Board of Regents of the University System of Georgia, Administrative Central Office (Oversight Unit), report on audit of the financial statements for the fiscal year ended June 30, 2004

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT)
REPORT ON AUDIT OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2004
Russell W. Hinton State Auditor

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT)
- 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

3

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

4

C STATEMENT OF CASH FLOWS

5

D NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

SCHEDULES

SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO

BUDGET - (NON-GAAP BASIS)

1

RESIDENT INSTRUCTION

29

2

REGENTS CENTRAL OFFICE AND OTHER ORGANIZED ACTIVITIES 31

SCHEDULES OF APPROVED BUDGET

3

RESIDENT INSTRUCTION

32

4

REGENTS CENTRAL OFFICE AND OTHER ORGANIZED ACTIVITIES

34

5

LOTTERY FOR EDUCATION

36

SCHEDULES OF ALLOTMENTS TO UNITS OF THE UNIVERSITY SYSTEM

OF GEORGIA

6

RESIDENT INSTRUCTION

38

7

REGENTS CENTRAL OFFICE AND OTHER ORGANIZED ACTIVITIES 41

8 ANALYSIS OF PRIOR YEAR'S SURPLUS FUNDS COLLECTED FROM

INSTITUTIONS AND REDISTRIBUTED TO INSTITUTIONS WITH

DEFICITS

42

9 RECONCILIATION OF SALARIES AND TRAVEL

45

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) - TABLE OF CONTENTS -
SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
March 10, 2005

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Thomas C. Meredith, Chancellor
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 Administrative Central Office (Oversight Unit) ofthe Board ofRegents ofthe University System of Georgia, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2004. These financial statements are the responsibility ofthe Administrative Central Office'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 of America. 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 Administrative Central Office are intended to present the financial position and changes in financial position and cash flows ofonly that portion of the business-type activities of the State of Georgia that is attributable to the transactions of the Administrative Central Office. 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.

04ARL-62

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the Administrative Central Office as of June 30, 2004, 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.
As discussed in Note 1, the Administrative Central Office adopted the prov1S1ons of the Governmental Accounting Standards Board, Statement Number 39, Determining Whether Certain Organizations are Component Units during the year ended June 30, 2004.
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 of inquiries 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 Administrative Central Office taken as a whole. The accompanying supplementary information (Schedules 1 through 9) is presented for purposes ofadditional 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,
i{AJ.,, 00. L<l~
Russell W. Hinton State Auditor
RWH:gp 04ARL-62

REQUIRED SUPPLEMENTARY INFORMATION

ADMINISTRATIVE CENTRAL OFFICE
Management's Discussion and Analysis
Introduction
The Administrative Central Office of Georgia's Board of Regents was created in 1931 as part of a reorganization of Georgia's state government. With this act, public higher education in Georgia was unified for the first time under a single governing and management authority. The governor appoints members to the Board, who each serve seven years. Today the Board of Regents is composed of 18 members, five of whom are appointed from the state-at-large, and one from each of the 13 congressional districts. The Board elects a chancellor who serves as its chief executive officer and the chief administrative officer of the University System. The Board oversees 34 institutions: 4 research universities, 2 regional universities, 13 state universities, 2 state colleges, and 13 two-year colleges. In addition, one marine research facility is governed by the Board. These institutions enroll more than 247,000 students and employ more than 9,800 faculty and 27,700 employees to provide teaching and related services to students and the communities in which they are located.
Overview ofthe Financial Statements and Financial Analysis
The Administrative Central Office is proud to present its financial statements for fiscal year 2004. 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 Administrative Central Office's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2003 and fiscal year 2004.
Statement ofNet Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the Administrative Central Office 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 of Net Assets is to present to the readers of the financial statements a fiscal snapshot of the Administrative Central Office. 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.
From the data presented, readers of the Statement of Net Assets are able to determine the assets available to continue the operations of the Administrative Central Office. They are also able to determine how much the Administrative Central Office 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 Administrative Central Office. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the Administrative Central Office's equity in property, plant and equipment owned by
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the Administrative Central Office. The next asset category is restricted net assets, which is divided into two categories, nonexpendable and expendable. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the Administrative Central Office 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 Administrative Central Office for any lawful purpose of the Administrative Central Office.

Statement of Net Assets, Condensed (thousands of dollars)

June 30, 2004

June 30, 2003

Assets Current Assets Capital Assets, Net Other Assets

$ 232,372

$ 208,774

15,400

15,911

3 612

3 612

Total Assets

$ 251,384

$

228,297

Liabilities Current Liabilities Noncurrent Liabilities

$ 184,943

$

154,824

3 084

3 426

Total Liabilities

$ 188,027

$

158,250

Net Assets

Invested in Capital Assets, Net of Debt

$

11,633

$

13,154

Restricted - Nonexpendable

3,612

3,612

Restricted - Expendable

42,709

42,034

Unrestricted

5 403

11 247

Total Net Assets

$

63 357

$

70 047

The total assets of the Administrative Central Office increased by $23,087,129.45. This increase was primarily due to an approximately $22 million increase in pooled investment activity.

The total liabilities for the year increased by $29,777,047.33. The primary cause for the increase was a significant increase in funds held for others due to the increased pooled investment activity. In addition, the incurred but not reported liability for health insurance claims of the University System's health insurance fund increased approximately $6 million.

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 Administrative Central Office, both operating and nonoperating, and the expenses paid by the Administrative Central Office,

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operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the Administrative Central Office. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the Administrative Central Office. 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 Administrative Central Office. 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 Administrative Central Office without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed (thousands of dollars)

June 30, 2004

June 30, 2003

Operating Revenues Operating Expenses

$ 251,058 394,057

$ 239,404 399,937

Operating Loss

$ -142,999

$ -160,533

Nonoperating Revenues and Expenses Special Items

136,309

154,510 -3,508

Increase (Decrease) in Net Assets

$

-6,690

$

-9,531

Net Assets at Beginning of Year, as Originally Reported

70 047

79 578

Net Assets at End of Year

$

63.357

$

70 047

The Statement of Revenues, Expenses and Changes in Net Assets reflects a decrease in the Net Assets at End of Year. 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 (thousands of dollars) For The Years Ended June 30, 2004 and June 30, 2003

Operating Revenue Grants and Contracts Sales and Services of Educational Departments Other
Total Operating Revenue
Nonoperating Revenue State Appropriations Grants and Contracts Investment Income Other
Total Nonoperating Revenue
Special Item Gain on Disposal of Capital Asset
Total Revenues

