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STATE OF GEORGIA DEPARTMENT OF AUDITS 
254 WASHINGTON STREET ATLANTA. GEORGIA 30334 
 
 AUDIT REPORT GEORGIANETAUTHORITY A COMPONENT UNIT OF THE 
STATE OF GEORGIA YEAR ENDED JUNE 30, 1995 
 
 GEORGIANETAUTHORITY - TABLE OF CONTENTS - 
 
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION 
 
EXHIBITS 
 
FINANCIAL STATEMENTS 
 
A COMBINED BALANCE SHEET (STATUTORY BASIS) 
 
ALL FUND TYPES AND ACCOUNT GROUPS 
 
2 
 
B STATEMENT OF CHANGES IN FUND BALANCES 
 
(STATUTORY BASIS) 
 
GOVERNMENTAL FUND TYPE 
 
3 
 
C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES 
 
GENERAL FUND 
 
4 
 
D NOTES TO THE FINANCIAL STATEMENTS 
 
6 
 
SUPPLEMENTARY INFORMATION 
 
SCHEDULES 
 
1 CASH AND CASH EQUIVALENTS 
 
18 
 
2 SCHEDULE OF OTHER OPERATING EXPENSES 
 
19 
 
 CLAUDE L. VICKERS 
STATE AUDITOR (404) 656-2174 
 
DEPARTMENT OF AUDITS 
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400 
January 19, 1996 
 
Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members ofthe GeorgiaNet Authority 
and Honorable David C. Evans, Commissioner Department of Administrative Services 
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION 
Ladies and Gentlemen: 
We have audited the accompanying financial statements (Exhibits A through D) of the GeorgiaNet Authority as of and for the year ended June 30, 1995. These financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these financial statements based on our audit. 
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 
As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles. 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position (statutory basis) of the GeorgiaNet Authority as of June 30, 1995, and the results ofits operations (statutory basis) for the year then ended, on the basis of accounting described in Note 1. 
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplementary information (Schedules 1 and 2) is presented for purposes of additional analysis and is not a required part ofthe financial statements of the GeorgiaNet Authority. Such information has been 
95ARL-1 
 
 subjected to the auditing procedures applied in the audit ofthe financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. 
i t ~ ~ Respectfully submitted, 
Claude L. Vickers State Auditor 
CLV:gp 95ARL-1 
 
 FINANCIAL STATEMENTS - 1- 
 
 GEORGIANET AUTHORITY 
COMBINED BALANCE SHEET <STATUTORY BASIS} ALL FUND TYPES ANP ACCOUNT GROUPS 
JUNE 30. 1995 
 
EXHIBIT"A" 
 
Cash and Cash Equivalents (See Schedule) 
Accounts Receivable Other 
FixedAssets Equipment 
Amount to be Provided for Payment of Accrued Compensated Absences 
 
GOVERNMENTAL FUND TYPE GENERAL FUND 
 
ACCOUNT GROUPS 
 
GENERAL 
 
GENERAL 
 
FIXED 
 
LONG-TERM 
 
ASSETS 
 
DEBT 
 
TOTALS 
(Memorandum Only) JUNE 301 1995 JUNE 30, 1994 
 
$ 
 
1,099,722.10 
 
$ 1,099,n2.10 $ 1,194,499.37 
 
1,797,021.64 
 
1,797,021.64 
 
1,531,207.10 
 
$ 1,125,794.37 
 
1,125,794.37 
 
709,705.32 
 
$ 
 
22,530.43 
 
22,530.43 
 
15,276.79 
 
Total Assets 
 
2,896,743.74 $ 1,125,794.37 $ 
 
22,530.43 $ 4,045,068.54 $ 3,450,688.58 
 
LIABILITIES AND FUND EQUITY 
Liabilities Accounts Payable Compensated Absences 
Total liabilities 
Fund Equity Investment in General Fixed Assets Fund Balances Unreserved Undes~nated 
Total Fund Equity 
 
