GEORGIA SOUTHWESTERN STATE UNIVERSITY AMERICUS, GEORGIA MANAGEMENT REPORT FOR FISCAL YEAR ENDED JUNE 30, 2013 A Member Institution of the University System of Georgia Georgia Department of Audits and Accounts Greg S. Griffin State Auditor GEORGIA SOUTHWESTERN STATE UNIVERSITY - TABLE OF CONTENTS - SECTION I FINANCIAL LETTER OF TRANSMITTAL SELECTED FINANCIAL INFORMATION EXHIBITS A STATEMENT OF NET POSITION - (GAAP BASIS) B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION (GAAP BASIS) C STATEMENT OF CASH FLOWS - (GAAP BASIS) D SELECTED FINANCIAL NOTES SUPPLEMENTARY INFORMATION SCHEDULES 1 BALANCE SHEET - (STATUTORY BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND 4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND 5 RECONCILIATION OF BUDGET TO GAAP 6 RECONCILIATION OF SALARIES AND TRAVEL Page 2 3 4 5 20 21 22 24 26 27 SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS SECTION I FINANCIAL Greg S. Griffin STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400 October 23, 2013 Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the State Board of Regents of the University System of Georgia and Honorable Kendall Blanchard, President Georgia Southwestern State University Ladies and Gentlemen: As part of our audits of the basic financial statements of the University System of Georgia presented in the Annual Financial Report for the University System of Georgia, the basic financial statements of the State of Georgia presented in the State of Georgia Comprehensive Annual Financial Report and the issuance of a State of Georgia Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2013, we have performed certain audit procedures at Georgia Southwestern State University. Accordingly, the financial statements and compliance activities of Georgia Southwestern State University 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 Southwestern State University as of and for the year ended June 30, 2013. Information contained in this report is a by-product of our audits of the basic financial statements of the University System of Georgia and 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 Southwestern State University, members of the Board of Regents of the University System of Georgia and the Southern Association of Colleges and Schools - Commission on Colleges and is not intended to be and should not be used by anyone other than these specified parties. Respectfully, GSG:as Greg S. Griffin State Auditor SELECTED FINANCIAL INFORMATION - 1 - GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF NET POSITION - (GAAP BASIS) JUNE 30, 2013 ASSETS Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Due from Affiliated Organizations Inventories Prepaid Items Total Current Assets Noncurrent Assets Investments Notes Receivable, Net Capital Assets, Net (Note 4) Total Noncurrent Assets Total Assets LIABILITIES Current Liabilities Accounts Payable Salaries Payable Deposits Unearned Revenue (Note 5) Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences Total Current Liabilities Noncurrent Liabilities Lease Purchase Obligations Compensated Absences Total Noncurrent Liabilities Total Liabilities NET POSITION Net Investment in Capital Assets Restricted for: Nonexpendable Expendable Capital Projects Unrestricted Total Net Position - 2 - EXHIBIT "A" $ 8,333,549 87,656 664,396 250,000 643,770 265,664 $ 10,245,035 $ 663,791 886,338 92,941,135 $ 94,491,264 $ 104,736,299 $ 797,584 127,901 222,107 2,482,702 237,515 359,804 460,763 $ 4,688,376 $ 38,192,508 321,476 $ 38,513,984 $ 43,202,360 $ 54,388,823 388,318 1,200,304 397,735 5,158,759 $ 61,533,939 GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - (GAAP BASIS) YEAR ENDED JUNE 30, 2013 OPERATING REVENUES Student Tuition and Fees Less: Scholarship Allowances Grants and Contracts Federal State Other Sales and Services Rents and Royalties Auxiliary Enterprises Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Operating Revenues Total Operating Revenues OPERATING EXPENSES Salaries Faculty Staff Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) State Appropriations Grants and Contracts Federal Gifts Investment Income Interest Expense Other Nonoperating Revenues (Expenses) Net Nonoperating Revenues Income (Loss) Before Other Revenues, Expenses, Gains, or Losses Capital Grants and Gifts State Increase (Decrease) in Net Position Net Position - Beginning of Year Net Position - End of Year EXHIBIT "B" $ 16,470,197 -4,782,026 1,345,761 161,999 1,563,230 32,402 18,022 3,717,467 1,457,437 2,111,489 93,131 387,343 1,206,028 327,156 217,920 $ 24,327,556 $ 8,509,901 8,102,264 5,628,922 136,691 300,672 3,221,455 1,543,369 11,861,800 3,663,082 $ 42,968,156 $ -18,640,600 $ 11,084,310 5,902,132 1,416,288 38,182 -1,902,626 -9,273 $ 16,529,013 $ -2,111,587 7,029,092 $ 4,917,505 56,616,434 $ 61,533,939 - 3 - GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF CASH FLOWS - (GAAP BASIS) YEAR ENDED JUNE 30, 2013 CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation Health Services Intercollegiate Athletics Other Organizations Other Receipts (Payments) Net Cash Provided (Used) by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES State Appropriations Agency Funds Transactions Gifts and Grants Received for Other than Capital Purposes Net Cash Flows Provided (Used) by Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of Capital Assets Principal Paid on Capital Debt and Leases Interest Paid on