June 30, 2004

$

5,847

55 245,156

$ 251,058

$ 136,232 526 535 -840
$ 136,453

$ 387!511

June 30, 2003

$

6,945

149 232,310

$ 239,404

$ 152,235 1,010 857 558
$ 154,660

$

921

$ 394!985

- IV -

Expenses (thousands of dollars) For The Years Ended June 30, 2004 and June 30, 2003

June 30, 2004

June 30, 2003

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

$

3,997

$

977

135

88

91,845

101,197

10,389

12,604

249

246

280,431

269,003

3,340

968

6,973

6 043

5 509

Total Operating Expenses

$

394,057

$

399,937

Nonoperating Expenses Interest Expense

$

144

$

150

Special Items Georgia Emergency Management Agency Floor Recovery Refund

$

4429

Total Expenses

$

3942201

$

4042516

The increase of Operating Revenue was due to an increase in health insurance premiums for the University System of Georgia employees and a refund of $4.9 million from Blue Cross Blue Shield to the health insurance reserve fund. Health Insurance premiums increased by the following percentages for Family Plans: Blue Choice - 17%, Kaiser - 5.44%, Indemnity - 5.56%, PPO-9.4%.

Continued budget reductions resulted in a decrease of $16,002,852.86 in State Appropriations.

Total expenses decreased by $10,314,976.76. Reductions in revenue result in less money to expend. The reduction of state appropriations system-wide, due to a continued sluggish economy, continues to be a challenge for all units of the University System of Georgia and thus, for the Administrative Central Office.

Statement ofCash Flows

The final statement presented by the Administrative Central Office is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the Administrative Central Office 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 Administrative Central Office. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating,

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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.

Statement of Cash Flows for the Years Ended June 30, 2004 and June 30, 2003, Condensed (thousands of dollars)

June 30, 2004

June 30, 2003

Cash Provided (Used) By:

Operating Activities

$ -131,466

Noncapital Financing Activities

148,928

Capital and Related Financing Activities

-6,508

Investing Activities

224

$ -166,105 171,276 -2,630 572

Net Change in Cash

$_ _---'3=-->-=-=lc=-3

Cash, Beginning of Year

$_ _~85a....,3"-"9~8

Cash, End of Year

$=====99~68"""9

$==='=88,,,,.,,5==1==1

Capital Assets

The Administrative Central Office had no significant capital asset additions for fiscal year 2004.

For additional information concerning Capital Assets, see Notes 1, 5, 7, and 8 in the Notes to the Financial Statements.

Long-Term Debt

The Administrative Central Office had a total long-term debt of $6,034,043.09 of which $2,950,507.50 was reflected as current year liability at June 30, 2004.

For additional information concerning Long-Term Debt, see Notes 1 and 7 in the Notes to the Financial Statements.

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Health and Dental Insurance

The Administrative Central Office is the fiscal agent for health and dental insurance for all the University System of Georgia. The financial information for all related health and dental insurance transactions is included on the face of the financial statements. The information regarding revenues and expense for fiscal year 2004 is listed below in thousands of dollars.

Beginning Net Assets July 1, 2003

$

35,034

Plus Revenues Fiscal Year 2004 Less Expenses Fiscal Year 2004

229,775 227,420

Ending Net Assets June 30, 2004 Component Units

$====37=3==8===9

Administrative Central Office does not have any units that qualify as component units for the purposes of GASB 39 reporting.

Economic Outlook

Despite continuing reductions in state appropriations in fiscal year 2004 resulting from the State's slow recovery from the recent economic downturn, the Administrative Central Office has implemented measures to ensure the financial integrity of current operations and has not created new programs or expanded existing ones. The fiscal year 2005 budget added new reductions to resources, which are being addressed through downsizing of operations and expenditure restrictions. Beyond unknown factors that may affect virtually all types of business operations, the Administrative Central Office is unaware of any currently known facts, decisions, or conditions that may be expected to have a significant effect on the office's current financial position or results of operations.

The loss of net assets attributable mainly to the increase in the incurred but not reported liability for health insurance claims has been addressed through measures designed to ensure that adequate reserves are available to meet that liability and to protect against any unanticipated increases in medical claims costs.

Constant monitoring of the resources and mission critical functions and activities continue in order to maintain the office's ability to react and respond effectively to unknown internal and external factors.

William R. Bowes, Vice Chancellor for Fiscal Affairs/Treasurer The Board of Regents Administrative Central Office

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BASIC FINANCIAL STATEMENTS - 1-

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) STATEMENT OF NET ASSETS JUNE 30, 2004

EXHIBIT"A"

ASSETS
Current Assets Cash and Cash Equivalents Investments Accounts Receivable, Net Federal Financial Assistance Other Prepaid Items
Total Current Assets
Noncurrent Assets Investments Capital Assets, Net (See Note 5)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Benefits Payable Deferred Revenue Funds Held for Others Capital Leases Compensated Absences
Total Current Liabilities
Noncurrent Liabilities Capital Leases Compensated Absences
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Unrestricted
Total Net Assets

$ 99,689,203.61 131,462,944.12
903,131.66 316,021.36
738.00
$ 232,372,038.75

$

3,612,043.20

15,399,922.51

$ 19,011,965.71

$ 251,384,004.46

$

53,773.89

26,506,139.92

248,659.95

155,184,144.89

1,508,057.88

1,442,449.62

$ 184,943,226.15

$

2,258,769.85

824,765.74

$

3,083,535.59

$ 188,026,761.74

$ 11,633,094.78
3,612,043.20 42,708,962.25
5,403, 142.49

$ 63,357,242.72

The notes to the financial statements are an integral part of this statement. -3 -

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT)
STATEMENT OF REVENUES. EXPENSES AND CHANGES IN NET ASSETS YEAR ENDED JUNE 30. 2004

EXHIBIT"B"

OPERATING REVENUES
Grants and Contracts Federal State Nongovernmental
Sales and Services of Educational Departments Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Staff
Employee Benefits 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 Nongovernmental Interest and Other Investment Income Interest Expense (Capital Assets) Other Nonoperating Revenues
Net Nonoperating Revenues
Increase (Decrease) in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

$

4,697,149.61

803,025.24

346,797.26

54,585.70

245, 156,480.41

$ 251,058,038.22

$

20,212,837.90

4,850,167.05

426,239.69

968,125.75

25,979,946.87

335,577,254.51

6,043,010.85

$ 394,057,582.62

$ -142,999,544.40

$ 136,231,950.72

308,509.62 218,322.63 534,955.63 -144,188.78 -839,923.30

$ 136,309,626.52

$

-6,689,917.88

70,047,160.60

$

63,357,242.72

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

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE {OVERSIGHT UNIT) STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30. 2004

