Georgia State University, Atlanta, Georgia, annual financial report for fiscal year ended June 30, 2013 (including independent auditor's reports)

2013Annual financial report
for the Fiscal Year Ended June 30, 2013 (Including Independent Auditors' Report)

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 POSITION
B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
C STATEMENT OF CASH FLOWS
D NOTES TO THE FINANCIAL STATEMENTS
SUPPLEMENTARY INFORMATION
SCHEDULES
1 BALANCE SHEET (NON-GAAP BASIS) BUDGET FUND 2 SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT
(NON-GAAP BASIS) BUDGET FUND 3 STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET
BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND
4 STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE (NON-GAAP BASIS) BUDGET FUND
5 RECONCILIATION OF BUDGET TO GAAP 6 RECONCILIATION OF SALARIES AND TRAVEL

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28 29 30 32 34 36

GEORGIA STATE UNIVERSITY - TABLE OF CONTENTS -
SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
SECTION III AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION IV CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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
January 24, 2014

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Mark P. Becker, President Georgia State University

INDEPENDENT AUDITOR'S REPORT
Ladies and Gentlemen:
Report on the Financial Statements
We have audited the accompanying basic financial statements (Exhibits A through D) of Georgia State University, a unit of the University System of Georgia, which is an organizational unit of the State of Georgia, as of and for the year ended June 30, 2013.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
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 of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to Georgia State University's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
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of expressing an opinion on the effectiveness of Georgia State University's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of Georgia State University as of June 30, 2013, and the respective changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Emphasis of Matter
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 of the State of Georgia as of June 30, 2013, the changes in its financial position or its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
As described in Note 1 to the financial statements, in 2013, Georgia State University adopted new accounting guidance, GASB Statement No. 63, Reporting Deferred Outflows, Deferred Inflows, and Net Position. Our opinion is not modified with respect to this matter.
As discussed in Note 1 to the financial statements, the prior period financial statements have been restated to correct a misstatement. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis on pages i through vi be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
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Other Information
Our audit was conducted for the purpose of forming an opinion on the basic financial statements of Georgia State University. The accompanying supplementary information (Schedules 1 through 6) is presented for purposes of additional analysis and is not a required part of the basic financial statements.
The accompanying supplementary information (Schedules 1 through 6) is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting or other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 24, 2014, on our consideration of Georgia State's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Georgia State's internal control over financial reporting and compliance.
Respectfully,

GSG:as 13ARL-62

Greg S. Griffin State Auditor

REQUIRED SUPPLEMENTARY INFORMATION

GEORGIA STATE UNIVERSITY
Management's Discussion and Analysis

Introduction

Georgia State University is one of the 31 institutions of higher education of the University System of

Georgia. The University, located in Atlanta, Georgia, was founded in 1913. The University offers

baccalaureate, master 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 32,000

students each year. The University continues to grow as shown by the comparison numbers that

follow.

Students

Students

Faculty

(Headcount)

(FTE)

Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011

1,276 1,221 1,219

32,087 32,022 31,538

Overview of the Financial Statements and Financial Analysis

28,568 28,374 27,949

Georgia State University is pleased to present its financial statements for fiscal year 2013. The emphasis of discussions about these statements will be on current year data. There are three financial statements presented: the Statement of Net Position; the Statement of Revenues, Expenses and Changes in Net Position; 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 2013 and fiscal year 2012, as restated.

Statement of Net Position

The Statement of Net Position presents the assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position of the University as of the end of the fiscal year. The Statement of Net Position is a point-of-time financial statement. The Statement of Net Position presents a fiscal snapshot of Georgia State University. The Statement of Net Position presents endof-year data concerning assets (current and noncurrent) plus deferred outflows, and liabilities (current and noncurrent) plus deferred inflows, and net position (assets plus deferred outflows minus liabilities plus deferred inflows). The differences between current and noncurrent assets are discussed in the Notes to the Financial Statements.

From the data presented, readers of the Statement of Net Position are able to determine the assets available to continue the operations of the institution and how much the institution owes vendors.

Finally, the Statement of Net Position provides a picture of the net position (assets plus deferred outflows of resources minus liabilities plus deferred inflows of resources) and their availability for expenditure by the institution. Net position is divided into three major categories. The first category, net investment in capital assets, provides the institution's equity in property, plant and equipment owned by the institution. The next category is restricted, which is divided into three categories, nonexpendable, expendable and capital projects.

i

The corpus of nonexpendable, restricted resources is available only for investment purposes. Expendable, restricted resources 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. Unrestricted resources are available to the institution for any lawful purpose.
Statement of Net Position, Condensed

June 30, 2013

June 30, 2012 (Restated)

Assets Current Assets Capital Assets, Net Other Assets

$ 224,657,473 816,950,835 7,023,440

$ 193,743,348 812,135,465 6,719,749

Total Assets

$ 1,048,631,748

$ 1,012,598,562

Liabilities Current Liabilities Noncurrent Liabilities

$

81,522,526

376,022,248

$

67,770,158

394,180,037

Total Liabilities

$ 457,544,774

$ 461,950,195

Net Position Net Investment in Capital Assets Restricted Nonexpendable Expendable Capital Projects Unrestricted

$ 427,819,355
57,340 20,915,361
1,200,000 141,094,918

$ 416,501,692
52,941 10,319,053
1,200,000 122,574,681

Total Net Position

$ 591,086,974

$ 550,648,367

Total assets increased by $36,033,186 which was primarily due to an increase of $30,914,125 in the category of Current Assets. The balance of the increase is due mainly to an increase of $52,327,936 in cash and a decrease of $22,587,944 in receivables.
Total liabilities decreased for the year by $4,405,421. The combination of the increase in total assets of $36,033,186 and the decrease in total liabilities of $4,405,421 yields an increase in net position of $40,438,607. The increase in net position is primarily due to the increase in the category of Current Assets, in the amount of $30,914,125.
Statement of Revenues, Expenses and Changes in Net Position
Changes in total net position as presented on the Statement of Net Position are based on the activity presented in the Statement of Revenues, Expenses and Changes in Net Position. The purpose of 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, operating revenues are received for providing goods and services to the various customers and constituencies of the
ii

