STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
I
GEORGIA STATE UNIVERSITY ATLANTA, GEORGIA REPORT ON AUDIT
OF THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2008
Russell W. Hinton State Auditor

GEORGIA STATE UNIVERSITY - TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

REQUIRED SUPPLEMENTARY INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS

EXHIBITS

A STATEMENT OF NET ASSETS

2

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

3

C STATEMENT OF CASH FLOWS

4

D NOTES TO THE FINANCIAL STATEMENTS

7

SUPPLEMENTARY INFORMATION

SCHEDULES

1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND

30

2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT

(NON-GAAP BASIS) BUDGET FUND

31

3 STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING

SOURCE COMPARED TO BUDGET

(NON-GAAP BASIS) BUDGET FUND

32

4 RECONCILIATION OF SALARIES AND TRAVEL

35

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
270 Washington Street, S.W., Suite 1-156 Atlanta, Georgia 30334-8400
November 26, 2008

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Carl V. Patton, President Georgia State University
INDEPENDENT AUDITOR'S COMBINED REPORT ON BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying basic financial statements (Exhibits A through D) of Georgia State University, an organizational unit of the State of Georgia, as of and for the year ended June 30, 2008. These financial statements are the responsibility of the University's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As discussed in Note 1, the financial statements of Georgia State University are intended to present the financial position and changes in financial position and cash flows of only that portion of the business-type activities of the State of Georgia that is attributable to the transactions of Georgia State University. They do not purport to, and do not, present fairly the financial position and changes in financial position and cash flows ofthe State of Georgia, in conformity with accounting principles generally accepted in the United States of America.