EXHIBIT"C"

CASH FLOWS FROM OPERATING ACTIVITIES Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships 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 Purchases of Capital Assets Principal Paid on Capital Debt and Lease Interest Paid on Capital Debt and Lease
Net Cash Provided (Used) by Capital and Related Financing Activities
CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

$

5,655,998.89

54,585.70

-361, 155,534.02

-20, 162,248.45

-968,125.75

245,108,792.79

$ -131,466,530.84

$ 136,381,949.72 11,873,975.70 617,742.50 54 709.08
$ 148,928,377.00

$ -4,690,882.89 -1,673, 102.30 -144,188.78

$

-6,508, 173.97

$

224,246.14

$ 11,177,918.33

88,511,285.28

$ 99,689,203.61

RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable. Net Prepaid Items Accounts Payable Benefits Payable Deferred Revenue Compensated Absences
Net Cash Provided (Used) by Operating Activities

$ -142,999,544.40
6,043,010.85
457,248.59 1,296.00
-273,014.27 5,949,792.37 -695,909.43
50 589.45
$ -131,466,530.84

NONCASH ACTIVITY NONCAPITAL FINANCING, CAPITAL AND RELATED FINANCING TRANSACTIONS AND INVESTING ACTIVITIES Fixed Assets Acquired by Incurring Capital Lease Obligation Change in Fair Market Value of Investments Recognized as a Component of Interest Income
The notes to the financial statements are an integral part of this statement.
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$

1,681,671.58

$

310,709.49

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS The Administrative Central Office of the Board of Regents of the University System of Georgia is the "Oversight Unit" of the Board of Regents and performs administrative functions and provides guidance to the thirty-four (34) State colleges and universities and Skidaway Institute of Oceanography which are organizational units of the Board of Regents of the University System of Georgia.
REPORTING ENTITY The Board of Regents of the University System of Georgia, an organizational unit of the State of Georgia, was created by the "Reorganization Act of 1931 ". As of June 30, 2004, the Board of Regents of the University System of Georgia was composed of 34 institutions (4 research university level, 2 regional university level, 13 state universities, 2 state colleges and 13 two-year colleges), Skidaway Institute of Oceanography and an administrative central office, which is the oversight unit, responsible for implementation of Board policies and administrative support. The Board of Regents is composed of eighteen members appointed by the Governor and confirmed by the Senate. The Chancellor is appointed by the Board of Regents as chief executive officer and serves at the pleasure of the Board.
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 Board of Regents does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the Board of Regents (and thus the Administrative Central Office) 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.
The Board of Regents of the University System of Georgia (and thus the Administrative Central Office) is required to implement GASB Statement No. 39 Determining Whether Certain Organizations are Component Units - an amendment of Statement No. 14, for fiscal year 2004. This statement requires the inclusion of the financial statements for foundations and affiliated organizations that qualify as component units of the Administrative Central Office. For fiscal year 2004, the Administrative Central Office does not have any foundations or affiliated organizations that qualify as component units.
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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 Administrative Central Office also adopted 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 Administrative Central Office's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required.
BASIS OF ACCOUNTING For financial reporting purposes, the Administrative Central Office is considered a specialpurpose government engaged only in business-type activities. Accordingly, the Administrative Central Office'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-Administrative Central Office transactions have been eliminated.
The Administrative Central Office has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The Administrative Central Office 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.
INVESTMENTS The Administrative Central Office 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 statements of revenues, expenses and changes in net assets.
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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTS RECEIVABLE Accounts receivable consists of other receivables disclosed from information available. Accounts receivable also include amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the Administrative Central Office's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
NONCURRENTINVESTMENTS Investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement of Net 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 Administrative Central Office's capitalization policy includes all items with a unit cost of $5,000.00 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000.00 and 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.
Effective July 1, 2001, the GSFIC retains construction in progress on their books throughout the construction period and transfers the entire project to the Administrative Central Office when complete. For the year ended June 30, 2004, GSFIC did not transfer any capital additions to the Administrative Central Office.
DEFERRED REVENUES Deferred revenues include amounts received from grant and contract sponsors that have not yet been earned.
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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004
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 accrued vacation payable 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 Administrative Central Office had accrued liability for compensated absences in the amount of $2,216,625.91 as of July 1, 2003. For fiscal year 2004, $1,541,501.02 was earned in compensated absences and employees were paid $1,490,911.57, for a net increase of $50,589.45. The ending balance as of June 30, 2004 in accrued liability for compensated absences was $2,267,215.36. Compensated absences include a current liability of $1,442,449.62.
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 Administrative Central Office's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the Administrative Central Office'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 Administrative Central Office 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 Administrative Central Office is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NET ASSETS Expendable Restricted Net Assets include the following:

June 30, 2004

Restricted - E&G and Other Organized Activities Self-insured Health and Dental Benefits

$ 5,319,206.07 37,389,756.18

Total Restricted Expendable

$42,708,962.25

Unrestricted net assets: Unrestricted net assets represent resources derived from state appropriations and sales and services of educational departments. These resources are used for transactions relating to the educational and general operations of the Administrative Central Office, 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 $156,827.12. Unexpended state appropriations must be refunded to the Office of Treasury and Fiscal Services.

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

June 30, 2004

Reserve for Encumbrances Other Unrestricted

$ 6,626,389.41 -1,223,246.92

Total Unrestricted Net Assets

$ 5,403,142.49

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

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

CLASSIFICATION OF REVENUES The Administrative Central Office 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) sales and services of Educational Departments and (2) most Federal, state and local grants and contracts.

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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE {OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CLASSIFICATION OF REVENUES 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.
NOTE 2: CASH AND CASH EQUIVALENTS: OTHER DEPOSITS: AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State of Georgia (and thus the Administrative Central Office) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bill, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use ofthe 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, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, The Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies of the State of Georgia (and thus the Administrative Central Office), the option of exempting demand deposits from the collateral requirements.
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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE 2: CASH AND CASH EQUIVALENTS; OTHER DEPOSITS; AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia.

CATEGORIZATION OF DEPOSITS Cash deposits are categorized by risk as follows:

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

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

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

At June 30, 2004, the Administrative Central Office cash deposits were as follows:

Carrying Amount

Bank Balances

Risk Categories

2

3

Cash Deposits

$42.515.360.54 $39.457,844.29 $ 100,000.00 $39,357,844.29 $

0.00

Investment Portfolio

Accounts

4.344.106.18 4 344.106.18 4,344,106.18

Total Cash Deposits $46,859.466. 72 $43.80 I. 950.4 7 $ 4,444.106.18 $39 357 844.29 $======0==.0==0

CATEGORIZATION OF INVESTMENTS Investments are categorized as to credit risk within the three categories described below:

Category 1 - Insured or registered, or securities held by the entity or its agent in the entity's name.

