1 GEORGIA MILITARY
ICOLLEGE MILLEDGEVILLE, MANAGEMENT REPORT FOR FISCAL YEAR ENDED I JUNE30,2010
Georgia Department of Audits and hccomts State Kuditpr

GEORGIA MILITARY COLLEGE - TABLE OF CONTENTS -
SECTION I FINANCIAL LETTER OF TRANSMITTAL SELECTED FINANCIAL INFORMATION EXHlBITS A STATEMENTOFNETASSETS B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS C STATEMENT OF CASH FLOWS D SELECTED FINANCIAL NOTES SUPPLEMENTARY INFORMATION SCHEDULE 1 RECONCILIATION OF SALARIES AND TRAVEL
SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

SECTION I FI NANClAL

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

DEPARTMENOTF AUDITSAND ACCOUNTS
270 Washington Street, S.W., Suite 1- 156 Atlanta, Georgia 30334-8400
November 1,2010

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Trustees of the Georgia Military College
and Major General Peter J. Boylan, President
Ladies and Gentlemen:
As part of our audits of the basic financial statements of the State of Georgia presented in the State of Georgia ComprehensiveAnnual Financial Repott and the issuance of a State of Georgia Single Audit Repod pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2010, we have performed certain audit procedures at Georgia Military College. Accordingly, the financial statements and compliance activities of Georgia Military College were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of Georgia Military College as of and for the year ended June 30, 2010. Information contained in this report is a by-product of our audit of the basic financial statements of the State of Georgia and is the representation of management. Accordingly, we do not express an opinion or any other form of assurance on it. The particular information provided which includes a section on findings and other items reported in accordance with Commission on Colleges regulation 2.11.1 is enumerated in the Table of Contents.
This report is intended solely for the information and use of the management of Georgia Military College, members of the Board of Trustees of Georgia Military College and the appropriate accrediting regulatory agency and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

State 'Auditor

SELECTED FINANCIAL INFORMATION

GEORGIA MILITARY COLLEGE STATEMENT OF NET ASSETS
JUNE 30,2010
ASSETS
Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories Prepaid Items
Total Current Assets
Noncurrent Assets Investments Capital Assets, Net (Note 4)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Deferred Revenue(Note 5 ) Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences Notes Payable
Total Current Liabilities
Noncurrent Liabilities Lease Purchase Obligations Notes Payable
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Unrestricted
Total Net Assets

EXHIBIT "A"

GEORGIA MILITARY COLLEGE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDEDJUNE 30,2010
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal State Nongovernmental
Auxiliary Enterprises Residence Halls Bookstore Food Services Intercollegiate Athletics
Other Operating Revenues
Total Operating Revenues
OPERATING EXPENSES
Salaries Faculty Staff
Employee Benefits Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES)
Grants and Contracts Federal State
G iRs Interest and Other Investment Income Interest Expense Other Nonoperating Revenues
Net Nonoperating Revenues
Increase (Decrease)in Net Assets
Net Assets - Beginning of Year
Net Assets - End of Year

EXHIBIT "B"

GEORGIA MILITARY COLLEGE STATEMENT OF CASH FLOWS YEAR ENDEDJUNE 30. 2010
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and FellOwSh~pS Other Receipts (Payments)
Net Cash Provided (Used) by Operat~ngActivities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Agency Funds Transacbons Gifts and Grants Receivedfor Other than Capltal Purposes Other Nonoperating Recelpts
Net Cash flows Provided (Used) by Noncapital FinancingActivities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Sale of Capita Assets Purchases of Capita Assets Principal Pald on Capital Debt and Leases lnterest Paid on Capital Debt and Leases
Net Cash Provlded (Used)by Capital and Related FinancingActivities
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sales and Maturlt~esof lnvestments Interest on lnvestments Purchase of Investments
Net Cash Provided (Used)by InvestingAmvltres
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year
RECONClLlArlON OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating lncome (Loss) Adjustments to Reconcile Operating lncome to Net Cash
Prov~ded(Used) by Operating Activities Depreciation Change in Assets and L~abilitles: Accounts Receivable, Net Inventories Prepaid Items Accounts Payable Deferred Revenue Salaries Payable Compensated Absences
Net Cash Prov~ded(Used)by OperatingActlvltles
NONCASH ACTIVITY Fixed Assets Acqulred by Incurring Capital Lease Obligat~ons Cancellation of Capital Lease Obligations Change In Fair Value of lnvestments Recognized as a Component of lnterest Income

