72

Office of Minority Business
State Appropriation State General Funds

480169.00 $

480169.00 $

480,169.00

0.00 $

480169.00 $

0.00

Research Consortium State Appropriation State General Funds

1,384,244.00 $

6,404,587.00 $

6404 587.00 $

0.00 $

6,404,587.00 $

0.00

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance wHh budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

-32-

SCHEDULE "3"

ExpendHures Compared to Budget

Variance

Positive

Actual

(Negative)

Actual Funds Available
OVer/( Under)
Exoenditures

Prior Period Adjustments

Other Adjustments

Program Fund
Balances

Transfers

P!!!!!ram Fund Balanoas

Reserve

Surplus

Total Fund Balance

42,936,221.00 23,249,351.41 14 168 840.58
80,354,212.99

0.00 1,750,648.59 3,911,015.42
5,661,684.01

0.00 8,515,646.71
846,236.13
9,362,082.84

72,724.36 0.00
6 830.63
79,555.01

0.00 0.00 363.40
363.40

72,724.38 8,515,848.71
853430.16

0.00 $ 0.00 ~

9,442,001.25 $ ___,l!;!!!!, $

0.00 $ 8,515,848.71
853430.16
9,369,276.87

72,724.38 $ 0.00 0.00
72,724.36 $

72,724.38 8,515,846.71
853,430.16
9,442,001.25

61,662.00 5,776,490.08
70 309.94
5 908 662.02

330.00 343,647.92
15 746.06
359,723.98

330.00 2,288,728.17
37 950.47
2 327,008.64

-330.00 0.00
330.00
0.00

0.00 0.00 -330.00
-330.00

0.00 2,288,728.17
37 950.47

0.00 $ 0.00 ~

2 326678.84 $~$

0.00 2,288,728.17
37 950.47
2 326 678.64

0.00 0.00 0.00
0.00 $

0.00 2,288, 728.17
37 950.47
2,326,678.64

35,391,924.00 18,014,357.14 11667,110.97
65,093,392.11

0.00 985,642.86 2 359 683.03
3,345,325.89

0.00 2,468,117.46
124438.55
2,592,558.01

26,629.73 0.00
8 349.92
34,979.65

0.00 0.00 -828.00
-828.00

26,629.73 2,468,117.46
131 960.47

0.00 $ 0.00 _____Qm_

2,626,707.66 $ ___,l!;!!!!, $

0.00 2,468,117.46
131 960.47
2,600,077.93

26,629.73 0.00 0.00
26,629.73

26,629.73 2,468,117.46
131 960.47
2,626,707.66

687,388.00 287,675.19
33,086.26
1 ,008,149.45

0.00 62,324.81 100009.74
162,334.55

0.00 59,952.68 22192.80
82145.48

145.68 0.00
300.00
445.66

0.00

145.66

0.00 $

0.00

145.66 $

145.68

0.00

59,952.66

0.00

59,952.66

0.00

59,952.68

0.00

22,492.80 ~

22492.80

0.00

22492.80

0.00

82,591.16 $ ~ $

82,445.48 $

145.68

82,591.16

3,276,331.00 3,438,216.89
931 245.79
7,645,793.68

0.00 61,783.11
-660.79
61,122.32

0.00 788,506.45 498,026.59
1,286,533.04

8,848.57 0.00
2,163.69
11,012.26

0.00

8,848.57

0.00 $

0.00

0.00

788,506.45

0.00

766,506.45

0.00

500190.28 _____Qm_

500,190.28

0.00

1,297,545.30 $ __,2;,22. $ 1,288,696.73

8,848.57 0.00 0.00
8,848.57

8,848.57 788,506.45 500,190.28
1,297,545.30

964,361.00 369,274.87
87 287.99
1,420,923.66

0.00 330,725.13
34 887.01
365,612.14

0.00 14,940.39 15448.38
30,388.77

800.00 0.00 0.00
800.00

0.00

800.00

0.00 $

0.00

800.00 $

800.00

0.00

14,940.39

0.00

14,940.39

0.00

14,940.39

0.00

15448.36 _____Qm_

15,448.36

0.00

15448.36

0.00

31,188.77 $ ___,l!;!!!!, $

30,368.77 $

800.00

31188.77

1,576,721.00 1 ,404,633.42
702 918.25
3,684,272.67

0.00 595,366.58
36,881.75
632,248.33

0.00 182,312.61
0.00
182 312.61

814.45 0.00
65.82
880.27

0.00

814.45

0.00 $

0.00

0.00

182,312.61

0.00

162,312.61

0.00

65.82 ~

65.82

0.00

183,192.88 $ __,2;,22. $

182,378.43

814.45 0.00 0.00
814.45

814.45 182,312.61
65.82
183,192.88

480169.00 $

0.00 $ ---~0~.0~0 $

0.00 $

o.oo s_ _ _~o-::::oo::. s~ s_ _ _..,l:o-;:.:oo::.s

o.oo s____o.l::oo:..