Category 2 - Uninsured and unregistered, with securities held by the counter party's trust department or agent in the entity's name.

Category 3 - Uninsured and unregistered, with securities held by the counter party, or by its trust department or agent, but not in the entity's name.

The following is a risk categorization of the pooled investments of the Administrative Central Office's investments, as of June 30, 2004:

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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE {OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE 2: CASH AND CASH EQUIVALENTS; OTHER DEPOSITS; AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS

Tyge of Investments
Common Stock Corporate Bonds Repurchase Agreements U.S. Government Securities
Total Investments

Risk Categories

2

3

Carrying Amount

$

0.00 $

0.00 $ 63,144,928.19 $ 63,144,928.19

16,964,710.10 16,964,710.10

4,834,000.00 4,834,000.00

102,961,085.92 102,961,085.92

$

0.00 $

0.00 $187 904 724.21 $187 904 724.21

NOTE3: EXTERNALINVESTMENTPOOL

The Administrative Central Office serves as fiscal agent for various units of the University System of Georgia and cooperative organizations. The Administrative Central Office pools the monies of these organizations with the Administrative Central Office's monies for investment purposes. The Administrative Central Office cannot allocate pool investments between the internal (University System) and external (cooperative organizations) investment pool portions. The investment pool is not registered with the SEC 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. Condensed financial information for the investment pool follows:

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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE3: EXTERNALINVESTMENTPOOL

Statement of Net Assets - June 30, 2004

Assets

Cash Investments Interest Receivable

$ 775,215.99 163,004,674.28 758,567.62

$164,538,457.89

Net Assets Held in Trust for Pool Participants

Internal Portion External Portion

$ 9,723,877.01 154,814,580.88

$164,538,457.89

Statement of Changes in Net Assets - Year Ended June 30, 2004

Revenues

Interest Income Net Increase (Decrease) in Fair Value oflnvestments

$ 3,951,670.41 4,146,711.27

Total Revenues

$ 8,098,381.68

Expenses

Operating Expenses Administrative Expenses

420,167.32

Net Increase (Decrease) in Assets Resulting from Operations

$ 7,678,214.36

Distribution to Participants Capital Transactions

-14,788,129.24 29,685,842.21

Total Increase (Decrease) in Net Assets

$ 22,575,927.33

Net Assets July 1, 2003

141,962,530.56

Net Assets June 30, 2004

$164,538,457.89

NOTE 4: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2004.

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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE 4: ACCOUNTS RECEIVABLE

Other Operating Activities Federal and Private Funds Other

$ 335,757.85 921,657.12 1 454.64

Less Allowance for Doubtful Accounts

$ 1,258,869.61 39,716.59

Net Accounts Receivable

$ 1,219,153.02

NOTE 5: CAPITAL ASSETS

Following are the changes in capital assets for the year ended June 30, 2004:

Beginning Balance July 1, 2003

Additions

Reductions

Ending Balance June 30, 2004

Capital Assets, Not Being Depreciated:

Land

$ 2,411,877.00

Capitalized Collections

10,000.00

$ 2,411,877.00 10 000.00

Total Capital Assets Not Being Depreciated

$ 2,421,877.00

$ 2,421,877.00

Capital Assets, Being Depreciated: Building and Building Improvements Equipment Capital Leases

$ 728,406.53 26,587,222.57 $ 4,339,698.28

4,623, 111.06 $ 1 749443.41

$ 728,406.53 1,821,605.77 29,388,727.86
6,089,141.69

Total Assets Being Depreciated

$ 31,655,327.38 $ 6,372,554.47 $ 1,821,605.77 $ 36,206,276.08

Less: Accumulated Depreciation:

Buildings and Building Improvements $

0.00 $ 16,389.14

Equipment

17,576,076.16 4,669,507.89 $

Capital Leases

590,826.03 1,357,113.82

$ 16,389.14 981,682.47 21,263,901.58
1,947,939.85

Total Accumulated Depreciation

$ 18,166,902.19 $ 6,043,010.85 $ 981,682.47 $ 23,228,230.57

Total Capital Assets, Being Depreciated,

Net

$ 13,488,425.19 $ 329,543.62 $ 839,923.30 $ 12,978,045.51

Capital Assets, Net

$ 15 910 302.19 $ 329 543.62 $ 839,923.30 $ 15399922.51

NOTE 6: DEFERRED REVENUE

Deferred revenue consisted of the following at June 30, 2004.

Prepaid Health and Dental Premiums

$ 248,659.95

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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE {OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE 7: LONG-TERM LIABILITIES

Long-Term liability activity for the year ended June 30, 2004 was as follows:

Beginning Balance July 1, 2003

Additions

Reductions

Ending Balance June 30, 2004

Current Portion

Leases Lease Obligations

$ 3,758,258.45 $ 1,681,671.58 $ 1,673,102.30 $ 3,766,827.73 $ 1,508,057.88

Other Liabilities Compensated Absences

2,216,625.91

1,541.501.02

1,490,911.57

2,267,215.36

1,442,449.62

Total Long-Term Obligations $ 5,974 884.36 $ 3,223.172.60 $ 3.164,0)3 87 $ 6 034 043 09 $ 2.950.507.50

NOTES: LEASE OBLIGATIONS

The Administrative Central Office 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 and equipment.

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2006 and 2007. Expenses for fiscal year 2004 were $1,817,291.08 of which $144,188.78 represented interest. Total principal paid on capital leases was $1,673,102.30 for the fiscal year ended June 30, 2004. Interest rates range from 3.66 percent to 7.73 percent.

The following is a summary of the carrying values of assets held under capital lease at June 30, 2004:

Equipment

$ 4,141,201.84

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms.

OPERATING LEASES The Administrative Central Office has entered into an agreement to lease real property which is classified as an operating lease (leases on assets not recorded on the balance sheet). This lease contains provisions that, at the expiration date of the original term of the lease, the Administrative Central Office has the option of renewing the lease on a year-to-year basis. The Administrative Central Office did not elect to renew the lease for the subsequent fiscal year.

Expenses for agreements to lease real property under operating leases for the year ended June 30, 2004, totaled $436,740.00.