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Georgia Military College serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge and by disseminating knowledge to the people of Georgia and throughout the country.
REPORTING ENTITY Georgia Military College was created as a public authority and is an instrumentality of the State of Georgia and a public corporation. The Board of Trustees is composed of the Mayor of the City of Milledgeville and six additional members, one of which shall be elected from each of the six municipal voting districts of the City of Milledgeville. The government, control and management of Georgia Military College shall be vested in the Board of Trustees. Georgia Military College shall receive any designated funds appropriated by the General Assembly through the State Board of Regents. In order to incur debt, the Board of Trustees must first receive permission from the Georgia State Financing and Investment Commission, as required for all State authorities. Accordingly, Georgia Military College is considered a component unit of the State of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Re~ortinSgtandards.
NET ASSETS The College's net assets are classified as follows:
Invested in capitalassets; net of related debt: This represents the College's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted net asset - 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 College 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.
Unre~t~ktendet assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the College and may be used at the discretion of the governing board to meet current expenses for those purposes. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 2: DEPOSITSAND INVESTMENTS

DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the College's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the College) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:

1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.

2.

Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or

municipalities of the State of Georgia.

3.

Bonds of any public authority created by the laws of the State of Georgia, providing that the

statute that created the authority authorized the use of the bonds for this purpose.

4.

Industrial revenue bonds and bonds of development authorities created by the laws of the

State of Georgia.

5.

Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary

corporation of the United States government, which are fully guaranteed by the United States

government both as to principal and interest and debt obligations issued by the Federal Land

Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank

for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and

the Federal National MortgageAssociation.

6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

The Georgia Military College Board of Trustees is responsible for all details relative to furnishing the required depository protection for Georgia Military College.

At June 30, 2010, the carrying value of deposits was $9,990,190.21 and the bank balance was $10,863,812.86. Of the College's deposits, $10,485,111.34 were uninsured. Of these uninsured deposits, $10,484,031.69 were collateralized with securities held by the pledging financial institution's trust department or agent in the College's name, and $1,079.65 were uncollateralized.

INVESTMENTS At June 30, 2010, the carrying value of the College's investment was $647,517.85, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Century Bank and Trust Trustee Endowment as follows:

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 3 0 . 2 0 1 0

NOTE 2: DEPOSITS AND INVESTMENTS

Investment Type
Debt Securities Mutual Bond Funds

Fair Value

Other lnvestments Equity Mutual Funds Common Stock
Total lnvestments
NOTE 3: ACCOUNTS RECEIVABLE
Accounts receivable consisted o f t h e following at June 30, 2010:

Student Tuition and Fees Federal, State and Private Funds

Less Allowance for Doubtful Accounts Net Accounts Receivable

EXHIBIT "DM

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 3 0 , 2 0 1 0

EXHIBIT "D"

NOTE 4: CAPITAL ASSETS Following are the changes in the College's capital assets for the year ended June 30, 2010:

Balance July 1, 2009

Additions

Reductions

Balance June 30,2010

Cap~taAl ssets, Not Being Depreciated: Land Capitalized Collections Construction Work-In-Progress

$

577,082.52 $

63,187.35

143,125.13

0.00 $

0.00 $

577,082.52 63,187.35
143,125.13

Total Capital Assets, Not Belng Depreciated $

783,395.00 $

0.00 $

0.00 $

783,395.00

Capital Assets, B e ~ n Dg epreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment Library Collections