08ARL-62

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of Georgia State University as of June 30, 2008, and its changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Management's Discussion and Analysis is not a required part ofthe basic financial statements but is required supplementary information required by accounting principles generally accepted in the United States ofAmerica. We have applied certain limited procedures, which consisted principally ofinquiries ofmanagement regarding the methods ofmeasurement and presentation ofthis required supplementary information. However, we did not audit this information and express no opinion on it.
Our audit was conducted for the purpose offorming an opinion on the basic financial statements of Georgia State University taken as a whole. The accompanying supplementary information (Schedules 1 through 4) is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Respectfully submitted,
~~~.~
Russell W. Hinton, CPA, CGFM State Auditor
RWH:as 08ARL-62

REQUIRED SUPPLEMENTARY INFORMATION

GEORGIA STATE UNIVERSITY Management's Discussion and Analysis

Introduction

Georgia State University is one of the 35 institutions of higher education of the University System of Georgia. The University, located in Atlanta, Georgia, was founded in 1913. The University offers baccalaureate, masters and doctoral degrees in a wide variety of subjects. This wide range of educational opportunities attracts a highly qualified faculty and a student body of more than 26,000 students each year. The comparison numbers follow:

Faculty

Students (Headcount)

Students (FTE)

Fiscal Year 2008 Fiscal Year 2007 Fiscal Year 2006

1,126 1,048
934

27,134 26,135 25,967

23,764 22,748 22,635

Overview ofthe Financial Statements and Financial Analysis

Georgia State University is proud to present its financial statements for fiscal year 2008. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Net Assets; and the Statement of Cash Flows. This discussion and analysis of the University's financial statements provides an overview of its financial activities for the year. Comparative data is provided for fiscal year 2008 and fiscal year 2007.

Statement ofNet Assets

The Statement ofNet Assets presents the assets, liabilities, and net assets of the University as of the end of the fiscal year. The Statement of Net Assets is a point of time financial statement. The purpose of the Statement ofNet Assets is to present to the readers of the financial statements a fiscal snapshot of Georgia State University. The Statement of Net Assets presents end-of-year data concerning Assets (current and noncurrent), Liabilities (current and noncurrent), and Net Assets (assets minus liabilities). The difference between current and noncurrent assets will be discussed in the Notes to the Financial Statements.

From the data presented, readers of the Statement ofNet Assets are able to determine the assets available to continue the operations of the institution. They are also able to determine how much the institution owes vendors.

Finally, the Statement of Net Assets provides a picture of the net assets (assets minus liabilities) and their availability for expenditure by the institution. Net assets are divided into three major categories. The first category, invested in capital assets, net of debt, provides the institution's equity in property, plant and equipment owned by the institution. The next asset category is restricted net assets, which is divided into three categories, nonexpendable, expendable and

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capital projects. The corpus of nonexpendable restricted resources is only available for investment purposes. Expendable restricted net assets are available for expenditure by the institution but must be spent for purposes as determined by donors and/or external entities that have placed time or purpose restrictions on the use of the assets. The final category is unrestricted net assets. Unrestricted net assets are available to the institution for any lawful purpose ofthe institution.

Statement ofNet Assets, Condensed

June 30, 2008

June 30, 2007

Assets Current Assets Capital Assets, Net Other Assets

$ 203,306,722 499,490,342 6,602,469

$ I63,413,445 328,827,899 6,5I8,372

Total Assets

$ 709,399,533

$ 498,759,7I6

Liabilities Current Liabilities Noncurrent Liabilities

$ 6I,338,463 238,341,46I

$ 52,840,699 45,547,700

Total Liabilities

$ 299,679,924

$ 98,388,399

Net Assets Invested in Capital Assets, Net ofDebt Restricted - Nonexpendable Restricted - Expendable Restricted- Capital Projects Unrestricted

$ 260,030,830 45,78I
9,826,994 335,535
I39,480,469

$ 284,92I' I24 49,957
I0,976,247 I, 763,282 I 02,660,707

Total Net Assets

$ 409!7I9!609

$ 400!37I!3I1

The total assets of the institution increased by $2I 0,639,8I7. A review of the Statement of Net Assets will reveal that the increase was primarily due to an increase of $I70,662,443 in the category of Capital Assets, Net. The balance of the increase is mainly in cash and cash equivalents, receivables and prepaid items categories.

The total liabilities for the year increased by $201,291 ,525. The combination of the increase in total assets of $210,639,817 and the increase in total liabilities of $20I,29I,525 yields an increase in total net assets of $9,348,292. The change in total net assets is primarily in the category of Invested in Capital Assets, Net of Debt, in the amount of $-24,890,294 and Unrestricted in the amount of$36,8I9,762.

Statement ofRevenues, Expenses and Changes in Net Assets

Changes in total net assets as presented on the Statement of Net Assets are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Assets. The purpose of

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the statement is to present the revenues received by the institution, both operating and nonoperating, and the expenses paid by the institution, operating and nonoperating, and any other revenues, expenses, gains and losses received or spent by the institution. Generally speaking operating revenues are received for providing goods and services to the various customers and constituencies of the institution. Operating expenses are those expenses paid to acquire or produce the goods and services provided in return for the operating revenues, and to carry out the mission of the institution. Nonoperating revenues are revenues received for which goods and services are not provided. For example state appropriations are nonoperating because they are provided by the Legislature to the institution without the Legislature directly receiving commensurate goods and services for those revenues.

Statement of Revenues, Expenses and Changes in Net Assets, Condensed

June 30, 2008

June 30, 2007

Operating Revenues Operating Expenses

$ 260,515,175 470,146,551

$ 237,916,539 425,057,948

Operating Loss

$ -209,631,376

$ -187,141,409

Nonoperating Revenues and Expenses

243,895,956

210,827,321

Income (Loss) Before Other Revenues, Expenses, Gains or Losses

$ 34,264,580

$ 23,685,912

Other Revenues, Expenses, Gains or Losses

-21,521,340

7,687,024

Increase (Decrease) in Net Assets

$ 12,743,240

$ 31 ,3 72,936

Net Assets at Beginning of Year, as Originally Reported

$ 400,371,317

$ 368,998,381

Prior Year Adjustments

-3,394,948

Net Assets at Beginning of Year Restated

$ 396,976,369

$ 368,998,381

Net Assets at End of Year

$ 409.719.609

$ 400.3 71.317

The Statement of Revenues, Expenses and Changes in Net Assets reflects a positive year with an increase in the net assets at the end ofthe year. Some highlights ofthe information presented on the Statement of Revenues, Expenses and Changes in Net Assets are as follows:

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Revenue By Source For The Years Ended June 30, 2008 and June 30, 2007

Operating Revenue Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Auxiliary Other
Total Operating Revenue
Nonoperating Revenue State Appropriations Grants and Contracts Gifts Investment Income Other
Total Nonoperating Revenue
Capital Grants and Gifts and Special Items State Other Special Items
Total Capital Grants and Gifts and Special Items
Total Revenues

June 30, 2008
$ 127,673,904 80,534,547
10,372,728 38,777,690
3,156,306
$ 260,515,175
$ 228, 180,842 8,225,126 12,373,240 5,801,670 93,478
$ 254,674,356
$ 10,033,611 1,072,192
-32,627,143
$ -21,521,340
$ 493!668,191

June 30, 2007
$ 111,233,207 76,812,343 13,632,930 32,312,724 3,925,335
$ 237,916,539
$ 200,710,980 6,736,565 79,187 7,468,797 -1,052,420
$213,943,109
$ 7,530,520 156,504
$ 7,687,024 $ 459,546,672

-IV-

Expenses (By Functional Classification) For The Years Ended June 30, 2008 and June 30, 2007

June 30, 2008

June 30, 2007

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

$ 158,614,525 78,559,136 26,562,665 57,247,474 26,055,120 38,676,798 34,804,662 16,524,709 33.101,462

$ 147,644,503 64,411,421 22,132,658 47,576,942 22,525,634 45,898,767 34,325,981 14,537,933 26,004,109