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 Position, Condensed

June 30, 2012

June 30, 2013

(Restated)

Operating Revenues Operating Expenses

$ 398,168,556 592,305,276

$ 372,325,975 567,604,082

Operating Gain/Loss

$ -194,136,720

$ -195,278,107

Nonoperating Revenues and Expenses

220,376,175

202,403,977

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

$ 26,239,455

$

7,125,870

Other Revenues, Expenses, Gains or Losses

14,199,152

12,815,919

Increase (Decrease) in Net Position

$ 40,438,607

$ 19,941,789

Net Position at Beginning of Year, as Originally Reported

$ 550,648,367

$ 531,153,207

Prior Year Adjustments

-446,629

Net Position at Beginning of Year, Restated $ 550,648,367

$ 530,706,578

Net Position at End of Year

$ 591,086,974

$ 550,648,367

The Statement of Revenues, Expenses and Changes in Net Position reflect a positive year, which is represented by an increase in net position at the end of the year. Some highlights of the information presented on this statement are as follows:

iii

Revenue by Source For the Years Ended June 30, 2013 and June 30, 2012

June 30, 2013

June 30, 2012 (Restated)

Operating Revenue

Tuition and Fees

$

Grants and Contracts

Sales and Services of Educational Departments

Auxiliary

Other

225,375,296 76,792,933 22,952,272 70,552,589 2,495,466

$ 214,959,743 70,906,414 20,481,458 63,601,079 2,377,281

Total Operating Revenue

$ 398,168,556

$ 372,325,975

Nonoperating Revenue State Appropriations Grants and Contracts Gifts Investment Income

$ 178,932,830 61,160,554 4,889,999 744,212

$ 164,945,293 60,724,223 131,615 1,276,287

Total Nonoperating Revenue

$ 245,727,595

$ 227,077,418

Capital Grants and Gifts State Other

$ 13,778,117 421,035

$ 12,699,013 116,906

Total Capital Grants and Gifts

$ 14,199,152

$ 12,815,919

Total Revenues

$ 658,095,303

$ 612,219,312

Expenses (By Functional Classification) For the Years Ended June 30, 2013 and June 30, 2012

June 30, 2013

June 30, 2012 (Restated)

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

$ 202,840,128 105,397,920 18,318,197 65,714,588 33,445,932 34,366,598 52,029,806 23,798,241 56,393,866

$ 199,291,596 98,671,900 19,982,529 65,059,945 30,529,806 30,679,081 46,583,021 21,599,489 55,206,715

Total Operating Expenses

$ 592,305,276

$ 567,604,082

Nonoperating Expenses Interest Expense (Capital Assets) Other

$ 24,688,429 662,991

$ 23,608,171 1,065,270

Total Nonoperating Expenses

$ 25,351,420

$ 24,673,441

Total Expenses

$ 617,656,696

$ 592,277,523

iv

Operating revenues increased by $25,842,581 or 7% in fiscal year 2013. Tuition and Fees had a $10,415,553 or 5% increase, revenues also increased in Grants and Contracts by $5,886,519 or 8%, Auxiliary by $6,951,510 or 11% and Sales and Services by $2,470,814 or 12%. The growth in Grants and Contracts resulted from expected growth in research which is part of the University's Strategic Plan. The growth in Tuition and Fees is due to the increase in student fees along with an increase in student enrollment and the growth in Auxiliary is attributed to increased enrollment as well. Nonoperating revenues increased by $18,650,177 or 7% for the year primarily due to an increase in State Appropriations of $13,987,537 or 8% and an increase in Gifts of $4,758,384. The Gifts increase was related to a large gift for the new Law School building. The compensation and employee benefits category increased by $8,195,892 or 2% primarily in the area of Research. Utilities increased by $1,501,631 or 9% during the past year. The increase was primarily associated with increased electricity and water costs and the incorporation of the SunTrust building into campus. Statement of Cash Flows The final statement presented by 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 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 Position.
v

Cash Flows for the Years Ended June 30, 2013 and 2012, Condensed

Cash Provided (Used) By: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities
Net Change in Cash Cash, Beginning of Year
Cash, End of Year

June 30, 2013

$

-148,434,562

266,231,654

-65,640,571

739,833

$

52,896,354

130,810,033

$

183,706,387

June 30, 2012 (Restated)

$

-155,161,380

226,314,697

-51,381,028

1,220,543

$

20,992,832

109,817,201

$

130,810,033

Capital Assets
The University had two significant capital asset additions for facilities in fiscal year 2013. The acquisition of the Atlanta Life Building for $8,912,204 and the improvements and additions to the Piedmont North Upgrade for $2,485,189.
Georgia State University also completed three major IT infrastructure projects. The IT Refresh Extreme Network Systems for $2,436,245, the Fiber Optic for $2,949,535, and the Data Center IT Upgrades for $2,088,035.
For additional information concerning Capital Assets, see Notes 1, 6, 8 and 10 in the Notes to the Financial Statements.
Long-Term Liabilities
Georgia State University had Long-Term Liabilities of $392,497,725 of which $16,475,477 was reflected as current liability at June 30, 2013.
For additional information concerning Long-Term Liabilities, see Notes 1 and 8 in the Notes to the Financial Statements
Economic Outlook
The University anticipates the current fiscal year will be challenging with a flat budget projected at the state level, but we 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.