$

278,690.00

46.874.464.38 $

2,298,244.77

2,311,877.80

257,125.32 $ 266,043.00 385,799.69

$ 120.399.00
167,379.17

278,690.00 47,011,190.70
2,564,287.77 2,530,298.32

Total Assets Being Depreciated

$ 54,418,767.16 $

1,153,129.00 $

391,760.17 $ 55,180.135.99

Less: Accumulated Depreciation: Infrastructure Building and Bullding Improvements Facilities and Other Improvements Equipment Library Collections

$

274,968.03 $

10,617,943.84

824,800.68

1,308,286.40

1,661,518.56

3,721.97 1,226,445.43 $
144,312.55 289,423.40 167,280.18

$ 35,216.71
159,896.87 103,982.00

278,690.00 11,809,172.56
969,113.23 1,437,812.93 1,724,816.74

Total Accumulated Depreciation

$ 14,687,517.51 $

1,831,183.53 $

299,095.58 $ 16,219,605.46

Total Capital Assets, Being Depreciated, Net $ 39,731,249.65 $

-678,054.53 $

92,664.59 $ 38,960,530.53

Capital Assets, Net

NOTE 5: DEFERRED REVENUE Deferred revenue consisted of the following at June 30, 2010: Prepaid Tuition and Fees Other Deferred Revenue
Total Deferred Revenue

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 6: LONG-TERM LIABILITIES The College's Long-Term liability activity for the year ended June 30, 2010, was as follows:

Beginning Balance July 1,2009

Additions

Reductions

Ending Balance June 30.2010

Current Portion

Leases Lease Obligations

$

263,897.37 $

43.834.54 $

89,180.33 $

218,551.58 $ 93,285.79

Other Liabilit~es Compensated Absences $ Notes Payable

383,343.79 $ 6,553,024.16

494.714.86 $

465,720.00 $ 177,999.92

412,338.65 $ 6,375,024.24

412,338.65 186,184.48

Total

Total Long-Term Obligations $

7,200,265.32 $

538,549.40 $

732,900.25 $

7,005,914.47 $ 691,808.92

NOTE 7: NET ASSETS

Changes in Net Asset activity for the year ended June 30, 2010, are as follows:

Balance July 1.2009

Additions

Reductions

Balance June 30,2010

Invested in Capital Assets Net of Related Debt

$ 33,697,723.12 $ -721,889.07 $ -174,515.66 $ 33,150,349.71

Restricted Net Assets

939,105.46 21,666,418.75 21,915,956.28

689,567.93

Unrestricted Net Assets

Total Net Assets

NOTE 8: LEASE OBLIGATIONS
Georgia Military College 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 2 0 1 1 and 2015. Expenses for fiscal year 2010 were $103,762.53 of which $15,621.85 represented interest. Total principal paid on capital leases was $88,140.68 for the fiscal year ended June 30, 2010. Interest rates range from 2.10 percent to 10.51 percent.

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "DM

NOTE 8: LEASE OBLIGATIONS

OPERATING LEASES Georgia Military College's noncancellable operating leases provide for renewal options for periods from one to five years at their fair rental value at the time of renewal. All agreements are cancellable if the State of Georgia does not provide adequate funding, but that is considered a remote possibility. In the normal course of business, operating leases are generally renewed or replaced by other leases. Operating leases are generally payable on a monthly basis. Examples of property under operating leases are copiers and office facilities.

Noncancellable operating lease rental expenses in 2010 were $1,930,083.48 for real property.

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30,2010, were as follows:

Capital Leases

Operating Leases

Year EndingJune 30:
2011 2012 2013 2014 2015
2016 - 2019

$ 104,518.34 $ 1,973,716.96

70,690.55

1,883,531.68

42,848.41

1,839,934.68

18,579.14

1,622,923.61

4,129.99

1,650,085.96

4,243,031.04

Total Minimum Lease Payments $ 240,766.43 $ 13,213,223.93

Less: Interest Principal Outstanding

22,214.85 $ 218,551.58

NOTE 9: NOTES PAYABLE

Notes payable consisted of the following at June 30,2010:

College note payable secured by Baugh Barracks, dated July 2006, payable in monthly installments of $38,404.70, matures July 2015, interest rate 4.310%.