Total Operating Expenses

$470,146,551

$ 425,057,948

Nonoperating Expenses Interest Expense (Capital Assets)

10,778,400

3,115,788

Total Expenses

$ 480.924.951

$ 428.173.736

Operating revenues increased by $22,598,636 in fiscal year 2008. In addition to a Tuition and Fees increase of 15%, revenues also increased in Grants and Contracts and Auxiliary categories.

The Auxiliary revenue increase of $6,464,966 is a result of the changing environment of residential life on the University's campus. During the year, residential life transferred the University Village which was institutionally owned to Georgia Institute of Technology. However, at the same time, Georgia State University Foundation, a related party, constructed over 2,000 beds of new housing on the campus. The net effect to the campus is that the students actually have more on-campus residential life availability. The increase in revenue for Auxiliary reflects higher rental rates for the new facility and increases in Transportation and Other Organizations categories.

Nonoperating revenues increased by $40,731,247 for the year primarily due to an increase of $27,469,862 in State Appropriations and $12,294,053 in Gifts.

The compensation and employee benefits category increased by $24,233,373 and primarily affected the Instruction, Research, Student Services and Institutional Support categories.

Utilities increased by $613,379 during the past year.

Statement ofCash Flows

The final statement presented by the Georgia State University is the Statement of Cash Flows. The Statement of Cash Flows presents detailed information about the cash activity of the institution during the year. The statement is divided into five parts. The first part deals with

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operating cash flows and shows the net cash used by the operating activities of the institution. The second section reflects cash flows from noncapital financing activities. This section reflects the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes. The third section deals with cash flows from capital and related financing activities. This section deals with the cash used for the acquisition and construction of capital and related items. The fourth section reflects the cash flows from investing activities and shows the purchases, proceeds, and interest received from investing activities. The fifth section reconciles the net cash used to the operating income or loss reflected on the Statement of Revenues, Expenses and Changes in Net Assets.

Cash Flows for the Years Ended June 30,2008 and June 30, 2007, Condensed

June 30, 2008

June 30, 2007

Cash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities

$ -180,548,361 247,717,628 -60,329,197 5,805,915

$ -172,295,428 209,811,643 -29,214,867 7,464,241

Net Change in Cash Cash, Beginning of Year

$ 12,645,985 134,757,442

$ 15,765,589 118,991,853

Cash, End of Year

$ 147.403.427

$ 134.757.442

Capital Assets

During fiscal year 2008 (fiscal year 2009 Capital Budget), Georgia State University was approved for another capital project. The $12.8 million building is located in Alpharetta and is apportioned $8.9 million to Georgia State and $3.9 million to Georgia Perimeter College. The two institutions will share the completed facility, and it is expected to be ready for occupancy in Spring Semester 2010. The 50,000 square foot building will be used primarily to teach both graduate and undergraduate Business and Education classes. As noted in fiscal year 2006, the State Legislature approved funding for the 213,000 square foot Science Teaching Laboratory building, and this remains the University's top capital priority. Additionally, in its 6 year capital funding plan the Board of Regents has included in its Major Capital Funding List our proposal for a 330,000 square foot Humanities Building and another classroom building.

For additional information concerning Capital Assets, see Notes 1, 6, 8, 9, and 10 in the Notes to the Financial Statements.

Long-Term Liabilities

Georgia State University had Long-Term Liabilities of$251,309,804 of which $12,968,343 was reflected as current liability at June 30, 2008.

For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the Financial Statements.

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Economic Outlook The University anticipates the current fiscal year will be challenging with budget cuts on the horizon at the state level, but will continue to maintain a close watch over resources providing the University with the flexibility to react to internal and external situations that may develop. The University's overall financial position is strong. Carl V. Patton, President Georgia State University
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BASIC FINANCIAL STATEMENTS - 1-

GEORGIA STATE UNIVERSITY STATEMENT OF NET ASSETS
JUNE 30, 2008
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Federal Financial Assistance Other Inventories (Note 4) Prepaid Items
Total Current Assets
Noncurrent Assets Noncurrent Cash Investments Notes Receivable, Net Capital Assets, Net (Note 6)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposits Deferred Revenue (Note 7) Other Liabilities 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 ASSETS
Invested in Capital Assets, Net of Related Debt Restricted for:
Nonexpendable Expendable Capital Projects Unrestricted
Total Net Assets
The notes to the financial statements are an integral part of this statement.
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EXHIBIT"A"

$ 146,838,067
16,434,478 25,954,111
137,560 13,942,506
$ 203,306,722

$

565,360

47,785

5,989,324

499,490,342

$ 506,092,811

$ 709,399,533

$

9,027,325

875,595

349,821

5,461

35,744,027

212,368

2,155,523

6,616,468

6,351,875

$ 61,338,463

$ 232,843,044 5 498 417
$ 238,341,461
$ 299,679,924

$ 260,030,830
45,781 9,826,994
335,535 139,480,469

$ 409,719,609

GEORGIA STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2008
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal State Other
Sales and Services of Educational Departments Rents and Royalties Auxiliary Enterprises
Residence Halls Bookstore Food Services Parking/Transportation 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
Other Gifts Interest and Other Investment Income Interest Expense Other Nonoperating Revenues
Net Nonoperating Revenues
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Other
Total Capital Grants and Gifts
Special Item -Capital Asset Transfer Special Item - Payoff of GSFIC General Obligation Bond Debt
Total Other Revenues, Expenses, Gains or Losses
Increase (Decrease) in Net Assets
Net Assets- Beginning of Year
Prior Year Adjustments
Net Assets- Beginning of Year, Restated
Net Assets - End of Year
The notes to the financial statements are an integral part of this statement. - 3-

EXHIBIT "B"

$ 142,693,539 -15,019,635
62,055,403 7,137,024
11,342,120 10,372,728
40,051
17,840,885 1,137,476 211,677 6, 103,199 8,560,153 4,924,300 3116255
$ 260,515,175

$

92,511,850

151,941,095

55,064,828

591,308

4,816,672

19,472,085

10,530,729

111,656,658

23,561,326

$ 470 146 551

$ -209,631,376

$ 228,180,842

8,225,126 12,373,240
5,801,670 -10,778,400
93 478

$ 243,895,956

$

34,264,580

$

10,033,611

1 072 192

$

11,105,803

$

-7,916,649

-24 710 494

$ -32,627,143

$

12,743,240

$ 400,371,317

-3 394 948

$ 396,976,369

$ 409,719,609

GEORGIA STATE UNIVERSITY STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES Tuition and Fees Grants and Contracts Sales and Services of Educational Departments Payments to Suppliers Payments to Employees Payments for Scholarships and Fellowships Loans Issued to Students and Employees Collection of Loans to Students and Employees Auxiliary Enterprise Charges: Residence Halls Bookstore Food Services Parking/Transportation 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 Capital Grants and Gifts Received Proceeds from Sale of Capital Assets 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
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents- End of Year

EXHIBIT"C"

$

130,457' 199

77,335,704

10,372,729

-169,267,064

-243,316,001

-20,250,882

-5,863,738

5,435,012

17,499,674 931,213 150,802
6,208,831 8,264,931 5,006,335 -3,513,106

$ -180,548,361

$

228,180,842

-1,061,580

20,598,366

$

247,717,628

$

10,033,611

9,488,360

-62,991,447

-6,081,321

-10 778 400

$

-60,329,197

$

5,805,915

$

12,645,985

134,757,442

$ ====14=7,6;,4=03:!,,4=2==7

-4-

GEORGIA STATE UNIVERSITY STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2008
RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash
Provided (Used) by Operating Activities Depreciation Change in Assets and Liabilities: Accounts Receivable, Net Inventories Prepaid Items Notes Receivable, Net Accounts Payable Deferred Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations Change in Fair Value of Investments Recognized as a Component of Interest Income Special Item - Capital Asset Transfer Special Item - Payoff of GSFIC General Obligation Debt Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts

EXHIBIT"C"
$ -209,631,376
23,561,326 -5,509,906
9,158 -428,726 -1,013,384 4,998,976 5,725,932 855,770 883,869
$ -180,548,361
$ =~16~1.,;;,8~85~.;,:19~2 $ ===::=::=:'-4~,2:4~5 $ ====::":-7.19,~16~,6~4~9 $ ===-2~4~,7~10~,4~9~4 $ ===-1.!;;,0=72:!.'=19=2

The notes to the financial statements are an integral part of this statement.
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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS Georgia State University serves the state and national communities by providing its students with academic instruction that advances fundamental knowledge, and by disseminating knowledge to the people of Georgia and throughout the country.
REPORTING ENTITY Georgia State University is one of thirty-five (35) 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 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 State University does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, Georgia 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.
Legally separate, tax exempt organizations whose activities primarily support units of the University System of Georgia, which are organizational units of the State of Georgia, are considered potential component units of the State. See Note 17 for additional information.
FINANCIAL STATEMENT PRESENTATION In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities. The State of Georgia implemented GASB Statement No. 34 as of and for the year ended June 30, 2002. As an organizational unit of the State of Georgia, the University was also required to adopt GASB Statements No. 34 and No. 35 as amended by GASB Statements No. 37 and No. 38. The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the GASB and are presented as required by these standards to provide a comprehensive, entitywide perspective of the University's assets, liabilities, net assets, revenues, expenses, changes in net assets, cash flows, and replaces the fund group perspective previously required.
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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION Generally Accepted Accounting Principles (GAAP) requires that the reporting of summer school revenues and expenses be between fiscal years rather than in one fiscal year. Due to the lack of materiality, Georgia State University reports summer school revenue and expenses in the subsequent fiscal year.
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, except as noted in the preceding paragraph. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-University transactions have been eliminated.
The University has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless FASB conflicts with GASB. The University has elected to not apply FASB pronouncements issued after the applicable date.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of petty cash, demand deposits and time deposits in authorized financial institutions, and cash management pools that have the general characteristics of demand deposit accounts. This includes the State Investment Pool.
INVESTMENTS The University accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying value of investments are reported as a component of investment income in the Statement of Revenues, Expenses and Changes in Net Assets. The Board of Regents Total Return Fund is included under Investments.
ACCOUNTS RECEIVABLE Accounts receivable consists of tuition and fees charged to students and auxiliary enterprise services provided to students, faculty and staff, the majority of each residing in the State of Georgia. Accounts receivable also includes amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the University's grants and contracts. Accounts receivable are recorded net of estimated uncollectible amounts.
INVENTORIES Consumable supplies and Resale Inventories are valued at cost using the average-cost basis.
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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NONCURRENT CASH AND INVESTMENTS Cash and investments that are externally restricted and cannot be used to pay current liabilities are classified as noncurrent assets in the Statement ofNet Assets.
CAPITAL ASSETS Capital assets are recorded at cost at the date of acquisition, or fair market value at the date of donation in the case of gifts. For equipment, the University's capitalization policy includes all items with a unit cost of $5,000 or more, and an estimated useful life of greater than one year. Renovations to buildings, infrastructure, and land improvements that exceed $100,000 and/or significantly increase the value or extend the useful life of the structure are capitalized. Routine repairs and maintenance are charged to operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 to 60 years for buildings, 20 to 25 years for infrastructure and land improvements, 10 years for library books, and 3 to 20 years for equipment. Residual values will generally be 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To obtain the total picture of plant additions in the University System, it is necessary to look at the activities of the Georgia State Financing and Investment Commission (GSFIC) - an organization that is external to the System. GSFIC issues bonds for and on behalf of the State of Georgia, pursuant to powers granted to it in the Constitution of the State of Georgia and the Act creating the GSFIC. The bonds so issued constitute direct and general obligations of the State of Georgia, to the payment of which the full faith, credit and taxing power of the State are pledged.
For projects managed by GSFIC, the GSFIC retains construction in progress on its books throughout the construction period and transfers the entire project to the University when complete. For projects managed by the University, the University retains construction in progress on its books and is reimbursed by GSFIC. For the year ended June 30, 2008, GSFIC did not transfer any capital additions to Georgia State University.
DEPOSITS Deposits represent good faith deposits from students to reserve housing assignments in a University residence hall and deposits from tenants for retail rental space.
DEFERRED REVENUES Deferred revenues include amounts received for tuition and fees and certain auxiliary activities prior to the end of the fiscal year but related to the subsequent accounting period. Deferred revenues also include amounts received from grant and contract sponsors that have not yet been earned.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPENSATED ABSENCES Employee vacation pay is accrued at year-end for financial statement purposes. The liability and expense incurred are recorded at year-end as compensated absences in the Statement of Net Assets, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses and Changes in Net Assets. Georgia State University had accrued liability for compensated absences in the amount of $10,966,424 as of July 1, 2007. For fiscal year 2008, $8,652,914 was earned in compensated absences and employees were paid $7,769,046, for a net increase of $883,868. The ending balance as of June 30, 2008 in accrued liability for compensated absences was $11,850,292.
NONCURRENT LIABILITIES Noncurrent liabilities include ( 1) liabilities that will not be paid within the next fiscal year; (2) capital lease obligations with contractual maturities greater than one year; and (3) other liabilities that, although payable within one year, are to be paid from funds that are classified as noncurrent assets.
NET ASSETS The University's net assets are classified as follows:
Invested in capital assets, net ofrelated debt: This represents the University's total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. The term "debt obligations" as used in this definition does not include debt of the GSFIC as discussed previously in Note 1 - Capital Assets section.
Restricted net assets - nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The 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 net assets - expendable: Restricted expendable net assets include resources in which the University is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NET ASSETS Expendable Restricted Net Assets include the following:

Restricted - E&G and Other Organized Activities Federal Loans Institutional Loans

$ 3,234,054 6,468,880 124,060

Total Restricted Expendable

$ 9.826.994

Restricted net assets - expendable - Capital Projects: This represents resources for which the University is legally or contractually obligated to spend resources for capital projects in accordance with restrictions imposed by external third parties.

Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the 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 $428,894.67. 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 Treasury and Fiscal Services. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