$ 
 
222,570.87 
 
$ 
 
$-------2=22-,-5-70.87 
 
$ 
 
$ 1,125,794.37 
 
$ _ _=21"&-7-4'-11n.a1 $ - -2~ ,67-4,172.87 $ 
 
1,125,794.37 
 
$ 22,530.43 
22,530.43 $ 
 
222,570.87 $ 22,530.43 
245,101.30 $ 
 
162,729.73 15,276.79 
178,006.52 
 
$ 1,125,794.37 $ 709,705.32 
 
2,674, 172.87 
 
2,562,976.74 
 
$ 3,799,967.24 $ 312n1682.06 
 
Total Liabilities and Fund Equity 
 
$ ___2_,8_96_,,7..4..3.....7..4,.. $ 1,125,794.37 $ 
 
22,530.43 $ 4,045,068.54 $ 3,4501688.58 
 
The notes to the financial statements are an integral part of this statement. -2- 
 
 GEORGIANET AUTHORITY STATEMENT OF CHANGES IN FUND BALANCES {STATUTORY BASIS} 
GOVERNMENTAL FUND TYPE YEAR ENDED JUNE 30, 1995 
 
EXHIBIT"B" 
 
FUND BALANCES - JULY 1 Unreserved Undesignated 
ADDITIONS 
Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures 
Exhibit "C" 
DEDUCTIONS 
Funds in Excess of Corporate Needs Office of Treasury and Fiscal Services State Revenue Collections - General Fund Through Department of Administrative Services 
Unreserved Fund Balance Carried Over from Prior Year as Funds Available 
FUND BALANCES - JUNE 30 (To Exhibit "Aj 
 
GENERAL FUND YEAR ENDED 
JUNE 30, 1995 JUNE 30, 1994 
 
$ 2,562,976.74 $ 2,930,796.38 
 
$ 
 
23,633.30 $ 
 
0.00 
 
16,150,539.57 
 
18,562,976.74 
 
$ 16,174,172.87 $ 18,562,976.74 
 
$ 13,500,000.00 $ 16,000,000.00 
 
2,562,976.74 
 
2,930,796.38 
 
$ 16,062,976.74 $ 18,930,796.38 
 
$ 216741172.87 $ 2 15621976.74 
 
The notes to the financial statements are an integral part of this statement. 
-3- 
 
 GEORGIANET AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES 
GENERAL FUND YEAR ENDED JUNE 30, 1995 
 
EXHIBtTc 
 
FUNDS AVAILABLE REVENUES 
OTHER REVENUES RETAINED 
Interest Earned Sale of Electronic Data Records 
Total Revenues CARRY-OVER FROM PRIOR YEAR 
Transfer from Unreserved Fund Balance 
Total Funds Available 
EXPENDITURES PERSONAL SERVICES 
Salaries and Wages Employer's Contributions for: 
F.I.C.A Retirement Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance 
REGULAR OPERATING EXPENSES 
Motor Vehicle Expenses Supplies and Materials Repairs and Maintenance Rents (Other than Real Estate) Insurance and Bonding Other Operating Expenses (See Schedule) Duplicating and Rapid Copy Publications and Printing 
TRAVEL MOTOR VEHICLE PURCHASES 
The notes to the financial statements are an integral part of this statement. -4- 
 
