c;,q t>ieoo -'R l Ci41 ::tco1-.;ioo;2. - ' ! 'I,.._ I _ ,_STA,TE OF ,GEORGIA ,, . DEJ)ARTMENl OF AUDITS AND' Acco,UNTS l - ' - '\ ' .; \'' ' -- . '. -' \ ,' ' _, I I I' . ' 1,- ',, ,, ' -' ,. '" '' ,_ " - : .?~ 1' \ ' .) '. ( GEORG'iA,SOUTHWESTERN STATE UNIVERSITY ,, AMERICUS, GEORGIA ' . - \ . { '. _pF THER'EFPINO' ARNT COINAL-RSETVAIE'TWEMENTS . \ FOR,THE FIS<;AL YEAR ENDED,JUNE 30, 2002: ' I ; -J . '\ (. I '' ' I , ,, Russell W. Hinton I State Auditor , \ I ' ' " I ' ' ,' I ' -- , ' . GEORGIA SOUTHWESTERN STATE UNIVERSITY -TABLE OF CONTENTS- SECTION! FINANCIAL INDEPENDENT ACCOUNTANTS COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENTS DISCUSSION AND ANALYSIS 3 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 31 2 LOTTERY FOR EDUCATION 32 3 RECONCILIATION OF SALARIES AND TRAVEL 33 SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECT1ONI FINANCIAL 1(114ii\H 1 \\'. H1vror,,, STATE AUD/TOA (40A)656-2174 DEPARTl\1ENT OF AUDITS AND ACCOUNTS :!54 \VJ,hmg:1on S1rcc1 SW, SuHc- 214 Atlama, Georgia 30334-MOO November 11, 2002 Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the Umvers1ty System of Georgia and Honorable Michael L Hanes, President Georgia Southwestern State Umvers1ty INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Laches and Gentlemen We have reviewed the accompanymg basic financial statements (Exh1b1ts A through D) of Georgia Southwestern State Umvers1ty, an organ1zahonal urut 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 bytheAmencan lnshtute ofCertified Pubhc Accountants. All mformahon mcluded m these financial statements 1s the representahon ofthe management ofGeorgia Southwestern State Umvers1ty A review consists pnnc1pally of mqumes ofUmvers1ty personnel and analytical procedures apphed to financial data It 1s substanhally less m scope than an audit m accordance with audltmg standards generally accepted m the Umted States of Amenca, the obJect1ve ofwh1ch 1s the express10n of an op1mon regardmg the financial statements taken as a whole Accordmgly, we do not express such an op1mon Based on our review, we are not aware of any matenal mochficahons that should be made to the accompanymg financial statements m order for them to be m conformity with accountmg pnnc1ples generally accepted m the Umted States of Amenca As descnbed m Note I, Georgia Southwestern State Umverslly adopted the prov1s1ons of Governmental Accounnng Standards Board (GASB) Statement No 35, Basic Fmanczal Statements and Management's Discusswn and Ana(vszs - for Public Colleges and Umverszlles, as amended by GASB Statement No 37, Basic Financial Statements - and Management's Discusswn and Ana(vs1s for State and Local Governments, and GASB Statement No. 38, Certain Financial Statements Note Disclosures, as of July I, 2001, to implement a new financial reponmg model 02ARL-66 L Management's D1scuss10n and Analysis 1s not a reqmred part ofthe basic financial statements but 1s supplementary mforrnat1on reqmred by the GASB We have apphed certam hm1tcd procedures, which consisted pnnc1pallyofmqumes ofmanagement regardmg the methods ofmeasurement and presentation ofth1s supplementary mforrnatton, and we are not aware of any matenal mod1ficat10ns that should be made thereto Our review was made for the purpose of expressmg hm1ted assurance that there are no matcnal modifications that should be made to the financial statements m order for them to be m conformity with accountmg pnnc1ples generally accepted m the United States of Amenca The accompanymg supplementary mforrnatton (Schedules 1 through 3) 1s presented for addltlonal 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 mod1ficat1ons that should be made to such data. Respectfully submitted, ~~.c:B--k Russell W. Hmton State Auditor RWHgp 02ARL-66 REQUIRED SUPPLEMENTARY INFORMATION - I- Georgia Southwestern State University Management's Discussion and Analysis Introduction Georgia Southwestern State Umvers1ty 1s one of the 34 mstltutlons of the Umvers1ty System of Georgia The Umvers1ty, located m Amencus, Georgia, was founded m 1906 The Uruvers1ty offers baccalaureate and masters degrees m a wide vanety of subjects Tlus wide range of educational opporturutles attracts a Jughly qualified faculty and a student body ofmore than 2,500 students each year, as shown below FY2002 FY2001 FY2000 Faculty 111 112 109 Students 2,535 2,622 2,569 Overview ofthe Financial Statements and Financial Analysis Georgia Southwestern State Umvers1ty 1s proud to present its financial statements for fiscal year 2002. The emphasis of discussions about these statements will be on current year data There are three financ1aJ statements presented the Statement of Net Assets, the Statement of Revenues, Expenses and Changes m Net Assets, and, the Statement of Cash Flows This d1scuss1on and analysis of the Umvers1ty's financial statements provides an oveTV1ew of1ts financial act1V1t1es for the year. Georgia Southwestern State Umvers1ty has elected to not restate pnor penods for purposes of providing the comparative data for this Management's D1scuss1on and AnaJys1s However, m future years, when pnor penod mformatlon 1s available, a comparative arralys1s 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 purpose ofthe Statement ofNet Assets 1s to present to the readers ofthe financ1aJ statements a fiscaJ snapshot of Georgia Southwestern State Umvers1ty The Statement ofNet Assets presents end-ofyear data concerning Assets (current and non-current), L1ab1ht1es (current and non-current), and Net Assets (assets mmus hab1ht1es). From the data presented, readers of the Statement of Net Assets are able to determme the assets available to contmue the operations ofthe 1nstJtutJon They are also able to determme how much the mst1tut10n owes vendors, mvestors and lendmg mstltutlons Fmally, the Statement ofNet Assets provides a picture ofthe net assets (assets mmus hab1ht1es) and theu availab1hty for expenditure by the 1nst1tutlon. Net assets are d1v1ded mto three maJor categones The first category, mvested m capital assets, net ofdebt, provides the institution's eqwty m property, plant and equipment owned by the 1nst1tut1on. The next asset category 1s restncted net -3- assets, which 1s d1v1ded mto two categones, none>.pendable and expendable The corpus of nonexpendable restncted resources 1s only available for mvestment purposes Expendable restncted net assets are av!lllable for expenchture by the mst1tut1on but must be spent for purposes as determmed 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 mstltutlon for any lawful purpose of the mstltutlon Statement of Net Assets, Condensed (thousands of dollars) Assets Current