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

R & R Reserve Reserve for Encumbrances Reserve for Inventory Other Unrestricted

$ 20,911,316 26,388,543 117,753 92,062,857

Total Unrestricted Net Assets

$ 139A80A69

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

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

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CLASSIFICATION OF REVENUES The University has classified its revenues as either operating or nonoperating revenues in the Statement of Revenues, Expenses and Changes in Net Assets according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) sales and services of auxiliary enterprises, net of scholarship allowances, (3) most Federal, state and local grants and contracts, and (4) interest on institutional student loans.
Nonoperating revenues: Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state appropriations and investment income.
SCHOLARSHIP ALLOWANCES Student tuition and fee revenues, and certain other revenues from students, are reported at gross with a contra revenue account of scholarship allowances in the Statement of Revenues, Expenses and Changes in Net Assets. Scholarship allowances are the difference between the stated charge for goods and services provided by the University, and the amount that is paid by students and/or third parties making payments on the students' behalf. Certain governmental grants, such as Pell grants, and other Federal, state or nongovernmental programs are recorded as either operating or nonoperating revenues in the University's financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the University has recorded contra revenue for scholarship allowances.
RESTATEMENT OF BEGINNING NET ASSETS In fiscal year 2008, the University determined that the University Lofts rental agreement with the Georgia State University Foundation met the criteria for capital lease treatment. This agreement commenced in fiscal year 2005 and was accounted for as an operating lease through fiscal year 2007. The lease treatment correction resulted in an increase to Capital Assets of $36,353,918, and an increase to Lease Purchase Obligations liability of $39,748,866, resulting in a net decrease to Net Assets of$3,394,948 as of July 1, 2007.
NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS The custodial credit risk for deposits is the risk that in the event of a bank failure, the 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
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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 2: DEPOSITS AND INVESTMENTS
DEPOSITS depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59:
1. Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the State of Georgia.
2. Bonds, bills, notes, certificates of indebtedness or other obligations of the counties or municipalities of the State of Georgia.
3. Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose.
4. Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5. Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National 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, 2008, the carrying value of deposits was $11,974,859 and the bank balance was $17,751,354. Of the University's deposits, $17,742,575 were uninsured. Of these uninsured deposits, $17,742,575 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, 2008, the carrying value of the University's investments was $135,435,465, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and Office of Treasury and Fiscal Services investment pools as follows:

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 2: DEPOSITS AND INVESTMENTS

INVESTMENTS

Investment Pools Only

Investments Pools Board of Regents Total Return Fund

$

47,785

Office of Treasury and Fiscal Services Georgia Fund 1

135.387.680

Total Investment Pools

$ 135.435.465

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 - University 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.state.ga. us/internet/ searchRpts.html.

The Georgia Fund 1 Investment Pool, managed by the Office of Treasury and Fiscal Services, 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 AAAm rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is 40 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's policy for managing interest rate risk is to comply with University policy and applicable Federal and State laws. The University's policy for managing interest rate risk for Endowment Funds is that the average maturity of the fixed income portfolio shall not exceed ten years and for Operating Funds the average maturity of the fixed income portfolio shall not exceed two years.

The Weighted Average Maturity of the Total Return Fund is 7.84 years. Of the University's total investment of$47,785 in the Total Return Fund, $15,100 is invested in debt securities.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 2: DEPOSITS AND INVESTMENTS

INVESTMENTS Credit Quality Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The University's policy for managing credit quality risk is to comply with University policy and applicable Federal and State laws.

The University's policy for managing credit quality risk is that all debt issues must be investment grade with ratings of at least BAA by Moody's and Standard and Poor's at the time of purchase as defined by the University System of Georgia. The Georgia Fund 1 investment is rated AAA by Standard and Poor's. As previously stated, the Board of Regents Total Return Fund Investment is not rated.

NOTE 3: ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30, 2008:

Student Tuition and Fees Auxiliary Enterprises and Other Operating Activities Federal Financial Assistance Georgia State Financing and Investment Commission Other

$ 4,637,667 13,030,897 16,434,478 1,208,351 10,801,468

Less Allowance for Doubtful Accounts

$ 46,112,861 3,724,272

Net Accounts Receivable

$ 42,388,582

NOTE 4: INVENTORIES

Inventories consisted of the following at June 30, 2008:

Physical Plant Other

$ 110,778 26,782

Total

$=~1~37!:!!,5~6~0

NOTE 5: NOTES/LOANS RECEIVABLE

The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2008. The Program provides for cancellation of a loan at rates of 10% to 30% per year up to a maximum of 100% if the participant complies with certain provisions. The

- 15 -

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 5: NOTES/LOANS RECEIVABLE

Federal government reimburses the University for amounts cancelled under these provisions. As the University determines that loans are uncollectible and not eligible for reimbursement by the Federal government, the loans are written off and assigned to the U.S. Department of Education. The University has provided an allowance for uncollectible loans, which, in management's opinion, is sufficient to absorb loans that will ultimately be written off. At June 30, 2008 the allowance for uncollectible loans was approximately $295,471.

NOTE6: CAPITAL ASSETS

Following are the changes in capital assets for the year ended June 30, 2008:

Beginning Balance July I, 2007 (Restated)

Capital Assets, Not Being Depreciated: Land Capitalized Collections Construction Work-in-Progress

$ 42,411,854 176,083
35,927,280

Total Capital Assets, Not Being Depreciated

$ 78,515,217

Capital Assets, Being Depreciated: Infrastructure Building and Building Improvements Facilities and Other Improvements Equipment
Capital Leases Library Collections

$ 9,259,657
371,382,181 1,463,019
64,729,648 1,557,733
96,775,111

Total Assets Being Depreciated

$ 545,167,349

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

$ I,365,482
139,644,580 894,344
44,826,011 391,087
71,379,245

Total Accumulated Depreciation

$ 258,500,749

Total Capital Assets, Being Depreciated, Net

$ 286,666,600

Capital Assets, Net

$ 365 181 811

Special Item Transfer (Note 16)

$

0

$

0

$ -72,150,026 -466,803

$ -72,616,829
$ -18,964, I08 -280,578

$ -19,244,686
$ -53,372,143 $ -53,J12 143

Additions

Reductions

$

54,583

16,419,893

$ 21,417,034

$ 16,474,476 $ 21,417,034

$ 1,924,239
198,527,564 934,492
10,794,638 602,389
8,090,043

$ 310,000 6,386
6,256,277 450,520 133,855

$ 220,873,365 $ 7,157,038

$ 428,668
14,732,981 81,794
3,424,023 288,184
4,605,676

$ 2,154,465 179,904 133,856

$ 23,561,326 $ 2,468,225

$ 197,312,039 $ 213186 515

$ 4,688,813 $ 26 105 847

Ending Balance June 30, 2008
$ 42,411,854 230,666
30,930,139
$ 73,572,659
$ 11,183,896 497,449,719 1,924,322 69,268,009 1,709,602 104,731,299
$ 686,266,847
$ 1,794,150 135,413,453 695,560 46,095,569 499,367 75,851,065
$ 260,349,164
$ 425,917,683 $ 422420 342

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2008

EXHIBIT "D"

NOTE 7: DEFERRED REVENUE

Deferred Revenue consisted of the following at June 30, 2008:

Prepaid Tuition and Fees Research Other Deferred Revenue

$ 23,212,607 6,621,072 5,910,348

Totals

$ 35.744.027

NOTE 8: LONG-TERM LIABILITIES

Long-term liability activity for the year ended June 30, 2008 was as follows:

Leases Lease Obligations