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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE 8: LEASE OBLIGATIONS

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) as of June 30, 2004, were as follows:

Year Ending June 30: 2005 2006 2007
Total Minimum Lease Payments
Less: Interest
Principal Outstanding

Capital Leases
$1,619,482.44 1,619,482.44 703,752.22
$ 3,942,717.10
175,889.37
$ 3,766,827.73

NOTE 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

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

Funding Policy Employees of the Administrative Central Office who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. The Administrative Central Office 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 2004, the employer contribution rate was 9.24% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT} NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE 9: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Funding Policy

Fiscal Year

Percentage Contributed

Required Contribution

2004 2003 2002

100% 100% 100%

$ 1,576,593.52 $ 1,527,821.81 $ 1,303,166.33

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description The Administrative Central Office participates in the Employees' Retirement System of Georgia (ERS), a single-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 65. If 10 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. 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 at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.

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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004
NOTE 9: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description 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 of SRBP 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 Administrative Central Office's payroll for the year ended June 30, 2004, for employees covered by ERS was $401,803.13. The Administrative Central Office's total payroll for all employees was $20,212,837.90.
Under the old plan, member contributions consist of 7.16% of annual compensation. Of these member contributions, the employee pays the first 1.5% and the Administrative Central Office 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 Administrative Central Office also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 2004, the ERS employer contribution rate for the Administrative Central Office amounted to 10.14% of covered payroll and included the amounts contributed on behalf of the employee under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Total contributions to the plan made during fiscal year 2004 amounted to $45,755.23, of which $40,732.68 was made by the Administrative Central Office and $5,022.55 was made by employees. These contributions met the requirements of the plan.
Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2004, financial report which may be obtained through ERS.
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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004
NOTE 9: RETIREMENT PLANS
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. 4721-1 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 Administrative Central Office 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. The employer contributes 10.03% of the participating employee's eamable compensation. Employees contribute 5% of their eamable compensation. Amounts attributable to all plan contributions are fully vested and nonforfeitable at all times.
The Administrative Central Office and the covered employees made the required contributions of $236,450.75 (10.03%) and $117,871.33 (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 Administrative Central Office participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia.
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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004
NOTE 9: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $ 3,500.00 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 and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
Total contributions made by employees during fiscal year 2004 amounted to $9,679.93 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.
The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices.
NOTE 10: RISK MANAGEMENT
The University System of Georgia offers its employees and retirees access to two different selfinsurance healthcare plan options - PPO/PPO consumer healthcare plan, and an indemnity healthcare plan. These plans are funded jointly through premiums paid by participants covered under the plans and employer contributions paid by the Board of Regents and its organizational units. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these plans are considered to be a self-sustaining risk fund. Both self-insured healthcare plan options provide a maximum lifetime benefit of $2,000,000.00 per person and dental coverage up to an annual maximum of $1,000.00 per person.
The Board of Regents has contracted with Blue Cross - Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator to process all medical claims in accordance with medical coverage guidelines as established by the Board of Regents. All claims submitted by program participants are remitted directly to Blue Cross - Blue Shield from the various organizational units for verification of coverage, processing and payment through a bank account maintained for this purpose by Blue Cross - Blue Shield. Blue Cross - Blue Shield maintains an eligibility file based on information furnished by the various organizational units of
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BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE 10: RISK MANAGEMENT

the University System of Georgia. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, two fully insured HMO healthcare plan options are also offered to System employees.

Express Scripts is the administrator of the Board of Regents' prescription drug plan. Pharmacy drug claims will be processed in accordance with guidelines established for the Board of Regents' Prescription Drug Benefit Program. Generally, claims are submitted by participating pharmacies directly to Express Scripts for verification, processing and payment. Express Scripts maintains an eligibility file based on information furnished by Blue Cross - Blue Shield on behalf of the various organizational units of the University System of Georgia.

A reconciliation of total estimated claims liabilities for the fiscal year ended June 30, 2004, is shown below:

Unpaid Claims and Claim Adjustments July 1, 2003

$ 20,556,347.55

Incurred Claims and Claim Adjustments Expenses - Provisions for Insured Events of the Current Year

221,832,434.71

Payments - Claims and Claim Adjustments Attributable to Insured Events of the Current Year and of Prior Years

215,882,642.34

Unpaid Claims and Claim Adjustments June 30, 2004

$ 26,506,139.92

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 Administrative Central Office, 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.

- 23 -

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004
NOTE 10: RISK MANAGEMENT
A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund.
NOTE 11: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the Administrative Central Office expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the Administrative Central Office (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2004.
NOTE 12: 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 of the 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 are on a pay as you go basis to finance the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000.00 for basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee.
As of June 30, 2004, there were 52 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2004, the Administrative Central Office recognized as incurred $236,600.35 of expenses, which was net of $108,537.36 of participant contributions.
- 24 -

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA EXHIBIT "D" ADMINISTRATNE CENTRAL OFFICE {OVERSIGHT UNIT) NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2004

NOTE 13: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The Administrative Central Office's operating expenses by functional classification are shown below:

Statement of Operating Expenses - Natural vs Functional Classifications For the Fiscal Year Ended June 30, 2004

Functional Classification

Natural Classification

Instruction

Research

Public Service

Academic Support

Student Services

Salaries Staff
Employee Benefits Travel Scholarships and
Fellowships Utilities Supplies and Other
Services Depreciation

$ 356,335.33 $ 69,074.04 3,158.39

17,000.04 $ 1,722,748.55 $ 1,256,205.88 $

3,889.68

382,276.08

284,985.80

7,841.51

42,773.99

41,513.43

203,799.07 36,156.07 6,375.27

4,109.56 3,564,446.40

106,383.25

19,311,399.81 70,385,414.43

27,255.68 8,779,382.28

2,398.45

Total Operating Expenses

$ 3 997 123 72 $ 135 114 48 $ 91 844 612.86 $ IO 389 343 07 $ 248 728.86

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

Institutional Support

Functional Classification

Scholarships and Fellowships

Unallocated Depreciation

Total Operating Expenses

$ 16,656,749.03 4,073,785.38 324,577.10

$ 20,212,837.90 4,850,167.05 426,239.69

$ 968,125.75 6,634,783.37

968,125.75 25,979,946.87

252,741,628.15

335,577,254.51

$ 6,043,010.85

6,043,010.85

$280 431 523.03 $ 968 125 75 $ 6043 010 85 $394 057 582.62

- 25 -

SUPPLEMENTARY INFORMATION - 27 -

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT)
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET - (NON-GAAP BASIS) RESIDENT INSTRUCTION YEAR ENDED JUNE 30. 2004

SCHEDULE "1"

REVENUES
State Appropriations Other Revenues Retained

BUDGET

ACTUAL{1)