Assets Capital Assets, Net Other Assets S 4,886 14,283 1,202 Total Assets $ 20,371 Liabilities Current L1ab1ht1es Non-Current L1ab1ht1es $ 2,695 264 Total Liabilities $ 2,959 Net Assets Invested m Capital Assets, Net ofDebt RestnctedNonexpendable Expendable Unrestncted $ 14,283 354 1,308 1,467 Total Net Assets $ IZ,~l~ Statement ofRevenues, Expenses and Changes in Net Assets Changes m total net assets as presented on the Statement of Net Assets are based on the act1V1ty presented m the Statement of Revenues, Expenses and Changes m Net Assets The purpose of the statement 1s to present the revenues received by the mstltution, both operating and nonoperatmg, and the expenses paid by the mstltutlon, operatmg and nonoperatlng, and any other revenues, expenses, gams and losses received or spent by the ms!Itutlon Generally speakmg operating revenues are received for proVIchng goods and services to the vanous customers and constituencies of the 1nst1tut10n Operatmg expenses are those expenses paid to acqwre or produce the goods and services proVIded m return for the operatmg revenues, and to carry out the nnss1on of the mstltutlon Nonoperatmg revenues are revenues received for winch goods and services are not provided For example state appropnattons are nonoperatlng because they are proVIded by the Legislature to the mst1tutlon without the Legislature directly rece1vmg commensurate goods and services for those revenues. -4- Statement of Revenues, Expenses and Changes m Net Assets, Condensed (thousands of dollars) Operatmg Revenues Operattng Expenses $ 12,217 32,408 Operatmg Loss $ -20,191 Nonoperatmg Revenues and Expenses 18,817 Income (Loss) Before Other Revenues, Expenses, Garns or Losses $ -1,374 Other Revenues, Expenses, Gams or Losses 6 Increase/Decrease m Net Assets $ -1,368 Net Assets at Begmrung of Year, as Ongmally Reported $ 50,139 Curnulattve Effect of Changes m Accountmg Pnnc1ple -31.359 Net Assets at Begmrung of Year Restated $ 18.780 Net Assets at End of Year $ 17.412 The Statement of Revenues, Expenses and Changes m Net Assets reflects a negative year with a decrease m the net assets at the end of the year Some highlights of the mformauon presented on the Statement of Revenues, Expenses and Changes m Net Assets are as follows -5 - Revenue By Source (thousands of dollars) For The Year Ended June 30, 2002 Operating Revenue Tuition and Fees Grants and Contracts Rents and Royalties Sales and Semces ofEducatlonal Departments Aux1hary Other Total Operating Revenue Nonoperatlng Revenue State Appropnatlons Grants and Contracts Investment Income Other Revenues Total Nonoperatmg Revenue Total Revenues $ 4,335 2,278 5 1,586 3,902 111 $ 12,217 $ 14,636 4,120 61 6 $ 18.823 S 31.040 Expenses (thousands of dollars) For The Year Ended June 30, 2002 Operating Expenses Instruction Research Pubhc Service Academic Support Student Semces lnst1tut1onal Support Plant Operations and Mamtenance Scholarslnps and Fellowslnps Aux1hary Enterpnses Unallocated Depreciation $ 10,978 334 1,508 2,105 2,005 3,834 4,782 1,674 3,880 I 308 Total Operating Expenses S 32 408 Statement of Cash Flows The final statement presented by the Georgia Southwestern State Uruvers1ty 1s the Statement ofCash Flows. The Statement of Cash Flows presents detailed mformat1on about the cash actiV1ty of the -6- institution dunng the year The statement 1s d1v1ded into five parts The first part deals with operating cash flows and shows the net cash used by the operating actlv1t1es of the institution The second section reflects cash flows from non-capllal financing act1v1tles This section reflects the cash received and spent for nonoperating, non-investing, and non-capital financing purposes The third section reflects the cash flows from investing act1v1t1es and shows the purchases, proceeds, and interest received from investing activities The fourth section deals with cash flows from capital and related financing actJv1t1es This section deals with the cash used for the acqms1t10n and construction ofcapital and related items. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets Cash Flows for the Year Ended June 30, 2002, Condensed (thousands of dollars) Cash Provided (Used) By Operating Activities Non-Capital Financing Act1V1t1es Investing ActJVltles Capital and Related Financing Act1v1t1es $ -18,843 18,997 -280 -490 Net Change in Cash Cash, Beginrung of Year $ -616 991 Cash, End of Year $ 375 Capital Assets The Uruverstty had no s1gruficant capital asset additions for fac1ht1es in fiscal year 2002 There are no major GSFIC projects in progress as of June 30, 2002, and the capital asset additions will be recorded upon completion of the projects For addttJ.onal mformatlon concerrung Capital Assets, see Notes I, 6, and 9 in the notes to the financial statements Economic Outlook The Uruvers1ty 1s not aware of any currently known facts, dec1s1ons, or cond1t1ons that are expected to have a s1gruficant effect on the financial position or results of operations dunng this fiscal year beyond those unknown vanatlons haV1ng a global effect on virtually all types ofbusiness operations The Uruvers1ty's overall financial pos1t1on 1s strong The Uruvers1ty ant1c1pates the current fiscal year will be much hke last and will maintam a close watch over resources to mamtain the Uruvers1ty's ability to react to unknown internal and external issues Michael L Hanes, President Georgia Southwestern State Uruvers1ty -7- BASIC FINANCIAL STATEMENTS -9- GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF NET ASSETS JUNE 30. 2002 EXHIBIT "A" ASSETS Current Assets Cash and Cash Equivalents Short-Term Investments Accounts Receivable, Net Federal Financial Assistance Other Prepaid Items Inventories Total Current Assets Nonrurrent Assets Investments Notes ReceNable, Net Capital Assets. Net /See Nol9 6/ Total Noncurrent Assets Total Assets LIABILITIES Current L1ab1lrties Contracts Payable Salanes Payable Payroll Wrthholdmgs Accounts Payable Deferred Revenue Funds Held for Others Compensated Absences Other 1Jabi11t1es Total Current IJabtlrties Nonrurrent L1ab1lltles Compensated Absences Total 1Jab1lrties NET ASSETS Invested m Capital Assets, Net of Related Debt Restncted for Nonexpendable Experulable Unrestncted $ 375,055 89 3,003,387 94 78,469 45 991,190 66 96,560 45 341 198 38 $ 4,885,862 77 $ 353,799 58 848,071 18 14,282,632 11 $ 15,484,502 87 $ 20,370,365 64 $ 220,633 72 38,332 96 45,117 46 84,579 84 1,773,791 28 75,356 54 411,43123 45,205 72 $ 2,694,448 75 264 414 45 $ 2,958,863 20 $ 14,282,632 11 353,799 58 1,307,946 87 1,467,123 88 Total Net Assets See Independent Accountant's Combined Report on Review of Basic Financial