Other Liabilities Compensated Absences
Total Long-Term Obligations

Beginning Balance July I, 2007 (Restated)
$ 83,655,641
10,966,424 $ 94.622.065

Additions $ 161,885,192
8,652,914 $ 170.538 106

Reductions $ 6,081,321
7,769,046 $ 13.850.367

Ending Balance June 30. 2008
$ 239,459,512
11,850,292 $ 251 .309.804

Current Portion
$ 6,616,468
6,351,875 $ 12.968.343

NOTE9: SIGNIFICANT COMMITMENTS

The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $14,198,292 as of June 30, 2008. This amount is not reflected in the accompanying basic financial statements.

In May 2007, Georgia State University entered into a lease agreement with Panther Place, LLC, for a complex of buildings collectively known as "25 Park Place". The lease agreement commences the day after the lease agreement between Panther Place, LLC, and SunTrust Bank has been terminated but no later than May 31, 2012. After the termination of the SunTrust lease and the University's lease has commenced, the University will have the exclusive right, privilege, and option of renewing or extending the agreement at the expiration of the initial one year term on a year-to-year for consecutive one-year periods until June 30, 2037. This activity is not reflected in the accompanying basic financial statements.

NOTE 10: LEASE OBLIGATIONS

Georgia State University is obligated under various operating leases for the use of real property (land, buildings, and office facilities) and equipment, and also is obligated under capital leases and installment purchase agreements for the acquisition of real property.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 10: LEASE OBLIGATIONS

CAPITAL LEASES Capital leases are generally payable in installments ranging from monthly to annually and have terms expiring in various years between 2008 and 2039. Expenditures for fiscal year 2008 were $16.8 million of which $10.8 million represented interest. Total principal paid on capital leases was $6.0 million for the fiscal year ended June 30, 2008. Interest rates range up to 10.5 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2008:

Infrastructure Buildings Equipment

$ 3,215,715 234,019,454 1,210,235

Total Assets Held Under Capital Lease

$ 238.445.404

Certain capital leases provide for renewal and/or purchase options. Generally purchase options at bargain prices of one dollar are not offered to Georgia State University at the expiration of the lease terms.

Georgia State University has four capital leases associated with buildings. In July 2001, Georgia State University entered into a capital lease valued at $34,650,000 with an effective interest rate of 6.985 percent with the Georgia State University Foundation (Foundation), whereby the University leases the Student Recreation Center for a twenty-year period that began July 2001 and expires June 2021. In March 2000, the University entered into a capital lease valued at $14,038,328 with an effective interest rate of 6.985 percent with the Foundation, whereby the University leases the Alpharetta Center for a twenty-year period that began March 2000 and expires February 2020. In January 2005, the University entered into a capital lease valued at $39,965,234 with an effective interest rate of 7.362 percent with the Foundation, whereby the University leases the Lofts for a twenty-seven year period that began January 2005 and expires August 2032. In August 2007, Georgia State University entered into a capital lease valued at $161,330,000 for a new dormitory complex with an effective interest rate of 5.50 percent with the Georgia State University Foundation. The University leases the University Commons for a 30 year period. The outstanding principal liability at June 30, 2008 on these capital building leases is $27,457,253, $10,389,287, $39,482,261, and $158,596,107 respectively. Each year the monthly payments for these leases will increase by the greater of 2 percent or the CPl.

Georgia State University also has various capital leases for equipment and software with an outstanding balance at June 30, 2008 in the amount of$3,534,604.

OPERATING LEASES Georgia State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2008 through 2015. Certain operating leases provide

- 18-

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 10: LEASE OBLIGATIONS

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

In addition to building leases renewed from fiscal year 2007, during fiscal year 2008, Georgia State University entered into a building lease with Park Plaza Property, Inc., for two suites in the Park Plaza Property in Decatur. This lease has one-year renewable options through June 30, 2009 only.

FUTURE COMMITMENTS Future commitments for capital leases (which here and on the Statement of Net Assets include other installment purchase agreements) and for noncancellable operating leases having remaining terms in excess of one year as of June 30, 2008, were as follows:

Real Property and Equipment

Capital

Operating

Leases

Leases

Year Ending June 30: 2009 2010 2011 2012 2013 2014- 2018 2019- 2023 2024-2028 2029-2033 2034-2038 2039-2043

$ 18,765,385 $ 20,009,369 20,270,513 20,092,592 20,209,008 106,950,642 97,538,108 79,351,453 77,386,738 63,056,518 12,785.396

7,015,644 7,103,309 6,459,949 5,367,832 5,031,308
504,000

Total Minimum Lease Payments

$ 536,415,722 $ 31.482.042

Less: Interest

296,956,210

Principal Outstanding

$ 239.459.512

Georgia State University's fiscal year 2008 expense for rental of real property and equipment under operating leases was $6,627,182.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 11: RETIREMENT PLANS

TEACHERS RETIREMENT SYSTEM OF GEORGIA

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

Funding Policy Employees of Georgia State University who are covered by TRS are required by State statute to contribute 5% of their gross earnings to TRS. Georgia State University makes monthly employer contributions to TRS at rates adopted by the TRS Board of Trustees in accordance with State statute and as advised by their independent actuary. For fiscal year 2008, the employer contribution rate was 9.28% for covered employees. Employer contributions for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Percentage Contributed

Required Contribution

2008 2007 2006

100% 100% 100%

$ 10,535,476 $ 9,727,493 $ 9,434,148

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Plan Description Georgia State University participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple-employer defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia.

The benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 11: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.
Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1, 1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion ofERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415.
The ERS issues a financial report each fiscal year, which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The University's payroll for the year ended June 30, 2008, for employees covered by ERS was $885,394. The University's total payroll for all employees was $244,452,945.
For the year ended June 30, 2008 under the old plan, member contributions consist of 6.5% of annual compensation minus $7.00. Of these member contributions, the employee pays the first 1.5% and the University pays the remainder on behalf of the employee.
Under the new plan, member contributions consist solely of 1.5% of annual compensation paid by employee. The University also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation for both old and new plans. For the year ended June 30, 2008, the ERS employer contribution rate for the University amounted to 10.41% of covered payroll and included the amounts contributed on behalf of the employees under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 11: RETIREMENT PLANS

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA

Funding Policy

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

follows:

Percentage

Required

Fiscal Year

Contributed

Contribution

2008 2007 2006

100% 100% 100%

$

92,322

$ 100,794

$

76,414

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 2008 financial report, which may be obtained through ERS.

REGENTS RETIREMENT PLAN

Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan that was created/established by the Georgia General Assembly in O.C.G.A. 4721-1 et.seq. and is administered by the Board of Regents of the University System of Georgia. O.C.G.A. 47-3-68(a) defines who may participate in the Regents Retirement Plan. An "eligible university system employee" is a faculty member or a principal administrator, as designated by the regulations of the Board of Regents. Under the Regents Retirement Plan, a plan participant may purchase annuity contracts from four approved vendors (AIG-VALIC, American Century, Fidelity, and TIAA-CREF) for the purpose of receiving retirement and death benefits. Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