$ 6,375,024.24

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30,2010

NOTE 9: NOTES PAYABLE

MATURITY INFORMATION The scheduled maturities of Baugh Barracks notes payable are as follows:

Total Princi~al

Interest

Total Pavments

EXHIBIT "D"

NOTE 10: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

Plan Description Georgia Military College participates in the Teachers Retirement System of Georgia (TRS), a costsharing 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 Georgia Military College who are covered by TRS are required by State statute to contribute 5.25% of their gross earnings to TRS. Georgia Military College makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2010, the employer contribution rate was 9.74% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "DM

NOTE 10: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description Georgia Military College participates in the Employee's Retirement System of Georgia (ERS), a singleemployer 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 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 of ERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415.
The benefit structure of ERS is established by the Board of Trustees under statutory guidelines. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1,1982, is an "old plan" member subject to the plan provisions in effect prior to July 1,1982. Members hired on or after July 1,1982 but prior to January 1, 2009 are "new plan" members subject to the modified plan provisions. Effective January 1,2009, newly hired State employees, as well as rehired State employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employee's Pension and Savings Plan (GSEPS). ERS members hired prior to January 1,2009 also have the option to change their membership to the GSEPS plan.
Under the old plan, new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 1 0 years of credible service and attainment of age 6 0 or 3 0 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 2 5 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest 2 4 consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to member's benefits provided the members were hired prior to July 1,2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivision, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contribution are established by State statute. The College's payroll for the year ended June 30, 2010, for employees covered by ERS was $82,023.34. The College's total payroll for all employees was $18,777,834.95.

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "DM

NOTE 10: RETIREMENT PLANS

EMPLOYEES RETIREMENT SYSTEM OF GEORGIA

Funding Policy Member contribution rates are set by law. Member contributions under the old plan are 4% of the annual compensation up to $4,200.00 plus 6% of annual compensation in excess of $4,200.00. Under the old plan, the College pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these College contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan and GSEPS are 1.25% of annual compensation. The College is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. These College contributions are not at any time refundable to the member or his/her beneficiary.

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

Fiscal Year

Percentage Contributed

Required Contribution

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2010, financial report, which may be obtained through ERS.
NOTE 11: POST-EMPLOYMENT BENEFITS
The College participates in two State of Georgia post-employment benefit plans, the Georgia Retiree Health Benefit Fund (administered by the Department of Community Health) and the State Employee's Assurance Department - OPEB (administered by the ERS System). Separate financial reports that include the applicable financial statements are required supplementary information for these plans are publicly available and may be obtained from the respectivesystem offices.
Georgia Retiree Health Benefit Fund The Georgia Retiree Health Benefit Fund (GRHBF) is a cost-sharing multiple-employer defined benefit post-employment healthcare plan that covers retired employees of the State including all departments, agencies and local school systems. GRHBF provides health insurance benefits to eligible retirees and their qualified beneficiaries through the health insurance plan for State employees. The Official Code of Georgia annotated (OCGA) assigns the authority to establish and amend the benefit provisions of the employees' health insurance plan (including benefits for retirees) to the Board of Community Health (Board).
The contribution requirements of the plan members and participating employers are established by the Board in accordance with the current Appropriations Act and may be amended by the Board. Contributions of plan members or beneficiaries vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately 25 percent of the cost of health insurance coverage.