Statements arul Supplementary lnformebon The notes to the financial statements are an integral part of this statement - 11 - $ 17,411,502 44 GEORGIA SOUTHWESTERN STATE UNfVERSIJY STATEMENT OF REVENUES EXPENSES AND CHANGES IN NET ASSETS YEAR ENDED JUNE 30 2002 EXHIBIT "B" OPERATING REVENUES Student Twhon and Fees Less Schotarship Allowances Grants and Contrads Federal Rents and Royalbes Sales end SeMc:es of Educational Departments Awol1ary Enterprises Residence HaDs Bookstore Food SeMces Health SeMces lnlen:olog1ate Alhlebcs Other Organlzallons Other Operatmg Revenues T01al OperaUng Revenues OPERATING EXPENSES Salaries FaaJlty Staff Employee Benefits Other Personal Services Travel Scholanslups and Fellowships Ulllrues SUppl,es and O!her SeMces Depreaabon Total Operating Expenses Operatlng Income (Loss) NONOPERATING REVENUES {EXPENSES) State Appropnabona Grants and Contracts Federal State Local Nongowmmental Gifts Interest and Other Investment Income Net Nonoperabng Revenues Income Before Other Revenues, Expenses Gains or Losses Cspllal Grants and Gifts Local lnaeaael(Oeaease) ,n Net Assets Net Assets Net Assets - Beg,nr,ng of Year as Onglnally Reported Cumulat1V8 Effect of Changes in Accounting Pnnclpfe Net Assets - Beg,m,ng of Year, Rastated s 5,471 729 45 -1,137,22000 2 278,069 03 4,687 50 1 585,909 57 t,152,455 78 t,009,715 34 691 64-4 69 287,907 19 662,044 89 98,624 41 11125097 $ 12,216,818 82 $ 8,175 298 12 5,883,581 94 3,775,85913 50,160 00 254,031 84 2,224,163 47 1,255,457 t t 9,481,27219 1,308,290 39 $ 3240811419 $ -20,191,295 37 $ 14,635,495 55 t 693,747 53 441,814 43 37,169 21 t ,947,381 38 600 00 60 497 90 $ 18,816,706 00 $ -t,374,589 37 6 380 00 $ -t ,368,209 37 $ 50 138,491 24 -31 358 779 43 $ 1877971181 Net All&ets - End of Year See Independent Aa:ountant's Combined Report on Review of Bas,c Rnanaal Statements and Supplementary Information The notes to the financaal statements are an rrtegral part of thts statement - 12 - $ 1741150244 GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT QF CASH FLOWS YEAR ENDED JUNE 30 2002 CASH FLOWS FROM OPERATING ACTMTIES Tulbon and Feet Grants and Contracts Sale1 and ServlCM of Educabonal Departments Payments to Suppliers Payments to Employee Payments for Scholarahlp1 and Fellowship.a Loan1 IHued to Students and Employee1 Collecbon of Loan to Students and Employee -Awol1ary EnterpnN Chargea Reu:lence Hall Food SaMCH Pa:rit.,g/Tran,portation Health SeMCa1 lntercollegLlta Alhlebcl OtMr Or;an1Zabon1 Othar Recetpts {Payments) Net CHh Provkted {Uaed) by Operating Activlbe1 CASH FLOWS FROM NONCAPITAL FINANCING ACTrvmES Stata Appropriabon1 Agency Fund Trana.action, Gtftl and Grants Received for Other than Capltal Purpoae1 Net Caah Flow Provkled {Used) by Nonceprtal Fmanang Act1Vlbe1 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital Grants and Gd'ta ReceNed Purd'la... ot Captbll Auetl Net CHh ProVJdac:I (Uaed) by Capltal and Related Flnanca-ig Ac:trvrtuH CASH FLOWS FROM INVESTING ACTMTIES Proceed from Sa)n and M11tul1Da1 of lnva:atmenta Interest on lnvntrnents Purd'laN of lnvntments Nllt Cuh Provided {Uaed) by Investing Ac:tMbel Net lnauu/(DeernN) in CHh Cuh and CHh EqUNaltints June :SO, 2001 Leu ShortTenn lnvntments CUh and CHh Equtvalents Beginning of Year CUh and CHh Eqwvalents End of Yur RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTMTIES Operating ll'\C0ffla (Lou) AdJuttrnents to Racol'IClle Net Income (Lou) to Net CHh Prooncled (Uaed) by Operating ActMtiel 0.-bon Changa an Auab and L111b11.sbn Aecounll Recetvablel Net In~ Prepaid ttem1 Note.I RecerniblH Net Accounts Payable S&lann Payable Payroll Withholdlng and Employer Matching Banefrts Defemtd Revenue Other Llabdrbel Compenui.d AbNncn Net Cash Pn:Mdad (UNd) by Operatrng Actrvrties Seo lndapendent Aecountant's Combined Report on Raw,w of BulC Ftnanaal Statements and Supplementary lnformatlon The nom to Iha finanaat statements are an integral part of this statement $ 4 272 405 22 2 278 069 03 1 590 561 81 14 777 116 58 14 044 176 19 2 224 163 47 -188 006 50 202 057 24 1152947 72 1 051 881 16 690,927 94 52 00 289,668 08 649,127 29 97,124 41 11593847 $ -18 842 802 37 $ 14 635 495 55 217 885 57 4 579 471 54 $ 18 997 281 52 s 6 380 00 -496 375 90 $ --489 995 90 $ 32 018 OS 60 497 90 -373 255 18 s -280 739 23 s -618 255 98 $ 3 398 228 63 -2 4oe 914 76 s 991 311 87 $ 375 055 89 s -20 191.295 37 1 308 290 39 so 747 38 -15 82 -5 105 74 14 050 74 28,513 8Q -1,322 85 1 II04 30 --83 715 29 4,752 24 30 393 72 $ -18 842 802 37 GEORGIA SOUTHWESTERN STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Georgia Southwestern State Umvers1ty serves the state. and national commumues by prov1dmg 1ts students with academic mstructlon that advances fundamental knowledge, and by d1ssemmatmg knowledge to the people of Georgia and throughout the country REPORTING ENTITY Georgia Southwestern State Umvers1ty 1s one ofthrrty-four (34) State supported member mS!itutlons ofhigher education m Georgia winch compnse the Umvers1ty System of Georgia, an organizational urut of the State of Georgia The accompanymg financial statements reflect the operations of Georgia Southwestern State Umvers1ty as a separate reporung entity The Board of Regents has constitutional authonty to govern, control and manage the Uruvers1ty System ofGeorgia Tius authonty mcludes but 1s not hm1ted to the power to designate management, the ab1hty to s1gruficantly mfluence operations, the authonty to control mstltutlons' budgets, the power to determme allotments of State funds to member mst1tut1ons and the authonty to prescnbe accountmg systems and admm1strat1ve pohc1es for member 1nst1tut1ons Georgia Southwestern State Umvers1ty does not have authonty to retam unexpended State appropnatlons (surplus) for any given fiscal year. Accordmgly, Georgia Southwestern State Umvers1ty 1s considered an orgaruzatlonal urut of the Board ofRegents of the Umvers1ty System of Georgia reportmg entity for financial reporung purposes because of the s1gn1ficance of its legal, operatlonal, and financial relationships With the Board of Regents as defined m Section 2100 of the Governmental Accounting Standards Board (GASB) Cod1ficat10n of Governmental Accountmg and Fmanc1al Reportmg Standards FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysisfor State and Local Governments This was followed m November 1999 by GASB Statement No 35, Basic Financial Statements and Management's Discussion and AnaZisis for Public Colleges and Umversmes The State of Georgia 1s reqmred to implement GASB Statement No 34 as of and for the year ended June 30, 2002 As an organ1zat10nal unit of the State ofGeorgia, the