TOTALS 
 
YEAR ENDED 
 
JUNE 30, 1995 
 
JUNE 30, 1994 
 
$ 
 
157,887.85 $ 
 
124,313.20 
 
16,241,667.39 
 
16,043,506.96 
 
$ 16,399,555.24 $ 16,167,820.16 
 
2,562,976.74 
 
2,930,796.38 
 
$ 18,962,531.98 $ 19,098,616.54 
 
$ 
 
313,989.61 $ 
 
125,850.60 
 
22,579.97 48,364.24 39,055.32 
1,580.00 24.00 
328.00 
 
7,839.20 20,565.17 15,044.28 
960.00 24.00 
266.00 
 
$ 
 
425,921.14 $ 
 
170,549.25 
 
$ 
 
14.00 $ 
 
0.00 
 
7,179.88 
 
2,658.87 
 
3,780.37 
 
12,210.22 
 
90.80 
 
0.00 
 
74.00 
 
50.00 
 
47,158.38 
 
9,516.56 
 
986.10 
 
0.00 
 
15,506.50 
 
504.52 
 
$ 
 
74,790.03 $ 
 
24,940.17 
 
$ 
 
15,618.83 $ 
 
3,909.68 
 
$ 
 
0.00 $ 
 
12,692.00 
 
 GEORGIANET AUTHORITY STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES 
GENERAL FUND YEAR ENDED JUNE 30, 1995 
 
EXHIBIT"C" 
 
EXPENDITURES 
EQUIPMENT 
Equipment Purchases Ren1al of Equipment 
COMPUTER CHARGES 
Other Costs Supplies and Materials 
Repairs and Maintenance Other Operating Expenses (See Schedule) Software 
Equipment Equipment Purchases Rental of Equipment 
Per Diem, Fees and Contracts Contracts 
Computer Billings, DOAS 
REAL ESTATE RENTALS 
TELECOMMUNICATIONS 
PER DIEM, FEES AND CONTRACTS 
Per Diem and Fees 
AUTHORITIES LIABILITY RESERVE FUND 
OtherCos1s Insurance and Bonding 
Total Expenditures 
Excess of Funds Available over Expenditures 
 
TOTALS 
 
YEAR ENDED 
 
JUNE 30, 1995 
 
JUNE 30, 1994 
 
$ 
 
60,724.01 $ 
 
15,431.70 
 
2,882.00 
 
1,135.33 
 
$ 
 
63,606.01 $ 
 
16,567.03 
 
$ 
 
16,660.15 $ 
 
0.00 
 
16,875.00 
 
1,255,650.09 
 
517,006.05 1,226.08 
 
222,848.00 109,796.40 
 
$ 
 
2,140,061.TT $ 
 
$ 
 
17,000.00 $ 
 
$ 
 
56,757.75 $ 
 
4,390.40 75.00 0.00 
10,246.76 
118,090.85 5,675.00 
92,840.00 56,691.62 
288,009.63 
5,300.00 
10,890.96 
 
$ 
 
17,405.88 $ 
 
1,950.08 
 
$ 
 
831.00 $ 
 
831.00 
 
$ 
 
2,811,992.41 $ 
 
535,639.80 
 
16,150,539.57 
 
18,562,976.74 
 
$ 18,962,531.98 $ 19,098,616.54 
 
The notes to the financial statements are an integral part of this statement. -5- 
 
 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATE:MENTS 
JUNE 30, 1995 
 
EXIIlBIT "D" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
REPORTING ENTITY The GeorgiaNet Authority is an instrumentality of the State of Georgia and a public corporation which is assigned to the Department ofAdministrative Services for administrative purposes only. The Authority is the State of Georgia's primary agency for providing centralized access to certain public information maintained in electronic fonnat to the public and other agencies ofthe State. The Authority consists of five (5) members as follows: three members appointed by the Governor; one member appointed by the Lieutenant Governor; and one member appointed by the Speaker ofthe House of Representatives. The management of the business and affairs of the Authority is vested in the Executive Board. 
The GeorgiaNet Authority is considered a component unit of the State of Georgia and is included within the State of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards. 
FUND ACCOUNTING The GeorgiaNet Authority uses a fund and account groups to report on its financial position and the results ofits operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State ofGeorgia. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. The fund and account groups presented in the accompanying financial statements are as follows: 
GOVERNMENTAL FUND TYPE 
GENERAL FUND - The fund used to account for all activities except those required to be accounted for in some other fund. 
ACCOUNT GROUPS 
GENERAL FIXED ASSETS - The account group used to account for fixed assets used in governmental fund type operations. Fixed assets purchased are recorded at cost or at estimated historical cost if historical cost is not practically determinable. Donated fixed assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on general fixed assets. 
The cost ofnormal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not included in the General Fixed Assets Account Group. Material improvements adding to the value or useful life of the assets are included in the General Fixed Assets Account Group. 
-6- 
 