Mark P. Becker, President Georgia State University

vi

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BASIC FINANCIAL STATEMENTS - 1 -

GEORGIA STATE UNIVERSITY STATEMENT OF NET POSITION
JUNE 30, 2013
ASSETS
Current Assets Cash and Cash Equivalents Accounts Receivable, Net (Note 3) Receivables - Federal Financial Assistance Receivables - Other Due from Affiliated Organizations Inventories (Note 4) Prepaid Items Other Assets
Total Current Assets
Noncurrent Assets Noncurrent Cash Short-Term Investments Investments Notes Receivable, Net Capital Assets, Net (Note 6)
Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities Accounts Payable Salaries Payable Contracts Payable Deposits Unearned Revenue (Note 7) Other Liabilities Deposits Held for Other Organizations Lease Purchase Obligations Compensated Absences Due to Affiliated Organizations
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
The notes to the financial statements are an integral part of this statement.
- 2 -

EXHIBIT "A"

$ 182,854,822
12,931,680 14,808,971
9,529,918 440,347
3,958,869 132,866
$ 224,657,473

$

851,565

57,340

1,884

6,112,651

816,950,835

$ 823,974,275

$ 1,048,631,748

$

21,426,268

996,560

845,785

17,267

38,424,489

141,472

1,145,599

8,124,339

8,351,138

2,049,609

$

81,522,526

$ 371,549,455 4,472,793
$ 376,022,248
$ 457,544,774

$ 427,819,355
57,340 20,915,361
1,200,000 141,094,918

$ 591,086,974

GEORGIA STATE UNIVERSITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
YEAR ENDED JUNE 30, 2013
OPERATING REVENUES
Student Tuition and Fees Less: Scholarship Allowances
Grants and Contracts Federal Federal Stimulus 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 Other Gifts Investment Income Interest Expense Other Nonoperating Expenses
Net Nonoperating Revenues (Expenses)
Income (Loss) Before Other Revenues, Expenses, Gains, or Losses
Capital Grants and Gifts State Other
Total Other Revenues, Expenses, Gains or Losses
Increase (Decrease) in Net Position
Net Position - Beginning of Year, Restated
Net Position - End of Year
The notes to the financial statements are an integral part of this statement.
- 3 -

EXHIBIT "B"
$ 277,344,750 -51,969,454
54,298,083 1,152,219 4,368,518
16,974,113 22,952,272
33,643
27,435,328 909,259
7,274,991 8,379,616 2,404,112 18,075,057 6,074,226 2,461,823
$ 398,168,556
$ 115,015,273 184,974,021 73,982,674 1,214,663 5,446,616 32,077,327 17,483,545 119,495,117 42,616,040
$ 592,305,276
$ -194,136,720
$ 178,932,830
56,573,202 4,587,352 4,889,999 744,212
-24,688,429 -662,991
$ 220,376,175
$ 26,239,455
$ 13,778,117 421,035
$ 14,199,152
$ 40,438,607
550,648,367
$ 591,086,974

GEORGIA STATE UNIVERSITY STATEMENT OF CASH FLOWS 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 Collection of Loans 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 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 Proceeds from Sales and Maturities of Investments Interest on Investments Purchase of Investments
Net Cash Provided (Used) by Investing Activities
Net Increase (Decrease) in Cash
Cash and Cash Equivalents - Beginning of Year
Cash and Cash Equivalents - End of Year

EXHIBIT "C"

$

222,818,131

78,162,925

22,952,272

-212,711,470

-299,111,211

-32,077,327

-1,710,664

1,979,770

27,537,862 950,702
7,310,364 8,405,744 2,048,085 17,271,608 5,694,257 2,044,390

$ -148,434,562

$

178,932,830

21,457,640

65,841,184

$

266,231,654

$

13,778,117

545

-47,848,846

-6,881,958

-24,688,429

$

-65,640,571

$

55,985

744,212

-60,364

$

739,833

$

52,896,354

130,810,033

$

183,706,387

- 4 -

GEORGIA STATE UNIVERSITY STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2013
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 Other Assets Prepaid Items Notes Receivable, Net Accounts Payable Unearned Revenue Other Liabilities Compensated Absences
Net Cash Provided (Used) by Operating Activities
NONCASH ACTIVITY Fixed Assets Acquired by Incurring Capital Lease Obligations Refinance of Capital Debt Resulting in a Decrease in Capital Lease Obligations Gift of Capital Assets Reducing Proceeds of Capital Grants and Gifts

EXHIBIT "C"

$ -194,136,720
42,616,040
1,560,426 -187,279 -132,866 -853,988 269,105
4,013,997 -2,724,516
470,235 671,004
$ -148,434,562

$

538,615

$

9,616,636

$

421,035

The notes to the financial statements are an integral part of this statement. - 5 -

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

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-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 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 Affiliated 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. Affiliated organizations are included in the reporting entity because of the significance of their operational or financial relationships with Georgia State University. For fiscal year 2013, Georgia State University Foundation, and the Georgia State University Research Foundation are presented as affiliated organizations. See Note 17, Affiliated Organizations, for additional information.
Financial Statement Presentation 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, liabilities, 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.

- 6 -

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

New Accounting Pronouncements 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.
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 and the Board of Regents Short-Term Investment Pool.
Short-Term Investments Short-Term Investments consist of investments of 90 days - 13 months, which includes certificates of deposits or other time-restricted investments with original maturities of six months or more when purchased. Funds are not readily available and there is a penalty for early withdrawal.
Investments Investments include financial instruments with terms in excess of 13 months, certain other securities for the production of revenue, land, and other real estate held as investments by endowments. The University accounts for its investments at fair value. 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 Position. The Board of Regents Diversified Fund and the Georgia Extended Asset Pool are 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 whom reside 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 an average-cost basis.
Prepaid Items Payments made to vendors for services that will benefit periods subsequent to June 30, 2013, are recorded as prepaid items.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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 of Net Position.
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, which also includes amortization of intangible assets such as water, timber, and mineral rights, easements, patents, trademarks, and copyrights, as well as software, 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 generally are 10% of historical costs for infrastructure, buildings and building improvements, and facilities and other improvements.
To fully understand 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. These bonds 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, 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, 2013, GSFIC did not transfer any capital additions to Georgia State University.
Unearned Revenues Unearned 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. Unearned revenues also include amounts received from grant and contract sponsors that have not yet been earned.
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 Position, and as a component of compensation and benefit expense in the Statement of Revenues, Expenses and Changes in Net Position. Georgia State University had accrued liability for compensated absences in the amount of $12,152,927 as of July 1, 2012. For fiscal year 2013, $9,804,444 was earned in compensated absences and employees were paid $9,133,440, for a net increase of $671,004. The ending balance as of June 30, 2013 in accrued liability for compensated absences was $12,823,931.
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.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Service Concession Agreements Georgia State University does not have any service concession agreements.