Uruvers1ty 1s also required to adopt GASB Statements No 34 and No. 35 as amended by GASB Statements No 37 and No. 38. The financial statement presentation reqmred 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 Uruvers1ty's assets, hab1ht1es, net assets, revenues, expenses, changes m net assets, cash flows, and replaces the fund group perspective preVJously reqmred. The Umverslty has elected to not restate its 2001 financial statements to conform with the new financial statement presentation, therefore comparative financial mformatlon WIii not be presented for fiscal year 2002 S1gn1ficant accountmg changes made m order to comply With the new reqmrernents mclude (I) adoption of depreciation on capital assets, and (2) recognition of compensated absences Generally Accepted Accountmg Pnnc1ples (GAAP) requires that the - 14 - GEORGIA SOUTHWESTERN STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMEl\'TS JUNE 30, 2002 EXHIBIT "D" NOTE 1 SUMMARY OF SIGNIFICAl\'T ACCOUNTING POLICIES FINANCIAL STATEMENT PRESENTATION reportmg of summer school revenues and expenses be between fiscal years rather than m one fiscal year Due to the lack ofmatenahty, lnstltullons ofthe Uruvers1ty System ofGeorgia will contmue to report summer revenues and expenses m the year m which the predommate activity takes place BASIS OF ACCOUNTING For financial reportmg purposes, the Umvers1ty 1s considered a special-purpose government engaged only m busmess-type act1v1lles. Accordmgly, the Umvers1ty's financial statements have been presented usmg the economic resources measurement focus and the accrual basis of account:mg, except as noted m the precedmg paragraphs Under the accrual basis, revenues are recogmzed when earned, and expenses are recorded when an obligation has been mcurred All s1gmficant mtraumvers1ty transactions have been ehmmated. The Umvers1ty has the option to apply all Fmanc1al Accounting Standards Board (FASB) pronouncements JSsued after November 30, 1989, unless FASB conflicts with GASB The Umvers1ty has elected to not apply FASB pronouncements issued after the applicable date RESTATEMENT OF NET ASSETS - BEGINNING OF YEAR As a result of the adoption of GASB Statement No 34, the Umvers1ty was also reqmred to make certain changes m accountmg pnnc1ples, specifically (1) adoption of depreciation on capital assets, and (2) recordmg of compensated absences GASB Statement No 34 reqmres certa:m summer semester revenues be recogmzed between fiscal years rather than the fiscal year m which the semester was predommantly conducted. The Umvers1ty System ofGeorgia has chosen to contmue to record summer revenue :m the year m which the semester was predommantly conducted Net assets at July 1, 200 I were reduced by $31,358,779 43 for the cumulative effect of these changes CASH AND CASH EQUIVALENTS/SHORT-TERM INVESTMENTS Cash and Cash Eqmvalents consist of petty cash, demand deposits and lime deposits m authonzed financial mst1tutlons, and cash management pools that have the general charactenstJcs of demand deposit accounts. INVESTMENTS The Umvers1ty accounts for its mvestments at farr value :m accordance with GASB Statement No 31, Accounting and Financial Reporting/or Certain Investments andfor External Investment Pools Changes m unrealized gam (loss) on the carrymg value ofmvestments are reported as a component ofmvestrnent mcome :m the statements of revenues, expenses, and changes m net assets ACCOUNTS RECEIVABLE Accounts receivable consists oftu1t1on 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 amounts due from the Federal governrnent, state and local - 15 - GEORGIA SOUTHWESTERN STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMEl\'TS JUNE 30. 2002 EX'lUBIT "D" NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNTS RECEIVABLE governments, or pnvate sources, in connechon with reimbursement of allowable expenditures made pursuant to the Uruvers1ty's grant and contracts Accounts receivable are recorded net of estimated uncollect1ble amounts INVENTORIES Consumable supplies are recorded on the consumption method and are valued at cost using the weighted average method Resale Inventones are valued at cost using the weighted average method NON-CURRENT INVESTMENTS Investments that are externally restncted and cannot be used to pay current hab1ht1es are classified as non-current assets in the statements of net assets CAPITAL ASSETS Capital assets are recorded at cost at the date of acqws1t10n, or fair market value at the date of donahon in the case of gifts For eqmpment, the Uruvers1ty's cap1tahzatlon pohcy includes all Items with a urut cost of $5,000 00 or more, and an estimated useful life of greater than one year Renovations to bwldings, mfrastructure, and land improvements that exceed $100,000 00 and s1gruficantly mcrease the value or extend the useful hfe of the struc!iire are cap1tahzed Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred Depreciation 1s computed using the straight-line method over the estimated useful hves of the assets, generally 40 to 60 years for bmldmgs, 20 to 25 years for infrastructure and land improvements, IO years for library books, and 3 to 15 years for equipment. To obtain the total picture of plant additions in the Uruvers1ty System, 1t 1s necessary to look at the act1VJtles ofthe Georgia State Financing and Investment Comm1ss1on (GSFIC)- an organization that 1s external to the System GSFIC issues bonds for and on behalfofthe State ofGeorgia, pursuant to powers granted to 11 in the Constitution ofthe State ofGeorgia 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 taxmg power of the State are pledged. Effeclive July I, 2001, the GSFIC retams construction in progress on their books throughout the construction penod and transfers the entire project to Georgia Southwestern State Umvcrsily when complete. DEFERRED REVENUES Deferred revenues mclude amounts received for twhon and fees and certam aux1hary actlVJl!es pnor to the end ofthe fiscal year but related to the subsequent accounting penod Deferred revenues also mclude amounts received from grant and contract sponsors that have not yet been earned - 16 - GEORGIA SOUTHWESTERN STATE UNNERSffi' NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT"D" NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 vacation payable m the Statement of Net Assets, and as a component of compensallon and benefit expense m the Statements of Revenues, Expenses, and Changes m Net Assets Georgia Southwestern State Umvers1ty had accrued hab1hty for compensated absences m the amount of $645,451.96 as of July I, 2001 For Fiscal Year 2002, $44 I ,824.95 was earned m compensated absences and employees were paid $4 I I ,43 I 23, for a net mcrease of$30,393 72. NON-CURRENT LIABILITIES Non-current hab1hlles mclude hab1ht1es that will not be paid witlun the next fiscal year NET ASSETS The Uruvers1ty's net assets are classified as follows Invested m capital assets, net ofrelated debt Tins represents the Umvers1ty's total mvestment m capital assets, net of outstandmg debt obligal!