GA A!loo ,t<_ I e,43 ~ ' ' .., . ' , ' I , ,I ' I '' ~ STATE OF GEORGIA . DEP'A' RTMENT, O.F AUDITS AND Ac:couNTS ' ' ; ' I ' ' I '\ ,... ~/ j ' I '\ ' ' i ,, \ I \ -' __, v I - ' ' j J ' ,, -<. ' \ . , 4 - ' 1\ .GEORGIA COLLEGE AND STATE UNIVERSITY ' I ' , MILLEDGEVILLE, ,GEORGIA r, _ ' ' ._ J J REPORT ON REVIEW ', - ' OF THE FINANCIAL STATEMENTS - ' FOR THE FISCAL YEAR ENDED :JUNE 30, 2002 I I ,, ' '- ' - \, r ) '- I I ' ', ' ' ' I ' ' ', I , , C L } , , ,I '- ' ., ,_ Russell W. Hinton I ' State Audito' r '- , ' GEORGIA COLLEGE AND STATE UNIVERSITY - TABLE OF CONTENTS - FINANCIAL INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENTS DISCUSSION AND ANALYSIS 2 BASIC FINANCIAL STATEMENTS EXHIBITS A STATEMENT OF NET ASSETS 11 B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS 12 C STATEMENT OF CASH FLOWS 13 D NOTES TO THE FINANCIAL STATEMENTS 14 SUPPLEMENTARY INFORMATION SCHEDULES SCHEDULES OF REVENUES AND EXPENDITURES COMPARED TO BUDGET - (NON-GAAP BASIS) 1 RESIDENT INSTRUCTION 33 2 LOTfERY FOR EDUCATION 34 3 RECONCILIATION OF SALARIES AND TRAVEL 35 FINANCIAL 1(1,s.scu W. Hl'm, STAT[ AUt'ITOA ('(),I\ 656 21 ,.s DEPARTl\fENT OF AUDITS AND ACCOUNTS ~.5..t W.1 ... hington ~1rrct S v,.. ~ullc 214 Al l,mlJ Gcorg,o 10334-8400 December 13, 2002 Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the Umverslly System of Georgia and Honorable Rosemary DePaolo, President Georgia College and State Umvers1ty INDEPEl\'DENT ACCOUNTANTS COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Ladies and Gentlemen We have reviewed the accompanymg basic financial statements (Exlub1ts A through D) of Georgia College and State Umvers1ty, an organ1zat1onal unit of the State of Georgia, as of and for the year ended June 30, 2002. m accordance with Statements on Standards for Accountmg and Review Services issued by the Amencan Institute ofCertified Pubhc Accountants All mformat1on mcluded m these financial statements 1s the representat10n of the management of Georgia College and State Umvers1ty. A review consists pnnc1pally of mqumes ofUmverslly personnel and analytical procedures apphed to financial data It 1s substanllally less m scope than an audit m accordance with aud1tmg standards generally accepted m the Umted States of Amenca, the obJecllve of which 1s the express10n of an op1111on regardmg the financial statements taken as a whole Accordmgly, we do not express such an opm1on Based on our reV1ew, with the excepllon of the matter discussed m the fourth paragraph, we are not aware of any matenal mod1ficat1ons that should be made to the accompanymg financial statements m order for them to be m conformity WIth accountmg pnnc1ples generally accepted m the Urutcd States of Amenca As descnbed m Note I to the fmancial statements, the Umvers1ty did not recogmze June 30, 2001, encumbrances as expenses m the June 30, 2002, basic financial statements To conform to generally accepted accountmg pnnc1ples, encumbrances should be recogmzed as expenses and hab1ht1es m the penod that goods and services are received The effects on the basic financial statements of this departure from generally accepted accountmg pnnc1p\es were not reasonably determmab\e 02ARL-67 As descnbed in Note 1, Georgia College and State Umvers1ty adopted the prov1s1ons of Governmental Accounting Standards Board (GASB) Statement No 35, Basic Fznanczal Statements and Management's D1scuss1on and Analvszs -for Pub/zc Colleges and Umverwzes, as amended by GASB Statement No 37, Basic Financial Statements -and Management's Dzscusszon and Analysis for State and Local Governments, and GASB Statement No 38, Certain Fmancza/ Statements Note Dzsclosures, as of July 1, 2001, to implement a new financial reporting model Management's D1scuss1on and Analysis 1s not a requJTed part ofthe basic financial statements but 1s supplementary mforrnat10n reqmred by the GASB We have apphed certain hm1ted procedures, which consisted pnnc1pally of mqwnes ofmanagement regardmg the methods ofmeasurement and presentation oftlus supplementary mforrnatlon, and we are not aware ofany matenal mod1ficat1ons that should be made thereto Our review was made for the purpose of expressmg hmlled assurance that there are no matenal modifications that should be made to the financial statements in order for them to be m conformity with accountmg pnnc1ples generally accepted m the Umted States of Amenca The accompanymg supplementary mformat10n (Schedules 1 through 3) 1s presented for add1t1onal analysis purposes. Such mforrnatlon has been subjected to the mqumes and analytical procedures apphed m the reVJew of the financial statements, and we are not aware of any matenal modifications that should be made to such data. Respectfully submitted, ~-~ ' Hmton State Auditor RWHgp 02ARL-67 REQUIRED SUPPLEMENTARY INFORMATION -I- GEORGIA COLLEGE AND STATE UNIVERSITY Management's Discussion and Analysis Introduction Georgia College and State Umverslty 1s one of the 34 institutions of the Umvers1ty System of Georgia Georgia College and State Uruvers1ty, located m M1lledgev11le, Georgia. onginated m 1889 as Georgia Normal and lndustnal College It later became Georgia State College for Women (GSCW) In 1967 1t became Georgia College and was re-established as a co-educational institution In 1995 the Board of Regents gave Georgia College umvers1ty status, a new m1ss10n, and a new name, "Georgia College and State Umvers1ty" As the state's designated pubhc hberal arts umvers1ty, Georgia College and State Umvers1ty 1s committed to combmmg the educational expenences typical ofesteemed pnvate liberal arts colleges with the affordab1hty of pubhc lugher education Georgia College and State Umvers1ty 1s a res1dent1al learning cornmuruty that emphasizes undergraduate education and offers selected graduate programs The faculty 1s dedicated to challenging students and fostering excellence m the classroom and beyond Georgia College and State Uruvers1ty seeks to endow Its graduates with a passion for acluevement, a hfelong cunos1ty, and exuberance for hvmg Georgia College and State Umvers1ty offers degree programs m the Arts and Sciences, Business, Education and Health Sciences as well as Pre-Profess10nal and Graduate Studies There are over 4,300 students enrolled on the M1lledgeV11le campus Faculty Students FY2002 FY2001 FY2000 282 6,352 236 7,028 229 7,096 Overview ofthe Financial Statements and Financial Analysis Georgia College and State Umverslty 1s proud to present Its financial statements for fiscal year 2002 The emphasis of d1scuss1ons 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 m Net Assets, and, the Statement of Cash Flows Tlus d!scuss10n and analysis of the Umvers1ty's financial statements provides an overview of1ts financial act1v1ues for the year Georgia College and State Umvers1ty