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 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. 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 - nonexpendable: includes 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 be either 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: includes resources in which the University is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties.

Expendable Restricted include the following at June 30, 2013:

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

$

14,250,335

6,581,388

83,638

Total Restricted Expendable

$

20,915,361

Restricted - 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: Unrestricted 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 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 $296,954.34. 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 the State Treasurer. These resources also include auxiliary enterprises, which are substantially self-supporting activities that provide services for students, faculty and staff.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Unrestricted resources include the following items which are quasi-restricted by management at June 30, 2013:

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

$

16,850,611

35,348,658

261,492

88,634,157

Total Unrestricted Net Position

$

141,094,918

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.
Classification of Revenues and Expenses The Statement of Revenues, Expenses and Changes in Net Position classify fiscal year activity as operating and nonoperating according to the following criteria:
Operating Revenue: includes activities that have the characteristics of exchange transactions, such as (1) student tuition and fees, net of scholarship allowances, (2) certain Federal, state and local grants and contracts, and (3) sales and services.
Nonoperating Revenue: includes activities that have the characteristics of nonexchange transactions, such as gifts and contributions, and other revenue sources that are defined as nonoperating revenue 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.
Operating Expenses: Operating expense includes activities that have the characteristics of exchange transactions.
Nonoperating Expense: includes activities that have the characteristics of nonexchange transactions, such as capital financing costs and costs related to investment activity.
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 Position. 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.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Restatement of Prior Year Net Position Georgia State University has a restatement of prior year net position, decreasing net position by $10,959,067. This is due to a correction of one prior year misstatement regarding work-in-progress as well as a change in accounting principle necessitating adjustments made to bring capital lease liabilities and related asset values consistent with the Georgia State University Foundation's asset values in accordance with GASB No. 61. An aggregate adjustment to work-in-process was made to increase net position by $1,740,938 to correct an error made in its calculation in the prior year. An adjustment to align capital lease liabilities and asset values with the values stated by the Foundation in accordance with GASB No. 61 resulted in a decrease in prior year capital assets of $4,637,180 and an increase in lease liability of $8,985,806 for a net decrease of $13,622,986 to net position. Additionally, an increase in net position and a decrease in accumulated depreciation of $922,981 aligned the values with those stated by the Foundation in accordance with GASB No. 61.
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 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, 2013, the carrying value of deposits was $31,513,098 and the bank balance was $37,855,599. Of the University's deposits, $37,602,240 were uninsured. Of these uninsured deposits, $37,602,240 were collateralized with securities held by the financial institution, by its trust department or agency, but not in the University's name.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Investments At June 30, 2013, the carrying value of the University's investments was $152,229,243, which is materially the same as fair value. These investments were comprised entirely of funds invested in the Board of Regents and/or Office of the State Treasurer investment pools as follows:

Investment Pools Board of Regents Short-Term Fund Diversified Fund

$

69,857,841

59,224

Office of the State Treasurer Georgia Fund 1 Georgia Extended Asset Pool

69,917,065
71,556,125 10,756,053

Total Investment Pools

$

152,229,243

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 and Accounts - Education Audit Division or on their web site at http://www.audits.ga.gov.
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.
The Georgia Extended Asset Pool, managed by the Office of the State Treasurer, is not registered with the Securities and Exchange Commission as an investment company. Net Asset Value (NAV) is calculated daily to determine current share price, which was $2.00 at June 30, 2013. The Georgia Extended Asset Pool is an AA+f rated investment pool by Standard and Poor's. The Weighted Average Maturity of the Fund is .26 years.
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 Effective Duration of the Short-Term Fund is .56 years. Of the University's total investment of $69,857,841 in the Short-Term Fund, $61,285,585 is invested in debt securities.
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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

The Effective Duration of the Diversified Fund is 5.43 years. Of the University's total investment of $59,225 in the Diversified Fund, $18,952 is invested in debt securities.

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 BBA 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. The Georgia Extended Asset Pool is an AA+ rated investment pool 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, 2013:

Student Tuition and Fees

$

Auxiliary Enterprises and Other Operating Activities

Federal Financial Assistance

Georgia State Financing and Investment Commission

Due from Affiliated Organizations

11,867,660 1,878,266
12,931,680 3,064,954
10,455,400

Less Allowance for Doubtful Accounts

$

40,197,960

2,927,391

Net Accounts Receivable

$

Note 4. Inventories

Inventories consisted of the following at June 30, 2013:

37,270,569

Physical Plant Other

$

320,457

119,890

Total Inventories

$

440,347

Note 5. Notes/Loans Receivable
The Federal Perkins Loan Program (the Program) comprises substantially all of the loans receivable at June 30, 2013. 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 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, 2013, the allowance for uncollectible loans was approximately $6,117.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Note 6. Capital Assets Following are the changes in capital assets for the year ended June 30, 2013:

Beginning Balance July 1, 2012 (Restated)

Additions

Reductions

Ending Balance June 30, 2013

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

$

88,704,816

$

88,704,816

221,093 $

14,607 $

4,000

231,700

17,478,797

21,301,075

21,194,965

17,584,907

Total Capital Assets, Not Being Depreciated $

106,404,706 $

21,315,682 $

21,198,965 $

106,521,423

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

$

16,128,132 $

838,544,290

7,971,971

84,624,881

2,137,077

126,697,003

10,699,322 20,236,690
1,172,710 $ 9,648,417
538,615 6,751,772

$
82,670 4,145,167
826,575 834,205

26,827,454 858,780,980
9,062,011 90,128,131
1,849,117 132,614,570

Total Assets Being Depreciated

$ 1,076,103,354 $

49,047,526 $

5,888,617 $ 1,119,262,263

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

$

4,169,073 $

211,736,162

1,372,168

55,968,562

1,145,013

95,981,617

1,167,090 25,828,828
396,293 $ 8,770,401
380,030 6,073,398

$
74,403 2,551,125
696,051 834,205

5,336,163 237,564,990
1,694,058 62,187,838
828,992 101,220,810

Total Accumulated Depreciation

$

370,372,595 $

42,616,040 $

4,155,784 $

408,832,851

Total Capital Assets, Being Depreciated, Net $

705,730,759 $

6,431,486 $

1,732,833 $

710,429,412

Capital Assets, Net

$

812,135,465 $

27,747,168 $

22,931,798 $

816,950,835

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Note 7. Unearned revenue

Unearned revenue consisted of the following at June 30, 2013:

Prepaid Tuition and Fees Research Other Unearned Revenue

$ 18,072,022 6,263,913
14,088,554

Total Unearned Revenue

$ 38,424,489

Note 8. Long-Term Liabilities Long-Term liability activity for the year ended June 30, 2013 was as follows:

Beginning Balance July 1, 2012 (Restated)

Additions

Reductions

Ending Balance June 30, 2013

Current Portion

Leases Lease Obligations

$ 395,633,773 $

538,615 $ 16,498,594 $ 379,673,794 $ 8,124,339

Other Liabilities Compensated Absences

12,152,927

9,804,444

9,133,440

12,823,931

8,351,138

Total Long-Term Obligations $ 407,786,700 $ 10,343,059 $ 25,632,034 $ 392,497,725 $ 16,475,477
Note 9. Significant Commitments
The University had significant unearned, outstanding, construction or renovation contracts executed in the amount of $23,888,974 as of June 30, 2013. This amount 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 it is also 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 2014 and fiscal year 2045. Expenditures for fiscal year 2013 were $31.6 million of which $24.7 million represented interest. Total principal paid on capital leases was $6.9 million for the fiscal year ended June 30, 2013. Interest rates range up to 8.6 percent. The following is a summary of the carrying values of assets held under capital lease at June 30, 2013:

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Description

Gross Amount (+)

Accumulated Depreciation
(-)

Net Position Held Under Capital Lease at June 30, 2013
(=)

Outstanding Balances per Lease Schedules at June 30, 2013

Infrastructure Equipment Buildings Buildings - (PPV Only)

$

2,657,104 $

831,590 $

1,825,514

1,849,117

832,766

1,016,351 $

730,658

41,088,341

11,151,708

29,936,633

37,568,075

367,014,930

42,286,526

324,728,404

341,375,061

$

412,609,492 $ 55,102,590 $ 357,506,902 $ 379,673,794

Georgia State University has eight capital leases associated with buildings. In July 2001, Georgia State University entered into a capital lease valued at $29,442,679 with a nominal interest rate of 8.575 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 $11,500,373 with a nominal interest rate of 7.081 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 a nominal 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 $150,525,574 for a new dormitory complex with a nominal interest rate of 4.392 percent with the Foundation, whereby the University leases the University Commons for a thirty-three-year period that began August 2007 and expires June 2039. In December 2009, the University entered into a capital lease valued at $1,041,646 with a nominal interest rate of 6.937 percent with the Foundation, whereby the University leases the ground of the Rialto Center for a thirty-five-year period that began December 2009 and expires November 2044. In May 2010, the University entered into a capital lease valued at $85,853,469 with a nominal interest rate of 5.378 percent with the Georgia State University Research Foundation, whereby the University leases the Petit Science Center for a thirty-year period that began May 2010 and expires June 2039. In 2010, the University entered into a capital lease valued at $16,109,603 with a nominal interest rate of 6.477 percent with the USG Real Estate Foundation for the Freshman Housing building for a thirty-year period that began July 2010 and expires June 2040. In 2012, the University took possession of the SunTrust building and complex and began making lease payments under a capital lease originally entered into in June 2007 valued at $65,483,384 with a nominal interest rate of 8.030 percent with the Foundation, whereby the University leases the SunTrust building and complex for a thirty-year period that began June 2007 and expires June 2037. The outstanding principal liability at June 30, 2013 on these capital building leases is $19,615,781, $6,310,520, $36,554,996, $149,629,872, $1,013,079, $84,484,460, $16,337,154, and $64,997,274, respectively. The monthly payments for these leases increase pursuant to a preagreed increase schedule or by the greater of 1.25 percent or the percentage change in CPI.

As of June 30, 2012, in accordance with GASB No. 61, Georgia State University restated the original principal capital lease amounts and interest rates for the Student Recreation Center, Alpharetta Center, University Commons, Petit Science Center and Freshman Housing capital leases to align the asset values with the asset values stated by the Foundation.

Georgia State University also has various capital leases for equipment with an outstanding principal balance at June 30, 2013 in the amount of $730,658.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Operating Leases Georgia State University's noncancellable operating leases having remaining terms of more than one year expire in various fiscal years from 2014 through 2019. Certain 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 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, the University is party to several real property operating leases for floor space in several buildings.
Future Commitments Future commitments for capital leases (which here and on the Statement of Net Position include 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 - 2043 2044 - 2045

$

30,513,581 $ 2,397,678

30,898,029

2,208,529

31,292,097

2,270,547

31,667,464

325,945

32,138,320

301,669

152,072,438

309,964

141,724,149

142,124,459

100,897,326

9,228,669

112,348

Total Minimum Lease Payments

$

702,668,880 $ 7,814,332

Less: Interest

322,995,086

Principal Outstanding

$

379,673,794

Georgia State University's fiscal year 2013 expense for rental of real property and equipment under operating leases was $6,263,957.
Note 11. Retirement Plans
Georgia 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
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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

significant retirement plans that Georgia 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.
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.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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 State University pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these Georgia 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 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 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.

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

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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 State University contributions by defined benefit plan for the years ending June 30, 2013, June 30, 2012, and June 30, 2011 (dollars in thousands):

Fiscal Year

ERS

Required

Percentage

Contribution

Contributed

TRS

Required

Percentage

Contribution

Contributed

2013 2012 2011

$

88,841

$

80,034

$

56,274

100% 100% 100%

$ 13,898,953 $ 12,718,066 $ 12,254,249

100% 100% 100%

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. 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.
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 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 nonforfeitable at all times.
Georgia State University and the covered employees made the required contributions of $11,332,409 (9.24%) and $6,774,358 (6%), respectively.