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 of related debt (The term "debt obhgauons" as used m tins defiruUon does not mclude debt of the GSFIC as discussed above ) Restncted net assets - nonexpendable Nonexpendable restricted net assets consist of endowment and slillllar type funds m winch donors or other outside sources have sllpulated, as a condition ofthe gift mstrument, that the pnnc1pal 1s to be mamtamed mv10late and m perpetuity, and mvested for the purpose of producmg present and future income, winch may either be expended or added to pnnc1pal. The Uruvers1ty may accumulate as much ofthe annual net mcome ofan mslltul!onal fund as 1s prudent under the standard estabhshed by Code Secllon 44- I 5-7 of Annotated Code ofGeorgia Restncted net assets - expendable Restncted expendable net assets mclude resources m which the Uruvers1ty 1s legally or contractually obligated to spend resources m accordance with restnct10ns imposed by external third parties Unrestncted net assets Unrestricted net assets represent resources denved from student tuJ.Uon and fees, state appropnallons, and sales and services of educational departments and aux1hary enterpnses. These resources are used for transacllons relatmg to the educational and general operat10ns of the Uruvers1ty, and may be used at the chscret1on of the govenung board to meet current expenses for those purposes, except for unexpended state appropnatlons (surplus) of $11,365.65 Unexpended state appropnallons must be refunded to the Board of Regents of the Uruvers1ty System of Georgia - Adm1rustrat1ve Central Office for remittance to the Office of Treasury and Fiscal Services These resources also mclude aux1hary enterpnses, which are substanually self-supporting ac11v1tles that proVJde services for students, faculty and staff. - 17 - GEORGIA SOUTHWESTERN STATE UNNERSITY NOTES TO TifE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE I SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NET ASSETS When an expense 1s mcurred that can be paid usmg either restricted or unrestncted resources, the Umvers1ty's pohcy 1s to first apply the expense towards unrestricted resources, and then towards restricted resources. INCOME TAXES Georgia Southwestern State Umvers1ty, as a pohllcal subd1VIs10n ofthe State ofGeorgia, is excluded from Federal mcome taxes under Secllon 115(1) of the Internal Revenue Code, as amended CLASSIFICATION OF REVENUES The Umvers1ty has classified its revenues as either operatmg or non-operating revenues m the Statement of Revenues, Experises, and Changes m Net Assets according to the followmg cntena Operating revenues Operating revenues mclude activities that have the charactensllcs ofexchange transacuons, such as (I) student tu11lon and fees, net ofscholarship allowances, (2) sales and serVIces of aux1hary enterpnses, (3) most Federal, state and local grants and contracts and Federal appropnat1ons, and (4) mterest on 1nslitulional student loans Non-operating revenues Non-operatmg revenues mclude acl!VIties that have the charactensllcs of non-exchange transacllons, such as gifts and contributions, and other revenue sources that are defined as non-operallng revenues by GASB No 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Ent1t1es That Use Propnetary Fund Accounting, and GASB No. 34, such as state appropnations and mvestment mcome. SCHOLARSHIP ALLOWANCES Student tu1lion and fee revenues, and certain other revenues from students, are reported at gross With a contra revenue account of scholarship allowances m the Statement of Revenues, Expenses and Changes m Net Assets Scholarship allowances are the difference between the stated charge for goods and services proVIded by the Umvers1ty, and the amount that 1s paid by students and/or third parties makmg payments on the students' behalf Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs, are recorded as either operatmg or nonoperatmg revenues m the Umvers1ty's financial statements To the extent that revenues from such programs are used to satisfy tu1llon and fees and other student charges, the Umvers1ty has recorded contra revenue for scholarship allowances NOTE 2 CASH AND CASH EOUNALENTS, OTHER DEPOSITS, AND INVESTMENTS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds belonging to the State ofGeorgia (and thus Georgia Southwestern State Umvers1ty) cannot be placed ma depository paymg mterest longer than ten days Without the depository providing a surety - 18 - GEORGIA SOUTHWESTERN STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT"D" NOTE 2 CASH AND CASH EOUNALENTS. OTHER DEPOSITS. AND Il\'VESTMENTS STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES bond to the State In heu of a surety bond, the depository may pledge as collateral any one or more ofthe followmg secunlles as enumerated m the Official Code of Georgia Annotated Secllon 50-1759 I Bonds, b11l, certificates of mdebtedness, notes, or other direct obligations ofthe Uruted States or of the State of Georgia. 2 Bonds, bills, certificates of mdebtedness, notes, or other obhgat10ns of the counlles or muruc1pah1Ies of the State of Georgia. 3. Bonds ofanypubhc authontycreated by the laws of the State of Georgia, proVIdmg that the statute that created the authonty authonzed the use of the bonds for tlus purpose 4 Industnal revenue bonds and bonds of development authontles created by the laws of the State of Georgia. 