has elected to not restate pnor penods for purposes of prov1dmg the comparative data for tlus Management's D1scuss1on and Analysis However, m future years, when pnor penod mformat1on 1s available, a comparative analysis will be presented Statement ofNet Assets The Statement ofNet Assets presents the assets, hab1ht1es, and net assets ofthe Umvers1ty as of the end of the fiscal year. The Statement of Net Assets 1s a pomt of time financial statement The -2 pwpose ofthe Statement ofNet Assets 1s to present to the readers of the financial statements a fiscal snapshot ofGeorgia College and State University The Statement ofNet Assets presents end-of-year data concerning Assets (current and non-current), Liab1ht1es (current and non-current), and Net Assets (assets minus hab1ht1es) The difference between current and non-current 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 ofthe institution They are also able to determine how much the institution owes vendors, investors and lending institutions Finally, the Statement ofNet Assets proVIdes a picture ofthe net assets (assets minus hab1ht1es) and their availab1hty for expenditure by the institution Net assets are d1v1ded into three maJor categones The first category, invested in capital assets, net ofdebt, provides the institution's eqwty in property, plant and equipment owned by the institution The next asset category 1s restncted net assets, which 1s d1v1ded into two categones, nonexpendable and expendable The corpus of nonexpendable restncted resources 1s only available for investment purposes Expendable restncted net assets are available for expenditure by the institution but must be spent for pwposes as determined by donors and/or external entitles that have placed time or purpose restnctlons on the use of the assets. The final category 1s unrestncted net assets Unrestncted assets are available to the institution for any lawful purpose of the institution Statement of Net Assets, Condensed (thousands of dollars) Assets Current Assets Capital Assets, Net Other Assets $ 13,854 32,688 5 907 Total Assets $ 52,449 Liabilities Current L1ab1ht1es Non-Current L1ab1ht1es Total Liabilities $ 6,703 805 $ 7,508 Net Assets Invested in Capital Assets, Net of Debt Restncted - Nonexpendable Restncted - Expendable Unrestncted Total Net Assets Statement ofRevenues, Expenses and Changes in Net Assets $ 32,649 2,645 4,715 4,932 $ 44 941 Changes in total net assets as presented on the Statement of Net Assets are based on tbe activity presented in tbc Statement ofRevenues, Expenses and Changes in Net Assets. The purpose of the -3- statement 1s to present the revenues received by the inst1tut1on, 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 inst1tut10n Generally speaking operating revenues are received for providing goods and services to the vanous customers and constituencies of the inslitulion Operating expenses are those expenses paid to acqmre or produce the goods and services provided in return for the operatmg revenues, and to carry out the m1ss10n of the insutuuon Nonoperating revenues arc revenues received for which goods and services arc not provided For example state appropnalions are nonoperating because they are provided by the Legislature to the mslitulion 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) Operating Revenues Operating Expenses $ 26,337 54.769 Operaung Loss $ -28,432 Nonoperating Revenues and Expenses 30. I 59 Increase in Net Assets S 1.727 Net Assets at Beginrung of Year, as Onginally Reported $ 93,854 Cumulative Effect of Changes in Accounting Pnnc1ple -50.640 Net Assets at Beginrung ofYearRestated $ 43,214 Net Assets at End of Year S 44.941 The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with an increase in the net assets at the end ofthe year. Some h1ghhghts ofthe information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows -4- Revenue By Source (thousands of dollars) For The Year Ended June 30, 2002 Operating Revenue Tuition and Fees Grants and Contracts Sales and Services of Educat10nal Departments Aux1hary Other Total Operatmg Revenue Nonoperatmg Revenue State Appropnatlons Gifts Investment Income Other Total Nonoperatmg Revenue Total Revenues Expenses (thousands of dollars) For The Year Ended June 30, 2002 Operatmg Expenses Instruction Research Pubhc SerY1ce Academic Support Student Services Inst1tut1onal Support Plant Operal!ons and Mamtenance Scholarships and Fellowslups Aux1hary Enterpnses Unallocated Deprec1alion Total Operating Expenses Nonoperatmg Expenses Interest Expense (Capital Assets) Total Expenses -5 - S 11,901 2,623 790 I 0,645 378 $ 26,337 $ 29,507 1,669 -256 -758 $ 30,162 $ 56.499 $ 22,349 22 319 3,593 3,223 6,673 4,282 3,284 8.900 2,124 $ 54,769 3 $ 54,772 Statement of Cash Flows The final statement presented by the Umverslly 1s the Statement of Cash Flows The Statement of Cash Flows presents detailed mformat1on about the cash activity of the mst1tut1on dunng the year The statement 1s d1v1ded mto five parts The first part deals with operatmg cash flows and shows the net cash used by the operatmg acuv11ies of the mslitulion The second seclion reflects cash flows from non-capital financmg ac11v11ies Th.is seclion reflects the cash received and spent for nonoperatmg, non-mvestmg, and non-capital financmg purposes The third seclion reflects the cash flows from mvesting acUVItles and shows the purchases, proceeds, and mterest received from mvestmg act1v1t1es The fourth section deals with cash flows from capital and related financing acl!VJtJes This seclion deals with the cash used for the acqms1t1on and construclion of capital and related items. The fifth seclion reconciles the net cash used to the operatmg mcome or loss reflected on the Statement of Revenues, Expenses and Changes m Net Assets Cash Flows for the Year Ended June 30, 2002, Condensed (thousands of dollars) Cash Provided (Used) By Operatmg Act1v11ies Non-Capital Fmancmg Acliv11ies lnvestJng Acliv1Ues Capital and Related Fmancmg Acl!VJl!es $ -27,436 31,182 -2,451 -3,342 Net Change m Cash Cash, Begmmng of Year $ -2,047 I 954 Cash, End of Year $._ ___.