VARIANCEFAVORABLE {UNFAVORABLE)

$ 40.797,259.00 $ 40,797,259.00 $

0.00

19,471,123.00

18,080,102.14

-1,391,020.86

$ 60,268,382.00 $ 58,877,361.14 $ _ _-....:.1,_39_1..:...,0_2_0._8_6

EXPENDITURES
Personal Services: Education, General and Departmental Services Sponsored Operations
Operating Expenses: Education, General and Departmental Services Sponsored Operations
Special Funding Initiative Research Consortium

$

14,821,778.00 $ 14,838,977.87 $

995,690.00

577,677.71

34,532,909.00 3,345,829.00 4,516,176.00 2,056,000.00

34,381,940.89 1,875,958.84 4,515,979.99 2,056,000.00

-17, 199.87 418,012.29
150,968.11 1,469,870.16
196.01 0.00

$ 60,268,382.00 $ 58,246,535.30 $ _ _2-'-',0'--2_,1,..;_84...c.6_7...c...0

Excess of Revenues over Expenditures

$

630,825.84 $ ===6=3=0,..,8=2=5.=8=4

(1) 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.

See notes to the financial statements.

- 29-

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT)
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET - (NON-GAAP BASIS)
REGENTS CENTRAL OFFICE AND OTHER ORGANIZED ACTIVITIES YEAR ENDED JUNE 30. 2004

SCHEDULE "2"

REVENUES
State Appropriations Other Revenues Retained

BUDGET

ACTUAL (1)

VARIANCEFAVORABLE (UNFAVORABLE)

$ 95.548.674.00 $ 95.548.674.00 $

3.914.586.00

3,863,932.48

0.00 -50,653.52

$ 99,463,260.00 $ 99.412.606.48 $ _ ___;-5:..::0.c.:.6:..::5::..3.:::.;52::..

EXPENDITURES
Personal Services: Education. General and Departmental Services Sponsored Operations
Operating Expenses: Education. General and Departmental Services Sponsored Operations
Capital Outlay SREB Payments Regents Opportunity Grants Rental Payments to Georgia Military College Direct Payments to GPTC for Operations Public Libraries Salaries and Operations Georgia Medical College Health. Inc.

$

7.995.285.00 $ 7.995.068.31 $

665.790.00

665.788.84

2.996.586.00 2.723.593.00
19.684.00 819,638.00 517.964.00 1.745.496.00 17.703.442.00 31,107.695.00 33,168,087.00

2.994.450.62 2,728,033.88
19.683.30 798.733.00 478.121.00 1.745.496.00 17. 703.442.00 31,107,680.07 33,168,087.00

216.69 1.16
2,135.38 -4.440.88
0.70 20,905.00 39.843.00
0.00 0.00 14.93 0.00

$ 99,463,260.00 $ 99.404,584.02 $ _ ___;5:..::8~,6:..:.7.:::.;5-.:::.;98.::...

Excess of Revenues over Expenditures

$

8,022.46 $ ====8=,0=2=2.=46=

(1) 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.

See notes to the financial statements.

- 31 -

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) SCHEDULE OF APPROVED BUDGET RESIDENT INSTRUCTION YEAR ENDED JUNE 30. 2004

REVENUES
State Appropriations Other Revenues Retained
EXPENDITURES
Personal Services: Education, General and Departmental Services Sponsored Operations
Operating Expenses: Education, General and Departmental Services Sponsored Operations
Capital Outlay Special Funding Initiative Office of Minority Business Enterprises Student Education Enrichment Program Forestry Research Research Consortium Austerity Adjustments

ORIGINAL APPROPRIATION

AMENDED APPROPRIATION

GOVERNOR'S EMERGENCY FUND

$ 1,469,544,801.00 $ 2,199,086,199.00

-40.887,449.00 $ 56,428,776.00

-35.000.00

$ 3,668,631,000.00 $

15,541,327.00 $====-=35='==00=0=.0=0

$ 1,765,376,132.00 $ 424,223,505.00
466,691,404.00 854,188,741.00 123.584,731.00
32,963,542.00 1,138,340.00 345,833.00 1,011,627.00
29,490,997.00 -30,383,852.00

32,481,632.00 79,214,807.00
4,256,358.00 $ -98,992, 177.00 -28,521,399.00
-1,842,771.00 -150, 188.00 -19,074.00 -55,796.00
-1,213,917.00 30,383,852.00

-35,000.00

$ 3,668,631,000.00 $

15,541,327.00 $ ====-=35=1,0=0=0=.0=0

See notes to the financial statements.

- 32 -

SCHEDULE "3"

BUDGET ADJUSTMENTS

TOTAL APPROVED
BUDGET

LESS: BUDGET TRANSFERS TO OTHER UNITS

TOTAL

$ 1,428,622,352.00 $

$ 324,249,205.00

2,579,764,180.00

1,387,825,093.00 $ 2,560,293,057.00

40,797,259.00 19,471,123.00

$ 324,249,205.00 $ 4,008,386,532.00 $ 3,948,118,150.00 $ 60,268,382.00

$

1,316,259.00 $ 1,799,174,023.00 $ 1,784,352,245.00 $ 14,821,778.00

451,755.00

503,890,067.00

502,894,377.00

995,690.00

160,230,357.00 112,929,538.00
49,312,546.00
350,000.00 -341,250.00

631,143,119.00 868,126,102.00 144,375,878.00
31,120,771.00 988,152.00 326,759.00
1,305,831.00 27,935,830.00
0.00

596,610,210.00 864,780,273.00 144,375,878.00
26,604,595.00 988,152.00 326,759.00
1,305,831.00 25,879,830.00

34,532,909.00 3,345,829.00 0.00 4,516,176.00 0.00 0.00 0.00 2,056,000.00 0.00

$ 324,249,205.00 $ 4,008,386,532.00 $ 3,948,118,150.00 $ 60,268,382.00

- 33-

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNITI SCHEDULE OF APPROVED BUDGET
REGENTS CENTRAL OFFICE AND OTHER ORGANIZED ACTIVITIES YEAR ENDED JUNE 30, 2004

FUNDS AVAILABLE REVENUES
State Appropriations Other Revenues Retained
CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance

ORIGINAL APPROPRIATION

AMENDED APPROPRIATION

$ 205,346,796.00 $ 206,673,342.00
$ 412,020,138.00 $

-3,938,372.00 10,324,643.00
6,386,271.00

1,799,747.00

$ 413,819,885.oo $ ===6,=38=6=,2=1=1=o=o

EXPENDITURES
Personal Services: Education, General and Departmental Services Sponsored Operations
Operating Expenses: Education, General and Departmental Services Sponsored Operations
Agricultural Research Advanced Technology Development Center/
Economic Development Institute Capital Outlay Center for Rehabilitation Technology SREB Payments Regents Opportunity Grants Rental Payments to Georgia Military College Direct Payments to the GPTC for Operations Public Libraries Salaries and Operations Georgia Medical College Health, Inc. Austerity Adjustments

$ 132,973,578.00 $ 70,959,391.00
53,997,362.00 41,101,657.00
2,811,580.00
23,067,667.00
7,790,087.00 874,601.00 565,155.00
1,831,602.00 18,157,376.00 30,951,441.00 35,104,249.00 -6,365,861.00

-2,583,211.00 4,902,807.00
-5,035, 138.00 134,851.00 -156,935.00
1,310,193.00
834,852.00 -54,963.00 -47,191.00 -86,106.00 -453,934.00 3,191,347.00 -1,936, 162.00 6,365,861.00

See notes to the financial statements.

$ 413,819,885.00 $===6,=38=6=,2=7=1.=00= - 34-

SCHEDULE "4"

BUDGET ADJUSTMENTS

TOTAL APPROVED
BUDGET

LESS: BUDGET TRANSFERS TO OTHER UNITS

TOTAL

$ 201,408,424.00 $

$ 32,873,571.00

249,871,556.00

$ 32,873,571.00 $ 451,279,980.00 $

105,859,750.00 $ 245,956,970.00

95,548,674.00 3,914,586.00

351,816,720.00 $ 99,463,260.00

-1,688,355.00

111,392.00

111,392.00

0.00

$ 31,185,216.00 $ 451,391,372.00 $

351,928,112.00 $ 99,463,260.00

$

2,237.00 $ 130,392,604.00 $

5,215,790.00

81,077,988.00

8,789,291.00 18,675,582.00

57,751,515.00 59,912,090.00
2,654,645.00

1,192,456.00 19,684.00
325,269.00
-3,035,093.00

25,570,316.00 19,684.00
8,950,208.00 819,638.00 517,964.00
1,745,496.00 17,703,442.00 31,107,695.00 33,168,087.00
0.00

122,397,319.00 $
80,412,198.00

7,995,285.00 665,790.00

54,754,929.00 57,188,497.00
2,654,645.00

2,996,586.00 2,723,593.00
0.00

25,570,316.00 8,950,208.00

0.00 19,684.00
0.00 819,638.00 517,964.00 1,745,496.00 17,703,442.00 31,107,695.00 33,168,087.00
0.00

$ 31,185,216.00 $ 451,391,372.00 $

351,928,112.00 $ 99,463,260.00

- 35 -

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) SCHEDULE OF APPROVED BUDGET LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 2004

FUNDS AVAILABLE REVENUES
State Appropriations CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
EXPENDITURES Prior Year ETACT - University of Georgia Prior Year ETACT - Georgia State University Prior Year ETACT - Valdosta State University

ORIGINAL APPROPRIATION

BUDGET ADJUSTMENTS

$

0.00 $

0.00

0.00

2,606,436.00

$

o.oo $ ==2=,6=06=,4=3=6=.o=o

$

0.00 $

1,538,231.00

1,063, 196.00

5,009.00

$

0.00 $

2,606,436.00

See notes to the financial statements.

- 36 -

SCHEDULE "5"

TOTAL APPROVED
BUDGET

LESS: BUDGET TRANSFERS TO OTHER UNITS

TOTAL

$

0.00 $

0.00 $

0.00

2,606,436.00

2,606,436.00

0.00

$ 2,606,436.00 $

2,606,436.oo $ =====o=.o=o

$ 1,538,231.00 $

1,538,231.00 $

0.00

1,063,196.00

1,063,196.00

0.00

5,009.00

5,009.00

0.00

$ 2,606,436.00 $

2,606,436.00 $ =====O=.O=O

- 37 -

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT)
SCHEDULE OF ALLOTMENTS TO UNITS OF THE UNIVERSITY SYSTEM OF GEORGIA RESIDENT INSTRUCTION
YEAR ENDED JUNE 30. 2004

RESEARCH UNIVERSITIES
Georgia Institute of Technology Georgia State University Medical College of Georgia University of Georgia
REGIONAL UNIVERSITIES
Georgia Southern University Valdosta State University
STATE UNIVERSITIES/COLLEGES
Albany State University Armstrong Atlantic State University Augusta State University Clayton College and State University Columbus State University Fort Valley State University Georgia College and State University Georgia Southwestern State University Kennesaw State University North Georgia College and State University Savannah State University Southern Polytechnic State University State University of West Georgia
ASSOCIATE DEGREE COLLEGES
Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Dalton State College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College Gordon College Macon State College Middle Georgia College South Georgia College Waycross College
OTHER
Skidaway Institute of Oceanography

See notes to the financial statements.

- 38 -

REGULAR

SPECIAL FUNDING INITIATIVE

$ 171.138.554.00 $ 3,393,738.00

162,935,968.00

1,062,019.00

105,002,657.00

1,603,065.00

305,101,704.00

1,885,425.00

68,541,388.00 42,848,458.00

3,481,861.00 521,451.00

17,802,926.00 24,141,627.00 22,670,003.00 17,405,812.00 26,103,344.00 16,300,409.00 24,726,164.00 12,338,309.00 54,066,212.00 18,019,482.00 15,355,009.00 18,337,429.00 37,289,474.00

1,264,267.00 975,954.00 245,042.00 181,304.00 318,087.00
2,659,644.00 1,630,673.00
285,403.00 591,581.00 892,983.00 1,014,078.00 262,668.00 1,019,351.00

11,459,149.00 7,040,101.00 5,364,886.00 7,704,694.00
10,692,402.00 11,330,323.00
4,052,976.00 9,556,364.00 11,675,644.00 49,797,027.00 10,215,483.00 15,459,407.00 9,817,138.00 5,245,716.00 3,349,043.00

203,460.00 170,277.00
56,356.00 65,112.00 17,738.00 247,593.00 820,582.00 142,650.00 247,620.00 147,660.00 152,145.00 150,060.00 727,793.00 57,982.00 108,973.00

184,644.00

$ 1,333,069,926.00 $ 26,604,595.00

SCHEDULE "6"