5. Bonds, bills, certificates of mdebtedness, notes, or other obligations of a subs1d1ary corporation ofthe Uruted States government, winch are fully guaranteed by the Uruted States government both as to pnnc1pal and mterest, or debt obhgallons 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 Assoc1at10n 6 Guarantee or msurance of accounts 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 Southwestern State Umvers1ty), the opllon of exemptmg demand deposits from the collateral requ1rernents. The Treasurer ofthe Board ofRegents 1s responsible for all details relative to furruslnng the requrred depository protection for all units 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 msurance or collaterahzed with secuntles (at fa1r value) held by the Uruvers1ty or by its agent m the Umvers1ty's name - 19 - GEORGIA SOUTHWESTERN STATE UNfVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EX'HIBIT "D" NOTE 2 CASH AND CASH EQUIVALENTS. OTHER DEPOSITS, AND INVESTMENTS CATEGORIZATION OF DEPOSITS Category 2 - Amounts collaterahzed with secunlles (at fa.1r value) held by the pledgmg financial msutuuon's trust department or agent m the Umvers1ty"s name Category 3 - Amounts collaterahzed with secuntles (at fa.1r value) held by the pledging financial mst1tut1on, or by its trust department or agent but not in the Umvcrs1ty"s name, and amounts uncollaterahzed Cash Deposits as of June 30, 2002 are as follows Cash Deposits Investment Portfolio Accounts Total Cash Deposits Cenymg Amount Bank Balances R1sJ... Categones s 368.955 89 S 1.607,761 10 s 200,000 00 S 1,130.577 73 s 277,183 37 36,846 58 36 846 58 ~6,846.58 ~z ,zz s ~D~ 6ll~ SI ~~UZ~B s 'lW DQ!l DD s I Ui2j~~JI s ISJ JZ CATEGORIZATION OF INVESTMENTS At June 30, 2002, the Umversity"s mvestments consisted of the following Investments Not SubJect to Categonzat10ns: Investment Portfolio Accounts Mutual Funds State Investment Pool $ 599,660 31 2.720,680 63 Total Investments S 3,320 340.94 Funds invested m an investment pool managed by another governmentaJ enl!ty are not reqUJred to be categonzed smce the Umvers1ty did not own any specific, 1dent1fiable mvestment secuntles of the pool NOTE 3 ACCOUNTS RECEfVABLE Accounts receivable consisted of the followmg at June 30, 2002 -20- GEORGIA SOUTHWESTERN STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 3 ACCOUNTS RECEIVABLE Student Tuition and Fees Aux1hary Enterpnses and Other Operating Act1v1t1es Federal, State, and Pnvate Funds Other $ 76.122 90 46,795 29 570,702 31 403,670 75 $ 1.097,291.25 Less Allowance for Doubtful Accounts 27,631 14 Net Accounts Receivable S I ,069.660.11 NOTE 4 INVENTORIES Inventones consisted of the followmg at June 30, 2002 Bookstore Central Stores $ 278,531 38 62,667 00 Total $ 341, I28,38 NOTE 5 NOTES RECEIVABLE Notes receivable at June 30, 2002, pnmanly consist of student loans made through the Federal Perkms Loan Program (the Program) The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maxrmum of I00% 1fthe participant comphes with certam prov1s1ons The Federal government reimburses the Uruvers1ty for amounts cancelled under these proV1s1ons As the Umvers1ty determmes that loans are uncollectlble and not ehg1ble for reimbursement by the Federal government, the loans are wntten off and assigned to the U. S Department of Education. 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 ended June 30, 2002. - 21 - GEORGIA SOUTHWESTERN STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 6 CAPITAL ASSETS AdJUSted Balance July I 20Cll Add1ttons Reductions Balance June JO, 2002 Capital Assets, Not Bemg Depreciated Land and Land Improvements S 529 207 00 s 529,207 00 Capital Assets, Bemg Depreciated Building and Bu1ldmg Improvements Fac1ht1cs and Other Improvements Equipment Library Collect1ons S 25,992,734 00 1,267,167 00 2,575,576 22 $ 5 495,277 00 115,443 26 $ 219 959 29 S 35 330,754 22 s._..3..3..5.cc402 55 s $ 25,992,734 00 1,267,167 00 20,822 90 2,670,196 58 18,299 00 S.9~ 937 29 39 121 9Q S 35,627,034 87 Less Accumulated Deprectatlon Bu1ldmgs and Bu1ldmg Improvements S 13,749,057 80 $ Fac1l1t1cs and Other Improvements 942,804 02 Equipment 1,813,741 45 Library Collecnons 4 098 838 00 741,471 17 103,470 83 258,353 39 $ 204,995 00 s 20 604 44 J 21 s,__.l...3,,0_8, ,290 12 s $ 14,490,528 97 1,046,274 85 20,822 90 2,051,271 94 18,299 00 4,285,534 00 19,121 90 S 21,873 609 76 Total Capital Assets, Bemg Depreciated, Net s 14 726 312 95 s_~-97.2,,,887 84 $ Cap1ta1 Assets, Net s 15 25S 519 95 s_.-.9.7..2....887 4 s 0 00 $ 13,753,425 11 gWl s 1!1 ~82 ~J~ 11 NOTE 7 DEFERRED REVENUE Deferred revenue consisted of the foJlowmg at June 30, 2002 Prepaid Tuition and Fees Federal, State and Pnvate Funds Other Deferred Revenue $ I ,025,082 93 689,398 30 59,310 05 Totals S j,773179),28 NOTE 8 LONG-TERM LIABILITIES Long-term hab1hty act1V1ty for the year ended June 30, 2002, was as follows Other L1ab1l1t1cs Compensated Absences Balance July) 200) Additions Recluc11ons Balance June 30, 2002 Current Poomn $ Cd~ !1~ I 9D s ~I 2!125 s !111 !1ll iJ $ ~75 ~~ CIS $ ~II ~JI 2J - 22 - GEORGIA SOUTHWESTERN STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBJT"D" NOTE 9 SIGNIFICANT COMMITMENTS Georgia Southwestern State Uruvers1ty had s1gruficant unearned, outstanding, construction or renovation contracts executed in the amount of$684,400 52 as ofJune 30, 2002 This amount 1s not reflected m the accompanymg basic financial statements. NOTE 10. LEASE OBLIGATIONS OPERATING LEASES The Uruvers1ty's noncancellable operating leases haVJng rernaining terms of more than one year expire in vanous fiscal years from 2003 through 2006. Certam operating leases provide for renewal options for penods from one to three years at their fa.1r rental value at the time of renewal All agreements are cancelable 1f the State of Georgia does not proVJde adequate funding, but that 1s considered a remote poss1b1hty. In the normal course of busmess, 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 other small business equipment Noncancellable operating lease expenses in 2002 were $23,972 40 for real property SUMMARY OF LEASE OBLIGATION Furore commitments for noncancellable operatmg leases having rermurung terms in excess of one year as of June 30, 2002, were as follows: Operating Leases Year Endmg June 30: 2003 2004 2005 2006 $ 24,887.50 20,295 10 10,172 88 5,525.50 Total M1rumum Lease Payments NOTE 11 RETIREMENT PLANS $ 60.880,98 TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description Georgia Southwestern State Uruvers1ty participates m the Teachers Retirement System of Georgia (TRS), a cost-shanng multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of proVJdmg retirement allowances and other benefits for teachers of the State of Georgia. TRS provides SerVJce retirement, d1sab1hty retirement, and -23 - GEORGIA SOUTHWESTERN STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 11 RETIREMENT PLANS TEACHERS RETIREMENT SYSTEM OF GEORGIA Plan Description 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 ofGeorgia Southwestern State Umvers1ty who are covered by TRS are reqmred by State statute to contnbute 5% of thetr gross earmngs to TRS Georgia Southwestern State Umvers1ty makes monthly employer contnbul!ons to TRS at rates adopted by the TRS Board of Trustees m accordance with State statute and as advised by theu mdependent actuary For fiscal year 2002, the employer contnbution 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 Reqmred Contnbul!on 2002 2001 2000 I 000/o 100% 100% $ 