 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1995 
 
EXIIlBIT "D" 
 
NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
FUND ACCOUNTING 
ACCOUNT GROUPS 
GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions of certain governmental long-term liabilities, such as claims, judgments and compensated absences, which will be paid from future resources. 
BASIS OF ACCOUNTING MEASUREMENT FOCUS 
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. 
Governmental funds should be accounted for using the flow of current financial resources measurement focus. Wrth this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources. 
GOVERNMENTAL FUND TYPE GENERAL FUND 
Except as disclosed in the following paragraphs, the GeorgiaNet Authority records its General Fund revenues and expenditures in accordance with the modified accrual basis ofaccounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Revenues that are accrued include certain amounts earned under operating agreements with other parties. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences, claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available financial resources. 
Contractual obligations for services which have not been performed and for goods which have not been delivered at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. 
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of the General Fund in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures. 
 
-7- 
 
 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1995 
 
EXHIBIT "D" 
 
NOTE I: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
BUDGET A budget for the financial operations of the GeorgiaNet Authority is approved by the Authority at a selected meeting. The budget is not subject to review or approval by the Legislature of the State of Georgia and therefore, is a nonappropriated budget. The budget is prepared for internal purposes only. 
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include demand deposits with banks and other financial institutions and cash 
management pools that have the general characteristics of demand deposit accounts in that the Authority may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty. 
INVESTMENTS The GeorgiaNet Authority participates in an investment pool managed by the State of Georgia's Office of Treasury and Fiscal Services (OTFS) referred to as the "Georgia Fund I". The Authority does not have any risk exposure from investments in Georgia Fund I as the investment policy of OTFS does not provide for investments in derivatives or similar investments through the Georgia Fund I. 
ACCOUNTS RECEIVABLE Accounts Receivable (Other) arising from operations are reported at gross value. Based on management's evaluation that amounts uncollectible are not material, no provision has been made for those accounts expected to be uncollectible. 
INVENTORIES No inventories ofsupplies are reported in the current financial statements. Expendable supplies are recorded as expenditures at the time of purchase. 
COMPENSATED ABSENCES Compensated absences represent obligations of the Authority relating to employee's rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating annual leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion of this obligation as this amount will not be liquidated with expendable available financial resources. 
The liability for compensated absences at year end is reported in the General Long-Term Debt Account Group for governmental funds. 
MEMORANDUM ONLY - TOTAL COLUMNS Total columns on the Combined Balance Sheet (Statutory Basis) are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. lnterfund eliminations have not been made in the aggregation of this data. 
-8- 
 
 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1995 
 
EXIIlBIT "D" 
 
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
COMPARATIVE DATA Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding of the changes in the Authority's financial position and operations. 
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS 
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds ofthe State of Georgia 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 ofthe following securities as enumerated in the Official Code of Georgia Annotated Section 50-17-59: 
(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or ofthe State of Georgia. 
(2) Bonds, bills, certificates ofindebtedness, notes, or other obligations of the counties or municipalities of the State of Georgia. 
(3) Bonds ofany 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 ofthe 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 ofaccounts provided by the Federal Deposit Insurance Corporation. 
As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State of Georgia the option of exempting demand deposits from the collateral requirements. 
CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1995, are categorized 
 
-9- 
 
 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATEl\ffiNTS 
JUNE 30, 1995 
 
EXHIBIT "D" 
 
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTl\ffiNTS 
 
CATEGORIZATION OF DEPOSITS below in order to provide infonnation about the extent to which such deposits are exposed to custodial credit risk. 
 
Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the Authority or by its agent in the Authority's name. 
 
Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Authority's name. 
 
Category 3 - Amounts collateralized with securities (at market value) held by the pledging financial institution or by its trust department or agent, but not in the Authority's name, and amounts uncollateralized. 
 