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GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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 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 $706,726 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.
Note 12. 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
Georgia State University and participating employees and retirees pay premiums to either of the selfinsured 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 self-sustaining 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-

- 21 -

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

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 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.
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 expenditure 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 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 14: Related Party Transactions
Georgia State University's Health Policy Center contracted with a related party entity named Georgia Health Decisions, Incorporated. Georgia Health Decisions is a related party because Beverly Tyler is Executive Director of Georgia Health Decisions and also an employee of Georgia State University. While Beverly Tyler serves as the Executive Director she is not an employee of Georgia Health Decisions. Beverly Tyler's salary is funded by sponsored projects. Georgia Health Decisions is a nonprofit, nonpartisan organization seeking to educate Georgians about health care issues. Georgia Health Decisions was part of the group that founded the University's Georgia Health Policy Center in 1995. In 2005, Georgia Health Decisions solidified its relationship when it relocated to the Georgia Health Policy Center. In this partnership, Georgia Health Decisions supports Georgia Health Policy Center projects while continuing to be responsible for its own staff oversight, accounting and other administrative duties. There are various consulting agreements in place

- 22 -

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

between the University and Georgia Health Decisions for Georgia Health Decisions to conduct focus groups for current University Health Policy Center sponsored projects. The University has reviewed this relationship and has determined that there is not a conflict. During fiscal year 2013, the University paid Georgia Health Decisions $199,840 for contract expenses and $25,989 for reimbursement of travel expenditures and other expenses. All expenditures were funded through sponsored projects.
Note 15. 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 1,252 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 State University recognized as incurred $6,101,273 of expenditures, which was net of $2,824,395 of participant contributions.

- 23 -

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Note 16. Natural Classifications with Functional Classifications The University's operating expenses by functional classification for fiscal year 2013 are shown below:

Functional Classification

Natural Classification

Instruction

Research

Public Service

Academic Support

Student Services

Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation

$ 88,452,483 $ 43,058,108 39,588,264
2,052,058 3,946,844
19,667 15,886,393
9,836,311

24,848,484 $ 38,338,905
8,619,325

1,206,523 $ 8,895,208 2,410,635

1,702,249 946,543 52,627
19,685,988 11,203,799

434,536 1,216,933
15,124 3,972,425
166,813

457,035 $ 31,371,793
8,138,928 444,942 663,094 301 685,431
15,357,832 8,595,232

55,548 18,565,008
4,448,054
325,411 655,362
33,749 8,312,581 1,050,219

Total Operating Expenses

$ 202,840,128 $ 105,397,920 $ 18,318,197 $ 65,714,588 $ 33,445,932

Natural Classification

Institutional Support

Functional Classification

Plant Operations Scholarships

and

and

Maintenance

Fellowships

Auxiliary Enterprises

Total Operating Expenses

Salaries Faculty Staff
Employee Benefits Other Personal Services Travel Scholarships and Fellowships Utilities Supplies and Other Services Depreciation

$ 19,660,197 $ 4,234,937 769,721 188,933 1,621,517 541,281 6,785,429 564,583

16,636,551 $ 4,528,161

$ 77,518
775

17,500
13,123,698 15,052,347
2,671,549

23,689,527 30,421

-4,800 $ 8,370,733 2,013,595
62,835 300
3,011,968 34,411,701
8,527,534

115,015,273 184,974,021
73,982,674 1,214,663 5,446,616
32,077,327 17,483,545 119,495,117 42,616,040

Total Operating Expenses

$ 34,366,598 $

52,029,806 $ 23,798,241 $ 56,393,866 $ 592,305,276

- 24 -

GEORGIA STATE UNIVERSITY NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2013

EXHIBIT "D"

Note 17. Affiliated Organizations
The Georgia State University Foundation and Georgia State University Research Foundation. are legally separate, tax exempt organizations whose activities primarily support Georgia State University. These affiliated organizations are considered potential component units 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 organizations are not included in these financial statements. Copies of the financial statements for the affiliated organization may be obtained from Georgia State University.
The Georgia State University Foundation and Georgia State University Research Foundation have been determined significant to the State of Georgia for the year ended June 30, 2013, and as such, are reported as blended/discretely presented component units in the Comprehensive Annual Financial Report of the State of Georgia (CAFR). The significant blended/discretely presented component units issue separate audited financial statements that can be obtained from the Board of Regents of the University System of Georgia.

- 25 -

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SUPPLEMENTARY INFORMATION - 27 -

GEORGIA STATE UNIVERSITY BALANCE SHEET (NON-GAAP BASIS)
BUDGET FUND JUNE 30, 2013
ASSETS
Cash and Cash Equivalents Investments Accounts Receivable
Federal Financial Assistance Other Prepaid Expenditures Inventories
Total Assets
LIABILITIES AND FUND EQUITY
Liabilities Accrued Payroll Encumbrances Payable Accounts Payable Unearned Revenue Other Liabilities
Total Liabilities
Fund Balances Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Carry-Over "Per State Accounting Office" Unreserved Surplus
Total Fund Balances
Total Liabilities and Fund Balances
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 special purpose framework.
- 28 -

SCHEDULE "1"

$

99,599,129.33

1,883.92

11,357,651.44 20,256,974.60
494,229.50 318,288.54

$ 132,028,157.33

$

889,372.73

37,148,669.90

3,476,038.37

33,934,446.68

458,812.32

$

75,907,340.00

$

54,632.27

9,496,774.27

26,820,275.33

4,501,230.35

4,716,671.08

2,521,724.88

261,492.03

6,251,062.78

1,200,000.00

296,954.34

$

56,120,817.33

$ 132,028,157.33

GEORGIA STATE UNIVERSITY SUMMARY BUDGET COMPARISON AND SURPLUS ANALYSIS REPORT (NON-GAAP 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
to Board of Regents - University System Office Year Ended June 30, 2012
Prior Year Reserved Fund Balance Included in Funds Available
FUND BALANCE JUNE 30
SUMMARY OF FUND BALANCE
Reserved Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Carry-Over "Per State Accounting Office"
Total Reserved
Unreserved Surplus
Total Fund Balance