Capital Debt and Leases Net Cash Provided (Used) by Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments Purchase of Investments Net Cash Flows Provided (Used) by Investing Activities Net Increase (Decrease) in Cash Cash and Cash Equivalents - Beginning of Year Cash and Cash Equivalents - End of Year RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating Income (Loss) Adjustments to Reconcile Operating Income (loss) to Net Cash Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Receivables, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Unearned Revenue Other Liabilities Compensated Absences Net Cash Provided (Used) by Operating Activities NONCASH ACTIVITY Change in Fair Value of Investments Recognized as a Component of Interest Income Gift of Capital Assets Reducing Proceeds of Capital Gifts and Grants Prepaid Assets Used for the Addition of Capital Assets - 4 - EXHIBIT "C" $ 11,647,346 3,510,141 32,402 -19,293,700 -16,603,134 -3,221,455 -52,529 3,726,724 1,423,607 2,027,159 93,076 386,347 1,204,743 327,928 1,280,400 $ -13,510,945 $ 11,084,310 -186,607 7,318,419 $ 18,216,122 $ -913,189 -281,602 -1,902,626 $ -3,097,417 $ 9,692 -117,351 $ -107,659 $ 1,500,101 6,833,448 $ 8,333,549 $ -18,640,600 3,663,082 1,223,168 -45,010 140,166 -52,529 99,620 40,169 53,091 7,898 $ -13,510,945 $ 28,490 $ 7,029,092 $ 2,120,300 GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REPORTING ENTITY Georgia Southwestern State University is one of thirty-one (31) State supported member institutions of higher education in Georgia which comprise the University System of Georgia, an organizational unit of the State of Georgia. The accompanying financial statements reflect the operations of Georgia Southwestern State University as a separate reporting entity. The Board of Regents has constitutional authority to govern, control and manage the University System of Georgia. This authority includes but is not limited to the power to designate management, the ability to significantly influence operations, the authority to control institutions' budgets, the power to determine allotments of State funds to member institutions and the authority to prescribe accounting systems and administrative policies for member institutions. Georgia Southwestern State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia Southwestern State University is considered an organizational unit of the Board of Regents of the University System of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the Board of Regents as defined in Section 2100 of the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards. FINANCIAL STATEMENT PREPARATION The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entity-wide perspective of the University's assets, deferred outflows, liabilities, deferred inflows, net position, revenues, expenses, changes in net position and cash flows. BASIS OF ACCOUNTING For financial reporting purposes, the University is considered a special-purpose government engaged only in business-type activities. Accordingly, the University's financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues, are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-University transactions have been eliminated. In fiscal year 2013, the University adopted the Governmental Accounting Standards Board (GASB) Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements. The provisions of this Statement establish accounting and financial reporting standards for governments who enter into Service Concession Arrangements (SCA) with other governmental or nongovernmental entities. As of June 30, 2013, the University has not entered into any arrangements that meet the qualifications to be reported as a SCA in accordance with this standard. In fiscal year 2013, the University adopted the Governmental Accounting Standards Board (GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in PreNovember 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement incorporate certain accounting and financial reporting guidance into authoritative GASB literature. In fiscal year 2013, the University adopted the Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. The provisions of this Statement establish financial reporting standards for the presentation of deferred outflows of resources and deferred inflows of resources and their effects on a government's net position. The University changed its presentation of net assets to net position for fiscal year 2013. There were no other applicable reporting changes for the University. - 5 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" NET POSITION The University's net position is classified as follows: Net Investment in Capital Assets: This represents the University's total investment in capital assets, net of outstanding debt obligations and deferred inflows, or resources 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 the net investment in capital assets. Restricted - nonexpendable: Nonexpendable restricted net position consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The University may accumulate as much of the annual net income of an institutional fund as is prudent under the standard established by Code Section 44-15-7 of Annotated Code of Georgia. Restricted - expendable: Restricted expendable net position includes resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties. Unrestricted: Unrestricted net position represents 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 Georgia Southwestern State University and may be used at the discretion of the governing board to meet current expenses for those purposes, except for unexpended state appropriations (surplus) of $2,235.05. Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office for remittance to the Office of State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff. NOTE 2: DEPOSITS AND INVESTMENTS DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the Georgia Southwestern State University's deposits may not be recovered. Funds belonging to the State of Georgia (and thus the University) cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: 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. - 6 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" 5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association. 6. Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation. The Treasurer of the Board of Regents is responsible for all details relative to furnishing the required depository protection for all units of the University System of Georgia. At June 30, 2013, the carrying value of deposits was $3,776,616 and the bank balance was $4,176,280. Of the University's deposits, $4,132,677 were uninsured. Of these uninsured deposits, $4,132,677 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name. INVESTMENTS At June 30, 2013, the carrying value of the Georgia Southwestern State University's investment was $5,214,074, which is materially the same as fair value. These investments were comprised entirely of funds invested in Debt Securities, Other Investments, the Board of Regents and Office of State Treasurer investment pools as follows: Investment Type Fair Value Investment Maturity 1 - 5 Years 6-10 Years Debt Securities Mutual Bond Fund $ 86,918 $ 54,426 $ 32,492 Other Investments Equity Mutual Funds Real Estate Investment Fund 542,857 34,016 Investment Pools Board of Regents Short-Term Fund 525,628 Office of the State Treasurer Georgia Fund 1 4,024,655 Total Investments $ 5,214,074 The Board of Regents Investment Pool is not registered with the Securities and Exchange Commission as an investment company. The fair value of investments is determined daily. The pool does not issue shares. Each participant is allocated a pro rata share of each investment at fair value along with a pro rata share of the interest that it earns. Participation in the Board of Regents Investment Pool is voluntary. The Board of Regents Investment Pool is not rated. Additional information on the Board of Regents Investment Pool is disclosed in the audited Financial Statements of the Board of Regents of the University System of Georgia System Office (oversight unit). This audit can be obtained from the Georgia Department of Audits Education Audit Division or on their web site at http://www.audits.ga.gov. - 7 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" The Georgia Fund 1 Investment Pool, managed by the Office of the State Treasurer, is not registered with the Securities and Exchange Commission as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. This investment is valued at the pool's share price, $1.00 per share. The Georgia Fund 1 Investment Pool is an AAAf rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 43 days. Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The University does not have a formal policy for managing interest rate risk. The Effective Duration of the Short-Term Fund is .56 years. Of the University's total investment of $525,628 in the Short-Term Fund, $461,128 is invested in debt securities. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the University will not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. The University does not have a formal policy for managing custodial credit risk for investments. At June 30, 2013, $86,918 were uninsured and held by the investment's counterparty's trust department or agent, but not in the University's name. Credit Quality Risk Credit quality risk for investments is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University does not have a formal policy for managing credit quality risk. The investments subject to credit quality risk are reflected below: Credit Quality Risk Fair Value BBB Unrated Related Debt Investments Mutual Bond Fund $ 86,918 $ 27,284 $ NOTE 3: ACCOUNTS RECEIVABLE Accounts receivable consisted of the following at June 30, 2013. Student Tuition and Fees $ Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission Due from Affiliated Organizations Other 239,367 93,636 87,656 147,735 250,000 296,188 Less Allowance for Doubtful Accounts $ 1,114,582 112,530 Net Accounts Receivable $ 1,002,052 59,634 - 8 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" NOTE 4: CAPITAL ASSETS Following are the changes in the University's capital assets for the year ended June 30, 2013: Beginning Balance July 1, 2012 Additions Reductions Ending Balance June 30, 2013 Capital Assets, Not Being Depreciated: Land $ 1,084,007 $ 0$ 0$ 1,084,007 Capital Assets, Being Depreciated: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections $ 74,420,907 $ 1,267,167 2,557,627 38,176,157 7,109,673 0 9,149,392 $ 666,466 171,723 75,000 205,755 $ 73,781 2,616 83,364,544 1,267,167 3,150,312 38,176,157 7,278,780 75,000 Total Assets Being Depreciated $ 123,531,531 $ 10,062,581 $ 282,152 $ 133,311,960 Less: Accumulated Depreciation: Building and Building