Funding Policy Georgia 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 2008, the employer contribution was 8.13% for the first six months and 8.15% for the last six months of the participating employee's earnable compensation. Employees contribute 5% of their earnable compensation. Amounts attributable to all plan contributions are fully vested and non-forfeitable at all times.

Georgia State University and the covered employees made the required contributions of $7,211,877 (8.13% or 8.15%) and $4,431,364 (5%), respectively.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 11: RETIREMENT PLANS
REGENTS RETIREMENT PLAN
Funding Policy 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 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 1s 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 2008 amounted to $607,127 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.

-23-

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 12: RISKMANAGEMENT
The University System of Georgia offers its employees and retirees access to two different selfinsured healthcare plan options - a PPO/PPO Consumer healthcare plan, and an indemnity healthcare plan. Georgia State 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 two plans are considered to be a self-sustaining risk fund. Both selfinsured healthcare plan options provide a maximum lifetime benefit of $2,000,000 per person. The Board of Regents has contracted with Blue Cross Blue Shield of Georgia, a wholly owned subsidiary of WellPoint, to serve as the claims administrator for the two self-insured healthcare plan products. In addition to the two different self-insured healthcare plan options offered to the employees of the University System of Georgia, a fully insured HSA/High Deductible PPO healthcare plan and two fully insured HMO healthcare plan options are also offered to System employees.
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Georgia 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.

-24-

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT "D"

NOTE 13: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures that are disallowed under grant terms. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although Georgia State University expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against Georgia State University (an organizational unit ofthe Board ofRegents ofthe 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, 2008.
NOTE 14: POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Pursuant to the general powers conferred by the Official Code of Georgia Annotated Section 203-31, the Board of Regents of the University System of Georgia has established group health and life insurance programs for regular employees of the University System of Georgia. It is the policy ofthe Board ofRegents to permit employees ofthe 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 2007 and 2008 plan years, the employer rate was approximately 75% of the total health insurance cost for eligible retirees and the retiree rate was approximately 25%.
As of June 30, 2008, there were 897 employees who had retired or were disabled that were receiving these post-employment health and life insurance benefits. For the year ended June 30, 2008, Georgia State University recognized as incurred $4,496,592 of expenditures, which was net of $1,822,429 of participant contributions.

- 25-

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 15: NATURAL CLASSIFICATIONS WITH FUNCTIONAL CLASSIFICATIONS

The University's operating expenses by functional classification for fiscal year 2008 are shown below:

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

Instruction

Functional Classification

Research

Public Service

Academic SUJ:!J:!Ort

Student Services

$ 70,584,827 35,796,556 25,866,407 4,636 1,824,679
1,363,942 820,237
15,086,583 7,266,658
$ 158 614 525

$ 20,853,301 28,881,891 5,865,566 45 1,391,131
1,289,210 119,498
18,175,033 1,983,461
$ 78 559 136

$ 763,301 7,325,600 1,733,055
352,935
310,598 82,691
15,947,309 47176
$ 26 562 665

$ 290,073 28,579,313 7,027,117 342 685,238
400 858,513
14,321,008 5,485,470
$ 57 247 474

$

16,548

14,817,426

3,562,345

3,265

275,659

100,711 254,140

6,077,863 947163

$ 26 055 120

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

Institutional SUJ;!J;!Ort

Functional Classification

Plant

Operations and Scholarships

Auxiliary

Maintenance and FellowshiJ:!S Entemrises

Total Operating ExJ:!enses

$

2,800

22,320,253

7,357,535

581,887

215,991

4,507 263,738

7,255,045 675,042

$ 38 676 798

$ 10,161,771 2,842,026 22,212
6,545,042 13,113,059 2,120,552 $ 34,804,662

$ 16,402,717 121,992
$ 16 524 709

$

1,000

4,058,285

810,777

1,133

48,827

1,586,870
21,558,766 5,035,804
$ 33 101 462

$ 92,511,850 151,941,095 55,064,828 591,308 4,816,672
19,472,085 10,530,729
111,656,658 23,561,326
$ 470 146 551

NOTE 16: SPECIAL ITEMS

Georgia State University transferred its University Village Student Housing Complex to Georgia Institute of Technology, a University System of Georgia institution, effective July 1, 2007. The complex contained approximately 2,000 student housing beds, 790 parking spaces, and site amenities.

Georgia Institute of Technology provided consideration for the complex totaling $45,455,494. The net book value of the capital asset transfer to Georgia Institute of Technology at July 1, 2007 was $53,372,143. The difference of $7,916,649 is reported as a Special Item - Capital Asset Transfer on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows. See Note 6 for additional information.

-26-

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008

EXHIBIT"D"

NOTE 16: SPECIAL ITEMS
As a result of the capital asset transfer, Georgia State University was required to defease the associated bonds that were issued by GSFIC to construct the housing complex. To accomplish this requirement, a portion of the consideration reflected above was paid directly to GSFIC at the time of the asset transfer in the amount of $24,710,494. The bond defeasance is reported as a Special Item - Bond Defeasance on the Statements of Revenues, Expenses and Changes in Net Assets and Cash Flows.
NOTE 17: AFFILIATED ORGANIZATIONS
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, an amendment of GASB Statement No. 14, The Reporting Entity, which became effective for the year ended June 30, 2004, Georgia State University Foundation and the Georgia State Research Foundation have been determined to be legally separate, tax exempt organizations whose activities primarily support Georgia State University, a unit of the University System of Georgia (an organizational unit of the State of Georgia). The State Accounting Office has determined Component Units of the State of Georgia, as required by GASB Statement No. 39, should be assessed in relation to their significance to the State of Georgia. Accordingly, Georgia State University has not included financial activity for Georgia State University Foundation and Georgia State Research Foundation in these financial statements.
The Georgia State University Foundation has been determined significant to the State of Georgia for the year ended June 30, 2008, and as such, is reported as a discretely presented component unit in the Comprehensive Annual Financial Report of the State of Georgia (CAFR). The significant discretely presented component unit issues separate audited financial statements that can be obtained from the Board of Regents of the University System of Georgia.

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SUPPLEMENTARY INFORMATION -29-

GEORGIA STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND JUNE 30, 2008
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Accounts Payable Encumbrances Payable Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Property Sale Unreserved Surplus Regular Tobacco Settlement Funds
Total Fund Balances
Total Liabilities and Fund Balances

SCHEDULE "1"

$ 67,107,998.29 2,004.40
3,279,385.90 23,241 ,075.07
3,613,625.20 110,777.76
$ 97,354,866.62

$

949,620.27

696,861.15

26,388,542.78

29,198,895.01

801,821.62

$ 58,035,740.83

$

1,575.02

6,343,397.82

15,030,951.73

3,069,564.24

7,788,149.38

3,048,763.76

117,753.14

2,290,076.03

1,200,000.00

428,586.24 308.43
$ 39,319,125.79

$ 97,354,866.62

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 30-

GEORGIA STATE UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP BASIS)
BUDGET FUND YEAR ENDED JUNE 30, 2008

SCHEDULE "2"

REVENUES
State Appropriation State General Funds Tobacco Funds
Other Funds
Total Revenues
CARRY-OVER FROM PRIOR YEAR
Transfer from Reserved Fund Balance
Total Funds Available
EXPENDITURES
Payments to Georgia Cancer Coalition Research Consortium 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 Non-Mandatory Transfers Unreserved Fund Balance (Surplus) Returned
to Board of Regents- University System Office Year Ended June 30, 2007
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 213,285,261.00 $ 213,285,261.00 $