OFFICE OF MINORITY BUSINESS ENTERPRISES

STUDENT EDUCATION ENRICHMENT PROGRAM

FORESTRY RESEARCH

RESEARCH CONSORTIUM

TOTAL

$ 14,850,106.00 $ 189,382,398.00

6,651,754.00

170,649,741.00

$

326,759.00

100,000.00

107,032,481.00

$

545,020.00

$ 955,831.00

2,856,722.00

311,344,702.00

414,434.00

72,437,683.00 43,369,909.00

102,262.00 170,435.00

567,843.00
257,254.00 181,717.00

19,169,455.00 25,685,424.00 23,085,480.00 17,587,116.00 26,421,431.00 18,960,053.00 26,356,837.00 12,623,712.00 54,915,047.00 18,912,465.00 16,369,087.00 18,781,814.00 38,308,825.00

170,435.00

11,662,609.00 7,380,813.00 5,421,242.00 7,769,806.00
10,710,140.00 11,577,916.00 4,873,558.00
9,699,014.00 11,923,264.00 49,944,687.00 10,367,628.00 15,609,467.00 10,544,931.00
5,303,698.00 3,458,016.00

184,644.00

$

988,152.00 $

326,759.00 $ 955,831.00 $ 25,879,830.00 $ 1,387,825,093.00

- 39 -

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT)
SCHEDULE OF ALLOTMENTS TO UNITS OF THE UNIVERSITY SYSTEM OF GEORGIA REGENTS CENTRAL OFFICE AND OTHER ORGANIZED ACTIVITIES YEAR ENDED JUNE 30. 2004

SCHEDULE "7"

RESEARCH UNIVERSITIES
Georgia Institute of Technology Education Extension Services Advanced Technology Development Center/ Economic Development Institute Georgia Tech Research Institute
University of Georgia Agricultural Experiment Station Cooperative Extension Service Marine Institute Marine Resources Extension Center Veterinary Medicine Experiment Station Veterinary Medicine Teaching Hospital
OTHER
Skidaway Institute of Oceanography

$ 9,361,860.00 9,086,302.00
43,074,977.00 36,143,638.00
996,208.00 1,550,755.00 3,461,327.00
492,975.00
1,691,708.00
$ 105,859,750.00

See notes to the financial statements.

- 41 -

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE /OVERSIGHT UNIT)
ANALYSIS OF PRIOR YEAR'S SURPLUS FUNDS COLLECTED FROM INSTITUTIONS AND REDISTRIBUTED TO INSTITUTIONS WITH DEFICITS YEAR ENDED JUNE 30 2004

TOTAL

COLLECTED

REDISTRIBUTED

RESIDENT INSTRUCTION

REGULAR

LOTTERY FOR EDUCATION

COLLECTED

REDISTRIBUTED

COLLECTED REDISTRIBUTED

RESEARCH UNIVERSITIES
Georgia Institute ofTechnology Georgia State University Medical College of Georgia University of Georgia

$ 4,878,883.99 $ 37,025.29
628,133.80 125,262.87

4,878,883.99 $

4,855,430.48 37,025.29
477,497.47 117,450.87

$

0.00

$

724.50

REGIONAL UNIVERSITIES
Georgia Southern University Valdosta State University

53,102.00 17,390.28

45,619.98 17,343.98

STATE UNIVERSITIES/COLLEGES
Albany State University Armstrong Atlantic State University Augusta State University Clayton College and State University Columbus State University Fort Valley State University Georgia College and State University Georgia Southwestern State University Kennesaw State University North Georgia College and State University Savannah State University Southern Polytechnic State University State University of West Georgia

406,835.72 6,503.53 3,514.32 58,765.44
48,350.31 64,514.67 40,089.24
6,722.72 355,036.12
12,498.36 2,369.37
278,952.93 6,580.46

15,976.70 3,514.32
64,514.67
225,314.70 6,579.51

402,810.62 4,764.93 $ 14,623.02
47,574.94 43,310.69 32,164.54
6,570.31 293,848.87
7,210.21 2,369.37 278,952.93

3,514.32

4,025.10 1,448.79
101.70
21,203.98 843.70
5,835.97

6,579.51

0.95

ASSOCIATE DEGREE COLLEGES

Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Dalton State College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College Gordon College Macon State College Middle Georgia College South Georgia College Waycross College

44,880.93 3,663.92
47,341.27 46.99
3,471.21 10,235.43 60,989.63 184,901.05 12,052.26 231,851.63 181,641.18 19,859.61 72,324.76
1,972.55 5,094.49

3,333.37 40.90
181,479.03 39,268.72 968.65

44,445.48 3,663.92
47,276.95 46.99
3,471.21 96.29
57,825.83 156,901.05
7,856.32 158,608.90 181,641.18
7,363.67 72,135.10
17.15

968.65

12.00 271.00
4,133.64
178.13 189.66 28.92

OTHER Skidaway Institute of Oceanography

143,352.62

$ 7,910,858.33 $

5,563,227.18 $ 7,425,918.54 $

11,062.48 $

38,998.04 $

0.00

Current Funds - Unrestricted Surplus

2,347,631.15 $ 7,910,858.33 $==7;,;;,9;;,;1~0.;,8;,;;58;,;;.3;;;3:.,

See notes to the financial statements.

-42-

SCHEDULE "8"

--------'0=-.;T"-H'-=E"-R'"'O"'R""G"""ANIZ=E=D~A-"C""T-'-IV~IT""l""ES=--------

REGULAR

LOTTERY FOR EDUCATION

COLLECTED REDISTRIBUTED

COLLECTED REDISTRIBUTED

PLANT FUNDS

REGULAR

LOTTERY FOR EDUCATION

COLLECTED

REDISTRIBUTED

COLLECTED

REDISTRIBUTED

$ 23,453.51 7,812.00

$

0.00 $

0.00

4,878,883.99 $

0.00 $

0.00

$ 149,911.83

7,482.02 46.30

289.81 3,514.32 44,040.72
775.37
7,081.00 152.41
55,351.28 5,288.15
6,579.51

15,976.70 64,514.67 225,314.70

435.45
64.32
10,127.14 2,892.80 28,000.00
62.30 73,242.73
12,317.81
1,943.63 5,077.34

3,333.37 40.90
181,479.03 39,268.72

$

143,352.62

$ 31,265.51 $

143,352.62 $

0.00 $

0.00 $ 414,676.24 $

5,408,812.08 $

0.00 $

0.00

-43-

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2004

SCHEDULE "9"

Totals per Annual Supplement
Compensated Absences June 30, 2004 June 30, 2003

SALARIES $ 20,165,843.52 $

TRAVEL 426,239.69

2,106,098.80 -2,059, 104.42

$ 20,212,837.90 $==4=2=6=,2=39=.6=9=

See notes to the financial statements.

-45-

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.