Improvements Facilities and Other Improvements Equipment Capital Leases Library Collections Capitalized Collections $ 22,973,392 $ 1,129,988 2,036,557 5,652,686 6,272,007 0 2,091,267 $ 274,363 1,118,693 178,446 313 197,611 $ 72,653 2,616 24,867,048 1,129,988 2,238,267 6,771,379 6,447,837 313 Total Accumulated Depreciation $ 38,064,630 $ 3,663,082 $ 272,880 $ 41,454,832 Total Capital Assets, Being Depreciated, Net $ 85,466,901 $ 6,399,499 $ 9,272 $ 91,857,128 Capital Assets, Net $ 86,550,908 $ 6,399,499 $ 9,272 $ 92,941,135 NOTE 5: UNEARNED REVENUE Unearned revenue consisted of the following at June 30, 2013. Prepaid Tuition and Fees Other Unearned Revenue Total Unearned Revenue $ 804,733 1,677,969 $ 2,482,702 - 9 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" NOTE 6: LONG-TERM LIABILITIES The University's Long-Term liability activity for the year ended June 30, 2013, was as follows: Beginning Balance July 1, 2012 Additions Reductions Ending Balance June 30, 2013 Current Portion Leases Lease Obligations $ 38,833,914 $ 0$ 281,602 $ 38,552,312 $ 359,804 Other Liabilities Compensated Absences 774,341 532,111 524,213 782,239 460,763 Total Long-Term Obligations NOTE 7: NET POSITION $ 39,608,255 $ 532,111 $ 805,815 $ 39,334,551 $ 820,567 Changes in Net Position for the year ended June 30, 2013 are as follows: Beginning Balance July 1, 2012 Additions Reductions Ending Balance June 30, 2013 Net Investments in Capital Assets $ 47,716,994 $ 6,681,101 $ 9,272 $ 54,388,823 Restricted Net Position 4,928,215 10,622,264 13,564,122 1,986,357 Unrestricted Net Position 3,971,225 32,494,195 31,306,661 5,158,759 Total Net Position $ 56,616,434 $ 49,797,560 $ 44,880,055 $ NOTE 8: LEASE OBLIGATIONS 61,533,939 Georgia Southwestern State University is obligated under various operating leases for the use of equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property. CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2037 and 2039. Expenses for fiscal year 2013 were $2,184,228 of which $1,902,626 represented interest. Total principal paid on capital leases was $281,602 for the fiscal year ended June 30, 2013. Interest rates range from 4.813 percent to 5.10755 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2013: Net Position Outstanding Held Under Balances per Accumulated Capital Lease Lease Schedules Description Gross Amount Depreciation at June 30, 2013 at June 30, 2013 (+) (-) (=) Buildings $ 38,176,157 $ 6,771,379 $ 31,404,778 $ 38,552,312 - 10 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are exercisable at the expiration of the lease terms. Georgia Southwestern State University had two capital leases with related entities in the current fiscal year. In August 2006, the University entered into a capital lease of $25,039,152 at 4.813 percent with the Georgia Southwestern Foundation, Inc., a discretely presented component unit, whereby the University leases a building for a thirty-one year period that began in August 2006 and expires June 2037. In August 2009 the University entered into a capital lease of $13,137,004 at 5.10755 percent with the same Foundation, whereby the University leases a building for a thirty year period that began August 2009 and expires June 2039. The outstanding liability at June 30, 2013, on these capital leases is $25,127,648 and $13,424,664, respectively. OPERATING LEASES Georgia Southwestern State University's noncancellable operating leases provide for renewal options for periods from one to three years at their fair rental value at the time of renewal. All agreements are cancelable 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, other small business equipment, and buildings. FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Position includes other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2013, were as follows: Real Property and Equipment Capital Operating Leases Leases Year Ending June 30: 2014 2015 2016 2017 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2038 2039 $ 2,246,984 $ 75,142 2,306,976 59,153 2,370,420 23,457 2,433,564 13,503 2,502,600 938 13,589,928 14,593,368 14,673,948 12,773,004 1,039,752 Total Minimum Lease Payments $ 68,530,544 $ 172,193 Less: Interest 29,978,232 Principal Outstanding $ 38,552,312 Georgia Southwestern State University fiscal year 2013 expense for rental of equipment under operating leases was $91,291. - 11 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" NOTE 9: RETIREMENT PLANS Georgia Southwestern State University participates in various retirement plans administered by the State of Georgia under two major retirement systems: Employees' Retirement System of Georgia (ERS System) and Teachers Retirement System of Georgia. These two systems issue separate publicly available financial reports that include the applicable financial statements and required supplementary information. The reports may be obtained from the respective system offices. The significant retirement plans that Georgia Southwestern State University participates in are described below. More detailed information can be found in the plan agreements and related legislation. Each plan, including benefit and contribution provisions, was established and can be amended by State law. Employees' Retirement System of Georgia The ERS System is comprised of individual retirement systems and plans covering substantially all employees of the State of Georgia except for teachers and other employees