0.00

15,337,799.00

15,337,799.00

0.00

354,447,487.00

285,523,277.15

-68,924,209.85

$ 583,070,547.00 $ 514,146,337.15 $ -68,924,209.85

0.00

38,204,365.48

38,204,365.48

$ 583,070,547.00 $ 552,350,702.63 $ -30 719 844.37

$

14,587,799.00 $

14,587,490.57 $

6,336,530.00

6,326,988.35

298,001.00

294,841.00

561,848,217.00

495,496,275.70

$ 583,070,547.00 $ 516,705,595.62 $

$

0.00 $

35,645,107.01 $

308.43 9,541.65 3,160.00 66,351,941.30
66,364,951.38
35 645 107.01

41,877,834.26 442,218.14

669,078.04 -669,078.04
550.00

-442,218.14 -38,204,365.48

$

39,319,125.79

SUMMARY OF FUND BALANCE
Reserved Capital Outlay Departmental Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Property Sales
Total Reserved
Unreserved Surplus Regular Tobacco Settlement Funds
Total Fund Balance

$

1,575.02

6,343,397.82

15,030,951.73

3,069,564.24

7,788,149.38

3,048,763.76

117,753.14

2,290,076.03

1,200,000.00

$

38,890,231.12

428,586.24 308.43

$

39,319,125.79

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
- 31 -

GEORGIA STATE UNIVERSITY STATEMENT OF PROGRAM REVENUES AND EXPENDITURES BY FUNDING SOURCE COMPARED TO BUDGET
(NON-GAAP BASIS) BUDGET FUND YEAR ENDED JUNE 30, 2008

Payments to Georgia Cancer Coalition Tobacco Funds

Original Appropriation
0.00

Final Budget
14,587,799.00

Current Year Revenues

Funds Available Comj?:ared to Budget

Prior Year Carry-Over

Total Funds Available

Variance Positive (Negative)

14,587,799.00 $

0.00 $

14,587,799.00 $

0.00

Research Consortium S1a1e Appropria1ion State General Funds Tobacco Funds
Total Research Consortium

4,172,504.00 750 000.00
4 922 504.00

5,586,530.00 750 000.00
6,336 530.00

5,586,530.00 750 000.00
6,336 530.00

0.00 $ 0.00
0.00

5,586,530.00 750,000.00
6,336,530.00

0.00 0.00
0.00

Special Funding Initiatives
State Appropriation State General Funds

148,001.00 $

298,001.00 $

298,001.00 $

0.00 $

298,001.00 $ _ _ _ _.,;0~.0~0:.,

Teaching State Appropriation State General Funds Other Funds
Total Teaching

208,170,620.00 283,844,236.00
492,014,856.00

207,400,730.00 354 447 487.00
561,848,217.00

207,400,730.00 $ 285 523,277.15
492 924p07.15

0.00 $ 38,204,365.48

207,400,730.00 323,727,642.63
531128,372.63

0.00 -30 719 644.37
-30 719 644.37

Grand Totals -All Programs

497,085,361.00 $

583,070,547.00 $

514,146,337.15 $

38,204,365.48 $

552,350,702.63 $ _ __.-3.o.,.7,.=19...84'"'""4.,;;,;37=

Actual amounts were prepared on a prescribed basis of accounting that demonstrates compliance with budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.

-32-

SCHEDULE "3"

Expenditures Compared to Budget

Variance

Positive

Actual

<Negative)

Actual Funds Available
Over/(Under) Expenditures

Prior Period Adjustments

Other Adjustments

14,587,490.57

308.43

308.43

0.00

0.00

Program Fund
Balances

Transfers

Program Fund Balances

Reserve

Surolus

308.43 $ ~ $

0.00 $

308.43

Total Fund Balance
308.43

5,576,988.35

9,541.65 $

9,541.65

0.00

0.00

9,541.65

0.00 $

0.00 $ 9,541.65

9,541.65

750 000.00

0.00

0.00

0.00

0.00 ----""o.,oo,_ _.QJlQ_

0.00

0.00

0.00

6,326,988.35

9 541.65

9 541.65

0.00

0.00

9 541.65 $~ $ _ _ __.0::;;.0~0:.,

9541.65 $ _ __.9:!l54=1.:;::65:.,

294,641.00 $

3,160.00 $

3,160.00 $

0.00 $

0.00 $

3,160.00 $~ $

0.00 $

3,160.00 $==""3~,1::;60;,:;.0:::0:.,

207,398,626.64 288,097,649.06
495 496 275.70

2,103.36 66,349 837.94
66,351,941.30

2,103.36 35 629,993.57
35,632,096.93

516,705,595.62 $ 66,364,951.38 $ 35,645,107.01 $

0.00 $ 390,510.83

0.00

116 991.05

0.00

507,501.88

392,614.19 $

0.00 $

0.00

35,746,964.62 _.QJlQ_ 35,723 714.22

36,139,598.81 $~$ 35,723 714.22

392,614.19 23 270.40
415 864.59

392,614.19 35 746,984.62
36 139,598.81

0.00 $ 507,501.88 $ 36,152,608.89 $ ~ $ 35,723,714.22 $ 428,894.67 $ 36,152,608.89

Unexpendable Reserves Uncollectible Accounts Receivable Inventories

3,048,763.76 117753.14
39,319,125.79

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GEORGIA STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2008

SCHEDULE "4"

Totals per Annual Supplement

Accruals June 30, 2008 June 30, 2007

Prepaid Items June 30, 2008 June 30, 2007

Compensated Absences June 30, 2008 June 30, 2007

Other Personnel Services Shared Services on Jointly Staffed Personnel

Deferred Compensation Plan

Patton,

Carl V.

Unidentified Variance

SALARIES

TRAVEL

$ 243,359,940.94 $ 4,815,558.79

862,360.96 -668,440.59

-2,661 ,876.47 2,454,516.39

11,008,167.62 -10,187,109.62

-45,252.00

300,000.00 30,637.77

1113.21

$ 244,452,945.00 $ 4,816,672.00

-35-

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA STATE UNIVERSITY AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2008

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-509-05-04 FS-509-06-01 FS-509-07-01

Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Previously Reported Corrective Action Implemented

CORRECTIVE ACTION/RESPONSES

ACCOUNTING CONTROLS Inadequate General Controls Finding Control Number: FS-509-05-04

Georgia State University has upgraded to the Oracle 1Og system. One application requires further configuration to completely resolve the access restriction issues. Corrective action has been discussed and should be implemented before the fiscal year-end.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

COMMUNICATION OF INTERNAL CONTROL DEFICIENCIES

The auditor is required to communicate to management and those charged with governance control deficiencies identified during the course of the financial statement audit that, in the auditor's judgment, constitute significant deficiencies or material weakness.

A control deficiency exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affect the Georgia State University's ability to initiate, authorize, record, process, or report financial data reliability in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Georgia State University's financial statements that is more than inconsequential will not be prevented or detected by the Georgia State University's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement ofthe financial statements will not be prevented or detected by the Georgia State University's internal control.

Any identified deficiencies in internal controls that we did not consider to be significant deficiencies and/or material weaknesses have been communicated to management and those charged with governance within a separate management letter dated November 26, 2008. Internal control deficiencies identified during the course of this engagement that were considered to be significant deficiencies and/or material weaknesses are presented below:

EXPENDITURES/LIABILITIES/DISBURSEMENTS CAPITAL ASSETS Inadequate Internal Controls over the Reporting of Leases Material Weakness Finding Control Number: FS-509-08-01

Condition:

During our examination of Capital and Operating Leases, we noted weaknesses in internal controls which we consider relevant to the University's financial statements for the fiscal year ended June 30, 2008.

- 1-

GEORGIA STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2008

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS CAPITAL ASSETS Inadequate Internal Controls over the Reporting of Leases Material Weakness Finding Control Number: FS-509-08-01

Criteria:

Controls should be in place to appropriately categorize and report lease activity on the financial statements. Generally accepted accounting principles require that a lease be capitalized if any one of the following four criteria pertaining to the lease transaction is met: 1) the lease transfers ownership of the property to the lessee by the end ofthe lease term, 2) the lease contains a bargain purchase option, 3) the lease term is equal to 75% or more of the estimated economic life ofthe leased property and 4) the present value ofthe minimum lease payments at the inception of the lease, excluding executory costs, equals at least 90% of the fair value of the leased property.

Questioned Cost: N/A

Information:

The University incorrectly reported "The University Lofts" lease as an operating lease. The lease met the criteria ofa capital lease and therefore the liability and associated building would need to be reported in the financial statements. Due to the material nature of this omission, the auditors requested that the University correct the financial statements submitted for audit.

Cause:

Management did not have proper controls over the lease determination process.

Effect:

Without proper controls over lease determination, leases could be incorrectly reported which could result in a material misstatement to the financial statements.

Recommendation:

Management should implement controls to ensure that leases are properly evaluated based on the lease agreement and are categorized as a capital lease or an operating lease in accordance with generally accepted accounting principles.

FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

No matters were reported.

- 2-