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 11: POST-EMPLOYMENT BENEFITS

Georgia Retiree Health Benefit Fund Participating employers are statutorily required to contribute in accordance with the employer contribution rates established by the Board. The contribution rate is established to fund both the active and retired employee health insurance plans based on projected "pay-as-you-go" financing requirements. The combined rates for the active and retiree plans for the fiscal year ended June 30, 2010, were as follows:

Certified Emwlovees July 2009 - August 2009 September 2009 - November 2009 December 2009 -June 2010

18.534% of covered payroll for August -September coverage 14.492% of covered payroll for October - December coverage 18.534% of covered payroll for January -July coverage

Non-Certified Em~lovees July 2009 -June 2010

$162.72 per employee/per month

No additional contribution was required by the Board for fiscal year 2010 nor contributed to GRHBF to prefund retiree benefits. Such additional contribution amounts are determined annually by the Board in accordance with the State plan for other post-employment benefits and are subject to appropriation.

The following table summarizes the College's contributions to the health insurance plans for the current fiscal year and the preceding two fiscal years:

Fiscal Year

Percentage Contributed

Required Contribution

State Employees' Assurance Department - OPEB State Employee's Assurance Department - OPEB (SEAD-OPEB) is a cost-sharing multiple-employer defined benefit post-employment plan that was created in fiscal year 2007 by the Georgia General Assembly to provide term life insurance to retired and vested inactive members of the Employees' Retirement System. Contributions by plan members are established by the Board of Trustees, up to the maximum allowed by statute (not to exceed 0.5% of earnable compensation). The Board of Trustees of the Employees' Retirement System establish employer contribution rates, such rates which, when added to members' contributions shall not exceed 1% of earnable compensation. For the fiscal year ended June 30, 2010, contributions of the ERS "old plan" members were 0.45% of earnable compensation, 0.22% of which was paid by the employer. Contributions of ERS "new plan" members were 0.23% of earnable compensation. There were no employer annual required contributions (ARC)for the fiscal years ended June 30,2010, and June 30,2009.

GEORGIA MILITARY COLLEGE SELECTED FINANCIAL NOTES
JUNE 30,2010

EXHIBIT "D"

NOTE 12: 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 Georgia Military College expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Georgia Military College, 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 30,2010.
During fiscal year 2002, upon advice of the Attorney General's Office, Georgia Military College required that full-time employees participate in Teachers Retirement System of Georgia. Previously, participation was elective by full-time employees. As a result of that change, a number of former fulltime employees and "constructively qualified" faculty members were eligible to "purchase" prior service credit (based on employment at Georgia Military College) in Teachers Retirement System of Georgia, and Georgia Military College became responsible for its share of the purchase. For fiscal year 2010, Georgia Military College's potential liability for its share of the purchase has been estimated at $684,990.26.
NOTE 13: AFFILIATED ORGANIZATIONS
The Georgia Military College Foundation, Inc., is a legally separate, tax exempt organization whose activities primarily support Georgia Military College. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 39, Determining Whether Certain Organkaions are Component Units. Therefore, the financial statements of this affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Georgia Military College.

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SUPPLEMENTARY INFORMATION

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GEORGIA MILITARY COLLEGE RECONCILIATIONOF SALARIESAND TRAVEL
YEAR ENDEDJUNE 30,2010

SCHEDULE "1"

Totals per Annual Supplement
Accruals June 30,2010 June 30,2009
Compensated Absences June 30,2010 June 30,2009
Adjustments College Work Study Unidentified Variance

SALARIES $ 18,831,987.67 $

TRAVEL 296,962.53

SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS

GEORGIA MILITARY COLLEGE SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS
YEAR ENDED JUNE 30,2010
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
No matters were reported.
FEDERAL AWARD FINDINGS AND OUESTIONED COSTS
No matters were reported.
OTHER ITEMS
GEORGIA MILITARY COLLEGE TRAVEL CARDS During our testing of Georgia Military College's (GMC) VISA travel credit card activity, we noted four transactions were approved by the appropriate Business Office authorities after the purchases were made, sometimes as late as a month afterward. Management should strengthen procedures to ensure that policies are followed related to credit card use and that all credit card purchases are approved by someone in the Business Office prior to the actual purchase.