covered by the Teachers Retirement System of Georgia. One of the ERS System plans, the Employees' Retirement System of Georgia (ERS), is a cost-sharing multiple-employer defined benefit pension plan that was established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract. On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan (SRBP-ERS) of ERS. SRBP-ERS 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 the SRBP-ERS is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1, 1998, all members and retired former members in ERS are eligible to participate in the SRBP-ERS whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 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 Employees' 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 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60. - 12 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" 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 24 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 members' 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. Member contribution rates are set by law. Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, Georgia Southwestern State University pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Georgia Southwestern State University 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. Georgia Southwestern State University 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 Georgia Southwestern State University contributions are not at any time refundable to the member or his/her beneficiary. Employer contributions required for fiscal year 2013 were based on the June 30, 2010 actuarial valuation as follows: Old Plan* New Plan GSEPS 14.90% 14.90% 11.54% * 10.15% exclusive of contributions paid by the employer on behalf of old plan members Members become vested after 10 years of service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions; the member forfeits all rights to retirement benefits. Teachers Retirement System of Georgia The Teachers Retirement System of Georgia (TRS) is a cost-sharing multiple-employer defined benefit plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS. On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan of the Georgia Teachers Retirement System (SRBP-TRS). SRBP-TRS was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of TRS. The purpose of SRBP-TRS is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP-TRS whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits. - 13 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" TRS provides service retirement, disability retirement, and survivor's benefits. The benefit structure of TRS is defined and may be amended by State statute. A member is eligible for normal service retirement after 30 years of creditable service, regardless of age, or after 10 years of service and attainment of age 60. A member is eligible for early retirement after 25 years of creditable service. Normal retirement (pension) benefits paid to members are equal to 2% of the average of the member's two highest paid consecutive years of service, multiplied by the number of years of creditable service up to 40 years. Early retirement benefits are reduced by the lesser of one-twelfth of 7% for each month the member is below age 60 or by 7% for each year or fraction thereof by which the member has less than 30 years of service. It is also assumed that certain cost-of-living adjustments, based on the Consumer Price Index, will be made in future years. Retirement benefits are payable monthly for life. A member may elect to receive a partial lump-sum distribution in addition to a reduced monthly retirement benefit. Options are available for distribution of the member's monthly pension, at a reduced rate, to a designated beneficiary on the member's death. Death, disability and spousal benefits are also available. TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Members become fully vested after 10 years of service. If a member terminates with less than 10 years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest. Member contributions are limited by State law to not less than 5% or more than 6% of a member's earnable compensation. Member contributions as adopted by the Board of Trustees for the fiscal year ended June 30, 2013, were 6.00% of annual salary. Employer contributions required for fiscal year 2013 were 11.41% of annual salary as required by the June 30, 2010, actuarial valuation. The following table summarizes the Georgia Southwestern State University contributions by defined benefit plan for the years ending June 30, 2013, June 30, 2012, and June 30, 2011: ERS TRS Required Percentage Required Percentage Fiscal Year Contribution Contributed Contribution Contributed 2013 $ 2012 $ 2011 $ Regents Retirement Plan 4,396 0 0 100% $ 100% $ 100% $ 808,557 782,398 771,434 100% 100% 100% Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 47-21-1 et.seq. and administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts. - 14 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" Funding Policy Georgia Southwestern State University makes monthly employer contributions for the Regents Retirement Plan at rates adopted by the Teachers Retirement System of Georgia Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2013, the employer contribution was 9.24% for the participating employee's earnable compensation. Employees contribute 6% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times. Georgia Southwestern State University and the covered employees made the required contributions of $688,504 (9.24%) and $411,002 (6%), respectively. AIG-VALIC, American Century, Fidelity, and TIAA-CREF have separately issued financial reports which may be obtained through their respective corporate offices. Georgia Defined Contribution Plan Plan Description Georgia Southwestern State University participates in the Georgia Defined Contribution Plan (GDCP) which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Board of Trustees of the Employees' Retirement System of Georgia. Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board of Trustees. If a member has less than $3,500 credited to his/her account, the Board of Trustees has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute. Contributions Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member. Total contributions made by employees during fiscal year 2013 amounted to $44,937 which represents 7.5% of covered payroll. These contributions met the requirements of the plan. The Georgia Defined Contribution Plan issues a financial report each fiscal year, which may be obtained from the ERS offices. - 15 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" NOTE 10: RISK MANAGEMENT The University System of Georgia offers its employees and retirees access to four different selfinsured healthcare plan options. For the University System of Georgia's Plan Year 2013, the following health care options were available: Blue Choice HMO plan (Blue Cross Blue Shield) HSA Open Access POS plan (Blue Cross Blue Shield) Open Access POS plan Kaiser Permanente HMO plan University and participating employees and retirees pay premiums to either of the self-insured healthcare plan options to access benefits coverage. The respective self-insured healthcare plan options are included in the financial statements of the Board of Regents of the University System of Georgia - University System Office. All units of the University System of Georgia share the risk of loss for claims associated with these plans. The reserves for these plans are considered to be a selfsustaining risk fund. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the self-insured healthcare plan products. In addition to the self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HMO healthcare plan option is also offered to System employees through Kaiser. The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental loses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Georgia Southwestern State University, as an organizational unit of the Board of Regents of the University System of Georgia, is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. A self-insured program of professional liability for its employees was established by the Board of Regents of the University System of Georgia under powers authorized by the Official Code of Georgia Annotated Section 45-9-1. The program insures the employees to the extent that they are not immune from liability against personal liability for damages arising out of the performance of their duties or in any way connected therewith. The program is administered by DOAS as a Self-Insurance Fund. NOTE 11: CONTINGENCIES Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditure disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although University expects such amounts, if any, to be immaterial to its overall financial positions. - 16 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SELECTED FINANCIAL NOTES JUNE 30, 2013 EXHIBIT "D" Litigation, claims and assessments filed against Georgia Southwestern State University (an organizational unit of the Board of Regents of the University System of Georgia), if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2013. NOTE 12: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 20-3-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy of the Board of Regents to permit employees of the University System of Georgia eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. The policies of the Board of Regents of the University System of Georgia define and delineate who is eligible for these post-employment health and life insurance benefits. Organizational units of the Board of Regents of the University System of Georgia pay the employer portion for group insurance for affected individuals. With regard to life insurance, the employer covers the total cost for $25,000 of basic life insurance. If an individual elects to have supplemental, and/or, dependent life insurance coverage, such costs are borne entirely by the employee. The Board of Regents Retiree Health Benefit Plan is a single employer defined benefit plan. Financial statements and required supplementary information for the Plan are included in the publicly available Consolidated Annual Financial Report of the University System of Georgia. The University pays the employer portion of health insurance for its eligible retirees based on rates that are established annually by the Board of Regents for the upcoming plan year. For the 2013 plan year, the employer rate was between 70-75% of the total health insurance cost for eligible retirees and the retiree rate was between 25-30%. As of June 30, 2013, there were 181 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2013, Georgia Southwestern State University recognized as incurred $837,244 of expenditures, which