-9.,.3 Capital Assets The Umvers1ty had several s1gmficant capital asset add1t10ns for fac1ht1es m fiscal year 2002 The Herty Hall Science Building renovation was completed and phase I of the Maxwell Student Umon extenor remodeling was completed Construclion began on a 95,319 square foot add1t1on to Russell Library and Informalion Technology Center Georgia College and State Umvers1ty also started major renovalions to the Old Governor's Mansion, one of the state's most 1mpress1ve lustoncal buildings These projects were funded by the Georgia State Fmancmg and Investment Comm1ss1on (GSFIC) at a cost of $25,000,000 00 Also funded by the GSFIC m Fiscal Year 2002 1s $4,200,000 00 for phase I of a Central Chiller Plant Projected funding by GSFIC for Fiscal Year 2003 will be approximately $1,700,000.00 For add11ional mformatlon concemmg Capital Assets, see Notes I and 6 m the notes to the financial statements Economic Outlook The Umvers1ty 1s not aware ofany currently known facts, dcc1s1ons, or conditions that are expected to have a s1gmficant effect on the financial pos11ion or results of operations dunng this fiscal year beyond those unknown vanauons haVIng a global effect on virtually all types ofbusiness operalions -6- The Umvers1ty's overall financial pos11Ion 1s strong Even with a relatively flat funded year, the Umverslly was able to generate a modest increase in Net Assets The Umvers1ty ant1c1pates the current fiscal year will be much hke last and will maintain a close watch over resources to maintain the Umvers1ty's ab1hty to react to unknown internal and external issues Rosemary DePaolo, President Georgia College and State Umvers1ty -7- BASIC FINANCIAL STATEMENTS -9- GEORGIA COLLEGE AND STATE UNIVERSITY STATEMENT OF NET ASSETS JUNE 30 2002 ASSETS Current Assets Short-Tenn Investments Aa:ounts Receivable, Net Federal Fmancoal Assistance Other Prepaid Items lnventones Total Cunent Assets Noncunent Assets Investments Notes Receivable, Net Capital Assets, Net (See Note 6) Total Noncurren1 Assets Total Assets LIABILITIES Cunent l.!ab1h!Jes Cash Overdraft Contracts Payable Salanes Payable Payroll Wrthholdmgs Aa:ounts Payable Deferred Revenue Funds Held for Others Capital Laases Compensated Absences Other L!abIh!Jes Total Cum,nt L!ab1llbes Noncum,nt L!ab1hl!es Capital Leases Compensated Absences Total Noncum,nt LlabIhl!es Total l.!ab1hl!es NET ASSETS Invested In Capital Assets, Net of Related Debt Res1ncled for Nonexpendable Expendable Unrestnctad Total Net Assets See Independent Aa:ountant's Combined Report on Review of Basic F1nancal Stataments and Supplementary lnfonnal!on The notes to the financal statements are an integral part of this statement - 11 - EXHIBIT"A" $ 9,383,595 5B 94,198 29 3,002,215 00 55,720 6B 1 317 7B0 61 $ 13,853,510 16 $ 3,021,273 40 2,885,625 B8 32,688,340 69 $ 38,595,239 97 $ 52 448,750 13 $ 93,219 19 35,600 20 113,057 38 151,65317 271,055 SO 3,026,289 01 266,67213 14,067 B8 1,068,053 13 1,663,653 00 s 6,703,320 59 $ 29226 06 775 229 09 $ 804 45515 $ 7 507 775 74 $ 32,648,942 28 2,644,562 21 4,715,397 87 4,932,072 03 $ 4419401974 39 GEORGIA COLLEGE AND STATE UNI\/ERSITY STATEMENT OF REVENUES EXPENSES AND CHANGES IN NET ASSETS YEAR ENDED JUNE 30 2002 EXHIBIT "B" OPERATING REVENUES Student Twt10n and Fees Less Scholarship Allowances Grants and Contracts Federal Rents and RoyaH,es Sales and Services of Educattonal Departments Awal1ary Entecpnses ReSldenc:e Haus Bookstore Food Services Perlng/Trensportetlon Health SeMceS lntercotleg,ate Athlebcs Other OrgeruzatlOnS Other Operabng Revenues Total Dperebng Revenues OPERATING EXPENSES Salenes Faa.,lty Staff Employee Benefits Other PfflOnal SeMCBS Travel Scholarships end Fellowships UIHrtles Supplies and Other Services Oeprecaallon Total Operating Expenses Operebng Income (Lou) NONOPERATING RE\/ENUES (EXPENSES) State Appropriations Grants end Contracts Federal State Local Nongowmmentel Gifts Interest end Other Investment Income Interest Expense (Ceprtel Assets) Other Nonoperabng Revenues Net Nonoperebng Revenues lncreese/(Deaease) In Net Assets Net Assets Net Assets - Begmmng of Year, as Ongmally Reported Cumulabve Effect or Changes In Accountmg Principle Net Assets - Begmmng of Year, Restated s 13 523 013 73 -1,62168484 2 623,156 93 2 400 00 789,558 26 3,152 871 03 2 578,487 07 2,965,407 11 321,845 84 373 642 85 1 158 285 06 94 434 83 37612813 s 26 337 546 00 $ 14,963,916 22 14,959,919 58 7,870,735 66 98 260 00 386 418 19 2,211,11143 2,021 828 11 10,132,964 50 2 124 082 56 s 54 769 236 25 s -28,431,690 25 s 29 506,593 05 513 045 66 256,265 88 33,354 35 862,399 72 4,650 00 -256,362 54 -3,269 90 -757 598 10 s 30 159 07812 s 1 727 387 87 s 93,853,554 90 -50,639,968 38 $ 43 213 586 52 Net Assets - End of Year See Independent Accountem'a Combined Report on Rev,ew of Bas,c Financial Statements end SUpplementary Information The notes to the financial statements are an Integral part of thts statement -12 - $ 44 940 974 39 GEORGIA COLLEGE AND STATE UNIVERSITY STATEMENT OF CASH FLOWS YEAR ENDER JUNE 30 2002 CASH FLOWS FROM OPERATING ACTMTIES Turtion and Fees Grants and Contracts Sales and SeMces of Educational Departments Payments to Supplt8fl Payments to EmplOyeea Payments for Scholal'9hlpa and Fellowships Loans lsauecl to Students and Employees Collecoon of Loans to Studenta and Employees Awai""'! Enl8Tpnse Cha,ves R8Sldence Halls Bookston, Food SeMCeS Paoong/Transportatlon Health SeMces lntercaDeglate Alhlebcs Other Org1111za110ns Other Recapts (Payments) Net Cash Provided (Used) by Operating Ac:lrvlbes CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State App.op. labo, 19 Agency Fund11 Tranaacbon1 Gsf'tl and Grants Received for Other than Cllpltal P ~ Net Cash Flows "'""8d (Used) by Noncoprlal Fmandng Ac:1rv1bes CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Sale of C8pital Assots Purchases ol Capttal Assets Pnndpal Paid on Capotal Debi and Lease Interest Pa.:l on Capital Debt nd Leue Net Cash PnMded (Uaed) by Cap,tal and Rllatod F"18ra,g Ac:lrvlbes P..,_ CASH FLOWS FROM INVESTING ACTIVITIES from Solos and MallmtJes of lnves1men1s (Net) lnterMtonlnvestmenta Pun::hae of lnWlltmel its (Net) Net Cash PnMded (Uaed) by ln.esbng Adrvltlos Net lnaeasel(Decrllne) 11 Cash Cash and CUh Equrvalenta - June 30, 2001 Less Short-Term Investments cash and Cuh EquNalents - Beginning of Ye r Cash and C81h Equlvllllenta - End of Year RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES -()perming lncomo (Loos) Ad,ustments to Reconole Net tncome (Lou) to Net Cash - (Uaed) by Operat,ng AdMbes Change In Aneta nd Uablllba Aa:oun1s Recelval>lea Net lnvenlor1lla Prepaid !tams Notes Recerv bles Net Em- Accounts Payable SalariesPayable Payn,U w.