Cash Deposits 
 
Carrying Amount 
 
Bank Balances 
 
Risk Categories 
 
2 
 
3 
 
$ 220 782 32 $ 2299 882 83 $ 100 000 00 $=====0,...00... $ 2 J99 882 83 
 
CATEGORIZATION OF INVESTMENTS Investments are stated at cost. The carrying amount of the investment balance as of June 30, 1995, shown below is maintained in an investment pool by the Office of Treasury and Fiscal Services and is not subject to risk categorization. 
 
Type of Investment 
 
Carrying Amount 
 
Market Value 
 
State Investment Pool 
 
$ 878,939.78 $ 878,939 78 
 
NOTE 3: CHANGES IN GENERAL FIXED ASSETS 
 
In accordance with the statutory definition of moveable personal property as defined in Official Code of Georgia Annotated Section 50-16-161, only those items with an acquisition cost of$1,000.00 or greater are reflected in the General Fixed Assets Account Group. 
 
The following is a summary of changes of equipment in the General Fixed Assets Account Group during the fiscal year: 
 
Balance July 1, 1994 
Additions Deductions 
Balance June 30, 1995 
 
$ 709,705.32 
419,340.18 3,251.13 
$ 1,125,794.37 
 
- 10- 
 
 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATEJ\ffiNTS 
JUNE 30, 1995 
 
EXIIlBIT "D" 
 
NOTE 4: GENERAL LONG-TERM DEBT 
 
CHANGES IN GENERAL LONG-TERM DEBT During the year ended June 30, 1995, the following changes occurred in the compensated absences liability reported in the General Long-Term Debt Account Group: 
 
Balance July 1, 1994 
 
$ 15,276.79 
 
Additions Annual Leave Earned and Utilized (Net) Salaries Salary Related Fringe Benefits 
 
6,738.17 515.47 
 
Balance June 30, 1995 
 
$ 22,530.43 
 
NOTE 5: RISK MANAGEJ\ffiNT 
 
Public Entity Risk Pool 
 
The State Personnel Board, Merit System ofPersonnel Administration internally administers for the State of Georgia a program of health benefits for the employees of units ofgovernment ofthe State of Georgia and units of county government and local education agencies located within the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations made by the General Assembly of Georgia. The State Personnel Board, Merit System of Personnel Administration has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board. 
 
Other Risk Management 
 
The Department ofAdministrative 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 services 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 is purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Authority is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the state agencies by DOAS to provide claims servicing and claims payment. 
 
- 11 - 
 
 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1995 
 
EXIIlBIT "D" 
 
NOTE 6: DEFERRED COMPENSATION PLAN 
The State ofGeorgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees ofthe State of Georgia and county health departments, permits such employees to defer a portion oftheir salary until future years. Participation in the plan is optional. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights of the State of Georgia subject only to the claims of the State's general creditors. Participant's rights under the plan are equal to those of a general creditor of the State of Georgia in an amount equal to the fair market value of the deferred account of each participant. Financial infonnation relative to the plan is presented in the financial report of the State Personnel Board - Merit System ofPersonnel Administration for the year ended June 30, 1995. 
NOTE7: RETIREMENTPLANS 
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 
Plan Description The GeorgiaNet Authority participates in the Employees' Retirement System of Georgia ("ERS"), a singleemployer, defined benefit plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia. The Authority's payroll for the year ended June 30, 1995, for employees covered by ERS was $310,759.00. The Authority's total payroll for all employees was $313,989.61. 
Benefits The benefit structure of ERS was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions. 
Members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 65. Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest eight consecutive calendar quarters of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. If 10 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after 30 years of service regardless of age. 
 