784,154 40 $ 909,129 37 $ 983,973 70 REGENTS RETIREMENT PLAN Plan Description The Regents Retirement Plan, a smgle-employer defined contnbul!on plan, 1s an optional retirement plan estabhshed and adnurustered by the Board of Regents of the Umvers1ty System of Georgia, under wluch 11 may ptITchase annmty contracts for the ptITpose of prov1dmg reurement and death benefits for ehg1ble faculty and pnnc1pal adnurustrators Benefits depend solely on amounts contnbuted to the plan plus mvestrnent eammgs. Benefits are payable to part1c1patmg employees or theu benefic1anes m accordance with the terms of the annuity contracts Funding Policy Member contnbullon reqmrements are estabhshed by the Board of Trustees of the Teachers Retirement System Employer contnbutJons are estabhshed by statute and may be amended only by the General Assembly of the State of Georgia The employer contnbutes 9 62% ofthe part1c1patmg employee's earnable compensation Employees contnbute 5% of theu eamable compensation Amounts attnbutable to all plan contnbutJons are fully vested and non-forfe1table at all l!mes Georgia Southwestern State Umvers1ty and the covered employees made the requued contnbutJons of$371,304 35 (9 62%) and $193,000 72 (5%), respectively - 24 - GEORGIA SOUTHWESTERN STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMEl\'TS JUNE 30, 2002 EXHIBIT "D" NOTE 11 RETIREMENT PLANS GEORGIA DEFINED CONTRIBUTION PLAN Plan Description Georgia Southwestern State Umvers1ty participates m the Georgia Defined Contnbutlon Plan (GDCP) wluch 1s a smgle-employer defined contnbutlon plan established by the General Assembly ofGeorgia for the pwpose ofprov1dmg retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system GDCP 1s admm1stered by the Board of Trustees of the Employees' Retirement System of Georgia Benefits A member may retire and elect to receive penod1c payments after attamment ofage 65 The payment will be based upon mortality tables and mterest assumptions to be adopted by the Board ofTrustees Ifa member has less than$ 3,500 00 credited to his/her account, the Board ofTrustees has the option of requmng a lump sum d1stnbuUon to the member m lieu ofmaking penod1c payments Upon the death of a member, a lump sum d1stnbut1on equalmg the amount credited to his/her account w1 II be paid to the member's designated beneficiary Benefit prov1S1ons are established by State statute Contributions and Vesting Member contnbutlons are seven and one-halfpercent (7 5%) ofgross salary There are no employer contnbutlons Contnbutlon rates are established by State statute. Eammgs are credited to each member's account m a manner established by the Board of Trustees. Upon temunatlon of employment, the amount of the member's account 1s refundable upon request by the member. Total contnbutions made by employees dunng fiscal year 2002 amounted to $I5,295 49 wluch represents 7.5% ofcovered payroll These contnbutlons met the reqwrements ofthe plan NOTE 12: RISK MANAGEMENT Georgia Southwestern State Uruvers1ty 1s a participant m the Board of Regents of the Uruvers1ty System of Georgia Health Benefits Plan, which 1s a self-msurance program of health and dental benefits for employees and retirees ofthe Uruvers1ty System ofGeorgia Georgia Southwestern State Uruvers1ty and partlc1patmg employees and retirees pay premmms to the Health Benefits Plan for this health msurance coverage. The Health Benefits Plan 1s mcluded m the financial statements of the Board ofRegents ofthe Uruvers1ty System of Georgia - Adm1rustratlve Central Office All uruts of the Umvers1ty System of Georgia share the nsk of loss for claims of the Health Benefits Plan The Health Benefits Plan 1s considered a self-sustainmg nsk fund that provides health coverage for Its members up to 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 to process claims m accordance with the Health Benefits Plan as established by the Board of Regents - 25 - GEORGIA SOUTHWESTERN STATE UNNERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2002 EXHIBIT "D" NOTE 12 RISK MANAGEMENT The Department of Adm1mstrat1ve Services (DOAS) has the respons1b1hty for the State of Georgia of makmg and carrymg out dcc1s1ons that will m1mm1ze the adverse effects of accidental losses that mvolve State government assets The State beheves It 1s more economical to manage its nsks mternally and set aside assets for claim settlement Accordmgly, DOAS processes clrums for nsk of loss to which the State 1s exposed, mcludmg general hab1hty, property and casualty, workers' compensat10n, unemployment compensallon, and law enforcement officers' mdemruficatlon L1m1ted amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certam other nsks Georgia Southwestern State Umvers1ty, as an organ1zat1onal unit ofthe Board of Regents ofthe Umvers1ty System of Georgia, 1s part of the State of Georgia reportmg enttty, and as such, 1s covered by the State of Georgia nsk management program admm1stered by DOAS Premmms for the nsk management program are charged to the vanous state organ1zat1ons by DOAS to provide clrums serv1cmg and clrums payment A self-msured program of professional liab1hty for its employees was estabhshed by the Board of Regents of the Umvers1ty System of Georgia under powers authonzed by the Official Code of Georgia Annotated Sectton 45-9-1 The program msures the employees to the extent that they are not immune from hab1hty agrunst personal hab1hty for damages ansmg out of the performance of their duties or m any way connected therewith. The program 1s admm1stered by DOAS as a Self- Insurance Fund NOTE 13 CONTINGENCIES Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies This could result m refunds to the grantor agency for any expenditures which are disallowed under grant terms The amount ofexpenditures which may be disallowed by the grantor cannot be determmed at tlus tune although Georgia Southwestern State University expects such amounts, 1f any, to be 1mmatenal to its overall financial pos1t1on L11tgallon, clrums and assessments filed agrunst Georgia Southwestern State Umvcrs1ty (an orgaruza!Ional unit of the Board of Regents of the Umvers1ty System of Georgia), 1f any, are generally considered to be actions agamst the State ofGeorgia. Accordingly, s1gmficant httgat1on, clrums and assessments pendmg agrunst the State of Georgia are disclosed m the State of Georgia Comprehensive Annual Fmanc1al Report for the fiscal year ended June 30, 2002 NOTE 14 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS Pursuant to the general powers conferred by the Official Code ofGeorgia Annotated Section 20-331, the Board of Regents of the Umvers1ty System ofGeorgia has