-ng and Matchlng Benefils ~R- Other Llabllttl a Compensated Absences Net Calh PrtMded (Used) by Operat,ng AcOvlbea See lndepetldelll1tAccountant'11 Combined Report.on Revtewo1 B8IIC Financlal Staternlints and Supplel1e11ta,f lnformabon The notea to the flnnaI state.1...rtb re an Integral Pl'1 ot this 1tatement 13- EXHIBIT ~C" s 13 978 959 20 2 908 363 95 789,558 26 -22 528 501 59 -29 809 166 00 -2211111 43 -591,72810 384 361 89 1 697 529 '41 2,666,219 39 29"'0'40711 321 845 84 373 842 85 115828506 94,'43"' 83 392 881 9"' s -27 438 017 39 s 29,506,593 05 -188 '488 eg 18&4278158 s 31 182 403 04 S- 11535372 -3 '431'41849 -22,n030 -3 289 90 s -3 342110 97 s 624 015 88 -548,215 75 -2528110 oe s -2 450 91B 93 s -2 001 54<1 25 s 8 4515,732 08 -8 542,307 02 s 195342!5 06 s -9321919 s -28 431,890 25 2 124 082 58 -1 877 388 47 -381 883 1g -8 188 39 -207 386 21 -1 857,033 '48 2B 000 '43 8,809 91 1 112,908 21 1 &47,04210 86 689 37 s -27 '436 017 39 GEORGIA COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Georgia College and State Umvers1ty serves the state, and nallonal commumlles by proVJdmg its students with academic mstruct10n that advances fundamental knowledge, and by d1ssemmatmg knowledge to the people of Georgia and throughout the country REPORTING ENTITY Georgia College and State Uruvers1ty 1s one ofthnty-four (34) State supported member mst1tullons ofhigher educallon m Georgia wluch compnse the Umvers1ty System ofGeorgia, an orgaruzat1onal urut of the State of Georgia The accompanymg financial statements reflect the operat10ns of Georgia College and State Umvers1ty as a separate reportmg enllty The Board of Regents has conslltullonal authonty to govern, control and manage the Uruvers1ty System ofGeorgia. Tlus authonty includes but 1s not hrruted to the power to designate management, the ab1hty to s1gruficantly mfluence operallons, the authonty to control mslltullons' budgets, the power to determme allotments of State funds to member mslltullons and the authonty to prescnbe accountmg systems and admm1stra11ve pohc1es for member mslltullons Georgia College and State Uruvers1ty does not have authonty to reta1D unexpended State appropnatlons (surplus) for any given fiscal year Accordmgly, Georgia College and State Uruvers1ty 1s considered an orgaruzatlonal urut of the Board of Regents of the Umvers1ty System of Georgia report1Dg enuty for financial report1Dg purposes because of the s1gn1ficance of its legal, operational, and financial relal!onslups with the Board of Regents as defined ID Secllon 2100 of the Governmental Accounllng Standards Board (GASB) Cod1ficat1on of Governmental Accountmg and F1Danc1al Report1Dg Standards FINANOAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No 34, Basic Financial Statements and Management Drscuss10n and Analysrsfor State and Local Governments This was followed ID November 1999 by GASB Statement No. 35, Basic Fmanc1al Statements and Management's Drscuss10n and Ana(vs1s for Public Colleges and Umvers1t1es The State of Georgia 1s reqwred to implement GASB Statement No 34 as of and for the year ended June 30, 2002 As an orgaruzauonal umt of the State of Georgia, the Umvers1ty 1s also reqmred to adopt GASB Statements No 34 and No. 35 as amended by GASB Statements No 37 and No 38. The financial statement presentation reqwred by GASB Statements No. 34 and No. 35 as amended by GASB Statements No 37 and No 38 proVJdes a comprehensive, entity-Wide perspective of the Umvers1ty's assets, hab1lit1es, net assets, revenues, expenses, changes ID net assets, cash flows, and replaces the fund group perspecllve previously required The Uruvers1ty has elected to not restate its 2001 financial statements to conform With the new financial statement presentat10n, therefore comparallve financial 1Dformallon will not be presented for fiscal year 2002 S1gruficant accountmg changes made m order to comply with the new reqwrements IDClude (1) adopllon of depreciation on capital assets, and (2) recognition of compensated absences Generally Accepted Accountmg Pnnc1ples (GAAP) requires that the - 14 - GEORGIA COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT"D" NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FINANCIAL STATEMENT PRESENTATION reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year Due to the lack ofmatenahty, lnslitut1ons of the Umvers1ty System ofGeorgia will contmue to report summer revenues and expenses in the year in wh.tch the predominate activity takes place At June 30, 200 I, encumbrances (contractual obligations for goods and sernces not received at fiscal year end) were recorded as expenditures by the Uruvers1ty instead ofreservations of fund balance as required by generally accepted accounting pnnc1ples For fiscal year 2002, the Umvers1ty changed its method ofrecordmg encumbrances such that encumbrances at June 30, 2002 were not recorded as expenses This change 1s in accordance with generally accepted accounting pnnc1ples No adjustments however, have been made on the financial statements to restate the fund balance at July I. 2001 for the June 30, 2001 encumbrances recorded as expenditures in fiscal year 2001 The net effect of the above accounting treatment resulted m an understatement of expenses on the accompanymg financial statements for pnor year encumbrances which should have been reflected as expenses in the penod when goods and services were received. BASIS OF ACCOUNTING For fmanc1al reporting purposes, the Umvers1ty 1s considered a special-purpose government engaged only m busmess-type act1V1t1es. Accordmgly, the Uruvers1ty's financial statements have been presented using the economic resources measurement focus and the accrual basis of accountmg, except as noted m the precedmg paragraphs Under the accrual basis, revenues are recogruzed when earned, and expenses are recorded when an obligation has been mcurred. All s1gruficant intrauruvers1ty transactions have been ehminated The Umvers1ty has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB The Umvers1ty has elected to not apply FASB pronouncements issued after the apphcable date RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adoption of GASB Statement No. 34, the Uruvers1ty was also reqwred to make certam changes in accounting pnnc1ples, specifically (I) adoption ofdepreciation on capital assets, and (2) recordmg of compensated absences GASB Statement No 34 requires certain summer semester revenues be recogruzed between fiscal years rather than the fiscal year in which the semester was predominantly conducted. The Uruvers1ty System ofGeorgia has chosen to contmue to record summer revenue in the year in which the semester was predorrunantly conducted. Net assets at July I, 2001 were reduced by $50,639,968.38 for the cumulative effect of these changes - 15 - GEORGIA COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS/SHORT-TERM INVESTMENTS Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits m authonzed financial mstttutlons, and cash management pools that have the general charactenstlcs of demand deposit accounts INVESTMENTS The Umvers1ty accounts for its mvestrnents at fmr value m accordance with GASB Statement No 31, Accounting and Financial Reporting/or Certain Investments andfor External Investment Pools Changes m unreahzed gmn (loss) on the carrymg value of mvestments are reported as a component of mvestment mcome m the statements of revenues, expenses, and changes m net assets ACCOUNTS RECEIVABLE Accounts receivable consists oftwtlon and fee charges to students and aux1hary enterpnse