was net of $401,044 of participant contributions. NOTE 13: AFFILIATED ORGANIZATIONS The Georgia Southwestern Foundation, Inc. is a legally separate, tax exempt organization whose activities primarily support Georgia Southwestern State University. This affiliated organization is considered a potential component unit of the State of Georgia in accordance with GASB Statement No. 61, The Financial Reporting Entity: Omnibus - an amendment of GASB Statements No. 14 and No. 34, and GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Therefore, the financial statements of the affiliated organization are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Georgia Southwestern State University. - 17 - (This page left intentionally blank) SUPPLEMENTARY INFORMATION - 19 - GEORGIA SOUTHWESTERN STATE UNIVERSITY BALANCE SHEET (STATUTORY BASIS) BUDGET FUND JUNE 30, 2013 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Federal Financial Assistance Other Prepaid Expenditures Inventories Other Assets Total Assets LIABILITIES AND FUND EQUITY Liabilities Salaries Payable Encumbrance Payable Accounts Payable Unearned Revenue Total Liabilities Fund Balances Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Unreserved Surplus Total Fund Balances Total Liabilities and Fund Balances SCHEDULE "1" $ 3,652,498.51 280,484.43 24,584.64 557,951.11 46,375.71 25,926.03 250,000.00 $ 4,837,820.43 $ 126,462.94 1,553,478.28 105,312.43 2,171,885.81 $ 3,957,139.46 $ 737.33 48,131.96 179,140.67 150,289.58 100,179.61 33,175.00 366,791.77 2,235.05 $ 880,680.97 $ 4,837,820.43 Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. - 20 - GEORGIA SOUTHWESTERN STATE UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2013 SCHEDULE "2" REVENUES State Appropriation State General Funds Other Funds Total Revenues ADJUSTMENTS AND PROGRAM TRANSFERS CARRY-OVER FROM PRIOR YEARS Transfers from Reserved Fund Balance Total Funds Available EXPENDITURES Special Funding Initiative Teaching Total Expenditures Excess of Funds Available over Expenditures FUND BALANCE JULY 1 Reserved Unreserved ADJUSTMENTS Prior Year Payables/Expenditures Prior Year Receivables/Revenues Unreserved Fund Balance (Surplus) Returned Prior Year Reserved Fund Balance Included in Funds Available FUND BALANCE JUNE 30 SUMMARY OF FUND BALANCE Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Total Reserved Unreserved Surplus Total Fund Balance BUDGET ACTUAL VARIANCE FAVORABLE (UNFAVORABLE) $ 11,085,293.00 $ 11,085,293.00 $ 27,920,110.00 25,068,927.25 0.00 -2,851,182.75 $ 39,005,403.00 $ 36,154,220.25 $ -2,851,182.75 0.00 33,500.00 33,500.00 0.00 735,801.86 735,801.86 $ 39,005,403.00 $ 36,923,522.11 $ -2,081,880.89 $ 58,500.00 $ 58,500.00 $ 38,946,903.00 36,118,184.52 0.00 2,828,718.48 $ 39,005,403.00 $ 36,176,684.52 $ 2,828,718.48 $ 0.00 $ 746,837.59 $ 746,837.59 875,036.86 982.58 488.77 -5,880.39 -982.58 -735,801.86 $ 880,680.97 $ 737.33 48,131.96 179,140.67 150,289.58 100,179.61 33,175.00 366,791.77 $ 878,445.92 2,235.05 $ 880,680.97 Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. - 21 - GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2013 Special Funding Initiative State Appropriation State General Funds Teaching State Appropriation State General Funds Other Funds Total Teaching Total Operating Activity Original Appropriation Amended Appropriation Final Budget Current Year Revenues $ 0.00 $ 0.00 $ 58,500.00 $ 58,500.00 $ 11,583,768.00 $ 11,583,768.00 $ 11,026,793.00 $ 11,026,793.00 27,804,925.00 27,804,925.00 27,920,110.00 25,068,927.25 $ 39,388,693.00 $ 39,388,693.00 $ 38,946,903.00 $ 36,095,720.25 $ 39,388,693.00 $ 39,388,693.00 $ 39,005,403.00 $ 36,154,220.25 Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. - 22 - SCHEDULE "3" Funds Available Compared to Budget Prior Year Adjustments and Total Carry-Over Program Transfers Funds Available Variance Positive (Negative) Expenditures Compared to Budget Variance Actual Positive (Negative) Excess (Deficiency) of Funds Available Over/(Under) Expenditures $ 0.00 $ 0.00 $ 58,500.00 $ 0.00 $ 58,500.00 $ 0.00 $ 0.00 $ 0.00 $ 735,801.86 $ 735,801.86 $ 0.00 $ 11,026,793.00 $ 33,500.00 25,838,229.11 33,500.00 $ 36,865,022.11 $ 0.00 $ 11,024,441.41 $ -2,081,880.89 25,093,743.11 -2,081,880.89 $ 36,118,184.52 $ 2,351.59 $ 2,826,366.89 2,828,718.48 $ 2,351.59 744,486.00 746,837.59 $ 735,801.86 $ 33,500.00 $ 36,923,522.11 $ -2,081,880.89 $ 36,176,684.52 $ 2,828,718.48 $ 746,837.59 - 23 - GEORGIA SOUTHWESTERN STATE UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (STATUTORY BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2013 Special Funding Initiative State Appropriation State General Funds Teaching State Appropriation State General Funds Other Funds Total Teaching Total Operating Activity Prior Year Reserves Not Available for Expenditure Inventories Uncollectible Accounts Receivable Beginning Fund Balance/(Deficit) July 1 Fund Balance Carried Over from Prior Period as Funds Available Return of Fiscal Year 2012 Surplus Prior Period Adjustments $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 982.58 $ 735,801.86 $ 736,784.44 $ $ 736,784.44 $ 0.00 $ -735,801.86 -735,801.86 $ -735,801.86 $ -982.58 $ 0.00 -982.58 $ -982.58 $ -479.38 -4,912.24 -5,391.62 -5,391.62 33,175.00 106,060.00 0.00 0.00 0.00 0.00 0.00 0.00 Budget Unit Totals $ 876,019.44 $ -735,801.86 $ -982.58 $ -5,391.62 Statutory Basis financial information was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. - 