- 12 - 
 
 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1995 
 
EXIIlBIT "D" 
 
NOTE7: RETIREMENTPLANS 
 
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 
 
Contributions Required and Contributions Made Under the old plan, member contributions consist of employee contributions paid by the employee of 1.25% ofannual compensation and 4.75% of annual compensation paid by the Authority on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% of annual compensation paid by employee. The Authority also is required to contribute at a specified percentage of active member payroll determined 
annually by actuarial valuation. For the year ended June 30, 1995, the ERS employer contribution rate for the Authority amounted to 14.81% of covered payroll and included the 4.75% contributed on behalf of the employee referred to above. Contributions are also made on amounts paid for accumulated leave of retiring employees. 
 
Total contributions to the plan made during fiscal year 1995 amounted to $49,918.02, of which $46,033.54 was made by the employer and $3,884.48 was made by employees. These contributions met the requirements of the plan. 
 
Funding Status and Progress Pension Benefit Obligation 
The amount shown as the "pension benefit obligation" is a standardized disclosure measure of the present value ofpension benefits, adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status ofERS on the going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due and make comparisons among employers. The measure is the actuarial present value of credited projected benefits, and is independent ofthe funding method used to determine contributions to the plan. 
 
The pension benefit obligation was computed as part of an actuarial valuation performed as ofJune 30, 1994. Significant actuarial assumptions used in the valuation include the following: 
 
1) The present value offuture pension benefits paid was computed using a discounted rate of7.5 percent. This rate is also the same rate assumed to be earned on investments in the plan in future years. 
 
2) Future pension payments reflect the following assumed salary increases as a result of inflation and merit increases: 
 
Age 20 25 30 35 40 to 65 
 
Percentage 9.5% 8.5% 6.5% 6.0% 5.7% 
 
- 13 - 
 
 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1995 
 
EXIIlBIT "D" 
 
NOTE7: RETIREMENTPLANS 
 
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 
 
Funding Status and Progress Pension Benefit Obligation 
3) ERS has the authority to grant cost-of-living adjustments by state statute. As of June 30, 1994, cost-ofliving adjustments have been included in the pension benefit obligation. 
 
The total unfunded pension benefit obligation ofERS as of June 30, 1994, was $310,149,000, as follows: 
 
Pension Benefit Obligation: 
 
Retirees and Beneficiaries Currently Receiving Benefits and Terminated Employees Entitled to Benefits but Not Yet Receiving Benefits 
 
$ 2,227,653,000 
 
Current Employees 
 
Accumulated Contributions 
 
648,516,000 
 
Employer-Financed Vested 
 
1,085,190,000 
 
Employer-Financed Nonvested 
 
1,206,805,000 
 
Total Pension Benefit Obligation 
 
$5,168,164,000 
 
Net Assets Available for Benefits 
 
4,858,015,000 
 
Unfunded Pension Benefit Obligation 
 
$ 310,149,000 
 
The measurement ofthe total pension benefit obligation is based on an actuarial valuation as of June 30, 1994. 
Net assets available for benefits were valued as ofthe same date. ERS does not make separate measurements 
of assets and pension benefit obligation for individual employers. 
 
Funding Policy The ERS funding policy provides for periodic employer contributions at actuarially determined rates that, 
expressed as percentages ofannual payroll, are sufficient to accumulate sufficient assets to pay benefits when 
due. Level percentage of payroll employer contribution rates are determined using the entry age funding method. ERS also uses the level percentage of payroll method to amortize the unfunded liability within approximately 20 years following the valuation date. 
 
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 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATEMENTS 
JUNE 30, 1995 
 
EXI-IlBIT "D" 
 
NOTE 7: RETIREMENT PLANS 
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 
Funding Status and Progress Funding Policy 
Total contributions from all employers to ERS for the year ended June 30, 1995, were $256,624,679.00. The Authority's contribution was actuarially determined and represented O.02% of total contributions made by all participating employers. 
Significant actuarial assumptions used to compute contributions are the same as those used to compute the standardized measure of pension obligation. 
Trend Information Historical trend information is presented in the financial report ofERS for the year ended June 30, 1995. This information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. 
GEORGIA DEFINED CONTRIBUTION PLAN 
Plan Description The GeorgiaNet Authority is eligible to participate in the Georgia Defined Contribution Plan ("GDCP") which is a single-employer defined contribution plan established by the Georgia General Assembly in July 1993 for the purpose ofproviding 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 Employees' Retirement System Board of Trustees. The Authority did not have any employees eligible to participate in GDCP for the year ended June 30, 1995. 
NOTE 8: LEAVE POLICIES 
Employees earn ten hours of sick leave each month with a maximum accumulation of ninety days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment. 
Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length ofcontinuous State service with a maximum accumulation of forty five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1 - Compensated Absences. 
Certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia. 
 