services provided to students, faculty and staff, the maJonty of each res1dmg m the State of Georgia Accounts receivable also mclude mnounts due from the Federal government, state and local governments, or pnvate sources, m connection with reimbursement ofallowable expenditures made pursuant to the Umvers1ty's grant and contracts Accounts receivable are recorded net of estimated uncollectlble mnounts INVENTORIES Consumable supplies are earned at the lower of cost or market on either the first-m, first-out ("FIFO") basis Resale Inventones are valued at cost usmg the average-cost basis NON-CURRENT CASH AND INVESTMENTS Cash and mvestments that are externally restncted and cannot be used to pay current llab1ht1es are classified as non-current assets m the statements of net assets CAPITAL ASSETS Capital assets are recorded at cost at the date of acqms1t1on, or fmr market value at the date of donation m the case ofgifts. For eqmpment, the Umvers1ty's cap1tallzat1on policy mcludes all items with a umt cost of $5,000 00 or more, and an estimated useful life of greater than one year Renovations to buildmgs and land improvements that exceed$ I00,000 00 and s1gruficantly mcrease the value or extend the useful hfe of the structure are cap1tal1zed Routme repmrs and mruntenance are charged to operatmg expense m the year m which the expense was mcurred Deprec1at:1on 1s computed usmg the strmght-lme method over the estimated useful lives ofthe assets, generally40 to 60 years for bmldmgs, 20 to 25 years for mfrastructure and land improvements, IO years for library books, and 3 to 7 years for eqmpment - 16 - GEORGIA COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMEl\'TS JUNE 30. 2002 EXHIBIT "D" NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CAPITAL ASSETS To obtam the total picture of plant add11Ions m the Umvers1ty System, 111s necessary to look at the act1v1t1es ofthe Georgia State Fmancmg and Investment Comm1ss1on (GSFIC)- an organ1zat1on that 1s external to the System. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to 11 m the Constltullon ofthe State ofGeorgia and the Act creatmg the GSFIC The bonds so issued conslltute direct and general obhganons of the State of Georgia, to the payment of which the full faith, credit and taxmg power of the State are pledged DEFERRED REVENUES Deferred revenues mclude amounts received for tuition and fees and certam aux1hary act1v11Ies pnor to the end ofthe fiscal year but related to the subsequent accountmg penod Deferred revenues also mclude amounts received from grant and contract sponsors that have not yet been earned. COMPENSATED ABSENCES Employee vacation pay 1s accrued at year-end for financial statement purposes The hab1hty and expense mcurred are recorded at year-end as accrued vacallon payable m the Statement of Net Assets, and as a component ofcompensauon and benefit expense m the Statements of Revenues, Expenses, and Changes m Net Assets Georgia College and State Umvers1ty had accrued hab1hty for compensated absences m the amount of$!,756,612 85 as of July 1, 2001 For Fiscal Year 2002, $1, I 54,722.50 was earned m compensated absences and employees were prud $1,068,053.13, for a net increase of $86,669 37 NON-CURRENT LIABILITIES Non-current hab1hlles mclude (1) hab1hlles that will not be prud w1thm the next fiscal year, (2) capital lease obhgallons with contractual matunl!es greater than one year, and (3) other hab1ht1es that, although payable within one year, are to be paid from funds that are classified as non-current assets NET ASSETS The Umvers1ty's net assets are classified as follows Invested m capital assets, net ofrelated debt This represents the Umvers1ty's total mvestment m capital assets, net of outstandmg debt obhgal!ons related to those capital assets To the extent debt has been mcurred but not yet expended for capital assets, such amounts are not mcluded as a component ofmvested m capital assets, net ofrelated debt (The term "debt obhgal!ons" as used m this defirut1on does not mclude debt of the GSFIC as discussed above ) Restricted net assets - nonexpendable Nonexpendable restncted net assets consist of endowment and s1m1Iar type funds m which donors or other outside sources have stipulated. as a condition ofthe gift mstrument, that the pnnc1pal 1s to be maJiltaJned mv1olate and m perpetmty, and mvested for the - 17 - GEORGIA COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NET ASSETS purpose of producing present and future income, which may either be expended or added to pnnc1pal The Umvers1ty may accumulate as much of the annual net income ofan institutional fund as 1s prudent under the standard established by Code Section 44-15-7 ofAnnotated Code ofGeorgia Restncted net assets - expendable. Restncted expendable net assets include resources in wluch the Umversl!y 1s legally or contractually obligated to spend resources in accordance with restnctlons imposed by external tlurd parties Unrestricted net assets Unrestncted net assets represent resources denved from student tml!on and fees, state appropnat10ns, and sales and services of educal!onal departments and auxiliary enterpnses These resources are used for transactions relating to the educal!onal and general operations of the Umvers1ty, and may be used at the discretion of the govermng board to meet current expenses for those purposes, except for unexpended state appropnatlons (surplus) of $51,737.87 Unexpended state appropnations must be refunded to the Board of Regents of the Umvers1ty System of Georgia - Adm1mstrat1ve Central Office for remittance to the Office of Treasury and Fiscal Services These resources also include auxiliary enterpnses, wluch are substantially self-supportmg act1VJt1es that provide services for students, faculty and staff When an expense 1s mcurred that can be paid using either restncted or unrestncted resources, the Umvers1ty's pohcy 1s to first apply the expense towards unrestncted resources, and then towards restncted resources INCOME TAXES Georgia College and State Umvers1ty, as a polillcal subd1VJs1on ofthe State ofGeorgia, 1s excluded from Federal mcome taxes under Section 115(1) of the Internal Revenue Code, as amended CLASSIFICATION OF REVENUES The Umvers1ty has classified its revenues as either operating or non-operatmg revenues in the Statement of Revenues, Expenses, and Changes m Net Assets accord.mg to the followmg cntena Operating revenues Operatmg revenues include ac!IVJ!les that have the charactens!lcs ofexchange transactions, such as ( l) student twt1on and fees, net ofscholarslup allowances, (2) sales and serVJces of aux1hary enterpnses, (3) most Federal, state and local grants and contracts and Federal appropnatlons, and (4) mterest on 1ns!ltu!lonal student loans - 18 - GEORGIA COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT "D" NOTE I SUMMARY OF SIGNIFICAl\'T ACCOUNTING POLICIES CLASSIFICATION OF REVENUES Non-operating revenues Non-operating revenues include act1v1t1es that have the charactenstlcs of non-exchange transactions, such as gifts and contnbuuons, and other revenue sources that are defined as non-operating revenues by GASS No 9, Reporting Cash Flows of Proprietary, and Nonexpendable Trust Funds and Governmental Entllles That Use Proprzetarv Fund Accounting, and GASS No 34, such as state appropnat1ons and investment income SCHOLARSHIP ALLOWANCES Student tmtlon and fee revenues, and certain other revenues from students, are reported at gross with a contra revenue account of scholarslup allowances in the Statement of Revenues. Expenses, and Changes in Net Assets Scholarslup allowances are the difference between the stated charge for goods and services provided by the Uruvers1ty, and the amount that 1s 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 operatJng or nonoperating revenues in the Umvers1ty's financial statements. To the extent that revenues from such programs are used to satisfy tu1t1on and fees and other student charges, the Umvers1ty has recorded contra revenue for scholarship allowances NOTE 2 CASH AND CASH EQUIVALENTS, OTHER DEPOSITS, AND INVESTMENTS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belongmg to the State of Georgia (and thus Georgia College and State Uruvers1ty) cannot be placed in a depository paying mterest longer than ten days without the depository providing a surety bond to the State. In heu of a surety bond, the depository may pledge as collateral any one or more of the following secunt1es as enumerated in the Official Code of Georgia Annotated Section 50-1759 I Bonds, bill, certificates of mdebtedness, notes, or other direct obhgatlons ofthe Uruted States or of the State of Georgia 2 Bonds, bills, certificates of indebtedness, notes, or other obhgauons of the counties or muruc1paht1es of the State of Georgia 3 Bonds of any pubhc authonty created by the laws of the State of Georgia, providing that the statute that created the authonty authonzed the use of the bonds for this purpose 4 Industnal revenue bonds and bonds of development authontles created by the laws of the State of Georgia - 19 - GEORGIA COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT "D" NOTE 2 CASH AND CASH EOUNALENTS. OTHER DEPOSITS. AND INVESTMENTS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES 5 Bonds, bills, certificates of mdebtedness, notes, or other obligations of a subsidiary corporation ofthe Uruted States government, which are fully guaranteed by the Urutcd States government both as to pnnc1pal and mterest, 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 Assoc1at1on, and the Federal National Mortgage Assoc1at1on 6 Guarantee or msurance ofaccounts provided by the Federal Deposit Insurance Corporation As authonzed m the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted pohc1es which allow agencies of the State of Georgia (and thus Georgia College and State Uruvers1ty), the opt10n of exempting demand deposits from the collateral requirements The Treasurer ofthe Board ofRegents 1s responsible for all details relative to funushmg the reqmred depository protection for all uruts of the Uruvers1ty System of Georgia CATEGORIZATION OF DEPOSITS The Uruvers1ty's cash deposits are categonzed by nsk as follows. Category I - Amounts covered by depository insurance or collateral1zed with secuntles (at fair value) held by the Uruvers1ty or by its agent m the Uruvers1ty's name. Category 2 - Amounts collateral1zed with secunties (at fair value) held by the pledging financial mstltutlon's trust department or agent m the UmversJty's name Category 3 - Amounts collaterahzed with secunt1es (at fair value) held by the pledgmg financial mstltutlon, or by its trust department or agent but not m the Uruvers1ty's name, and amounts uncollaterahzed Cash Deposits as of June 30, 2002 are as follows Cash DepoSIIS Investment Ponfoho Accounts Total Cash Deposits Carrying Amount Bank Balances Risk Categoncs s s 43,41081 996,877 73 $ 278,026 27 $ 0 00 s 718,85146 I JS,638 JO 115,638 JO s 1~2 ~5 21 SIIUSl~SJ $ 2ZS !li~ ~z $ 115,638 10 ~a2 g Q;Q $ s~~ ~~ - 20- GEORGIA COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS Jl.D\'E 30. 2002 EXHIBIT"D" NOTE 2 CASH AND CASH EOUNALENTS. OTHER DEPOSITS. AND INVESTMENTS CATEGORIZATION OF INVESTMENTS The Umvers1ty"s mvestrnents are categonzed as to credit nsk w1thm the three categones descnbed below Category 1 - Insured or registered, or secuntles held by the UruversJty or its agent m the Uruvers1ty's name Category 2 - Unmsured and unregistered, with secuntles held by the counter party's trust department or agent m the Uruvers1ty's name Category 3 - Urunsured and unregistered, with secuntles held by the counter party, or by its trust department or agent, but not m the Uruvers1ty's name. At June 30, 2002, the Uruvers1ty's mvestrnents consisted of the followmg Jypr of Investments Connnon Stock Corporate Bonds Totals R1~k Cm~ggnes $ 1,990,635 06 $ I 010 638 34 s Jg~I 2ZJ ~D s 000 s 022 s Investments Not Subject to Cetegonzattons Board of Rcgenls Total Rcrum Fund Slate !nvcstmcnl Pool Tola! Invcstmcnls Carrying Amount 0 00 $ 1,990,635 06 1,030,618 14 !JDD S 3,021,273 40 1,803,992 00 7,308 965 48 sq 13423088 Funds mvested man mvestment pool managed by another governmental entity are not reqmred to be categonzed smce the Uruvers1ty did not own any specific, 1dent1fiable mvestrnent secuntles of the pool NOTE 3 ACCOUNTS RECEIVABLE Accounts receivable consisted of the followmg at June 30, 2002 - 21 - GEORGIA COLLEGE Al\'D STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT "D" NOTE 3 ACCOUNTS RECEIVABLE Student Tmt10n and Fees Federal, State, and Pnvate Funds Other $ 2,614.534 44 132.677 76 515,656 03 $ 3,262,868 23 Less Allowance for Doubtful Accounts 166 454 94 Net Accounts Receivable NOTE 4 INVENTORIES lnventones consisted of the following at June 30, 2002 Bookstore Other $ 1,313,782.40 3 998 21 Total NOTE 5 NOTES/LOANS RECEIVABLE $ 1.317 780.61 Notes/Loans receivable at June 30, 2002, pnmanly consist ofstudent loans made through the Federal Perkms Loan Program (the Program) The Program proVJdes for cancellation of a loan at rates of I0% to 30% per year up to a maximum of 100% 1fthe part1c1pant complies with certain prov1s1ons The Federal government reimburses the Uruvers1ty for amounts cancelled under these prov1s1ons As the Uruvers1ty determmes that loans are uncollectJble and not eligible for reimbursement by the Federal government, the loans are wntten off and assigned to the U S. Department of Educat10n The Uruvers1ty has proVJded an allowance for uncollectible loans, wluch, in management's op1mon, 1s sufficient to absorb loans that WIii ultimately be wntten off At June 30, 2002 the allowance for uncollecuble loans was approximately $ I02,706 73 NOTE 6 CAPITAL ASSETS The balance at July I, 2001 was adJusted for accounting changes required in implementing GASB Statements 34 and 35 as disclosed m Note I FolloWing are the changes in capital assets for the year endedJune30,2002 - 22- GEORGIA COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEME1'.'TS JUNE 30. 