6,404,587.00 $

0.00 S _ _ __,;O:;;;.O;;;O;. $ 141869.61

0.00 $

14 669.61 $ __,2;,22. $ ---...l:0-;::00::,. $ 14,669.61

14,669.61

-33-

UNIVERSITY OF GEORGIA STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Special Funding Initiatives State Appropriation State General Funds

Original Appropriation

Final Budget

Current Year Revenues

Funds Available Coml?!red to Budget

Prior Year
Carrv~Over

Total Funds Available

Variance Positive (Negative}

1 240 580.00 $

1,648,860.00

1 648,860.00 $

0.00 $

1,648 860.00

0.00

Teaching State Appropriation State General Funds Federal Funds other Funds
Total Teaching

391,535,103.00 249,844,079.00 317 055 702.00
958,434 884.00

373,878,314.00 249,644,079.00 362 773 699.00
986,496,092.00

373,878,314.00 183,891,333.06 358 939,507.79
916 709154.85

0.00 30,853,721.75 18 377 049.52
49 230 771.27

373,878,314.00 214,745,054.81 377,316,557.31
965,939 926.12

0.00 -35,099,024.19 14 542 858.31
-20,556,165.88

Veterinary Medicine Experiment Station
State Appropriation State General Funds

3 384 254.00 $

3 384,254.00

3,384,254.00 $

0.00 $

3 364 254.00 $

0.00

Veterinary Medicine Teaching Hospital State Appropriation State General Funds Other Funds
Total Veterinary Medicine Teaching Hospital

502,585.00 6 700 000.00
7,202,585.00

502,585.00 11 750 000.00
12,252,585.00

502,585.00 10 042,989.90
10,545,574.90

0.00 1103 276.21
1,103,276.21

502,585.00 11 146 266.11
11,648,851.11

0.00 -603,733.89
-603,733.89

Grand Totals. All Programs

1,122,180,229.00 $ 1,186,369,985.00 $ 1,105,631,962.60 $ 64,853,118.80 $ 1,170,485,081.40 $ -15,884,903.60

Actual amounts were 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.

-34-

SCHEDULE "3"

Expenditures Compared to Budget

Variance

PosHive

Actual

<Neoatlvel

Actual Funds Available
OVer/( Under)
Exoenditures

Prior Period Adlustments

Other Adlustments

Program Fund
Balances

Transfers

P!:Qgram Fund Balances

Reserve

Surplus

Total" Fund
Balance

1648 860.00 $

0.00 $

0.00 $

0.00 $

0.00 $

0.00 $ _J!.!!!!.. $

0.00 $

0.00 $

0.00

373,878,314.00 181,654,164.45 352,056,451.68
907,588,930.13

0.00 68,189,914.55 10 717 247.32
78 907 161.87

0.00 33,090,890.36 25,260 105.63

108,075.11 0.00
349,215.20

56 350 995.99 $ 457,290.31

0.00 0.00 -289162.80
-289162.80

108,075.11 33,090,890.36 25 320 156.03

0.00 $ 0.00 _____Q,QQ_

58 519123.50 $ --.!!.!l!!. $

0.00 33,090,890.36 25 320 158.03
58 411 048.39

108,075.11 0.00 0.00
108 075.11

108,075.11 33,090,890.36 25 320 156.03
58 519123.50

3,364,254.00

0.00 $

0.00 $ 1,575.25 $

0.00 $

1 575.25 $ ----l!.!!!!.. $

0.00 $ _ _1:,:,5::,75:::..2~5:..

1 575.25

502,565.00 9 565 560.59
10,068,145.59

0.00 2,164,439.41
2,164,439.41

0.00 1 580 705.52
1,580,705.52

0.00 13465.19
13,465.19

0.00 -17 993.35
-17,993.35

0.00

0.00 $

1 576177.36 _____Q,QQ_

1,576,177.36 $ ~ $

0.00 1 576177.36
1 ,576,177.36

0.00

0.00

0.00

1 576177.36

0.00

1,576,177.36

1,094,690,352.50 $ 91,679,632.50 $ 75,194,726.90

614,873.23 -307,950.75

76,101,651.38 $ --.!!.!l!!. $ 75,867'168.60 $ 234,482.78 $ 76,101,651.38

Unexpendable Reserves Inventories Uncollectible Accounts Receivable

1,487,000.00 576499.70
78165151.08

-35-

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UNIVERSITY OF GEORGIA RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

Totals per Annual Supplement
Prepaid Salaries June 30, 2008 June 30, 2007
Accruals June 30, 2008 June 30, 2007
Compensated Absences June 30, 2008 June 30, 2007

SALARIES
$ 579,458,277 $

TRAVEL 14,411,709

-2,256,869 1,843,662

6,112,476 -5,065,051

39,886,939 -37,450,557

$

582' 528' 877 $ ===1="4-=4=11d,,7=0==9

- 37-

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS

UNIVERSITY OF GEORGIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.