BUDGET

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$

179,080,213.00 $

179,080,213.00 $

0.00

541,364,253.00

429,587,516.14

-111,776,736.86

$

720,444,466.00 $

608,667,729.14 $

-111,776,736.86

0.00

25,233,074.98

25,233,074.98

0.00

44,379,006.73

$

720,444,466.00 $

678,279,810.85 $

44,379,006.73 -42,164,655.15

$

145,850.00 $

145,850.00 $

720,298,616.00

624,821,391.09

$

720,444,466.00 $

624,967,241.09 $

$

0.00 $

53,312,569.76 $

0.00 95,477,224.91
95,477,224.91
53,312,569.76

46,920,972.92 147,382.59

1,241,513.15 -975,231.77

-147,382.59 -44,379,006.73

$

56,120,817.33

$

54,632.27

9,496,774.27

26,820,275.33

4,501,230.35

4,716,671.08

2,521,724.88

261,492.03

6,251,062.78

1,200,000.00

$

55,823,862.99

296,954.34

$

56,120,817.33

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 special purpose framework.
- 29 -

GEORGIA STATE UNIVERSITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BY PROGRAM AND FUNDING SOURCE
(NON-GAAP 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 $

145,850.00 $

145,850.00

$ 181,691,160.00 $ 181,691,160.00 $ 178,934,363.00 $ 178,934,363.00

436,418,172.00

436,418,172.00

541,364,253.00

429,587,516.14

$ 618,109,332.00 $ 618,109,332.00 $ 720,298,616.00 $ 608,521,879.14

$ 618,109,332.00 $ 618,109,332.00 $ 720,444,466.00 $ 608,667,729.14

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 special purpose framework.
- 30 -

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 $

145,850.00 $

0.00 $

145,850.00 $

0.00 $

0.00

$

0.00 $

44,379,006.73

$ 44,379,006.73 $

0.00 $ 178,934,363.00 $

25,233,074.98

499,199,597.85

25,233,074.98 $ 678,133,960.85 $

0.00 $ 178,934,363.00 $

-42,164,655.15

445,887,028.09

-42,164,655.15 $ 624,821,391.09 $

0.00 $ 95,477,224.91
95,477,224.91 $

0.00 53,312,569.76
53,312,569.76

$ 44,379,006.73 $

25,233,074.98 $ 678,279,810.85 $ -42,164,655.15 $ 624,967,241.09 $

95,477,224.91 $

53,312,569.76

- 31 -

GEORGIA STATE UNIVERSITY STATEMENT OF CHANGES TO FUND BALANCE BY PROGRAM AND FUNDING SOURCE
(NON-GAAP 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

$

84,734.03 $

44,441,655.29

$

44,526,389.32 $

$

44,526,389.32 $

0.00 $ -44,379,006.73
-44,379,006.73 $
-44,379,006.73 $

-84,734.03 $ -62,648.56

256,182.36 10,099.02

-147,382.59 $ 266,281.38

-147,382.59 $ 266,281.38

212,926.19 2,329,040.00

0.00 0.00

0.00 0.00

0.00 0.00

Budget Unit Totals

$

47,068,355.51 $

-44,379,006.73 $

-147,382.59 $ 266,281.38

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 special purpose framework.
- 32 -

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 $

-241,250.72

$ -241,250.72 $

$ -241,250.72 $

0.00 $ 0.00
0.00 $
0.00 $

0.00 $ 53,312,569.76

256,182.36 $

0.00 $

53,081,418.06 53,040,646.08

53,312,569.76 $ 53,337,600.42 $ 53,040,646.08 $

53,312,569.76 $ 53,337,600.42 $ 53,040,646.08 $

256,182.36 $

256,182.36

40,771.98 53,081,418.06

296,954.34 $ 53,337,600.42

296,954.34 $ 53,337,600.42

48,565.84 192,684.88

0.00 0.00

0.00 0.00

261,492.03 2,521,724.88

261,492.03 2,521,724.88

0.00 0.00

261,492.03 2,521,724.88

$

0.00 $

0.00 $

53,312,569.76 $ 56,120,817.33 $ 55,823,862.99 $

296,954.34 $ 56,120,817.33

Summary of Ending Fund Balance Reserved
Capital Outlay Department Sales and Services Indirect Cost Recoveries Technology Fees Restricted/Sponsored Funds Uncollectible Accounts Receivable Inventories Tuition Carry-Over Carry-Over "Per State Accounting Office" Unreserved Surplus
Total Ending Fund Balance - June 30

$

54,632.27

9,496,774.27

26,820,275.33

4,501,230.35

4,716,671.08

2,521,724.88

261,492.03

6,251,062.78

1,200,000.00

$

$ 55,823,862.99 $

$

54,632.27

9,496,774.27

26,820,275.33

4,501,230.35

4,716,671.08

2,521,724.88

261,492.03

6,251,062.78

1,200,000.00

296,954.34

296,954.34

296,954.34 $ 56,120,817.33

- 33 -

GEORGIA STATE UNIVERSITY RECONCILIATION OF BUDGET TO GAAP
YEAR ENDED JUNE 30, 2013

SCHEDULE "5"

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.
Subscription services are reported as prepaid items on the Statement of Net Position but are reported as expenditures in the Budget Fund.
Certain summer tuition and fees are reported as revenues for GAAP purposes but as unearned revenues in the Budget Fund.
Certain obligations are reported as accounts payable on the Statement of Net Position but are not recognized as expenditures in the Budget Fund.
Certain obligations are reported as accounts receivable on the Statement of Net Position but are not recognized as revenues in the Budget Fund.
Certain obligations are reported as unearned revenue on the Statement of Net Position but are recognized as revenues in the Budget Fund.
Certain obligations are reported as other liabilities on the Statement of Net Position but are recognized as expenditures and negative accounts receivable in the Budget Fund.
Funds placed on deposit with the Georgia State Financing and Investment Commission for use in capital outlay projects are reported as an outlay in the Budget Fund, but are included as investment on the Statement of Net Position.
Agency Fund activities are not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Agency Fund Activity
Remaining Auxiliary Enterprises Fund activities not previously adjusted and not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Remaining 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
Remaining Student Activities Fund activities not previously adjusted and not reported as a component of the Budget Fund. Assets Liabilities Total Net Effect of Remaining Student Activity Fund Activity