2002 EXHIBIT "D" NOTE 6 CAPITAL ASSETS AdJustcd Balance July 1, 2001 Add1t1ons Reduct19nc; Balance June 30, 2002 Capital Assets, Not Being Deprectatcd Land and Land Improvements S 634,079 21 Construction Work-In-Progress O00 S 897 781 25 S 634.079 21 897,781 25 Total capital Assets Not Being Depreciated S 634 079.21 S 897,781 25 s 1.53 l ,860 46 Capital Assets, Ekmg Deprec1atcd Buzlding and Buzlding Improvements Fac1ht1cs and Other Improvements Equipment capital Leases Library Collecnons Capitalized Collecnons $ 53,150,069 73 867,019 00 6,448,729 68 S 120,472 65 5,827.180 20 164,800 00 s 185,455 92 196,821 97 s 66,578 271 26 s_...3..8,,2,,.2n.89 S 1,502,433 32 $ 51,647,636 41 867.019 00 143,042 91 6,491,14269 120,472 65 116,902 00 5,907.100 17 164,800 00 n I 762,378 S 65,198,170 92 Less Accumulated Deprcc1at1on Buzldmgs and Buzldmg Improvements $ 23,921 002 72 S Fac1h11es and Other Improvements 494,923 35 Equipment 3,949, 109 07 Capital Leases O 00 Library Collect1ons Capitalized Collecnons n 4,418,544 80 454 60 1,213,337 27 S 41,15095 555,456 52 4,813 82 305,204 00 4 120 00 654,184 50 S 24.480, 155 49 536,074 30 118,339 91 4,386,225 68 4,813 82 116,902 00 4,606,846 80 27 574 60 S 3280703454 S 2124,08256 S 889,42641 S ,4041,69069 Total capital Assets, &mg Depreciated, Net $ 33,77123672 S -174180467 S C.p1tal Assets, Net S 34 405 315 9} S -844 023 42 S 872,95182 $ 31,l5648023 872 951 82 S 32 688 340 69 NOTE 7 DEFERRED REVENUE Deferred revenue consisted of the followmg at June 30, 2002. Preprud Tuition and Fees Other Deferred Revenue $ 2,725,986 71 300,302.30 Totals $ 3.026.289,01 NOTE 8 LONG-TERM LIABILITIES Long-term hab1hty acttv1ty for the year ended June 30, 2002, was as follows - 23 - GEORGIA COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT "D" NOTE 8: LONG-TERM LIABILITIES Leases Lease Obligatmns Other L1ab1ht1cs Compensated Absences Total Long-Term Obhgauons BaJance Ju\y I 2001 s 66,072 24 1,7~6,612 85 s I 82~ ~5~ Q2 Add1t1ons s 0 00 I I ~4 1;i;i ~Q s I I~~ Z~~ ~Q Reductions s 22,778 30 I 068,0~J I3 s I 090 SJI !P BJ}ancc June 10 2002 s 43,293 94 1,843,282 22 s 1S~ ~z~ rn Current Portion s 14,067 88 1,Q66,0~J )J s I Q62J2Llll NOTE 9 LEASE OBLIGATIONS CAPITAL LEASES Georgia College and State Umvers1ty has vanous capital leases for eqmpment with an outstandmg balance at June 30, 2002 m the amount of$43,293 94 SUMMARY OF LEASE OBLIGATION Future commitments for capital leases (which here and on the Statement ofNet Assets mclude other mstallment purchase agreements) and for noncancellable operatmg leases haVJng remammg terms m excess of one year as of June 30, 2002, were as follows Capital Leases Year Endmg June 30. 2003 2004 2005 $ 16,741 01 28,723.16 2.065 98 Total Mm1mum Lease Payments $ 47,530 15 Less Interest 4,236.21 Pnnc1pal Outstandmg NOTE 10 RETIREMENT PLANS $ !1J.62J 2~ TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Georgia College and State Umvers1ty part1c1pates m the Teachers Re!lrement System of Georgia (TRS), a cost-shanng mult1ple-cmployer defined benefit pension plan established by the General Assembly of Georgia for the purpose of prov1dmg rehrement allowances and other benefits for - 24 - GEORGIA COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE IO RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description teachers of the State of Georgia TRS provides service retirement, d1sab1hty retirement, and survivor's benefits for its members m accordance with State statute The Teachers Retirement System of Georgia issues a separate stand alone financial audit report and a copy can be obtamed from the Georgia Department of Audits and Accounts Funding Policy Employees of Georgia College and State Umvers1ty who are covered by TRS are required by State statute to contnbute 5% of their gross earnmgs to TRS Georgia College and State Umvers1tymakes monthly employer contnbutlons to TRS at rates adopted by the TRS Board ofTrustees m accordance with State statute and as advised by their mdependent actuary For fiscal year 2002, the employer contnbutlon rate was 9.24% for covered employees. Employer contnbutlons for the current fiscal year and the precedmg two fiscal years are as follows Fiscal Year Percentage Contnbuted Required Contnbutlon 2002 2001 2000 100/4, 100% 100% $ I,700,606 26 $ 1,971,616 64 $ 1,992,258 90 REGENTS RETIREMENT PLAN Plan Description The Regents Retirement Plan, a smgle-employer defined contnbut1on plan, 1s an optional retirement plan estabhshed and adm1rustered by the Board of Regents of the Uruverslty System of Georgia, under which 1! may purchase annuity contracts for the purpose of prov1dmg retirement and death benefits for ehgiblc faculty and pnnc1pal admm1strators Benefits depend solely on amounts contnbuted to the plan plus mvestment earrungs Benefits are payable to part1c1patmg employees or their benefic1anes m accordance with the terms of the annuity contracts Funding Policy Member contnbutlon requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contnbutlons are established by statute and may be amended only by the General Assembly ofthe State ofGeorgia The employer contnbutes 9 62% of the par!!c1patmg employee's earnable compensation. Employees contnbute 5% of their earnable compensation Amounts attnbutable to all plan contnbutlons are fully vested and non-forfe1table at all times. Georgia College and State Uruvers1ty and the covered employees made the reqmred contnbutlons of $854,618 97 (9.62%) and $444,759 58 (5%), respectively - 25 - GEORGIA COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE IO RETIREMENT PLANS GEORGIA DEFINED CONTRIBUTION PLAN Plan Description Georgia College and State Umvers1ty part1c1pates in the Georgia Defined Contnbut1on Plan (GDCP) which 1s a single-employer defined contnbullon plan estabhshed by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-lime and are not members of a pubhc retirement or pension system GDCP 1s adm1mstered by the Board of Trustees of the Employees' Retirement System of Georgia Benefits A member may retire and elect to receive penod1c payments after attamment ofage 65 The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees Ifa member has Jess than$ 3,500.00 credited to lus/her account, the Board ofTrustees has the option ofrequmng a lump sum d1stnbut1on to the member in heu of making penod1c