estabhshed group health and hfe msurance programs for regular employees ofthe Uruvers1ty System ofGeorgia It 1s the policy ofthe Board ofRegents to permit employees ofthe Umvers1ty System of Georgia ehg1ble for rettrement or that become permanently and totally disabled to contmuc as members of the group health and life - 26 - GEORGIA SOUTHWESTERN STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2002 EXHIBIT"D" NOTE 14 POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS msurance programs Employees who are ehg1ble for retirement or d1sab1hty under the cntena established by the Teachers Retirement System of Georgia and who have at least ten years ofservice with the Umvers1ty System of Georgia are ehg1ble for these post-employment health and hfe msurance benefits Orgaruzatlonal umts of the Board of Regents of the Umvers1ty System of Georgia pay the employer portion for group msurance for affected md1v1duals As of June 30, 2002, there were 128 employees who had retired or were disabled that were receivmg these post-employment health and hfe msurance benefits For the year ended June 30, 2002, Georgia Southwestern State University recogruzed as mcurred $388,901 16 ofexpenditures, which was net of $150,916 20 of participant contnbullons NOTE 15 NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS The Umvers1ty"s operatmg expenses by functional class1ficat1on are shown below Statement of Operating Expenses - Natural vs FunctKlnl.l Classificaoons For the Fiscal Year Ended June 30, 2002 ~,WIii Cliw1fi"-Ah00 Salanes Faculty Staff Employee Bcnefiu Other Personal Services Tra'lcl Sehowsh1ps and Fellowships UtlhtJes SuppllCS and Other Services Dep,=abon Total Operanng Expenses lns~tum B~b EYD~QDII Cl;rulfi!iiilJJQD Public Smm, Acadermc Suooort Student Srn:1~ lnsntunonal S!i!noort s 6,167.360 31 1,061,924 30 s 122,637 30 18,750 57 s 15,975 00 627,51113 s I,102,696 72 231,440 84 s 756,510 79 430,859 42 s 95000 2,129,943 32 1,723,091 67 15,01443 144.318 22 312,695 96 267.599 78 705,709 25 50,160 00 74,021 49 62163 44,127 33 ll.213 01 55.319 44 46,805 81 30,094 00 78,327 28 10000 1,768 95 74,339 25 14,45013 59,0ll 03 54,318 29 22,099 41 105,81603 37,567 22 1,843.587 78 174,667 75 587,432 25 )29 63 376,612 09 418.315 71 756,999 56 183 31 s 19 97& 406 } s Jn m63 s I SQS,282 94 s 2104740M S.,],00:'j 91 284 s 1RJ4 B4 52 Nanrral ClAAHficabOn Salanes Faculty Siafl' Employee Benefits OthcT Personal ~1.ccs Travel Schowsh1ps and Fc:llowsh1ps Ut1.htJes Supplies and Other Se,v,ces Deprcc,at1.on Total Operabng Expenses Plan! Operanoos and Mamtenancc El.!!!!i;l:JQJ]j)j Cl.!i'ilfi~l:JQD Schomh1ps and Felkra::shms Aux1hary EntroroK:S Unallocated Ocprec13t1on Total Operanng [yprnsg s 730,510 75 192,655 18 5.319 19 959,41 I 18 2,894,017 39 s ~ ZBl 21J "2 s 1,674,12004 151 74 s I 2~ 6Zl ZB s 9,168 00 652,641 61 414,774 64 5,543 94 285,375 86 82,810 91 2429,487 92 s JBZ2 B.Q2 B s 1,301 m 43 s 11a.:zm~u s 8, I 75,298 12 5,883,581 94 3,775,859 13 50,16000 254,0JI 84 2,224,163 47 1,255,457 11 9,481,272 19 I 308 290 39 SJ6~Q] II~ 12 - 27 - SUPPLEMENTARY INFORMATION -29 - GEORGIA SOUTHWESTERN STATE UNNERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET fNON-GMP BASIS} RESIDENT INSTRUCTION YEAR ENDED JUNE 30. 2002 SCHEDULE "1" REVENUES State Appropnations Other Revenues Retained BUDGET ACTUAL(1) VARIANCEFAVORABLE (UNFAVORABLE) $ 14,434,840 00 $ 14,434,840 00 $ 15,478,050 00 13,338,940 05 000 -2 139 109 95 $ 2919121890 00 $ 27,TT3,780 05 $ _ _=-2-'13"'9"",1""09""'"'95"'- EXPENDITURES Personal Services Educa1Jon, General and Departmental Services Sponsored Operabons Operating Expenses Educabon General end Departmental Services Sponsored Operabons Gaprtal Outlay SpeaaJ Funding lmllative $ 15,258,065 00 $ 15,059,815 83 $ 1,784,010 00 1,535,007 22 4,725,312 00 5,958 00500 2,070,611 00 11688700 4,995,346 06 4,179,847 65 1,924,034 81 114 161 08 198,249 17 249,002 78 -270,034 06 1,TTB,157 35 146,57619 2 72592 Excess of Revenues over Expendrtures $ 291912189000 $ 27,80821265 $ _ _~2-~104~,67_7_35_ $ -34 432 60 $ _ _ _-3_4_4_3_2_60_ (1) Actual amounts were prepared on a prescribed baSls of acx:ounbng that demonstrates complrance wrth budgetary staMes and regulations of the State of Georgia, which Is a comprehens,ve basis of accounbng other than generally accepted accounbng pnnaples See accompanying notes end Independent Accountanfs Combined Report on Revl8W of Basic Fu,anaal Statements and Supplementary lnformabon 31 GEORGIA SOUTHWESTERN STATE UNIVERSITY SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET - CNON-GAAP BASIS) LOllRY FOR EDUCATION YEAR ENDED JUNE 30. 2002 SCHEDULE "2" REVENUES State Appropriations BUDGET ACTUAL (1) VARIANCEFAVORABLE (UNFAVORABLE) $ 207,882 00 $ 201,882 oo s_ _ _ _---=.o..:coo=- EXPENDITURES Equipment, Technology and Construction Trust Fund Special Funding lnrtJattves Excess of Revenues over Expendrtures $ 108,850 00 $ 108,655 77 $ 99,032 00 99,032 00 19423 000 $ 2071882 00 $ 201.e8111 s _ _ _ _1:.:94c..:...::2=-3 $ 194 23 $ _ _ _ _1~94=23;;. (1) Actual amourrts were prepared on a prescnbed basis of accourrting that demonstrates compliance wrth budgetary statutes and regulations of the State of Georgia, wluch 1s a comprehens,ve basis of accounting other than generally accepted accourrtJng pnnciples See accompanying notes and Independent Accourrtant's Combined Report on Rev,ew of Basic Financaal Statements and Supplementary lnfonnabon - 32 - GEORGIA SOUTHWESTERN STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30 2002 SCHEDULE "3" Totals per Annual Supplement Accruals June 30, 2002 June 30, 2001 AdJustments Shared SeMces on Jointly Staffed Personnel Abraham Baldwin Agncultural College Miller, Paul Albany State Umversrty Harbert, Gina Georgia Southern Umversrty Rrttschof, Kent Compensated Absences June 30, 2002 June 30, 2001 Prepalds June 30, 2002 June 30, 2001 SALARIES $ 14,025,882 58 $ TRAVEL 254,031 84 38,332 96 -39,655 81 17,224 00 1,614 75 1,614 75 627,817 63 -599,583 80 -59,990 00 45,623 00 $ 14,0581880 06 $ _ _.2.54===0'-3_1__84_ See accompanying notes and Independent Accountant's Combined Report on Rev,ew of Basic Financial Statements and Supplementary lnformaoon - 33 - SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS GEORGIA SOUTHWESTERN STATE UNNERSITY AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR Fll\1DINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-542-99-01 Partially Resolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES FUND BALANCE Deficit to be Funded from Subsequent Years' Operation Fmdmg Control Number- FS-542-99-01 Efforts are contmumg to balance the Athletic budget and ehrnmate the deficit