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 GEORGIANET AUTHORITY NOTES TO THE FINANCIAL STATE:MENTS 
JUNE 30, 1995 
 
EXIIlBIT "D" 
 
NOTE 9: CONTINGENCIES 
Litigation, claims and assessments filed against the GeorgiaNet Authority, if any, are generally considered to be actions against the State ofGeorgia. Pursuant to the Official Code of Georgia Annotated, the Department of Administrative Services maintains a program of purchased insurance and self-insurance which provides coverage for such litigation, claims and assessments. 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, 1995. 
NOTE 10: OTHER FINANCIAL NOTES 
TRANSFER OF EXCESS FUNDS TO THE STATE TREASURY The GeorgiaNet Authority is directed by Official Code ofGeorgia Annotated Section 50-25-4 to transfer funds determined by the Authority to be in excess of those needed for the corporate purposes ofthe Authority to the State Treasury. For fiscal year ended June 30, 1995, the Authority had total funds available of $18,962,531.98, expenditures of$2,788,359.ll (net of cancellation of prior year accounts payable) and remittances of excess funds to the Office of Treasury and Fiscal Services of$13,500,000.00 which resulted in an ending fund balance of$2,674, 172.87 to be carried over to the next fiscal year. 
NOTE 11: BONDING INFORMATION 
In performance of their duties on behalf of the GeorgiaNet Authority, the Commissioner and all employees ofthe Department ofAdministrative Services and all employees ofthe GeorgiaNet Authority are bonded under a Public Employees Blanket Bond written by Employers Insurance of Wausau, their Bond No. 1450-00110723, on which the premium was paid to October 1, 1995. Under this agreement the Public Employee Dishonesty Coverage insures the Department and Authority to a maximum of $1,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees. The Faithful Performance ofDuty Coverage insures the Department and Authority to a maximum of $1,000,000.00 against loss sustained from failure of its employees to perform faithfully their duties or to account properly for all monies and property received by virtue oftheir position or employment. 
All employees ofthe Department ofAdministrative Services and GeorgiaNet Authority are also bonded under 
Commercial Crime Policies written by the United States Fire Insurance Company, their Policy Nos. 626 012292 6 and 626 012294 4, on which premiums were paid to October 1, 1995. Under these additional public employee dishonesty coverages, the policies insure the Department and Authority to a maximum of $9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees. 
 
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 SUPPLEMENTARY INFORMATION - 17 - 
 
 GEORGIANET AUTHORITY CASH AND CASH EQUIVALENTS 
JUNE 30, 1995 
INTEREST BEARING ACCOUNTS 
NationsBank of Georgia, N. A., Atlanta, Georgia 
Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool 
 
SCHEDULE "1" 
$ 220,782.32 878,939.78 
$ 1,099,722.10 
 
See notes to the financial statements. 
 
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 GEORGIANET AUTHORITY SCHEDULE OF OTHER OPERATING EXPENSES 
YEAR ENDED JUNE 30, 1995 
REGULAR OPERATING EXPENSES Conference Costs Freight, Express and Storage Legal Advertising Registration Fees Subscriptions and Dues 
COMPUTER CHARGES Direct Help Desk Service 
 
SCHEDULE "2" 
 
$ 
 
814.92 
 
902.25 
 
1,527.02 
 
21,148.00 
 
22,766.19 
 
$ 47,158.38 
 
$ 16,875.00 
 
See notes to the financial statements. 
 
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