paymertts Upon the death of a member, a lump sum d1stnbu11on equahng the amount credited to his/her account will be paid to the member's designated beneficiary Benefit prov1S1ons are estabhshed by State statute Contribntions and Vesting Member contnbutlons are seven and one-halfpercent (7 5%) ofgross salary There are no employer contnbutlons Contnbutlon rates are estabhshed by State statute Earmngs are credited to each member's account ID a maJJDer estabhshed by the Board of Trustees Upon termination of employment, the amount of the member's account 1s refundable upon request by the member Total contnbutlons made by employees dunng fiscal year 2002 amounted to $40,082 61 which represents 7.5% of covered payroll. These contnbutlons met the reqmrements of the plan NOTE 11 RISK MANAGEMENT Georgia College and State Umvers1ty 1s a part1c1pant in the Board of Regents of the Umvers1ty System of Georgia Health Benefits Plan, which 1s a self-insurance program of health and dental benefits for employees and retirees ofthe Umvers1ty System of Georgia. Georgia College and State Umvers1ty and partlc1patlng employees and retirees pay premiums to the Health Benefits Plan for tlus health insurance coverage. The Health Benefits Plan 1s included ID the financial statements of the Board ofRegents of the Umvers1ty System of Georgia -Adm1mstrat1ve Central Office All units of the Umvers1ty System of Georgia share the nsk of Joss for claims of the Health Benefits Plan The Health Benefits Plan 1s considered a self-sustaimng nsk fund that provides health coverage for its members up to a maximum hfetlme benefit of$2,000,000.00 per person and dental coverage up to an aJJDua! maximum of $1,000.00 per person. The Board of Regents has contracted With Blue Cross Blue Shield of Georgia to process claims in accordance With the Health Benefits Plan as estabhshed by the Board ofRegents - 26 - GEORGIA COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT"D" NOTE 11 RISK MANAGEMENT The Department of Achmrustralive Services (DOAS) has the respons1b1l11y for the State of Georgia ofmakmg and carrymg out dec1s1ons that WIii m1mm1ze the adverse effects ofacc1dental losses that mvolve State government assets The State believes 1t 1s more economical to manage its nsks mternally and set aside assets for claim settlement Accordmgly, DOAS processes claims for nsk of loss to wluch the State 1s exposed, mcludmg general hab1hty, property and casualty, workers' compensalion, unemployment compensalion, and law enforcement officers' mdemmfical!on L1m1ted amounts of commercial insurance are purchased applicable to property, employee and automob1le liability, fidelity and certain other nsks Georgia College and State Umvers1ty, as an organ1zat1onal umt of the Board of Regents of the Umvers1ty System of Georgia, 1s part of the State of Georgia reportmg enlity, and as such, 1s covered by the State of Georgia nsk management program adm1mstered by DOAS Premmms for the nsk management program are charged to the vanous state orgaiuzat1ons by DOAS to provide claims serv1cmg and claims payment A self-msured program of professional liab1hty for its employees was established by the Board of Regents of the Uruvers1ty System of Georgia under powers authonzed by the Official Code of Georgia Annotated Sect10n 45-9-1 The program msures the employees to the extent that they are not immune from hab1hty against personal liability for damages ansmg out of the performance of their duties or m any way connected therewith. The program 1s admm1stered by DOAS as a SelfInsurance Fund NOTE 12 CONTINGENCIES Amounts received or receivable from granter agencies are subject to audit and adjustment by granter agencies This could result m refunds to the granter agency for any expenditures which are disallowed under grant terms. The amount ofexpenditures which may be disallowed by the granter carmot be determmed at tlus tune although Georgia College and State Umvers1ty expects such amounts, 1f any, to be munaterial to its overall financial pos1t1on L111gat10n, claims and assessments filed against Georgia College and State Uruverslty (an organ1zalional unit of the Board of Regents of the Umvers1ty System of Georgia), 1f any, are generally considered to be act10ns against the State of Georgia Accordmgly, s1gruficant hligat1on, claims and assessments pendmg against the State of Georgia are disclosed m the State of Georgia Comprehensive Annual Fmanc1al Report for the fiscal year ended June 30, 2002 NOTE 13 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-331, the Board of Regents of the Uruvers1ty System of Georgia has established group health and life msurance programs for regular employees ofthe Umvers1ty System ofGeorgia It 1s the policy ofthe Board ofRegents to permit employees of the Uruvers1ty System of Georgia eligible for retirement or that become permmently and totally disabled to contmue as members of the group health and life -27 - GEORGIA COLLEGE AND STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 13 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS msurance programs Employees who are eligible for retirement or d1sab11ity under the cntena established by the Teachers Retirement System ofGeorgia and who have at least ten years ofservice with the Umvers1ty System of Georgia are eligible for these post-employment health and life msurance benefits Organ1zat1onal umts of the Board of Regents of the Umvers1ty System of Georgia pay the employer port10n for group msurance for affected md1V1duals As ofJune 30, 2002, there were 213 employees who had retired or were disabled that were rece1vmg these post-employment health and life msurance benefits. For the year ended June 30, 2002, Georgia College and State Umvers1ty recogmzed as mcurred $540,139.34 of expenses, winch was net of $198,583.34 ofpart1c1pant contnbutions NOTE 14. SIGNIFICANT COMMITMENTS Georgia College and State Umvers1ty had significant unearned, outstandmg construct10n or renovation contracts executed m the amount of$826,723 77 as ofJune 30, 2002 Tins amount 1s not reflected m the accompanymg basic financial statements - 28 - GEORGIA COLLEGE AND STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT"D" NOTE 15 NATIJRAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS The Umvers1ty's operating expenses by functional class1ficat1on are shown below Statement ofOpcranng Expenses - ?\atural vs Funchooal Class1ficat1ons For the Fiscal Year Ended June 30, 2002 Nawl ClassdjcabQD Salanes Faculty Staff Employee Benefits Other Personal Services Travel Scholarships and FellDW5hrp, Utihocs ~upphes and Other Sc:rv,ces Dep,23,168 82 740,476 59 982.218 58 J191}6 l2 5 l 592 6RH 41 5 ]22311668 5 6 672 474 63 Natural Oass1ficangn Salanes Faculty Staff Employee Benefits Other Pcnonal Services Travel S