24 - SCHEDULE "4" Other Adjustments Early Return Fiscal Year 2013 Surplus Excess (Deficiency) of Funds Available Over/(Under) Expenditures Ending Fund Balance/(Deficit) June 30 Analysis of Ending Fund Balance Reserved Surplus/(Deficit) Total $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 5,880.39 $ 5,880.39 $ $ 5,880.39 $ 0.00 $ 0.00 0.00 $ 0.00 $ 2,351.59 $ 744,486.00 746,837.59 $ 746,837.59 $ 1,872.21 $ 745,454.15 747,326.36 $ 747,326.36 $ 0.00 $ 745,091.31 745,091.31 $ 745,091.31 $ 1,872.21 $ 362.84 2,235.05 $ 2,235.05 $ 1,872.21 745,454.15 747,326.36 747,326.36 0.00 -5,880.39 0.00 0.00 0.00 0.00 33,175.00 100,179.61 33,175.00 100,179.61 0.00 0.00 33,175.00 100,179.61 $ 0.00 $ 0.00 $ 746,837.59 $ 880,680.97 $ 878,445.92 $ 2,235.05 $ 880,680.97 Summary of Ending Fund Balance Reserved Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Unreserved Surplus Total Ending Fund Balance - June 30 $ 737.33 48,131.96 179,140.67 150,289.58 100,179.61 33,175.00 366,791.77 $ $ 878,445.92 $ $ 2,235.05 2,235.05 $ 737.33 48,131.96 179,140.67 150,289.58 100,179.61 33,175.00 366,791.77 2,235.05 880,680.97 - 25 - GEORGIA SOUTHWESTERN STATE UNIVERSITY RECONCILIATION OF BUDGET TO GAAP YEAR ENDED JUNE 30, 2013 Total Fund Balances - Budget Fund - Non-GAAP Basis (Schedule "1") Amounts reported for Business-Type Activities in the Statement of Net Position are different because: Capital Assets used in Business-Type Activities are not reported in the Budget Fund. Uncollectible accounts receivable are reported as an asset and reserved fund balance in the Budget Fund and as a contra-asset account on the Statement of Net Position. Changes in the Fair Market Value of Investments are recognized on the Statement of Net Position, but are not reported in the Budget Fund. Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity Auxiliary Enterprises Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Auxiliary Enterprises Fund Activity Endowment Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Endowment Fund Activity Loan Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Loan Fund Activity Student Activities Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Student Activity Fund Activity The budgetary basis of accounting implemented by the State of Georgia recognizes expenditures when encumbered. The following adjustments were made to eliminate this activity for reporting on the Statement of Net Position. Payables reported in the Budget Fund that are based on encumbrances are eliminated for GAAP reporting. Payables for goods and services provided in the current fiscal year reported in the Budget Fund as encumbrances payable are reported as accounts payable for GAAP reporting. Reimbursement from grantors reported as revenues in the Budget Fund that are for expenditures based on encumbrances are deferred for GAAP reporting. Total Net Effect of Encumbrance Activity Certain Liabilities are not due and payable in the current period and therefore are not reported as liabilities in the Budget Fund. Capital Leases Payable Compensated Absences Payable Total Liabilities Net Position of Business-Type Activities (Exhibit "A") The supplementary information presented on Schedules 1, 2, 3 and 4 was prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a special purpose framework. The information was derived from, and relates directly to, the same information used to prepare the financial statements. However, the budgetary statutes and regulations of the State of Georgia require reporting of certain information that is not in accordance with generally accepted accounting principles. Presented on this schedule is a reconciliation of the fund balance of the Budget Fund, as reported on Schedule 1, to Net Position of business-type activities, as reported on Exhibit A. - 26 - SCHEDULE "5" $ 880,681 92,941,135 $ 867,255 -867,255 $ 4,811,386 -498,288 $ 395,306 0 $ 996,180 0 $ 124,385 -20,145 -100,180 -7,092 0 4,313,098 395,306 996,180 104,240 $ 1,553,478 -76,587 -131,769 1,345,122 $ -38,552,312 -782,239 -39,334,551 $ 61,533,939 GEORGIA SOUTHWESTERN STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 2013 SCHEDULE "6" Totals per Annual Supplement Accruals June 30, 2013 June 30, 2012 Compensated Absences June 30, 2013 June 30, 2012 Adjustments Shared Services on Jointly Staffed Personnel Abraham Baldwin Agricultural College Ellis, Diantha Georgia Perimeter College Kahiga, James McKinley, Lee Georgia Southwestern State University Bragg, Darcy S. Champion, Anna R. Curtin, Joshua J. Laughlin, Eric M. Leeder, Wayne M. Long, Colette C. Monts, William J. Slaton, Hugh D. Ward, Christina L. Ward, Edward S. Wynn, Keaton E. Georgia State University Brantley, Andra Middle Georgia College Sullivan, Troy South Georgia College Carlson, Paul University of North Georgia Chapman, Joe SALARIES $ 16,601,319 $ TRAVEL 300,672 127,901 -113,352 726,650 -719,313 12,750 2,018 8,612 -11,692 -1,500 -1,500 -6,277 -5,481 -13,471 -1,327 -1,500 -7,015 -1,500 -100 269 5,921 10,000 753 $ 16,612,165 $ 300,672 - 27 - SECTION II FINDINGS, QUESTIONED COSTS AND OTHER ITEMS GEORGIA SOUTHWESTERN STATE UNIVERSITY SCHEDULE OF FINDINGS, QUESTIONED COSTS AND OTHER ITEMS YEAR ENDED JUNE 30, 2013 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS No matters were reported. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. OTHER ITEMS (NOTED FOR MANAGEMENT'S CONSIDERATION) No matters were reported.