$ 56,120,817.33

816,950,834.82

-2,521,724.88 2,664,809.13 10,522,772.50 -1,088,528.11 2,287,792.94
-221,424.08 -583,258.22

$

11,143,468.57

-11,143,468.57

10,756,053.34 0.00

$

40,624,123.42

-4,956,436.63

$

57,339.66

0.00

$

6,683,448.70

-18,422.27

35,667,686.79 57,339.66
6,665,026.43

$

30,705,359.32

-1,000,320.34

29,705,038.98

- 34 -

GEORGIA STATE UNIVERSITY RECONCILIATION OF BUDGET TO GAAP
YEAR ENDED JUNE 30, 2013
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. Georgia State Financing and Investment activity reported as revenues in the Budget Fund to cover encumbrances reported as expenditures are eliminated 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 Contracts Payable Deferred gain from refinancing of lease Georgia State Financing and Investment payback bond balance Total Liabilities
Rounding Variance
Net Position of Business-Type Activities (Exhibit "A")

SCHEDULE "5"

$

37,148,669.90

-6,512,822.80
-3,349,512.57 $

27,286,334.53

$ -379,673,794.00 -12,823,931.00 -845,785.00 -9,457,685.52 -381,401.68

-403,182,597.20 0.04

$ 591,086,974.00

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.
- 35 -

GEORGIA 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
Federal Work Study Accruals June 30, 2013 June 30, 2012
Compensated Absences June 30, 2013 June 30, 2012
Adjustments Shared Services on Jointly Staffed Personnel Albany State University Spratt, Bruce Armstrong Atlantic State University Kraft, Dr. John Atlanta Metro State College Husain, Muhammad Mudabbir Clayton College and State University Foster, Victoria Taylor-Hamrick, Terri Nteff, Grace Shaw, Sharon Jane Thrash, Shontellen Columbus State University Barzegar, Abbas Emory University Crosson, Bruce Fort Valley State University Stark, Ron Georgia College & State University Bubacz, Eric Charles Farnell, Cynthia Georgia Gwinnett College Jackson-Minot, Marquita Staaf, Christopher Tomashot, Shane R. Georgia Health Sciences University Yu, Dr. Robert K. Georgia Institute of Technology Alemdar, Melton Bachman, Irma A. Bennett, Nathan Berry, Roberta M. Bobb, Kamau Ganeshan, Vridhagirl Hawley, Carolyn Lu, Dr. Jye Chyl Wilson, Deborah

- 36 -

SALARIES

TRAVEL

$ 299,667,620.34 $ 5,467,772.36

996,560.00 -947,737.00

168,585.67 -189,742.45

-10,620.30 11,929.93

11,912,615.74 -11,289,295.99

-6,807.50
800.00
-7,000.00
2,260.65 800.00
2,260.65 2,260.65 2,691.25
-1,000.00
13,898.85
-5,217.39
-3,512.50 -250.00
5,000.00 2,000.00 -23,100.00
500.00
9,229.50 -883.62
-35,100.00 19,972.10
5,382.50 -7,700.00 -4,000.00
700.00 -500.00

GEORGIA STATE UNIVERSITY RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30, 2013

SCHEDULE "6"

Adjustments Shared Services on Jointly Staffed Personnel Georgia Perimeter College Artinian, Liana Greathouse, Candice Holloway, Jason Kreutzer, Cynthia D. Siler, John Shapiro, Michael B. Stark, Ronald B. Georgia Southern University Brantley, Andra B. Laster, Ronnie Gordon College Tillmane, Candace Kennesaw State University Bedard, Brandie Bole, James Sanders Bubacz, Eric Charles Dee, Brian Michael Donaldson, Justin Ganeshan, Vridhagirl Hedeen, Timonthy Kozhanova, Tatian Macon State University Cantwell, Kevin North Georgia College and State University Caciula, Adrian Combier, Dr. Elizabeth Stapleton, Michael University of Georgia Chen, Iirong Jones, Gregory T. Lofton, Diana Wallace, Dr. Isabelle Loring University System of Georgia Carver, Jr., Curtis A. Fuss, Kristi Kirkwood, Diane University of West Georgia Hodges, Dr. Charles Jett, Dr. Christopher Overfield, Denise Reynolds, Rebecca Valdosta State University Murphy, Rebecca
Rounding Variance
- 37 -

SALARIES

TRAVEL

$

-2,200.00

-5,413.67

-6,300.00

750.00

750.00

750.00

-204,000.00

-250.00 7,000.00

4,521.30

-3,150.00 -500.00 -200.00
-14,500.00 -4,800.00 -5,382.50 300.00 -1,883.88

1,000.00

-40,000.00 800.00 800.00

-14,152.17 -72,000.00
1,626.75 400.00

9,000.00 4,044.09
800.00

10,692.00 1,181.63 800.00 3,552.00

1,500.00

0.59 $

0.42

$ 299,989,294.00 $ 5,446,616.00

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORTS

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
January 24, 2014

Honorable Nathan Deal, Governor Members of the General Assembly of Georgia Members of the Board of Regents of the University System of Georgia
and Honorable Mark P. Becker, President Georgia State University
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the basic financial statements of Georgia State University as of and for the year ended June 30, 2013, and have issued our report thereon dated January 24, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Georgia State University's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Georgia State University's internal control. Accordingly, we do not express an opinion on the effectiveness of Georgia State University's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
2013YB-10

Compliance and Other Matters
As part of obtaining reasonable assurance about whether Georgia State University's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Respectfully submitted,

GSG:as 2013YB-10

Greg S. Griffin State Auditor

SECTION III 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, 2013

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

No matters were reported.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-509-12-01

Previously Reported Corrective Action Plan Implemented

SECTION IV CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA STATE UNIVERSITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
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.